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176 Comments
- bradspangler, on 03/11/2009, -1/+74FTA: "Peter Schiff of Euro Pacific Capital put it well last Friday: 'Jobs must be lost in the service sector so that labor can be reallocated towards goods production. Asset prices, for both stocks and real estate, must decline to levels appropriate for current circumstances ... By postponing these adjustments we merely assure an even more painful transition in the future.'
Now that the housing bubble, stock market bubble and commodities bubble have popped, the market is trying to adjust to non-bubbly conditions. Laws and regulations that interfere with that process can delay that adjustment and prolong the recession. (If a failing business is artificially propped up, valuable resources are being wasted rather than being used for productive purposes.)" - bradspangler, on 03/11/2009, -0/+62The above excerpt that I posted makes the most important point -- failing enterprises MUST be allowed to fail. The notion that propping them up softens the blow is incorrect. It WORSENS the damage.
- inactive, on 03/12/2009, -14/+46Ron Paul!
- inactive, on 03/12/2009, -2/+25We keep hearing the bailout injections are necessary to keep the banks from failing. What everyone is forgetting is that the banks already failed. They privatized profits while knowingly socialized the risk because they held the "too big to fail" card. The greatest slap in the face for the middle class is that the majority of those responsible are not being held accountable financially or legally. Instead they are being handed more money. This is happening because politicians would rather be accused of trying to do something and failing verses doing nothing at all.
I'm typically an optimist but unfortunately the only possible, rational outcome of these actions being pursued is a total economic and social meltdown at the municipal and federal level. Not even nationalizing the banks can stop this trillion dollar train wreck that's heading towards a town near you. As far fetched as it may seem, the anarchists in our society may get the third world conditions they desire. Brought to you courtesy of the banking industry fat cats who want to insure their wealth by having the rest of us pay up.
The most unfortunate part is there's nothing any of us can do as long as we continue to put wealthy bankers in charge of solving a problem wealthy bankers created. Sit back an take it. - emazur, on 03/12/2009, -7/+25How long will Obama and his team continue with the bailouts? "Until they're thrown out of office":
http://kpfa.org/archive/id/48892
(If you don't have time to listen to the full 1 hour audio interview, it has been wittled down to a 10 minute youtube slideshow):
http://www.youtube.com/watch?v=sAmFwh8STPA
I'm currently listening to their most recent radio interview about the bailouts - haven't finished yet but great content so far:
http://www.kpfa.org/archive/id/49073 - PeppermintPig, on 03/12/2009, -4/+22They claim speculation is evil, but everyone speculates on investments, goods, and services. The biggest creators of artificial value are fractional reserve practices and fiat currency/credit creation.
They deride and outright ban the practice of short selling, which actually provides a beneficial service by helping to seek more accurate values for investments in the marketplace. Denying individuals the liberty to pull out money they put into the market in the first place is a complete violation of property rights.
At every turn, the government abridges our liberties in order to conceal the truth about the integrity of the financial industry, or lack thereof.
If the Federal Reserve is not dissolved or dislodged from the government's bosom, the currency will die off... that said, it is critical that individuals put their savings in other commodities that rise against the USD. The USD is a bad currency and should die off ASAP. - Anth0n, on 03/12/2009, -1/+18For the record, everyone operates economically based on self-interest. That's how capitalism works. What caused the crisis wasn't capitalism, it was artificially low interest rates set by the Federal Reserve, which caused everyone to spend and invest unwisely because of easy money. Oh, and don't forget the Community Reinvestment Act, which was the government's attempt to make mortgage companies generously hand out mortgages to any old Joe. Please ask yourself, did this regulation work?
- gbates31, on 03/12/2009, -4/+20We get the government we deserve.
The fact that the government and economy are ***** up is not the fault of the federal gov't or Wall Street or investment bankers, etc. The fact is that the government and economy are ***** up because of the American people through ignorance, cowardice, and apathy. The federal government is supposed to be representative of the people whom they serve. We still retain the right to alter or abolish this current government. I believe we have the moral obligation to correct the way we think, the way we live, the way our government (state and federal) operates; not just for ourselves, but for future Americans. Aren't we, as citizens, supposed to the the sovereign body in our political system? Isn't it time we started acting like it? - jfsimard79, on 03/12/2009, -3/+19Failure is a natural part of the business cycle. It is a requirement!
