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#284040 - 10/06/08 04:02 AM Re: Deregulation of Financial Institutions [Re: Chocolategenii]
lizbeth Offline
veteran member

Registered: 11/29/06
Loc: PNW
Okay, since neither of you like the Martial Law suggestion, how about this one. People who didn't vote for the bail-out the first time, were called and/or e-mailed with the following message (or something similar,) "This is so-and-so, I met you at a fund raiser for--insert candidate's nsme--. I understand you're reluctant to vote to pass the current fix to the financial mess we're in. Yes, that's right, it's a matter of public record. Um-hum...Yes...I understand and I agree with you...Yes I do.

"Hey, I have an idea. You know that project you're tried to get ear funding for? How about if we get it added to the financial fix, would you vote for it then? No. Wait, this is all perfectly legal! No, it isn't a bribe, believe me. I have the President's word on that. We'll get right on it. Yes.

"And thank you so much. With your vote we stand a chance to stave off the worst financial crises in 60 years, and you'll get your project approved. Yes, yes. You'll probably win your electection, won't you!

"That's quite alright, You're welcome very much. Yes. I need to go to bed now. Good night."

*click*
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Tomorrow's just your future yesterday. Craig Ferguson

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#284156 - 10/07/08 05:51 PM Re: Deregulation of Financial Institutions [Re: lizbeth]
draeco Offline
regular member

Registered: 07/21/07
thanks liz,

no, I didn't forget leveraging, just the level of debate I received back from my post was so banal and puerile that I didn't bother to elaborate on the subtlety of leveraging.

You have, correctly, pointed out that one of the practices that has landed us in this mess was borrowing to buy something that was depreciating or reducing in value. This practice ignored the reality that the borrowed money had to be paid back. Further, if the shares bought using money on loan are then sold, technically, that sale was of shares that were not owned by the seller but owned by the bank. Did the banks know or care? The ’87 meltdown which led to the last global recession was caused by just this practice. Banks then charged us all higher interest rates for 10 – 15 years to repay those losses. Again, the “little people” pay for the sins of the greedy.

And kudos to your moderate and thoughtful approach – nice to see some balance in these posts, finally.


Edited by draeco (10/07/08 05:52 PM)
Edit Reason: ghost in the machine
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Bringing the "gift" of democracy to Iraq via invasion is akin to bringing the "gift" of Christianity via the Crusades - which worked really well, n'est pas?

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#284157 - 10/07/08 07:23 PM Re: Deregulation of Financial Institutions [Re: Chocolategenii]
draeco Offline
regular member

Registered: 07/21/07
Originally by: Chocolategenii

many of these homeowners COULD afford the homes sold to them, they qualified...... nearly 50% of all personal bankruptcy filings are related to medical debt....... Realtors and lenders are supposed to be trained experts ....well this is not a future homeowner being stupid!





I agree in a qualified way, it was the banks and the "trained" experts were either stupid or greedy because they said that people who would not normally have qualified for a loan could have the money. Look up the definition of "low-doc" and "non-conforming" loans and get back to me. The homeowners who you say could afford the mortgages (which, by definition, they couldn't afford from what has happened, even if you say they could but that leads into the area of "honeymoon rates" and a whole other discussion) must have had a lot of medical bills all at once. Anyway to make you happy, I'll add "sick" to my list of stupid, greedy and criminal.

BTW, your Congressional hearings just found that the head of Lehmann bank was paid (not earned) USD$0.5B in the last 7 years. That's $500,000,000 US!. Not bad for stuffing up a company. I should go to the US and get paid half-a-Billion to ruin a bank instead of getting my current salary for doing a good job.


Edited by draeco (10/07/08 07:28 PM)
Edit Reason: dyslectics rule KO!
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#284164 - 10/07/08 10:40 PM Re: Deregulation of Financial Institutions [Re: draeco]
Lawmage Online
member

Registered: 07/03/03
Loc: varies from day to day
Quote:
Further, if the shares bought using money on loan are then sold, technically, that sale was of shares that were not owned by the seller but owned by the bank. Did the banks know or care?
Just a small technical point...those shares WERE NOT owned by the bank unless they were put up as collateral against the loan and the bank had a lein on the shares as a result. Even then, they would not have been owned by the bank unless the loan was defaulted upon and the collateral was seized.
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"America is at that awkward stage. It's too late to work within the system, but too early to shoot the bastards." ~ Claire Wolfe

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#284170 - 10/08/08 03:25 AM Re: Deregulation of Financial Institutions [Re: Lawmage]
lizbeth Offline
veteran member

Registered: 11/29/06
Loc: PNW
Leverage isn't always bad.

Let's remember what leverage is. If, for example, I want to buy $10,000 worth of common stock amd I have the money to pay that amount for the stock, but I choose not to do so. Instead, I borrow $5,000, add it to $5,000 of my money, and buy $10,000 worth of stock. I've leveraged my buying power, which is fine, by a small margin. I'm betting that my stock will go up sufficient to allow me to sell it at a high enough price to pay off my loan (plus interest,) my broker and myself. If the stock goes down, I'll pay off my loan, because I have the money to do so, and hang on to the stock until it goes back up again.

