Fannie Mae and Freddie Mac aren’t the problem- they’re the symptoms.

There are two approaches to medicine in my humble opinion: one tries to prevent illness or fix what’s causing the symptoms, the other- treats the symptoms and could care less about the cause.

Back aches are the best example- often, losing weight, proper shoes, changing mattresses and a lot of pilates/yoga will cure back problems- or there is the other route: drugs, surgery, braces etc.

The current financial crisis will continue until we start working on the core problem- and not treating the symptoms. No matter what you hear out of the “Political leaders” it will be wrong until we cut the apron strings to the banking, financial and insurance industries from the politicians campaign slush funds.

Once that happens, legislation that makes sound financial sense can be passed.

From the AP newswire today- the following talks about the bailout of Fannie Mae and Freddie Mac:

Fannie Mae and Freddie Mac together hold or back half of the nation’s mortgage debt, and have played an increasingly important role in the real estate market since the credit crisis started in August 2007. A government bailout could cost taxpayers around $25 billion, according to the Congressional Budget Office…

At a rally in Colorado Springs, Col., Republican vice presidential nominee Sarah Palin said, “They’ve gotten too big and too expensive to the taxpayers. The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help.”

Democratic nominee Barack Obama, speaking in Terre Haute, Ind., said, “These entities are so big and they’re so tied into the housing market that it is probably true that we have to take steps to make sure they don’t just collapse, because the housing market, which is already weakened, would be in even worse shape if we didn’t take some steps.”

News of the likely government takeover Friday followed a report by the Mortgage Bankers Association that more than 4 million American homeowners with a mortgage, a record 9 percent, were either behind on their payments or in foreclosure at the end of June.

That confirmed what investors saw in Fannie and Freddie’s recent financial results: trouble in the mortgage market has shifted to homeowners who had solid credit but took out exotic loans with little or no proof of their income and assets.

Fannie Mae and Freddie Mac lost a combined $3.1 billion between April and June. Half of their credit losses came from these types of risky loans with ballooning monthly payments.

While both companies said they had enough resources to withstand the losses, many investors believe their financial cushions could wither away as defaults and foreclosures mount….

On Friday, Nevada regulators shut down Silver State Bank, the 11th failure this year of a federally insured bank. And earlier this year, the government orchestrated the takeover of investment bank Bear Stearns by JP Morgan Chase.

“Any government action must help to strengthen our economy, which is suffering a crisis brought on by the administration’s failure to stop predatory lending,” said Sen. Chris Dodd, D-Conn., who chairs the Senate Committee on Banking, Housing, and Urban Affairs. “Any intervention also must minimize the cost to American taxpayers, and should not put other financial institutions at risk.”

Mobile News Network.

Home mortgages are fundamentally long term debt notes. They are supposed to be one of the safest investments that can be made. Typically, Americans move on average of once every 7 years- however, homeowners are supposed to stay longer- and homes are supposed to maintain or grow in value over time. We’ve unfortunately let bankers and financial markets use these holdings first as collateral for riskier investments- and then flat out deregulated the industry and allowed these long term secured debts to become un-collateralized stocks- that can be traded like monopoly money- instead of as real obligations.

Some people on Wall Street got very rich- siphoning off the cash, and leaving nothing. This isn’t the fault of Fannie Mae or Freddie Mac- this is the fault of unregulated capitalism. I recently heard some well respected pundit say that it wasn’t that we had a broken financial system- but that we now didn’t have one.

Every revolution has started because the gap between the rich and the poor got too big. The fat cats at the top seem to have forgotten this lesson, and now, since they own the politicians with their campaign contributions, don’t seem to be worried about Government stepping in and think they are safe. However, as the system fails, their ill-gotten gains end up not being worth as much as they thought- and soon, they too, will be in the same boat as the rest of us- with no oars, no rudder, no buckets and a bunch of big holes in the hull where sound financial controls could quickly fix, but- as you can see by the quotes above- neither party understands where this all must start.

The first step has to be intervention on credit card rates, fees and policy. With the Fed bailing out banks, the quid pro quo must be to lower rates to consumers to free up the consumer to spend again. At the base of our system, the little people must run fast on the hampster wheel to keep the bigger gears turning. Credit cards can’t syphon the spending ability away with 29% rates.

Second phase must be some sort of homesteading solution in lieu of foreclosure. Empty houses and fire sales on homes by banks stuck with defaulted properties are hurting everyone, including the banks. It is in our best interest to protect these home values.

