Question; What is the root cause of our financial dilemma?
 

Before you go half cocked
Take a moment and think before you answer.

Never mind politics and the election.
Never mind the candidates.
Never mind our personal biases.
What's the ROOT cause?

The love of money.

ummm.

I am going to guess the entire system of money as it represents a means to barter with others, without having any real value or use other than the value we assume it to be?

Or something?

People using money that they don't have..and signing on for things that they can't afford in the long run...I.e. credit, and/or mortgage..

And what exactly would prompt a person to do these things???

Greed, and corporate profits

Barak Obama

Kevin Federline

Perfect;

You ask a question and specify

Never mind politics and the election.
Never mind the candidates.
Never mind our personal biases.
What's the ROOT cause?

And what do you get? :(

I would say a complete lack of financial education on the part of the American people. As well as a gotta have it now mentality. What ever happened to saving money for things we wanted?

Well I was going to say Kevin Federline as well, but that's already taken so...

I think it's the habit of Americans (citizens all the way up to corporations and governments) using non-real "assets" like credit, equity, etc. to leverage their acquisition of higher value assets only thinking of the potential gain and equity growth (and subsequent increased consumption) without any regard for the potential risk or ramifications of their actions. It ties right back into an intrinsic sense of entitlement that nearly every American has without any sort of regard for the oversize "footprint" they have on the planet economically, environmentally, socially, etc. Unfortunately, this insatiable behavior over the last few decades was totally unsustainable, but until now, creative minds have found ways to delay the repurcussions by leveraging our relative economic and military strength. Lack of education, realism, integrity, leadership, personal and social responsibility, planning, foresight, foreign relations, etc. have only exacerbated the problems we face.

I'll cut and paste what I wrote in another post:


The underlying problem with our economy is that too large a percentage of the wealth is controlled by too small a percentage of the population. As a healthy economy relies on consumer spending, it is important to keep money in the hands of the masses so that they can buy and buy more. So what do you do when the masses no longer have any money due to a steady declining of wages over the past 30 years? :dunno:

Simple.....you let them borrow the money. You issue them credit cards, and more credit cards. And car loans to buy vehicles....and mortgages to buy homes....

And when the masses max out their credit cards? You issue them new ones with higher limits.

And when they can no longer afford the payment on a 3 year car loan? You start issuing 6 year car loans.

And when they can no longer afford the mortgage payment on a 30 year mortgage? You start issuing 40 and 50 year mortgages, and adjustable rate mortgages.

But eventually, you have to cut off the credit somewhere. And when you do, everything comes crumbling down. And that is where we are now.

ding ding ding ding winna winna

Some pretty cognet comments in this thread...
greed, (a catch-all term, but not far off), and esp.
the "gotta have it now" 'tude, of which all of us are
guilty to some degree.

Somewhere back aways, probably pre-bubble/late '90s,
us Boomers and the gen right behind us got caught up
in The Chase. A few of us were lucky/smart/more practical
and were able to avoid the debt encumberances then.

Post Bubble, into the new Wave, and it really just repeated
itself but in a different vein: housing, more credit to buy all
those things we missed the first go around, and the sense
that the boom was never gonna end. They always do, however.

From JoeSixPack to the Masters of the Universe, many were
caught up in this new Wave again. Add in the completely intertwined
labyrinth of mutual masturbation by Wall St, Fed, Politicos and
self-interest groups and the circle jerk, while momentarily satisfying,
will have to come to an end.

But, "they" won't/don't want to ever give up that control and chase of
the paper money power base...so, the next new deal and fix are formulated.

Things are really different, imo, this time. This chug along econ is not going
to be self-sustaining for long and I don't think we will be firing up Cohibas
and Macanudos this time next year, reminiscing about that "scare" of '08
and chortling up our cufflinked sleeves.

On the one hand I am pretty certain we will trundle "through" without
an utter depression; OTOH, I suspect things aren't going to revert to
2004 anytime soon. Some seriousazz fundamentals and soul searching
have changed the landscape.

As much as I read about the situ, I really can offer no fix or dramatic
advice. Those of us lucky enough to be debt free are not really above
it all, nor are there any rewards for our luck/better budgeting. I would
not want to be the ~65% or ~80% of the "avg households" in the US,
however. I do not know how they make ends meet, part of which is
an effect of the aforementioned Material World Fog most of us have
been consumed by.

