Senate panel slams Goldman in scathing crisis report

[CaptainCrunch]

Originally Posted by WilsonFourTwo

I love the optimism in the first sentence (seriously), but I don't think significant (peaceful) reform will take place. The establishment is so firmly entrenched, it almost seems an understatement to say that the government has been purchased. Add to that the people have no resources are incredibly scared of losing what little they have.......I just don't see it.

That said, I too am scared to think of the radicals lining up on each side. I was wondering the other day if there's a sizable uptick in "Militiamen" type organizations. There's a scary thought....

The problem is that most of the government stuff is done in the background, lobby groups have become so powerfull in the States that they've almost replaced Congress in terms of defining the direction that America will go in.

There's also the whole "While we sleep concept" where as long as you have a warm bed, food, and enough cash to get by, you might get angry but you have a fear of whats behind door number 2, so you're never going to push that hard for change.

And in a governmental system, change is never better(Different dude, smae sh%t), its either neutral (Same old sh%t) or negative (Holy sh$t, that sucked)

The days of revolutions being a catalyst of dynamic change are over. The guy that seizes power will more often or not be the same or worse then the guy that occupied the seat of power before.

[CaptainCrunch]

Originally Posted by burn_this_city

Is an armed insurrection even possible? The patriot act basically gives the government the ability to snuff out any sort of uprising by labelling the people terrorists.

Probably not, I think that Militia groups or armed civilians are never going to be a matchup for a properly trained soldier with armor heavy weapons and the weight of the United Sates Airforce on their side.

[J pold]

I'm not as down on the banks or the bailouts as some. To me if you let the banks fail and don't have any government intervention (quoting Ben Bernanke) "they won't call the it the great depression anymore, because this would be so much worse", and after looking at all the toxic assets banks had on their balance sheets I can't help but agree.

The system is broken for sure but it can be fixed. Bank bailouts have been going on for centuries and will continue on for centuries. If you look at the state some of the big banks are in (Citi, BoA) you could make a strong case for just nationalizing them. In fact if it was anywhere but the US I would bet the IMF would already have made them do it. Problem is bank nationalization is like patio chips, you can't have just one, once the big guys get taken down it can create a domino effect, and you're taking out some of the biggest buyers in the market once you re-privatize.

Anyway at the end of the day people need someone to blame for what's wrong with the US, and largely the world. Elite bankers are an easy target, people can claim they're the ones who got everyone into this mess and than took the money and ran. And while that is somewhat true Bankers are only a part of the equation. The entire system needs fixing, the government, the bankers, the rest of the private sector, the citizens of the US, and the major stakeholders of the global economy. All of them want more than what's attainable, or sustainable.

[WilsonFourTwo]

Originally Posted by J pold

Anyway at the end of the day people need someone to blame for what's wrong with the US, and largely the world. Elite bankers are an easy target, people can claim they're the ones who got everyone into this mess and than took the money and ran. And while that is somewhat true Bankers are only a part of the equation.

I'm all for the personal responsibility argument (I make it frequently), but I have a hard time with the idea that the 99% deserve even a fraction of the blame earned by the 1% (who ultimately ended up with 100% of everything). That may not be where you were going with that though....?

This part just kinda stuck out for me. If the "Bankers" are only partly to blame, who wears the rest of it?

[Red Slinger]

We can blame the banks, bankers, lobbyists, politicians and lawyers all we want but they are not the root cause of this collapse or what, I'd agree, is becoming more and more a plutocracy.

There are generally two types of large corporations. There are publically held companies with shareholders that are able to buy a little piece of the company and get their share of the profits as the company profits. There are also privately owned companies held by one or more individuals that do not offer share equities. Koch Industries is a prominent example of the latter. For a company like Koch, their direct interests lie in the company making money so of course they want to tilt the playing field in their favour whenever possible to maximize their profits. For a publically traded company the shareholders would give birth to kittens if the company didn't regularly turn more and more profit each year and thereby secure them a small personal profit.

