Hint at What Caused the Financial Meltdown

[Tempest]

Originally Posted By: Gary Allan
You're in a fishbowl, pal.
That fish bowl gets larger and smaller over time. It is NOT fixed.

Let me see if I can get a glimmer of realization here. Do you like the way our society is evolving/devolving? NO Who is the most influential in forming the absolute basement on where our society shall reside in terms of resources? Government Do you see a spire forming and continuing to climb while the rest of your surroundings crumble and decay? Yes, just look at government spending.
Who ultimately called those shots? Government, they can point guns at you and take your money/possesions The beneficiaries of the evolutions/devolutions.

 

[BrianWC]

I don't mean perpetuating an idea of privilege and entitlement. But I do see how cronyism tempered by real expectation of performance/results can be excused to a degree. I mean, if you know someone has the same background and life experiences, why wouldn't you expect them to have the same potential for success? Now, using this system to purely for greed and to the detriment of others is a different matter.

Perhaps I'll show my fraternity roots with this, but I think a fitting quote on the exercise of advantage comes from Robert E. Lee.

He stated:

The forbearing use of power does not only form a touchstone, but the manner in which an individual enjoys certain advantages over others is a test of a true gentleman. The power which the strong have over the weak, the employer over the employed, the educated over the unlettered, the experienced over the confiding, even the clever over the silly -- the forbearing or inoffensive use of all this power or authority, or a total abstinence from it when the case admits it, will show the gentleman in a plain light. The gentleman does not needlessly and unnecessarily remind an offender of a wrong he may have committed against him. He cannot only forgive, he can forget; and he strives for that nobleness of self and mildness of character which impart sufficient strength to let the past be but the past. A true man of honour feels humbled himself when he cannot help humbling others.

 

[TooManyWheels]

Originally Posted By: Tempest

Giving loans to people that could not afford it and the resulting property devaluation due to high amounts of defaults is what has devalued all of these bank's holdings (and those derivatives based on them) and made them broke.


Which takes us back to the original distinction I made. The government subsidized the mortgages so that the purchase price would be within the legitimate range of more people, based on their ACTUAL incomes. The people who actually had those incomes would have been able to pay them off. This is not trickery, or bad accounting, just basic banking loan analysis. The fact that the government was paying part of the tab did not increase their possibility for failure.

But then you had the industry signing up people who did not even meet the reduced requirements, betting on their chances of default, and then betting many more times against THE SAME ASSETS. Then the banks reassured everyone that these were valid transactions, when in fact there was nothing behind them. So now what would, at most, if you count in all subprime mortgages be a 1-200 billion problem, is now a trillion and counting, as financial companies find ways to sneak more and more of their miscellaneous bad gambles into the bailout coverage. Notice that we have evolved way beyond the fact that the government bought down the rate.

 

[Gary Allan]

Originally Posted By: Tempest
Originally Posted By: Gary Allan
You're in a fishbowl, pal.
That fish bowl gets larger and smaller over time. It is NOT fixed.

Let me see if I can get a glimmer of realization here. Do you like the way our society is evolving/devolving? NO Who is the most influential in forming the absolute basement on where our society shall reside in terms of resources? Government Do you see a spire forming and continuing to climb while the rest of your surroundings crumble and decay? Yes, just look at government spending.
Who ultimately called those shots? Government, they can point guns at you and take your money/possesions The beneficiaries of the evolutions/devolutions.



I don't agree. They're pwn'd and are doing what they're supposed to do by those who pwn them. To deny this is naivete in the most fundamental of views if stated kindly. Special interest designs our government to serve them.

How hard is that to see?

 

[Al]

Originally Posted By: Tempest
This has been caused by the government actively trying to give away houses to those that can't afford them in order to buy their votes.
It is that simple.


Yes it is really that simple. Of course this not the only reason but as the dominoes started falling this one is right up there.

And now the nice thing is that those folks will have their houses owned by the government who will never be able to kick them out (for obvious reasons). Oh..did I mention that this will occur ..again..with borrowed money from the government.

The country was built on financial responsibility and personal responsibility. We'll see how long it takes us to wind up like Iceland. Wealth distribution ftl.

 

[moribundman]

Originally Posted By: Al
The country was built on financial responsibility and personal responsibility.


I'm not sure if that's correct. Can you support this claim?

