Well Reasoned Article about Regulation and Free Markets

#51
#51
droski said:
i still dont understand this logic that the big guy gets a pass. i don't think aig or citi shareholders would agree with you. the so called ridiculous bonuses would have gotten paid before the crisis if they went bankrupt or not.
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The entire company should have failed if VBH's statement holds true. I still don't understand how unfortunate circumstances that cause financial failure apply to mainstreet but not Wall Street.
 
#52
#52
rjd970 said:
The entire company should have failed if VBH's statement holds true. I still don't understand how unfortunate circumstances that cause financial failure apply to mainstreet but not Wall Street.
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please explain how this penalizes anyone but main street. the money was paid, the stock holders were screwed (including myself and other employees who lost tens of thousands when one of the big banks went under). gee we got to keep our jobs. thanks for that. i would have had that anyway. only people getting screwed are the little people by letting them go under. both the tellars (who wont get rehired) and those that benefit from a functioning economy (i.e. everyone).
 
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#53
#53
Velo Vol said:
That's the point. The article (and others) try to portray this housing bubble as the consequence of government regulation.

History shows that the boom bubble/bust cycle happened even before there were such regulations.
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That wasn't the gist of the article in the least. The article was about free market need for free info flow and true pricing.
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#55
#55
rjd970 said:
Unless you're too big to fail, or your institution was the unwilling victim of a small number of people screwing it up.

I think your rule only applies to the little guy. The big guys get a pass (or those with enough money to lobby for a bailout).
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I'd like to see it more widely applied. However, I think not doing TARP or some form of it would have been a case of cutting off your nose to spite your face.

Chrysler should be have been liquidated and GM should have gone in to restructuring.

In general though I agree with your sentiment.
 
#56
#56
droski said:
please explain how this penalizes anyone but main street. the money was paid, the stock holders were screwed (including myself and other employees who lost tens of thousands when one of the big banks went under). gee we got to keep our jobs. thanks for that. i would have had that anyway. only people getting screwed are the little people by letting them go under. both the tellars (who wont get rehired) and those that benefit from a functioning economy (i.e. everyone).
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I understand this and see the underlying point of TARP. But let's not pretend that this idea of failing in the markets...whether by your own stupidity or unfortunate circumstances...is part of capitalism for everybody. Because what happened with TARP, whether it was good or not, was not capitalism. Everybody doesn't play by the same rules and pretending we do and making token references to personal responsibility is ignorant. What we have seen is "too big to fail" is a get out of jail free card from the traditional rules. Spinning it any other way is wrong. Just like "too big to fail" gets a pass, there is also a "too small to matter" group that plays by a stricter set of rules. That is the simple truth we learned the last couple of years.

I'm in the Ron Paul camp on this, let them fail, it sucks really bad in the short term, but we are better off long term because the system is now more stable. The fact here is nothing has changed and if these institutions over-bet on a big bubble again we are in the same boat. I say let capitalism work.
 
#57
#57
...also, I am just as mad at the government intervention to help home owners that over bought, the big three, etc. Government should stay out of it across the entire spectrum...all the way from the individual through the big guys.
 
#58
#58
volinbham said:
I'd like to see it more widely applied. However, I think not doing TARP or some form of it would have been a case of cutting off your nose to spite your face.

Chrysler should be have been liquidated and GM should have gone in to restructuring.

In general though I agree with your sentiment.
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I agree, but I think there is a character lesson somewhere in cutting off your own nose. Just not sure what it is yet.
 
#59
#59
i guess i fail to see how letting them fail prevents it from happening again and makes it more stable. you will still have the problem that taking enormous risks makes you profit and the shareholders take the loss.
 
#60
#60
droski said:
i guess i fail to see how letting them fail prevents it from happening again and makes it more stable. you will still have the problem that taking enormous risks makes you profit and the shareholders take the loss.
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It doesn't necessarily, but what we did doesn't keep it from happeneing again either. If we want to espouse the virtues of capitalism, lets all play by the same rules.
 
#61
#61
it will happen again no matter what we do. i dont' see any reason to further torpedo the economy to teach everyone a lesson that the next generation will always unlearn.
 
