Originally Posted By Mr X ***That's capitalism. That's how it works. People at these companies can go find another job someplace else.*** The truth of the matter though, is that it's not really capitalism. Not in it's purest form, anyway. Too much regulation to call it capitalism. I'm not sure what it is, exactly. At one point in history, I do believe America was capitalist. Not any more though. The great depression is probably what changed it, actually.
Originally Posted By Mr X ***I'm inclined to say let them fail. Other companies will pick up the pieces and we'll move on.*** I agree, but that's not what seems to be happening. Look at the sweetheart deals bailing out Countrywide and Bear Sterns. All those hundreds of companies before them were small enough to fail, but when they got up to the biggest lender and a well known investment bank...the game changed. I think that's only prolonging the problem, myself. As far as how a huge institution could screw up the financial system, I think it's simply a question of systemic failure (so many OTHER institutions are financially tied to and dependent on the biggies) leading to a panic.
Originally Posted By Dabob2 If that's so, I guess my question is: is it better to hold to the "pure" capitalism of "if they screw up, let 'em fail," even if a panic ensues and other institutions fail also? Is it fair not only to the little guy middle-class investor who has a decent-sized chunk of his life savings in, say, Citibank if Citi fails... but to the little guy middle-class investor who doesn't have a dime in Citi but whose investment firm has major ties with Citi and also ends up failing when Citi does? Is it fair for HIM to lose his money also? If that's deemed fair and allowed to happen, what middle class person would ever invest in that way again? We'd all stick with FDIC insured accounts or stuff our cash under the mattress. Which would be a real problem for our economy.
Originally Posted By jonvn The depression generation never trusted banks after. Well, a lot of them didn't. You still probably shouldn't. Unless there is the government insuring deposits, your money can go up in a puff of smoke. Which is why privatizing social security is a dangerously flawed idea.
Originally Posted By Mr X ***but to the little guy middle-class investor who doesn't have a dime in Citi but whose investment firm has major ties with Citi and also ends up failing when Citi does? Is it fair for HIM to lose his money also?*** Well, yes. These kinds of investments involve risk. Always. And the reason they pay out better than any other investment class is because the risk and volatility are higher. The simple fact is, you make your money because the companies in question continue to grow. If citibank brings down the company you're investing in, and they don't continue to grow, you lose. Simple as that. Anyone who doesn't want to assume such risk should invest in guaranteed CD's or government bonds which have next to no risk but, of course, lower returns. Now, the REAL issue though is the collateralized debt instruments that have been used to foist off the toxic loans of all these institutions. THESE have been AAA rated by ratings agencies (in bed with the institutions, no doubt), and sold to investors who EXPECT low risk, and only purchase AAA instruments which are SUPPOSED to carry very little risk. In THAT case, it's not fair. But, again, the buyer must beware and such investors should've done their research and realized that the rating agencies were telling lies. It was all out there for anyone to see if they did some research.
Originally Posted By Mr X After what I've seen these past couple of years, Jon, I wouldn't trust any bank any further than I could hoist up the building itself and throw it. Nearly ALL of them have been incredibly irresponsible.
Originally Posted By Mr X Thus I would HIGHLY recommend never exceeding the FDIC insurance level (I believe it's $100,000?). And, if you own a CD, make SURE it's covered by FDIC (some are, some aren't). If you have a nest egg that exceeds that amount, there is really no reason not to spread it around to many banks...thus insuring all your money.
Originally Posted By Dabob2 <In THAT case, it's not fair.> Well, that's one of the things I was talking about. <But, again, the buyer must beware and such investors should've done their research and realized that the rating agencies were telling lies. It was all out there for anyone to see if they did some research.> I think that's a little easy, and a little hindsight-y. Where do you do your research? I would never trust someone like Jim Cramer, but millions do, and you weren't hearing from the likes of him that these things shouldn't have been rated AAA. I don't remember it being said on any of the financial TV shows, or reading it in the papers UNTIL the failures started to happen. It's all a very incestuous business as far as I can see, with the rating companies and investment banks and financial press all saying things are hunky dory until, of course, they aren't. Then you'll hear the experts saying "people should have known better." Well, maybe they would have, pal, if you've raised a red flag or two AT THE TIME (not talking about you here, Mr. X, but rather the financial press.)
Originally Posted By SuperDry <<< Thus I would HIGHLY recommend never exceeding the FDIC insurance level (I believe it's $100,000?) >>> There's absolutely no reason to do this. Most brokerage houses have CD marketplaces that allow you to buy bank CDs from hundreds of different banks yet maintain only a single relationship with the brokerage house. This makes it easier to break up money into multiple CDs to stay under the $100k/bank FDIC insurance limit. Plus, when you do this, it's a lot easier to get a better rate, as you don't limit yourself to banks within driving distance. Also, for those that don't want to deal with a brokerage, many banks participate in a system called CDARS, which allows you do to a similar thing directly through your bank: they break up your money into $100k chunks and place each chunk in a CD in a different bank, so that your entire deposit has FDIC insurance.
Originally Posted By Mr X ***I would never trust someone like Jim Cramer, but millions do*** They deserve to go broke. And he belongs in jail, frankly (did you read my recent comments about his Bear Sterns "now I recommend it, now I didn't" debacle?). ***Where do you do your research?*** For the most part, I ignore the mainstream press and do my research straight from the horses mouths...Fed reports and 10-K reports from companies and by listening to conference calls and reading earnings reports. When they are lying, you can sniff it out in the fine print usually. It's an extreme form of due diligence, but with all the lies and obfuscations going on it's very necessary if you dare to jump into the investment waters (even the sharks are running scared there!).
