Just Let Them Die

[geni]

If there are no investment bankers, where is the money to start up new businesses gonna come from?

Historicaly shareholders.

Back when canals were being built the initial people behind the canal would hold town hall meetings to get subscribers.

Some lords might take some big stakes but smaller ones would be sold to merchants vicars and others. Some of the canals in costal areas would pick up retired navy offices.

 

[hamelekim]

Sorry... no you won't.

You can't tell if the "theories" hold or not because all economic situations are different, there are too many variables to say one recession / depression is exactly like the other.

If your theories hold true, they should be self evident in all situations. Either it's right or wrong.

You DO NOT now nor never will know (no matter how much you believe it to be true) what effect the current stimulus packages and bailouts are having.

I won't?

I think I'll be reading about it a decade or two from now when all the details come out. We will know very well whether or not the economic policies being followed right now were successful or not.

You think these stimulus packages are hurting, so be it, you are entitled to your opinion but it could be that they are helping immensely. It could be they are softening the inevitable face plant the economy is going to take over the next few months / years.

It could be, and you can base your economic decisions off of whatever you want to believe.

I choose to believe that people have been screaming for several decades that the inevitable conclusion to our fiat money is economic collapse through debt. This whole CDS thing just sped the process up after the killed all the laws put in place after the depression in 1929.

Only time will tell who is correct.

It could be that the bailouts and stimulus packages are going to prevent a much deeper recession / depression but when that enevitable bottom does hit you can easly say "look the bailouts didn't do anything" to your hearts content right? That's how everyone who plays the "prediction / politics" game are you are ends up spinning it when all is said and done.

I don't know. From what I've read, until the corruption, and opaque nature of the current financial system is dealt with these problems will not go away, and will actually get worse.

You can now can you? And do you have a way to prove that without the lending etc. things wouldn't have been much worse on their own? Of course you can't because your quote above is nothing but an opinion. It might be backed up by some economist but their opinion is still just an opinion as well because no one really knows what's going to happen.

I am REALLY getting sick of the doom and gloom. The world is not over, the sky is not falling and it's not the end of society as we know it. It's going to be a rough patch, things are going to be bad but they are going to get better.

I'm sure people were saying that before Mt. Vesuvius erupted too.

There are always signs if you choose to look for them. Once you find enough signs they become a pattern and then we see what is really going on.

Consider the fact that the banks said they were well capitalize, and yet all of the major investment banks that said so went under, or were bought up by others, so essentially went under.

I don't trust what they have to say because greed does funny things to peoples morals.

The financial arena needs to be heavily regulated so that "too big to fail" never happens again.

No one company should be able to bring down an industry let alone a country, or the world. Yet this is essentially what we saw starting with bear sterns.

You can believe bright sky's are ahead, but I kindly disagree with you.

Great, nice pick there Nostradamus.

LOL (just a joke, just a joke, easy tiger)

I felt the same thing, so did most folks who watched housing prices around the nation. $50,000 homes going for $300,000? Who doesn't see a problem with that?

Just because you were right on something many people saw coming as well doesn't make you right with what is coming next.... sorry.

Nope, and it doesn't make you correct either, we will have to watch what happens and look at what we are basing our beliefs on if we are wrong.

As it stands right now, the bank lending rates haven't increased in any significant way, and neither have the shipping numbers, nor other indicators that show the health of the US or global economy.

It might not be depression 2.0 but it is certain a deep, deep recession that will not be over by end of this year.

But again, we will have to wait and see if that is correct or not.

 

[hamelekim]

If there are no investment bankers, where is the money to start up new businesses gonna come from?
There has been a HUGE amount of incompentece in the Inverment banking industry, and a number of people in the management positions there need to have their butts fired, but let's not throw the baby out with the bathwater.

That's like saying if there are no fat people who is going to eat all the food? Excess does not mean success, and we certainly don't need massive investment banks taking huge risks, which could collapse entire economies, to invest in local business.

 

[drkitten]

That's like saying if there are no fat people who is going to eat all the food?

Wow. I didn't realize that there was an opposite of insightful -- a statement that would make me understand less than I did before.

Excess does not mean success, and we certainly don't need massive investment banks taking huge risks, which could collapse entire economies, to invest in local business.

