VPILF

Mulu · Post by **Mulu** » Wed Sep 17, 2008 8:47 pm

And being unregulated only worsened matters.

"Lack of net worth for many institutions as they entered the 1980s, and a wholly inadequate net worth regulation. "

fluffmonster · Post by **fluffmonster** » Wed Sep 17, 2008 8:49 pm

ç i p h é r wrote:Thanks for answering on Mulu's behalf, Fluff. The intent was to have him formulate an educated response, not a politically motivated one...for a change. Ironically, you seem to have forgotten about the S&L crisis in your broad empirical evaluation.

No. I was speaking of traditional banks as I stated. S&Ls were treated differently, and do not obviate my conclusion.

The CATO Institute published an interesting article (statistical analysis) in its journal on the correlation between financial crises, liberalization, and government size. It's available online here:

http://www.cato.org/pubs/journal/cj27n1/cj27n1-3.pdf

I'm curious to have your thoughts on it, given your background. BTW, you avoided the main thrust of my questioning, which was, are we in this financial crisis as a direct consequence of deregulation? Put another way, are the new banking standards you're now proposing with regard to risk assessment and transparency ever part of the regulatory equation in the last quarter century?

I may or may not get to the article, though I am curious. To your question, it isn't quite phrased correctly to fit the answer which is that the problem isn't deregulation in the current crisis, but a failure to regulate, but it still represents what I would call a shortcoming of the deregulatory philosophy, in particular its un-nuanced, burn-it-all flavor. The instruments of destruction here are relatively new which is part of the oversight, but the underlying practices are not. They simply moved from parts of the financial sector which are better regulated to those parts that are not. Also keep in mind, the fundamental purpose of many of the derivatives was to whitewash balance sheets, also a consequence of investment houses not being subject to regulations preventing such in depository institutions.

I realize we probably fundamentally disagree on the role of government in our lives, but the fact is that whether the financial markets are overly regulated or totally unregulated, they will always face risk. It's part of the business, after all. Trusting that banks and lending institutions have a far greater desire not to lose money than government officials have of preventing their losses, it seems to me that legislating risk assessment and transparency is simply redundant. It's something they're going to need to and want to do after what has taken place whether or not the government tells them to.

But what happens when the firm can make money by hiding risk? You also need to consider the fact that making a lot of money in a short time can be more lucrative than making less money over the long haul. Scams are never meant to be forever. In the current crisis, one didn't even have to set out to cheat people to be part of the game. The system of executive compensation which gives great rewards for even poor performance also contributes to a misalignment between the incentives of individuals and the profit motive of the firm, the well-known principal-agent problem. Now you tell me which is more efficient...everyone who wants to do business with such a firm having to put resources into discovery itself, individuals essentially doing the same work over and over, systemic inefficiencies building up to the periodic crisis; or instead, just make the business divulge its true risk and maintain capital reserves to protect it from systemic risk?

Mulu · Post by **Mulu** » Wed Sep 17, 2008 8:56 pm

Washington Post wrote:The Gramm-Leach-Bliley Act aimed to make the country's financial institutions competitive by removing the Depression-era walls between banking, investment and insurance companies.

That bill allowed AIG to participate in the gold rush of a rapidly expanding global banking and investment market. But the legislation also helped pave the way for companies such as AIG and Lehman Brothers to become behemoths laden with bad loans and investments.

Mulu · Post by **Mulu** » Wed Sep 17, 2008 9:20 pm

Fluff, your language is far too complex. Say it this way:

If you had an opportunity to make 10 million dollars, legally, but if you did it would cause a bank to collapse, would you do it?

An investor's answer is, "yes."

That's why we need regulations.

ç i p h é r · Post by **ç i p h é r** » Wed Sep 17, 2008 9:58 pm

But what happens when the firm can make money by hiding risk? You also need to consider the fact that making a lot of money in a short time can be more lucrative than making less money over the long haul. Scams are never meant to be forever.

Now that's a fair point and something we can both agree on. The government has an obligation to protect its citizens from scams. However, scams will happen regardless of regulation. We still have to identify these folks and prosecute them. As I acknowledged earlier, there is clearly an absence of governmental oversight and that needs to be addressed.

