View Full Version : J.P. Morgan and the Lessons Not Learned
montanadave
05-28-12, 10:38
First off, I'm not interested in rehashing Dodd-Frank or listening to a bunch of partisan talking points. And I don't have either the financial/economic background or the cerebral horsepower to even fully comprehend what these ****s are up to. But if you can read this story and not start seeing red, my hat's off to ya.
http://www.nytimes.com/2012/05/27/business/how-boaz-weinstein-and-hedge-funds-outsmarted-jpmorgan.html?_r=1&ref=business
In a nutshell, the story profiles a hedge fund manager, Boaz Weinstein, who out maneuvered the "London Whale," Bruno Iksal, a trader for J.P. Morgan, with resultant losses for the bank of at least $2 billion (and some are saying it might actually be $3 billion or more when the dust settles).
Weisnstein's thirty-eight years old and considered a talented, ruthless trader. He likes to play chess and gamble (he got banned from the Bellagio in Vegas for counting cards at the blackjack tables). Before he started his hedge fund, he was working at Deutsche Bank where he got canned after, surprise, losing almost $2 billion back in 2008, when somebody did to him what he just did to Bruno Iksal.
All trading derivatives and credit default swaps and the miasma of bullshit securities which have now become the stock in trade of the financial markets.
These assholes are playing with the assets of major banks and financial institutions (including chunks of my money, your money, your mortgage lender's money, the money socked away in your 501(K) and 403(B) accounts, and all the rest) like they're sitting at a table in Vegas at a Texas Hold'em tournament. It's nothing but a game of chicken, seeing who can out bluff the other guy, and when they lose, the world's financial markets quake, governments totter on the edge of insolvency, and people's life savings go poof.
And they don't give a shit because somebody will come along and bankroll them to to it all over again. It's just "easy come, easy go."
Meanwhile, we have politicians who actually defend this bullshit as essential and vital to a healthy and vibrant credit market. These are the ****ing "job creators" who maintain the market's financial liquidity and insure that we remain competitive in the world. WTF? "Doing God's work" as Lloyd Blankfein, the CEO of Goldman Sachs so humbly characterized it.
It just pisses me off to no end that our political leadership, both parties, kowtow to the Wall Street ****s who buy them off with campaign contributions, undermine any attempt to reign in their reckless behavior, and, when they light the whole shit house on fire, hold a gun to the American people's heads and demand that somebody bail them out or they're gonna take everybody down with them.
The financial industry learned NOTHING from the meltdown four years ago and they are doing EXACTLY the same shit that precipitated the crisis. Fool me once, shame on you. Fool me twice, shame on me. How many times are we going to get fooled?
Rant off.
...................., with resultant losses for the bank of at least $2 billion (and some are saying it might actually be $3 billion or more when the dust settles).
What is the big deal? So they lost $3 billion.
Their quarterly profit for the 1st quarter was $3.672 billion, so a $3 billion loss wipes out about 82% of 1 quarter's profit. A big loss to be sure, but hardly life threatening. But it was the shareholders' money that was lost, not the depositors', not the FDIC's, not the US Treasury's, and not yours, unless you are a shareholder.
To put things even more in perspective, as of March 31, 2012, JP Morgan Chase had a net worth of $134.305 billion. $3 billion of that is 2.235% of their net worth. Only 2%! When is it a crime to lose 2% of your net worth? Buy that measure, most individual investors are much, much worse. It is like losing $20 out of $1,000.
This is free-market economics. He didn't scam anyone or rip anyone off. There is no need for a bailout or further regulation. This is how the stock market works. Money changes hands, people win and people lose. Life goes on. Sometimes people lose big-time. Too bad. That is life.
montanadave
05-28-12, 13:13
Free market my ass. It's a ****ing crap shoot with financial cluster****s so complicated and convoluted there aren't more than a handfull of people that can even understand them, much less explain them. And there's no way to contain the risk and discern where the shareholder's risk ends and the depositor's risk begins.
These assholes are playing russian roulette on a daily basis with staggering amounts of money and we all suffer the collateral damage when their massive egos starting writing checks they can't cover.
This ain't banking and it ain't business.
It's bullshit.
It's not truly a free market and hasn't been in decades. Government regulation, favoritism, and lobbying has created a system with some of the appearance of a free market - just enough so that people can mistakenly blame "free market" economics or "capitalism" when things go wrong. In reality, they have created and run a phony system that results in the ridiculous bubbles we've seen. A truly free market economy wouldn't have such nonsense, it would weed it out naturally, and it wouldn't have government intervention. The fact that we keep seeing bubbles, often worse than the ones that came before, is clear evidence of the rigging and restrictions that prevent true free market enterprise.
That some people are smart enough to recognize and take advantage of this situation shouldn't make you angry. If it does, your anger is misplaced exactly where the Fed wants it to be - on people smart enough to succeed despite the crooked system - instead of on the ones truly at fault. It's understandable to feel envy at seeing others' success, but for that to turn into hatred shows you're being manipulated.
Dirk Williams
05-28-12, 13:44
Montana, from what ive reading those numbers may be very conservative in actual amounts lost. The real numbers won't be known for sometime.
My info is off of SHTF.com and SurvivalBlog. and TheBlaze.com a few weeks back.
DW
This is free-market economics. He didn't scam anyone or rip anyone off. There is no need for a bailout or further regulation. This is how the stock market works. Money changes hands, people win and people lose. Life goes on. Sometimes people lose big-time. Too bad. That is life.
I'd completely agree IF there was no such thing as tax payer funded bailouts. They crashed the economy and in the process severely crippled a business I have spent more than a decade building with my own money and hard work.
They get a bailout for their efforts, I learn to get by with less income.
montanadave
05-28-12, 16:47
That some people are smart enough to recognize and take advantage of this situation shouldn't make you angry. If it does, your anger is misplaced exactly where the Fed wants it to be - on people smart enough to succeed despite the crooked system - instead of on the ones truly at fault. It's understandable to feel envy at seeing others' success, but for that to turn into hatred shows you're being manipulated.
Utilizing that line of reasoning, I should be congratulating Kenneth Lay, Jeff Skilling, Andy Fastow and the rest of the Enron gang for their brilliant success in thwarting the profit-crushing machinations of federal regulators and the California legislature when, in reality, they spent millions to lobby legislators to gut regulatory budgets and fashion legislation allowing them the latitude to game the system and commit fraud on a massive scale.
My anger is not misplaced as it is directed across the board at not only those manipulating the system for their own gain but those charged with maintaining and protecting the integrity of the system who have sold their influence for thirty pieces of silver.
Free market my ass. It's a ****ing crap shoot with financial cluster****s so complicated and convoluted there aren't more than a handfull of people that can even understand them, much less explain them. And there's no way to contain the risk and discern where the shareholder's risk ends and the depositor's risk begins.
These assholes are playing russian roulette on a daily basis with staggering amounts of money and we all suffer the collateral damage when their massive egos starting writing checks they can't cover.
This ain't banking and it ain't business.
It's bullshit.
Thank you government regulation.
But no, we need more regulation, right Dave??????
