Capitalism Guarantees Rising Inequality

[Andylusion]

Wow. You must be privy to secret meetings between lots politicians and loan officers.
You must have 20/20 hearing.
Any proof or is this more bloviating on your part?

We have provided proof dozens of times in this thread alone. Possibly hundreds of times throughout the forum.

The Clinton Administration, and the Democrats, both pushed banks to make bad loans. They were very very open about it. They even had public announcements of their success in forcing banks to make bad loans, and even openly admitted the default rate would be higher on these bad loans.

[ame=http://youtu.be/PEoqKYCMDmc]1998: Andrew Cuomo admits Forcing Banks to Make Affirmative Action Loans - YouTube[/ame]

Andrew Cuomo, praising the actions of the Federal Government forcing banks to make bad loans, that he admits will have a higher risk, and a higher default rate. 1998.

I have on my computer right now, a court document, of a lawsuit by Acorn, against a bank to make more sub-prime loans. The document includes the name Barack Obama.

This claim that we have been saying over and over, is a well established documented fact.

"The Clinton Administration, and the Democrats, both pushed banks to make bad loans. They were very very open about it."

Is that right?
zzzzzzzzzzzzzzzzz.
How did Sandi Weill feel about that governmental action?

"Weissman notes that Glass-Steagall remained law until 1998, when Citicorp and Travelers Group announced they were merging:

"Such a combination of banking and insurance companies was illegal under the Bank Holding Company Act, but was excused due to a loophole that provided a two-year review period of proposed mergers.

"The merger was premised on the expectation that Glass-Steagall would be repealed.

"Citigroup’s co-chairs Sandy Weill and John Reed led a swarm of industry executives and lobbyists who trammeled the halls of Congress to make sure a deal was cut. But as the deal-making on the bill moved into its final phase in Fall 1999, fears ran high that the entire exercise would collapse. (Reed now says repeal of Glass-Steagall was a mistake.)

"Robert Rubin stepped into the breach.

"Having recently stepped aside as Treasury Secretary, Rubin was at the time negotiating the terms of his next job as an executive without portfolio at Citigroup.

"But this was not public knowledge at the time.

"Deploying the credibility built up as part of what the media had labeled 'The Committee to Save the World' (Rubin, Fed Chair Alan Greenspan and then-Deputy Treasury Secretary Lawrence Summers, so named for their interventions in addressing the Asian financial crisis in 1997), Rubin helped broker the final deal."

What about Rubin?
Was he functioning as a representative of big business or big government?
Lobbyists are paid by big business to buy big government

Looking Back at the Repeal of Glass-Steagall, or, How the Banks Caught Casino Fever | Roosevelt Institute

So what? That doesn't change the fact that the vast majority of the banks that failed would not have been affected by Glass-Steagall.

Bear Stearns, Lehman Brothers, IndyMac, Countrywide, and hundreds of others, none of which would have been affected in any way by Glass-Steagall.

So none of that matters. All that crap you just spewed on here, completely irrelevant, because none of it affected the vast majority of the banks that failed.

CitiGroup is the one single example that I know of, that would have been affected.

But can you even prove that had then not merged with Travelers, that this would have prevent CitiGroups sub-prime crisis? No, you can not.

How do I know this? Because they spun off Travelers Property Casualty Corporation, in 2002. So even in the case of CitiGroup, it still doesn't matter. Still doesn't show even one single example where Glass-Steagall would have prevented ANYTHING that happened in the 2008 crash.

Again, the government pushed banks to make sub-prime loans. They sued banks to make sub-prime loans.

All you can do is keep coming up with more irrelevant arguments. By all means, find some other dumb wrong, stupid articles that prove nothing.

You really have lost this argument. You have posted now, over a dozens times, things that do not prove, do not support, do not even make a good case against what I've said, and the evidence I have provided.

All you are doing now is cutting and pasting into posts, the opinions of others. That's not an argument.

 

[Andylusion]

What point do you imagine you (and grandma) are making here?
Are you implying private banks weren't behind more than 84% of sub prime mortgages in 2006?
Bill left in 2001, remember, Comrade?
The richest 1% of the evil 1% own Wall Street banks, and they're instigating the next crisis as we speak. Maybe you can outsource Goldman Sachs?

LOL, every time government controls free markets it makes things worse. Then you find that a reason for MORE control over markets. See Einstein's definition of insanity.

And your solution is to continue dismantling democracy in favor of a financial oligarchy like Italy under Monti or Greece under Papademos? Can you even tell us your definition "free market"? Is it a market free of government regulation or one free of hedge fund regulation?

The most free system in the world today, is the Canadian system, and they had no sub-prime crash, and no mass bank failures in the recent crash, or in the 1930s.

You and your policies, are what is created an oligarchy and dismantling freedom. YOU are the supporter of that.

 

[Andylusion]

Personally, I don't think it was coincidence that the War on Drugs began about the same time capitalists began outsourcing millions of middle class jobs

Personally, I don't think it was coincidence that the desire for drugs began about the same time Leftists engaged in a war on Capitalism, and that caused people's lives to suck, and engendered hopelessness.

