What's the worst that could happen?

[Accountable]

From a column by John Stossel:

I suspect that the bailout will do more harm than good, like "aiding" an alcoholic by giving him booze. It perpetuates the moral hazard produced by government guarantees that created the problems in the first place. It acts as an enabler by giving more money to opportunistic lenders who assumed they'd be bailed out.

And, of course, the politicians made a bad bailout bill worse by adding in tax breaks for stock-car racers, movie producers, "alternative" energy, etc. Then they insisted that all health insurance must cover mental illness, a requirement that will launch an orgy of fraud and make health insurance unaffordable for millions. The conceit of the anointed knows no bounds.

After the bailout passed, the stock market turned lower. Was it because investors then thought harder about how the politicians will misspend our $700 billion? All government can do is move money from one part of the economy to another. What makes anyone assume the government knows best where the money should be?

Steven Horwitz, an economics professor at St. Lawrence University, got it right when he wrote, "There will be short-term pain if we don't bail out these firms, but that is the hangover price we pay for 15 years or more of binge lending. The proposed bailout cannot prevent the pain of the hangover; it can only conceal it by shifting and dispersing it among the taxpayers and an economy weakened by the borrowing, taxing and/or inflation needed to pay for that $700 billion. Better we should take our short-term pain straight up and clean out the mistakes of our binge and then get back to the business of free markets without creating an unchecked executive branch monstrosity trying to 'save' those who profited most from the binge and harming innocent taxpayers in the process."

Sure, without the bailout, there might have been a severe recession. Bubbles must pop. But it's important that we let bubbles pop. Markets would then find a floor and recover.

Now the politicians are blowing some new air into the bubble, but we may have a recession, anyway. And with more intervention, regulation and ambiguity about what the real market prices for those government-supported securities are, investors won't know where the real bottom is.


So, any recession will last longer. And the moral hazard the bailout perpetuates will lead to new bubbles & and then demands for another bailout.

Free enterprise sounds nice. We should try it sometime.

[gmc]

Originally Posted by Accountable

From a column by John Stossel:

I suspect that the bailout will do more harm than good, like "aiding" an alcoholic by giving him booze. It perpetuates the moral hazard produced by government guarantees that created the problems in the first place. It acts as an enabler by giving more money to opportunistic lenders who assumed they'd be bailed out.

And, of course, the politicians made a bad bailout bill worse by adding in tax breaks for stock-car racers, movie producers, "alternative" energy, etc. Then they insisted that all health insurance must cover mental illness, a requirement that will launch an orgy of fraud and make health insurance unaffordable for millions. The conceit of the anointed knows no bounds.

After the bailout passed, the stock market turned lower. Was it because investors then thought harder about how the politicians will misspend our $700 billion? All government can do is move money from one part of the economy to another. What makes anyone assume the government knows best where the money should be?

Steven Horwitz, an economics professor at St. Lawrence University, got it right when he wrote, "There will be short-term pain if we don't bail out these firms, but that is the hangover price we pay for 15 years or more of binge lending. The proposed bailout cannot prevent the pain of the hangover; it can only conceal it by shifting and dispersing it among the taxpayers and an economy weakened by the borrowing, taxing and/or inflation needed to pay for that $700 billion. Better we should take our short-term pain straight up and clean out the mistakes of our binge and then get back to the business of free markets without creating an unchecked executive branch monstrosity trying to 'save' those who profited most from the binge and harming innocent taxpayers in the process."

Sure, without the bailout, there might have been a severe recession. Bubbles must pop. But it's important that we let bubbles pop. Markets would then find a floor and recover.

Now the politicians are blowing some new air into the bubble, but we may have a recession, anyway. And with more intervention, regulation and ambiguity about what the real market prices for those government-supported securities are, investors won't know where the real bottom is.


So, any recession will last longer. And the moral hazard the bailout perpetuates will lead to new bubbles & and then demands for another bailout.

Free enterprise sounds nice. We should try it sometime.

from the steve horowitz article

Those of us who support free markets are not your enemies right now. The real problem here is the marriage of corporate and state power. That is the corporatism we both oppose. I ask of you only that you consider whether such corporatism isn't the real cause of this mess and that therefore you reconsider whether free markets are the cause and whether increased regulation is the solution.

Your problem is not socialism or left wing politics of any kind it's right wing politics.

Consider instead that the problems of this mess were caused by the very kinds of government regulation that you now propose

It started with the lifting of any controls and allowing the market makers free rein to do what they wanted and with interference to prop up the markets. Yes in that regard you can argue with some justification that govt intervention took the brakes off and encouraged the creation of inventive financial instruments that had no real substance and that anyone with half a brain could see would lead t problems but so long as the money flowed no body listened.

Yes you can argue a good case that this has happened because free market economics were interfered with but what is happening and has happened is not socialist intervention or anything remotely like it. If anything it's right wing fascism/corporatism/nazism. You're hung up over the wrong ism.

[Accountable]

Originally Posted by gmc

from the steve horowitz article


Your problem is not socialism or left wing politics of any kind it's right wing politics.



