I actually do not believe they assumed these risks because they counted on a bailout. They did this because a bunch of really smart people got together and thought they had a foolproof plan. No one at the top levels really thought they would fail. History will show you that the free-market is quite capable of producing bubbles on its own. The Tulip Bubble happened long before FDR if I'm not mistaken.

From the GS and JPM perspective, the foolproof plan is something like this:

• Leverage deposits and investment capital to the maximum legally allowed limit (this limit - encouraged by the Treasury - does imply some level of public backing).
• If deposits are insured to $250,000, this can be leveraged into a $2.5 million credit account - and this can be leveraged into the stock and securities market at a notional value of $50 million. Or, the debt backing a $250,000 home could be used as a $5 million stock market bet. The actual (tiny) principle behind these positions is backed by the government. If the speculator loses everything, the depositor will be made whole.
• Buy so many mortgage securities as to drive up the price. When supply runs out, create more by selling to low income buyers or putting middle class people into huge houses via interest-only ARMs.
• Since the additional supply is overpriced relative to its actual value, back it up by explicit insurance and derivative contracts.
• Quietly re-sell trashy securities while bombarding the public with a marketing campaign that hypes the sector.
• Make particular effort to sell to competitors you'd like to take over.
• Collect large pile of cash and insurance contracts, then announce that housing is extremely overbought.
• Use TARP to liquidate derivatives and insurance contracts.
• Use FDIC insurance to take over the assets of failed depositors without the liabilities (kill competition).
• Use Federal Reserve secrecy arguments to hide the evidence.

It is a foolproof plan, but only when the head of the Treasury is and has been an ex-Goldman Sachs employee for the last ~30 years and the Federal Reserve has the ability to both print money and keep its actions secret.

There's no reason for them to not go for it again!

Why, independent, that can't be, after all the free market is always rational.

Originally Posted by princeofcats67

AA and any other MILLYS: I've seen members discuss the disappearance of the US manufacturing base. What do you think the Financial Industry is/was? The securitization of Mortgage-backed Securities(MBSs) WAS the Product. We EXPORTED them all over the World. Why do you think Glass-Steagall was repealed? Maybe to allow the expansion of investments w/Depositor Capital. Why would Bob Rubin be against Oversight of derivatives? Derivatives allow INCREDIBLE amounts of Leverage. You think this was just Big Banks gone bad? This was Govt Policy; They encouraged it if not forced the issue in some ways. Home Ownership; The American Dream. You all need to really study this if you want to know what happened. Not a serious % of defaults? Do you have ANY idea how Leveraged these guys were? What role did the change in Mark-to-Market/Mark-to-Model Accounting have in this? how about the suspension of the Uptick-Rule? Credit Default Swaps? OK. Let's go another way. How about somebody like Acorn? Why do you think Sub-Prime and Alt-A loans were allowed? Who CREATED the Sub-Prime Loan. Come on people. You all have to do homework if your going to understand this stuff. I guess it's difficult especially now after the fact. Who to trust? Don't trust me; Trust yourselves. But for God's sake, don't just repeat what others say and teach you. You've got to expose yourselves to DIFFERENT POVs and make-up your own minds. Watching MSNBC, Jon Stewart, and reading the NYT is NOT a balance. I read the NYT(Liberal) AND the Washington Times(Conservative). Hell, read USA Today to just get the McNews and do a Sudoku to work your minds. Watch Olbermann/Maddow AND Special Report w/Bret Bair/Glenn Beck. Watch C-Span. Listen to NPR AND Mark Levine. DON'T UNDER ANY CIRCUMSTANCES LISTEN TO ANY BOOMERS ON THIS MB!!!(LOL) Just kidding. It's up to you Millys to make up your own minds on these issues. You've got to be open-minded and try to REALLY see where the other side is coming from.
You've got to step-up your game. I'm just being straight w/you all.
Sincerely, PoC67

Most of your posts show a great deal of expertise, but then you let ideology lead you to make claims that are not statistically valid. If you examine the evidence, the vast majority of the damage from the foreclosure mess was NOT caused by low-income families, but by middle and upper-income familes who were trying to buy a larger house than they could afford. Therefore, it was not some government program that "forced" this one the mortgage industry. If you can prove otherwise I'm all ears. Whose idea was it for the banks, hedge funds, etc. to take on this leverage? They wanted to. Plus, who do you think lobbied for less restrictions? The government failed to intervene and stop them. I'm willing to admit when liberal big government is a failure, why can't you admit that the free market screwed up?

