TARP Strikes Back

[Ten-96]

Considering in the last 20 years CEO's earnings have risen nearly 304%, 90% cuts sound perfectly reasonable. So reasonable, in fact, it's unreasonable how much they'll still make.

Eventually we'll get back to a point where the profit of the corporations will go back to the workers like it did when capitalism was, well, capitalism. One small step closer toward fixing this bull**** economy.

 

Capitalism - an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.

 

 

Socialism - a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.

 

 

The bolded portion of your quote is almost the textbook definition of socialism. Here's the thing that makes this argument about CEO pay interesting: How does the amount of money someone earns affect you? Answer: It doesn't. These companies did take taxpayer money. These companies didn't come groveling to the government asking for help. It was Congress, Bush and Bernanke who decided that these companies needed the governement's assistance. Now, we have Congress, Obama and Feinberg telling us that since these companies took tax payer money, these companies need to have their top execs pay regulated so as not to offend traditional American values.

 

Which is worse, though? Bank CEO's and Exec's getting paid millions in contractual bonuses or our representatives in Congress wasting billions on pork-barrel projects designed to get them reelected? Or, our representatives in Congress getting paid their current salaries for the rest of their lives along with the best health care benefits for the rest of their lives after serving at least one full term?

 

Once again, I point to professional sports for an example. The lowest salary for an NFL rookie is $285,000. The lowest salary for an NBA rookie is $473,604 (for the 2010-2011 season). Just imagine what the elite professional players are making. Then, factor in their product endorsements and the sky is literally the limit. My point? Have you ever bought tickets to a professional sporting event? Have you ever purchased professional team apparel/merchandise of any kind? If so, you have spent your money (tax payer money) to support these organizations. I know I have but I also don't complain about Wall Street/Bank CEO's/Execs getting paid a lot of money. The amount they're (CEO's/Execs) being paid has no effect on me whatsoever.

 

Lastly, the one sure fire way to fix the economy is to cut taxes across the board. The less money that we (my wife and I) pay in taxes, the more we have to spend on things for our home and our children; driving the economy. The less money someone who owns a business has to spend in taxes, the more they can expand their business; thereby creating more jobs.

[El Sitherino]

So I guess that good old American capitalism we used to find the communists was really socialist, eh?

 

Clearly you don't know as much as you think you do if you think profit isn't what is used to make employee payments. What's been a common trend of businesses in the last 20 years under the model of Reaganomics and has exploded exponentially in the last 9 is CEO's and shareholders cut employee pay, deny previously afforded and generally required amenities, they cut costs by using inferior production materials, and deprive consumers of quality customer service. All for short term payoff, hence the golden age of Wall Street. What we're seeing now is a consequence of destroying the middle class and removing jobs from the American citizen.

 

So you can say that exploiting workers is Capitalism all you want, but you will find that you are incorrect. You also clearly don't know how to form an argument as your definitions in no way refute what I'm saying since they fail to address the means in which pay is distributed within business. Cost of production is simply that, cost of production, things like power, water, materials, etc. All other earnings are considered profit and go into a collective pot that is distributed as employee pay. When a CEO denies an employee their due pay to keep it as a bonus for themselves, they aren't acting on the foundations of capitalism, they are acting on the foundations of slave labor. I'm sure you're aware of the term indentured servant, but if you're not I'm sure you can look that definition up as well. The only difference here is there is no time table, instead it's an illusion that the bull**** work you're doing will be for only so long.

 

Which is worse, though? Bank CEO's and Exec's getting paid millions in contractual bonuses or our representatives in Congress wasting billions on pork-barrel projects designed to get them reelected? Or, our representatives in Congress getting paid their current salaries for the rest of their lives along with the best health care benefits for the rest of their lives after serving at least one full term?

 

Once again, I point to professional sports for an example. The lowest salary for an NFL rookie is $285,000. The lowest salary for an NBA rookie is $473,604 (for the 2010-2011 season). Just imagine what the elite professional players are making. Then, factor in their product endorsements and the sky is literally the limit. My point? Have you ever bought tickets to a professional sporting event? Have you ever purchased professional team apparel/merchandise of any kind? If so, you have spent your money (tax payer money) to support these organizations. I know I have but I also don't complain about Wall Street/Bank CEO's/Execs getting paid a lot of money. The amount they're (CEO's/Execs) being paid has no effect on me whatsoever.

[/Quote]

 

This is in no way an argument, it's a bunch of mush about people being saps.

 

Lastly, the one sure fire way to fix the economy is to cut taxes across the board. The less money that we (my wife and I) pay in taxes, the more we have to spend on things for our home and our children; driving the economy. The less money someone who owns a business has to spend in taxes, the more they can expand their business; thereby creating more jobs.

 

Wow, do you even know what taxes are for? Or how an economy works?

 

True there needs to be wiser spending of tax money, but less taxes being taken in does not in anyway mean wiser use of the money. It's simply ignoring the problem.

