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JP Morgan Chase: We Actually Benefit From Downturns


By Patrick   Follow   Sun, 3 Mar 2013, 5:09pm   1,281 views   85 comments
In Menlo Park CA 94025   Watch (1)   Share   Quote   Permalink   Like   Dislike  

http://www.huffingtonpost.com/2013/02/26/jamie-dimon-benefit-downturns_n_2765462.html

Like most soft-spined Americans, you probably have painful memories of the financial crisis and consequent recession. Perhaps you even think of those things as "bad." Fortunately, Jamie Dimon is not like the rest of you losers. That is because, unlike you, Jamie Dimon is CEO of JPMorgan Friggin' Chase, America's greatest bank, which just so happens to snack on financial crises and recessions like so much KIND bar.

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  1. bob2356


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    46   12:04am Mon 10 Feb 2014   Share   Quote   Permalink   Like   Dislike (1)  

    Reality says

    Prove what? That the AIG stock is for a holding company? You can look it up and verify for yourself. That the AIG company in a given state is its own corporation? Again, you can check with your state insurance regulator or the company itself to verify.

    The London AIG was its own corporation. Neither AIG the holding company nor the various AIG insurance companies in each state was liable to London AIG losses.

    Show me where in corporate law that the holding company is not liable for the subsidiaries. You claim it's true. Based on what?

  2. Reality


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    47   12:05am Mon 10 Feb 2014   Share   Quote   Permalink   Like   Dislike (1)  

    bob2356 says

    Reality says

    Legal Tender Law means those owed money have to accept the legal tender as payment for debt. What do you think the compensatory clause in a contract stipulates? A debt created due to lack of fulfillment, right?

    Again so what? Do you wish the court to stipulate cows and goats as payment in contract disputes? Do you actually have a point of any kind?

    Do you think businesses contracts did not exist before 1913?

  3. bob2356


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    48   12:07am Mon 10 Feb 2014   Share   Quote   Permalink   Like (1)   Dislike  

    Reality says

    bob2356 says

    bob2356 says

    What do you envision as a workable system of no government without anarchy

    So what's the plan stan?

    What are you talking about? The US was not in a state of anarchy before the founding of the FED in 1913.

    BTW, don't confuse anarchy with chaos. The two are different concepts.

    The word you've been searching for all this time is gold standard?

  4. bob2356


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    49   12:08am Mon 10 Feb 2014   Share   Quote   Permalink   Like (1)   Dislike  

    Reality says

    Do you think businesses contracts did not exist before 1913?

    Yes and they specified legal tender, US dollars just like today.

  5. Reality


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    50   12:09am Mon 10 Feb 2014   Share   Quote   Permalink   Like   Dislike (1)  

    bob2356 says

    Show me where in corporate law that the holding company is not liable for the subsidiaries. You claim it's true. Based on what?

    That's what a separately incorporated entity does:shielding the owners from losses beyond existing investment. Do you have no clue about why the concept of "corporation" was invented? London AIG was registered and incorporated in the City of London, hence a distinct entity from the US-based AIG holding company.

  6. Reality


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    51   12:11am Mon 10 Feb 2014   Share   Quote   Permalink   Like   Dislike (2)  

    bob2356 says

    The word you've been searching for all this time is gold standard?

    gold, silver, bimetallic, any objective standard would do. So that money can not be created at will to enrich a tiny group at the expense of diluting the money of everyone else, nor arbitrary bailouts at the expense of everyone else.

  7. Reality


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    52   12:14am Mon 10 Feb 2014   Share   Quote   Permalink   Like (1)   Dislike (2)  

    bob2356 says

    Do you think businesses contracts did not exist before 1913?

    Yes and they specified legal tender, US dollars just like today.

    Before 1913, it was a money that could not be arbitrarily created out thin air without consequences in "backing." It was a sound money that did not give banksters special privileges in changing the unit of accounting.

  8. bob2356


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    53   12:37am Mon 10 Feb 2014   Share   Quote   Permalink   Like (1)   Dislike  

    Reality says

    That's what a separately incorporated entity does:shielding the owners from losses beyond existing investment. Do you have no clue about why the concept of "corporation" was invented? London AIG was registered and incorporated in the City of London, hence a distinct entity from the US AIG holding company.

