Why would you make it sound like a bad thing that, the government and major capitalists are conspiring to prevent a crash and are doing it openly?
I have a problem when companies such as GS are the first ones to say don't regulate us, but then have no problem accepting gov. bailouts. If you want any gov. help ever, then you need to have them involved from the start. Obviously I'd rather the gov. not be involved at all, but this is the world we live in.
Oh, and anybody who makes it this far should read EastCoastSurfer's "Molly" link. Whoa!
Yep, and the guy is still a cop and nothing has ever been done. Talk about a huge injustice to the girl and her family. They were paying out of their own pockets to keep an investigation going, but eventually ran out of money.
What are you talking about sir? GS hasn't had a quarter where they lost money yet. Paulson is in Washington, and I have worked at the big banks, its popular among conspiracy theorists to think that there are back room machinations going on, but this is speculation based on absolutely no evidence whatsoever. He talks to the CEO's of all the major financials and there is no indication that GS has received any favorable treatment.
Really? So let all the others fail until the sights turn on GS? If GS was doing so well why would the fed need to shield them?
As for Buffet, I doubt the gov't had any influence whatsoever. The man is known for making deals when he feels there is value- and GS's
He didn't have to look for value. The fed told him that they wouldn't let GS fail and GS promised buffet 10% on his investment. That's the biggest no brainer I've ever seen. What's most amazing about this financial crisis is that these deals used to be in secret. Now they are all mostly out in the open. It's like they (the gov.) don't care anymore. You don't need conspiracy theories when the facts are on CNBC every day.
Do you have any evidence for this? Goldman Sachs was the most highly regarded of the investment banks well before Paulson. And plenty of financial companies were smart enough to stay relatively clean from this, in that they managed their risks a lot better.
The only financial companies that have been anywhere near okay are deposit banks. There are no investment only banks left. The last 2 standing were MS and GS. Without the fast intervention of the fed they would have also failed. And finally they chose to become deposit banks, signaling the end of investment only banking.
So GS might have been highly regarded, but they were also caught with their hand in the 30x leverage cookie jar. What I find disgusting is I wonder how many companies GS themselves ruined with CDSs and naked short selling before crying to the fed with the cross hairs pointed at them? We'll never know since the current rules don't force companies to show their short positions.
That Buffett was encouraged to invest doesn't mean that he doesn't think it was a good idea. It's not like they can push him around. Sure, he was betting on the bailout, but everybody was betting one way or another on a bailout, which is why you saw the 777 point drop when it failed the first time.
Buffet was on a phone interview on CNBC. He said that if the bailout didn't happen that buying into GE and GS would be the worst investment decision he's ever made. That tells you a lot. One is says that the gov. was on the phone with him explaining how the plan would help GS (and thus him) and that they really wanted him to get onboard. And two, look at the return he is getting on his risk. 10% dividend on the money he invested plus a buyout upside if they want to purchase the shares back from him.
Still, that's exactly what the Treasury and the Fed should be doing about now. A lot of people are scared just because other people are scared, and not because they know much of anything.
No, the fed and treasury need to get out of the way and let the markets correct. It was obvious years ago we had a problem. Some people in gov. noticed it (Ron Paul comes to mind), but were generally ignored or shouted down. Now we have a large class of assets declining in price with numerous derivatives (iirc, GS created some of the most dangerous ones to own right now) based on the said asset. We have to let these trades unwind before things can start to become normal again. Some people will lose 50% of the value of their house and even more people will lose their jobs. This is what happens when you attempt to prop up prices using gov. intervention. Eventually you can't keep printing money fast enough to keep inflation going.
If that's the case, then how would the fact that 3 percent of the mortgages slowed down have brought down the "house of cards"?
3% is the default rate of prime mortgages. That 3% is also double what it has been traditionally.
Sub-prime mortgages have a default rate closer to 25%, although the rate acceleration is slowing which means we may be seeing a peak in the sub-prime action.
Where the prime default rate will peak is still unknown. All the facts together are why the CDOs have tanked. No one currently knows what they are worth. The market has said somewhere between 20% - 100% of their original value.
I'll just point out that Goldman has done reasonably well in all this, and that's probably because they did have good risk models.
