No. Maybe you don't understand the concept of insurance? You don't write down an asset because the insurance fails, you write down an asset because the asset fails.
Ahh, now I see the problem... replace "mark down" everywhere I said "write down", since that's what I actually meant.
No, AIG was leveraged out the ass on CDS's many of them for 3rd parties. In those cases there are no "assets" just bets.
No, AIG was *also* leveraged out the ass on CDS's. But did they not also insure a large number of investments? And should that insurance fail, would those investments not have to be written down? And would not such write-downs result in increased institutional insolvency, and thus another chain reaction of failures? Yes or no?
You haven't been reading what I wrote, you are just rah-rahing for your team and accusing me of irrational fears.
But you haven't written anything of substance. Here, let me quote you, and if I'm misrepresenting your position, let me know:
Furthermore, what goes up must come down. The bailouts are only prolonging the coming disaster because the system is fundamentally broken, and has been since at least the S&L crisis. We can take our beating now, or we can take one 10x worse in a decade or two, or we put that one off too and end up with one 100x worse in 30-40 years.
Vague supposition. *Why* would it be "10x worse in a decade or two, or we put that one off too and end up with one 100x worse in 30-40 years"? Try actually supporting your position. Come on, you can do it!
Yet the bailout has now placed control over such a massively key piece of market infrastructure into the hands of the government, in complete violation of the principles of the free market.
Missed the point. The goal isn't to have the government control AIG, but to have the government facilitate a controlled teardown of the institution.
Fortunately, or unfortunately, depending on your perspective, the worst CDS's were written for 3rd parties
I agree, but as I'm querying above, I fail to see how this debunks the idea that AIG underwrites a sufficient number of assets that their failing would result in a chain reaction of asset writedowns and institutional failures.
So, have I missed anything? So far, it appears you've tried to make no coherent argument. You've used vague phrases like "what goes up must come down" and "command and control economy" without actually explaining why AIG failing is better than the government facilitating their liquidation.
No one is disputing that it would be bad for AIG to fail. Just that the alternative is worse in the long term.
But *why*. You *still* haven't explained that. I *think* your claim is that it creates government interference that, long-term, will damage the economy. But since the government doesn't plan to stay involved in AIG in the long-term, I don't understand how this makes any sense. Furthermore, you don't explain why said interference is actually worse than an immediate economic collapse.
You really think communisim is the only kind of command economy? Do fascism and corporatism ring a bell? Are you qualified to have this discussion?
And you accuse me of ad hominem attacks... nicely done.
Fortunately, or unfortunately, depending on your perspective, the worst CDS's were written for 3rd parties - they were essentially bets on the outcome of an unrelated transaction. While it may not have occurred to those gamblers that there was a third option, AIG's default on the CDS, I don't see defaulting on those as being particularly serious for the nation.
And thus you completely sidestep the point I actually made. Here, let me reiterate:
No, they believe it's true because they realize that, thanks to the unregulated CDS market, AIG underwrites an extremely large number of assets that, should AIG fail, would be written down by their holding entities, resulting in massive institutional failures due to insolvency dwarfing anything we've seen so far.
So, tell me, is this an accurate analysis or not? Yes, or no? If the answer is no, please, explain why, because I'm actually quite interested to hear your analysis on the subject.
Your messenger is biased. If you really speak the truth, surely you can find an educated and neutral messenger to support your claims. Or is it more about your "team" winning even if the country loses?
Meanwhile, you just say "you're wrong", and that's it. Let's see, on "my team", as you like to put it, we have a bunch of economists who all seem to agree that, yup, AIG failing would be bad. On "your team" we have... you. And you haven't provided *any* evidence or analysis to back your position. And *I'm* the one who isn't playing fair?
How does that contradict my point that COST of the bailout is not just the dollars, it is the aftermath on the market infrastructure?
So? That doesn't change the supposition that the bailout is still necessary. Expensive? Hell yes. But necessary nevertheless.
Gee, is singapore a communist state? Two ad-hominem attacks now, I really am begining to think that you are a team player.
So you're saying the reference to a "command economy" wasn't an allusion to communism? Well, my apologies, I must've misunderstood.
How come a bank is "suddenly" in trouble if it hits a few foreclosures?
Umm... a "few" foreclosures? Dude, we're not talking about a "few" foreclosures. We're talking about truly massive numbers of foreclosures.
