News Can the market alone fix the economy?

[mheslep]

That's all good, but I wasn't claiming that the government invested more than industry. I claimed that the majority of companies don't engage in R&D activity.

You claimed this to what possible point then? It was clear that you were implying that additional funds to industry would be wasted because they don't do R&D at the level the government does, justifying the transfer of funds to the government. Clearly, this is not the case. Can we take this statement as a retraction then that additional funding to industry, via tax breaks, will not create jobs?

Perhaps you didn't include the recovery act? The recovery plan by itself invests over $150B in energy and science...although I'm not sure how much of this is dedicated R&D, but I'd imagine it's a good portion.

You imagine wrong by an order of magnitude. C'mon, you can look these things up.
http://www.washingtonpost.com/wp-dyn/content/graphic/2009/02/01/GR2009020100154.html

Besides that, there is $ for R&D all over the place in the budget that you fail to recognize. Indeed many of the department budgets include money for this as they always have, such as the DOD, DOA, DOE, DOT, NASA, EPA, Homeland security, NIH, NSF,...etc. I think you are being a bit selective here.

I don't fail to recognize existing federal R&D, you failed to read my post. I cited the existing R&D in federal spending and sourced it.

The number of products we have enjoyed over the last many decades that were spin-offs directly from technology developed under government funding is simply too many to list. Whether it be NASA from the 60's, the Dept. of Defense in the 80's, NIH and NSF in the 90's, etc., the result always seems the same.

Yes, and the new tech products we've enjoyed from industry are too many to list. The airplane comes to mind. So to the point, spin-offs, or more generally new companies require private capital. Federal R&D budgets don't fund and manage the creation of new companies. So would you agree tax breaks would help with the generation of new companies an spin-offs?

 

[DrClapeyron]

The argument, as presented, suggest governments could all just spend themselves into infinite affluence. Where do you suppose that $100 came from in the first instance?

No, just the US Government. Only the US Government has the ability to print fiat money at random and the Federal Reserve never hesitates to purchase US fiat money plus interest. Where did the $100 come from? Whoever thought it was a good idea to spend $100 on a brick. Must have been a pretty damn good brick.

 

[BoomBoom]

You claimed this to what possible point then? It was clear that you were implying that additional funds to industry would be wasted because they don't do R&D at the level the government does, justifying the transfer of funds to the government. Clearly, this is not the case. Can we take this statement as a retraction then that additional funding to industry, via tax breaks, will not create jobs?

That is clearly not what I was implying. I stated it would be a waste for a company to hire workers it does not need. Then when R&D was brought up I stated that the majority of businesses do not engage in this activity...the rest was colorfully added by your imagination. Besides, Obama's budget does include tax breaks for companies that invest in R&D and he also proposes making these tax cuts permanent.

You imagine wrong by an order of magnitude. C'mon, you can look these things up.
http://www.washingtonpost.com/wp-dyn/content/graphic/2009/02/01/GR2009020100154.html

I don't fail to recognize existing federal R&D, you failed to read my post. I cited the existing R&D in federal spending and sourced it.

And I read through your source (http://www.whitehouse.gov/omb" ) and found you overlooked quite a bit. Indeed 14 out of the 23 departments included some sort of funding of this nature. If you read more carefully, I'm sure you can find 'em. That's the way research is funded... a scientist applies for funding from all these various departments and institutions to fund his/her research project.

Just for one example: you claimed there was $6B for cancer research and also made the claim that included the Recovery Act funding, however the Recovery Act did include an extra $10B.

The Budget includes over $6 billion within the National Institutes of Health (NIH) to support cancer research. This funding is central to the President’s sustained, multi-year plan to double cancer research. These resources will be committed strategically to have the greatest impact on developing innovative diagnostics, treatments, and cures for cancer. This initiative will build upon the unprecedented $10 billion provided in the recovery Act, which will support new NIH research in 2009 and 2010.

Yes, and the new tech products we've enjoyed from industry are too many to list. The airplane comes to mind. So to the point, spin-offs, or more generally new companies require private capital. Federal R&D budgets don't fund and manage the creation of new companies. So would you agree tax breaks would help with the generation of new companies an spin-offs?

Yes, I would support tax breaks for new startups. I'm not sure if Obama has any or not, but I know he has proposed funding for new businesses to get startup loans.

 

[Astronuc]

Citigroup to lower mortgage payments for some homeowners that are out of work
http://biz.yahoo.com/ap/090303/citigroup_mortgages.html

NEW YORK (AP) -- Struggling bank Citigroup Inc. said Tuesday that it will lower mortgage payments for some homeowners to an average of $500 a month for three months as part of a new program to help the unemployed.

The struggling bank makes the move as President Barack Obama looks to lenders to adjust the way loans are handled.