Bullshit! GS survived because they have Paulson as the treasury secretary. Paulson let other companies fail from the CDS manipulation, but when the target became GS the government stepped in and banned short-selling (among a lot of other things). It's nice to have your ex-CEO as the most financially powerful person in the world. Even other bankers made note of who the bailout really helps.
Warren Buffett recently invested in them, and he's one of the sharpest value investors out there.
Buffet invested in them for 2 reasons. Based on what Buffet has said it sounds like the government tapped him and begged him to get in the market to instill some confidence. So for his troubles GS (and GE for that matter) is giving him a 10% dividend! Even with those terms Buffet himself said it was risky and I have to paraphrase here...'if a government bailout doesn't get done, GE and GS will be the 2 largest investment mistakes I've ever made.'
The problem with this is it drives up interest rates. A bunch. If I'm losing 12% a year due to inflation, and I want 3% interest for my risk and profit, I will not loan out money for less than 15%, as it's a losing proposition.
That's true and it's been that way in the past. What you're missing is that everyone who has debt at a fixed rate is now way ahead. High inflation will deflate the bubble without having to go through asset deflation. Not exactly the optimal solution, but the one I think the government has been attempting given their actions.
3) Cut spending. This is a good thing. Running a house with a vicious cycle of debt never works. Why would it work for a government?
This should be rule #1.
We are in defect spending right now, and cutting services is political suicide. Here's the options: [...] Sadly, it looks like #4 is the way we're largely going to go. With all the liabilities we have, we're in for some real pain [youtube.com] in the not-so-distant future. This will not work as they think, either.
I agree. Any politician who mentions cutting is immediately cut off. We need fiscal responsibility to return to government. And that doesn't mean just cutting the war off, but cutting a lot of programs. Raising taxes some might work, but they are already fairly high as it is if you look at all the places we are currently taxed.
The main problem is that our government operates just like most Americans do as individuals. Last I checked the savings rate in the US was negative and the average credit card debt was over 8k. As a society we want everything given to us without paying for it. Look at all the promises of things Obama is planning to 'give' people. It's no wonder why he's so popular. It's funny that people don't seem to realize that this 800B bill that just passed pretty much means that either person who gets elected isn't going to be able to do anything they wanted to. Their entire presidency will be spent dealing with another 800B bill and bringing the troops home, and hopefully they'll both be forced into cutting spending and not adding more programs.
Actually this is the path the government has been trying to take. If you can get inflation going you shrink everyones debts. Obviously this hurts the responsible savers, but it is one way to 'fix' the bubble and it appears the one the government has been attempting. You don't even need anything like hyper-inflation. Just a simple 20%/year while house prices stay flat will get prices back to the norm in less than 5 years. Of course you'll have to deal with all the things that come along with inflation (and the possibility of stagflation), but many would argue the it's a better alternative than the current deflation we're seeing (despite the governments best efforts).
It would have been nice to open a trial to find the people responsible for this catastrophe, fine them, and forbid them from exercising the job of banker or to have a position in government.
We would have to go back to the formation of FNM and FRE, perhaps back even farther. These kinds of problems just don't happen one and generally come from a mix of factors.
I also think that the ban on short-selling that some countries adopted will have far more positive effect than the bailout
Banning the short selling was a terrible idea. It didn't have any effect on propping up the market on the record down day and is only delaying inevitable. The value that is no longer there needs to be washed out. Artificially trying to stop the down-side of the market is a bad idea.
Alternative plan : actually nationalize the failed banks and make a public, sane, not-for-profit and transparent bank run by the government. If you call that communist, then have a little faith in capitalism and let the failures happen.
The thing is, this bailout doesn't save your economy, it just buys some time. It is not a fix, it is damage control.
Healthy banks are for the most part doing fine. People are stilling getting loans and banking is getting done. Banks that made risky bets are struggling and going out of business. Well too bad, this is what happens when you take a risk and it doesn't work out. I would argue right now that the bailout (and before that the looming bailout) was the main item actually preventing a market to get made on the CDOs and MBSs. No one wants to sell them right now with the expectation that the gov. is going to pay more for them. So they hold onto them and freeze the market.
