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Taco John
03-24-2009, 09:04 AM
U.S. Seeks Expanded Power to Seize Firms
Goal Is to Limit Risk to Broader Economy

By Binyamin Appelbaum and David Cho
Washington Post Staff Writers
Tuesday, March 24, 2009; A01



The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.

The government at present has the authority to seize only banks.

Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process. The Treasury secretary, a member of the president's Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to the document.

The administration plans to send legislation to Capitol Hill this week. Sources cautioned that the details, including the Treasury's role, are still in flux.

Treasury Secretary Timothy F. Geithner is set to argue for the new powers at a hearing today on Capitol Hill about the furor over bonuses paid to executives at American International Group, which the government has propped up with about $180 billion in federal aid. Administration officials have said that the proposed authority would have allowed them to seize AIG last fall and wind down its operations at less cost to taxpayers.

The administration's proposal contains two pieces. First, it would empower a government agency to take on the new role of systemic risk regulator with broad oversight of any and all financial firms whose failure could disrupt the broader economy. The Federal Reserve is widely considered to be the leading candidate for this assignment. But some critics warn that this could conflict with the Fed's other responsibilities, particularly its control over monetary policy.

The government also would assume the authority to seize such firms if they totter toward failure.

Besides seizing a company outright, the document states, the Treasury Secretary could use a range of tools to prevent its collapse, such as guaranteeing losses, buying assets or taking a partial ownership stake. Such authority also would allow the government to break contracts, such as the agreements to pay $165 million in bonuses to employees of AIG's most troubled unit.

The Treasury secretary could act only after consulting with the president and getting a recommendation from two-thirds of the Federal Reserve Board, according to the plan.

Geithner plans to lay out the administration's broader strategy for overhauling financial regulation at another hearing on Thursday.

The authority to seize non-bank financial firms has emerged as a priority for the administration after the failure of investment house Lehman Brothers, which was not a traditional bank, and the troubled rescue of AIG.

"We're very late in doing this, but we've got to move quickly to try and do this because, again, it's a necessary thing for any government to have a broader range of tools for dealing with these kinds of things, so you can protect the economy from the kind of risks posed by institutions that get to the point where they're systemic," Geithner said last night at a forum held by the Wall Street Journal.

The powers would parallel the government's existing authority over banks, which are exercised by banking regulatory agencies in conjunction with the Federal Deposit Insurance Corp. Geithner has cited that structure as the model for the government's plans.

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/23/AR2009032302830_pf.html

Velvet_Jones
03-24-2009, 09:05 AM
Obama would never lie to me. jAZ told me so.

Taco John
03-24-2009, 09:08 AM
Of course, this is the path that Bush put the country on when he insisted on the first bail-out - so Obama is not alone here.

KC native
03-24-2009, 09:15 AM
This is completely necessary. Our regulation is nonexistent or stuck in the past with regards to financial markets and the shadow banking system. We need the ability to step in when investment banks, hedge funds, and holding companies are a systemic risk.

KC Dan
03-24-2009, 09:26 AM
No, no and no again. Bankruptcy is the path... The gov't controlling anything is a joke. Especially if the Congress is involved at all.

beavis
03-24-2009, 09:34 AM
No, no and no again. Bankruptcy is the path... The gov't controlling anything is a joke. Especially if the Congress is involved at all.

I don't know what you're talking about. This whole goverment ownership thing has come off without a hitch so far.

Garcia Bronco
03-24-2009, 09:35 AM
No, no and no again. Bankruptcy is the path... The gov't controlling anything is a joke. Especially if the Congress is involved at all.

Exactly. This baby boomer we can't fail attitude has to go. Shit breaks, people fail, things go up and down. By not allowing people to fail we stifle innovation and taint markets. Least we forget this whole economic mess started because government got involved in the first place.

Garcia Bronco
03-24-2009, 09:36 AM
I don't know what you're talking about. This whole goverment ownership thing has come off without a hitch so far.

LOL

Ultra Peanut
03-24-2009, 10:05 AM
First they came for the word "socialize," and I did nothing.

Then they came for the word "communize," and I lol'd.

Taco John
03-24-2009, 11:34 AM
This is completely necessary. Our regulation is nonexistent or stuck in the past with regards to financial markets and the shadow banking system. We need the ability to step in when investment banks, hedge funds, and holding companies are a systemic risk.

:doh!:

It's hard for me to believe that there are people this stupid out there.

cookster50
03-24-2009, 11:37 AM
Of course, this is the path that Bush put the country on when he insisted on the first bail-out - so Obama is not alone here.

Wow, make this about Bush?

KC Dan
03-24-2009, 11:37 AM
:doh!:

It's hard for me to believe that there are people this stupid out there.Yes, yes it is and scary too.

SBK
03-24-2009, 11:39 AM
I'd like to think that this big swing left will result in a big swing back to the right. What's going on right now scares the hell out of me.

Sully
03-24-2009, 11:48 AM
Let’s get one thing straight. This is not a communocracy. I am the communistator here. I make the commucisions, and I will deal with the commuonsequences. Now, if there are no more communinteruptions, we can communitinue. Thank you.

KC Dan
03-24-2009, 11:53 AM
Let’s get one thing straight. This is not a communocracy. I am the communistator here. I make the commucisions, and I will deal with the commuonsequences. Now, if there are no more communinteruptions, we can communitinue. Thank you.hehehehe

Donger
03-24-2009, 11:56 AM
I wonder what the next target of Comrade Hussein's administration will be? We know they are looking at health care. Maybe media?

Amnorix
03-24-2009, 11:59 AM
I wonder what the next target of Comrade Hussein's administration will be? We know they are looking at health care. Maybe media?

Would you have let AIG fail?

Donger
03-24-2009, 12:01 PM
Would you have let AIG fail?

Yes.

Taco John
03-24-2009, 12:10 PM
Would you have let AIG fail?

Without even blinking.

KC native
03-24-2009, 12:14 PM
Without even blinking.

Yes.

It's a good thing you guys aren't running things. It appears that AIG "safe" insurers may not have been so safe after all. Again, Barry is spot on.


Bernanke Bombshell: AIG Insurer Exposed to FP
Email this post Print this post
By Barry Ritholtz - March 24th, 2009, 1:00PM

In researching and think about AIG, I have been writing about them as if it were two separate companies: A well regulated Insurer, and a rogue derivatives products firm (FP).

The working assumption has been that the regulated insurer was run fairly conservatively, and the structured financial product side run like a giant hedge fund. The 32% net profit retention on the FP side is actually better than what most hedge funds see.

This dichotomy is mostly true, but with now has an interesting twist to it. In congressional testimony today, Ben Bernanke implied that had the Fed allowed AIG too fall, he detailed what might have happened had AIG been allowed to fail:

The Federal Reserve and the Treasury agreed that AIG’s failure under the conditions then prevailing would have posed unacceptable risks for the global financial system and for our economy. Some of AIG’s insurance subsidiaries, which are among the largest in the United States and the world, would have likely been put into rehabilitation by their regulators, leaving policyholders facing considerable uncertainty about the status of their claims. State and local government entities that had lent more than $10 billion to AIG would have suffered losses. Workers whose 401(k) plans had purchased $40 billion of insurance from AIG against the risk that their stable value funds would decline in value would have seen that insurance disappear. In addition, AIG’s insurance subsidiaries had substantial derivatives exposures to AIG-FP that could have weakened them in the event of the parent company’s failure.

If we are to take Bernanke at face value, he is saying that AIGFP had buried their own firm with junk paper. BB does not define what “substantial derivative exposure” meant — but given the $2.7 trillion dollars in derivatives exposure that FP had, even a tiny percentage might amount to an enormous sum.