Now you tell me which is more efficient...everyone who wants to do business with such a firm having to put resources into discovery itself, individuals essentially doing the same work over and over, systemic inefficiencies building up to the periodic crisis; or instead, just make the business divulge its true risk and maintain capital reserves to protect it from systemic risk?

Well again, it's inherently in the interest of the lender to properly assess risk. Whether or not the borrower understands the risk when they hold out the can isn't really important. They are borrowing the banks money, after all.

Furthermore, the bar isn't the same for everyone. How much risk each of us can tolerate is a function of many things: our lifestyle, our cash flow, our savings, our assets, etc. So there isn't a magic number for everyone. You want to know if borrowing that much money is a good idea or investing in that mutual fund is wise? Go talk to a financial advisor; It's a fairly detailed analysis. I don't believe that it's the government's responsibility to make good decisions for you.

Mulu · Post by **Mulu** » Wed Sep 17, 2008 10:19 pm

ç i p h é r wrote:I don't believe that it's the government's responsibility to make good decisions for you.

But it is the government's responsibility to prevent harm. Losing your pension is "harmful," especially when the only mistake you made was assuming your bank wouldn't gamble away your money.

And I'm pretty sure that when Fluff used the term "scam" he didn't mean "crime." He meant very risky practices that make some people very rich at the expense of many others, particularly others who are ill equipped to fully understand the risks.

ç i p h é r · Post by **ç i p h é r** » Wed Sep 17, 2008 11:01 pm

If you're ill equipped to fully understand the risks, it's not going to make any difference for someone to tell you what the risks are.

Mulu · Post by **Mulu** » Wed Sep 17, 2008 11:43 pm

ç i p h é r wrote:If you're ill equipped to fully understand the risks, it's not going to make any difference for someone to tell you what the risks are.

Which is why you regulate the risks, meaning you disallow risky behavior in banks and insurance companies, thank you for proving my point.

Mulu · Post by **Mulu** » Thu Sep 18, 2008 1:23 am

ç i p h é r wrote:
John McCain's campaign says the Republican is picking up the support of a top Hillary Clinton fundraiser and member of the Democratic National Committee's Platform Committee.

Boy is this backfiring...

Aristocrat Who Favored Clinton Endorses McCain
By Matthew Mosk
John McCain's election strategy has for weeks involved an aggressive push for support from disenchanted Hillary Clinton voters, particularly those white working class women who helped the former first lady win primaries in general election swing states such as Ohio, Pennsylvania and New Hampshire.

So it was with great fanfare this morning that McCain's campaign alerted reporters of a major development on that front: "A prominent Hillary Clinton supporter who is a member of the Democratic National Committee's Platform Committee will endorse John McCain at a press conference at the Capitol Hill Club today, September 17," the advisory said.

As a headline, the announcement played great -- even landing a prominent spot on the Drudge Report. But McCain supporters who read further might not have found the payoff quite as satisfying.

Turns out, the prominent Clinton supporter who crossed the partisan aisle to support McCain was none other than Lady Lynn Forester de Rothschild, wife of British banking scion Sir Evelyn de Rothschild. And the Lady Forester, as she is sometimes known, may not be the ideal spokesperson for McCain in the present environment of economic uncertainty.

When not engaged in politics, de Rothschild -- whom the Wall Street Journal dubbed a "New York socialite" and Portfolio has described as "the flashiest hostess in London" -- has the run of a sprawling estate in Buckinghamshire, north of London, known as Ascott House. In the U.S., she summers on Martha's Vineyard. And she has not been shy with her feelings about Obama prior to today, telling CNN weeks ago -- and without any hint of irony -- that, "frankly, I don't like him. I feel like he is an elitist."

Today, Rothschild offered a written statement, circulated by the McCain campaign, saying "In an election as important at this, we must choose the candidate who has a proven record of bipartisanship and reforming government, and that's John McCain. We can't afford a president who lacks experience and judgment and has never crossed party lines to work for meaningful reform."

In the midst of the nation's worsening economic crisis, the Obama campaign decided to sit back and let the announcement speak for itself.

And in the polls.

WASHINGTON — Despite an intense effort to distance himself from the way his party has done business in Washington, Senator John McCain is seen by voters as far less likely to bring change to Washington than Senator Barack Obama. He is widely viewed as a “typical Republican” who would continue or expand President Bush’s policies, according to the latest New York Times/CBS News Poll.

