Responses to the 700 Billion Blank Check.

[Keevan_Colton]

I know that a few of the cases of "bailing out foreign banks" actually come down to foreign parent companies that have bought up US banks. Take for example HSBC, they're being considered for an exemption from the US banks only part of it thanks to the fact they bought a US bank.

[Admiral Valdemar]

Oil is rallying. It's up five bucks already in the last hour or so. This action, and the ban on short selling, basically means commodities will go through the roof.

The Fed and Treasury are simply shifting the problem around. They're not solving shit.

And believe you me, when J6P suddenly can't afford his mortgage, weekly shop or fuel bills in the autumn and winter, then those not paying attention now most certainly will be. That will mean finally seeing what wrath the public can muster, or at least how ineffective any rebellion is.

[J]

I'm not sure charcterising 'forgein banks' as 'those who preyed on you' makes sense. Why do you think economic effects stop at national borders?

Why do you think I should pay to fix the bad decisions your countrymen made? Are you sending money our way to shore up our problems? No? Then why should I do that for you?

Actually the answer to the second question is yes, to the tune of around $2 billion every day. If that foreign investment dries up the US implodes in spectacular fashion. Those investments are every bit as important to the US economy as oil, if the oil or investment flow stops, it's almost instant death.

[Darth Wong]

It's pretty sad that a person living in the world's #1 debtor nation would be blissfully unaware that the US is borrowing massive amounts of money from the rest of the world, even to the point of being angry at them for thinking they should have any input as to what goes on there.

[GySgt. Hartman]

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

If I understand this right, they're saying something like "Please give us 700,000,000,000 $, but what we do with them is none of your business"? Gotta admire that chutzpa.

[Darth Wong]

If I understand this right, they're saying something like "Please give us 700,000,000,000 $, but what we do with them is none of your business"? Gotta admire that chutzpa.

It already worked once with the War on Terror. Why not try it again?

[Admiral Valdemar]

If I understand this right, they're saying something like "Please give us 700,000,000,000 $, but what we do with them is none of your business"? Gotta admire that chutzpa.

Incorrect. More like "Give us $700bn for starters. We'll call when we need more."

As for Ender's comments, if Congress does something stupid, and it wouldn't be the first time, then that concerns me every bit as much as Johnny Foreigner in the States. Interestingly, the UK and Germany are NOT going to be a part of this plan. Because it's fucking stupid.

[Darth Wong]

Funny bit of trivia: Canadian bankers have been regarded as "boring" in the US because of their conservative business practices. The same practices which kept them from jumping into this mess with both feet in the first place, thus protecting them. Interestingly enough, they are still regarded as "boring" by American bankers, but they are privately conceding that they may need to become more "boring" themselves. Pretty sad when the gambling culture is so endemic to the industry that people who try to shy away from excessive risk are considered "boring".

[Phantasee]

So boring = sensible? Hilarious.

Can someone explain to me what the term 'moral hazard' means? Especially (or maybe only?) in this context.

[Vympel]

Funny bit of trivia: Canadian bankers have been regarded as "boring" in the US because of their conservative business practices. The same practices which kept them from jumping into this mess with both feet in the first place, thus protecting them. Interestingly enough, they are still regarded as "boring" by American bankers, but they are privately conceding that they may need to become more "boring" themselves. Pretty sad when the gambling culture is so endemic to the industry that people who try to shy away from excessive risk are considered "boring".

Yeah, banking is pretty exciting when you're giving out loans called "NINJA loans" - you know - a loan to someone with No Income, No Job, and No Assets.

Andrew Sullivan made a good point on Real Time with Bill Maher the other night - the American people themselves are complicit in the collapse of this farce. No one ever forced the legions of irresponsible nitwits to take out a loan they couldn't afford to repay- and who is paying for their ignorance? Those with a proper financial head on their shoulders.

[Zac Naloen]

Vympel.


The final say on whether the loan is given is with the bank. No one FORCED them to accept loans for people that couldn't afford to repay them.

How is this anyone but the banks fault?

[Saxtonite]

Can someone explain to me what the term 'moral hazard' means? Especially (or maybe only?) in this context.

A Moral Hazard is when people would act differently if they're not subjected to the same harm as the people that their decisions effect; (for example, a politican's position on war and whether the person has any family fighting-sometimes they're less willing to be in wars if their loved ones are in the war).

Regarding this example, it's when the bankers get jailed or similar for what they did to the economy.

[Darth Wong]

Andrew Sullivan made a good point on Real Time with Bill Maher the other night - the American people themselves are complicit in the collapse of this farce. No one ever forced the legions of irresponsible nitwits to take out a loan they couldn't afford to repay- and who is paying for their ignorance? Those with a proper financial head on their shoulders.

