Nothing is good about this situation and there is no reason to think this will end in anything but Greek default.

Greece's government, elected by its citizens ran up a large and unsustainable debt which was masked by easy credit before the GFC and fraudulent accounting.

There were many contributors. Corruption, hugely wasteful state owned enterprises, joining the euro zone before they were ready to lose the ability to devalue their currency and lower interest rates, and flagrant tax evasion.

But as a country they're collectively responsible for not demanding the necessary reforms of their politicians to ensure they were not vulnerable to a credit crisis when the GFC hit and lenders began to look more scrupulously at individual European countries rather than Europe as a whole. Equally, Italy is responsible for voting Berlusconi into power for every year their economy recorded negative growth under his government. Spain is responsible for not providing sufficient oversight to bad bank lending leading a huge indebting bailout package.

Some of Syriza's reforms are reasonable. Tackling corruption and trying to break up oligopolies are worthy ideas, but they are unlikely to be easy and yield any immediate benefit. Raising the minimum wage and planning to hire back state workers as they have already promised will almost guarantee they will cease to receive EU funding/ECB assistance and later IMF funding.

The simple truth from the point of view of Germany and other austerity backing Nordic countries is if they buy their loans (and in effect transfer money to Greece) without austerity stipulations, there will be no pressure or guarantee that structural reforms that allow Greece to function independently will ever be implemented. These lender government and by extension its people have no interest in transferring wealth to Greece if it stalls its reforms.

Yes fire sales of state owned enterprises suck but the likely alternative at this point if the Troika lending is stopped is that all other lending stops and Greece defaults. At that point there would be mass loss of state sector jobs and sky-rocketing unemployment relative to what is now being experienced. It would take years of reform for the Greek government to be lend-worthy again. There is simply no trust for any alternative to austerity on the part of north Europe.

Currently Greece has reported positive growth in the past quarter and excluding debt repayments is running a budget surplus. Realistically, yes they cannot pay back the 180% of GDP. The likely way forward is after several more years of real reform they (+ Spain & Portugal) would get better terms from the EU as politically, leaders in Germany and elsewhere will be able to make the case that their objective has been achieved.

The ECB's QE package is in some ways already part of this. What I guarantee won't happen is electing Syriza to oppose bailout terms helping to secure that. Germany et al will quite rightly see that if they acquiesce to Greece they will encourage other populist parties in Spain, Portugal, Italy and France and stall reforms.

Could Germany and others in theory provide a huge cash infusion to Greece, Spain and Portugal now? Sure. And those parties would be voted out in the next election and the terms reversed. Even with the relative stinginess of current loan terms, the likes of UKIP and the National Front with their anti-EU stance, have gained political standing in the EU parliament and will likely see huge boosts in upcoming domestic elections.

A. We have been running counter-cyclical deficits. You can say what you want about the "shell game", which I btw don't agree with as a characterization, in the mid to late 90's, but compare that to the deficits run post 9/11. There's a marked difference. Compare George W. Bush deficits of the mid 2000's to what Obama has done. When the economy tanked, deficits grew, not stayed the same or shrunk.

http://www.usgovernmentspending.com/include/us_deficit_100.png

I completely agree with you we have failed to run surpluses when the economy has been prospering. That is absolutely the case, but you definitely see swelling of deficits in response to recessions in the chart above. That's a Keynesian idea, even if it is shared with the monetarists.

B. Yeah, I'm sure. Granted, LOL @ Ballmer from time to time.

D. Individuals may be skeptical of the FDIC right now, but we're speaking of the influence systemically of the FDIC. This past financial crisis was all about a credit crisis. Part of why the recession occurred occurred was an eroding of available credit due to pervasive fear and mistrust, a lot among banking institutions of each other. The last thing we needed was a run on the banks, and that was very largely avoided. The FDIC was a huge reason for that. Had there been, more banks would have gone under, and banks still surviving would have been even more irrationally tight on lending. That would have been absolutely disastrous. There's little doubt in my mind we would have seen 20% unemployment.

