Fannie Mae & Freddie Mac - the big bailout?

[Lyrical]

Originally Posted by Cynno

lol, I never stated that, keep up the straw man.

Are you drunk or high right now?

Originally Posted by Cynno

Also, the way the market works now is horribly broken, basing a companies worth on their earnings creates the issues we saw with Enron, Tyco and others. Companies need to be valued by their Liquid Assets, or easily liquefied assets.

[Eomer]

Originally Posted by Kiroy

So is there a difference in what your company is worth and how much can you sell it for?

I think that's the problem - ya, we can say your company is worth 2 million (liquid), but if your earning 5 million a year you could sell your company for many millions of dollars - so is it worth 2 million, or many millions.

The argument confuses me a bit.

Oh absolutely it can be confusing and convoluted, and that's the crux of this argument. Cynno originally argued companies should only be valued at what they could be liquidated for (which is incredibly fucking retarded in an information economy), now he seems to be backtracking.

For the example I was using, it's even more convoluted since it is a privately owned business and the company isn't worth all that much should the current management walk away, because most of the work we do is largely based on past relationships and experience, and without that management in place the company is nothing more than 80 plumbers and a bunch of tools and equipment.

But for tax purposes and that sort of thing, when I bought in we had to pay KPMG to do a valuation of the company (far too much money to basically spend 5 minutes reviewing financial statements and doing some basic arithmetic), because it would be tax evasion for my dad to just hand over his share of the company without being paid a reasonably fair market price for it and paying capital gains.

As I said though, I'm a fucking neophyte at this shit and really need to take some basic business and accounting courses. We're a fairly large company essentially being run by plumbers. Smart plumbers sure, but most of the balance and profit/loss reports our inhouse accountant emails me are greek, I just look at the bottom line and decide how much hookers and blow I can afford this weekend. It's over 9000!

[Hal2005]

So, anyone have a opinion on how retail savers will respond to the WaMu debacle ?

Deposit run at WaMu forced their hand, regulators say | Money & Company | Los Angeles Times

I can't find the list in this thread of my personal short list... but I think all that's left is regional players now, and shitty group./

[Cynno]

Originally Posted by Lyrical

Are you drunk or high right now?

where did I say only their assets?

You'd make a shitty lawyer

[Eomer]

Originally Posted by Cynno

where did I say only their assets?

You'd make a shitty lawyer

Are you really this fucking dense? Just admit you were wrong and walk away, jesus christ, there's no shame in that. Continuing to defend yourself when there is absolutely no line of defense is embarassing for everyone here.

Originally Posted by Cynno

Companies need to be valued by their Liquid Assets, or easily liquefied assets.

[Frieza_Prexus]

I'll start by saying that I am not a financial mastermind. I have a strong understanding of economics, morality, and finance, but I make no claim to be the second coming in these areas.

I have an MBA from the University of Houston Clear Lake and a BBA from the same school. I recently turned 24 years old and graduated in the spring of this year. So I would like to think that I am discussing from a reasonably intelligent position, but I admit that I do not have every answer. I only bring what I believe to be true.

There's a number of issues so I'll just start with this one.

Originally Posted by Kugbok & Lyrical

Insert Ron Paul Worship & then Hate

I am a huge supporter of Dr. Paul. In fact, he's my congressman and I've had the privilege of voting for him. I don't agree with every stance he takes on abolishing the fed, but he and I both have the same ultimate goal in mind. A stronger economy based on real (or at least more real than it is now) money.

Currently, our system is completely arbitrary and at the whim of the Fed. Dr. Paul wants the exact opposite and wants an inflation free (Yes, gold grows by a percent each year or so due to mining we can ignore this fact for now) system that is, as Milton Friedman puts it, completely automatic.

This is where he and I disagree. I understand the merits of a pure gold system that automatically controls inflation, but I agree with Milton Friedman as he said in Capitalism and Freedom. There should be a Pseudo Gold standard that lends weight to the currency, but it allows adjustment within a very limited range by using hard set rules.