Citigroup's new mortgage efforts also come on the heels of the latest attempt to bail out the company, which includes the U.S. government's exchange of up to $25 billion in emergency bailout money given to Citigroup for as much as a 36 percent equity stake in the company. The deal between the Treasury Department and Citigroup represents the third rescue attempt for the bank in the past five months.

Unemployed homeowners who may qualify for assistance from Citigroup under the Homeowner Unemployment Assist program include those that are 60 days or more past due on their mortgages or in foreclosure and can pay the reduced amount. Customers must also have a first mortgage loan that is owned and serviced by CitiMortgage Inc. and conforms to government sponsored enterprise limits. The house must also be the customer's primary residence, with homeowners meeting all insurer and guaranty requirements.

. . . .

Cheers to Citi. In theory, as Citigroup recovers, the government can sell its equity, and hopefully repay money it borrowed - rather than spend it on another program.

Meanwhile - Mortgage delinquencies up for 8th straight quarter
http://biz.yahoo.com/ap/090303/transunion_mortgage_delinquencies.html
TransUnion data shows mortgage delinquencies up in last 3 months of 2008 for 8th straight qtr.

Corrective action should have been initiated 2 years ago, e.g. loan requirements should have been tightened, and subprime mortgages suspended.

 

[misgfool]

That might be true if the money were free. Otherwise you have to account for the damage done obtaining the money.

Gov't spending does cause inflation, which is beneficial to the economy to a point (at the expense of the poor). But only under the right circumstances.

Inflation is essential in all circumstances. Btw, what exactly do the poor have to lose?

 

[misgfool]

I think you missed the point. The cash reserves of the rich are very small compared to their net worth and are not used to pay taxes.

The cash reserves should be small in absolute terms, not relative. And I have to say that your example doesn't give a very realistic picture of the current situation. Also CD's at the moment are almost as bad as cash, since the banks aren't lending. I'm not going to allow rich people to hide behind banks this time. It's either consumption or direct investments to the economy.

 

[misgfool]

This borders on misinformation. The process of growing GDP through government purchases is much more complicated than just writing a check. The argument, as presented, suggest governments could all just spend themselves into infinite affluence. Where do you suppose that $100 came from in the first instance?

"GDP is the total value of all final goods and services produced in a particular economy."

Agreed, I don't know how it is exactly calculated, but the rough idea is that, when the government buys a $100 brick, which has to be produced, then the GPD grows with value of the brick. If the government lends those $100, then of course the debt also grows. Anyway if the private sector is not spending, then the government has to do it for them.

 

[mheslep]

"GDP is the total value of all final goods and services produced in a particular economy."

Agreed, I don't know how it is exactly calculated, but the rough idea is that, when the government buys a $100 brick, which has to be produced, then the GPD grows with value of the brick. If the government lends those $100, then of course the debt also grows. Anyway if the private sector is not spending, then the government has to do it for them.

As you might imagine there a couple ways of tallying up GDP. The common one is the 'expenditures' method:
GDP = C(t) + I(r) + G + (X − M).
C = consumption, dependent in part on taxes
I = investment, dependent in part on interest rates
G = government purchases
X-M = net exports (~small compared to the others)
http://en.wikipedia.org/wiki/Gross_domestic_product

If the government buys a brick all we know for certain is that 'G', government purchases, increase. What happens to GDP is much more complex, since if the government raises taxes it it tends to lower 'C', and if borrows more money it may raise interest rates and thus lower 'I'. Generally, the theory is that if there is slack in the economy, e.g. in a recession, the government can get away with borrowing money without forcing up interest rates.

 

[mheslep]

Citigroup to lower mortgage payments for some homeowners that are out of work
http://biz.yahoo.com/ap/090303/citigroup_mortgages.html
Cheers to Citi. In theory, as Citigroup recovers, the government can sell its equity, and hopefully repay money it borrowed - rather than spend it on another program.

Meanwhile - Mortgage delinquencies up for 8th straight quarter
http://biz.yahoo.com/ap/090303/transunion_mortgage_delinquencies.html
TransUnion data shows mortgage delinquencies up in last 3 months of 2008 for 8th straight qtr.

Corrective action should have been initiated 2 years ago, e.g. loan requirements should have been tightened, and subprime mortgages suspended.

Citi was still making subprime loans (or buying MBS's containing them) as of March 2007? Good grief.

 

[Astronuc]

Citi was still making subprime loans (or buying MBS's) as of March 2007? Good grief.

I think even into 2008. I'm waiting impatiently for Bethany McLean's book on this mess.

 

[Astronuc]

Here's a twist - As recession saps demand, a world awash in oil
http://news.yahoo.com/s/ap/20090303/ap_on_bi_ge/awash_in_oil

NEW YORK – Supertankers that once raced around the world to satisfy an unquenchable thirst for oil are now parked offshore, fully loaded, anchors down, their crews killing time. In the United States, vast storage farms for oil are almost out of room.

