Yerda
Veteran Member
If you believe this I genuinely pity you.
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Only Capitalists Create Jobs
- Thread starter ThePainefulTruth
- Start date
Monk Of Reason
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To shock and awe individuals I will say that lower taxes on small buisinessse create a more powerful economy. Same can be said for workers. Higher taxes on the upper tiers of buisiness however should b
Clinton does bear some of the blame but I would shift the majority to Regan as his policies are what ultimately brought this recession. The main portion that Clinton did was deregulate banks. Had he not done that we wouldn't have seen a collapse of the banks and need to bail them out. The rest of the recession would have probably happened but it would not have snowballed the way it did.
jonathan180iq
Well-Known Member
Haven't we been down that road before?
I don't think Donald Regan (1981-85 Treasury Secretary) had all that much power. The recession had far more causes than are typically seen by economists. And they span far more time, with bi-partisan origins.
- 9/11 was the trigger for the 2008 crash (which actually started crashing in 2001). This is when businesses began scaling back, leading to lower profitability, lower wages, & unemployment.
- 9/11 was the result of many policies, eg, angering the Islamic world by our behavior in the middle east, lack of attention to self defense (hardening of infrastructure), lack of attention paid to intelligence (particularly under Clinton).
- The crash continued with homeowners being unable to cover their mortgage loan payments, & being unable to move to where work is because they couldn't sell because of being under water (loan balance greater than home value).
- Government prevented Fannie Mae & Freddie Mac from negotiating down principal & interest with defaulting home owners.
- Government created the housing bubble by subsidizing interest rates, making property taxes & interest tax deductable, by guaranteeing high risk zero down loans, by creating inflation (expanding the money supply faster than economic growth) & by making profit tax exempt on home sales (in most cases). This encouraged highly leveraged speculative buying. These policies go back many many decades, under both Dem & Pub administrations.
- Once the crash became apparent, government exacerbated the problem by requiring commercial real estate borrowers to pay income tax on waied principal & interest in loan renegotiations. This often insurmountable tax burden on phantom gains sent many owners into bankruptcy.
- Government required banks to refuse to renew "high risk" commercial term loans during a period when no new loans were available. This sent many borrowers who were current into foreclosure, causing a loss for both the banks (eg, Charter One, Citizens NA) & borrowers.
- Government was sucking up massive amounts of money & workers in 2 useless wars.
- Government sucked up even more money by bailing out politically connect Wall St firms who had no strategic or critical economic value (except possibly for AIG). Example: Countrywide's failure would've resulted in a loss only to the stockholders, since the assets (loans receivable) would've retained their value when sold to new owners.
As our economy continues to languish, we see continual tax increases, further straining businesses still suffering from the crash. Moreover, many of the policies leading the crash are still there, eg, highly leveraged government guaranteed loans, deductable interest & property taxes.
Monk Of Reason
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Don't forget the low wages, income inequality and lack of taxation with an incredibly expensive war.
jonathan180iq
Well-Known Member
Let's not leave out some very shady business practices, on the part of capitalist bank runners, who showed some of the folly of what happens when there are no restrictions or limitations on the capitalists (or when those restrictions aren't enforced or paid attention to) Their manipulation of the market lead to the boom being so big.
Any 3rd grader can look at an array of numbers and tell you if a trend is going to be sustainable or not.
And any 6th grader can tell you what happens when an equation is that unbalanced.
It was a failure of the whole system. I don't think either side can play the victim card when it's a such a multilateral collapse like that.
The lack of taxation wasn't the problem....it was the spending.
Whether paid for immediately by taxes or by borrowing, the cost will be borne, & that is productivity removed from our economy.
There are other causes, but my post was long, boring & tedious enuf already.
Much of the shady banking practices were due to government requirements, eg, making risky loans (required by auditors & Community Reinvestment Act) Market manipulation was almost entirely by government, for reasons I detailed above.
Yerda
Veteran Member
For anyone who isn't ideologically tethered to the denial that capitalism can fail, the main (and pretty much only) role governments playes in the crash was in deregulating the financial sector (euphemistically called market liberalisation) and looking the other way (regulatory capture).
Yerda
Veteran Member
More than 30 years of deregulation and reliance on self-regulation
by financial institutions, championed by former Federal Reserve chairman Alan
Greenspan and others, supported by successive administrations and Congresses, and
actively pushed by the powerful financial industry at every turn, had stripped away
key safeguards, which could have helped avoid catastrophe. This approach had
opened up gaps in oversight of critical areas with trillions of dollars at risk, such as
the shadow banking system and over-the-counter derivatives markets. In addition,
the government permitted financial firms to pick their preferred regulators in what
became a race to the weakest supervisor.
From the Financial Inquiry Commission Report.
by financial institutions, championed by former Federal Reserve chairman Alan
Greenspan and others, supported by successive administrations and Congresses, and
actively pushed by the powerful financial industry at every turn, had stripped away
key safeguards, which could have helped avoid catastrophe. This approach had
opened up gaps in oversight of critical areas with trillions of dollars at risk, such as
the shadow banking system and over-the-counter derivatives markets. In addition,
the government permitted financial firms to pick their preferred regulators in what
became a race to the weakest supervisor.
From the Financial Inquiry Commission Report.
Monk Of Reason
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Over spending of the government doesn't reduce productivity in the economy. In fact it is often the opposite. What it does, however, is cause greater inflation and potential loss of confidence. But the productivity of the economy is not a side effect of deficit spending.
"Fail" is a tricky word. I'd expect capitalism to have instabilities, so booms & busts aren't a system failure...just normal system response. So just what would constitute "failure"? I'd say an inability to recover, or an unacceptably severe depression. Complicating the matter is the question of just what failed? Was it something fundamental to capitalism, or an influence upon capitalism, ie, government intervention into & distortion of markets.
