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Economy of the U.S.A. - How we got here - 11/14/2008 2:20:25 PM
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Ichiban
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I have been posting and will post 3 total essays on the economy of the United States regarding the past, present and future state of affairs, through my eyes. In this chapter, I will attempt to describe why we are in the crisis we now face. If there are any questions regarding this lesson, then I'd urge you to please ask so that anyone who might have a similar question could better understand. Now, without further adieu, I present to you: The U.S. Economy: How we got here.
It's very easy to look at today's economic forecast and be nonchalant about it. Perhaps it hasn't affected you yet. Maybe you had nothing in the NYSE or you might even believe that the end of the crisis is nearing and soon the earth will spin in its proper course, in due time. First, let me be quite blunt in saying that this is not over. The bottom knows know boundaries in a market that's been so heavily tampered with. Secondly, you might be wondering if there is a solution to all of these things. Be a patient. No, I don't mean "be patient", I meant "be a patient".
When you go to the doctor with a stomach ache, headache and nausea; you are not sure if it is simply the flu season or something slightly more serious. You feel awful and you have no energy. Your sad because there are things you want to do (unless you want to be sick in order to duck work, school or a family reunion but those are the only exceptions). You tell the doctor you feel down and sad because your sick. So, in order to make you feel light and happy, he prescribes Paxil, an anti-depressant. Doesn't make much sense does it? You might feel a bit happier for a short while but ultimately the sickness comes back stronger and you continue to feel down, again. You go back to the doctor and he gives you Zoloft, a more powerful anti-depressantl. The cycle continues until you are on your death bed looking at your doctor begging him for more Zoloft and Paxil so that you won't feel so sad that you're dying.
Welcome to the United States economy. You can't give a good diagnosis though, without a proper family history. The U.S. market has a long and poor history of health. From poor monetary policies to deficit spending we'll look at the history of the supposed "free market" history of the United States.
The root of this crisis can be attributed to one entity in particular: The Federal Reserve Bank. Now, in the United States Constitution, in clearly states that only Congress has the right to regulate and coin money. It's quite simple deal the founding fathers had set up. They made the coins out of gold and silver and these coins had a given value based on the size and amount of precious metals in them. The excellent thing about this system is that inflation is rarely an issue and it is nearly impossible to spend money you don't have. With the Federal Reserve Act of 1913, Congress no longer regulated the system of coining money. A private bank did.
Now it wasn't that the federal reserve had suddenly created dollar bills. Bills of credit were emitted by banks who held the precious metals. You could spend these bills at stores, but the bills of credit were always accepted at banks for gold and silver. Unless there was fraud, there were no extra bills of credit then there were precious metals. So, the system still worked. In fact, the value of the dollar increased from 1860 to 1913. That all changed with the Great Depression.
In order to stop deflation (the price of goods falling), President Roosevelt suspended the gold standard, except for foreign currency exchange. Silver and gold were revoked as payments for debt and even banned the ownership of large amounts. What this effectively did, was turn the dollar into a piece of paper. However, because banks and places of business still accepted the bills of credit based on the value on the note, no one noticed. Later, in 1971, America completely left the gold standard as foreign markets could now no longer exchange bills of credit for gold, as well.
How does the Federal Reserve Bank tie into this? Well, they are supposed to "coin" money. But how do you coin paper? You can't...you print it. And that's what they did. According to the CPI (Consumer Price Index), the dollar today is only worth 0.04 cents comparatively to the dollar of 1900 (though many believe that it is even lower due to fudged government statistics). This is because of the rise of inflation due to a fiat currency (Fiat meaning a dollar that is backed by nothing). Some would try to argue that having a weaker dollar improves exports and to their extent, they are correct, but America is not a producing nation.
To put it in context, America can only get money in one of two ways: Print or borrow. Supposedly, we try our best to keep inflation in check. So instead of printing the money, we borrow it from countries like Saudi Arabia, Japan and most prominently, China. So, we become indebted to these countries. Well, how are we going to pay them back? We print the money necessary to pay them back. But China, is a heavily producing nation which sells most of its goods in the United States. So, all the money that Americans earn are partially invested in the Chinese, Saudi and Japanese countries that lent us the money in the first place. What does that leave America with? You guessed it: Loads of more debt to pay. And because the dollar has nothing to tie itself to other then other fiat currencies (Euro, Yen, Pound, etc), the Federal Reserve will continue to emit bills of credit without worrying about its acceptance. Though, this will be addressed later in Chapter 3.