As demand for crude has plummeted, the world suddenly finds itself awash in oil that has nowhere to go.

It's been less than a year since oil prices hit record highs. But now producers and traders are struggling with the new reality: The world wants less oil, not more. And turning off the spigot is about as easy as turning around one of those tankers.

So oil companies and investors are stashing crude, waiting for demand to rise and the bear market to end so they can turn a profit later.

Meanwhile, oil-producing countries such as Iran have pumped millions of barrels of their own crude into idle tankers, effectively taking crude off the market to halt declining prices that are devastating their economies.

Traders have always played a game of store and sell, bringing oil to market when it can fetch the best price. They say this time is different because of how fast the bottom fell out of the oil market.

"Nobody expected this," said Antoine Halff, an analyst with Newedge. "The majority of people out there thought the market would keep rising to $200, even $250, a barrel. They were tripping over each other to pick a higher forecast."

Now the strategy is storage. Anyone who can buy cheap oil and store it might be able to sell it at a premium later, when the global economy ramps up again.

The oil tanks that surround Cushing, Okla., in a sprawling network that holds 10 percent of the nation's oil, have been swelling for months. Exactly how close they are to full is a closely guarded secret, but analysts who cover the industry say Cushing is approaching capacity.

. . .

Don't you wish you owned an oil tanker. I wonder how many people got burned when the price of oil plummeted?

 

[mheslep]

And I read through your source (http://www.whitehouse.gov/omb" ) and found you overlooked quite a bit. Indeed 14 out of the 23 departments included some sort of funding of this nature. If you read more carefully, I'm sure you can find 'em.

I did not 'overlook' the other departments, whether there are 23 or 230, R&D increases in the other departments are pocket change in comparison to Energy and NIH.

Just for one example: you claimed there was $6B for cancer research and also made the claim that included the Recovery Act funding, however the Recovery Act did include an extra $10B.

You are mistaken. I clearly stated the $6B for cancer came from the budget proposal alone. I also stated that the Recovery Act committed an order of magnitude less than the $150B you claimed, i.e., ~$15-20B which includes the NIH funding.

 

[Astronuc]

Stock futures point higher after 5 days of selling
http://finance.yahoo.com/news/Stock-futures-point-higher-apf-14538077.html
Investors appear ready to move back into the market after 5 days of heavy selling

AIG is a real bargain at $0.43 (52wk Range: $0.38 - 49.50 ). If they don't go bust, they could climb back to the $40 range - but that's a big IF. Just imagine buying 1000 shares and having it increase 100-fold.

World stocks rebound on China stimulus hopes
http://finance.yahoo.com/news/World-stocks-rebound-on-China-apf-14537578.html
World stock markets rebound on Chinese stimulus hopes, Shanghai leads recovery

 

[misgfool]

As you might imagine there a couple ways of tallying up GDP. The common one is the 'expenditures' method:
GDP = C(t) + I(r) + G + (X − M).
C = consumption, dependent in part on taxes
I = investment, dependent in part on interest rates
G = government purchases
X-M = net exports (~small compared to the others)
http://en.wikipedia.org/wiki/Gross_domestic_product

I also read what wiki says, but that doesn't mean that GDP is actually calculated like that.

If the government buys a brick all we know for certain is that 'G', government purchases, increase. What happens to GDP is much more complex, since if the government raises taxes it it tends to lower 'C', and if borrows more money it may raise interest rates and thus lower 'I'. Generally, the theory is that if there is slack in the economy, e.g. in a recession, the government can get away with borrowing money without forcing up interest rates.

I believe I have already addressed this issue in this thread. But as our beloved prime minister says: "There is no need for discussion, because you disagree anyway."

 

[OmCheeto]

World stocks rebound on China stimulus hopes
http://finance.yahoo.com/news/World-stocks-rebound-on-China-apf-14537578.html
World stock markets rebound on Chinese stimulus hopes, Shanghai leads recovery

Proof that all this stimulus money is just a big communist plot.

Do you think Rush will come out with a big "Told you so! Neeener neeener neeener." speech?

 

[BoomBoom]

I also stated that the Recovery Act committed an order of magnitude less than the $150B you claimed, i.e., ~$15-20B which includes the NIH funding.

Again, that is not what I said at all. What I said was:

The recovery plan by itself invests over $150B in energy and science...although I'm not sure how much of this is dedicated R&D, but I'd imagine it's a good portion.

A real quick browse through the (http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1enr.pdf"), I can see a little over $30B in R&D just in the Recovery Act alone. While 20% is a bit less than I thought it would be, it still seems like a "good portion".