There is a reason no major country is still on a hard gold standard today. But does that mean the benefits of it must be discounted completely?

Originally Posted by Lyrical

The problem with letting politicians run it is greater than their lack of knowledge.

Very true. This is why you have your scientifically established rules using history and prudence as your guideline. This allows organizations like the Fed to actually fulfill their intended purpose of keeping the economy stable.

What turned the depression from a bad recession into "the depression" was the fact that the Fed actually contracted the money supply instead of increasing it. They disobeyed their own mandate! This is clearly a case that illustrates the need for hard set in stone scientifically proven and ethical rules that allow some breathing room, but still packs the stability of a gold system.

Originally Posted by Lyrical

Another professor I had who worked for the Fed argued that an economy is like an old house. You jump in the shower, and can't get the hot water to come out. You turn up the hot water, and it is still cold. You can't see it, but the hot water is building up - only your feedback is delayed. And then eventually you get burnt.

That analogy is a good "rough" description of the Fed, but I think that it is ultimately flawed. In the analogy, you are the one turning the faucet. In the case of the Fed, it is a form of central planning. I believe, from what I have seen in historical data, that the Fed has nothing special about it that makes its central planners more qualified than the market.

Note, I don't immediately discount it on principle (that's another argument entirely), but on a historical and factual basis that I believe them to be incompetent.

Originally Posted by Lyrical

He argued that you have to have people that are somewhat removed from the political process and have long terms to run the economy. Or you would get people that would manage for the short term and screw us in the long term

Excellent point. This is why some monitoring agency has to exist. Under the constitution that would be Congress. I believe with the right pressure from the citizens that Congress could actually pick up this responsibility in a reasonable manner. Then again, I've been called an idealist.

Originally Posted by Lyrical

I don't know what Ron Paul stands for, but apparently that is a good thing. It seems he knows about as much economics as your average politician (jack-squat)

I believe this is unfortunate, as I regard Dr. Paul as one of the most knowledgeable people living today in regards to economics. Keep in mind, that just because you don't agree with someone doesn't mean they don't know what they're talking about. I believe Obama (and McCain) are barking moonbats. But they are both intelligent people that (typically) believe what they do for a good reason. It is incumbent upon me to use logic and diplomacy to show why they are wrong and why what I advocate is correct.

I feel that way about Dr. Paul because I have read many of his writings and he basically has gotten to say 'I told you so" in regards to almost every major financial upset in recent history. His sheer predictive power commands respect. Even if you think his solutions are bad, his ability to see the long run must be respected.

Originally Posted by Lyrical

Who is going to manage inflation? As a member of the Fed taught us in lectures, markets don't manage inflation well at all. A market left to totally free operations will let inflation spiral out of control as businesses keep testing on how much they can push the envelope, but at the same time, they don't increase what is paid to the workers.

In theory, only Congress has that power as I outlined above. I agree, again, with Milton Friedman on this issue. Steady inflation of 3-5% per year is what is needed to maintain real growth. This is the main reason I discount a pure & automatic gold standard. If you've got 100 people and $100 in the economy what happens when the population grows to 200, with the same $100? Massive deflation, which really really sucks.

Kugbok & Cynno,

I appreciate the zeal you have from Dr. Paul and his movement, but a major cornerstone of classical liberalism, libertarianism, Juris Naturalism, or whatever want to call it is the idea that things must be evaluated in a scientific and sound manner. We must be fair in doing these things and we must respect freedom of choice.

While you and I both believe deeply in Dr. Paul's message, we must consider what we are asking people to do. We are asking them to reconsider and reevaluate their stances, many of which are deeply held. It would be unfair on our part not to, at the very least, debate the issue fairly and consider that we could be wrong. I sincerely doubt that I am wrong. But in the spirit of diplomacy I must do what I am asking others to do.

I believe you would have more success in your efforts if you tried this.

Also Cynno, I believe you have misstepped with the comment on company valuation at asset value only. Not only does that view not consider intangibles or unquantifibles such as personnel and trade secrets, it also doesn't consider the idea that some companies are just better despite all real assets being equal. To centrally control that would violate a core tenant of capitalism.