... unless, of course, the local business is a huge risk. One of the ways that the UK became the banking powerhouse of the world was because it was the only place that could come up with the kind of money for investment necessary if you were going to do a huge project like cutting a canal across the Suez peninsula That specific project, in fact, is what put the British branch of the Rothschild's in front of the Bank of England; the Old Lady of Threadneedle Street couldn't come up with money fast enough or big enough, but Nathan R. could, and did. Similarly, Nathan Rothschild was the man who kept the UK government solvent in the crisis of 25.


So, yes, we certainly do need massive investment banks, and massive investment banks who are willing to take massive risks that are sufficiently profitable. It would be nice if we had regulators who weren't asleep at the wheel, and who were capable of keeping the economy from being at risk, though.

Funny how all the major recent banking crises -- the Depression, the crash of 2007, the S&L crisis of the 1980s --- are caused by failure of regulators, and as soon as we get the regulations in shape, things not only return to normal, but get better?

 

[hamelekim]

Wow. I didn't realize that there was an opposite of insightful -- a statement that would make me understand less than I did before.

Instead of asking me what I meant you just spout off this crap?

I can tell where your mind space is...

My point was, since you didn't get it, we don't need to have a country like the US who does nothing but consume most of the resources on the planet.

In fact, everyone would be much better off, have more food, resources, etc... if the US wasn't consuming at all.

... unless, of course, the local business is a huge risk. One of the ways that the UK became the banking powerhouse of the world was because it was the only place that could come up with the kind of money for investment necessary if you were going to do a huge project like cutting a canal across the Suez peninsula That specific project, in fact, is what put the British branch of the Rothschild's in front of the Bank of England; the Old Lady of Threadneedle Street couldn't come up with money fast enough or big enough, but Nathan R. could, and did. Similarly, Nathan Rothschild was the man who kept the UK government solvent in the crisis of 25.

I wouldn't call the Suez Canal a local business. I was thinking more along the lines of small local businesses, not mega projects.

So, yes, we certainly do need massive investment banks, and massive investment banks who are willing to take massive risks that are sufficiently profitable. It would be nice if we had regulators who weren't asleep at the wheel, and who were capable of keeping the economy from being at risk, though.

Funny how all the major recent banking crises -- the Depression, the crash of 2007, the S&L crisis of the 1980s --- are caused by failure of regulators, and as soon as we get the regulations in shape, things not only return to normal, but get better?

The regulators are in collusion with the industry, which makes regulation an impossibility. Look at the SEC and the numerous scandals coming out now. They knew about all of these scams, but ignored them because the people were big players.

They have to much power to be stopped by government.

 

[Roboramma]

My point was, since you didn't get it, we don't need to have a country like the US who does nothing but consume most of the resources on the planet.

In fact, everyone would be much better off, have more food, resources, etc... if the US wasn't consuming at all.

Um... how's that?
I have a friend who owns a foundry just outside of shanghai. He's not particularly happy that people in the US can't come up with the funds to buy his merchandise. Nor are his 200 or so workers, who he's trying hard not to let go, but has already had to with quite a few.
I can't really think of anyone who would be better off without americans as a part of the economy, but maybe you can offer an example.

I wouldn't call the Suez Canal a local business. I was thinking more along the lines of small local businesses, not mega projects.

So, if you ignore the useful things that investment bankers do, investment bankers don't do anything useful?

 

[dudalb]

Historicaly shareholders.

Back when canals were being built the initial people behind the canal would hold town hall meetings to get subscribers.

Some lords might take some big stakes but smaller ones would be sold to merchants vicars and others. Some of the canals in costal areas would pick up retired navy offices.

Not sure that would work with small companies and other start up firsm nowdays.

 

[drkitten]

Historicaly shareholders.

Back when canals were being built the initial people behind the canal would hold town hall meetings to get subscribers.

Was this also "back when" creating a new share corporation required an Act of Parliament?

That does kind of change the game; by definition, a new corporation would automatically have wealthy and powerful backers if it existed at all.

Part of the job of modern investment bankers and whatnot is to evaluate proposals for funding; essentially, figure out if an investment is any good or not.

