When my former employer was having financial issues, the CEO and several other execs invested heavily in the company's stock as a show of confidence. They filed chapter 7 a few months later. (The case is still languishing in the court system over 4 years later--but it doesn't matter because I really don't expect to get the $3000+ they owe me even after all the ducks have been sorted.)

I can think of at least three possible interpretations.

First, stock prices looked like they were about to drop below December's new lows. A good time to buy(?) when management must proclaim buying decisions in advance.

Second, more Enron accounting was discovered in Merrill Lynch causing another complete loss of confidence in Bank of America. Either that was also another good reason to buy OR, well read the next paragraph.

Third, Lewis may be in for a proxy fight because of the Enron accounting and BAC now running to government for more welfare. Lewis's job may be on the line.

Well, yes, a vote of confidence may be another reason for the purchase. Or maybe the executives are still in denial as to how much trouble their institutions may be in. Reasons for the purchase could include parts of each above three points. Doubtful we will ever know their thinking. However even Bank of America and Citigroup have been sucked into a swirl around the drain.

Appreciate the problem. American financial institutions were running massive debt to equity ratios based only mythical accounting practices that claimed risk was under control. Europe demonstrates what better banking did. Bank of Scotland is in serious trouble because their ratio was 14:1. Most European banks were 5:1.

Morgan Stanley and others were operating at 30:1.

BTW, did anyone see 60 Minutes that demonstrated how Morgan Stanley, et al could run up the price of oil now that deregulation made it possible to manipulate markets with secret contracts? Enron accounting practices were alive and well for years. Why did Morgan Stanley own more oil than Exxon? Deregulation lobbied for in Congress in 2000 by Enron (that also made the mythical CA energy crisis possible) is still legal. Our banking and investment markets are a mess. Just another example of why finance markets must be so heavily regulated.

Does Lewis of BAC think things can only get better with regulation? Well how many more "Enron accounting" failures are there waiting to be exposed? How many more shoes will fall.

The Detroit auto show demonstrated that Chrysler has zero innovations in the pipeline and little hope of surviving as is. Nardelli is doing to Chrysler what he did to Home Depot. But then maybe we have already discounted the inevitable. Maybe that is but another reason why Lewis believes the bottom has been found.

Suggested are only a few reasons for his decisions. Nobody really knows how many more "Enron accounting" disasters await exposure. It is still a mess. We can only speculate what Lewis is speculating.

Imagine that...

Political Interference Seen in Bank Bailout Decisions
Barney Frank Goes to Bat for Lender, and It Gets an Infusion

Troubled OneUnited Bank in Boston didn't look much like a candidate for aid from the Treasury Department's bank bailout fund last fall.

The Treasury had said it would give money only to healthy banks, to jump-start lending. But OneUnited had seen most of its capital evaporate. Moreover, it was under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives' use.

Nonetheless, in December OneUnited got a $12 million injection from the Treasury's Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee.

Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection.

http://online.wsj.com/article/SB1232...cle-outset-box


A nice chart of where the money went:

http://online.wsj.com/public/resourc..._20081027.html

What are you getting out of that Merc? I see nothing surprising there - Bush and the democratic leaders apparently threw the money to their bankin cronies.

I just believe that most people believe that the Dems in Congress have no part of this.

Under the excuse of 'systemic' risk, Paulson, et al literally threw money at a problem with no game plan. The theory was that credit markets had rusted frozen. So if we throw enough oil at it, then rust would liquefy? Of course, that did not happen (as best we can tell). They had no plan, no study, no grasp, and a belief that something must be done ad hoc and ASAP.

So Goldman Sachs got $10billion and immediately rewarded employees with more than $10billion in bonuses. But appreciate the problem. Enron accounting is so widespread that even Merrill Lynch has again discovered more hidden losses - causing Bank of America to again go running for government welfare using claims of 'systemic' risk.

Now is time to learn from what we always knew and what worked. For example, the CA energy crisis demonstrated what happens when markets are liberated from regulation; when most trading occurs outside of open markets and in secret. And so we relived that mistake with gasoline prices and so many other markets.

Long Term Capital Management (LTCM) demonstrated what happens when options are traded secretly. LTCM was a potential $1.2 trillion meltdown. What did we do? We completely ignore the problem and lesson. Do nothing. Same problem exists again on an even larger scale.

The S&L crisis was solved by not protecting corrupt management and stockholders. Instead, responsible banks were loaned money to buy, disassemble, and clean out bad (corrupt) banks. Problem solved. Today, we gave the most corrupt banks money to reward themselves. Even AIG was still paying bonuses.

Learn the lessons of so many mistakes. Clearly a $trillion has been spent .... and still a housing mortgage problem persists without any resolution (as ABC News and Representative Maxine Waters demonstrated with Bank of America). We have seen what not to do. Question remains whether our leaders have finally grasp those lessons.

