March 10th, 2009, 12:06 am
QuoteOriginally posted by: FermionQuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: FermionQuoteBut breaking private contracts, seizing private assets, and the forced quartering of government loans seems unconstitutional and contrary to the rule of law to me (and unfair, too!).And the rackets that got us into the mess? They were fine, I suppose? Extraordinary situations call for extraordinary measures. I'm quite willing to seize the ill-gotten gains of racketeers who are holding us to ransom.Funny how you seem so much more willing to give up the rule of law than I am. So much for constitutions, eh?This crisis is so much simpler than your racketeer-infested corrupted-capitalist conspiracy theories. The taxpayers borrowed too much money (with the complete encouragement of the Fed, no less) and now the taxpayers must pay it back. Follow the money and you'll find that the vast majority of it ended up in the pockets of borrowers who then binged on McMansions, SUVs, Subzero refrigerators, SBUX lattes, and plasma TVs.And because the taxpayers borrowed that money from the banks, it's no surprise that we need to pay the banks back. (Of course, the reality is that bailing out the banks is just a bailout of the taxpayers, too. The USA can either prevent depositor and pension losses with bailout now or it can spend whole lot more money on FDIC seizures and boosts to social security to cover all that lost pension money). Yes, the banks look like the greater fools in all this because the banks were left holding the bag (or the housekeys) when the real estate bubble popped, but I'd wager that the vast majority of Americans directly or indirectly profited from this "racket."So, according to you, there was no fictional (i.e. fraudulent) accounting such as "mark-to-whatever-number-I think-of", no risky gambling with other people's money, no bonusses for risky gambling with other people's money (and losing it), no manipulation of ratings, no secret deals to execute fraud in OTC markets and no inducement to get people into debt in anticipation of the current outburst of loan-sharking (25% rates on credit cards when the fed rate is < 1%? Continually changing rules for missed payments? "Balance Transfer" fees of 3% with no cap for people who need to consolidate their debt?) . It was all the greedy consumer/taxpayers fault, eh? Are you kidding me?You are absolutely right about financial industry shenanigans but you fail see the true breadth of the guilt. Everyone who got a mortgage with less than 20% down was committing "risky gambling with other people's money." Everyone who played the cash-out refi game was collecting "bonusses for risky gambling with other people's money (and losing it)." Everyone who sold a house with 20% CAGR was committing fraud. In fact, one could argue that most of the real estate transactions from 2002 to 2007 were accomplished by fraud on the part of the buyer (risking other people's money), the seller (fraudulent asset pricing), and the entire retinue of real estate minions (including the banks) that collect the crumbs when ever a plot of land is passed about.Sure, a few contrarians (folks such as Roubini, myself and yourself included) knew that the real estate boom would end in tears (and knew the dotcom era would end in tears, and knew the Japanese real estate bubble would end in tears, and .....). But no one wants to listen to a Gloomy Gus when the economy is booming and the punchbowl is overflowing with the spirits of good times. Just drink the spiked Koolaid and repeat: "This time, it's different. This time, asset X can appreciate forever and ever, and we'll all be rich!" Perhaps the Illuminati, Masons, or parasitic beetles have engineered every bubble since the Turks gave tulips to the Dutch -- are financial bubbles an Islamic plot? -- but I think the answer is far far simpler. Everyone, especially the "little guy" taxpayers, wants to get rich quick. And if that means willful ignorance of the nature of debt and the unsustainability of economic trends, then so be it because "everybody is doing it."P.S.: As for "(25% rates on credit cards when the fed rate is < 1%? Continually changing rules for missed payments? "Balance Transfer" fees of 3% with no cap for people who need to consolidate their debt?)", I'd wager that P(Default|"needs to consolidate their debt") is extremely high, as is P(Default|"transfers balance"). In fact, the credit card companies could well be considered irresponsible for NOT charging high enough rates because the card companies are "risking other people's money."
Last edited by
Traden4Alpha on March 9th, 2009, 11:00 pm, edited 1 time in total.