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04-06-2010, 08:45 AM   #31
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Is the US Treasury too big to fail? Who's going to bail it out if it does?

04-06-2010, 08:51 AM   #32
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QuoteOriginally posted by B Grace Quote
Glass?Steagall Act - Wikipedia, the free encyclopedia

The mortgage lending rules were relaxed during the late 1990's with the above being the starting point. At the height of the bubble in my area first time home buyers could buy new houses with $0 down, no fees, no points, and $500 cash back, with all of those up-front expenses "rolled" into their 30-year mortgages at above-market rates with monthly payments of up to 40% of gross monthly income. Just before the crash, one local builder added a free new car to the deal. One of those new neighborhoods in my area has had a foreclosure rate of almost 50%.

The trigger behind the crash, in my opinion, was the speculative spike in gasoline prices during 2007 and 2008. That's the one satisfying outcome of the crash - many of the investment banks that drove up the price of gasoline took it on the chin when their sub-prime holdings tanked. Serves them right.

The irony behind the sub-prime market was the risks were fully insured but when the crash happened no one could cover the insurance.

Glass-Steagall deregulated, but it did not "force" or even "encourage" the banks to lend to unqualified buyers. It gave them the freedom to do so. I would agree that Glass-Steagall was a bad idea, but to say that Barney Frank or anyone else compelled the banks to make these loans does not seem to hold water.
04-06-2010, 08:54 AM   #33
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QuoteOriginally posted by GeneV Quote
I would agree with a lot of what you post, but there is a temporal line between a "correction" and a "crash." No one complained about double digit gains over the course of a year, but perhaps someone would have wondered what was going on if the market had gained 20% in a single week.
A 20% gain during one week is surely an oddity but very rare and usually followed by similar losses, and they are unpredictable anyway. I get concerned when I see two, three or even four weeks of approx 1% gains nearly everyday like we've had since the first of this year. Every major fall is setup by gains that are comfortable enough for most folks not to notice. Profit taking is always blamed for corrections but I know better. Optimism is one thing when it's related to the markets but when you see the stock market go up because our President visits Europe or the First Family chooses a dog it's time for a gut check of your mix of investments.
04-06-2010, 08:57 AM   #34
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QuoteOriginally posted by GeneV Quote
Glass-Steagall deregulated, but it did not "force" or even "encourage" the banks to lend to unqualified buyers. It gave them the freedom to do so. I would agree that Glass-Steagall was a bad idea, but to say that Barney Frank or anyone else compelled the banks to make these loans does not seem to hold water.
No, no no.. you GOT to blame the little guy... it was their right (or left or center) to game the system... American as apple pie.. Besides when a financial "expert" tells, don't worry the market is hot, in a few years you can refinance and "make money" as well.. Why would anyone NOT believe them????
Besides many new foclosures are now "commercial" surely they are to blame for trying to game the system to make a buck..... Obviosly business people don't know a LICK
about business....

04-06-2010, 09:01 AM   #35
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QuoteOriginally posted by B Grace Quote
A 20% gain during one week is surely an oddity but very rare and usually followed by similar losses, and they are unpredictable anyway. I get concerned when I see two, three or even four weeks of approx 1% gains nearly everyday like we've had since the first of this year. Every major fall is setup by gains that are comfortable enough for most folks not to notice. Profit taking is always blamed for corrections but I know better. Optimism is one thing when it's related to the markets but when you see the stock market go up because our President visits Europe or the First Family chooses a dog it's time for a gut check of your mix of investments.
Actually, I think the market recently had its largest two week gain in the S&P since 1938 at 7%. I don't think the market has gained as much in one week as the 20% the S&P lost in a single week in 2008.
04-06-2010, 09:01 AM   #36
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QuoteOriginally posted by GeneV Quote
Glass-Steagall deregulated, but it did not "force" or even "encourage" the banks to lend to unqualified buyers. It gave them the freedom to do so. I would agree that Glass-Steagall was a bad idea, but to say that Barney Frank or anyone else compelled the banks to make these loans does not seem to hold water.
So let's put part of Glass-Steagall back into place. A Republican congress passed the bill that repealed it and President Clinton signed it. It was bi-partisan. Instead of blowing up the banking market we should step in with targeted regulation that still allows the market to function properly. Either way, we're talking about fewer Americans buying their first homes sooner rather than later but also fewer losing their homes in the future.

The repeal opened the door and like a fire exit during a fire the banks used it.

---------- Post added 04-06-2010 at 10:08 AM ----------

QuoteOriginally posted by GeneV Quote
Actually, I think the market recently had its largest two week gain in the S&P since 1938 at 7%. I don't think the market has gained as much in one week as the 20% the S&P lost in a single week in 2008.
In terms of losses, how about one day?