    Yes I have a very good clue about incorporation, do you? I also have a good clue about the word subsidiary. I've also read a couple good books on the crash that detailed the story of AIG and AIGFP.

    Since you don't have a clue and obviously never actually read up on the AIG debacle here is the story. AIGFP started in 1987 on Third Avenue Manhatten, NY USA. In 1989 AIGFP moved to n Wilton, CT. AIGFP is still legally headquartered there. AIGFP is a US corporation even though they were operating in London. AIG has taken 62% of the profits from AIGFP from the very beginning. That means AIG was legally responsible for 62% of any losses. That's why the credit downgrades were for the entire AIG corporation not just AIGFP.

    It's public record, look it up. Yes AIG was most definately legally responsible for AIGFP loses under US law. I should have just found the book and looked earlier rather than arguing with you.

  9. bob2356


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    54   12:41am Mon 10 Feb 2014   Share   Quote   Permalink   Like (1)   Dislike  

    Reality says

    Before 1913, it was a money that could not be arbitrarily created out thin air without consequences in "backing." It was a sound money that did not give banksters special privileges in changing the unit of accounting.

    Good or bad, it's the system used everywhere on the planet Either you can move to mars or live with it. It's a binary solution set.

  10. bgamall4


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    55   12:56am Mon 10 Feb 2014   Share   Quote   Permalink   Like (1)   Dislike   Protected  

    CaptainShuddup says

    Every time we think we've bailed them out...

    They bail them selves back in!

    Even you can't swallow the arrogance of that jackal, Captain!

  11. Reality


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    56   7:06am Mon 10 Feb 2014   Share   Quote   Permalink   Like   Dislike (1)  

    bob2356 says

    Yes I have a very good clue about incorporation, do you? I also have a good clue about the word subsidiary.

    Apparently you don't have a clue about either concepts; see below:

    bob2356 says

    AIG has taken 62% of the profits from AIGFP from the very beginning. That means AIG was legally responsible for 62% of any losses.

    That's a nutty statement. AIGFP was a separate legal entity from AIG, which was/is a sharehold in AIGFP. If you own shares of CitiBank and get dividends for years, would you be personally liable for its losses as a result? Of course not! That's the whole idea about the Corporate Veil . . . and the reason why Corporations were invented to begin with: owners are not liable beyond their existing investment in the corporation.

    On top of that, even if AIG the holding company were somehow dragged into being liable, that would still not drag the various AIG insurance companies in the different states into this or devour their insurance reserves, which were always set aside per state insurance regulations. So the whole "nightmare scenario" about people losing their life insurance, car insurance, home insurance etc.. if AIGFP or AIG holding company went down was complete and utter nonsense and fabricated lie!

  12. Reality


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    57   7:09am Mon 10 Feb 2014   Share   Quote   Permalink   Like (1)   Dislike (2)  

    bob2356 says

    Reality says

    Before 1913, it was a money that could not be arbitrarily created out thin air without consequences in "backing." It was a sound money that did not give banksters special privileges in changing the unit of accounting.

    Good or bad, it's the system used everywhere on the planet Either you can move to mars or live with it. It's a binary solution set.

    As a worldwide system, it's been only 4 decades old, since Nixon closing the gold window in the early 70's. Those 4 decades have proved it to be a dismal failure, as evidenced by the drastic increase in wealth disparity and frequent financial instability in those same 4 decades.

  13. bob2356


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    58   8:06am Mon 10 Feb 2014   Share   Quote   Permalink   Like (1)   Dislike  

    Reality says

    bob2356 says

    Reality says

    Before 1913, it was a money that could not be arbitrarily created out thin air without consequences in "backing." It was a sound money that did not give banksters special privileges in changing the unit of accounting.

    Good or bad, it's the system used everywhere on the planet Either you can move to mars or live with it. It's a binary solution set.

    As a worldwide system, it's been only 4 decades old, since Nixon closing the gold window in the early 70's. Those 4 decades have proved it to be a dismal failure, as evidenced by the drastic increase in wealth disparity and frequent financial instability in those same 4 decades.