This property is a tangible asset right? It's just not liquid. How come they didn't say "hmm, mortgages have been defaulting 3% more than normal... maybe we should tighten standards for a bit to reduce our income loss?
ROFL. 3%. Try 55%. Meanwhile, those "tangible assets" were massively overinflated, and so the banks will take a loss no matter what.
While my life may be affected by the implosion of a large bank, insurer, or auto company, I still want it to implode.
You only say that because you don't understand the true extent of the problem. Imagine your local small business can't get a loan in order to expand their business. Or your city or state unable to get a loan for infrastructure development. Or how 'bout people unable to get mortgages to buy homes? The list goes on and on.
The fact is, credit plays a very important part in any health economy. What you're proposing is an effective freeze on credit issuance, and that would be a disaster.
I sit pretty well now w/ a 5.75% fixed loan paid bi-weekly w/ about $100 extra a month going to principal. No one so far, (I have asked several friends, banks, etc...) has been able to tell me why you wouldn't want to upgrade a loan someone who grows out of subprime if they are leaving.
Fear. Fear that housing prices will continue to decline and the bank will end up with a liability on it's books. Fear that the individual will be unable to cover their loan because the economy turns sour as credit dries up. I'm sure there are other reasons, but number one on the list, without a doubt, is plain and simply fear.
Plenty of people believe AIG is too big to fail, many do so merely because they take the word of people like Michael Lewitt.
No, they believe it's true because they realize that, thanks to the unregulated CDS market, AIG underwrites an extremely large number of assets that, should AIG fail, would be written down by their holding entities, resulting in massive institutional failures due to insolvency dwarfing anything we've seen so far.
Or do you perhaps actually have a counterargument to this position, as opposed to simply disregarding the idea based on the messenger?
There are numerous reasons to believe the AIG bailout is an error. However, the most obvious one is the same reason used to justify the bailout - that AIG is too big to fail. If that premise is true, then obviously AIG has a defining and central role in the US and world economies. Yet the bailout has now placed control over such a massively key piece of market infrastructure into the hands of the government
So it can be sold off in a controlled manner, as opposed to an uncontrolled implosion.
Or did you miss that part of the bailout plan?
So, OOC, did you have any *reasonable* objections to the bailout plan, as opposed to ones based on an irrational fear of communism?
Specifically, letting AIG fail would allow some forbidden things called capitalism and social mobility.
Well, that and the implosion of the US financial system.
But I'm sure that's no big deal, right? I mean, what's happened so far hasn't been a problem...
Since "the government" purposely created the "crisis" by releasing the orginial Paulson bailout request, I have to laugh.
Wow, talk about revisionist history. Last I checked, by the time Paulson was looking for a bailout plan, the credit markets had basically frozen up completely. But, hey, if you can't support your (insane) position with facts, it's a lot easier to just make them up, right?
Exactly how would the situation be better if there were 4-5 smaller firms filling the role of AIG?
It wouldn't be. Not by itself, anyway. 'course, I don't think anyone is suggesting it would be.
In fact, there's a whole range of measures that probably need to be instituted:
1. What you need is proper regulation on the CDS market, ensuring that, for example, insurers are sufficiently capitalized in order to cover their obligations.
2. Reinstituting legislation (like the Glass-Steagal act) to prevent banks from both taking deposits and investing would help to reduce systemic risk by preventing banks from taking leveraged investment positions.
3. Trying to eliminate truly massive, "too big to fail" institutions would also help, as it would ensure that there was no one single point of failure in the economy, again reducing systemic risk.
I'm sure there's plenty of others, too (eg, I think something must be done about the ratings agencies), but these are just a few off the top of my head.
The public is just as responsible for this "non-interventionist" bullcrap the reaganites were pushing as the reaganites themselves. After all, they kept electing them!
No shit, Sherlock. But how does that prove that there's "No such thing as 'too big to fail'", exactly?
And that is the essence of the problem, is it not? How can a a political establishment so obsessed with "national security" let a market of an estimated $60 trillion dollars [bloomberg.com] (almost 5 times our national GDP) go completely unregulated? It's absurd...
I couldn't possibly agree with you more.
Unfortunately, that doesn't change the fact that the US has to swallow an incredibly bitter pill now, lest the economy completely fall off the rails.