At the risk of sounding like I'm going to sack cloth and ashes, I ain't;
but, all these "things", and the next layer of "better things" and the
lack of awareness or delusion on the part of many of us that pursue
these "things", at all levels, has come home to roost, imo.

Sadly, imo, the "gov't" will try to make it better or get us over it,
or out of it, but they cannot and will not. It is going to be what
it is. Pay a lot now and pay a lot more, later. We will collectively
pull in our amoeba tentacles for awhile, but the landscape will remain
supported by Street Dream derivatives, 3 Card Monte, houses of cards
and a system that couldn't fix lunch let alone the state we are all in.

I am not a defeatist and I hope we all get through it, as I suspect we
will. The reality is, however, that we tend to become "used" to the deteriorating
situ, and policies and costs, over time. The reality is there is no real changing the
system any more than learning to fly. We wrap it up in flags, sound bites and feel
good stuff and become slightly more comfortably numb to the eroding conditions.

We are the gov't, but the Gov't is no longer us.

When you take cops of the street because everyone has the right to live free and do whatever they want- I wonder what will happen?

pRon

Interesting comment here. Some would compare our current economic situation (failing banks, huge national debt, inflation) to that of the 1920s Weimar Republic. We all know how that one turned out.

The problem with falling into a deep recession (or even depression) is that people are suckers for that word "change". And of course we are seeing that in our current election cycle. It's clear that we need change, but are the changes being proposed going to make things better?

I find it interesting that no one is really talking about the root cause of this financial problem we have. The flat out morally repugnant behaviour
demonstrated by those who decided to throw caution and their fellow man to the wind.

It is quite evident that If we cared about people more than we cared about money, we would not be having this problem or this discussion on this level today.

A lot of people have built their personal financial foundation on deceit and lies. They lied about their income and bought a home that they couldn't afford. … They spent money like it was going out of style and the banks we’re just as greedy encouraging loan officers to write loans they knew people couldn’t afford.

The lack of regulations meant that corporations were no longer in check which means they we’re free to do what people do. Rip off other people. In turn they then sold what they knew were bad loans to other corporations to make a profit. Other low life corporations continued this dishonest practice by buying packaged loans they knew were no good until it finally caught up with them and everyone working for the financial system contributed to the ruse.

The answer to all of this may well be what no one is willing to do. Return the entire system to a system of integrity and honesty.

If people had any integrity they wouldn’t try to cheat and lie just to get ahead only to find themselves living a lie that in the end will bring nothing but financial and personal destruction to not only themselves but others as well.

But I doubt that anyone would ever suggest the do it right option because the concept of honesty and moral integrity is a concept that is foreign to people in general. No longer is a good character and honor a part of the fabric of the society we live in.

Yes I know that many of you will say but but people are basically good aren't they? Oh sure they are. It’s those same people who innocently went in to the bank lied about their income and bought a home that they couldn't afford. The same people who charged up their credit cards knowing full well they couldn’t pay the bill. It’s those same honest people who worked for companies that wrote loans they knew people could not afford. It’s those same people…… well I believe you get the picture.

Let’s be real folks. We know what this is. It’s moral degradation from the top all the way down to Joe six pack fed by greed, corruption, dishonesty and all the other immoral vices that contribute to this and so many other ill’s we suffer from.

Now people are looking for a way out. But please do any of us honestly believe that self serving politicians will honestly come up with a plan that in the end will serve the people? Not until they find themselves digging thru the same garbage can with the rest of us.

The government is run by people who believe it’s ok to be caught in a mindless cesspool of spending on a war that no one wants and on programs that benefit no one but misses the boat entirely when it comes to serving it’s people with compassion.

The answer is so simple that I am amazed that people can’t see it.

“DO THE RIGHT THING”. You know what it is. If you don’t know then for Gods sake have the humility to ask someone.

Stop making excuses and dredging up personal ditches to hide in.
Stand up, Don’t let people off the hook ignoring them while they stand by and steal your good life. Show some character and honor and hold the line.

”DO THE RIGHT THING AND DEMAND THAT OTHERS DO SO AS WELL”

Amazing that greed and innovation, what makes our economy so good, almost led to our economy's collapse. The root of the problem is/was very poor risk management (in leverage and credit looseness) on the part of so many commercial and investment banks.

Anyone who really wants to understand the mess should read up on securitization, mortgage backed securities and credit debt obligations.

Well said....:iagree:

Hey Eric...We missed you in the discussion.