Now, in the next chapter, we will cover how this system of monetary policy has affected the market today, and where the market stands as of now.
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Come and discover Japan's spirituality, with me!
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RE: Economy of the U.S.A. - How we got here - 11/14/2008 2:34:09 PM
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kernsfamily
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Most of that is quite true....especially when it comes to US Federal Reserve Policy....and the "weak dollar" strategy of recent years has blown up in everyone's face.
I was just thinking about this VERY subject....how did we get here...and what should we all do? Because, just today, over lunch, I was reading an article in a magazine which explained in "plain English", in a non-partisan manner (blame is certainly spread around to all political parties)....very concise and to the point.... how we got here....and how we can get out of this mess. By far, the best "explanation" yet as to what went wrong...and how to fix it.
How Capitalism Will Save Us, by Steve Forbes.....Forbes Magazine....
http://www.forbes.com/intelligentinvesting/forbes/2008/1110/018.html
(be sure and go read all 3 pages....the link to the 2nd and 3rd pages are at the bottom)
_____________________________
Proud dad of 3 great girls....Erin, Emilie and Elise
Blessed to have all of them in a "totally awesome" public elementary school!
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RE: Economy of the U.S.A. - How we got here - 11/14/2008 2:46:28 PM
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Ichiban
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I was getting around to the "how to fix it part" later :P
I'll read the article though
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RE: Economy of the U.S.A. - How we got here - 11/14/2008 2:48:26 PM
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Ichiban
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quote:
How Capitalism Will Save Us, by Steve Forbes.....Forbes Magazine....
http://www.forbes.com/intelligentinvesting/forbes/2008/1110/018.html
(be sure and go read all 3 pages....the link to the 2nd and 3rd pages are at the bottom)
I stopped here: Belatedly, but thankfully, governments recognized that the only way to get credit flowing again was for them to make quick and direct massive infusions of new equity into beleaguered banks, as well as commit to other emergency measures hitherto unimaginable
I just explained that, that was stupid...and why. Go read so Walter Williams articles like: Wackonomics.
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RE: Economy of the U.S.A. - How we got here - 11/14/2008 3:31:00 PM
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kernsfamily
Posts: 1393
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quote:
ORIGINAL: Ichiban
quote:
How Capitalism Will Save Us, by Steve Forbes.....Forbes Magazine....
http://www.forbes.com/intelligentinvesting/forbes/2008/1110/018.html
(be sure and go read all 3 pages....the link to the 2nd and 3rd pages are at the bottom)
I stopped here: Belatedly, but thankfully, governments recognized that the only way to get credit flowing again was for them to make quick and direct massive infusions of new equity into beleaguered banks, as well as commit to other emergency measures hitherto unimaginable
I just explained that, that was stupid...and why. Go read so Walter Williams articles like: Wackonomics.
if you only got to the first couple of paragraphs...you missed the good middle, and "edge of your seat" ending....
yeah...i admit...that was kind of an odd statement to put in the article.....especially since the article ends like this (Spoiler alert!)
Cutting tax rates is also a necessity. Political cultures have a hard time understanding that taxes don't just raise revenue, they are also a price and a burden. The tax you pay on income is the price you pay for working, just as the tax on capital gains is the price you pay for taking risks that work out and the tax on profits is the price you pay for success. If you make it more worthwhile for people to work productively and take risks, they will do so. Rebates are useless--they don't change incentives the way lower tax rates do. Ideally, we should enact a simple flat tax. Twenty-five countries have adopted some form of a flat tax, all successfully.
Economic growth will help prevent another financial time bomb--credit default swaps, a form of debt insurance--from exploding. The nominal amount peaked at $62 trillion and is now down to $55 trillion. Renewed prosperity will enable big companies to service their debts, thus nullifying the need to ever collect on the insurance. Most of these swaps will expire within five years.
Sensible, not punitive, regulations in the financial sector are needed, such as standardization of new financial products so that there is more transparency.
Fannie and Freddie should be broken up into a number of new, recapitalized companies that have no ties to Uncle Sam.