Even Enron accounting is still industry acceptable. We have not even addressed that obvious problem.

How do you know, it all happened under a TARP? :haha:

Japan's big-works stimulus is lesson for U.S.

Well that really sucks. It is a longish article with some telling historical basis. Perhaps we could learn what NOT to spend money we already don't have on.

There's a difference between building for buildings sake and fixing the shit we've got that's literally falling apart.

Absolutely Bruce, I agree 100%, but finding the bridges, for example, that need the least amount of work and can be repaired in the least amount of time is not a good plan. There are so many that need to be completely replaced and those won't be getting any of this money. Not to mention the infrastructure like the sewers and and water systems in many major cities which would disrupt too much for too long to be properly repaired or upgraded.

Which means we are right back to the question of which jobs are 'making work' verses those that result in a productive return on investment. Arguing about some unnamed bridge or water project that can resulting quick returns today is nonsense because the bridge is not named and the water main is not cited. Such discussion can only occur at that level - pipe by pipe and bridge by bridge.

A solution starts only when each project is determined individually to have a real ROI. If we wanted short term stimulus, then simply declare war on Korea or build a bridge to nowhere. Both will accomplish same economic stimulus.

Any real solution cannot show productive economic results for four years. This recession is created by decisions four and more years ago. Anything that might show results this year only works by mortgaging part of a recovery four and more years later. And so arguments are circular because nobody is citing a solution bridge by bridge and water main by water main. Only useful economic stimulus plan discusses solutions at that level.

And? Do you have some insight into this? Is there a plan that is doing this? I agree with your point, but this isn't an exact science, is it?

No, it is not an exact science because the metrics used to measure are so poor - ie spread sheets. How do you identify something that is innovative? No spread sheet can ever measure an innovation. Accounting has not a clue; can only see symptoms. Finance is too far removed to actually see things that create real ROI.

Yes, it is not an exact science because the metrics are not really measuring productive economic activity - only measure economic activity.

When was the need for a Golden Gate bridge proven? When the traffic was more than willing to pay those tolls. Long after it was finished. Previously, the need was only speculation. Another example of the deficiency in those finance metric.

How do we indentify a productive and therefore real stimulus project? We must do it bridge by bridge and sewer by sewer - using metrics that are not very good. But even worse, Congressmen are trying to make these determinations school by school. Well, they are not. Too much information and not enough congressman. They are throwing money blindly in different directions hoping that some money hits a needed bridge, water pipe, sewer, and school. That was also called the great leap forward, a five year plan, or central planning.

It is not an exact science. Only people who can really identify a best projects are little people who devise those projects and then get capital to make those projects work. Best bankers are those who also worked previously in a construction business, engineering firm, or trucking. Only they can best loan money to upstarts with new ideas or good plans. No wonder bankers like John Doer are so innovative. No wonder the big banks must make money using money games - they cannot see innovation.

Unfortunately accountants and finance people without real world experience created this problem. Polticians are not better at channeling capital where it may be most productive. But when so many bankers act as MBAs - well even the spread sheets now cannot be trusted. Just another reason why government is throwing more money at the economy. The only people who really know best - who best understand the metrics - are the innovators who come from where the work gets done. But even they cannot get money due to so many banks who think their purpose is profits rather than serving the innovators. So government is throwing money hoping to hit innovators with cash.

Far from an exact science. But then it also explains why communism does not work.

Simplified by clusterstock

I know you all know that Wells Fargo bought Wachovia with bail out money.


Even though they say they didn't, you SO know they did.

jerks.

Some of these people are going to have to re-incarnate many, many times to pay for their sins; and they WON'T be coming back as rich WASPS, either. They'll be poor black children.

Another example of America selling off parts to pay for Enron accounting, war without purpose, and LTCM style hedge fund investing. From the NY Times of 11 Feb 2009:

Detroit Automakers Face Extinction

http://www.npr.org/templates/story/s...ft=1&f=2100359

Why Obama’s new Tarp will fail to rescue the banks
A dark read.

That is next week's story. Already Chrysler has sold off part of itself to Fiat and others. GM should be doing same. It will not. Instead it will make veiled appeals for more government welfare. It will want more money to buy back parts of Delphi.

Ford is a completely different story. A benchmark has long been the 70 horsepower per liter engine. After violent arguments between William Clay Ford and Jacques Nasser, Nasser was removed and Ford Motor finally started to fix itself. How long ago? Maybe seven years ago? So Ford has just started their recovery. Innovation, quality, and design take that long. That was when Ford finally developed 70 Hp/liter engines - a technology that was world standard in 1992 and why no car needs a V-8 engine.

Chrysler has nothing in the innovation pipeline. GM has a 400 horsepower Camaro and a hybrid - the Volt. So they will both go crying to government about how '_hard_' they are working. Maybe they will do it without the George Jr whine. But next week is when this story gets told. Congress probably will have no choice but the agree with Detroit and offer more corporate welfare when both companies should be replacing their top executives.

