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Google's Eric Schmidt on why bankers deserve little sympathy and Obama does

telegraph.co.uk

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Re: Google's Eric Schmidt on why bankers deserve little sympathy and Obama does

#11

Post by trevelyan »

nazgulnarsil wrote: post #7

he's full of schmidt. the private sector responds to the shitty incentives the government provides. the private mortgage market had no incentive to act responsibly because the government backed fannie and freddie were buying responsible and irresponsible loans indiscriminately. if banks had actually been holding the loans themselves they wouldn't have made such crappy investments.

This is not true. Fannie Mae has outperformed the rest of the private sector in terms of loan performance (non-delinquencies). The organization also lost market share throughout the bubble to private sector lenders, not the other way around.

http://real-estate-and-urban.blogspot.com/2008/09/charles-ca...

Re: Google's Eric Schmidt on why bankers deserve little sympathy and Obama does

#12

Post by patrickgzill »

It is a little odd that Schmidt seems to be channeling Andrew Jackson, who refused to renew the charter of the Second Bank of the United States (emphasis mine):

"I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank. You tell me that if I take the deposits from the Bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out and, by the Eternal, (bringing his fist down on the table) I will rout you out."

Re: Google's Eric Schmidt on why bankers deserve little sympathy and Obama does

#13

Post by patrickgzill »

Daniel_Newby wrote: post #8

Clueless. "I want to be clear here that the blame, to the degree that there was, is largely in the United States, not in Europe, not in Britain." Because the American branch of the Illuminati run Iceland, Northern Rock, those German manufacturers who were having to finance their customers because banking disappeared, and so forth? "And it was fundamentally because a low-interest policy created too much money. It was…

The USD is functionally the reserve currency of the world; perhaps that is what he is referring to?

Re: Google's Eric Schmidt on why bankers deserve little sympathy and Obama does

#14

Post by teamonkey »

Daniel_Newby wrote: post #8

Clueless. "I want to be clear here that the blame, to the degree that there was, is largely in the United States, not in Europe, not in Britain." Because the American branch of the Illuminati run Iceland, Northern Rock, those German manufacturers who were having to finance their customers because banking disappeared, and so forth? "And it was fundamentally because a low-interest policy created too much money. It was…

NRK collapsed due to buying US sub-prime mortgage deals. Buying them was a bad idea, and putting all its eggs in one basket was worse, but I think Schmidt is getting at the fact that these deals were available in the first place and no-one thought they were a bad idea. NRK is also small fry compared to Mae and Mac.

As for leverage/deregulation,

"So the banks are busy creating money and making a lot of money on that creation of money and the regulators were either, depending on your point of view, asleep at the wheel or did not have the tools to understand what was going on"

Re: Google's Eric Schmidt on why bankers deserve little sympathy and Obama does

#15

Post by graphene »

Daniel_Newby wrote: post #8

Clueless. "I want to be clear here that the blame, to the degree that there was, is largely in the United States, not in Europe, not in Britain." Because the American branch of the Illuminati run Iceland, Northern Rock, those German manufacturers who were having to finance their customers because banking disappeared, and so forth? "And it was fundamentally because a low-interest policy created too much money. It was…

The whole point is that leveraging (i.e. investing with borrowed money) becomes much more feasible when interest rates are close to zero, as they were in the early years of the boom.

Re: Google's Eric Schmidt on why bankers deserve little sympathy and Obama does

#16

Post by pieceofpeace »

teamonkey wrote: post #14
Daniel_Newby wrote: post #8

Clueless. "I want to be clear here that the blame, to the degree that there was, is largely in the United States, not in Europe, not in Britain." Because the American branch of the Illuminati run Iceland, Northern Rock, those German manufacturers who were having to finance their customers because banking disappeared, and so forth? "And it was fundamentally because a low-interest policy created too much money. It was…

NRK collapsed due to buying US sub-prime mortgage deals. Buying them was a bad idea, and putting all its eggs in one basket was worse, but I think Schmidt is getting at the fact that these deals were available in the first place and no-one thought they were a bad idea. NRK is also small fry compared to Mae and Mac. As for leverage/deregulation, "So the banks are busy creating money and making a lot of money on that c…

Yes. Also, don't forget the role of rating agencies. They should get a lot of the blame for this mess too.

Re: Google's Eric Schmidt on why bankers deserve little sympathy and Obama does

#17

Post by yummyfajitas »

trevelyan wrote: post #11
nazgulnarsil wrote: post #7

he's full of schmidt. the private sector responds to the shitty incentives the government provides. the private mortgage market had no incentive to act responsibly because the government backed fannie and freddie were buying responsible and irresponsible loans indiscriminately. if banks had actually been holding the loans themselves they wouldn't have made such crappy investments.

This is not true. Fannie Mae has outperformed the rest of the private sector in terms of loan performance (non-delinquencies). The organization also lost market share throughout the bubble to private sector lenders, not the other way around. http://real-estate-and-urban.blogspot.com/2008/09/charles-ca...

Your link provides no data supporting the contents of your post. There is a graph which ends in 2003, from which the blogger draws the same conclusion as you (Fannie has better non-delinquency rate). The graph does not show delinquencies at all, so I'm not sure where he is drawing this conclusion from.

Re: Google's Eric Schmidt on why bankers deserve little sympathy and Obama does

#18

Post by hga »

patrickgzill wrote: post #12

It is a little odd that Schmidt seems to be channeling Andrew Jackson, who refused to renew the charter of the Second Bank of the United States (emphasis mine): "I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided…

While Jackson had a point (let's ignore that he himself was a major land speculator) and a particular bit of corruption of the above nature destroyed the 2nd Bank politically, the resulting denouncement (including requiring specie (i.e. gold) for payments of I forget) was as I recall one of the (if not the) longest recession/depressions in American history.

Yeah, the speculative excesses had to be wrung out of the system, and the sooner the better as Jackson points out, but if you destroy or allow the failure of the banking system in the process (that one had some of both) the result is horrible. See also: the Great Depression in the US.

That was the argument for the TARP, and we can't falsify it and never could have. Continuing the TARP sort of thing (note this reply is made without the benefit of reading the fine article), though, risks one or more Lost Decades as we've seen in Japan.

If you're lucky; we don't yet know the denouncement of what's happening over there (didn't Great Britian require a century to recover from the South Seas Bubble (due to many factors)?) and the US is in a different position than Japan was and is.

Re: Google's Eric Schmidt on why bankers deserve little sympathy and Obama does

#19

Post by camccann »

patrickgzill wrote: post #12

It is a little odd that Schmidt seems to be channeling Andrew Jackson, who refused to renew the charter of the Second Bank of the United States (emphasis mine): "I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided…

It always surprises me the way politicians back then were so ballsy compared to the modern crowd. Not that that's relevant to anything, I suppose.
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