Wall St Cut = Main St Haemorage

Originally posted by uzless
you mean beyond the $300 billion that world central banks/reserves injected into the market last week?


The biggest problem facing the credit market is the bad investments. They have to be taken off the books. They are a cancer and the only way to do it is for someone to buy them.

The problem is that you keep having strong opinions about what you don't understand.

When people talk about injections of money by monetary authorities they're talking about loans, not injections of public capital into the companies themselves. Loans help with liquidity but they don't improve the balance sheets of banks. Public capital injections do both.

Originally posted by Palynka
The problem is that you keep having strong opinions about what you don't understand.

When people talk about injections of money by monetary authorities they're talking about loans, not injections of public capital into the companies themselves. Loans help with liquidity but they don't improve the balance sheets of banks. Public capital injections do both.

Right, ok so you want the US govt to take over the failing banks like they did in Scandinavia during the 90's. Ok fine. One problem. There are alot more banks/investment packages that need to be dealt with. Where are you going to get all those people to run things? Where will the people come from?

Sweden nationalized their banks for a period of 5-6 years before selling them. That's alot of manpower for the US (a country approx 50 times bigger with way more financial institutions)

Sweden spent approx 7% of GDP resolving their banking crisis.


I'm not saying this can't be done, but i'm not sure the US is prepared for that kind of task.

Originally posted by uzless
Right, ok so you want the US govt to take over the failing banks like they did in Scandinavia during the 90's. Ok fine. One problem. There are alot more banks/investment packages that need to be dealt with. Where are you going to get all those people to run things? Where will the people come from?

It's a good point, but there's always the possibility of keeping some of the management teams.

It's hard to believe that all of them are poorly managed. It seems to me it would be easier to have one or two government representatives on the board, than replacing whole teams.

Where did you get the 7% from? If I remember correctly injections were a bit less than that... I could be wrong though.

Originally posted by Palynka
It's hard to believe that all of them are poorly managed. It seems to me it would be easier to have one or two government representatives on the board, than replacing whole teams.

I think this is the whole point of not only Obama's comment in the first debate, but anyone living outside of the US who is not conflicted at the thought of regulation as a concept. In terms of the rhetoric that issues forth from the libertarian wing of the US body politic you would think that regulation means allowing Satan to sup at your table.

The point is that the management teams on Wall St, given the mindset that operates there, are of the best you get anywhere. Surely the rewards on offer and the culture of competition that allows only the hungriest to ascend up the corporate ladder, then its not a huge stretch to suggest that they are of the best available management teams to be found anywhere in the world. That's a given.

The problem is not management. The problem is the ideological framework within which Wall Street operates. These guys have become brilliant at playing that old parlour game of pass the parcel or as some others know it musical chairs.

It seems that if you can reduce the whole corporate mindset down into one sound byte, it would be don't be the last one left holding the loss. Now it seems to me that if because you have no regulatory oversight such that the market only ever oscillates between cycles of boom and bust, then you can't blame corporate management. Each player in this game cannot afford to lose any competitive edge. Trying to be conservative and show self regulation in order to avoid the possibility of meltdown in the long run, while all your competitors are only interested in short term gains will adversely affect your company's bottom line as investor funds will tend to follow those institutions that are experiencing the highest rates of growth in profitability.

Its governments role to make the game safe.