Comments on: Slouching towards nationalization

By: TNT

TNT — Tue, 02 Dec 2008 00:22:07 +0000

Ethics - We have lost sight of an honest day’s work for an honest day’s pay.

Careful management - We have indulged our wants without the taxes or the prices or the cash to pay for them.

Oversight - Public relations and spin have replaced disclosure and transparency; casual yet complex accounting and accommodating rating agencies left us blissfully unaware of the problems, and we revelled in our ignorance.

By: Hand in Cookie Jar

Hand in Cookie Jar — Sat, 29 Nov 2008 19:13:06 +0000

The Big Roulette Wheel of Capitalism and has been turning around faster and faster for ten years now with the big players borrowing lots of money from the house (and each other) to place even larger bets each day. The little players can barely see over the table to place just one chip on the table. But the wheel has an unseen yet inherent principal of physics attached to it. It is simple……..the ball must fall to the center sometime.

Well, the ball has finally fallen. Many of the big players placed too much borrowed money on Black. The ball instead fell on Red. The House says all wagering had ended and now demands that the losers pay the House.

But the big players are out of cash…..they bet wrong on Black. They owe the house very large sums of money. They cannot pay. They plead their situation to the House and make all kinds of excuses as to why they bet wrong. The car valets at the main door take the keys to their GM’s, Chryslers, and Ford F-250’s in the parking lot.

They find a glimmer of hope………Hank and his buddies are at the cash window with the BEN FED chairman willing to bail them out. They give the biggest losers more free money to pay the game again. Suddenly the big losers rush to the cash window for money………….what happens next?

In their rush to the cash window they ignore all the little people and many get trampled……….they have to cash-in their 401K’s, IRA’s, and other savings to keep their tiny houses and pay the bills. They have no faith left in the system.

They wake up one morning and realize they were lambs for the slaughter.

By: A. C. Hinkle

A. C. Hinkle — Fri, 28 Nov 2008 05:15:54 +0000

What is going on in the financial world is not an accident. A blind man could see more than that with his cane. When banks won’t make business loans because the get much greater returns from credit cards, and people can buy homes for as little as 2 to 4% with an adjustment in five years. Anyone with any amount of financial savy, knows that the bubble will burst. I was a small mortgage broker and I would not make any of those loans though the banks were pushing me to do so. It was easy to see that the people who needed that type of loan could never repay the debt at the time the loan would be adjusted to the full going rate of the day. The banks knew this, but they were in hopes that inflation would increase the value of the homes so that at the time they were reposessed their assetts would be secure.
Credit card debt is never ment to be paid off. If you ever buy anything new, the minimun payment will not pay the debt, but the banks don’t care whether the debt is paid or not so long as there is a constant flow of intrest coming in. If the debt is paid, they have to reloan the money, if it isn’t paid then thay just collect the interest. Lend at 18% to 21%, take off two to three percent for bad debt and you have a constant inflow of 16% to 18% and not have any risk. Why would you ever want to lend on a business with risk? The big banks have financed both sides all of the wars, with the exception of the Civil War, that we have ever fought. Wars create waste and waste has to be replaced, which can only be done from borrowed money. When we lend to a foreign country, there is never any hope of the debt ever being paid, they only want the interest. Let the banks solve the problems that they have created. You will find that the big banks will not go under, only the smaller ones, as the big banks controll the Federal Reserve.

By: A. C. Hinkle

A. C. Hinkle — Fri, 28 Nov 2008 04:44:06 +0000

The banking system has brought the crisis on itself, now let it figure out how to solve it. They loaned out money for housing that was as low as one third the actual lending rate. People who had those loans were paying far less than the actual interest and therefore loosing equity in there homes. This allowed people to by far beyond their means to pay. They were buying million and multi million dollar homes with the hopes that by the time the loan was due to be reset to the real interest rate, that they would be able to handle it. At the same time auto loans were put on longer terms so that they could buy hundred thousand dollar automobiles to go with their milion dollar homes. To bail out the big banks is to place a burden on the American people that will do away with freedom in our country. Someone has to pay the debt and no one can and still survive. Bailing out the banks does nothing to curb inflation in fact it will raise inflation by trillions of dollars. Those are dollars that the poor and middle class must pay. The best thing that can happen to America is to let the big banks along with those who have used unwise spending go bankrupt. Yes, this will throw the country into a depression and times will get very hard for awhile, several years, but the inflation that the bailout will create will only make the eventual depression harder and longer. The nation needa to go back to the gold standard and put something behind the dollar, which now is only writing on a piece of paper. The federal reserve needs to be owned by the government and not by the big money people. The free trade agreement needs to be done away with and the jobs brought home. Do we not realize that if we went to war with China or one of it’s allies that we could not even put shoes on our soldiers. We couldn’t buy steel to build machinery with as most steel now comes from Japan, which has no defence against China. We in America need to quit living in a dream world and start living in reality. We need to face the fact that money is not free, we don’t need million dollar homes. If we think that there is a magic way out of this we’re wrong. Buying out or bailing out the big banks puts us in the exact position that the people living in the comunist countries were under for many years. Let’s face it, whoever bails out the banks controlls the world, they decide who is going to pay for it and how it is to be done. Be assured that it won’t be the money people and that the banking system will only get worse. Fiat money has to be done away with, that was a plot by the banking system to allow them to lend as much as ten times what their actual assetts were and the American people bought it because it was named Federal Reserve and the government doesn’t own one dime of it.

