Are we in the middle of a financial meltdown?

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Population of Sweden is 9 million peeps. Its a frigging village compared to what is happening here. Cannot see for a minute whatever they did could possible relate to this fuck-up.

 

This crisis is bringing into question the whole concept of "money". By definition cash is just a "promise to pay" and once people lose confidence in a product its fecked.

 

This issue has now gone beyond the original problem of the sub-prime debt. It has destroyed confidence in the banking system - period.

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Actually most of the no voters were in close reelection races and voted the way they did because they had to bend to the will of their angry constituancies. So a bad move, yes - but I think it was in line with the desires of their constitutancies - it just happens the average voter is an idiot.

Hmmm most anti-US comment I've read on here in quite a while - one which I disagree with as well - the arseholes at the top just didnt take the time to present the plan properly to the people - that indeed they would take their pound of flesh from the institutions once they had been saved and secondly that it was in on-one's interest to see those same institutions fail.

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The US ends up dragging down everyone else? Many 'European' banks would get more than just their fingers burned if the US crumbled.

Maybe time to invest in Asian bank stock - I note, for example, that Standard Chartered's up 5% today.

That would be true if EU governments took the same attitude as Congress and washed their hands of supporting the banking sector. The point I was trying to make is that if EU governments protect and nationalise their banking sector making it immune to the current maket plunges and taking austere measures to purge it of bad debt in the same way that Japan did back in their last big downturn, they could be in better shape once current difficulties pass. Whereas the US with an unspported and c ollapsed banking sector would be in a mess. I am not predicting that that is what will happen. But if Congress fails to agree again the stakes are really that high.

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I have a hard time believing anyone would cite the experience of Japan in the 1990s as a positive model (if that is what you meant).

 

parnell, IMHO, the LP comments you responded to were largely accurate.

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Japan was in a mess in the 1990s and the banking sector had to go through a long period of austerity measures supported by their government. Notwithstanding exposure to US banking, the Japanese banking sector is in immeasably better shape than it was then.

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parnell, IMHO, the LP comments you responded to were largely accurate.

As you (should) know I have a lot of time for the average American , which doesn't mean that I'm blind to the excesses of it's and other economies. Are you saying that you consider the average US voter stupid?

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Hmmm most anti-US comment I've read on here in quite a while - one which I disagree with as well - the arseholes at the top just didnt take the time to present the plan properly to the people - that indeed they would take their pound of flesh from the institutions once they had been saved and secondly that it was in on-one's interest to see those same institutions fail.

What was anti-US about it (calling the average voter an idiot is not a symptom of being anti-American, I think the average voter of any society is an idiot)?

 

Sure, maybe the plan isn't marketed well - but the average citizen has little grasp on economics (a subject people with advanced degrees in economics can't come to a consensus about). What the average citizen hears is a 700 billion dollar price tag and then they see the CEOs geting 20 million dollar parachutes - they get pissed about this.

 

It isn't a failure of partisanship, its a failure of electoral greed. This plan may have been in the best interest of the country but with elections so close the people in close races (on both party sides) were too concerned about their careers to risk pissing off their base, even if it was for the good of this country.

 

Had this crisis happened in a non election year this thing passes by a significant margin.

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As you (should) know I have a lot of time for the average American , which doesn't mean that I'm blind to the excesses of it's and other economies. Are you saying that you consider the average US voter stupid?

On many issues in the economic realm, yes.

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That would be true if EU governments took the same attitude as Congress and washed their hands of supporting the banking sector. The point I was trying to make is that if EU governments protect and nationalise their banking sector making it immune to the current maket plunges and taking austere measures to purge it of bad debt in the same way that Japan did back in their last big downturn, they could be in better shape once current difficulties pass. Whereas the US with an unspported and c ollapsed banking sector would be in a mess. I am not predicting that that is what will happen. But if Congress fails to agree again the stakes are really that high.

Sorry, the point I was trying to make is that individual European government guarantees, when examined in the context of European bank's exposure to US/Central/Latin America, may not be worth the paper they are written on. I guess the most we could hope for is an EU/ECB guarantee.

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What was anti-US about it (calling the average voter an idiot is not a symptom of being anti-American, I think the average voter of any society is an idiot)?

 

Sure, maybe the plan isn't marketed well - but the average citizen has little grasp on economics (a subject people with advanced degrees in economics can't come to a consensus about). What the average citizen hears is a 700 billion dollar price tag and then they see the CEOs geting 20 million dollar parachutes - they get pissed about this.

 

It isn't a failure of partisanship, its a failure of electoral greed. This plan may have been in the best interest of the country but with elections so close the people in close races (on both party sides) were too concerned about their careers to risk pissing off their base, even if it was for the good of this country.

