The next bailout (soon)

[Syd]

Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation…

Bank of America’s holding company — the parent of both the retail bank and the Merrill Lynch securities unit — held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades.

That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.

Basically BAC is forcing the government to bail them out when they blow up. There's $1.04tn in FDIC funding and $75tn in derivatives. Derivative creditors get first crack at any assets which means that FDIC insured assets in the BAC company will vanish immediately making the government responsible for replenishing the FDIC.

Remember to stand strong, the 53%! The people not paying taxes are the problem, not the banks or the government that turns a blind eye to (or worse yet, cooperates with) banks.

[StanUpshaw]

Which part of this reflects the Austrian school again?

[Syd]

Letting the market do whatever the fuck it pleases is fairly laissez-faire, it's almost the exact definition for that matter.

Sorry that Rush didn't mention why this isn't a bad thing.

[StanUpshaw]

I must have dreamt the dozens of agencies supplying hundreds of thousands of pages of regulation on business, finance, tax, trade, employment, etc., etc., etc.

Come on econotroll, you can do better than that.

[Dude!]

Sorry that Rush didn't mention why this isn't a bad thing.

you really don't need to
do that on every post

that is a hanso trick
and you are smarter than he

[Syd]

I must have dreamt the dozens of agencies supplying hundreds of thousands of pages of regulation on business, finance, tax, trade, employment, etc., etc., etc.

Come on econotroll, you can do better than that.

you mean the regulations that were stripped away by the GLB act? because there was such a problem with liquidity that we needed to invent a new way to make a giant financial bubble?

There's nothing that can be done because BAC will topple and the FDIC money will go with it because any attempt at preventing it is going to be "OBAMA SOCIALISM COMMUNISM NAZI OBAMACARE" by the right wing talking heads. So now SS money will be raided, pensions will get blown away and a whole lot of other wealth is going to disappear when Bank of America fails.

[StanUpshaw]

that is a hanso trick
and you are smarter than he

no.

[Crash]

I must have dreamt the dozens of agencies supplying hundreds of thousands of pages of regulation on business, finance, tax, trade, employment, etc., etc., etc.

Come on econotroll, you can do better than that.

Okay, first of all let me say I know NOTHING about this.

But...if Syd is correct, isn't all of the watchdog regulation irrelevant? If they can openly move strong assets to another account and make the government responsible for the weak assets...doesn't that strike everyone as obviously wrong?

Wouldn't that be like me having $100,000 in a bank account, moving it to another bank account, and applying for welfare?

Yeah, I know this is probably an obvious simplification...but all I know at this point is based on the arguments above.

[StanUpshaw]

you mean the regulations that were stripped away by the GLB act?
I won't defend it, but neither will I use that as a scapegoat to blame for the house of cards tumbling. Not when we've had 100 fucking years of legislation based on economic alchemy building it up. I agree that we're all worse off as a result of the banks owning congress. But you're just exhibiting your colossal ignorance (or more likely intellectual dishonesty) when you try to claim we've had ANYTHING close to a free market during any of our lifetimes.

because there was such a problem with liquidity that we needed to invent a new way to make a giant financial bubble.
Don't you mean boosting aggregate demand?

[Syd]

The regulations against derivatives were erased, so now companies are free to create insurance policies with absolutely fuck-all oversight that amount to many, many times the wealth of the world over.

Right now it's analogous to having two farms. Right now one farm is completely covered in manure, the other in relatively OK condition. The one farm is now moving all of its manure to the other and telling the workers "hey it's your problem now" as the owner rides off into the sunset. They're literally shoveling shit onto the US public and telling them to have fun with it. The Fed is already in favor of doing this and there's no oversight outside the FDIC saying "uh, no"

[StanUpshaw]

Okay, first of all let me say I know NOTHING about this.

But...if Syd is correct, isn't all of the watchdog regulation irrelevant? If they can openly move strong assets to another account and make the government responsible for the weak assets...doesn't that strike everyone as obviously wrong?

Wouldn't that be like me having $100,000 in a bank account, moving it to another bank account, and applying for welfare?

Yeah, I know this is probably an obvious simplification...but all I know at this point is based on the arguments above.

Of course it's wrong. But syd is arguing against strawmen.

NO ONE who advocates free markets is in favor of bailouts. We're also against the Fed, fiat currency, fractional reserve banking, regulatory capture, and nearly everything else the modern economy is based on.

[Syd]

I won't defend it, but neither will I use that as a scapegoat to blame for the house of cards tumbling. Not when we've had 100 fucking years of legislation based on economic alchemy building it up. I agree that we're all worse off as a result of the banks owning congress. But you're just exhibiting your colossal ignorance (or more likely intellectual dishonesty) when you try to claim we've had ANYTHING close to a free market during any of our lifetimes.


Don't you mean boosting aggregate demand?

We don't have a completely free market but it's definitely been a hands off approach to the financial industry up until TARP which was socialize the losses and private the profits. All the worst parts of socialism and capitalism combined to fuck over the citizens of the world. If we had a more hands-on approach to the economy we wouldn't have let the derivatives market be so unregulated nor would we let BAC shovel a bunch of toxic waste onto the FDIC.

I like that you remember what I talk about, it makes me feel special, but, derivatives are completely out of control. BAC is, or was, a major player in America but were they big enough to have to have $75tn in money floating around? That was all imaginary money that was infinitely leveraged that allowed financials to create profits from thin air. It wasn't tangible in any way, and certainly had nothing to do with consumer demand since none of that money was "real" up until banks failed and all of a sudden pension funds, 401ks and sovereign debt had to pay for the credit default swaps.

I'm not saying anyone is in favor of bailouts, I'm saying you're in favor of letting banks do whatever the fuck they please and who cares what happens when they file bankruptcy.

[Crash]

Of course it's wrong. But syd is arguing against strawmen.

NO ONE who advocates free markets is in favor of bailouts. We're also against the Fed, fiat currency, fractional reserve banking, regulatory capture, and nearly everything else the modern economy is based on.

I don't know where to begin...

...are you saying that we aren't a world of governments? That our lives are actually controlled by international banking concerns and that we're so firmly entrenched in that system that there's no way to extricate ourselves?

I'm not trying to be dramatic or a conspiracy theorist, but that's what it sounds like you're saying.

[StanUpshaw]

We don't have a completely free market but it's definitely been a hands off approach to the financial industry up until TARP which was socialize the losses and private the profits. All the worst parts of socialism and capitalism combined to fuck over the citizens of the world. If we had a more hands-on approach to the economy we wouldn't have let the derivatives market be so unregulated nor would we let BAC shovel a bunch of toxic waste onto the FDIC.

I like that you remember what I talk about, it makes me feel special, but, derivatives are completely out of control. BAC is, or was, a major player in America but were they big enough to have to have $75tn in money floating around? That was all imaginary money that was infinitely leveraged that allowed financials to create profits from thin air. It wasn't tangible in any way, and certainly had nothing to do with consumer demand since none of that money was "real" up until banks failed and all of a sudden pension funds, 401ks and sovereign debt had to pay for the credit default swaps.

I agree with most all of this. But more regulation will only lead to more obfuscation. These fuckers are smarter than us. They will find a way to come out on top.

I contend that a more reasonable approach is, first and foremost, to return to money that actually has value. The inflationary nightmare that is fiat currency FORCES your everyday schmuck to essentially buy a lottery ticket if he wants any hope of holding on the what he has earned. My grandma has NO BUSINESS having a mutual fund or 401k. But it's forced upon her because she needs to keep up with inflation, and now she's at risk of losing everything.

[StanUpshaw]

I don't know where to begin...

...are you saying that we aren't a world of governments? That our lives are actually controlled by international banking concerns and that we're so firmly entrenched in that system that there's no way to extricate ourselves?

I'm not trying to be dramatic or a conspiracy theorist, but that's what it sounds like you're saying.

I make no claims about some centralized brain pulling all the strings, but the evidence for an intertwined worldwide network of influence between government and finance speaks for itself. I think it's entirely possible that it arises naturally from the ambitions of the powerful, and that there's no "conspiracy" to speak of.

As far as fighting it...I don't have much hope. The ONLY avenue that I can see is for the abolition of the state. I think if people can recognize there is an universal morality at the center of human interaction (namely the non-aggression principle (http://en.wikipedia.org/wiki/Non-aggression_principle) - that no one has the right to initiate force on anyone), then identify and root out instances where that morality is being violated, only then can we start any real progress.

[WRESTLINGFAN]

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[Syd]

I agree with most all of this. But more regulation will only lead to more obfuscation. These fuckers are smarter than us. They will find a way to come out on top.

So less regulation, which is the case now, is the best idea?

[pennington]

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Schiff is absolutely right.

I have a degree in Economics and these guys always seem to tie their opinions to politics. If Bush was president I'm sure they would have an endless analysis of the national economy.

[StanUpshaw]

So less regulation, which is the case now, is the best idea?

It's not the case now. Stop being retarded.

[Syd]

uh, it is the case now -- there's about $600 trillion dollars in derivatives right now that are unregulated. The total GDP of the world is $75 trillion. Don't you think there should be some oversight? Maybe just a bit?

[StanUpshaw]

Sure, let's not learn from the unintended/ignored consequences of prior shitty legislation. Instead, let's make new ones and kick the can farther down the road!

[Syd]

Obama had every chance to repeal the GLB act and restore Glass-Steagall that prevented any of this from happening, but he didn't.

[spoon]

We actually need to step on the fucking rusty can and replace it at this point, but that is surely not going to happen.

[WRESTLINGFAN]

Too big to fail


:laugh::laugh::laugh:

[spoon]

Too big to fail


:laugh::laugh::laugh:

You talking about Steve Job's cancer?








too soon?

[cougarjake13]

so does that mean i can stop paying my bank of america mortgage ?