>> ^bmacs27:

A. Lol at counter-cyclic budget deficits. I know they played that whole shell game with social security in the 90s, but other than that, I don't think we've really been running many counter-cyclic Keynesian surpluses. The other thing to remember is that monetarism is a derivative of Keynesian theory, so it isn't surprising that they have some overlapping prescriptions. I guess I would push my argument further by stating that Greenspan is broadly considered a monetarist, and he pretty much ran the economy over that interval. Teh maestro.
B. Heh, you sure about that? "I LOVE this COMPANY!!!!!!!"
C. I think we pretty much agree here without getting to wonkish.
D. My GF is in ING. It's now capital one, so she's likely leaving it. Pretty much I wish your average bank was much smaller than they are today. Also, I wouldn't be so confident in that FDIC insurance. The FDIC itself is in some dire straights. Also, they just moved all that bad Merrill paper into FDIC insured subsidiaries of BoA so that they could borrow against the deposits at better short term rates to support it.

3:13 = "How to solve a credit crisis" according to Fight Club.

Some interesting facts:

This policy is driving attention away from the governments attempt to implement ISP level censorship (mandatory filtering).

Filtering will choke the network speed.

If every household in Australia took it up, it would cost $5,000 AUD per to install and the wholesale cost of the service just to break even would be $60 AUD/month. If only 50% take it up, that cost rises to $200 per month (remember, that's no profit for retail or wholesale yet).

Australia's geographical isolation and dependancy on a few fibre optic links to the US gives us much higher data costs. Some ISP's in Australia still charge 15 cents per megabyte ($150 AUD per gigabyte) for excess data. Most of our plans sit in the 2-20 GB/month range. 100 Mbit will chew through that much data in a day .

Yes, we need the infrastructure, the existing copper is upwards of 60 y/o in some places. But this is another poorly thought out knee jerk by the idiot running communications. He picked the right answer to the problem and future proofing, but has no idea how to implement it, how to reduce costs, how to fund it (global credit crisis you say?!?!).

That's why they call us "the lucky country"... \= |

I'd like to see Cramer keep his show because of how he's said he'll change. Although it is quite a show of weaknesses to his bosses to do that, to change his show's theme and style because of what a guy on another network said.

I don't think Cramer is a, or the, bad guy. The problems leading to this crisis have been systemic and country-wide. Jon is right that Cramer knew it was all a big game played with working stiffs' money, but Cramer had no idea what it would all come to because everyone that he looked up to was wrong or lying. It's a credit crisis, not just the fiscal kind, but the human kind where we used to trust people because of their years of experience and their credentials, and now it's evident that neither of those are prerequisites to being truthful or being right. The system needs a real shaking up to restore confidence and revive credit.

Tags for this video have been changed from 'finance, economics, subprime, credit crisis, bankrupt, banks' to 'finance, financial, economics, subprime, mortgage, credit crisis, bankrupt, banks' - edited by calvados

>> ^imstellar28:
^Look at it this way NetRunner, if the government does nothing it only affects some small number of people (those with mortgages, those making high risk investments, and some small percentage of innocent bystanders)
When the government spends trillions bailing people out, it takes a problem affecting some percentage of irresponsible people and some smaller percentage of innocent bystanders--and forces it to affect all 300 million people living in America.
For example. I do not own a house, I have no risky investments, and moderate fluctuations in the price of goods does not affect me in any way. How could this crisis financially affect me unless the government directly increases my taxes or inflates the money I already own?
I don't think you have the evidence to claim that either way it affects everybody, especially when I am using myself as a counter-example...
Inflation and taxes, however, do affect everybody.



What about the products/services your company sells? If you're business-to-business then other companies who numbers are poor are going to affect you. Presumably the same if not worse with selling to consumers if they lose their jobs.

Do you have a pension? How safe is that? I'm self-employed and haven't embedded myself too deeply into the financial system to be affected currently but I'm worried about how this will play out. I work in education in England but I worry about the government's commitment to maintaining their recent levels of funding.

>> ^Sniper007:
First of all, this 'crisis' doesn't affect EVERYONE. That's just not true. It only affect those who get a mortgage on their home. I know lots of people who avoid mortgages at all costs for JUST THIS REASON.

Hmm, they did seem to miss a step in explaining this whole thing. It's not just people who have mortgages who're affected.

It's also people who own stock, or need to take out a loan to cover a business expansion.

It's also people who work for a company that sells things, since all the people out there who're seeing their mortgage equity and stocks collapse in value stop buying things.

