Roots of The Credit Crisis
This seemingly innocuous power point slide from the Securities and Exchange Commission (SEC) was used in June of 2004 to explain to market participants a new ruling on how broker dealers could compute their “net capital”. Instead of the previous fixed limits on leverage of 10:1, broker dealers like Lehman Brothers could use their own “internal models” to determine how much leverage they could put on their capital. As we saw with the crash of Bear Stearns and now Lehman Bros., both firms were leveraged more than 30:1.
When you combine this ridiculous willingness to let broker dealers determine their own leverage with the decision three years later to alter the short selling rules to make it easier to short a stock, you have a recipe for financial chaos. These are both Bush administration SEC moves. They stem from a idealogical hatred of regulation. They cannot be blamed on Democrats. This needs to be stated clearly by Obama and Biden.
GOP hate over-regulatory laws and executive decisions. The oldest party, on the other hand, is indifferent to LAWS, per se, but is instead quite infatuated with, quite in love with, regulation — with Administrative Law, and thus with the promulgation of (extra-statutory) regulations, rules, procedures.
I’m afraid you’ve inverted this ’45, my Taplin: the Squares hate the steroidal laws, yes; but We de Hip love the implementation of them laws. The pure-form-latex-Pow-Uh of the grinding of lawmeat into regulation-grade ruleage and bondage and endo-procedural semi-invasive up-your-veins-and-down-your-colon Depak-Knows-Best effing CONTROL over YOU and everything within you and without you…
…………. ……. …. . ………
GOP hate over-regulatory laws and executive decisions. The oldest party, on the other hand, is indifferent to LAWS, per se, but is instead quite infatuated with, quite in love with, regulation — with Administrative Law, and thus with the promulgation of (extra-statutory) regulations, rules, procedures.
I’m afraid you’ve inverted this ’45, my Taplin: the Squares hate the steroidal laws, yes; but We de Hip love the implementation of them laws. The pure-form-latex-Pow-Uh of the grinding of lawmeat into regulation-grade ruleage and bondage and endo-procedural semi-invasive up-your-veins-and-down-your-colon Depak-Knows-Best effing CONTROL over YOU and everything within you and without you…
…………. ……. …. . ………
Hugo, you’re writing like you’ve just taken a major hit on the crack pipe. Try to recover and write what you want us to understand, not your stream-of-consciousness wild and weird rap that only makes sense to your currently addled brain. Writing is sometimes intended to communicate rational thoughts, not spread brain farts.
Hugo, you’re writing like you’ve just taken a major hit on the crack pipe. Try to recover and write what you want us to understand, not your stream-of-consciousness wild and weird rap that only makes sense to your currently addled brain. Writing is sometimes intended to communicate rational thoughts, not spread brain farts.
@Hugo
Talking in inscrutable — and tiresome — hypersnark as usual. There’s a cogent point in there somewhere, accessible by only the truly masochistic.
Black Monday looms? I would love to be wrong, but…
@Hugo
Talking in inscrutable — and tiresome — hypersnark as usual. There’s a cogent point in there somewhere, accessible by only the truly masochistic.
Black Monday looms? I would love to be wrong, but…
Q: “So, turning away from foreign policy for a moment Mrs. Executive Palin, on the domestic front, what is your opinion of Mark-to-Market annual end-of-year asset valuation accounting requirements, and post- Glass-Steagal brokerage house self-assessment leveraging strategies, as they apply to financial institution reserve ratios?”
A: “What aspect of it do you mean, Charlie?”
Q: “So, turning away from foreign policy for a moment Mrs. Executive Palin, on the domestic front, what is your opinion of Mark-to-Market annual end-of-year asset valuation accounting requirements, and post- Glass-Steagal brokerage house self-assessment leveraging strategies, as they apply to financial institution reserve ratios?”
A: “What aspect of it do you mean, Charlie?”
Bobby – this is why there will be nothing farcical about a Palin Presidency. It will be an unmitigated tragedy.
She’s simply not the kind of person who attracts and retains real talent. Her style depends on yes men. And yes men compound bad choices very quickly.
Then they focus on shifting blame.
Bobby – this is why there will be nothing farcical about a Palin Presidency. It will be an unmitigated tragedy.
She’s simply not the kind of person who attracts and retains real talent. Her style depends on yes men. And yes men compound bad choices very quickly.
Then they focus on shifting blame.
@Rick:
at least my own lack-of-sleep-addled brain interpreted Hugo’s message as:
* All men are equal, except some are more equal than others
ie. “Do as we say, not as we do.”
ie. “We’re above the law.”
ie. “Let them eat cake.”
(Ok, I’ll stop now..)
@Rick:
at least my own lack-of-sleep-addled brain interpreted Hugo’s message as:
* All men are equal, except some are more equal than others
ie. “Do as we say, not as we do.”
ie. “We’re above the law.”
ie. “Let them eat cake.”
(Ok, I’ll stop now..)
Democrats create the methods/weapons for our own mass destruction and the Republicans stupidly pull the trigger.
