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You should also realize that people who did everything right lost. You could be a profitable employee at Bear Stearns, but a bunch of yahoos on a different floo

You should also realize that people who did everything right lost. You could be a profitable employee at Bear Stearns, but a bunch of yahoos on a different floor could implode the company. You can be an autoparts manufacturer whose line of credit got stopped because of a global credit crisis. You can be a student with a job lined up who happened to graduate in 2009 and have your offer revoked. The market isn't a meritocracy.

maxxxxx 9y ago
Correct. What bothered me was that the people who did things right and had no responsibility lost a lot whereas the responsible people stayed or walked away with a lot of money. At minimum some bank execs should have lost everything. Absolutely everything and then some more.
- skookumchuck 9y ago
  The FDIC means that banks no longer need to care about solvency. It's not the market doing that, it's government interference.
  - maxxxxx 9y ago
    The FDIC could seize banks (don't they?) and still protect deposits up to the 250k limit. They could also require claw-back clauses for banks that want FDIC protection. Without the FDIC the first thing banks would have done in 2008 would have been to drop the savings accounts of a lot of regular people. It plays an important role for the average citizen.
    - skookumchuck 9y ago
      > Without the FDIC the first thing banks would have done in 2008 would have been to drop the savings accounts of a lot of regular people. Banks go out of business if they get a reputation for defaulting on depositors' accounts. After all, would you deposit money in such a bank? I wouldn't, either. Depositors would still have legal recourse against the bank, too.
      - pjc50 9y ago
        Oddly, the only banks this happened to were in Cyprus and are still in business.
        skookumchuck 9y ago
        Are you a current customer of those banks? I'm not, either.
        jazzyk 9y ago
        They did not default - there was a 10% haircut on accounts > 100K. The haircut was possible only because most of the > 100K accounts were held by rich (mostly shady) Russians.
toss1 9y ago
What did it for me was well before the financial crisis, an earlier real estate crash. The bank at which our software/network business had a credit line lost a bunch of money on bad real estate loans. Their response was to turn the screws on all their customers. Although we had literally never been late on a payment in years, and had run up and down the credit amount, we were literally days away from having our entire loan called, requiring us to suddenly come up with far more cash than we had on hand that week, which would have ended the business. The only thing that saved us was the luck to have a relative that could co-sign for us. Other local businesses didn't have such luck and were shut down. The banks do a lot of marketing telling you how much they are "friends" of business, "there to help you grow", etc. It is utter nonsense. Never mistake a banker as a friend. If their incentives so dictate, it'll only take a New York Minute to stab you in the back. Edit: typos
skookumchuck 9y ago
Do you think a government bureaucracy (i.e. socialism) is a better arbiter of merit? For a more specific answer to your points, the free market is not a guarantee. It's probabilities. There are no risk-free actions, and you're not doing "everything right" if you fail to take that into account.
- LarryDarrell 9y ago
  It doesn't matter what he thinks, what you think or what I think. What matters is how and when the anger of those being stepped on fully manifests itself. Anyone who wants to protect "Capitalism" really ought to be frantically doing everything they can do to promote UBI or at least Universal Health Care and Education.
  - skookumchuck 9y ago
    Free K-12 doesn't count as universal education? And half of all expenditures on health care are spent by the government in all their various methods of handing out free health care.
    - freejulian 9y ago
      > Free K-12 doesn't count as universal education? No. K-12 doesn't qualify you for a job in the "modern economy." The sad thing is it's not even about the education: companies only look for the degree.
      - skookumchuck 9y ago
        You can get a free MIT education online, too. But of course that isn't good enough, either.
    - Broken_Hippo 9y ago
      Not when it isn't enough education to support yourself or get even a job requiring vocational education. It sometimes isn't enough on its own to go to universities in other countries. (The local university requires a certain number of AP courses with passing grades on the test or 1 year of university-level education to be considered eligible to go to school there if you are from the US). And not when it means that we aren't actually getting the best candidates for certain fields. To be a doctor, not only do you have to have the intellectual capability, but the financial ability as well. Yes, I know there are loans, but burdening folks with debt deters some folks from even trying... let alone the expenses required to apply and attend college.
Broken_Hippo 9y ago
This is generally the case. Anecdote: I worked in call center many years ago with a dude that worked for Enron. He was just an employee in a cubicle farm. He left work one Friday with a job. Monday, he found a box with his personal effects from his desk where his cubicle had been. That's how he found out he lost his job. He worked at the call center because the fact that he had Enron on his resume made folks hesitant to hire him, unfortunately.