Subprime and Alt-A loans were created to make money for the mortgage industry, not by some liberal do-gooder trying to get poor people into homes. Most of the Alt-A people were flippers and the like, not poor people. Don't assume we haven't looked anything up when you are referencing things that simply aren't true.

I spent and still spend quite a bit of time reading conservative view points - I once was a conservative in my younger days. I saw the light after giving both sides more than a fear hearing. If you're recommending alternative conservative viewpoints shouldn't you recommend a thinking conservative like George Will or Michael Medved rather than Glenn Beck. He's to commentary what pro-wrestling is to sports.

As far as the decline of our manufacturing sector - exactly our point - the only thing we manufacture in this company is debt. We do not make anything real, we played this financial shell game to hide how hollow our economy has become. How do you think we maintained this level of consumption? Debt.

Show us some evidence that these mortgage co
See, again, I know you are way too knowledgeable to think ACORN was a serious causal factor in this. Show me some hard evidence that ACORN had a statistically demonstrable impact. I challenge you to show me that most, or even a sizable percentage of the defaulted mortgages were a result of government coercion, low-income home ownership, or anything having to do with ACORN.

So does that mean I can count on seeing some hard evidence that shows that ACORN and government coercion were responsible for a significant % the foreclosures.

I agree so I'm trying to LEARN about how ACORN and government coercion to lend money to poor people was a causal factor. It's ok if you don't have it - you can still be a conservative and believe the free market failed. I'm a liberal and I think a lot of social welfare programs don't work. You'll probably also find I agree with you on a lot of entitlement issues. But seriously, I know you would show me if you have it because I know you know your stuff - is there evidence that shows that most of the bad loans were made because the government and/or ACORN made them?

I don't really think you're trying to change my mind, it's fine with me if you are, my mind is open. But the reason I'm asking you to admit to the Fmarket's responsibility is that there's this near-religious belief among conservatives that the free market does not make mistakes. You are still trying to use this "the government made me do it" justification. The reason people like Mozillo did this is they thought they would make money. It was greed. So anyway, do you have any evidence that the government directing results was a major cause of it? When I ask you to prove your claim of the government having a major role you kind of duck the question or try to blur it. Who made the decision to issue most of these bad loans - the market or the government?

Yes, I'd definitely be interested in that. I'm just being hard on you because I know, from your level of knowledge, that you know the answer you just hate to admit the market screwed up

One very simple way around all the discussions about health insurance is to drop the entire thing in favor of health care.

Now, since people are using the term "health care" interchangeably" with "health insurance", let me explain what I mean by "health care." I mean a network of walk-in clinics in small towns, rural areas, and inner-city neighborhoods, staffed by whoever makes sense for the region. Nurse-practitioners, physician's assistants, and dental hygienists would be a great improvement over what's available now. And possibly visiting nurses -- circuit-riders, if you will.

How do we pay these people and how do we get them to practice in such places? The latter is simple. We pay their schooling in return for their services. Totally voluntary but a binding contract, with escape clauses for those who end up unable to serve because of disability or whatever. The former is a problem but not that much bigger than the problem of paying for the health insurance or the people using the emergency room as a clinic because none exist.

Another suggestion: a lot of hospitals used to be run by various religions as part of their good works. Then they slowly moved from "we're losing too much money" to "we're losing money - we need to break even" to "we're breaking even, but we're not making any money" to "we're making money but not enough" to "we're making lots of money but we don't command the #1 market share" ... with being bought out by a commercial enterprise or a chain occurring somewhere along the way. Perhaps those religions that could afford it could start small and on the ground with medical missions to our own regions in need? In fact - are there any that do so now?

A third question: many things that now cost a lot of money were originally set up to be state-funded. Now they're lucky to squeeze out 10% of their funding from the state legislature. What happened between then and now? And what is the state spending the money on?

Originally Posted by The Grey Badger

One very simple way around all the discussions about health insurance is to drop the entire thing in favor of health care.

