2nd Term Part X - A link to a fore gone conclusion

[Kepler]

Re: 2nd Term Part X - A link to a fore gone conclusion

Which I have agreed with from day 1. Please dont equate me and Rover The Hill Lover

Fair point.

[ScoobyDoo]

Re: 2nd Term Part X - A link to a fore gone conclusion

All Hail The Big Short and all. Figured this is the place to put a couple commentaries, one on the book and the other provides a little more current background on the author himself.

The second article isn't about the author it's about one of the guys the author wrote about in his book (Michael Burry) who predicted the housing market collapse. Christian Bale plays him in the film.

[Rover]

Re: 2nd Term Part X - A link to a fore gone conclusion

Yeah, this is why I think you're not a liberal. The penalties were BS and you should absolutely know that being in the industry. The one lesson that came out of this is BofA and Goldman should have been broken on the wheel, but instead they're bigger now. We are so f-cked if this happens again, because nothing has changed. This is a hostage situation.

Because I'm in the industry is why I do know better than you. You don't spend collectively what had to be in the hundreds of billions of dollars and just blow that off as BS. I personally know the people who got canned who had nothing to do with this. At best you're misinformed and I'll leave it at that.

When you say nothings changed is when I think they've been handing out something stronger than joints at those Bernie Sanders rallies you've been going to. The capital requirements now are much, much more stringent. The stress testing is rigorous. How do I know this? Because I, unlike yourself, have to deal with it. The point of this isn't that it shouldn't be done. The point is its being done and it wasn't before new laws were passed, in this case Dodd-Frank. I'd also point out you can't take the opposite side of a hedge without collateral (AIG).

At this point Kep you've become a lefty version of a Trump voter. Anger over untrue statements and beliefs when some simple research to find out the truth would make you a lot happier.

[Kepler]

Re: 2nd Term Part X - A link to a fore gone conclusion

At this point Kep you've become a lefty version of a Trump voter. Anger over untrue statements and beliefs when some simple research to find out the truth would make you a lot happier.

The problem with this is there are plenty of economists who say the things I have been saying, and who say we're even more vulnerable than last time. So either you're a lot smarter and more knowledgeable than they are, or you're only seeing a small part of the elephant and that from a personally biased POV. This isn't you vs me, it's you vs them.

I absolutely admit to a prejudice against the institutions and the upper level management of the financial services sector. I am certainly much more likely to adopt and repeat statements made by their critics. But those criticisms are out there and they do seem to be coming from some very well-informed people who are well-placed to evaluate the industry. And obviously the financial institutions themselves, like any institution, will paint the rosiest possible picture in which they are actually the real heroes and victims of the piece.

When in doubt, ask, "cui bono"?

[ScoobyDoo]

Re: 2nd Term Part X - A link to a fore gone conclusion

Because I'm in the industry is why I do know better than you. You don't spend collectively what had to be in the hundreds of billions of dollars and just blow that off as BS. I personally know the people who got canned who had nothing to do with this. At best you're misinformed and I'll leave it at that.

When you say nothings changed is when I think they've been handing out something stronger than joints at those Bernie Sanders rallies you've been going to. The capital requirements now are much, much more stringent. The stress testing is rigorous. How do I know this? Because I, unlike yourself, have to deal with it. The point of this isn't that it shouldn't be done. The point is its being done and it wasn't before new laws were passed, in this case Dodd-Frank. I'd also point out you can't take the opposite side of a hedge without collateral (AIG).

At this point Kep you've become a lefty version of a Trump voter. Anger over untrue statements and beliefs when some simple research to find out the truth would make you a lot happier.

http://www.marketwatch.com/story/ano...nks-2015-08-03

The prosecution rests.

No wonder you love the Hill so much.

[Rover]

Re: 2nd Term Part X - A link to a fore gone conclusion

The problem with this is there are plenty of economists who say the things I have been saying, and who say we're even more vulnerable than last time. So either you're a lot smarter and more knowledgeable than they are, or you're only seeing a small part of the elephant and that from a personally biased POV. This isn't you vs me, it's you vs them.

I absolutely admit to a prejudice against the institutions and the upper level management of the financial services sector. I am certainly much more likely to adopt and repeat statements made by their critics. But those criticisms are out there and they do seem to be coming from some very well-informed people who are well-placed to evaluate the industry. And obviously the financial institutions themselves, like any institution, will paint the rosiest possible picture in which they are actually the real heroes and victims of the piece.

When in doubt, ask, "cui bono"?

If they can sucker people like you into buying their books and reading their articles, why wouldn't they tell you that? You do know Trump is a billionaire, right? Even though he peddles similar untruths.

What I have noticed though is you haven't actually addressed what I brought up, so lets try again.

1) Do you, or do you not agree, that capital requirements are much stricter?
2) Do you, or do you not agree, that banks now have to regularly run a stress test on their operations and then subject those results to the scrutiny of the Treasury dept who has a documented history of pushing back on them?
3) Do you, or do you not agree, that the uncovered hedges of AIG are now outlawed?