    You said 1913, read your own post. Now it's the 70's. Do you always argue with yourself? My question stands, are you moving to mars? I never said it was a good system, but it's the system world wide, it's not going to change, and I have to live within it preferably without bitching.

  14. Reality


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    59   8:23am Mon 10 Feb 2014   Share   Quote   Permalink   Like   Dislike (2)  

    bob2356 says

    You said 1913, read your own post. Now it's the 70's. Do you always argue with yourself?

    Do you not know the basic monetary history of the 20th century? here's the brief outline:

    1913 founding of the FED; prior to that the US was on the gold standard.

    1933 de-linking of gold to US$ within the US for domestic trade, banning private gold bullion ownership within the US and voiding all gold clauses in contracts; international trade was settled in gold, hence those cruisers shipping gold over the Atlantic for munition purchases during WWII

    1944 Bretton Woods Agreement: linking the US$ to gold internationally via a gold-exchange standard, while all the other countries set their currencies vis the US$. Other countries earning US$ could exchange those US$ for gold at fixed rate; i.e. pegging the US$ to gold for international trade.

    1971 Nixon unilaterally abrogated on the pledge to exchange gold for US$. The US$ hence became pure fiat currency. Consequently, almost all currencies in the world became pure fiat.

    My question stands, are you moving to mars? I never said it was a good system, but it's the system world wide, it's not going to change, and I have to live within it preferably without bitching.

    Change is constant. As you can see in the above list the changes in the monetary system in the 20th century alone.

  15. Robert Sproul


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    60   8:29am Mon 10 Feb 2014   Share   Quote   Permalink   Like   Dislike (1)  

    bob2356 says

    it's not going to change,

    It will change all right.
    Like every system before it, it will collapse.
    This fiat delusional schema based on a declining resource and a teetering Empire's unsustainable military expenditures is actually getting long in the tooth.

  16. bob2356


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    61   8:44am Mon 10 Feb 2014   Share   Quote   Permalink   Like (1)   Dislike  

    That's a nutty statement. AIGFP was a separate legal entity from AIG, which was/is a sharehold in AIGFP. If you own shares of CitiBank and get dividends for years, would you be personally liable for its losses as a result

    It may be a nutty statement but it's a fact documented in many places. The treasury department, the justice department, the ny ag, and pretty much every financial analysis of the crisis disagrees with you. AIG didn't get dividends from AIGFP. They were directly contracturaly involved in financing and profits. Here are some articles that might help explain it to you.

    http://talkingpointsmemo.com/muckraker/the-rise-and-fall-of-aig-s-financial-products-unit
    http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CEUQFjAC&url=http%3A%2F%2Fharaldhau.com%2FThe_Man_Who_Crashed_the_World.pdf&ei=6_j4Utb-KOTK0gHkwoH4Cw&usg=AFQjCNFLc9EbdiKSwYRB7mdI_5-szRrdzQ&bvm=bv.60983673,d.dmQ
    http://blogs.reuters.com/felix-salmon/2009/07/02/how-aig-fp-brought-down-the-world/
    http://hnn.us/article/69572
    http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=19&ved=0CGkQFjAIOAo&url=http%3A%2F%2Fclubs.ntu.edu.sg%2Frms%2Fresearchreports%2FAIG.pdf&ei=vvr4UqDiJ8Xv0gHFuYGwAQ&usg=AFQjCNHjWI12cUko37skjIgMzAZDNHiT9gReality says

    What happened to your idea that AIGFP was a british company not subject to us law? I guess you looked at their sec filings finally. Do you want to regal me again with your extensive knowledge of corporations?

    You do realize that there were other major financial problems at AIG beyond AIGFP. I think it was in NC that the holding company itself lost 50 billion in bad trades. AIGFP only lost 45 billion. There were others.

    Reality says

    So the whole "nightmare scenario" about people losing their life insurance, car insurance, home insurance etc.. if AIGFP or AIG holding company went down was complete and utter nonsense and fabricated lie!

    There was never any nightmare scenario about people losing their car insurance. What am radio station is that from. The nightmare scenario was not paying off the cds obligations and simultanuously bringing down every major financial institution that had insured their crappy ponzi scheme financial mortgage products through AIGFP.

