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  1. #41
    mountain surfing nomadic's Avatar
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    Quote Originally Posted by pure_mercury View Post
    His policies had no bearing on the insane productivity gains made by American workers in the 1990s, though. That was the #1 reason our economy grew. Bill Gates >>>>>> Bill Clinton when it comes to affecting economic growth in the '90s.
    it is amazing that this entire time that bush has not said anything about restoring confidence in money markets and bank deposits because im sure this guy was around during the s&l crisis. polls have totally leaned towards obama during the last 10 days. this guy has a total nervous breakdown during tough times... the market ticked down during bush's "speech" today when he said he is "working hard". man...

    lets say we had two economies to bet on in the future. one is clinton led, one is bush led, with all other variables remaining the same. lets say we have bernanke/greenspan, gates, etc... the same. im pretty sure i know which way i would lean towards for economic growth.

  2. #42
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    Quote Originally Posted by ptgatsby View Post
    Oh!

    In that case, it was because with the bailout of FMs, the market began to expect government bailouts across the board. Central to this issue is that management began making sub-par choices, such as AIG turning down other bank buyouts because a change of management was required. Letting Lehman fail was more or less a demonstration that the government was going to let you fail if they wanted.

    Why AIG? My instincts tell me that Lehman was left to fail because the government it wouldn't severely rock the markets. Places like AIG were more of a threat because they undermined the instruments themselves (ie: insurance via segregated funds would undermine an lot more than just the markets). The same goes with the FMs, although with the housing market (the sudden inability to get mortgage funding would literally collapse the market into the depths of the worst depression). It's actually notable - I was looking as Las Vegas, and the banks there won't issue mortgages to foreigners (including Canadians). This means that the prices won't have that support (ie: Rent multiple is reaching 100 - normally investors would step in here).

    It also sent a message that the government 'bailouts' are not nice, and that they had better pursue other options and/or take what is being offered. They come with big personal costs (ie: AIG has a new CEO), no protection for investors (it is in bankruptcy, as far as things go. Debt holders, perferred then common shares as it gets picked apart). The government is buying its assets just like a private company would, and is liquidating them. It's just doing it slowly and in a (hopefully) regulated way.

    (IMO, of course)
    This is correct.
    I am an ENTJ. I hate political correctness but love smart people ^_^

  3. #43
    mountain surfing nomadic's Avatar
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    Yeah, i've worked as a research associate at one of the biggest CDO^2 shops in the US and AIG is huge in the insurance of mortgage backed securities, providing liquidity, waterfall insurance, etc... basically most products to hedge the risk of investing in CDO's, MBS, ABS. If the insurance is gone, i can't emphasize how big the panic will be on a psychological, economic, and legal level, given the way that many of these MBS, CDO's are structured.

  4. #44
    Order Now! pure_mercury's Avatar
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    Quote Originally Posted by Modern Nomad View Post
    it is amazing that this entire time that bush has not said anything about restoring confidence in money markets and bank deposits because im sure this guy was around during the s&l crisis. polls have totally leaned towards obama during the last 10 days. this guy has a total nervous breakdown during tough times... the market ticked down during bush's "speech" today when he said he is "working hard". man...

    lets say we had two economies to bet on in the future. one is clinton led, one is bush led, with all other variables remaining the same. lets say we have bernanke/greenspan, gates, etc... the same. im pretty sure i know which way i would lean towards for economic growth.
    I didn't say one politician couldn't be better than another (I've been vocal about Clinton being a more consistent free marketeer than Bush several times), but that the POTUS is less important to economic growth than are the management of our largest corporations. As a figurehead, he has some value, and he can make good or bad policy decisions, but too much credit (or discredit) are attributed to Presidents by average people. Ever hear someone say "Gas is expensive because of George Bush?" That's idiotic.
    Who wants to try a bottle of merc's "Extroversion Olive Oil?"

  5. #45
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by pure_mercury View Post
    Ever hear someone say "Gas is expensive because of George Bush?" That's idiotic.
    I'm not so sure it is. You don't need direct control to have influence. Take, for example, the ability to wage war, or terminate an agreement to trade with oil-rich countries, or to put environmental protection acts that target refineries, or direct taxation.

