Welcome to the 80's! (Resolution trust group)

[Illuminatus Primus]

Wealth redistribution: uhh, yeah, I think that's bad. Really really bad. It does not matter to me if it's a crook on the corner robbing me, or the full force of a govermnent - any government, mind you - taking what should be mine.

And why should it be yours? Did you single-handedly create the entire national economic infrastructure in which your livelihood is made possible, and which is far more responsible for your prosperity than any individual attribute of yours? Are you one of those raving imbeciles who can say with a perfectly straight face that if you'd been born in Somalia, you would have found a way to be just as affluent as you are here?

Without society, YOU ARE NOTHING. Without society, you're barely better than an animal. It is society that makes you what you are, allows the affluence you enjoy, and even gives you the thoughts that you use in your head and mental tools with which to express and understand them. To say that you owe society nothing is sheer idiocy.

All wealth redistribution comes from the barrel of a gun.

So do laws against child porn. So what?

Central bank = evil. Gold standard = Godly. Income taxes = illegal. Theory to explain insanity: Paultard/Lolbertarian. Never fails. I'll be back to you tomorrow, Choco.

[aerius]

And now it gets really fun. Looks like the loss of confidence is starting to spread.

Reuters link

China banks told to halt lending to US banks-SCMP
Wed Sep 24, 2008 9:52pm

BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.

The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.

"The decree appears to be Beijing's first attempt to erect defences against the deepening U.S. financial meltdown after the mainland's major lenders reported billions of U.S. dollars in exposure to the credit crisis," the SCMP said.

A spokesman for the CBRC had no immediate comment. (Reporting by Alan Wheatley and Langi Chiang; editing by Ken Wills)

[Surlethe]

5) Frog in a pot - 50s to 2000. Personal income tax rates steadily increase, inflation roars, then subsides, then creeps up again. Constant reduction of middle class take-home pay and constant reduction of purchasing power of what does make it home. Savings rate declines to 0%.

Actually, personal income tax rates have decreased between the 1950s and the present day; in the '50s, the highest marginal tax rate was over 90%, and today it's just about 35%. You have your facts wrong.

In any case, a fiat paper currency has weaknesses like inflation, yes -- but nobody ever said it was a perfect system. In fact, a commodity-backed currency also has weaknesses; what about a country with rich gold mines? Its economy will be inflated on paper even if it's weak in reality. A commodity-based currency will, by nature, be deflationary; the size of the economy will not reflect its value. So at the end of the day, which are you willing to take? I'll take a fiat currency, because it's easier to control and because it's far more flexible.

(And that leaves aside Mr Degan's criticism: that gold is valuable only because we agree it to be so -- hence it is a fiat currency by nature.)

[Count Chocula]

Dark Hellion wrote:

The barrel of the gun the government is pointing at you is the only thing protecting you from the guy next door who would kill you in your sleep, rape your wife and steal your property if he could get away with it.

The barrel of that gun is supposed, by the US Constitution (and no I don't think it's fruitful to discuss its relevance today), to be pointed outwards AT OUR NATION'S ENEMIES. The original Constitution had the government raising its funds from trade duties, not from citizens.

If you have a guy next door like that, shoot him, move away, or better yet call the police. Do you really think your neighbors are that amoral? Would you murder, rape and loot if you thought you could get away with it? I'm guessing not, but if your general view of the government's role is that of being the biggest intimidator to keep everyone in line, you, sir or madam, have a dim view of human nature.

Dark Hellion again:

Stop taking the social contract for granted you ungrateful little punk. You are hiding behind all its protections yet don't want to have to put your pittance in. You don't get to have your cake and eat it too. The cost of a government capable of performing its duties is that you must give up some of your freedoms, such as this freedom to your property that you are trying to pretend is somehow absolute.

How the hell did you jump to those conclusions about me? I'm stumped. I'd prefer that gold & silver be used as commonly agreed frames of reference for value, because they seem to be more stable than any fiat currency. Not gonna happen, and not relevant to the topic, so I'll let it go. I don't like the income tax system, hate doing it every year, hate making out that check. That makes me unique how?