[Ten-96]

So I guess that good old American capitalism we used to find the communists was really socialist, eh?

Clearly you don't know as much as you think you do if you think profit isn't what is used to make employee payments. What's been a common trend of businesses in the last 20 years under the model of Reaganomics and has exploded exponentially in the last 9 is CEO's and shareholders cut employee pay, deny previously afforded and generally required amenities, they cut costs by using inferior production materials, and deprive consumers of quality customer service. All for short term payoff, hence the golden age of Wall Street. What we're seeing now is a consequence of destroying the middle class and removing jobs from the American citizen.

 

You sound really angry, Sitherino. I know that company profits are used to pay employees. I also know that no compnay uses 100% of it's profits to pay employees. Your previous post sounded to me as if you think that's the way companies should operate.

 

So you can say that exploiting workers is Capitalism all you want, but you will find that you are incorrect. You also clearly don't know how to form an argument as your definitions in no way refute what I'm saying since they fail to address the means in which pay is distributed within business. Cost of production is simply that, cost of production, things like power, water, materials, etc. All other earnings are considered profit and go into a collective pot that is distributed as employee pay. When a CEO denies an employee their due pay to keep it as a bonus for themselves, they aren't acting on the foundations of capitalism, they are acting on the foundations of slave labor. I'm sure you're aware of the term indentured servant, but if you're not I'm sure you can look that definition up as well. The only difference here is there is no time table, instead it's an illusion that the bull**** work you're doing will be for only so long.

 

So, you're saying that CEO's are denying workers their pay? Workers aren't being paid or workers aren't being paid as much as you think they should be paid? I don't remember saying anything about exploiting workers being capitalism. I also don't know any successful corporation that dumps all profits into a "collective pot" and distributes it to it's employees. I guess I don't know anything about economy. I always assumed that companies used profits to pay employees (all of them), invest in better technology, invest in advertising and other means to help grow their business.

 

 

This is in no way an argument, it's a bunch of mush about people being saps.

 

It's my take on the argument. I was never under the impression that everyone had to agree with it.

 

Wow, do you even know what taxes are for? Or how an economy works?

 

True there needs to be wiser spending of tax money, but less taxes being taken in does not in anyway mean wiser use of the money. It's simply ignoring the problem.

 

I guess I don't in your eyes. I was under the impression that taxes went to fund the federal, state and local governments to provide services on our behalf as deemed necessary by the Constitution. As far as the economy, I usually hold to a couple of basic beliefs: 1. the more money one keeps from ones pay, the more one can spend; which helps drive the economy. 2. The more money that a business has to spend, the more employees they can hire. I had no idea I was so far off the mark.

[Q]

TWO Ten 96's?

 

I'm so confused.

[Totenkopf]

@Q---yeah, that is odd. Apparently one has a hyphen between Ten and 96. Must be some weird system problem.

 

Considering in the last 20 years CEO's earnings have risen nearly 304%, 90% cuts sound perfectly reasonable. So reasonable, in fact, it's unreasonable how much they'll still make.

 

Eventually we'll get back to a point where the profit of the corporations will go back to the workers like it did when capitalism was, well, capitalism. One small step closer toward fixing this bull**** economy.

 

Raises the question of just how much you think either party is entitled to, and entitled is the right word under the circumstances. Company profits also go to shareholders, R&D and other areas, not just "a common pot to split with the workers". Or are you contending that shareholders and R&D are also part of the "costs of production"? Still, I wonder if you take this same expansive attitude with regard to entertainment. Ten-96 is correct that people in sports and entertainment are subject to the same wild variations in compensation you complain about with "industry" (be it manufacturing, financial, etc....). Do you find that equally offensive?

 

I agree that compensation is lopsided. So, who should be able to decide fair compensation? Bureaucrats with no real clue about how to run a business? Eggheaded academics who live in ivory towers and are insulated from the idiocy of some of their own notions? Unions, who are often as corrupt as the management they rail about? A big part of the problem seems to be that company boards are little more than rubber stamps. That and congressmen and women who are bought and paid for by many in the business community (whether that biz is manufacturing, activists, etc...). Fact is, no matter what system you live in there will be a gap between the top and bottom in pay. So, what specifically is your solution to addressing that issue? How much should the CEO get and how much the middle manager or the "lowly" janitor as a % of company profits? How do you determine your own answer (assuming you have one beyond "take the bums $$ away")?

[Ten-96]

TWO Ten 96's?

 

I'm so confused.

 

I was confused too until I looked at my tag. I joined the Lucas Forums back in 2004 under Ten-96. I revisited but forgot the password for Ten-96 so I registered as Ten 96. I'll PM one of the mods and ask if they can merge the two, if possible.

[Q]

I would do that right away. We've had problems here lately with people who have been perma-banned re-registering under an alt account, and the staff doesn't take too kindly to it, for obvious reasons. Your explanation sounds pretty innocent, though, so there shouldn't be a problem.

