The Capitalist Meltdown

Discussion in 'Political Discussions' started by ebbwvale, Sep 20, 2008.

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  1. Vinipink

    Vinipink Accounting Monster

    Things to come

    For years I have been telling my wife that we have to be preparing for things to come, that one day the government would say to everyone there is no money and all government obligations will be defaulted. And when that day comes Anarchy may be in sight. It is that we don't want to listen and believe the problem will resolve itself? Perhaps, and we may believe, since we already went through a mayor depression over 70 years ago, that we are ready to tackle another one? The true is, we are in a depression, but we just don't know it. Lots of people don't even have a clue of what is going on.:confused:

    It seems we are getting close this to happen, as our government continues to print money with not value, making the inflation worse and devaluating the dollar even more,(you ever wonder about Fort Knox and why is so secret?) there is no gold to back up our economic system and will not be able to pay our financial obligations(external debt) if they become due today(same way happened to Freddie Mac, Sallie Mae, and IAG), that we are running this country with the full faith in the credit of our government. Out there, are a lot of people that are stashing billions of dollars in banks or perhaps in their backyards, to find out one day, this will be only be paper and with no value. :eek:

    It outrages me that I have to pay taxes for money that does not exist (but as a good American is my duty to support this nation), it outrages me to pay interest for money that does not exist and it outrages me to bail out irresponsible and greedy individuals. It outrages me even more, that many of the Novel's prize winners in economics comes from this country and look at the mess we are. It outrages me that our country is running government affairs at the expense of our retirements and leaving our children, grandchildren and great grandchildren with a monster debt. Leaving them as slaves of this debts. :mad:

    There are a lot of rumors of possible martial law (which can happen is something is not done, as our government and corporate America will default in their obligations). There are rumors that our freedom will be lost due to this chaos created more than 30 years and different markets bubble has exploded and we still don't pay attention. Yes, our freedom will be lost but no our physical freedom (I am hopping) but our freedom of choices and everyone will need to their part in order to survive.

    Many changes are coming whether we like or not, for things to come.
     
  2. ebbwvale

    ebbwvale Member

    The bailout is starting to percolate around down under. Our PM is over in the US at the moment looking at what the effect will be on us. It has already swiped money off the pension funds (not that I'm upset - Pigs I'm not). We don't know yet how much we will have to kick into the business sector.

    Whatever it is, there will a shortage somewhere else to cover it. It most likely will occur in a sector that is less likely to be able to defend itself politically. The option, other than cutbacks, will be raising taxes. Nobody is going to wear that. Australians are being told by the finance gurus to tighten their belts, tear up their credit cards etc. No easy loans here anymore.

    This most likely will be a shorter term thing, and we will get over it, like a cyclone. The politicans have to clean this up, but big business got us into it. Politicians, if guilty of anything, are guilty of trust. Would any party have picked this up? Certainly none here did, nor anywhere else that I am aware of. Many countries got caught and none of their governments, (socialist or otherwise) saw it coming. I am more dirty with the educated elite in high positions in business.

    The other rumour getting around here is that the US borrowed money from China for the bailout. I am sure that this would not be right and it is just another example of a beat up. I would be interested to hear where this is coming from. Nothing in the media there?
     
  3. BillDayson

    BillDayson New Member

    Thanks for moving the conversation back to the financial crisis.

    My cable service shows CNBC Worldwide in the dark still early-morning hours here, when the Austro-Asian markets are closing and the European markets are opening. The other day they had a segment about struggling Australian banks and financial firms. There was one company in particular (whose name I completely forget) that appeared to be on the ropes and was getting last-rites from the commentators. So I meant to ask you what your government was doing and about whether Australia is contemplating an ambitious (and expensive) Paulsen-style mass bailout.