    Granted, it takes groups of people to make things happen, but the people at the top have a lot of indirect power at their hands. Wrong, maybe, not but so impossible to be idiotic.

    Anyway, it is congress that needs to step up here, from what I know of American politics. Although I can say that I don't think any regulation would of passed the R-R congress/president, I doubt anything would of passed a R-D or D-R regulation. Maybe a D-D, but it is unlikely that would of happened without Bush to undermine the R dominated congressmen (scandals aside, of course).

  6. #46
    Order Now! pure_mercury's Avatar
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    Quote Originally Posted by ptgatsby View Post
    I'm not so sure it is. You don't need direct control to have influence. Take, for example, the ability to wage war, or terminate an agreement to trade with oil-rich countries, or to put environmental protection acts that target refineries, or direct taxation.

    Granted, it takes groups of people to make things happen, but the people at the top have a lot of indirect power at their hands. Wrong, maybe, not but so impossible to be idiotic.
    I am so sure it is. Dubya hasn't done any of those things except start an unnecessary war, and that hasn't affected oil prices NEARLY as much as have the gigantic rise in demand in Asia and OPEC enjoying very tidy profits. That type of comment comes from those who are simplistic politically and ignorant economically.


    Anyway, it is congress that needs to step up here, from what I know of American politics. Although I can say that I don't think any regulation would of passed the R-R congress/president, I doubt anything would of passed a R-D or D-R regulation. Maybe a D-D, but it is unlikely that would of happened without Bush to undermine the R dominated congressmen (scandals aside, of course).
    What kind of regulation would help here? Personally, not bailing out private organizations would be the best "regulation" I can think of. Losing money is supposed to be a risk. That is how the market lets you know you are doing something wrong. I can abide a government loan to keep an insurance company from completely collapsing, but not bailouts (for either corporations or for stupid people who took home loans they couldn't afford) that will be paid for by the American taxpayers. That really burns my ass.
    Who wants to try a bottle of merc's "Extroversion Olive Oil?"

  7. #47
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    Quote Originally Posted by pure_mercury View Post
    I didn't say one politician couldn't be better than another (I've been vocal about Clinton being a more consistent free marketeer than Bush several times), but that the POTUS is less important to economic growth than are the management of our largest corporations. As a figurehead, he has some value, and he can make good or bad policy decisions, but too much credit (or discredit) are attributed to Presidents by average people. Ever hear someone say "Gas is expensive because of George Bush?" That's idiotic.
    yeah i can see your point. then again, there is too much protection of CEO's and figureheads that resided over this crisis as well. thats a systemic risk along with the concept of "moral hazard" to some degree as well. while fingerpointing in general will lead to a crippling of the ability to find a solution, in the end, you have to reward the solution finders and the ones who had success. but the people who fail, should be punished. my personal opinion is that is as much of an issue as problem solving and moral hazard these past few weeks/years.

    clinton had a pretty good interview on cnbc right now about how he would handle this crisis. i'd love to see clinton, bernanke, and paulson in a room together right now figuring out the details.

  8. #48
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by pure_mercury View Post
    I am so sure it is. Dubya hasn't done any of those things except start an unnecessary war, and that hasn't affected oil prices NEARLY as much as have the gigantic rise in demand in Asia and OPEC enjoying very tidy profits. That type of comment comes from those who are simplistic politically and ignorant economically.
    I was talking about how you portrayed it as idiotic, when the people at the top wield a great deal of power to make the changes.

    I don't particularily think it had much to do with Bush's legacy, although I am not about to dismiss it as a factor. In the short and long run, it is always prices that end up changing the dynamics. Just as we are seeing lower consumption now, and will continue to see it for a while regardless of prices, prices should start to return to historical norms again soon. Probably.

    FWIW, demand has been increasing, but what factor analysis have you done that would tell you what is responsible? The closest I have seen come from the oil majors, but I don't look at pricing reports, only volume (I work for a company that ships oil). I highly doubt that supply is responsible for the run on gas prices - there are definite supply shocks (and in particular with gas, hurricanes have played a large role). And so has US laws, as I hear it.

