At least your Social Security money was not used to "play with stocks", as Bush and McCain wanted.
In 2006, McCain voted for the Social Security Reserve Fund. The proposal would shift Social Security?s annual surpluses into a reserve account that would be converted into risky private accounts. [SCR 83, Vote #68, 3/16/06; SCR 83, Vote #68, 3/16/06]
By the way, the real issue with banks is that they have negative equity due to fall in values of the securities that they hold (mortgages) and high leverage.
So they are insolvent, in more simple terms.
Lending to them would not address this as it would not increase their equity.
While the authorities are not saying word "insolvent" for obvious reasons, they realized it and are considering giving money to these insolvent banks to make them not insolvent.
I firmly believe there are uncountable shiploads of culpability for this for every member of the federal gummint. More than enough to go around.
Therefore, it follows that notwithstanding our rudely advanced, passionate positions on the issue, our decision on who we vote for in the upcoming election will impact this mess about as profoundly as whether we decide to drive a Chevy or a Ford.
Ron Paul had it right. Unfortunately, nobody took him seriously.
If Social Security money was invested into stocks, mortgages, etc, the likely outcome of that would actually be that the bubble would last longer (so we'd be all celebrating right now, instead of the opposite), and would go higher, but the end result would be even worse.
I would respectfully disagree, and think that at least to some degree, the outcome of election will make a difference.
Keep in mind, however (check intrade.com if you want) that the market is already expecting Obama to win.
I, for one, would love to know what Ron Paul said, I respect him greatly from a long time ago.
Ron Paul had it exactly backwards. There is no more rabid anti-regulation looney-tune than him. That's what makes him a libertarian.
The entire domino series started with unregulated trade in securities, held at unconscionable leverage ratios and with unaudited ratings. The fact that they were based on mortgages is almost incidental; given the scheme, anything that looked secure would have worked. No regulatory scheme is bulletproof, but this was like sticking your belly out and inviting the thieves and pirates to cut off a few pounds of flesh.
Now Paul and the other anti-regulatory nutbags will find some sophistic arguments to suggest that it wouldn't have happened on their watch. Thank God it wasn't their watch, or the entire economy would be out to lunch by now -- permanently.
Iggy. Have no doubt that my remark about rudeness was in no way directed at you. I've always known you to be a role model of civility. I prefer to think of myself as another one in here. I haven't tallied up the score. But there may be as many as ten... although that might be a stretch.
Of course, you do understand that the proposal only allotted 15% of one's SS MAY be used for private accounts. You try and make it sound like all SS was going into the stock market.
Five days ago, addressing the John Birch Society, Paul said, responding to "pundits who challenged his opposition to the bailout with statements such as, 'Surely you can't believe that we should do nothing.' Dr. Paul's response was that the federal government should return to sound money and lower taxes, and take more care in regulating the regulators. He pointed out that we got into this mess because of too much government spending, too much debt, too much inflation, and too much regulation. Now we are being told that the solution is more of the same!"
Iggy, I'm sure you know the relationship between "sound money" (Paul means gold-backed money) and the money supply, right? They have practically nothing to do with each other. Certainly we have too much debt (duh...). As for regulation, you see what he's saying here: that the problem was caused partly by too much of it.
This guy either has no understanding of economics, credit and money, or he's playing off the fact that most people listening to him don't.
Tell us, Dr. Paul, how would "sound money" have prevented the current crisis? Do you think he really understands how all that money came into being in the first place? (Hint for Ron Paul supporters: it wasn't from printing it. Most of it was never printed at all; it's ciphers on a computer screen. How it got there is the key question -- and the answer has nothing to do with anything Paul said, except for the regulation part.)
================== For one thing because of fractional banking and the way the securities generated by one bank were counted as assets by another bank, "money" was "amplified" many times if not created.
In spite of the repeated chants of fear-fear-fear, the actual stock "problem" appears to be that the suckers "AKA" stock holders have had enough of the outlandish executive compensation and refusal to distribute dividends when the money was earned, and the dissipation of any profits on highly questionable activities such as stock buy backs at market highs and "investment" in outlandish and farfetched schemes. Every attempt to correct this has been thwarted by the coopted and preempted directors, and the suckers are voting with their feet.
The people have also looked at the claimed corporate "assets" and have concluded these are mainly smoke and mirrors, and are getting out while the getting is good [or at least while they can get some of their money back].
