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[Keukasmallies]

One of the underpinnings of our current economic crisis was banks loaning money to mortgage-seekers who were not truly qualified to assume the level of debt they sought. Nevertheless, lenders made the loans, predictably borrowers defaulted, and eventually the house of cards collapsed. The government rode to the rescue with TARP, bailouts, handouts, etc. Critical examinations determined the loans were a bad thing to begin with (Duh).

 

So, having lived through that crisis and identified some of the causes, our government has identified a group of poor-risk loan seekers (read Italy, Greece, etc.) and has swooped to the rescue by making suspect loans/loan guarantees. At least we will recognize the early signs of collapse, having just been through it on a national level.

 

Ordinarily, when one says, "learn from history," one means that the events should not be repeated. In our case we appear to have simply extrapolated the lesson to the international stage where we will well and truly get our fiscal tit caught in a major wringer as some point in the near future.

[Gary M]

One of the underpinnings of our current economic crisis was banks loaning money to mortgage-seekers who were not truly qualified to assume the level of debt they sought. Nevertheless, lenders made the loans, predictably borrowers defaulted, and eventually the house of cards collapsed. The government rode to the rescue with TARP, bailouts, handouts, etc. Critical examinations determined the loans were a bad thing to begin with (Duh).

 

So, having lived through that crisis and identified some of the causes, our government has identified a group of poor-risk loan seekers (read Italy, Greece, etc.) and has swooped to the rescue by making suspect loans/loan guarantees. At least we will recognize the early signs of collapse, having just been through it on a national level.

 

Ordinarily, when one says, "learn from history," one means that the events should not be repeated. In our case we appear to have simply extrapolated the lesson to the international stage where we will well and truly get our fiscal tit caught in a major wringer as some point in the near future.

 

Liberals do not believe that history applies to them.

[B-Large]

One of the underpinnings of our current economic crisis was banks loaning money to mortgage-seekers who were not truly qualified to assume the level of debt they sought. Nevertheless, lenders made the loans, predictably borrowers defaulted, and eventually the house of cards collapsed. The government rode to the rescue with TARP, bailouts, handouts, etc. Critical examinations determined the loans were a bad thing to begin with (Duh).

 

So, having lived through that crisis and identified some of the causes, our government has identified a group of poor-risk loan seekers (read Italy, Greece, etc.) and has swooped to the rescue by making suspect loans/loan guarantees. At least we will recognize the early signs of collapse, having just been through it on a national level.

 

Ordinarily, when one says, "learn from history," one means that the events should not be repeated. In our case we appear to have simply extrapolated the lesson to the international stage where we will well and truly get our fiscal tit caught in a major wringer as some point in the near future.

 

If Europe fails, we will be back in another recession- look at what rumbling in Greece and Italy have done to our stock market and economic recovery.

 

I think bailouts should be funded like Wars used to be, by selling bonds to American Taxpayers. This "let's do what we want anyway" and not having the taxpayers pay for it, those days are coming to a close. We still have not paid for our Wars, the Medicare D plan, the Stimulus, and a myriad of other things.... how long, as a country can we cut taxes, spend way more than we take it, and be ok with that?

 

Put the Bailout Bonds on Sale, we will see how motivated Americans are to fund the effort... then the public can live by their choices.... sounds good to me.

[Chef Jim]

If Europe fails, we will be back in another recession- look at what rumbling in Greece and Italy have done to our stock market and economic recovery.

 

I think bailouts should be funded like Wars used to be, by selling bonds to American Taxpayers. This "let's do what we want anyway" and not having the taxpayers pay for it, those days are coming to a close. We still have not paid for our Wars, the Medicare D plan, the Stimulus, and a myriad of other things.... how long, as a country can we cut taxes, spend way more than we take it, and be ok with that?

 

Put the Bailout Bonds on Sale, we will see how motivated Americans are to fund the effort... then the public can live by their choices.... sounds good to me.

 

Good time to be 50 and childless.

[B-Large]

Good time to be 50 and childless.

 

good to be 35, no kids, and not making the same mistakes other continue to make.