Third: Wall Street has to get back to investment as a legitimate, long term strategy for wealth creation. It’s not a casino to play for a day and walk off with a bundle. Stocks must be held at least a year, and bonds longer. Secondary markets have been ignored as a major cause of our problems; it’s time to either eliminate them or severely regulate until we have some stability on Wall Street.

Fourth: It’s time to make certain that people actually earn what they make by providing something of value- instead of through greed and cunning. Publicly traded companies should no longer be able to pay executives handsome salaries for running companies into the ground without fear of repercussions. The CEO of Countrywide made off with hundreds of millions for running what has been nothing but a legal ponzi scheme. Same for Enron. Etc. It’s time to start imposing the death penalty for crimes against society as opposed to just crimes against persons. Yes, it’s radical, but, how many people have had to suffer because of their actions? Seriously- John Wayne Gacy or Charlie Dalmer Jeffrey Dahmer didn’t affect near as many people.

I’m sure there are people who will want to crucify me for asking for such radical change. I’m sure people think that being smart enough to “beat the system” is OK and the American Way- however, making five billion on Wall Street in on year isn’t possible uneless the system is severely broken and in desperate need for re-engineering.

Thoughts?

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36 Responses

  1. Larkin September 7, 2008 / 12:11 pm
    It’s Jeffrey Dahmer, and I hope you aren’t serious about the death penalty, though certainly long prison terms (50+ years) might provide the incentive for some of these guys to wake up and smell the coffee. (And pancakes.)

    I’d like to see some legislation (or at least banking regulations) on the federal level that prevented the issuance of second mortgages except in the most extreme circumstances. I think you should have to prove terrible financial hardship in order to get one. Banks promoting second mortgages for home improvement, college educations and vacations (vacations!) just makes my stomach turn. Don’t people realize that they’re risking their homes to go to Disneyland? To buy more crap to put in the garage? For their new Prius?

    The American Middle Class has forgotten how to delay gratification. They want what they want and they want it now. They spend money on things they don’t need, or that they consume immediately and pay for over the next twenty years, shackling themselves to endless debt. How much of our economy is based on the paying of interest? Remember in the old days, wealthy people bought with cash or a check, or occasionally (for convenience only) on private account. Credit was for people who couldn’t quite make it. It’s fast becoming that way again.

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  2. David Esrati September 7, 2008 / 1:32 pm

    @Larkin-
    Nope, no typo on the death penalty. Why should we as taxpayers pay for room and board for these goons for 50 years?
    Second mortgages is only the tip of the iceberg- and you are living in la-la land if you buy this NeoCon crap that it’s all the fault of people living above their means- the books were being cooked not by the borrowers- but by the financial types on Wall Street.
    As to your last point: The “American Middle Class” hasn’t existed for 30 years. Who are you kidding?

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  3. Allison September 7, 2008 / 3:02 pm
    I guess I’m in La-La Land, too. My husband and I live in the home I owned before our marriage, the first home I ever bought. We enjoy a ridiculously affordable mortgage, and have resisted the lure of larger, newer housing for the security of that ridiculously affordable mortgage.

    I had a pre-approved mortgage and knew exactly how much I was approved for – which was not necessarily what I felt I could afford at that time. I was a paycheck-to-paycheck single parent and knew it was me – not the broker, the realtor, or the bank – who had to come up with that payment each month.

    In the recent past, I have known many people, young and not so young, who brag about the “great rate” they got on their second mortgages – opened so that they could buy a home they really couldn’t afford without a downpayment they didn’t have.

    They brag about the great ARM they got, and how they either don’t plan to be in that home when the rate expires, or “they don’t think rates can go up that much.” I have one friend who laughs that most rooms of her house are void of furnishings – because the overwhelming mortgage they took on to move into a neighborhood they felt they deserved but their incomes don’t qualify them for doesn’t have any breathing room. You know – for discretionary things like lamps and chairs. This same friend found the money to lease (not buy) a cute little sports car, though. Good for her.

    A former co-worker lost her house earlier this year to foreclosure. After several cash out refi’s, they were left with a $100k mortgage on a dumpy house that auctioned for $38k.

    So is it the lenders or the consumers? I think it’s both – and neither deserves a taxpayer bail out.