In the interest of full disclosure, here's a little bit about me, ungrateful little punk that I am:
- I was born the year the album Sgt. Pepper's Lonely Hearts Club Band was released.
- I served in the US armed forces. I am well aware of the "social contract" and thought enough of if to potentially put myself in harm's way;
- I put myself through college, and paid off the one student loan that I received;
- I've had paycheck-style jobs since I was seventeen, and in that time have received direct benefits in the amount of two unemployment checks;
- I've got a house in the suburbs, wife, kid.

As far as the income tax I pay being so worth it, go Google "government waste.' I got 488,000 hits.

You've got some fucking nerve to personally attack me based on what I think about the bailout plan and our money system. Attack my arguments, not me.

Bitch.

[Psychic_Sandwich]

*Snip*

The photo is from 1923. Those are German Marks.

O course, you leave out the fact that they fixed the hyperinflation problem by issuing a different fiat currency, which worked perfectly well until the Great Depression fucked everything up, irrespective of whether it was a fiat currency or not.

Besides, there are plenty of examples of fiat currencies that have done fairly well for themselves. Pound Sterling, IIRC, has always been a fiat currency, and we haven't experiance hyperinflation and the like in Britain.

[Count Chocula]

*taking a deep breath*

Emperor Wong wrote:

And why should it be yours? Did you single-handedly create the entire national economic infrastructure in which your livelihood is made possible, and which is far more responsible for your prosperity than any individual attribute of yours? Are you one of those raving imbeciles who can say with a perfectly straight face that if you'd been born in Somalia, you would have found a way to be just as affluent as you are here?

Without society, YOU ARE NOTHING. Without society, you're barely better than an animal. It is society that makes you what you are, allows the affluence you enjoy, and even gives you the thoughts that you use in your head and mental tools with which to express and understand them. To say that you owe society nothing is sheer idiocy.

Why shouldn't the money I earn be mostly mine? Congress wastes an ungodly amount of taxpayer money, and piles debt upon debt, every year. Hell, they're trying to line up tasty pork-filled riders on the bailout plan! I did not create America's economic infrastructure - no more than you created Canada's or PeZook created Poland's. I benefit from the system. The system does not in my opinion create my success, but does provide me incredible opportunities to make my own success (or failure). What I detest about it are the "pay us whatever amount we decide we need by following these arcane rules" tax codes, and the outright manipulation of America's money supply.

If I had been born in Somaila, I would have been stoned to death for being the wrong color . And I'd probably have been dead long before now. At least you asked if I was a raving imbecile instead of calling me one!

If I understand your first statement about society, I presume your contention is that without some kind of society NOBODY could reach their full potential. I agree. A society, any society, is composed of individuals living together under a more or less common moral and mental framework.

I don't like the fact that a bunch of grasping, thieving...people...in Washington manage the affairs of our contry so poorly, with so little accountability. I never once said that I owe society nothing. On the contrary, it's my duty to be a responsible member of my society.

Sorry if this digressed into SLAM territory. I'll try to stay on topic from here out.

[aerius]

Times online link

Wall St bailout - the deal is done
Suzy Jagger in New York

Lawmakers in Washington have reached a "fundamental agreement" over the basic terms of the biggest bail-out of Wall Street since the Great Depression.

Speaking on Capitol Hill this afternoon, senior representatives from both the Republican and Democratic parties said that while precise details had still to be agreed, they had managed to secure an overall deal.

Emerging from a meeting which had lasted all morning, Senator Chris Dodd, the chairman of the Senate Banking Committee, said that a deal had been reached which will see at least $700 billion worth of taxpayer funds given to the US Treasury to start bailing out America's banking system.

On the New York stock market, shares had already traded 2 per cent higher throughout the morning on anticipation of a deal. Just after the announcement, the Dow Jones Industrial Average was trading up 262 points to 11089.

Senator Dodd said that he believed Congress could act within the next few days to pass the bill.

He added: “We are very confident that we can act expeditiously.”

At the end of last week, Henry Paulson, the US Treasury Secretary, President Bush and Ben Bernanke, the chairman of the Federal Reserve Bank, said that they needed Congress to approve a $700 billion bail-out package to prevent the American banking system from meltdown.

Lawmakers on both sides of the political aisle have spent a week haggling over the terms.

It appears a compromise brokered by President Bush over several significant amendments demanded by the Democrats broke the deadlock.