That the collapse of AIG Financial Products would have damaged the other Insurance half of the firm is a frightening development.

Even more fascinating is this “lesson learned”

To conclude, I would note that AIG offers two clear lessons for the upcoming discussion in the Congress and elsewhere on regulatory reform. First, AIG highlights the urgent need for new resolution procedures for systemically important nonbank financial firms. If a federal agency had had such tools on September 16, they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors and counterparties as appropriate. That outcome would have been far preferable to the situation we find ourselves in now.

In other words, we should have nationalized them from the beginning . . .

Hat Tip: Bob Lenzner of Forbes was the first to spot the issue of AIG’s insurance half having AIG FP derivative exposure.

>

Source:
Chairman Ben S. Bernanke on American International Group
Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C.
March 24, 2009
http://www.federalreserve.gov/newsevents/testimony/bernanke20090324a.htm

Garcia Bronco
03-24-2009, 12:15 PM
Would you have let AIG fail?

I would have as well.

Donger
03-24-2009, 12:17 PM
It's a good thing you guys aren't running things. It appears that AIG "safe" insurers may not have been so safe after all. Again, Barry is spot on.

Another communist's rambling is supposed to do what?

KC native
03-24-2009, 12:20 PM
Another communist's rambling is supposed to do what?

The guy is director of research at a money management firm. He's about as far from a communist as you can be.

Donger
03-24-2009, 12:21 PM
The guy is director of research at a money management firm. He's about as far from a communist as you can be.

Sure: "In other words, we should have nationalized them from the beginning."

Personally, I'm holding our for the factory manager position at Obama Tractors.

KC native
03-24-2009, 12:23 PM
Sure: "In other words, we should have nationalized them from the beginning."

Personally, I'm holding our for the factory manager position at Obama Tractors.

:spock:Because letting them fail is such a good idea huh?

KC native
03-24-2009, 12:24 PM
Sure: "In other words, we should have nationalized them from the beginning."

Personally, I'm holding our for the factory manager position at Obama Tractors.

Check this out before you talk about nationalization again.

http://www.chiefsplanet.com/BB/showthread.php?t=204643 (http://www.chiefsplanet.com/BB/showthread.php?t=204643)

Donger
03-24-2009, 12:26 PM
:spock:Because letting them fail is such a good idea huh?

You know what? We don't KNOW what will happen if one of them fails, since we've adopted the course of action of bailing them all out.

It set a dangerous precedent.

I'm assuming that you are okay with printing money we don't have and having an $11 trillion debt?

Your answer had better be a resounding "Yes!"

Donger
03-24-2009, 12:28 PM
Check this out before you talk about nationalization again.

http://www.chiefsplanet.com/BB/showthread.php?t=204643 (http://www.chiefsplanet.com/BB/showthread.php?t=204643)

Are you for the nationalization of these companies or not?

KC native
03-24-2009, 12:33 PM
Are you for the nationalization of these companies or not?

For some. Not everyone that fails is a systemic risk. AIG, BofA, and Citi are all too big to fail.

I've already stated multiple times that I'm for the type that has been done with AIG. These companies should be taken into government receivership. Then all equity holders are squashed. Bad assets are quarantined with the government. Some people should lose their jobs and then the company is spun back out to market (in pieces)very quickly with a clean balance sheet and the ability to be a going concern. The bondholders will have to take a write down (as they should) and the sale of the company back to the market should go to paying the government back and the bondholders. (BTW we've already done this with WAMU)

KC native
03-24-2009, 12:34 PM
You know what? We don't KNOW what will happen if one of them fails, since we've adopted the course of action of bailing them all out.

It set a dangerous precedent.

I'm assuming that you are okay with printing money we don't have and having an $11 trillion debt?

Your answer had better be a resounding "Yes!"

Yes, I'm okay with it. I don't prefer it but the alternative isn't an acceptable course of action.

Donger
03-24-2009, 12:35 PM
For some. Not everyone that fails is a systemic risk. AIG, BofA, and Citi are all too big to fail.

I've already stated multiple times that I'm for the type that has been done with AIG. These companies should be taken into government receivership. Then all equity holders are squashed. Bad assets are quarantined with the government. Some people should lose their jobs and then the company is spun back out to market (in pieces)very quickly with a clean balance sheet and the ability to be a going concern. The bondholders will have to take a write down (as they should) and the sale of the company back to the market should go to paying the government back and the bondholders. (BTW we've already done this with WAMU)

"Too big to fail."

What about our debt?

KC Dan
03-24-2009, 12:36 PM
"Too big to fail."

What about our debt?
Too big to keep ourselves - give it away, give it away, give it away now... No matter the $50 loaves of bread or $200/month internet service later...Forest for the trees...

Donger
03-24-2009, 12:37 PM
Yes, I'm okay with it. I don't prefer it but the alternative isn't an acceptable course of action.

What alternative? What exactly do you think would have happened if we'd let these companies fail?

Cats and dogs living together?

Our debt is becoming unsustainable, and these bail outs have made it worse. It's delayed the inevitable.

KC native
03-24-2009, 12:38 PM
"Too big to fail."

What about our debt?

The absolute amount isn't important. What's important is the % of Debt to GDP. We've been much higher in the past so we still have room for more debt if need be. I don't want to see that but we've been down this path before.

KC native
03-24-2009, 12:39 PM
What alternative? What exactly do you think would have happened if we'd let these companies fail?

Cats and dogs living together?

Our debt is becoming unsustainable, and these bail outs have made it worse. It's delayed the inevitable.

How is our debt unsustainable?

BucEyedPea
03-24-2009, 12:40 PM
This is completely necessary. Our regulation is nonexistent or stuck in the past with regards to financial markets and the shadow banking system. We need the ability to step in when investment banks, hedge funds, and holding companies are a systemic risk.

No it is not necessary. There are some institutions out there that are stable and doing well because I see a guy that works at one. They briefed all their staff last fall on how they didn't get into the shenanigans that the others got into. The place has been in business 160 years. They're even growing adding new financial products. A lot of people who took their money out of other areas are giving it to them. Why should they be seized by the govt because of what others did?

The solution is simple. Allow failure which will help alleviate systemic risk.
We don't need a mix of fascism and communism.

BucEyedPea
03-24-2009, 12:41 PM
"Too big to fail."

What about our debt?

They're "Too BIG to SAVE" is more apt.

Donger
03-24-2009, 12:43 PM
The absolute amount isn't important. What's important is the % of Debt to GDP. We've been much higher in the past so we still have room for more debt if need be. I don't want to see that but we've been down this path before.

You do realize that we were fighting a World War at that time, right?

KC native
03-24-2009, 12:44 PM
No it is not necessary. There are some institutions out there that are stable and doing well because I see a guy that works at one. They briefed all their staff last fall on how they didn't get into the shenanigans that the others got into. The place has been in business 160 years. They're even growing adding new financial products. A lot of people who took their money out of other areas are giving it to them. Why should they be seized by the govt because of what others did?

The solution is simple. Allow failure which will help alleviate systemic risk.
We don't need a mix of fascism and communism.

If they're not in trouble then they wouldn't be seized. A lot of firms didn't get involved in all of this crap. I'm lucky because both of the firms that I have worked for since 2005 have steered clear of this mess and have been thriving as a result.

PS: I'm still waiting for you to demonstrate how the gold supply is elastic. :evil:

KC native
03-24-2009, 12:45 PM
You do realize that we were fighting a World War at that time, right?

And your point is?

Donger
03-24-2009, 12:45 PM
How is our debt unsustainable?

Think of the retards in DC like the friend of yours who has a certain income and has debt of ~75% of that income per year.

