[Econ] Jim Rogers calls for abolishment of The Fed

[Ashes Emberblade]

Originally Posted by Soriak

The answer to this mess certainly is more, not less, regulation. The lack of any regulation in the US mortgage sector caused this mess, clearly the involved actors (from home buyers to mortgage brokers to banks to hedge fund investors) have shown they're not acting responsibly enough to leave anything up to them.

Next up should be more regulation for credit cards, btw - that's another issue that might boil over in the near future.


Large investment banks/groups all have their operatives in tax havens - and countries who still respect banking privacy. Large transactions getting investigated as a routine = investors take their money abroad. Despite the pro-business image, the US is actually quite hostile - I don't think any other country locks up CEOs if one of their employees cooked the books without their knowing and the IRS has more power (and dishes out harder punishment) than other tax agencies.

Cognitive dissonance at its best. The US needs more regulation on an already highly regulated market so that more capital can flee to Singapore. Great advice.

[Heavens_Myst]

Originally Posted by dak

By "us" you mean the people who actually have the power to change it and they already know exactly what harm they are doing.

Better question is how do you usurp our military and have them drag the terrible elements that have infiltrated our system from their estates, into the streets and hang them on public TV.

Be careful, your Muslim is showing.

[dy fey]

Originally Posted by Kugbok_Fennin

Currency should be backed by hard assets and not debt, that is our fundamental problem here.

if currency output exceeds real currency value, then real inflation takes hold. nominal values may well keep pace with total wealth gains, but the risk is run of enduring periods where the gains cease to increase, resulting in true devaluation of currency. stimulus packages and rate adjustments are artificial means to artificial ends, and will only compound in the long term, until a point comes when you start playing jenga with billions of lives, both living today and yet to be born (that'd be a sweet fucking game though).

that speaker's analogy to the forest fire was spot on. we're not letting the cycle take it's turn. instead of clearing the brush, we sweep it into piles and grow more in it's place. better to burn it off now, as opposed to waiting for the spark at a time when we can't do shit to control it. i would have chosen my personal analogy that i'll term bubbanomics; sticking old bubba in a cage for a few years is cool, let the fuck simmer down, but hide him away for decades and he's gonna come out looking for someone to be his bitch.

or simply, qft

also, fuck regulation. laying the framework for gentle downturns is a necessity, but encouraging quick bucks at the expense of huge fucking bubbles is batshit crazy. a company must measure risk against potential gain. encouraging them to brush aside risk for immediate income by ensuring a safety net for their backwards ass business model is ignorant. providers will regulate themselves and consumers will fall in line when loans cease to be a source of immediate income. i'd love to see warren buffet play monopoly with the fed. they might start strong, but he'd dominate with some boardwalk hotels and utilities and shit.

[Soriak]

Originally Posted by Ashes Emberblade

Cognitive dissonance at its best. The US needs more regulation on an already highly regulated market so that more capital can flee to Singapore. Great advice.

People aren't going to buy real estate in Singapore when it becomes tougher to buy a house in the US... it's not like you can offshore this. Same with credit cards. It's not like people are going to set up an elaborate scheme in Singapore because they only qualify for a lower limit - nor will credit card companies go out of business when they're no longer permitted to skyrocket the rates whenever they want to.

The ones who do take advantage of offshore accounts and schemes don't have problems qualifying for mortgages or lines of credit.

[Kugbok_Fennin]

Not to pad Soriak's posts, but a bail out is coming. Just not on the scale most would expect should a bailout happen. Of course not everyone is going to be bailed out. All but a few of the big houses will be left to fend off the wolves. so to speak. At which you will have a handful of giant banks that only get bigger by gobbling up the assets of the recently failed banks. I suspect Wells Fargo, WaMu, and most of the mortgage companies will be no more in a short period of time.

Once that happens, your guess is as good as mine as to what will follow.

Scary times we live in here...Its not Fun making $3,500+ monthly after taxes and still living pay check to pay check. granted I live in So.Cal, but after Mortgage(supplemented by tenants), my apt. rent, bills, food, insurance, etc...I have little money left over for anything else. What money I do save has been funneled into Gold, which hit an all-time high today over $1,000/ounce. Something is fundamentally wrong with that.

