40 Economists Agree: The GOP Is In Fiscal La-La Land

[Toro]

Excellent! Man, why do I have a feeling we might be closer on the political spectrum than either of us think...is abortion your only major social issue you're Conservative on?

I am fiscally conservative on most things, and socially conservative on most things, with a few exceptions like gay marraige.

The global derivatives bubble was a team effort. And letting the flat-out criminals get away with fraud was achieved with the full cooperation of the government. This was organized crime in every sense of the word. And a D or an R after a politician's name is not a reliable indicator of which way that politician will come down.

Everyone should be in favor of jailing crooks. Everyone.

"Wall Street" is not criminal, per se, but it is overrun with them. And small fines with no admission of wrongdoing has led to more crime. When you don't weed your garden, the weeds multiply and grow bigger and stronger.

Now they are bringing down cities, countries, and continents, and have gone so far as to tinker with the very DNA of our economic system (LIBOR).

Just as an aside, it is mathematically impossible that Barclay's was the sole manipulator of LIBOR.

The Fed is the #1 culprit in all this.

Way, way down at #2 is Wall Street.

 

[ConservaDerrps]

They're derived from debt issues.

Currency swaps are derived from debt issues?
Please explain further.

? Seriously ?

You don't even know what a currency swap is and you're arguing with derps over them? LOL!

A currency swap is a foreign-exchange agreement between two parties to exchange aspects (namely the principal and/or interest payments) of a loan in one currency for equivalent aspects of an equal in net present value loan in another currency; see foreign exchange derivative. Currency swaps are motivated by comparative advantage.[1] A currency swap should be distinguished from a central bank liquidity swap.

Let me google that for you !

Jesus! Thank you! I'm glad I'm not the only one who sees right through his bullshit.

 

[Toro]

Additionally, these financial products were not constructed solely of home loans. The underlying assets were auto loans, credit card balance, corporate bonds, municipal bonds, and sovereign bonds.

That's true. But most of the problems were in the mortgage market. Structured products have been around for decades. There haven't been many problems in CLOs or other asset-backed securities such as credit card receivables. The problems were in mortgages. And even then, the problem wasn't mortgages per se but the price of houses that were underwritten by the mortgages.

 

[OohPooPahDoo]

Excellent! Man, why do I have a feeling we might be closer on the political spectrum than either of us think...is abortion your only major social issue you're Conservative on?

I am fiscally conservative on most things, and socially conservative on most things, with a few exceptions like gay marraige.

The global derivatives bubble was a team effort. And letting the flat-out criminals get away with fraud was achieved with the full cooperation of the government. This was organized crime in every sense of the word. And a D or an R after a politician's name is not a reliable indicator of which way that politician will come down.

Everyone should be in favor of jailing crooks. Everyone.

"Wall Street" is not criminal, per se, but it is overrun with them. And small fines with no admission of wrongdoing has led to more crime. When you don't weed your garden, the weeds multiply and grow bigger and stronger.

Now they are bringing down cities, countries, and continents, and have gone so far as to tinker with the very DNA of our economic system (LIBOR).

Just as an aside, it is mathematically impossible that Barclay's was the sole manipulator of LIBOR.

The Fed is the #1 culprit in all this.

Way, way down at #2 is Wall Street.

That's like saying the chief cause of crime is poor policing and the criminals themselves are only a distant secondary cause.

 

[Toro]

Wow 40 whole Economists, think Progress eh. lol I guess the 80% of the rest of Economists in the world who agree raising taxes right now is a bad idea are wrong and these 40 got it right.


You go with that, the rest of us will continue to live in reality where it's a bad idea to Increase taxes on anyone right now.

I would agree. I read a fair amount of economists and I can't recall one who thinks raising taxes on anyone right now is a good idea.

On the other hand, most of them think tax increases are necessary at some point to close the deficit, even if it is a small fraction compared to necessary spending cuts.