"We" paid almost $500 billion last year just to service the interest on our debt. How long do you think that can be sustained?

Donger
03-24-2009, 12:46 PM
And your point is?

World Wars are kind of expensive.

KC native
03-24-2009, 12:51 PM
Think of the retards in DC like the friend of yours who has a certain income and has debt of ~75% of that income per year.

"We" paid almost $500 billion last year just to service the interest on our debt. How long do you think that can be sustained?

Considering the US's GDP is about $14 Trillion, I would say quite awhile.

KC native
03-24-2009, 12:52 PM
World Wars are kind of expensive.

Debt is debt. Then and now.

BucEyedPea
03-24-2009, 12:55 PM
World Wars are kind of expensive.

Yeah, and the economy sukked during them too. Lots of nationalization during them including rationing. So why do we need this now?

Donger
03-24-2009, 12:56 PM
Considering the US's GDP is about $14 Trillion, I would say quite awhile.

I suppose that's peachy, unless you actually care about the f*cking future of our country:

Ultra Peanut
03-24-2009, 01:04 PM
Would you have let AIG fail?He indicated that he was totally fine with our failed health care system, so why would he worry his little head about our economy completely imploding?

KC native
03-24-2009, 01:04 PM
I suppose that's peachy, unless you actually care about the f*cking future of our country:

Post the source link because that chart has none of the assumptions on it. I would like to know how they are deriving such steep exponential growth of debt because as it stands that chart looks like nonsense.

KC native
03-24-2009, 01:07 PM
I suppose that's peachy, unless you actually care about the f*cking future of our country:

Nevermind, I found it and it's grossly misleading. It assumes that nothing is done to address medicare and social security. Good effort for trying to spin it as though that's the reality of the government debt situation but it doesn't bolster your position about current debt.

HonestChieffan
03-24-2009, 01:09 PM
He indicated that he was totally fine with our failed health care system, so why would he worry his little head about our economy completely imploding?

The health care system is not "failed". People who expect free health care see is as such but those of us who understand you pay for it and you get health care see it as working quite well. I have had an MRI, X-ray, 2 doctor visits, a nice drive to pharmacy, and have been to phys therapy all in the last week with not a hitch.

Amnorix
03-24-2009, 01:13 PM
Without even blinking.

I didn't bother asking you because I knew your answer. I didn't know Donger's.

SBK
03-24-2009, 01:14 PM
He indicated that he was totally fine with our failed health care system, so why would he worry his little head about our economy completely imploding?

We have the best health care in the world, yet it's failed. ROFL

KC native
03-24-2009, 01:15 PM
We have the best health care in the world, yet it's failed. ROFL

Define best. In most major categories of quality we are not the top.

Amnorix
03-24-2009, 01:16 PM
You know what? We don't KNOW what will happen if one of them fails, since we've adopted the course of action of bailing them all out.

It set a dangerous precedent.

I'm assuming that you are okay with printing money we don't have and having an $11 trillion debt?

Your answer had better be a resounding "Yes!"

Would you have bailed out anyone/anything, or are you more in the Misean/Austrian school?

I don't object to the actions the feds have taken thus far per se, but I worry greatly about the moral hazard issue as well as our rapidly escalating debt amounts, which had me worried before we added several trillion more in the last two or so years.

I know how to fix the debt/deficit after the ship is righted, though I fear our politicians will lack the political will. I don't know how to fix the moral hazard issue.

KC Dan
03-24-2009, 01:16 PM
You cannot expect people to pay for their own healthcare if they are out knocking on doors for ACORN instead of working...

HonestChieffan
03-24-2009, 01:19 PM
Define best. In most major categories of quality we are not the top.

Best as in better than you can get anywhere else without the government deciding what a doc can do and when and if or deal wityh rationing or incomptent boobs who like being a govt doc.

The system is working great. Its the freeloaders who redefine "working" to mean I get it free or it sucks.

BucEyedPea
03-24-2009, 01:27 PM
I don't know how to fix the moral hazard issue.

That's the easiest one of all to fix—you don't do bailouts. That's the biggest enabler of it. We never did it before. You don't reward failure because it comes from not doing something right. You don't have the will to do it because it requires short term pain and entitlement mentality is part of the Keynesian economic school. I'd rather have an acute short term pain than long term worsened growth. You can't run an economy on sympathy. It will bring us all down.

Chief Faithful
03-24-2009, 01:28 PM
I wonder what the next target of Comrade Hussein's administration will be? We know they are looking at health care. Maybe media?

Media!

"Print is the sharpest and the strongest weapon of our party." - Joseph Stalin

KC native
03-24-2009, 01:28 PM
That's the easiest one of all to fix—you don't do bailouts. That's the biggest enabler of it. We never did it before. You don't reward failure because it comes from not doing something right. You don't have the will to do it because it requires short term pain and entitlement mentality is part of the Keynesian economic school. I'd rather have an acute short term pain than long term worsened growth. You can't run an economy on sympathy. It will bring us all down.

So is this when you show us that the gold supply is elastic and the Austrians are right and everyone else wrong?

Garcia Bronco
03-24-2009, 01:30 PM
That's the easiest one of all to fix—you don't do bailouts. That's the biggest enabler of it. We never did it before. You don't reward failure because it comes from not doing something right. You don't have the will to do it because it requires short term pain and entitlement mentality is part of the Keynesian economic school. I'd rather have an acute short term pain than long term worsened growth. You can't run an economy on sympathy. It will bring us all down.

Isn't it amusing that generally the same people that are all up in a huff when evolution is challenged as well as natural selection, yet they disregard it with their ideaology in actual practice?

Donger
03-24-2009, 01:30 PM
Nevermind, I found it and it's grossly misleading. It assumes that nothing is done to address medicare and social security. Good effort for trying to spin it as though that's the reality of the government debt situation but it doesn't bolster your position about current debt.

What exactly do you think our government is going to do about Medicare and SS? Fix it?

They f*cking created it!

KC native
03-24-2009, 01:34 PM
What exactly do you think our government is going to do about Medicare and SS? Fix it?

They f*cking created it!

:clap: Way to jump off your point and try to move the next issue.

Anyways, lifting the income cap on SS and medicare goes a long way towards fixing this. Currently only the first $100k (give or take 5k don't know the exact number and don't feel like looking it up) is taxed for social security and medicare purposes.

BucEyedPea
03-24-2009, 01:35 PM
Media!

"Print is the sharpest and the strongest weapon of our party." - Joseph Stalin

Heh! Print media is going under. So the future is bright for electronic media in general. But as we saw in another thread, that's a threat to national security. Gawd! We live in a fascist/socialist country.

Amnorix
03-24-2009, 01:35 PM
That's the easiest one of all to fix—you don't do bailouts. That's the biggest enabler of it. We never did it before. You don't reward failure because it comes from not doing something right. You don't have the will to do it because it requires short term pain and entitlement mentality is part of the Keynesian economic school. I'd rather have an acute short term pain than long term worsened growth. You can't run an economy on sympathy. It will bring us all down.

It's hardly worth debating with you, as you have a 180 degree different view of economics, but my point is that I would like to come up with a solution to the moral hazard thing that doesn't involve worldwide financial failure the next time around.

I realize that to you worldwide financial failure is fine.

Amnorix
03-24-2009, 01:36 PM
What exactly do you think our government is going to do about Medicare and SS? Fix it?

They f*cking created it!

They can and will amend it, because sooner or later we'll go bankrupt. How and when are the operative questions.

Donger
03-24-2009, 01:36 PM
:clap: Way to jump off your point and try to move the next issue.

