USA Debt Crisis

[Splitlink]

You seem to be a decent bloke Atilla, but you really are clueless and a complete and utter sucker for Government propaganda. How can you be so seriously naive? The US government encouraged the banks to make loans available to everyone (sub-prime included) which is why they guaranteed them. They bailed out the banks that were to big to fail and now they are going to sue them! They will need the money again, and they'll get it in another bailout.

Read this document from the Boston Fed if you doubt me:

http://www.bos.frb.org/commdev/closing-the-gap/closingt.pdf

Closing the Gap:
A Guide To Equal Opportunity Lending

This publication offers a program for financial institutions seeking to apply their mortgage lending standards in accordance with equal opportunity goals and to expand their activity in underserved minority markets. Banks, mortgage companies, and other lenders subject to the Home Mortgage Disclosure Act (HMDA) are referred to as “financial institutions” or “lenders.” Specific recommendations are followed by the Federal Reserve Bank of Boston’s conclusions with respect to fair lending challenges. The recommendations are geared primarily to mortgage products but they may be modified to address small business, commercial, and consumer lending. A summary of fair lending laws is also provided.

Yes, that's a good point but why are they sueing the British government, sorry, I mean British Banks, as well?

 

[Atilla]

You seem to be a decent bloke Atilla, but you really are clueless and a complete and utter sucker for Government propaganda. How can you be so seriously naive? The US government encouraged the banks to make loans available to everyone (sub-prime included) which is why they guaranteed them. They bailed out the banks that were to big to fail and now they are going to sue them! They will need the money again, and they'll get it in another bailout.

Read this document from the Boston Fed if you doubt me:

http://www.bos.frb.org/commdev/closing-the-gap/closingt.pdf

Closing the Gap:
A Guide To Equal Opportunity Lending

This publication offers a program for financial institutions seeking to apply their mortgage lending standards in accordance with equal opportunity goals and to expand their activity in underserved minority markets. Banks, mortgage companies, and other lenders subject to the Home Mortgage Disclosure Act (HMDA) are referred to as “financial institutions” or “lenders.” Specific recommendations are followed by the Federal Reserve Bank of Boston’s conclusions with respect to fair lending challenges. The recommendations are geared primarily to mortgage products but they may be modified to address small business, commercial, and consumer lending. A summary of fair lending laws is also provided.

I am not clueless. I also do not suck up to government. I am also not naive.

What you say is true, they were encouraged/directed by Clinton. However, that does not negate the fact they should disregard all risk and good practice.

Look it is simple. Tax payers have bailed out banks to the tune of trillions - who are owned by shareholders. (hey presto it's capitalism and it works great most of the time).

There is a collosal redistribution of wealth here.

Now we need to re-address that balance.

Do you appreciate the redistribution of wealth part? In capitalist system shareholders should bear that risk and purchase new issues to raise capital. Not have big G and tax payers.

 

[new_trader]

I am not clueless. I also do not suck up to government. I am also not naive.

What you say is true, they were encouraged/directed by Clinton. However, that does not negate the fact they should disregard all risk and good practice.

Look it is simple. Tax payers have bailed out banks to the tune of trillions - who are owned by shareholders. (hey presto it's capitalism and it works great most of the time).

There is a collosal redistribution of wealth here.

Now we need to re-address that balance.

Do you appreciate the redistribution of wealth part? In capitalist system shareholders should bear that risk and purchase new issues to raise capital. Not have big G and tax payers.

What specifically is it about everything I have posted since the start of this debate that you failed to comprehend?

1) I said from the beginning the what we have is phoney capitalism, you thinks it's the real deal.
2) I said, from the beginning, that the banks should not have been bailed out.
3) I said, from the beginning, that Government and Central Bank policies created, facilitated and continue to perpetuate the crisis.

What exactly do you NOT understand about my support for FREE MARKET CAPITALISM?


YOU, I repeat, it is YOU that thinks the Government needed to intervene. Astonishingly, you think the problems created can be fixed with your 'Rube Goldberg' solution of continued artificially low interest rates and inflation...simples...

 

[Atilla]

What specifically is it about everything I have posted since the start of this debate that you failed to comprehend?

1) I said from the beginning the what we have is phoney capitalism, you thinks it's the real deal.
2) I said, from the beginning, that the banks should not have been bailed out.
3) I said, from the beginning, that Government and Central Bank policies created, facilitated and continue to perpetuate the crisis.

What exactly do you NOT understand about my support for FREE MARKET CAPITALISM?


YOU, I repeat, it is YOU that thinks the Government needed to intervene. Astonishingly, you think the problems created can be fixed with your 'Rube Goldberg' solution of continued artificially low interest rates and inflation...simples...

I thought I did agree but pointed out that I prefered Gordon Brown's approach that if tax payers bail out banks then tax payers should own bank stock.

FREE MARKET capitalism is no solution imho.

