The Economy, stupid

[southsider2k5]

Another interesting note on the mortgage mess...how pervasive was fraud on the part of the mortgage lenders in creating all these bad loans and getting them approved and sold off?

 

And none of it would have been possible if the government hadn't have set up agencies to buy this s***.

[Balta1701]

And none of it would have been possible if the government hadn't have set up agencies to buy this s***.

Because clearly, all of this stuff is currently owned by the government. That's why all the banks and investment companies are in such great shape. They didn't buy any of it, it all was bought by the government, and the banks are 100% healthy. I'm so glad we're defended from the government's excesses by these responsible bankers who didn't buy up any of the sub-prime mortgages in the last 5 years, and certainly did not BUY VASTLY MORE OF THEM than the GSE's.

[kapkomet]

Because clearly, all of this stuff is currently owned by the government. That's why all the banks and investment companies are in such great shape. They didn't buy any of it, it all was bought by the government, and the banks are 100% healthy. I'm so glad we're defended from the government's excesses by these responsible bankers who didn't buy up any of the sub-prime mortgages in the last 5 years, and certainly did not BUY VASTLY MORE OF THEM than the GSE's.

 

 

[southsider2k5]

Because clearly, all of this stuff is currently owned by the government. That's why all the banks and investment companies are in such great shape. They didn't buy any of it, it all was bought by the government, and the banks are 100% healthy. I'm so glad we're defended from the government's excesses by these responsible bankers who didn't buy up any of the sub-prime mortgages in the last 5 years, and certainly did not BUY VASTLY MORE OF THEM than the GSE's.

 

Good god, step away from your talking points for a second and try to understand the big picture here.

 

Dispite the contention that because of this one little fact that you keep bringing up being true, that doesn't change that having a lender of last resort made a market for this crap. Even if the US government didnt' buy VASTLTY MOST OF THE GSE's, they made them profitable by buying a portion of them, and setting up a defacto marketplace for them. When something becomes profitable it is economic law that it creates a stream of people who will attempt to enter that sector until the profitablility of said marketplace approaches zero. With the huge profits available in this sector because of both the money, plus the acceleration of housing prices, there was no "risk" in the marketplace. If you didn't sell your risk off, and the buyer failed in its obligation, they could sell in foreclosure for a higher price anyway. The profited in either manner.

 

Not only was the government responsible for guarenteeing a portion of this market, but they were also directly responsible for the beginning of the accleration of home prices, because they created a new level of demand that had never been there before by putting people into homebuying situations that had never been there before. Its the same things that the government has done to make health care and education so damned expensive. Its pure demand economics. When you enable more people to buy, the price goes up, if all other things stay the same. The effect is even greater in areas where supply is fixed, such as, I don't know, education and health care?

 

If you don't believe me, stop and ask yourself this question. How come there wasn't a sub-prime mortgage sector until after all of these laws were pased? Why haven't banks been doing this for decades, or even centuries?

[kapkomet]

/waits for the capital markets are evil and only governments can save us post.

 

[NorthSideSox72]

/waits for the capital markets are evil and only governments can save us post.

You may be waiting a while. I haven't seen anyone post anything like that.

 

[kapkomet]

You may be waiting a while. I haven't seen anyone post anything like that.

Are you kidding me? That wasn't Kaperbole.

[lostfan]

He's jabbing Balta again.

[NorthSideSox72]

Are you kidding me? That wasn't Kaperbole.

 

 

He's jabbing Balta again.

I figured. But I haven't heard Balta say that, or much like that. I don't think Balta has posted that the markets are evil, or that governments should have that money. I haven't see that at all.

 

[kapkomet]

I figured. But I haven't heard Balta say that, or much like that. I don't think Balta has posted that the markets are evil, or that governments should have that money. I haven't see that at all.

Balta has been very clear that he thinks the only thing that can save us is government takeover of (health care, banking, education, whatever to prevent deflationary cycle), while posting every chance he gets about "evil corporations" and their misdeeds. That's a translation that "markets" don't work with "abuses" such as these.