The common denominator to both of these scenarios is that of unlimited greed. I don't think greed is necessarily a bad thing, in and of itself. Healthy greed I compare to a trait like ambition. When there is no ceiling on the greed is when you have issues like the financial collapse. Most of us (certainly I am) are guilty of unlimited greed. I want more and more and more and there really is no end in sight. I want a bigger house, better car, vacation whenever I want, eat what I want, dress in the finest clothes, etc. It's a gluttony of monumental proportions. Before the invent of currency there was a natural limit on greed. If you wanted to have food you could only have enough before it spoiled. Anything beyond that was wasted. Now, there are no natural limits on our greed because everything we could ever dream of fits nicely in a thin plastic card easily carried in your back pocket and difficult to steal or lose.

The foundation for how we live our lives is based on the same unlimited greed as that which drove Goldmann Sachs to become the financial arm of the US government. It is the government's job to put controls in place so that one person's (or company's) greed doesn't negatively impact too many other people but there is really no definition as to how much is too much. If Goldmann Sachs had screwed over 1000 people would anyone really care much? What about 10000? 100000? In this case it was millions (possibly billions) of people that were directly affected by the financial meltdown. The point is that even if the government legislates to prevent this sort of thing from happening again, a similar scenario will play out again because the market is still based on winning and losing and winners are celebrated and losers generally ignored and forgotten. Those that want to win will find a way. The market is not now nor ever has been about doing what is right or fair. It has never been about ceilings. It has never been about limits. The market is the serpent swallowing it's tail.

Our way of life is unsustainable.

[J pold]

Originally Posted by WilsonFourTwo

This part just kinda stuck out for me. If the "Bankers" are only partly to blame, who wears the rest of it?

I guess it depends on what exactly you are talking about. My argument was referring more to what lead to the bailout, hosing bubbles, the credit crisis, and later the recession.

In that regard than yes to me bankers are only part of equation. Did they make foolish loans to people they knew couldn't afford their mortgages? Yes. But in order to make that loan you need an irresponsible person to accept the loan knowing full well that they won't be paying it back. So are people who borrow beyond their means at fault? I'd say yes they bare some of the responsibility. What about the rating agencies who rated the CDO's and other mortgage back securities AAA, saying they where as good as cash. That to me is irresponsible and mislead a number of investors. What about the pension, mutual, and hedge funds that created the amazingly high demand for these toxic instruments that nearly broke the entire financial system? What about governments who allowed mortgage regulation be diminished to almost nothing on the backs of lobbyist? I'd say they share the blame.

All of those entities are players in the same game, but when everything went to hell, and the banks had to be bailed out, blame was placed 100% on the bankers because of the bailouts and bonuses. They are an easy target for that reason. But maybe instead of just finger waving at them the American consumer should ask himself why he took out a $500,000 mortgage when he was working a part-time job at McDonalds. Maybe the ratings agencies should ask why they took complete crap and rated it as good as gold. Maybe businesses and money managers who inflated the demand for toxic assets should be wondering why they didn't do more due-diligence to understand what exactly they where getting themselves into. And maybe the government, instead of reprimanding the banks, should be wondering how they let his entire thing go on right under their nose.

[J pold]

Originally Posted by Red Slinger

Great post.

Yup.

[Weiser Wonder]

Originally Posted by WilsonFourTwo

I love the optimism in the first sentence (seriously), but I don't think significant (peaceful) reform will take place. The establishment is so firmly entrenched, it almost seems an understatement to say that the government has been purchased. Add to that the people have no resources are incredibly scared of losing what little they have.......I just don't see it.

That said, I too am scared to think of the radicals lining up on each side. I was wondering the other day if there's a sizable uptick in "Militiamen" type organizations. There's a scary thought....

Yes the establishment is firmly entrenched with the incentives to clearly guide those in power to corporate interests. However, political pressure can still be exerted through the voting booth because Americans maintain an expectation of democracy.

Obama was elected based with the expectation of reform. Now it turns out he had different objectives, but Americans won't stand for the next guy coming in and doing the same thing. The next reformer will have even more pressure to actually reform the next time he is elected. Sooner or later someone will figure out how much popularity he can actually gain from championing real reform.

Obviously, though, it's a spinning plate where another economic disaster will likely lead to real violence and upheaval.