If we have the kind of policies that marked the 1980s and not the kind that marked the 1930s and 1970s, we will be in for a dazzling era of innovation and economic advances. Free-market capitalism will save us--if we let it.
And, hey....I love Walter Williams, too....his article from April 2008 entitled "Foreign Trade Angst" was right "ON THE MARK"....most of what he had to say in that, I, myself, had been yelling from the rooftops for the past 5 years...as I have been working for a foreign-based multinational corporation.....and, have been immersed in international business and trade.
_____________________________
Proud dad of 3 great girls....Erin, Emilie and Elise
Blessed to have all of them in a "totally awesome" public elementary school!
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RE: Economy of the U.S.A. - How we got here - 11/14/2008 4:25:19 PM
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Ichiban
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And Forbes is correct on most marks. GSE's should be non-existent, lower taxes for all, etc.
But don't confuse Forbes with a free market guy. Anyone who encourages the words "injection" in a market phrase, is NOT a free market capitalist.
Honestly, there is no better mainstream, free market guys then Walter Williams and Peter Schiff. Those guys are the gold standard of free market capitalism.
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RE: Economy of the U.S.A. - How we got here - 11/14/2008 5:44:31 PM
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GroupW
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The crisis we face today is far more complex than can be attributed to one cause - ie. the Federal Reserve. While the FRB was a contributing factor, one must also realize that financial booms and busts are a normal part of a market driven economy.
The actual underlying causes need to include excessively expansionary fiscal policy since 2000/2001 and a fairly unusual string of very prosperous years globally that led people to be very complacent regarding the measurement, assessment, and pricing of risk.
Add to that a few factors unique to American markets and you have the makings of a crisis.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Economy of the U.S.A. - How we got here - 11/14/2008 6:55:11 PM
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mrtigger
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quote:
ORIGINAL: kernsfamily
I was just thinking about this VERY subject....how did we get here...
Dumbness..... Apparently much of America believes that you can borrow your way to wealth.
quote:
and what should we all do?
As a nation, we need to create jobs that actually generate decent pay for employees and add wealth to the nation as a whole (mining, farming, fishing, manufacturing, and the like...).
Individually, live within means. Pay off debts & invest excess.
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mr tigger
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RE: Economy of the U.S.A. - How we got here - 11/14/2008 7:01:26 PM
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Ichiban
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quote:
ORIGINAL: GroupW
The crisis we face today is far more complex than can be attributed to one cause - ie. the Federal Reserve. While the FRB was a contributing factor, one must also realize that financial booms and busts are a normal part of a market driven economy.
The actual underlying causes need to include excessively expansionary fiscal policy since 2000/2001 and a fairly unusual string of very prosperous years globally that led people to be very complacent regarding the measurement, assessment, and pricing of risk.
Add to that a few factors unique to American markets and you have the makings of a crisis.
You are correct. I'll point out in the next chapter that government is at large fault as well. And while they're are booms and busts in market economies, the question is: Are there booms and busts in FREE market economies? We don't know. We haven't seen it yet.
I would agree that fiscal policy is to blame but you have to go WAY back before 2000/2001. I mean the entitlement increases during FDR and LBJ's presidencies were enormous. And as for "unusually prosperous", the next chapter will explain how there was nothing unusual at all, about it. It was just simply the lack of a free market guideline that caused it.
Next essay will be out next week, sometime. Hopefully that will explain a little better what I mean
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RE: Economy of the U.S.A. - How we got here - 11/14/2008 7:09:54 PM
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GroupW
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Actually, the "unusually prosperous" comment goes back to some comments of some economists. It wasn't that we didn't have free markets per se. The issue is having excessive economic stimulation at the same time as some unusually strong wealth creation in the investment arena over a generation-long period of time.
As far as going back to LBJ, the roots don't necessarily go back that far. If you graph the budget deficit against interest rates and overlay a graph of the growth of mortgage debt, you can see that while the overall growth in mortgage debt increased during the 1970s and 80's, it didn't really begin to pick up serious steam until 2000.
Economic crises usually involve some degree of monetary and fiscal over-stimulation along with some degree of overconfidence/misestimation/underpricing of risk. If you look a the economic history of the past 10-20 years, our markets have been volatile but generally on an above-trend level of growth.
