On MTM, insolvency, and market over-corrections

[patientrenter]

[quote=davelj]

…PR, what you’re saying is that you’d rather cut off your nose to spite your face. Which is fine, but obviously I don’t share that view…..

I’m not one to cut off my nose to spite my face.[/quote]

Where’s my nose? I’ve lost my nose!

More seriously, what I am saying is that fairness is a goal just as valid as cost minimization. For some of us, it is less important than cost minimization; for some, more important. Your characterization of my priorities clearly places you in the first category. Obviously, I am in the second category. I accept the variety of views, but I don’t accept that fairness should be swept aside entirely.

I am not prepared to achieve fairness at any cost, but I think the public debate should acknowledge it as an important goal for many of us, and give it serious weight and priority. At the moment, fairness is receiving only a perfunctory acknowledgment, as something that must be deferred. I am suggesting that is a mistake, because it means that, in this first and most significant phase of the unwind, when vast amounts of wealth are being reallocated, the most irresponsible people will benefit the most from the entire bubble and its aftermath. You mentioned, davelj, that many of the well-paid professionals who actively aided and abetted, and profited from, the bubble will see no really large personal pain now. I am saying that part of what we should be doing, as part of a focus on fairness, is to change that.

I am a financial technician in the heart of the financial services industry, and near to some of the companies and issues that we read about every day on the front page of the WSJ. The lesson I personally am learning from the bubble and the unwind, and the way the unwind is being managed, is that reckless behavior, executed carefully to maximize my personal upside and to socialize as much downside as possible, will pay off handsomely.

If I buy a home in the future, I will make sure to do so using government-subsidized loans that require next to no downpayment. As home prices eventually start on their next up cycle, I will buy many homes with little or no money down, signing whatever the mortgage broker says about my living in each of the homes to get the best deal, and when prices eventually become frothy again, I will HELOC the hell out of each one, and walk when prices start to go down again.

And that is just the beginning. Knowing that the whole game is driven by selfish populism, I owe no moral allegiance to the rest of the population. All that scrupulous paying of taxes, regardless of how easily I could avoid some if I tried? Gone.

By demoting fairness to the bottom of the pile, we are allowing a corrosion of trust in our community that may have long-term consequences. I’d rather take my medicine now. My belief is that if we all did that, we’d all be much better off 20 years from now. So I don’t see putting fairness high on the priorities as self-denial or self-mutilation in any way. It’s in our best long-term interest. The biggest obstacle is that very few people think for the long term.

[Allan from Fallbrook]

Patientrenter: Excellent post. I started my corporate career in insurance and surety as an accountant. I moved up through the ranks and, the longer I was there, the more I realized what a complete and total racket the insurance business is. You can dress up it any way you’d like, but, at it’s heart it’s a shakedown racket.

Similarly, politics in the last thirty years has been a racket all it’s own and on both sides of the aisle. Your ideas of fairness are spot on and I’d like to add honesty to fairness. The problem is this: No one in Washington or New York wins if fairness and honesty are the order of the day.

Do you believe that Obama has the requisite political capital to look the American people in the eye and tell them the truth regarding wages, taxes and the very solvency of this country? No chance in hell! Do you think Rubin, Summers, Geithner, Paulson or any that crew have the courage to admit before Congress and the people that America has been gaming the world financial system since the 1970s?

I believe that if the entire system were openly exposed to the harsh light of day, it would collapse like the rotten house of cards that it is and the resultant populist rage would trigger nothing short of a revolution. No, that isn’t hyperbole. Look at the backlash surrounding the AIG bonuses and you’ll get an inkling of the rage that is simmering just below the surface of this country.

Obama and his crew are going to say ONLY what they CAN say and they are going to do what they HAVE to do. As I’ve opined before: Sometimes the choices aren’t between good and bad, they’re between bad and worse.

[Allan from Fallbrook]

Patientrenter: Excellent post. I started my corporate career in insurance and surety as an accountant. I moved up through the ranks and, the longer I was there, the more I realized what a complete and total racket the insurance business is. You can dress up it any way you’d like, but, at it’s heart it’s a shakedown racket.

Similarly, politics in the last thirty years has been a racket all it’s own and on both sides of the aisle. Your ideas of fairness are spot on and I’d like to add honesty to fairness. The problem is this: No one in Washington or New York wins if fairness and honesty are the order of the day.