#62
#62
droski said:
it will happen again no matter what we do. i dont' see any reason to further torpedo the economy to teach everyone a lesson that the next generation will always unlearn.
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Again, I understand. But let's not make these token references to responsibility when that simply isn't the case for everybody. You can keep saying the same thing over again about torpedoing the economy, but the fact still remains that what happened wasn't capitalism and the personal responsibility stuff said when others fail or hit bad luck is garbage.
 
#63
#63
rjd970 said:
Again, I understand. But let's not make these token references to responsibility when that simply isn't the case for everybody. You can keep saying the same thing over again about torpedoing the economy, but the fact still remains that what happened wasn't capitalism and the personal responsibility stuff said when others fail or hit bad luck is garbage.
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But it still holds true for every INDIVIDUAL.
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#65
#65
rjd970 said:
So you think GM should have received a bailout?
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Not at all. I do thinkmany of those companies at the core of our financial system should have been salvaged. Those companies lost big too.

Regardless, the discussion was individual education and responsibility. Just doesn't work for multinational corporations that are heavily regulated by the fed.
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#66
#66
BigPapaVol said:
Not at all. I do thinkmany of those companies at the core of our financial system should have been salvaged. Those companies lost big too.

Regardless, the discussion was individual education and responsibility. Just doesn't work for multinational corporations that are heavily regulated by the fed.
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I still see it as different rules. Are you not saying the markets weren't smart enough to decide the fate of huge financial firms, but it was smart enough to decide the fate of companies like GM? Why not let the market work in both cases?
 
#67
#67
rjd970 said:
I still see it as different rules. Are you not saying the markets weren't smart enough to decide the fate of huge financial firms, but it was smart enough to decide the fate of companies like GM? Why not let the market work in both cases?
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because in one situation the market takes down the country with them and in the other it doesn't.
 
#68
#68
rjd970 said:
I still see it as different rules. Are you not saying the markets weren't smart enough to decide the fate of huge financial firms, but it was smart enough to decide the fate of companies like GM? Why not let the market work in both cases?
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Judgment call. I don't think a hard, fast rule there works. Saving GM was union driven. Saving the banks was addressing systemic issues.
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#69
#69
droski said:
because in one situation the market takes down the country with them and in the other it doesn't.
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Exactly. Different rules. So lets cool it with the responsibility nonsense when somebody, anybody, corporations....b!thces about losing out when their investment doesn't work out like they thought it should have. The lesson here is if you are big enough and have your tentacles in enough places the responsibility rule doesn't apply.

...I'm playing devils advocate here. Just trying to understand the hypocrisy.
 
#70
#70
rjd970 said:
Exactly. Different rules. So lets cool it with the responsibility nonsense when somebody, anybody, corporations....b!thces about losing out when their investment doesn't work out like they thought it should have. The lesson here is if you are big enough and have your tentacles in enough places the responsibility rule doesn't apply.

...I'm playing devils advocate here. Just trying to understand the hypocrisy.
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I don't buy it. Plenty of uber rich individuals have been brought low. Strategic decisions about our economy as a whole are an entirely different topic.
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#71
#71
rjd970 said:
Exactly. Different rules. So lets cool it with the responsibility nonsense when somebody, anybody, corporations....b!thces about losing out when their investment doesn't work out like they thought it should have. The lesson here is if you are big enough and have your tentacles in enough places the responsibility rule doesn't apply.

...I'm playing devils advocate here. Just trying to understand the hypocrisy.
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why do you feel the banks have not been held responsible?
 
#72
#72
BigPapaVol said:
Judgment call. I don't think a hard, fast rule there works. Saving GM was union driven. Saving the banks was addressing systemic issues.
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And I'm saying I don't agree with the GM decision either. Maybe I'm missing something, but I am reading a hard fast rule works everywhere unless you are too big.
 
#73
#73
BigPapaVol said:
Judgment call. I don't think a hard, fast rule there works. Saving GM was union driven. Saving the banks was addressing systemic issues.
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Not entirely true. Most of the Tier 1 companies(where the cars are actually built) aren't unionized. The fallout from allowing GM to go bankrupt would have been disasterous for many small communities across the US
 
#74
#74
rjd970 said:
And I'm saying I don't agree with the GM decision either. Maybe I'm missing something, but I am reading a hard fast rule works everywhere unless you are too big.
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Size isn't the issue to me, but it is somewhat about how many lives the company's demise would torpedo.
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