Roubini has a way with words.
"This biggest bailout and nationalization in human history [Fannie and Freddie] comes from the most fanatically and ideologically zealot free-market laissez-faire administration in US history. These are the folks who for years spewed the rhetoric of free markets and cutting down government intervention in economic affairs. But they were so fanatically ideological about free markets that they did not realize that financial and other markets without proper rules, supervision and regulation are like a jungle where greed – untempered by fear of loss or of punishment – leads to credit bubbles and asset bubbles and manias and eventual bust and panics.
The ideologue “regulators” who literally held a chain saw at a public event to smash “unnecessary regulations” are now communists nationalizing private firms and socializing their losses: the bailout of the Bear Stearns creditors, the bailout of Fannie and Freddie, the use of the Fed balance sheet (hundreds of billions of safe US Treasuries swapped for junk toxic illiquid private securities), the use of the other GSEs (the Federal Home Loan Bank system) to provide hundreds of billions of dollars of “liquidity” to distressed, illiquid and insolvent mortgage lenders, the use of the SEC to manipulate the stock market (restrictions on short sales), the use of the US Treasury to manipulate the mortgage market (Treasury will now for the first time outright buy agency MBS to manipulate and prop up this market), the creation of a whole host of new bailout facilities (TAF, TSLF, PDCF) to prop and rescue banks and, for the first time since the Great Depression, to bail out non-bank financial institutions, and a whole range of other executive and legislative actions (including the recent bill to provide a public guarantee to mortgage for banks willing to reduce their face value).
This is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China. So foreign investors are now welcome to the USSRA (the United Socialist State Republic of America) where they can earn fat spreads relative to Treasuries on agency debt and never face any credit risks (not even the subordinated debt holders who made a fortune yesterday as those claims were also made whole).
Like scores of evangelists and hypocrites and moralists who spew and praise family values and pretend to be holier than thou and are then regularly caught cheating or cross dressing or found to be perverts these Bush hypocrites who spewed for years the glory of unfettered wild west laissez faire jungle capitalism (and never believed in any sensible and appropriate regulation and supervision of financial markets) allowed the biggest debt bubble ever to fester without any control, have caused the biggest financial crisis since the Great Depression and are now forced to perform the biggest government intervention and nationalizations in the recent history of humanity, all for the benefit of the rich and the well connected. So Comrades Bush and Paulson and Bernanke will rightly pass to the history books as a troika of Bolsheviks who turned the USA into the USSRA. Fanatic zealots of any religion are always pests that cause havoc and destruction with their inflexible fanaticism; but they usually don’t run the biggest economy in the world. But these laissez faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades. So let them be shamed in public for their hypocrisy and zealotry that has caused so much financial and economic damage."
I guess he will not be penciling in Bush for a third term, eh?
- CD
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Sailnet Adminstrator & Moderator (at large soon)!!
No bet. Their best hope is to find someone to buy them.
Are we going to change the signs??
Welcome to America, North America's newest socialist country.
brought to you by....... (wait for it)
The Republican Party
It was a catch-22. Darned if they did, darned if the did not. The question was not which one was bad... the question was which was worse?
If AIG, the Mae's, Bear, etc would have been allowed to fail, would you like to take a guess where the economy would be now? My guess is we would be facing a plunge possibly even bigger than the 30s. It would be global. No one would be spared. Would that have been better - or worse?
- CD
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Sailnet Adminstrator & Moderator (at large soon)!!
If AIG, the Mae's, Bear, etc would have been allowed to fail, would you like to take a guess where the economy would be now? My guess is we would be facing a plunge possibly even bigger than the 30s. It would be global. No one would be spared. Would that have been better - or worse?- CD
CD those words can only be spoken by someone inflicted with a sudden case of amnesia. Republican policies caused this mess. No one else's.... their policies. To add insult to injury they're running Mr. Deregulation for President.
Nah, I think their checkbook just ran out of checks.
Hey, what happened to all of the Bush defenders that used to post in this thread...
cowards... they should show up and take their medicine.
I do not blame Bush for this. Hind sight is 20-20. In fact, I am not even sure who to blame. But my guess is that it is spread pretty far and wide. The government cannot put morality on the person. It was greed, and it was not all US based.
I have told you my story way long ago in this thread about Florida. The short recap was that I paid what I thought was a LOT of money for my home on the water in SW Fl. I bought just before the big boom. Within the next 24 months, my home about tripled in value. Not a day went by that people were not coming up to me to buy my house - without even seeing it. Homes were being bought and sold for rediculous prices in a place where there was no industry. My next door "neighbor", who did not live there, bought the house to the left of me and mortgaged it to the hilt. TOok that money and got another property. Mortgaged that to the hilt, then kept repeating. Within about 12 months, he owned something like a dozen properties in SW FL (or the bank owned). He just flipped them - each time turning profits in the 100's of thousands. He then got into the condo business with many others that I know. They would buy these condos for almost nothing down (pre-construction pricing), then flip them before they had even poured a slab - for a hundred thousand more than they paid. As you know, Rick, Condos in Naples and other parts of SW Fl were sold out before they even cleared the property and flipped many times before they were completed. My nighborhood was filled with "neighbors" I never saw. Only three of us (as I recall) lived in the homes there. THe rest were properties all around us constantly being flipped. I got sick of it as did my other neighbor. I sold my house, almost sight unseen, thanks to my dad. He was flying home from SW FL on a visit to us, sat next to a guy on a plane who was angry because he could not get into the flipping in SW FL, and dad told him that we were frustrated and looking to get out. He turned around, flew to my house, and brought a contract with him to close. Signed, sealed, done. No realtors - no questions asked. My next door neighbor (the one who actually lived on the streeet with us) decided he had enough too. Listed with a realtor. She put the sign in the front yard. Within 24 hours, he had 5 (FIVE) offers, most of them cash, on the spot, with two potential buyers arguiing over the property and who would get it first. It sold for 100,000 (cash) more than his asking price. I was told the buyer never even went into his house (which was really a knock-down... but that is another conversation).