Anyways, lifting the income cap on SS and medicare goes a long way towards fixing this. Currently only the first $100k (give or take 5k don't know the exact number and don't feel like looking it up) is taxed for social security and medicare purposes.

I can multi-task.

So, increased taxation is the way to fix it, eh? I assume that you contribute to our government's revenue via income tax, yes?

Amnorix
03-24-2009, 01:38 PM
:clap: Way to jump off your point and try to move the next issue.

Anyways, lifting the income cap on SS and medicare goes a long way towards fixing this. Currently only the first $100k (give or take 5k don't know the exact number and don't feel like looking it up) is taxed for social security and medicare purposes.

Conceptually, SS is limited to the first 100K of income because payouts are limited on the backend. I would suggest, strongly, that increasing the cap on income to a very high number is a betrayal of what the system was designed to do in the first place.

Social Security is one of the most fair and rational policies we've ever had. It's been tremendously successful. The problem is that changing demographics have made it uneconomic to continue in its current form. Betraying the ideals under which it was created, however, is not my idea of a good answer.

BucEyedPea
03-24-2009, 01:38 PM
Isn't it amusing that generally the same people that are all up in a huff when evolution is challenged as well as natural selection, yet they disregard it with their ideaology in actual practice?

Yeah! I even mentioned that in another thread. They're such supporters of evolution, but they can't have it in an economy....they're afraid of going extinct. That's why they fear free markets. And you know what? They're right. That ideology and its supporters would be extinct. They know that deep down because they truly believe in evolution. The thing is they personally wouldn't be extinct, they're ideology would be though. It's a matter of sheer survival for them that we have bailouts. Because the market punishes all the right people.

Donger
03-24-2009, 01:39 PM
They can and will amend it, because sooner or later we'll go bankrupt. How and when are the operative questions.

How can that be? A government creation that was supposed to help all of us who are too stupid to plan for our retirement is facing insolvency?

I'm sure they'll do a bang-up job with health care, though.

KC native
03-24-2009, 01:41 PM
I can multi-task.

So, increased taxation is the way to fix it, eh? I assume that you contribute to our government's revenue via income tax, yes?

I pay taxes and have no problem paying taxes. There are two things that are certain in life, death and taxes.

KC native
03-24-2009, 01:42 PM
Yeah! I even mentioned that in another thread. They're such supporters of evolution, but they can't have it in an economy....they're afraid of going extinct. That's why they fear free markets. And you know what? They're right. That ideology and its supporters would be extinct. They know that deep down because they truly believe in evolution. The thing is they personally wouldn't be extinct, they're ideology would be though. It's a matter of sheer survival for them that we have bailouts. Because the market punishes all the right people.

Economic darwinisim isn't related to evolution at all. It's clear you and Garcia have no understanding of economics or biology.

Donger
03-24-2009, 01:43 PM
I pay taxes and have no problem paying taxes. There are two things that are certain in life, death and taxes.

Do you pay income tax?

KC native
03-24-2009, 01:44 PM
Conceptually, SS is limited to the first 100K of income because payouts are limited on the backend. I would suggest, strongly, that increasing the cap on income to a very high number is a betrayal of what the system was designed to do in the first place.

Social Security is one of the most fair and rational policies we've ever had. It's been tremendously successful. The problem is that changing demographics have made it uneconomic to continue in its current form. Betraying the ideals under which it was created, however, is not my idea of a good answer.

Ok, then how do you propose to fix it? (honestly curious here unlike most planeteers)

Amnorix
03-24-2009, 01:44 PM
How can that be? A government creation that was supposed to help all of us who are too stupid to plan for our retirement is facing insolvency?

I'm sure they'll do a bang-up job with health care, though.

Your skepticism and sarcasm are well taken in the current environemnt, but historically inaccurate.

Social Security has done an admirable job for about 80 years now of ensuring the elderly are not left in extreme poverty. Society has greatly changed since the 1930s, before which parents inevitably lived with their working children, etc.

One way or another people are stuck paying the tab for the elderly if they run out of money. The Social Security system is a rational and very fair system. It's not a welfare system. It's tied to earnings made over time, and taxes paid while working.

Regrettably, changing demographics make it doomed to die in its current form. The question is how do we fix it, or do we scrap it and replace it with some other system.

Garcia Bronco
03-24-2009, 01:45 PM
Economic darwinisim isn't related to evolution at all. It's clear you and Garcia have no understanding of economics or biology.

It's basic fundamental foundation it completely the same. The environment shapes the organism and the organism reacts to the environment.

Donger
03-24-2009, 01:45 PM
Your skepticism and sarcasm are well taken in the current environemnt, but historically inaccurate.

Social Security has done an admirable job for about 80 years now of ensuring the elderly are not left in extreme poverty. Society has greatly changed since the 1930s, before which parents inevitably lived with their working children, etc.

One way or another people are stuck paying the tab for the elderly if they run out of money. The Social Security system is a rational and very fair system. It's not a welfare system. It's tied to earnings made over time, and taxes paid while working.

Regrettably, changing demographics make it doomed to die in its current form. The question is how do we fix it, or do we scrap it and replace it with some other system.

Soylent Green.

KC native
03-24-2009, 01:45 PM
Do you pay income tax?

Doesn't matter. It doesn't change my view on taxes.

KC native
03-24-2009, 01:46 PM
It's basic fundamental foundation it completely the same. The environment shapes the organism and the organism reacts to the environment.

Nope, try again.

Donger
03-24-2009, 01:46 PM
Doesn't matter. It doesn't change my view on taxes.

So, you do not pay income taxes?

KC native
03-24-2009, 01:47 PM
So, you do not pay income taxes?

It's irrelevant to the argument we're having. Quit trying to change the subject.

Amnorix
03-24-2009, 01:47 PM
Ok, then how do you propose to fix it? (honestly curious here unlike most planeteers)

You want an honest answer? I don't know.

Unfortunately, I haven't come up with anything better than forced private savings accounts.

Social Security is much like any other defined benefit pension plan. And defined benefit pension plans are dying faster than you can shake a stick at. And for good reason, they're economic suicide.

It's probably a combination of measures.

Donger
03-24-2009, 01:49 PM
It's irrelevant to the argument we're having. Quit trying to change the subject.

It is absolutely relevant to this discussion. It's quite easy to be flippant about paying income taxes when others do so and you do not.

Garcia Bronco
03-24-2009, 01:49 PM
Nope, try again.

I don't need to "try" again. Whether you are talking about markets or organisms, if you artificially prop them up then they cannot adjust on their own and they are completely at the whims of the unnatural.<O:p></O:p>

Garcia Bronco
03-24-2009, 01:50 PM
It is absolutely relevant to this discussion. It's quite easy to be flippant about paying income taxes when others do so and you do not.

I think we can assume by now that Native doesn't pay income taxes at all. He's probably a student. At least he's honest and doesn't want to lie to you. It alos probably means his parents are still claiming him as a dependent.

KC native
03-24-2009, 01:51 PM
You want an honest answer? I don't know.

Unfortunately, I haven't come up with anything better than forced private savings accounts.

Social Security is much like any other defined benefit pension plan. And defined benefit pension plans are dying faster than you can shake a stick at. And for good reason, they're economic suicide.

It's probably a combination of measures.

Before I worked in the financial industry I would have agreed to the forced savings accounts however with the lack of ethics amongst many Wall Streeters I wouldn't trust something as vital as a safety net for the elderly to Wall Street.

KC native
03-24-2009, 01:52 PM
I think we can assume by now that Native doesn't pay income taxes at all. He's probably a student. At least he's honest and doesn't want to lie to you. It alos probably means his parents are still claiming him as a dependent.

Nope been working for 5 years. Try again buddy.

