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Old 03-23-2010, 11:18 AM   #21
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Looks like you have already pre-assigned the blame if the Dodd Bill doesn't pass... (the content of the bill and the public will notwithstanding)

Transparency begins at home.

Hide your money under your mattress. Read the prospectus. Investing involves risk- you can't have it both ways. Stay away from the Street if you don't like the risk, but don't expect the returns.

I agree with you on effective oversight. Let's start with public officials who don't pay their taxes.
I'm not sure what you are saying or assuming I was saying. My personal opinion is that transparency and effective oversight of the financial industry are important to our future. I am willing to put my money where my mouth is and take a hit in my pocketbook if that is what it takes to get reform. At the same time, I acknowledge that I am not sure what effective reform should be. Thus I asked two questions I am actually interested in hearing about: 1) what does real reform look like?; and 2) if we get it will it spook the Street enough to punch a big hole in our portfolios? The final note asking whether it is in our interests to let Wall Street to continue with their shenanigans while we whistle our way to our graves was tongue-in-cheek.
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Old 03-23-2010, 11:22 AM   #22
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Not to mention the regulated period had the longest strongest economic period in history with the largest increase of the middle class.
Really? The aftermath of the Depression lasted until we go involved in World War II. That finally cranked up GDP and production in the name of the war effort. National pride in USA made goods ran rampant, it was thought patriotic to buy US good, not "junk" from Japan and China......

After the war, the govt offered very low interest loans to vets, and a housing and baby boom followed. Companies grew and hire workers, offering good wages and the promise of nice pensions and the promise of long term employment to workers. With all that in place, it was almost a foregone conclusion the explosion of the middle class.

How much of that was the result of regulation? I am not sure, but it seemed there were other economic factors that contributed more.......
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Old 03-23-2010, 11:48 AM   #23
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re: the 'invisible hand'

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That worked well, didn't it?
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And maybe it would if we let it.

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Nah, it can never smackdown the snake oil salesman.
You are correct (or at least I agree with you, maybe we are both wrong ).

Trouble is, the regulators can't smack down the snake-oil salesmen either. Where was the SEC with Bernie Madoff? Why didn't Tim Geitner get audited by the IRS? and on and on....

The snake oil salesmen (and women) can move 1000x faster than those hundreds of people in Congress. The (largest part of) answer is transparency and education.

Why did so many people on this forum express shock at all those who were taken by Madoff? Simple, we are educated enough in basic financial matters to know the warning signs, we would look for more transparency, etc.

Don't get me wrong, I think that some forms of regulation are a good thing and I welcome them. But I really want to see them focus on education and transparency. I just love that old quote - "You can't cheat an honest man." Nah, it's not 100% true, but there is a lot of truth to it.

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Old 03-23-2010, 12:21 PM   #24
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I'm not sure what you are saying or assuming I was saying.
Originally Posted by donheff
The Dodd Bill is moving along like health care reform, crippled in the view of the progressives and the right.


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My personal opinion is that transparency and effective oversight of the financial industry are important to our future.
I agree. We've heard a lot of talk about "transparency" recently. Just that, talk. And effective oversight is too much to expect from officials who require oversight just to pay their own taxes, IMO.


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I am willing to put my money where my mouth is and take a hit in my pocketbook if that is what it takes to get reform.
Great, write a check to the US Treasury if that makes you feel better- I believe we are already being taxed for government services for which we are not receiving value commensurate to what we pay.

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At the same time, I acknowledge that I am not sure what effective reform should be.
I agree with you on this point.

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Thus I asked two questions I am actually interested in hearing about: 1) what does real reform look like?; and 2) if we get it will it spook the Street enough to punch a big hole in our portfolios?
1. I would start with : Succesful reform is when Americans can trust Wall Street, and more importantly those whom we elect and or appoint to oversee it- in equal measures. Not sure how you can quantify that, though. Investor confidence? Failures? Bailouts? Indictments?