- inactive, on 03/12/2009, -9/+24CYA piece for Obummer.
Businesses must be allowed to fail, but the problem is that the politicians have destroyed the once fertile environment required for new enterprises to spring up and take their place.
Obama seems to think that government is the answer.
I disagree. Government is and has always been the problem.
Local governments have taxed most manufacturing jobs out of existence, while the proliferation of rules and the strengthening of unions has made the US a very undesirable place to manufacture anything but expensive military hardware... but Obama has cut that.
Get ready for 4 years of FAIL under Obama - the inexperienced neophyte with a comprehensive lack of understanding on all things economic. Disaster looms. - mdoverkill, on 03/12/2009, -1/+15I recommend the following literature
Murray N Rothbard :
"The Case Against the Fed"
"What Has Government Done to Our Money? and The Case for a 100 Percent Gold Dollar"
Nobel Prize Winner in Economics, Friedrich Hayek:
"The Road to Sefdom"
"The Constitution of Liberty"
Nobel Prize Winner in Economics - Milton Friedman
"Capitalism and Freedom" - byrdboy, on 03/12/2009, -4/+17If anything, it was over-regulation of the free market that is to blame. Especially certain government sponsored corporations by the name of Freddie Mac and Fannie Mae.
http://en.wikipedia.org/wiki/Freddie_Mac
Which are "regulated" by the FIRREA
http://en.wikipedia.org/wiki/Financial_Institution ...
These two corporations were required by FIRREA to support the mortgages of low-and-medium income families. In this case, ones that couldn't afford the kinds of mortgages they were getting.
If you had just let the free market do what it does, the banks would not have made these loans due to the risk involved. Then the loans wouldn't have made it to the secondary mortgage market where they were bought up and speculated on.
Business is much more efficient than the government, and much wiser than the general populace. Otherwise they wouldn't be where they are. It's only when you have government intervention or the populace speculating on an unstable market created by said government that you have a problem. - inactive, on 03/12/2009, -3/+15The most shocking aspect of this article is that it appeared on cbsnews.com . There might be hope, after all.
Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall;
All the King's horses and all the King's men,
Couldn't put Humpty together again. - chesterogilvie, on 03/12/2009, -2/+14Give an example of how deregulation is to blame.
- shig, on 03/12/2009, -0/+12"non-bubbly conditions"
I'd laugh, but I received my 401k balance in the mail a few days ago... - NSResponder, on 03/12/2009, -3/+14"It was the lack of government oversight that allowed greedy, self-interested individuals to put their short-term gains over the needs of everyone else. "
What's your next guess, sunshine?
We were regulated into this mess, the same way the Soviets regulated their economy into collapse.
-jcr - inactive, on 03/11/2009, -6/+17Why must we follow a descending/ascending spiral rather than a straight line?
- hugolp, on 03/12/2009, -4/+15Ask the Fed. They like to inflate bubles.
- tao52nyc, on 03/12/2009, -2/+12The sad part of it is that Republicans, in their current form, have no answers either. The last 8 years encompassed the biggest expansion of government since Lyndon Johnson, and the biggest explosion of debt. So what's the difference between the two parties, really?
- emmeron, on 03/12/2009, -1/+10Obama is behind the errors you claim will occur. He's been in office long enough to pass TONS of pork he said he wouldn't -- heck, this last stimulus bill for the 4xx billion he signed on was done behind closed doors -- over 1,000 items of pork in that, or so it's been reported. Not that it's clear, not that he'd even come out and sign in public... yay for transparency. He's been in long enough to screw us over worse, and he's done just that.
- NSResponder, on 03/12/2009, -0/+9"Denying individuals the liberty to pull out money they put into the market in the first place is a complete violation of property rights."
Withdrawing your money from an investment isn't short-selling, it's just selling. Short selling is when you sell shares you don't own, because you expect the value of the shares to fall by the time you have to deliver them.
-jcr - m3arvk, on 03/12/2009, -3/+12The article summary made my soul smile. I'm glad I'm not the only one who has come to that conclusion.
The bigger question is why aren't we holding the Federal Reserve accountable? Greenspan was there during the Stock Market Bubble right? Are you telling me he didn't see any similarities? Or maybe he did but Bush felt like he had to keep the economy in the red to garner some popularity? - runchummey, on 03/12/2009, -2/+11A very well written article that effectively spells out the economic principles involved. I am surprised that CBS News - a "major" media outlet allows such views. 3 cheers for the author, Declan McCullagh.