Now, since people are using the term "health care" interchangeably" with "health insurance", let me explain what I mean by "health care." I mean a network of walk-in clinics in small towns, rural areas, and inner-city neighborhoods, staffed by whoever makes sense for the region. Nurse-practitioners, physician's assistants, and dental hygienists would be a great improvement over what's available now. And possibly visiting nurses -- circuit-riders, if you will.

How do we pay these people and how do we get them to practice in such places? The latter is simple. We pay their schooling in return for their services. Totally voluntary but a binding contract, with escape clauses for those who end up unable to serve because of disability or whatever. The former is a problem but not that much bigger than the problem of paying for the health insurance or the people using the emergency room as a clinic because none exist.

Another suggestion: a lot of hospitals used to be run by various religions as part of their good works. Then they slowly moved from "we're losing too much money" to "we're losing money - we need to break even" to "we're breaking even, but we're not making any money" to "we're making money but not enough" to "we're making lots of money but we don't command the #1 market share" ... with being bought out by a commercial enterprise or a chain occurring somewhere along the way. Perhaps those religions that could afford it could start small and on the ground with medical missions to our own regions in need? In fact - are there any that do so now?

A third question: many things that now cost a lot of money were originally set up to be state-funded. Now they're lucky to squeeze out 10% of their funding from the state legislature. What happened between then and now? And what is the state spending the money on?

What percentage of your current income is TAXABLE? What percentage of your current income is TAX PAYER FUNDED OR FORIEGN INVESTMENT? Food for thought

Is anyone following the medical malpractice ruling in Illinois? I have little doubt this consulting firm's study isn't biased, but it will be interesting to watch where this goes, in light of discussions at the federal level over the past couple of days.

Illinois med-mal ruling to boost insurers' costs 18%: study

Originally Posted by The Grey Badger

One very simple way around all the discussions about health insurance is to drop the entire thing in favor of health care.

Now, since people are using the term "health care" interchangeably" with "health insurance", let me explain what I mean by "health care." I mean a network of walk-in clinics in small towns, rural areas, and inner-city neighborhoods, staffed by whoever makes sense for the region. Nurse-practitioners, physician's assistants, and dental hygienists would be a great improvement over what's available now. And possibly visiting nurses -- circuit-riders, if you will.

How do we pay these people and how do we get them to practice in such places? The latter is simple. We pay their schooling in return for their services. Totally voluntary but a binding contract, with escape clauses for those who end up unable to serve because of disability or whatever. The former is a problem but not that much bigger than the problem of paying for the health insurance or the people using the emergency room as a clinic because none exist.

Another suggestion: a lot of hospitals used to be run by various religions as part of their good works. Then they slowly moved from "we're losing too much money" to "we're losing money - we need to break even" to "we're breaking even, but we're not making any money" to "we're making money but not enough" to "we're making lots of money but we don't command the #1 market share" ... with being bought out by a commercial enterprise or a chain occurring somewhere along the way. Perhaps those religions that could afford it could start small and on the ground with medical missions to our own regions in need? In fact - are there any that do so now?

A third question: many things that now cost a lot of money were originally set up to be state-funded. Now they're lucky to squeeze out 10% of their funding from the state legislature. What happened between then and now? And what is the state spending the money on?

So you're proposing a National Health Service? Government-provided health care, ala the United Kingdom?

Originally Posted by The Grey Badger

One very simple way around all the discussions about health insurance is to drop the entire thing in favor of health care.

Now, since people are using the term "health care" interchangeably" with "health insurance", let me explain what I mean by "health care." I mean a network of walk-in clinics in small towns, rural areas, and inner-city neighborhoods, staffed by whoever makes sense for the region. Nurse-practitioners, physician's assistants, and dental hygienists would be a great improvement over what's available now. And possibly visiting nurses -- circuit-riders, if you will.

How do we pay these people and how do we get them to practice in such places? The latter is simple. We pay their schooling in return for their services. Totally voluntary but a binding contract, with escape clauses for those who end up unable to serve because of disability or whatever. The former is a problem but not that much bigger than the problem of paying for the health insurance or the people using the emergency room as a clinic because none exist.

Another suggestion: a lot of hospitals used to be run by various religions as part of their good works. Then they slowly moved from "we're losing too much money" to "we're losing money - we need to break even" to "we're breaking even, but we're not making any money" to "we're making money but not enough" to "we're making lots of money but we don't command the #1 market share" ... with being bought out by a commercial enterprise or a chain occurring somewhere along the way. Perhaps those religions that could afford it could start small and on the ground with medical missions to our own regions in need? In fact - are there any that do so now?