Do you believe that Obama has the requisite political capital to look the American people in the eye and tell them the truth regarding wages, taxes and the very solvency of this country? No chance in hell! Do you think Rubin, Summers, Geithner, Paulson or any that crew have the courage to admit before Congress and the people that America has been gaming the world financial system since the 1970s?

I believe that if the entire system were openly exposed to the harsh light of day, it would collapse like the rotten house of cards that it is and the resultant populist rage would trigger nothing short of a revolution. No, that isn’t hyperbole. Look at the backlash surrounding the AIG bonuses and you’ll get an inkling of the rage that is simmering just below the surface of this country.

Obama and his crew are going to say ONLY what they CAN say and they are going to do what they HAVE to do. As I’ve opined before: Sometimes the choices aren’t between good and bad, they’re between bad and worse.

[Allan from Fallbrook]

Patientrenter: Excellent post. I started my corporate career in insurance and surety as an accountant. I moved up through the ranks and, the longer I was there, the more I realized what a complete and total racket the insurance business is. You can dress up it any way you’d like, but, at it’s heart it’s a shakedown racket.

Similarly, politics in the last thirty years has been a racket all it’s own and on both sides of the aisle. Your ideas of fairness are spot on and I’d like to add honesty to fairness. The problem is this: No one in Washington or New York wins if fairness and honesty are the order of the day.

Do you believe that Obama has the requisite political capital to look the American people in the eye and tell them the truth regarding wages, taxes and the very solvency of this country? No chance in hell! Do you think Rubin, Summers, Geithner, Paulson or any that crew have the courage to admit before Congress and the people that America has been gaming the world financial system since the 1970s?

I believe that if the entire system were openly exposed to the harsh light of day, it would collapse like the rotten house of cards that it is and the resultant populist rage would trigger nothing short of a revolution. No, that isn’t hyperbole. Look at the backlash surrounding the AIG bonuses and you’ll get an inkling of the rage that is simmering just below the surface of this country.

Obama and his crew are going to say ONLY what they CAN say and they are going to do what they HAVE to do. As I’ve opined before: Sometimes the choices aren’t between good and bad, they’re between bad and worse.

[Allan from Fallbrook]

Patientrenter: Excellent post. I started my corporate career in insurance and surety as an accountant. I moved up through the ranks and, the longer I was there, the more I realized what a complete and total racket the insurance business is. You can dress up it any way you’d like, but, at it’s heart it’s a shakedown racket.

Similarly, politics in the last thirty years has been a racket all it’s own and on both sides of the aisle. Your ideas of fairness are spot on and I’d like to add honesty to fairness. The problem is this: No one in Washington or New York wins if fairness and honesty are the order of the day.

Do you believe that Obama has the requisite political capital to look the American people in the eye and tell them the truth regarding wages, taxes and the very solvency of this country? No chance in hell! Do you think Rubin, Summers, Geithner, Paulson or any that crew have the courage to admit before Congress and the people that America has been gaming the world financial system since the 1970s?

I believe that if the entire system were openly exposed to the harsh light of day, it would collapse like the rotten house of cards that it is and the resultant populist rage would trigger nothing short of a revolution. No, that isn’t hyperbole. Look at the backlash surrounding the AIG bonuses and you’ll get an inkling of the rage that is simmering just below the surface of this country.

Obama and his crew are going to say ONLY what they CAN say and they are going to do what they HAVE to do. As I’ve opined before: Sometimes the choices aren’t between good and bad, they’re between bad and worse.

[Allan from Fallbrook]

Patientrenter: Excellent post. I started my corporate career in insurance and surety as an accountant. I moved up through the ranks and, the longer I was there, the more I realized what a complete and total racket the insurance business is. You can dress up it any way you’d like, but, at it’s heart it’s a shakedown racket.

Similarly, politics in the last thirty years has been a racket all it’s own and on both sides of the aisle. Your ideas of fairness are spot on and I’d like to add honesty to fairness. The problem is this: No one in Washington or New York wins if fairness and honesty are the order of the day.

Do you believe that Obama has the requisite political capital to look the American people in the eye and tell them the truth regarding wages, taxes and the very solvency of this country? No chance in hell! Do you think Rubin, Summers, Geithner, Paulson or any that crew have the courage to admit before Congress and the people that America has been gaming the world financial system since the 1970s?

I believe that if the entire system were openly exposed to the harsh light of day, it would collapse like the rotten house of cards that it is and the resultant populist rage would trigger nothing short of a revolution. No, that isn’t hyperbole. Look at the backlash surrounding the AIG bonuses and you’ll get an inkling of the rage that is simmering just below the surface of this country.