 

I've seen post after post after post citing "expert" after "expert" about this coming from there... and frankly, anyone can sound good for a 500 word essay but totally miss the point. This is NOT a knock about Balta, but I think it's dangerous reading all this s*** and then thinking one knows how all this works. Frankly, Timothy Gietner doesn't get it, yet. And neither does anyone here. But I do think 99.9% of people fail to look at this as a big picture, and it's flat out dangerous.

Edited February 26, 2009 by kapkomet

[NorthSideSox72]

Balta has been very clear that he thinks the only thing that can save us is government takeover of (health care, banking, education, whatever to prevent deflationary cycle), while posting every chance he gets about "evil corporations" and their misdeeds. That's a translation that "markets" don't work with "abuses" such as these.

 

I've seen post after post after post citing "expert" after "expert" about this coming from there... and frankly, anyone can sound good for a 500 word essay but totally miss the point. This is NOT a knock about Balta, but I think it's dangerous reading all this s*** and then thinking one knows how all this works. Frankly, Timothy Gietner doesn't get it, yet.

You were talking markets. Health care, yes, many people have suggested a government-controlled (to at least some extent) system.

 

But you are taking Balta's posting of bad stuff that corporate folks are doing, and assuming that means he thinks the markets are evil and government should take over. He hasn't said that, at all.

 

If one were to make a similar statement about, for example, those who constantly bash Obama... you could then leap to say that they think the Democratic party should be abolished in favor of a 100% GOP government. And yet, I don't think anyone is actually saying that.

 

[Balta1701]

If one were to make a similar statement about, for example, those who constantly bash Obama... you could then leap to say that they think the Democratic party should be abolished in favor of a 100% GOP government.

It worked great from 2000-2006!

[kapkomet]

It worked great from 2000-2006!

You're getting better at the Baltabole...

 

[lostfan]

So my boss was just telling me how he called his bank and wanted to refinance because the interest rate is so low now. He has 6.5%, so like many people he's thinking he can drop off a percentage point or something. He says they called him back and said for a fee of $150 or something like that they will just drop the interest rate down to 5.25%, no adjustments to his balance or the terms of the loan or anything. Has anyone else ever heard of this? That's the first I've heard of it. Because if so, I'm calling my bank ASAP and paying whatever they ask me to pay. That would save me like 300 a month on my mortgage.

 

Also, does the bank lose money doing this? I'm thinking the bank ordinarily just makes off with extra cash in that case since they don't have to give the 1.25% back to the feds, and when they drop the rate they just make whatever they'd normally make before the Fed cuts the rates. Am I wrong?

[kapkomet]

So my boss was just telling me how he called his bank and wanted to refinance because the interest rate is so low now. He has 6.5%, so like many people he's thinking he can drop off a percentage point or something. He says they called him back and said for a fee of $150 or something like that they will just drop the interest rate down to 5.25%, no adjustments to his balance or the terms of the loan or anything. Has anyone else ever heard of this? That's the first I've heard of it. Because if so, I'm calling my bank ASAP and paying whatever they ask me to pay. That would save me like 300 a month on my mortgage.

 

Also, does the bank lose money doing this? I'm thinking the bank ordinarily just makes off with extra cash in that case since they don't have to give the 1.25% back to the feds, and when they drop the rate they just make whatever they'd normally make before the Fed cuts the rates. Am I wrong?

Holy s***. Let me know more about this, can you? Because the day I get a job, I'm calling for the same deal.

 

[lostfan]

Holy s***. Let me know more about this, can you? Because the day I get a job, I'm calling for the same deal.

I'm calling my bank when I get home. What's the worst they can say? "No, sir, we can't do that." Then I'm just back where I started.

[NorthSideSox72]

I'm calling my bank when I get home. What's the worst they can say? "No, sir, we can't do that." Then I'm just back where I started.