 

 

Don't worry- we'll finance our way out of this one too....

[Chef Jim]

 

Don't worry- we'll finance our way out of this one too....

 

Yes, reason to be thankful for no kids.

[OCinBuffalo]

If Europe fails, we will be back in another recession- look at what rumbling in Greece and Italy have done to our stock market and economic recovery.

 

I think bailouts should be funded like Wars used to be, by selling bonds to American Taxpayers. This "let's do what we want anyway" and not having the taxpayers pay for it, those days are coming to a close. We still have not paid for our Wars, the Medicare D plan, the Stimulus, and a myriad of other things.... how long, as a country can we cut taxes, spend way more than we take it, and be ok with that?

 

Put the Bailout Bonds on Sale, we will see how motivated Americans are to fund the effort... then the public can live by their choices.... sounds good to me.

This is an awesome idea.

 

The only thing I would add: allow the bondholders to convert their bonds to shares when they are due. How many depends on the valuation of the company at the time the bond is due.

 

This way, the auto worker/investment banker can choose to bail himself out, instead of making us do it. And, if they truly believe, or others truly believe that a completely corrupted company like GM is able to be turned around then it's on them. And, why should only the union be able to benefit from owning the company? Let the working man benefit directly. The unions would have nowhere to go = how could they argue against this? And, why shouldn't a bunch of investment bankers pay to bail themselves out? It's not like they don't have the money.

 

If nobody believes in the business model, then the company goes bankrupt, as it should. We already have the mechanisms in place for this, we would only need the government to oversee the paperwork, and then get out of the way.

 

Let a bunch of average joe bond holders elect the board of GM.

 

You should PM this to Juror#8: Lord knows he needs the help.

[B-Large]

This is an awesome idea.

 

The only thing I would add: allow the bondholders to convert their bonds to shares when they are due. How many depends on the valuation of the company at the time the bond is due.

 

This way, the auto worker/investment banker can choose to bail himself out, instead of making us do it. And, if they truly believe, or others truly believe that a completely corrupted company like GM is able to be turned around then it's on them. And, why should only the union be able to benefit from owning the company? Let the working man benefit directly. The unions would have nowhere to go = how could they argue against this? And, why shouldn't a bunch of investment bankers pay to bail themselves out? It's not like they don't have the money.

 

If nobody believes in the business model, then the company goes bankrupt, as it should. We already have the mechanisms in place for this, we would only need the government to oversee the paperwork, and then get out of the way.

 

Let a bunch of average joe bond holders elect the board of GM.

 

You should PM this to Juror#8: Lord knows he needs the help.

 

It brings back the "Will" of the People, and strips government of the we WILL do what we want regardless of taxpayer sentiment....

 

What is Juror#8's story?

[OCinBuffalo]

It brings back the "Will" of the People, and strips government of the we WILL do what we want regardless of taxpayer sentiment....

 

What is Juror#8's story?

 

He's struggling in his job, and blaming his lack of ideas and leadership on us, the American people.

 

Here's an idea that the stupid American people came up with, and he can snag it and claim it, for free.

[DC Tom]

Here's an idea that the stupid American people came up with,

 

 

And it shows. By definition, if a company needs a bailout, they have no other sources of funding. You're not going to get anyone to subscribe to a corporate bond float in those conditions. You might get them to subscribe to a government bond issue to bail out the company - either a government-insured corporate bond (akin to what Fannie and Freddie due with mortgage bonds) or a government bond earmarked specifically for the bailout (which I'm pretty sure is impossible). Either way, you're still spending tax money bailing out a corporation. This idea just makes it that much less transparent.

 

 

I have a better idea: let failing companies declare bankruptcy. Like they're supposed to.

[OCinBuffalo]

And it shows. By definition, if a company needs a bailout, they have no other sources of funding. You're not going to get anyone to subscribe to a corporate bond float in those conditions. You might get them to subscribe to a government bond issue to bail out the company - either a government-insured corporate bond (akin to what Fannie and Freddie due with mortgage bonds) or a government bond earmarked specifically for the bailout (which I'm pretty sure is impossible). Either way, you're still spending tax money bailing out a corporation. This idea just makes it that much less transparent.