Obama and his crew are going to say ONLY what they CAN say and they are going to do what they HAVE to do. As I’ve opined before: Sometimes the choices aren’t between good and bad, they’re between bad and worse.

[patientrenter]

I don’t see anything to disagree with in your post, Allan.

I am perhaps a little less Obama-allergic, not because I see him as a savior, but because he seems slightly better than some of his fellow powerful politicians (E.g. Barney Frank, Chris Dodd, Chuck Schumer. And add a few Republicans with responsibility for financial oversight, if you think they have, or had, any power and were championing looser lending.) But the differences are not that great, for all the distracting sound and fury made over them.

I also see the problem more as the pursuit by a majority of our population of selfish short-term goals, using the tools of democratic politics, than a corruption of our system by a few powerful people. The problem, Allan, is us. Not necessarily you and I, but probably the majority of our neighbors, colleagues, friends and relatives. Certainly a few powerful people played a critical enabling role, for their own personal enrichment. And I would be happy to see them suffer far, far more. But there are way too many ordinary middle-class people who believe that they can consume more than they produce during their lifetime, using asset-price inflation fueled by borrowed money. That’s the real bubble that needs to be pricked.

[patientrenter]

I don’t see anything to disagree with in your post, Allan.

I am perhaps a little less Obama-allergic, not because I see him as a savior, but because he seems slightly better than some of his fellow powerful politicians (E.g. Barney Frank, Chris Dodd, Chuck Schumer. And add a few Republicans with responsibility for financial oversight, if you think they have, or had, any power and were championing looser lending.) But the differences are not that great, for all the distracting sound and fury made over them.

I also see the problem more as the pursuit by a majority of our population of selfish short-term goals, using the tools of democratic politics, than a corruption of our system by a few powerful people. The problem, Allan, is us. Not necessarily you and I, but probably the majority of our neighbors, colleagues, friends and relatives. Certainly a few powerful people played a critical enabling role, for their own personal enrichment. And I would be happy to see them suffer far, far more. But there are way too many ordinary middle-class people who believe that they can consume more than they produce during their lifetime, using asset-price inflation fueled by borrowed money. That’s the real bubble that needs to be pricked.

[patientrenter]

I don’t see anything to disagree with in your post, Allan.

I am perhaps a little less Obama-allergic, not because I see him as a savior, but because he seems slightly better than some of his fellow powerful politicians (E.g. Barney Frank, Chris Dodd, Chuck Schumer. And add a few Republicans with responsibility for financial oversight, if you think they have, or had, any power and were championing looser lending.) But the differences are not that great, for all the distracting sound and fury made over them.

I also see the problem more as the pursuit by a majority of our population of selfish short-term goals, using the tools of democratic politics, than a corruption of our system by a few powerful people. The problem, Allan, is us. Not necessarily you and I, but probably the majority of our neighbors, colleagues, friends and relatives. Certainly a few powerful people played a critical enabling role, for their own personal enrichment. And I would be happy to see them suffer far, far more. But there are way too many ordinary middle-class people who believe that they can consume more than they produce during their lifetime, using asset-price inflation fueled by borrowed money. That’s the real bubble that needs to be pricked.

[patientrenter]

I don’t see anything to disagree with in your post, Allan.

I am perhaps a little less Obama-allergic, not because I see him as a savior, but because he seems slightly better than some of his fellow powerful politicians (E.g. Barney Frank, Chris Dodd, Chuck Schumer. And add a few Republicans with responsibility for financial oversight, if you think they have, or had, any power and were championing looser lending.) But the differences are not that great, for all the distracting sound and fury made over them.

I also see the problem more as the pursuit by a majority of our population of selfish short-term goals, using the tools of democratic politics, than a corruption of our system by a few powerful people. The problem, Allan, is us. Not necessarily you and I, but probably the majority of our neighbors, colleagues, friends and relatives. Certainly a few powerful people played a critical enabling role, for their own personal enrichment. And I would be happy to see them suffer far, far more. But there are way too many ordinary middle-class people who believe that they can consume more than they produce during their lifetime, using asset-price inflation fueled by borrowed money. That’s the real bubble that needs to be pricked.

[patientrenter]

I don’t see anything to disagree with in your post, Allan.

