Monday Message Board

It’s time once again for the Monday Message Board. Please post your thoughts on any topic. Civilised discussion and no coarse language, please.

32 thoughts on “Monday Message Board

  1. Andrew’s banks come out fighting-
    http://www.news.com.au/business/story/0,23636,24038763-31037,00.html
    Nothing to do with his 4 pillars of propriety-
    http://www.news.com.au/business/story/0,23636,24037959-462,00.html
    although you’ll notice that lone ANZ exposure to the CDS market is over $1000 for every man woman and child in Oz(in short scale billions we trust hopefully)
    Meanwhile stockmarkets have a dead cat bounce on news JP Morgan’s results are better than expected, while investment bank Merrill Lynch keep flogging the family silver-
    http://www.news.com.au/business/story/0,23636,24038737-31037,00.html
    But oil and commodity prices are showing a welcome pullback as companies like Qantas lay off staff and cut routes and services and I’m supposed to fail to see the connection and the implications for commodity exporting Oz real soon. Welcome to 1929 Groundhog. Remember it wasn’t Black whatever day it was, but the dead cat bounces over the next year or so that enticed the blind and foolhardy back in all the way down as it wiped them out.

  2. so wealth got transferred from bank shareholders to the poor

    A negatively amortised loan (in my opinion), is not a transfer of wealth. At least not in the direction you’re suggesting.

  3. Smiley;
    said;
    “I’m of the opinion that the whole sub-prime market was an anachronism of deregulation or an inability to police the regulations.”

    Sounds similar to the last time Freddie and Fannie got into trouble during the S&L crisis.

    cause 4 of Savings and Loan crisis:

    “Increased competition on the deposit gathering and mortgage origination sides of the business, with a sudden burst of new technology making possible a whole new way of conducting financial institutions generally and the mortgage business specifically.”

    http://en.wikipedia.org/wiki/Savings_and_Loan_crisis

    Any inference or connection in this post to interest rates, banks or government policy; either expressed, implied or interpreted is unintentional- please do not delete.

  4. Smiley,
    The borrowers got the use of a home for two years or more and paid out very little. How is that not a transfer of wealth to the borrowers? If it were a government program you would have called it social housing and been out there marvelling at how wonderful governments were.
    .
    observa,
    Banks are just like any other business – and just as capable of making a wrong call. I just get annoyed when the uninformed try to make them out to be something they are not – special in some way, able to create money in some special way, or some other currently popular, but wrong, theory that has entered their heads.

  5. Andrew,

    If it had been a government program it would have been less ephemeral and I could have marvelled for much longer. Besides, describing a market in which house prices are rising at unsustainable and alarming rates as a “social program� is quite amusing.

    On your other point, banks are a special case, because when they start failing on mass, bad things start happening in the rest of the economy. They are at the centre of our economic system, so they have to be protected from the spivs.

  6. Smiley,
    I am trying to think of many governemtn programs that do not change from year to year, much less over any longer periods. Nope – can’t think of many.
    There are many industries that, if they fail on mass, would cause immense harm to the economy. In any case – that is not sufficient. You also need to demonstrate that the regulations actually help. There has been precious little evidence of that.

  7. Andrew,

    I’m somewhat tired of this line of argument, but just to make a final point: the idea that much of the lending that went on during the sub-prime fiasco was “predatory� doesn’t really stack up with your suggestion that there was some sort of altruistic motive behind this unsustainable practice. And I also suspect that building “McMansion� style tract housing in the Californian desert will be seen as extremely impractical in the years to come. You appear to be using a brand of particularly strong binoculars in an attempt to find a silver lining to this cloud.

    As for the value of government, it doesn’t take me long to think of a few things that governments have managed to deliver in western societies. Things like Medicare, PBS, transportation and utility services networks, reasonable public schools,… I could go on. While the actual work for many of these services have been “sub-contracted� out to private enterprises, government has provided the framework in which the services can be delivered in an efficient, safe and sustainable way.

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