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Iceland put top finance executives behind bars, but fears of cronyism remain

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Re: Iceland put top finance executives behind bars, but fears of cronyism remain

#121

Post by illumin8 »

guelo wrote: post #94
illumin8 wrote: post #59

Earlier quoted context omitted.

To be fair, Clinton only signed the law - it was created and voted for by a Republican majority congress. Look at the votes - every Republican senator voted Yea and only one Democrat voted Nay: https://www.govtrack.us/congress/votes/106-1999/s105 He still shouldn't have signed it, but to blame this law on the Clintons is really not being honest.

That's not the final vote. It passed 90-8 in the senate and 362-57 in the house. https://www.govtrack.us/congress/votes/106-1999/s354 https://www.govtrack.us/congress/votes/106-1999/h570

Thanks for the correction.

Re: Iceland put top finance executives behind bars, but fears of cronyism remain

#122

Post by illumin8 »

JumpCrisscross wrote: post #63
illumin8 wrote: post #52

Earlier quoted context omitted.

This can really be traced back to the repeal of Glass Steagal. After the great depression in the 30s, congress passed the Glass Steagal act, which put a firewall between investment banks and commercial banks. In other words, Wall Street investment banks could no longer gamble with customer deposits. This seems like common sense, and all of the financial problems actually occurred after Glass Steagal was repealed in t…

> This can really be traced back to the repeal of Glass Steagal Can it? Because none of the banks who initially failed would have been firewalled by Glass-Steagal. Bear Stearns, Lehman Brothers, AIG...none of these were deposit-taking institutions. The problem erupted from corn-fed mortgages, something Glass-Steagall wouldn't have saved us from. This isn't just my opinion. Most economists see Gramm-Leach-Bliley (the…

The mortgages themselves weren't the problem - the problem was the way they were allowed to be bundled into mortgage backed securities, which created a firehose of investment money piling in from Wall Street to the mortgage market, which created bad incentives to issue more low quality mortgages (NINJA - no income, no job, no assets).

Re: Iceland put top finance executives behind bars, but fears of cronyism remain

#123

Post by cm2187 »

illumin8 wrote: post #122
JumpCrisscross wrote: post #63

Earlier quoted context omitted.

> This can really be traced back to the repeal of Glass Steagal Can it? Because none of the banks who initially failed would have been firewalled by Glass-Steagal. Bear Stearns, Lehman Brothers, AIG...none of these were deposit-taking institutions. The problem erupted from corn-fed mortgages, something Glass-Steagall wouldn't have saved us from. This isn't just my opinion. Most economists see Gramm-Leach-Bliley (the…

The mortgages themselves weren't the problem - the problem was the way they were allowed to be bundled into mortgage backed securities, which created a firehose of investment money piling in from Wall Street to the mortgage market, which created bad incentives to issue more low quality mortgages (NINJA - no income, no job, no assets).

People forget there was a demand for them, because investors were starved for yield.

Re: Iceland put top finance executives behind bars, but fears of cronyism remain

#124

Post by jokull »

feelgood wrote: post #104
jokull wrote: post #22

Earlier quoted context omitted.

My uncle is one of the jailed, mentioned in the article. One of Iceland’s most respected lawyers and teacher at the University of Iceland has gone on paper, and on radio, and on TV, saying that the Al Thani trials did not make any sense, for more than one reason. The most obvious mistake was that by the time the case went from local courtrooms to the federal level the prosecution had completely switched the focus of…

I would take this reply with a huge grain of salt, the lawyer in the article is a personal friend/business partner and a defendant of one of the persons accused of the same crimes.

It’s one big grain of salt in Iceland since everything and everyone is somehow related.

Re: Iceland put top finance executives behind bars, but fears of cronyism remain

#125

Post by ktRolster »

mrweasel wrote: post #82
ktRolster wrote: post #70

Earlier quoted context omitted.

I don't even care that we didn't prosecute them. I just wish they weren't bailed out by the government (aka my tax money) when they went under. It's a free market: you make mistakes, you lose.

>It's a free market: you make mistakes, you lose. Precisely, if you invest money, you should be prepared to lose that money. Now we're in a situation where if the amount you lose is large enough, no worries, the tax payers will refund your investment. It was a large amount you lost after all. Here, in Denmark, we now have "systemic banks" aka "to big to fail", just like in the US. Not once have I hear someone suggest…

Not once have I hear someone suggest that MAYBE just fucking maybe, the issue is that the banks are to large.