[Jae Onasi]

Sports salaries are irrelevent to this issue. The banks signed the contract with the government for the bailout funds, including the clause that the government can dictate the CEO salaries. The feds have the legal right to dictate salaries as a result, and they've decided to exercise that right. I don't want my tax dollars to pay the salaries of abject failures and/or outright crooks, so I'm fine with the cuts within the legal limits.

[Parmenides]

I DO want my tax payer dollars to help contribute to pay the salaries and bonus's of abject failures and/or outright crooks. Who else is with me?

 

Of course I'm joking. The businesses went to bed with the snake. They are going to be bit by the snake. It's a small good they are getting jacked.

 

..but tyranny is on the rise. Every tyrant started with perceived good intentions. I'm not calling our leaders future tyrants, but bad precedents are set and tyranny can be subtle. A complete take-over doesn't have to happen overnight, nor within these 4 years, nor within these 8 years... but it IS gaining momentum. No doubt. And even if a takeover doesn't happen, our freedoms are still dwindling.

 

This is one of those things where you're doomed either way. This whole bailout was a big government scheme. Now here's the scary part.... our tax payer dollars are still going towards executives to certain companies. Some CEO's from SOME bailed-out companies are exempt. I wonder what these guys did differently. I guess the pay czar likes them for some reason.

 

Politics in action folks!

[Ten-96]

I used professional sports player's salaries as an example to contrast the amount of money pro athletes make as opposed to corporate CEO's. I disagree with you that it doesn't make a difference, though; Jae. We're supposed to be so incensed with the amount of money these CEO's are making because they took money from the government. I contend that none of these companies came to the government asking for help. The government called them all in.

 

I still contend that it is not the government's place nor is it in their enumerated powers to be involved in private industry. Best case scenario, the companies pay the money back and call it a learning experience. Worst case scenario, the government decides that this is a great idea and branches out into other areas they deem to be "vital to the nations economic stability." So far, the government has intruded into banks and car manufacturing companies. Who's to say the retail industry isn't next?

 

I also understand that the majority of people who support the pay czar cutting the salaries do so because these companies are paying bonuses to these people while their company is still losing money. Obama made a speech in which he said that what these companies are paying their CEO's offends American's values. Government waste is far more offensive to me than what anyone on Wall Street gets paid. (link from The Heritage Foundation)

[Totenkopf]

...I don't want my tax dollars to pay the salaries of abject failures and/or outright crooks....

 

You mean you want to see a rollback or cessation of Congressional salaries?

[jrrtoken]

I contend that none of these companies came to the government asking for help. The government called them all in.

Not exactly. While I will say that giving megacorporations like banking firms loans is a rather unnerving practice that has questionable integrity, I will say asked by their own volition. Whether or not the deal was entirely honest is another matter, however.

So far, the government has intruded into banks and car manufacturing companies. Who's to say the retail industry isn't next?

Seeing as both of aforementioned industries got us into this situation by their own mismanagement and greed, as well as immense government deregulation to the point of gross incompetence, I'd that it definitely is acceptable for the government to put these industries in-question under massive oversight, if only temporarily.

[Ten-96]

Not exactly. While I will say that giving megacorporations like banking firms loans is a rather unnerving practice that has questionable integrity, I will say asked by their own volition. Whether or not the deal was entirely honest is another matter, however.

 

From news reports of that meeting, it seems to me; that these institutions were asked to come to Washington to help find a solution to the problem, not to ask the government for money or help.

 

Seeing as both of aforementioned industries got us into this situation by their own mismanagement and greed, as well as immense government deregulation to the point of gross incompetence, I'd that it definitely is acceptable for the government to put these industries in-question under massive oversight, if only temporarily.

 

The financial implosion was largely the result of Fannie Mae and Freddie Mac.

 

Congress created Fannie Mae and Freddie Mac specifically to lower the costs of home borrowing by encouraging the development of the securitized mortgage market. Congress also pushed these government-sponsored entities (GSEs) to expand lending to low-quality borrowers and thereby raise the homeownership rate in America. The key to their financial success, aside from their support in Congress, was an implicit guarantee that the federal government would not let the institutions go bankrupt. This implicit guarantee eliminated a source of risk to GSE bondholders, thus reducing the interest rate markets charged on GSE debt.(link)

 

By forcing financial institutions to loan to people who were high-risk/low quality, Congress was as complicit in the financial meltdown as the execs at Fannie Mae and Freddie Mac. Attempts to reign in Fannie and Freddie were vehemently opposed by Barney Frank and Chris Dodd.

[Jae Onasi]

You mean you want to see a rollback or cessation of Congressional salaries?

Yes, and anyone associated with the problems with my hubby's pay....

 

The banks had 2 options--take the government's offer, or go bankrupt. Now, there are a lot of issues involved in the cause of the bank meltdowns, FM/FM being part of it, high oil prices and overpriced housing being another part, among many other factors. However, the banks still had a choice, however unpalatable. No one held a gun to their heads as they signed the contract with the gov't, and apparently any number of the execs thought they could continue on their merry ways with their overblown salaries that could hardly be justified considering the atrocious performance of their banks.