No really!

I think it is a combo of these things;

Greed
Selfishness
Stupidity
Kevin Federline

There was never a system of integrity and honesty. The difference between today and 50 years ago is that today, due to modern technology, there are more ways to cheat and steal from people. But that has always been the goal.

The basis of 90% of businesses is some combination of advertising, sales and promotion, i.e. the idea of trying to convince someone to buy something that they would not otherwise buy.

As technology has come about, the amount of advertising and promotion has increased to the point that we have become saturated with it. We spend more effort on trying to sell our products than we do on trying to produce better products.

The measure of how healthy our economy has become is no longer measured in production, but rather measured by how many times we can do eachother's laundry. As a result, we have become very unproductive -- the main reason for our huge trade deficit.

But either way you look at it, this is capitalism. The regulation all of the politicians are saying we need -- that is called socialism. Capitalism is a "free market", i.e. no government intervention. And this bailout package? That is called fascism or corporatism -- government intervention to help the large corporations.

You we're not on this earth 50 years ago I was.

And while you are partially correct regarding the fact that people have always cheated;
years ago there was heaps and bounds more integrity and honesty among people and
business owners than there is today.

Ask anyone who has lived long enough the have witnesses the change and they will tell
you that without a doubt compared to 50 years ago this world is rotten to the core.......:nanana:

The difference now is that people are not one bit ashamed of their conduct. In fact some wear it as a badge of honor

But that is due to technology. 50 years ago you had to look someone in the eye and shake their hand to do business with them. Now they go to your website and pay with a credit card, or you send them an email, or a fax, and you ship the item to them.

Even 25 years ago, when my dad ran my company, he used to hand-deliver records (yes, that was before CDs) to most of the NY-based production studios we dealt with, and he used to have lunch with the owners on a regular basis. When they needed a certain kind of music, they would call and we would do a search for them.

Today I have a number of customers who I have never even had a telephone conversation with, and I have never met most of them even once. They use the search engine at your website, download MP3s, email you to request a license, and you email them the bill. No personal contact.

Everyone is just so busy all the time that nobody wants to be bothered building personal relationships. And unfortunately, there is not as much guilt in ripping off a stranger who you have never even met or talked to. And I think that is the reason why the world has grown "rotton to the core".

You just prove my point. Thanks :thumbup:
But it's not due to technology. Technology
doesn't make people idiots, or thieves, or
any of the things i have already mentioned.

It's people who do those things.... pure and simple

I think Eric made a good point. I would bet that people in the 60's had these same thoughts and tendancies of people today, but the technology of todays world has given people an opportunity to more easily act upon those thoughts. It is a much less personal world we live in compared to 50 years ago.

Look at Ebay for example, you can put a nonexistent item up for sale and take the customers money without ever actually selling anything. You couldn't do that so easily 50 years ago, but if you could, I am sure people would have.

I would say that greed is still the underlying issue and it has been around forever, not just the last few years.

NYTIMES IN 2003: BUSH PROPOSED TIGHTENING OVERSIGHT OF FANNIE MAE AND FREDDIE MAC - THE DEMOCRATS OF CONGRESS BLOCKED IT

THE ENTIRE CRISIS IS THE FAULT OF THE DEMOCRATS OF CONGRESS.

Notice the strong objections of Democrats, many of whom profited handsomely. The same hypocritical bunch who are today blaming the administration's policies. :confused:

VOTE ACCORDINGLY. :nanana:

http://graphics8.nytimes.com/images/...ogoprinter.gif
September 11, 2003
New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By STEPHEN LABATON

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.

Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.

The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.

The proposal is the opening act in one of the biggest and most significant lobbying battles of the Congressional session.

After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.

''The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,'' Mr. Oxley said at the hearing. ''We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,'' the independent agency that now regulates the companies.

''These irregularities, which have been going on for several years, should have been detected earlier by the regulator,'' he added.

The Office of Federal Housing Enterprise Oversight, which is part of the Department of Housing and Urban Development, was created by Congress in 1992 after the bailout of the savings and loan industry and concerns about regulation of Fannie Mae and Freddie Mac, which buy mortgages from lenders and repackage them as securities or hold them in their own portfolios.

At the time, the companies and their allies beat back efforts for tougher oversight by the Treasury Department, the Federal Deposit Insurance Corporation or the Federal Reserve. Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families. This year, however, the chances of passing legislation to tighten the oversight are better than in the past.