Greed. Absolute, uncontrolled mayhem. Wreckless, herd-mentality investing. No government can stop that in a free market. But the banks should have known better than to keep carrying those notes. I have been told that they now own most of them as something like 25% of all the homes there are now in foreclosure. I cannot veryify that, but that is what a realtor told me. She also showed me some comps around my old house. I can now buy it (or one like it) all day long for $100,000 less than I paid originally. Ouch.
Do I blame Bush? No. Maybe, looking back, he could have done things to make it better - but I do not know how he would have gotten that past any type of congress. How many in Congress were doing the same thing? Half the purchasers on my street were from out the country - many of them German. Few of the "investors" were native SW FLoridians. Most were from up north coming down to make their fortunes.
My "frustration" is that I had enough sense not to get caught up in that mayhem. I realized it was out of control and got out. Now, it seems, I will pay for it anyways in long term US debt and taxes. You will too. So will most of the country and our children and their children.
My opinions.
- CD
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Sailnet Adminstrator & Moderator (at large soon)!!
Yep, cash is king because you will need it to pay for the increase in taxes, no matter who wins in November. Now I am all for kicking some ass, but the best thing for our economy is to stop the war. Things are bad now, but wait until the banks that hold the credit card debt get into the mix, bad to worse.
Like the saying goes "Cheer up, things could be worse. So I cheered up, and sure enough, things got worse."
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Great men always have too much sail up. - Christopher Buckley
Hey, look! It's Bestfriend! Where the hell have you been?
Now for the good news concerning the whole AIG thing and the governement "bailout." This is from TechTicker...
True, Paulson was late in reacting to the crisis last year, and probably wishes he had the Bear Stearns-JPMorgan transaction to do all over again. But consider the following:
An over 11% return on the 2-year, $85 billion loan to AIG, which is pretty stellar considering the government's 2-year borrowing cost is currently under 2%.
$1 billion of senior preferred stock in exchange for the Fannie Mae/Freddie Mac bailout loans, with a 10% dividend to compensate Treasury for the use of taxpayer capital.
The kind of clout and respect his Treasury predecessors, Paul O'Neill and John Snow, could never muster.
Clearly, Paulson is the right Treasury secretary at the right time -- which make his assertion that he won't stay past the current administration all the more troubling.
Do I blame Bush? No. Maybe, looking back, he could have done things to make it better - but I do not know how he would have gotten that past any type of congress. How many in Congress were doing the same thing? Half the purchasers on my street were from out the country - many of them German. Few of the "investors" were native SW FLoridians. Most were from up north coming down to make their fortunes.
My "frustration" is that I had enough sense not to get caught up in that mayhem. I realized it was out of control and got out. Now, it seems, I will pay for it anyways in long term US debt and taxes. You will too. So will most of the country and our children and their children. My opinions. - CD
CD
The problem began with Alan Greenspan, then head of the Fed. After the .com bubble burst he lowered the Fed rates. This was commendable. However, he kept them low for years and at the same time raised M3, our money supply. So, more cash, low rates....
Wall Street created those ridiclous loan progams (sub Prime) as a way to get rid of all the cash they had access to. Lo and behold they found buyers for them. Who wouldn't buy them? They hired the ratings agencies to rate these securities and got a AAA rating, and they were paying 8%-11% interest.
In short, this administration relaxed oversight and purposely allowed this to happen. Some of their advisors either never studied the causes of the Great Depression, or thought they they were somehow immune. People, like me, who were jumping up and down for years, waving red flags as hard as we could, were ignored.
I've covered this many times in this thread. The rest as they say... is History..
Yeah it is bad out there-- but lets not lose our heads just yet
this is being driven by the margin clerks and by pensions/foundations etc pulling out of direct commodity trades/positions--
The SEC reinstating rules against naked short selling is way over due-- why would you EVER let ANYONE sell stock short without the margin or position to cover??? WHY would you let anyone place a trade/ buy property etc-- where if it wins he takes all and if it loses he walks away scott free and whole? That is not good business-- that is irresponsible. WHY are people bitching about this rule reinstatement and tighter lending? Bring back the d**m uptick rule as well.
Those of us who have lived our financial lives prudently are not going to put up with this-- I think that AIG fed loan at 11%+ is a good start, although not from a great starting place-- Is the fed starting to play some hard ball?
you can just smell the fear of the guilty and the confused--- someday it will be time to start nibbling at some great businesses whose only problem is that when this much crap gets thrown some gets splashed on them too ...
Rant On!
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WyeNot
Beneteau 36 cc 2002
Lake Diefenbaker Sask
If AIG, the Mae's, Bear, etc would have been allowed to fail, would you like to take a guess where the economy would be now? My guess is we would be facing a plunge possibly even bigger than the 30s. It would be global. No one would be spared.CD
Certainly possible, but that's not the point. That's like talking about our hard choices in Iraq while ignoring that it was Bush that got us there in the first place. Yes, the government had to make some hard choices in the markets, right or wrong, but it was the free-market deregulators that got us in trouble in the first place. That's the point some of us, at least, are trying to make. Let's see if we can learn a little bit from history and try not to elect people who will make the same mistakes again.