[mur'phon]

Large post ahead, if your name isn't Ten-96, just skip it.

 

First of all profits are what you are left with after production costs (including wages) have been paid, and is the property of the shareholders. If they want to reinvest it is their business, though asuming the market is competetive, most of it will have to be reinvested to remain competetive.

 

Originally posted by Ten

There are numerous example of private industry out performing the government. I gave the examples UPS and FedEx because those businesses have to make money in order to operate. The government doesn't have that burden, the government fines or increases taxes on businesses and individuals to generate revenue.

 

At the same time, private companies usually don't have a responsibility to provide unproffitable services. For example the USP have to mantain postal services in sparsely populated areas where it isn't profitable (or have to deal with a maximum price on their services). If that's reason enough to support state owned companies, depends on the person.

 

Socialism - a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.

 

This is known as communism, take a look at socialist countries if you are unsure of the distinction.

 

Capitalism - an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.

 

This is not a good enough distinction for Capitalism (it ironically could also be used to describe a social-democratic state). Capitalism is built uppon the acumulation of vapitall by the capitalists and the asumption that they will be forced to reinvest this due to competition making this the only way to earn a profitt (and thus earn more).

 

How does the amount of money someone earns affect you? Answer: It doesn't.

 

Usually it doesen't, however the bonusses afect "me" in two ways. First of all since the companies wouldn't have survived without the bailout, they are taking my tax money (money spent to keep cash flowing, unlike money spent on a sporting event which I spend to get a spesific product/service that I then promptly recieve) to do something which hampers their ability to provide what I paid for. Secondly, the bonuses are part of a system of incentives that is partly to blame for the crisis, thus rejigging the incentives seems to be a perfectly reasonable response by the government.

 

our representatives in Congress wasting billions on pork-barrel projects designed to get them reelected?

 

Last time I checked, pork makes up a tiny percentage of money spent, not defending it, only saying it might not need to be our highest priority.

 

Or, our representatives in Congress getting paid their current salaries for the rest of their lives along with the best health care benefits for the rest of their lives after serving at least one full term?

 

I actually think this is a good thing, heck I might be in favor of increasing their pay. The reason being I want some of the nations best and brightest stuck in congress, which seems easier to do if the pay is good.

 

Lastly, the one sure fire way to fix the economy is to cut taxes across the board. The less money that we (my wife and I) pay in taxes, the more we have to spend on things for our home and our children; driving the economy. The less money someone who owns a business has to spend in taxes, the more they can expand their business; thereby creating more jobs.

 

This is all nice and good, however in a reccession, this tend to work a lot worse than it should. Reason being, what do most people do when times are/look tough? They spend less and save more, which is the opposite of what you want in a reccession. Not saying it can't have its uses (you get the effect fast, even if it isn't terribly large, it's relatively easy to roll back), but during reccessions, I prefer increased government spending (as long as it's easy to roll back).

 

I still contend that it is not the government's place nor is it in their enumerated powers to be involved in private industry.

 

Define private industry. While I agree with you in general, I'd argue that there are cases where the macroeconomic gain from goverment involvement outweigts microeconomic pain.

 

Best case scenario, the companies pay the money back and call it a learning experience.

 

Best case scenario? Best case scenario in my mind either involves the banks splitting into "not-too-big-to-fail" entities, or having them pay for "bailout insurance", either way they should e coupled with shareholders stopping their insanity and device a bonus system that actually benefits them. Of course, this is all just a dream that'll never come to pass, but I can dream can't I?

 

Worst case scenario, the government decides that this is a great idea and branches out into other areas they deem to be "vital to the nations economic stability." So far, the government has intruded into banks and car manufacturing companies. Who's to say the retail industry isn't next?

 

Because there is no macroeconomic justification for doing so? Or maybe because it would be political suicide for anyone doing it.

[Ten-96]

Another long post. Mainly to respond to Mur'phon.

 

First of all profits are what you are left with after production costs (including wages) have been paid' date=' and is the property of the shareholders. If they want to reinvest it is their business, though assuming the market is competetive, most of it will have to be reinvested to remain competetive.[/quote']

 

I agree with most of that and in theory I assume a lot of businesses operate in that manner. The shareholders who receive dividends aren't usually the ones who make the decisions for the company. It's the small group of controlling interest shareholders (the ones who own more than 50% of controlling interest) who decide the company's direction.

 

 

At the same time, private companies usually don't have a responsibility to provide unproffitable services. For example the USP have to mantain postal services in sparsely populated areas where it isn't profitable (or have to deal with a maximum price on their services). If that's reason enough to support state owned companies, depends on the person.

 

True, but the USPS could be run more efficiently. Would they have to raise the price of postage? Sure, otherwise they'll continue to hemorrhage revenue trying to deliver letters and packages at outdated prices.