The credit market is a separate issue, but the banks and financial institutions have no problem evaluating the actual credit worthiness of their borrowers and are now rationally acting on this knowledge, i.e. they are saying "NOT ONLY NO BUT HELL NO" to the applications for loans from the other banks and high rollers. The question is why our government continues to pour taxpayer money down this "black hole," including the 25 billion dollar loan guarantee for the US automotive industry.
If the banks are in such dire need of money why aren't they paying inflation + 5% on CDs/time deposits [c. 10%] and possibly a little less on checking? This is still almost no return when tax effect is considered.
There are regulations and there are regulations. The key is to be able to tell the difference between those that are vital and those are simply a PITA.
================== I have watched some of the Waxman hearings.
These display the usual total lack of hard facts. For example Greenberg of AIG blaming the new management, and the new management for blaming Greenberg for the AIG bust-out. The fatal blow was given to AIG by the credit defaults swaps [CDSs] written by one small division. These contracts have a date when these were written, and it is known when Mr. Greenberg was relieved as President/CEO of AIG. Were the bulk of the toxic CDSs written on his watch or not? This is not a question of opinion or debate.
Which is why regulation, as it exists, wasn't effective. What was enforced was a philosophy, not the law, and the thinking was defective. BTW, it also ignored something derided by Republicans as the common good.
I don't think the rest of the world wants to look like either Ohio Brosh or Ohio Mr. Gardner. Scouting out scrap metal to build you products from doesn't speak highly of Ohio Brush's quality. It is a good reflection of your character, however.
Here is what you and yours have lead your State into.
This is fall. This is Ohio State Buckeye football time. But, you know, there's a lot of people still saying, "Thank God for Michigan, because, without Michigan, we'd be number 50 instead of just number 49 in a lot of economic measures."
Our unemployment is at a 16-year high. Our Medicaid rolls are the highest in history. Our food stamp rolls are the highest in history. The WIC enrollment is at highest in history.
Food lines are growing. People who used to volunteer and serve in those food lines are now in the line getting food themselves. It's pretty bad here, so people are talking about the economy as issues one, two, and three, at least.
I'm surprised at you, George. Fractional reserve banking has been with us since at least 1100 A.D. If the complaints about fractional reserve banking had any substance, under a fiat money regime, inflation would have been roughly equal to growth of the money supply. Between 1995 and 2005, for example, it would have been 15% per year or more. In fact, it averaged less than 3%. Here are the graphs if you want to check it out (M2 is considered to be the big factor in inflation):
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That old argument is, if you'll forgive the term, bankrupt.
The problem is not fractional reserve banking. The problem is OUT OF CONTROL expansion of credit and debt obligations. In other words, funny money with no regulations, no reserve requirements, no auditing of underlying securities -- the whole deregulation economics schtick. To put it bluntly, it's brain-dead ideological nonsense. It assumes everyone is honest, prudent, and smart. Pffhhht.
I don't think so. There is no evidence that I know of that stock holders aren't perfectly happy to pay outrageous sums to the CEOs as long as their total returns (dividends plus stock evaluation) are humming nicely along. In fact, they let executive compensation pile up to the ionosphere when things were good.They didn't WANT dividends in a lot of cases; they wanted growth, big-time. It's only when they aren't making as much money as they think they should be that they start looking at places to point fingers and to raise hell. Otherwise, everything is hunky-dory. That's a big part of the problem. Nobody gives a damn as long as they're making money.
They're getting out because they think OTHER PEOPLE have noticed that it's smoke and mirrors -- or they think other people will THINK it's all smoke and mirrors. On their own account, they don't care if it's really curds and whey.
The market's irrationality is overstated. It's perfectly rational. It behaves as if EVERYONE ELSE is irrational. Of course, such behavior guarentees that everyone else WILL act irrationally -- only it's really rational, because they've correctly guessed that everyone will act irrationally. d8-)
From what I've read, the fear is not that their borrowers are not credit-worthy, but rather fear that someone else (who might be the source of income for their borrowers) will not be credit-worthy. Or the people who are those sources' sources will not be credit-worthy. And so on, and so on, ad infinitum.
I almost fear to ask this, but what alternative did you have in mind?
You'll have to ask them. Whatever it is, I haven't heard the answer.
Uh...yes, we are. We bought the bullshit. We could have noticed it and raised hell, but we were all too busy.
This "key" always shows up after a crisis. Until then, you can count on the _Free to Choose_ wackos to call all of it bad. To them, a regulation is only good when the horse is already out of the barn.
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