Actually, I would say that the American cultural mythology of populism and "rugged individualism" is the root of the problem. Americans just loooove to pretend that they don't need society, and that society shouldn't tell them what to do, and that society is just an obstruction which gets in the way of the individual, and that "common sense" will get people through the day, etc. But I have long maintained that while it's unpopular to say it, it is absolutely true that the people don't know what's best for them, and they need a paternalistic government run by well-educated elites in order to keep them from hurting themselves.

Of course, that message would go over like a lead balloon in the US, but their inability to face reality is not my problem. The facts are in, and they support my longstanding position.

Vympel.


The final say on whether the loan is given is with the bank. No one FORCED them to accept loans for people that couldn't afford to repay them.

How is this anyone but the banks fault?

The bank executives all acted according to rational self-interest based on the regulatory framework in existence at the time and the executive compensation schemes in place. Do you know how many executives walked away with tens of millions of dollars thanks to this? The American people have long accepted "rock star"-style compensation for CEOs and a free-wheeling deregulated business environment for corporations, and never questioned whether there could be any negative consequences for this. The Republicans still promote that mentality, and their base eagerly laps it up like Hillary Scott swallowing a cumload.

[Vympel]

Vympel.


The final say on whether the loan is given is with the bank. No one FORCED them to accept loans for people that couldn't afford to repay them.

How is this anyone but the banks fault?

Read what I said again. I said the American people were complicit, not that they were solely responsible.

[Phantasee]

Can someone explain to me what the term 'moral hazard' means? Especially (or maybe only?) in this context.

A Moral Hazard is when people would act differently if they're not subjected to the same harm as the people that their decisions effect; (for example, a politican's position on war and whether the person has any family fighting-sometimes they're less willing to be in wars if their loved ones are in the war).

Regarding this example, it's when the bankers get jailed or similar for what they did to the economy.

And how exactly is it a hazard for them to go to prison?

Okay, so this is what it is? When people are afraid of going to jail, they don't do shit, but if you don't prosecute someone after they do shit, everyone else will think they can get away with it too?

I guess it applies to more than just prison sentences, if a bank knows it can get bailed out with taxpayer money, it won't be as risk-averse aka boring.

[Zac Naloen]

Vympel.


The final say on whether the loan is given is with the bank. No one FORCED them to accept loans for people that couldn't afford to repay them.

How is this anyone but the banks fault?

Read what I said again. I said the American people were complicit, not that they were solely responsible.

Read what I said again, at no point did I say you claimed the public were solely at fault.

I'll reiterate my point.

The final say lies with the bank, how can the public have any blame for the bank making a decision to authorise a loan to someone with a bad credit rating/insufficient income in the first place?

They took advantage of what was on offer, what the marketing told them was safe and what ultimately was sold to them by the Banks.

The bank executives all acted according to rational self-interest based n the regulatory framework in existence at the time and the executive compensation schemes in place. Do you know how many executives walked away with tens of millions of dollars thanks to this? The American people have long accepted "rock star"-style compensation for CEOs and a free-wheeling deregulated business environment for corporations, and never questioned whether there could be any negative consequences for this. The Republicans still promote that mentality, and their base eagerly laps it up like Hillary Scott swallowing a cumload.

So basically, the blame game stops with the US government and it's deregulation?

[Themightytom]

Actually, I would say that the American cultural mythology of populism and "rugged individualism" is the root of the problem. Americans just loooove to pretend that they don't need society, and that society shouldn't tell them what to do, and that society is just an obstruction which gets in the way of the individual, and that "common sense" will get people through the day, etc. But I have long maintained that while it's unpopular to say it, it is absolutely true that the people don't know what's best for them, and they need a paternalistic government run by well-educated elites in order to keep them from hurting themselves.

Of course, that message would go over like a lead balloon in the US, but their inability to face reality is not my problem. The facts are in, and they support my longstanding position.

I think an alternate appliccation of "Rugged individualism" is complicit here as well. Elite capitalists who consider themselves "Above the sheep" and unabashadely wheel and deal to exploit the most profit for the least work. While the "common man" thinks that common sense and hard work will get him through, oblivious to complexities being applied, the Uber capitalist exploits the crap out of those complexities, using tools like advertising finance and sometimes just gall to generate and control profit.

The bank executives all acted according to rational self-interest based on the regulatory framework in existence at the time and the executive compensation schemes in place

I don't think it turned out to be entirely rational, over the last year or so the writing has been on the wall. First we had issues with minimum wage needing increase, than we had the slump in the construction industry, than we ahd the mortgage crisis, creative redefinition of unemployment so tath people on disability wouldn't count as unemployed, the stimulus packages.... The banks should have known to throttle back on the exploitation, but there was instead sort of a free for all rush to grab the most profit with whicch to weather the bad times ahead.

I have heard it tossed around quite a bit recently that "Recession is great for rich people, they invest when things are down and then sccore big when everything stabilizes. i'm sure many a bank executive pushed to scoop up desperate clients and invest in low stocks in order to make a "Killing" its jsut that they were premature, and the recession is bigger than they thought.