I think the Chrysler-Fiat deal has fallen through.

Say it isn't so. The Italians wised up?

Nope, they're still dumb, and broke from what I read. :haha:
Financing isn't exactly abundant at the moment.

Hell, just have them get a loan from Guido at the Mafia bank.

Or the Vatican Bank.

Or Tony Soprano...oh. Wait. He might be dead...

Ahhhh... the Pope, not a bad idea. Maybe they could cash in the gold fillings from the Jews.

This is a very interesting article.

Chomsky: Understanding the Crisis — Markets, the State and Hypocrisy

So Rubin gets the law changed and then went into the sector to benefit from it. . . nice.

So we should just let them continue to rot, so we don't inconvenience people? My god, the cost of repairs when things break every year just keeps adding up. We should just systematically start to fix/replace things, starting with the things that are in the worst shape. Remember the bridge that collapsed a couple of years ago? Or the water main busting in DC a few of months ago? Apparently, they had already fixed over 300 pipes in DC that had burst before that happened, this winter alone. In Savannah, where I live, underground pipes have blown up twice this year.

About Japan, from what I've heard from numerous economists, including Paul Krugman, the whole reason why Japan was in a recession for so long is because they didn't put enough money into it initially, so they had to keep pumping more in. That is why we need to go big, from the beginning. Doing things piecemeal, and stopping too soon, is what causes big recessions to last longer.

For crying out loud, even the Chamber of Commerce is behind the stimulus, and they are hardly a liberal organization.

I don't really think we should be bailing out the banks. They caused this mess. I DO, however, believe we should be using government money to create jobs for people by rebuilding our infrastructure, pumping money into alternative enregy (which I believe will create a whole new industry and supply millions of jobs while reduce our dependence on oil), and updating our schools and medical records.

On Fareed Zakaria's show this past weekend, he was at the World Economic Forum, and the finance minister of France said they only had to bail out one of their banks, and when they did, they got rid of all the management. Isn't that how it should be? Why would we leave people in charge who caused this to happen? People keep saying they are the smartest people in America, well, really? Because it doesn't seem very smart to me, what they were doing. It isn't rocket science, even though they want us to believe it is.

And some of the people Obama has advising him were a part of it, I believe, like Larry Summers?

GM made electric cars back in the 90s. They CHOSE to quit making them and focus on gas guzzling trucks and SUVs. Maybe those companies should be turned over to innovators making electric cars, or cars that run on compressed air or something. I don't even think we should be fosuing on hybrids, they still require gas. For sure the management should be gone.

I love Noam Chomsky. Paul Krugman also saw it coming. He wrote a book about it back in 1999.

I posted links a couple of weeks ago about how the repeal of Glass-Steagal caused the housing crisis. And we can't just focus on bailing out banks, which I don't think we should do anyway, but we also have to get strong regulations and oversight back into place.

Did you see the Congress questioning all the bank CEOs the other day? Even most of them agreed they need regulating. HA! Now they admit it...

Not at all - that was MY point, and we are! What this money is being spent on is the stuff that can be fixed the easiest with the least amount of disruption. From what I have heard from DOT engineers in a local state, the bridges and roadways which need the most serious repair and are in the worst shape are NOT GETTING FIXED.

I have heard that too - that is but one analysis of the Japanese situation. Doesn't really matter at this point. All we can do now is hope and pray that this package works.

So you agree with him:

I don't really know that much about Larry Summers or Robert Rubin, or the part they played in this fiasco, but I trust Noam Chomsky, and I believe that many of the people who we are trusting to get us out of this mess are the ones who caused it. I would include Tim Geitner in there as well. He was in charge of the Federal Reserve Bank in NY, correct?

I just don't understand how all these really, really (supposedly) smart people missed what was happening, or didn't know it WOULD HAPPEN when they started figuring out all these crazy, stupid ways to make money. For crying out loud, I would have known it would eventually come tumbling down, and I am nowhere near a genius when it comes to finance stuff.

Maybe they all knew and got theirs before it happened. I don't see any of them hurting too bad.

Exactly. Do you think that is OK?

So in 2005 when I warned of an obvious and major impending disaster in housing prices, you immediately saw the wisdom and agreed? Naive is to blame Tim Geitner. In fact, when you posted this, instead, you should have been watching Frontline to first learn the story.

Well, what are you waiting for:
Inside the Meltdown

Obvious is the arrogance where brains were smaller, bonuses largest, egos inflated, and MBA training is everywhere. Blaming Tim Geitner is silly. This problem is directly traceable to what we did to make it possible. (see the word we - not they). We ignored Enron accounting. LTCM made obvious the lack of transparency to let finance people enrich themselves at the expense of America. What also resulted was the CA energy crisis and (it now appears) $4 per gallon gasoline.

