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Forums - General - DOW falls 500 points today...Worst day since 9/11 attacks...

akuma587 on 16 September 2008
Impulsivity said:
The deregulation began in the 1980s soon after reagan took office (as he had run on a platform of deregulation among other things). The first change was Depository institutions deregulation and monetary control act which allowed banks mergers, removed some oversight and increased the ammount of bank investments the Federal government would insure from 40k to 100k raising moral hazard significantly. This was in 1980

The second change was in 1982 with the Depository Institutions act further deregulated both banks AND savings and loan institutions, it relaxed one borrower loan limits, added money market accounts as authorized forms of deposit (where instead of straight interest investor money is put into a semi risky portfolio tied to the stock market). It also encouraged heavy often speculative real estate lending at a time when the real estate market was collapsing. in 1983 49 banks failed in large parts due to risky investments encouraged by deregulation. This almost included Continental Illinois bank and trust which was the 8th biggest bank at the time, but the government was forced to bail them out to avoid a larger banking collapse.

How did the conservative hero help solve this problem in 1982? By cutting taxes? Quite the contrary, he RAISED taxes on corporations in 1982 to help raise the money the fed needed to deal with the recession. Yes Ronald Reagan, hero of the conservative movement, raised taxes because it was outrageously irresponsible not to given the huge ballooning deficit. George HW Bush did the same when it became necesary, only George W refused the course of action and continued outrageous deficit spending which has helped greatly in leading us to the point we are at today.

Of course every time the Republicans started again they went right back to more and more deregulation. The gas crisis has a lot to do with the so called "Enron loophole" created by Phil Graham in large part, McCains economic advisor, from when he was working on behalf of Enron. This deregulated large fund investment in comodities and that effect can best be seen when huge funds sold 40 billion worth of oil dropping the price from 140 to 100 where it continues to remain more or less. There was a 40 dollar a barrel price premium purely from the speculation deregulation had allowed to thrive.

Deregulation encourages risky investments and short term strategy. It creates better returns in good times, but in bad times the failures and economic meltdowns those good time returns net are just not worth it. Is a 10% increase in profit one year worth the bank failing a few years later as a result of the kinds of investments that brought that 10% increase? I certainly don't think so.

Deregulation let the irresponsible consumers you point to get loans they didn't fully understand. Lack of regulation let banks give 2% intro rates to let customers quality that went up 4 points a month later and 10 points a year later. Lack of regulation of lending practices and banks in general are the number one cause of the current problems, and those problems are what McCain helped create (he voted with the so called "Reagan revolution" republicans on many of the deregulation missteps from the 1980s through today in the house then the senate).

American History Pop Quiz, anyone know what caused the Great Depression? That's right! speculative mortgages and lack of stock market regulation! Almost all the regulations that the republicans have tried to deregulate were put in place after the depression to try and stop another one from happening. Smart move removing those safeguards, I was hoping we wouldn't go 100 years without another great depression, thanks Republicans.

Great job!  I am always happy when someone does their homework.

 



We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls.  The only thing that really worried me was the ether.  There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke

It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...."  Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson

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The_vagabond7 on 16 September 2008

tagging so I can read this later after work.



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ssj12 on 16 September 2008
akuma587 said:
Impulsivity said:
The deregulation began in the 1980s soon after reagan took office (as he had run on a platform of deregulation among other things). The first change was Depository institutions deregulation and monetary control act which allowed banks mergers, removed some oversight and increased the ammount of bank investments the Federal government would insure from 40k to 100k raising moral hazard significantly. This was in 1980

The second change was in 1982 with the Depository Institutions act further deregulated both banks AND savings and loan institutions, it relaxed one borrower loan limits, added money market accounts as authorized forms of deposit (where instead of straight interest investor money is put into a semi risky portfolio tied to the stock market). It also encouraged heavy often speculative real estate lending at a time when the real estate market was collapsing. in 1983 49 banks failed in large parts due to risky investments encouraged by deregulation. This almost included Continental Illinois bank and trust which was the 8th biggest bank at the time, but the government was forced to bail them out to avoid a larger banking collapse.