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  4. Greg Hunter September 7, 2008 / 4:36 pm
    Bush, as well as Reagan before him, have been at the helm during the biggest taxpayer robbery in human history. Paulsen is just kicking the can down the road to the next administration. This bubble has been brewing for awhile and the Boys on the East Coast (NYC, Boston and DC) have fleeced not only hardworking Americans, but most of the world to build terrible houses. We are stupid and we get what we deserve.

    In honor of the Greek Festival we will use the Greek Term for “our supposed Christian Nation”. Kakistocracy.

    Government under the control of a nation’s worst or least-qualified citizens

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  5. tg September 7, 2008 / 4:50 pm
    Getting back to the concept of fixing the underlying issue – let’s talk about financial literacy. The companies that got us in the mess were preying on the financial illiteracy of its target market. They played to the concept of what payment one could afford, and the average target has no clue what compounding interest is or how it literally adds up.

    Look at the initial predatory lending phase in the late 90s & early 2000s – they went after specific zip codes in the state of Ohio – because of loop holes in the state code. When you don’t have any money to start with, it’s hard to know how to manage it. When you don’t know how to manage it, how do you teach your kids?

    Bush may have wanted the American Dream to be available to everyone, but I don’t know of anyone putting a gun to the head of lenders to specifically target people they KNEW could not afford the loan. Let alone the practices of aggregious closing costs or falsifying income.

    The GREED existed on both sides of the fence. The average person knows whether or not they can afford a home, the payments, the maintenance…but when they’re dangled a payment they are told they can afford, they threw common sense to the wind and grabbed the bait.

    On the other side, the lenders KNEW some of those people could not afford the payments but knew they could make additional money on lates fees & interest. It’s the same with credit cards.

    And let’s not forget about shareholders who wanted fantastic dividends. There is plenty of blame to spread around here.

    Both sides have some role in this but I truly believe if we started teaching financial literacy, starting with Piggy Bank 101 in Kindergarten and all the way through high school, the average American could have figured out if it’s looks too good to be true, then it probably isn’t true.

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  6. David Esrati September 7, 2008 / 5:05 pm

    TG- problem is you are operating under the fallacy that it’s the fault of the individuals that these big banks are failing- it’s not. They sold off the notes and pocketed the money, and then reinvested it in more bad investments, and pocketed the money- and then when they couldn’t pocket the money anymore- because they’d already picked every pocket clean- they threw up their hands and said “Daddy Bernacke Bernanke, bail us out.”
    Then the shit rolled down hill.
    If you couldn’t “package” and resell- what you know is bad product- and shield yourself from the lawsuits- you wouldn’t have made the bad loans in the first place.
    Do you understand the concept of “secondary markets” now?
    The big banks were setting up dummy corporations to allow them to offload the bad loans- and that, my friend, is the problem.

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  7. Greg Hunter September 7, 2008 / 5:42 pm
    No there is not plenty of blame – We supposedly elected adults, but really they are criminals. What happened to “looking out” for the less fortunate or educated. It was obvious in 2002 the bubble was on, just by going to homearama as good jobs were leaving, but bigger homes were being constructed. Did not compute. But hey America never likes the truth, they like Cheerleaders, which is why we elect them. Palin and Bush, we are f*********.

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  8. Jake September 7, 2008 / 5:44 pm
    @David

    I believe it’s spelled “Bernanke”

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  9. tg September 7, 2008 / 9:02 pm
    “TG- problem is you are operating under the fallacy that it’s the fault of the individuals that these big banks are failing- it’s not. ”

    No David, I am not. The reason the big banks are failing is because they were greedy bastards. But the greed does not stop with them. I’m simply saying there is not just ONE guilty party here – a lot of “planets” lined up for this to happen. No one is blameless.

    I don’t believe the banks should be bailed out – they created this mess. But they had to have the help of dirty realtors, appraisers, and mortgage brokers – each of which were getting their cut of the pie – as were the shareholders who had a stake in the hedge funds.

    Greg – yes, we supposedly elected adults – but are we not adults? By electing them, are we subordinating all of our responsibility and expecting them to do what is right? How can we expect that of individuals who spend hundreds of millions of dollars for a job that only pays a 1/4 of a million in an annual salary? Oh, that’s right, they’re betting on the come – they know there are book rights & speaking engagements ahead.

    So to clarify – I think the lenders got what they deserved, but I also don’t believe everyone in default of their mortgage is necessarily a victim.

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  10. Larkin September 7, 2008 / 9:25 pm
    Sorry, I beg to differ.