Why does an executive deserve more than $1million annually. Why do people who were the less intelligent in school but are big image salesman type easily making $1million a year on Wall Street?

How much of the problem do you understand? Do you know that a stock broker underperforms the market. So he sells mutual funds rather than stocks - to increase your costs and his profits. Traditionally stock brokers are poor investors. They know almost nothing about economics or products, and everything about making the sale and enriching themselves. Is your stock broker informed, or only a salesman? Did you even ask yourself that question? If not, then you too are part of the problem. A finance person is paid for image; not for knowledge and intelligence. But because he moves large sums, he feels he must take a larger percentage and that only he best knows how to direct capital.

The people with knowledge and intelligence come from where the work gets done. So we let lower intelligence finance people hide their mismanagement in the name of deregulation? But again, watch the frustration of Bernanke and Paulson when these so called geniuses only played money games and chicken to enrich themselves and mortgage America.

When Greenspan was first told that 20% of the mortgages were sub prime, he denied it. No way would so many approve or apply for that kind of mortgage. But with extremists pushing deregulation, Greenspan had no way of knowing the content of mortgages. Today's finance industry turned into outright deception and shady backroom deals. We even let George Jr completely lie about Saddam's WMDs - and said that was good.

Long before looking at Geitner, instead, first look at yourself. Do you know that most every stock brokers is a poor investor; little more than a salesman? If you did not even know that, you set yourself up to be part of the problem. Geitner had nothing to do with, for example, so many people even foolishly taking out loans to buy disposable items such as cars.

Let's see how much your grasp. Fanny Mae and Freddie Mac were designed to make housing more affordable. That is the statement. Do you believe that? Yes? No?

Both make housing prices higher. Using basic economics, then you know that AND will then reply with the reason why. Long before you could blame Geitner, you must have the answer to that question AND know the why behind that answer. Otherwise, you are simply part of the problem.

In 2007, markets were crashing. Merrill Lynch's senior VP warned loudly of the problem in early 2008. So Merrill Lynch's president fired him. Is that an accident? Later that president was paid something around $200 milliion to leave. This is also acceptable?

With any grasp of these last six months, then you know widespread denial was routine even one year later at the CEO level in all 'now famous' finance companies. They were doing exactly what is taught in business schools.

If you blame Geitner for anything, he did not let Bear Stearns go bankrupt. IOW his bosses let the rest of Wall Street remain in denial. What is found everywhere in this crisis? Massive debts and risk were hidden in Enron accounting schemes. Long before blaming Geitner, explain why widespread accounting fraud is now legal in America.

Learn why every stock broker, investment banker, insurance broker, etc all must be highly regulated. Why so much corruption? Tell me. What is the purpose of a company? The third question.

Let's see how much you knew before you were blaming Geitner. Three questions that are easily answered. You saw the impending housing crash in 2005? What do Fanny Mae and Freddie Mac do and why? What is the purpose of a company?

You misunderstand. I was not blaming Geitner. I was saying I don't know that much about him (like I don't know much about Larry Summers or Robert Rubin), but he was in charge of one of the Federal Reserve Banks, and is supposedly one of those bright people, so what did he know? I was asking the question. I'm sorry I wasn't clear. From what I've heard/read about him, he is supposed to be one of the people most likely to get us out of this mess. But again, I don't know much about him, so I don't know. IF he helped create the mess, he should not be in charge of getting us out of it. Neither should Larry Summers or Ben Bernanke or Hank Paulson, or anyone else who created the problem.

I have been raging against Wall Street and CEOs for ages. I think they are way overpaid, I always have. I call them corporate pirates. I don't think most of them deserve the money they make. I have also been griping about deregulation, ever since Reagan started the deregulation boom. I do not now, nor have I ever, thought business would effectively police itself. It goes against reality. And the more we deregulate, the more corrupt things get.

I watched a show on CNBC called "House of Cards" the other night about the meltdown. http://www.cnbc.com/id/28892719 It was very informative. Fannie and Freddie did not invent the subprime mortgage, nor any of the other unethical and questionable (borderline illegal?) activities that collapsed the market. Those were invented by Wall Street corporate pirates and other vultures in the wake of the deregulation of commercial and investment banks.

What pisses me off, is there are people walking away from this with millions and millions of dollars. They knew what they were doing was questionable. How could they not know? But they did it anyway. And they collapsed the entire world economy. They should all go straight to prison, AND lose all their money. THEY should be the ones bailing us out, don'tcha think?

I think they hired him because he knows the system and the players... and they know him.
If he follows the program, he can be a valuable aid. If he doesn't, hopefully there will be enough transparency to nip him in the bud. We'll see what works and what doesn't, and I'll accept that but I don't want any secret under the table bullshit.

Geithner is a total insider. Ponzi turns itself inside out and gets a pass. The liberal press ignores it. If it was a Republickin Admin doing the same thing there would be a frigging riot. Double standard stinks.

