patrick.net

Our banking system is one giant sham. And I have no love for the banks.

“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford, founder of the Ford Motor Company.

“Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal – that there is no human relation between master and slave.” Leo Tolstoy, Russian writer.

Back to the original topic. The WSJ had a good article this past weekend titled Cost of Bailouts Continues to Decline.
The combined costs of the Fannie, Freddie and TARP programs, at $78.5 billion, fall far short of the trillions of dollars of losses feared during the worst days of the crisis...The costs of these programs are expected to keep falling as Fannie and Freddie and other surviving companies make more payments to the Treasury and as the government sells shares in many of the firms into which it put money. (Fannie and Freddie's payments to Treasury are technically dividends that don't count as repayment of their bailouts.) As part of the bailout of Fannie and Freddie, the government got preferred shares which are now paying out most of their profits as dividends to "the people" (err, government). They had previously only been paying out 10%. Fannie and Freddie still need to be dealt with...
"The payment of these dividends is not putting private capital in front of the government's current backing of the market," Mr. Mayopoulos said. Private capital would "not return in large scale" to the mortgage market "until it has some confidence about what the future system will look like," he added.

bob2356 says

If the bad banks had to operate in chapter 11 and be broken up the world would not have ended. The sun would rise, people would eat, sleep, and shit. The only result would have been lots of incompetent banksters rightfully in the unemployment line while responsible banks took over their former employers business.

Correct.

Dan8267 says

Exactly. When financial games are played that produce no wealth, yet bestow upon the few massive amounts of wealth, that wealth has to come from somewhere, and that somewhere is ordinary people including you and me.

By stealing the purchasing power of our savings and wages, they are stealing our savings and wages. Trickery does not change the truth.

There is no mathematically possible way to bail out the gamblers when things go wrong for them except by fucking over the non-gamblers.

I hear what you mean. They bailed out the banks, free money for the gamblers. But it doesn't trickle down to an average American, we are left to slave away until we die in order to get a tiny fraction of that wealth.

New Renter says

After (Cromwell's) death in 1658 he was buried in Westminster Abbey, but after the Royalists returned to power in 1660 they had his corpse dug up, hung in chains, and beheaded.

And the British still put up with their royal family. You'd think they come to their senses and just put the whole lot in the Tower of London and throw away the key.

Dan8267 says

New Renter says

After (Cromwell's) death in 1658 he was buried in Westminster Abbey, but after the Royalists returned to power in 1660 they had his corpse dug up, hung in chains, and beheaded.

And the British still put up with their royal family. You'd think they come to their senses and just put the whole lot in the Tower of London and throw away the key.

The tower wasn't so bad if you had money.

bob2356 says

The only result would have been lots of incompetent banksters rightfully in the unemployment line while responsible banks took over their former employers business.

thats 100% right.. as it happens everyday in other industries.

tatupu70 says

I think that's a bit naive and very easy to say after the fact. It you'll remember, GE was afraid it wouldn't be able to make payroll at the height of the panic.

This wasn't everyday. To pretend it was is just wrong.

What makes you so confident it's after the fact? If banks truly had to be bailed out (doubtful) to save the financial system then they should have been nationalized, broken up, and sold off just like the savings & loans with the RTC. With people going to jail like the savings & loans. Many people said so in 2007 including me. Rewarding failure will only result in bigger failures. The TBTF banks are larger and more vulnerable now than 2007. Good job fixing the system for both the bush & obama teams (that's sarcasm in case you missed it).

The housing bubble, ponzi financing schemes, and associated MBS, and CDS were giant Malinvestments.

Stated before - instead of creating easy financing associated with unsustainable bubbles, should have invested in education, manufacturing, small business, and US self reliance.

Its all Malinvestment from being allowed to overturn key securities laws made possible by "buying" Senators and Congressmen.

bob2356 says

What makes you so confident it's after the fact? If banks truly had to be
bailed out (doubtful) to save the financial system then they should have been
nationalized, broken up, and sold off just like the savings & loans with the
RTC. With people going to jail like the savings & loans. Many people said so
in 2007 including me. Rewarding failure will only result in bigger failures. The
TBTF banks are larger and more vulnerable now than 2007. Good job fixing the
system for both the bush & obama teams (that's sarcasm in case you missed
it).

Don't misunderstand--I agree 100% that something should have been done prior to 2007, I'm all for people being held accountable, and I concur that the TBTF banks need to be broken up immediately. You're right--the system wasn't fixed.

And your solution of nationalizing the banks, while probably impossible poilitcally, would have likely been better.

Entitlemented says

Its all Malinvestment from being allowed to overturn key securities laws made
possible by "buying" Senators and Congressmen.

So you're in favor of campaign finance reform, right?

That's all dancing around the real issue - no regulation will get you anywhere as long as a crime is not a crime when wall street does it and/or politicians are involved. Restore the rule of law which has been out of order for quite a while now. Instead of criminal money printing and bailout for the cronies, just orderly bankruptcy for the banks and some serious jail time and claw-backs for the fraudsters would have done trick. The TBTFs would have been gone by now and made room for smaller banks who lent responsibly. No voodoo crony economics needed ;)

http://market-ticker.org/akcs-www?post=220915

We should create rules where the Senator recievings funds has to disolve themself of voting.

They have rules like this but not enforced.

Nearly impossible?