Wow @ this article

Discussion in 'IntroSpectrum' started by TheReturn, Apr 4, 2009.

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  1. TheReturn

    TheReturn Life of the Party

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    Fuck you and your government is the answer bullshit.

    Fuck you and your big business over small business bullshit.

    People like this would be all over the business world if we let greedy, no moral-having CEOs' businesses fail instead of bail them out.

    The Banker Who Said No - Forbes.com

    Real Libertarian shit right there. Fuck you and your Party too.
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  2. Mcg-

    Mcg- New Member

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    Interesting article/person.
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  3. reggie_jax

    reggie_jax rapper noyd

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    good read. and i agree with you, let all of those companies crash and burn. the mortage company may go to shit but the house isn't going anywhere, at the end of the day. people are just too soft these days to deal with the reality that we'd be better off just ripping the bandaid off quickly and take the immediate brunt of the damage, rather than prolong our suffering by slowly pulling it up hair by hair.
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  4. Mcg-

    Mcg- New Member

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    ^ i don't think you realize how deeply we are in it. We can't just let it all crash and burn. Its a house of cards, but we LIVE in the house of cards.

    The west is specialized in finance. It cannot simply give this up.
    Think of those old equations that justify free trade (ricardo). Both countries specialize, so that both are better off. the US specialized in finance and opened the doors of free trade - if the US loses finance, what competitive advantage is it left with?
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  5. reggie_jax

    reggie_jax rapper noyd

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    there's nothing to say that letting specific failed companies crash and burn will take down the whole industry. if there is a market for said industry then somebody will inevitably take their place, and at a fair price rather than the inflated ones that helped lead to this crisis.
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  6. Mcg-

    Mcg- New Member

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    the problem is they are trading is securities. if the companies burn and their securities along with them, than those securities that are held by other companies, will also fail.

    This is the danger of huge corporations wheeling and dealing in financial instruments. And the danger of allowing banker-lobbyists to dictate the terms of what should be allowed as a security in the first place.

    Its not the same thing as when a traditional company fails, say one that produces widgets. Another company can easily come in and take its place. Here, wit htheir financial instruments, these financial corporations have literally sort of clawed themselves into the very structure of the system.
    Maybe a good metaphor is a vine plant that infects its tree then grows with it, they become so attached, that if you were to remove the vine plant, you would destroy the tree.
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  7. Volaticus

    Volaticus Anarcho-Capitalist

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    Strike the root.
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  8. Mcg-

    Mcg- New Member

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    the vine is rotting already, striking the root probably will make things worse.
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  9. reggie_jax

    reggie_jax rapper noyd

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    i see... so what exactly is it that's stopping another company from taking their place?
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  10. Mcg-

    Mcg- New Member

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    capital market structure. Another actor taking its place is totally useful in simple financial obligations that are not directly tied into the system and widespread, also for commodities markets. But for big-time finance, its completely different.

    Simple thought experiment.

    1-Lets say You (RJ) owes me (MCG) $100.
    There is a contract between us that says "RJ owes MCG $100."
    We will call this Obligation X.

    Here, I (MCG) is taking on 100% of the risk if RJ cannot pay me back. This is simple and straightforward, and if RJ runs into trouble, the only other person that can be effected in MCG.

    2-Lets say I sign another contract with Vol. It says "Vol gives MCG 50$ for a 50% stake for the value of Obligation X, terminated if the $50 is paid back". (this is a Security)

    Here, I (MCG),
    A-assuming I have extra money lying around, is taking on still 100% of the risk. If RJ fails to pay, I still owe 50% of the value of Obligation to Vol.

    B-assuming I have no extra money lying around ( i spent the 50$ and have no other cash), then I can't pay back that 50% of the obligation either. In this case, the loss falls to Vol.

    So here, risk is contingent on MCG(me) having extra capital lying around.

    3-Picture thousands of these obligations linked together, in ways so complex that people can't figure out the exact implications, either because its too complicated or because we simply don't know what people's assets are (due to privacy issues down the chain). Picture everyone in America, indeed the world, holding onto these financial securities as assets.
    Who will the loss fall to? Which persons or companies will simply go bankrupt tommorow due to toxic assets? its so complex, we can't figure it out.