- pstroll, on 03/12/2009, -3/+12The last bubble left is in US treasuries, which is the largest bubble of all. It's time for citizens of the world to call upon their governments and boycott American government junk bonds.
- ahughes, on 03/12/2009, -2/+11I love this headline...excellent analogy!
- randumbusername, on 03/12/2009, -0/+9they can't
it's the same ol tired *****.
the left uses the word regulation like the bush admin used the word terrorist.
tell you what i propose the entire market is handed over to the government for proper and full regulation. we'll see how well that strategy goes.
if there is no regulation then explain the fed. explain the sec. you cant get around the fact they those institution exist. they have a direct relationship with government to ask for more powers, if needed. - inactive, on 03/12/2009, -6/+14Anyone realize who the real "Terrists" are yet?
- Demand911Truth, on 03/13/2009, -1/+9Can we please, please, PLEASE abolish the Federal Reserve?
- Boggie08, on 03/12/2009, -1/+9The problem is not that banks were not regulated well enough. The problem is the fact that financial institutions, like Fannie Mae and Freddie Mac, were allowed to gamble with taxpayers money. The Greenspan put, FDIC and cheap credit from the Fed allowed banks to play fast and loose with public money instead of their own. Government policies and regulations created systemic moral hazard that drove banks to take incredible risks. Regulation can only attempt to address a few of the symptoms of the socialization of risk, but it cannot solve the problem.
- o3man, on 03/12/2009, -1/+9Yes, potentially catastrophic unforeseen consequences to my wallet, if we keep bailing out the banksters.
- shig, on 03/12/2009, -0/+7Hmm...
Should I go with the government that makes no bones about artificially setting the prices high?
Or should I go with the market that is accused by the government of artificially setting the prices low?
Well, I know which one is smarter... I'm going with the market. - PeppermintPig, on 03/12/2009, -0/+7If you don't like people who short sell investments, don't use their services. I'm not saying it's always a good thing, but you're effectively letting someone else handle your investments on your behalf. And that might be a systemic problem.
- thecoolestguy, on 03/12/2009, -1/+8The problem was policies setup at the end of 90's by the Democrats to increase home ownership for inner city poor.
The problem was affirmative action.
The CRA:
http://tinyurl.com/5wdbpr
The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities
Howard Husock
Winter 2000
The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.
Fannie Mae:
http://tinyurl.com/4clng5
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
The problem was NOT deregulation. Please stop buying the idiot affirmative actionists' lies. - jksturm, on 03/13/2009, -0/+7HR 1207 Audit the Fed
- reticulate, on 03/12/2009, -0/+7"2.) To intervene by going to the root of the problem. The root of the problem is that homeowners stopped making payments. They stopped making payments because either they couldn't or because it made no economic sense to do so even if they could."
This is not what caused credit to dry up. Poor people being foreclosed when a housing market slows does not kill banks. What has killed them is tying up huge amounts of debt in shoddy speculation, and the exposure to that debt that a whole bunch of other rather important banking groups and funds had to it. - Boggie08, on 03/12/2009, -1/+8Obama is significantly responsible for the stimulus package. That alone has already had serious consequences for the economy.
- gbates31, on 03/12/2009, -0/+7I haven't said anything about voting. It is possible that change can come through voting, but a more realistic scenario probably involves armed citizens and an ultimatum to political representatives.
We are the sovereign body and government is our machination. We are responsible for their actions. If we are not responsible for their actions, then we are not the sovereign body. Which of these statements do you agree with? - indyattic, on 03/12/2009, -0/+7"...human history is on the side of central banking being a necessity. "
More like human nature. The need for power and money, specifically. - WeavingSpiders, on 03/12/2009, -0/+6Have you?
Oh, and he put that word in quotes on purpose to imitate how Bush says the word terrorist. Duh. - dstntmbrk, on 03/12/2009, -0/+6Whether the CRA had any involvement in the process or not, the mortgage crisis would not have happened if the banks did not have the easy credit supplied by the Federal Reserve. What bank would risk billions of dollars of it's own capital on such risky investments if it was not guaranteed more money hot off the printing press with the stroke of Mr. Greenspan's pen?