It was not their job to know. It was their job to blow the whistle. However we built a system where accounting fraud (Enron accounting) is now legal. Look at what Geitner did when he finally walked into Bear Stearns to discover what was going on. He and his staff worked all night. Then at 4 o'clock AM, he called Benanke. Woke Bernanke up to announce ‘Pearl Harbor’. Bear Stearns was wall to wall junk.

Did the Wall Street executives know this years ago? Of course. What did they do? One (Merrill Lynch) even fired the messenger. They even created dummy companies to move losses into. Then claimed those companies as assets on their spread sheets. This is acceptable behavior if trained as a stock broker, investment banker, or MBA. Why are stock broker investment recommendations not to be trusted? Why do so many stock brokers recommend mutual funds to ignorant investors?

How do you know the company is in trouble? CEO comes from the finance department. Carly Fiorina who was running HP into the ground. She also was dumb because her education was MBA. Look at Rick Wagoner at GM. He never ran an single profitable operation in GM. But he was a finance guy his entire carrer. So they made him the top liar in GM. Look at the guys who replaced Herb Greenburg in AIG. The guy who created risk management was basically forced out so they could buy massive CDOs for increased profits and completely disregard the risks.

Again, I asked three important questions. Questions asked because the answers are paramount. Three questions. You saw the impending housing crash in 2005? What do Fanny Mae and Freddie Mac do and why? What is the purpose of a company? Three questions that make obvious what has happened. I await those answers that better define this mess.

Look over there. No the other way....

hey, I agree with you. But to answer your questions, did I see the crash in 2005? No, but I don't work in finance, banking or housing. IF I had known they were bundling mortgages and selling them over and over again, and they weren't checking people's income to see if they could even afford to buy a house, and mortgage lenders were creating loans where payments would balloon in a few years, and they were coercing some people into these loans who did not understand them, then I would have seen it, yes. Those are NOT good business practices, it is insanity.

My understanding of Fannie and Freddie is they were part private/part government mortgage companies. Fannie was created after the Great Depression to help lower income families own homes. It worked great for decades. From what I've read/heard, my understanding is the repeal of the Glass Steagall Act, and the separation of investment banks and regular banks, is partly what caused this. The rest is the creation, by all those MBAs you talked about, of seriously flawed systems that enabled them to make lots and lots of money while risking the world economy.

IMO, the purpose of a company is to supply a need, and supply a living to people working there. Yes, it is also their business to make money, but not at the expense of the workers, the shareholders, or anyone else (I would include the environment there) by engaging in risky behavior so people can make money.

I watched the movie Wall Street earlier, and it is even more relevent today than it was in the 80s. People on Wall Street have gotten greedier and greedier, and the job they do is crap. They don't produce anything. You are right. All they are is glorified salesmen. And what they are selling, the foundation of the system, is fundamentally flawed. I don't presume to understand it, all I know is they continually cause all kinds of problems that effect society as a whole. I am all for free enterprise, when that's what it is. What we have now? It's not that.

huh?

And ftr, I have stated many times that Clinton is the one who signed the repeal of Glass Steagal, and that many democrats also went along with the deregulation of the laws that allowed this to happen. They should ALL be held accountable for whatever their parts were in this faisco. I am sick of corruption and greed. I am sick of it in business, and I am sick of it in government, and I am sick to death of living in a society where people only care about themselves, damn the rest. THAT is the attitude that allows this kind of thing to grow. And I'm sorry Merc, I love you to pieces, but you have that attitude. That attitude is part of the problem.

Illusion? Misdirection? Yes, they are sort of like magicians...

That is a bit unfair because I care for people every day. I don't care for people coming into my life and telling me that I have to take my accomplishments and give them to others. I don't believe in wealth redistribution plans even though we already have that in the form of our tax system. It needs to be changed. I don't believe that we should make people who worked hard to get to a certain point and turn around and not give them an equal break to the asshole down the street who over mortgaged his life and bought into a home he never could have afforded. Nor do I think we should give people a break who sat on their ass screwing up their life while the rest of went to school and busted our assess. You make of life what it is and your failure to make the right choices are not my problem.

The markets response to the first 30 days.

http://www.google.com/finance?chdnp=...JX:.DJI&ntsp=0

Posted in 7 Sept 2006 in
Which is your favorite paranoid fantasy? Nobody really knew how much worse the economy had been made because Enron accounting and other money games were openly encouraged even at highest levels in government. Meanwhile, notice how many even denied that mild warning in 2006.

We knew a downturn was coming. We just had no idea how severe it would be because fraud was almost everywhere in the finance industry. Obvious in facts and numbers posted in those 2006 responses: downturn was pending. After all, that is what even tax cuts create once we eliminate rhetoric from those inspired by politicians. Any yet in the face of such facts, many (and from my perspective - most) still remained in denial.