Remember, under a true capitalist system people must be free to enter into any private deal they wish. Subject to reasonable (Pandora's box alert!) controls.

Originally Posted by Lyrical

The Paul plan doesn't even work on paper, and can be disproven in less than five minutes. Thank God Paul won't ever be President.

While that is not the plan I would choose I believe that plan would be preferable to what we currently operate under. Of course, changing things overnight would be bad obviously. Anything this sweeping must typically be phased in.

Grobbee,

The lack of respect you have for the constitution is disheartening. It covers objective moral issues about freedom. Issues that have absolute answers and will never become outdated. I find your attempts to destroy it immoral, unethical, and disingenuous at best.

Originally Posted by Grobbee

Capitalism at it's finest.

Why suffer these horrible swings? Why not just stop half-assing the regulation?

We don't live in a truly capitalist society. Not even close. (Counter point: As I said above, reasonable controls are nice. Extreme anything is usually bad.)

You advocate communism versus capitalism. I believe you're arguing a false position. Literally, apples versus oranges. A better analogy would be freedom versus slavery.

Under a capitalist society, you are free to enter into a communistic agreement with any willing participants. Under a communist system, I am jailed, or worse, for pursuing my own economic goals.

The difference between you and me is that I want everyone free to forge their own destiny.

You want me to be a slave to yours. And I dare assume you would justify murder and imprisonment in order to deny me my freedom of choice to live and trade as I want.

As Richard Maybury says in the "Uncle Eric" books line:

Originally Posted by Richard Maybury

There are two laws upon which all major religions and societies are founded.

Do all that you have agreed to do. This is the basis of contract law.

Do not encroach upon other persons or their property. This is the basis or tort law.

All other laws and rules can stem from those two. Should they not, they are not likely to be moral or add anything of value to our lives.

Ultimately, people should suffer for their own bad choices. The government should preserve our rights, and congress should not shirk its duties to a private and arguably incompetent unconstitutional organization.

[Cynno]

Freiza,

Yes it was a misstep and I could go back and change everything, but the retards here don't know really what it means to leave out implied information. I would assume anyone with a brain could realize that valuing a company by assets alone would be retarded, so it was implied in my statement.

Yes I know my initial statement was wrong, jesus christ this is a stupid arguement over symantecs.

[GrobbeeTrull2.0]

Holy Communism rant! I want to destroy the Constitution because I advocate more market controls? Awesome.

I'm not advocating Slavery over Freedom, quite the opposite. I'm advocating Freedom over Wage Slavery.

Originally Posted by Freiza

Under past communist systems, I would be jailed, or worse, for pursuing my own economic goals.

Fixed that for you. I'm not sure about you, but I don't give up on my science experiments just because I wasn't right the first 10 times. Please don't assume that because I share some of the same views as horrible dictators that I too wish for that same rule. Hitler hated Communism too, does that make you a Nazi? No? Ok then.

Your point about morals is fine, but my point is that perfect Communism is the pinnacle of morality. It is the perfection of Maybury's statement:

Do all that you have agreed to do. Agree to help your community, your country, and your world by helping one another.
Do not encroach upon other persons or their property. One cannot own the earth they live on any more than horses own the plains or birds own the skies. We can shape it, but we do not own it. And slavery is unheard of in true communism (but not capitalism).

I'd love to debate ideals versus reality, but as a fellow idealist, you'll understand what I'm going for is not what we've seen.

[Soriak]

Fox news criticizing high CEO pay?

FOXNews.com - WaMu Gives New CEO Mega Payout as Bank Fails - Local News | News Articles | National News | US News

The CEO of WaMu held his job for 17 days before the company failed and was taken over by the Fed. His compensation adds up to $20m. Damn good timing for him heh.

[chu]

Wachovia is next.

[Heavens_Myst]

I think National City first.

[Hal2005]

Originally Posted by chu

Wachovia is next.

Yup. Sadly their deposit growth will fetch far lower sweetener then WaMu-JPM.