 

This is known as communism, take a look at socialist countries if you are unsure of the distinction.

 

I just copied the dictionary definition of socialism and used that to draw a correlation to the comment posted by El Sitherino.

 

 

This is not a good enough distinction for Capitalism (it ironically could also be used to describe a social-democratic state). Capitalism is built uppon the acumulation of vapitall by the capitalists and the asumption that they will be forced to reinvest this due to competition making this the only way to earn a profitt (and thus earn more).

 

I did the same thing here with capitalism. I copied the dictionary definition to contrast the comment made my ES.

 

 

Usually it doesen't, however the bonusses afect "me" in two ways. First of all since the companies wouldn't have survived without the bailout, they are taking my tax money (money spent to keep cash flowing, unlike money spent on a sporting event which I spend to get a spesific product/service that I then promptly recieve) to do something which hampers their ability to provide what I paid for. Secondly, the bonuses are part of a system of incentives that is partly to blame for the crisis, thus rejigging the incentives seems to be a perfectly reasonable response by the government.

 

Here, we just disagree. I respect your point of view of the situation. My point of view is that the government has no business deciding which companies should succeed or fail. If those companies had been allowed to fail, there would have been other companies to step up and try to replace them. If the issue is using taxes, my point of view is that Congress shouldn't have made the move in the fist place. I know that Bush initiated the whole mess, but Congress had to agree to it and make it happen. My ire is still directed at the members of Congress because CEO's and Exec's have been taking risks for years. Some are successful and others aren't, but that's been a part of capitalism in America - risk vs. reward.

 

As far as the crisis with the financial institutions, my views have been the same since it happened. Everyone is blaming the CEO's and Exec's for the meltdown caused by the housing market finance bubble. What most are ignoring is Congress' complicity in the housing market collapse. At the center of that collapse stands Fannie Mae and Freddie Mac. I post a link in an earlier post.

 

 

Last time I checked, pork makes up a tiny percentage of money spent, not defending it, only saying it might not need to be our highest priority.

 

I believe that since we're supposed to incensed with the bonuses being paid to CEO's and Exec's in bailed out companies (which total in the millions), we should be just as incensed with the amount of waste Congress engages in regulary (which totals in the hundreds of millions - even billions).

 

 

I actually think this is a good thing, heck I might be in favor of increasing their pay. The reason being I want some of the nations best and brightest stuck in congress, which seems easier to do if the pay is good.

 

I don't remember who said it (either Tot, Evil Q, GTA or Pastramix) but one of them mentioned that the level of ineptitude displayed by Congress is underwhelming at best (something to that effect). It seems that the majority of the members of Congress (both parties) have lost touch with the real problems that are facing average citizens.

 

 

This is all nice and good, however in a reccession, this tend to work a lot worse than it should. Reason being, what do most people do when times are/look tough? They spend less and save more, which is the opposite of what you want in a reccession. Not saying it can't have its uses (you get the effect fast, even if it isn't terribly large, it's relatively easy to roll back), but during reccessions, I prefer increased government spending (as long as it's easy to roll back).

 

It worked for Reagan after the years of recession brought on by Carter. As far as increased government spending, I use your comment in my answer. If citizens usually hold onto their money (save/conserve) during a recession, shouldn't our government do the same? If your source of income gets, do you cut back on your spending or do you keep spending and spending hoping that things will turn around?

 

 

Define private industry. While I agree with you in general, I'd argue that there are cases where the macroeconomic gain from goverment involvement outweigts microeconomic pain.

 

Again, we are in disagreement here. If you have examples of government getting involved in private industry and making things more efficient and cheaper, please share them.

 

 

Best case scenario? Best case scenario in my mind either involves the banks splitting into "not-too-big-to-fail" entities, or having them pay for "bailout insurance", either way they should e coupled with shareholders stopping their insanity and device a bonus system that actually benefits them. Of course, this is all just a dream that'll never come to pass, but I can dream can't I?

 

I just don't believe that it's the government's job to determine that a company is "too big to fail." Nor is it Congress' duty to "bail out" a failing company. If a company fails, there are others to step in to take up the slack. Stop the insanity of all CEO bonus pay or just those that are involved with the government? There are still a lot of CEO's making tons of bonuses and they're still successful.

 

Because there is no macroeconomic justification for doing so? Or maybe because it would be political suicide for anyone doing it.

 

Both. It's not amongst the enumerated powers defined in the Constitution for the federal government to intrude into private industry. It's not about the justification or political suicide, it's not Constitutional.

[Totenkopf]

I don't remember who said it (either Tot, Evil Q, GTA or Pastramix) but one of them mentioned that the level of ineptitude displayed by Congress is overwhelming (something to that effect). It seems that the majority of the members of Congress (both parties) have lost touch with the real problems that are facing average citizens.

 

fixed. "Underwhelming at best" is either far too generous or exaggerated understatement.

[mur'phon]

Originally posted by Ten

Here, we just disagree. I respect your point of view of the situation.

