You know these people who say: Let the marketplace decide! Don't interfere with capitalism...

[dem629]

I have news for these people.

Business activity involving the selling of worthless paper, and "earnings" based on anything other than ACTUAL goods or services exchanged for REAL money (not some phantom credit line), is NOT capitalism. It's a shell game, a scheme, a scam...anything but a "free market" or "marketplace."

Just had to get that off my chest. :)

[Cronus Protagonist]

1. Yeah! So why SHOULD we inject CASH into a SHELL GAME?

I'm curious as to why some people want us to pump hard cash into Ponzi schemes. Are you in favor of handing them barrels of cash, or are you OK with letting them fail? I ask because it wasn't clear in the OP.

[dem629]

2. I will admit to being a "flip-flopper" on this.

I was in favor of the bailout back in the fall.

It seemed that there was enough bipartisan support that it must have really been as bad as some were predicting. And I trusted people like Krugman and Obama.

No more.

We were ripped off and they all knew what they were doing from the start. None of the money that was meant to open up new lines of available credit has been used to do that, and we haven't collapsed, so what was the danger?

From this point forward, I'm against any and all bailouts and "rescue plans."

[kentuck]

And what happened to the "stress" tests?

Shouldn't we find out the true condition of these banks before we start shoveling money to them? It seems like we are putting the cart before the horse?

[dem629]

8. Good questions. We're being lied to and ripped off. I think it's that simple.

[Cronus Protagonist]

10. I see the OP said he's not into sending out the cart right now

So I wonder why you would say that. No one posted about NOT doing "stress tests" (a nice example of conceptual framing), and no one in this thread mentioned anything about putting the cart before the horse. Are you replying to a thought you had inside your own head?

[dem629]

12. I think kentuck is agreeing with us.

[Cronus Protagonist]

14. I'd like to think that, but his post was less than clear on that point.

And I've been around the block enough to know one cannot assume anything with people, unless one wants to live in an unreality - hence I thought I'd ask.

[dem629]

20. Maybe I was assuming too much. :)

I thought kentuck was referencing the promises that were made and broken on that topic.

[kentuck]

15. Why should "stress tests" be part of the discussion??

?? :shrug:

[dem629]

25. I don't think they should.

We have a "stress test" for banks.

That test is their very own system they've constructed that is falling down around them, allegedly. Let 'em fail.

[kentuck]

40. Good enough...

But that seemed like a minimum requirement to me - before they would hand out hundreds of billions of dollars?? But I tend to agree with your argument. Let the market handle it. Why should the government get involved? The market can be cruel. Sometimes you win - sometimes you lose.

[Cronus Protagonist]

26. Well, you brought them into it, so perhaps you can explain?

I was responding to your post. And while you're at it, if you wouldn't mind, would you explain your version of what that euphemism is intended to mean, because I have no idea what to think of it. I'm not taking a position one way or the other, since I have no idea what to make of that framing.

[kentuck]

41. I assumed the OP was talking about the present "marketplace"...

and AIG seems to be the primary concern about the marketplace at this time. I apologize if that is not part of the discussion. Just put me on ignore...

[Cronus Protagonist]

6. Welcome to the eyes-open crew!

We concur. I thought the whole thing smelled like Iraq's WMDs - lots of noise from the usual suspects, nothing supporting the mighty Wurlitzer underneath - politics unsupported by reality.

[dem629]

7. Well, better late than never, right?

[Cronus Protagonist]

11. Damn right! And it's nice to see it happen too!

I wish for all the more eye-opening. If we're going to save the country, we'll need it!

:)

[dem629]

18. Continuing with some more potential "better late than never" realizations....

This system we have, of investment firms and credit lines beyond real cash and stocks (gambling)...why does it HAVE to be set up that way?

Why do we HAVE to preserve THAT system?

*I'm not arguing against capitalism. I'm a capitalist. What I'm questioning is the schemes that have been built into a system that (to me, anyway) would seem to work fine if REAL money were exchanged for REAL goods and services, and with the proper public safety nets to protect people who truly can't make it on their own.

[Cronus Protagonist]

27. I don't believe it has to be set up that way

I think there are certain greedy, robber baron types in Wall Street who set these structures up for the sole purpose of funneling money into their own interests, everyone else, the system, the country, the world, be damned.

[dem629]

28. Agreed. The only thing I would add to that is that I am beginning

to believe that our leaders, every last one of them, are part of the scheme.

[kentuck]

29. Capitalism has to have some regulation.

We had none.

[dem629]

That's my point.

[Odin2005]

37. Yep. a healthy system of any sort must have rules or else it comes under control by gangsters.

This is basic stuff yet the Free Market Theologians never got it, or didn't want to get it.

[Odin2005]

19. I'm trusting Obama long enough to let Geithner do his stress tests.

I'm probably being naive, but that's just me.

[dem629]

21. And that's your right. But I'm off the team on this one.

[JDPriestly]

43. I would trust a lot more if Elliot Spitzer were doing the stress tests, not Geithner

who was at the Fed in New York states when the fraud was going on and did nothing to stop it. Geithner is part of the problem. How can he possibly be part of the solution?

[Odin2005]

44. Unfortunately Spitzer screwed himself by screwing an expensive hooker.

[JDPriestly]

42. It isn't the bailout as a principle. It's the corrupt way in which it has been done.

Bailout -- yes. But with transparency and with accountability. This bailout was supposed to be overseen by an independent body. Congress can't get information about what has really happened to the money.

