muck Posted October 26, 2009 Share Posted October 26, 2009 From a guy I read quite a bit. PS - the subject matter may be different than you were expecting when you clicked on this thread. Walking on Eggshells I have been reading an in-depth article by James B. Steward in The New Yorker describing the eight days starting Sept. 12th, 2008, when the global financial system nearly went into cardiac arrest with the failure of Lehman and the near failure of AIG. Of course Merrill, BofA, JPMorgan Chase, etc., were all involved in the drama, which makes "Wall Street" look like an episode of "Dennis the Menace." I am beginning to believe that most people around the world had no idea how close we came to financial annihilation and a potential depression much like the 1930s. The fragility of the marketplace continues to weigh on the psyche of financial institutions every day and many people have been waiting for the other shoe to drop, like spooked cattle waiting for any unexpected noise to set off a stampede. We all continue to walk on eggshells, a tender, fragile existence where one move can bring disaster. Take Galleon Group as an example of this fragility. The proof alleged in the criminal complaint of insider trading (although it may prove that they actually lost money overall) was an instantaneous death sentence to a firm that once boosted of $3.7 billion in asset, now in liquidation/winddown mode. From a billionaire (No. 551 on the Forbes List) to colleague of Bernie Madoff in a few hours, Raj Rajaratnam can speak of the fragility of life as we know it. Not that he didn't dig his own grave over the years using nonpublic information for trades (if the charges are true), just as Ebenezer Scrooge forged his own chain link by link over a lifetime, but the end was swift and absolute. What was once thought stable and secure went up in a puff of smoke. Our culture has become about instant gratification in many aspects of life with the advent of cell phones, high speed information flows through the computer and 24-hour news that is broadcast within seconds of any event unfolding. All that is not particularly inappropriate, but it tends to spook the cattle and start the stampede without much thought about ramifications and consequences. Investors tend to develop a herd mentality and react before dissecting the information and drawing an appropriate conclusion. There needs to be a focus on responding not reacting. We all think that financial ruin can't happen to us but we know deep down we are all vulnerable. While we may have advanced technologically, our psyche, which has been developed over millions of years of hunting/gathering, has not kept up with today's information onslaught. Due to the speed of our information, our response needs to be that much more measured and thoughtful to preserve what perceived control of today's markets we may have. If we make an irreversible mistake, which could easily have happened last year the consequence will be swift and absolute. While the U.S. is the largest and strongest economy on the planet, we know deep down that its true stability is an illusion that can be wiped away in the blink of an eye. History has proven that time and time again; remember Rome once ruled the world. Quote Link to comment Share on other sites More sharing options...
TimC Posted October 26, 2009 Share Posted October 26, 2009 It helps if the Fed keeps artificially forcing all the money into the stock market, don't it? Quote Link to comment Share on other sites More sharing options...
wiegie Posted October 26, 2009 Share Posted October 26, 2009 I am beginning to believe that most people around the world had no idea how close we came to financial annihilation and a potential depression much like the 1930s. +1 (with the exception of the "beginning to believe" part--it's been obvious to me almost from the get-go that people had no idea how tenuous things were) Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted October 26, 2009 Share Posted October 26, 2009 +1 (with the exception of the "beginning to believe" part--it's been obvious to me almost from the get-go that people had no idea how tenuous things were) and still dont know how bad it is Quote Link to comment Share on other sites More sharing options...
gbpfan1231 Posted October 26, 2009 Share Posted October 26, 2009 I hope I am not taking this topic off on a tangent but what are the underlying reasons for the stock market turning around. The bank failures were one of the reasons for the market getting ugly (I think). Are there any specifics? I don't really see a lot of what has changed in the last year? Unemployment is still bad. We are (govt) still spending like crazy. Are there specifics or are people just feeling a bit more confident and optimistic? Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted October 26, 2009 Share Posted October 26, 2009 I hope I am not taking this topic off on a tangent but what are the underlying reasons for the stock market turning around. The bank failures were one of the reasons for the market getting ugly (I think). Are there any specifics? I don't really see a lot of what has changed in the last year? Unemployment is still bad. We are (govt) still spending like crazy. Are there specifics or are people just feeling a bit more confident and optimistic? i think one simple reason is supply and demand in the market. short funds made a killing last year and many are not trading this year or much much smaller. and the general public had stopped selling once the dust cleared. they were either holding or adding to their positions. so you have a huge part of the market on the sell side not there. Quote Link to comment Share on other sites More sharing options...
