for my next trick….

[Anonymous]

[quote=SD Realtor]The govt has a great track record running other massive programs so I am sure this one will be awesome.[/quote]

I hear some variation of this quite a bit these days. It’s easy to get nods of agreement when bashing the government.

But does the government really have such a bad track record?

Social security is a common example of a big government “failure.” But it did work for more than 70 years, and it will probably be a few more decades before it could fail. A century of success before it ends. Not a bad run.

The Federal Reserve (another popular target) has been around for around 100 years — coincidentally the most prosperous century any nation has seen in history.

Our highway system is a marvel of the world, and our military (the most massive of all programs, ever) seems to get the job done.

(I could go on, but by now the reader is actually considering my point or has cynically dismissed it.)

Some problems are inherently big. I think if were to take the time to objectively look at history and list the successes vs. the failures, we’d realize that government can actually do a pretty good job with many of these.

[SD Realtor]

As I said Brian, not all banks are as insolvent as you make them out to be nor are all the credit unions. The FDIC also insures deposits. The FDIC has the power to shut down banks but if you look at what happens to the problem banks, the insurable assets are insured and the assets are then taken over by other banks.

You yourself just implied that America is preserving the very bank management that got us into the problem in the first place. You seem to be convinced that this is and was the only possible solution.

I am not.

[SD Realtor]

As I said Brian, not all banks are as insolvent as you make them out to be nor are all the credit unions. The FDIC also insures deposits. The FDIC has the power to shut down banks but if you look at what happens to the problem banks, the insurable assets are insured and the assets are then taken over by other banks.

You yourself just implied that America is preserving the very bank management that got us into the problem in the first place. You seem to be convinced that this is and was the only possible solution.

I am not.

[SD Realtor]

As I said Brian, not all banks are as insolvent as you make them out to be nor are all the credit unions. The FDIC also insures deposits. The FDIC has the power to shut down banks but if you look at what happens to the problem banks, the insurable assets are insured and the assets are then taken over by other banks.

You yourself just implied that America is preserving the very bank management that got us into the problem in the first place. You seem to be convinced that this is and was the only possible solution.

I am not.

[SD Realtor]

As I said Brian, not all banks are as insolvent as you make them out to be nor are all the credit unions. The FDIC also insures deposits. The FDIC has the power to shut down banks but if you look at what happens to the problem banks, the insurable assets are insured and the assets are then taken over by other banks.

You yourself just implied that America is preserving the very bank management that got us into the problem in the first place. You seem to be convinced that this is and was the only possible solution.

I am not.

[SD Realtor]

As I said Brian, not all banks are as insolvent as you make them out to be nor are all the credit unions. The FDIC also insures deposits. The FDIC has the power to shut down banks but if you look at what happens to the problem banks, the insurable assets are insured and the assets are then taken over by other banks.

You yourself just implied that America is preserving the very bank management that got us into the problem in the first place. You seem to be convinced that this is and was the only possible solution.

I am not.

[sdduuuude]

[quote=gandalf]If the banksters had gone down, especially the big ones, our money goes with them. Actually, and here’s the rub, they’ve lost a good deal of it already, obligations they can’t pay, hence the bailout.

.
.
.

What should have happened other than the bailout?[/quote]

gandalf,

A good, honest question. I have several answers:

1) if the banks had not known that they would get bailed out, if they had no hope of being backstopped by the government, they would not have assumed so much risk in the first place. This is a classic “moral hazard” situation, right ? You can say what you want about regulation, but really the existence of backstopping forces put us in the situation in the first place. The banks should be punished for relying on it.

2) Our money would not go with them. The FDIC would take care of that, to a large extent.

3) Receivership is the real answer. The banks go bad, land in the goverment hands, and get sold off to the highest bidder.

4) Banks who weren’t stupid take over lending, or new banks form, funded by investors who weren’t stupid. Takes some time to get this rolling, but if government money went to fund the creation of new banks or fund the growth of small banks who were responsible instead of keeping the old ones alive, we’d be in a better place now, for sure.

Ralphs may have to seek different funding sources for a while, and may have to cut back on their inventory, but they would learn to choose their banks more wisely. Now, they have learned nothing and are still relient on banks who really are not that sound. Are they in a better place ? Not really.

5) We learn to be less relient on massive amounts of debt.

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?

[sdduuuude]

[quote=gandalf]If the banksters had gone down, especially the big ones, our money goes with them. Actually, and here’s the rub, they’ve lost a good deal of it already, obligations they can’t pay, hence the bailout.

.
.
.