I feel like the point is getting lost here...in order to bring this back to the subject of how to fix the economy, I will bring up another point that federal money for research also helps private industry in support roles as well.

As an example, the Human Genome Project in the 90's spawned huge growth in the biotech industry in support roles and technology development by private industry. This investment was a small fraction of what is being proposed now.
http://www.genome.gov/11006943"

In 1990, Congress established funding for the Human Genome Project and set a target completion date of 2005. Although estimates suggested that the project would cost a total of $3 billion over this period, the project ended up costing less than expected, about $2.7 billion in FY 1991 dollars. Additionally, the project is being completed more than two years ahead of schedule.

It is also important to consider that the Human Genome Project will likely pay for itself many times over on an economic basis - if one considers that genome-based research will play an important role in seeding biotechnology and drug development industries, not to mention improvements in human health.

If you truly want to believe that federal funds will not create job growth and economic recovery, then go ahead and believe that. If you are right, then in 2012 perhaps you can replace Obama with someone you find more suitable. If you are wrong, you will likely have to wait until 2016.

 

[mheslep]

I also read what wiki says, but that doesn't mean that GDP is actually calculated like that.

Wiki's just a convenient reference, you'll find the same thing plus other equivalent methods of tallying GDP in any macroeconomics textbook. The point is this equation is valid; it is widely supported by evidence. If you break down GDP into the components of government purchases, consumption, and investment (+net exports), and the evidence shows that you can, then the sum of those must increase to guarantee an increase in GDP.

 

[mheslep]

...I feel like the point is getting lost here...

Yes the original point in our discussion was that this statement mocking the idea that tax cuts create jobs:

I hear all the time that "tax cuts to business create jobs". Really? Do they? Where is the evidence for this? That is somewhat counter-intuitive to how business operates. Business is in the business of maximizing profit, so why in the world would a business hire people it doesn't need just because it's taxes were lowered? That's ridiculous...they will simply make more profit and not hire anyone. The only reason a business will hire people is when they are needed, and this only happens when they have more demand for their product.

is misinformed, and counter to accepted economic theory, especially that the academic work of the President's principle economic advisor, which I cited, and is used to back the billions of tax cuts in the Recovery Act. Her work, based in part on the theory that tax cuts create more demand and investment, details just how much growth they should create.

If you truly want to believe that federal funds will not create job growth and economic recovery, then go ahead and believe that.

I said no such thing in this conversation. No doubt the Recovery Act will create some jobs. I hope it creates a great deal since this is our money being spent, people need jobs, and now rather than later. The questions are how many, how soon, and at what eventual cost to the country. I do have doubts about those questions thanks to, among others, the father of fiscal spending:

Organized public works, at home and abroad, may be the right cure for a chronic tendency to a deficiency of effective demand. But they are not capable of sufficiently rapid organisation (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle.

http://thinkmarkets.wordpress.com/2009/01/25/keynes-as-public-works-skeptic/

 

[BoomBoom]

Yes, well obviously, my use of an absolute ("only") and the over-generalization of the term "tax cuts", was a mistake of phrasing on my part. But the general idea that it is demand that mainly creates jobs still stands IMO. Indeed the billions in tax cuts you mention are targeted specifically for this purpose...along with incentives for growth and R&D. This is also the reason why there are no tax cuts for the wealthiest 5% in the plan because that would not create more demand. (I would assume the rich buy whatever they want regardless of their taxes)

 

[Astronuc]

Ford to cut $10B in debt with cash, equity offer
http://news.yahoo.com/s/ap/ford_tender_offer

DEARBORN, Mich. – Ford Motor Co. says it will eliminate up to $10.4 billion of its debt by offering debtholders cash and stock instead, as the automaker continues to restructure amid a severe automotive sales downturn.

The Dearborn, Mich., automaker and its financial arm are putting up $2.2 billion in cash and about 500 million shares of stock to entice holders of bonds and secured-term debt.

The company said Wednesday it is restructuring the debt to reduce its costs and remain competitive, and it still does not intend to seek government loans.

. . .

Keep an eye on Ford.

 

[mheslep]

Yes, well obviously, my use of an absolute ("only") and the over-generalization of the term "tax cuts", was a mistake of phrasing on my part. But the general idea that it is demand that mainly creates jobs still stands IMO.

Alright, noting that tax cuts can create demand.

Indeed the billions in tax cuts you mention are targeted specifically for this purpose...along with incentives for growth and R&D.

Alright, noting that the payroll tax cuts were mainly chosen because they go into effect almost immediately (this week in fact) unlike most of the items in the Recovery Act which will take much longer.

 

[WheelsRCool]

I hear all the time that "tax cuts to business create jobs". Really? Do they? Where is the evidence for this?