AtomicCEO Posted October 26, 2009 Share Posted October 26, 2009 So... for those of us that think that the banks don't deserve a bailout for bringing themselves to the edge of destruction due to their own stupidity... what's the solution? Has anything changed that would keep taxpayers from rewarding these banks with another bailout if they make the same mistakes again? Did the people who profited the most from getting the banks into these situations suffer any loss on the back end, or are they still getting bonuses? Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted October 26, 2009 Share Posted October 26, 2009 So... for those of us that think that the banks don't deserve a bailout for bringing themselves to the edge of destruction due to their own stupidity... what's the solution? Has anything changed that would keep taxpayers from rewarding these banks with another bailout if they make the same mistakes again? Did the people who profited the most from getting the banks into these situations suffer any loss on the back end, or are they still getting bonuses? too big to fail baby!!!!! Quote Link to comment Share on other sites More sharing options...
AtomicCEO Posted October 26, 2009 Share Posted October 26, 2009 too big to fail baby!!!!! This should have been a wake up call that if a company is too big too fail, they are too big to exist. Quote Link to comment Share on other sites More sharing options...
TimC Posted October 26, 2009 Share Posted October 26, 2009 So... for those of us that think that the banks don't deserve a bailout for bringing themselves to the edge of destruction due to their own stupidity... what's the solution? Explain to me why we need 6 large banks and not 3? Not all banks were in this disaster, but the Fed forced them all to take bailout money to disguise that fact. Has anything changed that would keep taxpayers from rewarding these banks with another bailout if they make the same mistakes again? If anything, it emboldens them to take more risk and charge even greater fees and convinces investors it's a safer investment. You think next time they'll be allowed to fail? Heck no. Where's the regulation? :crickets: Did the people who profited the most from getting the banks into these situations suffer any loss on the back end, or are they still getting bonuses? Same people, same story. Mostly lip service about the bonuses. Instead of cash bonuses, you get stock bonuses. Well, that's great when the stock has only one way to go really. Quote Link to comment Share on other sites More sharing options...
AtomicCEO Posted October 26, 2009 Share Posted October 26, 2009 Rather than fearing socialism... this is really making me think hard about it's benefits. Right, comrade Tim? Quote Link to comment Share on other sites More sharing options...
TimC Posted October 26, 2009 Share Posted October 26, 2009 Rather than fearing socialism... this is really making me think hard about it's benefits. Right, comrade Tim? My goosestep is strong. It's nice having a big ole Government doing everything for you without those bothersome repercussions like actually having to pay for it. Except for when the whole knocking on your door in the middle of the night part starts. Quote Link to comment Share on other sites More sharing options...
muck Posted October 26, 2009 Author Share Posted October 26, 2009 Fixing "too big to fail" seems to be (sorta) simple. If any company, organization or legal entity (or groups of affiliated entities through common ownership) meet any of the following characteristics, they are to be considered a monopoly and are to be split up based on the rules and procedures in place to deal with such monopolies: * Total revenue > ______% National GDP * Total gross assets > ________% National GDP [note: this includes 'off balance sheet' items] ...just would need to define what % of GDP is too big and what sort of rules are placed on the measurement of GDP...both of which are important aspects of this requirement... Quote Link to comment Share on other sites More sharing options...
NAUgrad Posted October 26, 2009 Share Posted October 26, 2009 My goosestep is strong. It's nice having a big ole Government doing everything for you without those bothersome repercussions like actually having to pay for it. Except for when the whole knocking on your door in the middle of the night part starts. If you have a little time and want a good read, check out When Genius Failed. Different scenario but we almost had another dramatic financial collapse during the Clinton/Lewinski fiasko. Another to big to fail story. BTW, I don't think banks are increasing their risk currently. Just the opposite from what I've heard. Now charging more fees......well that sounds about right. Quote Link to comment Share on other sites More sharing options...
AtomicCEO Posted October 26, 2009 Share Posted October 26, 2009 My goosestep is strong. It's nice having a big ole Government doing everything for you without those bothersome repercussions like actually having to pay for it. Except for when the whole knocking on your door in the middle of the night part starts. Big Ole Government didn't do crap for me. They coughed up a trillion dollars in 10 days to save the biggest banks in the world. I ate ass, personally. Quote Link to comment Share on other sites More sharing options...