 

 

I have a better idea: let failing companies declare bankruptcy. Like they're supposed to.

No. That is not a better idea. That is not even a viable idea. There were plenty of sources of funding that were available to Lehman Bothers, that they turned down.

 

The only reason they didn't take them, was that they were operating on the assumption that the Feds would never let them fail. Bankruptcy was never on the table, and never should have been on the table. Bankruptcy is what they ended up doing, and it f'ed up the entire system = TARP. So, no, everywhere but in Tomland, bankruptcy is not a better idea.

 

We need to disabuse them of the assumption that the Feds will save them, and we can NOT just let them file. So what's left? Until we break up these big banks, who were made big by the Feds in the first place, this is better, because this is the ONLY viable solution.

[ieatcrayonz]

One of the underpinnings of our current economic crisis was banks loaning money to mortgage-seekers who were not truly qualified to assume the level of debt they sought. Nevertheless, lenders made the loans, predictably borrowers defaulted, and eventually the house of cards collapsed. The government rode to the rescue with TARP, bailouts, handouts, etc. Critical examinations determined the loans were a bad thing to begin with (Duh).

 

So, having lived through that crisis and identified some of the causes, our government has identified a group of poor-risk loan seekers (read Italy, Greece, etc.) and has swooped to the rescue by making suspect loans/loan guarantees. At least we will recognize the early signs of collapse, having just been through it on a national level.

 

Ordinarily, when one says, "learn from history," one means that the events should not be repeated. In our case we appear to have simply extrapolated the lesson to the international stage where we will well and truly get our fiscal tit caught in a major wringer as some point in the near future.

Did you forget to supply a link? I don't see a picture. Are you talking about your avatar? I don't even see that.

 

No. That is not a better idea. That is not even a viable idea. There were plenty of sources of funding that were available to Lehman Bothers, that they turned down.

 

The only reason they didn't take them, was that they were operating on the assumption that the Feds would never let them fail. Bankruptcy was never on the table, and never should have been on the table. Bankruptcy is what they ended up doing, and it f'ed up the entire system = TARP. So, no, everywhere but in Tomland, bankruptcy is not a better idea.

 

We need to disabuse them of the assumption that the Feds will save them, and we can NOT just let them file. So what's left? Until we break up these big banks, who were made big by the Feds in the first place, this is better, because this is the ONLY viable solution.

So we can't allow them to go bankrupt under any circumstances but the next step is to convince them they won't get bailed out even though they won't be allowed to go bankrupt?

Edited December 1, 2011 by ieatcrayonz

[3rdnlng]

Did you forget to supply a link? I don't see a picture. Are you talking about your avatar? I don't even see that.

 

 

So we can't allow them to go bankrupt under any circumstances but the next step is to convince them they won't get bailed out even though they won't be allowed to go bankrupt?

 

 

Now you get the picture.

[ieatcrayonz]

Now you get the picture.

Actually I don't. Either in the literal sense with the OP or the perturbiale sense with OC.

[3rdnlng]

Actually I don't. Either in the literal sense with the OP or the perturbiale sense with OC.

 

Well, actually after restating OC's thesis and condensing it into a simple understandable statement of decalculization and affirmatogory I thought you clearly saw the picture. Regardless, the OP's avatar is not only clever but cuts to the bare essentials. Who would have thunk of an avatar with an emperor with no clothes?

[GG]

No. That is not a better idea. That is not even a viable idea. There were plenty of sources of funding that were available to Lehman Bothers, that they turned down.

 

The only reason they didn't take them, was that they were operating on the assumption that the Feds would never let them fail. Bankruptcy was never on the table, and never should have been on the table. Bankruptcy is what they ended up doing, and it f'ed up the entire system = TARP. So, no, everywhere but in Tomland, bankruptcy is not a better idea.

 

We need to disabuse them of the assumption that the Feds will save them, and we can NOT just let them file. So what's left? Until we break up these big banks, who were made big by the Feds in the first place, this is better, because this is the ONLY viable solution.