    I always thought AIG should have bankrupted then defaulted on the cds/s and any bank that went under should have been nationalized. It would have been much cheaper and easier plus we would have gotten rid of the tbtf bank problem. bonus points for that.

  17. bob2356


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    62   8:47am Mon 10 Feb 2014   Share   Quote   Permalink   Like (1)   Dislike  

    Reality says

    Do you not know the basic monetary history of the 20th century? here's the brief outline:

    I know the history just fine, you are the one contradicting yourself.

  18. bob2356


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    63   8:48am Mon 10 Feb 2014   Share   Quote   Permalink   Like (1)   Dislike  

    Robert Sproul says

    bob2356 says

    it's not going to change,

    It will change all right.

    Like every system before it, it will collapse.

    Yes eventually. I don't think it's going to be in my lifetime. Consider my statement suitably modified.

  19. Reality


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    64   8:50am Mon 10 Feb 2014   Share   Quote   Permalink   Like   Dislike (2)  

    bob2356 says

    Reality says

    Do you not know the basic monetary history of the 20th century? here's the brief outline:

    I know the history just fine, you are the one contradicting yourself.

    There was no contradiction: before 1913, the US$ was on classical gold standard (most of the world's major currencies were on gold standard prior to WWI breaking out in 1914); after 1971, it was pure fiat worldwide. The transition took half a century and many steps.

  20. Reality


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    65   8:53am Mon 10 Feb 2014   Share   Quote   Permalink   Like   Dislike (1)  

    bob2356 says

    Yes eventually. I don't think it's going to be in my lifetime. Consider my statement suitably modified.

    Thanks for the meaningless statement. You could be 100 years old (just like the FED) and die tomorrow, for all we know.

  21. CDon


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    66   4:29pm Mon 10 Feb 2014   Share   Quote   Permalink   Like (2)   Dislike  

    Reality - to your credit, while you do (basically) have a point about a parent corp not having liability for a subsidiary, for the record, just about every other point of law you tried to make was wrong. Your ideas about jurisdiction are wrong - your points about "Legal Tender Law" are grossly overstated, etc. etc.

    The thing that really got me though was this:

    Reality says

    Contracts in the US, in order to be enforceable, has to be written with the US$ as unit of count (in compensatory clauses if not elsewhere); a unit of count that is entirely controlled by the FED, which automatically becomes a party to every business contract as a result.

    No offense, but this is about the biggest bit of nonsense I have ever seen when it comes to (what I can only assume is a laymen) talking about the law. This statement is so nonsensical, it is roughly the equivalent of someone taking their high school biology education and trying to make a medical diagnosis (well if your arm hurts, you clearly have a case of medulla oblongata irritating the Golgi apparatus...)

    If you do happen to care, there are a number of chancery courts that still operate in the US, and even in the states that don't have chancery, most circuit courts will grant all sorts of equitable (non-monetary) relief.

    But assuming you don't, your ideological point about a lot of people essentially getting away with a lot of stuff (and in that regard - I really am sympathetic) stands. You can make any ideological point you want, but there is no need to make up a bunch of non-sensical legalese in a hamfisted effort to support it.

  22. Mick Russom


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    67   4:53pm Mon 10 Feb 2014   Share   Quote   Permalink   Like (1)   Dislike  

    Banks are bartenders. They get money when the clients are crying or celebrating. They are evil. Usury was considered vile through most of history, and when the credit cards and house as a credit card mechanism was foisted on the public, the middle class has seen a drastic decline in the standard of living (real and relative).

  23. bob2356


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    68   7:27am Tue 11 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    Reality says

    bob2356 says

    Yes eventually. I don't think it's going to be in my lifetime. Consider my statement suitably modified.

    Thanks for the meaningless statement. You could be 100 years old (just like the FED) and die tomorrow, for all we know.

