Interestingly provocative economics prospective, discuss

[LegalSmash]

http://www.alternet.org/workplace/140394/our_economy_is_going_to_keep_tanking_until_we_stop _shoveling_billions_to_rich_people/

titilating?

[Red]

Stop giving free money to people. Pretty simple.

[LegalSmash]

Stop giving free money to people. Pretty simple.

Where did you get that out of the article?

[Red]

i didnt.

[Silentfaith]

i didnt.

Omg at your avatar again, and your sign is funny as hell lol

[PotshotPolka]

Sounds like some shit Moore would write, I'll be back tonight when I have time.

[RedOctober]

people are pissed that we are giving rich corporations money and the people are receiving squat. while i personally agree that attempting to bail out GM and the banks was a very large mistake it was a wiser investment than giving the money to the American people. i don't think that if i received a 4K dollar check from the government it would do the failing companies of America much good.

....the bailouts are failed anyway, eventually the market will go whatever way it was heading to begin with. Obama's plan was just to place a speed bump on it so the political blame falls on the next sorry ass that happens to be in charge.

[LegalSmash]

Failing companies should have been allowed to fail but the article is more a commentary from another prospective as to the effectiveness of trickle down economics that was posted by a friend of mine who is a lawyer in NY. I thought it was interesting.

[RedOctober]

it was pretty good article. i knew the author hated the trickle down approach when i read the title "Our Economy Is Going to Keep Tanking Until We Stop Shoveling Billions to Rich People"

but the flip side is that i don't see any poor people hiring anyone. and the continuing decline of jobs available is one of the most important factors why the economy isn't going to make a rebound any time soon

[Drox]

Failing companies should have been allowed to fail but the article is more a commentary from another prospective as to the effectiveness of trickle down economics that was posted by a friend of mine who is a lawyer in NY. I thought it was interesting.

Yea but wouldnt that make us a Capitalist country? Oh wait thats right, we are moving towards more fascist and socialist nowadays. ;) I agree we should have let these companies fail, thats how it works but the government is scared if they do fail then it will be a domino effect leading us to depression and another stock market crash or so they tell us. Now GM is 70% owned by the government now, which to me doesnt make much sense.

[LegalSmash]

Yea but wouldnt that make us a Capitalist country? Oh wait thats right, we are moving towards more fascist and socialist nowadays. ;) I agree we should have let these companies fail, thats how it works but the government is scared if they do fail then it will be a domino effect leading us to depression and another stock market crash or so they tell us. Now GM is 70% owned by the government now, which to me doesnt make much sense.

But yet, outside of GM, UAW, and the workers themselves, no one, Democrat, Republican, or other who is a VOTER and not a POLITICIAN wanted that shit activity. It's like purposefully empregnating a trailer trash whore that is prediabetic.

Red October, it is not a matter of "poor people hiring", poor people generally don't own businesses in that fashion, its about middle class businesses being able to hire rather than having to make due with less employees on, since the cuts given to the top 5%, the author hypothesizes, didn't result in investment into the infrastructure of the economy, but into yachts, fake tits, and multiple homes, which decidedly does not help a larger range of economic interests, like people who sell things aside from the above mentioned items that were the most likely recipients of funds from the cuts.

Additionally, its probably important to notice that a great many of the people who were receiving these funds were not responsible financially either, a great deal of people going ass over tea kettle in this economic DEPRESSION (I'm really tired of the euphemisms, its a fucking depression), are the people formerly making 250K + who could not manage their finances, credit lines, home equity, or discretionary spending.

Financial stupidity, extended across the different levels of financial ability. The only difference is that the election committees politicized the "middle class" and "joe six packs" rather than the rest of the nation, because its more politically charged and effective.

Again, I thought it was an interesting article.

[PotshotPolka]

Alright, serious response.


I cannot consider this an economic perspective from the start, simply because it doesn't address economics, it attempts to address the monetary system, which it does... poorly.

It really targets one thing as a whole, the U.S. financial system or mistakenly Wall Street, which is only one player in this system.

The things that created the environment for this recession was indeed not only a drastic increase in oil prices (perhaps a key factor in sparking the downturn, who knows, ask the NBR in half a decade) and a general boom surrounding the housing market.

So before I get any further, I would like to at least acknowledge that I have no Master's or Doctorate, or even BS in Economics, I'm just a HS grad with only a Prin. of Macro Economics under my belt. I can however tell, quite proudly, that I came to the same conclusion for my reasoning on the 2008 Financial Crisis as Senior Fellow at Cato; about month earlier then him as well.



I would say in a nutshell, the greatest contributions to the Financial Crisis was three things:

1. Increasingly low interests rates created by the Federal Reserve following the "dotcom" bubble that grew throughout the late 90s and 00s. This allowed the quantity of loans demanded to rise dramatically.