Black Monday (1987) - Wikipedia, the free encyclopedia

Scary stuff but not abnormal. Or at least until the pop-off valve scenario was installed after Black Monday. And, yes, I've been watching the gains lately and I'm concerned. Many of the recent gains are not due to proper economic data. Who knows for sure though with all of the stimulus money floating around.
04-06-2010, 09:11 AM   #37
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QuoteOriginally posted by Rupert Quote
You know, I am often amazed here at the power of old Barney in the tiny little minds of Lap Dogies that do the bidding for their Fat Cat handlers. We have a huge Govt bureaucracy, we have a President, Senators, Congressmen/women, a set of old Supreme guys, and all kinds of Lobbyists.......yet old Barney just ignores them all and makes all the decisions. That damn Barney is a regular Miracle Worker, isn't he? Jesus George could abolish a large part of the Constitution, create the biggest deficit in history, and start a phony war....but he was powerless over Barney, even with a majority Congress at his back. Awesome Barney!
Regards!
The Bahney Fwank legacy ...

From the moonbat left ...

Frank's fingerprints are all over the financial fiasco - The Boston Globe

From the dingbat right ..

http://www.americanthinker.com/2008/10/wrecks_lies_and_barney_frank.html

04-06-2010, 09:18 AM   #38
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QuoteOriginally posted by B Grace Quote
So let's put part of Glass-Steagall back into place. A Republican congress passed the bill that repealed it and President Clinton signed it. It was bi-partisan. Instead of blowing up the banking market we should step in with targeted regulation that still allows the market to function properly. Either way, we're talking about fewer Americans buying their first homes sooner rather than later but also fewer losing their homes in the future.

The repeal opened the door and like a fire exit during a fire the banks used it.
Recognizing that both parties drank this Kool-Aid is more productive than blaming Bush, Clinton or Barney Frank. I don't know if it can happen, now.

The entire Real Estate industry needs some careful scrutiny. There is no one on the ground with an incentive to turn down a bad transaction. Everyone from the real estate agent to the loan officer to the title officer is paid only when and if the transaction closes. No one tells the buyer he is paying or borrowing too much, and most people just aren't sophisicated enough to figure it out.

Also, the banking industry needs to get out of the "gotcha" approach to making money. From the credit card rules that change just to haul in late fees to the real estate loans with interest rate time bombs, banking has gone from an honorable lubricant of commerce to a gimmick. I don't buy that it is the consumer's fault for not reading the inches of paperwork one signs to buy a home. This is so rare that title officers have a label for them, "readers," and they are looked upon with disdain.

Allowing mergers to form huge banks (and other businesses) also contributed to this problem. For capitalism to work, there must be competition and there must be the possibility of failure. We have parked antitrust laws over in a corner gathering dust. These laws keep capitalism in existence, and they need to be enforced again. For Banks, this is a special issue since the government guarantees them.
04-06-2010, 09:19 AM   #39
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QuoteOriginally posted by reeftool Quote
Is the US Treasury too big to fail? Who's going to bail it out if it does?
It can't fail. The Big O will just print more money.
04-06-2010, 09:24 AM   #40
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QuoteOriginally posted by graphicgr8s Quote
It can't fail. The Big O will just print more money.
Only if Barney lets him....right?
Regards!
04-06-2010, 09:28 AM   #41
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QuoteOriginally posted by Rupert Quote
Only if Barney lets him....right?
Regards!
Barney's in bed with him.
04-06-2010, 10:18 AM   #42
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I'm going to stay clear of this mud (but then I live far, far away), and just post a few links that portray a very clear picture of economic trends in the USA. Some rather disturbing.

Grandfather Economic Report - Home Page - by MWHodges
Shadow Government Statistics - Home Page

Printing money to get out of debt is a dangerous strategy, but seeming to be what is being used. For a country it is bad news, but for a country controlling the international reserve currency, it is even worse...
04-06-2010, 10:43 AM   #43
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And a bit of optimism into all this gloom:
Op-Ed Columnist - Relax, We’ll Be Fine - NYTimes.com
04-06-2010, 10:43 AM   #44
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QuoteOriginally posted by graphicgr8s Quote
Barney's in bed with him.
Do you have the video George? Should make you a bundle! How about the older one where he was in bed with Jesus George........I bet neither one of them had a clue how to find their own ass....right?
Regards!
04-07-2010, 05:20 AM   #45
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I can't speak to the minutiae of economic policy, I'm not competent to do that.

But speaking from a broad general viewpoint...

... if there are economic institutions who in the course of doing business are making decisions that put in danger the entire economic system they are only a part of than it's perfectly reasonable to conclude that this behavior rises to an outstanding public concern.

If so there must be some way available to the public to step in and change this destructive behavior. If the only institution available is government intervention than so be it.

But than I'm not religious - that is a free market fundamentalist.
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