 

You asked how somebodys pay affects me, I answered that, unless you still want to argue it doesen't, I sugest you concede the point before bringing in a new one, which brings us to.

 

My point of view is that the government has no business deciding which companies should succeed or fail.

 

And here we agree most of the time, however.

 

If those companies had been allowed to fail, there would have been other companies to step up and try to replace them.

 

Partly, the car companies could have failed without much incident (reason why I HATE the car bailout. The banks on the other hand, if those had been alowed to fail we would have gotten a domino effect from hell, where your "replacers" would fall due to forces way out of their controll. Once that happens, you'd most likely be looking at a vicious depression.

 

As far as the crisis with the financial institutions, my views have been the same since it happened. Everyone is blaming the CEO's and Exec's for the meltdown caused by the housing market finance bubble. What most are ignoring is Congress' complicity in the housing market collapse. At the center of that collapse stands Fannie Mae and Freddie Mac. I post a link in an earlier post.

 

People aren't ignoring the two FM's, however, it is not as if the housing market collapse was the only reason, and it's not as if the other banks didn't gleefully use subprimes to make a fortune.

 

I don't remember who said it (either Tot, Evil Q, GTA or Pastramix) but one of them mentioned that the level of ineptitude displayed by Congress is underwhelming at best (something to that effect). It seems that the majority of the members of Congress (both parties) have lost touch with the real problems that are facing average citizens.

 

I fail to see how this is an argument against providing more incentives for people to become members of congress.

 

As far as increased government spending, I use your comment in my answer. If citizens usually hold onto their money (save/conserve) during a recession, shouldn't our government do the same?

 

Don't pretend to be stupid here, after all you said:

The less money that we (my wife and I) pay in taxes, the more we have to spend on things for our home and our children; driving the economy.

 

Simply put, once in a reccession, you want to boost demand to get out of it. During boom years, you want to reduce demand in order to have the resources to fight back a downturn.

 

Again, we are in disagreement here. If you have examples of government getting involved in private industry and making things more efficient and cheaper, please share them.

 

Goverment will rarely make a business (restricting to industry seems pointless, as there are hardly any reason att all for the goverment to be involved there) more effective (a possible exception being health care). What I argued was that macro economic gain by having the government do something can in several cases outweight micro economic pain. Usually this is because the state often can't externalize the same way private companies can.

 

It's not amongst the enumerated powers defined in the Constitution for the federal government to intrude into private industry. It's not about the justification or political suicide, it's not Constitutional.

 

Not sure if I agree here, if my two reasons where not present (f.e if there actually was a net macro economic gain by having the state controll retail), I'd hope (and think) congress would do what it could to amend the constitution.

[Ten-96]

You asked how somebodys pay affects me' date=' I answered that, unless you still want to argue it doesen't, I sugest you concede the point before bringing in a new one, which brings us to.[/quote']

 

Concede? How does the amount of money someone else earns, affect someone else? If I make $400K a year, how does that affect Joe Schmoe? Conceding the point is out of the question because the amount of money someone earns does not have a direct effect on you. We can argue cost associated with production, interests and other factors but it won't change my reasoning.

 

Partly, the car companies could have failed without much incident (reason why I HATE the car bailout. The banks on the other hand, if those had been allowed to fail we would have gotten a domino effect from hell, where your "replacers" would fall due to forces way out of their control. Once that happens, you'd most likely be looking at a vicious depression.

 

That may have happened but it wasn't an inevitability. As of this date, we are looking at an inflation spike never seen in this country before. So far, this administration has printed 10X the amount of money Carter's administration printed.

 

People aren't ignoring the two FM's, however, it is not as if the housing market collapse was the only reason, and it's not as if the other banks didn't gleefully use subprimes to make a fortune.

 

The 2 FM's while not the only reason of the collapse, they were the largest contributor to the collapse.

 

Don't pretend to be stupid here, after all you said:

 

As I wrote in the previous post, it worked wonderfully for Reagan. I know there are those that dispute that but the facts are there to support his actions.

 

Simply put, once in a reccession, you want to boost demand to get out of it. During boom years, you want to reduce demand in order to have the resources to fight back a downturn.

 

Hence the reason that the government needs to be fiscally responsible.

 

 

Goverment will rarely make a business (restricting to industry seems pointless, as there are hardly any reason att all for the goverment to be involved there) more effective (a possible exception being health care). What I argued was that macro economic gain by having the government do something can in several cases outweight micro economic pain. Usually this is because the state often can't externalize the same way private companies can.

 

Health care and the government? The government runs Social Security which will have $34 Trillion in unfunded liabilities. Medicare is also run by the government. Medicare will accrue $60 Billion in debt this year alone. Based on those two examples, I seriously doubt that the government will take over health care and make things better. Once again it begs the question: What private industry has ever been improved, become more efficient or it's costs been lowered when the government has gotten involved?