How did the conservative hero help solve this problem in 1982? By cutting taxes? Quite the contrary, he RAISED taxes on corporations in 1982 to help raise the money the fed needed to deal with the recession. Yes Ronald Reagan, hero of the conservative movement, raised taxes because it was outrageously irresponsible not to given the huge ballooning deficit. George HW Bush did the same when it became necesary, only George W refused the course of action and continued outrageous deficit spending which has helped greatly in leading us to the point we are at today.

Of course every time the Republicans started again they went right back to more and more deregulation. The gas crisis has a lot to do with the so called "Enron loophole" created by Phil Graham in large part, McCains economic advisor, from when he was working on behalf of Enron. This deregulated large fund investment in comodities and that effect can best be seen when huge funds sold 40 billion worth of oil dropping the price from 140 to 100 where it continues to remain more or less. There was a 40 dollar a barrel price premium purely from the speculation deregulation had allowed to thrive.

Deregulation encourages risky investments and short term strategy. It creates better returns in good times, but in bad times the failures and economic meltdowns those good time returns net are just not worth it. Is a 10% increase in profit one year worth the bank failing a few years later as a result of the kinds of investments that brought that 10% increase? I certainly don't think so.

Deregulation let the irresponsible consumers you point to get loans they didn't fully understand. Lack of regulation let banks give 2% intro rates to let customers quality that went up 4 points a month later and 10 points a year later. Lack of regulation of lending practices and banks in general are the number one cause of the current problems, and those problems are what McCain helped create (he voted with the so called "Reagan revolution" republicans on many of the deregulation missteps from the 1980s through today in the house then the senate).

American History Pop Quiz, anyone know what caused the Great Depression? That's right! speculative mortgages and lack of stock market regulation! Almost all the regulations that the republicans have tried to deregulate were put in place after the depression to try and stop another one from happening. Smart move removing those safeguards, I was hoping we wouldn't go 100 years without another great depression, thanks Republicans.

Great job!  I am always happy when someone does their homework.

 

Well if you look Reagon tried all forms of economic statagies that advisors across the USA suggested and they all failed. When Keynesian economics was suggested it was laughed at and turned away but afterwards was used by most Republicans. The problem is that most Republicans don't seem to know how to balance Keynesian style economics with other forms of economics. They also seem to like to defend corporations from taxs, ok mainly Bush.

In the next four years we need to raise taxes for corporations and focus on alternative power sources. Nuclear and Solar are the keys to the future of US power. If we can move that direction we can solve a lot of problems.

 



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Sansui on 16 September 2008

Interesting story below about a McCain advisor's direct involvement in this historic crash.  Important to note - the story is riddled with liberal leaning remarks, but the truth of the story remains very valid.  Also important to note, both democrats and republicans are culpable for the kinds of activities that started to occur in the late 90's and continued rampantly (or without halt, at least) during the Bush administration. 

This is one of the reasons that even though I would like to believe more in deregulation, I feel we cannot trust our corporate empire to really give a damn about what they're actually doing. 

http://www.bloggingstocks.com/2008/09/15/100-year-crash-mccain-advisor-spurred-62-trillion-derivatives/print/

100 Year Crash: McCain advisor spurred $62 trillion derivatives market that will swamp global markets

Posted Sep 15th 2008 9:09AM by Peter Cohan
Filed under: Federal Natl Mtge (FNM), Politics, Lehman Br Holdings (LEH)

Lurking in the background of this weekend's collapse of two of Wall Street's biggest names, is a $62 trillion segment of the $450 trillion market for derivatives that grew huge thanks to John McCain's chief economic advisor, Phil "Americans are Whiners" Gramm. That's because in December 2000, Gramm, while a U.S. Senator, snuck in a 262-page amendment to a government re-authorization bill that created what is now the $62 trillion market for credit default swaps (CDSs).

I realize it is painful to read about yet another Wall Street acronym, but this is important because it will help you understand why the global financial markets are collapsing. And it will give you information to consider when you vote in November. CDSs are like insurance policies for bondholders. In exchange for a premium, the bondholders get insurance in case the bondholder can't pay. As I posted, in the case of the $1.4 trillion worth of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) bonds, the government's nationalization last Sunday triggered the CDSs on those bonds. The people who received the CDS premiums are now obligated to deliver those bonds to the ones who paid the premiums.

