Author Topic: the "supposed" fiscal cliff  (Read 10735 times)

Offline kramarat

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Re: Some people learned a lesson about letting things fail
« Reply #90 on: February 02, 2013, 05:41:26 AM »
the funny thing is "you saying Obama is worse" kinda lends itself to me proving otherwise in a forum.  Which in turn upsets everybody.  So what you are saying is you have an opinon and you dont want any facts getting in the way.  Wait thats exactly what you said

So back to the facts.  The recession is getting worse.  We've bailed out the GSEs. We're bailing out the banks.   When Bush/Paulson let Lehman fail, we all cheered.  Now I have nothing but respect for Hank Paulson when but Lehman failed rich people panicked.  Money flooded out of the market.   it seems rich people didnt have the same "way to stick it to Lehman" attitude we did.  Now the Financial Commission tries to spin it was not just Bush's Lehman policy but it fails to convince

"The crisis reached seismic proportions in September with the failure of Lehman Brothers and the impending collapse of the insurance giant American International Group (AIG). Panic fanned by a lack of transparency of the balance sheets of major financial institutions, coupled with a tangle of interconnections among institutions perceived to be “too big to fail,” caused the credit markets to seize up. Trading ground to a halt. The stock market plummeted. The economy plunged into a deep recession."

http://www.gpoaccess.gov/fcic/fcic.pdf

and that pretty much explains why AIG's counterparties got 100 % on the dollar for their investments.  They were trying to put the horses back in the barn.

I get "page not found" on your link, but it doesn't matter. There should have been no bail outs for anyone...........and yet it continues.


Online Solar

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Re: its actually 2007 but a minor point
« Reply #91 on: February 02, 2013, 06:07:00 AM »
Some one brought up UE as proof of something.  Fine, lets discuss UE.  But you cant discuss UE unless you discuss the causes. So (honestly) when does it look like UE started shooting up?  So for you guys to rant that I'm just blaming bush is just your attempt to ignore the facts.  Whining dont change the facts. 

GDP__Q__year
-1.8__1__2008
+1.3__2__2008
-3.7__3__2008
-8.9__4__2008

http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1

 you saw UE, you saw job losses now you see GDP.  Looks like the economy fell off a cliff Q4.  Why did the recession accelerate to depression esque levels?

"Lehman's collapse was a seminal event that greatly intensified the 2008 crisis and contributed to the erosion of close to $10 trillion in market capitalization from global equity markets in October 2008, the biggest monthly decline on record at the time"

http://www.investopedia.com/articles/economics/09/lehman-brothers-collapse.asp#axzz1Yy6SIL3c



 
If you're going to use UE numbers, use all of the chart.

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Offline Vern

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Re: the "supposed" fiscal cliff
« Reply #92 on: February 02, 2013, 06:07:31 AM »
thanks kram. sometimes the links change

http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf

I wasnt even aware of the GSE bailout at the time. I was in favor of the bank bailout but I used to rail against the AIG bailout.  There was no way that AIG's counterparties should have gotten 100 % on the dollar.  But now I understand why they did what they did.  I was unaware what Lehman did to the economy.  Give Hank credit, he figured it out quickly. 

So while its fine for you and me to be against bailouts, preventing a depression seems more important than ideology

Online Solar

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Re: the "supposed" fiscal cliff
« Reply #93 on: February 02, 2013, 06:23:55 AM »
thanks kram. sometimes the links change

http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf

I wasnt even aware of the GSE bailout at the time. I was in favor of the bank bailout but I used to rail against the AIG bailout.  There was no way that AIG's counterparties should have gotten 100 % on the dollar.  But now I understand why they did what they did.  I was unaware what Lehman did to the economy.  Give Hank credit, he figured it out quickly. 

So while its fine for you and me to be against bailouts, preventing a depression seems more important than ideology


In this report, we detail the events of the crisis. But a simple summary, as we see
it, is useful at the outset. While the vulnerabilities that created the potential for crisis
were years in the making,
it was the collapse of the housing bubble—fueled by
low interest rates, easy and available credit, scant regulation, and toxic mortgages—
that was the spark that ignited a string of events, which led to a full-blown crisis in
the fall of . Trillions of dollars in risky mortgages had become embedded
throughout the financial system, as mortgage-related securities were packaged,
repackaged, and sold to investors around the world. When the bubble burst, hundreds
of billions of dollars in losses in mortgages and mortgage-related securities
shook markets as well as financial institutions that had significant exposures to
those mortgages and had borrowed heavily against them. This happened not just in
the United States but around the world. The losses were magnified by derivatives
such as synthetic securities.
The crisis reached seismic proportions in September  with the failure of
Lehman Brothers and the impending collapse of the insurance giant American International
Group (AIG). Panic fanned by a lack of transparency of the balance sheets of major
financial institutions, coupled with a tangle of interconnections among institutions
perceived to be “too big to fail,” caused the credit markets to seize up. Trading ground
to a halt. The stock market plummeted. The economy plunged into a deep recession.
The financial system we examined bears little resemblance to that of our parents’
generation. The changes in the past three decades alone have been remarkable.

