On Wall Street Bailout

[piterburg]

If  the Federal Government cannot properly manage  a railroad retirement system, how can we trust them to manage financial markets?

Comments

[the_white_man]

The truth of the matter is: we can't.
But they have the printing press money :(

[piterburg]

It is kinda of a pessimistic view. You work for financial industry, don't you?

[the_white_man]

Guilty as charged

[zvuv]

apparently not as little as we trust the financial markets themselves.

[makay855]

they are not going to manage, they are going to regulate,- 2 different things.

Recall that the government had to step in after the Great Depression - S.E.C. was created, Act of 1934, etc. There is similar situation now.

They will have to creat a new government body and charge it with risk management oversight.

[piterburg]

What is happening is not regulation, but rather nationalization. The US Government took over Fannie and Freddie and is in process of taking the ownership of AIG.

So the gov't will own two biggest mortgage trading companies in the world along with the biggest insurance company in the world. As the owner, the gov't will have to manage, not regulate these entities.

[makay855]

well, Fannie and Freddie have always been quasi-government entities.
With AIG, the company will pay $80 bn back to the government. They can spin it off, as soon as it can stand on both feet.
Ineffective regulation in the last 8 years allowed companies take unjustified bets. And now taxpayers will have to bail out failed companies. Wall Street socialism at its best.

[piterburg]

//Wall Street socialism//

Profits are privatized, but losses are socialized. Just like Russia.

[27183]

Well, if we are after one-liners, everyone can play that game, e.g, "If the financial markets can't manage financial markets, how can we trust them to manage financial markets", or something like that.

Except, it's not like one has ever left managing financial markets just to the financial markets (e.g, subprime loans were partly about increasing minority home ownership rates), so who is to know if the quip makes sense or not.

The thing that makes life difficult for me, your regular Joe Schmoe, is that the whole things seems a bit too technical, so one can't really invoke "pattern recognition", otherwise known as gut instinct, to guess what's right.

[piterburg]

Of course it is a sound bite, my dear friend. But also a sound bite that should serve as a catalyst for some hard thinking

[27183]

// The subprime loans were indeed partly about increasing minority home ownership rates ... but we should not overemphasize it, as some right-wing commentators do. ... we've had a system where banker's compensation was tied to the volume of the product sold rather than their quality or than long-term financial well-being of their institution

[piterburg]

//I haven’t for example, been able to understand whether free trade is really as good as they say