Grobee, keep the communism outta the thread.

[Rhuobhe]

Originally Posted by Lyrical

Wow, you Paul supporters are crazy. Pretty much when someone starts talking about the Fed as some Jewish conspiracy to take over the country, it ruins your argument.

If the extent of your argument is that there is some conspiracy to run a shadow government, you fail.

It makes sense to value a business on liquid assets (when most companies have more intangible IP than assets and we are moving to a service economy), and you think markets will manage inflation? And as much a believer as I am in free markets, it is now generally accepted that a free market will let inflation spiral out of control (through supply side). You also need a Fed to counter inflationary short term solutions that hurt us in the long term.

I am pretty sure that if we used Paul's plan, we'd be enjoying double-digit inflation year after year.

But please, feel free to pummel us with your lack of knowledge about basic economics. You learn this stuff in Econ 101 in any accredited school - something you clearly haven't taken. Its clear that the extent of knowledge you have of economics is that there is a Zionist consiparcy afoot. We get it, you are a paranoid lunatic on the level of Lumie. Now tell us something that is pertinent to the conversation or just stop posting.

The fact of the matter is that this country and hopefully the rest of the world at some point in history needs to have monetary reform. the federal reserve act was a huge mistake. money is controlled by a few men behind closed doors and the money changers will continue to ride this nation and the rest of the world for their interests. there is very little accountability. if this big bail out is approved do you think this money is going to be audited and be kept track off? who knows where it will be going. this is fort knox 2.0

[Lyrical]

Originally Posted by Frieza_Prexus

stuff

Nice, well thought out post for once, instead of flaming anti-semitism.

- When I majored in Econ for bit (until I realized an undergrad degree in Econ means no job without a PhD - I ended up in Finance and Accounting), one of my profs who worked for the Fed showed enough evidence of how it was working. He did show plenty of information that the US Fed was the most credible central bank at tamping down inflation.

- When got my MBA, both Econ professors and the highest rated professor in the school talked about how good a job the Fed has done historically. Its done fine, other than the last ten years. And one of them showed enough evidence that markets do not regulate inflation on their own. Suppliers do not want to cut prices, even though they should. I firmly believe you need people in charge of the process that are removed from voting, because your average American wants economic growth now and has no idea what could happen later (i.e. skyrocketing inflation).

I am not going to use names, given that they talked about how they didn't want their name out there. One of them talked about how he'd get hundreds of emails a day, and alot of them were from people they never met.

The point is that these were all credible sources. If there was a problem with the Fed, its the performance over the last decade.

And I really believe that if we have congress oversee inflation, we'd be screwed. As one of my profs (who worked at the Fed) put it, if the ruling party is in trouble vote-wise, they will just put stimulus out there that causes inflation for years and years. This is because they can then claim that the economy is growing (even if inflation is killing us).
While he was at the Fed, they would tighten up monetary policy to combat what Congress was doing, because they knew it was bad or the economy.

Congress can't balance spending or fix social security. And every time I watch them during these hearings, you can tell they know jack-squat about the economy. I don't trust either party to do the Fed's job - they've proven they can't handle what is on their plate. Why put more on their plate?

[Lyrical]

Originally Posted by Rhuobhe

The fact of the matter is that this country and hopefully the rest of the world at some point in history needs to have monetary reform. the federal reserve act was a huge mistake. money is controlled by a few men behind closed doors and the money changers will continue to ride this nation and the rest of the world for their interests. there is very little accountability. if this big bail out is approved do you think this money is going to be audited and be kept track off? who knows where it will be going. this is fort knox 2.0

The Fed isn't the issue.

The issue is that both parties have passed legislation that encourages bankers to take on risk (look up moral hazard). This crisis is nothing but the Savings and Loan Crisis 2.0. Until we find a way to either stop insulating bankers against losses (which might be a bit scary) or make sure they are following standards (i.e. limited subprime lending) or stop bailing them out, we'll see this again in our lifetimes.

If you guys need a scapegoat, blame both parties starting with the Carter administration. They keep sidestepping the core problem.