Garcia Bronco
03-24-2009, 01:53 PM
Before I worked in the financial industry I would have agreed to the forced savings accounts however with the lack of ethics amongst many Wall Streeters I wouldn't trust something as vital as a safety net for the elderly to Wall Street.

The elderly need to find a way to take care of themselves. What do you think is going to happen the day we have full on healthcare socialized by the Government? The government is going to tell the elderly to roll over and die when it becomes a financial burden to the state.

KC native
03-24-2009, 01:54 PM
It is absolutely relevant to this discussion. It's quite easy to be flippant about paying income taxes when others do so and you do not.

No, it's not relevant to the discussion. I firmly believe that people who make a lot of money in this society have a duty to pay more in taxes. If this society has allowed those people to make the amounts of money they do then they have a responsibility to contribute back to the system of laws, markets, and people that have made it possible.

Amnorix
03-24-2009, 01:54 PM
Before I worked in the financial industry I would have agreed to the forced savings accounts however with the lack of ethics amongst many Wall Streeters I wouldn't trust something as vital as a safety net for the elderly to Wall Street.

Nobody says the accounts must be invested in anything in particular. They could be CDs, or Treasury funds or other extraordinarily safe investments.

Clearly they can't end up in Bernie Madoff type accounts. Would need to be a certain grade of financial institution or whatever.

Garcia Bronco
03-24-2009, 01:55 PM
Nope been working for 5 years. Try again buddy.

No you haven't.

Garcia Bronco
03-24-2009, 01:56 PM
Before I worked in the financial industry

BS. Doing what?

BucEyedPea
03-24-2009, 01:56 PM
The elderly need to find a way to take care of themselves. What do you think is going to happen the day we have full on healthcare socialized by the Government? The government is going to tell the elderly to roll over and die when it becomes a financial burden to the state.
You're exactly right. Even in Hillarycare she covered that provision... and took it a step further into fascism. She was going to make it illegal for the elderly to even buy a private supplemental plan.

They have to do that, because that's when most people use most of their healthcare. It'd bankrupt the state. Oh wait....it is bankrupt. That's why they're seizing major industries.

Donger
03-24-2009, 01:56 PM
The elderly need to find a way to take care of themselves. What do you think is going to happen the day we have full on healthcare socialized by the Government? The government is going to tell the elderly to roll over and die when it becomes a financial burden to the state.

I've mentioned this before, but my grandmother in England recently moved into a nursing home. It's $3,000/month out of her pocket. My folks just got back from visiting her and said that it's a dump. Absolutely horrendous. She asked my dad why she has to pay $3,000/month when she paid into NHS most of her life.

Dad apparently laughed.

Amnorix
03-24-2009, 01:56 PM
Nobody says the accounts must be invested in anything in particular. They could be CDs, or Treasury funds or other extraordinarily safe investments.

Clearly they can't end up in Bernie Madoff type accounts. Would need to be a certain grade of financial institution or whatever.


Further note that I don't want to have these types of accounts screw up either the stock market or the credit markets. So much money would be involved in this that it's entirely possible that such markets would be greatly skewed, leading to misleading results.

Perhaps CDs is the way to go.

I wish I knew what systems other countries had.

KC native
03-24-2009, 01:57 PM
Nobody says the accounts must be invested in anything in particular. They could be CDs, or Treasury funds or other extraordinarily safe investments.

Clearly they can't end up in Bernie Madoff type accounts. Would need to be a certain grade of financial institution or whatever.

The problem is when you guarantee the amount of dollar flows that a system like that would entail then you would encourage even more asset bubbles.

HonestChieffan
03-24-2009, 01:57 PM
Before I worked in the financial industry I would have agreed to the forced savings accounts however with the lack of ethics amongst many Wall Streeters I wouldn't trust something as vital as a safety net for the elderly to Wall Street.

The ethics in Washington are acceptable though?

BucEyedPea
03-24-2009, 01:58 PM
I don't need to "try" again. Whether you are talking about markets or organisms, if you artificially prop them up then they cannot adjust on their own and they are completely at the whims of the unnatural.<O:p></O:p>

His critical thinking ( logic and connecting the dots of concepts to other areas in real ) is lacking.

Donger
03-24-2009, 01:58 PM
No, it's not relevant to the discussion. I firmly believe that people who make a lot of money in this society have a duty to pay more in taxes.

"The Rich" already pay the vast majority of the income tax burden in this country, but you want more?

Garcia Bronco
03-24-2009, 01:58 PM
I've mentioned this before, but my grandmother in England recently moved into a nursing home. It's $3,000/month out of her pocket. My folks just got back from visiting her and said that it's a dump. Absolutely horrendous. She asked my dad why she has to pay $3,000/month when she paid into NHS most of her life.

Dad apparently laughed.

Same thing is going on with a friends family of mine that has a relative in London. Can you get here stateside?

BucEyedPea
03-24-2009, 01:58 PM
The ethics in Washington are acceptable though?

They're actually worse. And it affects everyone when it blowsback in our faces.

Amnorix
03-24-2009, 01:58 PM
The elderly need to find a way to take care of themselves. What do you think is going to happen the day we have full on healthcare socialized by the Government? The government is going to tell the elderly to roll over and die when it becomes a financial burden to the state.


You're mixing healthcare with SS. It's hard enough to deal with without segregating the two. I realize they are intertwined to a degree, and maybe it is a joint solution that's needed, but....


....argh, screw it. I don't have time for this. (pulls ripcord on thread)

Donger
03-24-2009, 01:59 PM
You're mixing healthcare with SS. It's hard enough to deal with without segregating the two. I realize they are intertwined to a degree, and maybe it is a joint solution that's needed, but....


....argh, screw it. I don't have time for this. (pulls ripcord on thread)

ROFL

Eject! Eject! Eject!

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Garcia Bronco
03-24-2009, 02:00 PM
"The Rich" already pay the vast majority of the income tax burden in this country, but you want more?

Dude, he's got 5 years experience in the "Financial Industry". Obviously he knows this.

KC native
03-24-2009, 02:01 PM
"The Rich" already pay the vast majority of the income tax burden in this country, but you want more?

When you look at all taxes and not the income tax in isolation you will see that we have a relatively flat tax structure (don't let that get in the way of your argument though)

BucEyedPea
03-24-2009, 02:02 PM
Dude, he's got 5 years experience in the "Financial Industry". Obviously he knows this.

He wants the money so he can stay employed. Smacks of vested interest to me. Otherwise, he'd be on the street laid off. No wonder. :D

Garcia Bronco
03-24-2009, 02:02 PM
You're mixing healthcare with SS. It's hard enough to deal with without segregating the two. I realize they are intertwined to a degree, and maybe it is a joint solution that's needed, but....


....argh, screw it. I don't have time for this. (pulls ripcord on thread)

Before you even begin to talk about healthcare subsidized or socialized you have to talk about SS, Medicare, and Medicaid and SCHP and what to do with them. What do you think Seniors use to by meds when the medicare runs out?

KC native
03-24-2009, 02:04 PM
BS. Doing what?

I did sales for 9 months and decided it wasn't for me. I went to a discount broker (TD Ameritrade) and went from trading to credit risk (margin dept) to options. My position was being eliminated in my location so I went to a local firm that has a WRAP product. It's a discretionary fee based product (meaning we make all the decisions) that I help pick the funds that comprise the portfolios (there are 6 risk levels).

underEJ
03-24-2009, 02:05 PM
Conceptually, SS is limited to the first 100K of income because payouts are limited on the backend. I would suggest, strongly, that increasing the cap on income to a very high number is a betrayal of what the system was designed to do in the first place.

