US Politics Mega-thread - Page 1074

On May 24 2014 08:40 JonnyBNoHo wrote:
You have a source for the Tokyo real estate value? That sounds hard to believe.

Sen. Ted Cruz (R-TX) said Thursday that Democrats are making moves to repeal First Amendment rights to free speech and religious liberty.

Cruz was speaking to pastors at a Family Research Council conference when he warned that Democrats were moving to quash political speech and "muzzle" pastors and their communities, according to video of a portion of Cruz's speech posted online by Right Wing Watch.

“I'm telling you, I'm not making this up," he said as the audience offscreen gasped. "Sen. Chuck Schumer [D-N.Y.] has announced the Senate Democrats are scheduling a vote on a constitutional amendment to give Congress the plenary power, the unlimited authority to regulate political speech. Because elected officials have decided they don’t like it when the citizenry has the temerity to criticize what they’ve done."

Credit cycles don't normally cause a financial crisis. Nor does a boom and bust in a particular industry (read: housing) normally cause a financial crisis. For example, the bust of the 2000's dot com bubble didn't cause a financial crisis. Prior to the crisis the housing boom was re-balancing, largely with growing exports.

The Federal Reserve
Pushing the Federal Funds Rate below 3% was probably the most significant cause of The Great Credit Crunch. On October 2, 2001 the Greenspan Fed cut the funds rate 50 basis points to 2.5% and continued cutting the rate to 1.0% on June 25, 2003 on fears of Deflation.

Instead the Fed caused the Housing Bubble and began the bubbles we are still suffering from in the commodities markets. A year later the Fed began to raise the funds rate at 25 basis points in each of the next seventeen meetings to 5.25% on June 29, 2006, which was the straw that broke the back of the Housing Bubble.

It's similar to a bank run. Investors fear that they won't get their money back and pull funds. In the case of money markets there is a maturity transformation involved between people who put money into the fund and those who borrow from it. Same as with traditional banks. And like traditional banks, the money market funds had no way to raise funds fast enough to prevent a run.

The Fed offers liquidity to banks. Money market mutual funds are not banks.

Arsonists deliberately try to set things on fire. I don't think the relevant story is that people purposely set the financial system on fire.

On May 24 2014 10:15 GreenHorizons wrote:


It sounded off so I asked, Then you responded with that, so I had to look more deeply into what you are claiming. Where are you getting this idea from?

Even the pieces I've found giving the MMF's and the run/s you were talking about a significant role in the financial crisis don't come close to claiming it was the beginning or 'the main reason'? In fact they seem to paint a radically different picture than you seem to be doing? Do you have a source to support your claim?



Source



Well that didn't happen overnight for no reason right? What do you think motivated/caused them to want to make a run?



Why do you think The Fed offered liquidity to banks but didn't to MMF's (pre-crisis)?



I agree with that. Reckless children playing with fire without adult supervision would be more accurate but not as comedic.

On May 24 2014 10:15 GreenHorizons wrote:


It sounded off so I asked, Then you responded with that, so I had to look more deeply into what you are claiming. Where are you getting this idea from?

Even the pieces I've found giving the MMF's and the run/s you were talking about a significant role in the financial crisis don't come close to claiming it was the beginning or 'the main reason'? In fact they seem to paint a radically different picture than you seem to be doing? Do you have a source to support your claim?



Source

Well that didn't happen overnight for no reason right? What do you think motivated/caused them to want to make a run?

Why do you think The Fed offered liquidity to banks but didn't to MMF's (pre-crisis)?

These extraordinary measures were undertaken under section 13(3) of the Federal Reserve Act, a special provision that permits the Fed to lend to individuals, partnerships, and corporations in “unusual and exigent circumstances.” source

Kentucky won a lawsuit on Friday against the federal government for the right to plant a shipment of hemp seeds that had been impounded. The case underscores what appears to be a comeback for the controversial plant that, despite having much lower THC levels than marijuana, has been classified by the Drug Enforcement Agency as a Schedule 1 drug on par with heroin.

Federal legislation outlawed hemp as part of a war on marijuana in 1937. But the farm bill, passed on Feb. 4, contained a provision that allowed colleges and state agencies to grow and conduct research on the plant in states that would allow it.

Growing hemp under these circumstances is now legal in Kentucky, along with 15 other states that have removed barriers to hemp production.

Though industrial hemp and marijuana come from the same plant — Cannabis Sativa — hemp seeds are bred to produce plants with 0.3-1.5 percent THC, whereas marijuana has between 5-15 percent. THC, the intoxicating ingredient in marijuana that gets people high, is far too low in hemp to have the same effect.