[Weiser Wonder]

Originally Posted by J pold

I guess it depends on what exactly you are talking about. My argument was referring more to what lead to the bailout, hosing bubbles, the credit crisis, and later the recession.

In that regard than yes to me bankers are only part of equation. Did they make foolish loans to people they knew couldn't afford their mortgages? Yes. But in order to make that loan you need an irresponsible person to accept the loan knowing full well that they won't be paying it back. So are people who borrow beyond their means at fault? I'd say yes they bare some of the responsibility. What about the rating agencies who rated the CDO's and other mortgage back securities AAA, saying they where as good as cash. That to me is irresponsible and mislead a number of investors. What about the pension, mutual, and hedge funds that created the amazingly high demand for these toxic instruments that nearly broke the entire financial system? What about governments who allowed mortgage regulation be diminished to almost nothing on the backs of lobbyist? I'd say they share the blame.

All of those entities are players in the same game, but when everything went to hell, and the banks had to be bailed out, blame was placed 100% on the bankers because of the bailouts and bonuses. They are an easy target for that reason. But maybe instead of just finger waving at them the American consumer should ask himself why he took out a $500,000 mortgage when he was working a part-time job at McDonalds. Maybe the ratings agencies should ask why they took complete crap and rated it as good as gold. Maybe businesses and money managers who inflated the demand for toxic assets should be wondering why they didn't do more due-diligence to understand what exactly they where getting themselves into. And maybe the government, instead of reprimanding the banks, should be wondering how they let his entire thing go on right under their nose.

The reason they are taking the blame is they are the only ones to profit from this mess. The bailouts gave them all the money they lost back, they kept their bonuses, and who were ####ed? The American people. They are back to making record profits and bonuses while the American People continue to struggle mightily.

I also don't like the characterization of these loans as foolish. Foolish for whom? The banks? Certainly not, considering most of them lost nothing at all. Predatory and fraudulent are much better adjectives.

[Locke]

Originally Posted by Red Slinger

Our way of life is unsustainable.

No matter what else we take from the economic collapse this is an important truth.

[Shazam]

I look forward to my future where I plant my own crops and raise my own cattle. The best part is I get to shoot any trespassers. Who needs rule of law?

[Phanuthier]

Originally Posted by Azure

http://www.reuters.com/article/2011/...27563820110413

After having watched 'Inside Job'....I hope to hell the Senate does something about what IMO was blatant fraud and corruption amongst the big banks, especially Goldman.

Absolutely insane that they are being allowed to get away with what they have done.

Originally Posted by Azure

Probably both.

What percentage of the population understands what happened? 10? 20? If that.

People have no idea what happened, which is why it happened.

Everyone talks about Canada's banking regulation, and how it kept the economy from going under, or our banks from having to be bailed out. If that is true, which evidently it was, why the hell isn't the US doing something about it? The regulation passed by the Obama Administration is weak and does nothing to prevent another crisis.

Originally Posted by Azure

Even worse, the financial sector is generating something like 40% of the profit in the US economy.

On top of that, students that go to university to take engineering or a variety of other degrees that most of us would consider a higher standard program are being hired by Goldman and other finance companies who offer huge bonuses and a better salary than companies like Google, Facebook or Apple.

Result is all the people with the skills to actually start something, or be innovators are being sucked into an industry where the promise of a huge bonus prompts them to take huge risks.

The whole system is screwed up.

And if nothing changes the worst is yet to come.

Agreed on all these posts, Azure. Greed drove the bubble, passing off the impending crash that they knew was going to happen and ignorance from the general public let the system go wild. And yes, I do see companies like GS taking a lot of talent, I certainly know a few people who have passed on offers from Google, et al to work in financial where they can make a crap load more. Some fight it, and believe in world for a cause or purpose, but its hard to pass up when a fellow collage grad goes around driving a Tesla and you are driving a Prius. There is way too much in the financial sector, and those in the financial industry have their hand in the government's as well, and the economy and political policies are driven by elite private interests.

Too bad it'll happen again, and again, and again, and it will be average jane and joe that pay for the rich pigs in this world. C'est la vie.

[FlameOn]

Originally Posted by Phanuthier

Too bad it'll happen again, and again, and again, and it will be average jane and joe that pay for the rich pigs in this world. C'est la vie.

