17 Mar 10
http://www.mirror.co.uk/news/top-stories/2010/01/22/i-ll-end-age-of-big-bank-says-obama-115875-21986382/
Barack Obama says he will end age of big bank
By Clinton Manning 22/01/2010
President Obama last night unveiled plans to stop greedy bankers ever triggering another world financial crisis.
He proposed rules to prevent banks taking dangerous risks in search of enormous profits.
And he also wants to limit the size of banks so they can never again grow big enough to bring down America's economy if they go under.
He said: "Never again will the American taxpayer be held hostage by banks that are too big to fail."
The president warned he would not let the big Wall Street institutions sabotage his planned reforms. He said: "If these folks want a fight, it's a fight I'm ready to have."
His announcement came after US banking giant Goldman Sachs re-ignited the bonuses row by revealing its staff shared a £10billion pot last year - a 50% leap.
It meant 32,500 workers, including 5,500 in the UK, got an average £300,000.
17 Mar 10
Originally posted by MelanerpesDoes it matter whether one enormous bank fails or a thousand little ones do?
so do you agree that we should have laws that don't allow banks to become so big that they're "too big to fail"?
Seems to me that perhaps the ability bail out a few enormous banks, thereby staving off depression was a lot better than having to deal with the chaos of thousands upon thousands of local thrifts going under.
Oh, and one more thing. Why do people still talk about TARP as though it were such a terrible thing, when history is showing more and more clearly that it will be looked at as a brilliant success?
17 Mar 10
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Originally posted by zeeblebotBut a nice chunck of the stock market did. And the rest of it would have disappeared as well if nothing had been done in response to Lehman Bros' demise.
if Goldman Sachs fails, someone else will take their place.
the world didn't disappear when Lehman Bros. did.
Of course, if the Dow Jones went down to zero, that would have really stuck it to Wall St. Is that what you would have preferred to see happen?
17 Mar 10
Originally posted by sh76With a thousand little ones, the chances are better that a few of them didn't make the same stupid decisions everyone else did.
Does it matter whether one enormous bank fails or a thousand little ones do?
Seems to me that perhaps the ability bail out a few enormous banks, thereby staving off depression was a lot better than having to deal with the chaos of thousands upon thousands of local thrifts going under.
Oh, and one more thing. Why do people still talk about TARP as though i ...[text shortened]... when history is showing more and more clearly that it will be looked at as a brilliant success?
Those are the ones who will become the next big banks...oops...and then get broken up? Hmm.
17 Mar 10
Originally posted by Melanerpesi think the banking firms are not as necessary as they make themselves out to be. certainly not enough to justify huge bailouts.
But a nice chunck of the stock market did. And the rest of it would have disappeared as well if nothing had been done in response to Lehman Bros' demise.
Of course, if the Dow Jones went down to zero, that would have really stuck it to Wall St. Is that what you would have preferred to see happen?
they are gordian knots just waiting to be cut. bailing them out is not cutting them.
under what scenario does the Dow Jones would go down to zero? it is not composed entirely of banking stocks!
if the market needs correction, let it correct itself. if the market is overly sensitive to banking firms, let them fail so the next time it won't be as sensitive.
DJI chart for last 2 years:
http://finance.yahoo.com/echarts?s=^DJI#symbol=^DJI;range=2y
17 Mar 10
Originally posted by AThousandYoungYes, the thousand that fail are not all that exist. The thousand that fail are, say, of 3,000 that exist. The thousand that fail of 3,000 that exist are as harmful to the economy as that failure of a few big ones of the several big ones that exist.
With a thousand little ones, the chances are better that a few of them didn't make the same stupid decisions everyone else did.
Not all the big banks needed bailouts.
If there were no big banks, then instead of "too big to fail" we'd hear about "too many to fail."
My point is that the existence of the big banks is not the reason the bailouts were necessary. It could be argued that unregulated big banks caused the harmful bubble in the first place, but that's another issue.
