Comments on: Newsflash, Sebastian Mallaby: The Economic Village Is Burning

By: selise

selise — Fri, 26 Sep 2008 15:07:52 +0000

then my thanks to mr. reddhedd too. but you don’t have to be the expert on everything…. just giving us a place to discuss an op-ed like here and/or current events is great and much appreciated.

By: STTPinOhio

STTPinOhio — Fri, 26 Sep 2008 14:54:59 +0000

As usual, late to the party, but this guy is a good one.

Another one of those economic ‘deep thinkers’ that has all the answers but has never had a real job in finance.

Sorta like the Nobel prize winning economic a-holes whose ‘theories’ almost caused meltdown in the late nineties.

Hedge funds are the next disaster in waiting. They are blatantly manipulating markets to the downside and causing ‘regular’ investing to be put on hold.

Just like you put swimming on hold if you see sharks in the water.

By: jonerik

jonerik — Fri, 26 Sep 2008 14:52:59 +0000

I meant to ad that in the past, I think now the long dad past, government regulations used to be based on government studies of the industry to learn about the problems. That is, Congress or the Federal Trade Commission (formerly the Corporation Commission) would study a problem, find out things were working or not, and then pass laws, create agencies or commissions, which would pass regulations designed to ameliorate the problem. Think Ferdinand Pecora, the feisty layer from NYC, who cross examined the Wall Street Bigshots in Congressional hearings the 1930’s and got the evidence that set the groundwork for the Securities Act and the Securities and Exchange Act. The FTC studied the public utility industry for 10 years and its reports cover 80 volumes. That was even before the Senate and the House had their own committees do their own investigations and then came the Public Utility Holding Company Act of 1935. The New Deal was based on information and the pealing back of the secrecy and ignorance which had previously ruled and ruined the markets in 1929. No laws could be made in such a climate in a modern industrial economy. As Holmes said, “the life of the common law is experience.”

By: hackworth

hackworth — Fri, 26 Sep 2008 14:45:22 +0000

Constituents are raising hell. We don’t want the bailout. Dems wish to run out the clock. Repubs want to:
1. stand opposed (vote no) for the sake of their blue collar constituents.
2. make a new plan that will be perceived to benefit constituents - reduction of capital gains taxes.
3. give their candidate McCain credit for designing a plan.

Dems don’t want to make a plan. It will get shot down no matter its merits.
They don’t want the responsiblity of fixing the Republicans mess and getting tarred with it when it fails.

There has been no creative thinking on the part of the dems. Franks and Dodd jumped right in to tackle the project as it was presented. No thinking outside the box. This is how dems get screwed.

By: demi

demi — Fri, 26 Sep 2008 14:44:42 +0000

Rainstorms are such a wonderful excuse for a mother/daughter indoor escape from the world.
I’m going down the hill to visit my mom this morning. Taking her some of the stew I slow-cookered yesterday.
Maybe I’ll bake some cookies this afternoon too.
Take care.

By: Christy Hardin Smith

Christy Hardin Smith — Fri, 26 Sep 2008 14:38:13 +0000

Thanks, you too! It looks increasingly like we are going to have a humongous rainstorm here, judging by the dark, ominous clouds piling up outside. But The Peanut only has a half day of kindergarten, so I’m sensing a popcorn-filled movie bonanza for the two of us this afternoon, punctuated by bouts of coloring and some cookie baking, if she gets her way. *g*

By: demi

demi — Fri, 26 Sep 2008 14:34:01 +0000

If I don’t see you later, I hope you have a happy, satisfying beautiful autumn day.

By: STTPinOhio

STTPinOhio — Fri, 26 Sep 2008 14:33:02 +0000

Rather than seeing hedge funds as sources of dangerous financial fires, in fact, it is more accurate to see them as the financial system’s benevolent fire fighters — and to let them have the tools they need to do their jobs well.

Now that’s a steaming pile of crap if I’ve ever seen (or read) one.

There are many villains in this mess, but hedge funds are front and center.

From $4/gal oil to short selling the investment banks out of existence, their unchecked greed is a root cause of our problems.

Because of their size and use of leverage, they can gang up and short sell almost any company (that is, any company not formerly run by Paulson) out of existence.

If it wasn’t all so painful, it would be funny; the investment banks enabled the hedge funds to become gigantic by extending them leverage, then the hedge funds turned around and ate them.

By: BooRadley

BooRadley — Fri, 26 Sep 2008 14:31:49 +0000

FWIW, iirc, Bernanke testified that the FED estimated that $700 billion was 5% of the total.

By: diablesseblu

diablesseblu — Fri, 26 Sep 2008 14:31:33 +0000

Exactly. And it’s come to light over recent ,months that some of the internal risk management controls at the more succesful investment banks were “compromised” for the sake of profits.

Being regulated, whether by internal controls or oversight, just depends on the integrity of the players.