The Great American Bubble Machine (or why we're screwed)

[Aabidano]

Saw this on b3ta Fri, rings true with a lot I've read elsewhere. Without heavily re-regulating the finance industry we're screwed in the long term.

Recently finished reading a book on the rise and fall of US Steel (Homestead - ISBN-10: 0679748172), Lehman Bros (among others) held that hammer that drove the last few nails in that particular coffin.

The Great American Bubble Machine
From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression -- and they're about to do it again

The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates.

http://www.rollingstone.com/politics/ne ... 405?page=1

I'd vote for a candidate that went looking to dismantle this mess, unfortunately one will never arise, if one did Americans don't have the attention span to understand the problem.

Case in point that the liberal\conservative crap spewed by politicians and the news is just that, a load of crap to keep people divided\distracted.

[miir]

Thanks to a ton of regulations introduced in the 80s, the Canadian financial industry doesn't face the same problems.
I don't think any of the Canadian banks needed a bailout.

[Fairweather Pure]

The entire problem with America is the same as it's always been: Class Warfare. The Haves vs the Have Nots. Most everything else is just white noise. A distraction.

We're set up in such a way that when the shit really hits the fan, the rich are set for generations no matter what, so they don't really give a fuck about the plebes. It's going to be just like what happened to the former USSR.

Our financial system was on the verge of collapsing and only one person went to jail, and the only reason Madoff was locked up is because he fucked with rich people's money. Everyone else can fuck right off. Well, after we bail them out with hundreds of billions of taxpayer dollars. THEN we can fuck off.

[Aabidano]

Thanks to a ton of regulations introduced in the 80s, the Canadian financial industry doesn't face the same problems

Thanks (in part) to deregulation in the 80s and 90s we've got the mess we're in.

[masteen]

NONE of these fucking banks NEEDED a bailout. What they needed was to be left to fucking die, so the banks who didn't take all these stupid risks could pick their carcasses.

Every single country that bailed their banks out is still floundering. Countries that let their casino-banks die are recovering.

[miir]

The problem with that is what about all the people gave these banks their money...

[masteen]

That sentence does not make sense. Please clarify and specify.

[Boogahz]

The people with money in those banks would be fucked.

[masteen]

Which group are we talking about? Because within that category (people who have money in G-S) there are two groups: large investors and small investors. The small investors got fucked even with the bailout, which the large made out like the fucking bandits they are even without.

So, again, what was the purpose of the bailout, given that it has stifled the economy of EVERY SINGLE COUNTRY that participated, while those that didn't (Germany and Iceland are two great examples) are recovering?

[Zaelath]

Which group are we talking about? Because within that category (people who have money in G-S) there are two groups: large investors and small investors. The small investors got fucked even with the bailout, which the large made out like the fucking bandits they are even without.

So, again, what was the purpose of the bailout, given that it has stifled the economy of EVERY SINGLE COUNTRY that participated, while those that didn't (Germany and Iceland are two great examples) are recovering?

As an Australian, can I ask, "every single country"?

Not that we particularly needed to bailout banks (as I understand it most/all of TARP has been paid back anyway...), but we did spend into the GFC.

Now assuming most/all of TARP has been/will be paid back with interest, can I suggest the biggest burden on your economy is lack of consumer confidence, and that would be even worse if large financiers were allowed to collapse taking all their debtors with them (i.e. the people that have loans with them would ALL have been subject to margin calls when refinancing would have been impossible so would have needed to file for Chapter 11 at *best*)

It's popular to moan about welfare and particularly upper/middle-class welfare, but in this case I tend to agree with the Bush government's economists that it would have destroyed your economy to great depression levels.

[Siji]

the biggest burden on your economy is lack of consumer confidence

Or perhaps corrupt banks and robo-signing forclosures and not lending money they were given for the specific purpose of doing so, etc, etc, etc. It's not a matter of consumer confidence, it's a matter of not having any farking money to spend because there's no farking jobs. Companies are either (a) realizing they're getting by with only 30% of the workforce they had previously regardless of how strained those 30% are or (b) shipping out jobs to Argentina or India or China or..

You know, I used to think it was pretty fucked up to take a persons credit score into account when considering them for a job (which was non-financially related) but what's even more fucked up is discriminating against people who are unemployed and trying to find a job. Putting out a job ad saying "Must be employed" is akin to "Must be young white male". Most people aren't unemployed by choice in the same way they aren't a minority by choice. Only in America..

[miir]

That sentence does not make sense. Please clarify and specify.

Wow, that was a bit of a mess grammatically.