    What kind of regulation would help here? Personally, not bailing out private organizations would be the best "regulation" I can think of. Losing money is supposed to be a risk. That is how the market lets you know you are doing something wrong. I can abide a government loan to keep an insurance company from completely collapsing, but not bailouts (for either corporations or for stupid people who took home loans they couldn't afford) that will be paid for by the American taxpayers. That really burns my ass.
    Not bailing out is not regulation. It is the faith that an unregulated market won't fail. The regulation that was needed was to close the loopholes around exotics and accounting standards. In short, the government needs to audit a certain level of financial companies to ensure that both of these things are properly accounted for. Then, the government needs to set acceptable standards for what constitutes exotics and define leverage limits.

    I rather like Canada's banking system, actually. You can see our newer review system here - http://www.osfi-bsif.gc.ca/osfi/inde...x?DetailID=294 The problem in the states were known, but no one was willing to call them on it. They were likely insolvent for years.

    No, I don't think an actual solution would ever of passed. Americans seem to treat the government like an enemy rather than a tool and tend to end up with exactly that.

    Now, I don't think we disagree on this particular situation (meaning the AIGs of the world), but regulation would of done a lot to prevent this. It's going ok so far, but all you need is a LTCM to pop up in the middle of this and all hell is going to break loose.

    I know how anti-interventionist Americans are, but I don't think many understand the depth of what is happening now. We aren't talking about a few companies that will learn their lessons and start over. There is no 'over'. If Fred and Fannie had collapsed, there would be no mortgage industry. It's important to understand how banks protect each other, normally, but here, the same banks were starting to fail. It could of been liquidated for assets - data centers, land, buildings - but the cascading effect would of been astounding. There was no one to bail out their business - to take over, I mean.

    It has been handled very well, in my opinion. It's going to continue to hurt, but it won't be shock that does traumatic damage now. There will be fallout - investors, confidence, etc. Lots of write downs coming. Probably some stagnation. Nothing like it could of been.

  9. #49
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by The_Liquid_Laser View Post
    I'm not sure about AIG. I know that Fanny and Freddie were bailed out, because the government caused their mess by privatizing them. They took bigger risks than would normally be reasonable, and most people didn't think anything of it. Since they used to be publically owned, most investors were betting that the government would back their loans if anything bad happened. Looks like the investors were right.
    Seeing people write crap like this makes me want to scream. The government did cause the problem, but not by privatizing anything. Everything, EVERYTHING, originated with the Federal Reserve inflating the money supply. Greenspan kept interest rates low by printing money. That made credit cheaper than the market dictated, which encouraged businesses to engage in counter-productive behavior. Intervention by the Fed distorted market signals. Bank behavior was actually very predictable, acting on these distorted market signals. Attempts to change bank behavior (calling them greedy and whatnot) will be counter-productive, because that only treats the symptoms, not the disease. The Federal Reserve is the culprit.

    The Fed is going to try to inflate its way out of this problem, too. And if they fail, they'll blame the 'market'.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  10. #50
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    Quote Originally Posted by Lateralus View Post
    Seeing people write crap like this makes me want to scream. The government did cause the problem, but not by privatizing anything. Everything, EVERYTHING, originated with the Federal Reserve inflating the money supply. Greenspan kept interest rates low by printing money. That made credit cheaper than the market dictated, which encouraged businesses to engage in counter-productive behavior. Intervention by the Fed distorted market signals. Bank behavior was actually very predictable, acting on these distorted market signals. Attempts to change bank behavior (calling them greedy and whatnot) will be counter-productive, because that only treats the symptoms, not the disease. The Federal Reserve is the culprit.

    The Fed is going to try to inflate its way out of this problem, too. And if they fail, they'll blame the 'market'.
    I agree that the Greenspan days led up to this problem, my gawd. that guy lied thru his teeth to congress that one time to protect his legacy at the cost of the entire usa... damm ayn rand philosophy... but i think there is one more systemic issue. the wall between i banking and commercial is gone. the commercial banks want to lower their BIS ratios and get loans off their books, and the ib guys want deal flow and package loans into credit investment vehicles. and the lawyers are more than happy to opaque the hell out of the products. having both commercial and ib under one roof... its too tempting to do this all over again later...

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