    Bank promissory notes have been around since the 7th century., Banknotes aka paper money backed by gold aka the gold standard started since the late 1600's and lasted roughly 200 to 250 years depending on the country. Fiat money has lasted almost half as long as gold backed money already. What makes you think it's going away so fast? What do you believe it will be replaced by, bitcoins? Shall we go back to a carrying around gold? Back to gold backed money. Why would that improve anything. There were certainly lots of crashes, financial collapses, and currency debasement under the gold standard.

    Do you ever have any constructive thoughts about how things might be improved or just complaints about everything?

  24. Blurtman


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    69   7:41am Tue 11 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    Unlimited backstop, said Timmay.

  25. indigenous


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    70   9:59pm Tue 11 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    FWIW David Stockman detailed the AIG story in his book .

    They are an insurance company which means they are mandated to have high reserves, I think over 100%, of high quality bonds.

    10% of their money was involved in the derivatives.

    AIG had many arms if one failed it would not effect the other arms.

  26. bob2356


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    71   12:30am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    indigenous says

    FWIW David Stockman detailed the AIG story in his book .

    They are an insurance company which means they are mandated to have high reserves, I think over 100%, of high quality bonds.

    10% of their money was involved in the derivatives.

    AIG had many arms if one failed it would not effect the other arms.

    I was talking about stockman's book (which I read last summer) among others, especially neil barofski's. Stockman didn't say AIG wouldn't fail, he said AIG would have failed, should have failed, but that paulson and bernake were wrong it wouldn't have been a disaster. The result of AIG failure would have been the failure of Morgan Stanley and Goldman Sachs, the last two standing investment banks, which Stockman very accurately describes as casino operations. I think his exact quote was from his this week on wall street week interview was "AIG was safe to fail". He also details how the commercial banking sector had solid balance sheets and was never in any danger failing. The entire bailout was based on the lie, perpetrated amazingly enough by treasury secretary hank paulson former ceo/major shareholder of the about to become extinct goldman sachs, that the commercial banking sector was in trouble along with investment banking. Gee I wonder why good old hank was so anxious for a bailout? Must have been selfless concern for the american public. ya think?

    FWIW stockman's book is 700 pages of trying to distance himself from the train wreck he was instrumental in creating. Stockman was in the ideal position to act on his beliefs, but instead went along with and promoted many of the policies that he now spends all his time critisizing.

  27. indigenous


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    72   7:33am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    bob2356 says

    Stockman didn't say AIG wouldn't fail, he said AIG would have failed, should have failed, but that paulson and bernake were wrong it wouldn't have been a disaster.

    Go back and read page 6 of Stockman's book where he states what I quoted above. The many arms is stated somewhere else but it is in the book and it is common sense as all large companies are organized this way. He also talks about the assets could have easily been ring fenced.

    Yup GS and MS would have failed as it should be.

    bob2356 says

    He also details how the commercial banking sector had solid balance sheets and was never in any danger failing.

    From what I recall there were 12 banks that had 20 trillion dollars in assets with only 80 billion in exposure. So no they were not any danger.

    bob2356 says

    Gee I wonder why good old hank was so anxious for a bailout? Must have been selfless concern for the american public. ya think?

    Do you think it might have had something to do with the fact that he was former GS employee?

    It is amazing how "reality" can be engineered, unfortunately people can be coeirced into believeing in the water we swim in, because of their ignorance of money.

    bob2356 says

    FWIW stockman's book is 700 pages of trying to distance himself from the train wreck he was instrumental in creating.

    Bullshit he is just pissed (as we all should be) that GS got away with this crap. Think about the pure evil of this shit, this probably will be one of the final nails in the coffin of this country. When this country goes so goes the world.

  28. Reality


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    73   7:58am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    CDon says

    If you do happen to care, there are a number of chancery courts that still operate in the US, and even in the states that don't have chancery, most circuit courts will grant all sorts of equitable (non-monetary) relief.

    But assuming you don't, your ideological point about a lot of people essentially getting away with a lot of stuff (and in that regard - I really am sympathetic) stands. You can make any ideological point you want, but there is no need to make up a bunch of non-sensical legalese in a hamfisted effort to support it.

    "Equitable" as measured in the fiat dollar. Long term contracts prior to 1933 often stipulated Gold Clause, as people understood that government money may not be constant. That was the reason why FDR had to write the executive order banning private gold ownership in the US and making all Gold Clauses in existing contracts non-enforceable.