Democrats create the methods/weapons for our own mass destruction and the Republicans stupidly pull the trigger.
Why O Why does every post on this blog have to be a campaign ad nowadays? I’m getting tired of it.
Maybe I should just give up and come back mid-November.
Can’t we have a little analysis of topics without advice to the Obama campaign strategists about how they should handle it?
And by the way, I haven’t seen any evidence that Senator Obama would handle affairs any differently. This is what I see as the basic problem with the Democratic party since 1992: they are in it just as deep with the financiers, the arms merchants, and the multinational corporations, as the Republicans are.
Democrats look like ‘Republican lite’ now, and so they deliver a watered-down argument for populism. But why have decaf when espresso is so much more flavorful?
Why O Why does every post on this blog have to be a campaign ad nowadays? I’m getting tired of it.
Maybe I should just give up and come back mid-November.
Can’t we have a little analysis of topics without advice to the Obama campaign strategists about how they should handle it?
And by the way, I haven’t seen any evidence that Senator Obama would handle affairs any differently. This is what I see as the basic problem with the Democratic party since 1992: they are in it just as deep with the financiers, the arms merchants, and the multinational corporations, as the Republicans are.
Democrats look like ‘Republican lite’ now, and so they deliver a watered-down argument for populism. But why have decaf when espresso is so much more flavorful?
So you’re saying that Democrats are fully as responsible for the deregulation of the securities markets as Republicans. Right? They are definitely dirtied by money from the finance industry, you get no argument from me there. And too many of them have been so completely weak-kneed that they have more or less followed the Republican lead, who, in the period around 2003-2005, could deride *any* opposition on *any* issue to defeatism, terrorist-loving, America-hating, etc. etc. etc. Republicans were drunk on power and ran riot.
Now the shit is hitting the fan and we hear that Democrats are every bit as responsible as Republicans. For everything.
Your theory gains no traction with me.
So you’re saying that Democrats are fully as responsible for the deregulation of the securities markets as Republicans. Right? They are definitely dirtied by money from the finance industry, you get no argument from me there. And too many of them have been so completely weak-kneed that they have more or less followed the Republican lead, who, in the period around 2003-2005, could deride *any* opposition on *any* issue to defeatism, terrorist-loving, America-hating, etc. etc. etc. Republicans were drunk on power and ran riot.
Now the shit is hitting the fan and we hear that Democrats are every bit as responsible as Republicans. For everything.
Your theory gains no traction with me.
“but We de Hip love the implementation of them laws.”
Hence the endless series of executive signing orders.
“but We de Hip love the implementation of them laws.”
Hence the endless series of executive signing orders.
The date of creation was not Bush’s inauguration. Their is a huge shared responsibility here and more of the same dose not a change make.
The date of creation was not Bush’s inauguration. Their is a huge shared responsibility here and more of the same dose not a change make.
P.Cross- Your just wrong on this. It’s not the Clinton era elimination of Glass Steagal. It’s the Bush era elimination of leverage limits and removal of the short sale limitations. You can’t blame the Dems for this one.
P.Cross- Your just wrong on this. It’s not the Clinton era elimination of Glass Steagal. It’s the Bush era elimination of leverage limits and removal of the short sale limitations. You can’t blame the Dems for this one.
2005: “Democrats are socialists who hate markets, hate capitalism, hate the wealthy, and are trying to foment a class war with their ceaseless obstructionist tactics, instead of working with us in a nonpartisan way to get the great American economy moving again.”
2008: “Democrats worked hip-to-shoulder with Republicans, every inch of the way, to create this awful financial mess.”
(Pause.)
“Plus they’re still socialists.”
2005: “Democrats are socialists who hate markets, hate capitalism, hate the wealthy, and are trying to foment a class war with their ceaseless obstructionist tactics, instead of working with us in a nonpartisan way to get the great American economy moving again.”
2008: “Democrats worked hip-to-shoulder with Republicans, every inch of the way, to create this awful financial mess.”
(Pause.)
“Plus they’re still socialists.”
I sure hope I am wrong if Obama is elected.
I sure hope I am wrong if Obama is elected.
Jon,
can you please expand on this, “It’s the Bush era elimination of leverage limits and removal of the short sale limitations”. Wasn’t it the Democrat controlled congress that made these changes?
I don’t think this is a partisan issue. There was a variety of factors leading to the credit crisis, first and foremost the lenders and hedge fund managers ignoring the risks involved while pursuing higher returns. You clearly have a good understanding of economics so I can’t believe it when you say “This crisis is a result of Republican ideology. Its that simple.” The problems in the credit or derivative markets are anything but simple.
@pond – I’m beginning to think the answer to your question is that Jon may be one of the bloggers on the Obama campaign payroll. I continue to read because of the many excellent commenters.
Jon,
can you please expand on this, “It’s the Bush era elimination of leverage limits and removal of the short sale limitations”. Wasn’t it the Democrat controlled congress that made these changes?
