The Market : more control ?

Here the federal government forced the banks to give out loans to people who were not credit worthy through Freddie and Fannie Mac. That was the primary beginning of this whole thing.

 

The first purpose of a bank is to make their owner's a PROFIT. Not to loan money. If they could make as much profit without loaning money (read 'taking a risk') you can bet they'd do it in a heartbeat.

The only thing that we've done by bailing out these failed banks is to reinforce their improper loaning practices. We've said, 'Sure! Go ahead and loan $500k to that guy making $50k a year on an interest only loan... sure, go ahead and loan $200k to that family who's been on the job for a year, don't worry about making sure he'll pay it back, we'll back them. It's a free-for-all and the BIGGER you can make the problem, the more likely our wonderful government will swoop in and bail you out.

It's a crying shame.

 

It is obvious that we need more control of the financial institutions. If not, greed will cause the need for another bail out in the future.

 

If they couldn't count on being bailed out they might just be less greedy.

 

Agreed! But, since they control many lobbyists and many politicians, they can pretty much count on the American people paying for their greed again.

 

As long as the two major parties run things you are correct, Robert.

 

Get your facts straight

"Here the federal government forced the banks to give out loans to people who were not credit worthy through Freddie and Fannie Mac."

NOT CORRECT! The sub prime loans had a better payment record than the loans from high credit score people.

 

As usual you need to check your facts

 

The major parties control the state legislatures. The state legislatures control ballot access. The money that could be spent on advertising and party building is instead spent by minor parties on attaining ballot access.

 

I was wrong about timing however

The law specifies that the funds must be invested in government paper. see

http://www.ssa.gov/OP_Home/ssact/title02/0201.htm#act-201-e

(d) It shall be the duty of the Managing Trustee to invest such portion of the Trust Funds as is not, in his judgment, required to meet current withdrawals. Such investments may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired (1) on original issue at the issue price, or (2) by purchase of outstanding obligations at the market price. The purposes for which obligations of the United States may be issued under chapter 31 of title 31, United States Code[12], are hereby extended to authorize the issuance at par of public-debt obligations for purchase by the Trust Funds. Such obligations issued for purchase by the Trust Funds shall have maturities fixed with due regard for the needs of the Trust Funds and shall bear interest at a rate equal to the average market yield (computed by the Managing Trustee on the basis of market quotations as of the end of the calendar month next preceding the date of such issue) on all marketable interest-bearing obligations of the United States then forming a part of the public debt which are not due or callable until after the expiration of four years from the end of such calendar month; except that where such average market yield is not a multiple of one-eighth of 1 per centum, the rate of interest of such obligations shall be the multiple of one-eighth of 1 per centum nearest such market yield. Each obligation issued for purchase by the Trust Funds under this subsection shall be evidenced by a paper instrument in the form of a bond, note, or certificate of indebtedness issued by the Secretary of the Treasury setting forth the principal amount, date of maturity, and interest rate of the obligation, and stating on its face that the obligation shall be incontestable in the hands of the Trust Fund to which it is issued, that the obligation is supported by the full faith and credit of the United States, and that the United States is pledged to the payment of the obligation with respect to both principal and interest. The Managing Trustee may purchase other interest-bearing obligations of the United States or obligations guaranteed as to both principal and interest by the United States, on original issue or at the market price, only where he determines that the purchase of such other obligations is in the public interest.
(e) Any obligations acquired by the Trust Funds (except public-debt obligations issued exclusively to the Trust Funds) may be sold by the Managing Trustee at the market price, and such public-debt obligations may be redeemed at par plus accrued interest.
(f) The interest on, and the proceeds from the sale or redemption of, any obligations held in the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall be credited to and form a part of the Federal Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund, respectively. Payment from the general fund of the Treasury to either of the Trust Funds of any such interest or proceeds shall be in the form of paper checks drawn on such general fund to the order of such Trust Fund.[13]

 

BUT back to the IP

In the old days people invested in stocks in companies that sold a good product at a fair price and turned a profit. An IPO or any stock that sold more than 5 or 6 times earnings was consider a "flyer," a gamble, not an investment.

These days half the stock trades are made by computer programs when the program determines the price will rise. It is mostly statistical analysis. No one reads the prospectus or cares about price/earnings at the time the computer buys the stock.

In other words, the stock market is a crap shoot that has nothing to do with investing.

Further, the purpose of international companies is to sell stuff at a profit. There is no large (or medium size?) companies whose purpose is to provide jobs for the American working class. This is why a stock can rise when it is announced that production is going off shore and Americans will be laid off. Neither stockholders nor the management cares where the stuff is made or sold as long as it is made and sold at a profit.

This is why only countries with large economies support free trade and why growing countries want protection for local industries - the established large economies have all the advantage.

And why Lincoln's War was about trade regulations. The northern cotton mills wanted to force the Confederacy to sell them cotton but it was more profitable to sell cotton to England than to New England. Lincoln was trying to protect local industry at a cost to local agriculture. The big profit is always in manufacturing, not raising crops. This is even true in the dope industry. It isn't the growers who are getting rich.