    What do you call the enormous number of people who live above the poverty line but are decidedly not rich? Um-hm, the Middle Class. My husband and I are not rich, but neither are we poor. (And I am NOT using John McCain’s definition of “rich.”)

    What ever happened to personal responsibility? No one held a gun to the heads of the individuals who overextended themselves and said “Take out another loan you can’t afford, you can pay those bills with this credit card.” While financial education is essential, you don’t have to be a rocket scientist to realize you can’t afford something. A child can do that.

    Not to put too fine a point on it, but who creates the unending desire for all of these material goods?

    Finally, before advocating the death penalty for anyone, perhaps you ought to read this story from the Chicago Tribune about an innocent man executed in Texas in 2004.

    http://www.chicagotribune.com/technology/chi-0412090169dec09,0,4934450.story

    Surely the expense of housing inmates is less expensive than that of further chipping away at our facade of civilization?

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  11. Jeff September 7, 2008 / 9:50 pm
    Fannie Mae used to be a federal agency before it was quasi-privatized in the 1960s. Apparently it helped set the financial foundations for the postwar housing boom. Heres a brief history:

    Source:

    http://hnn.us/articles/1849.html

    “Fannie Mae was created in 1938 as part of Franklin Delano Roosevelt’s New Deal. The collapse of the national housing market in the wake of the Great Depression discouraged private lenders from investing in home loans. Fannie Mae was established in order to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing.

    “Initially, Fannie Mae operated like a national savings and loan, allowing local banks to charge low interest rates on mortgages for the benefit of the home buyer. This lead to the development of what is now known as the secondary mortgage market. Within the secondary mortgage market, companies such as Fannie Mae are able to borrow money from foreign investors at low interest rates because of the financial support that they receive from the U.S. Government.

    “It is this ability to borrow at low rates that allows Fannie Mae to provide fixed interest rate mortgages with low down payments to home buyers.

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  12. David Esrati September 8, 2008 / 6:06 am

    @Larkin
    “What do you call the enormous number of people who live above the poverty line but are decidedly not rich? Um-hm, the Middle Class.”
    I call them the “struggling to get by class”- without access to affordable health insurance/health care, who could at any moment lose their job due to actions well beyond their control. My health insurance rates yo-yo up either 20 or 40% each year- yet I can’t charge my customers that much more.
    One major illness in your family- and no amount of frugality finds you homeless.
    As to the death penalty- there was no question of the guilt of the people at the top of Enron- in fact, in these major white collar crimes- there is a clearer pattern of corrupt and morally bankrupt behavior than in most murder trials.

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  13. Larkin September 8, 2008 / 10:11 am
    “I call them the “struggling to get by class”- without access to affordable health insurance/health care, who could at any moment lose their job due to actions well beyond their control. My health insurance rates yo-yo up either 20 or 40% each year- yet I can’t charge my customers that much more.One major illness in your family- and no amount of frugality finds you homeless.”

    David, I would not expect a person of your intelligence to paint with such a broad brush. The Middle Class has always faced fiscal challenges, “struggling to get by” is perception. Perhaps if we did not want so much “stuff” we would not struggle so hard to get by.

    As to the death penalty– civilized countries do not execute people. Period. I understand the emotional appeal of capital punishment, but I cannot support that kind of state-sponsored barbarism philosophically or intellectually.

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  14. David Esrati September 8, 2008 / 11:44 am

    @Larkin- Civilized countries also have universal health care (something that convicts are entitled to- but not the citizens).
    Again- the “middle class” is a misnomer- we have a privileged class- and we have the rest of the great unwashed. The gap between the wealthy and the “middle” is so large now- that there is no more bell curve- it’s more like a hockey stick curve.
    I fully understand your feelings about the death penalty- however, I don’t share them.

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  15. Billy Jackson September 8, 2008 / 12:25 pm
    How good is the health care in those countries with universal health care. I’ve heard both sides. I watched the objective Michael Moore’s film Sicko. And then I read a rebuttal to the movie, claiming that the care is poor, it’s tough to get in to get seen, etc. Wonder about your thoughts.

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  16. David Esrati September 8, 2008 / 1:48 pm

    @ Billy- I’ve written before about how I feel on universal health care. When McCain try’s to scare us talking about letting some bureaucrat decide our health care- I’m wondering how we differ that “bureaucrat” from the one that works for the insurance company?
    Insurance companies are being allowed to pick and choose who they cover- the system is broken- we need to fix it.

