GM paying back its government debt

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Re: GM paying back its government debt

Postby Flex » Thu May 06, 2010 4:17 pm

thegreatheed wrote:Well, it's the government forcing the banks to have meltdown insurance to cover bad loans mandated by the government.


I'm sure that's the only reason banks went tits up
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Re: GM paying back its government debt

Postby Arcand » Thu May 06, 2010 5:13 pm

Fridmarr wrote:Anyhow, this fix, of course being a tax, is only aimed one portion of the problem. Why shouldn't all companies be forced to carry this fuckup insurance? I mean if you lose your job because your company goes tits up, does it really matter if it was a large or small company? Lately we seem to legislate more and more from a perspective of groups of people, even if that means stepping on individuals, which seems to be the counter to our legal fundamentals.


Well, a few months ago nobody was happy about the existence of too-big-to-fail banks. Are they creating legislation that discriminates against TBTFs with the rationale "We want them dead anyway so being mean to them is the least of our worries"?

Aren't you legislating from a perspective of groups of people at the expense of individuals the moment you put down your clubs, form a nation and start collecting taxes? :)
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Re: GM paying back its government debt

Postby Arcand » Thu May 06, 2010 5:14 pm

thegreatheed wrote:I'm not entirely sure how the private banking industry is supposed to recover while being forced to make the same bad loans, and being burdened by more taxes at the same time.


Shall we wait two years, then necro this thread and see how many destitute investment bankers are walking the streets? I'm game if you are. ;)

Goldman Sachs posts record profits
AIG profits rise despite scandal
Bank of America's $4.2B profit mainly due to recent deals
Citigroup Earnings 1Q 2010: Bank Earns $4.4 Billion On Trading Gains
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Re: GM paying back its government debt

Postby Fridmarr » Thu May 06, 2010 5:55 pm

Arcand wrote:
thegreatheed wrote:I'm not entirely sure how the private banking industry is supposed to recover while being forced to make the same bad loans, and being burdened by more taxes at the same time.


Shall we wait two years, then necro this thread and see how many destitute investment bankers are walking the streets? I'm game if you are. ;)

Goldman Sachs posts record profits
AIG profits rise despite scandal
Bank of America's $4.2B profit mainly due to recent deals
Citigroup Earnings 1Q 2010: Bank Earns $4.4 Billion On Trading Gains

Heh, I wouldn't link Goldman Sachs considering the government collusion going on there. However, all of these companies had tremendous earnings in the past, but little of what caused their cash flow problems has been fixed.

The tax isn't in place yet either, but it's not like the banks are ultimately going to paying that.
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Re: GM paying back its government debt

Postby thegreatheed » Fri May 07, 2010 8:38 am

Flex wrote:
thegreatheed wrote:Well, it's the government forcing the banks to have meltdown insurance to cover bad loans mandated by the government.


I'm sure that's the only reason banks went tits up



It wasn't the only reason, but it was a definite major factor. Obama keeps saying the private market has failed. Yet we haven't had a private market in decades. The private market, highly regulated, stimulated, and directed by a large federal government failed. I'm not sure how the winning strategy is to do even more of the same.

Here's how the Community Reinvestment Act Led To The Housing Bubble's Lax Lending
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Re: GM paying back its government debt

Postby Fridmarr » Fri May 07, 2010 9:36 am

Arcand wrote:
Fridmarr wrote:Anyhow, this fix, of course being a tax, is only aimed one portion of the problem. Why shouldn't all companies be forced to carry this fuckup insurance? I mean if you lose your job because your company goes tits up, does it really matter if it was a large or small company? Lately we seem to legislate more and more from a perspective of groups of people, even if that means stepping on individuals, which seems to be the counter to our legal fundamentals.


Well, a few months ago nobody was happy about the existence of too-big-to-fail banks. Are they creating legislation that discriminates against TBTFs with the rationale "We want them dead anyway so being mean to them is the least of our worries"?

Aren't you legislating from a perspective of groups of people at the expense of individuals the moment you put down your clubs, form a nation and start collecting taxes? :)

Well I'm certainly not sold on the TBTF concept in many cases. I didn't have a problem with the banks having their accounts at the fed marked up so that they had the capital to lend, given the circumstances, but that's a little bit different than the bailout a few of them got. Wasn't GM and Chrysler also deemed too big to fail? Are they getting new taxes levied at them?