2. The creation of the Community Reinvestment Act in the 70s, which was revamped to increase loans to high risk individuals beyond the original levels was also implemented by the Clinton Administration. These loans, which originally were almost exclusively made by the government contracted Fannie Mae and Freddie Mac companies were eventually coveted by other corporations, many in fact, since the opportunity for gains was high in the boom markets.

3. The rescinding of certain elements of the Glass-Steagall Act, aka the New Deal. This particular set of laws (among a few closely related others) was essentially the formation of the SEC, the HOLC, and the FDIC. It was in essence, the regulatory practices for major commerical banking and securities.
After basically taking off many of safety mechanisms, the amount of subprime lending skyrocketed after 1999, and ironcially the Bush Administration attempted to curb it at one point early on.

So, here is the kicker in my view.
I believe, in short, this all snowballed from actually 80 years ago, and specifically the New Deal.

The Home Owner's Loan Corporation for starters is essentially what TARP is today, in all practical aspects. Both have been buying up "toxic assets" or rather, loans and mortgages defaulted that banks took lossed from because their originally estimated value was much higher than what was received when debts were defaulted on and mortgages foreclosed. Essentially this, a major fault in Commercial/Security banking, threw banks into chaos, since the very sensitive level necessary for holding reserve amounts in banking is also dependent on returns expected from loans. When demand sank for homes, and banks were left with nothing BUT homes at a depreciated value and little fungible funds. Therefore many would have been KOed on the spot in bankruptcy, which happened in the Great Depression, but this time around, the government simply assumed these "toxic assets" on a massive scale, hence TARP, plus emergency measures to an extent by the FDIC

Another funny thing about the HOLC is that besides reclaiming untouchable assets from banks and later reselling them at a lower price (and incurring all the deficit themselves, and paying it off through taxes later) is that it launched a campaign to prevent loaning to high risk areas, I.E. slums, inner city neighborhoods, etc. This (argumentable, since to this day its a battle ground for interest groups) led to a process now known as redlining, which is essentially when a bank, like many pizza companies, looks at your address, looks back at a map, which has certain sections which are slated for no loans by the company. This was a major contribution to inner city decay While legal unto some degrees, this was deemed unacceptable by the Carter administration who in passed the CRA, which in led to subprime lending to risky borrowers, and finally as mentioned earlier the revisions to the Glass-Steagall Act removed the governors from these programs. The SEC is in reality reliant on risk assessments on securities by independent groups. When the art of "rolling" multiple securities into packages was created to obscure their real value, the companies kept on passing them as acceptable, even as many were filling with adjustable rate, subprime, loans, many of which were high risk. This explains the phenomenon of how Washington Mutual went from AAA to bankrupt within hours, they rotted from inside.

So basically, I have one other thing to say if you read to here. I am as far as I'm concerned an economic libertarian. Regulation of a free market is in my opinion less efficient then otherwise, but the point everybody is missing here is that unlike a conventional supply demand market, the financial and monetary systems are just that, systems. Even Milton Friedman acknoweledged this. Any human system will be prone to errors, certain actions will escalated these possibilities. Therefore I do condone regulation of banking. I do not however support the exploitation and manipulation of this system to fit a government's objectives, be they political, economic, or otherwise. This problem wasn't caused out of the greed and exploitation of the masses by an elite few. It was the chronic mismanagement of a system which was unsustainable from the start. What you saw last year cannot be physically repeated again at current deficit rates. This is the last time a bailout will be issued to anybody, and it is the end of the current banking paradigm.


By the way, those of you thinking tl;dr should be struck in your balls, this is as condensed as possible.

[RedOctober]

Alright, serious response.


I cannot consider this an economic perspective from the start, simply because it doesn't address economics, it attempts to address the monetary system, which it does... poorly.

It really targets one thing as a whole, the U.S. financial system or mistakenly Wall Street, which is only one player in this system.

The things that created the environment for this recession was indeed not only a drastic increase in oil prices (perhaps a key factor in sparking the downturn, who knows, ask the NBR in half a decade) and a general boom surrounding the housing market.

So before I get any further, I would like to at least acknowledge that I have no Master's or Doctorate, or even BS in Economics, I'm just a HS grad with only a Prin. of Macro Economics under my belt. I can however tell, quite proudly, that I came to the same conclusion for my reasoning on the 2008 Financial Crisis as Senior Fellow at Cato; about month earlier then him as well.



I would say in a nutshell, the greatest contributions to the Financial Crisis was three things:

1. Increasingly low interests rates created by the Federal Reserve following the "dotcom" bubble that grew throughout the late 90s and 00s. This allowed the quantity of loans demanded to rise dramatically.

2. The creation of the Community Reinvestment Act in the 70s, which was revamped to increase loans to high risk individuals beyond the original levels was also implemented by the Clinton Administration. These loans, which originally were almost exclusively made by the government contracted Fannie Mae and Freddie Mac companies were eventually coveted by other corporations, many in fact, since the opportunity for gains was high in the boom markets.

3. The rescinding of certain elements of the Glass-Steagall Act, aka the New Deal. This particular set of laws (among a few closely related others) was essentially the formation of the SEC, the HOLC, and the FDIC. It was in essence, the regulatory practices for major commerical banking and securities.
After basically taking off many of safety mechanisms, the amount of subprime lending skyrocketed after 1999, and ironcially the Bush Administration attempted to curb it at one point early on.

So, here is the kicker in my view.
I believe, in short, this all snowballed from actually 80 years ago, and specifically the New Deal.

The Home Owner's Loan Corporation for starters is essentially what TARP is today, in all practical aspects. Both have been buying up "toxic assets" or rather, loans and mortgages defaulted that banks took lossed from because their originally estimated value was much higher than what was received when debts were defaulted on and mortgages foreclosed. Essentially this, a major fault in Commercial/Security banking, threw banks into chaos, since the very sensitive level necessary for holding reserve amounts in banking is also dependent on returns expected from loans. When demand sank for homes, and banks were left with nothing BUT homes at a depreciated value and little fungible funds. Therefore many would have been KOed on the spot in bankruptcy, which happened in the Great Depression, but this time around, the government simply assumed these "toxic assets" on a massive scale, hence TARP, plus emergency measures to an extent by the FDIC

Another funny thing about the HOLC is that besides reclaiming untouchable assets from banks and later reselling them at a lower price (and incurring all the deficit themselves, and paying it off through taxes later) is that it launched a campaign to prevent loaning to high risk areas, I.E. slums, inner city neighborhoods, etc. This (argumentable, since to this day its a battle ground for interest groups) led to a process now known as redlining, which is essentially when a bank, like many pizza companies, looks at your address, looks back at a map, which has certain sections which are slated for no loans by the company. This was a major contribution to inner city decay While legal unto some degrees, this was deemed unacceptable by the Carter administration who in passed the CRA, which in led to subprime lending to risky borrowers, and finally as mentioned earlier the revisions to the Glass-Steagall Act removed the governors from these programs. The SEC is in reality reliant on risk assessments on securities by independent groups. When the art of "rolling" multiple securities into packages was created to obscure their real value, the companies kept on passing them as acceptable, even as many were filling with adjustable rate, subprime, loans, many of which were high risk. This explains the phenomenon of how Washington Mutual went from AAA to bankrupt within hours, they rotted from inside.

So basically, I have one other thing to say if you read to here. I am as far as I'm concerned an economic libertarian. Regulation of a free market is in my opinion less efficient then otherwise, but the point everybody is missing here is that unlike a conventional supply demand market, the financial and monetary systems are just that, systems. Even Milton Friedman acknoweledged this. Any human system will be prone to errors, certain actions will escalated these possibilities. Therefore I do condone regulation of banking. I do not however support the exploitation and manipulation of this system to fit a government's objectives, be they political, economic, or otherwise. This problem wasn't caused out of the greed and exploitation of the masses by an elite few. It was the chronic mismanagement of a system which was unsustainable from the start. What you saw last year cannot be physically repeated again at current deficit rates. This is the last time a bailout will be issued to anybody, and it is the end of the current banking paradigm.


By the way, those of you thinking tl;dr should be struck in your balls, this is as condensed as possible.

way to go Potshot..... post a ridiculously long response that only two of us are going read and start bragging about how you wrote a paper in Eco. and came to the same conclusion for as Senior Fellow at Cato a month earlier.

ha that was pretty good though!

[PotshotPolka]

way to go Potshot..... post a ridiculously long response that only two of us are going read and start bragging about how you wrote a paper in Eco. and came to the same conclusion for as Senior Fellow at Cato a month earlier.

ha that was pretty good though!

That's not the paper from Eco actually, it wouldn't have fit the topic well.

[VirDeBello]

lol The only way I know what going on in the world is through Steamgamers news and political section, very interesting topic and replies. So how bad is it over in the States? Like if this continues what will happen?

[PotshotPolka]

lol The only way I know what going on in the world is through Steamgamers news and political section, very interesting topic and replies. So how bad is it over in the States? Like if this continues what will happen?

To sum it up in best case scenario, defaulting on Social Security and Medicare/caid.

Worst case would be complete Federal bankruptcy, and hyperinflation.

Timeline is most likely 5-10 years.
If you don't believe me, look at how China is reacting at the news that these new deficits will be monetized.