Obama has officially lost it

The bailouts in the late 1997 of LTMC, the original, over leveraged, interconnected, arrogant, mathematical model dependant, "too big to fail"super bank, are what caused the need for bailouts in 2008. More than the repealing of GS, the 1997 LTMC bailouts created a decade of banks that knowingly overexpanded, collected the big gains and left the tax payers holding the bag when the equally huge losses fell upon them.

Since the government has shown that it will always cave and give bailouts to firms that they consider "too big to fail," the only solution is toeither ban or create incentives against any financial institution reaching a size that would put them in the "too big to fail" club. Therefore,either banning it outright or taxing a bank for becoming very large and interconnected is the best solution available given the lousy state of our policymakers.
 
The bailouts in the late 1997 of LTMC, the original, over leveraged, interconnected, arrogant, mathematical model dependant, "too big to fail"super bank, are what caused the need for bailouts in 2008. More than the repealing of GS, the 1997 LTMC bailouts created a decade of banks that knowingly overexpanded, collected the big gains and left the tax payers holding the bag when the equally huge losses fell upon them.

Since the government has shown that it will always cave and give bailouts to firms that they consider "too big to fail," the only solution is toeither ban or create incentives against any financial institution reaching a size that would put them in the "too big to fail" club. Therefore,either banning it outright or taxing a bank for becoming very large and interconnected is the best solution available given the lousy state of our policymakers.
 
Originally Posted by Rexanglorum


The bailouts in the late 1997 of LTMC, the original, over leveraged, interconnected, arrogant, mathematical model dependant, "too big to fail" super bank, are what caused the need for bailouts in 2008. More than the repealing of GS, the 1997 LTMC bailouts created a decade of banks that knowingly over expanded, collected the big gains and left the tax payers holding the bag when the equally huge losses fell upon them.

Since the government has shown that it will always cave and give bailouts to firms that they consider "too big to fail," the only solution is to either ban or create incentives against any financial institution reaching a size that would put them in the "too big to fail" club. Therefore, either banning it outright or taxing a bank for becoming very large and interconnected is the best solution available given the lousy state of our policy makers.
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From reading some of Rex's prior post in other related threads, I can confidently say that he knows a ton more about this than I do.

So just to be clear, my super-generalized analysis of the situation was somewhat close? That is... precedence has now been set where the govt has shown thatthey will bail out these "too big to fail" banks, so they might as well make the riskiest moves they can and generate as much profit as possible whentimes are good since they have virtually no fear of ever going completely out of business?
 
Originally Posted by Rexanglorum


The bailouts in the late 1997 of LTMC, the original, over leveraged, interconnected, arrogant, mathematical model dependant, "too big to fail" super bank, are what caused the need for bailouts in 2008. More than the repealing of GS, the 1997 LTMC bailouts created a decade of banks that knowingly over expanded, collected the big gains and left the tax payers holding the bag when the equally huge losses fell upon them.

Since the government has shown that it will always cave and give bailouts to firms that they consider "too big to fail," the only solution is to either ban or create incentives against any financial institution reaching a size that would put them in the "too big to fail" club. Therefore, either banning it outright or taxing a bank for becoming very large and interconnected is the best solution available given the lousy state of our policy makers.
Click to expand...
But hey, without LTCM we wouldn't have Black-Scholes!!!!!
Volker helped people get a ton of money back in the day with his Interest Rate policy.
Banks will lobby their way out of any "hard" type regulations. Furthermore, they'll figure out away to leverage again (as if they're notdoing it already) and new "financial products" will ultimately lead to a repeat of the cycle.
 
Originally Posted by poblack

You all do know that large banks manipulate stock prices everyday right?
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^THIS

First off, I don't agree with A LOT of what Obama, Ben Bernanke, Timothy Geithner and the rest of these clowns have done in response to this financialcrisis. The only person that I find myself agreeing with a lot of the time is my homie Paul Volker. THIS plan I agree with. Not because it's going topunish the banks or because the politics but because of WHAT IT WILL DO.

A lot of you guys don't trade or take part in the financial markets on a regular basis. The Obama administration has completely #@@%@@ up the financialmarkets in the past year. I won't go into the whole spiel about quantitative easing, primary dealers and the entire process but the financial markets havebecome a casino where the big banks are the major players. Take a look at where the profits in the last year came from. JP Morgan and Goldman Sachs made mostof their revenue from TRADING. Goldman Sachs AVERAGE VAR (value at risk) for 2009 was about 200 million. Value at risk is the value they risk in the marketevery day. TWO HUNDRED MILLION DOLLARS EVERY DAY. In the 3rd quarter, I think they had 35-36 days where they PROFITED OVER ONE HUNDRED MILLION DOLLARS. Add tothat they profit ALMOST EVERY DAY. I don't remember the exact statistics but last I recall, they had about THREE down days in the ENTIRE 3rd quarter.They're raping the financial markets every day.

This troublesome once you start considering that some of this trading is high frequency trading (which was NOT banned, flash orders were). They set up supercomputers a few feet away from the NYSE servers (it's called collocation if you want to look into it) and it allows them to essentially front run themarket. They get information before others do and they're able to react before others.

The biggest problem with all of this is the fact that GS is also an investment bank. They have HUGE conflicts of interest. For example, they have analyst thatput out ratings on stocks that essentially move the market. I can't tell you how many times I've seen buy ratings out on stocks that didn't deserveit. According to traders I know, GS regularly puts out ratings that affect positions they hold. To put it simply, if traders at GS have a position in companyABC, it's not surprising to see a buy rating on company ABC.

This plan is a good thing IMO. If this happen, trading volumes will be 10% of what they use to be and the market will be a whole lot less volatile. Guaranteed.That will hurt me as a trader but it's better than letting them control the market every day.

I'm glad the Obama Administration has pulled it's head out it's !%! for once and decided to do something that makes sense. Let's see if thiscontinues.
 
i mean... sometimes everyone has to take the brunt of the blow for the problems of a few.

i mean really... the entire reason we're here is cause the banks had unlimited freedom thanks to mr. GWB..
now that we wanna try the opposite everyone is mad?

WHAT WILL MAKE YOU HATERS HAPPY?!?!
 
The deregulation of derivatives are what got you guys in the financial mess that you're in. If Obama actually intends upon reform I don't see how thiscan hurt you.
 
Originally Posted by reemz

The deregulation of derivatives are what got you guys in the financial mess that you're in. If Obama actually intends upon reform I don't see how this can hurt you.
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I still maintain they weren't closely regulated to begin with.
 
I don'thave a problem with it. I'll admit I don't know much about economics but it seems to me that as long as the government refuses to let thesebig companies fail and is using taxpayer dollars to save them, it might as well put some limitations on the amount of risk it can take. The governmentdoesn't wanna have to bail them out every few years.
 
Originally Posted by kicksfiend

Originally Posted by poblack

You all do know that large banks manipulate stock prices everyday right?
Click to expand...


This troublesome once you start considering that some of this trading is high frequency trading (which was NOT banned, flash orders were). They set up super computers a few feet away from the NYSE servers (it's called collocation if you want to look into it) and it allows them to essentially front run the market. They get information before others do and they're able to react before others.
Click to expand...

I figured there were supercomputers involved in this, seriously. They have the funds to purchase computers most people can't even fathom.
 
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