|
|
Post by epaul on Mar 2, 2009 13:16:41 GMT -5
www.thisamericanlife.org/Radio_Episode.aspx?episode=375The Banking Crisis explained in 59 minutes. These are the same guys (This American Life with Ira Glass) who did the show explaining the Mortgage Crisis that SuperTramp linked to. They have done four (I think) episodes on the current mess. This is a wonderful show. And they save a couple real kickers for the end, so don't doze off. This economic crisis is many things, among them, an education. Kudos to public radio.
|
|
|
|
Post by Cornflake on Mar 2, 2009 13:22:17 GMT -5
Thanks, epaul. I caught only the beginning and the end. I was buying groceries during the middle. I want to hear the rest.
|
|
|
|
Post by theevan on Mar 2, 2009 16:20:01 GMT -5
I thought it was pretty good.
|
|
|
|
Post by AlanC on Mar 2, 2009 19:52:15 GMT -5
|
|
|
|
Post by millring on Mar 3, 2009 20:54:41 GMT -5
I finally got a chance to listen to this all the way through (tried two other times and got interrupted).
Interesting, indeed.
If I were a student in the class I guess I'd ask a coupla questions...
1. The HUGE red flag sign was when they noted the spike -- the parallel between '29 and now as it related to those being the only two times in history where debt=GDP. But from that point on, the obviously avoided question was “Is there anything that can be done to improve the ratio from the increasing-the-GDP side of the equation?”
The default assumption, as good and balanced as the report was, was that growth was not a solution. Maybe they have a good reason for the assumption, but it was a glaring omission not to have mentioned at least WHY they never even intended to address that.
2. Why did they make is sound as thought those guys at the end who were buying up “toxic assets” were pioneering some new economic phenomenon? My friend, Kevin, started up a “clean-out” business last year. He did so with the backing of his friend Leon, who has been doing exactly that (buying toxic assets) for a very long time now. Many, many years.
The means of dealing with toxic assets has been in place and would fill that role quite well. But “This American Life” made it sound as if that was an industry that, while it might have the potential to help solve the problem, was not developed yet. It’s full-blown industry now. Leon does millions of dollars of bad assets a year and, by his own words, he is VERY small potatoes in the industry.
3. Am I the only one who pulled out their "Album 1700" and listened to the rest of it after hearing it on the program?
More questions, but I’m going to bed. Long day. Lotsa pots, too much messing with my new blog.
|
|
|
|
Post by millring on Mar 5, 2009 9:33:18 GMT -5
4. Am I the only one asking the questions of the solution that they offered (Nationalizing the banks)...
They're going to have to (by their own admission) hire thousands of "regulators" for each bank taken over........and somehow we're to believe that those government positions will end up being temporary -- that the banks will be bought somewhen in the future and those government employees will be unemployed? really?
|
|
|
|
Post by Cornflake on Mar 5, 2009 11:31:44 GMT -5
I finally heard all of it. I thought it was pretty good. It added incrementally to my sense that Obama has more likely done too little than too much.
Millring, I know that other companies have nationalized and then privatized banks, so it can happen, but I don't know much about the details.
|
|
|
|
Post by millring on Mar 5, 2009 12:04:37 GMT -5
Millring, I know that other companies have nationalized and then privatized banks, so it can happen, but I don't know much about the details. What I'm getting at is the TAL's piece's aside -- that in the relatively small, regionalized S&L solution, it took (in their example) hundreds of regulators per bank.... ....and that those S&Ls were, by the banking size standards in the current debacle, tiny. Miniscule. I think that in their words they likened just ONE of the banks in the current crisis to being the economic scale of an average COUNTRY. That means that if the tiny S&Ls required hundreds of regulators per bank, it's not unrealistic to assume the the banks would require THOUSANDS. Per bank. Temporarily? How do you find TEMPS who are... 1. assumed to be better trained than the bankers who got us into the mess in the first place, and... 2. when assumed to be that much better at banking, will step aside when the US government sells the bank? |
|
|
|
Post by Cornflake on Mar 5, 2009 12:25:45 GMT -5
They're good questions and I don't know the answers. If the Swedes could manage, though, we should be able to.
|
|
|
|
Post by epaul on Mar 5, 2009 12:28:13 GMT -5
Yep, that's what they said. They said it could take up to a thousand wonks per (big) bank.
They said that if it wasn't our home turf, if we (the banker Feds) or the IMF saw a similar situation in another country, the accepted and best option would be to take over the banks, re-organize the banks, and then re-open and re-privatize the bank.
But size, and local traditions, but mainly size, complicates matters tremendously. Logistically, it would be a hugely complicated undertaking. It seems clear that all involved are striving and hoping like hell that it can be avoided.
This banking/credit crisis is like a funnel. At the edge, there is a wide range of opinions and proposed solutions, but the deeper a person (expert) becomes immersed in the problem, the opinions and proposed solutions, and real options narrow, and narrow, and narrow. For the wonks on the point, the options are pretty damn few and focused.