EDIT - I'm sorry. I can think of two - Krugman and Stiglitz who say we should raise taxes on the rich. But most don't. And I don't read those two on a regular basis.

 

[Toro]

I am fiscally conservative on most things, and socially conservative on most things, with a few exceptions like gay marraige.

The global derivatives bubble was a team effort. And letting the flat-out criminals get away with fraud was achieved with the full cooperation of the government. This was organized crime in every sense of the word. And a D or an R after a politician's name is not a reliable indicator of which way that politician will come down.

Everyone should be in favor of jailing crooks. Everyone.

"Wall Street" is not criminal, per se, but it is overrun with them. And small fines with no admission of wrongdoing has led to more crime. When you don't weed your garden, the weeds multiply and grow bigger and stronger.

Now they are bringing down cities, countries, and continents, and have gone so far as to tinker with the very DNA of our economic system (LIBOR).

Just as an aside, it is mathematically impossible that Barclay's was the sole manipulator of LIBOR.

The Fed is the #1 culprit in all this.

Way, way down at #2 is Wall Street.

That's like saying the chief cause of crime is poor policing and the criminals themselves are only a distant secondary cause.

Why?

 

[OohPooPahDoo]

The Fed is the #1 culprit in all this.

Way, way down at #2 is Wall Street.

That's like saying the chief cause of crime is poor policing and the criminals themselves are only a distant secondary cause.

Why?

Because the Fed failed to adequately police its member banks.

 

[bripat9643]

No, the economy was okay until Glass Steagall was repealed (honesty alert: The death knell being placed under Clinton), and speculative lending and derivatives fucked everything up. The housing bubble burst was part of that, but not the cause. If we had been able to tell big banks they couldn't rebundle GOVERNMENTAL debt in derivatives, this all would have been avoidable.

You should like, educate yourself or something.

There's nothing wrong with people speculating with their own money. NOTHING AT ALL!

Sell short. Write puts. Buy exotic derivatives. Do whatever the fuck you want, just don't make the taxpayer liable for your fuck ups. If you win great, if you lose, tough shit

They weren't speculating with their own money, dumbfuck. They were speculating with the money of municipalities and governments. Boy, you really are fucking stupid, aren't you?

And they did stick the taxpayers with it. Have you heard of TARP?

So if a state or local government uses the services of a Financial company, the later has committed a crime of the former ever loses any money? The local governments don't want undertake any sort of financial risk, then they have no business investing in the market. No one is guaranteed against loss in the market.

 

[bripat9643]

No, the economy was okay until Glass Steagall was repealed (honesty alert: The death knell being placed under Clinton), and speculative lending and derivatives fucked everything up. The housing bubble burst was part of that, but not the cause. If we had been able to tell big banks they couldn't rebundle GOVERNMENTAL debt in derivatives, this all would have been avoidable.

You should like, educate yourself or something.

There's nothing wrong with people speculating with their own money. NOTHING AT ALL!

Sell short. Write puts. Buy exotic derivatives. Do whatever the fuck you want, just don't make the taxpayer liable for your fuck ups. If you win great, if you lose, tough shit

They weren't speculating with their own money, dumbfuck. They were speculating with the money of municipalities and governments. Boy, you really are fucking stupid, aren't you?

And they did stick the taxpayers with it. Have you heard of TARP?

So if a state or local government uses the services of a Financial company, the later has committed a crime of the former ever loses any money? The local governments don't want undertake any sort of financial risk, then they have no business investing in the market. No one is guaranteed against loss in the market.

Speculating with other people's money is what financial institutions get paid to do,

Dumbfuck.

 

[bripat9643]

Did you IGNORE the part where they asked people across the political spectrum?

Where is the proof of that claim?

You should learn how links work. This was linked in the article I posted.

IGM Economic Experts Panel | IGM Forum

I read the article at the end of your link. I failed to see any evidence that the participants were "people across the political spectrum." They are hand picked stooges.