I'd completely agree IF there was no such thing as tax payer funded bailouts. They crashed the economy and in the process severely crippled a business I have spent more than a decade building with my own money and hard work.
They get a bailout for their efforts, I learn to get by with less income.
I don't see where bailouts have anything to to with this particular event. In fact, my understanding is that JP Morgan was one of least offensive players in the bailout mess (yes, I'm familiar with the Fed's non-recourse loan to insure the acquisition of Bear Stearns).
FromMyColdDeadHand
05-28-12, 18:32
I don't see where bailouts have anything to to with this particular event. In fact, my understanding is that JP Morgan was one of least offensive players in the bailout mess (yes, I'm familiar with the Fed's non-recourse loan to insure the acquisition of Bear Stearns).
Exotic financial instruments leading to unexpected loses- yes that sounds familiar....
Not saying that these are as complex, widespread and large as the CDO/CDS mess around home mortgages, but it is a familiar tune- especially when things like this are supposed to reduce risk, not increase it.
With safe rates held artifically low by the FED, I wonder if we'll see more ill advised transactions that are designed to return higher than govt bond rates- and fail.
montanadave
05-28-12, 19:12
Thank you government regulation.
But no, we need more regulation, right Dave??????
We need effective regulation with adequate, impartial enforcement.
And, yes, I do think government has a role to play in providing necessary constraints on those in the private sector who would literally kill the very goose that laid their golden eggs and leave the rest of us holding the stinking carcass.
I don't see where bailouts have anything to to with this particular event. In fact, my understanding is that JP Morgan was one of least offensive players in the bailout mess (yes, I'm familiar with the Fed's non-recourse loan to insure the acquisition of Bear Stearns).
I don't think anyone engaged in any form of gambling should be getting bailouts. And that goes for everyone from the major players all the way down. If you are gonna gamble it should be with your own damn money and if you lose more than you can afford then you should learn not to gamble.
It's a ****ing crap shoot with financial cluster****s so complicated and convoluted there aren't more than a handfull of people that can even understand them, much less explain them. And there's no way to contain the risk and discern where the shareholder's risk ends and the depositor's risk begins.
Both of the above statements are incorrect.
1. Option trades are not that hard to understand. If I can understand them, and I do (traded options for about 5 years in the 90's and made good money doing so), then just about anybody can if they would take the time to educate themselves.
2. Sorry but there are in fact easy ways to tell when the shareholder's risk ends. Just because you don't understand how to tell when doesn't make your statement correct. And the average depositor ($250 thousand and under) has no risk, the FDIC does, then Treasury, and ultimately the taxpayer if the regulators lack the balls to let the institution fail.
Utilizing that line of reasoning, I should be congratulating Kenneth Lay, Jeff Skilling, Andy Fastow and the rest of the Enron gang for their brilliant success ....................
Incorrect again - the above named people broke the law. By all accounts, no laws were broken in the trade under discussion.
Not saying that these are as complex, widesread and large as the CDO/CDS mess around home mortgages, but it is a familiar tune- especially when things like this are supposed to reduce risk, not increase it.
Not quite accurate - not counting the middlemen, there are 2 parties to every option trade and both have risk. Always. My open option trade and the counterparty to the trade both have risk until the day it is closed out or expires. The market could go against either one of us and might, if fact, go back and forth during the duration of the trade. On any given day I will know if my open trade is in or out of the money, and by how much, but I won't really know the finale outcome until the trade expires or one of us blinks and closes out out position, which closes out both sides of the trade.
I don't think anyone engaged in any form of gambling should be getting bailouts. And that goes for everyone from the major players all the way down. If you are gonna gamble it should be with your own damn money and if you lose more than you can afford then you should learn not to gamble.
Here, here! Total agreement from me.
And Chase gambled with their own money, were wrong, and lost ony 2% of their net worth. This should not be a big deal, IMO, except to the Chase shareholders who should be pissed.
Edited to add: But be careful, however, how you define gambling. How is an investment decision that might go bad any different from making a loan that might go bad? Both are a gamble in the broad sense.
Montana, from what ive reading those numbers may be very conservative in actual amounts lost. The real numbers won't be known for sometime.
My info is off of SHTF.com and SurvivalBlog. and TheBlaze.com a few weeks back.
DW
I've been reading more or less the same thing...The speculation I've read is that they (JPM) forgot a "0" and the actual figure is something like 20b..The reasoning behind this is, that when JPM passed the fed's stress test earlier this year, JMP's policy was that they would'nt pay the shareholders a divdend in the event they lost more than 15b in a quarter,JPM was getting ready to payout to shareholders when, all of a sudden they decided not to..just as this was coming out.. Hmmm, while what I've read is speculation, it does make one wonder..I do think they lost considerably more than 2b...20b? I don't know...Frankly, the way things are starting to shape up in Europe, I don't think it's going to matter much, for very much longer...
The reasoning behind this is, that when JPM passed the fed's stress test earlier this year, JMP's policy was that they would'nt pay the shareholders a divdend in the event they lost more than 15b in a quarter,JPM was getting ready to payout to shareholders when, all of a sudden they decided not to..just as this was coming out.. Hmmm, while what I've read is speculation, it does make one wonder..
Why speculate when it is so easy to look thinks up. JPMC declared a dividend on May 15: http://investor.shareholder.com/jpmorganchase/dividend.cfm
montanadave
05-29-12, 08:21
Both of the above statements are incorrect.
1. Option trades are not that hard to understand. If I can understand them, and I do (traded options for about 5 years in the 90's and made good money doing so), then just about anybody can if they would take the time to educate themselves.
2. Sorry but there are in fact easy ways to tell when the shareholder's risk ends. Just because you don't understand how to tell when doesn't make your statement correct. And the average depositor ($250 thousand and under) has no risk, the FDIC does, then Treasury, and ultimately the taxpayer if the regulators lack the balls to let the institution fail.
No, actually, they're not.
I've traded stock and commodities options myself. Comparing those transactions to what I'm talking about here is simply absurd. They aren't even in the same ball park. And the notion that any average joe can pick up a book on options trading or do a google search and wrap their mind around these trades is equally absurd. When the likes of Sheila Bair, former head of the FDIC, and Jamie Dimon, CEO of J.P. Morgan, acknowledge they can't fully unravel what was in play, I think there are serious problems.
As for your second point, tell that to the American taxpayers who picked up the tab the last go around when these Wall Street ****s tried to run the table and crapped out, shlepping off to the Hamptons with their ill-gotten gains and leaving the rest of us to pick up the tab and clean up their mess.
Incorrect again - the above named people broke the law. By all accounts, no laws were broken in the trade under discussion.
Sorry, not buying it. These people operate without ethics and are driven by pure greed. They lobby the politicians to influence how laws and regulations are crafted, then release their hounds to run down any and every loophole which permits them to circumvent the intent of the law. They invent financial strategies and investment instruments faster than the regulatory agencies can keep up. It's no different than a drug dealer who alters the chemical formula of his latest batch by a molecule or two, pushes it out the door, and claims innocence when arrested because the law actually says the drug he was making last week is illegal, not the one he cooked up today. It's just a strategy to stay one step ahead of the law on a technicality. And it's a distinction without a difference.
