Occupy Wall Street

[Moliere]

Do you know how sad it is that a Comedy Channel show is probably the most honest "news" show on TV?

This is true.

It still doesn't mean we are getting the full story and I doubt the full story is outlined in that lady's book. Fwiw, she is a wsj writer.

[frank ryan]

Don't these folks have jobs? Who is paying for them to sit around and protest?

Occupy Wall Street are a bunch of lazy degenerates who are using legitimate grievances that most conservatives share (Wall Street bailouts, cronyism) to advocate their little commie agenda. Conservatives, don't be suckered in to finding common cause with these people...they hate you, you're the bourgeoise.

Anyone remember hearing about how the Hells Angels beat the crap out the hippie protestors back in the 60's? Where are they when we need them?

this is fuckin' classless, you are a better man than that venkman

[calicoug]

This. The OWS movement needs to open it's eyes and realize that the government is to blame for the economic mess we're in. Are there crooked bastards on Wall Street? Of course. There are crooked bastards everywhere. But Wall Street was playing by the rules that were set by the government.

That's a copout. It suggests that unless something is clearly illegal, people have a full license to do whatever they want and the government must be at fault when they do it. That can't possibly be true. Not to mention your implication is that the government ought to have been doing more- despite the fact that you have repeatedly stated that you hate the government. If you find yourself setting up a scenario where no matter what happens, you will blame the government for it, you might be well-served to reexamine your biases.

[Moliere]

That's a copout. It suggests that unless something is clearly illegal, people have a full license to do whatever they want and the government must be at fault when they do it. That can't possibly be true. Not to mention your implication is that the government ought to have been doing more- despite the fact that you have repeatedly stated that you hate the government. If you find yourself setting up a scenario where no matter what happens, you will blame the government for it, you might be well-served to reexamine your biases.

The whole credit crisis is an interesting lesson in blame. The left blames the banks. The right blames the government. The centrists blame the credit agencies. The president blames the past president (some truth here). Personally I blame the Utes.

FTR, both the banks and the government share the blame, as do the people who took out the loans and the credit agencies. The government mandated certain quotas on subprime lending, backstopped it all by Fannie/Freddie/etc. so banks would lend and then the banks found interesting ways to package it all together using CDS' and other machinations so it would have a AAA credit rating and sold those to pension funds and other banks.

Blaming solely banks or capitalism is absurd. Government mandated quotas is not capitalism. And saying what the banks did was unethical is also absurd given that the loans were made because they had to be made. The part about packaging the loans and servicing them through QSPEs was borderline unethical, but no one cared at the time because we were all making money.

At the end of the day, I think the Utes actually should shoulder most of the blame.

[Moliere]

I don't think it is silly at all. I find DS interviews to be some of the most informative interviews on television, probably second only to the regular interviews we see on the PBS News Hour.

I love the Daily Show. Every day I watch it on my lunch break. It's entertainment and JS does a great job pointing things out, but he's no where near thorough or unbiased on most issues. I know they don't have 4 hours to hash over the history of pension funds, but that is exactly why it's silly to link a DS clip and say "see, corporations are screwing us man!"

Ellen [I can't remember her last name] is trying to make the point that corporations are stealing money from their pension funds to pay off the higher ups. This is only partially true. Corporations can't take money out of the fund and use it however they like. Pension funds qualify for tax-exempt status under the IRC as long as they meet certain thresholds, which include annual non-discriminatory testing (meaning higher paid workers can't be unfairly advantaged) and certain participation rights. If you break those IRC rules then your plan is no longer tax exempt, which would be a nightmare case scenario. It's for this reason that most companies will have non-exempt plans for executives, which do not have the same tax advantages as a typical pension or 401K fund.

What is happening in pension and other post-retirement benefit funds is that companies are simply cutting the benefits, which requires less money to be put into the fund down the road. Now you will probably say "See, I told you so!", which is what John Stewart did, but you have to realize that the cutting of benefits and funds has happened in synch with the rise of Social Security and Medicare. Not everyone is losing benefits, those benefits are being swapped for a government plan.

Take for instance Medicare Part D (prescription drug benefit plan). When this passed back in 2005 (or was it 2006?) many large corporations had retirement drug benefits. In fact, the government realized this and wanted to incentivize corporations to keep their plans, so they set up a non-tax reimbursement plan where the government reimburses the corporation about $0.27 for every dollar they spend on an equivalent plan. This is good for the government as it keeps many people off of Part D and it only costs them 27% (or I guess 36% since it's tax-free) of what it would likely cost them if they were on Part D. Corporations were content because they still had a bit of a perk in that their retirees would stay off government assistance.

