Aren't you Glad you Bailed Out These Poor Banks?

Discussion in 'Economy' started by froggy, Mar 10, 2011.

  1. froggy
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    froggy Gold Member

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  2. Mad Scientist
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    Mad Scientist Deplorable Gold Supporting Member Supporting Member

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    I'm glad to see more and more people realize it isn't about Republican vs Democrat, it's about Us vs the Banks.

    The Feds print money and give it to the banks claiming they need "liquidity". Then those same banks lend it back to us at credit card rates.

    Nice scam if you manage it.
     
  3. froggy
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    froggy Gold Member

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    looks from the lack of comment, most here faired from these bank bailouts.
     
  4. JWBooth
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    JWBooth Gold Member

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    So long as the Fed exists to manufacture money the banksters will continue to win.
     
  5. Rental Lease
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    While I don't love my tax dollars going to the banks any more than anyone else does, I do think it's worth considering just how f#cked we would have been if people around the world lost faith in US banks. There would be runs to withdraw cash, credit and lending would have come to a screeching halt, and the whole foundation of our economy system would have collapsed.
    Even if the entire system hadn't collapsed, if more banks had gone under the credit markets would have tightened even further, making small business loans and mortgages nearly impossible to obtain, which would mean the job market and the real estate market would be even worse off right now than they already are. Even if I weren't a real estate investor, I don't think most homeowners would want to buy their next house in cash.
    Anyway just wanted to mix things up a little on here, cheers!
     
  6. william the wie
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    william the wie Gold Member

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    BofA is a casebook of banking incompetence only citigroup comes close. While I can understand people that get mad at the Morgans and Goldman what I don't understand is getting more upset at them than at the idiots who caused the mess.
     
  7. LordBrownTrout
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    LordBrownTrout Gold Member

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    I was against any bailout of the banks. I would have preferred them to fail on their own and would have had all sorts of confidence in the banks that survived and weren't doing screwy things.
     
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  8. william the wie
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    william the wie Gold Member

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    That makes way too much sense for our politicians to go with it.
     
  9. Cuyo
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    Cuyo Training a Guineapig army

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    wtw - Aren't you an economist? I'm shocked to hear you go along with that statement, unless I have you mistaken for someone else.

    When BofA fails, how much does FDIC have to pay out in tax dollars? How many people are just f#cked out of balances in excess of $100k? What does this failure and consequential domino effect do to M1?

    Personally? I'd have rather seen the bank seized instead of 'Bailed out.' But pull out and let them fail? Poverty; massive, widespread, and immediate.
     
  10. william the wie
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    william the wie Gold Member

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    Relax, the bondholders become stockholders in bankruptcy. Admittedly some retirees will go to the ER when they find this out (CDs are bonds), a lot of people will be sued and no one will be happy but otherwise you let the same incompetent management team destroy even more wealth. The military axiom for Paulson, Geithner and Bernancke's handling of the meltdown is "Reinforcing Failure" also known as snatching catastrophe from the jaws of tactical setback. And no my background is in banking finance not economics although I do study economics.

    The majority of major banks were out of real estate in 2005. The screw ups such as WaMu, BofA, Lehman Brothers, Bear Sterns, Lehman Brothers and Citigroup had bad balance sheets as early as 2004. By 2006 most of them should have been shut down by regulators. Bear Sterns and Merril Lynch should have been put in bankruptcy in the summer of 2007 but this was not done. WaMu, Countrywide and New Century in early 2006. Instead BofA paid a premium for both Merril Lynch and Countrywide. Citigroup was less psychotic than that but was still encouraged to add the loans and accounts of defaulted banks by the FDIC. The meltdown was a case study of what not to do from 1994-2008. Rewarding incompetence was the watchword under Clinton and Bush. In the financial sector York financial was offering a 10% discount for direct purchase of their shares in 1992 or 93. Almost all and maybe all of the deposit banks mentioned above also had direct purchase share discounts and to the best of my recollection those discounts generally equaled or exceeded the 5% underwriting charge for secondary offering with the majority of those discounts going back to the 90s.

    Chase Manhattan back in 1996 offered 5% discounts on reinvested dividends and 3% discounts on direct purchases. ("Buying Stocks Without a Broker" by Charles B Carlson) Chase morphed into JPM and was the most liquid bank in the country in 2008. That is an indictment of Greenspan, Bernancke and all of their works that's hard to top. So, yeah the regulators were over a decade behind time in straightening out the mess and now we are headed for an even worse decade of failure reinforcement. This current policy is the lost decade recipe on steroids.
     
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