It started with the lifting of any controls and allowing the market makers free rein to do what they wanted and with interference to prop up the markets. Yes in that regard you can argue with some justification that govt intervention took the brakes off and encouraged the creation of inventive financial instruments that had no real substance and that anyone with half a brain could see would lead t problems but so long as the money flowed no body listened.

Yes you can argue a good case that this has happened because free market economics were interfered with but what is happening and has happened is not socialist intervention or anything remotely like it. If anything it's right wing fascism/corporatism/nazism. You're hung up over the wrong ism.

I see your point and it makes sense, and fits better than socialism. I still am concerned that a Barama administration might capitalize on the public's fear and centralize all they can grab, just as Bush did. Call it what you like.

Baramatrics?

[gmc]

Originally Posted by Accountable

I see your point and it makes sense, and fits better than socialism. I still am concerned that a Barama administration might capitalize on the public's fear and centralize all they can grab, just as Bush did. Call it what you like.

Baramatrics?

Most people are fairly easy going and don't take an interest in politics unless it affects them directly or they just feel it doesn't matter they can't affect what happens. As a result influential groups can get more say than they should. It sometimes takes seismic events to get people out to vote. Hopefully the last eight years has got people ready to take an interest.

I still am concerned that a Barama administration might capitalize on the public's fear and centralize all they can grab

That's going to be difficult though isn't it? Seems to me you worry about Obama doing something that has already happened. Bush had the excuse of terrorism to accrue more power to govt agencies with the tacit support of the legislature frightened to appear as if they supported terrorism if they objected. maybe the next set of congressman etc will be a bit more assertive in attitude. (I was going to say bolshier but that's a term that might not cross the cultural divide too well).

[Galbally]

I have looked a bit at what Obama intends to do should he win (and depsite the lead and all that, its still a big if, he may well lose) he intends to realign American policy away from international confrontation and towards a more multilateral style of American leadership of the West (in other words he is actually going to pay attention to what his NATO allies say, and not just come demanding troops as he needs them), he also seems to realize that the actual original problem with Al Queda was based in Pakistan and Afganistan, and had nothing to do with Iraq, so he wants to get out of Iraq as quickly as is sensible, and concentrate resources now on fighting the Taleban, thats welcome.

In terms of geopolitics He seems to be keen to wean the US of its complete economic foreign oil dependence and wants a new industrial revolution based on sustainable energy and its associated technologies, and in the meantime seems to realize that nuclear power will have to be expanded big time, as well as looking for new oil reserves. Again, my own view would be that this is the only long term solution to the current geopolitical instability. And we in Europe need a similarly ambitious policy if we are not to become the plaything of the Russians and the Arabs.

In terms of the domestic economic policy he certainly seems to want to shift the focus of taxation policy away from giving huge breaks to corporations, the super-rich, and the executive classes; and shift the system to be of benefit more toward middle income earners, as well as the poor, and he also seems to be serious about reforming healthcare. As a European I would say those things are eminently sensible, but the devil is in the detail. Of course in the states, which is so indoctrinated with the mantra of big business, it will be spun as "socialism" but to me it simply seems like a less rabid version of American capitalism, and more long-term policy of stable geopolitics. Maybe I am mad, I dunno.

[Accountable]

Originally Posted by gmc

That's going to be difficult though isn't it? Seems to me you worry about Obama doing something that has already happened. Bush had the excuse of terrorism to accrue more power to govt agencies with the tacit support of the legislature frightened to appear as if they supported terrorism if they objected. maybe the next set of congressman etc will be a bit more assertive in attitude. (I was going to say bolshier but that's a term that might not cross the cultural divide too well).

Obama will take the huge power grab that Bush made in the area of privacy invasion et al and keep it, as is traditional with any expanded power here. I think he will also take the recent acquisitions and, using the economic crisis as an excuse, centralize as much as he possibly can under federal government agencies. To some extent I expect to see nationalized insurance of all types, nationalized home mortgages & other lending, and a vastly expanded nationalized bank.

[Accountable]

Originally Posted by Galbally

I have looked a bit at what Obama intends to do should he win (and depsite the lead and all that, its still a big if, he may well lose) he intends to realign American policy away from international confrontation and towards a more multilateral style of American leadership of the West (in other words he is actually going to pay attention to what his NATO allies say, and not just come demanding troops as he needs them), he also seems to realize that the actual original problem with Al Queda was based in Pakistan and Afganistan, and had nothing to do with Iraq, so he wants to get out of Iraq as quickly as is sensible, and concentrate resources now on fighting the Taleban, thats welcome.

I predict a massive reduction in the military. We may well pull out of Afghanistan as well. Obama's got to find the funds somewhere to pay for his social programs and that's the easy mark.

eta: the additional unemployment that will create can help justify his new programs as well. Win/win!

[Galbally]

Originally Posted by Accountable

I predict a massive reduction in the military. We may well pull out of Afghanistan as well. Obama's got to find the funds somewhere to pay for his social programs and that's the easy mark.

eta: the additional unemployment that will create can help justify his new programs as well. Win/win!