A third question: many things that now cost a lot of money were originally set up to be state-funded. Now they're lucky to squeeze out 10% of their funding from the state legislature. What happened between then and now? And what is the state spending the money on?

This looks like the Free Clinic concept. I don't see it as a replacement for the healthcare system, or maybe the illness care system is more accurate, but wellness care is a perfect fit.

My wife is a hygienist in a clinic similar to what you describe. There are issues, but on a whole, it works.

Originally Posted by The Wonkette

So you're proposing a National Health Service? Government-provided health care, ala the United Kingdom?

As cheaper and more direct than government-provided health insurance, yes.

Originally Posted by The Grey Badger

One very simple way around all the discussions about health insurance is to drop the entire thing in favor of health care.

Now, since people are using the term "health care" interchangeably" with "health insurance", let me explain what I mean by "health care." I mean a network of walk-in clinics in small towns, rural areas, and inner-city neighborhoods, staffed by whoever makes sense for the region. Nurse-practitioners, physician's assistants, and dental hygienists would be a great improvement over what's available now. And possibly visiting nurses -- circuit-riders, if you will.

How do we pay these people and how do we get them to practice in such places? The latter is simple. We pay their schooling in return for their services. Totally voluntary but a binding contract, with escape clauses for those who end up unable to serve because of disability or whatever. The former is a problem but not that much bigger than the problem of paying for the health insurance or the people using the emergency room as a clinic because none exist.

Most of the counties here in western South Carolina have an unemployment rate near 20%. This area is full of ex textile mill employees who now count
on the county clinic for their health care. I know several people personally who only have this as a viable option for health care. The fact that this bill will improve the county clinic system is one of the reasons why I still support it despite the lack of a public option.

Originally Posted by GB

Another suggestion: a lot of hospitals used to be run by various religions as part of their good works. Then they slowly moved from "we're losing too much money" to "we're losing money - we need to break even" to "we're breaking even, but we're not making any money" to "we're making money but not enough" to "we're making lots of money but we don't command the #1 market share" ... with being bought out by a commercial enterprise or a chain occurring somewhere along the way. Perhaps those religions that could afford it could start small and on the ground with medical missions to our own regions in need? In fact - are there any that do so now?

A third question: many things that now cost a lot of money were originally set up to be state-funded. Now they're lucky to squeeze out 10% of their funding from the state legislature. What happened between then and now? And what is the state spending the money on?

What happened between then and now? Reagan and the third turning.

Speaking of free clinics: The ones Keith Olbermann is always plugging are doing infinitely more harm to the cause of health-care reform than good!

Have you seen the way the patients who are shown on camera are dressed - FUBU, SeanJohn, etc.? And the signs on display in Spanish?

This falls right into the line with the stereotype the Republicans want to put out there as to who would inordinately benefit from a massive expansion of coverage.

Where did these people learn strategy and tactics from - watching the Mel Brooks movie The Producers?

Joe Klein of TIME pretty much hits it on the head

The Health Care Summit
Posted by JOE KLEIN Friday, February 26, 2010 at 10:28 am

Shame on me. I was elsewhere yesterday and missed the health care summit. I'm catching up now, and the tea leaves seem to indicate that Obama came out well ahead of the Republicans. How do I know that? From Matt Drudge, of course. I mean, Drudge's takeaway from the summit is that the President talked a lot--actually, the President, the Congressional Democrats and Republicans each spoke an equal amount--the Times of London found it boring and the networks turned to other programming.

Reading between the lines, you can conclude that the Republicans had nothing very interesting, or clever, to say (and were never able to get the President's goat). And that the President was his usual, unflappable, well-informed self. You can also conclude that not much progress was made at the summit, as Karen reports here--but that's a huge surprise, right?

Reading further, in the New York Times, I can't find any indications that the Congressional Democrats were actually present at this meeting. Certainly, they had nothing notable to say, no new compromises to propose--which leads to another obvious conclusion: the Republicans have been absolutely recalcitrant in this process, but the Dems are no bargain, either.