There is a widespread illusion that deregulation even took place. In fact, the amount of market regulation has greatly increased over time, particularly in the Reagan administration & since then, as measured by several metrics, eg, the volume of regulations in the CFR (Code Of Federal Regulations), the extent of state & local regulation. (Note: Only in one year under Clinton did the CFR volume decrease.)
Some regulation is useful, & some is not. But all regulation imposes a cost in the form of economic loss (the dead hand of bureaucracy). The trick is to limit regulation to that which offers more benefit than cost. This cost is often masked by greater increases in productivity due to technology. But things change when we're subject to foreign competition, which is now becoming technologically just as (sometimes more) advanced.
jonathan180iq
Well-Known Member
I evaluate and process anywhere from 400-800 deeds a year. There are at least 8-10 times that many that come through our office annually, and that's just one part of what we do. And what we see, from all of the major lenders, is nothing short of what would be considered insider trading, if it were on the stock market floor. Forms and dates are manipulated, ownership signatures are forged, fair market and resale values are set by the lenders (in conjunction with the appraisers who supposedly indepdently "study" and set those market values - literally, I'm not kidding, down to the penny) and properties that are deemed as being more "salvageable" are hand-picked by the bank owners for their own institution while riskier loans are pawned off on the smaller, usually unaffiliated, institutions.
None of that kind of stuff is forced on anyone by any over-reaching organization. It's just the nature of the beast when market decisions are left to be determined by human greed.
I want what's best for me. You want what's best for you. Capitalists want what's best for them. Organizations want what's best for whoever their Capitalist is... When humans are deregulated, bad **** happens. That statement is true any pretty much every scenario you can think of - why would it be any different in the economy?
Ah, the old Keynesian theory. While Keynes had it right about limited time frame over-spending being useful, our problem is the misreading of his work to justify perpetual over-spending. (Tis a common fallacy that if an amount of something is good, than more is better.)
This has problems:
1) Politicians will spend money which will only be repaid by successor generations.
2) #1 means a lack of accountability, leading to using money for political rather than economic goals.
3) Money spent today, will be repaid tomorrow, at which point the cost plus interest is a burden on the economy.
This is a good time to note that I don't oppose all regulation....just the bad stuff.
Fraud should always be avoided, & regulation can serve this goal.
Unlike the S&L crisis, which was driven largely by fraud, our latest crash was different.
To reiterate:
I favor capitalism, not unregulation.
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jonathan180iq
Well-Known Member
But was it?
I've got first hand evidence of these fraudulent practices leading to an increase of market values to ungodly levels, the property pawned off on a lesser institution (who was able to offer a mortgage to a grantee who otherwise had no business purchasing that home), which lead to basically an inevitable foreclosure, only to then have the property flipped back to the original big bank so that it could be sold again and again.
Rinse and repeat.
I know of dozens of these examples just off the top of my head and just locally to me. The same can be said of examples all over my state, and also on the national level. When it gets that big, it's not unfair to call that a culture. It was the culture of the banking industry to participate in stuff like this... That's scary, because you'd think banking would be a little more rigid than, say, retail.
It was a money-grabbing scheme that was incredibly successful until the whole thing blew up. While it was more clever than before, it's still just fraud, isn't it?
Vishvavajra
Active Member
I forgot it's only class warfare when leftists do it. When folks talk about "greedy socialists" eating the poor, downtrodden capitalist's lunch, that's just telling it like it is.
And socialists/anarchists are playing with the dictionary, even though their definitions of words have an entire extra century of attested use behind them. Apparently they also made extensive use of TARDISes in order to seed their semantic revisions backwards in time and start an intellectual tradition that later capitalist apologists would blithely ignore anyway. Seems like a great deal of effort (not to mention time travel) for nothing, that.
And socialists/anarchists are playing with the dictionary, even though their definitions of words have an entire extra century of attested use behind them. Apparently they also made extensive use of TARDISes in order to seed their semantic revisions backwards in time and start an intellectual tradition that later capitalist apologists would blithely ignore anyway. Seems like a great deal of effort (not to mention time travel) for nothing, that.
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. In fact, the regulation went over-board due to corrupt politicians seeking unjust revenue, causing other problems, but that is a thread for another day. Of the many people I know with lender difficulties, not one was due to any fraud. Their plight was due to the economic crash wiping out much of their income, & exacerbated by government imposed hurdles to loan renegotiation. It seems that no one outside of real estate investors know of this, including economists (who typically don't run businesses or have real jobs).
Monk Of Reason
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This is the definition of deficit spending yes.
This is a huge problem and I don't think we will disagree on this notion
To an extent. Finding a way to fix the deficit spending on each and every year is the goal however. Paying back the debt in fully usually never happens. The government will always have debt and this is, economically, a good thing. A vast amount of debt is bad. But the bad debt of our current situation is not the cause or even a factor of the recession. It has had some minor play in the slow recovery but you can thank conservative media for that. Austerity on the other hand is demonstrably worse than over spending in times of economic crisis and recession. The research is almost unanimous on which will bring about a better end to a recession.
Also a secondary issue is that a lot of focus has been put on wallstreet. And while walltreet and corporations tend to have the most money in America people wouldn't feel any real difference if it crashed. My job was in no way affected. However when it does good we also don't feel it on the lower levels. The vast majority of the money being moved in America has very little impact on the vast majority of the population. So while tremendous efforts were made to secure the fortunes of many high end investors, corporations and banks, it did very little to help the American economy as a whole. Had we let them drop and focused on making sure that the American people would be able to recover I think we would have seen a drastically different outcome to the recession.
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.