Heartland

markfiend wrote:

nodubmanshouts wrote:Really, I thought socialism died out with the miners strike... its sad to see itsu gly head rise again.

various governments' part-nationalisation of the banks seems to suggest to me that the socialist ideal of collective ownership was right all along.

Ugh. It's not collective ownership, though, it's government ownership. I've said this before, but personally, I think the banks should have been allowed to fail, because that would punish them for the bad credit risks they took, and encourage them not to do it again (the same would apply to the people falling under the heading of 'bad credit risk' themselves). Of course, the other side of that is the fact that for many of them (here in the States, at least) those bad credit risks were government mandated ("Credit is a human right!" some people said, rather than a privilege granted to responsible adults). It's partly government involvement in private industry that got us into this mess. One might reply that it's incompetent government involvement, but really: is there any other kind?

I would also add that generally speaking, the people who pay $900 for a toilet seat probably should be in charge of as little as possible of the financial sector.

markfiend wrote:
I would agree that if people had more control at a local level, perhaps there would be less voter alienation. Which ties back into a socialist picture...

See, that's where we disagree. I side with Tocqueville on this: socialism is in part the result of that alienation.

sultan2075 wrote:I think the banks should have been allowed to fail, because that would punish them for the bad credit risks they took,

Best joke I've read in a while.

I think the banks should have been allowed to fail, because that would punish them for the bad credit risks they took,

Aw man, Sultan2075 I was routin' for ya until that one....

Hmm. Perhaps that came across a little more heartless than intended. That being said, I'm open to suggestions, provided they actually address the root of the problem (which a bailout doesn't).

sultan2075 wrote:Hmm. Perhaps that came across a little more heartless than intended. That being said, I'm open to suggestions, provided they actually address the root of the problem (which a bailout doesn't).

I would normally be inclined to agree that failed banks (or any other business) should be allowed to go bang without the taxpayer propping them up. But because of the knock on effect that a failed bank has on other businesses within the financial system, unfortunately in this particular case the bail-out makes sense but only (and here's where I agree with Sultan) if the bailout is part of a raft of measures designed to prevent this thing from recurring.
For example, better enforcement of the prohibition on naked shorting, stricter mortgage lending rules, the renewal of the uptick-only shorting rule, and perhaps even the repeal of the Gramm-Leach-Bliley Act of 1999 that allowed bank holding companies to own other financial companies (for example, insurance companies). Financial institutions might be required to mark to market every quarter the way insurance companies are.
Legislation that is rushed through in the wake of a crisis (Sarbanes Oxley, for example) tends to be ill-considered and short-sighted, and fails to take into consideration the wider problems that may be lurking just below the surface. There is a danger that the closing days of the Bush administration will see a plethora of this kind of legislation being passed.

Oh no, Sultan, I don't think you were being heartless at all. I think EvilBastard's first paragraph sums it up for me:

I would normally be inclined to agree that failed banks (or any other business) should be allowed to go bang without the taxpayer propping them up. But because of the knock on effect that a failed bank has on other businesses within the financial system, unfortunately in this particular case the bail-out makes sense but only (and here's where I agree with Sultan) if the bailout is part of a raft of measures designed to prevent this thing from recurring.

Instead, I suggest we need to take a careful look at every employee of these banks who wrote a bad loan, and see if they (or anyone in their chain of command) committed fraud by doing so, and prosecute as necessary.

After all, these bad loans hurt the shareholders of the banks too, who were effectively lied to. And these shareholders are people like you and me, indirectly, through our pension funds and 401ks.

Criminal prosecution won't get anybody's money back, but sure might help it from happening again.

nodubmanshouts wrote:Instead, I suggest we need to take a careful look at every employee of these banks who wrote a bad loan, and see if they (or anyone in their chain of command) committed fraud by doing so, and prosecute as necessary.

After all, these bad loans hurt the shareholders of the banks too, who were effectively lied to. And these shareholders are people like you and me, indirectly, through our pension funds and 401ks.

Criminal prosecution won't get anybody's money back, but sure might help it from happening again.

Agreed.