maxxxxx 9y ago

Correct. What bothered me was that the people who did things right and had no responsibility lost a lot whereas the responsible people stayed or walked away with a lot of money. At minimum some bank execs should have lost everything. Absolutely everything and then some more.

skookumchuck 9y ago
The FDIC means that banks no longer need to care about solvency. It's not the market doing that, it's government interference.
- maxxxxx 9y ago
  The FDIC could seize banks (don't they?) and still protect deposits up to the 250k limit. They could also require claw-back clauses for banks that want FDIC protection. Without the FDIC the first thing banks would have done in 2008 would have been to drop the savings accounts of a lot of regular people. It plays an important role for the average citizen.
  - skookumchuck 9y ago
    > Without the FDIC the first thing banks would have done in 2008 would have been to drop the savings accounts of a lot of regular people. Banks go out of business if they get a reputation for defaulting on depositors' accounts. After all, would you deposit money in such a bank? I wouldn't, either. Depositors would still have legal recourse against the bank, too.
    - pjc50 9y ago
      Oddly, the only banks this happened to were in Cyprus and are still in business.
      - skookumchuck 9y ago
        Are you a current customer of those banks? I'm not, either.
      - jazzyk 9y ago
        They did not default - there was a 10% haircut on accounts > 100K. The haircut was possible only because most of the > 100K accounts were held by rich (mostly shady) Russians.

toss1 9y ago

What did it for me was well before the financial crisis, an earlier real estate crash. The bank at which our software/network business had a credit line lost a bunch of money on bad real estate loans. Their response was to turn the screws on all their customers. Although we had literally never been late on a payment in years, and had run up and down the credit amount, we were literally days away from having our entire loan called, requiring us to suddenly come up with far more cash than we had on hand that week, which would have ended the business. The only thing that saved us was the luck to have a relative that could co-sign for us. Other local businesses didn't have such luck and were shut down. The banks do a lot of marketing telling you how much they are "friends" of business, "there to help you grow", etc. It is utter nonsense. Never mistake a banker as a friend. If their incentives so dictate, it'll only take a New York Minute to stab you in the back. Edit: typos

skookumchuck 9y ago

Do you think a government bureaucracy (i.e. socialism) is a better arbiter of merit? For a more specific answer to your points, the free market is not a guarantee. It's probabilities. There are no risk-free actions, and you're not doing "everything right" if you fail to take that into account.

LarryDarrell 9y ago
It doesn't matter what he thinks, what you think or what I think. What matters is how and when the anger of those being stepped on fully manifests itself. Anyone who wants to protect "Capitalism" really ought to be frantically doing everything they can do to promote UBI or at least Universal Health Care and Education.
- skookumchuck 9y ago
  Free K-12 doesn't count as universal education? And half of all expenditures on health care are spent by the government in all their various methods of handing out free health care.
  - freejulian 9y ago
    > Free K-12 doesn't count as universal education? No. K-12 doesn't qualify you for a job in the "modern economy." The sad thing is it's not even about the education: companies only look for the degree.
    - skookumchuck 9y ago
      You can get a free MIT education online, too. But of course that isn't good enough, either.
  - Broken_Hippo 9y ago
    Not when it isn't enough education to support yourself or get even a job requiring vocational education. It sometimes isn't enough on its own to go to universities in other countries. (The local university requires a certain number of AP courses with passing grades on the test or 1 year of university-level education to be considered eligible to go to school there if you are from the US). And not when it means that we aren't actually getting the best candidates for certain fields. To be a doctor, not only do you have to have the intellectual capability, but the financial ability as well. Yes, I know there are loans, but burdening folks with debt deters some folks from even trying... let alone the expenses required to apply and attend college.

Broken_Hippo 9y ago

This is generally the case. Anecdote: I worked in call center many years ago with a dude that worked for Enron. He was just an employee in a cubicle farm. He left work one Friday with a job. Monday, he found a box with his personal effects from his desk where his cubicle had been. That's how he found out he lost his job. He worked at the call center because the fact that he had Enron on his resume made folks hesitant to hire him, unfortunately.