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Topic:
Have we been duped
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Princess_Tina
Registered:
May '01
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Date Posted:
4/12 11:37pm
Subject:
RE: Have we been duped
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Espaldapalabras posted:
Ideologically it is easy to say the taxpayer should never bail anyone out for their own mistakes. However in the real world we have to confront the reality that it would be much worse off for the taxpayer if they don't bail out certain institutions and groups of people.
I agree with that, particularly in regards to the banking sector, because bank failures reverberate through all sectors of the economy. As I'd said earlier, it's not that bailouts are a good thing, it's just that sometimes they become the lesser of two evils.
Espaldapalabras posted:
It is a very difficult line to walk, and we almost never have all the information we need when we have to make the decision.
Indeed we don't at this point. There's been a lot of finger-pointing but I'm not entirely sure if we know the whole story yet.
Espaldapalabras posted:
To address the current situation, I don't see how you can support the bailout of Bear Stearns and JPM, and not support any relief for the average joe that got swindled into a bad mortgage. We don't know exactly how much the taxpayer is going to have to pay for Bear Stearns, but as soon as the fed used taxpayer money to stop them from going bankrupt, the shareholders who should have lost everything demanded more and got it.
If there is concrete evidence of some wrong-doing on the part of lenders, something that can be actually considered akin to a "swindle," then of course the homeowners should be helped. I'm not sure how many of the affected homeowners could be said to be in this position. However, I continue to feel the banking industry merits special considerations, not because of any particular sympathy for the bankers, but simply because of all the ramifications for the whole economy once the risk of bank failures becomes serious enough to lead to panic in the markets.
Espaldapalabras posted:
Should we like the fact that institutional banks and broker-dealers are now un-failable in todays complex global financial system? No, but we still have to bail them out. All we can do is impose reasonable regulation on them.
I agree 100% that more regulations is needed, especially for investment banks. And of course that regardless of any bailout actions, if any individuals within the banking industry are found guilty of any wrong-doing, they should be prosecuted to the fullest extent of the law. (Not sure whether anything they are suspected of having done or failed to do is in fact actionable, at this point).
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Lowbacca_1977
Title: Senate Moderator
Registered:
Jun '06
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Date Posted:
4/13 12:09am
Subject:
RE: Have we been duped
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Because if anything is going to encourage the banks and other lenders to not do stupid things where they can lose millions, its knowing that they're considered so critical that when they do said stupid things, the gov't will help them recover the losses. The fear of losing all their money should keep them in check from doing this stuff in the future
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Princess_Tina
Registered:
May '01
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Date Posted:
4/13 12:17am
Subject:
RE: Have we been duped
- Date Edited:
4/13 12:18am (1 edits total)
Edited By:
Princess_Tina
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Lowbacca_1977 posted:
Because if anything is going to encourage the banks and other lenders to not do stupid things where they can lose millions, its knowing that they're considered so critical that when they do said stupid things, the gov't will help them recover the losses. The fear of losing all their money should keep them in check from doing this stuff in the future
That's exactly where regulation comes in. To keep banks from acting irresponsibly, to act before things get out of hand.
Furthermore, remember that even when banks end up in trouble, the bank officials responsible for the decision-making will almost invariably still get their regular compensation, and/or a very generous golden parachute. So the bank officials aren't likely to be chastised by "the fear of losing all their money," because it's the bank's money that's at stake, and not typically their own pay packages. However, proper regulatory measures that carried stiff penalites and are strictly enforced might be a more effective deterrent.
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ShaneP
Registered:
Mar '01
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Date Posted:
4/13 11:17am
Subject:
RE: Have we been duped
- Date Edited:
4/13 11:19am (1 edits total)
Edited By:
ShaneP
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Yet it still is silly to expect the hypocrites in Washington DC who acted in the roles of enablers to suddenly come in like superheroes and save the day now that things have gone south. They didn't say a thing when the cash was rolling in.
Many in DC were encouraging subprime lending, including Bush and members of congress from both parties.
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It was as if a million middle-aged virgins just farted with rage and were suddenly silenced.
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Princess_Tina
Registered:
May '01
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Date Posted:
4/13 11:21am
Subject:
RE: Have we been duped
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ShaneP posted:
Yet it still is silly to expect the hypocrites in Washington DC who acted in the roles of enablers to suddenly come in like superheroes and save the day now that things have gone south. They didn't say a thing when the cash was rolling in.
Actually, I think it will make a very good election-year strategy to at least give the appearance of doing something about the whole mess. Yes, it could be nothing more than electioneering, but even that can sometimes raise public expectations - and the prospect of paying a hefty political price if the next administration fails to do something about it.
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Espaldapalabras
Registered:
Aug '05
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Date Posted:
4/13 12:38pm
Subject:
RE: Have we been duped
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The answer isn't just more regulation, because too much regulation can be just as bad for the economy as well. We have to have just enough. Right now I think the biggest problem is that the guys at the top claim they believe in the market, but really what they are doing is skimming off their take and not really doing anything that justifies their pay. When we were in the boom it might have been tenable for them to say their huge pay packages were because they were doing such a great job, but it is clear now they were more often than not doing more harm than good. It seems like if you could actually find a company that didn't pay the upper level management so much they would be a better deal. Unfortunately the market doesn't work perfectly and in the bidding war for top executive talent, everybody just expects to get paid far more than they are worth.
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A vote is like a rifle: its usefulness depends upon the character of the user.
Theodore Roosevelt
We should be eternally vigilant against attempts to check the expression of opinions that we loathe.
Oliver Wendell Holmes Jr.
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Princess_Tina
Registered:
May '01
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Date Posted:
4/13 12:47pm
Subject:
RE: Have we been duped
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Espaldapalabras posted:
The answer isn't just more regulation, because too much regulation can be just as bad for the economy as well. We have to have just enough. Right now I think the biggest problem is that the guys at the top claim they believe in the market, but really what they are doing is skimming off their take and not really doing anything that justifies their pay. When we were in the boom it might have been tenable for them to say their huge pay packages were because they were doing such a great job, but it is clear now they were more often than not doing more harm than good. It seems like if you could actually find a company that didn't pay the upper level management so much they would be a better deal. Unfortunately the market doesn't work perfectly and in the bidding war for top executive talent, everybody just expects to get paid far more than they are worth.
The key phrase for me in that post was "the market doesn't work perfectly." It could be argued that a totally unregulated market is almost as bad as an excessively regulated one. We should hope America can find the right point in-between, with enough regulation to protect society from the worst excesses of greed but not too much to hinder the market from healthy growth. At this point, the biggest source of concern should probably be the investment banking sector.
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