What should have happened other than the bailout?[/quote]

gandalf,

A good, honest question. I have several answers:

1) if the banks had not known that they would get bailed out, if they had no hope of being backstopped by the government, they would not have assumed so much risk in the first place. This is a classic “moral hazard” situation, right ? You can say what you want about regulation, but really the existence of backstopping forces put us in the situation in the first place. The banks should be punished for relying on it.

2) Our money would not go with them. The FDIC would take care of that, to a large extent.

3) Receivership is the real answer. The banks go bad, land in the goverment hands, and get sold off to the highest bidder.

4) Banks who weren’t stupid take over lending, or new banks form, funded by investors who weren’t stupid. Takes some time to get this rolling, but if government money went to fund the creation of new banks or fund the growth of small banks who were responsible instead of keeping the old ones alive, we’d be in a better place now, for sure.

Ralphs may have to seek different funding sources for a while, and may have to cut back on their inventory, but they would learn to choose their banks more wisely. Now, they have learned nothing and are still relient on banks who really are not that sound. Are they in a better place ? Not really.

5) We learn to be less relient on massive amounts of debt.

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?

[sdduuuude]

[quote=gandalf]If the banksters had gone down, especially the big ones, our money goes with them. Actually, and here’s the rub, they’ve lost a good deal of it already, obligations they can’t pay, hence the bailout.

.
.
.

What should have happened other than the bailout?[/quote]

gandalf,

A good, honest question. I have several answers:

1) if the banks had not known that they would get bailed out, if they had no hope of being backstopped by the government, they would not have assumed so much risk in the first place. This is a classic “moral hazard” situation, right ? You can say what you want about regulation, but really the existence of backstopping forces put us in the situation in the first place. The banks should be punished for relying on it.

2) Our money would not go with them. The FDIC would take care of that, to a large extent.

3) Receivership is the real answer. The banks go bad, land in the goverment hands, and get sold off to the highest bidder.

4) Banks who weren’t stupid take over lending, or new banks form, funded by investors who weren’t stupid. Takes some time to get this rolling, but if government money went to fund the creation of new banks or fund the growth of small banks who were responsible instead of keeping the old ones alive, we’d be in a better place now, for sure.

Ralphs may have to seek different funding sources for a while, and may have to cut back on their inventory, but they would learn to choose their banks more wisely. Now, they have learned nothing and are still relient on banks who really are not that sound. Are they in a better place ? Not really.

5) We learn to be less relient on massive amounts of debt.

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?

[sdduuuude]

[quote=gandalf]If the banksters had gone down, especially the big ones, our money goes with them. Actually, and here’s the rub, they’ve lost a good deal of it already, obligations they can’t pay, hence the bailout.

.
.
.

What should have happened other than the bailout?[/quote]

gandalf,

A good, honest question. I have several answers:

1) if the banks had not known that they would get bailed out, if they had no hope of being backstopped by the government, they would not have assumed so much risk in the first place. This is a classic “moral hazard” situation, right ? You can say what you want about regulation, but really the existence of backstopping forces put us in the situation in the first place. The banks should be punished for relying on it.

2) Our money would not go with them. The FDIC would take care of that, to a large extent.

3) Receivership is the real answer. The banks go bad, land in the goverment hands, and get sold off to the highest bidder.

4) Banks who weren’t stupid take over lending, or new banks form, funded by investors who weren’t stupid. Takes some time to get this rolling, but if government money went to fund the creation of new banks or fund the growth of small banks who were responsible instead of keeping the old ones alive, we’d be in a better place now, for sure.

Ralphs may have to seek different funding sources for a while, and may have to cut back on their inventory, but they would learn to choose their banks more wisely. Now, they have learned nothing and are still relient on banks who really are not that sound. Are they in a better place ? Not really.

5) We learn to be less relient on massive amounts of debt.

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?

[sdduuuude]

[quote=gandalf]If the banksters had gone down, especially the big ones, our money goes with them. Actually, and here’s the rub, they’ve lost a good deal of it already, obligations they can’t pay, hence the bailout.

.
.
.

What should have happened other than the bailout?[/quote]

gandalf,

A good, honest question. I have several answers:

1) if the banks had not known that they would get bailed out, if they had no hope of being backstopped by the government, they would not have assumed so much risk in the first place. This is a classic “moral hazard” situation, right ? You can say what you want about regulation, but really the existence of backstopping forces put us in the situation in the first place. The banks should be punished for relying on it.

2) Our money would not go with them. The FDIC would take care of that, to a large extent.

3) Receivership is the real answer. The banks go bad, land in the goverment hands, and get sold off to the highest bidder.

