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The Government is Patching the Barn Door Instead of Catching the Escaped Horses
If all of the horses are already out of the
barn, fussing about how to patch the door to fill in a few cracks isn't
really very helpful.
You have to go out and round up the escaped horses. Then - once you catch them - you can think about how to improve the barn.
The same is true with the economy.
The
too big to fails are - by their very size and the moral hazard created
by the government's actions - drawing the American economy down into a
black hole.
The TBTFs - by their very size - are so powerful that they are making the playing field uneven and warping democracy.
By allowing the TBTFs - even after all of their fraud
and recklessness - to profit through taxpayer bailouts, various
guarantees, incentives and other perks, the government is encouraging
them to loot the economy again in the future.
Letting
them get so big and powerful was letting the horse out of the barn.
Allowing them to stay gigantic is letting the escaped horses go free
while arguing over small cracks in the barn.
Similarly, failing to claw back the secret bailouts through AIG and other channels to American and foreign banks - see this, this, this, this, this and this - is also letting the runaway horses get away.
Indeed, as derivatives and other financial experts will tell you, the government's proposals do not even effectively fix the cracks, let alone close the barn door, let alone catch the escaped horses.
For a short example of the patching-the-barn-door-approach, read this short report from McClatchy on Barney Frank's overall game plan.
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Now the FHA is going to rent back foreclosed houses to the foreclosed owner. This coupled with California's new Gideon law (everyone is entitled to an attorney in major life shaking event) you could conceivably stay in a house without paying a dime for over 3 years. If you saved the mortgage and rent payments you could give em the finger and walk with over $65,000 cash. Slums of Rio will have nothing on us baby.
Ah, another brick becomes visable.
Now FHA can remove these homes from their foreclosed rolls (you know they will), and even if the "tenant" doesn't pay rent it will show as an improvement in both balance sheet and foreclosed homes. Farkin' brilliant don't you think?
Added bonus: the "tenant" can trash the house removing any "improvements" that he "paid for" (we know he charged it)
Good luck to us all when this crashes and burns.
Is there a practical difference to our societies between an implosion of a quadrillion dollar derivative market now vs a 10 quadrillion dollar derivative market later? Hasn't even the illusion of government control been lost already? Do our governments even have a choice but to kick the can down the road regarding TBTF? Do national governments have enough taxing authority to handle such an implosion. Now or later, won't a supra-national "government" be formed to deal with the aftermath? You want that now or later?
This government roped the horses into the stalls and closed the barn doors long ago. You're the horse.
good analogy.......you left out the last step:
They set the barn on fire......saves on feed, electric and water bills.....not to mention the insuranance collection........we could go a long way with this analogy.
If Rome is going to burn - they could at least legalize the 'weed'
[Oakland, California 2011 , a.k.a. "Oaksterdam"]
customer: "Give me a dimebag of Panama Red"
clerk: "Well, could I interest you in some Sonoma Valley Red Sinsemilla? It's only a few dollars more."
customer: "Ok, sounds good"
clerk: "We also have a special- 2 for 1 on Doritos. And for $7.99 you have your choice of either Pink Floyd's "Dark Side of the Moon" or Led Zeppelin's "Physical Graffitti" "
Synopsis: That's an upsell and a couple of cross-sells. With this, states like California could easily emerge from their economic black hole
And other excellent cross sells are the Barry-in-'12 roach clip, Terminator xtra wide rolling paper and various styles of Bernanke Bongs. The possibilities are truly endless.
Sooner or later people will come to the realization that the government has no interest in fixing the obvious problems. Expect nothing but lip service. The inaction is only irrational if you assume they actually want to the horses back in the barn. While I'm no conspiracy theorist, I appreciate the efforts to develop new explanations. The working theory that governments are there to serve the best interest of the voters is obviously flawed. TARP solidified that one. Abandon that fairy tale and let's develop one that is more aligned with reality. Why would politicians want to screw the people who voted them in? hmmmm...
I'm of the give them enough rope school. This is not over.
Woah that last post sheds too much hope on the situation. You should really try decaf.
Ill bet he's a terror on the freeway to that 9-5 green shoot where he works,
Yes.Such reckless optimism is never helpful.
no one is fiddling while rome burns...the
totalitarian emmissaries of satan's rockefeller /
rothschild cabal are lighting fires with blow
torches and nanothermite....
americans are too stupid to know it and that
wouldn't be the first time....a nation full of
boobs standing by as someone comes into their
homes to steal the furniture, tear down the house,
and empty the safety deposit boxes because they
think that someone is coming to help them....
sorry chump, the joke is on you and the oligarchs
are laughing all the way to the bank and off to
asia to set up shop....
amerika's only purpose is to supply military
power for world conquest.....
keep dancing with the stars, feel good with
cnbc anchors, and pretend those green shoots are
growing....and don't forget your hopium injection....
By allowing the TBTFs - even after all of their fraud and recklessness - to profit through taxpayer bailouts, and various guarantees, incentives and other perks, the government is encouraging them to loot the economy again in the future."
But, GW, is this not why TBTF pay US$ 6.5 Billion each year to Congress? To look the other way.
Thank you, Anon.
One more time; this nonsense would not be happening without the Feds okay. The Feds don't wan't to fix anything. The Feds don't want to investigate anything. The Feds only bailed out themselves.
I was just channel surfing and while passin CNBS the headine under Larry Kudlow was
"Insider trading, is it good for the markets?"
You know I would be happy if I was down that rabbit hole with the receivers of all this wealth but I rather just have a blanket party with all of them.
Whats a blanket party you ask? Thats where you throw a blanket over them and take turns kicking and beating the shit out of them ...The guy under that blanket gets to judge who the winner is.
I somehow feel that's whats happening to me not them though.