The Democratic leader of the House of Representatives, Speaker Nancy Pelosi, said the president's agreement with her party on limiting pay for executives of bailed out financial institutions and giving taxpayers an equity stake in the companies had helped progress negotiations.

Mr Dodd said both sides would now submit their outline agreement to the Treasury and party colleagues.

The principles give Treasury Secretary Henry Paulson “the authority and funding he needs to act,” Mr Dodd said.

“We’ve also dealt, effectively I think, with the issue of effective oversight, with home ownership preservation, as well as executive compensation."

President George W Bush in a televised address last night urged swift action to help avert "a long and painful'' recession.

The progress was reported just hours before President George W. Bush was to meet with presidential contenders Barack Obama and John McCain and congressional leaders at the White House to clear obstacles to the controversial rescue plan.

Mr Paulson wants to create a federal-backed fund into which troubled bank can dump distressed assets. The banks are to sell these mortgage-backed bonds at a discount to the fund. Mr Paulson hopes that once the market recovers, the Treasury will be able to sell the bonds back into the market and recoup taxpayer funds. He is also hoping that once the banks are able to rid themselves of such assets, they will begin lending to one another again and America's capital markets will return to normal.

I have no comments, other than to say "thank god I don't live in the US".

[Count Chocula]

Sir Nitram wrote:

Tax rate on the top bracket during the 1950s you believe were economically awesome:

91%. From 51 to 60.

Surlethe wrote:

Actually, personal income tax rates have decreased between the 1950s and the present day; in the '50s, the highest marginal tax rate was over 90%, and today it's just about 35%. You have your facts wrong.

(Slaps head) d'Oh! Hoo boy, was I 100% wrong on that! I assumed the income tax rates went up without checking. Well, I got the ass part right. I should have noted that inflation post-1952 was under 3%, and stayed under that rate until 1968 when it started creeping up. link

Some ups and downs since then, but I don't know how the Fed jiggered their criteria since the '90s. All I remember is 'hedonic adjustment.'


Re $2 trillion in HELOCs going poof: could it be we're looking at late '70s stagflation again, with a credit crunch and high consumer prices? Would a rolling $700 billion balance as in the proposed bailout put liquidity into the credit markets while further driving up consumer prices? Shit, I'm getting a headache again thinking about it.

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[aerius]

Would a rolling $700 billion balance as in the proposed bailout put liquidity into the credit markets while further driving up consumer prices?

In the short term as in maybe a few days to a few months, yes, in the medium to long term, no. What happens is that foreign investors decide that the US no longer worth investing their money in, the inflow of foreign cash which is needed to keep the US economy going dries up and you get a bonds market dislocation. Nobody want to buy T-bills or any other kind of US debt anymore so the yield on them goes ballistic, and all lending rates such as mortgages, car loans, business loans, and so forth follow. Credit become impossible to obtain and interest rates go sky high. Right now you can get car loans for 1%, or mortgages for 6%. Suddenly they start charging loan shark rates, as in 30%. Credit cards go to 40-50%, if they don't get cancelled outright.

Lending dries up almost overnight, consumer spending is cratered, recall that consumer spending is something like 2/3 of the total economy. That kills everything. Say hello to a depression.

[SirNitram]

Sir Nitram wrote:

Tax rate on the top bracket during the 1950s you believe were economically awesome:

91%. From 51 to 60.

Surlethe wrote:

Actually, personal income tax rates have decreased between the 1950s and the present day; in the '50s, the highest marginal tax rate was over 90%, and today it's just about 35%. You have your facts wrong.

(Slaps head) d'Oh! Hoo boy, was I 100% wrong on that! I assumed the income tax rates went up without checking. Well, I got the ass part right. I should have noted that inflation post-1952 was under 3%, and stayed under that rate until 1968 when it started creeping up. link

Some ups and downs since then, but I don't know how the Fed jiggered their criteria since the '90s. All I remember is 'hedonic adjustment.'


Re $2 trillion in HELOCs going poof: could it be we're looking at late '70s stagflation again, with a credit crunch and high consumer prices? Would a rolling $700 billion balance as in the proposed bailout put liquidity into the credit markets while further driving up consumer prices? Shit, I'm getting a headache again thinking about it.

'Hey, will 2 trillion dollars of deflation minimum cause stagnation plus inflation? What if we throw less than half of the minimum deflation back in?'