4) Banks who weren’t stupid take over lending, or new banks form, funded by investors who weren’t stupid. Takes some time to get this rolling, but if government money went to fund the creation of new banks or fund the growth of small banks who were responsible instead of keeping the old ones alive, we’d be in a better place now, for sure.

Ralphs may have to seek different funding sources for a while, and may have to cut back on their inventory, but they would learn to choose their banks more wisely. Now, they have learned nothing and are still relient on banks who really are not that sound. Are they in a better place ? Not really.

5) We learn to be less relient on massive amounts of debt.

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?

[briansd1]

SD Realtor, actually, I don’t think the bailout was the only solution.

I would have preferred a nationalization like they did with Northern Rock in Britain or the RTC back in the 1990s The government could have nationalized Goldman, Morgan, Citibank, etc..

But that would have created more government involvement in the financial supply chain, not less.

That was my point.

*

BTW, I think that there was a more political, national security dimension to the bailout.

American banks were successful in securitizing away risk. And they offloaded the securities to European banks and pension funds.

But the European buyers of those securities purchased insurance policies with AIG.

The Europeans are our reluctant allies in the Wars in Iraq and Af-Pak.

A bankruptcy of the big banks and AIG would have forced the Europeans to take big haircuts. They had already signaled that the would not and that American taxpayers would have to bear the cost of financial hubris.

Can we force the Chinese and Japanese to take haircuts on their GSE investments? We may do so with inflation, but we certain can’t force face value losses.

Our debts were increasing externally held. So we had no choice but to make our partners whole lest they decide to no longer fund and support us.

[briansd1]

SD Realtor, actually, I don’t think the bailout was the only solution.

I would have preferred a nationalization like they did with Northern Rock in Britain or the RTC back in the 1990s The government could have nationalized Goldman, Morgan, Citibank, etc..

But that would have created more government involvement in the financial supply chain, not less.

That was my point.

*

BTW, I think that there was a more political, national security dimension to the bailout.

American banks were successful in securitizing away risk. And they offloaded the securities to European banks and pension funds.

But the European buyers of those securities purchased insurance policies with AIG.

The Europeans are our reluctant allies in the Wars in Iraq and Af-Pak.

A bankruptcy of the big banks and AIG would have forced the Europeans to take big haircuts. They had already signaled that the would not and that American taxpayers would have to bear the cost of financial hubris.

Can we force the Chinese and Japanese to take haircuts on their GSE investments? We may do so with inflation, but we certain can’t force face value losses.

Our debts were increasing externally held. So we had no choice but to make our partners whole lest they decide to no longer fund and support us.

[briansd1]

SD Realtor, actually, I don’t think the bailout was the only solution.

I would have preferred a nationalization like they did with Northern Rock in Britain or the RTC back in the 1990s The government could have nationalized Goldman, Morgan, Citibank, etc..

But that would have created more government involvement in the financial supply chain, not less.

That was my point.

*

BTW, I think that there was a more political, national security dimension to the bailout.

American banks were successful in securitizing away risk. And they offloaded the securities to European banks and pension funds.

But the European buyers of those securities purchased insurance policies with AIG.

The Europeans are our reluctant allies in the Wars in Iraq and Af-Pak.

A bankruptcy of the big banks and AIG would have forced the Europeans to take big haircuts. They had already signaled that the would not and that American taxpayers would have to bear the cost of financial hubris.

Can we force the Chinese and Japanese to take haircuts on their GSE investments? We may do so with inflation, but we certain can’t force face value losses.

Our debts were increasing externally held. So we had no choice but to make our partners whole lest they decide to no longer fund and support us.

[briansd1]

SD Realtor, actually, I don’t think the bailout was the only solution.

I would have preferred a nationalization like they did with Northern Rock in Britain or the RTC back in the 1990s The government could have nationalized Goldman, Morgan, Citibank, etc..

But that would have created more government involvement in the financial supply chain, not less.

That was my point.

*

BTW, I think that there was a more political, national security dimension to the bailout.

American banks were successful in securitizing away risk. And they offloaded the securities to European banks and pension funds.

But the European buyers of those securities purchased insurance policies with AIG.

The Europeans are our reluctant allies in the Wars in Iraq and Af-Pak.

A bankruptcy of the big banks and AIG would have forced the Europeans to take big haircuts. They had already signaled that the would not and that American taxpayers would have to bear the cost of financial hubris.

Can we force the Chinese and Japanese to take haircuts on their GSE investments? We may do so with inflation, but we certain can’t force face value losses.

Our debts were increasing externally held. So we had no choice but to make our partners whole lest they decide to no longer fund and support us.

[Author]

Posts