Reflecting the changing political climate, both Fannie Mae and its leading rivals applauded the administration's package. The support from Fannie Mae came after a round of discussions between it and the administration and assurances from the Treasury that it would not seek to change the company's mission.

After those assurances, Franklin D. Raines, Fannie Mae's chief executive, endorsed the shift of regulatory oversight to the Treasury Department, as well as other elements of the plan.

''We welcome the administration's approach outlined today,'' Mr. Raines said. The company opposes some smaller elements of the package, like one that eliminates the authority of the president to appoint 5 of the company's 18 board members.

Company executives said that the company preferred having the president select some directors. The company is also likely to lobby against the efforts that give regulators too much authority to approve its products.

Freddie Mac, whose accounting is under investigation by the Securities and Exchange Commission and a United States attorney in Virginia, issued a statement calling the administration plan a ''responsible proposal.''

The stocks of Freddie Mac and Fannie Mae fell while the prices of their bonds generally rose. Shares of Freddie Mac fell $2.04, or 3.7 percent, to $53.40, while Fannie Mae was down $1.62, or 2.4 percent, to $66.74. The price of a Fannie Mae bond due in March 2013 rose to 97.337 from 96.525.Its yield fell to 4.726 percent from 4.835 percent on Tuesday.

Fannie Mae, which was previously known as the Federal National Mortgage Association, and Freddie Mac, which was the Federal Home Loan Mortgage Corporation, have been criticized by rivals for exerting too much influence over their regulators.

''The regulator has not only been outmanned, it has been outlobbied,'' said Representative Richard H. Baker, the Louisiana Republican who has proposed legislation similar to the administration proposal and who leads a subcommittee that oversees the companies. ''Being underfunded does not explain how a glowing report of Freddie's operations was released only hours before the managerial upheaval that followed. This is not world-class regulatory work.''

Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.
http://query.nytimes.com/gst/fullpag...gewanted=print

i'd say people and greed...all these companies and CEOs have salaries and bonuses in the millions of dollars while their company is going bankrupt...these people should be sent straight to jail...

It is such a simple "sound bite" answer to say greed, high CEO salaries, or whatever. The truth is that in a prior administration (which happened to be a liberal Dem one), it was made a requirement that lending institutions had to lend home mortgage funds to folks who didn't otherwise actually qualify. These loans were done under the guise of providing "affordable home ownership" to those in "economically depressed areas". In fact, it was bad business, and now those forced to do that bad business are suffering (as are the rest of us due to the repercussions).

yes an on the surfice answer...but still same problem... no matter how you look at it or explain in, we are still here in this situation it is still $$$$ and we are paying for their mistakes:dunno::dunno:

Yeah, but why did they do that? Did they stand to profit one way or another? Greed is still the underlying issue and motivator, IMO.

Did you miss my statement? The lending institutions were Federally required to start doing these loans. Can you blame them for trying to figure out a way to make a profit on them? Is profit evil now? I think the companies involved may have been lax, played loose with their rules/regs, etc (no argument from me on that). However, the simple fact that a company is trying to maximize profits for their stockholders is not an evil action. It is what we WANT companies to do.

Nope, didn't miss your statement. I feel that greed is the underlying cause because the gov't had something to gain (money or popularity), the lenders were eager to make the loans becuase it created revenue they weren't able to capitalize on before, homebuyers signed up to buy a house that they really couldn't afford or more house then they could afford and so on. It was greed all around. Someone is always benefiting or profiting in one way or another.

I agree that greed can be a very positive thing, but it also has it's downside.

Ummm, yeah. Isn't that an essential aspect of "society"? Caveman goes out to get food, in exchange for the cavewoman cooking it later? Guy flips burgers at McD's, in exchange for Ronald McD paying him salary, whilel Ronald sells said burger to someone else, making a profit for the trouble? I know you know all this, but I just am annoyed that so many folks can so easily act like trying to be capitalists (ie, making a profit) is a bad thing on its face. I detect an easy slide to Marxism in that easy blame.

I agree with you that bad lending practices played a huge part in getting us where we are today.

I think QS was asking what is the underlying reason people do the things they do. What is their motivation? My answer was because of greed. I am all for capitalism, sometimes things just go to far and need to be put in check and that is what is happening now.

I came across a statistic while performing an analysis for my company several months ago (i'd have to dig for the source). It stated that in 2007 1% of the the worlds population made approx' 20% of the worlds money. Who the hell is that 1%?...We certainly don't read about them on the Forbes list. I believe that percentage may very well be the culprit. I believe they also manipulate the federal reserve.