To your latter point, no most definitely not.
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Re: GM paying back its government debt

Postby Arcand » Fri May 07, 2010 10:07 am

thegreatheed wrote:
Flex wrote:
thegreatheed wrote:Well, it's the government forcing the banks to have meltdown insurance to cover bad loans mandated by the government.


I'm sure that's the only reason banks went tits up



It wasn't the only reason, but it was a definite major factor. Obama keeps saying the private market has failed. Yet we haven't had a private market in decades. The private market, highly regulated, stimulated, and directed by a large federal government failed. I'm not sure how the winning strategy is to do even more of the same.

Here's how the Community Reinvestment Act Led To The Housing Bubble's Lax Lending


Did the market blow up because of, or in spite of, regulation? Canada's got an economy similar to yours only more controlled - just a couple years ago our feds told the Royal Bank of Canada that they couldn't acquire another bank because the resulting bank would be too big, for example. (Too big to fail, maybe?) It could be coincidence, but our market crash wasn't as harsh as the one south of the border...

There isn't exactly some more-private-than-the-USA's market out there somewhere that you can compare against (is there?). At some point you have to consider the possibility that markets, like nuclear reactors, do their best work when certain controls are in place. And that, even when they're controlled, they're gonna screw up sometimes because they have greedy, panicky, imperfect humans at their cores.
Last edited by Arcand on Fri May 07, 2010 10:27 am, edited 3 times in total.
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Re: GM paying back its government debt

Postby Arcand » Fri May 07, 2010 10:10 am

Fridmarr wrote:To your latter point, no most definitely not.


I thought that was a slam dunk.

So living with a group of other people definitely doesn't entail giving up some freedom in return for some social and economic benefits? I think there's no way I'm understanding you correctly.
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Re: GM paying back its government debt

Postby Fridmarr » Fri May 07, 2010 10:40 am

Arcand wrote:Is there some more-private-than-the-USA's market out there somewhere that you can compare against? At some point you have to consider the possibility that markets, like nuclear reactors, do their best work when certain controls are in place.

Yes, clearly those "controls" are working great... :roll:

I mean in this context, the government told banks that they had to make high risk loans. The government said they'd take those loans, securitize them and sell them on an exchange to mitigate the bank's risks. Then the government got caught cooking their books (twice), hiding how bad these instruments were doing, and when the bottom fell out of the collateral market that was backing these instruments, they got pissed at the banks (literally called them names) for making stupid investments. Now the government says we need legislation to protect us from those evil banks with their fat cat CEOs, while ignoring other TBTF industries. Controls are one thing, but I think they are putting them on the wrong group.

Yes, I realize the above is an oversimplification of the whole scenario, but I think you get the idea.

Arcand wrote:
Fridmarr wrote:To your latter point, no most definitely not.


I thought that was a slam dunk.

So living with a group of other people definitely doesn't entail giving up some freedom in return for some social and economic benefits? I think there's no way I'm understanding you correctly.

You are right you aren't understanding me.
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Re: GM paying back its government debt

Postby Fridmarr » Fri May 07, 2010 10:47 am

Arcand wrote:Did the market blow up because of, or in spite of, regulation? Canada's got an economy similar to yours only more controlled - just a couple years ago our feds told the Royal Bank of Canada that they couldn't acquire another bank because the resulting bank would be too big, for example. (Too big to fail, maybe?) It could be coincidence, but our market crash wasn't as harsh as the one south of the border...

Because of it. You are blending two different things though. The crash and the TBTF concept aren't really related to how the market crashed or the severity of it. Since the government stepped in and gave these banks capital, the negative effects of TBTF for the banks never happened, they didn't fail.
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Re: GM paying back its government debt

Postby Arcand » Fri May 07, 2010 11:12 am

To wind this down - I see it like this.

The USA's government policies, speaking generally, are significantly to the right of Canada's. Our conservative party's platform is not terribly different from Obama's, and if you gave Ann Coulter a copy of the NDP's platform either she or it would burst into flames.

So when your government moves you from "thirty feet to our right" to "twenty-eight feet to our right", and Americans erupt about how the country's going communist and how there will be devastating consequences to all this regulation and centralized government, it weirds me out.

The angriest, most rigid pundits seem to have way too much control of the discourse.