Even Greenspan, who did not believe outrageous fraud had been all but encouraged by government, said finance people in free markets can be trusted. Greenspan could not believe people would promote or sign into an ARM. It just made no sense - except where political spin had even promoted houses as an investment. (If not yet obvious - housing never was investment.) Obvious was a pending downturn. But those who should have known it would remain openly in denial. Those who knew the entire financial industry was mostly wealth created by toxic (fictional) assets (ie CDOs, SIVs) attached to nothing of physical value - they were most in denial.

The lesson is obvious - your stock broker, investment banker, or financial consultant is typically the worst person to consult for financial advice. These people are mostly either ignorant of basic economics or have interested contrary to yours.

View that discussion even in July 2006 where I knew something bad was pending - with reasons why. Obvious even to me without any finance training or industry experience. But then I do not entertain my emotions AND do not listen to political hype, conclusions without reasons and numbers, and other junk science myths. One need not be in the industry to know something bad was coming. (Even I did not realize in 2006 how much worse it would be.)

Without finance knowledge, I did something I never do. Early last year (2008), I sold all investments. Without any financial knowledge and a contempt for brokers who really have no economic knowledge (who are only salesmen), I did something completely contrary to my investment philosophies - that I never did in generations. I got out because this market was obviously in a dangerous and unstable state due to too much MBA thinking and too few productive companies. Because I have contempt for political spin, the economy was in trouble.

The point: yes most who ignored facts and numbers - who were the problem and preached the party line - could not see it coming even thought facts and numbers were screaming otherwise. No, I too had no reason to know it would be this bad. But remember, finance people (some of the least economically knowledgeable and trustworthy) are promoting another obvious myth about a recovery in 2009 or 2010. Economists are saying otherwise. But again, finance people are not driven by knowledge even when facts and numbers bluntly say otherwise.

With basic knowledge (in or out of the finance industry), obvious was a housing bubble that had to crash because housing prices were 40% too high. Obvious was that all housing prices had to fall at least 20%. Obvious. And then we learned finance people did only what finance people routinely do - outright fraud and corruption. Mortgage backed securities and other intentional lies intended first or only to enrich finance people (despite what finance people said or believed).

Predicting a pending housing crisis in 2005 did not require finance wizardry. It required one to think logically and to not believe the so called experts who really don't understand basic economics (ie what was posted in mid July 2006) and whose interests are too often contrary to others.

This completes a response to question one. What you saw in 2005 is typical because we tend to deny facts and even listen to people whose interests are often contrary to America. A long reply because this quite simple concept still remains too new or radical to some. But again, read that 2006 discussion to appreciate why housing problem should have been obvious to laymen even in 2005. Thread title was Paranoid Fantasy? Yes, to so many in 2006 who remained in denial of facts that everyone could /should have known.

Glass Stegall separated investment banks and commercial banks. But it was never completely repealed. For example, ask your commercial banker about your stock investments. He cannot access them. Investments are separted from commercial banking.

Fannie and Freddie were crated to help low income families more easily afford a home. Make homes affordable to the early comers and increase housing prices for everyone else. There is no free money. A lower interest rate for early applicants means homes now have more buyers: so home prices increase making homes just as less affordable. But now we have this massive government bureaucracy that also must be paid for. Worse, to put things back to normal - to eliminate Fannie and Freddie – home prices drop down to where they should have been. Home sellers take an unexpected price drop.

The intent (a popular belief) is not what Fannies and Freddie actually do. Did it worked great for decades? Or did people appreciate them while ignoring why Fannie and Freddie only caused higher housing prices and more government bureaucracy? Show me how Freddie and Fannie also capped housing prices?

Why would Fannie and Freddie be necessary? Because commercial banks would not make home loans? So we maintain massive government bureaucracies rather than fix the problem - bank loan officers? Yes, things like Freddie and Fannies had a purpose to fix a temporary problem during the Depression. However their continued existence does little productive. Their functions should have been passed back to commercial banks and other mortgage lenders long ago.

All that goodness by Fannie and Freddie ignores how both distort market prices – keep prices artificially higher – do not make houses any more affordable. IOW too many believe what they are told - ignore how the housing market compensates low interest Fannie and Freddie mortgages by raising prices.

Blind loyalty in any form is bad and allows manipulation.

It's still Bush's fault. The D's will ride that horse right through 2010 and 2012, bet on it.

Greed is good only when the greedy forget their purpose: forget to serve the economy. Your response to question three is the rare and accurate one. But Wall Street has not become greedier. We asked them to become greedier. Wall Street et al always needs heavy regulation because of the nature of a finance person is to enrich themselves first. To sell anybody anything as long as they reap a profit. All are greedy. Some less than others.

Derivatives and other such contracts have no business being traded outside of regulated markets. Worse, accounting has no right to consider them hard assets. 'Mark to market' being absolutely essential because finance people are forced to maintain a larger inventory of real collateral to back up those 'short' assets. 'Mark to market' also forces traders to have access to liquidity that day in case assets do what are normal in any market. In short, to have reserves so that today’s financial collapses could never happen.