 

[OohPooPahDoo]

There's nothing wrong with people speculating with their own money. NOTHING AT ALL!

Sell short. Write puts. Buy exotic derivatives. Do whatever the fuck you want, just don't make the taxpayer liable for your fuck ups. If you win great, if you lose, tough shit

They weren't speculating with their own money, dumbfuck. They were speculating with the money of municipalities and governments. Boy, you really are fucking stupid, aren't you?

And they did stick the taxpayers with it. Have you heard of TARP?

So if a state or local government uses the services of a Financial company, the later has committed a crime of the former ever loses any money? The local governments don't want undertake any sort of financial risk, then they have no business investing in the market. No one is guaranteed against loss in the market.

When the bank lies or deliberately misrepresents the risks involved in the product they are selling, it could be criminal, yes.

 

[Toro]

What government debt did they bundle into derivatives?

Well, you can't bundle debt into derivatives.

He's whining about Greek debt.
Somehow Greek debt caused the entire crisis we're in, according to Derp's tiny brain.

Government bonds aren't derivatives, they're bonds.

But a cross currency swap is a derivative. And that is one way a debt, which is all a bond issuance is, can be hidden.

Hey, DumpsterPatriot, read g5000's post very carefully.

Well, what mess are you referring too? "Bundling" government debt didn't cause the housing bubble, nor did it cause the financial collapse. Swaps contributed to the bankruptcy of Jefferson County, but municipal bankruptcies are hardly the underlying cause of the financial crisis.

 

[ConservaDerrps]

Well, you can't bundle debt into derivatives.

He's whining about Greek debt.
Somehow Greek debt caused the entire crisis we're in, according to Derp's tiny brain.

But a cross currency swap is a derivative. And that is one way a debt, which is all a bond issuance is, can be hidden.

Hey, DumpsterPatriot, read g5000's post very carefully.

Well, what mess are you referring too? "Bundling" government debt didn't cause the housing bubble, nor did it cause the financial collapse. Swaps contributed to the bankruptcy of Jefferson County, but municipal bankruptcies are hardly the underlying cause of the financial crisis.

So the Eurozone catastrophe was because of...?

 

[Toro]

That's like saying the chief cause of crime is poor policing and the criminals themselves are only a distant secondary cause.

Why?

Because the Fed failed to adequately police its member banks.

That's true, and I would agree with you on that.

However, though deregulation certainly contributed to the crisis, the fundamental problem was the mis-pricing of credit. The Fed sets the price for credit. The list of the Fed's mispricing of credit and it's proclivity to bailing out the financial markets is long, and fundamentally was at the heart of this problem. Of course, the Fed denies this.

Even Wall Street - which deserves a whole lot of blame - took much of its cues from the Fed and the market in general. Institutions such as pension funds and insurance companies have return targets they must hit. Because the Fed kept interest rates so low for so long, institutions began reaching for yield, and demanded the structured products from Wall Street. For a time, European institutions demanded nothing but structured products from the Street. So Wall Street was happy to comply. Institutions were yield pigs, willing to pay an extra 20-30 basis points for AAA-paper above Treasuries.

 

[OohPooPahDoo]

Why?

Because the Fed failed to adequately police its member banks.

That's true, and I would agree with you on that.

However, though deregulation certainly contributed to the crisis, the fundamental problem was the mis-pricing of credit. The Fed sets the price for credit. The list of the Fed's mispricing of credit and it's proclivity to bailing out the financial markets is long, and fundamentally was at the heart of this problem. Of course, the Fed denies this.

Even Wall Street - which deserves a whole lot of blame - took much of its cues from the Fed and the market in general. Institutions such as pension funds and insurance companies have return targets they must hit. Because the Fed kept interest rates so low for so long, institutions began reaching for yield, and demanded the structured products from Wall Street. For a time, European institutions demanded nothing but structured products from the Street. So Wall Street was happy to comply. Institutions were yield pigs, willing to pay an extra 20-30 basis points for AAA-paper above Treasuries.