But to the same extent as mortgages? That's the real question. Just how much commercial paper is backed by student loans? You haven't actually provided that number, and I'd be truly shocked if it wasn't but a small percentage of total paper being held by institutions.
massive student debt defaults will: a - make loan companies more averse to making them.. b - make the public leery of paying for an education which won't return their investment
Except there's no evidence of these massive defaults that are on the verge of sweeping the nation. I mean, it's not like student loan debt is anything new. And unlike the housing crisis, there's nothing to make me believe that there's going to be a sudden, massive ramp-up of defaults. Obviously an economic downturn will make things worse, but there's nothing even remotely close to the mortgage bubble and collapse going on, there.
Now, I agree, student debt is a problem and I think it'll hamper long-term US economic development. But I'm sorry, there's just no evidence that the student loan market is a grenade waiting to go off (as opposed to the already detonated housing market).
No, it's pretty clear what would happen. AIG's collapse wouldmean the insurance would evaporate for literally billions upon billions of loans (Google "Credit Default Swaps" for more info on this topic). The result would be a write-down of all that debt, which would create a massive domino effect as institutions started going insolvent.
Look who the author of that op-ed piece is - President of Harch Capital Management - an investment advisory firm that serves institutional and high net worth investors. Clearly he has a vested interest in the bailout.
Yes... as if he's the only one who believes an AIG collapse would be devastating.::rollseyes:
BTW, ever heard of the phrase "ad hominem fallacy"?
The bailouts are only prolonging the coming disaster because the system is fundamentally broken, and has been since at least the S&L crisis. We can take our beating now, or we can take one 10x worse in a decade or two, or we put that one off too and end up with one 100x worse in 30-40 years.
Excellent! So I suppose you have data and a good theory to back your bold claims? Or are you, perhaps, just talking out of your ass?
A distributed bailout among grass-roots consumers is more likely to encourage profitable innovation and will re-enter society immediately.
No one said that shouldn't *also* happen. But it sure won't be targeted at student loan holders. It'll be targeted at holders of mortgage debt. And such a plan is already part of the 700B plan that Congress passed. Hell, right now, as we speak, the FDIC is working with institutions to renegotiate mortgages in order to keep people in their homes.
Don't forget the forced loans to people who couldn't afford them. Your government did its best to drag the banks under, whether it realised it or not at the time.
Bah, the fact that you believe the CRA had any sizeable effect on the economic collapse just illustrates to me your lack of knowledge on the subject. Learn some more. Come back when you're better educated.
I'm sorry, you still haven't demonstrated why student loan debt is systemic risk. Unless lack of payment of those loans creates magnified losses in the greater economy, all you're describing is an economic drag, not a serious threat to the stability of the economy as a whole.
Of course, any such drag should be taken seriously. But make no mistake, that drag is nothing, *nothing* compared to the impact of the collapse of an institution like AIG on the greater economy.
The very fact you believe that speaks volumes about your knowledge regarding the US economy. Let me introduce you to a term: systemic risk.
If congress can't take the popular impact of such massive companies collapsing, then they need to pass legislation limiting the assets of specific companies, compelling divisions into financially separate departments as they approach that cap.
Damn right. Let's hope they do exactly that. After all, limiting systemic risk is precisely one of the more important roles of government in the economy.
But meanwhile, there's an economic collapse to stave off.
It was the companies that performed the shenanigans
Hell yes, I couldn't agree more. But if a friend of yours has a kid and they stab themselves while running around the house with scissors, who do you blame? The kid for doing it, or the parents for not stopping the behaviour in the first place?
Answer: both.
Or, to echo Greenspan's sentiments: these jackasses apparently can't regulate themselves. Therefore, it behooves the government it regulate them on behalf of everyone else who would be royally fucked if they were allowed to run the economy off a cliff.
Haven't been watching the news much? What do you think the Democrats (not to mention John McCain) have been pushing for? Hell, the ability for the Fed to directly purchase mortgages is *already* part of the 700B fund the Fed was given (an amendment the Democrats got in). Meanwhile, right now, as we speak, the FDIC is working with banks to try and renegotiate mortgages in order to keep people in their homes.
and after the economy improves, and everything is back on its feet, the government is going to go after these companies for being anti-competitive monopolies, right?
Who said anything about anti-competitive monopolies? There were many companies in the CDS game. AIG is just one of the biggest and most intertwined in the financial system.