Feel free to defend these guys all day long. But the next time we go into meltdown how about pickin' up the tab yourself and leavin' me out of it.
No, actually, they're not.
Yes, actually they are. I could argue against your statements but won't as I see it is a fruitless exercise.
As for your second point, tell that to the American taxpayers who picked up the tab the last go around when these Wall Street ****s tried to run the table and crapped out, shlepping off to the Hamptons with their ill-gotten gains and leaving the rest of us to pick up the tab and clean up their mess.
Again you miss the point. I was responding to your incorrect statement that depositors' money was at risk. It wasn't, shareholders' money was. And I acknowledged the taxpayer risk in my response.
I really don't see why you are getting so excited about somebody (individual or business) risking their own money (shareholder equity) and losing only 2% of it, the equivalent of losing $20 on a $1000 trade.
And the shareholders were punished mightily for that loss with the stock now trading around $33 per share, well off the $45 12-month high, and a percentage loss well in excess of the loss in book value. Which is as it should be. Do you really think that didn't get people's attention?
I do agree that the total trade should not have been allowed to get as big as it did (and CEO Dimon agrees) but I have no doubt that Dimon has plugged that hole very well and that it won't happen again at JPMC.
Feel free to defend these guys all day long. But the next time we go into meltdown how about pickin' up the tab yourself and leavin' me out of it.
Not sure how you define "these guys", but my responses are specifically about JPMC, which did not need or want TARP money (it was forced on them) and paid it off as soon as they could. JPMC never went into meltdown, not even close. You are overreacting.
So, tell me Dave, your position is what? That no business or individual should be able to risk their own money? Because that is what occurred here. And if you agree that they should be able to, what level of risk is acceptable to you?
CarlosDJackal
05-29-12, 10:10
Free market my ass. It's a ****ing crap shoot with financial cluster****s so complicated and convoluted there aren't more than a handfull of people that can even understand them, much less explain them. And there's no way to contain the risk and discern where the shareholder's risk ends and the depositor's risk begins.
These assholes are playing russian roulette on a daily basis with staggering amounts of money and we all suffer the collateral damage when their massive egos starting writing checks they can't cover.
This ain't banking and it ain't business.
It's bullshit.
Would you rather the government took of all of this? Should we do what the current socialist administration wants and outlaw such institutions so that things are more stable? This approach seems to be working for the likes of China; so why not try it here?!
You're complaining that this isn't part of the free market but you have yet to come up with a viable alternative. Should we just close these guys down, take control of our money, and then stuff it under a mattress where it will grow at a higher rate?
Oh wait, it wouldn't grow at a higher rate would it? It is this type of loss and profit that allows them to lend to individuals so that they can start businesses and such. And this in turn helps create jobs and revenue which provide income that makes up a community's tax base.
Give me a break. There are not free lunches in life and the only way you can ensure that your money does not get affected by the free market is if you took control of it yourself. Unfortunately, doing so guarantees that your money will not grow. FYI, 401 Ks, IRAs, Savings Accounts, Mutual Funds, and such have always had associated risks and anyone who thinks that these are not gambles need to get their heads out of the sand.
Edited to add: But be careful, however, how you define gambling. How is an investment decision that might go bad any different from making a loan that might go bad? Both are a gamble in the broad sense.
All speculating and investments are gambling. Even buying gold is essentially gambling and the same rules apply.
All speculating and investments are gambling. Even buying gold is essentially gambling and the same rules apply.
Exactly!
Edited to add: Even doing nothing has risk.
In my last post, I had misquoted an article I had read about JPM.. it's here, www.ifii.com Click on "Investing Articles" May 25 article "Are you prepared to bail out JMP again"... Good reading..
FromMyColdDeadHand
05-29-12, 12:11
All speculating and investments are gambling. Even buying gold is essentially gambling and the same rules apply.
Oh, please don't rile the Gold bugs....
These were not simple options and it still not clear what went on. The best discussion I've seen about how little we know about it all.
http://dealbook.nytimes.com/2012/05/24/jpmorgans-deficient-disclosures/
New info:
http://www.huffingtonpost.com/2012/05/29/jpmorgan-chase-securities-london-whale_n_1552037.html
JPMorgan Chase Sells $25 Billion In Securities To Offset 'London Whale' Losses
montanadave
05-29-12, 15:47
So, tell me Dave, your position is what?
How about something as simple as reinstating Glass-Steagall (or the functional equivalent)? If investment banks want to hire a bunch of quants and risk the whole enchilada on a portfolio of alpabet soup derivatives and other such shit, let 'em have at it. And when it blows up in their face, let 'em burn.
But reinstate a firewall between the reckless gamblers and honest savers/investors. I don't want my local banker thinking he can zap my money off into cyberspace when the teller window closes at four o'clock to invest in god knows what to turn a quick buck just as long as he thinks he can get it back before he opens up in the morning. If commercial banks can't make a reasonable living on the interest spread between their deposits and their loans (particularly with today's interest rates) they need to find a new line of work.
People should be allowed to take on whatever level of risk the are comfortable with but that risk must be contained. If a bunch of these assholes want to set their own house afire, so be it. But I don't want to be living next door. And don't call me to put out the fire or expect me to chip in to build 'em a new house.
People should be allowed to take on whatever level of risk the are comfortable with but that risk must be contained. If a bunch of these assholes want to set their own house afire, so be it. But I don't want to be living next door. And don't call me to put out the fire or expect me to chip in to build 'em a new house.
Isn't this what happened? I didn't realized you had been called on to chip in for the JPMC trading loss. I thought they paid for it all by themselves, both in terms of the actual loss itself, and the significantly higher loss in their share price.
montanadave
05-29-12, 18:10
Isn't this what happened? I didn't realized you had been called on to chip in for the JPMC trading loss. I thought they paid for it all by themselves, both in terms of the actual loss itself, and the significantly higher loss in their share price.
Yeah, and Bear Stearns and Lehman Brothers paid the price, too. And then the whole world caught on fire and everybody found themselves caught in the blast zone.
I'm talking about a continuing, pervasive pattern of extremely high-risk investment practices by the remaining "too big to fail" banks which are even bigger now than before the crisis four years ago and the potential for a repeat of the same kind of financial contagion.
These ****s blew up the economy, promised to clean up their act if we would just give them a second chance, and promptly went right back to doing the same shit.
We need effective regulation with adequate, impartial enforcement.
And, yes, I do think government has a role to play in providing necessary constraints on those in the private sector who would literally kill the very goose that laid their golden eggs and leave the rest of us holding the stinking carcass.
The last thing we need is more regulation. What we really need are consequences.