2. Wall Street is understandably skittish about more government intervention and the Dow drops a hundred points every time an administration official speaks. There has to be mutual trust. Don't see that happening anytime soon.

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The final note asking whether it is in our interests to let Wall Street to continue with their shenanigans while we whistle our way to our graves was tongue-in-cheek.
As was my answer...
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Old 03-23-2010, 12:50 PM   #25
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I don't think there is such a thing as a politician with integrity.
Sure there is: The one that stays bought once they've been paid off.
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Old 03-23-2010, 01:37 PM   #26
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(I am willing to put my money where my mouth is) Great, write a check to the US Treasury if that makes you feel better- I believe we are already being taxed for government services for which we are not receiving value commensurate to what we pay.

(comment was tongue-in-cheek) As was my answer...
I suspect your write a check comment was also tongue-in-cheek but it is so common that I have to respond. Many people express a willingness to pay more for the good of the whole. For example, I was adamantly opposed to the Bush tax cuts even though I profited from them. Similarly, I would accept a hit in my portfolio if financial reform would serve my kids and the country as a whole well. The trite answer to write a check is disingenuous. The sacrifice of writing a check would have no impact whereas the policy in question (taxes, financial reform) could be far reaching thus meriting a sacrifice.
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Old 03-23-2010, 01:40 PM   #27
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I suspect your write a check comment was also tongue-in-cheek but it is so common that I have to respond. Many people express a willingness to pay more for the good of the whole. For example, I was adamantly opposed to the Bush tax cuts even though I profited from them. Similarly, I would accept a hit in my portfolio if financial reform would serve my kids and the country as a whole well. The trite answer to write a check is disingenuous. The sacrifice of writing a check would have no impact whereas the policy in question (taxes, financial reform) could be far reaching thus meriting a sacrifice.
In other words: The tragedy of the commons.
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Old 03-23-2010, 02:04 PM   #28
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For example, I was adamantly opposed to the Bush tax cuts even though I profited from them.
Don't worry, they will be a distant memory in a year or so........so don't feel bad........

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Similarly, I would accept a hit in my portfolio if financial reform would serve my kids and the country as a whole well.
How much of a hit, 50%, 60%?
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Old 03-23-2010, 02:52 PM   #29
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Pre-1933, little financial regulation . . . banking crisis
1933-mid-1970's, heavy financial regulation . . .no banking crises
mid-1970's-present - financial deregulation . . . two banking crises
If you go further back, you'll see that banking crises, and depressions, were pretty common in the 1800's. A financial "panic" happened in the US or Britain every 10 years or so. After the Great Depression, though, it's been relatively calm . . . that is until recently.
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Old 03-23-2010, 02:59 PM   #30
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If you go further back, you'll see that banking crises, and depressions, were pretty common in the 1800's. A financial "panic" happened in the US or Britain every 10 years or so. After the Great Depression, though, it's been relatively calm . . . that is until recently.
You can't compare the 1800's to now...........
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Old 03-23-2010, 03:05 PM   #31
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One of the problems is that people are fogetting what was regulated and a financial institute (bank) and what was not back when...

Investement banks .... NOT
Insurance companies that handle interest rate swaps .... NOT
Car companies .... NOT...
Brokerage firms... NOT

These were the firms that were not regulated as banks... and these are the biggest culprits of the problem... Goldman Sacs, AIG, Merrill, Morgan, GM, Chrysler, etc. etc.

When the worst started to hit, they 'allowed' some of these to become bank holding companies so they could get bailed out...


