How Can We Truly Level the Playing Field?

[Jimmy Snyder]

Perhaps they mean that when the last trillionaire standing collects that last stray dollar so that all of the money is in the hands of a single individual, then we will have a kind of level playing field. Or perhaps it means that everyone has the exact same amount of money. This is difficult to maintain since someone might get hungry enough to buy some food with their money and upset the level. Here is the same story I have posted on several occasions in the past.

My neighbor and I are equal in almost all things. We each have an apple. However, there is a slight difference in that he likes to eat his apple in the morning and I like to eat mine in the afternoon. One day the OWS crowd happened by just at noon. What they saw was that I had an apple and my neighbor did not. That's not a level playing field they said. So they cut my apple in three, one for me, one for my neighbor, and one for themselves. Level.

 

[ginru]

I take it as just an expression for wanting to achieve a more balanced, idealistic society in which everyone is skilled, educated, active and reasonably content. Simple but complex as well.

 

[Evo]

In addition, there would be local nonprofit unions to act as both a talent agency and a consumer block that effectively coordinates work/training programs with local businesses, ensure transparent fairness, and create marketing incentives to get consumers to buy from those businesses.

Honestly, I don't see why it's so difficult to figure out creative ways to make use of large numbers of young or laid-off workers, especially as there's currently a greater aptitude in this generation for things like crowdsourcing and other cooperative models.

You mean like this?

Find A Job

Find Jobs, Training Opportunities, and Career Information
Jobseekers
Programs, resources and online tools help workers in all stages of the job and career development

Worker Reemployment Portal
Employment, training, and financial help during job transition
Youth
A variety of career resources available specifically for youth

Job Corps
Helps young people ages 16 through 24 get a better job, make more money, and take control of their lives.

Jobs for Veterans Act

http://www.doleta.gov/

Many differnet job/training programs listed.

http://www.google.com/search?source...1T4GGLL_enUS339US339&q=work+training+programs

 

[ginru]

You mean like this?

Not quite, as I see that as still following the typical system from which many are frustrated. I'm saying the future should be about transitioning them to a mobile, freelancing workforce; always engaged, learning and actively challenged. This reflects the technological evolution and offers people a work model suited to their potential. A freelancer is less of a victim of downsizing and more a predator hunting for projects. That shift in self-perception is critical as it gets them away from feeling at the mercy of economic boom-bust cycles and rather more confident, adaptive, and in control of their fate.

This article kind of describes a little of what I mean:

http://businessonmain.msn.com/brows...nesstrends.aspx?cp-documentid=30876276#fbid="
************************************************
"Essentially we’ve created a contingent, freelance economy. There’s still money to be made, innovations to be marketed and ideas to be harvested. The difference is that many businesses today are choosing to hire on an as-needed basis, relying on a freelance workforce. But rather than being traditional freelancers, many of these people have become freelance entrepreneurs, crafting businesses out of projects."
****************************************************

I also think it's important to invest in local relationships between businesses and community in order to lessen any need for government involvement (making conservatives happy). Perhaps use something like the union/agency option I mentioned earlier as a way to foster closer bonds in the production-marketing-consumption cycle.

But anyways getting back to the OP, "Level the playing field" is likely just a simple expression of frustration that some may feel in the sluggish system. If we figure a way to get everyone (or at least most everyone) actively and progressively engaged in contributing to a fulfilling system (feeling empowered and challenged as one would expect as an entrepreneur), then I think much of the complaining would quiet down.

 

[ThomasT]

Will somebody please give a detailed answer of what you want when you ask for this ?

Yeah, I have no idea. If I get your drift, you don't either. I think what might be done to realize equality of opportunity has pretty much been done/realized.

Now, from my personal experience as an employer, of course we discriminated against certain groups. So what? That's the way the world works. We, all of us, discriminate. If the people that we discriminated against were to be put in positions of power, then they'd discriminate.

The 'playing field' changes, but it's never level, and it's never going to be. That's life, that's us.