I don't think he is going to pull out of Afganistan (not in the first term anyway, if he manages to win two, long shot). If he does, thats a long term strategic disaster. Anyway, if you owe 10 trillion dollars and are running a deficit near a trillion a year, you better do something to reduce the size of the borrowing, and yes, it looks like you willl have to cut military spending massively, thats not his fault, he didn't run up these massive deficits, thats Bush trying to fight two wars at the same time, cut taxes for the rich and for companies, and expand the government all at the same time.

Its actually hilarious that the Republicans are trying to paint the democrats as the big irresponsible "tax and spend" party. The Republicans have been "borrowing and spending" on an epic scale, and I am sure you realize thats the same as taxing and spending, it just means that the tax rises have been deferred for a while, as of course borrowing is just deferred taxation, and you have 10 trillion to make good.

To be honest I think on that level both candidates are being dishonest, its imperative that the US Government trys to get its spending and debt in order, and that should mean cutting current spending, and raising taxes people might now like it, but the alternative is to keep on borrowing and eventually the country will go bankrupt. Money should only be spent on capital projects to boost the economy, on essentials like the police, running the state, and the military, on stiving off the worst of the now inevitable poverty coming down the line, and not on unwinnable military adventures, proping up housing bubbles, or tax-breaks for already mega-rich corporates.

[Accountable]

Originally Posted by Galbally

I don't think he is going to pull out of Afganistan (not in the first term anyway, if he manages to win two, long shot). If he does, thats a long term strategic disaster. Anyway, if you owe 10 trillion dollars and are running a deficit near a trillion a year, you better do something to reduce the size of the borrowing, and yes, it looks like you willl have to cut military spending massively, thats not his fault, he didn't run up these massive deficits, thats Bush trying to fight two wars at the same time, cut taxes for the rich and for companies, and expand the government all at the same time.

I would be surprised to find out that Obama has true vision beyond election/reelection/legacy. I believe he would ruin American culture and traditions in the long term to be seen in a positive light short-term. In that way he's no different from any recent president (post-GHW Bush).

Originally Posted by Galbally

Its actually hilarious that the Republicans are trying to paint the democrats as the big irresponsible "tax and spend" party. The Republicans have been "borrowing and spending" on an epic scale, and I am sure you realize thats the same as taxing and spending, it just means that the tax rises have been deferred for a while, as of course borrowing is just deferred taxation, and you have 10 trillion to make good.

I haven't heard 'tax & spend' in years. The repubs know they're on thin ice in summer on that issue.

Originally Posted by Galbally

To be honest I think on that level both candidates are being dishonest, its imperative that the US Government trys to get its spending and debt in order, and that should mean cutting current spending, and raising taxes people might now like it, but the alternative is to keep on borrowing and eventually the country will go bankrupt. Money should only be spent on capital projects to boost the economy, on essentials like the police, running the state, and the military, on stiving off the worst of the now inevitable poverty coming down the line, and not on unwinnable military adventures, proping up housing bubbles, or tax-breaks for already mega-rich corporates.

I don't know how long the concept's been around, but in Washington the term "spending cuts" means a reduction in the rate of increase of spending. Congress came up with this nifty idea to put automatic budget increases in all their spending packages, so that the suck up more and more tax revenue automatically. They say it's not an increase since it is already planned. So when they want to look magnanimous, they reduce next year's increase in a pragram or two and crow about how they've reduced spending.
You won't see true spending cuts in Washington any time soon.

[oscar]

Originally Posted by Galbally

In terms of the domestic economic policy he certainly seems to want to shift the focus of taxation policy away from giving huge breaks to corporations, the super-rich, and the executive classes; and shift the system to be of benefit more toward middle income earners, as well as the poor, and he also seems to be serious about reforming healthcare. As a European I would say those things are eminently sensible, but the devil is in the detail. Of course in the states, which is so indoctrinated with the mantra of big business, it will be spun as "socialism" but to me it simply seems like a less rabid version of American capitalism, and more long-term policy of stable geopolitics. Maybe I am mad, I dunno.

Where does all this money come from galbally?

We have Gordon Brown saying now that he is investing in training and more jobs, which is great but half of these newly un-employed are the very money men who caused this greed, power and misery to the middle class in the first place. Shop workers will be out of a job this Christmas because falling British prices in food and fuel mean the owners of the store's are having a hard time.
Well tough is my view.
As per bloody usual, they have caused their own downfall and then not only blame the government but immediately turn to them for a solution.
Well get in the back of the dole queue Buddy and be humble while your about it.
For Uncle Gordon to invest in the newly un-employed will mean higher taxes for those who have not robbed this country blind.
Why the feck should we bail them out??
You can bet your life these money men won't be taking any job to put food on the table for their familie's. You won't see them sweeping floors in McDonalds will you.
They are also quick enough to blame the Governments Immigration policie's when the truth of it is these people won't get up a ladder or sweep a floor for a living anyway.
I hope they rot in hell.