 

Big banks did not get big because of the Fed, especially since the Fed didn't regulate all of the big banks, and Lehman & Bear Stearns weren't banks in the first place, and neither was AIG. And no, Lehman did not have all funding options available to it, as Fed opened up its discount window to investment banks only AFTER Lehman had filed. Granted that Lehman was still rolling the dice on repo funding during the summer before its filing, but the firm was miffed that Fed didn't let it use the discount window sooner. Also, little is talked about Bank of England not allowing Barclays to buy Lehman prior to bankrputcy filing. A lot of things happened that in retrospect should have been done differently.

[OCinBuffalo]

So we can't allow them to go bankrupt under any circumstances but the next step is to convince them they won't get bailed out even though they won't be allowed to go bankrupt?

We did let them go bankrupt, and look at the response: we got TARP and larger/merged banks.

 

We need to take bailouts off the table, period. They have to know this. Not only will it precipitate better short-term thinking, as in Lehman taking the private offers from Warren Buffet, etc., and not holding out for the government, it will also mean better long-term thinking, as in not expecting to operate with impunity, because the Feds will always be there to bail you out.

 

 

[OCinBuffalo]

Big banks did not get big because of the Fed, especially since the Fed didn't regulate all of the big banks, and Lehman & Bear Stearns weren't banks in the first place, and neither was AIG. And no, Lehman did not have all funding options available to it, as Fed opened up its discount window to investment banks only AFTER Lehman had filed. Granted that Lehman was still rolling the dice on repo funding during the summer before its filing, but the firm was miffed that Fed didn't let it use the discount window sooner. Also, little is talked about Bank of England not allowing Barclays to buy Lehman prior to bankrputcy filing. A lot of things happened that in retrospect should have been done differently.

I said "Feds" not Fed, so I apologize for the confusion.

 

There were private offers, at least 2 that we know about, that Lehman could have taken PRIOR to all of this. Instead, they tried to play idiot coy, because they thought they had the government as an out. Dumb. And worse, ego-driven dumb. Lehman had choices that were decent, if we look at this from purely a spreadsheet POV. But, we had the typical Wall Street "superiority" complex take it's inevitable toll, didn't we?

 

I am not sure what could have been done to stop AIG from doing what it did, as that looks bad on anybody's spreadsheet. Short of some excel plugin that comprehends underwriting the failure of 80% of the mortgages in the world as the patent stupidity that it is, deletes your work, and calls some over-the-hill pro wrestler to come shove a pineapple up your ass....how can we stop insurance companies from taking as much risk as they want....without some kind of regulation?

 

What did you expect from the Brits? They are over-regulated, and we could easily argue that stopping Barclays directly contributed to the problems in Europe now: so they "intelligently" screwed us, and in turn, screwed themselves. The fact is that we have elderly people, who refuse to see the world as it really is, in charge. There's experience, which is great, and then there's pining for the way things used to be, so that you can still understand them, and don't have to put any work into understanding the way things are now, which is awful, and means it's time for the golf course.

 

The problem is we can't continue to look at regulation, in Wall Street, or health care, or the environment, as opposite ends of a volume knob.

 

We need smarter people, with smarter ideas, and above all, we need to end the one-size-fits all mentality. Break up the banks? Hell, break up the regulations and the regulators. SMALL teams of people who focus on singular issues are much more likely to find the problems, and solve them, than a large group of people who are everything to every problem with the word "financial" attached.

[Alaska Darin]

It's too bad the old board isn't around anymore. I'd love to see the old threads on what a bad idea a common currency was going to be for Europe. Just to read Olivier's responses to the contrary...

[BillsFanM.D.]

Good time to be 50 and childless.

 

 

good to be 35, no kids, and not making the same mistakes other continue to make.

 

 

Don't worry- we'll finance our way out of this one too....

 

Good time to be 40 w four kids....and know that my wife and I have financed our own educations; worked our a@@es off; and will take care of our own retirement. The rest is just daydreaming. This country needs to get to work.