So, you have no understanding of the situation, but you definitely know what should be done?
Well, looks like Dubya finally got hisself a gol’durned SDMB account. Thank god. I feel safer already.
-Joe
Why not? Seriously, they’re getting public money, so why shouldn’t they have to abide by public regulations? And given what a piss-poor job they’ve been doing, and the state the industry is in, the CEOs shouldn’t be getting much money.
I’d like to see Obama cut the presidential salary to $1. It would, of course, make no difference financially to the country, but it would be a huge symbolic gesture. Walking a mile in the shoes lends credibility (I believe) before asking someone else to do it. I suspect it might also go over well with the middle-America working class red-staters.
Not trying to poke you here, really, but doesn’t “I’m against wage controls, except…” = “I’m not against wage controls”? I’m not trying to twist your words, but it sounds like you’re saying that in certain situations, like this one, you are *in favor *of wage controlls, e.g. salary caps, for certain people.
My position is that I am *against *wage controlls. Period. All the time every time.
:dubious: I think you’ll find the average trufan has a much better grip on reality than the average mundane – including more highly developed critical faculty, and a better ability to separate fiction/fantasy from fact.
Um, no. Why? Anybody famous ever come out of there?
Well then… you have three more peer-reviewed papers on economics, and apparantly at least one more daughter, than I.
HAH! GOTCHA! I’m a macro-economist. No. Wait. No I’m not. Never mind.
Voyager, I’ll admit: you probably have a lead on me in understanding the current economic situation. You also have more experience (you’re about a presidential term older than me). That being said, economics related to engineering is a substantially more narrow focus than macroeconomics in general, so just becuase you have produced that body of work doesn’t necessarily lead me to agree with your opinion on salary caps.
In other words – I acknowledge your experience, but your experience in those areas doesn’t lead me to agree with you in this one.
Um, it doesn’t really have anything to do with anything. This is the pit, where people mix in little pokes along with their replies, kind of like this:
You were suggesting I was reality challenged, I suggested you were living in a fictional world. In truth, I think both those assertions are false.
Ahh… the meat of your question. Easy credit. Too easy credit (mortgages mostly). Which fueled speculation (in housing mostly). Those mortgages were then re-packaged and re-sold, and leverage was used to buy them. So we had packages of bad debts being bought with even more debt. It couldn’t go on forever, and, spectacularly, hasn’t. How the banks handled risk management? Very poorly, obviously. Which is why I think the losers should be allowed to fail. Why should we continue to support people who obviously can’t successfully run a bank? But wait, there’s more…
Baseball. Steroids. I do not believe, for a second, that major league owners, executives, and managers were completely in the dark about steroid use (and other drugs, like speed). But, the number of home runs kept increasing, which makes for great press, and none of them were willing to step in and douse the fire. Hey, as long as things kept going good, nobody had the guts to stand up and stop it.
That’s my analogy as to how the banking *regulators *failed. Voyager, did you see the sub-prime mess coming? I did. I saw that loans were being made to extremely sub-prime borrowers, and loans were being made for more than the asset collateralizing them. I knew the boom in housing prices was a bubble (more like a pus-filled boil) waiting to burst. I didn’t know when, I but knew it would. Voyager, did you too? Given what you’ve said about your background, I’m going to assume that you did. So…
If two average Joes like us could see it coming, why didn’t the regulators? And not only the regulators, but Freddie and Fannie? I suspect they did. But, just like baseball, nobody had the guts to douse the fire. People were getting rich don’t you know! (Of course, it was mostly on paper, most people really didn’t get rich, but they thought they were.) Times were booming! More people than ever could afford the American dream of owning a home! Except that… they really couldn’t. But… nobody had the guts to tell them.
Yes, nobody in the Bush administration had the guts to puts the brakes on. That being said, it’s my understanding that it was during Clinton’s tenure that the lending guidelines at Freddie and Fannie were relaxed, substantially. Clinton started the fire, Bush failed to douse it, and here we are.
(Disclaimer – I don’t know everything. No, really, I don’t. I’m sure there are facets of the situation I have missed, mis-stated, or mis-understood. However, I’m 100% certain that nobody reading this would get it 100% correct either.)
64 million slices of american cheese on the wall!!
64 million slices of cheese!!
Take one down, pass it around, 63,999,999 slices of cheese on the wall!!
63,999,999 slices of american cheese on the wall!!
63,999,999 slices of cheese!!
Oh heck, this is going to take all day…
What has he done to deserve $1? I don’t know if it is true for him, but a lot of presidents donate their salary to charity anyhow. In any case, the government needs to spend money for the stimulus. He should let the girls loose in the mall. 
During WW II there were price controls to keep a lid on people raising prices for rationed goods. I don’t know if there were wage controls or not - I would hope there were. But the current case isn’t a generic control structure, but a very specific one for companies the government has a stake in. If they screw up badly enough to almost get nationalized, this isn’t a lot different than setting a salary for a government worker.
I absolutely agree that the regulators failed - because the Bush regulators didn’t really believe in regulating. (See Madoff, Bernie.) I saw it coming - but that is because I read Krugman, who nailed the problem 2 years ago. I got out just before one housing bust, in Louisiana, so I might have been more sensitive than some.
I think the steroids analogy is pretty good. Any banker not taking the risk would lose out.
Some banks actually avoided mortgage instruments, so the bankers screwing up was not inevitable. But most of them didn’t have the balls, or didn’t really know what was going on in their shops.
And, btw, no one is even suggesting that the salary cap is going to solve this problem. It does help get popular support for the bad tasting medicine of propping up these assholes, and might make ones in the future think about what happens when it falls apart. What would the message be if these clowns kept on collecting $20 million paychecks? (Including bonuses.)
You heard Greenspan, right? He was ideologically blinded to what was going on. He was so dedicated to this free market stuff (even when manipulating it) that I think he was truly shocked that his worldview was incorrect. Plenty of conservatives today are saying to cut taxes and let the market take care of it, just like he Hoove. They don’t get it.
Clinton signing the law repealing the depression era limitations on banks was the real killer. Freddie and Fannie had capitalization issues, but really didn’t get into the mortgage mess until late, and even then they got the good loans. Though I don’t give Clinton a pass, Bush did have nearly 8 years to do something about it, so he has to bear most of the blame.
Voyager, all in all I think you and I agree on more than we don’t. Touché.
Good day, good luck, and God bless. I’m signing off.