Gramm's 262-page amendment, dubbed "The Commodity Futures Modernization Act," according to Texas Observer, freed financial institutions from oversight of their CDS transactions. "Prior to its passage, they say, banks underwrote mortgages and were responsible for the risks involved. Now, through the use of [CDSs]-which in theory insure the banks against bad debts-those risks are passed along to insurance companies and other investors," wrote Texas Observer.

How does this relate to Lehman's bankruptcy? "[CDSs] were a key factor in encouraging lenders to feel they could make loans without knowing the risks or whether the loan would be paid back. The Commodity Futures Modernization Act freed them of federal oversight," according to Texas Monthly. And it was due to these CDSs that Wall Street held an emergency session yesterday to try to minimize the damage of Lehman's CDSs and other derivatives. Unfortunately, this session did not produce much thanks to the built-in lack of knowledge of the risks in these transactions that Gramm's legislation ensured.

You are going to be reading more and more about CDSs over the months ahead -- it will become as familiar as the phrase subprime mortgage was in 2007. Unfortunately, there were "only" $1.3 trillion worth of subprime mortgages and the CDS market is 48 times bigger than that -- and more than four times bigger than U.S. GDP. And since nobody has ever had to deal with this volume of CDS unwindings, it is impossible to calculate how much they will cost.

One thing is clear. If you think America is a nation of whiners and this is a mental recession, I strongly urge you to vote for McCain. But if you take a look at how much you are paying at the gas pump, how much of your retirement will be wiped out in the months ahead, and how you will pay all those bills as the unemployment rate climbs higher, it might be worth considering whether you can afford to elect a man who relies on Phil Gramm for economic advice.
akuma587 on 16 September 2008
ssj12 said:

Well if you look Reagon tried all forms of economic statagies that advisors across the USA suggested and they all failed. When Keynesian economics was suggested it was laughed at and turned away but afterwards was used by most Republicans. The problem is that most Republicans don't seem to know how to balance Keynesian style economics with other forms of economics. They also seem to like to defend corporations from taxs, ok mainly Bush.

In the next four years we need to raise taxes for corporations and focus on alternative power sources. Nuclear and Solar are the keys to the future of US power. If we can move that direction we can solve a lot of problems.

 

Agree 100%.  Republicans for whatever reason have been very Keynesian recently.  If you cornered them on that though they would probably deny it.  The government is hemmoraghing money while a lot of corporations (not ones who bought into the housing market though) are doing moderately well even during the recession (which was partially caused by the government not collecting corporate taxes).

Nuclear and solar are definitely our best options to fix our energy needs.  Wind is feasible in some parts of the country too, as it can be done on land used for other things, such as ranching land.

 



We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls.  The only thing that really worried me was the ether.  There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke

It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...."  Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson

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rocketpig on 16 September 2008

Wind is bloody expensive to maintain but its use should be explored for certain areas of the country.

I definitely agree that a multi-pronged approach is badly needed. Solar in the southwest, tidal and other oceanic resources where available, geo-thermal in the midwest, and nuclear whereever possible.

Combine that with incentives for clean drilling in the US and this country could be sitting in pretty good shape in twenty years. Almost completley energy-independent. We have the resources and the space to exploit these energy sources better than any other country, possibly excepting Russia (abundance of resources) and Canada (large resources, lack of population).




Or check out my new webcomic: http://selfcentent.com/

akuma587 on 16 September 2008

Some farmers here just get a check every year to put wind turbines on their land, so I see it is a win-win if the owner of the turbine is making money.

The people who annoy me the most are those who complain that wind turbines are "ugly." I mean its fine if you wanna argue whether or not wind energy is that efficient and cost-effective, but "ugly"? What are you, a Democrat?



We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls.  The only thing that really worried me was the ether.  There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke

It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...."  Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson

Kasz216 on 16 September 2008
Impulsivity said:
The deregulation began in the 1980s soon after reagan took office (as he had run on a platform of deregulation among other things). The first change was Depository institutions deregulation and monetary control act which allowed banks mergers, removed some oversight and increased the ammount of bank investments the Federal government would insure from 40k to 100k raising moral hazard significantly. This was in 1980

The second change was in 1982 with the Depository Institutions act further deregulated both banks AND savings and loan institutions, it relaxed one borrower loan limits, added money market accounts as authorized forms of deposit (where instead of straight interest investor money is put into a semi risky portfolio tied to the stock market). It also encouraged heavy often speculative real estate lending at a time when the real estate market was collapsing. in 1983 49 banks failed in large parts due to risky investments encouraged by deregulation. This almost included Continental Illinois bank and trust which was the 8th biggest bank at the time, but the government was forced to bail them out to avoid a larger banking collapse.