    There's going to be a big-time tightening of credit, that's for certain. I know next to nothing about economics (and here I am posting on a board full of MBAs and DBAs!) But my layman's-eye view is that a tightening of credit is going to have an effect similar to a central bank raising interest rates. And that in turn will cause the economy to slow down. We have already been flirting with a recession here in the US and this might push us into an actual economic contraction. The silver-lining is that these events will likely be anti-inflationary.

    I'm kind of angry, to tell the truth. I do NOT want to see the expensive-suit crowd who drove these companies into the ground allowed to blithely hand the ugly consequences over to the public to take care of while they just walk away from everything, back to their horse-country estates and to their hundreds of millions in ill-gotten net worth. I'd like to see government both in the US and elsewhere make a major effort to sue these bastards for any and all compensation that they received while they were violating their fiduciary responsibilities.

    Regarding the government itself, I would like to see a careful dispassionate study designed to understand how this happened and to suggest how to improve regulatory oversight of what the financial and securities inductries are doing in the future. Unfortunately, I predict that any government attempt to do that would immediately devolve into partisan-posing and become just another idiot front in our incessant red-blue culture-war.

    I don't think that it's happening directly. But indirectly, the US federal government does issue a lot of treasury bonds and many of these are sold overseas. People around the world see them as a very safe place to park money. Given China's obscene trade imbalances with the rest of the world (they are playing the old 'mercantilist' game while the rest of us pretend that it's 'globalization') I'm sure that they have lots of cash. The rest of the world does kind of prop up the United States in the credit markets.

    I have heard that some of the troubled American financial firms have been shopping themselves internationally and that includes the Chinese. I remember seeing a news story last week that Morgan Stanley might sell up to 50% of itself to some investment arm of the Chinese communist government. (Ironic isn't it?)
     
  4. ebbwvale

    ebbwvale Member

     
  5. Gin Ichimaru

    Gin Ichimaru New Member

    Oh its seeping into domestic cases involving US citizens as well. Google Jose Padilla. Its also involving non-terrorist related cases.
     
  6. truckie270

    truckie270 New Member

    Jose Padilla is an enemy combatant as is John Walker Lindh (the "American Taliban").

    As for the bailout - there is plenty of blame on BOTH sides of the aisle contributing to where we are today.
     
  7. Abner

    Abner Well-Known Member

    Except one side wants less and less regulation which led us to this mess. This same side wants to deregulate health care, and privitize social security. Hence the recent polls showing distrust of Republicans in this area.

    No gracias.

    Abner
     
    Last edited by a moderator: Sep 23, 2008
  8. ewillmon

    ewillmon New Member

    I may be confused here, but wasn't it government regulations and policies which opened the door to the "subprime" loans in the first place? Forcing banks to loan money to persons with less than stellar credit and then using Fannie Mae and Freddie Mac to purchase these risky loans? So now we need more regulation to correct the regulation that got us into the mess we're in? I'm not buying it.

    The only way the US is going to get out of this mess is to seriously reduce spending and reduce the national debt. If that means cutting earmarks, then cut earmarks. If that means really reducing spending, then reduce spending, rather than reduce the size of the growth in spending. Unfortunately those in Washington, and elsewhere, do not care about you or me. They only care about their wallets and their power. We need a government which will advance the cause of the American People, not advance itself.

    Just my thoughts on the matter.
     
  9. truckie270

    truckie270 New Member

    I was speaking about the circumstances that have resulted in the need for a bailout - not the bailout itself.

    Let us not forget the Clinton banking reform legislation of 1999 led us into this mess by allowing financial insititutions the ability to mingle investment funds with regular banking alllowing for the sub-prime situation. Its the economy stupid. With the bailout the government is going to have a substantial stake in the management of market giants -do you really think the collective wisdom on the hill can manage systems that financial experts have been unable to do? I am sure that experience and insight in Lehman, Bear Stearns, MerrilLynch, etc. really wanted to fail.

    Regulation is not the answer. The Federal government has bankrupted social security - do you think they are really going to be able managage additional nationalized systems?