 

[Zombie_Pundit]

Not in any intelligent manner. Slavery was evil, but it was not the back bone of the industrial rise in capitalism. Once the agrarian era was over, and it became obvious that the concept of capital is the excessive production of labor had been totally wrong, capitalism was born. Then we realized it needed regulation. It is the only economic system which makes the most people and nations prosperous.

In fact, during the years before the US Civil War, there was no capitalism without slavery; they were one and the same thing.
http://opinionator.blogs.nytimes.com/2013/03/30/king-cottons-long-shadow/?_php=true&_type=blogs&_r=0
...

If I am a slave.... I can't have capital. If I can't have capital... it's not capitalism stupid. Idiots on the forum today.

"We deny people the ability to own capital, and that proves capitalism is bad!"

What moron says stuff like this? Oh wait... some internet forum poster.

We were having a discussion on the definition of the economic system. Defining terms is the first stage in any intellectual exchange. You have chosen to disrupt a respectful tone with this gibberish. Do you live under a bridge?

If I am a slave.... I can't have capital. If I can't have capital... it's not capitalism

Idiotic.
The slave is the capital and is traded like property alongside horses. The slave is no more a participant in the system than is a horse. Ergo, it doesn't matter if the slave can hold capital.

"We deny people the ability to own capital, and that proves capitalism is bad!"

If the definition of Capitalism revolves around slavery, a definition which dnsmith was very careful to avoid and the reason I asked for qualifiers, then yeah it's pretty bad.
Are you just shrugging your shoulders at slavery? Really? "meh" is how you feel about slavery?

What moron says stuff like this? Oh wait... some internet forum poster.

And would some Power the small gift give us
To see ourselves as others see us!
It would from many a blunder free us,
And foolish notion:
What airs in dress and gait would leave us,
And even devotion!
"To A Louse, On Seeing One on a Lady's Bonnet at Church" - Robert Burns (Translated)

 

[Indeependent]

So Androw cheers on CEOs who cave in to pressure to hand out millions of bad loans.

I'd like to see the PDF that lowered the Lending Standards (doesn't exist) and I'd like to know why these ultra savvy CEOs approved bypassing the database tables with paper.

The answer is greed, avarice and knowing they would get bailed out.

 

[dnsmith35]

Don't sulk, kiddo, you sorta got the point in the end. (pun?)

He has had the point all along.

Okay, now that's funny on a number of levels.

When do you expect to arrive? When discussing new construction the "appraisers" must look at the plans, the size of the house, where it is located, determine what similar new construction sold for then ESTIMATE its value so as to set a fair price. Having been in the real estate business while pursuing my graduate work it became that "appraisers" can be off either way as to the actual value of the house and the price at which it should be sold. Until about 1995 the "appraisers" mostly took the price to construct from the builder giving the builder huge profits in many cases. In the mid 90's our state's laws took the appraiser out of the brokerage business such that they could hold them responsible for more accurate estimates and insisted they complete a course in appraisal before getting their license. Things changed for the better toward the end of Clinton's term and we started to get appraisals which adhered to value.

Zombie - I wouldn't expect a price index to include a market value on the home until it had sold a few times. Is the resale not the real test of value? Wasn't that the original point of contention?

Yes it was the original point that both Androw and I made, and you have just confirmed that we were right.

But I digress...
I don't disagree that some form of appraisal is needed for setting a price on a new thing. Of course, the market will provide the real answer.

Yep! That is what we said.

Hypothetical:
If you started to build a development of some 30 homes, had the model homes appraised, was happy with that price because it was around your target and then started getting sales based on that projected price range... things would be great, right?
Now, let's throw in market forces... the housing market heats up... prices of existing homes all around your development are spiking. Do you
A) increase your prices because the market will bear more
B) keep your prices the same, ride through on easy sales
C) lower your prices because you're a real nice guy
Do market forces have no effect on the final sale price, is what I'm asking.

For the typical contractor the answer is A) because some of the houses may eventually have to be sold at lower prices, just like a furniture store or a clothing store; the total profit for the year may be in what you sell at the market peak, and the other stock is sold at or below market to recoup investment. Construction persons are not in the business of being "real nice guys" or they won't last long in the business. Economics 101.

 

[Zombie_Pundit]

The most free system in the world today, is the Canadian system

Then move to Canada! Go on then!

Write back and tell us how great it is to have banks fully regulated by the Office of the Superintendent of Financial Institutions. No really, tell us! That central authority seems to be doing really well.

 

[Zombie_Pundit]

Don't sulk, kiddo, you sorta got the point in the end. (pun?)

He has had the point all along.

Okay, now that's funny on a number of levels.

Yes it was the original point that both Androw and I made

Androw attempted to prove that new construction was always cheaper and defended the claim by exclaiming the equivalent of "well...duh!". I didn't even touch that in relation to the original claim on price indices the subsequent claim is a non sequitur. I do show restraint, you know.
But I digress...
I get that you're doing some tag team thing. That's cute. Is it your intention to have any serious discussion in this thread or are you just tagging in and out for the lulz?