Wow. I researched a re-fi recently myself, and decided against it, because the closing costs were too high versus what we'd save in interest during the couple years we are likely to stay in our condo.

 

But, if I can call my current place, and talk them down with a deal like that... well hallelujah!!!! I'm calling them tonight.

 

[mr_genius]

I'm calling my bank when I get home. What's the worst they can say? "No, sir, we can't do that." Then I'm just back where I started.

 

me too

 

bailouts for everyone!

 

 

[Balta1701]

Good god, step away from your talking points for a second and try to understand the big picture here.

 

Dispite the contention that because of this one little fact that you keep bringing up being true, that doesn't change that having a lender of last resort made a market for this crap. Even if the US government didnt' buy VASTLTY MOST OF THE GSE's, they made them profitable by buying a portion of them, and setting up a defacto marketplace for them. When something becomes profitable it is economic law that it creates a stream of people who will attempt to enter that sector until the profitablility of said marketplace approaches zero. With the huge profits available in this sector because of both the money, plus the acceleration of housing prices, there was no "risk" in the marketplace. If you didn't sell your risk off, and the buyer failed in its obligation, they could sell in foreclosure for a higher price anyway. The profited in either manner.

 

Not only was the government responsible for guarenteeing a portion of this market, but they were also directly responsible for the beginning of the accleration of home prices, because they created a new level of demand that had never been there before by putting people into homebuying situations that had never been there before. Its the same things that the government has done to make health care and education so damned expensive. Its pure demand economics. When you enable more people to buy, the price goes up, if all other things stay the same. The effect is even greater in areas where supply is fixed, such as, I don't know, education and health care?

 

If you don't believe me, stop and ask yourself this question. How come there wasn't a sub-prime mortgage sector until after all of these laws were pased? Why haven't banks been doing this for decades, or even centuries?

You know, lately, I feel like I've been doing my best thinking at the gym. Yesterday, I was able to come up with 3 different ways to set off a volcano in the middle of Louisiana for a cost of less than 2 Iraq wars, today I was able to think through a response to you.

 

What you're not realizing with your post is that your fundamental economic principle is actually exposing the single key flaw in the current wall street setup that leads to this. Your argument is that if the federal government does anything of any sort that it feels provides a public good, like say, increasing home ownership amongst disadvantaged communities, and in specific market conditions this program actually produces a profit, then Wall Street will see this profit, conclude that those market conditions will prevail forever and that infinite profits can therefore be accrued by doing the exact same thing and then leveraging 1000 to 1 bets on it.

 

My first response to this argument is...ok, then what we need is the government to produce a small profit running high speed trains. In response, Wall Street will see this profit, conclude an unlimited amount of money can be made on high speed trains, and then before that bubble bursts we'll have the world's best high speed rail system. Or hell, even cooler, what we need is to turn a profit on volcano monitoring. Suddenly Wall Street sees profitability in volcano monitoring, money pours in, and before you know it, I'm taking my 10 figure bonus and buying beachfront property in Orlando (which will still be above water once the Greenland ice sheet goes).

 

Switching away from the sarcasm, what you're failing to realize is that you've illuminated the exact flaw in the current Wall Street setup that allowed this to happen, and you've illuminated exactly why we need a fundamental reform of the system.

 

There's nothing on principle wrong with the government providing assisted homeownership to disadvantaged groups. Homeownership provides a strong benefit to society. It makes people's lives more stable, stimulates the economy, reduces crime rates. Even if it takes a loss on some portion of the loans, there is a clear benefit to society of having the government work to extend home ownership to disadvantaged communities. Similarly, there is nothing on principle wrong with even somewhat crazy mortgages. Low rate ARM's and such can make sense for people in certain economic conditions. For example, if I get a 2 year postdoc somewhere, and I expect the housing market to stay somewhat flat, then buying a place on a discounted rate and then selling it in 2 years can allow me to build up significant equity rather than paying the money as rent to someone else, and the bank is happy because they make a profit off the interest I do pay. There is nothing a priori wrong with either of these types of loans.