An example... What about those people who have mortgages with those banks.

[masteen]

That sentence does not make sense. Please clarify and specify.

Wow, that was a bit of a mess grammatically.

An example... What about those people who have mortgages with those banks.

If a bank folds while holding your mortgage, it will get bought by another bank. Net affect on a loan in good standing? You now write the check to a different bank.

The people who were having issues meeting their payments didn't get a fucking bit of relief because of the bailout money.

[miir]

I knew that and it serves me right posting before I've had my coffee

[Boogahz]

It isn't always that simple. Shitty loans have less of a chance to get picked up by a "good" bank. They are more likely to move on to the next bank to fold. Sure, the borrowers may not "qualify" for the mortgage they have, but it was also the bank's fault for giving it to people that it knew shouldn't have it. I ran into this constantly while working in pre-foreclosure for a mortgage loan servicer. Some banks did better than others when it came to qualifying their borrowers.

Now, would you be telling those people "too bad?" It doesn't matter that the rich would be "more protected" than the "less rich." They would all be screwed. Bailouts without nuking the boardrooms is the part that bothered me. Having the same decision-makers in power that got the companies into the situation stick around after bailing them out...dunno, but doesn't sound smart to me.

[masteen]

The problem is that the people in the boardrooms are the SAME FUCKING PEOPLE who are empowered to fire and/or arrest the executive assholes. Goldman-Sachs has their fingers in every aspect of the government.

Wanna know why gas is still $4 a gallon? Because G-S lobbied against (and succeeded) increased regulation in the commodities futures markets. We have another 4-5 years before THAT bubble pops and we're back to blaming those greedy fucking teachers and firemen for ruining our economy.

[Leonaerd]

The article of our times. Should be required reading for Seniors in High School.

[Aabidano]

The article of our times. Should be required reading for Seniors in High School.

You'd be teaching them a lesson they won't be able to learn for another 5-10 years.

[Zaelath]

That sentence does not make sense. Please clarify and specify.

Wow, that was a bit of a mess grammatically.

An example... What about those people who have mortgages with those banks.

If a bank folds while holding your mortgage, it will get bought by another bank. Net affect on a loan in good standing? You now write the check to a different bank.

While that sounds sensible, it doesn't happen if the house is worth less than the loan. Hell, you had people getting margin calls on loans in good standing just because the loan was for more than the house was currently worth. Which in a lot of cases was the basis on which the loan was *established*

You need far more regulation, but you spend far too much time praying to the God of "the market knows best" to put it in place. For example, you could regulate that such forclosures were illegal.

That said, as Boog said, once the entire bank is in receivership you're not going to get a $300k mortgage with $200k of security in a market that's flat/declining.

Though that could also be somewhat alleviated by not allowing lending over 90% of the value of the property, mandatory insurances, etc, etc. None of which USAdians are comfortable with.

As far as I can see you're in a fuckpile of your own ideological making and the only way to avoid getting one in the ass is to get to the top of the pile.

[masteen]

As far as I can see you're in a fuckpile of your own ideological making and the only way to avoid getting one in the ass is to get to the top of the pile.

This is the root of the problem. Most US voters are too stupid to actually understand these kind of financial complexities. Fuck, they're too stupid to understand that the only way to balance the budget is to either cut from one of the big four catagories (SS, Medicare/caid, Defense, and Entitlements) or to raise taxes. Which is why the GOP has been able to feed them a never ending train of lies for 30 years, all the while devaluing the currency and moving their assets offshore to avoid that invisible tax.

[Aabidano]

Think I posted this before:

...describes the rise of conservatism and the far right in the social and political landscape of Kansas. He finds it difficult to understand the overwhelming support for Republican party politicians, given his belief that the economic policies of the Republican party do not benefit the majority of people in the state. He also claimed that the party fails to deliver on the "moral" issues (such as abortion and gay rights) which brought the support of cultural conservatives in the first place, which in his view deepens a cycle of frustration aimed at cultural liberalism

http://en.wikipedia.org/wiki/What%27s_t ... ith_kansas

Suppose a I owe Beck and Limbaugh's followers a word of thanks for being gullible enough to make me go look at what's actually happening so I could argue with them.

I still consider myself "theoretically conservative", though not at all in a Fox news fashion.

[masteen]

I almost always agree with Ron Paul in theory.

In practice, I favor realpolitik over Normative economics. The gubmint is NEVER going to allow itself to be shrunk in any kind of significant way.

Given that, our choice is real simple: Do we want to take a little more from the "haves" and give a little more to the poor, or do we squeeze the workers until they revolt?