Bear Stearns

[IconOfEvi 0]

If he is for it, I'm against it.

[Count von Phoib 0]

Relevant political analysis. Someone make IconOfEvi a Senator!

[IconOfEvi 0]

I'm thinking of running for the House here against our incumbent rep :P. No joke.

[Korona 0]

It's important not to overlook that as well as shoring up Wall Street, the government bail out would put control of these "toxic" assets in government hands. Why is that important? Well the government would be preventing a very large number of people from becoming homeless. I think that when it's billions of dollars it is easy to see just facts and figures, but on the ground this translates to millions of families who will be screwed up long before Uncle Moneybags has to sell his summerhouse.

 

It's easy to characterise these people as idiots who wanted a holiday or a car more than a house, which I think stems from a more general tendency in the US to see people as earning their fate. But in reality this is very rarely the case. Real people were the victims of predatory loans companies who presented "affordable" loans secured against their property as a viable way to raise much needed funds. The small print caught them out when the banks switched theme to much higher rates after a few years of low payments.

 

http://news.bbc.co.uk/1/hi/business/7070935.stm

Sub-prime mortgages carry a much higher risk of default by the borrower than other kinds of mortgage lending.

 

That is because most of them are "balloon" mortgages (technically known as hybrid-adjustable rate mortgages, or ARMs), which offer the borrower a fixed-rate loan for two or three years, and then switch to a much higher adjustable rate after that.

These "sub prime" mortgages were inherently unfair and it seems reasonable to have the government fix a problem that they essentially caused through deregulation of the loans industry.

[IconOfEvi 0]

I just remembered Im not old enough to run for Congress (the HOR) :(.

[Rattuskid 0]

I was in student government. I think I represented the homerooms where all the smelly kids resided.

[IconOfEvi 0]

I'm on the Diversity Comittee at my college lol. I gotta give my input on this Plan 2008 and other stuff. See how much I don't agree with lol.

[Rattuskid 0]

I wish I could get committee positions on things just because I'm brown.

[IconOfEvi 0]

Well its more cause the Student Gov President who's in one of my classes asked me too, and we agreed I wanna eventually demonstrate among many other things, it's wrong to HAVE to get someone who isn't white, or non-male to fill the seat. He's a cool guy, been in the Marines, etc. :P

[Korona 0]

Ah so you're like his Uncle Tom type thing?

[IconOfEvi 0]

Watch it asshole.

 

And, no. Unlike you, I try not to live in the world of identity politics. This commission and all it stands for really is just a homage to that end.

 

EDIT - http://www.independent.co.uk/opinion/comme...rce-838215.html

 

Oh beautiful. This explains quite a lot. So I see that that same attitude, that blacks and Asians have to be with the leftist party is alive and well in the UK too. That they can't turn their backs on the party, lest they be some sort of freak or traitor. Whether its Labour or the Democrats, its all the same.

 

It sickens me and is not really surprising - that the tolerant left is not really all that tolerant at all.

Edited October 4, 2008 by IconOfEvi

[Korona 0]

I was only provoking you to get a response, I apologise.

 

Anyway, back on topic please, there is plenty to talk about

[IconOfEvi 0]

Nah don't worry, I was angry about the whole identity politics thing, but as for Uncle Tom, I think its kinda funny actually so no harm done ;).

 

I mean srsly, I'm a somewhat /b/tard.

 

Anyway, back on topic please, there is plenty to talk about

The Kiwi's invade Economic Issues:

:wub: :wub: KIWI :wub: :wub:

 

 

 

Also, somewhat on topic, the bailout deal got passed second time around. I suppose there was enough bribe money for the stragglers.

Edited October 4, 2008 by IconOfEvi

[Korona 0]

Yeah the irony is that everyone is mad at the politicians. Those guys are at least somewhat accountable and can be hounded from their positions of power, the same can't be said for the corporate motherfuckers who caused the whole thing in the first place. I think they need to get some more democratic accountability into the world of economics. Not that this would ever happen of course, but ideally it would be there.

[IconOfEvi 0]

Well, ideal would probably be say every citizen had a stock in these major banks (anyone operating in Fed anyways). In practice, it would run into the government having a large share of stocks.

 

I would support the former, detest the latter.

 

You know what? Every citizen having a share of every major bank in the Fed wouldn't be such a bad idea.

 

 

 

Also,

 

:wub: :wub: KIWI :wub: :wub:

Edited October 5, 2008 by IconOfEvi

[Korona 0]

I say abolish the banks, let them all crash. Instead let people borrow from the Federal Reserve directly and cut out the volatile and self-interested middle man.

[IconOfEvi 0]

NOOOO. Are you nuts? Investment banks, yes. Actual banks people hold their deposits and stuff in...dude. Banks are the underpin of an economy. A modern economy will crash without banks. And no, in a modern society as you like to put it, I don't think people would like only one choice for bank.

 

Also, the Federal Reserve IS a bunch of banks! You can't just borrow from the Fed, since technically, the Fed is really a conglomerate of private top banks who borrow money directly to the US government. Nevermind the inherent unconstitutionality of it all, and the immense faggotry of it all. No, get rid of the Fed - Hamilton did nurture the idea of a National bank, however, not a private conglomerate having Federal power and protection of the sorts that we have in the form the Fed. Jackson was right in killing the Second.

[Korona 0]

Ha really? I thought that the Fed was like the Bank of England. I would like to see the bulk of loans issued by the taxpayer rather than have them issued by banks using taxpayer money. It seems like ultimately the taxpayer picks up the tab when things go wrong, so why should private individuals benefit when they go right?