 

The problem is the insanity that you say always must follow. In this case, and in the case of each and every one of these bubbles we've seen, exactly what you state from theory has happened...money has come in until there is no more profit to be had. But here's the flaw...when the bubbles burst, every time, we find out that VASTLY more money has poured in than what should have happened based on the theory you describe. Every time Wall Street finds something new that is turning a profit, the incentives have gotten so out of line in favor of short term gains with no concern about long term market conditions or risk that a nearly infinite amount of money pours in, Wall Street makes hugely leveraged bets against those small profits, comes up with crazy theories no one but a handful of bankers believes about how the market can never and will never go down (Dow 40,000!), and then watches it all blow up in their faces when it turns out that a small amount of money producing a small profit does not in fact lead you to believe that an infinite amount of money invested the same way will produce an infinite amount of profit.

 

Based on this argument, therefore, either 1 of these 2 things must be true.

 

1. Capitalism as a system does not work, because every new invention, every new service or product that is created will give rise to a bubble taking all of the profit out of that product and then will wind up destroying vastly more wealth than was created by the invention of the new product or service. Therefore, capitalism will eventually spiral you down a set of bubbles until all wealth is destroyed.

 

2. The problem isn't with the existence with the loans, or with capitalism itself, the problem has absolutely nothing to do with the government creating them, the problem is entirely due to the focus on short term profit taking and dramatic over-leveraging that exists within our system that is allowing the creation of these asset bubbles. The corporate culture within the banking world is the villain in this case.

 

As I'm not yet a communist, I'm going to go with option 2 until proven otherwise. The problem is not that these loans existed. They can be profitable and useful under the right circumstances and provide significant benefits to people on both sides if they're used wisely. The problem is that Wall Street came up with these crazy ideas that failed to include the most basic facts about the housing market; like the fact that the value of one home can effect the value of its neighbor, assumed that the market would therefore always go up, removed any means of balancing the risk by paying its workers entirely based on their short term profitability rather than whether or not it was making sound long-term decisions, and then rewarded the people who made the biggest shot-term gambles while punishing and firing the people who said the gambling was insane.

 

This flaw suggests several necessary fixes. It doesn't suggest banning sub-prime loans or banning giving loans to poor people. The problem, again, is not that the loans existed, it is what was done with them. What it does suggest is:

 

1. The corporate culture on Wall Street is the true evil here. It is currently set up to entirely reward people who sacrifice everything for short term gain and punish people who plan for the long term. It basically rewards the person who goes to the casino, wins the first few hands, and then keeps upping the wager. This must be fixed. Corporate boards and compensation must be reformed by legislative fiat. They really are key elements to driving the formation of these bubbles. Additional advantages for long term planning as opposed to short term gains (i.e. reforming the tax code that allows losses to be deducted over such large amounts of time) could also help.

 

2. The thing that allows the insidious corporate culture to really destroy things is the leverage that these banks are allowed to go to. It's inexcusable that, for example, the Default Swap market could be leveraged up to $60 trillion dollars on a few hundred billion dollars of assets. Madness. A worldwide effort must be undertaken to bring the banks, and anything that wants to operate like a bank, under control, even in the good times when it seems everything is fine.

 

3. The Securities rating agencies need a complete overhaul. I think that's obvious...them putting garbage as AAA loans without even bothering to check on the quality of the loans was a key part in convincing investors to keep making them.

 

As soon as we finish the Volcano Monitoring bubble, these changes would be a good start. There are probably more that need to be made that aren't coming to my head right now. The entire financial system needs a gigantic regulatory overhaul. Anything less and we're just asking for another bubble, and who knows where the bottom of that one will be.

[BigSqwert]

I'm calling my bank when I get home. What's the worst they can say? "No, sir, we can't do that." Then I'm just back where I started.

Just called my bank and they acted like I should put down my bottle of Hennessey.

[mr_genius]

Just called my bank and they acted like I should put down my bottle of Hennessey.

 

those jerks.

[Balta1701]

Oh, and this is still Schumer's fault. If only he'd kept his mouth shut, all the banks would be in fine shape.

Federal regulators ignored repeated warning signs about Pasadena's IndyMac Bancorp., and their failure to prevent the mortgage lender's collapse last year cost the Federal Deposit Insurance Corp. $10.7 billion -- nearly $2 billion more than previous estimates, according to a new report.

 

The Treasury Department's inspector general blasts banking regulators for missing key signals that IndyMac was growing too quickly on the basis of loans that were poorly underwritten.

 

The inspector general says that the Office of Thrift Supervision should have taken enforcement action against IndyMac more than two years before the bank was finally seized by the FDIC on July 11, 2008.

 

At $32 billion in assets, it was the third largest bank failure in U.S. history and the largest failure ever to be investigated by the inspector general.

 

"OTS waited until June 2008 to issue its first informal enforcement action against IndyMac," said Marla Freedman, the assistant inspector general for audit. "That was much too late. They had a very risky business model, and the OTS should have been making recommendations much earlier about how IndyMac could manage its risk."

 

John M. Reich, director of OTS, said in a letter to the inspector general that he agreed with the agency's filings.

 

The report also dismisses the notion that Sen. Charles Schumer (D-N.Y.) caused IndyMac's failure by writing a letter to the OTS that outlined his concerns with the bank. Reich told reporters the day after IndyMac's failure that Schumer's letter had given IndyMac "a heart attack."

 

"We found no supporting evidence for that," said Inspector General Eric Thorson. "The bank already was failing by the time that letter was made public."

 

Thorson said that IndyMac was undone by its lax loan standards, specifically citing its reliance on so-called alt-A loans, which allowed people to borrow money without documenting their income. In one case cited in the report, IndyMac gave a borrower a $926,000 loan to buy a $1.4 million home. The borrower did nothing to prove a stated income of $50,000 a month.

 

"This guy made, in total, payments of $5,300 before defaulting," Thorson said. "The property later went up for sale for $599,000. It was that kind of thing that they weren't checking out."

 

Inflated appraisals such as the one Thorson cited were regular culprits in IndyMac's bad loans. The report found that in one case IndyMac sought multiple appraisals on a property that ranged from $500,000 to $5 million.

 

"Which one do you think IndyMac went with?" Freedman said. "They always went with the high appraisal because their goal was to get these loans done and make a profit."

[lostfan]

So I called a friend of mine who's sharp with this stuff (M.S. in Econ, the guy who I've mentioned on here used to work at Treasury) and he said that sounds shady as hell and unless it's a new mortgage altogether or it's in the existing contract, that's impossible.

[southsider2k5]

You know, lately, I feel like I've been doing my best thinking at the gym. Yesterday, I was able to come up with 3 different ways to set off a volcano in the middle of Louisiana for a cost of less than 2 Iraq wars, today I was able to think through a response to you.

 

What you're not realizing with your post is that your fundamental economic principle is actually exposing the single key flaw in the current wall street setup that leads to this. Your argument is that if the federal government does anything of any sort that it feels provides a public good, like say, increasing home ownership amongst disadvantaged communities, and in specific market conditions this program actually produces a profit, then Wall Street will see this profit, conclude that those market conditions will prevail forever and that infinite profits can therefore be accrued by doing the exact same thing and then leveraging 1000 to 1 bets on it.

 

My first response to this argument is...ok, then what we need is the government to produce a small profit running high speed trains. In response, Wall Street will see this profit, conclude an unlimited amount of money can be made on high speed trains, and then before that bubble bursts we'll have the world's best high speed rail system. Or hell, even cooler, what we need is to turn a profit on volcano monitoring. Suddenly Wall Street sees profitability in volcano monitoring, money pours in, and before you know it, I'm taking my 10 figure bonus and buying beachfront property in Orlando (which will still be above water once the Greenland ice sheet goes).

 

Switching away from the sarcasm, what you're failing to realize is that you've illuminated the exact flaw in the current Wall Street setup that allowed this to happen, and you've illuminated exactly why we need a fundamental reform of the system.

 

There's nothing on principle wrong with the government providing assisted homeownership to disadvantaged groups. Homeownership provides a strong benefit to society. It makes people's lives more stable, stimulates the economy, reduces crime rates. Even if it takes a loss on some portion of the loans, there is a clear benefit to society of having the government work to extend home ownership to disadvantaged communities. Similarly, there is nothing on principle wrong with even somewhat crazy mortgages. Low rate ARM's and such can make sense for people in certain economic conditions. For example, if I get a 2 year postdoc somewhere, and I expect the housing market to stay somewhat flat, then buying a place on a discounted rate and then selling it in 2 years can allow me to build up significant equity rather than paying the money as rent to someone else, and the bank is happy because they make a profit off the interest I do pay. There is nothing a priori wrong with either of these types of loans.

 

The problem is the insanity that you say always must follow. In this case, and in the case of each and every one of these bubbles we've seen, exactly what you state from theory has happened...money has come in until there is no more profit to be had. But here's the flaw...when the bubbles burst, every time, we find out that VASTLY more money has poured in than what should have happened based on the theory you describe. Every time Wall Street finds something new that is turning a profit, the incentives have gotten so out of line in favor of short term gains with no concern about long term market conditions or risk that a nearly infinite amount of money pours in, Wall Street makes hugely leveraged bets against those small profits, comes up with crazy theories no one but a handful of bankers believes about how the market can never and will never go down (Dow 40,000!), and then watches it all blow up in their faces when it turns out that a small amount of money producing a small profit does not in fact lead you to believe that an infinite amount of money invested the same way will produce an infinite amount of profit.

 

Based on this argument, therefore, either 1 of these 2 things must be true.

 

1. Capitalism as a system does not work, because every new invention, every new service or product that is created will give rise to a bubble taking all of the profit out of that product and then will wind up destroying vastly more wealth than was created by the invention of the new product or service. Therefore, capitalism will eventually spiral you down a set of bubbles until all wealth is destroyed.

 

2. The problem isn't with the existence with the loans, or with capitalism itself, the problem has absolutely nothing to do with the government creating them, the problem is entirely due to the focus on short term profit taking and dramatic over-leveraging that exists within our system that is allowing the creation of these asset bubbles. The corporate culture within the banking world is the villain in this case.

 

As I'm not yet a communist, I'm going to go with option 2 until proven otherwise. The problem is not that these loans existed. They can be profitable and useful under the right circumstances and provide significant benefits to people on both sides if they're used wisely. The problem is that Wall Street came up with these crazy ideas that failed to include the most basic facts about the housing market; like the fact that the value of one home can effect the value of its neighbor, assumed that the market would therefore always go up, removed any means of balancing the risk by paying its workers entirely based on their short term profitability rather than whether or not it was making sound long-term decisions, and then rewarded the people who made the biggest shot-term gambles while punishing and firing the people who said the gambling was insane.

 

This flaw suggests several necessary fixes. It doesn't suggest banning sub-prime loans or banning giving loans to poor people. The problem, again, is not that the loans existed, it is what was done with them. What it does suggest is:

 

1. The corporate culture on Wall Street is the true evil here. It is currently set up to entirely reward people who sacrifice everything for short term gain and punish people who plan for the long term. It basically rewards the person who goes to the casino, wins the first few hands, and then keeps upping the wager. This must be fixed. Corporate boards and compensation must be reformed by legislative fiat. They really are key elements to driving the formation of these bubbles. Additional advantages for long term planning as opposed to short term gains (i.e. reforming the tax code that allows losses to be deducted over such large amounts of time) could also help.

 

2. The thing that allows the insidious corporate culture to really destroy things is the leverage that these banks are allowed to go to. It's inexcusable that, for example, the Default Swap market could be leveraged up to $60 trillion dollars on a few hundred billion dollars of assets. Madness. A worldwide effort must be undertaken to bring the banks, and anything that wants to operate like a bank, under control, even in the good times when it seems everything is fine.