Obamacare will change the nature of the reimbursement to make it taxable. Democrats called it a "tax-loophole" which is funny because usually tax loopholes are not intended to be created but this one was actually openly negotiated and publicly known from day one. So with the tax advantage being lost, companies are likely to eliminate their retiree prescription drug programs. This will save corporations a lot of money and the good part is that retirees won't be affected at all since they will get the exact same benefit with Part D. The impact is that Part D will just have more people enrolling in its plan and instead of paying 27% (or 36% including taxes) the government will now pay 100%.

So will the corporations be doing something evil by eliminating benefits? I'm not sure how you can say they did given that the retiree is not out anything and has the same coverage. The corporation maybe ends up in a better spot as it now has less benefits to fund. The real loser is the government which now has to find a way to increase taxes to help cover the increasing enrollment of retirees that weren't expected.

[venkman]

this is fuckin' classless, you are a better man than that venkman

Which part? I'll give you the Hells Angels crack, that was mean.

[I.J. Reilly]

The whole credit crisis is an interesting lesson in blame. The left blames the banks. The right blames the government. The centrists blame the credit agencies. The president blames the past president (some truth here). Personally I blame the Utes.

FTR, both the banks and the government share the blame, as do the people who took out the loans and the credit agencies. The government mandated certain quotas on subprime lending, backstopped it all by Fannie/Freddie/etc. so banks would lend and then the banks found interesting ways to package it all together using CDS' and other machinations so it would have a AAA credit rating and sold those to pension funds and other banks.

Blaming solely banks or capitalism is absurd. Government mandated quotas is not capitalism. And saying what the banks did was unethical is also absurd given that the loans were made because they had to be made. The part about packaging the loans and servicing them through QSPEs was borderline unethical, but no one cared at the time because we were all making money.

At the end of the day, I think the Utes actually should shoulder most of the blame.

I have spent a good portion of my free/personal time and quite a bit of my professional/scholastic time over the past three years trying to understand the Great Recession as an integrated whole.

My conclusion: at it's heart, it's an agency problem.

Unfortunately, that's really hard to explain to people and make them care about it. Many of the solutions are equally as snooze-worthy.

There are sexier ways to explain it, but none of them capture the problem as well, imo.

[frank ryan]

Which part? I'll give you the Hells Angels crack, that was mean.

that is what i meant. i know some of these protestors. they aren't bad people. you've always struck as a good dude with different politics than mine. don't get caught up in the hate.

[U-Ute]

This.

[byu71]

Did you guys see the article in the NY Post about the protestors having problems with stealing from each other.

They really do believe in the redistribution of the wealth.

[U-Ute]

[calicoug]

The whole credit crisis is an interesting lesson in blame. The left blames the banks. The right blames the government. The centrists blame the credit agencies. The president blames the past president (some truth here). Personally I blame the Utes.

FTR, both the banks and the government share the blame, as do the people who took out the loans and the credit agencies. The government mandated certain quotas on subprime lending, backstopped it all by Fannie/Freddie/etc. so banks would lend and then the banks found interesting ways to package it all together using CDS' and other machinations so it would have a AAA credit rating and sold those to pension funds and other banks.

Blaming solely banks or capitalism is absurd. Government mandated quotas is not capitalism. And saying what the banks did was unethical is also absurd given that the loans were made because they had to be made. The part about packaging the loans and servicing them through QSPEs was borderline unethical, but no one cared at the time because we were all making money.

At the end of the day, I think the Utes actually should shoulder most of the blame.

Yes- there is plenty of blame to go around, but I'm surprised how many people have clung to the "government quotas" argument as if it had some large effect on the crisis. There have been many studies of that very topic, and I'm unaware of any that have concluded that CRA loans were large contributors to the meltdown. To the contrary, there's substantial evidence suggesting that: (i) CRA lenders were far less likely than non-CRA lenders to make risky home purchase loans; (ii) the average APR on high cost loans originated by CRA banks was lower than the average APR on high cost loans originated by other lenders; and (iii) CRA banks were more than twice as likely as other lenders to retain originated loans in their portfolio (i.e., the CRA loans were far LESS likely to be securitized). Those points are all out of a fascinating study by Traiger & Hinckley, but have been corroborated by multiple parties since.

http://www.traigerlaw.com/publicatio...udy_1-7-08.pdf

If the government shares blame (and it does) it's not for requiring banks to do something but rather for letting them do too much. For example, credit default swaps went largely unregulated, and permitting a 30:1 debt to capital ratio (under a 2004 SEC rule) was insane.