MIght as well lock this thread, imho. All you're going to get wrt 'levelling the playing field' is some wishful thinking about how we human beings might behave if we weren't so, uh, selfish and self centered. Maybe there are some truly altruistic humans out there. I don't know. I've never dealt with one.

 

[Evo]

Yeah, I have no idea. If I get your drift, you don't either. I think what might be done to realize equality of opportunity has pretty much been done/realized.

Now, from my personal experience as an employer, of course we discriminated against certain groups. So what? That's the way the world works. We, all of us, discriminate. If the people that we discriminated against were to be put in positions of power, then they'd discriminate.

The 'playing field' changes, but it's never level, and it's never going to be. That's life, that's us.

MIght as well lock this thread, imho. All you're going to get wrt 'levelling the playing field' is some wishful thinking about how we human beings might behave if we weren't so, uh, selfish and self centered. Maybe there are some truly altruistic humans out there. I don't know. I've never dealt with one.

Couldn't agree with you more. I believe that oltz was trying to say that people that are for OWS keep saying that they want a "level playing field" but they can't explain what that would be or how it would be achieved.

 

[ThomasT]

I believe that oltz was trying to say that people that are for OWS keep saying that they want a "level playing field" but they can't explain what that would be or how it would be achieved.

Yeah, the people who are actually involved in the OWS encampments are, imho, generally a sorry lot, though there are some sincere and knowledgeable people involved. I'm for the demonstrations only insofar as they might focus attention on what seem to me to be basically underhanded dealings of the financial sector, structural problems related to those, and the inordinate importance and control that the financial sector has gained in the last decade or so -- which has, I think most would agree, been bad for the general economy and bad for the US, imo. OWS demonstrations by themselves won't change any of that.

If people actually want to change the status quo, then they have to stop voting for political candidates who represent it.

 

[BobG]

Frankly, I don't think anyone clearly described/defined the analogy and any useful discussion must start with such clarity:

The game is life and the goal is to live long and prosper.

To conservatives and as intended by the Constition (minus the now corrected racist and sexist caveats...), "a level playing field" is a set of rules that apply equally to all. In the Constitution, that's "equal protection" under the law.

Liberals take a broader view of what is encompassed by "the playing field" which often includes the results on the scoreboard (as shown by wealth inequality discussions). But to me the analogy gets strained by an improper definition of "the playing field", as also discussed previously in the difference between "equality of opportunity" and "equality of outcome". In essence, though, most liberals to one extreme or another, seek an improved level of equality on the scoreboard, not just an equality on the playing field. Or, rather, some presume that an equality on the playing field will result in an equality on the scoreboard.

Leveling the playing field is a sports analogy. You only have to look at how sports level the playing field to know what the analogy means.

The NFL & NBA have salary caps. Major league baseball imposes a tax on teams that have too high of a salary.

All 3 sports have a draft to select the best incoming players so even the teams with little money have a chance of acquiring the best players.

The NFL shares TV revenue equally among its teams so even small town teams, such as Green Bay, have a chance to win the Super Bowl.

League rules in all three sports are set to attain equality on the scoreboard to at least some extent, because equality on the scoreboard raises the level of revenue for all.

American sports are not at all like those capitalist British soccer leagues where not only are the weak left to fend for themselves, but the weakest of the week get demoted right out of the Premier league.

From your post, one wonders if conservatives have ever watched American sports.

 

[WhoWee]

Leveling the playing field is a sports analogy. You only have to look at how sports level the playing field to know what the analogy means.

The NFL & NBA have salary caps. Major league baseball imposes a tax on teams that have too high of a salary.

All 3 sports have a draft to select the best incoming players so even the teams with little money have a chance of acquiring the best players.

The NFL shares TV revenue equally among its teams so even small town teams, such as Green Bay, have a chance to win the Super Bowl.

League rules in all three sports are set to attain equality on the scoreboard to at least some extent, because equality on the scoreboard raises the level of revenue for all.

American sports are not at all like those capitalist British soccer leagues where not only are the weak left to fend for themselves, but the weakest of the week get demoted right out of the Premier league.

From your post, one wonders if conservatives have ever watched American sports.

