'Merkin 'lections

[James Deuce]

So, unlike here, for example, where such largess is far more likely to be the result of left-ish entities with questionable understanding of market cause/effect, in the US it was the rabid right who orchestrated legislation all but mandating dodgy loans? Presumably in order to provide a foundation on which selected 2nd and 3rd tier financial institutions could benefit from repeatedly short-selling, knowing that subsequent government would make good?

I've taken very little notice of the whole string of events, feel free to re-structure the above.

Fundamentally yes, bearing in mind that the Republicans owned Congress and the Senate at the time Clinton was president, making it really hard to moderate the effects of a loosening fiscal policy at the time an Ayn Rand disciple was running the Federal Reserve. A combination of events and legislation meant that mortgage defaulters in the US could simply remove their stuff, lock the door and tell the bank, "Your Problem". This led to the AIG crisis which in turn pummeled our banks and insurance companies, forcing them to call in mortgages that weren't sub-prime, merely a bit risky.

So a fat American walked off his property and couple this with the illegal in NZ practice of mortgage brokers onselling mortgages to another finance institution with their mortgage business underwritten by Fanny Mae and someone in, for instance, New Zealand, lost their house as a direct result. DAMHIK.

[jrandom]

My understanding of the GFC and the subprime issue is that, simply, very high risk debt (that should probably not have been issued in the first place, but, greedy lenders were being given very cheap money by central banks and had to do something with it) was repackaged and on-sold multiple times, with the risk being obfuscated at every turn, not to mention the proceeds of the on-selling then being re-lended again to similar high-risk debtors.

The fundamental issue was the underlying assumption that property values would continue to go up and that the dodgy debt would keep working because of capital gains.

When the bubble burst, the chain collapsed and everyone realised that everybody's money had actually been spent on booze and hookers.

Now there's no money to do jack with, and economies have contracted.

It'll come right in due course but there's a lot of pain in the interim.

Anyway, governmental regulation could've avoided the GFC by:

- regulating money markets to disallow the kind of repackaging and on-selling debt and re-lending of the proceeds that was going on, which basically allowed all the actual liquidity in the economy to get spent on booze and hookers "because capital gains";

- disallowing lending to people who fundamentally couldn't pay it back in the first place.

That sort of thing.

The whole deal is a good example of how regulation of markets can be a good and necessary thing, mostly because people, left unchecked and given temptation, can often be kinda stupid and evil.

[Ocean1]

The whole deal is a good example of how regulation of markets can be a good and necessary thing, mostly because people, left unchecked and given temptation, can often be kinda stupid and evil.

Dunno, kind of seems to me that far from failing to interfere with the market the govt regulated the fuck out of the market, leading to:

lending to people who fundamentally couldn't pay it back in the first place.

And that keeping one's idealistic fantasies well seperate from the real world would have proven a better idea all round.

Except for the above mentioned fat Americans, of course.

[jrandom]

And that keeping one's idealistic fantasies well seperate from the real world would have proven a better idea all round.

I guess so. Dunno. I'm no expert on the topic.

I am very slightly enjoying my inner smugness over the fact that a lot of my acquaintances over the last ten years bought into the BECAUSE CAPITAL GAINS! mantra and hocked themselves up to the eyeballs to purchase residential property.

I was always pretty dubious about the wisdom of it, but attempting to be a naysayer never went down well. Because, you know - capital gains! *mumble mumble handwave-over-the-details*

Told ya so, guys.

[Ocean1]

I guess so. Dunno. I'm no expert on the topic.

I am very slightly enjoying my inner smugness over the fact that a lot of my acquaintances over the last ten years bought into the BECAUSE CAPITAL GAINS! mantra and hocked themselves up to the eyeballs to purchase residential property.

I was always pretty dubious about the wisdom of it, but attempting to be a naysayer never went down well. Because, you know - capital gains! *mumble mumble handwave-over-the-details*

Told ya so, guys.

No, me neither. I'm just sick of both sides fucking with what should be perfectly sensible negative feedback controls on all sorts of markets. In my purely unprofessional perusals of How Shit Works (tm) the only thing I'm moderately sure of is that any time you find an insulating layer between the dude paying for something and the dude benefiting from it you'll get grief.

Trouble is, of course the original fuckers always make sure that the fallout only ever falls upon those who can pay for it, leedingto ever more perverse distortions. Or, as uncle Oscar put it : "if it seems too good to be true then someone's trying to shaft you".

[mashman]

I still find it amusing that people believe that market crashes aren't intentional and that they are things that happen naturally. I may well be wrong, but looking at the historic federal reserve rates, when they go through a "sustained" period of decreasing interest rates, some form of recession takes place and historically the market rebounds as the interest rate starts rising again. Monetary policy I think the federal reserve call it. I guess we now know what happens as the rate keeps decreasing due to monetary policy exposing "brain fart bubbles". I hope the US fly off the fiscal cliff and come crashing down with an almighty boom.

[scumdog]

I hope the US fly off the fiscal cliff and come crashing down with an almighty boom.

Yep, and we'll be SO much better off for it, right?

[mashman]

Yep, and we'll be SO much better off for it, right?

heh... nope, we'll be up to our necks in shit, and some. Might even make you do some honest work.

[scumdog]

heh... nope, we'll be up to our necks in shit, and some. Might even make you do some honest work.

I've done my share of that sonny - and still do so! (amazing the people who tell me "don't know If I could ever do you job mate, buggered if I know how you do it" - so I guess I DO do some honest work.

[mashman]

I've done my share of that sonny - and still do so! (amazing the people who tell me "don't know If I could ever do you job mate, buggered if I know how you do it" - so I guess I DO do some honest work.

They probably say that coz they couldn't shaft people just because the letter of the law says so.

[mashman]

I've done my share of that sonny - and still do so! (amazing the people who tell me "don't know If I could ever do you job mate, buggered if I know how you do it" - so I guess I DO do some honest work.

They probably say that coz they couldn't shaft people just because the letter of the law says so, pops.

[Ocean1]

I still find it amusing that people believe that market crashes aren't intentional and that they are things that happen naturally.

You astonish me, there's a link between official cash rates and national economic health?

While your giggling explain what dastardly mechanism are at work, there dude, eh?

[scumdog]

They probably say that coz they couldn't shaft people just because the letter of the law says so, pops.

I ain't THAT thick ya need to tell me twice.

And next time somebody says as I said previously I'll ask them if mashman is right - 100 to 1 ya ain't, d'ya feel luck punk, do ya???

[mashman]

You astonish me, there's a link between official cash rates and national economic health?

While your giggling explain what dastardly mechanism are at work, there dude, eh?

yup.

It's called Monetary Policy. It affects all sorts of things apparently, including inflation and the addition and removal of vast amount of money available to the economy. Given that the entire economy revolves around money, why would the people who control the economy allow it to fall into recession?

I ain't THAT thick ya need to tell me twice.

And next time somebody says as I said previously I'll ask them if mashman is right - 100 to 1 ya ain't, d'ya feel luck punk, do ya???

heh, haven't had a double post for a while...

Make my day.

[Ocean1]

Given that the entire economy revolves around money, why would the people who control the economy allow it to fall into recession?

Dunno. Maybe the economy falls into recession in spite of tweaks to monetory policy. P'raps making cash easier to borrow, for example doesn't stimulate spending enough once it becomes obvious that borrowing money in a contracting economy is a bad idea.

I guess in the long run fucking with controls on public money doesn't really change the behaviour of thse who have private money to spend. Or not.