 

[mhaze]

I think you need to read what drkitten said above and then go back and think about what I wrote.

What if, just a hypothetical question here, WHAT IF letting them fail has a severe negative impact on your life and mine, greater than the impact of bailing them out?....

Premises seem imperfectly stated, thus your "What if" is irrelevant argument from fear.

Some options were:

• Do nothing
• Bailout
• Chapter 11
• Chapter 11 then bailouts
• Chapter 7, liquidation

Now where is "letting them fail"? I see it in the current policy.

 

[leftysergeant]

Maybe bailijng them out is a ridiculous idea. Maybe it would be better just to nationalize them, take over the toxic assets and re-set the interest rates to somethin less than usurious, and finace government out of the mortgage payments. Eventually, it might even bring in more revenue than the income tax.

In the meantime, people will be staying in their homes, stimulating their local ecconomies, people will be able to find work and there will be a market for manufactured goods and agricultural produce.

Slap on a few tariffs, and you have an incentive for people who want to invest money to make it grow to invest in actually making stuff again, instead of trying to get rich quick trading vapor ware.

 

[rjh01]

I think they need to let a few companies go bankrupt then you can buy the rest of the companies at bargain prices.

 

[Puppycow]

Turns out taxpayers made an $18 billion (with a 'b') profit on the AIG bailout:

Fed turns AIG bailout into $18 billion profit

NEW YORK (CNNMoney) -- The Federal Reserve finally has wiped its hands clean of AIG and turned a nearly $18 billion profit for taxpayers in the process.

Now it's up to the Treasury Department to sell the rest of the U.S. government's stake in the insurance giant.

So we loaned AIG money, and we got all of our money back, plus $18 billion in interest.

Does this change anyone's mind?

ETA:
Oh, and one more thing:

That said, the U.S. government is not entirely free of AIG. The Treasury Department still owns $29 billion, or roughly 53% of AIG's common stock.

The Treasury Department has said it too expects to make a profit on that investment, as it sells the shares over time.

So actually it's $18 billion plus whatever profit Treasury makes when it sells its shares.

 

[geni]

Was this also "back when" creating a new share corporation required an Act of Parliament?

That does kind of change the game; by definition, a new corporation would automatically have wealthy and powerful backers if it existed at all.

You would generaly put together you initial backers before you got your act of parliment (canals needed them anyway since you effecively needed forced purchase orders to build most of them).

 

[psionl0]

So we loaned AIG money, and we got all of our money back, plus $18 billion in interest.

Does this change anyone's mind?

That's a bit like saying, "but the horse won".

 

[Puppycow]

That's a bit like saying, "but the horse won".

I don't think the situations are comparable.

Not betting on a horse carries no negative consequences.

Not bailing out a too big to fail company can have very serious consequences as we found out in the Lehman case. Nobody seems to have learned the lesson of that though.

 

[geni]

Not bailing out a too big to fail company can have very serious consequences as we found out in the Lehman case. Nobody seems to have learned the lesson of that though.

The only reasonable lesson is that such companies shouldn't be allowed to exist a step that would risk being messy.

 

[psionl0]

Nobody seems to have learned the lesson of that though.

What lesson is that? We should allow corporate psychopaths to become "too big to fail" then force taxpayers to gamble on their viability?

 

[Dymanic]

You would generaly put together you initial backers before you got your act of parliment (canals needed them anyway since you effecively needed forced purchase orders to build most of them).

Of all the posters I've seen disappear from this forum over the years, drkitten is the one I miss the most.

 

[not_so_new]

What lesson is that? We should allow corporate psychopaths to become "too big to fail" then force taxpayers to gamble on their viability?

That is a different argument. I completely agree that we shouldn't let companies get so large their very existence causes an effect on the economy as a whole. You are arguing for regulation and antitrust law enforcement.

But, using the horse analogy earlier in the thread.... that's like complaining about the latch on the barn door being broken when the riderless horse is already bolting down the road.

Regardless of the fact that the banks should or should not have been able to get that large in the first place, the banks were ALREADY "too big to fail" and by definition we couldn't let them... well..... fail... because they were too big right?

 

[psionl0]

We are stuck with these "too big to fail" institutions so taxpayers must prop them up until the bitter end?