You won't hear complaints about the Keynesian model because he is a Keynesian. He's never pretended to be anything else.

I agree that this is propaganda however. This bill won't prevent the next bubble, it almost certainly won't stop too big to fail, and it probably won't prevent the next tax payer funded bailout. Honestly, it's anemic. It doesn't even address credit default swaps.

The Volker rule is interesting, but it isn't clear to me how it will be applied. I mean, banks have clients betting on one side or another of just about every possible transaction. I guess, the idea is that banks can longer engage in proprietary trading at all. The thing is, then all the banks will go belly up because nobody will actually keep their money with them. People will go chasing the higher returns just like they did before. The banks will start clamoring about relaxing the rules just like they did before. Finally, we'll end up mired in the same shit we are now.

Being a Keynesian is great and all, it's just they need to draft some legislation with a little more nut.

White House:
Here are a few highlights:

* There's now a single agency responsible for looking out for consumers: the Bureau for Consumer Financial Protections. Instead of seven agencies dealing with these issues part-time, one agency will be in charge of establishing clear rules of the road for banks, mortgage companies, payday lenders and credit card lenders.
* Mortgage brokers won't make a higher commission by selling people mortgages that they can't afford. This was a major factor in the recent housing crisis. Now brokers and banks have to take into consideration a borrower's ability to repay before giving a home loan.
* You’ll be able to get a free credit score if you’re denied a loan, an apartment, or a job because of your credit, so you won’t be turned down without knowing why. Right now, you get one free credit report a year, but you can’t see your credit score for free, even if a lender or employer rejects your application because you have bad credit.
* No more bailing out banks with our tax dollars, no more "too big to fail." If a company's in trouble because of risky gambles, it will have to liquidate -- and do so before it can take down the rest of the financial system.

There's two things that need to be separated here.

The fraud allegation are that Goldman Sachs's employees mislead its client into believing that the hedge fund that arranged certain CDOs for them - Paulson & Co held a long position in the CDO (they expected it to go up in value, obviously a reassurance for the investor), rather that what was really the case - that they were short (expecting it to go down in value).

If this is indeed the case then they will likely be fined and lose some of their prestige and reputation. At best it would have been an overzealous employee, at worst it would be have been a corporate strategy from upper management. Regardless they will be deemed less trustworthy and lose business from potential clients in addition to any fines imposed.

The second point is though, that the idea that this is evidence that they caused this financial crisis is simply ridiculous and anyone who believes this is channeling populist outrage.

Goldman Sachs were not the only ones selling CDOs. The client who bought from Goldman would have likely bought from someone else otherwise if they felt this was an appropriate investment. There was no shortage of financial corporations who would have been willing, and judging by their near collapse, likely would not have had any reservations like the hedge fund that arranged this CDO for Goldman.

http://media.economist.com/images/images-magazine/2010/17/fn/201017fnc367.gif

Yes, Goldman bet against the market and profited handsomely. Had there been more firms betting against the market, it would have kept the prices of houses down, and discouraged further reckless lending and prevented the bubble in the first place. Financial firms profit from the mis-pricing of securities and in acting against them bring the market back to an accurate representation of value preventing such crises. If you want to blame someone, blame the ones who created the boom. Blame the ones who perpetuated the culture of misinformation that house prices would rise indefinitely, that savings rates of around 0% were sustainable. Blame the regulators for not having sufficient safeguards in place and limits to risk taking.

If you want to prevent the next crisis, insist on there being a tax on liabilities (debt) that financial firms take on, to counteract the perception that they are too big to fail and in effect adjust upwards their borrowing costs from unrealistically low rates. Insist on there being a legal procedure to impose orderly losses on shareholders of failing banks, allowing there to be a middlegrounds that hurts investors in these banks as opposed to the option of bailing out the bank and perpetuating too big to fail, or allowing it to collapse and triggering meltdown.

When Sen. Mitch McConnell said that the Senate financial-regulation bill meant "endless taxpayer-funded bailouts for big Wall Street banks," he was, knowingly or not, taking aim at a policy that had been jointly developed by Sens. Mark Warner (D-Va.) (pictured above) and Bob Corker (R-Tenn.). The two lawmakers began collaborating last spring, when they started holding joint briefings on the financial crisis. Eventually, Sen. Chris Dodd tasked them with handling the problem of what happens when too-big-to-fail firms, well, fail. He tasked them, in other words, with handling the problem of endless bailouts.

After months of meetings, the two finalized an agreement in February. That's the "resolution authority" part of the bill, which begins in section 201. And in an interview in his office this morning, Warner was not too happy with McConnell's characterization of their work. "It appears that the Republican leader either doesn't understand or chooses not to understand the basic underlying premise of what this bill puts in place."