That gave people the complacency regarding risk that's necessary for a bubble to form.
Sorry - don't mean to steal your thunder. As a banker/economist/trader, I have some educated opinions on this topic as well. Feel free to tell me to shut up so you can finish your post.
BT
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Economy of the U.S.A. - How we got here - 11/16/2008 12:56:16 AM
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Ichiban
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quote:
ORIGINAL: GroupW
Actually, the "unusually prosperous" comment goes back to some comments of some economists. It wasn't that we didn't have free markets per se. The issue is having excessive economic stimulation at the same time as some unusually strong wealth creation in the investment arena over a generation-long period of time.
As far as going back to LBJ, the roots don't necessarily go back that far. If you graph the budget deficit against interest rates and overlay a graph of the growth of mortgage debt, you can see that while the overall growth in mortgage debt increased during the 1970s and 80's, it didn't really begin to pick up serious steam until 2000.
Economic crises usually involve some degree of monetary and fiscal over-stimulation along with some degree of overconfidence/misestimation/underpricing of risk. If you look a the economic history of the past 10-20 years, our markets have been volatile but generally on an above-trend level of growth.
That gave people the complacency regarding risk that's necessary for a bubble to form.
Sorry - don't mean to steal your thunder. As a banker/economist/trader, I have some educated opinions on this topic as well. Feel free to tell me to shut up so you can finish your post.
BT
I like good open discussion. So, don't take my disagreements with you as an insult or something. I don't :P I'm just a 21 year old who has too much time on his hands while finishing up a certificate in graphic arts :P
I believe the roots go back to Woodrow Wilson. The creation of the Fed bank and dropping of the gold standard was a main factor in the bubble forming, bursting and depression of the 30's. Out of the Depression, we got the New Deal with a LOAD of government entitlements.
Interest rates are only part of the problem and that is only because we have bankers trying to set them. Why are we supposed to believe that some appointed chairman head is supposed to magically know the right interest rate? It's either too high or too low and today it's WAAAAYYYYYYY low. Mortgage debt happened because people purchased their homes for ridiculous prices and at ridiculous rates. The rate cuts after 9/11 to stimulate the economy started the snowball and legislators attempting to put everyone in homes as apart of the "American Dream" add two or three more and they merged together to smash into the financial house.
I absolutely agree on your assessment of how bubbles form. Low interest rates are a perfect example of over stimulation. GSE's created a false confidence. People WAY overestimated the prices of homes but could afford to because of the ridiculous interest rates.
My opinion is that the market can get us out of this without government intervention and that means the closing of the federal reserve bank.
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Come and discover Japan's spirituality, with me!
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RE: Economy of the U.S.A. - How we got here - 11/17/2008 10:49:38 AM
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GroupW
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Actually what I think created the overconfidence was a fairly unusual national trend toward ever-higher home prices. Nationally, home prices had never had a down year. Coming off the commercial real estate bubble of the late 80's, the stock bubble in '87, the tech bubble in '01 and a few other minor bubbles in between, people were looking for "the next big thing" without regard for risk.
In housing, they thought they had the magic answer - an asset class that never goes down.
2 decades of above trend economic growth and above trend investment performance generally gave people a false sense of security.
As far as having a fiduciary currency, that in and of itself isn't a huge factor. Monetary manipulation in today's financial system can be accomplished under either a gold standard or with fiduciary currency. It's a bit of a red herring.
Similar with the GSE's. While they contributed to the crisis in a small way, they were not a necessary part of it. The underlying trends were so strong that the bubble likely would have happened without them. Indeed, in 2005, there was a very healthy debate in the industry over whether or not FNM/FRE were even relevant or necessary to the housing market. It appeared in 2005 that there was so much private money available that there was literally no need for the GSE's - the market was awash in cash even without them.
IMO, a healthy and politically independent central bank is vital for economic stability. If you go back to the pre-Federal Reserve days, our economic booms and busts were even more dramatic before we had the "shock absorbers" that we do today.
Edit: Forgot to add - it's nice seeing a "21 year old with too much time on his hands" thinking about this stuff. I think that bodes well for our country to have the next generation of leaders spending some time considering all this and educating themselves. Keep up the good work.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Economy of the U.S.A. - How we got here - 11/17/2008 10:55:29 AM
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GroupW
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Forgot to add - regarding the "ridiculous rates" comment.