Perhaps I'm wrong, but in the US at least, isn't the problem not so much fraud by bank employees but pressure by the US government to provided loans to those who otherwise couldn't get them? From what I've read on here, that's not what has happened in the UK; the impression I've gotten is that unscrupulous contractors cajoled people into taking loans they could ill-afford (hence the use of terms like fraud). That is a different situation from the US government telling banks that they have to provide loans on favorable terms to people with bad credit--and the root of my skepticism about a government based solution, in the US, lies in that fact. Government involvement in private industry got the United States into this mess, and while it is conceivable that government involvement can get it out, that alone does not necessarily make it a good idea. I am skeptical about a government based solution precisely because it does not seem to address the root of the problem (of course, there are multiple roots; for example, in the US, at least, we don't, as a society, encourage saving money anymore, and we do encourage living on debt). Ideally, I would favor some sort of solution based on free market incentives (if one could be conceived). Failing that, a cash bailout which did not increase government control of private industry (and in some ways decreased it: if private industry had been running its own affairs, rather than trying to appease the demands of the US government, these bad credit risks would not have been granted mortgages in the first place).

All of that being said, EvilBastard sounds like he knows what he's talking about (remember, I muck about in old books for a living, I don't work in the financial sector).

in the US at least, isn't the problem not so much fraud by bank employees but pressure by the US government to provided loans to those who otherwise couldn't get them?

I don't believe that's the case.

in the UK; the impression I've gotten is that unscrupulous contractors cajoled people into taking loans they could ill-afford

True, but nobody held a gun to the borrower's head and made them sign. Both lenders and borrowers were carried away by greed, IMHO, and both should pay some price for it.

There's also more to this mess than just mortgages, but its a significant part of it.

Back to an earlier point... Facts about ACORN and alleged voter fraud

Edit: Oops, quoted nodubmanshouts's post by accident...

nodubmanshouts wrote:...nobody held a gun to the borrower's head and made them sign. Both lenders and borrowers were carried away by greed, IMHO, and both should pay some price for it...

But if borrowers were misled about the risks and the benefits (as I believe they were*) then the borrowers are victims of fraud perpetrated by the lenders or their agents.

You seem intent on blaming the victims in this mess, I don't really understand why.

*We certainly were told concerning our endowment mortgage that the endowment portion would be guaranteed to cover the cost of the loan when it matures. This will almost certainly not be the case, and our mortgage advisor acted illegally in telling us this. We are actually entitled to compensation for this (and are pursuing it currently).

Well, the key is "misled". Take an example.

In 2004, somebody wants to buy a house, but the mortgage come out at $2,800 a month. So the lender says "I can get you a no-interest loan for $1,800, and after which the payments go to $3,000 a month". "Ok" says the borrower, "but I can't afford the $3,000". "Well", says the lender, "if your house continues to go up in value like it has the last few years, you can refinance get a lower fixed rate in 2 years time.". "Ok!" says borrower, and signs.

Now the $3,000 payment is due, and the borrower cannot refinance because they are in negative equity, and they cannot afford the $3,000 per month. They cannot afford the payment, so they foreclose.

Do they really have anyone to blame but themselves?

In the meantime, Johnny sensible takes out a $1800 for a much smaller house (probably an apartment) in a less-desireable part of town. Is it really fair that Johnny gets no help, and Mr No-Intereset-Suicide-Mportage-So-I-Can-Live-In-A-Huge-House does?

This is by far the most common kind of bad-loan we are seeing, and I fail to see how the borrower is a "victim". (The other major example is people who take home equity loans on equity yo buy toys, that equity has since vanished)

I'm sure some lenders lied to people, but not to everyone. Those lying lenders certainly need to take accountability.

But I have no sympathy for the majority who knowingly got themselves into Suicide Mortages. None at all.

Ah right. That does make a difference, I'll agree. Fair enough. The situation you describe is different to what I had thought was the case.

(In your picture, we were "Johnny Sensible". We were still mis-sold our mortgage.)

A quote from elsewhere about the "folly of tax-and-spend":

Right. Because it would be tragic if we were to waste our national wealth repairing bridges, ensuring the health of our citizens, converting to a sustainable energy infrastructure and paying down the national debt, when we could be buying more plastic widgets and melamine from China and more oil from dictators, and building more 6bed4bath mansions and sporting venues with corporate boxes.

markfiend wrote:A quote from elsewhere about the "folly of tax-and-spend":

Right. Because it would be tragic if we were to waste our national wealth repairing bridges, ensuring the health of our citizens, converting to a sustainable energy infrastructure and paying down the national debt, when we could be buying more plastic widgets and melamine from China and more oil from dictators, and building more 6bed4bath mansions and sporting venues with corporate boxes.