Originally Posted By Mr X ***Well, maybe they would have, pal, if you've raised a red flag or two AT THE TIME (not talking about you here, Mr. X, but rather the financial press.)*** Actually, I myself DID raise some red flags here on LP and was called a nutcase. So I stopped. I agree, the mainstream press was way too busy telling us how everything was "contained" and "under control" and "limited to small, irresponsible sub-prime lenders"...if anything, they swung that checkered flag as much as possible as soon as possible, every time.
Originally Posted By DouglasDubh <And what is "it has been established that..." but saying something is a fact. But the semantics continue.> It seems like it always comes down to semantics, because you keep distorting what is said. I said it was established that there was political pressure to increase lending to the poor. Like it or not, bills don't get passed without political pressure. <It got tired a long time ago.> You have the power to stop it. Discuss the issues instead of trying to blame your problems on me.
Originally Posted By Dabob2 <<And what is "it has been established that..." but saying something is a fact. But the semantics continue.>> <It seems like it always comes down to semantics, because you keep distorting what is said. > No, I don't. I always quote you exactly, so that you can't do this nonsense. Yet, you do it anyway. Amazing. <I said it was established that there was political pressure to increase lending to the poor. Like it or not, bills don't get passed without political pressure.> Let's go to the videotape. Here are your exact words. "For many years, liberals have complained that banks didn't lend money to the poor. The banks responded to political pressure by lowering the barriers to credit, and now they're being blamed for handing out too much money.'" That sure sounds to me like you're saying the banks responded to political pressure from liberals to lend more money to the poor. But that's your assertion only; that wasn't established. It's just as likely the bill in question (which passed late in the game in any event, as others pointed out) passed because the lending institutions lobbied hard to get it passed - THAT was the political pressure, not liberals leaning on the institutions. Can you show the direct link you clearly imply - i.e. liberals pressure institutions to lend more to the poor, and therefore they do it? I won't hold my breath. <<It got tired a long time ago.>> <You have the power to stop it. Discuss the issues instead of trying to blame your problems on me.> Only you can stop your own semantics. And I don't have a problem. In fact, this link was actually turning into an interesting discussion till you came back. I note that you didn't add a dang thing TO the discussion with your post, only your usual naysaying, "you're distorting me" and "I know you are, but what am I?" stuff. It really is tired, DD.
Originally Posted By DouglasDubh <I always quote you exactly, so that you can't do this nonsense.> Even when you do quote me exactly, it doesn't stop you from distorting what I said. As you did in this case. <Can you show the direct link you clearly imply - i.e. liberals pressure institutions to lend more to the poor, and therefore they do it?> Not to your satisfaction. As I said before, I often form my opinion from things that I have read over several years. If you think my opinion is incorrect, you can disagree with it, or you can refute it. <I don't have a problem.> I disagree. <In fact, this link was actually turning into an interesting discussion till you came back.> Stop claiming I did things I didn't, and you can get back to it.
Originally Posted By Mr X So, can you or can you not provide a link to a news source telling us about who exactly put this pressure on the lenders to lower the barriers to credit?
Originally Posted By DouglasDubh <So, can you or can you not provide a link to a news source telling us about who exactly put this pressure on the lenders to lower the barriers to credit?> I think I could. However, I'm sure it would take a lot of effort on my part, and I don't see the point. Again, if you think my opinion is incorrect, you can disagree with it, or you can refute it by present contrary evidence. But telling me it's a fact that I'm wrong, and then repeatedly insisting that I present evidence while providing none (which is what Dabob did in this thread) is not engaging in an honest discussion.
Originally Posted By Dabob2 <<I always quote you exactly, so that you can't do this nonsense.>> <Even when you do quote me exactly, it doesn't stop you from distorting what I said. As you did in this case.> How so? You always say stuff like this, but when challenged to show how, you can't do it. <<Can you show the direct link you clearly imply - i.e. liberals pressure institutions to lend more to the poor, and therefore they do it?>> <Not to your satisfaction. As I said before, I often form my opinion from things that I have read over several years. If you think my opinion is incorrect, you can disagree with it, or you can refute it.> Except you presented it as fact (i.e. "it has been 'established'"). Perhaps if you stopped presenting your opinion as fact, things would look up. <<I don't have a problem.>> <I disagree.> Other people here are also taking you to task for your methods, indicating it is your problem, not mine. (Jon chides me for responding to your nonsense, and he may have a point). <<In fact, this link was actually turning into an interesting discussion till you came back.>> <Stop claiming I did things I didn't, and you can get back to it. > I didn't. And I got back to the discussion anyway - I note you're still stuck on semantics from 100 posts ago. I really shouldn't go down there with you, but it does bother me when you claim stuff about me that isn't true. < But telling me it's a fact that I'm wrong, and then repeatedly insisting that I present evidence while providing none (which is what Dabob did in this thread) is not engaging in an honest discussion.> Like that. That's projecting, DD, as someone pointed out earlier.
Originally Posted By DouglasDubh <You always say stuff like this, but when challenged to show how, you can't do it.> I've shown it plenty of times. <Except you presented it as fact (i.e. "it has been 'established'"). Perhaps if you stopped presenting your opinion as fact, things would look up.> You're distorting again, this time by taking two separate things I said and blending them together. It is my opinion that liberal complaining lead to banks loaning more money to the poor. It is a fact that political pressure led Congress to lower the barriers for banks to loan to the poor. <Like that. That's projecting, DD, as someone pointed out earlier.> No, that was describing what happened on this thread.
Originally Posted By Mr X ＊＊＊<You always say stuff like this, but when challenged to show how, you can't do it.> I've shown it plenty of times.＊＊＊ That being the case, could you link to one example please?
Originally Posted By DouglasDubh In post 178, I gave an example of one of Dabob's distortions. If you'd like more of them, you're welcome to peruse some of our old debates.