Hah! Just the other day I decided to do this. I don't care if the person running against the incumbent is a republican or democrat, I'm voting for them.
I'm also writing in Ron Paul for President. He can be a bit eccentric, but he's also the only person who has been speaking about truly cutting spending and the real measures needed to fix the fiscal mess this country is in.
I watched some of the debate because I was expecting both of them to humiliate themselves. Biden is great at sticking his foot in his mouth and Palin keeps getting that deer in the headlights look. Once I realized both them were going to manage to stick to the script I flipped the channel.
Re:Oh, well, that explains everything...
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Turbo Pascal is what I used to learn OOP programming. Your post just brought me back lol...
Re:One of the most widely used languages?
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ROFL...if the javadocs actually contained much sample code I'm sure you would see the same thing.
A tool is just a tool. C# is a great tool for windows development. Saying that c# is easy when you need to code for windows is actually a plus for c# and not a negative.
Re:One of the most widely used languages?
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Can you elaborate on your scaling issues with MSSQL? I've worked with various size MSSQL databases for years and I've always found scaling was more of an application design issue than the database itself. Of course some designs might work better/worse on different RDMS, but I would think that you would have done research on how to scale MSSQL applications.
The trouble is, if you accept the premise that government action is needed to avert a more serious collapse, you don't have a choice about propping up poor decision making.
I still don't think that we have to do anything. A market will eventually get made for the paper. Heck, if I had Warren Buffet money lying around I would probably start shopping. Some of this stuff has sold at 20c on the dollar. Even the worst subprime has only had 25% default. Anyways, at this point something will get pushed through because if they continue to stall and the system pulls through on it's own Paulson, Bernanke and crew will look even more like idiots.
Frankly, if I have to prop up bad decisions, I'd rather see to it that the money helps people keep their homes(and everybody else avoid having a lot of crummy foreclosed property hanging around) by aiding them in paying off the mortgages(which will assist the banks), rather than letting everybody default and then doling out the money to the banks.
Once the gov. buys up all the mortgages I'm fully expecting them to renegotiate terms, give super low fixed rates, etc... (say Hi! to Frannie and Freddie part 2) Basically screwing over everyone like myself who saw this coming and acted responsibly. I guess I should have bought more house than I could afford with some IO ARM a few years ago...
This sounds like BS. Money IS an objective evaluation of people's success.
Really? So the CEOs of all these failed banks were successful? They ranked in huge amounts of money, but I wouldn't say much of anything they did was successful.
People don't want just to be rich they want to be successful and large incomes are the best proof.
There is nothing wrong with money if that's your goal, but having money doesn't prove much of anything or automatically mean you are successful. How do you define success?
I've known rich and poor. A friend in college used to always say "Money might not buy happiness, but it'll buy me a nice car to drive around in while I look for it." She was one of the most unhappy people I've ever met. To this day she has plenty of money (and thus success in your book), but she sure isn't happy.
A better movie against consumerism was 'Fight Club.' It was a great flick and just came out too soon. One of the greatest lines is spoken by Tyler, "The things you own, end up owning you." This is a profound statement if you think about it. The more things you have the less freedom you end up with.
More manueverability in college majors. Some majors are so predefined it's stifling. Interested in taking Spanish next semester just to try it? Tough, this flowchart says that your 18 credits have been defined that semester, and none of them are for singing. Some of these flowcharts even define full-time classes for summer, spring, and fall, to get all that you supposedly need for the 2 or 4 year degree. No wonder people get liberal arts degrees, looking at those charts people have a huge degree of choice in what they do semester to semester.
You can go to a liberal arts school and still get a BS. IMHO, it's the best of both worlds, but then again I'm biased.:)
Debt and credit don't necessarily lead to a boom/bust. Free credit on the other hand does, as we have just seen. Our current issue was caused by a multitude of factors, culminating in a black swan event.
If you look at the history of Fannie and Freddie they were started to help everyone own a home (a poor premise to begin with). By having the government back them they quickly pushed everyone else out of the market when it came to buying mortgages, and why not. They could push lower rates than any true private company could because they had the implicit backing of the US government for anything they did. The idea of 'everyone should be able to own a home' is what started us down this path that has finally led us to this crash.