That company cuts costs, and lays a bunch of workers off. Those unemployed now stop buying things too, reinforcing the cycle.

This affects everyone.

> Problem is every credit card for 30 feet doesn't work anymore.

What if I told you that I built a 600 foot tall one of these in Kansas just six months before the credit crisis.

>> ^imstellar28:
my kind of protest. any links to the story?


They are protesting in front of parliment. We now have protests there every saturday at 15:00. People show up, 3-4 people hold speeches. These motorcyclists weren't an official part of the protest but wanted to do show support in this way. The flag the guy on the roof was raising is the flag of Bonus (icelandic Wal Mart, Tesco). The cops tried to get him but the crowd got him back and he ran away. I was very happy they didn't resort to spraying people with tear gas which they did this summer. When people are shouting at the police there they are saying "YOU ARE WORKING FOR US, NOT THEM". I suspect the police were this passive because most of them probably agree with the protesters.

Basically, Iceland is in turmoil. The credit crisis led to all of our 3 banks collapsing(12x the size of the GDP). It's down to a european trade agreement(can't remember the name in english). It gives companys all sorts of freedoms, some good, some not so good. It meant that our banks could operate anywhere in Europe. So, they went and started loaning in Holland, Germany and England. In England alone over 300.000 people had accounts (these accounts had very high interest rates). So.. when the banks couldn't get loans from other banks they started falling, they had expanded themselves way too much like everybody else. BUT.. while the law gave them freedom to operate in other countries, the banking license was still in Iceland. Which meant 310.000 people were now responsible for accounts of almost 500.000 people, many of which had high amounts in the accounts.

The Icelandic goverment started freezing the banks, to take over. A disputed act, but they couldn't really let the banks go bankrupt because then the country would have no way to buy anything, nobody would have any money. So when Gordon Brown saw what they were doing he talked to our goverment and they said they would probably be able to pay off what the law required of them (about 20-30.000 euros for each person I think). Somehow Gordon took that as us not being willing to pay. So next the British goverment froze all Icelandic assets in England (using the terrorist law) and declared Iceland as a bankrupt nation (even though the country itself had no debts and has been practically debtless for some years, quite rare for a country). Next we knew, iceland was on the same list as terrorist organizations like Al quaida and terrorist supporting nations. It has now come to light that before they did that, the assets of the banks would have sufficed to pay off the legal requirement and then some. But freezing everything and declaring us as a terrorist nation effectively took all value off those assets. Catch 22?.

We are now running down on foreign currency to buy in produce. We have been working with the IMF to get a loan to get the economy moving but word is that the english and dutch are working behind the scenes to deny us of that loan until we agree to pay way over the legal requirements. Gordon Brown is basically trying to look as some savior to the british people, he's been doing horrible in the polls and this is his Falklands war.

In essence, we got fucked by greedy businessmen and inept politicians. 99% of the nation had no idea we were written down as responsible for all these foreign accounts. The politicians championed these businessmenn while everything here was booming, they were buying up huge companies overseas, money here was very easy to come by. But as it turns out, it was a bubble, none of it was real.

In the last few decades unemployment has been from 1,2-2,2%. We are now facing a possible 10-20% next year. Numbers that have never been seen in the history of the country. Our international reputation has been terminally fucked. We read stories of icelanders in england having their dinner plates spat on, people getting verbally abused in the street e.t.c. Just for being icelandic. For the actions of about 30 people.

This rant could probably be 3x longer, but i'll stop here for now .

where to begin... i am tempted to be drawn into qm's debate here, but i fear i can't contribute anything convincing (certainly to him) other than more fuel to flame with.

i did, however, want to stress that the housing and credit crisis currently goes so far beyond fannie and freddie and partisan politics that it really should not ever be invoked to argue against dems/republicans. to do so just shows an incomplete understanding, and it's inappropriate to try to pin this on party negligence or willful government harm. it's mostly hinged on nonfeasance (sec/greenspan), unfettered greed, as well as the mortage borrowers borrowing more than they could from lenders lending more than they should.