I am perhaps a little less Obama-allergic, not because I see him as a savior, but because he seems slightly better than some of his fellow powerful politicians (E.g. Barney Frank, Chris Dodd, Chuck Schumer. And add a few Republicans with responsibility for financial oversight, if you think they have, or had, any power and were championing looser lending.) But the differences are not that great, for all the distracting sound and fury made over them.

I also see the problem more as the pursuit by a majority of our population of selfish short-term goals, using the tools of democratic politics, than a corruption of our system by a few powerful people. The problem, Allan, is us. Not necessarily you and I, but probably the majority of our neighbors, colleagues, friends and relatives. Certainly a few powerful people played a critical enabling role, for their own personal enrichment. And I would be happy to see them suffer far, far more. But there are way too many ordinary middle-class people who believe that they can consume more than they produce during their lifetime, using asset-price inflation fueled by borrowed money. That’s the real bubble that needs to be pricked.

[Allan from Fallbrook]

Patientrenter: For the record, I’m not really Obama allergic. I was honestly hoping that he would be an agent for change and would offer the sweeping mandate needed to clean things up. Sadly, the events of the last few months have disabused me of that notion.

I also agree that the average American is the problem, but it’s not that simple, either, unfortunately. Marketing the “American Dream” has been a growth industry over the past thirty years and that period of time dovetails perfectly with the growth (explosion, really) of personal, governmental and commercial credit and debt and the necessary massive deregulation programs as well. The politicians, bankers and their teams of lawyers have been selling that “dream”, all the while hiding the reality that America doesn’t really produce anything anymore, but we consume ever larger portions of the world’s energy and money and expect, against all reality, that the bill will never come due.

Well, it did. And now we have to figure this shit out, and quickly. The fairness and honesty we’re discussing is necessary to do this, but I don’t see it happening and that saddens and scares me, all at the same time.

[Allan from Fallbrook]

Patientrenter: For the record, I’m not really Obama allergic. I was honestly hoping that he would be an agent for change and would offer the sweeping mandate needed to clean things up. Sadly, the events of the last few months have disabused me of that notion.

I also agree that the average American is the problem, but it’s not that simple, either, unfortunately. Marketing the “American Dream” has been a growth industry over the past thirty years and that period of time dovetails perfectly with the growth (explosion, really) of personal, governmental and commercial credit and debt and the necessary massive deregulation programs as well. The politicians, bankers and their teams of lawyers have been selling that “dream”, all the while hiding the reality that America doesn’t really produce anything anymore, but we consume ever larger portions of the world’s energy and money and expect, against all reality, that the bill will never come due.

Well, it did. And now we have to figure this shit out, and quickly. The fairness and honesty we’re discussing is necessary to do this, but I don’t see it happening and that saddens and scares me, all at the same time.

[Allan from Fallbrook]

Patientrenter: For the record, I’m not really Obama allergic. I was honestly hoping that he would be an agent for change and would offer the sweeping mandate needed to clean things up. Sadly, the events of the last few months have disabused me of that notion.

I also agree that the average American is the problem, but it’s not that simple, either, unfortunately. Marketing the “American Dream” has been a growth industry over the past thirty years and that period of time dovetails perfectly with the growth (explosion, really) of personal, governmental and commercial credit and debt and the necessary massive deregulation programs as well. The politicians, bankers and their teams of lawyers have been selling that “dream”, all the while hiding the reality that America doesn’t really produce anything anymore, but we consume ever larger portions of the world’s energy and money and expect, against all reality, that the bill will never come due.

Well, it did. And now we have to figure this shit out, and quickly. The fairness and honesty we’re discussing is necessary to do this, but I don’t see it happening and that saddens and scares me, all at the same time.

[Allan from Fallbrook]

Patientrenter: For the record, I’m not really Obama allergic. I was honestly hoping that he would be an agent for change and would offer the sweeping mandate needed to clean things up. Sadly, the events of the last few months have disabused me of that notion.

I also agree that the average American is the problem, but it’s not that simple, either, unfortunately. Marketing the “American Dream” has been a growth industry over the past thirty years and that period of time dovetails perfectly with the growth (explosion, really) of personal, governmental and commercial credit and debt and the necessary massive deregulation programs as well. The politicians, bankers and their teams of lawyers have been selling that “dream”, all the while hiding the reality that America doesn’t really produce anything anymore, but we consume ever larger portions of the world’s energy and money and expect, against all reality, that the bill will never come due.

Well, it did. And now we have to figure this shit out, and quickly. The fairness and honesty we’re discussing is necessary to do this, but I don’t see it happening and that saddens and scares me, all at the same time.

[Author]

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