Only Capitalists Create Jobs

[Monk Of Reason]

Debt is always paid back, but it mimics a Ponzi scheme, & this is why it only appears to not be paid back, ie, because newly borrowed money pays down older debts. Many say this is good for the economy, but this is without proof. I prefer more responsible spending, ie, deficit spending should be temporary. Otherwise, a culture of careless over-spending takes over. Example: We have so many who want to start a war with Iran. How do they think this would proceed? Do they realize it could be more costly than both the Afghan & Iraq war combined? How would it be paid for? No discussion of this happens. They just presume that somehow we'll muddle thru.

You and I are on the same page when it comes to war profiteering and the massive amounts of money hemorrhaging into the military budget. I don't think we see eye to eye on the taxes though.

If there is a massive increase in spending, such as for a war, there should be a proportionate increase in taxation.

 

[ThePainefulTruth]

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The following is a summation of the verifiable facts which was published in USA Today (Jul 31, 2009), and the details for which are in the book I mentioned, Reckless Endangerment :

1. Jimmy Carter pushed for and signed the Community Reinvestment Act (CRA) which forced banks to lower their standards so that previously unqualified people could get a mortgage.

2. Bill Clinton doubled-down on the CRA lowering standards significantly more.

3. Atny. Gen. Janet Reno intimidated reluctant banks.

4. Clinton appointee Fannie Mae Chief, Franklin Raines, bundled bad loans under falsified financial reports, helping to support the housing bubble, and getting himself $90 mil in bonuses. He was the only culprit in this to be tried and found guilty.

5. Senator Chris Dodd, and Rep. Barney Frank, of Dodd-Frank "Affordable Housing Act" fame, helped suppress Congressional investigations into Fannie Mae and Freddie Mac--which Sen. Barack Obama supported.

6. George W. Bush's treasury secretary, Henry Pouslon, arranged the biggest government bailout in history. It was a very Democrat-like tactic, exploiting crises.

7. Then attorney, Barack Obama, filed lawsuits against banks on behalf of ACORN to force banks to make sub-prime loans.


The housing bubble burst and was being called the sub-prime mortgage crisis across the media before the economy tanked. The crash in housing prices it precipitated was the result of government forced housing loans. As a control for that idea, look at Canada. They didn't force their banks to make such loans and their economy, which is very much tied to ours otherwise, didn't crash.

 

[ThePainefulTruth]

If there is a massive increase in spending, such as for a war, there should be a proportionate increase in taxation.

An increase in taxation doesn't necessarily increase revenues. In fact, depending on where we are on the tax percentage bell curve, it can actually decrease government revenues. This has been shown to work during the Coolidge, Truman, Kennedy, Reagan and Bush II administrations. But the increase can be swallowed up by increasing spending even more.

 

[jonathan180iq]

I was once a real estate broker. (I still own, manage & develop it.) I saw much fraud before the S&L crisis, eg, inflated appraisals. Afterwards, appraiser licensing made that a thing of the past.

What part of the country are you in? I'm in GA, for what it's worth.
I've had appraisers literally come up to me and very bluntly ask "What are we shooing for?" That was their independent market analysis...
These guys are certified, registered, and have been working the area for a long time. On the flip side of that, the only real appraisals that we have seen usually come from Atlanta, but they're a bit inflated because they'll comp properties local to them when they can't find anything to their liking in the local market. This is especially true of commercial property.

Their plight was due to the economic crash wiping out much of their income, & exacerbated by government imposed hurdles to loan renegotiation.

This I can mostly agree with - the one caveat being that from everything I've seen and heard, from second knowledge and from person experience, is that the only I've seen comes from the bank itself.

A bit of personal history here, I purchased my home in 2007. At the time, I was able to snag a deal and had, at the time of purchase, nearly $50,000 in "equity" (which you know if a make-believe thing, but let's roll with it.) By late 2008-early 2009, that equity was gone and I was looking at a loan that was borderline break even. I've done my due diligence, yet still find myself underwater, even after the rebound. My first attempt at a loan renegotiation and refinance took 12 months and saved me $36.... I **** you not. That time frame and decision had nothing to do with government intervention and everything to do with the collapse of Taylor, Bean & Whitaker and the flipping from one institution to another before the first letter of said collapse reached my door - TB&W, despite court documents barring them from doing so, told none of their customers about this collapse and continued to take payments that were withdrawn from people's accounts and deposited to who-knows-where. Fast forward two years, and Bank of America has yet to credit certain accounts (mine being one) for documented payments made to magic free-market land. None of that had anything to do with government regulations and everything to do with people/companies being ****ty.