You're getting a headache because you're asking very stupid questions. The most economic prosperity for the whole and inflationary stability was during an era of heavy wealth re-distribution, and heavy taxation of the top few percent. The fact you seem to want an excuse to find real inflation to justify your fears, when the math tells you hell no, is not helping.

[J]

Ken Lewis, Chairman & CEO of Bank of America was interviewed on CNBC recently. He suffered a sudden moment of honesty. Here's an excerpt from the transcript of that interview.

LEWIS: I'VE SAID FOR A LONG TIME THERE WERE TOO MANY BANKS CHASING TOO FEW DEALS. I'VE ALSO SAID I DON'T THINK THEI NVESTMENT BANKING MODEL WOULD WORK LONG TERM, WHOLESALE FUNDING IS A TOUGH WAY TO ALWAYS HAVE TO GO. I WAS A LITTLE PREMATURE.IT TOOK SEVEN YEARS TO BEGIN TO HAPPEN. BUT I STILL BELIEVE THAT, THAT A WHOLESALE FUNDED INVESTMENT BANK IS A TOUGH WAY TO GO. PARTICULARLY IN THIS ENVIRONMENT, PARTICULARLY GOING FORWARD. SO I THINK YOU'LL SEE SOME MORE CONSOLIDATION. NOW, YOU MAY HAVE AN INVESTMENT BANK BUY A COMMERCIAL BANK YOU COULD DO THAT.BUT I WOULD BE SURPRISED IF -- IF BOTH OF THE BIG ONES REMAINING DON'T LOOK DIFFERENTLY OVER THE NEXT YEAR OR TWO YEARS. AND THEN WITH THE COMMERCIAL BANKING BUSINESS, WE'VE ALWAYS SAID THAT IT'S GOING TO BE MORE OF A BAR BELL, THAT YOU'RE GOING TO HAVE BIGGER AND BIGGER BANKS, BUT FEWER. AND THEN MUCH FEWER SMALLER -- I MEAN, NORMAL SIZE BANKS. YOU'LL ALWAYS HAVE THE COMMUNITY, THE VERY SMALL BANKS. IT'S GOING TO BE MORE DIFFICULT EACH AND EVERY DAY FOR MID-SIZED BANKS TO COMPETE WITH LARGE BANKS BECAUSE THEY'VE GOT THE BETTER FUNDING, THEY'VE GOT A BETTER CALL STRUCTURE, AND BETTER BRANDS FOR THAT MATTER.

BARTIROMO: SO RIGHT NOW WE HAVE, WHAT, 9,000 BANKS? 9,000 BANKS IN THIS COUNTRY.WHAT WILL YOUR PREDICTION BE AS FAR AS HOW MANY THERE ARE IN THE NEXT FIVE YEARS?

LEWIS: GOSH, I HAVEN'T THOUGHT ABOUT THAT. MAYBE HALF.

Whoops! I don't think he meant to say that. Half the banks in the US. Gone.

[Broomstick]

In that case, maybe we should give 700 billion to the FDIC rather than the Wall Street fuckups.

[The Kernel]

Whoops! I don't think he meant to say that. Half the banks in the US. Gone.

He's obviously talking about consolidation, not outright bank failures and he's right. There are way too many banks out there with way too much specialization and we are going to see a ton of consolidation to create more regional mega banks.

I really doubt that Ken Lewis would predict massive bank insolvency when he's sitting on the biggest bank in the world.

[SirNitram]

In that case, maybe we should give 700 billion to the FDIC rather than the Wall Street fuckups.

Then Paulson can't move it between shell companies and retire to whatever non-extradition location is hot these days.

[Count Chocula]

Hmmm. B of A supplied my mortgage, for a very good rate - then turned around and less than a week later split the principal and interest into separate CDOs and sold them. Makes me wish I'd gone with SunTrust - at least they hold on to their resi mortgages.

I think Kernel nailed it. Consolidate, consolidate, consolidate. Fewer regional banks and more mega-banks.

Now that I think of it, aren't most dystopian and cyberpunk novels set in future worlds where megacorps rule? William Gibson is a fucking genius! Fight Club is still the shit.

[Count Chocula]

Sir Nitram wrote:

Then Paulson can't move it between shell companies and retire to whatever non-extradition location is hot these days.

What's Belize going for these days?