anyways, my real comment was that powell makes a decent point about taxes: they have to be collected. you have to hire a janitor to clean the toilets or they'd never be done... i'm sure everyone can talk about cleaning toilets better than "uncle sam's janitorial service", but that's not the point. it just so happens that of the 20$/hr paid to "uncle sam's janitorial service", about 5$ goes to cleaning the toilets. the other 15$ goes to brass knuckles for the janitors or whatever. it's a silly analogy. there's bureaucratic waste, but it's not 80% inefficient as qm suggests -- i don't know where that figure comes from. the inefficiency is secondary to the poor allocation of funds; namely, the lack of reinvestment in infrastructure, the superfluous military spending, and now trillions for banks in combined capital injections and loan guarantees.

i honestly just hope obama (since mccain is not specific about his plans for significant change aside from just vocalizing that sentiment), should he be elected, delivers on enough of his campaign talking points. i mean... what then? what if good shit happens? we really need, as a nation, to figure out how to pull out of this nose dive in order to even contemplate competing with china and india in the world scene.

and seriously, if you don't believe in global warming, you sure as hell should believe in our loss of superpower status enough to want to reclaim it.

Other countries' socialist policies, like in say, the whole of Europe, do quite well compared to us.

Actually, this is causation without correlation. If you go to Europe, living situations are deteriorating. Their massive amounts of welfare have created a situation in which immigrants are coming not for opportunity, but to be subsidized by programs they haven't paid into their whole lives like existing citizens. Sound familiar? Our programs are being strained by the same problem. I won't deny that they've made better decisions with their socialist powers over the past twenty years. If you want to make this an argument about whose dictator is doing a better job at emulating the market, then certainly Europe wins. France, for example, gets 80% of their energy from nuclear power and is the largest energy exporter in Europe. I'm jealous. That's what the market would have chosen. Our dictators, however, have been blocking it for thirty years due to the influence of the radical environmentalist lobby. Our government-directed economy has also pumped billions of forcibly appropriated money into agri-business bio-fuels like ethanol. It reduced the supply of food because it became more profitable after all the subsidies to grow corn for ethanol than some other crop for food. And it takes almost as much energy to create as it produces. Negative net result, that money would have been better off staying in the hands of people who really couldn't afford to have it taken away. We realize this now, but it never needed to happen. Any product that wouldn't be able to compete on the market without being funded with stolen money isn't worth a damn. So why did we think a bill could do something the market couldn't? All subsidies are retarded, they have collusive anti-competitive redistribution written all over them, and that's exactly what we got despite election year promises that it would give us miracles.

In fact, imagine if a stranger comes to your house and says "Hi, I'd like to take some of your money from your paycheck every week because I think I can spend it better than you can on products and services for your life. You look pretty busy, irresponsible, and unintelligent." Would you give it to them? Why would you do that? That's essentially socialism in a nutshell. People spending other people's money on the claim they can do so with greater thrift than the person that earned it.

Another thing that we do different than Europe is maintain a gigantic military empire. Of course their socialist programs are better, they don't have a military industrial complex sucking trillions of dollars away from them. It's really not necessary in the nuclear age. No nuclear power has ever been invaded domestically. Because it's a losing proposition. If you win the ground war, they have nothing to lose so they launch them. But we're idiots over here, we have this manchausen syndrome where our CIA creates problems that eventually blow back in our face, at which point we can launch all out invasions under the pretense of self-defense. This might include installing the Shah in Iran. Or giving bioweapons to Saddam during the Iran-Iraq conflict. Or arming afghani warriors to fight the Soviets. Or paying off Musharraf in Pakistan to be a puppet. Terrorist propaganda becomes effective because of this shit.

Nowhere else in the world has a more libertarian system than us, as near as I can tell, and it handicaps us.

Price fixing interest rates = socialist
Bailout out bankruptcy with forcibly appropriated money = socialist
Allowing one industry to loan out money they don't have, at interest = socialist
Subsidizing one company and not another = socialist
Taxing one company and not another = socialist
Nationalizing private industry to be financed with forcibly appropriated money = socialist
Directing industry and research with forcibly appropriated money = socialist
Declaring lending standards discriminatory to low income people and forcing banks to remove them via the Community Reinvestment Act = socialist
Issuing a non-market determined or constitutional money, banning competing currencies, and taxing dollar debasement gains on gold as if it were income = socialist
Blocking nuclear power for 30 years = socialist
Blocking domestic oil drilling for 20 years = socialist


Actually no, they would just need to get enough market power, and apply it ruthlessly to stomp out competition wherever it rises.