Why is there no other insurance company like AIG that is so inter-tied to our multi trillion dollar economy.
It's the nature of free market economics. Big companies get bigger. Particularly in the insurance game.
All that said, yes, there is certainly a push to properly regulate these entities (including regulating the gargantuan CDS market), with the goal of reducing systemic risk. 'course, it's anyone's guess what the final outcome would be, but I think everyone agrees that something must be done.
Many people failing to pay their student loans is as much of a systemic risk as AIG failing.
Really? I suppose you have the numbers to back your assertion that student loan debt comprises a large fraction of the debt holdings of various financial institutions?
I'm pretty comfortable with an imploding AIG myself.
Anyone who says that doesn't understand the role of AIG in the economy. Go learn about credit default swaps and loan underwriting. Then read a bit about what would happen if all that insurance suddenly evaporated. Here, let me get you started. Try reading this.
Trust me. You wouldn't be terribly comfortable if AIG imploded. No one would be.
Well, although I see a certain amount of logic in your position, the problem is that it ain't happening
Uhh... what do you think they're going to be doing with AIG? The entire point, here, was to essentially acquire the company so that they can stabilize it in preparation for a controlled sell-off of it's assets, which would then be used to pay back at least some of the bailout loan (which is why the US ended up with a near 80% equity stake in the company).
Exactly. For most everyone else, the degree gets one's foot in the door, at which point you can get some experience and then throw the degree away.
Incidentally, this is why other trades have apprenticeship programs (which, IMHO, could have a place in the IT sector in certain areas, such as system administration, etc).
Why do rich bankers get bailed out for billions but the rest of us get stuck with $50K in student debt?
Because, like it or not, the health of the economy doesn't directly hinge on your ability to comfortably pay back your student loans (unlike, say, AIG, who's failure would have untold repercussions throughout the financial industry).
Basically, the government fucked up and let these companies get too big to fail while turning a blind eye to their shenanigans. And now they're forced to bail them out. It's just that simple. It sucks, to be sure, but that's the reality. Bitching and complaining won't change it.
What that statement really means is that AIG is, quite simply too big to be allowed to exist.
Well, yes, of course. No one's disputing that. But it's too late to worry about that now, so how 'bout we not let the economy collapse and *then* deal with these sorts of issues?
Slashdot Mirror
You won't read this anyway, but...
No. Maybe you don't understand the concept of insurance? You don't write down an asset because the insurance fails, you write down an asset because the asset fails.
Ahh, now I see the problem... replace "mark down" everywhere I said "write down", since that's what I actually meant.
No, AIG was leveraged out the ass on CDS's many of them for 3rd parties. In those cases there are no "assets" just bets.
No, AIG was *also* leveraged out the ass on CDS's. But did they not also insure a large number of investments? And should that insurance fail, would those investments not have to be written down? And would not such write-downs result in increased institutional insolvency, and thus another chain reaction of failures? Yes or no?
You haven't been reading what I wrote, you are just rah-rahing for your team and accusing me of irrational fears.
But you haven't written anything of substance. Here, let me quote you, and if I'm misrepresenting your position, let me know:
Vague supposition. *Why* would it be "10x worse in a decade or two, or we put that one off too and end up with one 100x worse in 30-40 years"? Try actually supporting your position. Come on, you can do it!
Missed the point. The goal isn't to have the government control AIG, but to have the government facilitate a controlled teardown of the institution.
I agree, but as I'm querying above, I fail to see how this debunks the idea that AIG underwrites a sufficient number of assets that their failing would result in a chain reaction of asset writedowns and institutional failures.
So, have I missed anything? So far, it appears you've tried to make no coherent argument. You've used vague phrases like "what goes up must come down" and "command and control economy" without actually explaining why AIG failing is better than the government facilitating their liquidation.
No one is disputing that it would be bad for AIG to fail. Just that the alternative is worse in the long term.
But *why*. You *still* haven't explained that. I *think* your claim is that it creates government interference that, long-term, will damage the economy. But since the government doesn't plan to stay involved in AIG in the long-term, I don't understand how this makes any sense. Furthermore, you don't explain why said interference is actually worse than an immediate economic collapse.
You really think communisim is the only kind of command economy? Do fascism and corporatism ring a bell?
Are you qualified to have this discussion?