  29. Reality


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    74   8:14am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    bob2356 says

    Bank promissory notes have been around since the 7th century., Banknotes aka paper money backed by gold aka the gold standard started since the late 1600's and lasted roughly 200 to 250 years depending on the country.

    Promissory notes were in existence soon after money lending were in existence, long before the 7th century. Precious metal ingots and coins have been used as money for thousands of years. Run on banks were known in Greek and Roman time.

    Fiat money has lasted almost half as long as gold backed money already. What makes you think it's going away so fast?

    Fiat money episodes come and go throughout history for the last 2000+ years. Almost all of those episodes lasted about a century or less.

    What do you believe it will be replaced by, bitcoins? Shall we go back to a carrying around gold?

    Bitcoin is a scam run by the fiat money elite looking for alternative ways of creating a cashless society. As for carrying gold (or other material things as money) around, it's not a matter of "shall" but "when." It has already happened quite a few times in various countries around the world in the past 100 years alone whenever fiat money systems collapsed. Not just Zimbabwe, but Russia, Germany, China and (to a less extent but almost always standing-by) India.

    Back to gold backed money. Why would that improve anything. There were certainly lots of crashes, financial collapses, and currency debasement under the gold standard.

    Almost all those crashes and financial collapses were results of governments trying to undermine and leave gold standard. Currency debasement under the gold standard was obviously the government trying to leave the gold standard. duh!

    Do you ever have any constructive thoughts about how things might be improved or just complaints about everything?

    Yes, removing the power of arbitrarily changing the unit of count in money from a few government bureaucrats, just like we do not allow the government bureaucrats to tell us how much is in a pound of weight or a gallon of liquid on monthly or quarterly basis. Would you actually believe the agro business would do better if there were a government committee deciding how big "a bushel" is as a unit of volume depending on the level of harvest?

  30. bob2356


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    75   8:35am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    indigenous says

    Go back and read page 6 of Stockman's book where he states what I quoted above. The many arms is stated somewhere else but it is in the book and it is common sense as all large companies are organized this way. He also talks about the assets could have easily been ring fenced.

    That's not the way I read it in the later parts, it's open to interpretation what he means in different parts of the book, but his interviews since seem to indicate he absolutely believed AIG would fail.

    Of course it was ring fenced, that's how insurance reserves work. But reserves exist in case an insurance company fails, not to prevent an insurance company from failing. You can't take your reserves and make payroll or pay bank loans with it. If you can't make payroll or pay your loans you are bankrupt. Insurance companies go bankrupt all the time, their reserves are picked up by whoever picks up their policies. AIG would have been bankrupt without the bailout.

    indigenous says

    Do you think it might have had something to do with the fact that he was former GS employee?

    I was being sarcastic. Paulson lied through his teeth to the whole world to keep GS alive. Bernake lied through his teeth to preserve his reputation.

    indigenous says

    Bullshit he is just pissed (as we all should be) that GS got away with this crap.

    Stockman has been pushing his mea culpa bullshit long before the crash. It was his policies as budget director that started this disaster. Just another hypocrite. Like burn down the house Newt saying there is a lack of civility in politics. Of course there is, he started it.

  31. bob2356


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    76   8:39am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    Reality says

    Promissory notes were in existence soon after money lending were in existence,

    BANK promissary notes were not. They were first issued in China in the late 7th century.

    Reality says

    Run on banks were known in Greek and Roman time.

    Very good, with hard currency. Same as with fiat money. Nothing has changed.

    Reality says

    Almost all those crashes and financial collapses were results of governments trying to undermine and leave gold standard. Currency debasement under the gold standard was obviously the government trying to leave the gold standard. duh!

    Reality says

    Yes, removing the power of arbitrarily changing the unit of count in money from a few government bureaucrats,

    and your practical solution to end this is? No one has managed to do it in all of human history.

  32. indigenous


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    77   9:00am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    bob2356 says

    That's not the way I read it, it's open to interpretation, but his interviews since seem to indicate he absolutely believed AIG would fail.

