News Obama Seeks Expanded Power to Seize Firms

1. Mar 24, 2009

Brilliant!

Ex-squeeze me? A-baking powder? Can I believe what I'm reading? I guess I can. It's right there... I-I-I-I ju- I just can't believe it. This is incredible. What good arguments can their possibly be for something so obviously socialistic; for something that is so shamelessly unconstitutional? There is going to be a press conference where this will be addressed. What could Obama and Geithner possibly say to get themselves off the hook? Or will they have to say anything? Are Obama's followers so scared or drone-like that they will follow him to the end of capitalism, even if he is one of the biggest causes?

And does the title of that article count as libel? "U.S. Seeks Expanded Power to Seize Firms". No one consulted me. Did they consult you? Or did they conspire amongst themselves to come up with such ideas as these, which stand destroy the idea of "the individual".

Source: http://www.washingtonpost.com/wp-dyn/content/article/2009/03/23/AR2009032302830_pf.html

2. Mar 24, 2009

Staff: Mentor

Well there are some good arguments in the quotes you posted, you could always respond to them....

Look, I'm anything but an Obama "follower", but you really need to do better than that with a criticism.

IMO, a company like AIG really is "too big to fail", which to me also means "too big to exist". No one company should have such a power to destroy the economy if it fails. As such, I think it should be broken up via the Sherman Act if possible or regulated so heavily it is essentially nationalized.

Regular investment companies I don't think should be siezed because for the most part, those affected are only the individual investors, who made the choice of where to invest themselves.

3. Mar 24, 2009

Brilliant!

I don't see any good arguments in the things I posted. This is because I don't think any company is "too big to fail". Let's assume the country would plummet into a depression, the likes of the Great, if AIG went the way of Lehman Brothers. So be it. If we are going to go into a depression, then it isn't only what needs to happen, it is what we deserve.

We could make the argument that we don't deserve anything because none of us were involved in the building of these corporate giants who have carved an empire out for themselves and our ruining this country. We could. But we'd be wrong. Let me explain:

We, and those who came before us, have had a huge hand in the creation of our society, which allows for such gross interference of the government into economics. It's our altruistic ideals and overall passiveness that allows a company to become "too big to fail". In our names, we allow the government to show preference (in the form of subsidies, bailouts, etc.) for some companies and not others. We spend much time arguing over which candidate is better: this one, or that one? All the while believing (because of a healthy dose of denial or poor education, or both) that the current candidates aren't corrupt like the one's from 4 years ago, and 4 years before that, and 4 years before that, or that our party's candidate is the only uncorruptable politician in existance, and the other guy is Satan incarnate.

Denial: that's it. Our society is corrupted with it. Refusal to accept and deal with what we know to be true. "Too big to fail" should be "Leave alone and see what happens", and if "what happens" is a depression, we'll have nothing left to do but wake up.

4. Mar 24, 2009

Office_Shredder

Staff Emeritus
If we're so responsible for this, then why can't we clean up the mess?

5. Mar 24, 2009

Brilliant!

If a house burns and nothing but the charred frame is left standing, you don't fix it by attaching plywood, siding, and shingles to the scorched remains. You tear it down to the foundation, and rebuild the house from there.

This country is a burned house, and the government isn't just putting new plywood, siding, and shingles on the charred, fragile frame: they're adding new rooms!

What's most amazing to me is that people can conceive the concept that a company can be "too big to fail", and not see that it also applies to the government, the biggest company of them all.

6. Mar 24, 2009

rootX

If house is burning, I would call 911 and/or use a fire extinguisher..

If it is burnt, instead of simply building it again from scratch I would consider the fire causes and try to prevent them in future

If it going to burn, I will avoid it

7. Mar 24, 2009

Brilliant!

Certainly. Let's start now.

I'm going to work backwards from effect to cause.

Effect: Spend trillions of dollars (which we don't have) on bailout and stimulus programs, increasing the national debt by 25 - 33% (depending on who you ask.