By: Johnny Wiseguy

Johnny Wiseguy — Thu, 27 Nov 2008 20:20:06 +0000

Dave Goodfellow, about your “massive debt-forgivness” proposal. In today’s economy, most people’s savings are debts that the banks owe to their customers. A massive debt-forgiveness will wipe out the population’s savings and retirement funds as well as eliminating the insurance companies and the finance industry.

In fact, this is easy to do. Just keep issuing infinite amounts of printed money, until massive inflation wipes out all savings and debts, Weimar Republic style. The only problem with that, is that the Weimar Republic’s inflation didn’t create an economic boom followed by prosperity and democracy, but had a less happy consequence.

By: anton kleinschmidt

anton kleinschmidt — Thu, 27 Nov 2008 11:42:18 +0000

Let us assume that history will demonstrate that the various bail outs were the turning point in resolving the crisis. This is only the starting point because you make a pivotal statement which is central to the success of this initiative. You say…..”But governments are finding it increasingly frustrating, at least publicly, that they pour money into banks yet see little in the way of lending come out the other end.”

The people in the various troubled banks who caused the crisis are not capable of sorting out the problems. They are deal making hot shot movers and shakers with no lending skills. What is needed is people who can:

1/ Work on a recovery program of regularising all the non performing bad loans
2/ Use the injection of government funds to make GOOD well structured new loans.

We are talking about experienced lending and risk managers. I suspect that one of the reasons why new loan flows are so constipated is because there are simply not enough good lending bankers left to recover all the bad loans and make new loans. The banking industry is top heavy with all the wrong skills and they need to get the right skills on board PDQ

By: goldchest

goldchest — Thu, 27 Nov 2008 11:20:19 +0000

US Treasury and Federal Reserve are throwing a lot of good Money after bad.They are behaving exactly as the reckless Wall Street Bankers did,without thinking of consequences.If printing Currency can rescue the US Economy none of the African nations would still be poor.
Credit pipelines are jammed because Solvency of Firms is the real issue.Governments and Central Banks cannot play God by saving weak Firms falling prey to dynamic Business Cycles. The results of reckless Fiscal profligacy now being enacted will set back Economic progress for America,by many decades.America is putting Paulson and Bernanke through a tough test in Basic Economics.I am giving them 1/10 for their solutions.
Where are the Credit rating Jokers? AAA for America?Do these farts know the A B or C of Economics?They are going to be sued for Billions.Will the Government bale them out too?

By: Tang kin Meng

Tang kin Meng — Thu, 27 Nov 2008 10:30:21 +0000

Great, the bright sparks responsible for this mess are given tax payers life lines to continue. These are the criminals who are responsible for this sinful crime are now claiming economic armaggedon if they are not rescue. So US government, Fed, Treasury provides more tax payers money.
See they are bright sparks. After milking one round, they are now on round two. With the rescue packages to them they can now do a lot of share buy back, push the share price up, sell their portion they own, maybe exercise options, keep their high paying jobs, corporate jets, declare more bonuses for themselves. Yes continue to throw more life lines to these Ivy Leagues crooks. Where is the transparency when the money goes to them? Are there any clear distinction on what is and not distressed assets? Are they colored differently? Wake up America. Your are still sleeping.

By: sanjay

sanjay — Thu, 27 Nov 2008 03:03:51 +0000

I agree with james that no one knows what they are doing with all these bailouts. One thing is certain that it is the end of American style of capitalism because we need Chinese to buy our debt. I wonder why our great business schools have not come up with any other solutions to fix the economy.Even Harvard Business School finances is in a mess now. Wonder when will they dump their case methodology and begin to reeducate themselves on the “fundamental of economics” rather than wasting time devloping exotic financial engeneering derivatives which have brought about this unprecedented crisis.

By: Jim Edgcomb

Jim Edgcomb — Thu, 27 Nov 2008 02:26:26 +0000

James Saft is an artist…. Once again he offers up scary scenarios, but fails to supply any solutions…. True artistry at work….