I was against changing the Glass-Stegal act (sp)... and I worked at a bank. My take was that you could make a great living being a bank and not have the risks that some bankers wanted to take... but were prevented because of it... let's bring it back!!!
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Old 03-23-2010, 03:08 PM   #32
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I suspect your write a check comment was also tongue-in-cheek but it is so common that I have to respond. Many people express a willingness to pay more for the good of the whole. For example, I was adamantly opposed to the Bush tax cuts even though I profited from them. Similarly, I would accept a hit in my portfolio if financial reform would serve my kids and the country as a whole well. The trite answer to write a check is disingenuous. The sacrifice of writing a check would have no impact whereas the policy in question (taxes, financial reform) could be far reaching thus meriting a sacrifice.
donheff, I am enjoying this discussion, appreciate your responses. Glad that we can have a spirited discussion with such ideological differences.

My comment about writing the check was not tongue-in-cheek. I am not willing to pay more for yet another government program that isn't going to deliver what I am already paying for. I'm not willing to take a hit in my portfolio for yet another promise of "financial reform" - from a federal government that has a long history of over-promising and under-delivering. I don't support the notion that the answer to whatever problem-of-the-moment that ails us is blindly raising taxes. I'd like to see measurable and sustained accountability in place for the programs we already have, cost-cutting measures to increase efficiency and streamline government, and across- the- board head count reductions to eliminate bloated civil service payrolls first. Would you be opposed to the tax reductions we would enjoy from a more efficient, accountable government? And the premise that just because you are willing to write a check that I should be forced to write one, too is disingenuous- it's easy for you to to pontificate about writing that check; actually doing so is another matter altogether. Why should my portfolio suffer to make you feel better?
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Old 03-23-2010, 03:10 PM   #33
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Why should my portfolio suffer to make you feel better?
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Old 03-23-2010, 03:29 PM   #34
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You can't compare the 1800's to now...........
So what changed?
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Old 03-23-2010, 03:30 PM   #35
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You can't compare the 1800's to now...........
Not if you are comparing policies and laws. But you surely can compare them if you are analyzing basic human behavior. Greed and herd mentality are both very strong players in the finance markets. And I would submit that is what causes these crises, not policies and laws. People see what looks to be a profitable way of doing things, and go after it until the area they are exploiting has ballooned out of proportion. Then the balloon pops.

Greed and herd behaviors are both behavioral constants.
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Old 03-23-2010, 03:42 PM   #36
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So what changed?
For one, we moved from a rural agricultural economy to an industrialized one that has much greater population congregating in large cities.

Farmers used to barter with each other for goods and services, etc. There's probably 100 or more ways we are NOT like the 1800's..........
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Old 03-23-2010, 03:45 PM   #37
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So what changed?
Let me help . . .

The Federal Reserve Act of 1913
The Glass-Steagall Act of 1932
The Banking Act of 1933
The Banking Act of 1935

But lets not forget . . .

Depository Institutions Deregulation and Monetary Control Act of 1980
Depository Institutions Act of 1982 (allowed S&L's to engage in more risky behavior - Ooops)
Glass-Stegall repeal 1999
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Old 03-23-2010, 03:45 PM   #38
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For one, we moved from a rural agricultural economy to an industrialized one that has much greater population congregating in large cities.

Farmers used to barter with each other for goods and services, etc. There's probably 100 or more ways we are NOT like the 1800's..........
And that all has what to do with banking crises?
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Old 03-23-2010, 03:47 PM   #39
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For one, we moved from a rural agricultural economy to an industrialized one that has much greater population congregating in large cities.

Farmers used to barter with each other for goods and services, etc. There's probably 100 or more ways we are NOT like the 1800's..........
There are probably a few million ways we are not like the 1800s. But the constants-the psychology-that motivate human behavior haven't changed at all.
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Old 03-23-2010, 03:50 PM   #40
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Let me help . . .

The Federal Reserve Act of 1913
The Glass-Steagall Act of 1932
The Banking Act of 1933
The Banking Act of 1935

But lets not forget . . .

Depository Institutions Deregulation and Monetary Control Act of 1980
Depository Institutions Act of 1982 (allowed S&L's to engage in more risky behavior - Ooops)
Glass-Stegall repeal 1999
And lets not forget that we moved the dollar off of the gold standard in the 70s.
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