Smart people have said it. Here's Paul Volcker saying, "Any bank that is too big to fail is too big to exist." They should be broken up: http://www.wsj.com/articles/SB100014240527487048255045745863...

Sheila Bair, the head of FDIC was also talking about breaking up banks that were too big.

But you know, there were lobbyists, and also the regulators who want to regulate large things. Eventually it will happen, after the next crisis, or the one after that, because, as Volcker says, "it just makes sense."

Re: Iceland put top finance executives behind bars, but fears of cronyism remain

#126

Post by tosseraccount »

pdkl95 wrote: post #111
tosseraccount wrote: post #42

Earlier quoted context omitted.

"Austerity stagnates an economy". How did overspending work out for Greece? [ edit: I'd be glad to discuss substance. The admittedly rhetorical question stands. What is the evidence on overspending and growth? ]

Their current economic situation has very little to do with overspending. In general, they didn't. The country has it's traditional tax revenue problems and has never had a great economy, but without the Euro they would have simply devalued their currency (among other tools available only to governments) and left the debt unpaid for a few hundred years. Just like every other country does. So what happened? Greece was…

Some don't think it's "stupid" ...

"This study observes a negative relationship between government debt and growth. The point estimates of the range of econometric specifications suggest a 10-percentage point increase in the debt-to-GDP ratio is associated with 23 basis point reduction in average growth. "

from : Government Debt and Economic Growth – Decomposing the Cause and Effect Relationship

link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2601874

Re: Iceland put top finance executives behind bars, but fears of cronyism remain

#127

Post by [deleted] »

tosseraccount wrote: post #126
pdkl95 wrote: post #111

Earlier quoted context omitted.

Their current economic situation has very little to do with overspending. In general, they didn't. The country has it's traditional tax revenue problems and has never had a great economy, but without the Euro they would have simply devalued their currency (among other tools available only to governments) and left the debt unpaid for a few hundred years. Just like every other country does. So what happened? Greece was…

Some don't think it's "stupid" ... "This study observes a negative relationship between government debt and growth. The point estimates of the range of econometric specifications suggest a 10-percentage point increase in the debt-to-GDP ratio is associated with 23 basis point reduction in average growth. " from : Government Debt and Economic Growth – Decomposing the Cause and Effect Relationship link: http://papers.s…

[deleted]

Re: Iceland put top finance executives behind bars, but fears of cronyism remain

#128

Post by dang »

whistlecrackers wrote: post #28
grabcocque wrote: post #7

Just to clarify, They were sent to prison for "market manipulation and fraud" which are crimes in many places, not just Iceland. They weren't sent to prison for being "bad bankers" which isn't a crime in Iceland or anywhere else.

Yeah, but putting it that way it doesn't make Iceland seem like the Socialist utopia that it is. Evil bankers are the cause of all of the world's problems; they're why things aren't free and stuff. #FeelTheBern

Please stop posting unsubstantive comments to Hacker News.

Re: Iceland put top finance executives behind bars, but fears of cronyism remain

#129

Post by cmrdporcupine »

tosseraccount wrote: post #113
cmrdporcupine wrote: post #106

Earlier quoted context omitted.

There have been two different Greek governments in this period. Smearing Syriza, a socialist formation which made the same critique as the above poster, and would never have signed those deals -- for the corrupt actions of New Democracy & PASOK which did is a little bit of intellectual dishonesty.

PASOK = Panhellenic Socialists

They're a social democratic group with very extreme differences with Syriza.

Re: Iceland put top finance executives behind bars, but fears of cronyism remain

#130

Post by cmrdporcupine »

tosseraccount wrote: post #109
cmrdporcupine wrote: post #101

Earlier quoted context omitted.

We did not run a budget surplus during the crisis. Far from it. There was extensive stimulus spending that led to very high deficits during that period. We had a budget surplus in the decade prior to the crisis, but not right before, and once the Harper gov't took power it slashed revenue through a bunch of tax cuts and then once the crisis hit the opposition demanded stimulus spending or it would bring the gov't dow…

http://www.tradingeconomics.com/canada/government-budget According to this link, the Canada Federal Budget appears to have been in surplus during 2007-2008 crisis. Deficits came later. Their previous fiscal prudence mitigated the problems that struck Italy, Greece and the United States.

The stimulus budget was passed in 2009, the bulk of the spending came through in 2010, and the graph you linked to shows that.

Cutting your tax revenue isn't fiscal prudence. It's letting ideology triumph over reality. Harper never met a surplus he didn't throw away.

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