These are but a few of the examples I could cite to show that things have indeed changed. There are others (limits on overdraft fees, Lizzy Warren created Consumer Financial Protection Bureau) but lets start here. I don't care about you linking articles. Tell me where you are on these questions.

[Kepler]

Re: 2nd Term Part X - A link to a fore gone conclusion

If they can sucker people like you into buying their books and reading their articles, why wouldn't they tell you that?

Now who sounds like Trump and the Republicans? Scientists only say climate change is man-made because they're in on a scam to get research grants...

What I have noticed though is you haven't actually addressed what I brought up...

You haven't addressed any of the substance of what I and others have said either, so by your own implication that means you're nefariously ducking and have ceded the argument to me. Thanks, I accept your surrender.

Now see, that's called being a jerk. But rather than play that game I have forwarded your points to my childhood best friend who is also an Econ PhD, as he is much better able to answer them. Like Wu Tang Clan, he aint nuthin' to f-ck with, but he's a busy attorney, so please be patient for your impending beating.

(He's only Penn, though, so you know... lesser Ivy.)

[unofan]

If they can sucker people like you into buying their books and reading their articles, why wouldn't they tell you that? You do know Trump is a billionaire, right? Even though he peddles similar untruths.

What I have noticed though is you haven't actually addressed what I brought up, so lets try again.

1) Do you, or do you not agree, that capital requirements are much stricter?
2) Do you, or do you not agree, that banks now have to regularly run a stress test on their operations and then subject those results to the scrutiny of the Treasury dept who has a documented history of pushing back on them?
3) Do you, or do you not agree, that the uncovered hedges of AIG are now outlawed?

These are but a few of the examples I could cite to show that things have indeed changed. There are others (limits on overdraft fees, Lizzy Warren created Consumer Financial Protection Bureau) but lets start here. I don't care about you linking articles. Tell me where you are on these questions.

Yes
Yes
Don't know, but don't think it matters, so sure, I'll agree for the sake of argument. The next financial crisis won't be caused by the same thing as before anyway.

And the regulations above won't stop something that happens suddenly and without warning. Annual stress tests are great, but the risk is that a sudden unpredictable event brings down a major player like Wells Fargo or BoA, which then brings down others like Goldman's, and everyone else in a long but extremely quick chain reaction. No stress test will stop that if the whole sector gets affected at once.

[Rover]

Re: 2nd Term Part X - A link to a fore gone conclusion

And the regulations above won't stop something that happens suddenly and without warning. Annual stress tests are great, but the risk is that a sudden unpredictable event brings down a major player like Wells Fargo or BoA, which then brings down others like Goldman's, and everyone else in a long but extremely quick chain reaction. No stress test will stop that if the whole sector gets affected at once.

A few points:

1) Stress tests aren't annual. They're **** near quarterly at this point.
2) Capital requirements lessen chance of quick demise. Sorta like what happened to Wachovia which by all rights should have survived. If panic happens and nobody will lend you money short term, you have to have enough liquid capital to fund yourself in the meantime. By law. That's a big change and if you weren't aware of it that's cool but it should make you a little happier.

A financial crisis may happen, but it need not be on the level as this one. Only twice in the last 80 years has the govt had to step in so its not like this recent one was a run of the mill occurrence.

[Rover]

Re: 2nd Term Part X - A link to a fore gone conclusion

Now who sounds like Trump and the Republicans? Scientists only say climate change is man-made because they're in on a scam to get research grants...



You haven't addressed any of the substance of what I and others have said either, so by your own implication that means you're nefariously ducking and have ceded the argument to me. Thanks, I accept your surrender.

Now see, that's called being a jerk. But rather than play that game I have forwarded your points to my childhood best friend who is also an Econ PhD, as he is much better able to answer them. Like Wu Tang Clan, he aint nuthin' to f-ck with, but he's a busy attorney, so please be patient for your impending beating.

(He's only Penn, though, so you know... lesser Ivy.)

Kep you're channeling Karl Rove now. You've made several statements that I've challenged, and now you're hiding behind "oh well you did it too". While we're waiting for your friend, tell me what questions you raised that I refused to answer? I've put mine down here for all to see. Kindly accept the challenge to do the same (again, while we're waiting for your friend )

[ScoobyDoo]

Re: 2nd Term Part X - A link to a fore gone conclusion

A financial crisis may happen, but it need not be on the level as this one. Only twice in the last 80 years has the govt had to step in so its not like this recent one was a run of the mill occurrence.

The reason it didn't happen for so long was because of Glass-Steagel. Look how long it took to happen once that was gone. As long as that's gone there is not enough insurance in the system to save it once it starts. Thank God the American Government will always be there to bail you out.

[St. Clown]

Re: 2nd Term Part X - A link to a fore gone conclusion

A few points:

1) Stress tests aren't annual. They're **** near quarterly at this point.
2) Capital requirements lessen chance of quick demise. Sorta like what happened to Wachovia which by all rights should have survived. If panic happens and nobody will lend you money short term, you have to have enough liquid capital to fund yourself in the meantime. By law. That's a big change and if you weren't aware of it that's cool but it should make you a little happier.

