Posted by
m0t0r1zed on Thursday, October 09, 2008 6:04:09 AM
i meant to stop posting since i've been procrastinating from life, but i just wanted to get out one last thing ... not that anyone is reading, but anyhoo ...
organizations are interested in self-preservation - including the megabanks. the "crisis" was created by self-serving loans by banks and low interest rates, and the temporary "solution" is loaning / giving reckless banks our money and lowering interest rates? ok ... so how is this not going to create another problem later on down the line ...
also, i don't see why gov't can't work with banks at the local and regional levels to assist them in setting up business loans. gov't is fixated on unwieldy and inefficient top-down approaches. congress prolly gave our money to the wrong people at the wrong level ...
if banks won't lend out money, you go around them - to force competition and make them lend out money or die off. i assume that banks make money by lending money. if they are not lending money, then they must have some alternative revenue source and are not functioning as banks, or they are anticipating more bailout money or ... again, the important principle to remember is that these banks are not altruistic, but selfish, agents that ran amok and broke the established ESS. they cannot be trusted.
currently, the gov't is seeking to re-establish the previous equilibrium state; however, if the megabanks were one of the primary causes of disruption, then you are merely feeding the beast / cancer that created the mess. their existence may be counterproductive, and you may have to apply selection pressure through promotion of sound competitors and alternatives. the threat of extinction may be necessary to rein in their "selfish" behavior.
these are just broad principles based on the casual observation of an outsider. to sum up - 1) do not trust the megabanks, 2) assist their competitors, 3) do not fall into the trap of trying to re-establish "normalcy." you will just recreate the same conditions prior to the crisis - which were unstable and led to the crisis - thereby perpetuating the crisis, not resolving it.
just general principles to keep in mind ... unfortunately, we seem to be doing precisely the opposite things ... whateva. i'm not an expert at anything anyway.
have a nice day! buh-bye!
edit: about the libor lending issue ...
is this partly a technical issue where contracts were written out pegged to a benchmark that seemed reasonable at that time, but now has gone haywire? since so many things seemed to be pegged to Libor before banking became a minefield, is there a way to artificially lower and set Libor to a "reasonable" rate until the dysfunctional banks are washed out of the system? since the rates are based on reported estimates (and there may have been underreporting before), why can't the estimates be "adjusted" (or have phony transactions where bank A lends to bank B and bank B lends back to bank A at some rate agreed upon through global gov't consensus)?
this would be a phony number, of course, but it seems to me that containment is needed to prevent the cancer from spreading outside of banking while the industry is undergoing chemo. the real Libor number could be reported separately under a different acronym - perhaps W.T.F., and that number could be used where it makes sense to use it (i dunno what Eurodollar futures contracts are all about, but i assume they'd be pegged to W.T.F. instead of the "adjusted" Libor).
i dunno everything that is pegged to Libor - just know that some home loans, student loans, and small business loans are pegged to it, but by creating an artificial Libor, you could then decouple old contracts from the current credit mess, i suppose. again, not sure what else is pegged to Libor, so maybe this idea is just stupid. heh. playing around with a benchmark is kinda underhanded, and maybe there is a better method out there. also, dunno if banks are already manipulating it for their own benefit.
then again, manipulating Libor may apply undue pressure to lenders, but an overly high Libor will apply pressure to borrowers who could default. pick your poison? meh. dun like the idea, but if it's a case where a benchmark that is normally useful has gone bonkers, i suppose it's necessary. unless it is supposed to go bonkers and is performing properly. or maybe the number hasn't gone bonkers, but is being overstated. hmm. i dun know enough about the issue or all of the inside baseball stuff to make a reasonable guess.
there seems to be a lot of hysteria about subjects that are unfamiliar to most of the population, so it is probably the perfect opportunity for unscrupulous behavior and manipulation. not sure which are the most reliable, objective numbers that could be used for assessment of impact.
blah blah blah about stuff i don't know anything about lol. interesting tho.