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  •  The Great Depression began when (1+ / 0-)
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    jfdunphy

    the stock market collapsed because there was too much speculation and buying on margin.  We're in the trouble we're in now because banks were deregulated and consolidated and greedy, so they made bad loans that could not be repaid and now they don't have enough money coming in to meet the demands of investors.  You see they lost lots of the money that was put in their banks and now when people want it, it just isn't there.  That's how simple it is.

    The only psychology here is the greed and stupidity involved in making stupid loans.  I really can't understand Fanny and Freddie.  How could they make such stupid loans when they know that the government guarantees them and will have to bail them out to the tune of 5 trillion dollars?  That's 10% of the worldwide debt and half as much as the U.S. already owes.  Yes, the psychology associated with fear can stop people from investing, but there is a reality out there that includes bankruptcy and no money available for banks to function.  That is reality.  I also don't understand why these two banks are privately owned and still backed 100% by the U.S. government.  We cannot let private greed be rewarded with government bailouts.  These banks should have been owned and regulated by the U.S. government.  The government should never guarantee anything privately owned and operating for profit.  The $100,000 deposit government insurance is quite different and necessary.

    •  Don't be so quick to sell out greed (0+ / 0-)

      As though seeking a profit were some sort of paradigm of immorality.

      But just so I'm sure here, is what you are advocating a nationalization of the banking system? And, with that, a nationalization of the bank loans system? That's pretty dangerous (and invasive) ground. . . .

      •  No. Not suggesting nationalization of banking. (0+ / 0-)

        What I'm saying is that when government decides to create a bank that will guarantee all loans, it doesn't logically follow that they then privatize it and deregulate everything it does.  Would you guarantee someone's loans without placing some rules on how they operate?   Also, if you want people whose credit is poor to own homes, is it logical to turn their loans over to a private bank whose goal it is to make a profit?  If the government wants to help people who can't get loans, let them handle the loans directly.  I understand that loans were being given out and those applying were encouraged to lie on their applications.  Is this how to run a bank?  Greed is not the same as profit.  How much more does a person need when they already have more than they can spend in ten lifetimes?  Some of these people are consumed by greed.  It's a sickness.  As for nationalization, now that Fannie and Freddy are in trouble, nationalization looks good to the GOP.  These are the people who don't believe in government help, except of course, when it's for themselves.

        •  Point well taken (0+ / 0-)

          in regards to the GOP. Their recent boondoggles highlight the reason why I identify myself as a conservative and explicitly not as a Republican.

          The problem with your assessment of greed, I think, is that you look at other people's desires through the scope of your own ideas and values. There are people who could live for years on a $40k salary, and there are people who couldn't live for a month without their $40 million salary. We can make subjective assertions that the former is somehow 'better' than the latter - but why is it considered so wrong for a person to want to be able to capitalize as much as possible on his own ideas, ingenuity, and productiveness? It's like saying that a person's value has to be capped at a certain point - and if you try and do it that way, you'll find that productiveness tends to be capped at the same point. People need a motivation to create, and that motivation tends to come in the form of trading power. The most accessible symbol in our society of trading power is money. Ergo, most people try to get as much money as possible.

          What we're discussing, though, is a physical manifestation of a moral issue. I find greed (which seems more or less to be an obsession with earning and profits) to be morally reprehensible. That's all well and good - but it isn't the role of government to translate morality into law, and it certainly isn't within the legal scope of our governmental structure. But it's always difficult to assess motivations from actions alone - which is what people tend to do anyway, especially in times like these where prices are skyrocketing. It's a tough dilemma, but a personal one - not a governmental one.

    •  Fanny and Freddie twin frankenstiens (0+ / 0-)

      Freddie & Freddie were created by well meaning socialists to fund home loans to people who could not otherwise afford them. This pyramid scheme was privatized around 1970 because congress needed to hide this debt from taxpayers. Although these companies are no longer operated by government they do not operate as private corporations.Instead they make it profitable for banks to make foolish homeloans.F&F remain profitable by by lobbying  ploiticians (they do not pay taxes).F&F operate as piggybanks for liberal politicians,they are  a distortion of the market (not a result of capitalism)

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