The leveling you've described would require Wall Street firms to have an equal balance of talent - surely you're not suggesting the fans share in the profits - correct?

 

[russ_watters]

Well gee, Bob, there are a lot of different sports and different levels at which you can play, so I guess I hadn't considered that the analogy would be specifically referring to American professional sports. It would seem an odd choice for liberals, to me, considering all four leagues enjoy some level of anti-trust law exemption. I also think it makes application of the analogy difficult because in the professional sports based analogy (as you indicated), the purpose of playing the game is no longer to win/get a high score but rather to profit from the fans. So I think your focusing on the money at first glance appears to make the analogy more direct but in actuality makes it miss the point. Some specifics

-In the pro sports based analogy, who are the players, owners, and fans? The owners are the 1%, the players the 99%? I hope the fans aren't the 3rd world workers we are exploiting for our profits... In an amateur sports analogy, there are no owners or fans and everyone is involved in the game.

-The NFL's revenue sharing (stricter than the MLB's luxury tax) is credited with giving the NFL the most marketable product of all the pro sports leagues, thus enabling them to extract the maximum amount of revenue from their fans. To me, this use of the analogy better fits a price-fixing ring, such as how the airlines used to do it (hence, the sports leagues' anti-trust exemptions). The teams are the airlines, the NFL is the group of airline company execs setting up the price fixing and the NFLPA are the airline workers, trying to get their maximum share of the pie. And the fans are the passengers, screwed out of their money by illegal collusion...

...then again, perhaps the fans are the ordinary citizens, the players are the communist party members, the owners are the central committee members and the refs the KGB? :D

 

[WhoWee]

...then again, perhaps the fans are the ordinary citizens, the players are the communist party members, the owners are the central committee members and the refs the KGB? :D

 

[DoggerDan]

That is great news then and shows welfare support must work!

No. They're from the multi-generational welfare groups. They're not in them. They worked hard to get out of them. Most work for other companies. A few own their own businesses.

Yes, escaping poverty/disadvantage can be a strong spur in life.

It was for them, and me.

Just as being born to privilege can be demotivating too.

I can see that.

But peer-reviewed research rather than annecdote may be necessary to tell us which is actually the exception, and which the rule.

Might you have any links to such research?

Again, I agree that the opportunities are remarkably level in broad historic terms. But what I think OWS represents is people daring to question whether we are all playing the right game.

I believe there is responsible wealth creation and irresponsible wealth creation, and that a lot of what wall street is about is creating wealth any way possible, regardless of the costs to others or to society as a whole. In that sense, I think some changes in order.

Good luck getting them. Wall street's campaign contributions are huge.

"Work hard, get rewarded" may be the just the mantra of a particular society at a particular moment in history. The future mantra might be work smart, or work co-operatively. The rewards might be having a sustainable future rather than an uncertain one, living in society less divided into winners and losers, etc.

The number one problem I see here in the U.S. is both people and our government living well beyond their means. Had I lived like most of those with whom I worked over the years, I never would have been able to retire when I did.

 

[apeiron]

I believe there is responsible wealth creation and irresponsible wealth creation, and that a lot of what wall street is about is creating wealth any way possible, regardless of the costs to others or to society as a whole. In that sense, I think some changes in order. Good luck getting them. Wall street's campaign contributions are huge.

Agreed. Finance was meant to be the lubricant of the system of production, but has become predatory. There was always an element of this - read the history of Goldman Sachs - but due to a lack of suitable regulation, has become spectacularly uncontrolled.

The number one problem I see here in the U.S. is both people and our government living well beyond their means. Had I lived like most of those with whom I worked over the years, I never would have been able to retire when I did.

Agreed again. The problem is that being financially prudent leaves you feeling that you are likely to be the one now helping with the bailing out. Your savings earn next to nothing, and you are just waiting for governments to inflate away that debt any time soon.

People talk about leftist "levelling the playing fields", but there is the right's version too. Neoliberals like Thatcher made a virtue of home ownership, adjusting policy settings to increase it. Everyone should enjoy this "right". And so the lax lending and housing speculation took off, ending up in subprime.