 

[dnsmith35]

I am, sadly, able to believe that. As painful as it is to review this chapter in our history, and recognize that much of the wealth we enjoy today was built on those early unspeakable bonds and investments, does this reflect an inherent flaw in Capitalism? Or do we need some other qualifier such as "integrated" "regulated" "fair" to disambiguate a system that treats humans as capital from the system that we have today?

Today compared to two centuries ago is improvement. However, I don't think we've reached the qualifier "fair." Countless millions are systematically denied basic rights, including the right to exist domestically (homeless, propertyless) and all over the globe (often at the behest of US and the West in general for the sake of open markets for western corporations). Would you agree?

Okay, there is a dangerous double-edge sword at play here. Global trade has, in point of fact, increased the real wage in developing countries. Global trade has also, in point of fact, set up sweatshops so terrible that the workers leap from windows.
So my answer is I don't know. I want that real wage increased. Global trade is a good path to world peace. Little girls making Nike shoes is why I don't buy Nikes.

We need not trade with nations that enslave people. C'mon, be fair, Nike didn't open up a plant in Sudan. That being said, I don't know how to implement global trade without recognizing the sovereignty of foreign nations over their own people. Maybe, just maybe, as these other nations go through many of the pains we went through, these other countries will go through those pains more quickly and with less pain overall than we experienced. Maybe we can try to set a good example?

The problem is, you don't understand what the double edged sword really is. Each country in the 3rd world must have its own economic evolution or revolution, depending on the situation. If you turn up your nose at a product which may have been produced by that "little girl" you are delaying that country's evolution. If, and when, you choose to drive down a road in India, and you see little old ladies breaking big rocks into little rocks, you have chosen to respect her right to work such that she can eat, even if she sleeps in the ditch next to the road. When liberals with borders, choose to deny the rights of workers in other countries to support them selves even to the tune of child labor, that country's labor evolution will never occur. It doesn't matter the particular excuse you give; child labor, environmental pollution, nets to stop suicides of virtual slave labor, any and all will eventually give way to safe work places, decent wages (relative to the local economy) and liberty.

 

[dnsmith35]

But are there any valid and sound arguments the Democrats will serve Wall Street any less obediently than Bush did?

"Financial reform didn’t work. Banks today are bigger and more opaque than ever, and they continue to trade in derivatives in many of the same ways they did before the crash, but on a larger scale and with precisely the same unknown risks.

"Ignoring warning signs has inevitable consequences. We ignored them before and we saw what happened.

"We can say this with virtual certainty: if we continue as now and ignore them again, the great white shark of a global financial meltdown will gobble up the meager economic recovery and make 2008 look like a hiccup."

Big Banks and Derivatives: Why Another Financial Crisis Is Inevitable - Forbes

Neither party is going to bite the hand that feeds them, and the politicians can't stand success, they wouldn't have a point to run on.

Lest We Forget: Why We Had A Financial Crisis - Forbes

"Many actors obviously played a role in this story.

"Some of the actors were in the public sector and some of them were in the private sector.

"But the public sector agencies were acting at behest of the private sector.

"It’s not as though Congress woke up one morning and thought to itself, 'Let’s abolish the Glass-Steagall Act!' Or the SEC spontaneously happened to have the bright idea of relaxing capital requirements on the investment banks. Or the Office of the Comptroller of the Currency of its own accord abruptly had the idea of preempting state laws protecting borrowers.

"These agencies of government were being strenuously lobbied to do the very things that would benefit the financial sector and their managers and traders.

"And behind it all, was the drive for short-term profits."

Maybe we can all agree to blame the lobbyists?

I think we can all agree that lobbyists played a part, politicians played a part and the banking industry was all to ready to help them along the way. Lobbying should be outlawed. Gerrymandering should be outlawed. We should go back to "all politics are local."

 

[dnsmith35]

From 1941 to the 1960's we had high taxes on the rich and high wages. The taxes were invested in education and infrastructure and the high wages created consumer demand. Now we have low taxes for the rich and low wages. What is the result? 23% of total income goes to the top 1%. 70% of our economy is consumer demand. Too much money in too few hands starves the economy of demand. Stagnation is the result.

Raise the minimum wage and tax capital gains as income.

Apply a property tax to intangible property like stocks and bonds, and eliminate the FICA cap.

I partially agree. Eliminate the FICA cap. The problem with property tax on stocks and bonds is, until you sell them there is no way to accurately determine the value; which tends to be either higher or lower than purchase price. I agree with raising the minimum wage, but taxing LONG TERM capital gains more than we currently do may well, as JFK told us, cause too much of a loss of capital in the market. I guess that is why he chose to reduce the marginal rate for the rich from 91% to 70% and lower capital gains taxes (a pretty piece of Supply Side economics).

 

[dnsmith35]

What point do you imagine you (and grandma) are making here?
Are you implying private banks weren't behind more than 84% of sub prime mortgages in 2006?

Imply hell! let me say it straight out. The banks did what the government told them to do. The fault is the government's. No matter how you try to pass it off on the banks whose only blame is trying not to lose too much money with low interest toxic loans. If there is another crisis in the making, look to our politicians in Washington, D.C., not to the banks.

