It is all in that lost book of the bible, Lizards 8:20-25, which states:
And lo' the Lord did ride the T. Rex, even without a saddle. He rode into Bethlehem and commanded his apostles thusly: "Touch him, touch my dinosaur!" Only Wally, the rarely spoken of thirteenth apostle was brave enough, and as he reached out to touch the mightly lizard, it ate him. After seeing the carnage, Jesus traded in his T. Rex on a Diplodocus.
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It's just so hard to think of something cogent to say here. I mean...um...dang.
So let us change the subject but use the same headline. How can the Federal Reserve help bail out rich investors by ramming the sale of Bear Stearns down the throats of it's shareholders(who just might be rich also, but they are the owners of the company and the deal which was set up makes them less rich by defination). Add to this the fact the fed is pumping untold sums of money into this weak market and we will have inflation we have not seen for thirty years.
Bear Stearns should have been allowed to file bankruptcy and either reorganized or go under. This is how the market self regulates; make mistakes and it might be your last. To do otherwise leaves you with a moral hazard situation. If big,rich investors have the idea the government will come in and bail them out you get investors willing to take bigger and riskier bets. This Too-Big-To-Fail tag is bullshit and the longer we wait to let the shit hit the fan the bigger the shit pile and the bigger the fan to spread it over this great land. And let it be said if it was you or I asking for a helping hand from the government to keep us out of bankruptcy, the ensuing laughter would be of epic scale(let alone the unConstitutional nature of the transaction). One more way federalism would help this situation; could you imagine the CEO of a large financial institution going around to all fifty states with hat in hand? Why, it is so much easier when it is one-stop shopping at the Washington, D.C. mall.
Actually, something similar might be going on for small mortgage holders. Lots of people bought houses they could not afford with subprime mortgages, variable rates and balloon payments. Now, when the balloon comes due, they cannot afford it. Should they lose their house? Perhaps. But there are movements afoot to bailout these borrowers and lenders. Is this a good idea?
It is never as simple as just let it happen. That is what brought us the Great Depression. But bailouts, by their very definition are unfair.
An argument can be made that allowing Bear Stearns to fail could cause huge repercussions in the economy. A better example would be the Chrysler bail out of a few years back. Now that was ill-advised IMHO.
I don't think it is a good idea because of the moral hazard. Should these unfortunates lose their homes? Yes. Should the unscrupulous loan brokers get time? Yes. Should the investors who will lose their shirts be made whole? No. Should the regulators who should have seen this coming and didn't be canned? Yes. This is how the markets self regulate. And the markets do this self-regulation all the time; it just becomes headlines when the bubble gets bigger than any of the experts forecast. Do any of you remember news stories mentioning the housing bubble? I'll bet you did and even if you didn't you gotta know financial experts and regulators did and they did nothing about it. Interest rates stayed low, they stayed there a long time and anyone with any financial acumen should have seen it coming instead of picking up the pieces and spreading the word after the horses have left the barn.
There are a couple of differences between today's fiasco and the Great Depression. One, the protectionist legislation enacted during this time exacerbated the devolution(kinda reminds me of Democratic rhetoric coming out of Congress and the campaign trail)of the price of assets. Two, there was a lot less regulatory infrastructure in place in the '20s and '30's and markets were left to their own devices and were less transparent than they are now. Which I guess could be taken two ways, either regulation ain't what it is cracked up to be(though in this arena I am for a reasonable modicum of regulation, with the caveat of concentrating all the regulation in Washington within lobbyists reach might not be the best)or regulators have to be arms length away from the regulated.
Hmmm. Interesting. If your tragedy is a manufactured one, such as an economic one, then the gummint can bail you out. But if it's due to natural reasons or 'acts of god', then they might toss you a couple of half baked bones, but otherwise you're on your own.
Sorry, just hit me about victims of the mortgage loan debacle, and victims of hurricane Katrina.
i heard someone from the admin (treasury sec?) speaking sunday morning, i think it was on fox news sunday, rationalizing the sale of bear stearns at $2/share.
basically, he said the risk 2 the economy is 2 great right now, and that risk outweighs the moral hazard argument.
i'm not sure i agree w/ that rationale, unless they're not telling us the whole story.
and with this admin, that's usually the case.
honestly, it was dubya's make-believe economic policies brought us 2 this point (the brink of collapse).
i wonder if the most apt comparison we can draw is 2 the savings & loan crisis of the 80's & 90's. hard 2 say.
And another Bush was instrumental in that S&L debacle, remember?