The second leg of this issue was easy credit. Again, why do you need to do a credit check when all you had to do was write the loan and hand it off to Franron? If banks (and mortgage brokers) actually kept the loans they wrote, I can promise you that we wouldn't be in this problem. They would have continued to require money down, documentation, etc... The banks you see failing now are ones that were still standing when the music stopped so to speak. They had no one to dump their poorly written loans to.
The final leg was the greed from top to bottom. This includes the CEOs all the way to hairdresser buying waaay too much house b/c 'prices only go up'. All these people should lose their shirts. It pisses me off how the dems keep saying 'you have to help the homeowner.' Why? They put themselves in the situation they are in. Why do my tax dollars need to go prop up more poor decision making?
I would much prefer re-establishing strong vocational education programs that would take those directionless 18-year olds and give them a job.
It could be argued that the military does just this. When I graduated HS my directionless friends who joined the military have ended up doing quite well in life. The others are still directionless and not doing too much.
Sometimes there's really no other choice. I have about 15 Wal-Mart DRM tracks because it was the ONLY place I could find those particular songs/arrangements. For less popular genres (choral, instrumental, karaoke, etc.) it can often be difficult to find viable alternatives since they are often too rare to download and not offered DRM-free anywhere else.
I see where you're coming from. When I run into tracks like that (usually it's some form of classical) I just buy the CD. IMHO, buying single tracks is generally most helpful when it comes to 'pop' music.
People are STILL buying DRM tracks?? At this point I don't blame the retailers, but the consumer. Amazon has been selling DRM free tracks for a long time now, and they're usually cheaper to boot!
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I have a problem when companies such as GS are the first ones to say don't regulate us, but then have no problem accepting gov. bailouts. If you want any gov. help ever, then you need to have them involved from the start. Obviously I'd rather the gov. not be involved at all, but this is the world we live in.
Yep, and the guy is still a cop and nothing has ever been done. Talk about a huge injustice to the girl and her family. They were paying out of their own pockets to keep an investigation going, but eventually ran out of money.
Really? So let all the others fail until the sights turn on GS? If GS was doing so well why would the fed need to shield them?
He didn't have to look for value. The fed told him that they wouldn't let GS fail and GS promised buffet 10% on his investment. That's the biggest no brainer I've ever seen. What's most amazing about this financial crisis is that these deals used to be in secret. Now they are all mostly out in the open. It's like they (the gov.) don't care anymore. You don't need conspiracy theories when the facts are on CNBC every day.
The only financial companies that have been anywhere near okay are deposit banks. There are no investment only banks left. The last 2 standing were MS and GS. Without the fast intervention of the fed they would have also failed. And finally they chose to become deposit banks, signaling the end of investment only banking.
So GS might have been highly regarded, but they were also caught with their hand in the 30x leverage cookie jar. What I find disgusting is I wonder how many companies GS themselves ruined with CDSs and naked short selling before crying to the fed with the cross hairs pointed at them? We'll never know since the current rules don't force companies to show their short positions.
Buffet was on a phone interview on CNBC. He said that if the bailout didn't happen that buying into GE and GS would be the worst investment decision he's ever made. That tells you a lot. One is says that the gov. was on the phone with him explaining how the plan would help GS (and thus him) and that they really wanted him to get onboard. And two, look at the return he is getting on his risk. 10% dividend on the money he invested plus a buyout upside if they want to purchase the shares back from him.
No, the fed and treasury need to get out of the way and let the markets correct. It was obvious years ago we had a problem. Some people in gov. noticed it (Ron Paul comes to mind), but were generally ignored or shouted down. Now we have a large class of assets declining in price with numerous derivatives (iirc, GS created some of the most dangerous ones to own right now) based on the said asset. We have to let these trades unwind before things can start to become normal again. Some people will lose 50% of the value of their house and even more people will lose their jobs. This is what happens when you attempt to prop up prices using gov. intervention. Eventually you can't keep printing money fast enough to keep inflation going.
3% is the default rate of prime mortgages. That 3% is also double what it has been traditionally.
Sub-prime mortgages have a default rate closer to 25%, although the rate acceleration is slowing which means we may be seeing a peak in the sub-prime action.
