The Shrine

...down 346 points and it is just after lunch. Are we fucked?

Im baffled at how the big boys got mixed up in this credit and mortgage disaster. The small mortgage companies offering ridiculous balloons, zero down payments, and short year ARMs makes sense to have crumbled... but why did experts like Freddie, Leyman, AIG, and Fannie make these loans? Straight up greed?

Greed and no fear of consequences. I don't know what it's like down there, but if the big banks (primary mortgage lenders) up here fuck up huge, they're bailed out by the gov't with no real consequences. Can't have a bank go bankrupt after all. If there's one lesson that stuck from the Great Depression is that the gov't cannot allow people to lose faith in the banking system.

The CEOs generally get paid a ton no matter what so they might as well go for high risk stuff for even more money. I think most of these failed companies still paid their CEO $10 million or more in a severance package. One of the analyst said it pretty well: "The worst that can happen to a CEO is to be publicly humiliated and fired. For $20 million, just about everyone can live with that."

Don wrote:The CEOs generally get paid a ton no matter what so they might as well go for high risk stuff for even more money. I think most of these failed companies still paid their CEO $10 million or more in a severance package. One of the analyst said it pretty well: "The worst that can happen to a CEO is to be publicly humiliated and fired. For $20 million, just about everyone can live with that."

For example, look what happened when they sent HP's CEO packing, she got a $22mill golden parachute.

Flip wrote:Im baffled at how the big boys got mixed up in this credit and mortgage disaster.

This guys presents a good argument deregulation was a part of the problem: http://www.electoral-vote.com/,

It was the 1999 Gramm-Leach-Bliley Act that repealed the 1933 Glass-Steagall Act and thus eliminated the depression-era walls between between banking, investment, and insurance that made this crisis possible. Glass-Stegall erected walls between banking, investment management, and insurance, so problems in one sector could not spill over into the others, which is precisely what is happening now.

I was just going to post something similar:

This economic disaster began with Reagan

EDIT: Here's some better detail on Gramm: http://www.dailykos.com/story/2008/9/15/172840/738

Up 410 today.

Today was definitely a buy day.

DJI +410
FTSE + 400
GDAXI +275
HSI +1,695
N225 +432

DJI just dropped 530 points.

Was neg 700 at one point.

The front page of CNN is a face palm:



edit: It's more of a "Oh man I'm fucked" facepalm than a "How stupid can you get?" facepalm, but it's still a facepalm.

fake edit of the edit: facepalm.

Directly in response to the bill not passing Congress. Oh, and it dropped to 777. Imagine that.

The impression I got was that Pelosi hurt the Republicans' feelings, so many of them voted no. Boo fucking hoo! Suck it up, admit that you fucked up this economy, and fix it!

SineSwiper wrote:Directly in response to the bill not passing Congress. Oh, and it dropped to 777. Imagine that.

The impression I got was that Pelosi hurt the Republicans' feelings, so many of them voted no. Boo fucking hoo! Suck it up, admit that you fucked up this economy, and fix it!

My rep voted for the Bill. I will not be voting for his ass when his term comes up.

Imakeholesinu wrote:My rep voted for the Bill. I will not be voting for his ass when his term comes up.

When the banks collapse and millions of Americans are out on the street wondering where their money, their houses, their jobs went, I'm going to be blaming you.

Look, nobody likes the idea of spending close to a trillion dollars on this bailout when we already have a $12 trillion debt. However, the end result if this bailout doesn't happen will be very grave. Whatever words I say won't completely reflect just how bad such a mess it will turn out to be.

So, instead of trying to blame your rep for voting for the solution to this mess, blame your rep if he voted for the deregulation that started this problem in the first place. Blame your rep if he voted against any solutions that would have fixed it before them. Don't blame him for voting for this critically important bill.

SineSwiper wrote:However, the end result if this bailout doesn't happen will be very grave.

Probably. The end result if the bailout <i>does</i> happen is likely to be very grave too, though.

I'm inclined to say, let the market sort itself out. How often does intervention of this kind actually work?

Andrew, Killer Bee wrote:I'm inclined to say, let the market sort itself out. How often does intervention of this kind actually work?

Government Bailouts: A U.S. Tradition Dating to Hamilton

Alex J. Pollock of the American Enterprise Institute wrote:If you would like an empirical law of government behavior, it is that in a panic or threatened financial collapse, governments intervene -- every government, every party, every country, every time.

The Great Depression was an example of what happened when the government didn't do anything and let the market sort itself out. It lasted 10 years, literally created World War II, and only fixed itself because of the massive military complex we were building.

Ultimately, capitalism is not as stable as people are lead out to believe, and government intervention is required from time to time.

Well, I'm more willing to say that the repression of the Germans for 20+ years led to WW2......

Not to mention your part didn't start until 1941

The Great Depression was a world-wide depression, and Hitler came to power during a time of severe hardship. People don't turn to megalomaniacal dictators when times are good.

Kupek wrote:The Great Depression was a world-wide depression, and Hitler came to power during a time of severe hardship. People don't turn to megalomaniacal dictators when times are good.

But that didn't necessarily lead to WW2. The repression of the German people for the 20+ years leading up to it did. What do you think led to Hitler taking power in 1933? Germany's economic hardship was due a lot to restrictions imposed by the Allies.

Of course there was no single cause of WW2. World Wars happen because of a perfect storm of circumstance. But the Great Depression was one of the factors.

The causes for the second world war have very complex ingredients; but the core of it had to do with nationalism, Slavs vs. Germans. When two proud, confident, and aggressive nations who hate each other become extremely powerful and are side by side (Greater Germany and the USSR in this case), and tied with alliances throughout the world; world war becomes a very strong possibility.

Of course, the proud Western nations, traditional rulers of the world, used the attack on Poland as an excuse to rush in and crush the Germans.... Though they got swatted away like flies.

Kupek wrote:Of course there was no single cause of WW2. World Wars happen because of a perfect storm of circumstance. But the Great Depression was one of the factors.

The main cause IMO was the repression of the German people.

Well, let's put it this way: Hitler would have never came into power if the Great Depression never happened.

SineSwiper wrote:Well, let's put it this way: Hitler would have never came into power if the Great Depression never happened.

Man, I wish I had some of my Origins of the 20th Century War reading material left......

I'll try and find some stuff to back up this claim: after WW1, the Allies had so severely repressed the Germans (destroying their trade market and alienating them from the rest of Europe) that they built up a (much more than normal Germans have) disdain for non Germans. This is how you have a sociopath such as Hitler who's entire platform is "we are the best race in the world and we have to prove it to everyone" win an election. Remember, he won an election so most of the people wanted him.

So yes, the depression had something to do with it as they were the "different" party coming up and gained their popularity start because of it, but that shit ain't gonna lead to a freakin' war. It took something else for so many Germans to get sucked into that mindset.