How did they misprice the credit?

 

[Toro]

So the Eurozone catastrophe was because of...?

Too much debt in the periphery, inflexible exchange rates and productivity differentials.

No doubt, hiding the Greek debt was a catalyst for the European problem but its not the root cause.

 

[CrusaderFrank]

No, the economy was okay until Glass Steagall was repealed (honesty alert: The death knell being placed under Clinton), and speculative lending and derivatives fucked everything up. The housing bubble burst was part of that, but not the cause. If we had been able to tell big banks they couldn't rebundle GOVERNMENTAL debt in derivatives, this all would have been avoidable.

You should like, educate yourself or something.

There's nothing wrong with people speculating with their own money. NOTHING AT ALL!

Sell short. Write puts. Buy exotic derivatives. Do whatever the fuck you want, just don't make the taxpayer liable for your fuck ups. If you win great, if you lose, tough shit

They weren't speculating with their own money, dumbfuck. They were speculating with the money of municipalities and governments. Boy, you really are fucking stupid, aren't you?

And they did stick the taxpayers with it. Have you heard of TARP?

Is English not your first language? Do you know what the phrase "your own money" means?

 

[Toro]

Because the Fed failed to adequately police its member banks.

That's true, and I would agree with you on that.

However, though deregulation certainly contributed to the crisis, the fundamental problem was the mis-pricing of credit. The Fed sets the price for credit. The list of the Fed's mispricing of credit and it's proclivity to bailing out the financial markets is long, and fundamentally was at the heart of this problem. Of course, the Fed denies this.

Even Wall Street - which deserves a whole lot of blame - took much of its cues from the Fed and the market in general. Institutions such as pension funds and insurance companies have return targets they must hit. Because the Fed kept interest rates so low for so long, institutions began reaching for yield, and demanded the structured products from Wall Street. For a time, European institutions demanded nothing but structured products from the Street. So Wall Street was happy to comply. Institutions were yield pigs, willing to pay an extra 20-30 basis points for AAA-paper above Treasuries.

How did they misprice the credit?

The Fed sets the funds rate. The term structure of the Treasury market is influenced by the funds rate. So keeping it so low and being very clear that they would gradually raise rates, along with the perception of the Bernanke and Greenspan Put, led to excess leverage in the financial system. The real funds rate has averaged less than zero since 2000.

 

[ConservaDerrps]

So the Eurozone catastrophe was because of...?

Too much debt in the periphery, inflexible exchange rates and productivity differentials.

No doubt, hiding the Greek debt was a catalyst for the European problem but its not the root cause.

Wasn't just Greece. You should read up on this.

 

[OohPooPahDoo]

That's true, and I would agree with you on that.

However, though deregulation certainly contributed to the crisis, the fundamental problem was the mis-pricing of credit. The Fed sets the price for credit. The list of the Fed's mispricing of credit and it's proclivity to bailing out the financial markets is long, and fundamentally was at the heart of this problem. Of course, the Fed denies this.

Even Wall Street - which deserves a whole lot of blame - took much of its cues from the Fed and the market in general. Institutions such as pension funds and insurance companies have return targets they must hit. Because the Fed kept interest rates so low for so long, institutions began reaching for yield, and demanded the structured products from Wall Street. For a time, European institutions demanded nothing but structured products from the Street. So Wall Street was happy to comply. Institutions were yield pigs, willing to pay an extra 20-30 basis points for AAA-paper above Treasuries.

How did they misprice the credit?

The Fed sets the funds rate. The term structure of the Treasury market is influenced by the funds rate. So keeping it so low and being very clear that they would gradually raise rates, along with the perception of the Bernanke and Greenspan Put, led to excess leverage in the financial system. The real funds rate has averaged less than zero since 2000.

But the failed mortgages were all long term debt.