Social Security is one of the most fair and rational policies we've ever had. It's been tremendously successful. The problem is that changing demographics have made it uneconomic to continue in its current form. Betraying the ideals under which it was created, however, is not my idea of a good answer.

Not to mention SS obligation is split evenly between employer and employee, so for every company with large numbers of highly compensated employees, it's not just bookkeeping to hold back the employee contribution, it is significantly increasing the employer labor cost.

Garcia Bronco
03-24-2009, 02:06 PM
I did sales for 9 months and decided it wasn't for me. I went to a discount broker (TD Ameritrade) and went from trading to credit risk (margin dept) to options. My position was being eliminated in my location so I went to a local firm that has a WRAP product. It's a discretionary fee based product (meaning we make all the decisions) that I help pick the funds that comprise the portfolios (there are 6 risk levels).

So you are pretty much starving then I take it? Bottom line, life controls you, you really don't control it from a financial perspective?

KC native
03-24-2009, 02:12 PM
So you are pretty much starving then I take it? Bottom line, life controls you, you really don't control it from a financial perspective?

:spock: How do you figure that? I'm salaried and live comfortably. I actually need to drop about 15 pounds.

HonestChieffan
03-24-2009, 02:12 PM
PSsssssssst buddy....wanna buy a good mutual fund? Huh? Getch in on the ground floor...wink wink nudge nudge....

Donger
03-24-2009, 02:18 PM
:spock: How do you figure that? I'm salaried and live comfortably. I actually need to drop about 15 pounds.

So you throw in a few extra $$$ when you do your taxes, right?

KC native
03-24-2009, 02:21 PM
So you throw in a few extra $$$ when you do your taxes, right?

:rolleyes: How is this relevant to you getting clowned on the debt situation?

Garcia Bronco
03-24-2009, 02:22 PM
:rolleyes: How is this relevant to you getting clowned on the debt situation?

It relevant because you think people that are well off should pay more, yet you don't throw in extra. I mean, put your money where your mouth is.

Donger
03-24-2009, 02:26 PM
:rolleyes: How is this relevant to you getting clowned on the debt situation?

Clowned? How so?

Because you wrote this: "I firmly believe that people who make a lot of money in this society have a duty to pay more in taxes."

Then this: "I'm salaried and live comfortably."

KC native
03-24-2009, 02:26 PM
It relevant because you think people that are well off should pay more, yet you don't throw in extra. I mean, put your money where your mouth is.

So was the topic of this thread nationalization and debt or taxes? Just because he wants to jump off topic and try to escape it doesn't mean I have to.

KC native
03-24-2009, 02:26 PM
Clowned? How so?

Because you wrote this: "I firmly believe that people who make a lot of money in this society have a duty to pay more in taxes."

Then this: "I'm salaried and live comfortably."

Go back to your argument about debt and how quickly it was shot down.

Donger
03-24-2009, 02:29 PM
Go back to your argument about debt and how quickly it was shot down.

The fact that you don't like the projection doesn't make it any less realistic.

Now, why don't you cough up a little more in taxes?

BucEyedPea
03-24-2009, 02:33 PM
Because you wrote this: "I firmly believe that people who make a lot of money in this society have a duty to pay more in taxes."

He's said that? Translation: "I need more of their money because I can't make it on my own." And it's a "duty" too. AKA From each according to ability and need. He's obviously a communist. And he may work in the financial sector probably as a janitor.

And his avy: socialism for the rich. He's advocating it for them even. He doesn't want to lose his job. That's his idea of symstemic risk.


KC we have socialism for the rich, small businesses, the middle-classes and the poor.

mikey23545
03-24-2009, 02:40 PM
The health care system is not "failed". People who expect free health care see is as such but those of us who understand you pay for it and you get health care see it as working quite well. I have had an MRI, X-ray, 2 doctor visits, a nice drive to pharmacy, and have been to phys therapy all in the last week with not a hitch.

The health care system won't be "fixed" until they cut the dicks off circus freaks like Ultrapenis for free...

KC native
03-24-2009, 02:42 PM
He's said that? Translation: "I need more of their money because I can't make it on my own." And it's a "duty" too. AKA From each according to ability and need. He's obviously a communist. And he may work in the financial sector probably as a janitor.

And his avy: socialism for the rich. He's advocating it for them even. He doesn't want to lose his job. That's his idea of symstemic risk.


KC we have socialism for the rich, small businesses, the middle-classes and the poor.

How do you figure I can't make it on my own? I've made it quite far in my life. I grew up in a shitty neighborhood, graduated college, and now have a family and career with plans to return to school in 2010.

My avatar is sarcasm at it's finest. It's highlighting that all of the bailouts at the time have gone to the financials and nothing had been done to help everyone else who was hurting. It's actually a hilarious cartoon too bad your ideology blinds you so much.

Simplex3
03-24-2009, 06:42 PM
...If this society has allowed those people to make the amounts of money they do...

ROFL

What a tool.

Saul Good
03-24-2009, 06:55 PM
If this society has allowed those people to make the amounts of money they do then they have a responsibility to contribute back to the system of laws, markets, and people that have made it possible.

Society "allows" it? It's more likely that society is in the damned way.

wazu
03-24-2009, 10:18 PM
My avatar is sarcasm at it's finest. It's highlighting that all of the bailouts at the time have gone to the financials and nothing had been done to help everyone else who was hurting. It's actually a hilarious cartoon too bad your ideology blinds you so much.

Your avatar makes a very good point, but not in the way you think. I'll vote against any "bailout", and if I have to prioritize, I'll vote against bailing out the rich before the poor, but both are cancerous to a free society.

Ultra Peanut
03-25-2009, 05:48 AM
We have the best health care in the world, yet it's failed. ROFL

Best as in better than you can get anywhere else without the government deciding what a doc can do and when and if or deal wityh rationing or incomptent boobs who like being a govt doc.

The system is working great. Its the freeloaders who redefine "working" to mean I get it free or it sucks.gloooooooooooooooooooooorious

Amnorix
03-25-2009, 12:17 PM
It relevant because you think people that are well off should pay more, yet you don't throw in extra. I mean, put your money where your mouth is.

Why should he volunteer to pay mor ehtan he is obligated?

Amnorix
03-25-2009, 12:20 PM
How do you figure I can't make it on my own? I've made it quite far in my life. I grew up in a shitty neighborhood, graduated college, and now have a family and career with plans to return to school in 2010.

My avatar is sarcasm at it's finest. It's highlighting that all of the bailouts at the time have gone to the financials and nothing had been done to help everyone else who was hurting. It's actually a hilarious cartoon too bad your ideology blinds you so much.


This is the "you're a n00b" beatdown. Ignore their ad hominems and stick to the subject. You don't have to justify your lifestyle or livelihood or anything else. It's a freaking message board.

Garcia Bronco
03-25-2009, 12:31 PM
Why should he volunteer to pay mor ehtan he is obligated?

Because he's hip to decide what other should pay. He feels as though enough isn't being paid into the public coffers. Pay more on your own then.

banyon
03-25-2009, 12:49 PM
This is an unnecessary and unwise step. The government already had the ability to address the "too big to fail" and "systemic risk" situation. It's called the Sherman Antitrust Act and has been around for over 100 years. Just because the government hasn't had the intestinal fortitude to use it for 20 years doesn't mean we should collectivize the junk risks of these irresponsible casino-styled hedge funds onto the regular taxpayers.

Garcia Bronco
03-25-2009, 12:52 PM
This is an unnecessary and unwise step. The government already had the ability to address the "too big to fail" and "systemic risk" situation. It's called the Sherman Antitrust Act and has been around for over 100 years. Just because the government hasn't had the intestinal fortitude to use it for 20 years doesn't mean we should collectivize the junk risks of these irresponsible casino-styled hedge funds onto the regular taxpayers.