Do you know how many executives walked away with tens of millions of dollars thanks to this? The American people have long accepted "rock star"-style compensation for CEOs and a free-wheeling deregulated business environment for corporations, and never questioned whether there could be any negative consequences for this. The Republicans still promote that mentality, and their base eagerly laps it up like Hillary Scott swallowing a cumload.

Thanks Mike, now I need to midnwipe hilary scott blowing Dick Cheney, sometimes an analogy can cause collatoral damage.

[Lusankya]

Read what I said again. I said the American people were complicit, not that they were solely responsible.

Read what I said again, at no point did I say you claimed the public were solely at fault.

I'll reiterate my point.

The final say lies with the bank, how can the public have any blame for the bank making a decision to authorise a loan to someone with a bad credit rating/insufficient income in the first place?
[/quote]

So if I (without the aid of a loan) splurge all my money on hookers and beer, and then can't afford to eat, is it entirely the fault of the hookers and bottle shop owners for selling their wares to someone who can't afford it, or should I take some responsibility for my own financial decisions?

There's no real difference, save for the fact that a house is presumably a larger investment than a hooker.

[Vympel]

Read what I said again, at no point did I say you claimed the public were solely at fault.
.

By saying "how is this anyone but the banks fault" that necessarily implies that no one else has fault but the bank.

[Zac Naloen]

So if I (without the aid of a loan) splurge all my money on hookers and beer, and then can't afford to eat, is it entirely the fault of the hookers and bottle shop owners for selling their wares to someone who can't afford it, or should I take some responsibility for my own financial decisions?

There's no real difference, save for the fact that a house is presumably a larger investment than a hooker.

Due to the lack of a loan, that is a false analogy.

[Lusankya]

Read what I said again. I said the American people were complicit, not that they were solely responsible.

By saying "how is this anyone but the banks fault" that necessarily implies that no one else has fault but the bank.

Dude, you just quoted yourself there.

Also, I messed the quote tags up in my previous post.

Due to the lack of a loan, that is a false analogy.

No it isn't. It's still someone spending money on crap that they don't need. And maybe the hookers are socially irresponsible for taking money from someone who can't afford it (assuming they are aware), I would still be partially at fault for not budgeting properly. The only difference is in that of scale.

[White Haven]

The fact that you're doing business with a company that 'should know better' doesn't absolve you, as a hypothetical customer, from thinking about the deal. The only way colossal fuckups like this occur is when neither party in a deal is either intelligent enough or honest enough to point out the glaring problems.

[Zac Naloen]

No it isn't. It's still someone spending money on crap that they don't need. And maybe the hookers are socially irresponsible for taking money from someone who can't afford it (assuming they are aware), I would still be partially at fault for not budgeting properly. The only difference is in that of scale.

No, it still is.

And this is why.

For your analogy to work there needs to be a second outside influence saying "here's more money, don't worry it's perfectly safe, spend away it's all goood"

Yes they are spending money on shit they don't need. But if the Banks were responsible at the point this person who spent their money on hookers and blow wanted more money they would say, pure and simple "No chance".

What you are basically saying is that the public, most of whom don't know a dot about financials are at fault for something they have been told by the insitution they trust with their money is A-OK.

It may be convenient in the blame game to try and blame the public, but it's not really fair when they don't actually have any real say in the process. All they can do is say "Can I?"

[Uraniun235]

Let's not forget the crucial element - the assumption that housing prices would keep going up forever. I'm willing to bet a substantial proportion of people who bought into the scam completely believed it. It's not like a lot of people were thinking "fuck the future it's time to party now", they believed this was a viable financial plan.

No it isn't. It's still someone spending money on crap that they don't need. And maybe the hookers are socially irresponsible for taking money from someone who can't afford it (assuming they are aware), I would still be partially at fault for not budgeting properly.

This is not analogous at all. Nobody thinks hiring a prostitute is an investment that will see returns. On the other hand, a huge amount of people bought houses thinking they could make profit off of it. There's a massive ingrained belief in America that "buy a house" is - or was - one of the surest investments there is, and that if you can afford it, you should do it. A lot of people were led to believe they could afford it, when in fact they couldn't.

[Saxtonite]

And how exactly is it a hazard for them to go to prison?

they're "shouldering the blame" for what they did to the economy, as RedImperator said it's likely some laws were broken.

Okay, so this is what it is? When people are afraid of going to jail, they don't do shit, but if you don't prosecute someone after they do shit, everyone else will think they can get away with it too?

I don't think I explained it good. But yes that's an example of it

wikipedia gives a better explanation of it
http://en.wikipedia.org/wiki/Moral_hazard

I guess it applies to more than just prison sentences, if a bank knows it can get bailed out with taxpayer money, it won't be as risk-averse aka boring.

right.