    Health care is a market system with the inefficiencies resulting from exisitng regulations - HIPPA, Medicare, etc. How is more regulation on health care going to improve the situation?

    Even with the market performance of the last week I would rather have my SS in the market with its historical rate of return of 7% than in SS with its 1% ROR.
     
    Last edited by a moderator: Sep 23, 2008
  10. ebbwvale

    ebbwvale Member

    The question for me is the amount of trust that we put in these blokes at the top of business. They can create situations that have massive effects across an entire country. Your defence, health, employment, education, housing, and a host of other elements of the community can be significantly affected by decisions in large business houses.

    If I make a poor decision, that I affect my family and myself. The scale of failure by large businesses in the US and elsewhere has affected the globe. Business everywhere is responsible so this is not a simply US problem. Those of us that believe in capitalism and free enterprise have to work out a system that prevents massive meltdowns and maintains most the principles of it.

    There has to be some oversight process because of the massive impacts that can occur. We exercise oversight of the flight of 747s so they don't crash. They don't intend to either, but they do if left unsupported. Perhaps we should do likewise for other significant risks.
    You can't remove risk, but you can manage it. Business has proved that they can't be trusted to fly without support. Little people get hurt. I received a little damage, although my wife, rather unkindly, suggested that I could eat less and save some money that way. I am sure that others were hurt a lot worse.
     
  11. Vinipink

    Vinipink Accounting Monster

    The Social Security is not bankrupted yet and with Medicare, are running huge surpluses. That are helping paying the national debt, but is something is not done it will definitely be bankrupt, because they will be more people retire than people paying for it.:eek:
     
  12. Abner

    Abner Well-Known Member

    A difference of philosophy my friend. Less regulation results in the current situation, and of course situations like Enron. I just heard today the FBI is investigating criminal activitiy into the bail out situation.

    I will agree to disagree with you. I am a business student, but I do not believe everything I am taught.

    Take care,

    Abner
     
  13. truckie270

    truckie270 New Member

    I agree that criminal activity should be investigated and agressively prosecuted, but I still fail to see how regualtion will stop the criminal abuses in question. Just like gun laws have failed to stop those not legally entitled to possess firearms in the first place from using them to commit crimes (that should start another interesting conversation :).

    No worries - I enjoy the dialogue. Healthy debate strengthens the foundations of our democracy. I wish more people had their viewpoints supported with the facts as they see them instead of spewing the media and campaign constructed rhetoric or going on what they heard in the checkout line at Wal-Mart.
     
  14. ebbwvale

    ebbwvale Member

    The Australian Government announced a four billion dollar bail out program for lenders. It will supply 4 B for non bank lenders so they can onlend the money for AAA rated loans. My limited sources of information indicates that foreign capital has moved into at least one bank to rescue it. The capital allegedly was Chinese. This 4 B package was announced on the same day the government imposed a tax on Liquid Petroleum Gas which I run my car on. LPG was previously tax free. The tax just happens to considerably shorten the gap created by the bail out. I wonder if there is any connection or am I being overly suspicious?

    On the topic of regulation of the market, any business that participates in a global economy will have regulation. Business that goes into Europe will be faced with regulation. Any US or Australian business in China, for example, will be regulated by the Chinese Govt. which is communist. If business is so scared of regulation, then why are pushing so hard to get into the Chinese market?

    Just about every operating arm of business, is regulated by unions, legislation covering safety, or some sort of consumer protection such as the FDA. Airlines are covered by air navigation rules, flight control mechanisms, and other air safety issues. It is often the complaint on this board that the education providers which are businesses are underregulated by state governments. These education providers are known as "mills" and have dodgy products for sale. Why then should Wall Street be protected from regulation? Most of the listed companies are participating in a regulated market elsewhere anyway.
     