    Lets say the value of these financial instruments are SO LARGE and ubiquitous that they make up such a large portion of the economy. So huge in fact, that the west has been specializing in them from the last 20 years of trade. Its the main product hte west offers. So large in fact, that if they fail, there is no market to purchase these securities. (i.e. you can't let the market decide, it doesn't have the $) There is simply not enough money in the system.

    so what the hell are you supposed to do?
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  11. reggie_jax

    reggie_jax rapper noyd

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    i'm not sure. are you saying that if we let companies like AIG or Bank of America fail, that they will take down the entire economy with them? if that's the case, then how is pumping a trillion dollars we don't have into these companies that have already proven such a vital yet irresponsible part of our economy going to do anything besides delay the problem and inflate the dollar in the process?

    if they fall and they take down companies that contribute to the real economy with them, then theoretically wouldn't someone else come in to take the place of those companies? at the end of the day, wouldn't the only thing that can't be replaced be these companies that seemingly have the ability to destroy the economy simply by going bankrupt?
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  12. Mcg-

    Mcg- New Member

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    its not the companies themselves, its their financial assets. If we let the obligations they have fail then this can cause chain reactions of failures in the system, and its not clear who the loss falls to.

    The irresponsiblity is not of the companies, its of the failure of state planners (including judges) that would follow from allowing these things from developing as they have.

    The problem is that these are giants, there is no one else to take up these assets if they fail. Even the government itself, printing dollars in the trillions is having trouble buying up all these assets. THAT'S HOW BAD IT IS.

    The bailout might work. Lets say all these obligations generated have pumped up the market so that everything is already overpriced. I.E. the current value of things already reflects the increase in price reflected in the creating of the securities. So if the amounto f curency added to the system is equal to teh securities being overpriced, there is a chance that pumping piles of $$ into the system will result in balance.
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  13. reggie_jax

    reggie_jax rapper noyd

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    do you think that's the case though? i mean i hope you're right it just sounds a little far fetched to me.. that the feds can print a trillion dollars but things are already inflated to the point where this somehow balances out. even if things are already overpriced, wouldn't printing more money just inflate prices even more? how do you print more money without decreasing its value? unless you're saying that prices are naturally bound to fall due to current prices being unreasonably inflated, and the new inflation caused by printing the trillion dollars will just bring the prices back up the current levels.

    and what exactly do you mean by it's not the fault of the companies but rather the state planners/judges fault..? i'm not that well versed in economics so bare with me here.
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  14. Mcg-

    Mcg- New Member

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    i also think its far fetched, and I have no clue if it will work or not.


    fyi this is just how I conceived it working. I'm not an economist either, so I have no clue if this is accurate or not of what their ideas are exactly, although what i've put up seems like a reasonable guess based on what i've read.


    The companies simply used the legal tools available to them. They didn't make the laws on securities that allowed them to do what they did. Obviously, now people are looking for scapegoats. This is typical in crisis.
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  15. reggie_jax

    reggie_jax rapper noyd

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    the laws allowed them to do what they did, but isn't any business decision they (the companies) made still their responsibility/fault? even if it's legal, that doesn't make it a good idea.
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  16. Mcg-

    Mcg- New Member

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    its not really companies job thought to regulate the market. That's the job of regulators and lawmakers. Companies are supposed to try to maximize profit (their alloted function in our economies), what they think that is depends on what is available to them and what the state of knowledge is at the time.

    They thought that specializing in these securities would result in gain. They did not think it would bring on ruin.

    Its hard to blame corporations for something that is a systemic problem. Especially when the companies were following the laws, didn't commit any fraud, we're widely acclaimed at the time, etc...
    Its also hard to blame the republicans for this, or the democrats. Its not like the democrats or republicans platform has been "lets reform securities law". It wasn't exactly a hot topic. I don't think Obama's change was "Change in securities law at a fundamental level".
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  17. reggie_jax

    reggie_jax rapper noyd

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    i'm not saying that they knew it would bring on ruin... obviously they didn't know that or else they would have been wiser in their actions... but the fact of the matter is it did bring on ruin and just because everything they did was legal doesn't absolve them from their bad business decisions.

    it's not their job to regulate the market. however it is their job to regulate their own business. why shouldn't it be? why do we need a nanny-state government to tell these companies what is and isn't a good idea?
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  18. TheReturn

    TheReturn Life of the Party

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    Isn't the amount tied up in the obligations from these securities something like $65 trillion?
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  19. Volaticus

    Volaticus Anarcho-Capitalist

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    No one can regulate a market.

    Regulation causes merket distortion causes business cycle (boom-bust) causes malinvestment causes the very problem that we're currently facing causes more regulation causes more distortion causes booms & busts of greater magnitude causes bigger malinvestment causes TOTAL FUCKING GALACTIC FAIL. At some point you just have to say fuck it and accept the recession (market correction) that will liquidate all the malinvestment and heal the market. Hands OFF.
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  20. Radium

    Radium f k

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