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  17. Larkin September 8, 2008 / 1:51 pm
    Okay, so if we’re going to be civilized we will have socialized medicine (not such a bad thing as people fear, and I’ve lived with it in three countries, including the notorious Italy) and no death penalty.

    According to your logic this will also restore the middle class. If you think there is only the privileged and the great unwashed, YOU need to get out more, see how the rest of the country lives.

    My position on the death penalty is not based on feelings, and yours shouldn’t be either. My FEELINGS may be that I’d like to rip that S.O.B. limb from limb. As a human being, I am allowed to “feel” this. Governments, on the other hand, are expected to take a rational approach, and the death penalty is anything but rational.

    David, I say this as someone who had lost two close friends, a handful of acquaintances and a cousin to murder; as someone who has interviewed men on death row, and someone who has held grief-stricken parents in their anguish. I’ve attended the autopsys of brugal murders, and sat in on countless trials and inquests. I’ve been stalked, harrassed and threatened by a murderer who is still on the streets.

    I don’t expect you to agree with me, but you would represent yourself better if your own philosophies were more consistent.

    Have to run.

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  18. In the 'burg September 8, 2008 / 2:18 pm
    David’s philosophies ARE consistent: He supports the death penalty, abortion rights, and assisted suicide. He’s an equal opportunity executioner. ;-)

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  19. Larkin September 8, 2008 / 3:15 pm
    ‘Burg,

    LOL. However, you know that those are actually polar opposites from a philosophical point of view. Assisted suicide and abortion rights involve free will and freedom of choice; clearly that’s not at play in regards to capital punishment. Good quip, though.

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  20. David Esrati September 8, 2008 / 3:24 pm

    @Larkin-
    Criminals have a choice on if they commit a heinous crime too Larkin.
    I’m not for executing semi-guilty or the innocent convicts- just the absolutely guilty, sociopathic ones.

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  21. In the 'burg September 8, 2008 / 3:33 pm
    Ok, Larkin, but just for argument’s sake:

    Maybe the state should attach no more value to life than the individual does.

    If a terminally ill person says their quality of life has deteriorated to the point that they no longer wish to live, the state should not intervene.

    If a pregnant girl or woman says that carrying and delivering a fetus would be physically, psychologically or financially devastating for herself and/or the child, the state will not intervene.

    And if someone demonstrates that they don’t value life (by committing murder, for example) the state can impose capital punishment.

    Murderers have free will and freedom of choice. They waived their right to life, liberty, and the pursuit of happiness when they committed the crime. It’s easy not to kill people. I’ve lived over 40 years and I haven’t killed anyone yet (although, Lord knows, I’ve been tempted).

    But I agree with you that David’s idea about death sentences for white collar, nonviolent offenders is “out there”.

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  22. David Esrati September 8, 2008 / 3:36 pm

    Kenneth Lay violently ripped the future out of the hands of a lot of his employees- while living an obscene lifestyle. He took their pensions, their life’s work and blew it all- so he could be “rich.”
    He got what was coming to him- only it was a higher power that did it to him than the State.

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  23. Larkin September 8, 2008 / 4:18 pm
    Burg…

    But your argument is specious. The state does intervene in assisted suicide (in fact there are very few states where this is legal, and then only in very specific circumstances that meet specific criteria.) The state does set limits on terminating abortions, which is why you can’t “freely” decide at 8 mos gestation that you don’t want to be pregnant anymore.

    What is the point of capital punishment? It is not fairly imposed: a man with sub-normal IQ shoots a clerk at a convenience store in Virginia and is executed for the crime: a man in Xenia murders his preegnant girlfriend and gets 10 years. Five for her, five for the illegal termination of pregnancy. Why is one woman’s life worth only five years, while another’s mandates the taking of the killer’s life? Where is the logic (or even common sense) in that?

    People who witness executions do not feel better afternoon. Families who think they will find vengeance don’t. Many of the people who witnessed the death of Timothy McVeigh regretted it later. It doesn’t bring anyone peace.

    The long process of imposing the death penalty is expensive and cumbersome, with numerous appeals. People who live on death row are harder for the Corrections Department to manage because they have no incentive to behave. There is far too much opportunity for mistakes. Laws in this country have to be equally applied, so only applying the death penalty to those who are “definitely” guilty is a garden path no one should traverse.