 

Had this crisis happened in a non election year this thing passes by a significant margin.

Ok ok , I disagree with your stance - I think voters in general are smarter than non voters and being an idiot to be a person of less than average intelligence , therefore voters , on average , cannot be idiots.

 

It is the job of the leaders to look after their country first and show guts , if they can't do that , they should be punished. End of.

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Sadly - that is not reality, many will likely be rewarded by reelection for 'standing up against the big bad corporate welfare bailout' at the behest of their oh-so-enlightened electorate.

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Last week Republican apointee Hank Paulson literally got down on one knee to beg Nancy Peolsi to force her fellow democratic congressmen to adopt a GWB/Republican bailout proposal that they weren't wild about because it would give one Republican apointee a blank check almost as big as the whole Iraq war with no guarantee of success. Plus, since Paulson is the ex-CEO of Goldman Sachs (who got to sell his $500 million of GS stock near the top and not have to pay a dime in capital gains because he was a "forced seller" upon his appointment; conflict of interest and all that), there's the unavoidable "fox guarding the henhouse" perception to deal with. The djgrazy-style conspiracy theory is that GWB and Paulson strongarmed Pelosi by saying "if you don't support this, be prepared to watch all of your constituents' 401ks and IRAs go down in flames into the election," but Paulson was probably persuasive enough just by truthfully describing how badly things have metastasized into the "Main Street" economy. I find it amazing that the democrats couldn't squeeze an additional 12 votes out if they felt so strongly about it, but Peosi and Barney Frank clearly convinced many more to ignore their constituents and vote for something that most were only days before decrying as a "bailout for fatcats". Truly extraordinary!

 

So, the democrats turned positive on a republican-sponsored plan and then Pelosi steps up to the podium and overplays her hand: "Republicans ... party of self-reliance my butt!", and at that very moment the entire republican side of the House looked at constituent opinion running 100:1 against any sort of bailout and decided to defy their democratic colleagues, Paulson and GWB. The only people they didn't defy were the majority of their constituents ... which is exactly what representatives in repersentative democracies are supposed to do. I find it very ironic that the very people baying for the public hangings of Wall Street firms have just used JPMorgan and Citigroup to act as white knights for Washington Mutual and Wachiovia, which otherwise would likely have failed. But the real wonder here republicans went from being "in bed with Wall Street fatcats" to "friend of the common man" literally overnight... by defying a republican plan! Truly extraordinary!

 

That all said, Europe is likely in even deeper trouble because there is a singular lack of transparancy and no pot of money (or transnational regulatory authority at the ECB's disposal ... which is why we're seeing all these piecemeal nationalizations (Fortis, Hypo Real Estate, etc.). That schadenfreude session lasted about half a day last Friday :( Watch the euro.

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This is the ECB having member banks pitch in the dough ... completely different from what Treasury has proposed to do by pulling $700 billion out of a hat.

 

The EU does, however, have the option to crank up the printing presses. Check out the Weimar Republic thread to see how that one ends :(

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The only people they didn't defy were the majority of their constituents ... which is exactly what representatives in repersentative democracies are supposed to do.

False. A representative is a rep. democracy is not charged with being a proxy who is obliged to follow every whim of his constituency. His job is to act in the best interest of the constitutency, a choice which (due to information not necessarily available to his electorate) might not currently be the direct rule. If we wanted direct proxy voting we would have a direct democracy.

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Should have used some sarcasm tags there. I agree. However, just witness how strongly people selectively feel they live in a "direct democracy" when politicians start unpopular wars or "steal" elections ;)

 

This is the very thing that has made the EU referenda so contentious as well.

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the entire republican side of the House looked at constituent opinion running 100:1 against any sort of bailout and decided to defy their democratic colleagues, Paulson and GWB. The only people they didn't defy were the majority of their constituents ...

I think it's more likely that they believed the bill would pass, and decided to grab some popularity by opposing it. I'm sure they were as shocked as everyone to see it fail, and they now fielding a lot of angry phone calls from major campaign contributors who are watching their shares slide into the toilet.

 

I dare say they'll find a (another) compromise. That's really what democracy is for.

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I just read a good Slate article on this topic written by someone who doesn't have to furtively write over one's lunch hour as I do.

 

 

In general, I've found a lot of the analogies between the present situation and the Great Depression to be way off. But there's one area in which the analogy might hold true. Just as happened in 1932, it's possible that the Republicans' incompetence and bullheadedness in managing a financial crisis could lead to Democrats controlling both the White House and Congress.

Word.

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