If you go back and look historically at our interest rate history, a 3-4% 10 year US Treasury yield like we saw in 2003 isn't all that unusual. Indeed, the 6-10% rates we saw in the 20 years prior to that are the anomaly.
As far as can a chairperson of the Fed accurately gauge where rates should be? Actually, there is considerable evidence that would suggest that one can. Given free reign, markets are prone to overshooting. The "overshooting" is usually fairly recognizable and follows a predictable pattern with consistent symptons. Rising prices, falling unemployment beyond some frictional minimum level, a lack of excess industrial capacity (capacity utilization beyond 82-85% is typically observed to be inflationary.).
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Economy of the U.S.A. - How we got here - 11/17/2008 5:13:25 PM
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Ichiban
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I wish more people would take an interest to economics. :D
I disagree with your findings on the value of a central bank and that really is the heart of the discussion. I would argue the booms and busts of pre-central banking goes back to when we went off the gold standard we have at the time (Civil War era, in particular). I believe you fix the economy we are in by reforming (by reform I mean overhaul) monetary policy (which includes getting rid of the central bank but it is not limited to that), lowering taxes and reducing government spending (foreign policy, department cuts, entitlement spend).
Unfortunately, none of the three things will be done.
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Come and discover Japan's spirituality, with me!
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RE: Economy of the U.S.A. - How we got here - 11/17/2008 6:14:46 PM
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GroupW
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Go back and do a study on the frequency and depth of economic cycles before WWI. You'll find both the frequency and the depth of booms/busts were exaggerated in years prior compared to the post-Fed era.
(Econ was one of my majors in school. I also wish more people took an interest in the topic. I'm also a banker/trader/risk management exec by career choice.)
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Economy of the U.S.A. - How we got here - 11/17/2008 7:09:25 PM
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APZR
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I'll go with GroupW when it comes to bank/trading. But if you want to know where the real estate market went....
When I started in real estate, we had income verification work sheets to make sure the buyers qualified... 38% gross, 28% net income could go to a house payment. Then the Gobment stepped in to "make owning a home possible for EVERYONE", and my old spread sheets became worthless. Our imperial Gobment leaned hard on HUD, Fannie, & Freddie to make ridiculous loans. Everyone was fat and happy, I just shook my head and said here we go again (having surviving the 1980's S&L bailout). Now I'm using those old worksheets again.
http://www.youtube.com/watch?v=usvG-s_Ssb0&NR=1
http://www.youtube.com/watch?v=_MGT_cSi7Rs
http://www.youtube.com/watch?v=cMnSp4qEXNM
_____________________________
Ya can't keep trouble from visitin, but you don't have to offer it a chair.
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RE: Economy of the U.S.A. - How we got here - 11/17/2008 8:18:12 PM
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relady
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quote:
Our imperial Gobment leaned hard on HUD, Fannie, & Freddie to make ridiculous loans. With all due respect (and I DO respect your opinion as a fellow realtor) the Government may have encouraged the situation, but they did not FORCE the banks by any stretch of the imagination to stop basic underwriting, i.e., verification of income and employment. The banks chose to do that all on their own. In fact, all through the "boom" my buyers always had some level of underwriting going on - the ones with less than spectacular credit often had to jump through what I considered ridiculous hoops to get their loans closed, sometimes just 24 hours or less in advance of closing. Banks dropped the ball on this one big time (although there is plenty of blame left over for borrowers as well).
quote:
Now I'm using those old worksheets again. I'm new enough that I don't remember the worksheets. I am getting a little more educated on the finance side of things, but I have 3-4 local bankers that I trust and have worked with to refer my buyers to. I am finding my buyers are much more willing to go to my bankers than they ever were before.
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RE: Economy of the U.S.A. - How we got here - 11/18/2008 10:12:34 PM
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GroupW
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Hey APZR.
While I agree that the government gave the crisis a slight tail wind, it's likely that the crisis would have occured anyway with or without the federal pressure to lend to low-to-moderate income groups.
Keep in mind that FNM and Freddie composed only about 10% of the whole subprime market. Also, the problem was an overallocation of investment dollars in housing related assets - not just subprime.
