The reason there is,

too many people think that government intervention of any sort equates to excessive bureaucrary stuffing up the system even worse,

those same too many people think that a free market will get us out of this mess better than any government help,

yet they seem to be forgetting that it was free market practices (even if "encouraged" by government deregulation)

that got us into this rut in the first place.

 

Initially, the 2 mortgage giants were set up and run by the government, then handed off to public, non-governmental ownership leadership. It was that very non-governmental leadership that got us into this mess in the first place, as there was insufficient regulation to keep the top executives in order, no accountability for the bad direction mistakes their leadership took those companies in.

No matter that Clintonian era deregulation encouraged those mortgage giants to relax their basic credit requirements.

It was still those exces that signed off on the paperwork saying, "yeah, we'll sign these people, even if they lack sufficient credit and sound financial responsibility."

 

Sad thing is, even those CEO types lack sufficient sound financial responsibility

(and I wonder, if that's what is being taught in colleges and universities when it comes to business leadership,

maybe we need to rewrite those requirements?),

because you don't solve your company's financial hard times by laying off your actual workers and giving yourself an equivalent bonus in the process for all the money you supposedly saved the company.

 

I look at this mess as,

since it was those CEOs' and execs' leadership that led their companies down the road to bankruptcy, solvency, or whatever other financial mess they signed off on

(accepting risky clients was their own damn fault, the government never forced or threatened them into it),

then they don't deserve a single cent of severance pay from any government or taxpayer bail-outs.

 

But then again, that rings of common sense.

And if this mess has taught us anything, it's that common sense isn't a requirement

to be amongst the world's financially-leading corporations.

 

(Feh! Were this an era of a World War, we could just shoot them for treason,

solve that problem real quick-like: a 50-cent bullet and a $500 pine box is cheaper than a 7-digit severance package,

and the public wouldn't be as outraged over it!)

 

It was Klinton-era **regulation** that encouraged it, not "deregulation"--which by definition means it was encouraged by intervention into an already-heavily regulated market, and hence not by "free market practices."  You can read all about it on the United States board.  Just look in several of the recent threads, and read everything posted by Softwar and Rocky.

 

That's all I hear about the subprime crisis.

 

- There's your ex commies that wanna use this to sell me the idea that capitalism is a faillure.

- There's your libertarians that wanna use this to sell me the idea that any regulation of capitalism's excesses is a failure.

- There's your leftwing politicians that wanna use this as a stick to beat the rightwing politician, conveniently

   ignoring the leftwing role in this.

   ignoring the rightwing role in this.

- And then there's the media who are in a class all of their own in this:

    -1 They are doing everything to scare the living bejeesus out of the general public for easy ratings.

    -2 They are willfully misrepresenting the bail out plan. The bailouts are loans nothing is given away the banks have to pay all

        this back (That's what a loan is).

    -3 They are doing everything to create a needless panic among the general public causing people to get needlessly hurt.

 

I work in engineering. When we have a problem after swearing and cursing a bit, we look at it soberly and start to fix it. What else are you gonna do? Hyperbole and panic does not fixes things. After the thing is fixed we move on and try to never make that stupid mistake again.

 

With the attitude I described the " problems" we are having would not be half as bad.

 

I don't wanna make more statements about this, because I'm busy. I'm compiling a list of useless fear mongering reporters that need to be beaten up. If asked politely I might be persuaded to include some aviation journalists on that list.

 

 

 

 

 

 

Regardless of whether it was regulations, de-regulation, re-regulation, or whatever other word of choice needed to justify playing more favorably to people who just didn't have the sound financial judgment to take on loans the magnitude of a home mortgage,

it's the fault not solely of Presidential administrations for signing off on said legislation,

but also of both principal parties of the US Legislative branch (plenty of dems and Reps have dirt/blood on their hands from filthy money), after all, that's what they do: legislate laws that keep the country functioning,

and it's also the fault as well of the very financial institutions and their leadership who took part in this.

 

Yes, the US Federal Government, with backing/support by both the Executive and Legislative branches of government,

dictated down that it would be beneficial to the US economy to allow people of unfavorable economic capabilities to have acceess to the same home loan opportunities as the people who were actually financially sound enough and responsible enough to take on such debt.

But in the end, no one put a gun to the heads of those financial institutions and said "you will consent to taking on the loans of umpteen hundred thousand (umpteen million?) people who won't necessarily be able to hold up their end of the deal."

Perhaps, in hindsight, they should've only committed to the bare minimum number of people the Government suggested they shoud allow...?

 

In the end, the US government never forced those major financial players to put their faith in mortgage-based securities over things that may (or then again may not) have proven as stable investments.

What made mortgages attractive was that, foolishly, the Wall Streeters and their financial ilk believed that people would fully commit to and honor 15+ year loans on their very homes. After all, who would risk defaulting on a mortgage if it meant you'd be out of your dream home and living off either generous and patient friends and relatives, renting a dive of an apartment that's barely enough room for you, your children, and all your possessions, or even out in the street?

 

It didn't help this past year that the price of oil went thru the roof, making it very difficult for already financially-stressed people to continue keeping commitments they probably could have honored if it suddenly wasn't starting to cost them so much extra just to go to work and put food on the table.

