[excon]

Hello again, El:

Of course, I would be remiss if I didn't add that the SOCIAL liberal bent is the correct one, if one opposes pre-emptive war, the war in Iraq specifically, torture, warrantless spying on Americans, secret CIA prisons, and a whole host of wrong headed right winged ideals.

excon

[BABRAM]

Good. Then my job is half done. :rolleyes:.

Chaver, I'll try not to add a single grey hair more to your scalp. Promise!

I think we have a disagreement of terminology here. It wasn't DEREGULATION that caused the standards to be lowered. It was the new CRA regulations that forced banks to lower their standards. In other words it was a case of REGULATION causing the problem, not DEREGULATION. Banks never wanted to lower their standards. We were forced to make loans we really didn't want to make because the law required it..

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. Perhaps we are both headed the same direction, just terminology. Every once in awhile Vegas Gaming takes risks and lowers the criteria. However that criteria can change because it's regulated with just one meeting from the boss. His word! He says "guys" this is what were are going to do. It's official.

First of all, the borrowers generally applied for loans. Banks didn't just grant credit where there was no application. Nobody forced borrowers to take money they didn't want. Don't the borrowers bear some responsibility for applying for loans they couldn't afford? Which part of sub-prime lending was predatory?

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.

I'll admit that there have indeed been predatory lending practices performed by financial institutions, especially credit card companies and student loan companies. But even there, don't the consumers bear some responsibility for their actions? Nobody forced anyone to borrow.

For sure. I'm just stating predatory lending happens, not that most consumers have a clue.

By contrast, the CRA regulations DID force banks to lend.

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.

Pensions are too expensive in the current environment. Too many companies can't afford to pay for the retirements of longer-lived retirees.

Yes. I was reminiscing of good time and yesteryear's. And the average American workers changes careers seven times. 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.

As for 401Ks or for that matter personal retirement investments in general: the fact is that over any decade in history, mutual funds have produced an average of a 6% per annum return on investment... even in decades with significant bear markets. That is significantly better than the less-than-1% per annum that the US government pays on Social Security. Furthermore, the money never leaves my possession, and the government doesn't use it to fund its pet projects and wellfare programs. Given the choice, I'll take the personal investment option over forced government savings any time, even in lean times.

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.

There's room for discussion on the subject of how the war was run. There were definitely mistakes. But the biggest mistake of all would have been an early withdrawal, which was favored by the liberals in Congress.

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.

The idea of paying the Chinese government for ecological reform at the same time that they are opening one new dirty coal plant every day and strip mining their lands is rediculous. Yet that is exactly what the Kyoto agreement does. And then again the idea of talking nicely to the Chinese and telling them to stop their human rights abuses... or else we'll tell them to stop again... is a waste of time and human lives. Liberalism has completely failed in our relations with China.

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. 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.

[ETWolverine]

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

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.

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.

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.

Yes. I was reminiscing of good time and yesteryear's.

A bygone era.

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.

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.

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.

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.

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.

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

[BABRAM]

Elliot, I'll be busy with company for about a week and half starting tomorrow. We probably come a lot closer to agreeing on some economic issues, rather than how we went about the Iraqi war. Admittedly I find it a more difficult to point all wrongs to one single ideology. As usual you are a joy to bounce views back and forth with. May tomorrow's work day be pleasant and the shabbos delightful.

Since I don't have any hair worth speaking of, that's not an issue. :D

I hear you! The little I have, I keep short. :)

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.

OK. To use your summary, I then ask for new (corrected) regulation and with stricter oversight.

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.

I agree. And I recall some of those places going under starting around 2002. The Vegas boom was unique because we led the nation in growth for about a decade.

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.

Even since the bailouts, I don't think anything has changed as for as guidelines. I have limited contact and exposure with a few Banks in NY, but I never got the impression they were giving the money away.

A bygone era.

True! Sad, but true.

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.

I agree. I just saying there is not much loyalty all the way around.

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.

Yes. It goes both ways. I'm just wanted to acknowledge those that worked hard and still got pushed out the door.

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.

The multi billion dollar corp I work for offers all the goodies in a 401K plan and they start matching at a minimum investment of 6%. They offer a free financial support advice staff to employees and they provide basic setup information and somewhat help direct folks to chose how risky or conservative of fund they like. I shouldn't have to worry about my retirement money. We all agree Social Security may not be around in the future, but any investment is a risk.

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.

I'd let the Iraqis figure that out after giving them the head start under my plan.

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. Air strikes and artillary make winning wars easier, but it is the presence of ground troops in the conquored area that define military victory.

I didn't agree with one American soldier boot touching soil in Iraq. However, we do agree on strategy. Knowing the history of Iraq, I'm not overly optimistic. I'll say this, given the amount of time, money, and young American blood that Dubya has devoted to the war, the Iraqis better get ready to take charge.

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...We have the advantage in that area.

I agree. But they are working hard at obtaining it.

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.

I agree. I think we need to step it up. We also have the Japanese and Koreans to contend with.

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....Despite the fact that they own so much of our debt, we are actually in the driver's seat.

I wonder though if it really means as much to the Chinese, as it does the US? Those people have lived off far less and their view is not motivated by Capitalism being a function of society. The other thing is that by having some leverage, do we decide not to pay our debts. Given that scenario have we not also broken with our obligations?