Bullshit, no one but the government has endless streams of capital to buy up anything and everything. Only government monopolies are self-sustaining, because they're the only monopolies financed with forcibly appropriated money.

In your version of the world, AMD shouldn't exist. Aptera Motors shouldn't exist. Right? I mean, giant corporations a thousand times their size existed before they even entered the market. They should have been bought out. Oh, wait, what's that? Not all companies are publicly traded.

The reality is, in order for a MARKET monopoly (note: in an environment where they don't have access to government specific powers like inflation and subsidization) to stay that way is to continue to offering the best product at the best price. Because then there's no window, no opportunity for someone else to come in and eat into that marketshare. If a company is delivering crap or overcharging, however, that immediately opens a window for someone else to come in. That's how AMD got so large, Intel was doing exactly that with netburst architecture. Even with a monopoly position, competition was waiting in the wings.

Suppose Microsoft took XP off the market and put Windows 3.1 on the shelf? Do you think they wouldn't go bankrupt? Do you think a competitor wouldn't arise to take their place? Because they're an all-powerful monopoly, right? They don't have to deliver shit, they can just buy Macintosh and anyone else while they pay thousands of programmers to create a product that doesn't sell.

Doh. Someone doesn't understand basic market principles.

One of my favorites from the roaring 20's was the rate war. Slash your prices to nearly nothing, and let your company lose a lot of money, on the premise that the smaller company will go bankrupt before you do.

Actually, large businesses with lots of workers have far more overhead and are much more inefficiently run. That's why most businesses today are small businesses. My mother owns an advertising business for wedding directories with no one but herself employed. A local newspaper owned by the Gannett company recently created a staff of twenty people to try and compete with her. They lasted two years before the magazine ended the operation. It was costing way more money than it was bringing in, and the so-called greedy megagiant slashed it.

Nuttery, Ron Paul is the only politician who believes in the law? Seriously, that's what you're saying? He's probably the only Republican who believes in the law being supreme, but there's more than a few Democrats who believe in the supremacy of law (including some joker with a law degree from Harvard running for President...).

Supreme law is the constitution doofus. It's the law that came before all other laws, it's the laws against government to prevent them from becoming a tyrannical, collusive nuthouse like all other governments before it by assessing which powers, which enablements, it shouldn't have under any circumstances. And inflation was one of them. But after a couple hundred years, people became complacent, arrogant, and ignorant, like yourself, and politicians found that they could ignore it with impunity. There was no longer a bunch of gun-toting, tea-hating radicals ready to hang them on the nearest tree when they broke it. There was nothing but the opposing party. But that party loves to spend, too. So they compromise by allowing the other to break it so long as they get to break it in another way. Remember how the bailout failed and then got passed? They put some extra pork in there to get the votes they needed. Rum and arrowheads...

http://www.greenfaucet.com/economy/porky-the-bailout-bill/19680

Welcome to our country, and the socialist enablements that make this spending possible.

No, but he can still bribe the politicians to look the other way on violation of rights. They do it now, and I'm not sure why it would change, just because the companies have more money to spend (according to your theory).

The bottom line here is that attacking Democrats as being socialist is a huge fucking straw man. We like the free market, and we want it to work.

No, you don't, You don't even know what it is.

Most investment banks are now crying out to be regulated in the wake of this credit crisis, and given that they bribed the government into deregulating them in the first place, that should tell you something.

They're not crying to be regulated, they're crying to be bailed out after being regulated. What do you think regulation is exactly? Do you realize that the fundamental way in which banks operate is fraudulent? How do you regulate that? How do you oversee to make sure fraud is being conducted in the best way possible?

http://en.wikipedia.org/wiki/Fractional_reserve_banking#Money_creation

This is the type of nonsense I hear from the republicrat camp. Regulation, the buzzword of the day. It's meaningless. To "regulate" the bank runs this system was causing, the Federal Reserve was created to backstop bankruptcy. Yes, failure, that free market pinnacle that makes private business suffer and fear consequences for risk and imprudent policy. Or how about the FDIC, FEDERAL GOVERNMENT INSURANCE on deposits. Don't worry, now you don't have to fear about losing your deposit on this scam industry. We've regulated it with the FDIC. OOPS, THE FEAR OF LOSING ONE'S DEPOSIT WAS WHAT DETERRED PEOPLE FROM GIVING IT TO HIGHLY LEVERAGED INVESTMENT BANKS OFFERING ABNORMAL YIELDS, CAUSING THAT BUSINESS MODEL TO GROW, CAUSING OTHER BANKS TO FOLLOW SUIT IN ORDER TO COMPETE.