- gleongelpi, on 03/12/2009, -1/+7The government, purposely and maliciusly, has ignored the only solutions to the problem of the housing bubble, Not one elected member or major appointee deserves to be where they are except those who opposed all these programs.
There were only two possible courses of action:
1.) To keep the government out of it altogether, and go back to a free enterprise approach of letting the chips fall where they may, and get over with the adjustment as soon as possible
or
2.) To intervene by going to the root of the problem. The root of the problem is that homeowners stopped making payments. They stopped making payments because either they couldn't or because it made no economic sense to do so even if they could.
The solution to this was for the government to facilitate the payment of as many mortgages as possible; not to throw money around to financial institutions, insurance companies and the auto industry. How would this be done? They should have turned the home mortgage deduction, which the tax payer takes on Schedule A of the tax return, into a refundable credit.
This refundable credit is not like the EIC, which is altogether counter-productive, or the meaningless child credit or educational credit. The home mortgage interste refundable credit would have been available only to those people paying their mortgages. So, for example, if a person has a 1,200 mortgage, of which 1,000 interest, they would have been able to take a refundable credit of 12,000 with their tax return. In other words, they would have done eveything possible to make the house payment because when they filed taxes, they would get so much back. This amount could have been capped and lowered every year,to expire in five years. Then, at that time do away with the Schedule A deuctions and all other credits, and raise the personal exemption to 100,000.
But, do you think our government will ever simplify the whole process? They will not stop until the country collapses. People can even figure out how to complete a tax return even with the use of computers. A person has to enter thousands of numbers. They take credits they are not entitled to take. They fail to take credits they are entitled to take. It is all a nightmare. - inactive, on 03/13/2009, -0/+61. Theses papers and disks, indeed, have no intrinsic value. They are not tied to any commodity that represents wealth. They are thus referred to as a "fiat currency". Free markets practice sound money. So you're not even arguing free markets here...
2. You are not asking the government to provide you with equal opportunities. Equal opportunities means they will present you with a completely free and unregulated markets in which you are left to seek your own pursuits of happiness.
You're asking them to provide you jobs, money and healthcare; the same things that we all worked hard for.
"There is all the difference in the world between treating people equally and attempting to make them equal." – F.A. Hayek
One of the greatest Austrian economists - in my view. - Waiting2awake, on 03/12/2009, -0/+6So then you are saying the real problem is the fractional reserve banking system...
SO wouldn't it make sense to let that system fail, instead of propping up something that is broken, and even if you fix it - the fear that you state would always be there, because the banks never have enough cash to cover their deposits. - indyattic, on 03/12/2009, -1/+7A bank facing a solvency issue that only the government can patch *is* a fundamentally flawed company.
If it is not, then other banks and/ or investors will lend them money. - inactive, on 03/12/2009, -1/+7Starving people? 30% unemployment? Where? We are talking about the US and the 2nd world, not Africa.
- emmeron, on 03/12/2009, -0/+6tebriel1 -- there is plenty to pick apart, but the idea that the President "runs the country" in the first place is the worst and most heinous bit of rubbish you wrote. Please educate yourself better.
- geekee, on 03/12/2009, -1/+7I'll take an economic collapse in a free market over bad govt regulation any day. The free market has up and down cycles, but it is self-correcting. When you elect someone with bad facal policies, there's nothing to stop him/her until the next election. I prefer having the freedom to fail, then being forced to fail or succeed.
BTW, fraud was a major factor in the collapse. If the FBI had done their job, the worst may have been averted. - thecoolestguy, on 03/13/2009, -0/+5The CRA didn't just increase subprime directly through lending, but also indirectly by increasing liquidity in the subprime lending industry, thus reducing risk for individual lenders to lend to low credit individuals.
Any way, I'd like to see where this 50% figure comes from. A lot of allies of the Democrats have been making ***** claims to cover for the Democrats' ass for their huge *****. - inactive, on 03/12/2009, -0/+5"What do you think the effect of ultra-tight credit would be on growth?"
You mean as opposed to the rapid economic expansion we're experiencing while we throw bad money at the problem? - emmeron, on 03/12/2009, -1/+6Interesting part to pick. I guess that answers my question: you can spin a turd.
I liked the bit about pressure from the Clinton Administration to make getting loans easier. That would've been the relevant part. That's exactly what happened, and then we say "for shame, Fannie and Freddie, you ***** us all!" Hmm. -
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