  15. mattbrent

    mattbrent Well-Known Member

    Actually, my father was, in a way. He died of Melanoma Cancer 8 years ago. They were "treating" him, but now my mom, who makes a mere 12K a year, has to pay off his $100,000+ bills. Granted he wasn't "denied" health care, he received poor care. Do you know who diagnosed his cancer? Was is the doctors at the hospital? Nope. His Primary Care physician? Nope. It was the OB/GYN my sister worked for.

    Medical Expenses are WAAAAAY expensive. I think the expense is more of an issue than the availability of insurance. If care were affordable, we wouldn't need to pay expensive premiums for insurance. Of course, when you have doctors who have to pay an arm and a leg for malpractice insurance because any Joe Schmoe can get a bruise during surgery and sue the living daylights out of them, there's a problem. If anything, there need to be limits on how much people can get in lawsuits.

    It's because of stupid lawsuits and the high cost of malpractice insurance that areas like mine have ZERO facilities available for pregnant mothers. The OB/GYN I mentioned earlier, he and his partner had to stop practicing the OB portion because they couldn't afford the insurance. Now everyone in Lancaster has to drive TWO HOURS to deliver a baby. That is absurd.

    -Matt
     
  16. sentinel

    sentinel New Member

    Another Casualty of Wall Street's Financial Debauchery

    As of this morning I join the ranks of those affected by the financial market fiasco. For the past two and one-half years I was employed in the legal and compliance division of behalf of a major investment bank until 09:30AM ET.

    My severance package was 4 weeks pay and maybe, if I am lucky, the 2 weeks vacation pay for unused vacation days. This is a pittance compared to the golden parachutes garnered by the masterminds of financial market debauchery.

    Now back to editing my curriculum vitae and resume suitable for the positions I have already identified as potentially worthy of my consideration.
     
    Last edited by a moderator: Oct 2, 2008
  17. Abner

    Abner Well-Known Member


    Sorry to hear that man! Thank God for all your qualifications. I agree with you about the golden parachutes those assholes are going to get. I guess they need a reward for their failures. Incredible!

    I wish you the best.

    Abner
     
  18. tmartca

    tmartca New Member

    Wow. Sorry to hear that. I had a friend that worked at IndyMac for a few years before it went under. He took a severance package a couple of weeks before they blew up. He talked to a couple of his colleagues that stayed, and they said they didn't receive any severance at all. Nothing!!

    I worked for a non-profit that relied on a state (California) grant. The budget delay in this state, lead the lead agency to cancel the contract and, BOOM, my job. I am just glad I'm in school so I can get financial aid and pay the bills. A article in the LA times today talked about the state (California) not being able to get bridge financing to pay operations, and payrolls, and state employees could be out of a paycheck AGAIN in the next month.

    Hey Congress, while your at it, can you lift the student financial aid limits!!! I need to pay my mortgage!!!! :(
     
  19. Abner

    Abner Well-Known Member


    I hear you. So much for the Terminator coming in and fixing everything. If it wasn't for my union filing a lawsuit, the Gov would have reduced my State Worker pay to $6.55 an hour! He did go ahead and illegally lay off a bunch of workers without following CA state law, or the MOU and contract. So guess what? He is going to end up having to pay all those employees back wages for illegaly laying them off. Even the Gov has to follow labor law, and his own contract. The union has another lawsuit for that as well. Thank God for my union. I don't think my mortgage company would accept "Gee, I am sorry, but the Terminator reduced my pay to $6.55, can you please not penalize me?" Arnie seems to forget State workers are taxpayers, and reducing them or getting rid of them does not help a weak economy.

    Ok, I will cool down now. Sorry for your trouble guys.

    Take it easy,

    Abner
     
  20. sentinel

    sentinel New Member

    Thank you, Abner. I choose to look at this situation as an opportunity to test my hypothesis that having experience in financial industry legal and compliance will help me land a good position in an accounting firm or e-discovery firm. Worst case, it was a waste of the last 2.5 years of my life.

    At least if I get sick or injured while unemployed, the "free" universal health care in this country (Canada) will still be there for me and funded by those who are still employed and paying taxes.
     

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