TimC Posted October 26, 2009 Share Posted October 26, 2009 Big Ole Government didn't do crap for me. They coughed up a trillion dollars in 10 days to save the biggest banks in the world. I ate ass, personally. Dude, you were supposed to walk into the bank the next day and get your fair share. It may be too late now, but simply go to the nearest large bank and tell them, "I ate ass and give me my money" very loudly and sternly. They gave me two big bags of it when I did it....see if you can beat that. It's your money. It's probably still sitting on the floor with your name on it. Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted October 26, 2009 Share Posted October 26, 2009 This should have been a wake up call that if a company is too big too fail, they are too big to exist. the one that makes me the sickest is AIG bonuses and payments. Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted October 26, 2009 Share Posted October 26, 2009 Investors tend to develop a herd mentality and react before dissecting the information and drawing an appropriate conclusion. So, the news is that "investors" are a bunch of sheep with zero critical faculties? This is news? Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted October 26, 2009 Share Posted October 26, 2009 it wont change anytime soon......... Facing a government crackdown over predatory lending and a troubled housing finance system, Wall Street and the real estate industry were among the top political givers in 2007, a campaign finance watchdog group said on Sunday. Leading all corporate donors in campaign donations as of the end of last year was investment banking giant Goldman Sachs, based on an analysis of Federal Election Commission records, the Center for Responsive Politics said. we need to fix washington 1st. Quote Link to comment Share on other sites More sharing options...
westvirginia Posted October 27, 2009 Share Posted October 27, 2009 it wont change anytime soon......... we need to fix washington 1st. And you think that'll happen voting for heffalumps and jackasses? Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted October 27, 2009 Share Posted October 27, 2009 And you think that'll happen voting for heffalumps and jackasses? im saying money runs everything. even our govt. the deep pockets control our politicians. its too bad. Quote Link to comment Share on other sites More sharing options...
Clubfoothead Posted October 27, 2009 Share Posted October 27, 2009 The rating agencies are crooks so you can start there. Quote Link to comment Share on other sites More sharing options...
jetsfan Posted October 27, 2009 Share Posted October 27, 2009 (edited) "Paradoxically enough, the release of initiative and enterprise made possible by popular self-government ultimately generates disintegrating forces from within. Again and again after freedom has brought opportunity and some degree of plenty, the competent become selfish, luxury-loving and complacent, the incompetent and the unfortunate grow envious and covetous, and all three groups turn aside from the hard road of freedom to worship the Golden Calf of economic security. The historical cycle seems to be: From bondage to spiritual faith; from spiritual faith to courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to apathy; from apathy to dependency; and from dependency back to bondage once more. At the stage between apathy and dependency, men always turn in fear to economic and political panaceas. New conditions, it is claimed, require new remedies. Under such circumstances, the competent citizen is certainly not a fool if he insists upon using the compass of history when forced to sail uncharted seas. Usually so-called new remedies are not new at all. Compulsory planned economy, for example, was tried by the Chinese some three milleniums ago, and by the Romans in the early centuries of the Christian era. It was applied in Germany, Italy and Russia long before the present war broke out. Yet it is being seriously advocated today as a solution of our economic problems in the United States. Its proponents confidently assert that government can successfully plan and control all major business activity in the nation, and still not interfere with our political freedom and our hard-won civil and religious liberties. The lessons of history all point in exactly the reverse direction. " - Henning W. Prentis, Industrial Management in a Republic, p. 22, March 18, 1943 Edited October 27, 2009 by jetsfan Quote Link to comment Share on other sites More sharing options...
westvirginia Posted October 27, 2009 Share Posted October 27, 2009 im saying money runs everything. even our govt. the deep pockets control our politicians. its too bad. But they fear not getting a vote more than they fear not getting the money. The gov't was turned over from '92-94 and we got welfare reform, deficit reduction (as a % of GDP) cap gains tax cuts, etc. When you grab 'em by the balls they tend to pay attention. Just sayin'... Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted October 27, 2009 Share Posted October 27, 2009 But they fear not getting a vote more than they fear not getting the money. The gov't was turned over from '92-94 and we got welfare reform, deficit reduction (as a % of GDP) cap gains tax cuts, etc. When you grab 'em by the balls they tend to pay attention. Just sayin'... Without the money, there's no votes. We elect the politicians but the lobbies pay for them to run. Quote Link to comment Share on other sites More sharing options...
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