Comments on: Banks: “We Don’t Need No Stinkin’ Lending”

By: Zhivago

Zhivago — Thu, 16 Dec 2010 14:24:49 +0000

This is the way banks gain profit. Banks also have to make money, they are not dropping to them from the sky.

By: Andrew Horowitz

Andrew Horowitz — Tue, 20 Jan 2009 02:02:12 +0000

Scott…

i suppose I am frustrated. Not in denial. May be a bit of both. But, point well taken. I will work something up .. Or at least try.

Much thanks..

Andrew

PS. Are you sure they were not listening?

By: Scott

Scott — Tue, 20 Jan 2009 00:07:10 +0000

Hi Andrew, I hope I don't come across as trying to pick a fight here because I do enjoy your work. To answer your question: "detailing it? Why? They do not listen to even those they respect. Why should I detail…? " That's a bit of a nihilist attitude, this is our government after all. You spend an entire podcast detailing the auto industry's problems and with all do respect I don't think they were on the edge of their seat tuning into that podcast scribbling down notes so there really was no point there either other then to engage and entertain your listeners (which you did!). Our financial crisis is probably the single biggest crisis of our lifetimes, so if you as a very engaging and intelligent financial mind spent time on reforms the auto industry should take (not just saying what they are doing wrong but brainstorming reforms) then I figured your listeners would enjoy hearing your thoughts on some things our government should be doing, not just what they are doing wrong.

I AM clear and agree that we should be letting the bad banks fail and the good banks survive so let me rephrase my question: What different actions, if any, should the Fed or Treasury be taking besides letting bad banks fail? I think we're in agreement on what they SHOULDN'T be doing, but should they be doing something for homeowners who will be foreclosed on, reforming the SEC, cut rates, should we be slashing taxes and upgrading our crumbling infrastructure, etc. I realize there are no easy answers I just thought your blog/podcast could spend some time moving beyond for a moment what we (the government) are doing wrong and exploring what the fed/treasury/congress/president should be doing (perhaps dedicate 1 podcast solely to this issue and then we can move on?).

Ultimately, the goal of your listeners is to make money so we don't need to spend every day breaking down alternative fiscal and monetary policy ideas that as you said probably won't be heard. But I think there would be interest among your listenership in exploring them for at least one episode.

By the way – an idea for a guest would be Mebane Faber. I'm a fan of his work, your recent interview with Tom Lydon made me think of Faber.

By: Andrew Horowitz

Andrew Horowitz — Mon, 19 Jan 2009 17:28:26 +0000

–
Scott:

We have said OVER AND OVER… Just pushing money to it is not good. Let them fail. I am sorry that somehow that is not clear enough. The government needs to stop rewarding those that did this, harsh consequences and let them fail. It can’t get much worse.

Also, detailing it? Why? They do not listen to even those they respect. Why should I detail…? What is the point? All we need to do is to know how to invest to profit by their reckless behavior and keep out of trouble. Right?

Thoughts?

Andrew

By: Scott

Scott — Fri, 16 Jan 2009 02:48:29 +0000

Hi Andrew, I appreciate all of the work you do on MSN and via your blog/website. I started listening to your blog every day in 2008 and it is a wealth of information. I do have one question or complaint that has gnawed at me since about last October. You have spent quite a bit of time (rightfully) complaining about the logistics and moral hazard of the 'bailout'. In fact, nearly all of the financial blogs and writers I read spend much of their time complaining about the bailout, but nary is their a voice who lays out a plan on what they would do. I think it would be helpful for you to spend significant time on a blog episode putting yourself in the position of Treasury Sectretary and Fed Reserve Chairman. What would you do, specifically, if you were in those positions? Perhaps you could address it like your blog episode that detailed what ailed the auto industry and then you made specific recommendations on what changes you thought would help the industry.

Keep up the good work!

By: Fred

Fred — Thu, 15 Jan 2009 18:06:50 +0000

A new emerging solution is social lending, where people lend to each other without intervention or intermediaries. This whole mess was caused because of our thinking that a centralized entity and a "fits all" regulatory framework will keep things tight… well… it did not work. Let the power of the masses deal with it.

I found out about is on change.org. Check it out and vote:
http://www.change.org/ideas/view/solving_the_cred…

By: Jonathan

Jonathan — Thu, 15 Jan 2009 02:37:16 +0000

A, "TRAP" well stated. The idea of "forcing" a bank to lend, in effect create more debt to solve a debt crisis is amazing. Although it parallels the of idea of bringing down a heroin addict by giving them slightly less addictive drugs, until they can finally be free of the addiction. Cold Turkey can kill the addict.

I am most discouraged by seeing the executives getting salaries and bonuses paid with federal (taxpayer/debt) monies. They continue to get paid for running their business into the ground. Moral Hazard at its worst. When my first business failed, I still had to pay my debts and NOT draw a salary. Not so with these guys. To add insult to injury I was audited by the IRS after my first business failure. These guys get golden parachutes.

Trickle down economics seems to have flaws during times of recession. Although I prefer not to have Keynesian economics used, I guess this is the time for it. The millionaires and billionaires don't want to loose their moniker, so they are not going to trickle much down.

And just to think, the real pain is just starting to be felt and the Fed has few bullets left.