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Originally Posted by
BABRAM
Chaver, I'll try not to add a single grey hair more to your scalp. Promise!
Since I don't have any hair worth speaking of, that's not an issue. :D
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What I'm stating is that in effect the loosening of the standards was deregulation, although as you mentioned technically packaged as regulations. In other words, we needed stricter other regulations.
Actually, the loosening of standards that you speak of was caused by the regulations. More than once I have found myself approving a loan that I would not otherwise have made because the Bank I was working for needed the CRA credits. We didn't lower our standards... we were forced to make the loans DESPITE our standards. That is a case of regulations driving the lending environment rather than good business decisions.
If the banks had lowered their standards on their own, without it being required by the government, I would agree that it was deregulation that caused the problem. But the banks never wanted to lower their standards in the first place and were forced to do so anyway. That is regulation at work, not deregulation.
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You bet! Much of the public is gullible. I'm not suggesting it's not their fault when they didn't ask questions upon signing. But right here in Vegas many companies were in such competition during our boom, they even told applicants how to fill in the blanks.
That practice should be investigated and stopped. The lender has no business telling an applicant how to fill out the application forms. It is a conflict of interest. It is fine to explain what a particular blank on an application means, but not for the lender to tell the applicant how to fill out the form. And as far as I know, every bank I have ever worked for had specific prohibitions against that in their policy manuals. I don't know about the gaming industry or the credit card companies, but I think it's just bad business.
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I understand it lowered the criteria. I agree. What I question is that the banks were forced against their better judgement. I know when I need to turn someone down on credit, I can find a reason.
In too many cases, if we tried to turn down a credit we would be perceived as red-lining, and the FDIC would nail us. You have to have a very solid case for turning down a CRA credit, because the FDIC will check those records. The rules for turning down consumer credit requests are very specific, down to what the decline letter has to say about contacting the FDIC if the applicant feels that they have been wrongly declined. (And which applicant DOESN'T think they have been wrongly declined?) Declining consumer credit is HARD to do without violating some regulation or other.
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Yes. I was reminiscing of good time and yesteryear's.
A bygone era.
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And the average American workers changes careers seven times.
Keep in mind that quite a few of those career changes are voluntary, where the worker is making a change that is to their advantage (better pay, better hours, more benefits, better title). There is as little employee loyalty as there is employer loyalty in the current job market.
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I've worked for several corporations that would fire employees as soon as they started making a good living. They did this, of course, to hire someone in for less.
Absolutely. But many corporations are looking for experienced employees, so even the older, higher-paid employees can find work most of the time. From the POV of a business owner, why should I pay more for employment costs when I can get the same amount of work from another person for less money? It is the job of the business owner/manager to keep costs low so that they can maximize profit. And it is your job as a worker and bread-winner to maximize your earnings so as to provide the best life you can for your family. Sometimes those two goals are mutually exclusive. That's the nature of the markets.
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The problem for those that had recently retired is that they couldn't wait for rebound. You and I have time to wait this out.
Perhaps. But the truth is that those who were close to retirement had no business being in securities or derivatives in the first place. The closer one gets to retirement, the safer their investments should be. People within a few years of retirement should have the substantial portion of their investments in low-risk government bonds. If individuals nearing retirement were making investments into securities, derivatives, hedge-funds, or options, they were making bad investment decisions. Caveat Emptor. It is NOT the market's fault, or the government's fault or the banks' fault that they made bad investment decisions. And it sure ain't my fault as the tax payor who is going to be called upon to foot the bill to bail out these retirees with bad decisions.
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The President got us in a pickle and the Congress is as almost as confused. Personally I would had bombed military installations, government buildings, and high ranking officials homes until the hills in Iraq were flat. Done.
Perhaps. But would that have led to the overthrow of Saddam? Probably not. He would have simply continued to hide in his palace-like bunkers and hidey-holes. Would it have brought the various factions of Iraq together as we currently have in Iraq? Likely not. Would we have found the 500 tons of yellowcake uranium? Again, probably not. We needed a ground presence in Iraq to bring it all together.
On the other hand, the original strategy of clear-and-leave was a bad strategy. Patreus' strategy of conquer-and-hold was the right one. I blame that error on Donald Rumsfeld, who clearly believed that technology was more important than boots on the ground, and that we therefore didn't need large numbers of troops. He was definitely wrong about that, and Bush was too slow in adapting to a new strategy. I hold him responsible for that. But the need for a ground invasion to affect change in Iraq was correctly promoted by Bush. Air strikes and artillery make winning wars easier, but it is the presence of ground troops in the conquored area that define military victory.
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The problem is that China is fast approaching in the International market and we are descending economically on the home front. Depending on the direction of alternative fuels, the Chinese want to plunge next into the automobile market.
Perhaps. And maybe that's a good thing. It will certainly create competition that will keep car prices down. And it will create competition in finding and developing the next alternative fuel and the next generation of eco-friendly and energy-efficient vehicles. Furthermore, the nature of our system makes it likely that any such scientific breakthroughs will happen here rather than there. GM is already making huge strides in hybrid technologies, and other car manufacturers are following suit. China doesn't have the R&D infrastructure or the monetary incentives to their car makers to compete at that level of research and development. We have the advantage in that area.
Once the technology is perfected, then the Chinese have the advantage in production due to lower labor costs and fewer regulations regarding the ecological impact of their factories. That's when the competition gets rough for us.
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Conservative presidents are just hand tied as the past Liberal ones. Asia is not going to collectively stop taking imports from China and we need that to happen to strengthen our position.
Remember that $541 Billion in debt that we owe to China? Remember the old saying that if you borrow $50,000 from a bank they own you, but if you borrow $50 million from a bank you own them? We have all the leverage we need by telling China that we won't be repaying the debt unless and until they cooperate on environmental and human rights issues. The possible loss of 1/6th of their GDP would probably be sufficient to get their attention. Currently China owns about $1.8 Trillion of foreign debt primarily from the USA and Europe. They only have about $3.2 billion of cash reserves or 0.2%. If that debt "goes bad" because we and European countries refuse to pay that debt, China would go bankrupt pretty quickly. They would certainly listen to the threat of loan loses totaling over $1 Trillion. That's all the leverage we need. And remember, China took a huge hit from Fannie and Freddie recently. Their economy is going through tough times as well. They have no liquidity, no significant loan loss reserves, and they borrowed money from their citizens in order to buy our debt, approximately equal to the amount of debt they purchased. If we don't pay them, they can't service their debt to their own people, and their economy collapeses. Despite the fact that they own so much of our debt, we are actually in the driver's seat.
Elliot