I don’t think this is a partisan issue. There was a variety of factors leading to the credit crisis, first and foremost the lenders and hedge fund managers ignoring the risks involved while pursuing higher returns. You clearly have a good understanding of economics so I can’t believe it when you say “This crisis is a result of Republican ideology. Its that simple.” The problems in the credit or derivative markets are anything but simple.
@pond – I’m beginning to think the answer to your question is that Jon may be one of the bloggers on the Obama campaign payroll. I continue to read because of the many excellent commenters.
I guess I really hadn’t read that post very well. I see now you did explain what you meant better than I had thought.
never mind.
I still disagree and don’t think the blame can all be laid on Reps.
I guess I really hadn’t read that post very well. I see now you did explain what you meant better than I had thought.
never mind.
I still disagree and don’t think the blame can all be laid on Reps.
Rick, sometimes I don’t understand you. Just a part of you, I mean. It’s the cruel part.
I get the rest of you, I think, and I think I get something that’s a balm, or at least a kind of beloved harkening. You hate cant. I get that. So do I, man. Why do then do you husband your taste in these matters and ball it up as though it were the blackest ballest opium?
Does my own particular brand of fulloshitness threaten you somehow, despite my conspicuous regard for your honesty, your reputation your wares your accomplishment your experience your genuineness your prose? Why in hell would such as you even bother, Rick, with such as me?
My guess: I represent History; in particular, cold-eyed historiography. And you’re plumb afraid of that.
In which case, that would make you an ashamed Romantic.
Stop it, RT. I’ve never meant you any harm. On the contrary.
Rick, sometimes I don’t understand you. Just a part of you, I mean. It’s the cruel part.
I get the rest of you, I think, and I think I get something that’s a balm, or at least a kind of beloved harkening. You hate cant. I get that. So do I, man. Why do then do you husband your taste in these matters and ball it up as though it were the blackest ballest opium?
Does my own particular brand of fulloshitness threaten you somehow, despite my conspicuous regard for your honesty, your reputation your wares your accomplishment your experience your genuineness your prose? Why in hell would such as you even bother, Rick, with such as me?
My guess: I represent History; in particular, cold-eyed historiography. And you’re plumb afraid of that.
In which case, that would make you an ashamed Romantic.
Stop it, RT. I’ve never meant you any harm. On the contrary.
I just would like more clarity in the reading of what you are writing…and sometimes that means that I see stream of consciousness prose as coming off as basically a “fuck you” to the readers. If you’re doing it for yourself, great, but I come here for an exchange of ideas (hugely needed these days), and to be plunged into a nether world of jammed up words is kind of off-putting to me. If there was ever a time for clarity and insight, it is now.
I just would like more clarity in the reading of what you are writing…and sometimes that means that I see stream of consciousness prose as coming off as basically a “fuck you” to the readers. If you’re doing it for yourself, great, but I come here for an exchange of ideas (hugely needed these days), and to be plunged into a nether world of jammed up words is kind of off-putting to me. If there was ever a time for clarity and insight, it is now.
Now that’s cool. And I do dig. I even Hustle, etc. on occasion. It’s just that your prose is so — (and I do mean this) wonderfully spare — that sometimes it cuts. And I never could reconcile that to the rest of what I know of you.
It makes sense now.
Yes, I was riffing on a kind of junkie who’d just given up and shot his stuff for the last. In retrospect it looks lame, probably because, as it happens, I couldn’t tell a “crack” pipe from a stovepipe. I’m squarer than Gill thinks he is; squarer even than Orbison, if that’s gloriously possible.
Rick I recall only that I was at the time of that writing pretty deep despair over my party’s horrid mistreatment of Ms. Palin. So mindbent was I over that, and so unmentionable was my brand of outrage at that moment, that I just went into a kind of Quaker Gonzo thing.
That’s all.
I realize that you Turners keep a woodworker’s edge at all times, but jayuzussah man I was hurting when I wrote that crap, and I wasn’t hurting from junk.
Was hurting from junk politics.
Now that’s cool. And I do dig. I even Hustle, etc. on occasion. It’s just that your prose is so — (and I do mean this) wonderfully spare — that sometimes it cuts. And I never could reconcile that to the rest of what I know of you.
It makes sense now.
Yes, I was riffing on a kind of junkie who’d just given up and shot his stuff for the last. In retrospect it looks lame, probably because, as it happens, I couldn’t tell a “crack” pipe from a stovepipe. I’m squarer than Gill thinks he is; squarer even than Orbison, if that’s gloriously possible.
Rick I recall only that I was at the time of that writing pretty deep despair over my party’s horrid mistreatment of Ms. Palin. So mindbent was I over that, and so unmentionable was my brand of outrage at that moment, that I just went into a kind of Quaker Gonzo thing.
That’s all.
I realize that you Turners keep a woodworker’s edge at all times, but jayuzussah man I was hurting when I wrote that crap, and I wasn’t hurting from junk.
Was hurting from junk politics.