Of course it is a more complex story. The smart growth policies adopted by many local authorities - voted for by baby boomers who already had their houses and now wanted to protect their neighbourhoods - created constraints on land supply, driving house prices to unsustainable multiples of annual income.

But left or right, the modern story is of a basic unreality when it comes to economics. Neither side wants to make the voter-unfriendly suggestion that the planet might need to live within its means.

So as I say, level playing fields are always a good principle, but are not really the issue here. The playing fields, so far as access to playing the neoliberal game, is indeed pretty level.

But that game has indeed changed in the lifetime of some of us. I share the old-fashioned ethic of work hard, be productive, get rewarded. And I really disliked the more recent game plan of "borrow large, invest speculatively, make out like a bandit (so long as you cash out before the bubble bursts".

This is predatory finance. The game was democratised so even the average joe could clamber aboard and get a McMansion on a ninja loan. On the face of it, a triumph of the neoliberal dream. But really, it was just getting a lot of suckers to take on ludicrous debt (disguised as an appreciating asset). Then selling this liability on to other suckers (Icelandic banks, pension funds, etc). And when it all goes phut, well the suckers get left with the hurt, to the extent they can't transfer it to the general public in terms of cut-backs, bail-outs, debt forgiveness. The Goldman Sachs get to walk away with the loot.

So yes, it is good to see scruffy, angry mobs camping on the front lawns of the institutions. They may be baffled as to what actually happened, and how things might be changed, but at least they are clear something wrong did happen.

Justice would seem to demand that the financially prudent (you and me!) should be properly rewarded, that our children should not have their futures already taken away from them (they may be whiney and entitled, but this neoliberal mess-up happened on our watch), and that the Goldman Sachs of this world feel some real pain (even though what they did of course was "completely legal" due to the wildly irresponsible lack of regulation).

 

[mheslep]

Whatever. Goldman Sachs down ~50% over ten years, or $50B of "loot" gone.
http://www.google.com/finance?hl=en...sb&biw=1280&bih=899&um=1&ie=UTF-8&sa=N&tab=we

 

[WhoWee]

Justice would seem to demand that the financially prudent (you and me!) should be properly rewarded, that our children should not have their futures already taken away from them (they may be whiney and entitled, but this neoliberal mess-up happened on our watch), and that the Goldman Sachs of this world feel some real pain (even though what they did of course was "completely legal" due to the wildly irresponsible lack of regulation).

The financial sector is highly regulated. However, people find ways to violate those rules. Case in point - the 8th(?) largest financial collapse in history is happening currently. MF Global - headed by former Democrat Governor John Corzine (President Obama campaigned for him against Chris Christie in 2010). my bold

http://www.foxnews.com/politics/201...ess-corzine-takes-steep-fall-after-mf-global/
"Now, critics, are saying Corzine brought that same level of risk to his management of MF Global -- a company that crashed in spectacular fashion last month after it disclosed a $6 billion exposure to Eurozone nations like Italy and Portugal.

The former Goldman Sachs CEO’s penchant for juggling finances was once considered an asset. During the tumultuous early months of the Obama administration -- as it faced the immensity of recession -- Vice President Joe Biden hailed Corzine as a wise financial sage. At a campaign stop in October 2009 in support of Corzine's gubernatorial re-election bid, Biden recalled that time and Corzine's counsel.
"I literally picked up the phone and called Jon Corzine and said, 'Jon, what do you think we should do?'"
Just two years later, as the country struggles with recovery, Corzine sits atop the wreckage of MF Global. Its demise is the subject of at least six investigations, including by the FBI and Commodities Futures Trading Commission.
In addition to its bankruptcy filing and lay-offs of more than 1,000 employees, MF Global has told investigative authorities that $600 million of customer money is missing. The shortfall was withheld from investigating authorities for five days -- an apparent violation of the law, according to the head of the Commodities Futures Trading Commission. "
*****

Aside from FOX and WSJ, there doesn't seem to be much coverage of this fiasco?


http://online.wsj.com/article/SB10001424052970204517204577044481154710176.html?mod=googlenews_wsj
"Regulators have unearthed new details indicating MF Global Holdings Ltd. shifted hundreds of millions of dollars in customer funds to its own brokerage accounts in the days before its bankruptcy filing, according to people familiar with the matter.