Cha-ching

Amnorix
03-25-2009, 01:12 PM
Because he's hip to decide what other should pay. He feels as though enough isn't being paid into the public coffers. Pay more on your own then.


He's arguing a policy point. Refute the logic of his arguments if you can. Don't spout silliness.

No one is expected to pay more than they are obligated to under the tax laws, regardless of whether they can or not. Warren Buffett argues for systemic changes in the tax code all the time -- I doubt he pays more than his accountant says he should.

KC native
03-25-2009, 02:09 PM
This is an unnecessary and unwise step. The government already had the ability to address the "too big to fail" and "systemic risk" situation. It's called the Sherman Antitrust Act and has been around for over 100 years. Just because the government hasn't had the intestinal fortitude to use it for 20 years doesn't mean we should collectivize the junk risks of these irresponsible casino-styled hedge funds onto the regular taxpayers.

Yes, we do have antitrust but it wouldn't have prevented AIG, Bear Stearns, or Lehman Bros. This is necessary because the financial market place has changed significantly in the last 20 years. Antitrust should have been applied to Citi and BofA but hindsight is 20/20. One of the few bright spots to come out of this mess will be the fact that the financial supermarket model as practiced by Citi and BofA is dead.

banyon
03-25-2009, 02:13 PM
Yes, we do have antitrust but it wouldn't have prevented AIG, Bear Stearns, or Lehman Bros. This is necessary because the financial market place has changed significantly in the last 20 years. Antitrust should have been applied to Citi and BofA but hindsight is 20/20. One of the few bright spots to come out of this mess will be the fact that the financial supermarket model as practiced by Citi and BofA is dead.

Why not? What's the reason?

KC native
03-25-2009, 02:24 PM
Why not? What's the reason?

For AIG, the issue isn't AIG's prominence in insurance. There is apparently some shenanigans that went on with exposure to CDS's in some of the insurance subsidiaries but by and large the insurance companies are safe and not in danger of going under. The problem is AIG's holding company (which is the overall corporate umberlla) was ran like a giant hedge fund. They engaged in derivative transactions that threaten the global payment systems because they were never required to post collateral. They then levered the hell out of their positions and became a systemic risk.

With Bear Stearns, they had liquidity issues, derivative issues, and accounting issues. Their problem wasn't size in terms of trust implications but size of the leverage allowed (which they got an SEC waiver for in 2004 Thank Chris Cox for that). The problem with them is that people that had accounts with them were in danger of not being able to get any of their assets because of Bear not being able to cover it. We're talking about prime brokerage, clearing accounts and a whole host of other functions that would have driven a huge run on all banks and investment banks.

Lehman had the same issues as Bear but was allowed to fail which made many players realize they needed to reduce leverage and that lead to the violent sell off from Sept 2008 through November 2008.

The only one that you may have been able to get a trust case against would have been AIG but that's a dicey case because of the worldwide competition they have (Met Life, AXA, etc)

banyon
03-25-2009, 04:01 PM
For AIG, the issue isn't AIG's prominence in insurance. There is apparently some shenanigans that went on with exposure to CDS's in some of the insurance subsidiaries but by and large the insurance companies are safe and not in danger of going under. The problem is AIG's holding company (which is the overall corporate umberlla) was ran like a giant hedge fund. They engaged in derivative transactions that threaten the global payment systems because they were never required to post collateral. They then levered the hell out of their positions and became a systemic risk.

With Bear Stearns, they had liquidity issues, derivative issues, and accounting issues. Their problem wasn't size in terms of trust implications but size of the leverage allowed (which they got an SEC waiver for in 2004 Thank Chris Cox for that). The problem with them is that people that had accounts with them were in danger of not being able to get any of their assets because of Bear not being able to cover it. We're talking about prime brokerage, clearing accounts and a whole host of other functions that would have driven a huge run on all banks and investment banks.

Lehman had the same issues as Bear but was allowed to fail which made many players realize they needed to reduce leverage and that lead to the violent sell off from Sept 2008 through November 2008.

The only one that you may have been able to get a trust case against would have been AIG but that's a dicey case because of the worldwide competition they have (Met Life, AXA, etc)

No offense, but the main problem here is not that there were crappy companies pulling shenanigans over their customers (and yes, I am familar with how the CDS scheme functioned), but that they were doing so while they were in a position that was so large that it posed system wide systemic risk to our fiancial system.

The antitrust provisions would have solved the latter problem and then we could have just let the charlatans and crooks go bankrupt on their own dime.

it would have been nice if Glass-Stegall hadn't been repealed and allowed these people to contaminate the mortgage market, and we should restor that as well, but the combination of repairing Glass-Stegall and busting up the giants is clearly preferable to me and more importantly to taxpayers than giving government some sweeping vague new powers whenever they deem any financial entity "risky".

Garcia Bronco
03-25-2009, 04:20 PM
He's arguing a policy point. Refute the logic of his arguments if you can. Don't spout silliness.

No one is expected to pay more than they are obligated to under the tax laws, regardless of whether they can or not. Warren Buffett argues for systemic changes in the tax code all the time -- I doubt he pays more than his accountant says he should.

Which is exactly why these people can't be taken seriously. Put your money where your mouth is. Step up.




I didn't think so.

Garcia Bronco
03-25-2009, 04:22 PM
No offense, but the main problem here is not that there were crappy companies pulling shenanigans over their customers (and yes, I am familar with how the CDS scheme functioned), but that they were doing so while they were in a position that was so large that it posed system wide systemic risk to our fiancial system.

The antitrust provisions would have solved the latter problem and then we could have just let the charlatans and crooks go bankrupt on their own dime.

it would have been nice if Glass-Stegall hadn't been repealed and allowed these people to contaminate the mortgage market, and we should restor that as well, but the combination of repairing Glass-Stegall and busting up the giants is clearly preferable to me and more importantly to taxpayers than giving government some sweeping vague new powers whenever they deem any financial entity "risky".


Thanks Bill and Congress for the GLB. Great idea.

Hydrae
03-25-2009, 07:34 PM
I think the biggest thing I have learned so far with this fiasco is that we need to find a way to limit the size of these corporations. It is ridiculous that they are "too big to allow to fail" and then they take bailout money to buy up their failing brothers and grow larger. No way should any company be allowed to be in a position that their well being is more important than that of my family!!!!!!!!!(there are not enough exclamation points in this world to express myself)

KC native
03-25-2009, 09:37 PM
No offense, but the main problem here is not that there were crappy companies pulling shenanigans over their customers (and yes, I am familar with how the CDS scheme functioned), but that they were doing so while they were in a position that was so large that it posed system wide systemic risk to our fiancial system.

The antitrust provisions would have solved the latter problem and then we could have just let the charlatans and crooks go bankrupt on their own dime.

it would have been nice if Glass-Stegall hadn't been repealed and allowed these people to contaminate the mortgage market, and we should restor that as well, but the combination of repairing Glass-Stegall and busting up the giants is clearly preferable to me and more importantly to taxpayers than giving government some sweeping vague new powers whenever they deem any financial entity "risky".