"Resolution," Warner continued, "will be so painful for any company. No rational management team would ever choose resolution. It means shareholders wiped out. Management wiped out. Your firm is going away. At least in bankruptcy, there was some chance that some of your equity would've been retained and you could come out in some form on the other side of the process. The resolution that Corker and I have tried to create means the death of the company. The institution is gone."

Another element of the Republican critique concerns the $50 billion "orderly liquidation fund" that the FDIC will raise by taxing the banks. The idea of this fund is to create holdover money so the bank doesn't collapse while regulators are trying to unwind it. Sen. Richard Shelby, the ranking Republican on the Banking Committee, called it a "slush fund" and said that “the mere existence of this fund will make it all too easy to choose a bailout over bankruptcy.”

"Again," says Warner, "it's either that they don't understand or they choose not to understand. There's nobody in the financial sector who believes this. They'd laugh at the proposition that $50 billion is enough to get you through the resolution process if a couple of firms go down. What we've heard time and again is that the challenge in a crisis is to buy enough time to keep the lights on for a few days till you get the FDIC in here. You could make it smaller. Corker and I spoke about $25 billion. But this is funded by the industry."

"And here's the hypocrisy of the Republican leader's comments," continues Warner. "I can guarantee you that if there had not been some pre-funding, the critique would've been: 'Look at these guys! They've left the taxpayers exposed! What's going to keep the lights on for these few days? It's going to be Treasury funds or Federal Reserve funds. The taxpayer will be exposed!' ”

"If you haven't spent time with these issues," Warner sighed, "it's easy to pop off with sound-bite solutions that don't work."


http://cl.ly/LQd

The best that can be said about Crock Hussein Fraudbama after 1 year is his ears are too big to fail catching the slightest praise.

back in the good old days, economic policy protected the small businessman from being squeezed by giant corporations. Now economic policy protects the "too big to fail"

It's hard to explain to some people why government spending is harmful. But I will try and point out that government spending isn't helping anything. Yes, 50 jobs here, 80 jobs there. I give you that. A few thousand jobs in an economy that's lost several million full time jobs is a drop in the bucket.

Well if you aren't working for the government, or a giant corporation, your days are numbered until you are absorbed by the corporate political machine and you will work for the political status quo.

The cons have very short memories.

They've spent the past twenty or thirty years screaming for deregulation. They get it. Predictably, the financial institutions abuse this new-found freedom in a bid to make an obscenely high profit in a ridiculously short period of time. Most of them fail, and since they are "too big to fail" the rest of us little people have to bail them out.

But it's not their fault....

>> ^quantumushroom:
QM here.
The conservative base isn't shrinking, but even if it were, the Obamarchy isn't too big to fail: it's so big it WILL fail. ha ha ha ha haaaaa!


What did I just say in my post above?

CHECK YOUR FACTS.

http://www.gallup.com/poll/118937/Republican-Base-Heavily-White-Conservative-Religious.aspx?CSTS=alert

The number of people who identify themselves as "Conservative" has dropped over the last 10 years. The GOP has spent much of that time ousting moderates from office.

Do your fucking homework QM.

http://www.gallup.com/video/118087/Party-Advantage-Belongs-Democrats.aspx
http://www.gallup.com/tag/Republicans.aspx

QM here.

In case you were wondering, no, I have nothing to do with WP, I have enough trouble being QM to also be someone else, particularly from the Grey Poupon school of conservatism.

Volump, you might be happy to know Señor Pennypacker doesn't care for my fiery brand of reactionary rhetoric and has taken pains to never respond to anything I've written.

I've warned him that his extensive logical arguments are wasted here, but I like him all the same.

The conservative base isn't shrinking, but even if it were, the Obamarchy isn't too big to fail: it's so big it WILL fail. ha ha ha ha haaaaa!

The 100-Day Assault on America

by Larry Elder

Has it really been 100 days?

Aided by an eagerly compliant Democratic-controlled Congress, a sycophantic media, and a bunch of squishy Republicans, President Obama has taken the country on a radical, mind-boggling leap into collectivism.

Obama -- to use one of his favorite expressions -- doubled down, no, tripled and quadrupled down on Bush's "stimulus" and "rescue" packages, spending trillions of dollars to "bail out" financial institutions, too-big-to-fail businesses, and even deficit-running states. Obama promises to use taxpayer money to rescue "responsible homeowners" -- whatever that means -- from foreclosure, thus artificially propping up prices that shut out renters who would love to buy now-much-cheaper houses.

Obama proposes spending billions (or trillions?) more on "creating or saving" -- whatever that means -- 4 million, 3.5 million or 2.5 million jobs. Pick a number. Given the government's vast business expertise, Obama proposes spending gobs of money to "invest" in green jobs. And he's just warming up. He wants taxpayers to guarantee, presumably to all who request it, a "world-class education" -- whatever that means.