Polls taken after the Republican convention suggested that Mr. McCain had enjoyed a surge of support — particularly among white women after his selection of Gov. Sarah Palin of Alaska as his running mate — but the latest poll indicates “the Palin effect” was, at least so far, a limited burst of interest. The contest appeared to be roughly where it was before the two conventions and before the vice-presidential selections: Mr. Obama had the support of 48 percent of registered voters, compared with 43 percent for Mr. McCain, a difference within the poll’s margin of sampling error, and statistically unchanged from the tally in the last New York Times/CBS News Poll in mid-August.

The poll showed that Mr. McCain had some enduring strengths, including a substantial advantage over Mr. Obama as a potential commander in chief. It found that for the first time, 50 percent of those surveyed in the Times/CBS News poll said they considered that the troop buildup in Iraq, a policy that Mr. McCain championed from the start, has made things better there.

The poll also underlined the extent to which Mr. McCain’s convention, and his selection of Ms. Palin, had excited Republican base voters about his candidacy, which is no small thing in a contest that continues to be so tight: 47 percent of Mr. McCain’s supporters described themselves as enthused about the Republican Party’s presidential ticket, almost twice what it was before the conventions. As often happens at this time of year, partisans are coalescing around their party’s nominees and independents are increasingly the battleground.

But the Times/CBS News poll suggested that Ms. Palin’s selection has, to date, helped Mr. McCain only among Republican base voters; there was no evidence of significantly increased support for him among women in general. White women were evenly divided between Mr. McCain and Mr. Obama; before the conventions, Mr. McCain led Mr. Obama among white women, 44 percent to 37 percent.

By contrast, at this point in the 2004 campaign, President Bush was leading Senator John Kerry of Massachusetts, the Democratic challenger, by 56 percent to 37 percent among white women.

The latest Times/CBS News nationwide telephone poll was taken Friday through Tuesday with 1,133 adults, including 1,004 registered voters. The margin of sampling error is plus or minus three percentage points for all respondents and for registered voters. Among other groups, Mr. Obama had a slight edge among independents, and a 16 percentage point lead among voters ages 18 to 44. Mr. McCain was leading by 17 points among white men and by the same margin among voters 65 and over. Before the convention, voters 65 and older were closely divided. In the latest poll, middle-age voters, 45 to 64, were almost evenly divided between the two.

The poll was taken during a period of extraordinary turmoil on Wall Street. By overwhelming numbers, Americans said the economy was the top issue affecting their vote decision, and they continued to express deep pessimism about the nation’s economic future. They continued to express greater confidence in Mr. Obama’s ability to manage the economy, even as Mr. McCain has aggressively sought to raise doubts about it.

This poll found evidence of concern about Ms. Palin’s qualifications to be president, particularly compared with Senator Joseph R. Biden Jr. of Delaware, Mr. Obama’s running mate. More than 6 in 10 said they would be concerned if Mr. McCain could not finish his term and Ms. Palin had to take over. In contrast, two-thirds of voters surveyed said Mr. Biden would be qualified to take over for Mr. Obama, a figure that cut across party lines.

And 75 percent said they thought Mr. McCain had picked Ms. Palin more to help him win the election, rather than because he thought that she was well-qualified to be president; by contrast, 31 percent said they thought that Mr. Obama picked Mr. Biden more to help him win the election, while 57 percent said it was because he thought Mr. Biden was well-qualified for the job.

This poll was taken right after Ms. Palin sat down for a series of high-profile interviews with Charles Gibson on ABC News.

ç i p h é r · Post by **ç i p h é r** » Thu Sep 18, 2008 4:35 pm

de Rothschild is 54 and has been a Democrat from the day she was able to vote. The take-away from her support for McCain is this:

"I believe that Barack Obama, with MoveOn.org and Nancy Pelosi and Howard Dean, has taken the Democratic Party - and they will continue to - too far to the left," Lynn Forester de Rothschild said. "I'm not comfortable there."

"I believe that the McCain-Palin government will be a centrist government," Rothschild said. "It's not going to be an ideological government."

She also went on to say that our government doesn't do well when it functions at the extremes. With Democrats in control of the executive and legislative branches of government, there will be no checks and balances.