 

 

Not sure if I agree here, if my two reasons where not present (f.e if there actually was a net macro economic gain by having the state control retail), I'd hope (and think) congress would do what it could to amend the constitution.

 

Thankfully, they don't have the votes in order to amend the Constitution. The Constitution is there to protect individual liberty and freedom. We don't need the government taking over anything on our behalf. Whatever happened to personal responsibility? Why do some people think that the government is the answer to all problems?

[mur'phon]

That may have happened but it wasn't an inevitability.

 

Then please tell me who would have stepped up. In the case of the car cmpanies it was simple enough, the industry needed to be downsized anyway, plenty of companiesand where ready to step up, the macro economic pain would be minimal, and not saving for instance GM wouldn't affect for instance Toyota much. When it commes to the banks, there wasn't any likely to fill the gap (especially after the domino effect from not saving them had run its course), and the macro economic pain of letting them fail would be devastating (try recovering with minimal access to credit).

Note: I'm not in favor of saving companies as a rule, which is why I want to see the banks splitt up or having to pay bailout insurance (so the next time they need one, we'll save them with their own tax money).

 

As I wrote in the previous post, it worked wonderfully for Reagan.

 

i'd argue it didn't work "wonderfully" (and his method involved the defecits you hate) however that's a subject massive enough for its own thread, so if you want to discuss it, feel free to start one.

 

Hence the reason that the government needs to be fiscally responsible.

 

And obviously we agree here, I'm merely arguing in favor of saving during boom years to use during bust years.

 

Health care and the government? The government runs Social Security which will have $34 Trillion in unfunded liabilities. Medicare is also run by the government. Medicare will accrue $60 Billion in debt this year alone. Based on those two examples, I seriously doubt that the government will take over health care and make things better.

 

I said government canrun health care better, the US system is one of the least effective in the world, though that also applies to the private parts of it.

 

Once again it begs the question: What private industry has ever been improved, become more efficient or it's costs been lowered when the government has gotten involved?

 

My main point is macro economic gain, in other words, it doesen't need to benefit the company directly. For instance a railway line might very well be loss-making for a company, but the amount saved by society by for instance less trafic jams, less wearing down of roads, cleaner air, fewer trafic accidents, etc is likely to be far higher than the loss the company makes. Now, a private company would never run a loss making line, unlike the government who has an incentive to run it because far less of the effects of not doing so is externalized.

[Ten-96]

No more quoting for me, takes up too much space.

 

In regards to the banking/financial situation, there are numerous mega banking/financial corporations. Take Wells Fargo Financial for instance. One of the many banks that fought to pay back the TARP money, immediately. There are others but I can't name them off the top of my head.

 

As far as Reagan, there are numerous economists who agree that Reagan did the right thing to fix the economy when he took office. However, there are some economists who argue the opposite. My viewpoint is that Reagan did the right thing at the right time that had lasting effects far after his terms in office.

 

I concur, there's nothing wrong with the government putting some away to combat a downturn. I still disagree that during a downturn, the government should be spending and printing money like there's no tomorrow. In just the first nine months, Obama has managed to triple the fiscal year deficit. I like to explain it like this: If you have a hole in your wall, do you patch the hole or do you make the hole three times the size it was and call it improved air flow?

 

There's nothing I can reply to "the government can run health care better." Your claim is that ours is the least effective/efficient in the world. My question: Why do people from around the globe come here for health care if our system is so bad? If you're referring to the infant mortality rate, not every country reports every infant death like we do. We include in that number, all of those infants that are neglected, abandoned, left in garbage cans, dumpster and those that are just killed by the parent.

 

Finally, government loss means an increase in taxes and/or inflation at some point sooner or later.

[Darth Avlectus]

Random side note of some relation: How about banks rejecting baiolout money?

 

http://amateurassetallocator.com/2008/11/04/some-banks-are-rejecting-bailout-money/

 

http://money.cnn.com/2008/11/03/markets/thebuzz/index.htm?postversion=2008110317

 

 

I posed this question: Why, if a potential borrower looks like a high chance liability, would you decide to go through with loaning money to them where they in your best estimation might not and likely would not be able to pay it back? The common sense answer says you wouldn't.

 

Someone (murphs I think you) replied "unless it looked like a better deal somehow".

 

I have also heard from Clark Howard that on the full economic scale of looking at things simply paying debt back does not ensure avoiding catastrophe. While, no it may not *absolutely* avoid the pitfalls of economic turbulence I should think it would reduce the likelihood of this happening.

 

If regulations forcing a bank to take a bad loan deal were not in play as a major factor for this economic crisis then how otherwise could it be that potential and likely *bad* loan deals would look like a good deal to profit from (especially if the assets seized in such defaults weren't enough to be "worth it")?

 

I would think it wouldn't be good in the long run. Events that unfolded thus far are evidence of this. I'll listen but understand that I think lack of common sense in dealings is a folly and recipe for disaster.