We leave in a market-based greed-based economy where everyday we are pelted with advertisers going about their subtle business of telling us all that we're nobodies and don't amount to anything if we don't buy the products they're adverstising. So naturally, people will go into debt just to prove "hey, I'm as good as anyone else", and we keep going further into debt in our efforts to "keep up with the Joneses" just like everyone else, clinging to the ill notion that we're only somebody based on how much stuff we accumulate, even if it means losing our peace of mind as we go further into debt...

 

(perhaps this is proof-positive our (US) education system is failing?: we no longer teach young adults the importance of sound financial decisions, fiscal responsibility (but then again, look at the example our elected governments show us there), and the importance of honoring our committed-to debts, as well as not taking on new ones we can't afford in the long run,

 in a world where credit is measured as so important a commodity.

Other than some fictitious Second Coming that's supposed to fix all the world's ills, I just don't ever see humanity stemming away from being a materialistic species: we let our accumulations of stuff determine our sense of self-worth and who we are in the world.)

 

Politicians are as much to blame for this US-mortgage-mess-turned-worldwide-financial-crisis as the corporate and financial execs who all agreed with each other that this was the course of action to follow (accepting so many loans from people most likely not to honor them to full term, and even worse when it's decided to put a large portion of financial faith in those risky loans).

And as I can't voice my anger to those corporate types, other than trying to avoid doing business with their companies,

my only recourse in any of this is to tell all the political shills representing every politician this election day why I won't vote for incumbents anymore.

Maybe the change we really need is to get all the old stale hot air out of office and get new blood in there that hasn't been bought off or isn't on the take yet (not to mention we need the adequate legislation that keeps the bribing, manipulative PACs and SIGs out of the political cycle altogether).

 

I'm all for any other ideas that represent more than just putting a bandage over the wound and hoping enough time will allow it to heal itself (which won't ever happen so long as we have the same bickering politicians with opposing mentalities who are constantly scraping old wounds open again and again in a never-ending blame gain of whose fault it really was why we got such a wound in the first place.

Sometimes it's downright amazing that there's actually enough civility remaining in government to at least make it look like it actually works most of the time).

I get the impression that much of the current woes have resulted from people who should have known better classing the big picture, as well long term effects of their actions / decisions on the big picture, as being someone elses problem or responsibility.  So basically we have our business and political leaders consistently displaying a lower level leadership, responsibility and accountability than we expect, even demand, from many professionals or even ordinary employee's.

 

It is ironic that the people who are chosen and paid to provide leadership and vision are less accountable as well as less likely to face the consequences of getting it wrong than an ordinary person in their ordinary job would be.

 

I wonder how big a part inappropriate or poorly targeted KPI's play in the current mess.  Automatic rewards for achieving short term goals irrespective of the long term damage done, while ignoring efforts towards long term results does not encourage responsible or ethical behaviour.

...How do these CEOs of those failing corporations really stand to make out like bandits in the bail out?

 

Simple: when the gov't bails out the companies that those guys' leadership didn't hinder sinking further,

their stock options' values will go thru the roof.

 

How then do we reward such pisspoor leadership in the US?

By granting them even bigger windfall profits.

 

I don't know just how credible this Michael Brush guy is over there at MSN.Com,

but his articles here    and over here

certainly provide some interesting food for thought. 

 

...the above links are bad enough,

but this

is the one that can really make you sick.

Sorry FO but while I think socialism is fine along with the principals behind it; communism is not and this is a proven concept. Communism ALWAYS turns in totalilarian states. It always suprises me the amount of people who decide to look back and continue to repeat the same mistakes over. Yes capitalism is an un-sustainable form however, why on earth move backwards towards something that is proven to be represive and fail. Move forward.

 

The collective ownership part (not state ownership) of socialism is a path no one ever talks about and yet it is the way to prevent the greed we see today without the totalilarian society. An example of this is when say 30 people from the local community majority own the local pub that they go to. What point is there to have high profits if they are the ones paying for the higher drink prices. Same things go for companies if they employees own the majority of shares and their wages are affected by profits. In terms of banks, credit unions today are probably the closest form of this where quite often you have to buy shares in the credit union.

 

Of course these are simplified examples but it relates to de-centralisation of power and wealth into the local communities rather than by a select few. This spreads the risk and and helps to limit any adverse effects of greed mainly to those who were greedy. This is a problem with both communism and capitalism which is causing the problems we are seeing now. These induce a neo-humanistic approach of "helping my neigbour is goor for me" rather than screw everyone else as long as I do well.

 

Personaly I think the financial crisis will takes years to properly resove let alone for banks to pay governments back (so get into a secure job if your not in one :-) ). I see the US heading to a depression if its not really in one now. The big questions is will this mean the US cuts back on military spending? If so how will this shift the balance of power in our part of the world and how will it affect australia?

 

Food for thought if the US "needs" to cut production of the F35 by half and it dramatically increses its price to levels unaccpetable levels for australia where we won't or can't buy it. What will this mean for us; we buy the typhoon, more Shornets or something else ( not the F-22!), cut production of planned naval vessels, etc. Interesting times are ahead.