 

3. The Securities rating agencies need a complete overhaul. I think that's obvious...them putting garbage as AAA loans without even bothering to check on the quality of the loans was a key part in convincing investors to keep making them.

 

As soon as we finish the Volcano Monitoring bubble, these changes would be a good start. There are probably more that need to be made that aren't coming to my head right now. The entire financial system needs a gigantic regulatory overhaul. Anything less and we're just asking for another bubble, and who knows where the bottom of that one will be.

 

So what you are telling me is that a system where the people in charge of making decisions put short term gain ahead of long term growth to impress the equity holders of a system into keeping them around for a long period of time so that they can take advantage of all of the perks of their jobs is a failed system. This system needs to be reformed, right? Great, so who are you going to get to reform the financial sector, because you pretty much just indicted all of Congress and the Presidency as flawed by your standards. With the pressures of being re-elected, and getting as much money as possible from lobbys, unions, and constituents, we watch Congress sacrifice intelligent growth for being able to make as many short-term gains as possible for their districts, and then go back and brag about exactly how inefficient they have been. These are the guys who are supposed to reform the broken financial sector? HA!

 

Remember this is the same Congress that had to have financial dictionaries printed so that they could even understand the banking meltdown that they were supposed to be fixing. And now they are supposed to objectively know how to fix the problems? If you didn't know what a default credit swap was six months ago, you have no business passing laws that will influence the direction of our financial sector for generations to come.

 

Going back to there being nothing wrong with all of the ideals behind the bills, you are right. There is nothing wrong with trying to good for people who need help. But the road to hell is paved with good intentions. Just because it is a noble cause, doesn't mean that it makes it immune from having unintended consequences. Every single one of these bills and items that I keep touching on were all passed for good reasons. That doesn't change the damaging effects on our economy. Many of them were huge contributing factors to this very crisis. So to fix that, we are going to pass more laws when the laws we already had passed are what screwed things up in the first place. No, I have zero confidence in the President and the Congress to fix this mess because those are the very groups that did this to us! If you give a gun to to a three year old, you can't blame the gunmaker, nor the kid for what they do with it. You blame the idiot who gave them the gun in the first place.

 

Going back to your sarcasm, the irony is that it is 100% true. It is the entire reason that the whole alternative energy and transportation things haven't gotten off of the ground. There is no money in them. When did you see the big push towards alternative energy? When the prices of regular energy got expensive and alternative energy became potentially profitable. It wasn't some noble pursuit, or some governmental speech/program that made it work. It was money and profit motivation. Its somebody looking at it and making leveraged bets that if they can make a thousand dollar profit selling one hybrid, then they can make billions if they can sell millions. And if the bubble bursts in that sector, they will go broke. Imagine that, now you hate green energy too.

 

As for the financial sector, I have said it before and I will say it again. It is regulated about as stupidly and ineffectiently as could be possible. When you have something like 100ish regulating bodies that don't work with each other, that compete with each other, and are managed by people who don't necesarily have experience in their fields, you are begging for a disaster. Guess what, we get disasters pretty regularly in this sector, and they keep happening, dispite more and more regulations. And this isn't just happening in the US. It is happening all over the world. The EU is having problems, and they are much heavier in regulations than we are. China is having problems, and it is 100% government controled. Japan is in a freefall, and that is with all of their notions of honor and decency that are built into their business realm. All you have to do is look at your history to know that this generation of regulations, only turns into the next generation of problems. It is a truism throughout all of American economic history. Things would be better if we had a single centralized agency that wasn't at the lap of Congress. I would close the doors of every single regulating and oversight body, and give all of their budgets to the Federal Reserve. They would be responsible for the American financial sector, the way that they should be.

 

[StrangeSox]

Canada's banking system seems ok

 

Should we really give all regulation power and funding to one quasi-governmental entity, though?