But we have tax and spend now!
I'm fairly certain at least 70% of my income goes on some form of tax. Maybe it works if you have a Government who are interested in the long term well-being of the nation rather than just re-election, or their own pet social engineering projects.
The British Government have taxed us, borrowed more, and spent it on Christ only knows what. Certainly not on a rainy-day fund, or infrastructure, energy self-sufficiency and damn well not the national debt.
So, because of that, I want to keep the money I earn, as I believe I can spend it better.

American politics are hilarious and scary.

markfiend wrote:A quote from elsewhere about the "folly of tax-and-spend":

Right. Because it would be tragic if we were to waste our national wealth repairing bridges, ensuring the health of our citizens, converting to a sustainable energy infrastructure and paying down the national debt, when we could be buying more plastic widgets and melamine from China and more oil from dictators, and building more 6bed4bath mansions and sporting venues with corporate boxes.

Tax-and-spend is folly? What are you going to do with tax revenues if you don't spend them - put them under the government's mattress? Allow senior cabinet officials to sneak into the Federal Reserve late at night and slide naked down piles of nickels, dimes, and pennies, yelling "Weeeee!"?
The folly is when the taxes are spent on things that don't provide a reasonable return on investment - space exploration, intractable wars in far-away places, or propping up the regimes of dodgy militarists in South America.
PJ O'Rourke suggested that the test of good government was whether they spent your money on things that you would have spent your money on if you hadn't had to give it to the government. It's a bit simplistic, true, but if on your tax return you had to specify what the tax was spent on (with a minimum percentage being allocated to a number of areas - defense, education, social security, for example) we might find ourselves with a compact military capable of defending the country in time of war and an education system that actually educated people.

Yeah, that's what I was trying to say. Perhaps I should have used <sarcasm> tags

Except...

EvilBastard wrote:space exploration

What????

I agree with this:

Steven Hawking wrote:I don't think the human race will survive the next thousand years, unless we spread into space. There are too many accidents that can befall life on a single planet. But I'm an optimist. We will reach out to the stars.

Scientific research (of which space exploration is a subset) may not provide immediately recognisable returns on the investment, but you'd sure as hell notice it if it was gone.

I just can't comprehend the idea that space exploration could be regarded as folly. You're so far from being right that you're not even wrong.

*edit: I'd assign not one penny to "defence".

markfiend wrote:Yeah, that's what I was trying to say. Perhaps I should have used <sarcasm> tags

Except...

EvilBastard wrote:space exploration

What????

I agree with this:

Steven Hawking wrote:I don't think the human race will survive the next thousand years, unless we spread into space. There are too many accidents that can befall life on a single planet. But I'm an optimist. We will reach out to the stars.

Scientific research (of which space exploration is a subset) may not provide immediately recognisable returns on the investment, but you'd sure as hell notice it if it was gone.

I just can't comprehend the idea that space exploration could be regarded as folly. You're so far from being right that you're not even wrong.

*edit: I'd assign not one penny to "defence".

I'm not opposed to space exploration per se - I'm just not sure that governments should be the ones doing it. Given that it's an offshoot of the defence sector (and that the sepos seem intent on militarising space), I'm not entirely happy with my tax dollars funding it.

and while I respect Mr. Hawking's enormous intellect, if the human race didn't survive the next thousand years it wouldn't really bother me a lot. If we explore the universe and find other planets to colonise, we're likely just to fcuk them up liked we fcuked up this one, and be having the same conversation 5000 years from now.

Tax-and-spend is folly? What are you going to do with tax revenues if you don't spend them

1. pay off national debt
2. deposit it in banks for a rainy day
3. allow taxes to be cut at a later day

EvilBastard wrote:Tax-and-spend is folly? What are you going to do with tax revenues if you don't spend them - put them under the government's mattress?

Well, they *could* give a tiny, minute fraction of those revenues to me, so I could pay off my student loans and get the hell out of this country!

Which begs the questions, which country do you live in and which are you going to?

nodubmanshouts wrote:Which begs the questions, which country do you live in and which are you going to?

1. The U.S. - where, despite having been born and raised, I've never wanted to be.

b. Pretty much any country in Western Europe - somewhere civilized and, unlike the bad old US of A, not culturally and intellectually bereft...

I was born in Western Europe and now live in the USA. I wouldn't dream of ever living and working in Western Europe again. I wonder why you think the grass is greener over there?