    Not true

    bob2356 says

    Of course it was ring fenced, that's how insurance reserves work. But reserves exist in case an insurance company fails, not to prevent an insurance company from failing. You can't take your reserves and make payroll or pay bank loans with it. If you can't make payroll or pay your loans you are bankrupt. Insurance companies go bankrupt all the time, their reserves are picked up by whoever picks up their policies. AIG would have been bankrupt without the bailout.

    This is a 800 billion dollar company with one of it's arms having 80 billion in derivative exposure. Yes they could not have used the assets for cash flow. But they could BK the arm that was in trouble.

    bob2356 says

    Stockman has been pushing his mea culpa bullshit long before the crash. It was his policies as budget director that started this disaster. Just another hypocrite. Like burn down the house Newt saying there is a lack of civility in politics. Of course there is, he started it.

    Links? he did quit in disagreement with the adminstration? Me thinks that anyone who is again GS or Benny or the status quo is a good dude...

  33. Reality


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    78   9:19am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    bob2356 says

    Reality says

    Promissory notes were in existence soon after money lending were in existence,

    BANK promissary notes were not. They were first issued in China in the late 7th century.

    What do you think Biblical prohibition against usary was about? Banksters were around long before the 7th century. Instances of fiat money preceded perhaps even the invention of paper: both the Romans and the Chinese had copper money that had face value far in excess of their metal value. It makes no difference whether the number indicator is made in ink on paper vs. say, thin gold stripes on a chunk of copper.

    bob2356 says

    Reality says

    Run on banks were known in Greek and Roman time.

    Very good, with hard currency. Same as with fiat money. Nothing has changed.

    There is a huge difference: a run on a private bank meant consumers removing that private bank from the list of desirable counter-parties, hence giving the business to other banks. That's consumer individual choice. Central bank prevents run-on-banks by banning individuals from making the choice: everyone gets screwed by the central bank when the central bank bails out a bank that deserve to have a run and banishment.

    bob2356 says


    Yes, removing the power of arbitrarily changing the unit of count in money from a few government bureaucrats,

    and your practical solution to end this is? No one has managed to do it in all of human history.

    What are you talking about? The mediterranean had a rapidly growing economy on silver coin standard before Roman Empire unified the mediterranean and went on to debase the currency. The Chinese had a rapidly growing economy on copper coin standard before their unification and centralized monetary debasement 2000+ years ago. The silver ingot standard (Troy Pound Sterling) gave rise to the economic revival of Western Europe in the 10th century. The gold coin standard among the Italian city states gave rise to the Renaissance. When the Spanish Empire refrained from debasing the currency, the Spanish Dollar (where our dollar derived its definition) became the basis of global trade for about 300 years and allowed the rapid rise of the West. The precious metal standards of the 19th century allowed rapid industrialization of the West.

    Precious metal standard prevents the government from arbitrarily change the unit of count in money. Just like we do not allow government bureaucrats to change the unit of length, weight, area and volume, units of measurement and count not arbitrarily changed by people who are in the game themselves makes for more fair game, and makes for motivation to produce instead of skulldudgery / looting.

  34. CDon


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    79   9:24am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    Reality says

    "Equitable" as measured in the fiat dollar. Long term contracts prior to 1933 often stipulated Gold Clause, as people understood that government money may not be constant. That was the reason why FDR had to write the executive order banning private gold ownership in the US and making all Gold Clauses in existing contracts non-enforceable.

    No, not equitable as measured in fiat dollar - equitable as in the only way to make the aggrieved party whole. Contract says I shall paint your house and once complete, you will give me your one of a kind Renoir painting - no mention of dollar or fiat currency of any kind. If you don't give me the Renoir, I take you to chancery court and sue you for specific performance to get the Renoir. End of story - this is first year (hell first semester) contracts law.

    Honestly, I don't know why you want to dig yourself further in the hole when it is patently obvious you are out of your depth here. I don't expect you to say "I was wrong" as no one on the internet does - but it surprises me you wanted to respond (thereby giving me further opportunity to show how clueless you are).

    Again, make whatever ideological points you want, but please do not mention anything about a contract requiring any sort of dollar or fiat currency or "unit of count" or other convoluted bullshit as that is just flat out wrong!