And you accuse me of ad hominem attacks... nicely done.
Fortunately, or unfortunately, depending on your perspective, the worst CDS's were written for 3rd parties - they were essentially bets on the outcome of an unrelated transaction. While it may not have occurred to those gamblers that there was a third option, AIG's default on the CDS, I don't see defaulting on those as being particularly serious for the nation.
And thus you completely sidestep the point I actually made. Here, let me reiterate:
So, tell me, is this an accurate analysis or not? Yes, or no? If the answer is no, please, explain why, because I'm actually quite interested to hear your analysis on the subject.
Your messenger is biased. If you really speak the truth, surely you can find an educated and neutral messenger to support your claims. Or is it more about your "team" winning even if the country loses?
Meanwhile, you just say "you're wrong", and that's it. Let's see, on "my team", as you like to put it, we have a bunch of economists who all seem to agree that, yup, AIG failing would be bad. On "your team" we have... you. And you haven't provided *any* evidence or analysis to back your position. And *I'm* the one who isn't playing fair?
How does that contradict my point that COST of the bailout is not just the dollars, it is the aftermath on the market infrastructure?
So? That doesn't change the supposition that the bailout is still necessary. Expensive? Hell yes. But necessary nevertheless.
Gee, is singapore a communist state? Two ad-hominem attacks now, I really am begining to think that you are a team player.
So you're saying the reference to a "command economy" wasn't an allusion to communism? Well, my apologies, I must've misunderstood.
How come a bank is "suddenly" in trouble if it hits a few foreclosures?
Umm... a "few" foreclosures? Dude, we're not talking about a "few" foreclosures. We're talking about truly massive numbers of foreclosures.
This property is a tangible asset right? It's just not liquid. How come they didn't say "hmm, mortgages have been defaulting 3% more than normal... maybe we should tighten standards for a bit to reduce our income loss?
ROFL. 3%. Try 55% . Meanwhile, those "tangible assets" were massively overinflated, and so the banks will take a loss no matter what.
While my life may be affected by the implosion of a large bank, insurer, or auto company, I still want it to implode.
You only say that because you don't understand the true extent of the problem. Imagine your local small business can't get a loan in order to expand their business. Or your city or state unable to get a loan for infrastructure development. Or how 'bout people unable to get mortgages to buy homes? The list goes on and on.
The fact is, credit plays a very important part in any health economy. What you're proposing is an effective freeze on credit issuance, and that would be a disaster.
I sit pretty well now w/ a 5.75% fixed loan paid bi-weekly w/ about $100 extra a month going to principal. No one so far, (I have asked several friends, banks, etc...) has been able to tell me why you wouldn't want to upgrade a loan someone who grows out of subprime if they are leaving.
Fear. Fear that housing prices will continue to decline and the bank will end up with a liability on it's books. Fear that the individual will be unable to cover their loan because the economy turns sour as credit dries up. I'm sure there are other reasons, but number one on the list, without a doubt, is plain and simply fear.
Plenty of people believe AIG is too big to fail, many do so merely because they take the word of people like Michael Lewitt.
No, they believe it's true because they realize that, thanks to the unregulated CDS market, AIG underwrites an extremely large number of assets that, should AIG fail, would be written down by their holding entities, resulting in massive institutional failures due to insolvency dwarfing anything we've seen so far.
Or do you perhaps actually have a counterargument to this position, as opposed to simply disregarding the idea based on the messenger?
There are numerous reasons to believe the AIG bailout is an error. However, the most obvious one is the same reason used to justify the bailout - that AIG is too big to fail. If that premise is true, then obviously AIG has a defining and central role in the US and world economies. Yet the bailout has now placed control over such a massively key piece of market infrastructure into the hands of the government
So it can be sold off in a controlled manner, as opposed to an uncontrolled implosion.
Or did you miss that part of the bailout plan?
So, OOC, did you have any *reasonable* objections to the bailout plan, as opposed to ones based on an irrational fear of communism?
Shooting a few of the CEO's who got it into that mess would sure make me feel better, though. Or at least jabbing them with a sharp stick.
Well, I've got my stick. Meet you in NYC? :)
Specifically, letting AIG fail would allow some forbidden things called capitalism and social mobility.
Well, that and the implosion of the US financial system.
But I'm sure that's no big deal, right? I mean, what's happened so far hasn't been a problem...