Of course, those banks hired the lobbyists to tell government which laws to pass, right?

"Even this morning, November 22, 2011, a seemingly smart guy like Joe Kernan was saying on CNBC’s Squawkbox, 'When the losses at Fannie and Freddie reach $200 billion… how can the ‘deniers’ say that Fannie and Freddie were enablers for a lot of the housing crisis. When it gets up to that levels, how can they say that they were only into sub-prime late, and they were only in it a little bit?'

"The reason that people can say that is because it is true.

"The $200 billion was a mere drop in the ocean of derivatives which in 2007 amounted to three times the size of the entire global economy."

Lest We Forget: Why We Had A Financial Crisis - Forbes

Yet the failure and losses in the derivatives market was a result of the housing crash, not the cause.

 

[Indeependent]

Today compared to two centuries ago is improvement. However, I don't think we've reached the qualifier "fair." Countless millions are systematically denied basic rights, including the right to exist domestically (homeless, propertyless) and all over the globe (often at the behest of US and the West in general for the sake of open markets for western corporations). Would you agree?

Okay, there is a dangerous double-edge sword at play here. Global trade has, in point of fact, increased the real wage in developing countries. Global trade has also, in point of fact, set up sweatshops so terrible that the workers leap from windows.
So my answer is I don't know. I want that real wage increased. Global trade is a good path to world peace. Little girls making Nike shoes is why I don't buy Nikes.

We need not trade with nations that enslave people. C'mon, be fair, Nike didn't open up a plant in Sudan. That being said, I don't know how to implement global trade without recognizing the sovereignty of foreign nations over their own people. Maybe, just maybe, as these other nations go through many of the pains we went through, these other countries will go through those pains more quickly and with less pain overall than we experienced. Maybe we can try to set a good example?

The problem is, you don't understand what the double edged sword really is. Each country in the 3rd world must have its own economic evolution or revolution, depending on the situation. If you turn up your nose at a product which may have been produced by that "little girl" you are delaying that country's evolution. If, and when, you choose to drive down a road in India, and you see little old ladies breaking big rocks into little rocks, you have chosen to respect her right to work such that she can eat, even if she sleeps in the ditch next to the road. When liberals with borders, choose to deny the rights of workers in other countries to support them selves even to the tune of child labor, that country's labor evolution will never occur. It doesn't matter the particular excuse you give; child labor, environmental pollution, nets to stop suicides of virtual slave labor, any and all will eventually give way to safe work places, decent wages (relative to the local economy) and liberty.

So Asians aren't motivated, educated or potentially self-reliant?
You are really insulting India.

It's amazing how so many European nations have accomplished so much without all the muck and all India is doing is sucking America dry.

 

[Zombie_Pundit]

Today compared to two centuries ago is improvement. However, I don't think we've reached the qualifier "fair." Countless millions are systematically denied basic rights, including the right to exist domestically (homeless, propertyless) and all over the globe (often at the behest of US and the West in general for the sake of open markets for western corporations). Would you agree?

Okay, there is a dangerous double-edge sword at play here. Global trade has, in point of fact, increased the real wage in developing countries. Global trade has also, in point of fact, set up sweatshops so terrible that the workers leap from windows.
So my answer is I don't know. I want that real wage increased. Global trade is a good path to world peace. Little girls making Nike shoes is why I don't buy Nikes.

We need not trade with nations that enslave people. C'mon, be fair, Nike didn't open up a plant in Sudan. That being said, I don't know how to implement global trade without recognizing the sovereignty of foreign nations over their own people. Maybe, just maybe, as these other nations go through many of the pains we went through, these other countries will go through those pains more quickly and with less pain overall than we experienced. Maybe we can try to set a good example?

The problem is, you don't understand what the double edged sword really is. Each country in the 3rd world must have its own economic evolution or revolution, depending on the situation. If you turn up your nose at a product which may have been produced by that "little girl" you are delaying that country's evolution. If, and when, you choose to drive down a road in India, and you see little old ladies breaking big rocks into little rocks, you have chosen to respect her right to work such that she can eat, even if she sleeps in the ditch next to the road. When liberals with borders, choose to deny the rights of workers in other countries to support them selves even to the tune of child labor, that country's labor evolution will never occur. It doesn't matter the particular excuse you give; child labor, environmental pollution, nets to stop suicides of virtual slave labor, any and all will eventually give way to safe work places, decent wages (relative to the local economy) and liberty.

Hey hey now! When it comes to the commodities I choose to purchase I am the almighty consumer and if I don't want shoes made by the torn hands of little girls, then by golly, I won't buy those things. What's more, you would have me believe it is okay for Nike to open up shop in a Sudanese slave labor camp if it would, eventually, better the lives of literal slave laborers. Notice Nike does no such a thing.

There must be some preconditions we impose on other nations if they want to do business with us. The fact that Sudan has literal slavery does, to my mind, exclude that nation from participating in our marketplaces. Slavery=Get out of the pool
Further, we can make an impact on the lives of the workers in those countries by refusing to purchase a product manufactured in a manner we find intolerably cruel. Little girls with torn hands is well above my pain threshold.