    In 2002 Texas executed a woman, Betty Lou Beets,who murdered her husband after years of abuse? Is that justice? It’s one thing to say “it’s easy not to kill people” but that’s not always the case, and its important to neither presume nor use our own “privileged” lives as the standard to which all others are held.

    I think a lifetime in solitary confinement in a 6 by 8 cement block cell is punishment enough for any crime. David, money is not everything. These people had a setback. It wasn’t the first company, it won’t be the last to leave their pensioners high and dry. But people go on, or they don’t. It’s all about choice.

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  24. tg September 8, 2008 / 4:27 pm
    Several years ago an 81 year old, East Dayton woman was raped and killed in her home. She was a friend of my mother’s. My first thought was “I hope they fry the bastard”. Later it was discovered that the accused was the 21 year old neighbor, who just happened to be a classmate of my son’s. How ironic is that?

    I used to volunteer in the school cafeteria with his father. My husband used to coach the kid in basketball. I knew what a good family he came from, but he got screwed up with the wrong crowd and started doing drugs and making generally bad decisions.

    He is now doing life in prison. I have to tell you, it’s really easy to scream death penalty when you don’t know the person or his/her family – but it’s a different story when you know the family.

    I think the Kenneth Lay’s of the world should have to pay back every penny – no matter how hard it is to determine just how many pennies are involved. I think they should have to liquidate everything they own to make restitution. They sure didn’t care about who they were screwing over and if those people lost everything, why should we care if the same happens to them?

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  25. Gene September 8, 2008 / 10:32 pm
    Besides the holding a stock for a minimum of one year ( maybe make it 1/4 year) I actually like everything you proposed.

    CEO’s still will make a fortune, but what is the cap?

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  26. Gary September 8, 2008 / 10:49 pm
    This is purely information. I neither agree or disagree with it. I just think some of you may find it interesting. In the past, governments avoided the whole issue of just punishment by declaring someone “Outside the Law’ or an “Outlaw”. This meant that their crimes were considered bad enough that their lives were forfeit. The government or King (in the Middle Ages)were not responsible for carrying out the punisment, they wouldn’t charge anyone who did though and would reward them for the service. Hence we had bounty hunters and all those dead or alive posters.
    I think that they have pretty much proven that the death penalty does not deter or reduce the amount of serious crime. It does reduce the liklihood of repeat offences and the cost to society though. You know, if this were the dark ages and we were Huns, these criminals would be heros as long as their victims were enemy tribes people or Romans!Many of the less intelligent ones would become casualties of war, thus culling the herd but would be mourned as heros. This has been the case for what, 150,000 years? This has only changed in the last 100 years or so in this and many other countries.
    Our prisoners receive free room and board, free meals, free TV and utilitie, free medical attention even if they are paralyzed as the result of their crime and all the sex they can handle whether they want it or not. To many, this lifestyle is desireable. I am informed that the highest cost for prisoners is not labor any more but health care. Some prisoners cost the system over $100,000 each in medical costs due to having AIDS or major health conditions. It would be cheaper to society to put some of these people on house arrest with an outlaw status if they leave their home.

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  27. David Esrati September 8, 2008 / 11:08 pm

    @Gene-
    There is no cap if it’s their own money. The cap, if it’s public money is a ratio established by number of people employed, their wages, gross profits and a distribution schedule. Shareholders first, employees second, and then the icing for them.
    @Gary-
    Some of those convicts couldn’t find a house to live in. That’s the point, society doesn’t want them anymore.
    @ Teresa-
    Please look at my hotbutton issues category- I clearly explain when I believe the Death penalty is to be used. Repeat offenders- absolute surety of the crime, no remorse.
    Charlie Manson is an example.

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  28. tg September 8, 2008 / 11:15 pm
    @ David –

    Can’t wait to use this line on you “don’t take things so personally”. I was merely commenting on how I felt about the death penalty in general – it wasn’t directed at you! (tee hee, that felt good).

    By the way, it’s Theresa, with an “h”. :)

    I say ship them (all criminals) off to a remote island somewhere and let them fend for themselves. Oh yeah, isn’t that how Australia got its start?

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  29. E. September 9, 2008 / 7:29 pm
    I received health care in two countries with socialized medicine – England and S. Korea.
    And how was it you ask? How was it? It was GREAT!
    The truth is – THE GODDAMN HEALTH CARE WAS MUCH BETTER THAT WHAT I AM USED TO IN THE UNITED STATES.

    IT WAS BETTER, FASTER AND CHEAPER.