If you want to make a quick buck, put on your big boy pants before you lay your money down. If you're not smart enough to understand how you're making that buck, look in the mirror, cause you're the one with "dupe" written on your forehead. If you get all the investors money and piss it away, you should expect to lose your job.If you shoot a hole in the bottom of your boat, don't come to Uncle Sam looking for a patch. If you didn't hold back enough to cover your losses, expect a run on your house. If you DO crawl to Uncle Sugar for a handout, you should bring the keys to the door, cause you're not gonna need them anymore. Perhaps you'll get a dividend check when the U.S. Marshall's finish carving it up and selling it for scrap (most likely not though). If you don't know what your bank does with your deposits, ask them! If they won't tell you or you don't like the answer, pull your money and find one you do trust! If you (little guy) walk into them (Bank) with a wad of cash to lay down on a "investment", you're the gambler and they're the house. You might get lucky and win, but eventually, you're gonna lose. If you really want to win, buy into the house, not the investment. If anyone's gonna win, it's the house.
The sooner people realize this, the sooner they'll stop losing their life savings.
We need effective regulation with adequate, impartial enforcement.
They lobby the politicians to influence how laws and regulations are crafted, then release their hounds to run down any and every loophole which permits them to circumvent the intent of the law.
It truly is amazing witnessing, in real time, the cognitive dissonance of the liberal mind.
montanadave
05-30-12, 14:00
It truly is amazing witnessing, in real time, the cognitive dissonance of the liberal mind.
What are you babbling about?
RancidSumo
05-30-12, 14:24
How about something as simple as reinstating Glass-Steagall (or the functional equivalent)? If investment banks want to hire a bunch of quants and risk the whole enchilada on a portfolio of alpabet soup derivatives and other such shit, let 'em have at it. And when it blows up in their face, let 'em burn.
But reinstate a firewall between the reckless gamblers and honest savers/investors. I don't want my local banker thinking he can zap my money off into cyberspace when the teller window closes at four o'clock to invest in god knows what to turn a quick buck just as long as he thinks he can get it back before he opens up in the morning. If commercial banks can't make a reasonable living on the interest spread between their deposits and their loans (particularly with today's interest rates) they need to find a new line of work.
People should be allowed to take on whatever level of risk the are comfortable with but that risk must be contained. If a bunch of these assholes want to set their own house afire, so be it. But I don't want to be living next door. And don't call me to put out the fire or expect me to chip in to build 'em a new house.
What needs to happen is banks need to be taken off their pedestal. They should operate in the market just like any other kind of business. If they want to make high risk investment, let them and don't bail them out if they lose their ass.
The government should not be regulating which banks can and which can't make these type of investments. Rather, it should be your job as the consumer to do your homework before you put your life savings into the bank. Find one that operates with a level of risk that is acceptable to you and don't bitch if things go south. A bank should not be a guaranteed safe bet.
Regulations and bailouts are not the answer. The only real solution is to institute a real free market and to take banks out of the little special world they get to live in now and treat them just like any other business. This can't happen until people stop seeing banks as a way to get free money. TANSTAAFL. If you want your money to be safely in your control, buy a safe and put it in there. If you want to make interest, accept the risk and find a bank that operates how you want it to.
Edit: I realize that this requires the consumer to actually do a little bit of work and research on their own. I know this idea will make some uncomfortable as they are used to having all the important stuff done for them but they need to suck it up and deal with it. Big Brother doing everything for you creates far more problems than it solves.
I theoretically agree with you. And in a lot of ways, practically as well.
However, the banks we have today have used the system to grow so big that what affects them affects everyone else too, whether or not they have/had accounts or investments there or were remotely involved with them at all.
The consequences of their actions blow up the whole system including those people who were not involved at all.
So, before we can implement the systems you propose, we need to decompose these huge banks, that used the system to grow to huge behemoths, into banks that would have naturally grown/been limited in growth by the market.
and, to complicate things:
We cannot leave things to the market when we don't have a market in the first place.
What needs to happen is banks need to be taken off their pedestal. They should operate in the market just like any other kind of business. If they want to make high risk investment, let them and don't bail them out if they lose their ass.
The government should not be regulating which banks can and which can't make these type of investments. Rather, it should be your job as the consumer to do your homework before you put your life savings into the bank. Find one that operates with a level of risk that is acceptable to you and don't bitch if things go south. A bank should not be a guaranteed safe bet.
Regulations and bailouts are not the answer. The only real solution is to institute a real free market and to take banks out of the little special world they get to live in now and treat them just like any other business. This can't happen until people stop seeing banks as a way to get free money. TANSTAAFL. If you want your money to be safely in your control, buy a safe and put it in there. If you want to make interest, accept the risk and find a bank that operates how you want it to.
Edit: I realize that this requires the consumer to actually do a little bit of work and research on their own. I know this idea will make some uncomfortable as they are used to having all the important stuff done for them but they need to suck it up and deal with it. Big Brother doing everything for you creates far more problems than it solves.
It truly is amazing witnessing, in real time, the cognitive dissonance of the liberal mind.
Not to mention ignoring replies you don't want to acknowledge. :D
I theoretically agree with you. And in a lot of ways, practically as well.
However, the banks we have today have used the system to grow so big that what affects them affects everyone else too, whether or not they have/had accounts or investments there or were remotely involved with them at all.
The consequences of their actions blow up the whole system including those people who were not involved at all.
So, before we can implement the systems you propose, we need to decompose these huge banks, that used the system to grow to huge behemoths, into banks that would have naturally grown/been limited in growth by the market.
and, to complicate things:
We cannot leave things to the market when we don't have a market in the first place.
Then carve them up like Ma Bell. If they're too big to fail, they're too big to allow.
DeltaSierra
05-30-12, 22:16
It truly is amazing witnessing, in real time, the cognitive dissonance of the liberal mind.
uhh, no, what we are seeing here is the inability of the conservative mind of grasping relatively simple concepts that might actually be correct...
What needs to happen is banks need to be taken off their pedestal. They should operate in the market just like any other kind of business. If they want to make high risk investment, let them and don't bail them out if they lose their ass.
The government should not be regulating which banks can and which can't make these type of investments. Rather, it should be your job as the consumer to do your homework before you put your life savings into the bank. Find one that operates with a level of risk that is acceptable to you and don't bitch if things go south. A bank should not be a guaranteed safe bet.
Regulations and bailouts are not the answer. The only real solution is to institute a real free market and to take banks out of the little special world they get to live in now and treat them just like any other business. This can't happen until people stop seeing banks as a way to get free money. TANSTAAFL. If you want your money to be safely in your control, buy a safe and put it in there. If you want to make interest, accept the risk and find a bank that operates how you want it to.
Edit: I realize that this requires the consumer to actually do a little bit of work and research on their own. I know this idea will make some uncomfortable as they are used to having all the important stuff done for them but they need to suck it up and deal with it. Big Brother doing everything for you creates far more problems than it solves.
Well put.
montanadave
05-31-12, 10:48
What needs to happen is banks need to be taken off their pedestal. They should operate in the market just like any other kind of business. If they want to make high risk investment, let them and don't bail them out if they lose their ass.
The government should not be regulating which banks can and which can't make these type of investments. Rather, it should be your job as the consumer to do your homework before you put your life savings into the bank. Find one that operates with a level of risk that is acceptable to you and don't bitch if things go south. A bank should not be a guaranteed safe bet.