The irony, of course, is that conservatives are finding themselves in the odd position now of criticizing the government for not having done enough to stop bad practices which clearly contributed to the crisis, even though the permissive attitude directly arose out of conservative doctrines to let the market operate more freely. If the government had stepped in and refused to repeal Glass-Steagel, or required a 3:1 debt to capital ratio, or regulated CDSs, we would be in a very different world to be sure, but we'd also be hearing daily from conservatives about how much faster the economy would be growing if we didn't have all those pesky and needless regulations.

It's difficult to balance the need for government regulation with the need for markets to operate efficiently. What's baffling, however, is how quickly conservatives point the finger at government for not identifying every single issue that could lead to a crisis and stopping it. If conservatives were being more intellectually honest, they'd tell you that abuses like those we suffered are part of the system and are gradually worked out by the market over time without government intervention. They certainly wouldn't be blaming the government for not regulating more.

Yes- the government could have done more and should have done more. Fannie and Freddie clearly played a role, and the government clearly should have recognized the risks of securitizing substandard home mortgages (although Fannie and Freddie only facilitated and therefore accelerated securitizations- they didn't start them nor would their absence have kept us from getting to the same point).

So yes- there's room to point fingers at the government. There's room to point fingers at a lot of people. But as with anything in life, to figure out who was responsible just follow the money.

[Pheidippides]

On a non-political note, I talked to an acquaintance who works two blocks away from the protest park (same building I used to work in - I walked past/through that park every day, and it's not large). He told me that the people are starting to get quite stinky. He also told me that NYPD has brought in a bunch of mounted units for crowd control, so you have a fair bit of horse excrement and urine around as well. Makes for a rather odorous area.

Looks like Bloomberg is taking the approach that NYC should just let them be - with cold weather coming up soon, the general feeling is that they'll disburse on their own as winter comes on. I think he's right, and it's a sensible strategy.

[il Padrino Ute]

Have these OWS folks ever thanked the owners of the park for allowing them to make a mess of private property? If the property owner wanted them off, would they comply and move?

Just curious...

[Moliere]

Yes- there is plenty of blame to go around, but I'm surprised how many people have clung to the "government quotas" argument as if it had some large effect on the crisis. There have been many studies of that very topic, and I'm unaware of any that have concluded that CRA loans were large contributors to the meltdown. To the contrary, there's substantial evidence suggesting that: (i) CRA lenders were far less likely than non-CRA lenders to make risky home purchase loans; (ii) the average APR on high cost loans originated by CRA banks was lower than the average APR on high cost loans originated by other lenders; and (iii) CRA banks were more than twice as likely as other lenders to retain originated loans in their portfolio (i.e., the CRA loans were far LESS likely to be securitized). Those points are all out of a fascinating study by Traiger & Hinckley, but have been corroborated by multiple parties since.

http://www.traigerlaw.com/publicatio...udy_1-7-08.pdf

If the government shares blame (and it does) it's not for requiring banks to do something but rather for letting them do too much. For example, credit default swaps went largely unregulated, and permitting a 30:1 debt to capital ratio (under a 2004 SEC rule) was insane.

The irony, of course, is that conservatives are finding themselves in the odd position now of criticizing the government for not having done enough to stop bad practices which clearly contributed to the crisis, even though the permissive attitude directly arose out of conservative doctrines to let the market operate more freely. If the government had stepped in and refused to repeal Glass-Steagel, or required a 3:1 debt to capital ratio, or regulated CDSs, we would be in a very different world to be sure, but we'd also be hearing daily from conservatives about how much faster the economy would be growing if we didn't have all those pesky and needless regulations.

It's difficult to balance the need for government regulation with the need for markets to operate efficiently. What's baffling, however, is how quickly conservatives point the finger at government for not identifying every single issue that could lead to a crisis and stopping it. If conservatives were being more intellectually honest, they'd tell you that abuses like those we suffered are part of the system and are gradually worked out by the market over time without government intervention. They certainly wouldn't be blaming the government for not regulating more.

Yes- the government could have done more and should have done more. Fannie and Freddie clearly played a role, and the government clearly should have recognized the risks of securitizing substandard home mortgages (although Fannie and Freddie only facilitated and therefore accelerated securitizations- they didn't start them nor would their absence have kept us from getting to the same point).

So yes- there's room to point fingers at the government. There's room to point fingers at a lot of people. But as with anything in life, to figure out who was responsible just follow the money.

This is a good post. FTR, I blamed everyone, just like you did

I'm for regulating derivatives in most cases. I'm for executive pay reform. I'm for restoring Glass-Steagal. I'm basically for a lot of Dodd-Frank, the only problem is that no one in Washington seems to be for any of this. They are all afraid of losing corporate donations.