Such moves could violate regulations stipulating that commodities brokers can't mix customer funds with brokerage funds. Brokerage funds often are used to back proprietary trading positions."

************

Actually, Reuters and Huffington carried this story - made it sound as though the missing money would be returned - until you read the entire story and realize they still haven't found the missing funds but might return other money that didn't disappear?


http://www.huffingtonpost.com/2011/11/17/mf-global-layoffs-workers-customers_n_1099130.html

"MF Global May Return Money To Customers As It Lays Off More Workers"

"A bankruptcy judge on Thursday will consider a request by James Giddens, the trustee supervising the liquidation of the MF Global Inc broker-dealer unit, to release $520 million associated with 23,300 commodity customer accounts that contained only cash.

The amount represents 60 percent of the $869 million of cash that had been frozen, Giddens said in court papers.

Late on Wednesday, Giddens said if the transfer is allowed, distributions to nearly all of MF Global's roughly 38,000 customer account holders will be made "within three weeks" of MF Global's bankruptcy filing. That would mean November 21, based on the company's having sought court protection on October 31.

Commodities traders and exchanges have clamored for the release of the money. They contend that the freeze punished customers who amassed the cash by liquidating their trading positions prior to MF Global's bankruptcy.


Customers may still get a payout even as investigators continue their pursuit of about $600 million that has gone missing from customers' futures accounts at MF Global.

The Commodity Customer Coalition, a group of former MF Global customers, on Wednesday said Giddens should be distributing even more money, saying the trustee has access to more than $1.4 billion."
******

Where is the outrage in the press over this breach of trust? Where is the outrage over the lack of media attention? Where is the outrage amongst pro-Occupiers?

This did not happen because of a lack of rules - the rules are clear. This happened because people broke the rules - and stopped (by regulators) before the remaining $869 million was lost.

 

[apeiron]

Whatever. Goldman Sachs down ~50% over ten years, or $50B of "loot" gone.

Yeah, those executives are crying all the way to the bank aren't they?

Goldman Sachs has set aside $10 billion for compensation and bonuses this year, it announced on Oct. 19 -- the same day it reported a third-quarter loss of $428 million...The $10 billion figure is 24 percent less than the bonus pool at this time last year, but if the bonus pool actually fluctuated based on the company's profits, it would have decreased by 70 percent, because that's how much Goldman Sachs's profits have declined since 2010.

http://www.ibtimes.com/articles/235626/20111021/goldman-sachs-bonuses-executive-compensation-lloyd-blankfein-third-quarter.htm

And meanwhile OWS types keep getting the numbers wrong.

They made a big deal that the CEO earns in an hour what a minimum wage worker earns in a year. What fools. It takes Blankfein at least two hours to earn that!

http://www.politifact.com/rhode-isl...-providence-protester-says-goldman-sachs-ceo/

 

[WhoWee]

Good news - Goldman is hiring.
http://www2.goldmansachs.com/a/data/jobs/search.html

 

[apeiron]

The financial sector is highly regulated. However, people find ways to violate those rules.

So, over-the-counter derivatives, rating agencies, mortgage brokers, non-bank lenders, hedge funds - these are all "highly regulated" aspects of the financial sector in hindsight?

And if people find it easy/rewarding to break what rules there are, does "highly regulated" mean anything in practice? Regulation = rules + enforcement.

 

[WhoWee]

So, over-the-counter derivatives, rating agencies, mortgage brokers, non-bank lenders, hedge funds - these are all "highly regulated" aspects of the financial sector in hindsight?

And if people find it easy/rewarding to break what rules there are, does "highly regulated" mean anything in practice? Regulation = rules + enforcement.

In reference to my link:
"In addition to its bankruptcy filing and lay-offs of more than 1,000 employees, MF Global has told investigative authorities that $600 million of customer money is missing. The shortfall was withheld from investigating authorities for five days -- an apparent violation of the law, according to the head of the Commodities Futures Trading Commission."

