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| reply to vpoko
Re: And who said Google could do no wrong! No...its because Congress along with the regulators failed to do their job. Its a given that the financial companies are out for massive profits, but when you have people like Chris Cox sleeping at the wheel of the SEC, and Congressional oversight committees too stupid to understand that the house was caving in, then you have a big problem.
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BF69~~~Please stop suffocating gerbils! | |
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3 edits | said by S_engineer:No...its because Congress along with the regulators failed to do their job. You're partially correct. That was one factor. But, "vpoko" is very correct. Just look at the effort to regulate derivatives in 1997. The commissioner of the futures and commodities agency was squashed like a bug when she raised concerns about the opacity of derivatives.[1] She predicted they would be our undoing.
She was squashed by Greenspan, Rubin and Summers. Congress proceeded to pass legislation in 1999 to prohibit states from regulating Credit Default Swaps as insurance (requiring capital reserves). That was a Republican Congress, and a Democrat President.
For what it's worth:
• Greenspan retired just before the train wreck, appearing before congress admitting his libertarian worldview had been proven wrong.
• Rubin, appointed by Democrat President Clinton, went on to lead Citibank -- one of the largest recipients of bailout money. And, considered among the least capable to repay.
• Summers became President Obama's financial adviser.
"A good time was had by all."
You're definitely right that the regulatory agencies could have done a better job with the tools they had. But, there's no doubt that those tools were limited by legislation (influenced by the financial industry). That culture of deregulation influenced the agencies and their application of the tools they had.[2]
[1] The story can be watched here: PBS Frontline: The Warning. Click the link to watch the full program online.
[2] Read the massive book, Too Big To Fail, which documents the hour-by-hour interactions of industry insiders and regulators during the meltdown. Particularly Treasury Secretary Paulson's near-visceral reaction to SEC Secretary Cox's blatant capitulation of his regulatory tools when they were needed most. A true eye-opener. | |
 vpokoPremium
join:2003-07-03
Boston, MA | reply to S_engineer
said by S_engineer:No...its because Congress along with the regulators failed to do their job. Its a given that the financial companies are out for massive profits, but when you have people like Chris Cox sleeping at the wheel of the SEC, and Congressional oversight committees too stupid to understand that the house was caving in, then you have a big problem. They weren't stupid, they were complicit. | |
| You gentlemen missed my point. If the FCC has to outsource to these companies for a "framework" of policy that the FCC itself is responsible for writing, then we either need to purge the FCC or abolish it. Now I can understand input, but in no way shape or form should the FCC be taking marching orders from Google or Verizon.
Now as far as the economy goes, there were many, many contributing factors. From Greenspans "cheap money" tenure, to the Graham-Leach-Bliley act. And don't forget Amigo, it was Rubin along with Greenspan who opposed giving the CFTC any oversight of the over the counter credit derivatives. But if it makes you feel any better, Rubin received approx $50,000,000.00 in compensation in 2008 instead of the appropriate sentence he deserved.
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BF69~~~Please stop suffocating gerbils! | |
Core0000Premium
join:2008-05-04
Somerset, KY | reply to amigo_boy
...I never knew Alan Greenspan had a "Libertarian worldview"...
Anyways, did you recall all of what you said from memory or is it because you read those books recently?
IF its from memory I am feeling really bad right now. V_V' | |
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2 edits | reply to Core0000
Re: And who said Google could do no wrong! said by Core0000:...I never knew Alan Greenspan had a "Libertarian worldview"... The Frontline video[1] gives a brief introduction to Greenspan's libertarian beliefs and his association with Ayn Rand (who was his guest at the White House when sworn in as Chairman of the Council of Economic Advisers to President Ford). He described himself as a "lifelong libertarian Republican."[2]
Therefore, it's not difficult to understand what he meant when testifying before Congress after the economic collapse, saying he was wrong about how "free markets could regulate themselves without government oversight." Or, "I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,"[3].
Those who've been involved with libertarianism know that he was touching the Article of Faith. Consensual relationships. The non-coercion principle which drips from Ayn Rand's writings.
I believe Greenspan was a genius. But, when you listen to him, it sounds like he could talk around anything. He was so motivated by libertarian ideology that he would talk in circles to avoid reality interfering with his worldview.
