Financial News

[NorthSideSox72]

Is that the new explanation?

 

Japan is sunk because they never moved their debts off of the books. Which coincidentally is what the Obama administration is trying really hard to do by stalling foreclosures, plus all of the ridiculous programs to go with it that haven't worked, but sure cost us a lot, and still keep debt and toxic assets on the banks books.

 

Remember your mantra about what happens when you stop spending in a recession? The Obama administrations response has done the exact same thing in banking. Blaming banks for sitting on cash, while forcing banks to sit on cash out of fear of being closed, is what is the problem here. If you want money to flow, you don't tighten regulations and oversight. It doesn't work that way.

Eh, I mostly agree, but I think you can tighten regulations while still promoting growth. Depends on how you do it, and the way NOT to do it is have this endless stream of vague generalities thrown around to put the whole sector in a waiting mode.

 

[Balta1701]

Is that the new explanation?

 

Japan is sunk because they never moved their debts off of the books. Which coincidentally is what the Obama administration is trying really hard to do by stalling foreclosures, plus all of the ridiculous programs to go with it that haven't worked, but sure cost us a lot, and still keep debt and toxic assets on the banks books.

That is, of course, what happens when we...um...listened to the banks (and you) and did exactly what they wanted.

 

Remember your "Paying his neighbors mortgage" complaint? And the original Tea Party rant? That is exactly what that was about. If we took taxpayer money and did anything to really redeem those loans, it was bailing out people who screwed up unfairly. They had to learn their lesson.

[NorthSideSox72]

That is, of course, what happens when we...um...listened to the banks (and you) and did exactly what they wanted.

 

Remember your "Paying his neighbors mortgage" complaint? And the original Tea Party rant? That is exactly what that was about. If we took taxpayer money and did anything to really redeem those loans, it was bailing out people who screwed up unfairly. They had to learn their lesson.

Not really. The banks are mostly not getting what they want.

 

But certainly you are right that they were let off the hook after TARP to some degree, and that's why I am saying it would be smart to tighten the regs, but do so clearly and immediately so that we can clear that hurdle.

 

[southsider2k5]

That is, of course, what happens when we...um...listened to the banks (and you) and did exactly what they wanted.

 

Remember your "Paying his neighbors mortgage" complaint? And the original Tea Party rant? That is exactly what that was about. If we took taxpayer money and did anything to really redeem those loans, it was bailing out people who screwed up unfairly. They had to learn their lesson.

 

The biggest problem is your are forcing banks to hold up the removal of bad debts from their books, which means they can't lend, which is exactly what you are blaming here. Just like I told you three years ago, keeping debt on the books is only going to drag this out, and the sell off of prices is going to happen eventually. The government doesn't have enough money to spend itself out of this mess.

 

The biggest problem with the banking sector was setting up governmental agencies that allowed banks to take risks, and then dump mortgages off on. Freddie and Fannie still need to be shutdown, because that problem there hasn't been solved. Encouraging and rewarding risk was stupid, and it still is stupid. If you force banks to be judicious with the loans they make, they won't take nearly the risk.

[Balta1701]

Not really. The banks are mostly not getting what they want.

 

But certainly you are right that they were let off the hook after TARP to some degree, and that's why I am saying it would be smart to tighten the regs, but do so clearly and immediately so that we can clear that hurdle.

There's a 2 way street problem here, and it comes out of the Congress. The best way for this to work would be simple regulations. Both 2k5 and I agree on that. It saves accounting work (his opinion), it makes things idiot/lobbyist-proof (my opinion). Works either way.

 

Problem is...the big banks know that too. If the regulations were simple, there wouldn't be workarounds. So any time a simple regulation solution...like an across the board limit on leverage, or having banks hold onto some fraction of assets they issue, or the dividing line between commercial banks and investment firms comes along...it gets hammered by lobbyists, so that it becomes complex enough that either they can lobby effectively on obscure issues or so that there are enough loopholes that the regulations really won't matter.

 

What we wind up with is a patchwork of things that are occasionally effective but become huge enemies of the financial industry (See: the CPFB) and enormously complicated, loophole-filled regulations sit on the books, keeping lawyers employed finding workarounds and lobbyists employed rewriting the rules to make things slightly better for Wall Street at every step.

[NorthSideSox72]

There's a 2 way street problem here, and it comes out of the Congress. The best way for this to work would be simple regulations. Both 2k5 and I agree on that. It saves accounting work (his opinion), it makes things idiot/lobbyist-proof (my opinion). Works either way.

 

Problem is...the big banks know that too. If the regulations were simple, there wouldn't be workarounds. So any time a simple regulation solution...like an across the board limit on leverage, or having banks hold onto some fraction of assets they issue, or the dividing line between commercial banks and investment firms comes along...it gets hammered by lobbyists, so that it becomes complex enough that either they can lobby effectively on obscure issues or so that there are enough loopholes that the regulations really won't matter.