Some history in this video that is pure fact, even if you don't like the political spin toward the end.
http://www.youtube.com/watch?v=H5tZc8oH--o

From the outside.....
 

Hi all. Well I will try to answer the question posed at the outset as from where I sit, the answer seems pretty clear....

Here in Australia, when you take out a mortgage for the property, you are effectively giving a personal guarantee for the debt to the bank. If you default, the bank will step in, repo the property (and they don't care about how much they sell it for) then pursue you for the difference. Your only escape is to declare Bankruptcy or do a deal to pay off the balance over a period of time.

We also have a national credit referencing agency called Baycorp, which records all your applications for any kind of credit, together with your defaults (so don't EVER miss your phone bill) and it is checked by the lender each time you apply for a mortgage. Essentially, the onus is upon YOU the borrower to make the payments or if you cannot, you sell the property and pay off the balance somehow.

Now, this system means that you rarely get an LVR above 80% (Loan to Value Ratio or the amount the lender will contribute towards the value) with a bank, and if you didn't pay that bill and your credit is stuffed then you go to a non bank lender. These lenders have higher LVR's, looser credit restrictions, and allow you to state your own income level by self certification. BUT!!!! They still do a credit check on you, and they also do a background picture to see if you really have the lifestyle to which you claim. The message is, you cannot obtain a mortgage without a personal guarantee.

My understanding of what has been happening in the US is, that non bank lenders have been giving mortgages to so called 'ninjas' (no income, no job or assets) and when those people default, they can just hand the keys back and walk away!!!!!!!!!!!!!!

A lot of people are blaming the 'wall street' people for their trading of equities or in real world language, packaging up these mortgages and trading them. This is nothing new or no big deal, just the scale of it is the problem.

Here in Australia you can buy what is called a 'loan book'. When your broker writes up your loan, he gets an upfront and trailing commission from the lender. That trailing commision (around 0.025%-0.04% of the total value of the loan depending on certain criteria) continues for the life of the loan. Brokers from time to time build up a portfolio of loans and sell them off. Just like real estate agents buy and sell their rent rolls. Banks will quite happily give you finance for them as they know the income is sound (what you have to be careful of though is that the commission only lasts for the life of the loan....in other words, when someone goes and re-finances or buys a new home, that loan ends).

Over a period of time the book begins to become stale and drops off in value quite markedly as the loans drift off to different lenders. So if you buy this, you have to do a lot of research about the amount of churn, the age of the book, the number of dodgy borrowers etc. When you compare the cost of financing it versus the income/management/cost of new business to maintain the value it soon becomes clear that it is a niche product only suitable to be bought and sold by those in the industry.

I was able to buy a $4 Billion loan book. Sounds impressive, but the reality is that after about 3 years that loan book would only be worth 60-70% of its original value, and the income would be unable to service the repayments after only 2 years. Even though you are only paying a factor of eg 2 times income for the book, the point of buying a diminishing asset disappears quickly. So I didn't..

For those of you wondering where all the money has gone on Wall Street, take a couple of million for the purchase of the book, chop it in half after 2 years and leverage that on a huge scale for the number of trades that have likely occurred.

Essentially, I think that the foundations of your whole mortgage industry are dangerously flawed because the borrowers are not liable for the debt. It only took the trading or 'leveraging' of this flaw to magnify the damage. If you have a flaw in something, fix it before you leverage it as you will only leverage the flaw to levels of disaster now being seen.

That product should never have been traded on the scale that it has, on such a flawed foundation..... that is the root cause of this mess IMO

Finally....

(A personal observation here)....over the years on this and other forums, I have seen enough comments about 'compensation','your rights' 'class action' etc to understand that taking responsibility for your own mistakes has largely disappeared in American Culture. I know this statement offends some of you, but ask yourself this, how many times do you read that a dealer 'should give you a new car because the gizmo broke down twice and you only got a Ford as a loaner'

As hard as it is to hear, Americans medicine will be self administered and it will probably be in the form of taking responsibilty for your own actions.

Or to put it another way, taxpayers paying for the losses incurred by financial institutions that have had taxpayers walk away from their debts on them....