 

[jonathan180iq]

An increase in taxation doesn't necessarily increase revenues

Well of course not if the metric for making such a statement is qualified with an increase in spending because they "saw it coming."

All he is saying that if there is going to be an increase in spending, (war being his example) then a proportionate increase in taxation has to go hand in hand. If it doesn't then it's a negative on the ol' spending chart. I think it's quite simple.

The refusal to ever raise taxes is simply nonsensical, regardless of which political party you side with. Math makes it a necessity anytime extra expenditures are incurred.

 

[Monk Of Reason]

An increase in taxation doesn't necessarily increase revenues. In fact, depending on where we are on the tax percentage bell curve, it can actually decrease government revenues. This has been shown to work during the Coolidge, Truman, Kennedy, Reagan and Bush II administrations. But the increase can be swallowed up by increasing spending even more.

You have to calculate what the rate of economic determent is based upon taxation. Its a simple elasticity of demand equation (well simple to calculate difficult to obtain the accurate information) and then the rates can be adjusted to produce the highest amount of revenue from taxes. However reduction of taxes very rarely increases tax revenue.

 

[ThePainefulTruth]

What part of the country are you in? I'm in GA, for what it's worth.
I've had appraisers literally come up to me and very bluntly ask "What are we shooing for?"

Yes, that's wrong, but that isn't trying to reinforce some external artificially derived value, but rather just to be in the ball park of what a buyer and seller have agreed on in a specific sale. It actually greases the skids of the market instead of trying to push a market in a given direction. But like I said, it's still wrong.

 

[ThePainefulTruth]

Well of course not if the metric for making such a statement is qualified with an increase in spending because they "saw it coming."

I'm stating no such qualification.

You have to calculate what the rate of economic determent is based upon taxation. Its a simple elasticity of demand equation (well simple to calculate difficult to obtain the accurate information) and then the rates can be adjusted to produce the highest amount of revenue from taxes. However reduction of taxes very rarely increases tax revenue.

It did under those administrations, though in Truman's case, it was very complex since we were retrofitting from the War.

 

[jonathan180iq]

Yes, that's wrong, but that isn't trying to reinforce some external artificially derived value, but rather just to be in the ball park of what a buyer and seller have agreed on in a specific sale. It actually greases the skids of the market instead of trying to push a market in a given direction. But like I said, it's still wrong.

But you aren't privy to the terms of those understandings. When the bank has set a price at $150,000 on a house that's only worth $100,000 under normal circumstances, and the appraiser just blankly accepts that value and then finds comps to support it, and the whole thing is then written off as being the new market value, then haven't they artificially and arbitrarily increased the market? And it's basically just because they want to.

 

[Monk Of Reason]

It did under those administrations, though in Truman's case, it was very complex since we were retrofitting from the War.

Let me rephrase that. The only time that reduction in taxes meant an increase in revenue was usually due to extraneous circumstances.

 

[metis]

In order to understand what mostly caused the Great Recession, one needs to understand how the "shadow-banking system" worked, and especially what "credit-default swaps" are. What these had done was to build a house of cards, that could take small jolts but not big ones. Since the investment firms and banks were heavily involved in the spiderweb of interconnectedness, any major firm that defaulted could and did set off a chain reaction. The idea of just letting them fail is nonsense because it just didn't involve one of even just a few firms-- it became systemic here in the States and internationally.

Roughly 60% of all business investment outside of the stockmarket in 2007 were through the shadow-banking system, which even Greenspan said was so complicated that he could keep pace with all of the changes.

 

[Revoltingest]

You and I are on the same page when it comes to war profiteering and the massive amounts of money hemorrhaging into the military budget. I don't think we see eye to eye on the taxes though.

If there is a massive increase in spending, such as for a war, there should be a proportionate increase in taxation.

