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

[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....

 

[Rover]

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

To your questions

1. Do you agree this is a fair summary of what the central problem is and how Dodd-Frank was supposed to meet it?

Yes, and then No. A central problem of Dodd-Frank is too big to fail. Dodd Frank met this problem is several ways. 1) capital requirements. If you have enough liquid capital, you are less likely to fail. 2) bankruptcy as you say and 3) the govt's ability to freeze, take over, and wind down failing banks so they don't crash the system which you seem to admit is already in place.

2. Do you agree that Title I of Dodd-Frank has not in a meaningful way yet been implemented?

Yes, but its an extra layer on top of what's already in place to prevent too big to fail (capital requirements and govt takeover and wind down)


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?


No I don't. You may need some govt intervention because that's how the federal law is written. However as the last crisis didn't end up costing the Treasury mone (in fact they made money) the next one is less likely to do so.

Doom and Gloom always sells Kep.

 

[ScoobyDoo]

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

To your questions

1. Do you agree this is a fair summary of what the central problem is and how Dodd-Frank was supposed to meet it?

Yes, and then No. A central problem of Dodd-Frank is too big to fail. Dodd Frank met this problem is several ways. 1) capital requirements. If you have enough liquid capital, you are less likely to fail. 2) bankruptcy as you say and 3) the govt's ability to freeze, take over, and wind down failing banks so they don't crash the system which you seem to admit is already in place.

2. Do you agree that Title I of Dodd-Frank has not in a meaningful way yet been implemented?

Yes, but its an extra layer on top of what's already in place to prevent too big to fail (capital requirements and govt takeover and wind down)


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?


No I don't. You may need some govt intervention because that's how the federal law is written. However as the last crisis didn't end up costing the Treasury mone (in fact they made money) the next one is less likely to do so.

Doom and Gloom always sells Kep.

Glass-Steagall Glass-Steagall Glass-Steagall Glass-Steagall Glass-Steagall Glass-Steagall Glass-Steagall Glass-Steagall Glass-Steagall

 

[Rover]

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

Glass-Steagall Glass-Steagall Glass-Steagall Glass-Steagall Glass-Steagall Glass-Steagall Glass-Steagall Glass-Steagall Glass-Steagall

Scooby I don't necessarily agree but its cool.

 

[ScoobyDoo]

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

Scooby I don't necessarily agree but its cool.

Elizabeth does. That's all that matters to me. She also wrote the most significant economics book in US history. Glad to have her on my side.

 

[Rover]

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

Elizabeth does. That's all that matters to me. She also wrote the most significant economics book in US history. Glad to have her on my side.

Good thing she was involved in making the Dodd-Frank law.

 

[ScoobyDoo]

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

Good thing she was involved in making the Dodd-Frank law.

Considering how toxic and moronic the Republicans in Congress are I'm surprised that law even passed. Flawed as it is. Glass-Steagall should have been put back. Greedy Money Humpers have a strong lobby.

 

[mookie1995]

Elizabeth does. That's all that matters to me. She also wrote the most significant economics book in US history. Glad to have her on my side.

Thank God for Pocahontas

 

[ScoobyDoo]

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

Meanwhile in Alabama.

ATLANTA — The chief justice of the Alabama Supreme Court, Roy S. Moore, on Wednesday ordered probate judges in the state not to issue marriage licenses to same-sex couples, a move that could cloud the carrying out of the United States Supreme Court decision that legalized same-sex unions.

Within hours of the administrative order, the probate court in Mobile County said on its website that it was “not issuing marriage licenses to any applicants until further notice.” That probate office, among the busiest in Alabama, was involved in the litigation that last year prompted a federal judge in Mobile to strike down the state’s marriage restrictions as unconstitutional.

http://www.nytimes.com/2016/01/07/u...-halt-to-same-sex-marriage-licenses.html?_r=0

 

[St. Clown]

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

Alabama confuses me. How can a single judge carry so much power? Does Alabama not have a state supreme court that consists of a panel/quorum of judges that would need to vote to make such a decision? To my understanding, when looking at the Federal model, the Chief Justice there can only decide on seemingly minor things (which probably have large consequences) that impact how the SCOTUS goes about its business, not issue directives without a majority rule.

 

[Slap Shot]

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

I am being too lenient by wanting them punished accordingly? Ok...

If you think this was a 50/50 screw-up you're being too lenient.

 

[Handyman]

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

If you think this was a 50/50 screw-up you're being too lenient.

If yo can kindly find me where I said that I will mea culpa. Since I didnt, nor have I ever thought as such (I usually say 80/20 for the record) I wont go holding my breathe.

 

[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 )

My friend responded very briefly but hinted when he has time he'll hit it more analytically. His response is concise, at least:

So what if the law requires them to do something? They're a lawless mafia who are never punished because they've captured their regulators and they own Congress. They're more highly leveraged now than they were in 2008 and the next time they fall will be even worse. I'll work on the footnotes.

He's typically more laconic than Spock, so I think we hit a nerve.

 

[Rover]

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

My friend responded very briefly but hinted when he has time he'll hit it more analytically. His response is concise, at least:



He's typically more laconic than Spock, so I think we hit a nerve.

Definitely sounds like he's going to bring a sober, reasoned analysis to all this after those comments. I await his reply....

 

[Kepler]

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

Definitely sounds like he's going to bring a sober, reasoned analysis to all this after those comments. I await his reply....

Actually, if you found something that gets him annoyed I'll be forever grateful. I've been trying to annoy him for 30 years and haven't hit it yet.

 

[Kepler]

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

A very long piece detailing Obama's domestic policy achievements. The important thing, of course, is to cement and then extend these changes by continuing to hold the White House, which is why in the end liberals should and hopefully will turn out for Hillary.