Forum Post: Need to prove my brother wrong. Help?
Posted 12 years ago on Nov. 1, 2011, 1:15 p.m. EST by cciaranddunne
(10)
This content is user submitted and not an official statement
He says that all this is pointless. I say no its not, they need to make change in the banks and government, he asks why, so I say, because the banks are greedy and corrupt. He asks me if I know why, but I don't know, someone help?
You haven't gotten very good responses, I'll try to hopefully clear this up for you.
Not all banks are bad. Regional banks which accept funds in the form of savings etc, invest those savings locally, in homes and businesses, the interest they charge on those investments are dispersed among the customers who have accounts, minus operating expenses, of course. Credit Unions work pretty much the same way. This is an over simplification of the issue.
The banks that are being named in the protests are the banks that are actually 'trading the customers money', for profit for themselves, profit above and beyond the operating expenses they incur.
They do this trading by buying and selling mortgages, among other things, and by 'padding' the rating (good/bad) the mortgage has, making it look like a good investment to other banks and companies. They sold millions of mortgages that were toxic, meaning bad, thus insuring their profits while spreading the loss among others. They also insured these mortgages in case of failure, often buying back these toxic mortgages for pennies on the dollar, yet the insured amount was for the total cost of the mortgage.
They did this for so long and so vigorously they ended up being short. Not enough insurance and too many toxic mortgages. Since the amount of money was in the billions per bank adding up to trillions over all, they turned to the government to save them, meaning that everyone who works and pays taxes contributed to the money the banks received from the government.
The mortgages went toxic because in some cases the houses lost value, a $500,000 house became worth only $300,000 (not exact figures). Some became toxic because the owners were unable to pay their payments, loss of work, injury, illness, or simply cuts in pay.
The banks were allowed to do this because of deregulation, the deregulation occurred because the banks and some corporations funded some politicians who then took up the banks cause in Congress. Basically it got to the point where the banks could do almost anything they wanted to with your, my, everyone's money, if they lost it, they'd just get the government (us) to help them out again.
While they were loosing our money they were also paying bonuses to some of their top employees, huge bonuses, even when the money was from (us) the government, they continued to pay out larger and larger bonuses to the same people who helped create the mess in the first place, and the banks made even more money.
As it stands today, the banks can do this again and again with no restraint, no consequences to them, however, there are consequences which fall to the rest of us.
Even Greenspan admitted he over estimated the ability of Corporations (banks and large business) to regulate itself reasonably.
I hope this helps and someone else adds to it for you.
You explained this great.
Thank you mate, this really helped:)
You're welcome
I will say that your brother is wrong. But if you don't understand why, you can't agree with me, and you can't make that kind of statement with confidence.
I support your quest for knowledge, but I will caution that coming to a clearly biased forum (even if I happen to think it's biased towards the truth) is not the best way to get an objective understanding of the issues or to come to a proper conclusion about what you believe.
Ok, mate, but you can't trust anything you see on the major news corporations (BBC) So where can I look.
Depends on what you already know and what you want to know. Are you interested in economic theory and finance (i.e. why the banks, specifically, are F'd up)? Or are you interested more in the larger questions of social justice and theories of right and wrong? Or maybe you're interested in political theories, like democracy vs. republics vs. plutocracies, etc...?
More of the banks to be honest. I'll learn about the political theories and stuff later on as I don't know much about politics, I know the basic stuff, but not in depth.
Alright. I'll walk you through a little bit, but keep in mind I could be lying. So look up everything and double check me. Thank God and the Queen for Google, right?
Here are some fundamentals you'll need to understand: fiat currency, fractional reserve banking, and credit. These are three systems in place (for both the US and the UK) that are fundamental building blocks. Know their pros and cons. Anyone who tells you they are only good or only bad is trying to sell you something. There are reasons these systems are in place, but these systems also have weaknesses that can be exploited. Just get a basic understanding, first (you'll probably keep coming back to these systems, later).
"Too big to fail." You have to understand what that means. The obvious starting point is "well, it means if an institution that is TBTF fails, it drags down other industries with it." But you've got to understand how it does that to understand why the public sector has to care.
Then you've got to understand the philosophical foundation of two major ideas: capitalism, and the rational market theory. Both of these ideas have a key pillar that you have to look out for: "risk / reward." This pillar is critical for both capitalism and the rational market to function.
Now, with all that information in place, ask yourself: when an institution that is TBTF makes a huge, risky bet, who reaps the reward if the bet pays off? Who takes on the risk if it doesn't? How does that change the risk / reward theory that is fundamental to capitalism and rational markets? Can capitalism and rational markets still stand up with that change? If you were in charge of a bank, what are the reasons you might take a huge, risky investment, and what are the reasons you wouldn't?
It would take hours to explain why the banks are greedy and corrupt. You would need to go all the way back to 1910 to understand what is going on in our great nation in the present day. Ask him if he knows why in 1913 when our elected officials gave control of our money to a private corporation (Federal Reserve) the income tax was passed at the same time. The true history used to be hard to find because what is taught in (government controlled) schools is no where close to what has really been going on for the last 100 years.
A better question to ask him is why the US Constitution is not mentioned but briefly in your 12 years of public education. It lays out all of the rights that you have but if you knew all of them and tried to protect them then the whole system as we know it know would not be in existence today and instead we would be a whole lot better off.
I know, but I want to know why everyone is protesting. In depth.
I don't think most of the protesters know what really happened and what caused most of our problems. It was the government itself.
Read this ....
http://news.investors.com/Article/589858/201110310805/Housing-Crisis-Obama-Clinton-Subprime.htm
Don't forget to download the link to the 20 page government document from 1994 and read it. That document lays out the foundations for the federal government's role in creating the mess.
No, I'm 16
The short answer is the largest corporations control the government. They have been systematically looting the nation.
Here you go:
http://www.youtube.com/watch?v=gIcqb9hHQ3E&feature=related
http://alchemicalreaction.blogspot.com/2011/10/2011-occupy-america-peoples-official.html
Im in the UK BTW
HAHA typical. You think something is good or bad but when it come to defending it, you don't know why, it's just true.
Why should you have to prove your brother wrong? This is not how truth is found, you're going about it upside down. You shouldn't have the result before you have the science. Instead of saying, "he's wrong" and I need a way to prove it, say "What's this all about" and educate yourself to find out. You might be right, or your brother might be right. Find the truth first before you decide that.
Yeah, true, I really worded this wrong, the time I posted it I was pissed off. :) Now after reading this, I know what it is all about, and why everyone is there in depth.
You sound like you're way too young to worry about stuff like this. Enjoy your childhood while you can, it's over before you know it.
Putting off understanding the world is the reason why we're taking it from both ends, now, by people who didn't put off understanding the world.
Well I was homeless and eating out of dumpsters by the age of 16. Kids need to be kids, there's plenty of time to learn about the big bad world when they are legally adults.
There is no such thing as "childhood". We are ALL just babies learning to walk.
Speak for yourself.
If you aren't levitating and don't genuinely love your enemy, you are a baby learning to walk. I do speak for myself.
You're brother is wrong. It's not pointless. It is going to provide someone with a sizable payday. 400k+