Regulations and bailouts are not the answer. The only real solution is to institute a real free market and to take banks out of the little special world they get to live in now and treat them just like any other business. This can't happen until people stop seeing banks as a way to get free money. TANSTAAFL. If you want your money to be safely in your control, buy a safe and put it in there. If you want to make interest, accept the risk and find a bank that operates how you want it to.
Edit: I realize that this requires the consumer to actually do a little bit of work and research on their own. I know this idea will make some uncomfortable as they are used to having all the important stuff done for them but they need to suck it up and deal with it. Big Brother doing everything for you creates far more problems than it solves.
I recognize the appeal of the libertarian tropes of "let the marketplace rule" and "caveat emptor" but the reality is we all operate in a complex and integrated society which makes this virtually impossible for anyone. The consumer is often so far removed from the actual manufacturer or the products/services being purchased so specialized and/or complex as to make such a system untenable.
It all sounds great (and it would work) if we all lived in a little village and were bartering goods and services directly, but that's not the world we live in. Extending the line of reasoning suggested with regards to the depositor and his bank quickly leads to chaos and paralysis. Imagine every individual attempting to wade through the data to determine which drug to take for their diabetes or seizures if there was not a system in place to screen these drugs for safety and efficacy. Want to build a house? I guess you better bone up on your electrical and plumbing because there are no codes, no licensing requirements, no inspections to verify the work is properly performed. And if you do purchase a product/service and it's faulty or substandard? Tough shit. There's no product liability law or contract law. The free market rules all. What kind of pussy is gonna sue somebody for doing a shitty job? It was your responsibility as the consumer to know what you were buying, inspecting the product, and seeing that it was properly employed. You have no recourse other than to say "well, shit, guess I'll do it different next time."
Think about it. Why are the evaluations on many consumer products so worthless half the time? Because the companies source all their components from a plethora of suppliers around the globe and always shop for the best bargain. The model I bought last week which is jim dandy turns out to be a lemon for you because the widget controlling the flux capacitor came from a different vender. Such is life, right?
But companies would never do that, right? The omniscient "invisible hand" of the marketplace will eventually ferret out these evil-doers and purge them from the system, right? So what about all the folks that got burned before the word got out? They had to amputate dad's feet and the house burned down, but tough shit for me because I should have learned pharmacokinetics and electrical contracting before I put my money down? And the companies and contractors who got taken down? No problem. They just change the name, jump right back in with a clean slate, and the consumer is none the wiser.
As I stated before, there is a role for regulatory and enforcement agencies to monitor the market. And there needs to be a dynamic tension between the public and the private sector to keep everybody in line and on their toes. If either side is given too much latitude, they will overreach and disrupt the efficiency of the system. It's a balancing act and it's always problematic trying to "maintain an even strain" but that's how the system works. To cede control to either side is to invite chaos.
People are pissed and "the gummint" is their whipping boy. I get it. But too many folks are so ideologically hidebound that they are ready to through the baby out with the bathwater.
Then carve them up like Ma Bell. If they're too big to fail, they're too big to allow.
This we can agree on.
montanadave
05-31-12, 11:44
This we can agree on.
And I would also agree. But just to be argumentative, in the absence of any form of regulatory oversight, who does the carving and who decides what to cut?
But just to be argumentative, in the absence of any form of regulatory oversight, who does the carving and who decides what to cut?
I never argued for a lack of regulatory oversight. I simply thought you were overreacting to a relatively small loss as compared to their total shareholders' equity, which, above that required by the regulators to meet the stress tests, is their play money.
But to answer your question as posed, the courts, unless I am appointed Czar, in which case I would do it unilaterally.
uhh, no, what we are seeing here is the inability of the conservative mind of grasping relatively simple concepts that might actually be correct...
So riddle me this, how can one get "effective regulation with adequate, impartial enforcement" when, "They lobby the politicians to influence how laws and regulations are crafted, then release their hounds to run down any and every loophole which permits them to circumvent the intent of the law"?????
Either you (though I don't think you are capable based on your performance on this site) or Dave can feel free to offer me your grand plan for solving this little conundrum, I'll wait.
BTW, not a conservative......
I recognize the appeal of the libertarian tropes of "let the marketplace rule" and "caveat emptor" but the reality is we all operate in a complex and integrated society which makes this virtually impossible for anyone. The consumer is often so far removed from the actual manufacturer or the products/services being purchased so specialized and/or complex as to make such a system untenable.
It all sounds great (and it would work) if we all lived in a little village and were bartering goods and services directly, but that's not the world we live in. Extending the line of reasoning suggested with regards to the depositor and his bank quickly leads to chaos and paralysis. Imagine every individual attempting to wade through the data to determine which drug to take for their diabetes or seizures if there was not a system in place to screen these drugs for safety and efficacy. Want to build a house? I guess you better bone up on your electrical and plumbing because there are no codes, no licensing requirements, no inspections to verify the work is properly performed. And if you do purchase a product/service and it's faulty or substandard? Tough shit. There's no product liability law or contract law. The free market rules all. What kind of pussy is gonna sue somebody for doing a shitty job? It was your responsibility as the consumer to know what you were buying, inspecting the product, and seeing that it was properly employed. You have no recourse other than to say "well, shit, guess I'll do it different next time."
Think about it. Why are the evaluations on many consumer products so worthless half the time? Because the companies source all their components from a plethora of suppliers around the globe and always shop for the best bargain. The model I bought last week which is jim dandy turns out to be a lemon for you because the widget controlling the flux capacitor came from a different vender. Such is life, right?
But companies would never do that, right? The omniscient "invisible hand" of the marketplace will eventually ferret out these evil-doers and purge them from the system, right? So what about all the folks that got burned before the word got out? They had to amputate dad's feet and the house burned down, but tough shit for me because I should have learned pharmacokinetics and electrical contracting before I put my money down? And the companies and contractors who got taken down? No problem. They just change the name, jump right back in with a clean slate, and the consumer is none the wiser.
As I stated before, there is a role for regulatory and enforcement agencies to monitor the market. And there needs to be a dynamic tension between the public and the private sector to keep everybody in line and on their toes. If either side is given too much latitude, they will overreach and disrupt the efficiency of the system. It's a balancing act and it's always problematic trying to "maintain an even strain" but that's how the system works. To cede control to either side is to invite chaos.
People are pissed and "the gummint" is their whipping boy. I get it. But too many folks are so ideologically hidebound that they are ready to through the baby out with the bathwater.
Dave; I understand your argument and it is a viable one, however-
Just becasue we wish to remove FEDERAL regulatory/licensing agencies does not mean that private companies cannot provide essentially the same services whilst making a profit instead of costing the tax payer $$$.
Just think about it; we remove the regulatory boards and licensing agencies and it opens up the field for private citizens to open up businesses to conduct research and provide fact/scientific testing based information to consumers to better inform themselves of potential risks with commercial products, medicine, et cetera.
It's really a better system as long as there is separation of ownership of the research agencies and the business'/products they are providing information on. A "regualtion" in and of itself yes, but the least amount necessary IMO.