17 Mar 10
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Originally posted by sh76You continue to be a master of re-writing history. The rationale behind TARP was if the government saved the banks from the consequences of their own poor risk management, the banks would lend more and thus stabilize the economy. The banks were given a $700 billion bailout, but lending actually dropped close to 10% in 2009. Thus, this "great success" failed to achieve its only legitimate purpose.
Does it matter whether one enormous bank fails or a thousand little ones do?
Seems to me that perhaps the ability bail out a few enormous banks, thereby staving off depression was a lot better than having to deal with the chaos of thousands upon thousands of local thrifts going under.
Oh, and one more thing. Why do people still talk about TARP as though i ...[text shortened]... when history is showing more and more clearly that it will be looked at as a brilliant success?
And banks are back to the risk taking and speculation in securities that add nothing of real value to the economy. Another crash is inevitable given that the underlying structure has not been reformed. The US Banking system has become more centralized, less competitive and less useful to the economy in the last ten years since the foolish repeal of Glass-Stegall. Sending a message to banks that they will not be allowed to fail even if they take extraordinary risks which do not benefit the economy was the message sent by TARP and it will have consequences.
17 Mar 10
Originally posted by no1marauderIt's "legitimate purpose" was to prevent the panic that would have ensued after the failing of these enormous banks and to avert another Great Depression.
You continue to be a master of re-writing history. The rationale behind TARP was if the government saved the banks from the consequences of their own poor risk management, the banks would lend more and thus stabilize the economy. The banks were given a $700 billion bailout, but lending actually dropped close to 10% in 2009. Thus, this "great success" fai ...[text shortened]... s which do not benefit the economy was the message sent by TARP and it will have consequences.
The government has already been repaid with interest by many banks and will eventually recover most of what it laid out, with interest.
Your continuous assertions that I am re-writing history stems from this premise of yours that everything can only be judged by whether the initial motivations of some of the people responsible for an action is satisfied. I think that initial motivation is mostly irrelevant in determining the outcome of a strategy. In any case, increasing lending was not the only purpose of TARP.
I agree that reform and some more oversight is necessary going forward. But that has nothing to do with whether TARP was, in retrospect, a necessary and/or successful enterprise.
17 Mar 10
Originally posted by sh76Of course the banks wanted everyone to believe that the economy would collapse if they weren't handed over tons of money and relieved of trillions of dollars of bad investments. An orderly liquidation of the worst run banks in bankruptcy court would have been the responsible thing to do. If some big investors lost money BFD; the world economy shouldn't be run solely for the benefit of the super-rich.
It's "legitimate purpose" was to prevent the panic that would have ensued after the failing of these enormous banks and to avert another Great Depression.
The government has already been repaid with interest by many banks and will eventually recover most of what it laid out, with interest.
Your continuous assertions that I am re-writing history stems from ...[text shortened]... nothing to do with whether TARP was, in retrospect, a necessary and/or successful enterprise.
The money wasted on the bailouts could have been directly pumped into the economy by a government lending agency thus allowing productive businesses to continue to expand and averting the huge increase in unemployment caused by the credit crunch caused by the banks' decision to forego reasonable lending in preference to risky, trillion dollar speculations. Nobel Prize winner Joseph Steglitz estimates that with the multiplier effect a $700 billion investment in such an agency could have led to an $8.4 trillion increase in economic activity. That would have saved millions of jobs that this economy has lost even with the "brilliant success" of TARP and its progeny.
Instead the money was thrown away to incompetents with the not very subtle message that in the future you can be just as stupid and more will be tossed your way. And the sight of rich bankers feeding at the public trough while millions of Americans lost their jobs and economic insecurity spread like wildfire because of the credit crunch they caused and maintained, has led to a toxic political atmosphere in the US. So in no way can TARP be considered a "success"; public money was misdirected, necessary changes in the banking system were avoided and the economy fall apart anyway.