  35. Reality


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    80   9:33am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    CDon says

    No, not equitable as measured in fiat dollar - equitable as in the only way to make the aggrieved party whole. Contract says I shall paint your house and once complete, you will give me your one of a kind Renoir painting - no mention of dollar or fiat currency of any kind. If you don't give me the Renoir, I take you to chancery court and sue you for specific performance to get the Renoir. End of story - this is first year (hell first semester) contracts law.

    That's why I specifically mentioned "Compensatory Clause" or "Penalty Clause" in the contract. What if the Renoir is destroyed or never existed to begin with? Then the party unable to perform has to pay money in order to make up for the aggrieved party. Often times, Time is Of the Essence in business dealings. Unable to perform on time results in the exercise of the Compensatory Clause or Penalty Clause.

    CDon says

    Honestly, I don't know why you want to dig yourself further in the hole when it is patently obvious you are out of your depth here. I don't expect you to say "I was wrong" as no one on the internet does - but it surprises me you wanted to respond (thereby giving me further opportunity to show how clueless you are).

    Again, make whatever ideological points you want, but please do not mention anything about a contract requiring any sort of dollar or fiat currency or "unit of count" or other convoluted bullshit as that is just flat out wrong!

    When you fail to account for some important aspects of reality, don't assume others to be as ignorant or negligent as you are. There was a reason why I specifically talked about the compensatory clause and penalty clause in contracts. Time is of the essence in many business contracts; late delivery is no delivery at all. That can not be made up by even later delivery after court appointment!

  36. indigenous


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    81   9:43am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    Reality says

    Yes, removing the power of arbitrarily changing the unit of count in money from a few government bureaucrats,

    and your practical solution to end this is? No one has managed to do it in all of human history.

    Have there been instances where the currency was put back on a metal standard?

  37. CDon


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    82   9:50am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    Reality - OK you are doing a decent job skating away from your original point back onto more solid ground. But again remember what you said that I originally pointed out:

    Reality says

    Contracts in the US, in order to be enforceable, has to be written with the US$ as unit of count (in compensatory clauses if not elsewhere); a unit of count that is entirely controlled by the FED, which automatically becomes a party to every business contract as a result.

    This (along with some nonsense about jurisdiction & whatnot) was what you originally said which started this conversation.

    Do you still stand by this statement? Yes or No?

  38. Reality


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    83   9:59am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    CDon says

    Reality - OK you are doing a decent job skating away from your original point back onto more solid ground. But again remember what you said that I originally pointed out:

    Reality says

    Contracts in the US, in order to be enforceable, has to be written with the US$ as unit of count (in compensatory clauses if not elsewhere); a unit of count that is entirely controlled by the FED, which automatically becomes a party to every business contract as a result.

    This (along with some nonsense about jurisdiction & whatnot) was what you originally said which started this conversation.

    Do you still stand by this statement? Yes or No?

    Do you not see the "(in compensatory clauses if not elsewhere)" in my original post ? You quoted that yourself.

  39. Reality


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    84   10:05am Wed 12 Feb 2014   Share   Quote   Permalink   Like (1)   Dislike  

    indigenous says

    Have there been instances where the currency was put back on a metal standard?

    Usually it takes a monetary collapse of the debased currency. However, there were exceptions: East Roman Empire briefly experimented with debasing the gold coin Solidus but quickly stopped and went back to full gold content for the currency for soldiers; Spanish Empire briefly tried to reduce the silver content in the Spanish Dollar, and that was reversed quickly too.

  40. CDon


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    85   10:16am Wed 12 Feb 2014   Share   Quote   Permalink   Like   Dislike  

    Reality says

    Do you not see the "(in compensatory clauses if not elsewhere)" in my original post ? You quoted that yourself.

    Ok - here is the contract...

    I paint your house and in exchange you give me the Renoir...AND

    in the event you fail to deliver the Renoir as promsed, I shall keep the deed to your house that you signed over in escrow as damages

    So again we have a valid and contract, we have a compensatory clause - where is the units of count or dollar or fiat of any kind? How is the FED a party to this contract?

    Do you want to stop digging now?

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