Shit there are already web-sites that provide all the info one needs to buy quality anything; I believe I am utilizing one such website right here that has all the info necessary to make a prudent rifle/handgun/tactical gear purchase. And hey I bet if you look a bit; there are resources for everything under the sun to be researched properly in this technological/information age.
The free market does regulate itself if consumers put forth a bit of effort; there will be positives/negatives of this system; just as there are positives/negatives regarding Gummint regulation. The only difference is the free-market doesn't de-regulate itself based on back-door deals and powerful lobbying, where as the Gummint controlled market does when it is beneficial to those in control or those who seek to buy-off the ones in control.
There will always be those who seek to manipulate the market to their advantage and screw other over in the process; regardless of gummint or privately controlled; that's why we have laws and courts...
Dave, has all this gummint regualtion really made things safer; I mean really? Don't people still get screwed by bad/ill-researched purchases and they still get injured and/or dye from faulty products, improperly filled prescriptions, et cetera?
Does the test to get ones drivers license really make the streets safer? That test is a bunch of common sense, and they don't even make people drive more than a block before giving them a pass. Has the drivers license really helped stop traffic accidents? Has it stoppped loss of life and property? I see no evidence to support it has; only that it has made it much easier to track us all and keep us complacent in yet another BS way...
Is OSHA or MSHA really wortt the cost to the tax payer? The second the compliance officers leave the site/mine, it's business as usual; just ask anyone who works in a mine or on a site (I realize some firms have stricter safety practices than others internally, but the majority of construction sites/mines I have been to; and they are numerous; are lax as hell as long as OSHA or MSHA isn't there acting as big brother); OSHA and MSHA are ****ing bullshit wastes of time and money....
Does the CCW class/test really make a safer concealed carrying gun owner? I know tons of guys with CCW's that are elmer fuds who I wouldn't trust with a BB gun; but hey they got a permit so that must make it "safer" for all of us right? I know one CCW holder who is a drug addict alcoholic moron; he has ND'd on several occassions; but hey he has a CCW permit so we must be "safer"...
We have regulations on loans and on housing; but wait didn't something just happen that ****ed us all? How could that have happened with all the regualtion we have in place to keep us safe? I'm stumped...
If I am hearing you correctly ONLY a gummint can regulate/license things properly? Why only a gummint? Why can't a private/self-regulated market be succesful (Historically the free market is the most stable and steady; just look to history- Yes things are abit more complicated now than they have been in the past; but that doens't mean the free-market won't evolve/we won't evolve to make things work)? I would love to hear what people think on the subject.
The level and power of a totalitarian police state dictatorship increases with the number of regulations they impose on their subjects and regulation has been associated with falling productivity rates in many industrialized countries
For me, self-regulation is the only way; I don't blindly trust what some gummint regulation states is safe or unsafe, I research it for myself. I don't trust private companies claims, I research the company/product/claim myself. It's called due diligence and it is very realistic; I don't have to rely only on my own research I can "stand on the shoulders" of others who have come before me and put it all into perspective, make the best choice and deal with the consequences of my decision.
We are still a village, just a damn huge one, with the internet and world wide web to connect us (Some would argue we are better connected than when we were smaller villages; I won't get into that debate here...). It's really not all that different than meeting on the streets and in storefrnnts of small villages; we are just thousands of miles away digitally mediating our interactions. Here at M4C we are a village, we even have some village idiots; and we even have rivalry with other villages such as TOS.
I just haven't been privy to the facts that support only a gummint being able to handle regualtion/lincensing; in fact historical evidence shows that gummint regulation is, has been and will continue to be problematic and in fact de-regulates a free-market capable of regulating itself. Please educate me otherwise...
I recognize the appeal of the libertarian tropes of "let the marketplace rule" and "caveat emptor" but the reality is we all operate in a complex and integrated society which makes this virtually impossible for anyone. The consumer is often so far removed from the actual manufacturer or the products/services being purchased so specialized and/or complex as to make such a system untenable.
It all sounds great (and it would work) if we all lived in a little village and were bartering goods and services directly, but that's not the world we live in. Extending the line of reasoning suggested with regards to the depositor and his bank quickly leads to chaos and paralysis. Imagine every individual attempting to wade through the data to determine which drug to take for their diabetes or seizures if there was not a system in place to screen these drugs for safety and efficacy. Want to build a house? I guess you better bone up on your electrical and plumbing because there are no codes, no licensing requirements, no inspections to verify the work is properly performed. And if you do purchase a product/service and it's faulty or substandard? Tough shit. There's no product liability law or contract law. The free market rules all. What kind of pussy is gonna sue somebody for doing a shitty job? It was your responsibility as the consumer to know what you were buying, inspecting the product, and seeing that it was properly employed. You have no recourse other than to say "well, shit, guess I'll do it different next time."
Think about it. Why are the evaluations on many consumer products so worthless half the time? Because the companies source all their components from a plethora of suppliers around the globe and always shop for the best bargain. The model I bought last week which is jim dandy turns out to be a lemon for you because the widget controlling the flux capacitor came from a different vender. Such is life, right?
But companies would never do that, right? The omniscient "invisible hand" of the marketplace will eventually ferret out these evil-doers and purge them from the system, right? So what about all the folks that got burned before the word got out? They had to amputate dad's feet and the house burned down, but tough shit for me because I should have learned pharmacokinetics and electrical contracting before I put my money down? And the companies and contractors who got taken down? No problem. They just change the name, jump right back in with a clean slate, and the consumer is none the wiser.
As I stated before, there is a role for regulatory and enforcement agencies to monitor the market. And there needs to be a dynamic tension between the public and the private sector to keep everybody in line and on their toes. If either side is given too much latitude, they will overreach and disrupt the efficiency of the system. It's a balancing act and it's always problematic trying to "maintain an even strain" but that's how the system works. To cede control to either side is to invite chaos.
People are pissed and "the gummint" is their whipping boy. I get it. But too many folks are so ideologically hidebound that they are ready to through the baby out with the bathwater.
I think you misunderstand. Liability does not go away in a market oriented economy. In most cases "libertarianism" does not equal "anarchy"
People need to suffer the consequences of their actions, but attempts to defraud, or causing damage to another person by your actions still makes you responsible for your own actions. Courts and Laws would still exist.
montanadave
05-31-12, 13:39
So riddle me this, how can one get "effective regulation with adequate, impartial enforcement" when, "They lobby the politicians to influence how laws and regulations are crafted, then release their hounds to run down any and every loophole which permits them to circumvent the intent of the law"?????
Either you (though I don't think you are capable based on your performance on this site) or Dave can feel free to offer me your grand plan for solving this little conundrum, I'll wait.
BTW, not a conservative......
Obviously the system cannot function when those legislative bodies charged with crafting regulatory laws sell their influence to the those individuals/corporations affected.
The solution is to minimize the corruption, not scrap the system.
Obviously the system cannot function when those legislative bodies charged with crafting regulatory laws sell their influence to the those individuals/corporations affected.
The solution is to minimize the corruption, not scrap the system.