P.S. I <3 Dak, you probably know the "real score" in the game better than anyone else I have come across on this board.

[Soriak]

Carlyle Capital in default, on brink of collapse | Reuters

AMSTERDAM (Reuters) - An affiliate of U.S.-based buyout firm Carlyle Group has defaulted on about $16.6 billion of debt and expects its lenders to seize remaining assets as the global credit crunch tightens around leveraged investors.

I suppose this isn't reported much outside of business news, but hedge funds are going down pretty much on a daily basis now. Not all of them as big as this one, but still.

Sucks for the investors, but there's a big reason for the warning that comes with them: not subject to the regulations governing other funds, high risk investment. Depending on where it's located, you can also add "local laws don't contain protections for investors" though that's usually left out of the brochure.

[Ashes Emberblade]

Originally Posted by Soriak

People aren't going to buy real estate in Singapore when it becomes tougher to buy a house in the US... it's not like you can offshore this. Same with credit cards. It's not like people are going to set up an elaborate scheme in Singapore because they only qualify for a lower limit - nor will credit card companies go out of business when they're no longer permitted to skyrocket the rates whenever they want to.

The ones who do take advantage of offshore accounts and schemes don't have problems qualifying for mortgages or lines of credit.

What in the hell are you talking about? In your first post you're crying for more regulation on the market in a country you don't even live in while simultaneously deriding the same country's poor business climate. It boggles my mind how you don't see that those two are intrinsically linked. Capital has been fleeing the U.S. for a long time now because of ever increasing regulation and taxation.

More of the same will only hasten capital flight, reduce long term growth, and cause your beloved proletariat to experience a decline in equity, earnings growth, and access to capital.

[Kugbok_Fennin]

Originally Posted by Ashes Emberblade

What in the hell are you talking about? In your first post you're crying for more regulation on the market in a country you don't even live in while simultaneously deriding the same country's poor business climate. It boggles my mind how you don't see that those two are intrinsically linked. Capital has been fleeing the U.S. for a long time now because of ever increasing regulation and taxation.

More of the same will only hasten capital flight, reduce long term growth, and cause your beloved proletariat to experience a decline in equity, earnings growth, and access to capital.

Keep in mind that most of what Soriak is saying would be considered Fraud. Offshore accounts have very strict regulations attached to them, especially when dealing with the purchase of property and establishing Lines of Credit.

[Soriak]

Originally Posted by Ashes Emberblade

What in the hell are you talking about? In your first post you're crying for more regulation on the market in a country you don't even live in while simultaneously deriding the same country's poor business climate. It boggles my mind how you don't see that those two are intrinsically linked. Capital has been fleeing the U.S. for a long time now because of ever increasing regulation and taxation.

Hmm, I thought you quoted my latest post - sorry

I'm not favoring regulation for the sake of regulation, I'd agree that some of it could be done away with - in fact, I'd like to have as little regulation as possible. But there are some segments, where regulation is very important. Not just to protect the stupid, but to protect the global economy.

The reason I whine about a lack of regulation in the US is because, as the current crisis shows, it has a global effect. Someone on minimum wage buying a cheap-ass house in Harlem that he can't afford affects the job of a factory worker in Germany a few years down the road.

I don't think it harms the economy when you prevent people who clearly can't afford their house from buying it. In this instance, it would have prevented a recession. This wasn't an inevitable part of a cycle, it's entirely a regulatory problem that isn't being addressed.


For those screaming socialism (which doesn't describe government regulations, but rather government ownership of companies) - I assume you're just as outraged over the Federal Housing Administration (not a GSE, but close enough), Fannie Mae and Freddie Mac? Government sponsored enterprise - Wikipedia, the free encyclopedia

More of the same will only hasten capital flight, reduce long term growth, and cause your beloved proletariat to experience a decline in equity, earnings growth, and access to capital.

I have no problem making it tougher to get credit if they can't afford it. It's hardly a right to live so far beyond your means that you can't get out of the hole anymore.

As for income growth - doesn't the real income still trail behind that of 2000? Now consider that the income of the top quintile has grown very quickly and imagine what this means for the lower and middle class. But the goal in this case should be preserving the credit market, not some sort of better equality.