The best part of 'mark to market' - the greedy finance man gets driven to bankruptcy now before he can cause even further and worse damage. Bankruptcy is especially essential to harm the greedy ones. But today, we even eliminated regulations and oversight. Some so love to destroy Wall Street responsibility as to even oppose 'mark to market' – which is especially brutal on the greediest.

Extremist Republicans got the economy they wanted - where the rich reap income increases sometimes by 60% and 100% annually. Where the middle class saw their incomes drop 2%. Where the most rewarded are finance people – not innovators who actually do productive work. How curious. This income redistribution only happened once previously in American history - just before the 1929 stock market crash.

They did not get greedier. Finance people - including those I went to school with - typically are not the bright ones. They are the greedy ( often conceited) ones who more often promoted themselves. Were chock full of vanity and self-promotion. In some cases, had no interest in knowing how anything worked.

People whose job is about promoting myth - whose wealth can increase if they can lie: over the past ten years we let them do that without oversight.

They did not get any greedier. When did everyone know the foxes controlled the hen house? When the Feds refused to investigate and prosecute Enron. When Harvey Pitts (George Jr's SEC commissioner) refused to take any additional money from Congress to do SEC investigations. They were as greedy as we wanted. Nobody could have ignored Harvey Pitts testimony (and his predecessors) unless they wanted foxes to control the hen house. Any additional greed is directly traceable to Cellar dwellers and other citizens who wanted greed to increase by staying silent and naive.

Why do venture capitalists create so many productive companies? And not Wall Street? The former invest by actually knowing how things work. The latter believe their personal wealth is more important and only know what any salesman would understand. Which ones reap profits by serving America? Which ones reap bonuses by inventing finanical instruments not even based in hard assets? George Jr encouraged the greed that we wanted.

As the president so accurately noted, we will be paying for wacko extremist economics for the next 10 years. But too many with MBA training were predicting a recovery in 2009 or 2010. Anyone with minimal economic knowledge knows that is impossible. Markets are slowly realizing how destructive wacko extremists have been to America AND how deep the damage is. Slowly, those who predicted recovery in 2009 are realizing a recovery cannot happen. George Jr’s legacy is alive and well.

Expect at least another four years of George Jr "Reagan proved that deficits don't matter" economics. Economic damage created by tax cuts, trickle down economics, destruction of science to make wackos happy, "Mission Accomplished" ... hell, he did not even bother to go after bin Laden. Just another bill we must pay for. We have yet to pay the bills just as Nixon's lies in 1969 & 70 caused economic damage in 1975 and 1979. We have yet to see how destructive George Jr has been to America. Slowly, even wacko extremist Republicans on Wall Street are coming to grips with the carnage. Who knows how much farther George Jr's intelligent will push down the Dow Jones. Pending are bills created by "Mission Accomplished". And then we must fight the Afghanistan war all over again.

The world has changed significantly over the past few of decades, and it gets worse every year. It used to be perfectly acceptable to do something with your life other than spend years in school, and you could still make a decent living. People who worked in construction or factories, etc. made a decent wage, why is it their their fault that we have allowed corporations to go offshore in order to increase their profits by using cheap labor, or that corporations and rich people have chosen to hire illegals instead of giving jobs to Americans, so they can have cheap labor? Not everyone is cut out to be a doctor or a lawyer, and the fucking people going to business school getting MBAs are a bunch of greedy morons who have crashed the entire world economy. Why do THEY deserve so much money, when teachers and cops and soldiers get crap pay? Why is OK that CEO pay has risen to almost 500x the amount of average workers, while salaries have been stagnant for their workers, and even gone down? Why is OK for profit to outweigh everything else?

As far as taxes go, our taxes pay for WalMart's employees healthcare, one of the richest, most successful corporations of all time. Our taxes pay for new stadiums owned by rich pricks who own sports teams, but we get nothing back from them, no benefit (yes, it may benefit the people in the city where they build them, but why is the rest of the country paying for that?). Our taxes pay for the R&D of most drugs, but pharmaceutical companies jack the prices up in to the stratoshpere and many people (whose taxes helped develop those drugs) cannot afford to buy them. IF you're going to be all pissed off about wealth redistribution, please, be angry at the right people. The rich have been stealing from the poor and middle class for decades now. It's time we got some equilibrium back.

It's disturbing to me how indifferent you are sometimes to the plight of people who are less fortunate than you are. What if something catastrophic happened to you, or someone in your family, and you lost your income and benefits (unlikely I know because you work in healthcare) and you were unable to support them? What if you lost your job, and your income, and you couldn't find another job, and you couldn't sell your house (assuming it's not paid for, which I know it probably is)? What the hell would you do?

