So, I think the world economy is crashing due to the massive, and massively mismanaged, giga-corporations. With them failing, they leave a space for small businesses to come back, housing prices to return to reasonable levels, and forcing the endless streams of useless middle management to go out and get a real job.

I think government regulation and bailouts are supporting these top heavy monsters and going to make everything worse for everyone.

Thoughts?

Hey, I'm useless middle management.

To talk about the Auto Industry:


Why bail out a company in 08 that will still go bankrupt in 2010. Saving GM wont make them build a decent fuel economic vehicle. The same goes for the other top 2.

the world economy is collapsing because:

0. the united states economic recession, since all national economies are increasingly interlinked globally, caused by
1. serious contraction of the united states money supply, caused by
2. stoppage of lending (lending creates money under fractional reserve banking), caused by
3. toxic "exotic" loans (i.e. the mortgages) which are on alot of asset sheets but whose real value cannot really be ascertained, caused by
4. the subprime mortgage lending crisis, caused by
5. the collapse of the mortgage/housing buying/flipping frenzy, and its associated increase in the money supply, caused by
6. loose fiscal policy under greenspan around the turn of the century, that priced money too low caused by
7. greenspan and administration at that time

the bailout is an attempt to prevent a domino effect (one big firm dragging down several other firms associated with it). it also attempts to inject liquidity into the market (i.e. all this talk about "freeing up" the credit markets). in a way you are right, but your explanation is too simplistic. alot of firms made alot of bad loans. but that practice was hardly limited to big firms. but yes the bailout is actually rewarding some firms that made bad choices and imo therefore deserve to die.

To talk about the Auto Industry:


Why bail out a company in 08 that will still go bankrupt in 2010. Saving GM wont make them build a decent fuel economic vehicle. The same goes for the other top 2.

I agree. When did the government become a saftey net for big business? If your company is failing then maybe you should figure out why and change it or continue with what you're doing and run you company into the ground. We shouldn't reward companies that fail because they get greedy.

Maybe these companies should take out insurance policies. And maybe these insurance policies should charge enough money for premiums to where they can't tank.

Maybe these companies should take out insurance policies. And maybe these insurance policies should charge enough money for premiums to where they can't tank.

a credit default swap is essentially an insurance policy. but the AIG collapse had nothing to do with a incorrect valuation of risk and premium

it was collateralization. each firm has a rating. AIG was AAA. it had clauses in the credit default swap packages where it would have to pony up x amount of money collateral (aka collateralize) if that rating was downgraded.

when the market went poof, AIG marked down the value of some of its mortgage backed securities, as required by law in the wake of enron. this reduced AIG's capital strength. as a result, it was downgraded from AAA to A. this triggered the collateralization requirements in the credit default swap contracts.

in short, the housing market bust lead to AIG owing about $100 billion in collateralization requirements instantly. and it didn't have $100 billion in liquid funds.

AIG financial products was the subsidiary selling those swaps. they made ridiculously amounts of money during the boom. iirc there were only 200-300 people in that subsidiary. they pretty much single handedly destroyed the rest of AIG

^ Proof that Asians know numbers IMO.

Eh, the regulation and oversight fucked up if that is the case IMHO.

2nd gen knows his shit too i'm sure, so it's not just asians haha

it was more than just oversight. i think the administrations knew this would happen and kept it up, both dem and gop. but that's not TOO surprising. who wants to preside over a recession?

http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html
i like how spitzer had that little sexy time problem about a week after this article came out

Spitzer was a pretty good Attorney General.