Former Democrat Senator and New Jersey Governor (and close Obama/Biden associate) John Corzine's company MF Global ran afoul of regulators for 5 days before they were shut down. It seems 60% of the investor funds were saved by regulators.

 

[Evo]

We've gotten off topic.

 

[ginru]

I tend to go off topic myself as I always see interconnected issues between different threads and then rant about comprehensive solutions to all of them.

Anyways, this is quoted from a http://www.youtube.com/watch?v=kWgkr7aCgIk":
"It's time to level the playing field, and begin treating working Americans as partners again, rather than rented mules."

From this sentence (and putting aside the government's role), I'd gather that the OWS frustration is somewhat connected to a breakdown in working relationships between community and business. Granted, this is a two-way street so the betrayal can be seen on both ends. For example, Consumers can sell out local trust with small business by switching to megastores (Wal-mart), but likewise businesses have opted for profit over community by using cheap overseas labor.

Either way, we're all just serving our bottom lines and I feel there are repercussions for recklessly following that path. This frustration may get expressed or interpreted as anti-capitalism/anti-corporations but I think the issue goes deeper than that.

I also want to add the explanation of "level playing field" from http://en.wikipedia.org/wiki/Level_playing_field" :
************************************************
"A level playing field is a concept about fairness, not that each player has an equal chance to succeed, but that they all play by the same set of rules. A metaphorical playing field is said to be level if no external interference affects the ability of the players to compete fairly. Although some may view "government interference" to slant the field in reality the level playing field is created and guaranteed by the implementation of rules and regulations."
**************************************************

I'm reminded of the last World Cup of Soccer in which an African team (Ghana) had the chance to progress to the Semifinal for the first time, but a player on the Uruguay team handled the ball off the line to prevent a sure goal. Proper procedures were taken, he was expelled and a penalty kick was given but Ghana missed it and then lost on the following shootout.

Now granted, the ref followed procedures by the book, but the final result still left many people bitterly feeling like the thief had been caught, punished, and STILL got away with the goods. And this is a pervasive issue that goes beyond a particular sport where diving and bending the rules to gain advantage is rampant because of the same justification used by ThomasT earlier (Everybody Does It). It's brutal Competition, of course, but then there's also Cooperation needed to ensure that people feel the game is worthy of participation. Public confidence in a system is critical as we all suffer if people start opting for extreme alternatives.

Personally, part of me accepts that the field is marked with holes, bumps and dips aplenty as the cold reality of life but then another part wants to encourage the younger generation in not accepting our cynicism as an excuse.

 

[Oltz]

therefore I favor ideas that encourage balance in both individual and collective economic relationships.

Such As?

 

[ginru]

Such As?

Ahh, you quoted me before I deleted that part as I knew I wouldn't have time to explain this all thoroughly (I'm behind schedule on a few things). Besides, I'd just be rambling through a mix of crazy ideas from a half dozen threads that nobody's really interested in rehashing now so let's just forget it.

 

[Diracula]

Such As?

Personally I like the idea of a "National Dividend", with some modifications. The basic idea is presented about halfway down this page:

http://www.whywork.org/rethinking/whywork/rawilson.html

 

[WhoWee]

Personally I like the idea of a "National Dividend", with some modifications. The basic idea is presented about halfway down this page:

http://www.whywork.org/rethinking/whywork/rawilson.html

The National Debt just passed the $15,000,000,000,000 mark - are you prepared to share this obligation?

 

[Diracula]

Don't we pretty much have to anyway?

 

[WhoWee]

Don't we pretty much have to anyway?

Given a $15 Trillion debt - sustained with $.40 of every $1.00 spent in additional borrowings - why would anyone expect a "dividend" (we're bankrupt - the credit line just hasn't been shut off).

 

[Diracula]

Are you suggesting the government has stopped spending money because of its debt?

(Just a thought: we may need a restructuring of government and a reallocation of resources given the situation we are in. I'm not suggesting implementing a National Dividend would be a magical switch we could flip to fix our problems by tomorrow.)