WRT BofA and Citi, you are right. They should have been subjected to antitrust. WRT to AIG, there was no way that antitrust would have prevented it. AIG was a systemic risk because of all of the CDS and assorted derivatives that they wrote. If they were to have failed and the counter parties would have had to take a loss on assets that they had been showing as positive it would have triggered write downs everywhere. This would have lowered the equity of firms that were already on the ledge because of their leverage. We would have seen a run on every type of financial firm that was out there as people would have tried to make sure that they got their assets out before that business went under. We would have seen foreign governments demand payments and everything would have cratered. The bailout of AIG was not a bailout of AIG but a bailout of all the counter parties that AIG would have screwed. AIG's use of derivatives would have triggered no antitrust violations because it was a competitive market place with hundreds of participants. Also, the was no way to detect how bad AIG's exposure was until they had to start recognizing losses and reveal how little equity they had in the firm.

banyon
03-25-2009, 09:48 PM
WRT BofA and Citi, you are right. They should have been subjected to antitrust. WRT to AIG, there was no way that antitrust would have prevented it. AIG was a systemic risk because of all of the CDS and assorted derivatives that they wrote. If they were to have failed and the counter parties would have had to take a loss on assets that they had been showing as positive it would have triggered write downs everywhere. This would have lowered the equity of firms that were already on the ledge because of their leverage. We would have seen a run on every type of financial firm that was out there as people would have tried to make sure that they got their assets out before that business went under. We would have seen foreign governments demand payments and everything would have cratered. The bailout of AIG was not a bailout of AIG but a bailout of all the counter parties that AIG would have screwed. AIG's use of derivatives would have triggered no antitrust violations because it was a competitive market place with hundreds of participants. Also, the was no way to detect how bad AIG's exposure was until they had to start recognizing losses and reveal how little equity they had in the firm.

It's as if every time I post, you're not granting my premise.

Are you saying that AIG was somehow immune or not subject to antitrust? Or that if AIG had been just one much smaller irresponsible unit, that it could still have caused the same extent of damage?

I'm not sure either makes sense to me.

KC native
03-25-2009, 09:51 PM
It's as if every time I post, you're not granting my premise.

Are you saying that AIG was somehow immune or not subject to antitrust? Or that if AIG had been just one much smaller irresponsible unit, that it could still have caused the same extent of damage?

I'm not sure either makes sense to me.

As antitrust has been applied I believe that would be immune from it. I'm not a legal expert nor a historian but from what I've read I don't see how you would make the case to bust up AIG prior to them engaging in the crap they did.

banyon
03-25-2009, 09:53 PM
As antitrust has been applied I believe that would be immune from it. I'm not a legal expert nor a historian but from what I've read I don't see how you would make the case to bust up AIG prior to them engaging in the crap they did.

What makes AIG different from AT&T or Microsoft?

KC native
03-25-2009, 09:58 PM
What makes AIG different from AT&T or Microsoft?

Competition. AIG had competition in every area that they did business. Microsoft and AT&T were both oligopolies.

Simplex3
03-25-2009, 09:58 PM
What makes AIG different from AT&T or Microsoft?

The financial guys figured out earlier to get their hooks into politicians. Sheesh, that was easy.

banyon
03-25-2009, 10:05 PM
Competition. AIG had competition in every area that they did business. Microsoft and AT&T were both oligopolies.

Microsoft and AT&T had competition as well (and by definition were monopolistic, but not oligopolistic). But they towered over them, like AIG did their competition. The "too big to fail" component, along with the market share of these CDS's would've made an easy argument for DOJ.

KILLER_CLOWN
03-25-2009, 10:13 PM
I think the biggest thing I have learned so far with this fiasco is that we need to find a way to limit the size of these corporations. It is ridiculous that they are "too big to allow to fail" and then they take bailout money to buy up their failing brothers and grow larger. No way should any company be allowed to be in a position that their well being is more important than that of my family!!!!!!!!!(there are not enough exclamation points in this world to express myself)

Amen to that!

***SPRAYER
03-26-2009, 06:52 AM
Old but still relevant


http://www.youtube.com/watch?v=QAyLHSNKuQ0&feature=PlayList&p=4CDAB99FAB5980BA&index=8

KC native
03-26-2009, 09:52 AM
Microsoft and AT&T had competition as well (and by definition were monopolistic, but not oligopolistic). But they towered over them, like AIG did their competition. The "too big to fail" component, along with the market share of these CDS's would've made an easy argument for DOJ.

No, it wouldn't have. Antitrust law has no "too big to fail" component. It covers anti-competitve and unfair business practices. CDS and the other derivatives were available from a variety of firms not just AIG. If AIG would have used their positioning in the derivatives space to push the market around then they would have wound up being subjected to Antitrust laws but since they were many participants AIG didn't control the market or engage in any unfair business practices to get to where they were it would be a difficult if not impossible case to make.

Taco John
03-26-2009, 10:07 AM
There's no such thing as too big to fail. That's a liberal boogeyman. It doesn't exist.

There is no man made entitiy that is too big to fail.

BucEyedPea
03-26-2009, 10:10 AM
There's no such thing as too big to fail. That's a liberal boogeyman. It doesn't exist.

There is no man made entitiy that is too big to fail.

They're too big to save is a more accurate slogan. Nothing like taking everyone down with them.

banyon
03-26-2009, 10:12 AM
No, it wouldn't have. Antitrust law has no "too big to fail" component. It covers anti-competitve and unfair business practices. CDS and the other derivatives were available from a variety of firms not just AIG. If AIG would have used their positioning in the derivatives space to push the market around then they would have wound up being subjected to Antitrust laws but since they were many participants AIG didn't control the market or engage in any unfair business practices to get to where they were it would be a difficult if not impossible case to make.

It's not as if I've pulled this possiblity from left field here. Many fairly knowledgable people have suggested this, including ex-Speaker Newt Gingrich in the thread I posted the other day. The size of the business is absolutely a relevant component. It's not just about being unfair, that would be covered by other acts like consumer protection, FTC, etc. It's unfair restraint on trade + monopolistic pressure.

Let's be clear here, you don't think AIG was manipulating markets to their advantage?

banyon
03-26-2009, 10:15 AM
There's no such thing as too big to fail. That's a liberal boogeyman. It doesn't exist.

There is no man made entitiy that is too big to fail.

I assume you're trying to address me with this vague assurance.

To be clear, I haven't advocated bailing out anyone here.

I'm merely asserting that they are too big. I don't care if they fail or not. Bankruptcy protection and reorganization would have been adequate, I've said that all along.

KC native
03-26-2009, 10:26 AM
It's not as if I've pulled this possiblity from left field here. Many fairly knowledgable people have suggested this, including ex-Speaker Newt Gingrich in the thread I posted the other day. The size of the business is absolutely a relevant component. It's not just about being unfair, that would be covered by other acts like consumer protection, FTC, etc. It's unfair restraint on trade + monopolistic pressure.

Let's be clear here, you don't think AIG was manipulating markets to their advantage?

No, they weren't manipulating the market. They were operating on a set of bad assumptions. If they were being unfair someone seeking a CDS contract could have gone to any of the other firms that wrote these contracts. You should read the 3 part AIG Washington Post series for a clear view of how they blew up.

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/28/AR2008122801916.html

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/29/AR2008122902670.html

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/30/AR2008123003431.html

It's unfair restraint on trade + monopolistic pressure.

Ok, so where is the monopolistic pressure and restraint on trade? Everyone was getting involved with these contracts not just AIG.

Simplex3
03-26-2009, 10:28 AM
...Everyone was getting involved with these contracts not just AIG.

I wasn't.

Calcountry
03-26-2009, 04:06 PM
I can multi-task.

So, increased taxation is the way to fix it, eh? I assume that you contribute to our government's revenue via income tax, yes?Probably as good as the SecTreas.

Calcountry
03-26-2009, 04:07 PM
There's no such thing as too big to fail. That's a liberal boogeyman. It doesn't exist.

There is no man made entitiy that is too big to fail.But, but, if they didn't bail them out, they wouldn't be able to bitch about the bonus checks.