I can't paste it from here but I'm looking at a graph of the LIBOR-OIS spread which is a measure of cash scarcity at banks it is at an all time high of 2.6% Here's what the graph looks like ...............| ..............| ............./ _______/ Sep..........Oct. To give perspective, "normal" range for this is 0.11 % Prior to mid-september it was around 1.0%
Ugh. Seize and redistribute? Yes, Marx is my god and Lenin my archangel. We have a financial system built on products that add absolutely nothing except the convenience of hiding bad debt created by greedy jerks who more often than not, git consumers to enter into these agreements through surreptitious means. It's not like any of these companies are under investigation or anything. I think I've made it clear. We need to cut down on exotic financial products, reset to a more traditional mortgage structure, change the consumer culture to one emphasizing savings, change the prime objective for Wall Street from immediate profits to long-term investments, increase oversight and regulations in a sensible way, and punish the bastards that ran us into the ground. The fact that our economy is based on consuming things, be it toys and health care or clothes and mortgages, scares the hell out of me. It needs to be changed. This bill doesn't come close and does nothing but perpetuate the status quo at an enormous cost... and in fact it makes it more difficult to later change the things that need changing.
Of course it perpetuates the status quo. That's the point. The status quo is 6-7% unemployment and a 25% DJIA drop. Do you want to not perpetuate this, maybe go to a 12-13% unemployment and a 50% DJIA drop? Why? You think people aren't already feeling pain over this? I know a lot of laid-off people who believe otherwise. And do you think the swaps and derivatives market is going to jump back to life if automatically if we manage to keep the ship afloat? Unlikely - and swap/deriv regulation is already in teh works at the SEC. You're saying that we shouldn't perpetuate the system of super leveraged I-banks - dude we already eliminated that system. It eliminated itself. There are none left as of last week. There's really no tenable reason to absolutely destroy everything and rape people's life savings and destroy a generation of retirees in the hope of a better Keynesian Phoenix rising from the ashes. This can be encouraged in the long term without gutting people. Basically your plan (let everything go to sh-t, hope that something better naturally arises in its places) is quite reminiscent of the Bush Administration's plan for the Reconstruction of Iraq circa 2003.
Funny. I was just about to compare your plan (which really is Bush's plan) to the run-up to the Iraq War... create a crisis and ram through a bunch of stuff that wouldn't pass under normal circumstances. But your comparison is much better applied to your position... make a wreck of things and spend money in a way that does very little for the people suffering the consequences, but gives huge sums of money to favorite companies with little oversight to slap some paint on a school wall. And get off your high horse about you being the only one who can see that people are suffering. Of course people are suffering. And for those who aren't yet, many will, regardless of whether this bill goes through or not. I'd rather take the pain now then drag it out and leave it for my kids to deal with. This bill does nothing to address the underlying causes and probably makes it worse.
There you go. Over the last two weeks. I guess people really won't be convinced that credit has really seized up until their weekly paychecks stop coming in.
It's not intended to do so. Baling water out of a sinking ship doesn't fix the hole in the ship. It doesn't punish the guy who steered the ship into the rocks. But it keeps the ship from sinking and killing everybody on board. They're on the same ship. Your kids are on the same ship.
This iteration. They'll come back and we'll do this again if we don't make significant changes in oversight and culture. You know there are a bunch of jerks in wall Street right now figuring out how they're going to game the system and they've probably already convinced themselves that they wouldn't make the mistakes those other guys did.
No not really. I can tell you that the mood is not that, it's basically utter panic and people are trying to tread water. Basically the only people who can take advantage of this are those with large amounts of accumulated capital - Russians and Arabs.
If we are depending on a system that a guy with advanced degrees can't understand very well, that tells me it is intentional and designed in a way to prevent oversight and to take advantage of less sophisticated people.
This is also what amazes me. People that aren't involved in finance insisting that since they don't see the problem already, it must not be a major problem. It's incredible to me. Over the last two weeks, the problem has gotten substantially worse, and that's even with the hope of a bailout to stop it. Without that, it's over. Lending will basically stop. Both large and small businesses that are otherwise perfectly functional will go down. For no good reason whatsoever. Even GE, one of the most sound companies on the planet, had commercial paper problems yesterday and today and had to raise capital from Warren Buffett - for absolutely no good reason except that other people are scared. It's becoming insane.
No, me and my kids are on a neighboring ship and we're watching the Captain of your ship pay so much attention to bailing that his ship is drifting on a course that will wreck both.
No it's the same ship. You might be in steerage or think you are, but it's the same ship. When the first class cabins go underwater - yours go too.
But those bastards involved in finance got us here in the first place. Why the hell should I trust them? That would be like me trusting the Bush Administration. Oh wait! That's what you guys are doing. Really now. The arguments for this bill come down to two main points: Something must be done NOW! and you should defer to people who aren't as ignorant as yourself.
If we are on the same ship, my cabin's going way before First Class... and again, I'd not only want someone bailing, I'd want someone steering and somebody thinking about how to get back to harbor safely... I don't want everyone freaking out.
Fine - don't trust them. In 2 months, there will be a global depression. Then you can sit down and fix the problem that no longer exists because it's too late and all the damage has been done. Brilliant. If you don't want to trust them, fine. Do you not trust the small businesses that are having payroll problems? The car dealerships that can't buy cars because of a lack of access to capital? How about the students who are having their student loans revoked because the lenders went under? Are all these people bastards that caused the problem too? Or just collateral damage in your fight to argue "don't ever trust the administration, no matter whether there's evidence they are right or not"?
To quote Benjamin Disraeli or Mark Twain or any of the other people it has been attributed to, There are three kinds of lies. Lies, Damn Lies and Statistics. I guess you guys don't know what the 3 month LIBOR was in September of 2000? (6.816%) Or what it was as recently as September of last year? (5.62125%) The following puts this "unprecedented historical crisis" in the LIBOR into better perspective: Doesn't look quite like the end of the world when you include a reasonable amount of data, huh?
This is the type of thing someone with zero knowledge of the financial markets posts. The LIBOR was 5.6% last September because the market was at its peak and the Federal Funds target rate was 5.25. Today the target rate is 2%. The spread has increased from 50 basis points to 223 basis points. Just because you don't understand what's happening doesn't mean it isn't happening. You will remain oblivious until it blindsides you and tosses you out onto the street.
But when you use a graph with the exactly the same data, but with a scary upward line and a shorter time frame, we are supposed to view that as proof?
