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Chomsky was right, Geithner bails out everybody

Discussion in 'BBS Hangout: Debate & Discussion' started by rhadamanthus, Jan 11, 2010.

  1. rocketsjudoka

    rocketsjudoka Contributing Member
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    I agree but it seems to me that if the banking system had collapsed those reforms wouldn't have meant much. As much as I would've liked for the Fed to put away the checkbook my understanding of the crisis was that there might not have been anything to reform if their hadn't been bailouts.
     
  2. rocketsjudoka

    rocketsjudoka Contributing Member
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    Not quite. It seems to me that while everyone else might've resolved their debts Pierre the hotel owner is the one taking the final loss. As far as ill-begotten only Pierre is the one that took the money by ill gotten means and he loses that too. This doesn't seem so much as a metaphor on the US but more like a metaphor about cash flow in general.
     
  3. Invisible Fan

    Invisible Fan Contributing Member

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    Combined, the behind the scenes schemes by the Treasury and Fed dwarf TARP. Do you know what generated profits and what were losses? Would these profits come easily in the future as the Fed starts mopping up excess liquidity in the money supply?

    In some bailouts, we don't even know the borrowers.

    I don't mind as much as others for the government to be lender of last resort, but as it is, it's like we're dealing with thugs with guns stuck behind our backs. They b**** and moan against transparency and executive pay while threaten to collectively hold their breaths to see who blinks. Then with the issue of reforms, they pretend as if they can police themselves as if the last 20 years have earned them that trust and point to snippets like how much profit the Treasury made as proof things are working.

    I wonder if we can get any progress to reform the bankrupt state we're already in.
     
  4. giddyup

    giddyup Contributing Member

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    I guess you could say he got what he deserved! In the end, though, he settled his own debt to the butcher with phantom money and "forgave" the w****'s indebtedness to him with likewise phantom money...
     
  5. rhadamanthus

    rhadamanthus Contributing Member

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    I've made peace with that and agree. But put it away now. Pass some major reforms while they're still squirming... then continue to bail them out.
     
  6. bingsha10

    bingsha10 Member

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    Nobody with a brain ever said TARP would be bad for the financial system. Too bad the economy isn't the financial system.
     
  7. pgabriel

    pgabriel Educated Negro

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    privative profits, socialize losses. what kills me are these banks saying we need to pay these traders gazillions to keep talent. that just doesn't pass the smell test with me personally
     
  8. pgabriel

    pgabriel Educated Negro

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    on the article, I don't mind the banks saying they can't disclose this info because it will cause runs against the most needy. Also, all banks, even private, financials are public info (actually that may depend on the charter), but I can link a website where you can go and find most banks' financial statements
     
  9. rocketsjudoka

    rocketsjudoka Contributing Member
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    It isn't exactly phantom money more like a deposit. Consider that a bank will lend out other people's money that it is holding or even pay off its own expenses with that money. As long as the depositer gets the same amount of money back as the original deposit there is nothing illegal, phantom or swindled about it.

    Another way to think about it is that a client pays a business $100 the business uses that money to pay its expenses. Later the client complains and the business refunds the $100. The end result is that the business is out $100 not that the expenses have been paid with phantom money.
     
  10. rocketsjudoka

    rocketsjudoka Contributing Member
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    They aren't but they are closely related. Cash supply is what keeps the economy going and when money is tight the economy suffers.
     
  11. giddyup

    giddyup Contributing Member

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    But what if the w**** hadn't come to settle her hotel bill... or anyone else in the chain for that matter? The hotelier would have had to come up with another $100.
     
  12. lpbman

    lpbman Member

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    The take home for me:
    These mega bank/ insurance monstrosities have got to go. Nothing can be too big to fail. If ma bell can get busted up over telephone service/pricing, these guys will have to deal with it as well.
     
  13. rocketsjudoka

    rocketsjudoka Contributing Member
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    Of course things that happen to cash flow. When your collections don't come in as fast as your payments you suffer a loss. There is nothing necessarily ill gotten about that.
     
  14. giddyup

    giddyup Contributing Member

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    ... except the salesman had no "receipt" for his deposit-- therefore the hotelier's use of the money was improper. The salesman's offer of $100 to the hotelier was more of a casual good faith gesture and an anticipation of pre-payment... but there was no record of the transaction.

    The hotelier would not likely have predicted that either A) the man would not be a guest or B) that the string of exchanges would unfold that would see the $100 returned to him... much less both!
     
  15. Billy Bob

    Billy Bob Member

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    This whole phenomenon is called the round-by-round effect. Economist actually takes this into account in monetary policy. You have to take into account other factors like MPS (marginal propensity to save). There's always someone who's not in debt who will save a portion of it, like the CEO of Walmart.

    He'll likely put the money in the bank and the bank will start lending out his money. The money eventually coming back into the bank system. This money will be lent out again.

    It's the same effect as the hotel scenario, but banks are required to keep a reserve ratio of cash in hand. This reduces the circulation of cash by a percentage each time it goes back to the bank and eventually ends the cycle. If the government didn't impose an reserve ratio on banks, it's the same effect as dumping unlimited amount of cash into economy and therefore causing inflation.
     
  16. Cohete Rojo

    Cohete Rojo Contributing Member

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    It takes two to bail out: one to give and one to receive. I didn't read too many stories about private insurance companies not accepting government loans.
     
  17. glynch

    glynch Contributing Member

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    The banking system needed to be bailed out so it did not collapse. The price would have been too steep for mainstreet. The problem is that the individual bankers needed to be made to pay a price. In addition we need to eliminate the blackmail of too big too fail. The poster was correct who said we need to reform the corrupting influence of money in Congress that will make the elimination of this blackmail almost impossible.

    In the 1930's we were able to make such reforms that led to a sound system for over 50 years. With the massive think tank generated propaganda of the corporate elite and their news organs it may be impossible to do this politically in this era.

    Obama is no Roosevelt and the folks who put him in are not the political movements of the 1930's either. The pissed off but thoroughly confused teabaggers will just be used by the corporate elite to block change.
     
    1 person likes this.
  18. giddyup

    giddyup Contributing Member

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    OBSERVATION: The hotelier didn't put the money in the bank; he used it for his own gain without even knowing it was his for certain.

    QUESTION: Isn't the reserve requirement on banks something like 2%?
     
  19. rhadamanthus

    rhadamanthus Contributing Member

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    Concur with this post.
     
  20. FranchiseBlade

    FranchiseBlade Contributing Member
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    I like the Huffington idea of encouraging people to withdraw their money from large banks, and put them in credit unions or local banks that are suffering as well, but don't receive the same favoritism as these big banks. People should do it. Move their money away, and make the big banks pay.
     

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