Cheers

John

Good analysis, but you are seeing the problem and not the cause behind the problem. The cause of all this trouble in this country is a slipping middle class due the cost of living increasing at a much faster rate than wages over the past 30 years -- a net decrease in real wages. This trend by itself would cause our economy to go bad due to lack of consumer spending.

So in order to keep the economy moving along and keep consumer spending up, the banks have continued to loan more and more money to people and most people have continued to borrow and borrow more in order to maintain the same lifestyle that 20-30 years ago they could have maintained without borrowing a penny.

Until that issue is addressed, any "bailout" packages or economic aid packages will just postpone the inevitable, not fix the problem.

What is happening here is the end result of capitalism. The rich get richer, while everyone else gets poorer until eventually there is no more middle class. We reached this point once before back in the 1930s before FDR saved capitalism by injecting a does of socialism/wealth redistribution in the mix with things like unemployment benefits, welfare and social security. This bailout package they are discussing is exactly that -- more socialism.

I say leave it alone. Let it die, which it surely will eventually regardless of what bandaids they put on it. Why prolong the inevitable.

Ignore it all you want but again the real answer is "The flat out morally repugnant behaviour demonstrated by those who decided to throw caution and their fellow man to the wind." If the people who did this had an ounce of moral integrity and practiced it in their business dealings we wouldn't be having this discussion.

But nobody wants to face the real truth about this issue and personally i cant blame them. The answer may be too hard to bare.

Finally! someone is asking the correct question! (see my thread for "my bailout solution") - Most of the problem stems from Congress - the Community Reinvestment Act actually fined banks for not making sub-prime loans and allowed mortgages to be split up across several "investment" entities until no one knew who held the "bad" loans or how much of a part of that loan was in it - Sarbanes-Oxley forces companies/banks to "write-off" non-performing assets immediately - the removal of the uptick rule allowed "shorts" to keep on shorting stocks without pause - And increasing the size of loans Freddie-mac & Fannie-Mae just pushed them both into the middle of the quicksand

it all became a "perfect storm"

And all that happened because of dishonest immoral people who in a position of authority took advantage of the system.

Amen, Brother! But those also include those in Congress who wrote these laws

you want to "change" Washington? Give me term limits, line item veto, loss of pension & bennies if convicted of ANY federal law or major state law, massively restrict lobbying, politicians prohibited from lobby activities for 10yrs after office, also prohibited from employment by companies they came in contact with during their time in office (only exception, if they worked there before entering politics)

Can you imaging the uproar that would cause???????

But that would be REAL change - not just the word "change" - 2 terms for Senate, 6 for representative - It would definitely dry up alot of lobby money

here's another one - no political donations by companies or unions - that would include "free" labor for political campaigns by both

:iagree: ...Damn, Mark...you musta been reading my short story mind! :thumbup:

Maybe, finally, a list of things that could really have impact on the morass called Congress.
To a man, my geezer buds tend to agree on those kinds of points, regardless of their politics.

The prob is none of that will ever come to pass, as Congress has become entrenched in their
own methods, madness and bad habits of how they think the system does, and should run.

Wish there was a way to put those kind of items on a ballot, even for "show"...the US people are
not idiots; they would vote for those restrictions overwhelmingly. All the other "listening to my constituents"
stuff is just head patting jive to get re-elected, of which consumes about 80% of any congressman's
time and energy. Congress could really care less what "Main Street" really thinks or feels, other than their
potential re-election votes.
BR,mD

Yes, we all know this is the cause. It's like saying that the reason the murder rate is so high in Baltimore is because people kill eachother and are not moral.

How about offering up a solution. If you were King Quicksilver of the United States with absoulute power to do whatever you want with no oversight, how would you fix this problem?

I could be wrong, but somehow I think you are going to say that the problem is "individual responsiblity" -- something politicians say when they don't want to deal with a problem.

As much as people don't like to admit it, the real world is just a more complicated version of the old video game "Sim City". Everything the government does to oversee the country has an effect, some good, and some bad. This greed that has developed in our society is not a random happening. It is a result of our system for decades, and it may have no quick fix. It is a result of kids growing up in a world where money is the most important thing and people are judged based on what they have and not who they are or what they do. It is the essence of capitalism.

cough, BMW, cough.

Well if you know that's the cause then try to get others to zero in on the real issue. Instead of dancing around the problem concentrate on a solution that can solve the problem.

I believe you already ask the king question and I have already commented on the solution but it seems like more people are interested in bandages rather than closing the wound.

