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Posted on 5/16/17 at 8:22 am to TigerFanInSouthland
quote:
quote:
but markets (and consumers) are not always rational.
Yet you think that the government is always out for the good of the people?
Not always, but under specific circumstances, yes.
FDIC insurance wouldn't exist if financial markets were perfectly rational. Again, it's a prisoner's dilemma for the credit consumer, and the incentives are not high enough in difficult circumstances to break the problem and get consumer behavior into equilibrium.
Do you think banks have leverage ratios and capital requirements out of the good of their hearts?
This post was edited on 5/16/17 at 8:24 am
Posted on 5/16/17 at 8:23 am to TigerFanInSouthland
yes
Posted on 5/16/17 at 8:34 am to AbuTheMonkey
I guess what it comes down to for me is the government set the "too big to fail" precedent, so they bailed em out. Well know, who's to say that we're just not headed towards another huge recession or depression? Because once they set that precedent, why shouldn't I believe that all those companies aren't doing even more shady shite that we don't realize at the moment? Hell, if it blows up in their faces, they're backed by the full faith and credit of the United States Government.
The problem that I see with that is, what happens when it happens again and we can't bail them out? I don't think that I'll ever see a federal tax rate of 50% but that seems to me like that's where we would be heading if another recession broke out and it was bad enough. If there weren't riots in the streets the last time, there most definitely will be for this one. Because what it sounds like to me is they put a rather large band aid on a bullet hole.
The problem that I see with that is, what happens when it happens again and we can't bail them out? I don't think that I'll ever see a federal tax rate of 50% but that seems to me like that's where we would be heading if another recession broke out and it was bad enough. If there weren't riots in the streets the last time, there most definitely will be for this one. Because what it sounds like to me is they put a rather large band aid on a bullet hole.
Posted on 5/16/17 at 8:42 am to LSURussian
quote:
No. The banks all repaid the loans they received plus paid interest.
They also had no interest loans, the proceeds of which they invested in government bonds which earned interest, so they were being paid by the government to borrow the government's money and lend it back to the government.
quote:
Enough banks failed to maintain market discipline, including Lehman Brothers
And anybody with a brain knew they wouldn't voluntarily exercise market discipline, which is why there needed to be regulation on what they could do with money (both their own and other people's), but certain people decided that deregulating banks was a good idea. Iceland made the same mistake and practically collapsed their economy.
quote:
A large part of the bad home loans were at the behest of the federal government which is probably why your dad wisely got pissed at Barney Frank.
The government encouraged banks to lend the money, but it was the financial firms that came up with the ridiculous securities schemes that caused the crisis, which is why your dad was a moron to blame Barney Frank.
Posted on 5/16/17 at 8:43 am to Nuts4LSU
Posted on 5/16/17 at 8:51 am to Nuts4LSU
Wait, so you mean to tell me that Barney Frank wasn't a key proponent for the banks to lend money to people that could never afford to pay it back so they all defaulted?
Posted on 5/16/17 at 8:53 am to TigerFanInSouthland
If you are interested in learning more about what happened I would recommend the book "Too Big to Fail" and "The Quants" . Also I would recommend "Lords of Finance" which is goes into the causes of the Great Depression.
Posted on 5/16/17 at 8:53 am to TigerFanInSouthland
quote:
I guess what it comes down to for me is the government set the "too big to fail" precedent, so they bailed em out. Well know, who's to say that we're just not headed towards another huge recession or depression? Because once they set that precedent, why shouldn't I believe that all those companies aren't doing even more shady shite that we don't realize at the moment? Hell, if it blows up in their faces, they're backed by the full faith and credit of the United States Government.
I said it before in this thread, but you are correct about this: the moral hazard of TBTF was/is the biggest issue of the whole thing.
quote:
The problem that I see with that is, what happens when it happens again and we can't bail them out? I don't think that I'll ever see a federal tax rate of 50% but that seems to me like that's where we would be heading if another recession broke out and it was bad enough. If there weren't riots in the streets the last time, there most definitely will be for this one. Because what it sounds like to me is they put a rather large band aid on a bullet hole.
The banks aren't exposed right now like they were last time. People learned to pay attention to asset-backed securities, and banks were (still are, arguably) really finicky about credit for years afterward. Slow credit liquidity is arguably an even worse problem for us than bailing the banks out, so you're in a bit of a pickle with this: basically, choosing the better of two bad options.
Again, the government has had a role in this for more than a century. We had regular bank runs and financial crises about once a decade until we set up infrastructure to counteract the problems we face when credit goes to shite.
Posted on 5/16/17 at 9:11 am to AbuTheMonkey
quote:
The banks aren't exposed right now like they were last time. People learned to pay attention to asset-backed securities, and banks were (still are, arguably) really finicky about credit for years afterward. Slow credit liquidity is arguably an even worse problem for us than bailing the banks out, so you're in a bit of a pickle with this: basically, choosing the better of two bad options.
Ah, I see.