I just want to add that I do support global trade. I support immigration. Global Trade will better the lives of everyone, and I think will eventually secure world peace.

 

[dnsmith35]

The collapse was caused by Bush's SEC letting Wall Street run a derivatives Ponzi scheme.

It wasn't the housing market.

But are there any valid and sound arguments the Democrats will serve Wall Street any less obediently than Bush did?

"Financial reform didn’t work. Banks today are bigger and more opaque than ever, and they continue to trade in derivatives in many of the same ways they did before the crash, but on a larger scale and with precisely the same unknown risks.

"Ignoring warning signs has inevitable consequences. We ignored them before and we saw what happened.

"We can say this with virtual certainty: if we continue as now and ignore them again, the great white shark of a global financial meltdown will gobble up the meager economic recovery and make 2008 look like a hiccup."

Big Banks and Derivatives: Why Another Financial Crisis Is Inevitable - Forbes

Whenever something goes wrong, the left instantly blames big business, and makes this claim that government is somehow in the pocket of big business.

But this very topic disproves that entire concept.

The big banks were completely against sub-prime loans to begin with. Default rates of CRA loans were easily double that of conventional mortgages.

None of the banks wanted the CRA, or sub-prime to begin with. The only reason CRA and sub-prime loans existed is because government forced them to.

And of course the government isn't going to back track on this. They all believe that home ownership is inherently good. Barnie Frank even said there was no bubble at all.

[ame=http://youtu.be/iW5qKYfqALE]Barney Frank in 2005: What Housing Bubble? - YouTube[/ame]


Again, has nothing to do with 'government is in the pocket of business' bull crap.... it's government pushing this agenda. They were warned there was a price bubble, and they ignored it.

Barney Frank, "2005, no bubble, no problem, not a dot.com. There will be no collapse, and those of us on our committee will continue to push for more home ownership."

 

[georgephillip]

Neither party is going to bite the hand that feeds them, and the politicians can't stand success, they wouldn't have a point to run on.

Lest We Forget: Why We Had A Financial Crisis - Forbes

"Many actors obviously played a role in this story.

"Some of the actors were in the public sector and some of them were in the private sector.

"But the public sector agencies were acting at behest of the private sector.

"It’s not as though Congress woke up one morning and thought to itself, 'Let’s abolish the Glass-Steagall Act!' Or the SEC spontaneously happened to have the bright idea of relaxing capital requirements on the investment banks. Or the Office of the Comptroller of the Currency of its own accord abruptly had the idea of preempting state laws protecting borrowers.

"These agencies of government were being strenuously lobbied to do the very things that would benefit the financial sector and their managers and traders.

"And behind it all, was the drive for short-term profits."

Maybe we can all agree to blame the lobbyists?

Yeah, which lobbyists? You mean ACORN and other community groups that lobbied to lower lending standards? Yeah. Absolutely we blame them.

Whoever wrote that article from Forbes, was an idiot.

The very act of the banking business, involves risk. It's fundamental to how loaning money works. You don't know what will happen when you loan money to person X, and if they will repay or not.

Of course the banks are operating the same way they were in the past. If you legislate out risk, there would be no banking industry.

Further, of course reform didn't work. When you bailout banks, what reason do banks have to fundamentally change how they operate?

"WHY BANKS FAILED THE STRESS TEST"
Andrew G Haldane
Executive Director for Financial Stability
Bank of England
13 February 2009

Gave this report:

A few years ago, ahead of the present crisis, the Bank of England and the FSA commenced a series of seminars with financial firms, exploring their stress-testing practices. The first meeting of that group sticks in my mind. We had asked firms to tell us the sorts of stress which they routinely used for their stress-tests.

A quick survey suggested these were very modest stresses. We asked why. Perhaps disaster myopia – disappointing, but perhaps unsurprising? Or network externalities – we understood how difficult these were to capture?

No. There was a much simpler explanation according to one of those present. There was absolutely no incentive for individuals or teams to run severe stress tests and show these to management. First, because if there were such a severe shock, they would very likely lose their bonus and possibly their jobs.

Second, because in that event the authorities would have to step-in anyway to save a bank and others suffering a similar plight.

All of the other assembled bankers began subjecting their shoes to intense scrutiny. The unspoken words had been spoken. The officials in the room were aghast.

Did banks not understand that the official sector would not underwrite banks mismanaging their risks?

Yet history now tells us that the unnamed banker was spot-on. His was a brilliant articulation of the internal and external incentive problem within banks.

You people on the left don't seem to grasp this. You can make a BILLION LAWS.... all trying to mitigate risk, and it's all pointless. No amount of regulation will ever stop banks from making bad choices. No amount of laws will stop this.

The only system that will prevent banks from making bad choices, is letting them fail, and not bailing them out.

This report, where government officials interviewed bank executives, is absolute proof of why everything happened the way it did.

The banker years before the crisis, said they would likely lose their jobs, and the banks would end up bailed out anyway.

When Bear Stearns, one of the original players in the 1997 Sub-prime Freddie Mac Loan scheme, crash... the very first thing that happened was James Cayne, was fired. Alan Schwartz replaced him, but only for a few months, and he was gone. Meanwhile the company was given billions, and ultimately bond holders of Bear Stearns were paid back 100¢ on the dollar by tax payers.

