The market, however, isn't the car, but the game itself. And the game failed to keep the car safe. We can argue about whether it was airbags, good directions or a lack of wings that was at the heart of it, but I think it's safe to say that the market - the game itself - didn't do much good when things went splat.

A better market would have done a better job of looking after long-term growth. This might or might not require more regulation.

If you go to a bank and get a loan to start a business, the business fails, and you go back to the bank for more money, they have every right to say 'ok we'll give you the money, but only if you let someone else run the business'.

What's done is done, there's nothing that can be done to change that - the bailout happened, and can't be reversed. However what can happen is that the government can still at least do some things better, such as forcing out the incompetant management if they ask for more money. Still not as good as just saying no to giving more money, but a lot better than giving them money for nothing. The arguments lately on these forums have been attacking the government for this though - with the implication that it would be better for the government to hand over the money with no strings attached than to give the money in return for new management.

It may be that some of those people wouldn't support the bail out in the first place, but the arguments that have been put forward have been focused against the government using it's position of power to force out the execs.

Blaming capitalism/the markets (in part) is what should happen, because they have failed. There's no getting around the fact that numerous companies operating under a profit maximising self-regulatory regime have failed spectacularly. Shareholders allowed the execs and other staff to have their rewards weighted in such a way as to encourage excessive risk taking, leading to the company pursuing loss-making activities because it was in the management's best interest.

there WAS regulation, the affordable housing program had to REMOVE that regulation.

You are just tossing liberal slogans without any substance.

And what was the 'raw material' of this 'unregulated' industry?  High-risk mortgages banks were required to write.

The law of unintended consequences is immutable.

I'm glad you have those doubts - they are extraordinarily well-founded.  I'm very puzzled by that last statement, however, which seems to imply that reality should be suspended because elected officials are involved.  Well... on second thought, guess that goes without saying.  What do they know of reality?

If it hadn't been real estate I think it would have a derivative or loan package of some other form. Unsecured debt is a really, really bad thing to be trading around, and banks didn't have to do it. They chose to offer incentive-backed loans. They should have had more sense.

Unless of course you're saying that giving no-doc loans to everyone were legislatively required as part of revisions to the banking code. I hadn't heard that, so if that's the case, then you're right - you guys really need to vote more wisely.

What I mean is that if the people as a bloc own something, their elected representatives have a right to meddle with it. Whether they should or not is irrelevant. Public property is held in trust and cared for by the legislature.

I just happen to think CEOs are fair game for sacking if their performance is as woeful as in Detroit, and if the other shareholders won't do it, and the Government can harnass the votes, it has a responsibility to decide and act in the company's best interest just like any other share or equity holder.

The loans were backed by the government in the form of Fannie mae and Freddie mac. The banks had to make the loans and Fannie and Freddie would buy the loans from the banks. The problem was that there was too much bad debt going into Fannie and Freddie so the banks were stuck with some of the bad debt. People started to ask why Fannie and Freddie were not picking up the loans as they were supposed to and the cover up began.

The law states that the banks have to make a certain percentage of their loan money available to the poor so they can own a home. The banks required 20% of your own money in down payment. Poor people could not do that and the Congress said they had to make the loans available. The only way to do that is to lower the interest rate for a time and if you are responsible you will save your money and by the time the interest rates start to go up you are ready to deal with it. Well most poor people are ignorant of finance. Even though it states in big bold letters on the loan package that they need to reduce all their debt to just their home and car payments within the first three years so they can afford the rate hike they did not do this. Now they are going to lose their homes and it is the banks fault. Had the Congress not insisted that banks make a percentage of their loans for people that could not pay them we would not be in this fix. The banks had a choice no doc loans or go out of business. Had the Congress backed the bad debt as they said they would do in the law then we would not be in this fix. Instead they did nothing and allowed it to break the banks financial backs. Then turned around and blamed the banks for predatory lending. Well how else do you get your percentage up to Congressional percentages levels? If you are smart you don’t buy a house you can’t afford. If the poor people were smart the banks would not meet the percentages and get shut down for discriminatory practices.

This is what happens when you let ideology right business laws. The laws as written over thirty years told the banks to do what every business person knew was bad business. If you want to stay in business you have to risk your business, the Congress demanded that the banks take on more risk than was prudent. The congress then faulted the banks for bad business decisions but it was the Congress that forced this to happen.

At least you got that part correct.  It was socially engineered & manipulated capitalism (i.e., socialism) that failed to foresee the risk.  The banks all knew it was a game of 'hot potato' but, if they wanted to continue operating as banks, those were the rules.

I can't blame them in the least for offloading high-risk loans when Fannie & Freddie were not just willing but obligated buyers.  That there was 'collateral damage' (if you want to call it that) in European banks doesn't change the underlying defect - a misguided (however well-intentioned) attempt at social engineering at the expense of sound risk-management, compounded by what may turn out to have been outright fraud at Fannie & Freddie.

http://www.youtube.com/watch?v=EdD1gsa8XPY&eurl=http://iusbvision.wordpress.com/&feature=player_embedded

perish the thought, a person holding more than one job through his lifetime? learning more than one field? just holding any job instead of just living off of welfare? what has the world been coming to!

Wow, you really do take things too seriously. It wasn't a challenge, just a query!

Companies operating supposedly with a self-regulating profit maximising role actually operating in a way that not only isn't profit maximising, but will likely lead to the destruction of that company. As for European banks, they've too taken on near worthless assets and destroyed their value in many cases, just as US ones have. Last I checked the US didn't have the power to dictate how a bank based in and operating in another country is run.

The only imaginary world is one where you somehow believe it's not any of the banks fault, but all down to government "socialists".

Why don't you step out of this imaginary world and check out the laws passed by our Congress since the Carter administration. it was done little by little till it came to a head. the same was done to the banks in the 80's. Congress told the S&L's that they could lend 20% of their assets so they could compete with banks. Then suddenly in the 80's while Mr. Reagan was in office they changed the law saying that the S&L's could only lend up to 10% of thier assets. Then to be helpful they ordered that any S&L that was not in compliance within 12 months would be taken over by any bank with the money to bring them into compliance. The S&L's were forced to foreclose on homes in order to stay in business. when the S&L's that could not do this fast enough the Congress (liberal democrats that wrote both laws) screamed about the greed of american business.

The Community Re-investment Act was the final nail in the banks coffen. It orders the banks to make a percentage of loans to low income people and if they did not comply they would be investigated for discrimination. If found guilty they would have to pay a huge fine for each occurance and have the bank taken over by federal regulators just like the S&L's were 20 years ago. So they made the loans they knew people could not pay back, with the hopes that the Congress would actually do what they promissed, to back the loans with federal dollars. When the banks said hey you need to help us here. The Congress said you bankers are greedy and took advantage of poor people, you should be shut down for predatory lending practices. That my friend is the REAL WORLD.

This is true but remember the repackaged loans in America were supposed to be backed by the full faith and credit of the Government. This made the loans very attractive to Europe and Asia. By the way part of the TARP money went to Europe to satisfy those bad loans. That was part of the money wasted by AIG that the Congress was bitching about.

Now do you see how the banks were not self regulated? They could not and can not make a profit as long as we have a Congress that writes stupid laws regulating businesses they have no clue as to the workings. Each time the liberals try to make life easier for people they hurt millions and blame everyone but themselves.