Take a look at the job creation in the United States as opposed to Europe. Or in Switzerland and Ireland as opposed to Europe. Or in how states like Ohio, Illinois, Michigan, New York, and California are shedding jobs and businesses like crazy.

Businesses do not like highly-taxed areas.

That is somewhat counter-intuitive to how business operates. Business is in the business of maximizing profit, so why in the world would a business hire people it doesn't need just because it's taxes were lowered? That's ridiculous...they will simply make more profit and not hire anyone. The only reason a business will hire people is when they are needed, and this only happens when they have more demand for their product.

Businesses seek growth. They do not remain static.

This is also the reason why there are no tax cuts for the wealthiest 5% in the plan because that would not create more demand. (I would assume the rich buy whatever they want regardless of their taxes)

The "wealthiest 5%" are a good deal small businesses filing as individuals, and they are not "the rich." The truly rich make up a very small portion of this group. Most of these people earn in the hundreds of thousands of dollars, which while putting them in the top 5%, doesn't make them "rich" by any means, and yes taxes do affect their spending, just like everyone else.

The Administration right now is pursuing an anti-growth agenda while at the same time planning for an unprecedented amount of spending. You cannot claim you are going to raise taxes and implement things like a ridiculous carbon tax and union card check, and then expect the economy to begin decent recovery.

No economy has ever performed well under the policies it is following. They have destroyed the world's 7th largest economy, California, they have tanked Ohio, Illinois, Michigan, and New York, and they do not work in the cities such as Philadelphia, Detroit, Los Angelos, New York, etc...they didn't work in the 1960s or 1970s in either America or the UK, and they still to this day do not work in Europe.

And make no mistake, Obama's spending plans are going to be a huge boondoggle. His spending on "green" technology isn't going to work. People don't want to drive roller-skates and wind and solar and all that are not viable at all. His universal healthcare is not going to work, simply by the laws of economics. Rationing will occur. And his spending on education will not work. It will just be more money to the teachers' unions. Such spending is already at record levels, and the students see none of it.

 

[Astronuc]

Stimulus good in theory, not practice
http://marketplace.publicradio.org/display/web/2009/03/04/pm_economic_multiplier/

Kai Ryssdal: Treasury Secretary Timothy Geithner's been a busy guy today. As Steve Henn told us up at the top of the program, he released the details of the administration's mortgage-relief plan this morning. And he's been up on Capitol Hill defending the president's budget, too. It is a budget that is heavy on the expense side of the ledger book. The White House is betting government spending will be good for the economy and the country's long-term health. The idea here, something called the "multiplier effect," is another contribution from the theories of John Maynard Keynes. But commentator David Frum says, in this case, theory and practice are pretty far apart.

--------------------------------------------------------------------------------

DAVID FRUM: If you are under 40 and not a professional economist, I wonder whether you had ever even heard the phrase "economic multiplier" before this month.

The concept got its last big airing during the slow-growth 1970s. Since World War II, economists of the Keynesian school had argued that government spending exerted a bigger impact on stimulating economic activity than private spending, a bigger multiplier.

Government could borrow and spend -- and so long as it spent intelligently, the spending would actually go a long way to paying for itself by expanding the overall economy. The "multiplier effect" was the liberal equivalent of the Laffer curve -- the conservative promise that the government could cut taxes without losing revenue.

The Keynesian argument was not wrong exactly. It was just that we began to run out of good things to buy. An I-95 or an O'Hare airport: Yes, they probably added more to the economy than they cost. But public housing? Synthetic fuels? Boston's "big dig"? Not so much.

Through the 1970s, resurgent free-market economists showed that public spending typically yielded much worse results than private investment. Government still spent a lot. But more and more of that spending supported government's current operations: defense, health care, pensions.

. . . .

Maybe we just fire the entire US government and hire China to manage the nation at a fraction of the cost.

 

[mheslep]

Stimulus good in theory, not practice
http://marketplace.publicradio.org/display/web/2009/03/04/pm_economic_multiplier/
Maybe we just fire the entire US government and hire China to manage the nation at a fraction of the cost.

2nd

 

[Al68]

Inflation is essential in all circumstances. Btw, what exactly do the poor have to lose?

Not much, but it's a lot to them.

The cash reserves should be small in absolute terms, not relative.

I was only pointing out that they don't use their cash reserves to pay their tax bill. It's not my place to tell someone else how much of their money to keep in reserve instead of invest. Obviously the greediest will have the most invested, but that's their decision.

I'm not going to allow rich people to hide behind banks this time. It's either consumption or direct investments to the economy.

So it's your place to say what someone else should do with their own money? It's no wonder we're in such danger of losing our freedom in the U.S. Too many people have been propagandized into believing society and private transactions between free people should be controlled by government.