 

What we wind up with is a patchwork of things that are occasionally effective but become huge enemies of the financial industry (See: the CPFB) and enormously complicated, loophole-filled regulations sit on the books, keeping lawyers employed finding workarounds and lobbyists employed rewriting the rules to make things slightly better for Wall Street at every step.

Patchwork is one problem, and that existed before 2007. But no, the banks to NOT want vagueries. And that's what they got. Sure they want exceptions and loopholes, they will work towards that, but you can't even HAVE those when the rules of the game haven't been set. This is not the happy go lucky times for banks you seem to think.

 

[Balta1701]

This is not the happy go lucky times for banks you seem to think.

Have you taken a look at Wall Street profits since 2009? A new record every quarter just about.

[southsider2k5]

There's a 2 way street problem here, and it comes out of the Congress. The best way for this to work would be simple regulations. Both 2k5 and I agree on that. It saves accounting work (his opinion), it makes things idiot/lobbyist-proof (my opinion). Works either way.

 

Problem is...the big banks know that too. If the regulations were simple, there wouldn't be workarounds. So any time a simple regulation solution...like an across the board limit on leverage, or having banks hold onto some fraction of assets they issue, or the dividing line between commercial banks and investment firms comes along...it gets hammered by lobbyists, so that it becomes complex enough that either they can lobby effectively on obscure issues or so that there are enough loopholes that the regulations really won't matter.

 

What we wind up with is a patchwork of things that are occasionally effective but become huge enemies of the financial industry (See: the CPFB) and enormously complicated, loophole-filled regulations sit on the books, keeping lawyers employed finding workarounds and lobbyists employed rewriting the rules to make things slightly better for Wall Street at every step.

 

It has also saddled them with billion in compliance costs, and up to a couple of dozen regulatory bodies looking at their books at different times. This system is a disaster. The fact that it has failed so many times, should be the onus on fixing it. Instead it we have done the equivalent of giving Adam Dunn a contract extension, today.

[southsider2k5]

Have you taken a look at Wall Street profits since 2009? A new record every quarter just about.

 

Banks can, and do, be profitable, and bankrupt.

[NorthSideSox72]

Have you taken a look at Wall Street profits since 2009? A new record every quarter just about.

And, again, not doing anything useful with those earnings because they are hoarding and capitalizing internally. Clarify the regulations, even if stringently, and you will see more money flow back into the markets and into loans. Guaranteed. They know how that's how they'll make more money later.

 

[Y2HH]

And, again, not doing anything useful with those earnings because they are hoarding and capitalizing internally. Clarify the regulations, even if stringently, and you will see more money flow back into the markets and into loans. Guaranteed. They know how that's how they'll make more money later.

 

Yes, absolutely. This is necessary or banks will continue to horde cash for some time to come. The problem is they're all dragging their feet getting it done for one reason or another. To me, the reason why they're dragging this out means nothing, I don't care what the excuse is on either side of the aisle...they need to get together and get this done, and soon.

 

And that leads us back to the everlasting problem...them getting together and doing anything that they can agree/compromise on for the good of the nation.

[Cknolls]

 

Yeah, it's Obama's fault that record numbers of banks are closing. Not the fact that they invested in assets that left them insolvent. It's Obama.

 

That one ranks up there with thinking FNMA and FDMC caused the housing crisis when 6% of their mortgages went bad while 18% of private bank mortgages went bad.

 

 

Yeah who would have thought investing in Fannie Mae preferreds would lead your bank to insolvency??

Edited July 2, 2011 by Cknolls

[Cknolls]

And, again, not doing anything useful with those earnings because they are hoarding and capitalizing internally. Clarify the regulations, even if stringently, and you will see more money flow back into the markets and into loans. Guaranteed. They know how that's how they'll make more money later.

 

 

They have to hoard and capitalize because they know what garbage they have on their book. The accounting atrocities they are allowed to get away with are baffling. Mark this s*** to market for crying out loud. You marked to market while riding the coaster to the top of the hill.

[Balta1701]

They have to hoard and capitalize because they know what garbage they have on their book. The accounting atrocities they are allowed to get away with are baffling. Mark this s*** to market for crying out loud. You marked to market while riding the coaster to the top of the hill.

 

I think that's just about as Entertaining as kap's mark2market post.

[kapkomet]

 

I think that's just about as Entertaining as kap's mark2market post.

 

 

You mean this one?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Balta1701]

Nailed it.

[NorthSideSox72]

They have to hoard and capitalize because they know what garbage they have on their book. The accounting atrocities they are allowed to get away with are baffling. Mark this s*** to market for crying out loud. You marked to market while riding the coaster to the top of the hill.

Pfft, what? How are you going to mark the kind of stuff they are still muzzling amongst their credit books? There is no M to M against. Contingent won't work, you have to consider it like a pre-auction asset to go at a steep discount. But no one can say which is at that level. So no, MTM isn't some great fix.