[El Sitherino]

Once again it begs the question: What private industry has ever been improved, become more efficient or it's costs been lowered when the government has gotten involved?

Alcohol, letter and parcel delivery service, emergency services to name a few.

While many like to bring up the downfall of the USPS, I would like to note that people conveniently forget the impact e-mail has made on the USPS, which is directly attributable to it's falling. The reason UPS and FedEx do very well is because they're very specifically package delivery, something that is very much tied to the boom of online interaction, especially considering they have contracts with online shopping groups like amazon and ebay's many hosted shops. As most products we purchase in this country actually come from overseas, the USPS is unlikely to be used as often as these two. Still, we can't forget that it's existence allows for UPS and FedEx to work at the level it does.

 

 

 

Thankfully, they don't have the votes in order to amend the Constitution. The Constitution is there to protect individual liberty and freedom.

You're forgetting that it's also to protect the welfare of the union.

 

We don't need the government taking over anything on our behalf. Whatever happened to personal responsibility? Why do some people think that the government is the answer to all problems?

We don't have personal responsibility in this country. I agree there needs to be more done to support the idea in people, but that doesn't mean we just leave our children out in the street for them to learn self-defense through trial and error. I don't think the government is the answer to all of our problems, but in turn I also do not believe they bring about all of our problems. Let us also remember which individuals in the government have actually brought about more strife for our nation. While you seem to love him like a grandpa, Reagan has factually done more to harm and divide this nation than any other President. His economic strategy was atrocious and we're still facing the repercussions of it. I'm sure you complain plenty about the lack of jobs in America, like many fail to recognize Reagan is to blame for this, as he eliminated America as an Industry nation. Stocks are nothing more than cheating a quick profit, a profit that does not get paid back into the system, therefore causing many issues with the stability of the economic structure.

 

As well it's his Administration that created the crime wave we still experience and polarized the poor and rich, eliminating the middle class. Granted you won't believe me, but it's your right to ignore fact.

 

PS: No anger here, perhaps confusion, but not anger.

[Tommycat]

As well it's his Administration that created the crime wave we still experience and polarized the poor and rich, eliminating the middle class. Granted you won't believe me, but it's your right to ignore fact.

 

You're really going to try to pin the crime rate on REAGAN? REALLY

 

Ok well per capita murders are DOWN since 1980 actually all crimes are down since 80. So you are essentially saying that Reagan caused this down turn in crime. I'm sure he would be pleased.

 

 

oops SOURCE

[Totenkopf]

Alcohol, letter and parcel delivery service, emergency services to name a few.

While many like to bring up the downfall of the USPS, I would like to note that people conveniently forget the impact e-mail has made on the USPS, which is directly attributable to it's falling. The reason UPS and FedEx do very well is because they're very specifically package delivery, something that is very much tied to the boom of online interaction, especially considering they have contracts with online shopping groups like amazon and ebay's many hosted shops. As most products we purchase in this country actually come from overseas, the USPS is unlikely to be used as often as these two. Still, we can't forget that it's existence allows for UPS and FedEx to work at the level it does.

 

Yes, the USPS delivers all kinds of mail and packages. Doesn't take away from the fact that it's poorly run. If the USPS were private, or properly funded by the govt, it wouldn't run (nor would it be able to) such huge deficits. The fact that you have state stores doesn't mean that the govt is better than the private sector, just that the govt has seen it as a source of revenue stream. And you know that $$ is like crack for the govt.

 

You're forgetting that it's also to protect the welfare of the union.

 

The territorial integrity of the Union and the people from a potential tyranny, either foreign OR domestic. Just what is "the welfare of the union"? That's a slippery slope kind of concept......VERY elastic.

 

We don't have personal responsibility in this country. I agree there needs to be more done to support the idea in people, but that doesn't mean we just leave our children out in the street for them to learn self-defense through trial and error. I don't think the government is the answer to all of our problems, but in turn I also do not believe they bring about all of our problems. Let us also remember which individuals in the government have actually brought about more strife for our nation. While you seem to love him like a grandpa, Reagan has factually done more to harm and divide this nation than any other President. His economic strategy was atrocious and we're still facing the repercussions of it. I'm sure you complain plenty about the lack of jobs in America, like many fail to recognize Reagan is to blame for this, as he eliminated America as an Industry nation. Stocks are nothing more than cheating a quick profit, a profit that does not get paid back into the system, therefore causing many issues with the stability of the economic structure.

 

We don't have a sense of personal responsibility b/c it's not pc enough of a concept. Between pop culture and education pushing concepts like collective responsibility and the culture of victimization, why would anyone expect people to take responsibility for anything when it's easier to blame everyone else. As to the Reagan hating, sithy, give it a rest. Johnson's great society programs went a long way toward ghettofication of the black communities in the US. Unions are no less responsible for making American goods uncompetitively priced. Industries like steel and the automobile made bad decisions long before Reagan got into office that reduced their competitiveness.

 

As you said, granted you won't believe me, but it's your right to ignore fact.