And can you imagine the rivers of hope and fear flowing through their head. "Come'on Dow, Come'on Dow. Turn the corner Citi, come on Citi, come'on Citi, Move Your Blooming Arse!!
|
|
|
|
Post by Cornflake on Mar 5, 2009 12:34:12 GMT -5
"Come'on Dow, Come'on Dow. Turn the corner..."
Seriously, is the Dow of any significance in all this? It's a barometer of the moods of some people. It's of interest to those with investments. My sense, though, is that if it shot up to 10,000 tomorrow, the basic problems would be unchanged, and the Dow is something of a sideshow.
|
|
|
|
Post by epaul on Mar 5, 2009 13:45:56 GMT -5
I think the Dow does matter.
The market is a barometer of confidence and hope, or gloom and despair. When the market is up and going upper, lots of folks have a spring to their step and a gleam to their pocketbook. When the market goes down, and down, and the rebounds don't happen, optimism about the economy sags, and droops.
Most folks are working and doing as well or better now as they were two or five years ago. But the cascade of bad news is creating big concerns. The sinking of the markets has caused at least 50% of the people in this country to feel a whole lot poorer. I would guess a lot of folks that are sixty or above has ratcheted in any spending they can ratchet. And that is a very influential demographic chunk of this country.
It seems to me that a good portion of the economy is just a huge Ponzi scheme. So we need to get people kicking money in again to get the good feelings rolling. If the Dow would start climbing, all by itself it would pull optimism and house values back up, and credit crisis would be over. Maybe the Fed should just take over the ticker tapes instead of the banks. Put the fix on the Stock Exchange.
|
|
|
|
Post by millring on Mar 5, 2009 14:15:19 GMT -5
It seems to me that a good portion of the economy is just a huge Ponzi scheme. So we need to get people kicking money in again to get the good feelings rolling. If the Dow would start climbing, all by itself it would pull optimism and house values back up, and credit crisis would be over. Well, that's been my sense of things and my hope. |
|
|
|
Post by Cornflake on Mar 5, 2009 15:09:08 GMT -5
I hear you guys and you may be right. On the other hand, while the Dow was soaring in past years, the underlying problems grew as quietly as cancer, and they're still there.
|
|
|
|
Post by epaul on Mar 5, 2009 17:22:02 GMT -5
True.
|
|
|
|
Post by TDR on Mar 5, 2009 17:47:03 GMT -5
I think the Dow does matter. It seems to me that a good portion of the economy is just a huge Ponzi scheme. So we need to get people kicking money in again to get the good feelings rolling. If the Dow would start climbing, all by itself it would pull optimism and house values back up, and credit crisis would be over. Maybe the Fed should just take over the ticker tapes instead of the banks. Put the fix on the Stock Exchange. So, we need to prop things up and keep the Ponzi scheme going? So that it collapses later at bigger numbers? The stock market inflates share values periodically due to speculation. It always corrects. Occasionally stocks are undervalued, often over. No doubt a similar thing will happen with real estate. It was over in 2004 - 2007 or 08. Now some or many things are under valued. They will correct in time. What looks like a pyramid scheme is the paper trading. Banks with 25:1 capital to loan ratios. Bad loans backed by undercapitalized insurance giants. Hedgers borrowing to bet short. Automated trading pools swinging the commodities markets. Criminal negligence in the regulatory sector. |
|
|
|
Post by RickW on Mar 5, 2009 17:47:26 GMT -5
It seems to me that a good portion of the economy is just a huge Ponzi scheme. So we need to get people kicking money in again to get the good feelings rolling. If the Dow would start climbing, all by itself it would pull optimism and house values back up, and credit crisis would be over. Well, that's been my sense of things and my hope. Pretty much. The endless growth theme means it really is a complicated ponzi scheme - you keep taking in enough to pay off the folks coming behind, while skimming for yourself. I go back again to our banks here in Canada. They are making excellent profits, and have not needed any bailout. They are not nationalized. They are regulated. We do not have bazillions of regulators. Perhap the need is simply to get them stable, and examine the laws around which they are run. Perhaps the government should take the shares, run them at arms length, and then sell the shares when the value is back up. Seems like a no brainer to me. I know 'muricans get all wound up about nationalizing anything. I'm not so sure it's a terrible thing. But about all we have nationalized is medicine, and that's worked out pretty good. The rest we just regulate, and that's turned out pretty good, too. |
|
|
|
Post by Cornflake on Mar 5, 2009 17:57:48 GMT -5
"I know 'muricans get all wound up about nationalizing anything. I'm not so sure it's a terrible thing."
Lots of us have qualms about the government's talent for running businesses, so it's not a solution we're quick to embrace. If the economy gets bleak enough, though, many things will be on the table that ordinarily wouldn't be.
|
|
|
|
Post by TDR on Mar 5, 2009 18:13:37 GMT -5
Millring:
Do you really think the problem there was GDP was too small, rather than too many people too deep in debt and bound to default? Seriously?
There's nothing magic about a debt to GDP ratio, other than it shows how big the debt is relative to a very big number.
|
|
|
|
Post by millring on Mar 5, 2009 18:16:38 GMT -5
Millring: Do you really think the problem there was GDP was too small, rather than too many people too deep in debt and bound to default? Seriously? . No. Do you think that's what I said? Seriously? |
|