Firmly in charge of much of the domestic car industry, Obama effectively fired the CEO of General Motors. He threatens to fire still more executives in the parts of the financial services industry currently under the management, direction or control of Uncle Sam -- that eminent, well-regarded banker.

Obama blames the financial crisis on "greed" and the "lack of regulatory oversight." Funny thing about greed. Celebrated investor-turned-Obama-supporter/adviser Warren Buffett says, "Be fearful when others are greedy, and be greedy when others are fearful." Apparently, some practice good greed, while others engage in greedy greed.

As for regulation, the SEC already heavily regulates most of the troubled financial institutions. The world's largest insurer, AIG, operated under heavy regulation. The government-sponsored entities Freddie Mac and Fannie Mae -- blamed for irresponsibly buying, packaging and selling bad mortgages -- are regulated by a government agency, called the Office of Federal Housing Enterprise Oversight. Its sole responsibility is to oversee those two agencies. OFHEO, shortly before the government takeover of Freddie and Fannie, gave them two thumbs up.

Did the President, after campaigning against pork and earmarks, really sign bills that include both? Yes. Will the President's new budget really triple and quadruple the annual deficit? Yes. Will the President's budget really double the national debt within a few years and then increase still more beyond that? Yes. Do the President and members of Congress, many of whom never operated so much as a T-shirt concession booth, really believe that they can "modernize" health care, thus "saving" taxpayers buckets of money? Yes.

America traditionally represents the greatest possibility of someone's going from nothing to something. Why? In theory, if not practice, the government stays out of the way and lets individuals take risks and reap rewards or accept the consequences of failure. We call this capitalism -- or, at least, we used to.

Today's global downturn reflects too much borrowing and too much lending. But would borrowers and lenders -- at least in America -- have engaged in the same kind of behavior but for artificially low interest rates under the Federal Reserve System? Would borrowers and lenders have acted as precipitously but for the existence of Fannie and Freddie, which bought up their mortgages? Would banks have so readily lent money to those who clearly could not repay it but for the Community Reinvestment Act? That law pressured banks into relaxing their normal lending standards to help low-income borrowers.

Now let's turn to Job No. 1 -- national security. We no longer call the War on Terror the "War on Terror." We no longer call Islamofascist enemy detainees "enemy detainees." The President embarked on an I'm-not-Bush and we're-sorry-for-being-arrogant international tour. To the receptive, admiring G-20 nations, the President flogged America, calling us domineering and overbearing. What did the swooning leaders give in return? Virtually nothing. He wanted more assistance in fighting the war in Afghanistan. The NATO members offered more advisers and trainers, all, mind you, out of harm's way and only on a temporary basis.

The President offered a new relationship with Iran, provided Iranians "unclenched their fist." The President even sent a shout-out video to the Iranians on one of their holidays. What did he get in return? Iran promised to continue its march toward the development of a nuclear weapon and called Israel the "most cruel and racist regime."

Obama offered North Korea a kinder, gentler foreign policy. What did he get in return? The North Koreans, in violation of a United Nations resolution, attempted to launch a long-range missile. The President condemned the act. The United Nations Security Council convened an emergency session. What happened? Nothing. Well, not exactly nothing. North Korea kicked out the U.N.'s nuclear inspectors and announced the resumption of its nuclear weapons program. And North Korea, along with Iran, arrested and imprisoned American journalists.

On the other hand, Washingtonian magazine graced us with a spiffy, Photoshopped cover of a fit and toned swimsuit-wearing President Obama. So all is not lost.

At least he looks good.

More logical solution:

Demand ALL the AIG bailout money back. Take AIG under temporary government control. Use the bailout funds to stabilize the business while splitting the business into numerous independents to GET RID OF THE TOO BIG TO FAIL business model which is what is screwing this country over to begin with.

Toss all of the screwball executives (and employees) involved in scamming the nation and world to the fire (figuratively).

It is time for the greed, the scamming, and the self destructive behavior to END.

Comment hidden because you are ignoring dag. (show it anyway)

^You're right Farhad - I'm sure Bush would think that the Sift is too big to fail.

The truth is we are very darn successful by some measures- just not monetary ones. Our traffic continues a steady, inexorable rise - we're pretty well known in the media and we have a fantastic, dedicated core group of users.

None of that translates to a business model or financial success. The only solace I take is that there are many, many sites out there that are suffering from that kind of success - and have not figured out how to make it pay.

The difference with VideoSift is that we haven't taken any funding money at all. We could have during the height of all the craziness - but in retrospect, I'm glad we didn't.

I see now many sites with a quarter of our traffic and even less of a revenue stream that were funded to the tune of several million dollars - folding like cardboard houses in a hurricane.

So, the nice thing is that while our financial cupboards are bare - we are unencumbered by debt or angry investors demanding blood. It's up to us to figure out how to survive in the current environment - please keep the ideas flowing.