Keep in mind that most of what Soriak is saying would be considered Fraud. Offshore accounts have very strict regulations attached to them, especially when dealing with the purchase of property and establishing Lines of Credit.

Yeah, this was my point: if you institute some better regulation of the mortgage industry, it's not going to run away.

[FulorianC]

The point is that Soriak is the left-wing version of Khorum.

[Lithose]

None of this will get better until the government allows banks with bad lending practices to fail. One of the essentials of a neo-liberal market system is failure, you can't maintain the system we are in without it. Failure and eventual entrepreneurship to fill the void of that failure are key, basic elements of the Chicago-school economy.

We could learn a lot from South Korea and their auto industry, but we won't..This will end much like our current airline industry. Pile of shit.

[Soriak]

The point is that Soriak is the left-wing version of Khorum.

In other news: Bush Administration now made up of left-wings?

U.S. Treasury secretary calls for stronger regulation on housing finance - International Herald Tribune

The overhaul would include tougher disclosure requirements for banks and Wall Street firms, a national licensing system for mortgage brokers, and new rules for credit rating agencies, which have been widely criticized for failing to recognize major problems with mortgage-backed securities and for having potential conflicts of interest.

Sounds like a good first step.

[Lithose]

Originally Posted by Soriak

In other news: Bush Administration now made up of left-wings?

U.S. Treasury secretary calls for stronger regulation on housing finance - International Herald Tribune

Sounds like a good first step.

The market would regulate itself, if it didn't have constant safety nets preventing it from doing so. Banks actually managing funds effectively because they may go out of business with bad loans? Unpossible!

[Soriak]

A major bank going out of business would have devastating consequences. "The market" stops working when people lose confidence, just think back to the bank runs. As one collapses, customers at the other banks start to panic and withdraw their money, leading to more collapse.

In the end, everyone loses money (fractional reserve banking), the FDIC insurance has to pay up and from there it goes even further downwards: banks are major investors in a lot of companies that might go down with them.


There's some talk of having banks split up investment banking and private banking into two separate groups, like it used to be. That way, we could let one side go bankrupt without affecting regular banking. This is something a lot of big shareholders prefer to reduce the risk, but management hates it: bonuses are much bigger when the two are combined.

This is something that will have to come from within though. I imagine it may follow after the bonus structure is changed - I doubt the current system will make it much longer.

[Lithose]

Originally Posted by Soriak

A major bank going out of business would have devastating consequences. "The market" stops working when people lose confidence, just think back to the bank runs. As one collapses, customers at the other banks start to panic and withdraw their money, leading to more collapse.

In the end, everyone loses money (fractional reserve banking), the FDIC insurance has to pay up and from there it goes even further downwards: banks are major investors in a lot of companies that might go down with them.


There's some talk of having banks split up investment banking and private banking into two separate groups, like it used to be. That way, we could let one side go bankrupt without affecting regular banking. This is something a lot of big shareholders prefer to reduce the risk, but management hates it: bonuses are much bigger when the two are combined.

This is something that will have to come from within though. I imagine it may follow after the bonus structure is changed - I doubt the current system will make it much longer.

Major banks are emboldened in their bad investments by the safety nets put in place to stop them from collapsing. They can be reckless because the government makes it ok for them to reckless.

If there is no consequence to your action, then there is no reason not to do it if it results in a short term gain. The fed has removed consequence from a free market system where the only limitation and regulation was supposed to be consequence.

I understand what your saying about government oversight, but having worked in TIGTA for a number of years (The IRS investigative branch), let me just say that the government couldn't possibly prevent a disaster through enforcement. Its just not institutionally possible, at all. (The IRS is far more organized then the SEC and neither of them can pin down any big player.)

The market though, can..If the nets weren't there it would never sting as bad as it does now. The only reason those banks are in a position to disrupt as much as they are is because they have been allowed to grow like a cancer, when they should have failed ages ago.

Had they failed and died in their infancy this wouldn't be an issue. They would never have built up the investment capital to pose a serious long term threat of depression inducing collapse.

You can "prevent" forest fires in California for a long time, but that only makes the inevitability of a huge fire more certain. I, for one, would prefer to deal with small crisis's then stunting them in favor a giant collapse. This actually has more to do with politics then most realize..yay for a limited term administration system!