I'm in favor of increasing taxation commensurate with spending.
But I say we've been spending way too much in far too reckless a fashion.

 

[Revoltingest]

What part of the country are you in? I'm in GA, for what it's worth.
I've had appraisers literally come up to me and very bluntly ask "What are we shooing for?"

I'm in Michiganistan.
Before the S&L crisis, appraisers would ask me what I needed.
But those heady days are long gone, now that appraisers are licensed.
I've never heard of a bogus appraisal here since.
(That would mean that if it happens, it's uncommon.)
Georgiastan doesn't regulate appraisers very closely, eh?
To have them meet strict standards is one form of regulation I heartily endorse.

Big unintended (I hope) only problem:
If I want a more bare bones analysis for fighting our typical illegally high real estate assessments, appraisers are prohibited from doing anything less than a full blown appraisal, which costs about $4000 for a commercial property.

A bit of personal history here, I purchased my home in 2007. At the time, I was able to snag a deal and had, at the time of purchase, nearly $50,000 in "equity" (which you know if a make-believe thing, but let's roll with it.) By late 2008-early 2009, that equity was gone and I was looking at a loan that was borderline break even. I've done my due diligence, yet still find myself underwater, even after the rebound. My first attempt at a loan renegotiation and refinance took 12 months and saved me $36.... I **** you not. That time frame and decision had nothing to do with government intervention and everything to do with the collapse of Taylor, Bean & Whitaker and the flipping from one institution to another before the first letter of said collapse reached my door - TB&W, despite court documents barring them from doing so, told none of their customers about this collapse and continued to take payments that were withdrawn from people's accounts and deposited to who-knows-where. Fast forward two years, and Bank of America has yet to credit certain accounts (mine being one) for documented payments made to magic free-market land. None of that had anything to do with government regulations and everything to do with people/companies being ****ty.

My biggest problems were with a government (Brits) owned bank, RBC (which owns Charter One & Citizens NA). They were horrible b******s to deal with. Fortunately, they sold my loans at a big discount to a Texastan company. They were a joy to deal with, & gave me time to find a new lender. The tough part was coming up with enuf money to cover the income tax liability caused by the refinance. I played a complex game & got lucky by finding a cooperative local lender. F*** the Brits, the fed gov, & the IRS!

 

[Yerda]

The crash in housing prices it precipitated was the result of government forced housing loans.

I know (and I'm sure other do too) that this narrative is fantasy. If you want to keep pushing it, go wild. I'm sure Bloomberg and the guys at Fox will be delighted to have such a dedicated acolyte spraying their manure around in public.

For anyone who is interested, these two articles deal specifically with this trash:

What caused the financial crisis? The Big Lie goes viral - The Washington Post

Lest We Forget: Why We Had A Financial Crisis - Forbes

The Washingston Post, and Forbes. Two stallions of the pinko-leftist vanguard.

 

[metis]

I know (and I'm sure other do too) that this narrative is fantasy. If you want to keep pushing it, go wild. I'm sure Bloomberg and the guys at Fox will be delighted to have such a dedicated acolyte spraying their manure around in public.

For anyone who is interested, these two articles deal specifically with this trash:

What caused the financial crisis? The Big Lie goes viral - The Washington Post

Lest We Forget: Why We Had A Financial Crisis - Forbes

The Washingston Post, and Forbes. Two stallions of the pinko-leftist vanguard.

Both are very good and match what I've read from several economists. Of the two articles, I especially liked Forbes' listing and brief explanations-- sort of the K.I.S.S. approach.

 

[Revoltingest]

I know (and I'm sure other do too) that this narrative is fantasy. If you want to keep pushing it, go wild. I'm sure Bloomberg and the guys at Fox will be delighted to have such a dedicated acolyte spraying their manure around in public.

For anyone who is interested, these two articles deal specifically with this trash:

What caused the financial crisis? The Big Lie goes viral - The Washington Post

Hmmmm....it's interesting that a guy offering a simplistic & incomplete analysis of the crash calls someone else's simplistic & incomplete analysis a "big lie". I distrust people who think a difference of opinion is due to the other guy's dishonesty. (That's usually an accusation I see made by young children who have difficulty with disagreement.)

