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Old 09-23-2008, 12:53 AM   #31
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How would anyone know when the situation hasn't really been examined closely or publically?

Regardless, why should the taxpayers bail them out without consequences?

Let the liberalised market take care of itself.
It's sure going to be examined, and, probably not this year, measures will probably be taken that go further than what has been done this week. But both will take a lot of time, so it's too early to say what really will follow. My point just is, you probably cannot take the upper management to court like you did with Enron, since they did not break a law. They got rid of these laws years before, and now we see the dire consequences.

In a perfect world we could now sit back in our chairs and let the liberalised market take care of itself. In the real world, sadly, we cannot do that. But the taxpayer would be well advised when going to excercise his voting powers to consider what would be in his best long-term interest.
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Old 09-23-2008, 09:26 AM   #32
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I hear you. The comparison to Enron lies in the deregulation in the energy sector which led a creative CFO to raise capital by building a futures market that wasn't sustainable - essentially betting (and losing) on futures to create false profits to artifically boost the stock price.

I'm not an economist or a financial expert but I can see that this exactly parallels what happened in the housing markets (I'm sure with some technical differences only bankers understand).

Except now it isn't just 22,000 Enron employees that got screwed out of jobs and their life savings.

Before anyone is the wiser, the financiers of these major investment firms will have gotten their free ride while the rest of us go under.

There won't be any government money (or even bank credit) to bail out major retail chains when the coming Christmas season sees drastic reductions in consumer spending and leads to bankruptcy and job loss for how many thousands of service sector low wage earners who are already in debt beyond recovery...some right here at interference.

So who to vote for?

Whoever wins Nov 4 inherits this unfixable mess...and leads us into another major war (since that's a convenient distraction from understanding economic woes and boosts manufacturing).
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Old 09-23-2008, 10:24 AM   #33
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My point just is, you probably cannot take the upper management to court like you did with Enron, since they did not break a law.
There are currently dozens of federal, state, and local investigations open against a large number of companies involved in the mortgage backed securities mess. So it's too early to conclude that laws were not broken. We might not see action for a while (especially while Bush is in office). An example of wrongdoing was to rate the securities AAA or investment grade when they were closer to junk.
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Old 09-23-2008, 10:42 AM   #34
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Yeah, that's right, on that level there is investigations and probably criminal behaviour can be identified, like those "bundling-negotiations", or the people that went out and talked people into starting such a mortgage when they never were in the position to get one.

However, as I wrote, the upper management is most probably out of that, especially since much of what they did was made possible by the deregulation.
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Old 09-23-2008, 10:50 AM   #35
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an interesting insight that's arisen from the leftish blogosphere that seem about right:

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The Republican/McCain plan is to get the Democrats to bail out the GOP’s Wall Street friends and then run against them for doing it.
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Old 09-23-2008, 10:56 AM   #36
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However, as I wrote, the upper management is most probably out of that, especially since much of what they did was made possible by the deregulation.
Two Bear Stearns execs were arrested, however. I think there have been over 400 arrests so far overall. IMO we will see more arrests (including upper management) as this debacle gains political steam - especially in the next administration.
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Old 09-23-2008, 01:01 PM   #37
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I don't know anything about economics but here's something to think about.

Now Is the Time to Resist Wall Street's Shock Doctrine
by Naomi Klein

I wrote The Shock Doctrine in the hopes that it would make us all better prepared for the next big shock. Well, that shock has certainly arrived, along with gloves-off attempts to use it to push through radical pro-corporate policies (which of course will further enrich the very players who created the market crisis in the first place...).

The best summary of how the right plans to use the economic crisis to push through their policy wish list comes from Former Republican House Speaker Newt Gingrich. On Sunday, Gingrich laid out 18 policy prescriptions for Congress to take in order to "return to a Reagan-Thatcher policy of economic growth through fundamental reforms." In the midst of this economic crisis, he is actually demanding the repeal of the Sarbanes-Oxley Act, which would lead to further deregulation of the financial industry. Gingrich is also calling for reforming the education system to allow "competition" (a.k.a. vouchers), strengthening border enforcement, cutting corporate taxes and his signature move: allowing offshore drilling.

It would be a grave mistake to underestimate the right's ability to use this crisis -- created by deregulation and privatization -- to demand more of the same. Don't forget that Newt Gingrich's 527 organization, American Solutions for Winning the Future, is still riding the wave of success from its offshore drilling campaign, "Drill Here, Drill Now!" Just four months ago, offshore drilling was not even on the political radar and now the U.S. House of Representatives has passed supportive legislation. Gingrich is holding an event this Saturday, September 27 that will be broadcast on satellite television to shore up public support for these controversial policies.

What Gingrich's wish list tells us is that the dumping of private debt into the public coffers is only stage one of the current shock. The second comes when the debt crisis currently being created by this bailout becomes the excuse to privatize social security, lower corporate taxes and cut spending on the poor. A President McCain would embrace these policies willingly. A President Obama would come under huge pressure from the think tanks and the corporate media to abandon his campaign promises and embrace austerity and "free-market stimulus."

We have seen this many times before, in this country and around the world. But here's the thing: these opportunistic tactics can only work if we let them. They work when we respond to crisis by regressing, wanting to believe in "strong leaders" -- even if they are the same strong leaders who used the September 11 attacks to push through the Patriot Act and launch the illegal war in Iraq.

So let's be absolutely clear: there are no saviors who are going to look out for us in this crisis. Certainly not Henry Paulson, former CEO of Goldman Sachs, one of the companies that will benefit most from his proposed bailout (which is actually a stick up). The only hope of preventing another dose of shock politics is loud, organized grassroots pressure on all political parties: they have to know right now that after seven years of Bush, Americans are becoming shock resistant.
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Old 09-23-2008, 03:02 PM   #38
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Sadly, things aren't bad enough yet for collective grassroots rage against the machine.

And when that groundswell starts, it will be time for Iran or Russia to take a military beating.

Pre-WWII history is repeating itself with alarming similarities so far. The only difference now is that the 1929-1941 period could be condensed into a far shorter time frame given the severity and global ressonance of the current crisis.

Oh and, our "enemies" have the bomb now too.
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