And I would posit that it is the "system" istself that is corrupting the market; so scrap the system, get rid of the corruption and allow the market to regulate itself...
montanadave
05-31-12, 14:06
THCDDM4:
You present a compelling case but having independent watchdogs operating within a free market is as problematic as the notion of a "rational free market" itself. Weren't rating agencies such as Standard and Poor's supposed to provide investors with objective information to make sound financial decisions. Yet they were manipulated into (or complicit in) magically transforming securities composed of complete shit into AAA securities. Investors rely upon independent accounting firms to provide accurate analysis of a company's financial condition before investing but that didn't prevent Arthur Anderson from cooking the books for Enron. The internet is a sea of information but it is virtually impossible for an individual to vet the accuracy of the information available. Companies routinely hire people to flood internet sites with positive reviews of their products (or negative reviews of their competitor's).
We are currently witnessing the breakdown of a system specifically designed to operate independently of the market because of vast amounts of money targeted towards corrupting that system. I cannot see how letting the fox manage the hen house resolves these conflicts.
Obviously the system cannot function when those legislative bodies charged with crafting regulatory laws sell their influence to the those individuals/corporations affected.
Yes, obviously.
The solution is to minimize the corruption, not scrap the system.
Oh, the promise of nearly every politician in human history....
That you categorically FAIL to see the fundamental contradiction of these statements is PRECISELY what inspired my previous post.
You don't trust a free market's ability to regulate itself, choosing instead to continue placing your trust in governmental institutions that have abjectly failed at nearly every pivotal point in their histories. I simply don't know what to do say to people like you Dave; you strike me as an intelligent person, even fairly knowledgeable, but trying to get you to reconcile your views with the reality even you recognize, that fundamentally contradicts those views is like trying to explain organic chemistry to a 5-year-old.
THCDDM4:
You present a compelling case but having independent watchdogs operating within a free market is as problematic as the notion of a "rational free market" itself. Weren't rating agencies such as Standard and Poor's supposed to provide investors with objective information to make sound financial decisions. Yet they were manipulated into (or complicit in) magically transforming securities composed of complete shit into AAA securities. Investors rely upon independent accounting firms to provide accurate analysis of a company's financial condition before investing but that didn't prevent Arthur Anderson from cooking the books for Enron. The internet is a sea of information but it is virtually impossible for an individual to vet the accuracy of the information available. Companies routinely hire people to flood internet sites with positive reviews of their products (or negative reviews of their competitor's).
We are currently witnessing the breakdown of a system specifically designed to operate independently of the market because of vast amounts of money targeted towards corrupting that system. I cannot see how letting the fox manage the hen house resolves these conflicts.
Shouldn't we be discussing the SEC then; the Govt. REGULATORY board responsible for manipulating and coercing S&P into bad business practices? They had the reins in the whole mess; S&P just went along for the ride (Not dissolving S&P of respopnsibility; just pointing out that the regulators were the ones who stared it all; with full Govt. approval).
The SEC manipulated S&P; an easy thing to do with Govt. backing/approval and regulatory power- that is what I am getting at; the misperception that Govt. regulation is actually a form of regulation, it is not; it is defacto deregulation and it is up for sale.
Edited to add:
The SEC "Laxed" regulations; Fair hoiusing act and other Gvot. BS pushed banks to make bad investments; when the investments go south; must be the banks and S&P right? Wrong; it was all manipulated to be what it was; a huge bubble to get in on for those that passed the legislation and coerced banks (And why would the banks care either way, they know we will bail them out regardless of what investments they make, right? they follow-suit with the Govt. and make money either way. What a scheme it was!) into making VERY RISKY loans/investments in order to create a smoke screen- LOOK over there we laxed regulationa nd look what happened...
When the reality is they were in control the entire time; wall street and the Govt. in the same bed manipulating the same market/creating the bubble as a two-pronged sword. 1) Smoke screen to make it look like "Deregulation" by the SEC was what caused the crisis 2) Use the crisis to effectively nationalize the housing and banking industry and get teh US populace to pay for bad investments that they not only KNEW would go south, but were counting on it. Pretty neat trick; some of us smelled that shit for what it was; a scheme perpetuated by Govt. and Wall street to strengthen their grip on the American Citizens and their pocket books. There were many a citizen that is responsible for taking loans they couldn't afford, but hey isn't that the argument here; trusting the SEC, loan officers, S&P, et cetera VS> a free market approach of researching for ones self?
There is much more to all of this than what we can debate here; but what would you postulate the answer is for limiting corruption given the current sytem parameters? The regulatory boards have been rife with corruption since there inception; what can or will realistically change this?
I believe the answer is a true free market; where a consumer is rewarded/punished based on individual market accumen (History tend to favor my view point as well...). Sometimes the research will be misleading or flat out misinformation, but that happens regardless of Govt. regulation or free market regualtion; it is human nature to control and manipulate things, I just believe we'd be better off handling this as a private business enterprise with "checks and ballances" so to speak on analysis/research firms; rather than paying exorbitant taxes to get similar results and further this totalitarian states power and oversight over our every day lives...
The so-called "regulators" have been deregulating the market all along and now serious growing pains are necessary to regain what we once had, a freemarket capable of regulating it self sufficiently; as long as citizens are willing to man up- DUE DILLIGENCE.
Also, once we are burned by the types who seek to manipulate, we can vote with our dollar and spread the word; those that forget easily will be punished, those who remember well will be rewarded...
The fox is already managing the hen house; and a few hens are in bed with the fox- that is the problem.
montanadave
05-31-12, 15:10
I'm going to try to make one last point then I'm gonna have to give this a rest. I concede that the current system is corrupted (perhaps irretrievably). And I don't have a magic solution to miraculously purify the larcenous hearts of the wicked and purge all vestiges of corruption from the system.
But I do believe that a balanced system requires opposing forces working in unison to remain viable. Just as the Constitution contains all those checks and balances we learned about as kids to function effectively, a society requires similar mechanisms and safeguards. And as remarkable as a capitalist free market economy is, that same market is capable of running amok in pursuit of the ultimate goal (profit) and killing the very goose that produced the golden egg.
In reality, I don't believe my ideal of a functional government representing the best interests of its citizens and operating free of undue influence and rampant corruption is any more or less fantastical than that of an idealized rational free market capable of meeting the needs of all without prejudice or favoritism.
Both ideals are subject to the corrosive effects of corruption. So I suppose the argument centers on which alternative is least susceptible to those deleterious influences. Arguments will be made, people will choose, and we'll witness the results.
http://www.cnbc.com/id/47633576
I recognize the appeal of the libertarian tropes of "let the marketplace rule" and "caveat emptor" but the reality is we all operate in a complex and integrated society which makes this virtually impossible for anyone.
It can be argued that government regulation is at least partially responsible for that. How much of that is the direct result of over-regulation, that creates the incentive for loopholes, lobbying, complex and often obfuscated rulesets, reporting practices, and government agencies.
If the market were simpler it would be inherently less of a challenge for people to make wise investments and that argument would evaporate.