Cause: The "progress" of our country will be devastated if we allow certain firms which have become "too big" to fail

Effect: Companies have become so powerful that they can influence politics, where the only influences in politics should be the public
-Effect of the Effect: Some corporations and firms have become so large that our countries "progress" hinges on their survival

Cause: Government interference into the economic system: showing preference for some companies over others.

That's getting old, and it doesn't lend itself to representing cycles very well.

The point I'm trying to illustrate is obvious. I believe we need smaller government. And I believe that smaller government should keep it's hand out of economics. Free market economics is the way to go.

Last edited: Mar 24, 2009
8. Mar 24, 2009

Staff: Mentor

Well, ok, you can call them "bad arguments if you want. The point is there are arguments and you didn't address them in the OP. You really didn't say anything at all in the OP.
Now you're starting to make an argument! Next time, try leading off the thread with it. A thread that starts off pointless doesn't tend to do well.

9. Mar 24, 2009

Ivan Seeking

Staff Emeritus
"So be it" is easy for someone to say who has probably never spent a day hungry. Why should the people suffer for the whims of a dead ideology? Obviously markets don't act rationally or in their own interest, so the basis for free-market theory doesn't exist.

What's more, we already have a similar system in place for banks. The problem is that companies like AIG weren't covered by the laws resulting from the Depression. But like large banks, any company that poses systemic risk to the national and global economies must be regulated, just as banks are regulated.

You philosophy amounts to "let the rich screw everyone else" - "Let the rich profit and the people pay the price". That sounds like something some third-rate dictator would fashion.

Last edited: Mar 24, 2009
10. Mar 25, 2009

Brilliant!

It's nice to see that, around here, anecdotal evidence is hardly accepted as an effective means for argument, but is perfectly acceptable when attempting to discredit someone. It's likely that had I said, "In my life..." you would have said, "Anecdotal evidence. Hah. Your personal experiences are a good indicator for the rest of the world..."

Why should people strive for world peace when it's obvious it will never happen? Why should we care about recycling when all of us who are alive today won't live long enough to experience landfill avalanches? Should I really take you seriously? You're obviously an intelligent human being, which makes me wonder how you could say "Obviously markets don't act rationally or in their own interest" as if the markets had a mind of their own, and the irrationality is built into the concept, the irrationality is inherent in the idea, instead if in the participants.

The irrationality is in the people. The irrationality of the markets is simply a reflection of that. It is our corrupt ideals that paved the way to corrupt business and government. Free-market economics, or something very close to it, is possible, but not before the moral code is fixed.

Don't get me wrong, I'm not some ultra-idealistic Randist that thinks if we drop it all (the altruism, big government that interferes with economics, etc) our situation will be perfect instantly. I don't think it's possible. But, I think it's a damn good thing to strive for. On the other hand, what are we striving for today? Homogeneity? If it's not what you want, it's what you're getting. You need only take a trip to a mall, or spend a few minutes of Myspace or Facebook to see the lack of identity, confidence, and self-esteem. And while those may seem like personal problems, you're crazy if you don't think that has a large effect on politics.

And let me clarify something for you that you don't seem to understand. Don't think I'm condescending, I really am trying to clear something up for you that you have all wrong. In this thread you have implied that a free-market system has been tried and has failed. In the "Hate Obama" thread, you argue that free-market economics has been a failure in the Bush administration, and has been a huge failure since Reagan's days. You're partly correct. Whatever economic policy Reagan and Bush were using definitely failed. However, it wasn't free-market economics they were using. They, too, were using a form of socialist economics. Where Democrats raise taxes, Republicans lower taxes... for corporations. This is not free-market. This is interference. Free-market economics has never been tried. So, please, stop going on about "Republicans nearly destroying the country with their blind ideology" with implication towards the free-market system, because you don't know what you're talking about.

I don't see what referencing the existing bank laws does. This is like arguing that when a man complains of fairness when his home is seized by the government, we should take his neighbors house to make it fair, instead of give the man his house back.

Obviously you believe regulation of the financial and banking sectors is necessary. I can only assume it's because you've been told your entire life that bank failures, and the absence of such things as the FDIC, were a major cause of the Great Depression. That's true. But because you still support regulation, I can only assume you've never dug deeper into the subject. What caused the bank failures? Two things: bank runs and fractional reserve banking, and the Federal Reserve. You'll see that both are linked.

