plus nothing has been stopped or fixed instead it has just been delayed for awhile at massive expense to the tax payer and it can still collapse quite easily, ponzi schemes are unstable as it is part of their nature
Capital already flows where they think the returns is biggest, from England to Iceland via the deposits schemes, from Germany to America via investment securities, from Japan and US to Australia via the carry trade. Yet through out all that time, the standing of financial centres like the City, Frankfurt, Tokyo, or New York, were not lessened. What will change? You know they said the same thing when Sarbanes-Oxley was passed, and yet New York is still a world financial centre. The people in the City is grumbling about the new tax on bonuses, I can bet you that a decade from now the City will still be the financial centre of the world. It is where the contacts are, where the money gathers. You can relocate factories, but it's harder to relocate a well entrenched industry/connections like the City.Capital will flow to whereever it is allowed to earn the best return. So if regulation creates a difference in regulation between London and America, yes capital will flow there. No one has to completely leave town like you mention, they shift the work, profit, employment, taxes paid to government ( which is never mentioned) to another part of the world.
This is an international world, we should have learned that over the last 15 years as our manufacturing base has been hollowed out by foreign competition. Those factories in China are there because they get a greater return than building one in Ohio.
You agree with the measure, but because Obama is the one who push the legislation, it's a "political gimmick so that the administrative can turn the pitchforks against bankers"?I am in favor of finding ways to not contaminate the the money guarenteed by FDIC from more speculative trades. Although almost everyone will concede that is not the reason for the banking problems.
This is another political gimmick so that the administrative can turn the pitchforks against bankers. It is Obama being a politician which he is.
Not change we can believe in. But we were the dopes who bought that snake oil in 2008.
But I don't care about what it is to the politicians, I care about the merits of the proposal. I think it does two good things: one is to limit the amount of risks the bank can take by limiting the amount of capital available for those activities. Second, it lessens the government's implied support for the banks, though not far enough.
please explain why prime loans are defaulting at a rate north of 5%, and that btw puts most banks out of business if they follow the reserve requirements
Fact is the banks over leveraged and gambled and did it on their own free will and when crunch time came they got burned and this has happened many many times in history. They assumed the ponzi scheme of securitization would hold up under pressure and it didn't and here we are.
oh ya and while I am here, take a look at some of the failed banks foreclosed on by the FDIC in 2009, yes they levered up in some cases to as high as 60:1 and the losses show it and most had no CRA involvement AT ALL
Last edited by elbatrop; 01-22-10 at 12:31 PM.
I am not totally disagreeing with you here. But, I have to say that had not the pressure from demo's and progressive repubs been put on these banks to get people into homes, and make loans they couldn't afford, then we would be looking at a totally different scenario right now. To punish one side of the equation is not being genuine.
banks have reserve requirements they ignored, mortgage underwriters have standards they ignored, and citizens that knew better borrowed money they couldn't repay and they all deserve the appropriate punishments that is why we have laws to deal with all of it
banks have no excuses at all, they create money from nothing and have no excuse at all to screw that up, they got greedy and now they are insolvent
On the first point, I think the administration was clear in saying that we had to move past an economy based on consumerism and get back to making things and living within our means. I agree with that it is how we get there that counts as well.
Next, if companies have to disconnect their trading from pure banking this will be a competitive disadvantage against European entities that have one shop banking. Over time the relationships you rightly point out are essential will erode as large corporations will find banking partners who can handle all of their needs. One won't forever go to one bank for a loan and another to hedge your currency positions.
On the last point, I am a lifelong democrat. So it isn't because it is Obama I am against these policies. I can be and am for some type of reform as I mentioned with better regulation, enforcing Chinese walls etc. I am not for the method expressed by the President yesterday.
ACORN? Uhh no. A nonprofit organization did not cause a financial meltdown.
The unintended consequence was putting our government in a situation where it was faced with the choice of allowing the entire financial system to collapse or bailing out the banks with taxpayer money. It did the responsible thing and chose the latter. Some regulatory reforms are necessary to minimize the risk of it happening again, and to eliminate the moral hazard of banks taking big risks knowing that Congress will bail them out.Originally Posted by j-mac
Last edited by Kandahar; 01-22-10 at 05:10 PM.
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