In other words, the bank executives were absolutely right. They knew exactly what would happen. The government would bail them out anyway, and they would lose their jobs, so why bother mitigating risk?

This is the real problem. All that blaw blaw blaw blaw and Glass-Steagall, and leverage ratios, and capital requirements... all of that, doesn't mean anything. It's all completely irrelevant.

As long as the banks know the government will bail them out, they will never do high risk stress tests, because there's no reason to.

Lastly, the article makes some really lame points.

Glass-Steagall had nothing to do with the crash. If it had been left in place, nothing would have changed. As far as I can tell, only 3 of the major banks would have been affected by it, and 2 of those did NOT fail.

Second, relaxing capital requirements on investment banks, is also largely irrelevant. I have yet to find one single example of an investment bank that failed, that had they followed the original capital requirements, would not have failed. If you can tell me which investment bank you think would not have failed, under the original capital requirement rules, by all means post it.

Moreover, investment banks were a fraction of the banks that failed. IndyMac was not an investment bank. Countrywide was not an investment bank. Wachovia (originally First Union, one of the original 1997 sub-prime Freddie Mac lenders), was not an investment bank. AIG was not an investment bank.

All of these, and the majority of all banks that failed, were not investment banks, and did not have their capital requirements relaxed.

Lastly, preempting state laws that protect borrowers, is something I'm against, but honestly it was good from the crisis perspective.

I'm against it, because I'm against the federal government telling anyone what to do. It's not the Federal government's job to determine what protections borrowers have, or what regulations banks must follow.

However, that said.... Borrower protection, is exactly the opposite of what we want. When you protect borrowers from the fallout of making bad loans, that just increases the chances of having people make bad loans.

What do you think "strategic default" means? People intentionally default on their loans, knowing they have protections. They can declare bankruptcy, and walk away from all the debts they owe.

This is one of the reasons Canada has had no real housing price bubble, or housing price crash, because all loans are full recourse. Meaning, if you buy a house with a loan for $200,000, and you decide to strategically default... you end up losing everything. They'll chase you until the end of your life until you pay back that loan.

Consequently people are not likely to make a risky loan. They are not likely to borrow hundreds of thousands, and then walk away... because they'll lose everything, and end up garnished for years.

The article was dumb, and pointless. Focus on the cause, not irrelevant unimportant side notes, that had nothing to do with the crash.

The cause, was government pushing bad loans. Period.

Which lobbyists pushed the government to push bad loans?
Hint: it wasn't ACORN or Obama

"Weissman notes that Glass-Steagall remained law until 1998, when Citicorp and Travelers Group announced they were merging:

"Such a combination of banking and insurance companies was illegal under the Bank Holding Company Act, but was excused due to a loophole that provided a two-year review period of proposed mergers.

"The merger was premised on the expectation that Glass-Steagall would be repealed. Citigroup’s co-chairs Sandy Weill and John Reed led a swarm of industry executives and lobbyists who trammeled the halls of Congress to make sure a deal was cut.

"But as the deal-making on the bill moved into its final phase in Fall 1999, fears ran high that the entire exercise would collapse. (Reed now says repeal of Glass-Steagall was a mistake.)"

If you decide to argue that the repeal of Glass-Steagall played no role in perpetuating the US housing bubble, supply proof (for a change)

Looking Back at the Repeal of Glass-Steagall, or, How the Banks Caught Casino Fever | Roosevelt Institute

 

[georgephillip]

Not in any intelligent manner. Slavery was evil, but it was not the back bone of the industrial rise in capitalism. Once the agrarian era was over, and it became obvious that the concept of capital is the excessive production of labor had been totally wrong, capitalism was born. Then we realized it needed regulation. It is the only economic system which makes the most people and nations prosperous.

In fact, during the years before the US Civil War, there was no capitalism without slavery; they were one and the same thing.
http://opinionator.blogs.nytimes.com/2013/03/30/king-cottons-long-shadow/?_php=true&_type=blogs&_r=0

"In the 1830s, hundreds of millions of acres of conquered land were surveyed and put up for sale by the United States. This vast privatization of the public domain touched off one of the greatest economic booms in the history of the world up to that time..."

"Without slavery, however, the survey maps of the General Land Office would have remained a sort of science-fiction plan for a society that could never happen.

"Between 1820 and 1860 more than a million enslaved people were transported from the upper to the lower South, the vast majority by the venture-capitalist slave traders the slaves called 'soul drivers.'

"The first wave cleared the region for cultivation. 'Forests were literally dragged out by the roots,' the former slave John Parker remembered in 'His Promised Land.'

"Those who followed planted the fields in cotton, which they then protected, picked, packed and shipped — from 'sunup to sundown' every day for the rest of their lives..."

"When the cotton crop came in short and sales failed to meet advanced payments, planters found themselves indebted to merchants and bankers.

"Slaves were sold to make up the difference.

"The mobility and salability of slaves meant they functioned as the primary form of collateral in the credit-and-cotton economy of the 19th century.