You work for a nonprofit. You receive federal funds. You account for where you spent the money. I know. I used to manage and write grants.

These rich guys were given money, no questions asked. This also happened with the Halliburton contracts. Obama has stated there will be no more no-bid contracts or at least far fewer.

I am not angry that there were bail-outs. I am angry that the bail-out money was given to overseas banks, to greedy executives and not to improve the American economy.

[Deja Q]

3. Or why they demand government give them money while bashing anyone else who gets it.

Like the workers they won't pay decent wages to*.


* We'll presume, for sake of argument, they do a good job. Most people do by default. Some don't. Just like how the fat cats can do good work or otherwise too.

[dem629]

4. Yep. Good points.

[jody]

5. We should have let Microsoft monopolize the software industry & the world would be perfect. n/t

[dem629]

9. I guess some would say that....

[jody]

22. Microsoft was given a big boost when govt departments chose Microsoft products and that meant any

non-government agency wanting to send a file to a government agency had to make it Microsoft compatible and have the ability to accept government files in Microsoft format.

For example, word processing files had to be Microsoft Word or compatible so non-government agencies took the easy way out and adopted Microsoft Word.

[dem629]

23. I'm not sure we're disagreeing here.

I'm not against gov't intervention in certain cases.

What I am against now is gov't bailouts, the way we've been doing them for a while now. That's all I'm saying here.

[jody]

30. I oppose government bailouts unless I can examine the economic and business models that indicate

bailout dollars will produce an acceptable return on investment for We the Taxpayers.

So far, all I've heard is "trust us" from talking heads, babbling politicians, and pompous experts from both the pro and con side of the stimulus argument.

If capitalism with its focus on selecting investments that are economically feasible is so good, then apply that same process to investing money from We the Taxpayers.

[dem629]

31. We're in agreement here.

[Cronus Protagonist]

13. What? And become another Apple?

:teflon suit on:

[jody]

24. Apple, you know what happened to Forrest Gump when the Lt . invested money from the shrimp business

in the fruit business! :rofl:

[Odin2005]

16. Much of the financial industry has degenerated into gambling and market manipulation.

It's supposed to be about investing capital in legitimate enterprises that actually create real value. According to a stock market analyst and economic historian named Mike Alexander who posts on a history & current events message board I frequent low corporate taxes (below a rate of 30%) and high interest rates create conditions that lead to bubbles based on funny money and speculation while high corporate taxes and low interest rates encourage the rich to put their money back into the real economy.

[leftstreet]

17. Let them all sink

[truedelphi]

32. An explantion of the toxic asset program -IT WILL NOT HELP JOE OR

JOSIE AVERAGE CITIZEN --
Here is analysis of what the Toxic Asset Buy Out program will involve mroe than likely


Hoisted from comments:

Say I am SAC Capital.

I get to be one of the bidders on bank assets covered by the program Citi holds $100mm of face-value securities, carried at $80mm.

The market bid on these securities is $30mm. Say with perfect foresight the value of all cash flows is $50mm.

I bid Citi $75mm. I put up $2.25mm or 3%, Treasury funds the rest. (Edit: This means either fiat money is printed, which is inflationary, or that the taxpayer is billed. Each taxpayer now owes twenty five thousand bucks as part of his responsibility to the various Bailouts and toxic Asset Buyouts)

I then buy $10mm in CDS directly from Citi, or another participant (BOA, GS, etc)] on the bonds for a premium of $1mm.

In the fullness of time, we get the final outcome, the bonds are worth $50mm

SAC loses $2.25mm of principal, but gets $9mm net in CDS proceeds, so recovers $6.75mm on a $2.25mm investment. Profit is $4.5mm

Citi writes down $5mm from the initial sale of the securities, and a $9mm CDS loss. Total loss, $14mm (against a potential $30mm loss without the program)

U.S. Treasury loses $22.75mm

Great program. Note that the average person will not be able to purchase any of these money making pieces of paper. We are too stressed over where we will get our next rent payment, mortgage payment, how we will find money for Junior to go to college, and where our next meal is coming. And the average that you would need to go into this program is over a million bucks.

But it is the average person who is paying for the government to offer the money to the people buying up the Toxic Assset.

[Tierra_y_Libertad]

33. Most of capitalism, and the "free market", is based on the P.T. Barnum theory of economic success.

"There's a sucker born every minute." P.T. Barnum

[dem629]

34. I get your point, and agree, but P.T. Barnum didn't say that. :)

There's some interesting stuff about that quote all over The Google.

[Tierra_y_Libertad]

35. Oh, well.

[dem629]

36. It's just an interesting story/piece of trivia. I didn't mean to sound like I was criticizing you.

[Tierra_y_Libertad]

39. No offense taken. I appreciate the response.

"It is better to appear stupid for a minute and be corrected, than to remain stupid for a lifetime uncorrected." A Chinese saying (I think).

[dem629]

47. LOL

[TWiley]

38. They sure have had their hands out lately now havent they.

billions and billions of dollars. Probably ten dollars for every star in the sky just to bail out all the free-market capitalists.

[Gin]

45. they sold worthless paper..... that we are buying...something is wrong with that

picture...(IMO)

[dem629]

46. That about sums it up!