One of the many things that's happened in the financial industry is that it's leveraged far beyond its cash flow. Its financial leverage ratio was much higher than 2:1 because it was looking for higher profits. It may have worked, except that too many people had ARMs. As the mortgage lenders started to lose money because their cash flow was drying up due to leveraging, they bumped the interest rates on those ARMs up at renewal time, which led to defaults, which led to upper level bankruptcies.

I believe there used to be a reg that imposed a cap on the amount of money a company could borrow in order to leverage their buying power--or at least imposed a cap on the ratio. This must be one of the regs that was either thrown out or ignored by the financial industries in its efforts to make more and more profit. But more and more profit was goaded by investors who wanted more and more profit and in order to attract more and more investors.

Now, the bubble has burst.


Edited by lizbeth (10/08/08 03:28 AM)
Edit Reason: clean up
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#284177 - 10/08/08 11:29 AM Re: Deregulation of Financial Institutions [Re: draeco]
Chocolategenii Moderator Offline
Domestic Affairs Moderator

Registered: 10/03/06
Loc: California
Originally by: draeco



I agree in a qualified way, it was the banks and the "trained" experts were either stupid or greedy because they said that people who would not normally have qualified for a loan could have the money. Look up the definition of "low-doc" and "non-conforming" loans and get back to me.


Draeco, the bottom line, the housing market is what was plumping up the economy this past decade. Sure, these folks should have asked "another professional" what exactly is meant by a low-doc... BUT, they were speaking to professionals! Home purchases with low interest rates were a great investment. Yes, medical bills can add up overnight. Besides, paying higher premiums, co pays, etc... if a family ( I was one) has a catastrophy... an over night little accident can bankrupt a family in a snap! My husband had a serious accident, co payment for the hospital was over $40,000.00!!! Our deductable is low...15% as we are on a great "golden plan".

Dax mentioned in Florida, homes are protected from bankruptcy. This is true...only if the homeowner "homesteads" his property...same in the state of Nevada. In Nevada, a home can only be homesteaded (this may have changed) to about $95,000.00. Florida had a huge mortgage melt down, because developers were allowed to overbuild.

Quote:

BTW, your Congressional hearings just found that the head of Lehmann bank was paid (not earned) USD$0.5B in the last 7 years. That's $500,000,000 US!. Not bad for stuffing up a company. I should go to the US and get paid half-a-Billion to ruin a bank instead of getting my current salary for doing a good job.


It was just found out AIG execs. took $400,000.00 of the bailout money and went on a nice little holiday...spending spree. Obama is asking that Congress demand they repay the money...and are fired.
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#284202 - 10/08/08 05:19 PM Re: Deregulation of Financial Institutions [Re: Dax]
Anonymous
Unregistered

"knee jerk political reaction and ignorance"-Who authored this bill, RNG? Phil Gramms, McCain's chief economic advisor. Who was among those who voted for it? John McCain. Check McCain's 26 year record in Congress and you'll find except for ONE occasion when he spoke of regulation, it was to DEREGULATE. Check out his involvement with the Keating 5 and the S&L SCandal of the 80's, an illegal scam using DEREGULATION that cost the American tax payer 200 billion dollars back then. Even after that up until 2005, his record is clearly for DEREGULATION. Now when he knows how angry Americans are about that position, he suddenly talks as if he's been the most hardline deregulator in Congress all his life. LIES. Even in 2005 if the Republicans wanted to pass a deregulation bill they could have. Congress was STILL controlled by Republicans and even in the event of a tie, Cheney could have come into the Senate and broken the tie in favor of the Republicans. Why didn't this happen? There was no filibuster I could find by the Democrats to stop it. You have no valid argument and name calling such as "leftie" further undermines any credibility you have.
Oh, but if I'm not mistaken Cheney did come in to pass the huge,unethical fat cat tax cut.

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#284203 - 10/08/08 05:42 PM Re: Deregulation of Financial Institutions [Re: Chocolategenii]
Aint Offline
Foreign Policy/Pagan Circle Moderator

Registered: 02/25/04
Loc: Deep In It
The way I hear it, is that it was an AIG subsidiary that was actually preforming quite well that took the holiday. They spent company money that was earned by the company. Those employees met their goals and got their reward.

Still though, AIG should be pulling in all its resources to help itself, not go out for a party.
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Paddle or die!

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#284205 - 10/08/08 06:26 PM Re: Deregulation of Financial Institutions [Re: Anonymous]
Ray Global Moderator Offline
TM Chairman of the Board


Registered: 09/22/00
Loc: Arkansas, USA
Originally by: Anonymous
"knee jerk political reaction and ignorance"

Ahhhh, thank you! Sometimes a little comic relief can be welcome during heated discussion. Appreciate you!
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Debating the Political Left or Speaking Truth to Kooks!

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#284224 - 10/09/08 04:15 AM Re: Deregulation of Financial Institutions [Re: Aint]
lizbeth Offline
veteran member

Registered: 11/29/06
Loc: PNW
There is a thing called the 'appearance of fairness,' Aint. Whether or not it was a subsidiary of AIG that had been 'doing well,' it should not have 'rewarded' its 'execs'
with a $4M holiday so soon after it got bail-out money.

It shouldn't be 'rewarding' anyone. So your last sentence is correct.
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