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 ArmFromTheAbyss
Old Hand
Registered: 10/09/02
Posts: 1,351
Loc: Down here in Babylon
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 Re: FED made 9 trillion in overnight loans  [Re: Yrat]
#13596210 - 12/07/10 04:21 PM (2 years, 5 months ago) |
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Quote:
Yrat said:
what is your third option?
Free markets with common sense regulations and competent regulators.
We think very differently in some ways; I believe deregulation led to the financial crisis. If they never removed the leverage limits on banks, the Fed would never have to intervene. Ironically it was a belief in the power of the "free market" that Greenspan used to justify cutting capital reserve requirements. This actually set up "too big to fail." By 2007 the banks were so leveraged that a decline in real estate prices led to outright financial collapse.
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"The man who knows something knows that he knows nothing at all" -Badu
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 Yrat
Hello
Registered: 11/08/07
Posts: 2,030
Last seen: 3 hours, 3 minutes
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but the free market was about to wipe all those bad bets out. this would have cleared the system. the market is the regulator. instead, everyone got a bailout...
i agree that the repeal of glass-steagal was a bad idea, but the de-regulation was never given a chance to work.
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"There are a thousand hacking at the branches of evil
to one who is striking at the root."
-Henry David Thoreau
Strike The Root
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Silversoul
Holon
 
Registered: 01/01/05
Posts: 22,562
Loc: Mostly harmless
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Re: FED made 9 trillion in overnight loans [Re: Yrat]
#13596306 - 12/07/10 04:39 PM (2 years, 5 months ago) |
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Quote:
Yrat said:
but the free market was about to wipe all those bad bets out. this would have cleared the system. the market is the regulator. instead, everyone got a bailout...
I think you underestimate just how much there was to "clear out." We're talking about a house of cards bigger than the total world GDP. The Great Depression would've been a cakewalk compared to what we were facing. That said, the bailout money should have gone to the people, not to the parasites that caused the crisis.
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Shins
Fun guy
Registered: 09/15/04
Posts: 11,385
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Re: FED made 9 trillion in overnight loans [Re: Silversoul]
#13596472 - 12/07/10 05:07 PM (2 years, 5 months ago) |
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Quote:
The Great Depression would've been a cakewalk compared to what we were are facing.
All they did was kick the can down the road and make it worse.
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Silversoul
Holon
Registered: 01/01/05
Posts: 22,562
Loc: Mostly harmless
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Re: FED made 9 trillion in overnight loans [Re: Shins]
#13596648 - 12/07/10 05:41 PM (2 years, 5 months ago) |
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Quote:
Shins said:
Quote:
The Great Depression would've been a cakewalk compared to what we were are facing.
All they did was kick the can down the road and make it worse.
In the absence of comprehensive financial regulation, you may be right in the long term. However, the bailouts themselves will not be the cause of the next recession, except insofar as they prevented more comprehensive reforms to prevent the same kind of Wall Street behavior.
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Yrat
Hello
Registered: 11/08/07
Posts: 2,030
Last seen: 3 hours, 3 minutes
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Re: FED made 9 trillion in overnight loans [Re: Silversoul]
#13597372 - 12/07/10 08:01 PM (2 years, 5 months ago) |
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Quote:
Silversoul said:
the bailouts themselves will not be the cause of the next recession
no, but they will ensure the next will be more severe, unless of course some banks get their bailout money after blowing bubbles and ripping off the public, and all will be saved until next time... see how this works? there is no out. the sooner the fix comes, the better. and yes, it will be drastic, i do not underestimate that. but it is necessary. do you believe there is a slow way to unwind everything? the whole system is a ponzi, and the sooner a ponzi ends the lesser the damage in store.
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"There are a thousand hacking at the branches of evil
to one who is striking at the root."