A financial crisis may happen, but it need not be on the level as this one. Only twice in the last 80 years has the govt had to step in so its not like this recent one was a run of the mill occurrence.

No, Wachovia should've died. I've seen a sizeable portion of the insides of that beast, and it was bloated and rotten. On top of that, most of the people in that company didn't really know how the foot bone connected to the leg bone.

[Kepler]

Re: 2nd Term Part X - A link to a fore gone conclusion

2) Capital requirements lessen chance of quick demise. Sorta like what happened to Wachovia which by all rights should have survived. If panic happens and nobody will lend you money short term, you have to have enough liquid capital to fund yourself in the meantime. By law. That's a big change and if you weren't aware of it that's cool but it should make you a little happier.

Wikipedia (I know, I know) says this isn't phased in yet. This is Basel III, correct? There are a million articles out there saying it's insufficient and can be gamed.

[Kepler]

Re: 2nd Term Part X - A link to a fore gone conclusion

Kep you're channeling Karl Rove now. You've made several statements that I've challenged, and now you're hiding behind "oh well you did it too". While we're waiting for your friend, tell me what questions you raised that I refused to answer? I've put mine down here for all to see. Kindly accept the challenge to do the same (again, while we're waiting for your friend )

You certainly are a charmer sometimes.

Let's start with Scooby's link.

MarketWatch (hardly the Second Internationale) says the following:

At the heart of the Dodd-Frank law is a two-pronged approach to the too-big-to-fail problem. The first section of the legislation, Title I, stipulates that all firms must be able to go bankrupt without causing large-scale damage to the broader financial system or the real economy.

Regulators are instructed, in no uncertain terms, to make sure that all large financial firms are structured in such a way that bankruptcy, using the standard rules and procedures of the court system, can happen without repeating the catastrophic post-Lehman cascade.

In Title II of Dodd-Frank, Congress created a back-up authority through which the Federal Deposit Insurance Corporation (FDIC) can take over and manage a failing financial firm and impose appropriate losses on shareholders and some creditors without creating widespread systemic damage or a global panic. The good news is that, over the past half-decade, the FDIC has made some progress formulating the design of a workable Title II.

OK, good -- Title II seems to be on its way, but what of Title I?

Nearly seven years after the global financial crisis erupted, and more than five years after the passage of the Dodd-Frank financial-reform legislation in the United States, the cause of the crisis — the existence of banks that are “too big to fail” — has yet to be uprooted. As long as that remains the case, another disaster is only a matter of time.

The bad news is that there has been almost no progress in terms of ensuring that large financial firms actually can go bankrupt. In a hearing last week before a part of the Senate Banking Committee, there was complete agreement across the political spectrum on this point. The disagreement concerns what must be done to finish this important piece of Dodd-Frank business.

The Republican proposal is to modify the bankruptcy code, creating special provisions for large, complex financial institutions. There are three problems with this approach.

And the three are:

1. All companies in the U.S. should be able to fail under the same rules. Privileged treatment for anyone perpetuates the perception that it is safer to lend to some large financial firms — and further strengthens their unfair advantage.

2. It is fanciful to believe that the private sector would want to get involved in providing funding to a huge financial firm under court supervision, particularly during a systemic crisis. The definition of such a crisis is precisely that moment when private-sector loans are not readily available. And a large loan — in the tens of billions of dollars — provided by the U.S. Treasury to a bankruptcy court judge is unlikely to be politically acceptable or economically sensible.

3. The bankruptcy of any large U.S. financial firm today would induce a scramble for assets by regulators around the world. Some foreign regulators — such as the Bank of England — have agreed not to act pre-emptively in a resolution process run by the FDIC. But such agreements do not apply to a court-run bankruptcy process; authorities everywhere would move to protect local creditors and taxpayers by seizing assets in their jurisdiction.

Which leaves us with the continuance of Too Big to Fail. Here are my questions based on the above:

1. Do you agree this is a fair summary of what the central problem is and how Dodd-Frank was supposed to meet it?
2. Do you agree that Title I of Dodd-Frank has not in a meaningful way yet been implemented?
3. Do you agree that re: the size of the financial institutions and their domino effect in the economy these entities are still too big to fail and we would have to bail them out yet again?

[Rover]

Re: 2nd Term Part X - A link to a fore gone conclusion

Wikipedia (I know, I know) says this isn't phased in yet. This is Basel III, correct? There are a million articles out there saying it's insufficient and can be gamed.

Its an escalating requirement. Basel III being the final one. For the record several firms are already at the Basel III requirements. Firms have already had to hit the higher requirements (Basel II).

I don't give a rat's arse about "a million articles saying its insufficient and can be gamed" There's this guy on CNBC named Gartman who predicts the market will crash every time he's on TV. Eventually he'll be proven correct, but that doesn't make him worth following. If you aren't in compliance with federal requirements, they'll be sure to let you know. If that happens, you get creamed in the stock market (witness the firms that had trouble with their stress test). If your stock price goes down, you get fired as an exec. Its not too much more complicated than that, but perhaps your economist friend will enlighten you on the capital requirements point....