We conclude widespread failures in financial regulation and supervision
proved devastating to the stability of the nation’s financial markets. The sentries
were not at their posts, in no small part due to the widely accepted faith in the selfcorrecting
nature of the markets and the ability of financial institutions to effectively
police themselves. More than 30 years of deregulation and reliance on self-regulation
by financial institutions, championed by former Federal Reserve chairman Alan
Greenspan and others, supported by successive administrations and Congresses
, and
actively pushed by the powerful financial industry at every turn, had stripped away
key safeguards, which could have helped avoid catastrophe. This approach had
opened up gaps in oversight of critical areas with trillions of dollars at risk, such as
the shadow banking system and over-the-counter derivatives markets. In addition,
the government permitted financial firms to pick their preferred regulators in what
became a race to the weakest supervisor.
« Last Edit: February 02, 2013, 06:46:03 AM by Solar »
Koolaid is for kids, TEA is for adults

Offline kramarat

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Re: the "supposed" fiscal cliff
« Reply #94 on: February 02, 2013, 06:55:17 AM »

In this report, we detail the events of the crisis. But a simple summary, as we see
it, is useful at the outset. While the vulnerabilities that created the potential for crisis
were years in the making,
it was the collapse of the housing bubble—fueled by
low interest rates, easy and available credit, scant regulation, and toxic mortgages—
that was the spark that ignited a string of events, which led to a full-blown crisis in
the fall of . Trillions of dollars in risky mortgages had become embedded
throughout the financial system, as mortgage-related securities were packaged,
repackaged, and sold to investors around the world. When the bubble burst, hundreds
of billions of dollars in losses in mortgages and mortgage-related securities
shook markets as well as financial institutions that had significant exposures to
those mortgages and had borrowed heavily against them. This happened not just in
the United States but around the world. The losses were magnified by derivatives
such as synthetic securities.
The crisis reached seismic proportions in September  with the failure of
Lehman Brothers and the impending collapse of the insurance giant American International
Group (AIG). Panic fanned by a lack of transparency of the balance sheets of major
financial institutions, coupled with a tangle of interconnections among institutions
perceived to be “too big to fail,” caused the credit markets to seize up. Trading ground
to a halt. The stock market plummeted. The economy plunged into a deep recession.
The financial system we examined bears little resemblance to that of our parents’
generation. The changes in the past three decades alone have been remarkable.

We conclude widespread failures in financial regulation and supervision
proved devastating to the stability of the nation’s financial markets. The sentries
were not at their posts, in no small part due to the widely accepted faith in the selfcorrecting
nature of the markets and the ability of financial institutions to effectively
police themselves. More than 30 years of deregulation and reliance on self-regulation
by financial institutions, championed by former Federal Reserve chairman Alan
Greenspan and others, supported by successive administrations and Congresses
, and
actively pushed by the powerful financial industry at every turn, had stripped away
key safeguards, which could have helped avoid catastrophe. This approach had
opened up gaps in oversight of critical areas with trillions of dollars at risk, such as
the shadow banking system and over-the-counter derivatives markets. In addition,
the government permitted financial firms to pick their preferred regulators in what
became a race to the weakest supervisor.

These conversations are a lot more clear when we don't try to put faces on bad policies.

The government sucks. I wish they would stop trying to fix things. :mad:

Offline Vern

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Re: the "supposed" fiscal cliff
« Reply #95 on: February 02, 2013, 06:56:44 AM »
"fueled by low interest rates, easy and available credit, scant regulation, and toxic mortgages"

You can have low interest rates without a bubble but you cant have a bubble without toxic mortgages and 'scant' regulation. 

Scant is being nice.  It was more like 'cheering on the banks' than 'scant regulation'.   and when did the toxic mortgages start?  you know the answer. Not wanting to know doesnt make it go away.

Online Solar

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Re: the "supposed" fiscal cliff
« Reply #96 on: February 02, 2013, 07:39:07 AM »
These conversations are a lot more clear when we don't try to put faces on bad policies.

The government sucks. I wish they would stop trying to fix things. :mad:
Which was the point I've been trying to get across to Vern, it took years and bad policy to bring to a head the collapse.
To point the finger at one person is ludicrous and ignorant at best.
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Offline TowardLiberty

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Re: the "supposed" fiscal cliff
« Reply #97 on: February 02, 2013, 10:17:17 AM »
"fueled by low interest rates, easy and available credit, scant regulation, and toxic mortgages"

You can have low interest rates without a bubble but you cant have a bubble without toxic mortgages and 'scant' regulation. 


Tulipmania was a bubble in 16th century Holland that did not involve toxic mortgages.

And "scant" regulation, if taken to the financial system as a whole, would prevent bubbles from emerging in the first place.

Bubbles are the product of monetary manipulations, aka regulations.

I would consider interest rate targeting to be a regulation. The most important one, at that.
Quote

Scant is being nice.  It was more like 'cheering on the banks' than 'scant regulation'.   and when did the toxic mortgages start?  you know the answer. Not wanting to know doesnt make it go away.

The world wide financial system is only a few shades away from the complete central planning of capital markets.

I know this is not something commonly heard or said, but it is the case.
Only the individual thinks. Only the individual reasons. Only the individual acts. Ludwig von Mises

Offline Vern

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Re: the "supposed" fiscal cliff
« Reply #98 on: February 05, 2013, 04:21:37 PM »
And "scant" regulation, if taken to the financial system as a whole, would prevent bubbles from emerging in the first place.

er uh toward, I was clear. 'Scant' was being nice.  Try "non exisitent" or "cheering on the banks".  the OCC replaced 700 state regulators with 40.  And the 40 spent alot of time fighting the state regulators who tried to do their job. 

the deriviatives, bonds and CDOs  based on mortgages would not have been a problem had the bad mortgages not been written in the first place.  in 2006 over 50 % of all loans were No Doc loans.  again 'scant' is being nice.

 

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