 

[misgfool]

Not much, but it's a lot to them.
I was only pointing out that they don't use their cash reserves to pay their tax bill. It's not my place to tell someone else how much of their money to keep in reserve instead of invest. Obviously the greediest will have the most invested, but that's their decision.

Because you can't say it, I have to do it for you.

So it's your place to say what someone else should do with their own money? It's no wonder we're in such danger of losing our freedom in the U.S. Too many people have been propagandized into believing society and private transactions between free people should be controlled by government.

Hey, I'm not the one fighting a war (on terrorism), which does not have clear conditions for determining victory and therefore can continue for eternity. Nor am I spending billions waging second priority wars, giving US citizens a false sense of security by harassing foreigners at the airports, abandoning the founding values and making the world more totalitarian. If I'm not totally incorrect, it wasn't a Democrat who implemented these changes.

I believe in essential freedoms and that means that I can and I am obligated to point out the logical flaws of the system. I don't force anyone to do anything, but be prepared for a fight, if you come claiming the intellectual/moral high ground.

 

[Al68]

Hey, I'm not the one fighting a war (on terrorism), which does not have clear conditions for determining victory and therefore can continue for eternity. Nor am I spending billions waging second priority wars, giving US citizens a false sense of security by harassing foreigners at the airports, abandoning the founding values and making the world more totalitarian. If I'm not totally incorrect, it wasn't a Democrat who implemented these changes.

Since I haven't advocated any wars in this thread, I don't know what to make of that.

I believe in essential freedoms and that means that I can and I am obligated to point out the logical flaws of the system. I don't force anyone to do anything, but be prepared for a fight, if you come claiming the intellectual/moral high ground.

I would consider the right of someone to decide what to do with their own money an "essential freedom". Possibly the most essential in a free nation, since usurping private property rights/economic oppression has been the greatest source of oppression of people worldwide in the past century.
I absolutely believe libertarianism/economic liberalism is the intellectual/moral high ground.
(and I'm using the word liberalism in the classic sense, not the modern political sense.)

The cash reserves should be small in absolute terms, not relative.
I'm not going to allow rich people to hide behind banks this time. It's either consumption or direct investments to the economy.

If you only meant this as advice for rich people, and not advocating "forcing anyone to do anything", then my apologies.

 

[misgfool]

Since I haven't advocated any wars in this thread, I don't know what to make of that.

Perhaps it tells that the arch-nemesis of a Democrat isn't a much better alternative.

I would consider the right of someone to decide what to do with their own money an "essential freedom". Possibly the most essential in a free nation, since usurping private property rights/economic oppression has been the greatest source of oppression of people worldwide in the past century.

Problem is that one man's/woman's freedom can be another's slavery. There are also other very important freedoms, which are hard to put in order such freedom of speech, assembly, movement etc.

If you only meant this as advice for rich people, and not advocating "forcing anyone to do anything", then my apologies.

I meant that if they want capitalism to work at optimal efficiency then they should do as I said. If they don't, then their opinions lose weight.

 

[Al68]

Problem is that one man's/woman's freedom can be another's slavery.

Well, no-one is enslaved by economic liberty. Unless you're using some weird definition of slavery.

I meant that if they want capitalism to work at optimal efficiency then they should do as I said. If they don't, then their opinions lose weight.

If you're referring to someone else's opinion about what to do with their own property, I'd say it's your opinion that is irrelevant (as well as mine).

That's besides the obvious fact that rich people already choose (out of self-interest) to invest in the economy (which matches what you said they should do).

 

[turbo]

That's besides the obvious fact that rich people already choose (out of self-interest) to invest in the economy (which matches what you said they should do).

It should be apparent to you (and to everybody else) by this point that "rich" people often don't invest in the economy, and that they sometimes bet against economic health by trading in derivatives that only pay off if the economy goes to hell.

The "rich people invest and create wealth for all" fiction died before Reagan was out of office (in our time), and it does us no good to resurrect it now. Looking back a ways, FDR inherited an economy that had been ravaged by robber-barons, and then strangled by do-nothing administrations stretching back far before his. Obama's situation is no less daunting, and I wish him well.

 

[misgfool]

Well, no-one is enslaved by economic liberty. Unless you're using some weird definition of slavery.

You are assuming that everyone starts from equal position where from they can compete. Economic liberty works when we have tabula rasa situation i.e. where no-one has an established foothold. After that it only serves the purposes of the first rounders and their offspring who won with skill, knowledge and luck.

If you're referring to someone else's opinion about what to do with their own property, I'd say it's your opinion that is irrelevant (as well as mine).

I'll interpret this so, that the rich don't want capitalism. That leaves a lot of room to maneuver between capitalism, state property and socialism.

That's besides the obvious fact that rich people already choose (out of self-interest) to invest in the economy (which matches what you said they should do).

Why has NYSE dropped 50% from 2007?