Since "the government" purposely created the "crisis" by releasing the orginial Paulson bailout request, I have to laugh.
Wow, talk about revisionist history. Last I checked, by the time Paulson was looking for a bailout plan, the credit markets had basically frozen up completely. But, hey, if you can't support your (insane) position with facts, it's a lot easier to just make them up, right?
Exactly how would the situation be better if there were 4-5 smaller firms filling the role of AIG?
It wouldn't be. Not by itself, anyway. 'course, I don't think anyone is suggesting it would be.
In fact, there's a whole range of measures that probably need to be instituted:
1. What you need is proper regulation on the CDS market, ensuring that, for example, insurers are sufficiently capitalized in order to cover their obligations.
2. Reinstituting legislation (like the Glass-Steagal act) to prevent banks from both taking deposits and investing would help to reduce systemic risk by preventing banks from taking leveraged investment positions.
3. Trying to eliminate truly massive, "too big to fail" institutions would also help, as it would ensure that there was no one single point of failure in the economy, again reducing systemic risk.
I'm sure there's plenty of others, too (eg, I think something must be done about the ratings agencies), but these are just a few off the top of my head.
The public is just as responsible for this "non-interventionist" bullcrap the reaganites were pushing as the reaganites themselves. After all, they kept electing them!
No shit, Sherlock. But how does that prove that there's "No such thing as 'too big to fail'", exactly?
Oh wait... it doesn't.
And that is the essence of the problem, is it not? How can a a political establishment so obsessed with "national security" let a market of an estimated $60 trillion dollars [bloomberg.com] (almost 5 times our national GDP) go completely unregulated? It's absurd...
I couldn't possibly agree with you more.
Unfortunately, that doesn't change the fact that the US has to swallow an incredibly bitter pill now, lest the economy completely fall off the rails.
student debts are also securitized.
But to the same extent as mortgages? That's the real question. Just how much commercial paper is backed by student loans? You haven't actually provided that number, and I'd be truly shocked if it wasn't but a small percentage of total paper being held by institutions.
massive student debt defaults will: a - make loan companies more averse to making them.. b - make the public leery of paying for an education which won't return their investment
Except there's no evidence of these massive defaults that are on the verge of sweeping the nation. I mean, it's not like student loan debt is anything new. And unlike the housing crisis, there's nothing to make me believe that there's going to be a sudden, massive ramp-up of defaults. Obviously an economic downturn will make things worse, but there's nothing even remotely close to the mortgage bubble and collapse going on, there.
Now, I agree, student debt is a problem and I think it'll hamper long-term US economic development. But I'm sorry, there's just no evidence that the student loan market is a grenade waiting to go off (as opposed to the already detonated housing market).
No, it's pretty clear what would happen. AIG's collapse wouldmean the insurance would evaporate for literally billions upon billions of loans (Google "Credit Default Swaps" for more info on this topic). The result would be a write-down of all that debt, which would create a massive domino effect as institutions started going insolvent.
It would be ugly. Really really ugly.
Look who the author of that op-ed piece is - President of Harch Capital Management - an investment advisory firm that serves institutional and high net worth investors. Clearly he has a vested interest in the bailout.
Yes... as if he's the only one who believes an AIG collapse would be devastating. ::rollseyes:
BTW, ever heard of the phrase "ad hominem fallacy"?
The bailouts are only prolonging the coming disaster because the system is fundamentally broken, and has been since at least the S&L crisis. We can take our beating now, or we can take one 10x worse in a decade or two, or we put that one off too and end up with one 100x worse in 30-40 years.
Excellent! So I suppose you have data and a good theory to back your bold claims? Or are you, perhaps, just talking out of your ass?
A distributed bailout among grass-roots consumers is more likely to encourage profitable innovation and will re-enter society immediately.
No one said that shouldn't *also* happen. But it sure won't be targeted at student loan holders. It'll be targeted at holders of mortgage debt. And such a plan is already part of the 700B plan that Congress passed. Hell, right now, as we speak, the FDIC is working with institutions to renegotiate mortgages in order to keep people in their homes.
Don't forget the forced loans to people who couldn't afford them. Your government did its best to drag the banks under, whether it realised it or not at the time.
Bah, the fact that you believe the CRA had any sizeable effect on the economic collapse just illustrates to me your lack of knowledge on the subject. Learn some more. Come back when you're better educated.