Where the prime default rate will peak is still unknown. All the facts together are why the CDOs have tanked. No one currently knows what they are worth. The market has said somewhere between 20% - 100% of their original value.
Bullshit! GS survived because they have Paulson as the treasury secretary. Paulson let other companies fail from the CDS manipulation, but when the target became GS the government stepped in and banned short-selling (among a lot of other things). It's nice to have your ex-CEO as the most financially powerful person in the world. Even other bankers made note of who the bailout really helps.
Buffet invested in them for 2 reasons. Based on what Buffet has said it sounds like the government tapped him and begged him to get in the market to instill some confidence. So for his troubles GS (and GE for that matter) is giving him a 10% dividend! Even with those terms Buffet himself said it was risky and I have to paraphrase here...'if a government bailout doesn't get done, GE and GS will be the 2 largest investment mistakes I've ever made.'
That's true and it's been that way in the past. What you're missing is that everyone who has debt at a fixed rate is now way ahead. High inflation will deflate the bubble without having to go through asset deflation. Not exactly the optimal solution, but the one I think the government has been attempting given their actions.
This should be rule #1.
I agree. Any politician who mentions cutting is immediately cut off. We need fiscal responsibility to return to government. And that doesn't mean just cutting the war off, but cutting a lot of programs. Raising taxes some might work, but they are already fairly high as it is if you look at all the places we are currently taxed.
The main problem is that our government operates just like most Americans do as individuals. Last I checked the savings rate in the US was negative and the average credit card debt was over 8k. As a society we want everything given to us without paying for it. Look at all the promises of things Obama is planning to 'give' people. It's no wonder why he's so popular. It's funny that people don't seem to realize that this 800B bill that just passed pretty much means that either person who gets elected isn't going to be able to do anything they wanted to. Their entire presidency will be spent dealing with another 800B bill and bringing the troops home, and hopefully they'll both be forced into cutting spending and not adding more programs.
Actually this is the path the government has been trying to take. If you can get inflation going you shrink everyones debts. Obviously this hurts the responsible savers, but it is one way to 'fix' the bubble and it appears the one the government has been attempting. You don't even need anything like hyper-inflation. Just a simple 20%/year while house prices stay flat will get prices back to the norm in less than 5 years. Of course you'll have to deal with all the things that come along with inflation (and the possibility of stagflation), but many would argue the it's a better alternative than the current deflation we're seeing (despite the governments best efforts).
It would have been nice to open a trial to find the people responsible for this catastrophe, fine them, and forbid them from exercising the job of banker or to have a position in government.
We would have to go back to the formation of FNM and FRE, perhaps back even farther. These kinds of problems just don't happen one and generally come from a mix of factors.
I also think that the ban on short-selling that some countries adopted will have far more positive effect than the bailout
Banning the short selling was a terrible idea. It didn't have any effect on propping up the market on the record down day and is only delaying inevitable. The value that is no longer there needs to be washed out. Artificially trying to stop the down-side of the market is a bad idea.
Alternative plan : actually nationalize the failed banks and make a public, sane, not-for-profit and transparent bank run by the government. If you call that communist, then have a little faith in capitalism and let the failures happen.
The thing is, this bailout doesn't save your economy, it just buys some time. It is not a fix, it is damage control.
Healthy banks are for the most part doing fine. People are stilling getting loans and banking is getting done. Banks that made risky bets are struggling and going out of business. Well too bad, this is what happens when you take a risk and it doesn't work out. I would argue right now that the bailout (and before that the looming bailout) was the main item actually preventing a market to get made on the CDOs and MBSs. No one wants to sell them right now with the expectation that the gov. is going to pay more for them. So they hold onto them and freeze the market.
Hah! Just the other day I decided to do this. I don't care if the person running against the incumbent is a republican or democrat, I'm voting for them.
I'm also writing in Ron Paul for President. He can be a bit eccentric, but he's also the only person who has been speaking about truly cutting spending and the real measures needed to fix the fiscal mess this country is in.