I have to go along with Relady on this one - there are too many examples of good banks that never ignored basic rules of credit management. Those good banks are still strong today and aren't having problems. As examples, I would cite BB&T (they do a fair amount of subprime loans for their own balance sheet) and Wells Fargo (the best performing subprime shelf out there.)
Being told to lend to low/moderate income groups is one thing. Doing it stupidly is quite another.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Economy of the U.S.A. - How we got here - 11/19/2008 3:07:35 PM
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relady
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quote:
Being told to lend to low/moderate income groups is one thing. Doing it stupidly is quite another. Oh, GW, you put it so eloquently! 
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RE: Economy of the U.S.A. - How we got here - 11/20/2008 5:48:32 PM
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BlueAdept
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I will respectfully disagree with Relady, and groupW. The government can impact how banks operate, since they are the ones that effectively loan out the money to the banks. If they "feel" bank A is not loaning enough money to this group, or "re-investing" into the community at a appropriate level they then remove that banks ability to do short term borrowing. So they smooth the way or they make life harder for the banks.
Since we are not privy to the correspondence that was sent, we can only speculate. However, I do think there is enough evidence of malfeasance. As Rush Limbaugh has said, IF there was a way for the democrats to pin this on the republicans; we would be having hearings already on the Freddie/Fannie problems. However, since the party at fault is in control of congress this will be buried and noted as a footnote in history.
When the hearings took place several years back, pointing out the problems at Freddie/Fannie the committee pretty much said "ignore the man behind the curtain." Franklin Raines was defended by the democratic members of the committee, since they were in control that was that.
I have seen enough from multiple sources to cause me to seriously question what was going on there. And because Fannie/Freddie was lining the pockets of the democratic members coffers (any other judges would have been forced to recuse themselves) you can't really trust what they decided.
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RE: Economy of the U.S.A. - How we got here - 11/20/2008 6:30:28 PM
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APZR
Posts: 954
Joined: 4/18/2005
From: GA
Status: offline
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GroupW and RELady, I know what you mean about many investment banks. And I agree that a large part of the problem was an overallocation of investment dollars in housing related assets, not just subprime. Of the many who failed, it's my opinion they deserve what they got, they were crooked at the top board level... I knew some didn't want to have anything to do with them. A big difference is did they spell bank with a K or a C? 
However, being involved with real bank regs all day long, I still have to disagree. I do a lot of work for BB&T on their non-consumer and commercial end, but do not do any FANNIE/FREDDIE stuff. Why? Because of the regulations they have to follow and the management companies we are forced to use, interfering with the process, because of FIRREA. The HVCC will wreak even more havoc in the housing industry, Gobment control and intrusion. My clients are always calling me for suggestions and ideas, wishing they could use me for all of their consumer/sellable loans. But they can't, because it MUST go through a management company. The goal of the AMC is to get things done cheap, so they can up-sell the invoice to the lender. The lender is getting garbage and the bank knows it, the loan officers know it and grumble about it, but in the end they just want to do what ever it takes to sell it on to the big Fannie like big brother says to do.
I've described it before like a plane crash. The plane doesn't just fall from the sky, it take many small things to cause a major failure. But at the heart of it, it's the Gobment meddling in the free market and lack of enforcement of CURRENT laws. We don't need more, we don't need HVCC, we don't need to mess with FIRREA. They just need to enforce what's on the books.
< Message edited by APZR -- 11/20/2008 6:37:59 PM >
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Ya can't keep trouble from visitin, but you don't have to offer it a chair.
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RE: Economy of the U.S.A. - How we got here - 11/20/2008 10:00:24 PM
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GroupW
Posts: 2864
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
Status: offline
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quote:
ORIGINAL: APZR
I've described it before like a plane crash. The plane doesn't just fall from the sky, it take many small things to cause a major failure. But at the heart of it, it's the Gobment meddling in the free market and lack of enforcement of CURRENT laws. We don't need more, we don't need HVCC, we don't need to mess with FIRREA. They just need to enforce what's on the books.
As a former (and hopefully again soon) banker who has to deal with the regs like you do, I totally agree with the statements above. (Except the bit about free markets. I still think banking it too prone to abuse and is such a critical component of the economy that a certain amount of Gobment meddling is a good thing.)
Now I realize why I almost never disagree with you. Bankers are nearly always right.
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“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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