 

[TooManyWheels]

I thought it was built on stalwart "Men of Steel" taking risks, willing to bet it all on a roll of the dice in pursuit of their dreams...

The hardy entrepreneur, etc, etc,...

 

[TooManyWheels]

By the way, the financial and business communities use the word "leverage" a lot. Is that part of the responsibility that made this country great, or is that something else?

 

[Steve S]

Originally Posted By: TooManyWheels
I thought it was built on stalwart "Men of Steel" taking risks, willing to bet it all on a roll of the dice in pursuit of their dreams...

The hardy entrepreneur, etc, etc,...
there is no risk involved when they are bailed out with taxpayer $$$$

 

[Gary Allan]

Originally Posted By: Al
Originally Posted By: Tempest
This has been caused by the government actively trying to give away houses to those that can't afford them in order to buy their votes.
It is that simple.


Yes it is really that simple. Of course this not the only reason but as the dominoes started falling this one is right up there.

And now the nice thing is that those folks will have their houses owned by the government who will never be able to kick them out (for obvious reasons). Oh..did I mention that this will occur ..again..with borrowed money from the government.

The country was built on financial responsibility and personal responsibility. We'll see how long it takes us to wind up like Iceland. Wealth distribution ftl.



Errr ..and houses just appeared out of thin air ..or did people that owned houses just decide to leave them for the "good of the urban dwelling economically depressed" (if I read your implications here)????

The leading edge of the flame front was all "gutter dwellers" that are now "squatters"?????

 

[Tempest]

Quote:
The people who actually had those incomes would have been able to pay them off.

That is a matter of opinion. With debt loads of 50% or higher, It's very iffy. I'm not saying that there wasn't shady things going on, but it's a very small part of the problem. The conforming specifications on these loans were very open.
Fanny and Freddy had a directive to get more people into homes. This directive just so happened to be good for the people in charge bonuses so they were more than happy to go along with it.
Quote:
Notice that we have evolved way beyond the fact that the government bought down the rate.

If Fanny and Freddie did not exist, there would have been nothing to base other shady activities on.

A very good read written before the final melt down on the derivatives.
http://www.economist.com/finance/displaystory.cfm?story_id=11751139

 

[1sttruck]

This seems to be a major development, as it's acknowledgement that the current global system doesn't adequately handle the risks associated with US 'free market' doctrine.


http://www.washingtonpost.com/wp-dyn/content/article/2008/10/18/AR2008101800797.html

Global Summits Planned to Tackle Economic Crisis

President Bush announced plans yesterday to host an emergency summit of leaders from the world's top economies to map out a response to the global financial crisis, urging a renewed effort to secure the basis of "democratic capitalism."

The objectives set for the summit are every bit as far-reaching as those of the 1944 landmark meeting in Bretton Woods, N.H., attended by 44 Allied nations to remake the global financial system after the Great Depression. But while that earlier gathering was devoted to coordinating monetary policy and setting up an international currency exchange system, the summit announced yesterday at Camp David would aim to overhaul the regulatory framework for global finance.

The agenda would address a wide range of challenges such as increasing the transparency of markets, revising the rules that govern the flow of investment around the world and improving oversight of big banks, ratings agencies and hedge funds, a senior White House official said. Bush warned, however, that these reforms should not come at the expense of free markets.

 

[oilyriser]

Democratic Capitalism. I'll add that to my list of oxymorons.

OR does that mean the prez has finally acknowledged he advocates that "the people" should own the means of production?

 

[ZZman]

Money is not evil...the love of money is. What is your God...Money?

What will you do for your God?

 

[1sttruck]

Love of money ? This stuff is like crack for rich people; it melts theirs brains and they can't get enough of it. Even the 'staid, conservative Swiss' acted like druggie rock stars with this stuff.

http://www.swissinfo.ch/eng/news/busines...&rss=true&ty=st

biggest bank, UBS.
The Swiss National Bank has agreed to put SFr6 billion ($5.23 billion) into UBS, in a move that aims to strengthen the bank's capital base and reduce its balance sheet.

The surprise move by the cabinet, the Swiss National Bank (SNB) and the Swiss Federal Banking Commission was announced on Thursday morning.

It includes lending UBS up to $54 billion so that it can part with securities that have gone bad since the start of the worldwide financial crisis.