Hemp proponents said the plant can be an environementally friendly source of paper, textiles, oils, and even biodegradeable plastics.

What wasn't normal this time was the financial crisis. That began with a run in the money markets and spread throughout the system.

The Fed is only supposed to offer liquidity to banks. The Fed had to rely on obscure language in its charter to do what it's doing:

On May 27 2014 05:32 GreenHorizons wrote:


Following this reasoning that suggests the financial crisis was 'started' by the run on MMMF's, what is it you are suggesting started the run and, why did the run matter?

Investments go sour every day, why do you believe these investments going sour was enough to trigger such catastrophe?



Why wouldn't (we want)/The Fed want to offer liquidity to MMMF's?

You suggested you wanted The Fed to provide this liquidity recently, do you want it to stop? If so, when?

Either way, what do you think is preventing all this or worse from happening again?

Based on your interpretation of what went wrong (which is still unclear), what do you see as heading toward a solution?

Washington (CNN) -- Some conservatives unhappy with House Speaker John Boehner's leadership are looking for a replacement, and recent moves by Texas Republican Jeb Hensarling are fueling speculation he wants Boehner's job in the next Congress.

Hensarling, who was part of Boehner's leadership team two years ago but left to chair the House Financial Services Committee, gave an expansive speech last week hosted by Heritage Action for America, a group that frequently and publicly clashes with Boehner.

Asked afterward if he was interested in running for speaker, Hensarling initially said he was "flattered," and said, "It's not something I've aspired to. It's not something I'm thinking about."

But then he left the door open, saying, "No, I haven't been Shermanesque, again I'm not sure there's any opportunity I want to foreclose."

While Heritage Action's Chief Executive Officer Michael Needham told CNN that his group doesn't get involved in leadership races, the conservative group gave Hensarling a high-profile platform to outline his own conservative philosophy for governing.

Needham said there is a "real need to take on sacred cows in Washington at time when the party too often looks after K Street," a reference to the downtown D.C. address for corporate lobbyists. He said, "Jeb Hensarling is a great spokesman and fighter for conservative values."

On May 27 2014 05:32 GreenHorizons wrote:


Following this reasoning that suggests the financial crisis was 'started' by the run on MMMF's, what is it you are suggesting started the run and, why did the run matter?

Investments go sour every day, why do you believe these investments going sour was enough to trigger such catastrophe?

Why wouldn't (we want)/The Fed want to offer liquidity to MMMF's?

You suggested you wanted The Fed to provide this liquidity recently, do you want it to stop? If so, when?

Either way, what do you think is preventing all this or worse from happening again?

Based on your interpretation of what went wrong (which is still unclear), what do you see as heading toward a solution?

On May 27 2014 10:11 JonnyBNoHo wrote:

MMMFs suffered investment losses which put investors at risk for not receiving 100% of their money back. Since you can pull your money from MMMFs quickly, investors did just that. Why that matters is the same reason why a bank run matters. As money is pulled the money supply effectively shrinks, which causes stress elsewhere, which leads to more runs, which causes more stress elsewhere... Essentially runs have a feedback effect to them. If they aren't stopped, they build momentum.

Money in MMMFs is treated as safe money. MMMFs are alternatives to bank deposits. You don't put money in them expecting any nominal loss. It is extremely rare for any MMMF to 'break the buck'.


Going forward I think there needs to be some way for the Fed to act as the lender of last resort beyond just traditional banks.

On May 27 2014 10:37 GreenHorizons wrote:
So people who thought MMMF's were safe money... Why weren't they?

What other institutions bad bets would you like to see the American tax payer cover when they go bad?

Money in MMMFs is treated as safe money. MMMFs are alternatives to bank deposits. You don't put money in them expecting any nominal loss. It is extremely rare for any MMMF to 'break the buck'

Because they don't invest in perfectly safe assets.

I didn't say that I want tax payers to cover losses.

On May 27 2014 11:04 GreenHorizons wrote:


So wait... They thought they were 'safe' but they weren't 'perfectly safe'.

So did MMMF's (and their investors) know how not 'perfectly safe' the investments they were making were?

On May 27 2014 11:14 JonnyBNoHo wrote:

I think so. We aren't talking large losses here. Just a couple percent.

I think I've answered plenty of your questions at this point.

On May 27 2014 11:55 GreenHorizons wrote:


Answer as many or as few as you would like, just know you haven't made a very convincing case that the 'start' of the financial crisis was a run on MMMF's. You also haven't made it clear why MMMF's being what you say investors knew they were, and performing less than perfectly, somehow caused a run.