I think it all goes back to 'Reaganomics', and the republican ideal of unregulated businesses being wonderful, and that the best way to boost the economy is to help out the richest and ignore the middle.
while i agree with ya, bob, i feel obliged 2 point out that dubya's version of reaganomics was a bit dumbed down. (reaganomics for dummies?)
of course, i think any version of wealth's "trickle down" effect is hogwash. the only things that trickle down equitably are butt-chewings. wealth? nah.
personally, the ideal of deregulation scares the bejeebers out of me. if people could actually be trusted 2 be honest, we wouldn't need any gov't at all.
as 4 the republican tact of aiding the rich 2 boost the economy:
a lot has been made of the dem's supposedly utilizing class warfare tactics over the years. which might be a bad thing, IF the republicans didn't show such an overwhelming preference 4 the richest among us and outright disdain 4 those w/o wealth (witness new voter id laws).
csm,
while bush da elder and reagan certainly fanned the flames of the s&l crisis, i'm thinking carter actually started the deregulation of the s&l's. could be wrong, though. and even if i'm not, you and bob and bawdy are still on target. imo. :)
i don't know if y'all check out politico.com or not, but yesterdays video clip w/ james kotecki had the little dweeb singing the bright side of life.
seemed relevant 4 this crowd. :)
da bright side
I was thinking of Neil Bush, CoreyD. There are just so many of them thar Bushes!
And isn't "reaganomics for dummies" a bit redundant?
W's make believe econimics? Besides taxes or the cutting of them I don't remember Bush doing much for the economy(remember I am of the thinking the President,himself, has little to do with how the economy behaves and deserves little of the credit good or bad).
corey,
I have a tendency to agree with you about the honesty of humans especially when the accumulation of wealth is concerned, but you have to remember the regulators are humans too and when they get close to the regulatory target they can and have been become subjects of the target.
In the case we are talking about, bailing out Bear Stearns, I would prefer the market way; take them out and shoot them(figuratively, of course). Most of the shareholders of Bear Stearns stock were wealthy(I am assuming)and could afford the loss(I read one British investor lost 800 million). As it is, the government will probably be forced to buy the bad mortgages(with taxpayer money or borrowed from our monied friends, of course) and some sort of Resolution Trust Corp. will have to dispose of them similar to the aformentioned S&L crisis.
csm, sorry bout da bush mixup. i completely blanked on neil.
bawdy, to your first point on presidents & economies, i feel ya.
but whatabout... the treasury dept or the federal reserve? i feel like "gentle" ben bernanke is in g-dub's pocket, like greenspan b4 him.
gotta hand it 2 ol' g-dub. he got some of the best 2 sell their souls 4 him. alan greenspan, colin powell, i'm sure there's more, but i'm sleepy...
so 2 your 2nd point, about the regulators - excellent! isn't it ironic (doncha think) that we have 2 police ourselves (regulate, whatever), but the police/regulators need 2 be policed, and so on and so forth ad infinitum. ahhh! the humanity.
i'm with ya on your 3rd point, bear stearns. my only caveat would be that i think the gov't is worried about inflation, stagflation, and a depression, not just a lil recession. not bush, of course. but his henchmen at the fed and treasury dept.
btw, doesn't stagflation sound kinda dirty? like maybe the real reason some types of men go hunting, or somethin? ;)
and while i'm thinking of it, do any of y'all think a real free market would work, or do we need the fed? i resent it, but i'm not sure about anything beyond that...
That's hilarious!! When you believe in something as ridiculous as Jesus, I guess it doesn't hurt to push it a little further and make him ride a Mini-Rex.
Being part of this species is really embarassing sometimes... ok, most of the time.
Nebulous, I suspect that the whole Jesus and dino bit is a creationist reference. There's a fair number of those folk who see the idea of dino's coexisting with people as part of their doctrine, so why not have the messiah riding a raptor?
if anybody knows where i can get a coloring book with pictures like that...please let me know.
i'd hang dino-ryder jesus on my frig, fo sho.
Since this image sorta reeks of Ken Ham's particular breed of creationism I went looking through his web site for this particular coloring book, but it was not there (at least that I could find). Lots of dinosaur stuff, but nothing that indicated it would have Jesus riding one...
I decided to do a bit of looking around, and found that the phrase "Jesus rides by on a dinosaur" is in the Urban Dictionary. It apparently originated on gaming chat boards as a phrase meant to indicate old or stale news. The example they give is:
1st Post: Whoa, they're making a "Doom" movie!
2nd Post: *Jesus rides by on a dinosaur*
I also found this very...um..amusing web page. Ok I meant that sarcastically...http://www.angelfire.com/mi/dinosaurs/
I never heard of that usage (or any usage really) of "Jesus rides by on a dinosaur" ... but then again, I'm not a gamer nor do I hang out in chat rooms.
And thanks (I think) for that reference, Bob. It saddens me that people cling so tenaciously to their myths that they can't let go when science and reason smack them in the face. I mean, c'mon, "believe" in your gods, but learn a little something about science along the way, too!
What I find so amusing and absurd is that they claim they have 'scientific' evidence for their claims.
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