 

I would like to see all banks abolished, but I think just putting the reserve multiplier back down to a sane level would shunt most of them out of business pretty fast. For me, building societies seem perfectly adequate to handle personal cash deposits and administer mortgages and stuff.

[IconOfEvi 0]

Korona, banks are what underpin the entire economy of any nation-state. When people need a loan, it is borrowed from the sums of money stored inside. The whole basic function of banks can best be thought of as.

 

10 people have accounts of $100,000 = $1,000,000

4 businesses need a loan of say, $10,000. Interest is at 3.5% APR, that makes $350 per loan.

Said businesses pay back the loans on time with said interest, at $10350, that makes a total of $41400

Bank distributes surpluses after profit collects to customers in the form of positive interest.

 

Now I know I painted a basic picture of banks and overtly rosy, and that they can and often are more diabolical, however this is mostly true only for national banks. More local banks along with other national banks and mutual funds are basically the key to wealth to society. They are the building block, what allows society to build itself. Build itself is the key phrase here. Banks are merely the means Korona, not the end.

 

 

As for the Feds, they basically have the power to print money out of thin air, and make up money.

[Korona 0]

Banking doesn't work like that at all. It's not just the Fed that can make up money, all banks can with the fractional reserve system

http://en.wikipedia.org/wiki/Reserve_banking

The bottom line is that £1m of deposits can be loaned out many many times. Firstly the reserve multiplier is way to high in just about every country, but also the motivations of the banks themselves exacerbate the problem. Their whole modus operandi is screwed. They are about the last type of institution that you want to be wielding the responsibilities that they have.

 

I want either a single government bank, or a series of publicly owned banks. Essentially the point is that everyone has a stake and their actions are open to public scrutiny and accountability. They fill the same economic role as a contemporary bank but they are accountable and not run for profit and thus their behaviour should end up being very different.

[flyby 0]

10 people have accounts of $100,000 = $1,000,000

4 businesses need a loan of say, $10,000. Interest is at 3.5% APR, that makes $350 per loan.

Said businesses pay back the loans on time with said interest, at $10350, that makes a total of $41400

Bank distributes surpluses after profit collects to customers in the form of positive interest.

 

And that's where you went wrong...

The deregulation, which made the US banks so powerfull, on paper, allowed to lower their provisions subtsancially. With Bearn Stearns , fe, the ratio was 1/33...

 

Meaning that for each dollar ppl put on the bank, 33$ went out as a loan, or in your example : not $ 41400 but 33,000,000 was created. This debt was then considered as "being as good as the real money", but in rality it was thin air and only based upon the promise it would be paid back.

It basically means that the banks lend a lot more money then they have in their vaults and have again and again increased the ratio to maximising their profits. It is an inversed piramid and a game that has to bust at certain point.

Bankprovisions are ment as security to deal with bankruns. Now that a massive world wide bankrun is under way, banks now find them selves with not enough money to pay their customers and their debt owners.

For the Belgian Fortis bank, by now disected into parts and sold, 4 billion euros was withdrawn in 3 days. Wire transfers are great in this modern time, but it can also backfire..

 

Remember that little video i've put up more then a year ago? some of you called me naive for putting it up...but it did accuratly explain how the banking system worked...

 

Looking back on this week, i'd say we're in a systemic bank failure right now...we're going to be hit by a serious resseccion, regardless to what politician are trying to deny.

Last september broke every record in the number of companies failing. TBh, i'm starting to worry if i'll be able to survive myself. All friends i know are worried, every order is suspending. business is grinding to a near dead stop. consumers are retracting from buying frenzies.

I doubt i'll be able to keep going for another year like this, as some analyst are predicting. At this rate, i'll be out of business by next year...

[IconOfEvi 0]

As I said, a simplified example that doesn't take into account the present situation. I was merely giving an example of a normal bank. Normal.

 

Also, again, I think this may be a little more akin to a mutual fund, what I described.

[Feuersturm 0]

Everything dropping again, and now what do the governments have left to offer.... :(

 

Answers please?

[Torlek 0]

Financial markets realized that $700bn won't just magically appear in their coffers and the banks are still refusing to lend. Status quo ante bailout. Before it could have been viewed as a market correction, now panic rules the markets.

[flyby 0]

Panic now only jumps in because many ppl failed to see or believe the implications of a financial crisis has on the real productive economy.

 

The panic continious to play because banks haven't even been half as honnest as they should have.

Out of fear of causing panic, banks (& the FED) have been lying over and over again about the size of the financial blackhole...

Now, we're at a point that, because of crying "wolf" too many times, nobody actually believes them anymore.

Each time a final solution or modest losses have been propagated, we find that next quarter the losses continue to pile up...

 

Where months ago, ppl who projected $500Billion as potential loss for the sub-prime crisis were laughed at as "doomdsday preachers", we now see we have since long passed that threshold and estimates are made for 3 Trillion in losses...

 

It is going to be a double whammy, with the production economy not being able to secure funds when needed, companies putting expansion plans into the fridge... and consumers stoppping to buy goods because they've been badly hurt with their stocks that have evaporated. No more money for nothing.

A lot of ppl who got their surplus money from speculation are now sitting on the bare concrete, with nothing left...

this has a serious impact on consumption.

 

It's too late i'm afraid... we're in for a reccession....and a serious one...

 

-I have a friend that works in a website company and have not yet secured any order of all their outgoing offers in the last 3 months. Everything pends in mid air. Companies are cutting corners and closing doors & windows in order to be as financially healthy as possible, so they can weather out the economic hurricane that is nearing...