-Henry David Thoreau
Strike The Root
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snuffedout
Registered: 11/10/10
Posts: 228
Loc: Earth
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Re: FED made 9 trillion in overnight loans [Re: Yrat]
#13597414 - 12/07/10 08:10 PM (2 years, 5 months ago) |
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Silversoul
Holon
Registered: 01/01/05
Posts: 22,562
Loc: Mostly harmless
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Re: FED made 9 trillion in overnight loans [Re: Yrat]
#13597430 - 12/07/10 08:14 PM (2 years, 5 months ago) |
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Quote:
Yrat said:
the sooner the fix comes, the better.
Couldn't agree more. But the fix doesn't come from letting all that debt become deleveraged. I could see a Marxist supporting that, so as to hasten the proletarian revolution, but as someone who likes a market economy, I'd prefer to avoid that. It comes from reforming our institutions. At minimum, reinstate Glass-Steagall, regulate derivatives, and implement the Volcker Rule. Those are the more realistic, pragmatic measures I'd support, though if it were up to me, I'd be a bit more drastic: nationalize the Fed under the Treasury Department, create a debt-free monetary system, end the privilege of private banks to create money from debt, shift taxes from production and consumption to land values and resource rents, and outlaw derivatives and any other debt instruments and phantom wealth. In the meantime, I'd give the bailout to homeowners, though this bailout could simply be in the form of canceling the debts of any whose bank can't produce the paperwork for the loan(since they've collateralized those debts and no one knows who has them).
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Yrat
Hello
Registered: 11/08/07
Posts: 2,030
Last seen: 3 hours, 3 minutes
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Re: FED made 9 trillion in overnight loans [Re: Silversoul]
#13597498 - 12/07/10 08:30 PM (2 years, 5 months ago) |
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Quote:
Silversoul said:
Quote:
Yrat said:
the sooner the fix comes, the better.
Couldn't agree more. But the fix doesn't come from letting all that debt become deleveraged. I could see a Marxist supporting that, so as to hasten the proletarian revolution, but as someone who likes a market economy, I'd prefer to avoid that. It comes from reforming our institutions. At minimum, reinstate Glass-Steagall, regulate derivatives, and implement the Volcker Rule. Those are the more realistic, pragmatic measures I'd support, though if it were up to me, I'd be a bit more drastic: nationalize the Fed under the Treasury Department, create a debt-free monetary system, end the privilege of private banks to create money from debt, shift taxes from production and consumption to land values and resource rents, and outlaw derivatives and any other debt instruments and phantom wealth. In the meantime, I'd give the bailout to homeowners, though this bailout could simply be in the form of canceling the debts of any whose bank can't produce the paperwork for the loan(since they've collateralized those debts and no one knows who has them).
the free market is marxist? surely you jest..
you forget one key fact, and that is congress is entirely captured by the fed/wall street beast. there will be no significant regulations to reform this system. this will go on until the currency collapses.
i think your fixes, by the way, are spot on.
--------------------
"There are a thousand hacking at the branches of evil
to one who is striking at the root."
-Henry David Thoreau
Strike The Root
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Silversoul
Holon
Registered: 01/01/05
Posts: 22,562
Loc: Mostly harmless
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Re: FED made 9 trillion in overnight loans [Re: Yrat]
#13597596 - 12/07/10 08:51 PM (2 years, 5 months ago) |
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Quote:
Yrat said:
the free market is marxist? surely you jest..
No, but a laissez-faire solution to deleveraging would surely stoke the fires of a Marxist revolution(either that, or we'd be in Mad Max territory).
Quote:
you forget one key fact, and that is congress is entirely captured by the fed/wall street beast. there will be no significant regulations to reform this system. this will go on until the currency collapses.
I haven't forgotten that fact at all, which is why I started off by mentioning three reforms that should be realistic: Glass-Steagall, the Volcker Rule, and regulating derivatives, all of which were part of the mainstream discourse on financial reform. And because I'm aware of how much Wall Street owns D.C., I accept the bank bailout as better than nothing, however plutocratic it may have been.
Quote:
i think your fixes, by the way, are spot on.
Thank you. I spend a lot of time reading up on these sort of things.
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