Check up on Mr Ritholtz, I see no business experience, particularly related to the housing bubble or economic crash. But he was competitive equestrian once.

Heard on NPR the other day...
Three econometricians go hunting, and they spot a large deer. The first econometrician fires but his shot goes three-feet wide to the left. The second econometrician - he fires also, but he misses. His shot goes three feet to the right. The third econometrician starts jumping up and down shouting we got it. We got it.

 

[Monk Of Reason]

I'm in favor of increasing taxation commensurate with spending.
But I say we've been spending way too much in far too reckless a fashion.

I can agree with the second part but usually when I hear people say that we disagree on what it is that the government is spending too much money on.

 

[Revoltingest]

I can agree with the second part but usually when I hear people say that we disagree on what it is that the government is spending too much money on.

I say too much on everything.

 

[ThePainefulTruth]

But you aren't privy to the terms of those understandings. When the bank has set a price at $150,000 on a house that's only worth $100,000 under normal circumstances, and the appraiser just blankly accepts that value and then finds comps to support it, and the whole thing is then written off as being the new market value, then haven't they artificially and arbitrarily increased the market? And it's basically just because they want to.

Let me rephrase that. The only time that reduction in taxes meant an increase in revenue was usually due to extraneous circumstances.

In order to understand what mostly caused the Great Recession, one needs to understand how the "shadow-banking system" worked, and especially what "credit-default swaps" are. What these had done was to build a house of cards, that could take small jolts but not big ones. Since the investment firms and banks were heavily involved in the spiderweb of interconnectedness, any major firm that defaulted could and did set off a chain reaction. The idea of just letting them fail is nonsense because it just didn't involve one of even just a few firms-- it became systemic here in the States and internationally.

Roughly 60% of all business investment outside of the stockmarket in 2007 were through the shadow-banking system, which even Greenspan said was so complicated that he could keep pace with all of the changes.

But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them and Congress certainly isn’t going to blame themselves.”

Barry Ritholtz in the Washington Post calls the notion that the US Congress was behind the financial crisis of 2008 “the Big Lie”. As we have seen in other contexts, if a lie is big enough, people begin to believe it.

I'm in favor of increasing taxation commensurate with spending.
But I say we've been spending way too much in far too reckless a fashion.

I know (and I'm sure other do too) that this narrative is fantasy. If you want to keep pushing it, go wild. I'm sure Bloomberg and the guys at Fox will be delighted to have such a dedicated acolyte spraying their manure around in public.

For anyone who is interested, these two articles deal specifically with this trash:

What caused the financial crisis? The Big Lie goes viral - The Washington Post

Lest We Forget: Why We Had A Financial Crisis - Forbes

The Washingston Post, and Forbes. Two stallions of the pinko-leftist vanguard.

It's really this simple:

On the left, with zero taxes, there is (obviously) no government revenues. On the right, with 100% taxation, there's no revenue because no individual or company is going to work when they need to keep some money to live or stay in business. In 1932, in response to the Depression, the top income tax rate was raised from 25% to 62%, the worst thing they could have done. It went up from there in 1944 to 95%--an absurd but unsustainable rate justified by the war.

The only question is, where the top of the curve lies, T*, for maximum government revenues. Is it in the middle or to the left, or the right? If T* is to the left, government maximizes revenues, but its control/power is concurrently reduced. If it's on the right, bureaucratic waste and official corruption increase accompanied by a very steep and risky backside. With those factors involved, and with a populace the majority of which receives little to no economics education, how are we going to be able to get an honest/educated look at where T* is.

Jaiket:

The WP is only exceeded by the NY Times as a left wing tool. Forbes is usually less biased (the WSJ is better) are significantly less biased. The following is from your Forbes source, which references the WP source:

"But they (Congress) were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them and Congress certainly isn’t going to blame themselves.

But somehow, throughout all this, he manages to completely ignore the Community Reinvestment Act, and the Affordable Housing Act. Those, from their misleading, euphemistic titles on, are the elephant in the room that's behind the Big Recession.

 

[Monk Of Reason]

I say too much on everything.

I think we spend too much on subsidies and war. I think we spend far less than we need in education and infrastructure.