 

Yes, part of the hoarding of capital is real, internal risk abatement. But that doesn't explain the lego-peg-like jump in capital reserve numbers after the QE waves. Its fear and uncertainty, more than anything.

 

[Cknolls]

Another s***ty jobs report. But what did Plouffe say, It will not matter.

[southsider2k5]

Another s***ty jobs report. But what did Plouffe say, It will not matter.

 

The interesting part was that the private sector number wasn't that bad.

[mr_genius]

The interesting part was that the private sector number wasn't that bad.

 

that seemed s***ty as well. not even close to the 150,000 to cover the new job market entrants let alone bring unemployment numbers down. I wouldn't be surprised to see a net loss of jobs in a month or so.

 

unless i am missing something.

[southsider2k5]

Now this is one time I wish I had watched CSpan. This is my biggest problem with Ron Paul. Somehow gold isn't just as fiat as paper. Their value is all in what people believe they are worth.

 

http://blogs.forbes.com/afontevecchia/2011...olds-not-money/

 

Bernanke Fights Ron Paul In Congress: ‘Gold Isn’t Money’

Jul. 13 2011 - 11:26 am | 37,291 views | 0 recommendations | 9 comments

 

Chairman Ben Bernanke faced-off with Fed-hating Representative Ron Paul during his monetary policy report to Congress on Wednesday. The head of the Fed was forced to respond to accusations of enriching already rich corporations while failing to help Main Street, while he was pushed on his views on gold. “Gold isn’t money,” Bernanke said.

 

While most of Bernanke’s reports to Congress serve politicians to pursue their own agendas by gearing the Chairman towards their issues, with Republican Rep. Bacchus talking of the unsustainability of Medicaid and Rep. Frank (D, Mass.) asking about the need to raise the debt limit without cutting spending, it was a stand-off between Bernanke and Ron Paul that took all the attention. (Read Apocalyptic Bernanke: Raise The Debt Ceiling Or Else).

 

Rep. Ron Paul, Republican for Texas, asked Bernanke why a capital injection of more than $5 trillion “hasn’t done much” to help the consumer, who makes up about two-thirds of GDP in the U.S., and prop up the economy, while it helped boost corporate profits. “You could’ve given $17,000 to each citizen,” Ron Paul claimed.

 

Bernanke, clearly on the defensive, told Rep. Ron Paul that his institution hadn’t spent a single dollar, rather, the Fed has been a “profit center” according to the Chairman, returning profits to the federal government. As Bernanke began to sermon Rep. Paul on the history of the Fed (“we are here to provide liquidity [in abnormal situations],” the Chairman said), he was interrupted.

 

“When you wake up in the morning, do you think about the price of gold,” Rep. Paul asked. After pausing for a second, Bernanke responded, clearly uncomfortable. that he paid much attention to the price of gold, only to be interrupted once again.

 

“Gold’s at about $1,580 [an ounce] this morning, what do you think of the price of gold?” asked Rep. Paul. A stern-faced Bernanke responded people bought it for protection and was once again cut-off, with Ron Paul once again on the offensive.

 

“Is gold money?” he asked. Clearly bothered, Bernanke told the representative “no, gold is not money, it’s an asset. Treasuries are an asset, people hold them, but I don’t think of them as money,” said Bernanke.

 

Rep. Ron Paul again jumped in, noting the long history of gold being used as money, and then asked Bernanke why people didn’t hold diamonds, clearly hinting at his fiat money criticism of the U.S. monetary system. The Fed Chairman told Rep. Paul it was nothing more than tradition, and, as he was attempting to develop his argument, Rep. Ron Paul quickly asked the acting authority of the House of Representative’s Committee on Financial Services, Rep. Bacchus, to excuse him for exceeding his time, as he returned the floor to the Committee. (Read Bernanke To Rep. Paul Ryan: QE2 Created 600,000 Jobs).

 

The interesting exchange served as one of the few times Bernanke has been publicly pushed off his comfort zone by an elected official. Rep. Ron Paul brought up the issues that he’s famous for, namely, a sort of allegiance between the Fed and the nation’s most powerful institutions, the illusion of fiat money, and the gold standard. Bernanke, angered and bothered, had no option but to respond.

[StrangeSox]

I'm glad we can agree that the whole "gold standard"/fiat money crap common in Ron Paul circles is a bunch of nonsense.

[bmags]

there was a strange tilt to that article I can't quite put my finger on. But god I hate the gold standard talk. Was this around in the 80s and 90s?

[StrangeSox]

there was a strange tilt to that article I can't quite put my finger on. But god I hate the gold standard talk. Was this around in the 80s and 90s?

 

It was in the 1880's and 90's.

[southsider2k5]

there was a strange tilt to that article I can't quite put my finger on. But god I hate the gold standard talk. Was this around in the 80s and 90s?

 

It never completely goes away. It always picks up volume when the price of gold goes up, and the economy goes down.