Re: Don't You Wish?
- From: "Uncle_vito" <uncle_vito2002@xxxxxxxxx>
- Date: Sat, 31 Jan 2009 12:58:20 -0800
I just got back from a board meeting at my orange groves and packing houses.
We made $2M last year and will be taxed on half that due to depreciation.
Unfortutely we voted to freeze emplyees pay for this year but the min wage
employees got a very nice raise when that rate went up 1 year ago.
Start a business and use the stock market for 'spare change'. This market
is worse than a crap table in Vegas.
V earnings are out on Feb 4. Should be a blow out. Folks are swiping like
crazy. V doesn't lend money so doesn't care if the credit charges get paid
back or not.
Vito
"Don Tiberone" <s_knight8@xxxxxxxxxxx> wrote in message
news:93b18d37-0dff-401b-8563-fcf117a02c07@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
http://www.financialsense.com/fsu/editorials/harding/2009/0130.html
Don't You Wish?
by Sy Harding, StreetSmartReport.com | January 30, 2009
Dont you wish we didnt have to bail out the banks? I dont know
anyone who thinks that either the institutions or their executives
deserve it.
It might be different if it was the first time their incredible greed
got them and the country in so much trouble that it was necessary for
tax-payers to bail them out.
It might be different if they had learned from past mistakes and had
embraced their responsibility to be prudent with other peoples money,
instead of returning as quickly as possible to embracing unfettered
greed.
It might be different if they were taking the current massive bailout
funds in the spirit in which they are being provided, to try to
salvage the economy, instead of looking at it as a windfall, a source
for big parties (a la AIG), huge personal bonuses, million dollar
redecorations of their executive offices, even the purchase of a new
$40 million dollar corporate jet.
But anyone who has been around for any length of time probably agrees
with what John Adams was already saying way back in 1799, Banks have
done more injury to the morality, prosperity, and wealth of the nation
than they will ever do good.
As I wrote in my 1999 book Riding the Bear How to Prosper in the
Coming Bear Market, The banking industry has an appalling record of
allowing excess greed to overwhelm its judgment, with the government
periodically having to step in with taxpayer dollars to prevent a
complete collapse of the banking system. In the 1970s it was their
high-interest loans to struggling 3rd world-countries, countries which
could not afford to pay the interest let alone pay the loans back.
Banks made the loans on the theory that the world was not going to
allow countries to go bankrupt. They finally had to write-off their
bad loans, and when the extent of those loans was revealed, billions
of dollars of taxpayer-backed Brady bonds had to be issued to cover
the loans and bail the banks out. In the 1980s it was junk bond
financing and careless real estate loans that resulted in the collapse
of more than 900 Savings & Loan banks, the so-called S&L scandals,
with the bailout costing taxpayers billions of dollars. In the early
1990s similar greed and reckless loans to real estate developers,
takeover firms and other speculators as the economy approached the
1991 recession, resulted in the failure of hundreds of banks. Hundreds
more had to be bailed out and restructured by the FDIC, in a very
close call to the banking system.
Did the banks learn anything?
Oh yes. They learned they could probably get away with anything,
because they had obviously become too big and too important to be
allowed to fail.
But they didnt learn to curb their greed. On the contrary, they
immediately began lobbying in the 1990s to have laws changed so they
could offer brokerage and mutual fund services in addition to banking
services, and so they could operate trading departments of their own.
They wanted to participate in the rip-roaring stock market of the
1990s in the worst way. And thats exactly how they participated, in
the worst way.
Among other activities they began packaging their mortgage, auto, and
commercial loans into debt-backed securities that they sold off to
institutions, hedge funds, and investors. Thinking they were thus
pushing the risk off on others they brought in millions of new
borrowers, by offering creatively financed mortgages to home-buyers
who had no chance of handling the loans once initial teaser rates were
adjusted to real rates. Thus did they do more than their share to
create the housing bubble which has spawned all the problems since.
Meanwhile, in a brilliant move, they began putting the toxic waste
they had created back on their own books by accepting it as collateral
for still more loans to hedge funds and other speculators.
In the current bank crisis they apparently dont feel the need to even
pretend they have learned a lesson and intend to mend their ways. Such
is their arrogance with the bonuses and spending on lavish perks.
So once again theyve done it, and as much as wed all like to exact
revenge, to see them personally in the depths of despair they have
forced on so many, their institutions cannot be allowed to fail.
The only way I can stomach it is to realize that failure of the
banking system, and therefore the economy, would bring far worse
repercussions for the country and those who can least afford it than
it would for high level bank executives (who, in order to maintain
their lifestyles, would merely be forced to spend some of the fortunes
they had already accumulated).
In the early 1990s dozens of S&L executives, junk-bond kings of the
investment banks, and their friends caught in illegal insider trading,
wound up in court and served prison sentences. Im not an attorney,
but it is my laymans opinion that the deliberate misleading of home-
buyers for the profit of lenders at least skated around the edge of
being a scam. And that lobbying for billions in bailout money to
rescue the banking system and allow banks to make loans again, and
then locking it up in their vaults and using it to buy out
competitors, throw corporate parties, and pay themselves huge bonuses,
comes as close to the definition of theft as I can imagine.
Rescuing the economy has to be at the top of all priorities. So
everyone is going to have to hold their noses and continue the bailout
efforts. But at some time in the future, when such activities wouldnt
further depress consumer and investor confidence, Id love to see more
than a few people have to answer for their activities in the courts.
.
- References:
- Don't You Wish?
- From: Don Tiberone
- Don't You Wish?
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