How did the conservative hero help solve this problem in 1982? By cutting taxes? Quite the contrary, he RAISED taxes on corporations in 1982 to help raise the money the fed needed to deal with the recession. Yes Ronald Reagan, hero of the conservative movement, raised taxes because it was outrageously irresponsible not to given the huge ballooning deficit. George HW Bush did the same when it became necesary, only George W refused the course of action and continued outrageous deficit spending which has helped greatly in leading us to the point we are at today.

Of course every time the Republicans started again they went right back to more and more deregulation. The gas crisis has a lot to do with the so called "Enron loophole" created by Phil Graham in large part, McCains economic advisor, from when he was working on behalf of Enron. This deregulated large fund investment in comodities and that effect can best be seen when huge funds sold 40 billion worth of oil dropping the price from 140 to 100 where it continues to remain more or less. There was a 40 dollar a barrel price premium purely from the speculation deregulation had allowed to thrive.

Deregulation encourages risky investments and short term strategy. It creates better returns in good times, but in bad times the failures and economic meltdowns those good time returns net are just not worth it. Is a 10% increase in profit one year worth the bank failing a few years later as a result of the kinds of investments that brought that 10% increase? I certainly don't think so.

Deregulation let the irresponsible consumers you point to get loans they didn't fully understand. Lack of regulation let banks give 2% intro rates to let customers quality that went up 4 points a month later and 10 points a year later. Lack of regulation of lending practices and banks in general are the number one cause of the current problems, and those problems are what McCain helped create (he voted with the so called "Reagan revolution" republicans on many of the deregulation missteps from the 1980s through today in the house then the senate).

American History Pop Quiz, anyone know what caused the Great Depression? That's right! speculative mortgages and lack of stock market regulation! Almost all the regulations that the republicans have tried to deregulate were put in place after the depression to try and stop another one from happening. Smart move removing those safeguards, I was hoping we wouldn't go 100 years without another great depression, thanks Republicans.

Your ignoring that the biggest bank deregulations happened during the Clinton Administration in the mid 90's.

Also, i'd argue that people have the right to loans they don't understand.

Though they should also be smart enough not to take them.

I don't believe in the government protecting people from themselves.

Of course there were people that outright lied or misled people into these loans. (Not a majority but still some.)  Those people should be made to pay.

People should be given the best education they can, they be allowed to make all the stupid decisions they want to make.  The only time the government should step in is when the buisnesses at hand are being misleading.



Kasz216 on 16 September 2008
akuma587 said:
Some farmers here just get a check every year to put wind turbines on their land, so I see it is a win-win if the owner of the turbine is making money.

The people who annoy me the most are those who complain that wind turbines are "ugly." I mean its fine if you wanna argue whether or not wind energy is that efficient and cost-effective, but "ugly"? What are you, a Democrat?

I think Wind Turbines look cool personally.

Wasn't Kennedy the one who refused to allow wind turbines be built by his house because he thought they were ugly?

 



Kasz216 on 16 September 2008
akuma587 said:
ssj12 said:

Well if you look Reagon tried all forms of economic statagies that advisors across the USA suggested and they all failed. When Keynesian economics was suggested it was laughed at and turned away but afterwards was used by most Republicans. The problem is that most Republicans don't seem to know how to balance Keynesian style economics with other forms of economics. They also seem to like to defend corporations from taxs, ok mainly Bush.

In the next four years we need to raise taxes for corporations and focus on alternative power sources. Nuclear and Solar are the keys to the future of US power. If we can move that direction we can solve a lot of problems.

 

Agree 100%.  Republicans for whatever reason have been very Keynesian recently.  If you cornered them on that though they would probably deny it.  The government is hemmoraghing money while a lot of corporations (not ones who bought into the housing market though) are doing moderately well even during the recession (which was partially caused by the government not collecting corporate taxes).

Nuclear and solar are definitely our best options to fix our energy needs.  Wind is feasible in some parts of the country too, as it can be done on land used for other things, such as ranching land.

 

It's because of the Neocons.