I remain convinced that if the Republicans actually wanted to deal with this issue, they might have gotten some major concessions from the President--malpractice reform, for sure; perhaps a greater use of insurance polices that emphasize catastrophic coverage (as the Republicans wanted), maybe even a system--as John McCain proposed during the campaign and health wonks everywhere favor--that truly limited the deductability of corporate health care benefits. To get these things, however, the Republicans would have had to say yes at some point. As in, YES, I'll vote for the bill if you throw in malpractice and pay for it with the money you get from limiting deductability. That is what happens in a negotiation. That is what is supposed to happen in a democracy.

But the obvious truth here is that the Republicans do not want any sort of health care bill to pass at all because they do not want to hand President Obama a victory. Shame on them.

True, not wanting to hand Obama anything he can pass off as a "victory" is certainly a contributing issue here; but the simple truth of the matter is that the Republicans believe that health care is a privilege, while the Democrats see it as a right.

It's the difference between "we're all in this together," vs. "every man for himself" - and you can't haggle over that the way one could at a Turkish bazaar.

The two words in the subject line seem to say it all concerning the entire healthcare reform debates. Any thoughts on this?

Obviously we're never going to agree on this. Liberals like me see it as a right, conservatives see it as an individual responsibility. Let me see if we could agree on this compromise:

1. Extend medicare to all uninsured children 0-18. If the parents combined income exceeds 100k they have to provide their children with insurance if they have not already.

2. Anyone in college as a full-time student will receive medicare, if they can prove financial need - if their parents do not provide them with health care and they make over 100k they cannot claim them as a dependent. (This is not to benefit people like me, I am able to purchase low-cost insurance)

3. Ban on all pre-existing conditions exclusions for all ages.

4. Enact tort reform legislation. However I do not believe we should have a cap for catastrophic cases where someone is permanently injured or killed.

Originally Posted by '58 Flat

...but the simple truth of the matter is that the Republicans believe that health care is a privilege, while the Democrats see it as a right.

That's sort of correct. Many conservatives I know will privately say that health care is not a right. If you have a treatable life-threatening illness and cannot afford treatment then you should not get it at public expense, and if that means you die, then so be it. No public conservative will make this argument.

And this is the problem with the current health care "debate". Conservatives claim that the general public supports their views, yet they won't articulate these views publicly.

Only libertarians will articulate these views and they generally do not do well electorally.

Originally Posted by Mikebert

That's sort of correct. Many conservatives I know will privately say that health care is not a right. If you have a treatable life-threatening illness and cannot afford treatment then you should not get it at public expense, and if that means you die, then so be it. No public conservative will make this argument.

And this is the problem with the current health care "debate". Conservatives claim that the general public supports their views, yet they won't articulate these views publicly.

Only libertarians will articulate these views and they generally do not do well electorally.

I'm not so sure. If memory serves me I remember the GOP publicly attacking Obama in '08 for thinking health care is a right. But that may have just been on right-wing radio.

Originally Posted by aadams1980

Obviously we're never going to agree on this. Liberals like me see it as a right, conservatives see it as an individual responsibility. Let me see if we could agree on this compromise:

1. Extend medicare to all uninsured children 0-18. If the parents combined income exceeds 100k they have to provide their children with insurance if they have not already.

2. Anyone in college as a full-time student will receive medicare, if they can prove financial need - if their parents do not provide them with health care and they make over 100k they cannot claim them as a dependent. (This is not to benefit people like me, I am able to purchase low-cost insurance)

3. Ban on all pre-existing conditions exclusions for all ages.

4. Enact tort reform legislation. However I do not believe we should have a cap for catastrophic cases where someone is permanently injured or killed.

Add two more and you've got a deal:

5. Establish a national "charity care" program patterned on that already in force in Utah and New Jersey - to be funded (predominantly) with admittedly "regressive" taxes on items like pre-paid phone cards and remittances of money out of the country (as to Mexico).

6. Allow health-insurance policies to be sold across state lines. Throw in medical savings accounts if the right is still interested.

Originally Posted by '58 Flat

Add two more and you've got a deal:

5. Establish a national "charity care" program patterned on that already in force in Utah and New Jersey - to be funded (predominantly) with admittedly "regressive" taxes on items like pre-paid phone cards and remittances of money out of the country (as to Mexico).