If I were the king, I would legalize and tax:

Prostitution
Marijuana
Autobahn type speeding on certain types of roads..

I would then use the money gained on those taxes to fix some of the problems in the country..

And assuming we are living in a monarchy now and I could also impose social restrictions, I would also impose a CHILD TAX and REQUIREMENT LAW.
- The law being that the only people who can have children are those people that can afford health insurance for their children X2.

Meaning, if health insurance costs $100 month, the family who wants to have children needs to pay $200 month. The extra $100 month would then go to pay for health insurance for a family that can't afford it, but wins the right to have a child in the lottery.

So that there is no bias or ethnic type cleansing. It would be 1:1.

Forget about the right to an abortion, I think we should make it more difficult for people to have kids.

I would also take treasure baths, daily...

http://www.ladyofthecake.com/mel/wor...s/treasbth.jpg

:iagree: ...just can't justify paying for ass...however, i'm understanding of those who do.

The belief that home ownership should be possible for everybody.

:rofl: Flood gates have opened.....:cool:

OT...
I like this "King" idea :thumbup: ...I rail at my wife, V, all the time that
if I were King for a year or two, I could fix/change a lot of things. :rofl:

Its good to be da King

http://www.ladyofthecake.com/mel/wor...s/goodkng2.jpg

Ah, good to be king...this is more like the "king of the house"
I get to be, below.
(Though Carrie is fairly hot, I am closer to Jerry Stiller, I suspect.) :rofl:

I don't vote but I just might vote for you.
Family ought to get some perks ya know....... :thumbup:

Thanks, my BFAM...I think I look better than Jerry.
I know I'm taller. :D

Maybe even better looking....:D

The real deal???

Seems to me there needs to be regulations and oversight that take into account human nature, including the inevitable tendency of some people to make an easy buck off of someone else's good intentions.

Anyone see Hardball on msnbc this afternoon....They were showing Mccains' taped response to the bailout failure

Chris Mathews then stated .. it's clear Mccain is reading from cards and has no idea what he is talking about..this issue is to complicated for politicians...

pretty blunt statement

Chris Mathews might as well be running the Obama campaign. There is a reason MSNBC pulled him from the convention coverage. His bought and paid for by the Democrats.

It wouldn't have made any difference if Daffy Duck said it if it's true... :rofl:

McCain is too old to use a TelePrompter like Obama.

Did I just say that? :wow:

regulations and oversignt = socialism

capitalism = no regulations and oversignt. ;)


Americans need to make up their minds which one they want. If they want socialism, then a lot of changes are in order. If they want capitalism, then have capitalism. But don't pretend to want capitalism while slipping socialism into the mix. Last time I checked, "free market" did not include government regulations and oversignt.

That's right E, it means NO regulation :rofl: :tsk: :rolleyes:

You got the socialism part right though :thumbup:

That is an extremely polarizing position. Regulations are simply laws, and you are saying therefore that it is not a free society because there are some laws on the books? That is like saying that we don't live in a democracy because I can't vote individually to set my own speed limit. Capitalism in its purest sense is pretty theoretical, I don't think many would take it to the extreme that a mixed economy with a few regulations to stop theft and fraud is actually a form of socialism. But I guess it helps sell fear.

There is a point at which market intervention is such an influence that it becomes the dominant force, but laws in and of themselves do not make a society socialist.

Yes, it is an extremely polarizing position. My issue here is that the same media pundits that always criticize socialism are the ones cheerleading for this bailout bill. It's not that they don't like socialism. Their ideal system is to have socialism for the rich and capitalism for the poor.

You hear them refer to the "welfare state", but they are not talking about corporate welfare. They complain about high government spending, but they never criticize these expensive no-bid corporate contracts, they only criticize spending on things like education and social programs. They talk about how high the taxes are, but they never mention lowering regressive sales taxes that hit the poor harder, they only complain about progressive taxes like the income tax. And now with regard to this bailout bill, you don't hear them saying we need to help out the people who are losing their homes. They only seem to be concerned with fixing wall street and the banking system.

Enough is enough already. You can't have your cake and eat it too. Make up your mind which system you want and be consistant. If you are in favor of a "free market", then that means when a company makes poor business decisions and has no more money, they can declare bankruptcy and go out of business. All these people always rave about how the free market adjusts to new conditions on its own. So if there is a need for more banks after these banks go out of business, then I'm sure new banks will eventually open up. And if they don't, then obviously the system simply does not work without central planning (i.e. socialism).