Fractional-reserve banking allows banks to lend out more money than is created and held by the Federal Reserve, thereby creating money that doesn't really exist. For example: Let's say you deposit $100 into your savings account. Technically, the bank now owes you$100 that you can claim at any point. However, the bank is allowed to loan up to a certain amount of that money. For the purposes of this example, let's say the bank lends out $80. Assuming these were the only two transactions the bank has ever done, and you try to claim your total savings, we would have a huge problem here. The bank only has$20 to give to you. This would most definitely result in a bank failure, and end with you taking an 80% loss. And believe it or not, I didn't choose \$80 for dramatic effect. 80% is well within today's reserve limits.

How does the Federal Reserve fit in?
Contrary to what you may think, the Fed and our government, including FDR, slowed down resolution and made things worse in many instances. Part of the problem was the regulation of the banking sector. The largest reasons for the Great Depression and it's severity are: the creation and involvement of the Federal Reserve, and the inability for our government to step back and keep their hands off the economy. And as for the reasons behind these things, I could write you an entire book, but someone has already done it far better than I ever could.

My philosophy amounts to "the rich and corrupt will screw us from the pedestals we built for them". We are allowing, and have allowed for quite sometime, the corrupt aristocracy that runs this nation to take away our individuality. The irony of it all? They're doing it in our name.

Last edited: Mar 25, 2009
11. Mar 25, 2009

rootX

Are you talking about ideal situations or you think this will be trouble free system in reality?
(I like no regulations, no taxes and efficiency, but I yet don't know if pure free system can run for years without much troubles in realistic conditions - obviously things don't go as smooth as books say)

12. Mar 25, 2009

Brilliant!

Of course there will be troubles, as corruption will always exist. A free-market system does not guarantee that there won't be recessions or depressions (though they are less likely). To put it simply, a free-market system is the only system that protects the individual. That's its only guarantee, everything else is theory. But the strength of the theory can be likened to that of Evolution as opposed to the religious alternatives.

Currently, a free-market system isn't possible. Human nature will always throw a wrench into the gears. There will be unavoidable problems, but they will be far less dangerous because they won't involve so many people. The dangers inherent in our current system can all be linked to monetary/commercial dependency. If AIG falls through the floor and we go into a depression, we are all suffering. And we like to call ourselves individuals? We all suffer, even those of us who never even heard of AIG before this crisis. In a free-market system, only those involved are in grave danger. A shockwave will be created, but it won't be as devastating as it would be in our current system.

It's strange to think that there is at least one aspect of the free-market ideal that, if enacted in our economic system, we would begin to instantly see positive results: Revising the 14th Amendment so as not to be so broad as to include corporations. Something you may not know is that corporations are separate entities from their investors, boards, and presidents. In all actuality, a corporation is a person in the eyes of the government (I'm not exaggerating. It really is.). When you create this sort of separation, and get rid of virtually all liability, have you not created a situation that makes irresponsibilty more attractive? And if not more attractive, have you not created a situation where irresponsibility is more likely? Certainly. Even if it isn't a conscious effort, people tend to be more careless when they have less on the line. Well, the people involved in corporations have virtually nothing on the line. The investors can turn a blind-eye to obvious frauds, and claim ignorance, like those involved in the Madoff Ponzi scheme. Madoff goes to prison, but there is no punishment to the people who invested with him. They simply claimed ignorance, despite the fact that such high returns on investments should have indicated foul play. You can bet they just chose a position of denial, because it benefited them to do so.

The benefits of taking such measures are obvious. Make people responsible for their actions again, and you'll see a taming of the economic system. You better believe that if the employees of these huge lending firms had any real stake in what they were doing, they wouldn't have made thousands upon thousands of bum loans. Instead, no one is responsible. Well, I guess you and I must be. We're paying for it, right?

13. Mar 25, 2009

neu

They attempted something similar in Iraq, except they burnt it down to start with.