 

[Al68]

The "rich people invest and create wealth for all" fiction died before Reagan was out of office (in our time), and it does us no good to resurrect it now. Looking back a ways, FDR inherited an economy that had been ravaged by robber-barons, and then strangled by do-nothing administrations stretching back far before his.

Robber barons, huh. Someone's been reading the communist manifesto again.

 

[turbo]

Robber barons, huh. Someone's been reading the communist manifesto again.

That was the popular name for well-connected industrial titans and railroad owners who bought political influence and made fortunes. Perhaps you've not read any history books. As for my being a "Communist", I am far more fiscally conservative than probably 99% of the US populace. I mean real conservatism - not the neo-con model in which profits are privatized and losses are foisted off on the taxpayer.

Name-calling does not advance your argument.

 

[Al68]

You are assuming that everyone starts from equal position where from they can compete.

No, I'm, not.

Economic liberty works when we have tabula rasa situation i.e. where no-one has an established foothold. After that it only serves the purposes of the first rounders and their offspring who won with skill, knowledge and luck.

False and false. And I have the moral highground again.

I'll interpret this so, that the rich don't want capitalism. That leaves a lot of room to maneuver between capitalism, state property and socialism.

Huh?

Why has NYSE dropped 50% from 2007?

Well, I discussed this in another thread, but basically the biggest reason was the Community Re-investment Act.

That's the thing about having a mixed economy. Socialists will always blame the consequences of socialist policy on capitalism, then take credit for the benefits of capitalism. And back up each lie with other lies, and say "see, I told you so". And they rely on the fact that most people don't understand economics and don't want to, and will just believe what Dems say, no matter how absurd it is to anyone who knows what's going on.

As an example, it's logically impossible for anyone to be familiar with the budget numbers of the 1980's and believe that the deficit was caused by tax cuts. No problem for the Dems, though.

 

[Al68]

I mean real conservatism - not the neo-con model in which profits are privatized and losses are foisted off on the taxpayer.

The use of the word "privatized" implies that they aren't private to begin with. As far as being conservative, I won't argue. But it's clear you're ideology is very Marxist. It's not name calling, just an observation. And by communist, I didn't mean any official party or any relation to what regimes have done in the past in the name of communism. I just meant it as a reference to the writings of Marx, and a belief that the economy should be controlled by government.

And, I never claimed to be "conservative", mostly because the word is commonly used to mean the opposite of what I believe. I'm a libertarian and believe in (classical) economic liberalism. And absurd accusations about people who believe in economic freedom and their motives certainly won't cause me any shame.

It's amazing to me how many people are reverting back to pre-Enlightenment economic beliefs, and so obviously completely unaware of the lessons learned during the Enlightenment.

 

[misgfool]

False and false. And I have the moral highground again.

Exactly why do you have the moral high ground?

Well, I discussed this in another thread, but basically the biggest reason was the Community Re-investment Act.

What I was aiming at was that investors are selling more than buying. Considering that the rich control the vast majority of wealth, it means that your claim that rich people are investing into the economy is not accurate.

That's the thing about having a mixed economy. Socialists will always blame the consequences of socialist policy on capitalism, then take credit for the benefits of capitalism. And back up each lie with other lies, and say "see, I told you so". And they rely on the fact that most people don't understand economics and don't want to, and will just believe what Dems say, no matter how absurd it is to anyone who knows what's going on.

"Socialists/Capitalists will always blame the consequences of socialist/capitalist policy on capitalism/socialism, then take credit for the benefits of capitalism/socialism."

 

[misgfool]

It's amazing to me how many people are reverting back to pre-Enlightenment economic beliefs, and so obviously completely unaware of the lessons learned during the Enlightenment.

It should be very hard for you to argue about Enlightenment as long as religions are around. I also find it hard to believe that the ultimate unsurpassable truth was discovered then and there is no more room for development.

 

[Al68]

Exactly why do you have the moral high ground?

Because I'm on the side of liberty. I'm reminded of a famous quote (by Barry Goldwater?): "Extremism in defense of liberty is no vice." And one thing there is no doubt about, in today's political climate, I'm an extremist.

What I was aiming at was that investors are selling more than buying. Considering that the rich control the vast majority of wealth, it means that your claim that rich people are investing into the economy is not accurate.

I wasn't referring to now, specifically. I was referring to the general tendency of people with money who want more to invest it. I never said that they are investing more now than at some other time.

It seems strange that your complaint is that rich people aren't being greedy enough right now. (assuming that you consider the desire of the rich to get richer to be greed).

 

[Al68]

It should be very hard for you to argue about Enlightenment as long as religions are around. I also find it hard to believe that the ultimate unsurpassable truth was discovered then and there is no more room for development.

What does religion have to do with anything?