 

 

Getting into a post Cold War mentality (or post Desert Storm mentality) and starting another cutback on US military personnel would be a disaster.

First, we have to find a means to solve the current 2 major conflicts in such a way that they aren't going to rise up and bite us again anytime soon (next several decades would be nice).

 

Suddenly shortly afterward the US Government announces that some 400,000-500,000 military personnel are now out of a job due to downsizing and budget-saving cuts,

and that's disastrous both for the men and women who were planning on making a worthwhile career out of it, complete with guaranteed paychecks, re-enlistment bonuses, and retirement money those people could be investing into homes, cars, and elsewhere in the already-hurting economy,

 

and disastrous also if, a short time later, we find ourselves in the midst of another continent-hopping large scale military exchange with the next group of terrorists, or worse yet, armed conflict with a major player who would then have us considerably outnumbered (bringing back The Draft to make up for lost numbers means death knell for political careers who OK'ed it).

 

As to the coming crunch on defense contracts: if it isn't the Republican party taking the next Presidential election (Republicans love a big fat healthy military),

then consider your prescious F-35s to be going up in price to compensate for delays, or outright cuts, in the US batches of aircraft.

 

(but the optomistic hope then is that, with approval from the US Government,

the defense contractors are allowed to market those aircraft,

the ones the US won't be buying after all, 

at foreign customers instead, in a hail-mary effort to keep the production lines running (jobs, tax base) and prices low so even more customers won't cut their orders also and settle for other solutions from other suppliers (not necessarily US companies)).

 

Either way, naturally, I for one will then be saying, "who didn't see this coming?"

My final hope could only then be that, instead of buying shiny new F-35s and keeping a low-rate F-22 line open, we somehow manage to get some orders for new-build, latest-Block-with-latest-tech F-15s, F-16s, and Super Hornets to replace the aging aircraft that aren't getting replaced by more expensive 5th-gen stealth aircraft (and that 2018 bomber we've discussed elsewhere here suddenly becomes the 2028 bomber, or later).

But then again, any cuts in that manymilitary personnel would mean we don't need as many vehicles (land, air, sea)  in the inventory to be operated by and maintained by the lower manpower available.

 

Sacrificing military budgets to fund other projects across the economy is a lose-lose situation,

 

both for the US (rise in unemployement from departing military personnel who are then competing with those civilians currently struggling to find adequate (and worthwhile) work,

and add in the fact that defense contractors who are fighting to keep contracts certainly won't be hiring all those departing military personnel with experience, not if the contracts aren't there to support),

 

and it's also bad for those US allies who were counting on lower prices for US equipment that suddenly rose in price when the US cut back its own orders.

 

It's gonna get messy no matter what,

but in the end it comes down to the lesser of the two evils,

just like every other US election.

 

That domino effect sucks.

It's amazing how a group of high-risk people, who didn't have the sense of financial responsibility to commit to lengthy mortgages,

can cry all whiny and petition the Government to open their bureaucratic hearts to ease the restrictions on getting a mortgage,

and after all is said and done it caused a worldwide cascade failure in everything from the civilian financial sector to the defense industry.

Just because some financially irresponsible twits wanted a bigger piece of the pie from society and the government,

without actually earning the qualifications to get it like a lot of the rest of us.

 

Bummer.

Yes we have libertarians in the Netherlands.

"http://www.vrijspreker.nl/wp/"

"http://www.libertarian.nl/NL/index.php"

 

PS

The US could become much stronger, because of this:

By saving enough money to buy something you only pay the price once. By borrowing to buy something you eventally end up paying double, triple the price or even more. So for instance if you save money to buy a computer you pay 1500$, compared to if you borrow to buy a computer you end up paying 3000$ ovet time. That means that the person who saves money first and then buys something can buy for twice the amount of stuff compared to someone who borrows (both having the same amount of money).

 

So delaying gratification and saving for stuff has very powerfull economic benefits over the long term. All that money that would be spent on paying off loans and interests/profits to banks could be spent on additional consuming instead. I would not be suprised if that modification could case an America that is able to consume twice the amount of goods it has done in the past. I wonder wether the world would be ready for such a thing though.

 

 

 

We here in the states have made hash of this and IMO the bleeding will not stop for some time.  The stock market is no big thing, the problem right now is credit lines for operations.  Lay offs are already starting and the B word will be big in the news soon if the credit lines to companies don't start coming through.  Budgets that were based on 2007 commodity prices are now out the window.  The supply chain here in the states is in trouble, 10" valves that last year were two weeks for delivery are now 8 to 16 weeks.  "We are waiting on the castings from our supplier, they are waiting on steel from there their supplier, they are having problems getting the pig iron from Bananastan."  Or get a quote on 316 plate and compare that to last year.  I could go on and on.  All it takes is one company in the chain to run out of money and not be able to fill its orders.  I think that in the near term we are going to be seeing companies demand prepayment for goods.

 

gf0012-aust,  help me here.  Would the exchange rate guarantee that you have shown, keep the price of the F-35 down if the numbers were drastically cut by the USA as the poster suggested: