Posted:
November 5, 2009 11:28 AM | Post #188634—in reply to #187353 |
Scott Rasmussen
 Mother tongue: English
Joined: April 28, 2004
Location: United States | RE: Understanding the Financial Crisis Here's a nifty letter that really will help the uninitiated "understand the financial crisis"...
http://www.ft.com/cms/s/0/1e4cfc6a-c74f-11de-bb6f-00144feab49a.html?nclick_check=1
For the record: I don't think we want to abolish the SEC...yet....
As for lavishing the poor with tax monies...it's been happening for decades, with decidedly mixed results. Here's a swell story from my own town. Never mind that the article is from 1997; it could have been written last week.
http://articles.latimes.com/1997-05-16/news/mn-59369_1_sausalito-school-district
[Edited by Scott Rasmussen on November 5, 2009 11:29 AM]
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Posted:
November 5, 2009 12:36 PM | Post #188640—in reply to #188634 |
John Bunch
 Expert    Mother tongue: EnglishPosts: 1706 Joined: February 1, 2008 Location: United States | RE: Understanding the Financial Crisis
- Lax lending and too much lending to people who are bad risks
- By banks and financial institutions that are undercapitalized
That is it. But to say that this is "within capitalism" (as if capitalism were not operating in the U.S. within the framework defined by government, and not also to a large degree, about government itself, would be grossly wrong.
Take the example of mortgages: the U.S. government positively "encouraged" (some would say: blackmailed) banks to loan to people with bad credit histories, or no credit histories, and then did not demand that banks have enough reserves to cover it, when it all blew up. And then when the banks failed, the government threw a net up to catch them when they fell.
So the message from our government has been:
a. Lend to people who can't repay the loan
b. Or else we will sue you
c. We don't demand that you have the reserves when the loans go bad
d. We will bail you out when this system explodes.
"Moral hazard".
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Posted:
November 5, 2009 1:08 PM | Post #188643—in reply to #188640 |
Jacek K.
TC Master
 Mother tongue: Polish
Joined: February 18, 2003
Location: Poland | RE: Understanding the Financial Crisis | Originally written by John Bunch on November 5, 2009 6:36 PM
the U.S. government positively "encouraged" (some would say: blackmailed) banks to loan to people with bad credit histories, or no credit histories, and then did not demand that banks have enough reserves to cover it, |
John,
Polish special services revel in provocations and controlled purchases lately. Does that mean all businesses have to follow their game? Don't you have law enforcement agencies where you could report the U.S. government for blackmailing your bank into operations that are destructive for the whole world?
Jacek
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Posted:
November 5, 2009 1:59 PM | Post #188649—in reply to #188643 |
John Bunch
Expert Mother tongue: EnglishPosts: 1706 Joined: February 1, 2008 Location: United States | RE: Understanding the Financial Crisis
There is no one to go to, because the Justice Dept is the ultimate federal authority for enforcement. I know a guy who is an attorney here in the U.S. and he compared going to court against the government, with "having sex with a gorilla. You don't stop when you are tired, you stop when the gorilla is tired". The government basically has unlimited resources.
The notion that the bad banks were off giving bad loans, and the government didn't want that, it totally incorrect. The government wanted the banks to issue debt to people with bad credit.
[Edited by John Bunch on November 5, 2009 2:02 PM]
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Posted:
November 5, 2009 2:03 PM | Post #188650—in reply to #188649 |
Jacek K.
TC Master
Mother tongue: Polish
Joined: February 18, 2003
Location: Poland | RE: Understanding the Financial Crisis | Originally written by John Bunch on November 5, 2009 7:59 PM
The government wanted the banks to issue debt to people with bad credit. |
Then they shouldn't have done it.
The government wants you, for example, to go to war. You obviously won't, will you?
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Posted:
November 5, 2009 2:11 PM | Post #188652—in reply to #188650 |
John Bunch
Expert Mother tongue: EnglishPosts: 1706 Joined: February 1, 2008 Location: United States | RE: Understanding the Financial Crisis
One example of government failure:
- There is currently $ 60 billion of fraud in the Medicare (public health care) system. One young woman in Florida even managed to defraud $ 105 million from Medicare, on her own (on her PC, from her room).
- The government simultaneously claims that the $ 8 billion of profit made by private insurance companies is the reason our health care system is so expensive and bad (in their view).
The government is trying to convince us that it will root out this $ 8 billion to "give it back to the people" or whatever. But that nasty $ 60 billion (per YEAR, by the way) of fraud remains...
I guess this is what is referred to as "You lie !!"
[Edited by John Bunch on November 5, 2009 2:14 PM]
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