Obama's plan to fix the financial crisis

[The Better Version]

1. More government oversight over investment and commercial banks. The logic behind it is that if the government is giving them money, then they have the right to oversee the money and control where and how it's being invested. More importantly, though, because part of the stimulus package is coming out of taxpayers money, it's the governments duty to make sure our money doesn't end up in bonuses or bad investments.

2. Mandatory capital reserves. The idea is to make sure investment banks have enough capital reserves so that they can make investments they can handle, instead of maximizing their leverage.

3. Creating a macro agency to collect and analyze all financial data in the nations economy in order to establish a more transparency. Before it was a bunch of smaller agencies with overlapping data, which made it difficult to spot bad assets.

4. Regulate the financial instruments and homogenize the investment and commercial banks rules and regulations.

5. Crack down on Fraud and insider trade.

6. Establish a commission of professionals to forecast economic conditions so that we never get into this mess in the first place.

So there you have it. Obama's miraculous plan. I was actually afraid he was going to take over the entire banking sector but instead took a more relaxed approach and opted for careful oversight instead. What do you guys think of this plan? If you disagree, could you provide, what you believe, to be a better solution? Btw I'm not trying to entice a challenge but rather trying to prepare for an exam and I figure getting both sides of the argument would provide a better understanding.

[crazzyass]

1. More government oversight over investment and commercial banks. The logic behind it is that if the government is giving them money, then they have the right to oversee the money and control where and how it's being invested. More importantly, though, because part of the stimulus package is coming out of taxpayers money, it's the governments duty to make sure our money doesn't end up in bonuses or bad investments.

2. Mandatory capital reserves. The idea is to make sure investment banks have enough capital reserves so that they can make investments they can handle, instead of maximizing their leverage.

3. Creating a macro agency to collect and analyze all financial data in the nations economy in order to establish a more transparency. Before it was a bunch of smaller agencies with overlapping data, which made it difficult to spot bad assets.

4. Regulate the financial instruments and homogenize the investment and commercial banks rules and regulations.

5. Crack down on Fraud and insider trade.

6. Establish a commission of professionals to forecast economic conditions so that we never get into this mess in the first place.

So there you have it. Obama's miraculous plan. I was actually afraid he was going to take over the entire banking sector but instead took a more relaxed approach and opted for careful oversight instead. What do you guys think of this plan? If you disagree, could you provide, what you believe, to be a better solution? Btw I'm not trying to entice a challenge but rather trying to prepare for an exam and I figure getting both sides of the argument would provide a better understanding.



1. The only issue with that is that we shouldn't be bailing out retarded companies. And as I'm sure you've noticed, bonuses didn't slip through. They were exclusively allowed. People in Congress didn't have time to even read it, and there are two possiblities for Obama: he either approved of this (which is a scary thought), or he didn't read his own brainchild. Either way, I"m thoroughly disappointed.

If they'd let the companies fail, the assets would liquidate and reform into a more efficient, non epic fail business. We could use all that bailout money to support the temporarily unemployeed until they received new jobs at the new companies.

2. Or rather, if they make a stupid mistake like investments they can't handle, we let them fail instead of insuring their mistakes. Backing their investments encourages them to make enormously high-risk investments for their own greed that will invariably lead to this mess of bailing them out again. If they learn they have to use their own money, they can't throw away ours.

3. Sounds good.

4. More or less, though I don't think it necessary if they had to be responsible.

5. Definately.

6. We already have similar institutions, all of them filled with neoclassical economists. They are the ones that brandied the same policies that got us into the mess and were completely blindsided. As much as they make fun of Austrain School of Economics, most of those economists accurately predicted this crisis. And yet we allow the ones that screwed it up to fix it.


My plan? Use all of the trillions given to retarded businessmen to the People in the form of relief, and use it to support the unemployeed until the irresponsilble businesses reform.

[patton]

1. More government oversight over investment and commercial banks. The logic behind it is that if the government is giving them money, then they have the right to oversee the money and control where and how it's being invested. More importantly, though, because part of the stimulus package is coming out of taxpayers money, it's the governments duty to make sure our money doesn't end up in bonuses or bad investments.

2. Mandatory capital reserves. The idea is to make sure investment banks have enough capital reserves so that they can make investments they can handle, instead of maximizing their leverage.

3. Creating a macro agency to collect and analyze all financial data in the nations economy in order to establish a more transparency. Before it was a bunch of smaller agencies with overlapping data, which made it difficult to spot bad assets.

4. Regulate the financial instruments and homogenize the investment and commercial banks rules and regulations.

5. Crack down on Fraud and insider trade.

6. Establish a commission of professionals to forecast economic conditions so that we never get into this mess in the first place.

So there you have it. Obama's miraculous plan. I was actually afraid he was going to take over the entire banking sector but instead took a more relaxed approach and opted for careful oversight instead. What do you guys think of this plan? If you disagree, could you provide, what you believe, to be a better solution? Btw I'm not trying to entice a challenge but rather trying to prepare for an exam and I figure getting both sides of the argument would provide a better understanding.

1. Bad idea. Giving corporation money to start with is a bad idea, but when you have the government forcing this money on private companies, and then making corporate decisions for them, you have a lot of problems. I'd prefer no bailouts and no cash infusions into the private sector, but if we're going to do it, let's have qualified people make the decisions. The government buying up private companies and then controlling them is the kind of thing that happens in fascism, not in America.

2. This isn't too great an idea either. The banking system is based on private capital that banks can attain for themselves (by private capital I just mean money they don't get from the government). It might be a good idea in the short run as an attempt to try and return the credit markets to "normalcy." But it's important to note that what we've considered "normal" over the past few decades obviously wasn't so normal. Credit markets made it way too easy for people to get loans, and this easy access to credit allowed the credit bubble to get huge. So maybe we don't want to return credit markets to what's been normal in the past.

3. Sounds like a basically good idea, not something I've seen much about but it doesn't sound bad. I'm often too ignorant of what the SEC does, but I thought that was their responsibility.

4. Ehhh, I'm not a big fan of regulation of business. But that's what I expected from Obama. But what regulations is he really going to pass? Monetary policy isn't set by the executive branch, so he doesn't have much control over interest rates. Is he seriously going to set regulations as to who can get loans from private banks? And he's going to do this while trying to "return the credit markets to normalcy?" And this is going to happen while the CRA is on the books? Bankers are profit driven, politicians are not. So it makes sense to me that we should let bankers make the decisions on who to give loans to, not politicians. Because as we've seen recently, its better for everyone when the banks are profitable. If it wasn't, then there wouldn't be so much temptation to bail them out.

5. Well this is good, but I don't think it's really like insider trading and fraud are running rampant and causing major problems.

6. This one is real bullcrap. We already have economic advisers trying to do this, but we can never get rid of boom-bust cycles. As crazyass said, all the advisors to Obama are neoclassical guys (and neo-keynesian), yet they're the ones who fucked up. We pay so much attention to fiscal policy when talking about economic policy, however the nation would be very smart to stop taking lessons from Keynes, and start taking lessons from guys like Friedrich Hayek and Milton Friedman. They understood that monetary policy was key to sound economic policy. The great depression and the current economic crisis both could have been avoided with sound monetary policy. We let out credit bubble grow so big that it was bound to burst. But sound monetary policy can prevent bubbles from getting too big, fiscal policy can't do that.

[Captain Politik]

funny thing is watching almost every stock I was looking at drop considerable once that monkey started talking. I knew that once I saw obama to speak at 1130 on cnn the stocks were going to drop.