I have no economic experience, but IMO the least corrupt system is one that is free of "parachutes" especially government generated ones that force all citizens to pay for the errors of a few. Corporations like JPMC, Leahman, Goldman are there to make money, not loose it. The only reason they are willing to play Russian roulette wih a thermonuclear device is cause they know that the hard work of 130,000,000 tax payers will be used to get them out of the hole should they loose. Essentially they are in a situation where they can't loose. If you get rid of the bail outs and allow them to fail they will stop playing these goofy shell games and return to a business model that makes them and their investors money with lesser risk of a melt down. If there is such a high demand for investment banking the slack created by a failed institution will be picked up by the other banks along with the needed resources to increase business.
Allowing deuchebag politicians the ability to control and sell favors to the highest bidder is asking for trouble. Just too easy to buy off, bribe or control 525 illiterate idiots than thousands of investors looking to make money and who are ready to come after you with pitch forks should you decide to screw them over.
I'm going to try to make one last point then I'm gonna have to give this a rest. I concede that the current system is corrupted (perhaps irretrievably). And I don't have a magic solution to miraculously purify the larcenous hearts of the wicked and purge all vestiges of corruption from the system.
But I do believe that a balanced system requires opposing forces working in unison to remain viable. Just as the Constitution contains all those checks and balances we learned about as kids to function effectively, a society requires similar mechanisms and safeguards. And as remarkable as a capitalist free market economy is, that same market is capable of running amok in pursuit of the ultimate goal (profit) and killing the very goose that produced the golden egg.
In reality, I don't believe my ideal of a functional government representing the best interests of its citizens and operating free of undue influence and rampant corruption is any more or less fantastical than that of an idealized rational free market capable of meeting the needs of all without prejudice or favoritism.
Both ideals are subject to the corrosive effects of corruption. So I suppose the argument centers on which alternative is least susceptible to those deleterious influences. Arguments will be made, people will choose, and we'll witness the results.
Good post. I agree, there isn't any magical "lolli-pop & butterflies" solutions to this mess; but we can look back on history and see that:
1) Free Market Capitalism > Central Planning/Govt. controlled markets.
2) Central planning/govt. Controlled markets is a direct catylist and road to increased Goverment control and power. Regulation of one area of our lives/society begets regulation of the next area they seek to control.
The more and more regulations/licensing we have the less freedoms we have, period.
That is something that gets lost in this debate time and time again; Free Market capitalism has been the best system and most self-sustaining system devised to date. It is heavily/partly responsible for this great nations past success.
Man did our freemarket kick ass back in the day; until gummint regualtion reared its ugly head...
I am not saying we cannot do better or innovate, but obviously the current system needs a major overhaul, and free market capitalism worked incredibly well for this country until these "regulatory" and "lincensing" agencies were created by the Govt. to protect us from ourselves; and look where we are now...
Yeah, and Bear Stearns and Lehman Brothers paid the price, too. And then the whole world caught on fire and everybody found themselves caught in the blast zone.
I'm talking about a continuing, pervasive pattern of extremely high-risk investment practices by the remaining "too big to fail" banks which are even bigger now than before the crisis four years ago and the potential for a repeat of the same kind of financial contagion.
These ****s blew up the economy, promised to clean up their act if we would just give them a second chance, and promptly went right back to doing the same shit.
The point I'd like to add to the above is, part of the blame for the greed fest "they" played a major part in, was driven by the greed fest of a large % of the US public, Joe average. You could see it like the train wreck it was, people buying homes they could not afford (and in many cases should not have been allowed to purchase using old school debt/income formulas essentially ignored), assuming the silly housing bubble prices could and would go on forever (it's called "bubble" for an f-ing reason people!), over extending themselves and throwing out all common sense financially speaking, then blaming "them" for the total meltdown they all plaid a part in. There's endless examples there that was easy to see as a disaster in the making of their own creation and per usual these days, no intention of taking any personal responsibility for it.
I was offered at least 3x what I asked for on a home equity line for example, and said no thanx, and the numbers didn't add up and I knew it. Many people have either had their equity line cut way back by the bank, and or simply shut off at what ever debt the person has.
They didn't touch mine as I didn't take the 95% of the estimated value of my home (which was at least 200K over valued at the time) and friends who make considerably more $$$ then I do, did it and purchased things like way over priced properties to flip, or rent, etc, which blew up in their face due in large part to bad decision making on their part.
My own sister got a house on a no doc loan (against my strong advice not to) that when the bubble popped, she lost. A really sucky thing for her.
I don't know what ratio/% is of those greedy inventors of complex financial instruments to joe public making one bad decision making is in the blame game here, but the a large % of people need only look in the mirror as to who to blame for their situation.
To me, the real pisser and suck fest, those who didn't make poor decisions, did all the right things (such as yours truly) taking up the wazoo due the greed fest that took place and I hold both sides equally responsible for the current situation.
We are currently witnessing the breakdown of a system specifically designed to operate independently of the market because of vast amounts of money targeted towards corrupting that system. I cannot see how letting the fox manage the hen house resolves these conflicts.
One difference is that everyone pushing the limits thinks that if it is legal, it is ethical and except for the force of government, there is nothing stopping them from doing it. Everyone relies on the govt fixing the screwups so the moderating force of the market doesn't really affect things.
And realize, that in a properly functioning market, it is not all peaches and cream. There will still be corrupt people trying to take advantage of others. But instead of relying on the govt tho whack their wee-wees, the market will do it instead, much harder and much more convincingly when in a properly functioning market where people are not relying on the government to tell them what is right and to fix their problems when they dig themselves a hole they cannot get out of.
Markets don't shield you from mistakes (your own or of others). They just make the consequences much more serious so that you are less likely to even try and take advantage of others.
If JPMC knew that the government was not there backstopping them and there to pick up the pieces if they have problems, would they be as willing to do the stupid things that can cause them to disappear in a thermonuclear type economic event?
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Not sure about the rest of you, but here in the NorthEast JPM Chase is building branches like they are going out of style!
I should know... Im one of the Architects ;)
I don't think they are hurting after this loss. I would not worry.
Belmont31R
06-01-12, 16:00
First off, I'm not interested in rehashing Dodd-Frank or listening to a bunch of partisan talking points. And I don't have either the financial/economic background or the cerebral horsepower to even fully comprehend what these ****s are up to. But if you can read this story and not start seeing red, my hat's off to ya.
Maybe picked a didn't author of an article than that. A little digging tells me what I need to know about him.
This ain't banking and it ain't business.
It's bullshit.
ahhhh I thought it was investing ? its risky it has its up and downs this time it was down like mentioned they make a lot of money !!!
you most likely hate fishing ? cause its not a sure thing !!
many people like yourself might not understand fishing !!!
you think it just shows up at the grocery store all wrapped up nice and neat
since when has trying to make money been risk free and since when do most people not try to game the system ?
gov does such a good job with money !!! look at what obama has done to this country and you worry about a few billion from a investment firm !!!
yeah lets put gov in charge with more regulations !!!!
you should be standing on rooftops then about how obama and his cronies are spending OUR money and only seem to want to take it from those who have money so they can spend more
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