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  30. Mike G. September 9, 2008 / 8:14 pm
    To your point “Third: Wall Street has to get back to investment as a legitimate….”

    Hold stocks for a year? Why? At that point you make them bills and not tradable stocks.

    The basic idea of the market is to buy the good and sell the bad. With the way information flows now, this is a split-second decision, and is much often executed by a machine and not a person.

    Do you think folks with $50k in cash sitting in the pajamas at home playing on eTrade are making any impact in the market? No, they’re not.

    -Mike

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  31. David Esrati September 9, 2008 / 8:54 pm

    @Mike-
    Programmed trading isn’t investing. Companies net worth doesn’t go up and down 20% on a DAILY basis. How do you propose to make the volatility go away- and bring sanity to financial markets?
    Stock is, by it’s nature- supposed to be “OWNERSHIP” in a company- you don’t buy into a company for an hour- that’s called gambling.

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  32. Mike G. September 9, 2008 / 9:31 pm
    David, if you want to own part of a company, buy the stock and hold it. That is your choice. You have the ability to do that now.

    So David, here’s the scenario:
    You buy a company stock right now, and then, in the next 15 minutes the company releases earnings and a statement with “we feel the market will not purchase our products for the next 5 years”, and you want to sell it, obviously. That’s like your prom date saying she has herpes – get outta there. What’s wrong with that?

    Why do you want to limit someone to hold that stock for a year? At that point you are holding a bond for a company. Bonds have low risk (2.06% yield to maturity for 1 year today). Stocks have high risk (1.64% YTM for 2007 and some of 2008) but the returns can be much higher (see: MSFT, APPL, EMC, etc for the last x years).

    Pick your tables to throw down your chips. That is what we all do – whether it is in Vegas or a 401k or IRA or mutual fund.
    The market isn’t a wavy hell right now because of the investors, it is that way because common people agreed to math that would never work for them (mortgages), that consumers embedded themselves in $10-15k of debt in a year when their income is $50k, and that our education system failed at allowing potential homeowners to realize that an interest only loan means you only pay interest (see my post on Michael’s loveofdayton blog for my thoughts on your thoughts).

    -Mike

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  33. David Esrati September 9, 2008 / 10:25 pm

    Mike G- You revealed yourself quite well with the comment about the prom date- you had no love, no interest in her as a person- you were just out for a quickie.
    It’s that kind of thinking that has our “financial markets” not a financial market at all.
    I doubt you’d understand, you just want to get laid- not in it for a relationship.

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  34. Mike G. September 9, 2008 / 10:36 pm
    David,

    Very good observation. I think it clarifies how the market is and always has been since individual investing has been allowed. But, the points you try to make are not valid.

    A prom date is that, a date, it is a committment for an evening of nice dress and maybe dinner, etc. It is not something for life – it isn’t a marriage, as the prom date hasn’t been vetted through, and might end is drunken debauchery or might end in a ‘thank you’ and drop her off at home. If that is your expectation, good, then you are done.

    Look at this way, you meet the love of your live, and find out she can’t have kids. And, you want kids 100% right now. Do you sell now or do you keep in hopes that something will change?

    Define a relationship with a stock for me. I don’t day trade, I rarely trade on intraday market activity, I trade on what I know and understand about the company involved. I disagree with your last post.

    -Mike

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  35. pizzabill September 9, 2008 / 11:01 pm
    I personally don’t think either of you knows what you’re talking about. It’s pretty clear that neither one of you has actually gotten herpes from a prom date.

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  36. David Esrati September 9, 2008 / 11:07 pm

    @pizza boy is correct- I didn’t go to prom. The girl I wanted to go with went with one of my best friends- he puked on her at the prom dinner- and then made off with her virginity that night.
    As to Mike: If you truly do your research before you buy the stock- you should know if the company can give birth or not. You are giving them your money to make you money by the skills they have- not based on what other investors think that minute. Google hasn’t changed their business model, Apple hasn’t had a downturn in sales- yet their stocks go up and down wildly based on rumor and innuendo. This isn’t financial data- it’s a popularity contest.
    You are kidding yourself if you call that investing.
    If you were privately held- you wouldn’t let someone buy and sell part of your company based on daily deals.
    Think about what you are advocating- and think how trying to perform for quarterly returns is hurting the long term investment strategies of the American Corporation. Japanese planning horizons are over 10’s and 100’s of years. Ours is 90 days. We’re losing the war.

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