14. Mar 25, 2009

Woody101

Back to the original topic, "Obama seeks Epanded Powers to Seize Firms" who didn't see this coming. Socialism - Change you can believe in!

We don't need a more powerful government, we need a less powerful one. If you think the banks were messed up under private ownership wait till the government gets through with them. If you need an example, look at any government run agency, FEMA, for example.

There is an old saying on Wall Street, "Bears make money, Bulls make money and Pigs get slaughtered." Right now the pigs are ripe for slaughter but the government is stepping in to prevent it from happening. This, to my way of thinking is a big mistake because it only postpones and compounds the inevitable. The crash will still come but it will just be a bit farther down the road. We are spending money we don't have to create a debt that our children can never repay.

15. Mar 25, 2009

Brilliant!

Is this an argument against? I hope it isn't. You'd have to assume that a moral system required for a free-market system to work would still advocate intervening in the politics and customs of another country. Not likely. It's a moral system born out of longing and respect for the individual. Individualists believe a man to be an end in himself, so you'll find that some of the harshest critics of war, especially the brand that aims to forcefully project the beliefs of one people's ideology onto another, are individualist.

Are you still operating under the notion that Republicans are free-market advocates?

16. Mar 26, 2009

WheelsRCool

I do support social safety nets, I agree with you here, I am not for huge social welfare programs though. But social safety nets are a necessity to protect the free-market I believe. The reason being, because, if a depression occurs, too many people end up suffering very terribly, and socialism or fascism often can take over.

It was Hitler railing against the capitalists and the financiers that helped him gain power in Germany. The Jews also happened to be financiers and capitalists as well, so they made easy scapegoats for him as well.

The National Socialist ideology was to take the best aspects of both Marxist socialism and free-market capitalism, this is why it was so attractive to people (although in practice one finds fascism is just another variant of socialism ultimately).

But with proper social safety nets, if the economy goes into a major recession, people do not suffer as hard, and then capitalism survives.

It is believed that John Maynard Keynes may have saved capitalism in the United States because he said, "Capitalism works, it just needs the government to play a strong role in it," as opposed to outright socialism. Whether one agrees with Keynesian economics or not, it probably did help prevent socialism in America.

Free-market theory most definitely works, the question is just how much should the government intervene to regulate. And the problem with that is that government agencies are always doomed to grow and grow and grow, so even if you try to lightly regulate an industry, it will end up growing more and more regulated, which then leads precisely to HUGE companies that are "too big to fail" because only those huge companies can thrive.

One big problem is that if certain industries are highly regulated, thus allowing for a limited number of enormous firms to form in it, and yet the economy is overall a free-market, then if the free-market decides to give the boot to these huge firms (as they did to the investment banks and AIG), they are then too big to fail and can bring down the system.

Look at the waste disposal industry for example. It used to be made up of small companies, until companies such as Waste Management began being built. However, this also happened right when the industry came under stringent regulations. As a result, the industry became dominated by enormous companies because the smaller companies could not afford the regulatory and compliance costs.

If the computer and software industries were as regulated as the healthcare industry for example though, we'd still be on vacuum tube computers.

But everything we have, is because of the free market. Everything from the chair you sit in, to the Starbucks coffee you drink, to the computer you use, to the clothes you wear, to the house you live in, is from the free-market.

Free-market capitalism isn't an ideology, it is just reality. The problem is when a crash occurs. Crashes do not mean a failure of the free-market, they occur every once in awhile, but when you have a unique crises such as this, it can almost bring down the system.

We had a housing market bubble that burst, due to the Federal Reserve and legislation. The Japanese economy had the same thing, and their government played a much larger role in their economy during that particular bubble, but it still happened.

The difference with us was our real-estate market is far larger and tied into the entire global financial industry based on the wrong assumption that "housing prices always go up."

It isn't a "failure" of the free-market per se, and perhaps more regulation in certain areas is needed, but in general, the freer economies and market economies create far more prosperity.

I agree with you here, we do need regulation, but the government and the citizenry must be vigilant at keeping the regulation light and effective, and not heavy-handed, which then allows companies like AIG to form because smaller companies are either swallowed up by the bigger ones, or driven out of the market.