 

[WhoWee]

Are you suggesting the government has stopped spending money because of its debt?

(Just a thought: we may need a restructuring of government and a reallocation of resources given the situation we are in. I'm not suggesting implementing a National Dividend would be a magical switch we could flip to fix our problems by tomorrow.)

Perhaps the US should cut spending by 40% and allow the people receiving benefits to sign personally for the cash borrowed from China - eliminate the US as middleman on the debt?

Here's a link for anyone interested in setting up a personal line of credit with the bank of China.
http://www.boc.cn/en/

The offer quite a few different options.
http://www.boc.cn/en/bcservice/bc1/For VIP's:
http://www.boc.cn/en/pbservice/pb2/200806/t20080625_1324002.html

 

[ThomasT]

So, over-the-counter derivatives, rating agencies, mortgage brokers, non-bank lenders, hedge funds - these are all "highly regulated" aspects of the financial sector in hindsight?

And if people find it easy/rewarding to break what rules there are, does "highly regulated" mean anything in practice? Regulation = rules + enforcement.

Good points, imho. Wrt the thread topic, it seems that 'levelling the playing field' would entail sufficient regulation/oversight and enforcement to prevent the sorts of atrocities that financial institutions have visited upon us.

 

[WhoWee]

Good points, imho. Wrt the thread topic, it seems that 'levelling the playing field' would entail sufficient regulation/oversight and enforcement to prevent the sorts of atrocities that financial institutions have visited upon us.

Actually, none of those points were supported (we'll excuse the derivates from the list) and the meaning of "highly regulated" was never clarified.

As for "the sorts of atrocities that financial institutions have visited upon us" - perhaps you'd like to clarify a bit?

 

[ThomasT]

Actually, none of those points were supported (we'll excuse the derivates from the list) and the meaning of "highly regulated" was never clarified.

Good points, imho.

As for "the sorts of atrocities that financial institutions have visited upon us" - perhaps you'd like to clarify a bit?

Isn't it common/accepted knowledge that financial institutions caused, more or less, the economic crash? Money was lent, eg., to buy homes, to people who likely would not be able to keep up with payments, especially increased payments. Then those loans were bundled in a way that made them extremely difficult to sort out. Then those bundles were sold in derivatives markets, and knowledgeable insiders bet against them ... making billions of dollars in the process ... while the general economy, the housing market, and tens of millions of ordinary people were affected adversely.

Yes, government 'pressure' on lenders to lend, and breaks for unqualified buyers to buy, had a lot to do with it. But, why did the government do that? My guess is pressure (incentives) from the financial lobby.

Many financial institutions weren't just overleveraged, they were absurdly overleveraged -- and this is something that sufficient regulation and enforcement could have prevented.

So, a small percentage of people got a lot richer, while the rest of the country suffered the consequences of the actions of that small percentage who got a lot richer.

But, yeah, you can chalk some of it (a lot of it ... most of it?) up to the greed of average folks also. We all seem to be alike in that regard, whether rich or poor. Hence, the need for tight(er) governmental regulation and enforcement regarding financial wheeling and dealing, IMHO.

Of course, it could be argued that there would have been an economic downturn anyway (albeit perhaps not so abrupt, and not requiring trillions of dollars to bail out financial institutions). That is, if people who can't afford (or be trusted) to pay back relatively large loans (most Americans, I suspect) like home mortgages weren't extended this credit in the first place, then there wouldn't have been an inevitably bursting bubble for some in the financial industry to take undue advantage of, but there would still remain the inevitable steady decrease in the buying power of most Americans -- which results in downsizing and layoffs, and in turn less buying, and more downsizing and more layoffs, and so on, and there doesn't seem to be any way to reverse that sort of downward spiral.

 

[WhoWee]

Good points, imho.

Isn't it common/accepted knowledge that financial institutions caused, more or less, the economic crash? Money was lent, eg., to buy homes, to people who likely would not be able to keep up with payments, especially increased payments. Then those loans were bundled in a way that made them extremely difficult to sort out. Then those bundles were sold in derivatives markets, and knowledgeable insiders bet against them ... making billions of dollars in the process ... while the general economy, the housing market, and tens of millions of ordinary people were affected adversely.

