Posted by: Timothy Ellis (The Tim)

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

213 responses to “Spending our way out of a spending-induced problem. Huh?”

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  1. Kary L. Krismer

    By mydquin @ 198:

    B. Executive pay is really a non-issue in an economic sense. The only reason the govt cares about it is that the media have whipped up a populist frenzy. .

    It’s not a non-issue economically. It’s incredibly stupid. Although these banks are not the type that typically do a lot of lending to small business, you can’t simultaneously complain banks need to do more lending, while setting policies that encourage banks to pay back the government loans ASAP.

    If I were a bank exec meeting with Obama, after his “fat-cat” statement yesterday I would have contacted all the other bank exec and organized a boycott of the meeting, and then issued a statement that we didn’t want to waste our time meeting with someone who is more interested in pandering to voters than helping the economy.

    I think it was Geithner a month or two ago that had to squirm a bit in explaining why he didn’t think the pay czar thing was a bad idea.

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  2. mukoh

    IMO, rescuing banks is not a bad thing. I think and most of my partners, and friends agree that leaving banks in the same structure that they are right now, is the bad thing. Banks need to be broken up into entities that do not have systemic risk to the economy or financial system, I think too big to fail is still going to be coming back and haunting us. If you look at B of A now it is even larger then it was before the crash.

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  3. mydquin

    RE: Kary L. Krismer @ 201 – I don’t see how you are showing that exec pay is economically relevant. It might be politically relevant, but exec pay is peanuts compared to the real issue. The exec pay issue is just a distraction from the real issues (e.g., fraudulent credit ratings, excessive leverage in commercial banks).

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  4. mydquin

    By mukoh @ 202:

    IMO, rescuing banks is not a bad thing. I think and most of my partners, and friends agree that leaving banks in the same structure that they are right now, is the bad thing. Banks need to be broken up into entities that do not have systemic risk to the economy or financial system, I think too big to fail is still going to be coming back and haunting us. If you look at B of A now it is even larger then it was before the crash.

    Exactly. People should have their panties in a knot about the lack of regulation, not about the rescue package or the stimulus. We need to remember where this whole mess started (i.e. credit rating agencies being allowed to issue fraudulent AAA ratings on mortgage-backed securities) instead of where it ended up (i.e., the rescue).

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  5. Kary L. Krismer

    RE: mydquin @ 203 – It’s not the pay that is relevant. It’s the banks paying back the TARP funds early so that they can avoid government interference in their businesses that is relevant. The TARP dollars are much bigger. They could be used to be loaned out, where they should create some jobs, but instead the funds are going back to the government, and no longer earning the government interest.

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  6. mukoh

    RE: Kary L. Krismer @ 205 – I thought TARP was not ment to be used for lending out more money?

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  7. Kary L. Krismer

    RE: mukoh @ 206 – I don’t recall that at all, but maybe. I seem to recall complaints that they couldn’t demonstrate where the money had gone, and that I think would be lending.

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  8. Matthew

    Privatize the gains, socialize the losses… Nice mantra floating around here.

    The banks took taxpayer money to post record profits, without any accountability and without the taxpayer getting any reasonable claw backs.

    The model has not been fixed, we merely gave them a bundle of money without fixing what caused the problems in the first place.

    The financial reforms passed so far are a complete joke.

    The banks paid themselves huge bonuses to assume huge risk in a giant insurance fraud scheme, and came begging for a bailout when it came crashing down. They took my money, turned record profits, and now its biz as usual.

    The banks own this country, if you are ok with that, SOLD TO YOU!

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  9. Matthew

    Kary,

    BTW, the banks weren’t lending any money when the got TARP assistance, and they aren’t lending money now that they have paid it back.

    0 X 0 = 0

    WHAT IS THE DIFFERENCE??????

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  10. softwarengineer

    RE: Matthew @ 208

    There’s Gold in Them Thar Stock Hills

    At least for 2009, or until the stimulus welfare to the banksters runs out?

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  11. explorer

    I’d say #208 is a fine example of “populst” analysis getting to the heart of the matter. Well said Matthew.

    Bailouts without clawbacks and defined conditions only delay the inevititable. I would rather see a SHORT, sharp, crash, than a long extended decline. The latter only really benefits the wealthy.

    Restructuring the banks is a good idea, and is more “populust” than at first meets the eye. the chances of that happening at this point, seem less than zero.

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  12. mukoh

    RE: Matthew @ 209 – Your stats might be incorrect, the banks are not lending to mainly secured real estate loans, they are however lending in other aspects.

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