Posted on 5/16/17 at 9:13 am to Nuts4LSU
quote:
The government encouraged banks to lend the money, but it was the financial firms that came up with the ridiculous securities schemes that caused the crisis, which is why your dad was a moron to blame Barney Frank.
quote:
"I want to roll the dice a little bit more in this situation toward subsidized housing."
The moron is you.
Except dishonest moron would be more accurate.
Posted on 5/16/17 at 9:27 am to Havoc
Computerized trading on securities composed of weak loans.
Separate that from loaning money to people who didnt make good.
Rich people bought those securities. Remember lincoln s and l? They were paying 10% when i was getting 2% at wells fargo.
When real estate market fell, lincoln fell.
People were losing their shirts after oklahoma and north Texas real estate fell. People who bet on lincoln s and l were made whole even though they bet over 100k. 1/2 trillion of our tax money bailed out rich bettors.
Thank mccain and bushes.
Separate that from loaning money to people who didnt make good.
Rich people bought those securities. Remember lincoln s and l? They were paying 10% when i was getting 2% at wells fargo.
When real estate market fell, lincoln fell.
People were losing their shirts after oklahoma and north Texas real estate fell. People who bet on lincoln s and l were made whole even though they bet over 100k. 1/2 trillion of our tax money bailed out rich bettors.
Thank mccain and bushes.
Posted on 5/16/17 at 9:31 am to Nuts4LSU
quote:
And anybody with a brain knew they wouldn't voluntarily exercise market discipline, which is why there needed to be regulation on what they could do with money (both their own and other people's), but certain people decided that deregulating banks was a good idea. Iceland made the same mistake and practically collapsed their economy.
Wait, so we're for heavy government regulation but against government intervention?
Posted on 5/16/17 at 9:39 am to ksayetiger
quote:
I think the rational was to prevent another great depression.
Yep. The powers that be felt the world was on the edge looking down.
Depressions suck. I listen to my grand parents and their friends talk about their lives during the Great one. Not a happy place. WW2 was the kicker that got us out of the Great one. The destruction of so many world's economies/productivity capacity lead to the rise of the USA in the 50s and beyond.
I don't think today's USA population is ready for something like that. I mean, with technology and instant news, the panic effect would be a tidal wave. I can easily see the next big Depression having some serious short-term effects. Big riots in major metro areas. Shortages. etc. These events would fuel further insurrections and a possible snowball effect.
Posted on 5/16/17 at 9:44 am to TigerFanInSouthland
quote:
I understand that, but to me, that's a horrible approach to that kind of problem and that's not the way that the American economy is supposed to work. Businesses fail and businesses succeed. It's not the government's place to pick and choose who fails and who succeeds. It's on the consumer.
That is a text book definition.
In reality, the government has always had a hand (in crisis moments) of how fails and who lives. The USA is not a pure capitalism model.
Posted on 5/16/17 at 9:50 am to tgrbaitn08
quote:
I don't know about that. Banks are being more stingy with their money right now than I've seen in 10 years. Businesses are hurting right now because banks won't lend money to companies to buy equipment to grow their businesses. 5-10 years ago banks were giving money away, not anymore.
quote:
This year, tepid growth in commercial and industrial loans and a drop in 1-4 family mortgages could not offset the credit card loan decrease, and total loans and leases fell to $9.297 trillion at March 31 from $9.305 trillion at Dec. 31, 2016. C&I loans sold in U.S. offices of banks increased by just 0.9% during the quarter, and residential property loans, including home equity lines of credit, fell by 0.6% during the quarter. C&I loans and 1-4 family loans make up 19% and 26% of the industry's total loans & leases, respectively. Also contributing to the decline in loans was a rare decrease in auto loans, which fell for the first time since the industry began fully reporting auto loan balances in 2011.
Loan growth dip for the first time in four years. I believe your 10 years timeframe is a bit large.
Posted on 5/16/17 at 9:54 am to LucasP
quote:
was pretty close. Not bad for doing it in my head.
It was literally 10+13. I'm more concerned about your retarded arse having the right to vote than OP who is trying to learn.
Posted on 5/16/17 at 10:17 am to TigerFanInSouthland
quote:
Seems to me that a lot of tax paying dollars went into bailing out the banks
Bailout isn't really correct, they were more like loans. The government recouped every dollar and made roughly $15billion in profit. There was collateral in the form of equity in the companies receiving money. Once the payments were made and the stock was sold it worked out well.
Posted on 5/16/17 at 10:22 am to jbgleason
quote:
Between this thread and the Madoff movie, I am wanting to go cash out my accounts and hide the cash in my mattress.
A) I doubt you have the kind of money it takes to get into hedge funds
B) Go ahead and do hide your money. That 0% interest will really help set you up for the future.
Posted on 5/16/17 at 10:22 am to Alltheway Tigers!
quote:
Loan growth dip for the first time in four years
quote:
I believe your 10 years timeframe is a bit large.
Do you have a 10 year graph? Im still right
Change the 10 years to 4 years and I'm still right.
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