I completely agree. The scary part is that it's not even some hidden agenda. It's completely out in the open. The CEO of BB&T even called Paulson out on it. http://scconservative.wordpress.com/2008/09/24/rescue-plan-from-a-healthy-banks-perspective/
I watched some of the debate because I was expecting both of them to humiliate themselves. Biden is great at sticking his foot in his mouth and Palin keeps getting that deer in the headlights look. Once I realized both them were going to manage to stick to the script I flipped the channel.
Turbo Pascal is what I used to learn OOP programming. Your post just brought me back lol...
ROFL...if the javadocs actually contained much sample code I'm sure you would see the same thing.
A tool is just a tool. C# is a great tool for windows development. Saying that c# is easy when you need to code for windows is actually a plus for c# and not a negative.
Can you elaborate on your scaling issues with MSSQL? I've worked with various size MSSQL databases for years and I've always found scaling was more of an application design issue than the database itself. Of course some designs might work better/worse on different RDMS, but I would think that you would have done research on how to scale MSSQL applications.
I still don't think that we have to do anything. A market will eventually get made for the paper. Heck, if I had Warren Buffet money lying around I would probably start shopping. Some of this stuff has sold at 20c on the dollar. Even the worst subprime has only had 25% default. Anyways, at this point something will get pushed through because if they continue to stall and the system pulls through on it's own Paulson, Bernanke and crew will look even more like idiots.
Once the gov. buys up all the mortgages I'm fully expecting them to renegotiate terms, give super low fixed rates, etc... (say Hi! to Frannie and Freddie part 2) Basically screwing over everyone like myself who saw this coming and acted responsibly. I guess I should have bought more house than I could afford with some IO ARM a few years ago...
Really? So the CEOs of all these failed banks were successful? They ranked in huge amounts of money, but I wouldn't say much of anything they did was successful.
There is nothing wrong with money if that's your goal, but having money doesn't prove much of anything or automatically mean you are successful. How do you define success?
I've known rich and poor. A friend in college used to always say "Money might not buy happiness, but it'll buy me a nice car to drive around in while I look for it." She was one of the most unhappy people I've ever met. To this day she has plenty of money (and thus success in your book), but she sure isn't happy.
A better movie against consumerism was 'Fight Club.' It was a great flick and just came out too soon. One of the greatest lines is spoken by Tyler, "The things you own, end up owning you." This is a profound statement if you think about it. The more things you have the less freedom you end up with.
You can go to a liberal arts school and still get a BS. IMHO, it's the best of both worlds, but then again I'm biased. :)
Well we have to have someone to do the grunt work.
Cry more?
Debt and credit don't necessarily lead to a boom/bust. Free credit on the other hand does, as we have just seen. Our current issue was caused by a multitude of factors, culminating in a black swan event.
If you look at the history of Fannie and Freddie they were started to help everyone own a home (a poor premise to begin with). By having the government back them they quickly pushed everyone else out of the market when it came to buying mortgages, and why not. They could push lower rates than any true private company could because they had the implicit backing of the US government for anything they did. The idea of 'everyone should be able to own a home' is what started us down this path that has finally led us to this crash.
The second leg of this issue was easy credit. Again, why do you need to do a credit check when all you had to do was write the loan and hand it off to Franron? If banks (and mortgage brokers) actually kept the loans they wrote, I can promise you that we wouldn't be in this problem. They would have continued to require money down, documentation, etc... The banks you see failing now are ones that were still standing when the music stopped so to speak. They had no one to dump their poorly written loans to.
The final leg was the greed from top to bottom. This includes the CEOs all the way to hairdresser buying waaay too much house b/c 'prices only go up'. All these people should lose their shirts. It pisses me off how the dems keep saying 'you have to help the homeowner.' Why? They put themselves in the situation they are in. Why do my tax dollars need to go prop up more poor decision making?
It could be argued that the military does just this. When I graduated HS my directionless friends who joined the military have ended up doing quite well in life. The others are still directionless and not doing too much.
I see where you're coming from. When I run into tracks like that (usually it's some form of classical) I just buy the CD. IMHO, buying single tracks is generally most helpful when it comes to 'pop' music.
You mean the internet exists outside the US? :p
People are STILL buying DRM tracks?? At this point I don't blame the retailers, but the consumer. Amazon has been selling DRM free tracks for a long time now, and they're usually cheaper to boot!