I'm sorry, you still haven't demonstrated why student loan debt is systemic risk. Unless lack of payment of those loans creates magnified losses in the greater economy, all you're describing is an economic drag, not a serious threat to the stability of the economy as a whole.
Of course, any such drag should be taken seriously. But make no mistake, that drag is nothing, *nothing* compared to the impact of the collapse of an institution like AIG on the greater economy.
There is no such thing as "too big to fail".
The very fact you believe that speaks volumes about your knowledge regarding the US economy. Let me introduce you to a term: systemic risk.
If congress can't take the popular impact of such massive companies collapsing, then they need to pass legislation limiting the assets of specific companies, compelling divisions into financially separate departments as they approach that cap.
Damn right. Let's hope they do exactly that. After all, limiting systemic risk is precisely one of the more important roles of government in the economy.
But meanwhile, there's an economic collapse to stave off.
It was the companies that performed the shenanigans
Hell yes, I couldn't agree more. But if a friend of yours has a kid and they stab themselves while running around the house with scissors, who do you blame? The kid for doing it, or the parents for not stopping the behaviour in the first place?
Answer: both.
Or, to echo Greenspan's sentiments: these jackasses apparently can't regulate themselves. Therefore, it behooves the government it regulate them on behalf of everyone else who would be royally fucked if they were allowed to run the economy off a cliff.
That seems to make at least as much sense.
Haven't been watching the news much? What do you think the Democrats (not to mention John McCain) have been pushing for? Hell, the ability for the Fed to directly purchase mortgages is *already* part of the 700B fund the Fed was given (an amendment the Democrats got in). Meanwhile, right now, as we speak, the FDIC is working with banks to try and renegotiate mortgages in order to keep people in their homes.
and after the economy improves, and everything is back on its feet, the government is going to go after these companies for being anti-competitive monopolies, right?
Who said anything about anti-competitive monopolies? There were many companies in the CDS game. AIG is just one of the biggest and most intertwined in the financial system.
Why is there no other insurance company like AIG that is so inter-tied to our multi trillion dollar economy.
It's the nature of free market economics. Big companies get bigger. Particularly in the insurance game.
All that said, yes, there is certainly a push to properly regulate these entities (including regulating the gargantuan CDS market), with the goal of reducing systemic risk. 'course, it's anyone's guess what the final outcome would be, but I think everyone agrees that something must be done.
Many people failing to pay their student loans is as much of a systemic risk as AIG failing.
Really? I suppose you have the numbers to back your assertion that student loan debt comprises a large fraction of the debt holdings of various financial institutions?
I'm pretty comfortable with an imploding AIG myself.
Anyone who says that doesn't understand the role of AIG in the economy. Go learn about credit default swaps and loan underwriting. Then read a bit about what would happen if all that insurance suddenly evaporated. Here, let me get you started. Try reading this.
Trust me. You wouldn't be terribly comfortable if AIG imploded. No one would be.
Well, although I see a certain amount of logic in your position, the problem is that it ain't happening
Uhh... what do you think they're going to be doing with AIG? The entire point, here, was to essentially acquire the company so that they can stabilize it in preparation for a controlled sell-off of it's assets, which would then be used to pay back at least some of the bailout loan (which is why the US ended up with a near 80% equity stake in the company).
Maybe my experience is unique
Exactly. For most everyone else, the degree gets one's foot in the door, at which point you can get some experience and then throw the degree away.
Incidentally, this is why other trades have apprenticeship programs (which, IMHO, could have a place in the IT sector in certain areas, such as system administration, etc).
Why do rich bankers get bailed out for billions but the rest of us get stuck with $50K in student debt?
Because, like it or not, the health of the economy doesn't directly hinge on your ability to comfortably pay back your student loans (unlike, say, AIG, who's failure would have untold repercussions throughout the financial industry).
Basically, the government fucked up and let these companies get too big to fail while turning a blind eye to their shenanigans. And now they're forced to bail them out. It's just that simple. It sucks, to be sure, but that's the reality. Bitching and complaining won't change it.
What that statement really means is that AIG is, quite simply too big to be allowed to exist.
Well, yes, of course. No one's disputing that. But it's too late to worry about that now, so how 'bout we not let the economy collapse and *then* deal with these sorts of issues?