I know you probably don't care, but I have 3 family members who are afraid of losing their jobs right now (one works for Chatham Steel, one works for Toyota, and one is a fireman). Yes, they are all educated. They all went to college. They have all had these jobs for many years. If something happens, and they lose their jobs, they will be in danger of losing their homes as well. Whose fault is that?

After the last bubble crash (the .coms), my cousin, who worked in IT and made a ton of money, lost her job. It took her over a year to find another one. Is that her fault? And a LOT of white collar jobs that require degrees are now also going byebye. If someone buys a house they can actually afford because they have a good job, and then a few years later they lose that job and can't find another one, because the economy crashed, why is that their fault? While it is true that a lot of people were living beyond their means, there are also a lot being hurt now who were not. Whose fault is that?

If they are so bad, why then did they only now crash? Fannie has been around since the 30s or 40s. Seems to have worked pretty well up until recently.

We could all learn something by listening to, and living by, the words and ideals of Benjamin Franklin... "As we enjoy great advantages from the inventions of others, we should be glad of an opportunity to serve others by any invention of ours; and this we should do freely and generously." His inventions also included social innovations, such as "paying forward." Franklin's fascination with innovation could be viewed as altruistic; he wrote that his scientific works were to be used for increasing efficiency and human improvement.

That is the point exactly. It will never be the same. People need to get over it and move on, come up with new and innovative ways to make a living as well as come up with new plans, be willing to change jobs, relearn, etc. But most people are not willing to do that. Why? Now just wait for the government to bail them out. I will not defend the corps that go off shore, but I find it hard to condemn them as well. IMHO that all started with Clinton and NAFTA. It is only because of the current round of massive layoffs that people are now willing to do anything to get by. You want to blame all of this on Corps and that is a simplistic view.

Who says it is their fault? Not me. Who says that corps and "rich people have chosen to hire illegal’s instead of giving jobs to Americans". That is a pretty damm broad sweeping list of allegations on which to blame all of the countries economic ills. I doubt you can back most of it up. How about Corps have gone where labor is cheap because it is a profit driven industry. You have this hard on for anyone who makes money. How about the companies have given jobs to people who are willing to work hard, not the slackers who would rather sit on their ass and complain about how the man is keeping them down and enslaving them while they spit out another baby from some baby daddy? How do you explain the Korean immigrants who moved to the most depressed parts of cities in America and opened hugely successful chains of grocery stores? How about the waves of immigrants from India or Pakistan and have opened huge successful chains of hotels and motels? Where is the American drive to do that among those who started with or had very little to do that? You can't blame Corps and "rich people" for all the ills of this Nation. That is a ridiculous notion. This country was founded on the tenacity, innovation, and investment of "rich people".

[quotoe]Not everyone is cut out to be a doctor or a lawyer, and the fucking people going to business school getting MBAs are a bunch of greedy morons who have crashed the entire world economy.[/quote]So people are greedy if they work hard to get an advanced education and take advantage of a system that rewards hard work? Wow. Envy much?

Who gets to say who deserves what in this life? I don't disgree that we have huge sectors of our society that is underpaid and under appreciated. You can't defend a socialist construct to me. I don't buy it.

And the millions of illegal aliens, and welfare mothers on the dole.

Many people would disagree with that. You completely ignore the revenue that is gained from attracting millions of people to the events where they then spend money on the local economy.

Actually our high prices of medications pay for that, not our taxes. Get your facts straight.

I agree we need to get some equilibrium back and inact a flat tax so every single person pays the same rate, regardless of income. You make $1000, you pay $200 to tax. You make $100,000, you pay $20,000. No one gets a pass.

It disturbs me that you judge me about what I do and how I feel. I take care of people everyday who are less fortunate than me.

What if I did? I would sell my assets and start over. And that is why I pay so much for insurance.

Why are you judging my feelings again? There is much I could tell you about my family and their plights in life but it doesn't change the situation they find themselves in right now. And nothing I can say or do will change any of that. How for one fucking minute can you say that because of the plight of your family that I don't have my own issues to deal with concerning family members? What? Because I am not willing to put them on some public board? When times get tough we focus on our own families and issues, not yours. I have no responsibility for your problems or your families, my plate is full.

Who said it was?

Well I know for one thing your simplistic view of who to blame is wrong.

You must acknowledge that the system that loses those jobs, created those jobs in the first place. It's the same system.

Look at me. I was laid off the week after the crunch and I have a shitty mortgage in a house I can't afford, living on UI and charity. Sorry, it's not a tragedy, that I go around looking to blame on something. Humbling maybe, but the worst that will happen is that I will have to sell the house and we'll move into an apartment or rent a townhouse. Sucks to be me? Hell no, I will remain awesome (in a humble sort of way :D ) no matter what.

The tenacity of the Great Toad embodies the American spirit so many lack.

Maybe because they are over 45 or 50 and nobody will hire them no matter what they do. How many hotdog carts can survive?

I hate to laugh but it made me LOL.