"It is not simply that the labor of enslaved people underwrote 19th-century capitalism.

"Enslaved people were the capital: four million people worth at least $3 billion in 1860, which was more than all the capital invested in railroads and factories in the United States combined.

"Seen in this light, the conventional distinction between slavery and capitalism fades into meaninglessness."

If I am a slave.... I can't have capital. If I can't have capital... it's not capitalism stupid. Idiots on the forum today.

"We deny people the ability to own capital, and that proves capitalism is bad!"

What moron says stuff like this? Oh wait... some internet forum poster.

You are fundamentally challenged, aren't you?
Were you homeschooled?
You're lack of reading COMPREHENSION skills make most of your responses imbecilic.

Slaves were NOT denied the right to have capital, Moron.

Slaves WERE capital.

Go to college

 

[Toddsterpatriot]

Wow. You must be privy to secret meetings between lots politicians and loan officers.
You must have 20/20 hearing.
Any proof or is this more bloviating on your part?

We have provided proof dozens of times in this thread alone. Possibly hundreds of times throughout the forum.

The Clinton Administration, and the Democrats, both pushed banks to make bad loans. They were very very open about it. They even had public announcements of their success in forcing banks to make bad loans, and even openly admitted the default rate would be higher on these bad loans.

[ame=http://youtu.be/PEoqKYCMDmc]1998: Andrew Cuomo admits Forcing Banks to Make Affirmative Action Loans - YouTube[/ame]

Andrew Cuomo, praising the actions of the Federal Government forcing banks to make bad loans, that he admits will have a higher risk, and a higher default rate. 1998.

I have on my computer right now, a court document, of a lawsuit by Acorn, against a bank to make more sub-prime loans. The document includes the name Barack Obama.

This claim that we have been saying over and over, is a well established documented fact.

"The Clinton Administration, and the Democrats, both pushed banks to make bad loans. They were very very open about it."

Is that right?
zzzzzzzzzzzzzzzzz.
How did Sandi Weill feel about that governmental action?

"Weissman notes that Glass-Steagall remained law until 1998, when Citicorp and Travelers Group announced they were merging:

"Such a combination of banking and insurance companies was illegal under the Bank Holding Company Act, but was excused due to a loophole that provided a two-year review period of proposed mergers.

"The merger was premised on the expectation that Glass-Steagall would be repealed.

"Citigroup’s co-chairs Sandy Weill and John Reed led a swarm of industry executives and lobbyists who trammeled the halls of Congress to make sure a deal was cut. But as the deal-making on the bill moved into its final phase in Fall 1999, fears ran high that the entire exercise would collapse. (Reed now says repeal of Glass-Steagall was a mistake.)

"Robert Rubin stepped into the breach.

"Having recently stepped aside as Treasury Secretary, Rubin was at the time negotiating the terms of his next job as an executive without portfolio at Citigroup.

"But this was not public knowledge at the time.

"Deploying the credibility built up as part of what the media had labeled 'The Committee to Save the World' (Rubin, Fed Chair Alan Greenspan and then-Deputy Treasury Secretary Lawrence Summers, so named for their interventions in addressing the Asian financial crisis in 1997), Rubin helped broker the final deal."

What about Rubin?
Was he functioning as a representative of big business or big government?
Lobbyists are paid by big business to buy big government

Looking Back at the Repeal of Glass-Steagall, or, How the Banks Caught Casino Fever | Roosevelt Institute

Any banks fail because Glass-Steagall was repealed? Which ones?

 

[georgephillip]

We have provided proof dozens of times in this thread alone. Possibly hundreds of times throughout the forum.

The Clinton Administration, and the Democrats, both pushed banks to make bad loans. They were very very open about it. They even had public announcements of their success in forcing banks to make bad loans, and even openly admitted the default rate would be higher on these bad loans.

1998: Andrew Cuomo admits Forcing Banks to Make Affirmative Action Loans - YouTube

Andrew Cuomo, praising the actions of the Federal Government forcing banks to make bad loans, that he admits will have a higher risk, and a higher default rate. 1998.

I have on my computer right now, a court document, of a lawsuit by Acorn, against a bank to make more sub-prime loans. The document includes the name Barack Obama.

This claim that we have been saying over and over, is a well established documented fact.

"The Clinton Administration, and the Democrats, both pushed banks to make bad loans. They were very very open about it."

Is that right?
zzzzzzzzzzzzzzzzz.
How did Sandi Weill feel about that governmental action?

"Weissman notes that Glass-Steagall remained law until 1998, when Citicorp and Travelers Group announced they were merging:

"Such a combination of banking and insurance companies was illegal under the Bank Holding Company Act, but was excused due to a loophole that provided a two-year review period of proposed mergers.

"The merger was premised on the expectation that Glass-Steagall would be repealed.

"Citigroup’s co-chairs Sandy Weill and John Reed led a swarm of industry executives and lobbyists who trammeled the halls of Congress to make sure a deal was cut. But as the deal-making on the bill moved into its final phase in Fall 1999, fears ran high that the entire exercise would collapse. (Reed now says repeal of Glass-Steagall was a mistake.)