Yes, government 'pressure' on lenders to lend, and breaks for unqualified buyers to buy, had a lot to do with it. But, why did the government do that? My guess is pressure (incentives) from the financial lobby.

Many financial institutions weren't just overleveraged, they were absurdly overleveraged -- and this is something that sufficient regulation and enforcement could have prevented.

So, a small percentage of people got a lot richer, while the rest of the country suffered the consequences of the actions of that small percentage who got a lot richer.

But, yeah, you can chalk some of it (a lot of it ... most of it?) up to the greed of average folks also. We all seem to be alike in that regard, whether rich or poor. Hence, the need for tight(er) governmental regulation and enforcement regarding financial wheeling and dealing, IMHO.

Of course, it could be argued that there would have been an economic downturn anyway (albeit perhaps not so abrupt, and not requiring trillions of dollars to bail out financial institutions). That is, if people who can't afford (or be trusted) to pay back relatively large loans (most Americans, I suspect) like home mortgages weren't extended this credit in the first place, then there wouldn't have been an inevitably bursting bubble for some in the financial industry to take undue advantage of, but there would still remain the inevitable steady decrease in the buying power of most Americans -- which results in downsizing and layoffs, and in turn less buying, and more downsizing and more layoffs, and so on, and there doesn't seem to be any way to reverse that sort of downward spiral.

My bold No, it's not that simple. Much of the financial crisis was (and is) rooted in Europe. We've discussed the amount of money that was routed to European institutions in other threads.

As for the housing market. When people were signing for no-doc and $0 down loans - as much as the bank would lend - with the hopes of buying a house they couldn't afford with the expectation of appreciation - was the bank the "good guy" if they said "no" - or was the bank the "bad guy" trying to keep the poor person down?

As for the bundling and resale of mortgages - we didn't learn anything from the S&L crisis a decade earlier (and neither did Congress) - IMO.

 

[apeiron]

As for the housing market. When people were signing for no-doc and $0 down loans - as much as the bank would lend - with the hopes of buying a house they couldn't afford with the expectation of appreciation - was the bank the "good guy" if they said "no" - or was the bank the "bad guy" trying to keep the poor person down?

Apparently they were highly regulated, so the dilemma could not occur.

There were liquidity ratios set by Basel, etc, that "tightly controlled" on balance sheet lending. Of course banks could not just make dumb loans according to whether they were feeling generous or mean that week.

But, whoops, then there was the off balance sheet derivative casino where - with a mixture of moral corruption and incompetence - the ratings agencies, mortagage brokers, investment banks, could allow the banks to freely write any stinker loan they wanted (ie: any loan that paid their bonus that year).

Do people still not understand what the credit crunch was all about?

People were persuaded to bid up the cost of their housing far beyond economic sense. They bought mortgage debt believing it to be a gold-plated asset. And the intermediaries made out like bandits in this fools' game. The public have been left covering the losses. The intermediaries - unless they were particularly dumb as well - are retired to nice places with their loot.

The fact that the victims include some hick European banks (as well as many other financial institutions in many other countries) just shows how incompetent they were, and how opaque/unregulated the derivative scams were.

 

[WhoWee]

But, whoops, then there was the off balance sheet derivative casino where - with a mixture of moral corruption and incompetence - the ratings agencies, mortagage brokers, investment banks, could allow the banks to freely write any stinker loan they wanted (ie: any loan that paid their bonus that year).

Do people still not understand what the credit crunch was all about?

People were persuaded to bid up the cost of their housing far beyond economic sense. They bought mortgage debt believing it to be a gold-plated asset. And the intermediaries made out like bandits in this fools' game. The public have been left covering the losses. The intermediaries - unless they were particularly dumb as well - are retired to nice places with their loot.

The fact that the victims include some hick European banks (as well as many other financial institutions in many other countries) just shows how incompetent they were, and how opaque/unregulated the derivative scams were.

Why don't you support your comments?