I wouldn't consider undoing the freedom and prosperity gained post-Enlightment to be "development".

 

[misgfool]

Because I'm on the side of liberty. I'm reminded of a famous quote (by Barry Goldwater?): "Extremism in defense of liberty is no vice." And one thing there is no doubt about, in today's political climate, I'm an extremist.

I try find a balance between liberty and general welfare. In today's political climate I'm a dissident.

 

[misgfool]

What does religion have to do with anything?

Again if you apply one method to one thing, it's reasonable to demand that you apply it to other things as well. If the Age of Reason was unable to solve social problems like religions, wouldn't it be possible that it might have failed in giving perfect solutions to other problems like economics as well?

I wouldn't consider undoing the freedom and prosperity gained post-Enlightment to be "development".

lol. Well I would say that a couple of other things have happened as well since then.

 

[Astronuc]

TCF Financial Corp. is returning TARP funds to Treasury, since they don't need it.

http://www.yahoo.com/s/1039325

Cheers to Bill Cooper, Chairman and CEO of TCF Financial!

TCF is a Wayzata, Minnesota-based national financial holding company with $16.7 billion in total assets. TCF has 448 banking offices in Minnesota, Illinois, Michigan, Colorado, Wisconsin, Indiana and Arizona, providing retail and commercial banking services. TCF also conducts commercial leasing and equipment finance business in all 50 states and commercial inventory finance business in the U.S. and Canada.

http://www.tcfbank.com/About/about_bank_profile.jsp

http://www.tcfbank.com/About/about_chairmans_letter.jsp

 

[mheslep]

TCF Financial Corp. is returning TARP funds to Treasury, since they don't need it.

http://www.yahoo.com/s/1039325

Cheers to Bill Cooper, Chairman and CEO of TCF Financial!

http://www.tcfbank.com/About/about_bank_profile.jsp

http://www.tcfbank.com/About/about_chairmans_letter.jsp

Saw it, noted the the question about how the government could force them to take the money in the first instance. Response (approximately): "in the banking business when a regulator jumps, you say how high". Given the circumstances, what business does the government have telling this guy how much money he can make?

 

[mheslep]

Again if you apply one method to one thing, it's reasonable to demand that you apply it to other things as well. If the Age of Reason was unable to solve social problems like religions, wouldn't it be possible that it might have failed in giving perfect solutions to other problems like economics as well?

http://en.wikipedia.org/wiki/Nirvana_fallacy"

 

[Astronuc]

Saw it, noted the the question about how the government could force them to take the money in the first instance. Response (approximately): "in the banking business when a regulator jumps, you say how high". Given the circumstances, what business does the government have telling this guy how much money he can make?

I get the feeling that we need to send a truckload of anti-anxiety medication to Congress and the Treasury.

 

[Al68]

A If the Age of Reason was unable to solve social problems like religions, wouldn't it be possible that it might have failed in giving perfect solutions to other problems like economics as well?

Give perfect solutions? The Enlightenment was not a religion. It didn't "give solutions". I don't know what to make of this.

I try find a balance between liberty and general welfare

Individual liberty and general welfare are not at odds with each other. Quite the contrary. Economic freedom results in prosperity. Economic oppression causes poverty.

 

[turbo]

Individual liberty and general welfare are not at odds with each other. Quite the contrary. Economic freedom results in prosperity. Economic oppression causes poverty.

I would like to see you back this up with some scholarly articles. Whenever economic "freedom" results in the rich having a disproportionate influence on our government, the spread between the incomes of the rich and poor increases. This is not conjecture, but historical fact. Real fiscal conservatism urges that we rein in such abuses so that wealth is not drained out of our businesses to the detriment of the taxpayers.

 

[Al68]

I would like to see you back this up with some scholarly articles. Whenever economic "freedom" results in the rich having a disproportionate influence on our government, the spread between the incomes of the rich and poor increases. This is not conjecture, but historical fact. Real fiscal conservatism urges that we rein in such abuses so that wealth is not drained out of our businesses to the detriment of the taxpayers.

Nonsense. The idea that a non-socialist government is the result of the "disproportionate influence" of the rich is not just conjecture, it's absurd.

 

[Al68]

I would like to see you back this up with some scholarly articles.

Try John Locke. Or Thomas Jefferson. Or Thomas Hobbes. Or Adam Smith. Or any non-socialist economist.

Or even just the common sense observation that the more people are forced to share, the less there will be to share. Or the simple fact that the U.S. went from literally nothing to the greatest economy on Earth in a very short time, but recently others caught up easily.

I suppose you have evidence of socialist policies causing prosperity?

 

[misgfool]

http://en.wikipedia.org/wiki/Nirvana_fallacy"

Thanks, I hadn't heard of this one. But I think you posted this to the wrong person, since I'm not the free market extremist.