"Robert Rubin stepped into the breach.

"Having recently stepped aside as Treasury Secretary, Rubin was at the time negotiating the terms of his next job as an executive without portfolio at Citigroup.

"But this was not public knowledge at the time.

"Deploying the credibility built up as part of what the media had labeled 'The Committee to Save the World' (Rubin, Fed Chair Alan Greenspan and then-Deputy Treasury Secretary Lawrence Summers, so named for their interventions in addressing the Asian financial crisis in 1997), Rubin helped broker the final deal."

What about Rubin?
Was he functioning as a representative of big business or big government?
Lobbyists are paid by big business to buy big government

Looking Back at the Repeal of Glass-Steagall, or, How the Banks Caught Casino Fever | Roosevelt Institute

So what? That doesn't change the fact that the vast majority of the banks that failed would not have been affected by Glass-Steagall.

Bear Stearns, Lehman Brothers, IndyMac, Countrywide, and hundreds of others, none of which would have been affected in any way by Glass-Steagall.

So none of that matters. All that crap you just spewed on here, completely irrelevant, because none of it affected the vast majority of the banks that failed.

CitiGroup is the one single example that I know of, that would have been affected.

But can you even prove that had then not merged with Travelers, that this would have prevent CitiGroups sub-prime crisis? No, you can not.

How do I know this? Because they spun off Travelers Property Casualty Corporation, in 2002. So even in the case of CitiGroup, it still doesn't matter. Still doesn't show even one single example where Glass-Steagall would have prevented ANYTHING that happened in the 2008 crash.

Again, the government pushed banks to make sub-prime loans. They sued banks to make sub-prime loans.

All you can do is keep coming up with more irrelevant arguments. By all means, find some other dumb wrong, stupid articles that prove nothing.

You really have lost this argument. You have posted now, over a dozens times, things that do not prove, do not support, do not even make a good case against what I've said, and the evidence I have provided.

All you are doing now is cutting and pasting into posts, the opinions of others. That's not an argument.

Apparently, you are right about GLB:

"Did the Gramm-Leach-Bliley Act cause the housing bubble?
by Tyler Cowen on September 19, 2008 at 6:48 am in History | Permalink
"No.

"That is one common myth among the progressive left.

"Because it involves financial deregulation and the unpopular Phil Gramm, the Act is vilified and assumed to be part of a broader chain of evil events. Here are some of the articles which promulgate the myth that the Act caused or helped cause the housing bubble.

"One version of the claim originates with Robert Kuttner, but if you read his article (and the others) you’ll see there’s not much to the charge. Kuttner doesn’t do more than paint the Act as part of the general trend of allowing financial conflicts of interest.

"Most of all, the Act enabled financial diversification and thus it paved the way for a number of mergers. Citigroup became what it is today, for instance, because of the Act.

"Add Shearson and Primerica to the list. So far in the crisis times the diversification has done considerably more good than harm.

"Most importantly, GLB made it possible for JP Morgan to buy Bear Stearns and for Bank of America to buy Merrill Lynch.

"It’s why Wachovia can consider a bid for Morgan Stanley. Wince all you want, but the reality is that we all owe a big thanks to Phil Gramm and others for pushing this legislation."

Did the Gramm-Leach-Bliley Act cause the housing bubble?

 

[dnsmith35]

Before capitalism, the poor starved on a regular basis. They had no healthcare, no clothing, no food, no television, no cell phones, no central heating, no air conditioning, no nothing. The poor live like kings compared to how they lived before capitalism.

You must be fond of the idea that civilization started about 100 years ago and beforehand people were savage animals who had no direction until capitalism baptized them. You've regularly advocate learning about history but have opted for a white washed history that paints the modern era as the only leap forward in human civilization.

Given your level of knowledge about the world, your viewpoint on capitalism is accurate and I am wrong. But there's a big difference between what you perceive to know about the world and how the facts bear. We have no hope of knowing all the facts but your amnesia of history permits the view that capitalism has saved the world.

If you want to maintain your perceptions, I suggest you never look at history because you will be shaken. The phrase "there's nothing new under the sun" was true when Solomon wrote it in 700BC and still is. But you would only agree if you actually knew the facts of history, the Hellenic Age, the Dynasties in Asia, on and on and on.

Understanding history is important, as is understanding human behavior important. Are you suggesting that during the first 100 years or so in American there was not a greater % of the population who were poor? Are you suggesting that during the period leading up to the settling of America there was not rampant serfdom and poverty in Europe or Asia?

Basically what he said is correct, Capitalism has lifted more people out of poverty than any other economic system. Poverty was the common condition during the Age of Solomon and the Hellenic Age in Greece or in the Dynasties in Asia. That there was more wealth concentration with the leaders of those civilizations than there is now in every capitalistic system the world over.

I am not saying it was capitalism which relieved most people from poverty, but it sure does look like it from where I sit. I not only read a lot about ancient civilizations, I experienced one of the oldest. Of the 1 billion people in India, prior to capitalism 90% of the people lived in poverty. That has been reduced to about 50% now, and if the liberals with borders choose not to delay their labor evolution, that will drop drastically in the next generation.