For example:
quote:
Dogmatic market capitalists hailed the trend, none more enthusiastically than Greenspan. He claimed, implausibly, that a lack of margin requirements would "promote the safety and soundness of broker-dealers, by permitting more financing alternatives and, hence, more effective liquidity management." In the week before LTCM imploded, he told Congress, "Market pricing and counterparty surveillance can be expected to do most of the job of sustaining safety and soundness." And, in 2003, he told an investment conference:
"Critics of derivatives often raise the specter of the failure of one dealer imposing debilitating loses on its ounterparties, including other dealiers, yielding a chain of defaults. However, derivative markets participants seem keenly aware of the counterparty credit risks associated with derivatives and take various measures to mitigate those risks." This is the same Greenspan who told Congress that the Fed had to intervene in the LTCM crisis, because:
"Had the failure of LTCM triggered seizing up of markets, substantial damage could have been inflicted on many market participants, including some not directly involved with the firm, and could have potentially impaired the economies of many nations, including our own." In other words, counterparty surveillance works fine, so long as you're willing to accept the occasional crash of "the economies of the nations." But given the enormous rewards that accrue to top-of-the-food-chain players like LTCM partners, true market-believers may find that a cheap enough price.[4]
That's the "worldview" which he ended up saying had been proven wrong. It's easy to deregulate everything, resulting in a massive party. Just because the party lasts for 10-20 years doesn't mean a hangover isn't coming.
Greenspan's pre-crash reasoning was like the person driving without brakes on the interstate. "I've gone 200 miles without needing any brakes!" -- frantically explaining away the pile-ups he drove past. When Greenspan testified before Congress, he looked exactly as you'd expect of such a driver. Feeling a bit foolish? Humbled?
said by Core0000:Anyways, did you recall all of what you said from memory or is it because you read those books recently? I read a lot. I write notes to support my memory.
[1] »www.pbs.org/wgbh/pages/frontline/warning/
[2] »en.wikipedia.org/wiki/Alan_Green···f_office
[3] »current.com/groups/money/8944413···rong.htm
»www.bloomberg.com/apps/news?pid=···h9Up4rIg
See also, the last 5 minutes of the Frontline video, supra note 1.
[4] Two Trillion Dollar Meltdown, Chapter 3. | | |
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| reply to Core0000
from Wikipedia: “Greenspan describes himself as a ‘lifelong libertarian Republican.’”
Wikipedia's cite is the front page of the WSJ from 2007. I'll accept the accuracy. Why question it? | |
WhatNowPremium
join:2009-05-06
Charlotte, NC | reply to S_engineer
That is the problem they broke no law. They got their gold and have more then they spend in a life time. If you lost your job that is just how the economy works. The crowd at the top gets paid for success or failure. The one in the middle just lose everything for the mistakes at the top. How many times do you hear their contract says we have to pay them. If we don't give them bonuses they will go to the competition but those living from paycheck to pay check get laid off with sorry we don't have any money to pay you. Why because the idiots at the top got your paycheck.
The Board of Directors have no incentive to fix the problem because they have to protect each other so they will get their bonuses.
The Democrats may not have the answer and can make their own big mess but if they had been in charge as long as the Republicans there may not have been the Massey Coal Mine explosion or the BP oil spill. If you want to live in a Latin America economy of the very rich and no Middle Class keep voting for the free market Republicans. There is not free market for the middle class and below. If you think you are going to make more then $200 thousand for the next few years vote you pocket book vote Republican if not who do you think is going to pay for the no deficit budget. It will not be the those that get a bonus bigger then most people make in their regular pay.
I don't have any problem with someone making money but when you get paid a bonus after you risk taking blew up then something is wrong. Let's see how many heads at the top of BP lose their job because the tried to save money on the the Gulf well. So far the only people that have suffered are those that live along the coast and small time BP share holders. | |
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| said by WhatNow:The Board of Directors have no incentive to fix the problem because they have to protect each other so they will get their bonuses. I think that has a lot to do with how stock ownership has changed. Forty years ago people bought IBM to hold it for the rest of their life. And, it was very few people because the stock market was considered risky (with the Great Depression still in people's minds).
Today, millions of workers buy indexed funds (400 to 2000 companies in one mutual fund). No regard to the company they are buying, or its ethics. And, unlike the guy who bought IBM forty years ago, these millions of workers (buying hundreds of companies) can't vote for the Board. Even if they could research 400-2000 companies, purchasers of shares in a mutual fund aren't considered the owner of shares in the underlying company. The fund manager is.
The bottom line is, corporations are more easily capitalized today, with less accountability to the people doing the capitalization. Worrying less about shareholder reaction, certainly must have contributed to the fact that CEO pay increased from 33 times the average workers' pay in 1978 to 300 times in 2000.
said by WhatNow:If you want to live in a Latin America economy of the very rich and no Middle Class keep voting for the free market Republicans. There is not free market for the middle class and below. I agree with your generalization. IMO, the problem with Ds is they get on board with every looney, marginal bandwagon that comes along. If they had been in control the past 20 years, we'd have National Transvestite Day, prohibition of gun ownership, and dozens of programs rewarding juvenile delinquency.
50 years ago they were more the party for the "working man." Since then, they've confused "the underdog" with marginalization (transvestites, illegal immigration). Not the mainstream, such as the middle class watching their jobs offshored in the interest of "free markets." | |
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