And finally, I've been listening to Dub FX obsessively for the last four days and I still really like it.
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Re: GM paying back its government debt

Postby Fridmarr » Fri May 07, 2010 11:37 am

Arcand wrote:So is regulation a great predictor of busted market behavior? If so, that begs the question why Germany, China, Sweden and the other hardcore communist nations aren't smoking craters by now.

Or does it depend on the type of regulation, and the USA just excels at setting up crappy market controls?

Oh jeez, I can see the posts coming now from people in those countries you listed...
Sweden (which is a mostly free market system, or at least a reasonable mix) actually had this problem a few decades ago, but modernized their practices quite a bit, but I digress.

Anyhow, controls are one thing, but it's when you go beyond those that you invite trouble into a free market system. If you aren't in an otherwise free market system, then it's a bit of a different story. Anyhow we went beyond controls here.

First, we have the fed controlled interest rate that has stayed pretty low since at least 94 (when I had a need to become aware of it) partially to keep interest in housing, though it has other impacts like inflation control and business cashflow etc. The subprime loans themselves aren't such a big problem, but we had a bit of a perfect storm. We kept inflating demand in the housing market by keeping the interest rates low. We pressured banks to give these loans to folks who shouldn't have qualified, banks were willing to do this because the Gov't reclassified the offsetting securities allowing them sell easier and offsetting the risk from the bank. The Gov't was able to do that, because the artificial demand in the housing market caused appreciation (and a lot of it) so no one was going to default on a house that they could sell at a profit even if they couldn't make their payments. That's why when Freddie was questioned about operating at a 1% margin, their CEO made the comment that they could do that because real estate was a "safe" investment.

Well the housing market reached critical mass, the values stopped going up as fast, folks started defaulting, investors started losing money because the collateral wasn't as valuable as the security, snowball snowball snowball, significantly influenced by artificial government forces on the market.
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Re: GM paying back its government debt

Postby thegreatheed » Fri May 07, 2010 12:09 pm

Fridmarr wrote:
Anyhow, controls are one thing, but it's when you go beyond those that you invite trouble into a free market system. If you aren't in an otherwise free market system, then it's a bit of a different story. Anyhow we went beyond controls here.


This was my point. Free market systems work to an extent. They are usually more roller-coaster than regulated economic systems, but that's mostly a preference choice that the citizenry should decide. My beef is that our "free market" system didn't fail because it was free, it failed because of a combination of factors, one of those large factors being large-scale government intervention encouraging many bad mortgages.

My primary beef is with the current administration pointing it's finger at banks, when the primary culprits were Fannie Mae, Freddie Mac, and the CRA. There wouldn't have been nearly as big of crash if those loans had any value to them. So, sure the trading and speculating on these loans was a problem that worsened the bubble and subsequent crash, but it wouldn't have been nearly so damaging had they actually been more than worthless paper.
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Re: GM paying back its government debt

Postby Erendis » Sat May 08, 2010 9:52 pm

Arcand wrote:No, I saw it. I think the statement "My government oppresses me less than any other country would" contains the meaning "My government oppresses me", and that's the part I consider absurd. It's a cheap and facile use of the word when you consider the lives some other human beings have had.


The fact that some people have it worse does not mean one cannot hope to have it better. After all better than everyone else does not always mean you have a desirable outcome.

And the fact is that ALL government oppress the individual. The idea of being forced into an agreement to which you have no say in is somewhat immoral in my opinion. If I want to opt out of said agreement then I get put in jail. In other words the government is literally putting a gun to my head to force me into an arrangement I do not want. In every other situation I generally have the power to opt out.

We don't think a monopoly in business is a good thing yet people are fine with Government having a monopoly of power.

The idea of the United States as it was founded was to provide the bare minimum of government service by severely restricting its power through checks and balances as well as making most things the government would think to do Illegal. Instead of saying the government can do anything except XYZ it says the government can ONLY do ABC.

These protections have been eroded over the years and have moved us away from being a Republic and toward being a Democracy. Note that most of the founders purposely wrote the Constitution to avoid being a democracy since democracy has every bit as much potential for tyranny as a autocracy.

It's not that the situation in the USA is bad but rather we have given the federals so much power that it very could become bad.

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Re: GM paying back its government debt

Postby Dianora » Thu May 13, 2010 3:56 pm

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