:iagree: 100% Without some regulation people will do all they can to lie cheat and steal.

It would almost be like abolishing all the laws because most people don't break the law. Society needs rules as long as they don't interfere with life liberty and the pursuit of happiness.

For most people who don't break the law regulations will not make a difference. However there are a lot of unscrupulous people who feel that taking advantage of others is their life liberty and the pursuit of happiness. For them the law is a must.

Quick note: You have laws and regulations against murder, still happens daily :)

Not sure you can legislate away greed and corruption.

True. You can't stop a thief who is hell bent
on stealing your X5 But why leave the key
in the ignition as an invitation.

I would like to see Congress to be forced to add a statement describing what "wrong" this law was intended to correct and why each amendment/rider was added on

We had a body to over see this, SEC, they didn't do their job. You don't need more regulation, you need enforcement.

BigR, I sorta agree, but:

The SEC was either asleep, playing pocket pool, footsies or, just thought
everything would be "fine". Cox of the SEC said the other day:

“The last six months have made it abundantly clear that voluntary regulation does not work,” he said in a statement
. The program “was fundamentally flawed from
the beginning, because investment banks could opt in
or out of supervision voluntarily. The fact that investment bank
holding companies could withdraw from this voluntary supervision at
their discretion diminished the perceived mandate” of the program,
and “weakened its effectiveness,” he added."

What the fook is a "regulation" when a party can choose to participate in
the regulatory process, or not? :rolleyes:

The SEC is a surprisingly lightly staffed operation...I'm not defending
Cox and his gang of merry pranksters, but they were given water pistols instead of Glocks.


Meanwhile, back at the GoingBrokeRanch, no one, and I mean No One, is overseeing, looking at,
or even wondering why the Credit Default Swaps keep boogieing along like they are the best deal(s) in town.

Last I looked there were ~$65 to $70 Trillion Dollars worth of this crap floating around inside/buried in most
portfolios...for reference there are ~ $One Trillion Dollars worth of sub-prime mort loans out there in UnderwaterVille.

Buffett, Warren not Jimmy, categorized CDSs as "weapons of financial mass destruction." :wow:

No arm wrestle here and in reality, this collective board could not bring an iota of pressure to bear on some
of these Ponzi schemes and rigged card games. There are a few/several economists floating around that I have
great regard for in their commentary and ideas; most of "gov't" pays them little more attention than a bastard step child someone has stuck out in the tool shed. It's a pity, imo.
BR, mD

Edit/PS: sorry for the bad indents and "look" of the paragraphs; somedays
the site won't allow me to fix/edit some of my rambling stuff...:confused:

:iagree:

Peter Schiff is one such visionary:

http://www.youtube.com/watch?v=LfascZSTU4o

Precisely! It's the lack of financial education early on.
Personally, I think most people should at least read
Rich dad, poor dad
By Robert T. Kiyosaki, Sharon L. Lechter

:nanana:

Wait a minute, you mean it comes back to individuals again?

As with just about every other regulatory agency in our government, you have the foxes guarding the hen house.

If you look closely, each and every government regulatory agency is either run by someone who is a former CEO of one of the companies he/she is now supposed to be regulating, or they are a former lobbyist for the industry, or a politician who has spent their career preaching less regulation.

Instead, the person put in charge of regulating an industry should have no previous ties to that industry and should be someone with a background in law enforcement, like perhaps a former district attorney or federal prosecutor.

As I am in the music industry, I'll share an example. The Federal Copyright Board is meeting this week to set the statutory rate for mechanical roylaties. Wouldn't it be great for me and every other music publisher out there if this board were made up of former music publisher CEOs and former songwriteres. Unfortunately, we have no such luck! But many other industries do.

Getting back to the original question:

What is the root cause of our financial dilemma?

I think the answer is clear. ERIC5273 continually refusing to actually buy a premier membership to this site.
So even though he reads, posts frequently and generally stirs the pot, he obviously thinks he is entitled to be here, for free, forever.

So like most of the other problems we have in society like people stealing music, movies, subprime mortgages... The problem is people want something for nothing... They are too cheap or too stingy to actually spend money on things they enjoy at the cost of others..

But that's just my opinion..

OMG, that might have been the best example ever :bustingup

Hmm.. the first post that isn't blaming some govt agency or method of business.

You guys still haven't started looking at WHAT is the cause not WHO.......

Cheers

John