6. Allow health-insurance policies to be sold across state lines. Throw in medical savings accounts if the right is still interested.

I'll give you taxes on remittances of money out of the country, but I can't give you pre-paid phone cards unless there's some very good reason I don't know of for why they should be singled out. Otherwise, that's a regressive tax on the poor, people who have bad credit, basically anyone who's hurting. But if there's a reason behind it I'm all for hearing it. If we can toss out the phone card tax I'll let you double your remittances abroad tax and double the penalties.

I can give you MSA's as well.

But, I can't give you sold across state lines and to save time I copied and pasted where Ezra Klein of washingtonpost.com explained the case against it.



"Conservatives want the opposite: They want insurers to be able to cluster in one state, follow that state's regulations and sell the product to everyone in the country. In practice, that means we will have a single national insurance standard. But that standard will be decided by South Dakota. Or, if South Dakota doesn't give the insurers the freedom they want, it'll be decided by Wyoming. Or whoever.
This is exactly what happened in the credit card industry, which is regulated in accordance with conservative wishes. In 1980, Bill Janklow, the governor of South Dakota, made a deal with Citibank: If Citibank would move its credit card business to South Dakota, the governor would literally let Citibank write South Dakota's credit card regulations. You can read Janklow's recollections of the pact here.
Citibank wrote an absurdly pro-credit card law, the legislature passed it, and soon all the credit card companies were heading to South Dakota. And that's exactly what would happen with health-care insurance. The industry would put its money into buying the legislature of a small, conservative, economically depressed state. The deal would be simple: Let us write the regulations and we'll bring thousands of jobs and lots of tax dollars to you. Someone will take it. The result will be an uncommonly tiny legislature in an uncommonly small state that answers to an uncommonly conservative electorate that will decide what insurance will look like for the rest of the nation."

Originally Posted by aadams1980

I'll give you taxes on remittances of money out of the country, but I can't give you pre-paid phone cards unless there's some very good reason I don't know of for why they should be singled out. Otherwise, that's a regressive tax on the poor, people who have bad credit, basically anyone who's hurting. But if there's a reason behind it I'm all for hearing it. If we can toss out the phone card tax I'll let you double your remittances abroad tax and double the penalties.

Why must it be done precisely this way?

Because otherwise it doesn't pass.

And at least this way you get to say that "there's no such thing as a free lunch."

You can bring certain special-interest constituencies (e.g., environmentalists) on board by adding items to the list of those to be taxed (e.g., incandescent light bulbs - which not for nothing are tending to disappear from store shelves except in the poorest neighborhoods!). Tobacco is a dead horse, though - and you'll lose the support of the Guidos if you tax visits to tanning parlors!

I can give you MSA's as well.

But, I can't give you sold across state lines and to save time I copied and pasted where Ezra Klein of washingtonpost.com explained the case against it.


"Conservatives want the opposite: They want insurers to be able to cluster in one state, follow that state's regulations and sell the product to everyone in the country. In practice, that means we will have a single national insurance standard. But that standard will be decided by South Dakota. Or, if South Dakota doesn't give the insurers the freedom they want, it'll be decided by Wyoming. Or whoever.
This is exactly what happened in the credit card industry, which is regulated in accordance with conservative wishes. In 1980, Bill Janklow, the governor of South Dakota, made a deal with Citibank: If Citibank would move its credit card business to South Dakota, the governor would literally let Citibank write South Dakota's credit card regulations. You can read Janklow's recollections of the pact here.
Citibank wrote an absurdly pro-credit card law, the legislature passed it, and soon all the credit card companies were heading to South Dakota. And that's exactly what would happen with health-care insurance. The industry would put its money into buying the legislature of a small, conservative, economically depressed state. The deal would be simple: Let us write the regulations and we'll bring thousands of jobs and lots of tax dollars to you. Someone will take it. The result will be an uncommonly tiny legislature in an uncommonly small state that answers to an uncommonly conservative electorate that will decide what insurance will look like for the rest of the nation."

So long as it's Sioux Falls and not Bangalore, I have no problem with it.

But if abuses become truly intolerable, you can always put a federal cap on it, reminiscent of the Extortionate Credit Transactions Statute passed in the mid-'60s to "combat the Mafia" (the same reason given for the abolition of $500 and $1,000 bills).