Hopefully things get turned around before the wealth of the middle class gets destroyed. Otherwise, it could be a very bleak future indeed.

[burn_this_city]

Originally Posted by Locke

No matter what else we take from the economic collapse this is an important truth.

I just pray we're all having a dirt nap before the magical ride comes to an end.

[J pold]

Originally Posted by Weiser Wonder

The reason they are taking the blame is they are the only ones to profit from this mess. The bailouts gave them all the money they lost back, they kept their bonuses, and who were ####ed? The American people. They are back to making record profits and bonuses while the American People continue to struggle mightily.

I also don't like the characterization of these loans as foolish. Foolish for whom? The banks? Certainly not, considering most of them lost nothing at all. Predatory and fraudulent are much better adjectives.

I'm not for the big bonuses and people have every right to be upset about that. But the fact remains if you don't bailout the banks the American people suffer MUCH worse than they are or have. We are talking about unemployment levels in the high teens, banks runs, people losing their entire life savings, like I said earlier worse than the 1930's.

And yes I agree with the terms fraudulent and predatory in describing some of the loans made (ie. NINA) but it takes two to tango. I'm fine with bankers being dolled out the loins share of the blame but the consumer has some discretion and should bare some of the responsibility, without them they loans don't get made in the first place.

[mikey_the_redneck]

Originally Posted by J pold

But the fact remains if you don't bailout the banks the American people suffer MUCH worse than they are or have. We are talking about unemployment levels in the high teens, banks runs, people losing their entire life savings, like I said earlier worse than the 1930's.

Do you know this for certain?

Iceland is proving you wrong. They have had moderate economic growth since telling the banks to stuff it.

There was alot of fear mongering going on when the bail-out bill was being passed. Several congressman (you can get this on video) were saying how Hank Paulson and some of the financial people behind the scenes were telling them that there would be martial law in America if they didn't bail out the banks.

Allowing banks to roll in big profits during good times, but dumping their losses on Americans when they fail goes against free market capitalism.

BTW unemplyment is in the high teens, and more likely around 20%. The government has all kinds of neat ways to hide job losses by cherry picking their criteria.

[Shazam]

Meh. Canada had high unemployment for ages.

[Azure]

Canada also never had to bail out their banks. So, we're obviously doing something right.

The financial sector should be in place to provide a service to the people. Not there to maximize profits.

And the bonuses are a big problem because it motivates risk taking. Risk taking results in the collapse of the financial system.

I say that as someone who argued that the bonuses should have been paid out because the banks were under contract to do so.

I don't think I would still argue that.

[Azure]

Originally Posted by J pold

I'm not for the big bonuses and people have every right to be upset about that. But the fact remains if you don't bailout the banks the American people suffer MUCH worse than they are or have. We are talking about unemployment levels in the high teens, banks runs, people losing their entire life savings, like I said earlier worse than the 1930's.

And yes I agree with the terms fraudulent and predatory in describing some of the loans made (ie. NINA) but it takes two to tango. I'm fine with bankers being dolled out the loins share of the blame but the consumer has some discretion and should bare some of the responsibility, without them they loans don't get made in the first place.

Well, first and foremost the government should be blamed simply because they deregulated the market and allowed this to happen. Of course, considering the history Larry Summers has with the US government, I often wonder why they brought in deregulation.

Is the consumer responsible for electing a government that deregulates the financial industry? Maybe, but most of us aren't educated enough. For me, I've read a crap load of stuff about the bailout, how it worked and what was involved, and I still don't completely understand it. Things like toxic assets and derivatives are foreign to me, so I can't imagine what other people who have little to no interest in how this stuff works get by.

But, I think the whole bailout and crash exposes what I think is a common problem within the US government. Too much influence from lobbyists. I bet the same crap is happening with the defense contracts being handed out to companies like Boeing. I don't even what to know what kind of under the table stuff is going on.

[Shazam]

Canada requires banks to have a much higher reserve than the US. Europe's even worse in that regard.

Everything's done to maximize profits. Business is really pointless otherwise. I find it rather strange that someone like Phanuthier railing against this.