HATEFACE · Post by **HATEFACE** » Thu Sep 18, 2008 4:41 pm

Mr Biden wasn't really well recieved by a lot of democrats (Even less by republicans but who gives a shit about us, right?) during the POTUS nominations. I understand Obama taking Biden because he wants to counter that inexperienced aguement but the majority of democrats ignored it any way and it even pushed Clinton out of the way, unless people were voting simply for their earnest dislike of clinton. A better choice would have been edwards at the time. However, hindsight and all. . . I dunno maybe kucinich. He's a stickler for the constitution. . .

. . .Which constitution, I have no idea. . .

. . .maybe the iraqis'. . .

And 75 percent said they thought Mr. McCain had picked Ms. Palin more to help him win the election, rather than because he thought that she was well-qualified to be president

Heh. I thought that too only because the man needs to appeal to other people, not merely the base. After all people elect other people for the sole purpose of representing them in a republic. - irregardless of views / disagreements. I wouldn't say out of desperation but maybe to pull republicans together.

HATEFACE · Post by **HATEFACE** » Thu Sep 18, 2008 4:42 pm

ç i p h é r wrote:de Rothschild is 54 and has been a Democrat from the day she was able to vote. The take-away from her support for McCain is this:

"I believe that Barack Obama, with MoveOn.org and Nancy Pelosi and Howard Dean, has taken the Democratic Party - and they will continue to - too far to the left," Lynn Forester de Rothschild said. "I'm not comfortable there."

"I believe that the McCain-Palin government will be a centrist government," Rothschild said. "It's not going to be an ideological government."
She also went on to say that our government doesn't do well when it functions at the extremes. With Democrats in control of the executive and legislative branches of government, there will be no checks and balances.

How the fuck did republicans land a rothchild?! ;/ Still don't understand. . .

friggin' billionares. How? Anyone?

[edit: inflammatory - kmj]

Mulu · Post by **Mulu** » Thu Sep 18, 2008 5:48 pm

ç i p h é r wrote:de Rothschild is 54 and has been a Democrat from the day she was able to vote.

But she's a billionaire NY socialite, exactly the kind of person the Republican base hates.

It would be like James Dobson suddenly supporting Obama. Dems would be going wtf?

Of course given the total financial collapse of the globe, I doubt many people will even notice Rothschild.

AP wrote:The worst global financial crisis since the Great Depression forced the Federal Reserve and central banks in other countries to pump billions of dollars into the world's banking system in an urgent bid to stop further damage.
The Fed plowed as much as $180 billion into money markets overseas. At home, the New York Federal Reserve acted to ease a spike in overnight lending rates by injecting $55 billion into the banking system.

Ain't no way people are going to see "McCain the Deregulator" as the answer to this problem. Now Washington Mutual is rated as junk bond status, and the big fear is a lack of willingness to support the US debt by foreign investors. Nobody even knows what would happen if that occurred, though obviously the value of the dollar would go into free fall. It would probably result in bank runs, Great Depression II.

Regulation is good for you. It's good for America. It's good for our National Security. Remember that.

HATEFACE · Post by **HATEFACE** » Thu Sep 18, 2008 6:21 pm

Mulu wrote:Regulation is good for you. It's good for America. It's good for our National Security. Remember that.

Some regulation, Jack Sprat.

I think credit card companies are monopoly cartels and should be pwned. Fact is, they have low security and debt has soared in this country. The people don't need regulation. Its unforunate that no one mentions this shit and its been going on for years. What I want to know is if Obamessianic order of Socialism is aware of Joe "The bruiser" Biden's credit card company connects. Seein' as he's (obama) is all "opposed" to them and likes "regulation". Seems like Biden and Obama are at odds at a lot of things but credit cards (of course) MAY NOT be one of them

HATEFACE · Post by **HATEFACE** » Thu Sep 18, 2008 6:24 pm

http://www.timesonline.co.uk/tol/news/w ... 781027.ece

On a lighter note, cold war is back on.

Oh, and on the 17th - We got a Czech - US agreement on those anti-missle radar dealies. U.S. soldiers will be based thur. Don't take my word for it. It's from the AFP. That might of been something contributing to that.
ONE MORE THING. The deal will be signed this friday.

ONE MOAR THING!

Anon needs something better to do other than fapping to Palin's pregnant daughter over the internets.