The problem is regulation on fraudulent activity that should have never been allowed. It slowly but surely eliminated basic deterrents and self-regulating principles by backstopping risk and rewarding bad behavior.

^ This will sound childish, but BansheeX, you're a nutbar.

Actually, socialist policies have done nothing but increase, and the problems you describe have gotten worse.

...in America. Other countries' socialist policies, like in say, the whole of Europe, do quite well compared to us.

Nowhere else in the world has a more libertarian system than us, as near as I can tell, and it handicaps us.

In order to make that kind of money in a free market system that protects rights, the person to whom you're referring would essentially have to create every product and service with the utmost quality and awesomeness.

Actually no, they would just need to get enough market power, and apply it ruthlessly to stomp out competition wherever it rises. One of my favorites from the roaring 20's was the rate war. Slash your prices to nearly nothing, and let your company lose a lot of money, on the premise that the smaller company will go bankrupt before you do.

What's a libertarian government going to do about that? Price controls?

98% of the public didn't vote for Ron Paul, therefore 98% of the people don't believe the supreme law is important or should be followed.

Nuttery, Ron Paul is the only politician who believes in the law? Seriously, that's what you're saying? He's probably the only Republican who believes in the law being supreme, but there's more than a few Democrats who believe in the supremacy of law (including some joker with a law degree from Harvard running for President...).

Remember, with small government, he can't bribe a politician for forcibly appropriated money because the politician doesn't have it.

No, but he can still bribe the politicians to look the other way on violation of rights. They do it now, and I'm not sure why it would change, just because the companies have more money to spend (according to your theory).

The bottom line here is that attacking Democrats as being socialist is a huge fucking straw man. We like the free market, and we want it to work. However, unlike market fundamentalists, we realise that neither extreme is good, neither the libertarian nor the pure communist/socialist structure. Most market functions should be decentralized and unrestricted, but just like pruning a tree, some restrictions can aid growth.

Most investment banks are now crying out to be regulated in the wake of this credit crisis, and given that they bribed the government into deregulating them in the first place, that should tell you something.

Democrats in America are moderates -- our goal is not absolute control of the market, and we're as happy to deregulate as regulate (see Clinton's Presidency) but for some reason the conservatives here have adopted an absolutist goal, seeking to destroy government, or at least discredit it.

Bush has done a fantastic job at making government fail in every aspect, but did it make the people embrace the conservatives more strongly?

Hell no, because they were shown all the ways government was helping them, and suddenly had it ripped away -- now they want it back in working order.

Libertarians need to stop pretending they have all the answers already, and that the rest of us are fools. No country, least of all the US, has ever been libertarian. There's no evidence that such a system would even remotely work the way you claim, and in many cases through history regulation has been imposed because the market system was destroying itself, and ruining millions of people's lives.

Like right now.

Tags for this video have been changed from 'marcy kaptur, congress, house, economy, bailout' to 'marcy kaptur, congress, house, economy, bailout, credit, crisis, wall, street' - edited by marinara

I can fill in the blanks for Cenk. The talk-radio branch of the Republican party is pushing a line of bull about how the credit crisis is really the Democrats' fault.

It hinges on a piece of legislation called the Community Reinvestment Act (CRA). The site describes the bill:

The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations.

(emphasis mine)

Yes, the legislation was aimed at encouraging banks to do more lending to low-income buyers, and minorities. However, it was not requiring them to abandon the considerations of risk.

This diary from dKos fills in more detail, and has further references (from Government agencies) debunking this as being even a minor contributing factor to our current crisis.

Cavuto just forgot to mention the piece of legislation before race baiting.

Oh, and he was Olbermann's worst person tonight for this very comment.