>> ^blankfist:
Still, what would a bailout prove? I remember experiencing a lot of fellow industry people in the tech-industry losing everything after the dot-com bubble popped, and Congress didn't raise a finger to bail us out. And why should they? The market was unsustainable because people were throwing too much money at it without a system of monetizing it. Those who could work through that collapse, did. The industry survived even though a lot of the major companies did not.

Difference is, with the dot bomb crash, the industry wasn't a monolithic triopoly, there were thousands upon thousands of fresh upstarts that turned to dust as quickly as they rose up. If we were talking about a similar situation with the auto industry, where most of the companies/products were new and non-essential, I don't think there'd be any talk of a bailout...or a union.

Conservatives (or at least people in Republican jersies, and self-identified conservative Democrats) helped them get too big by never exercising the FTC and having them actually stave off companies from getting "too big to fail" as GM, Ford and Chrysler have.

The same group also prevented government helping these companies take a long view of the global situation -- yes Virginia, I mean environmental issues, fuel efficiency standards, and alternative fuels.

GM, Chrysler and Ford are not sustainable. I'm sorry, but let's try not to make this a party issue. This is about private companies not being able to sustain themselves, and I'm sorry if those of us against the bailout oppose your party position for labor, but that doesn't make those of us against it "republicans". That makes us against nationalizing private debt. And, if you were smart, you'd be against that too.
Economy be damned when industries are falsely propped up.


Why are Ford, GM and Chrysler not sustainable? Could it be that we have bad trade agreements, allowing companies like Hyundai to sell 500,000 cars in the US, while limiting us to 5000 in Korea?

Could it be that every other country with an auto industry gives their companies government support, including both national healthcare as well as protectionist trade policies, and government subsidies?

Could it be that in pursuit of the conservative ideal of "free trade", we're forcing our employees to try to compete with countries with no worker safety or labor laws?

Then there's this little matter about the banks not being willing to give anyone loans for anything, including cars, which makes it a tiny bit hard for these guys to sell anything.

I know you'd rather it not be a "party issue", and that's fine. I just figured I'd lay the blame at the Republican party's feet, rather than saying "conservative ideology" where it probably rightfully belongs, because I always hear that Republicans aren't conservative, and they've been the ones pushing these failed government practices since the 1980's.

But hey, if you want to take the blame for making the environment impossible for the big three to operate as a non-sweatshop employer, who am I to stop you.

If you were smart, you'd be on the side of this argument that's looking to keep people employed, and fix the big three, rather than clinging to the same ideology that got us into this mess in the first place.

You've got a good point about propping up failing businesses, and I think that there should be serious, serious strings attached to any money we loan these guys, and that we ensure these are loans to be paid back with interest, not a big gift basket, like TARP is. Problem is those pesky conservatives (or Republicans as they call themselves) have fought to keep Democrats from adding environmental restrictions and management paycuts/restructuring, while at the same time trying to insert legislation that requires the unions to agree to salaries and benefits below the foreign auto makers. I suppose that's because under their reading of the conservative ideology, telling businesses how to operate is okay if it's to put the screws to unions, but not when management is being made accountable.

These are going to be party issues, and generally speaking, blankfist, I categorize you as being a 3rd party -- neither progressive nor "Republican", the former because it's accurate, and the second because you're as frustrated with that group of howler monkeys as I am.

However, don't try to tell me that Republicans are now high-minded conservatives, because it's a little suspect that they seemed to only remember those principles on Nov 5th, 2008, and they just so happen to lead them to the conclusion that the right course of action is to filibuster everything the Democrats try to do.

>> ^quantumushroom:
Don't know how I ended up smarter than Greenspan , but warped regulations, not deregulation, caused these crises.
Financial institutions wouldn't have dared play chicken with high-risk investments of their own money. Government paved the way for the corruption by allowing them to gamble without worry. "Too big to fail?" There's nothing those government idiots can't screw up, given enough time and other people's money. And now taxocrats want MORE government to fix what they already screwed up.

Funny wasn't it Bush who said that its very urgent for the country to save the economy by giving away 700 billion to save a few Wall Street firms.

Wasn't it McCain who said a few weeks ago "The fundamentals of our Economy remain strong"?

Who push forward privatization more then ever over the last 8 years? Energy deregulation? Enron.

What about deficits like this...

Don't know how I ended up smarter than Greenspan*, but warped regulations, not deregulation, caused these crises.

Financial institutions wouldn't have dared play chicken with high-risk investments of their own money. Government paved the way for the corruption by allowing them to gamble without worry. "Too big to fail?" There's nothing those government idiots can't screw up, given enough time and other people's money. And now taxocrats want MORE government to fix what they already screwed up.



* An old fool trying to salvage his legacy by blaming the victim: free markets.