Can you expand on your vision of how free market capitalism would handle;

defence
education
health
public services -
fireservices
police
prison
rubbish collection
planning
judicial system
banks
business
international relations
international trade
land & property rights
how about divorce
commercial law
elections
parliament
voting
citizens rights
unions
health and safety


etc etc...
you know the basics that we all take for granted...

addenda - the monarchy

 

[new_trader]

Capitalism isn't a solution, it is a system. Do more research on the subject yourself instead of closing your eyes and ears to everything you think is abhorrent to your moral sense.

 

[Atilla]

Capitalism isn't a solution, it is a system. Do more research on the subject yourself instead of closing your eyes and ears to everything you think is abhorrent to your moral sense.

Ok will do thanks.

 

[Splitlink]

I am not clueless. I also do not suck up to government. I am also not naive.

That's right, mate. You stick up for yourself or the politicians will be treading all over you and then what will we do?

 

[YouAreNotFree]

I thought I did agree but pointed out that I prefered Gordon Brown's approach that if tax payers bail out banks then tax payers should own bank stock.

FREE MARKET capitalism is no solution imho.

Can you expand on your vision of how free market capitalism would handle;

defence
education
health
public services -
fireservices
police
prison
rubbish collection
planning
judicial system
banks
business
international relations
international trade
land & property rights
how about divorce
commercial law
elections
parliament
voting
citizens rights
unions
health and safety


etc etc...
you know the basics that we all take for granted...

addenda - the monarchy

The issue is not do we choose between Government or an extreme anarchical free market version of capitalism. Its the role that we believe government should play in our lives.

My own opinion is that I believe we need government for defence and law and order. That's it. Local government can provide whatever services the people want in that area. That way, prefer lower taxes and fewer services? Fine, move somewhere else.

I'll pick one of your bullet points. The reason we do not need government to impose health and safety standards, in the workplace for example, is because nobody is forced to work. If an employer was providing unsafe working conditions he would likely find it difficult to retain or hire employees and therefore he has an incentive to improve safety through market forces for his own personal benefit.

 

[Splitlink]

The issue is not do we choose between Government or an extreme anarchical free market version of capitalism. Its the role that we believe government should play in our lives.

My own opinion is that I believe we need government for defence and law and order. That's it. Local government can provide whatever services the people want in that area. That way, prefer lower taxes and fewer services? Fine, move somewhere else.

I'll pick one of your bullet points. The reason we do not need government to impose health and safety standards, in the workplace for example, is because nobody is forced to work. If an employer was providing unsafe working conditions he would likely find it difficult to retain or hire employees and therefore he has an incentive to improve safety through market forces for his own personal benefit.

Believe it, or not, people are frightened of losing their jobs, to the extent of cutting corners to improve production. Here, in Spain, we have 21% unemployed. People will put up with umsafe working conditions to keep their jobs or the employer will find someone who will.

 

[Atilla]

The issue is not do we choose between Government or an extreme anarchical free market version of capitalism. Its the role that we believe government should play in our lives.

My own opinion is that I believe we need government for defence and law and order. That's it. Local government can provide whatever services the people want in that area. That way, prefer lower taxes and fewer services? Fine, move somewhere else.

I'll pick one of your bullet points. The reason we do not need government to impose health and safety standards, in the workplace for example, is because nobody is forced to work. If an employer was providing unsafe working conditions he would likely find it difficult to retain or hire employees and therefore he has an incentive to improve safety through market forces for his own personal benefit.

I'm all for cutting down on Government, number of politicians and civil servants, Health and Social Services and the army... See rule number 2.

1. Raise taxes
2. Cut spending
3. i > r

 

[Atilla]

Believe it, or not, people are frightened of losing their jobs, to the extent of cutting corners to improve production. Here, in Spain, we have 21% unemployed. People will put up with umsafe working conditions to keep their jobs or the employer will find someone who will.

Exactly. Back to the Victorian and Feudal system period when life was so great.

 

[Atilla]

On the ball analysis by Malcolm Fraser - former prime minister of Australia.


Opinion

America's self-inflicted decline

If the broad post-World War II prosperity that has endured for six decades comes to an end, both the United States and Europe will be responsible. With rare exceptions, politics has become a discredited profession throughout the West. Tomorrow is always treated as more important than next week, and next week prevails over next year, with no one seeking to secure the long-term future. Now the West is paying the price.

President Barack Obama’s instincts may be an exception here, but he is fighting powerful hidebound forces in the United States, as well as a demagogic populism, in the form of the Tea Party, that is far worse - and that might defeat him in 2012, seriously damaging the United States in the process.

The United States’ friends around the world watched with dismay the recent brawl over raising the federal government’s debt ceiling, and the US congress’ inability to come to anything like a balanced and forward-looking compromise. On the contrary, the outcome represents a significant victory for the Tea Party’s minions, whose purpose seems to be to reduce government obligations and expenditures to a bare minimum (some object even to having a central bank), and to maintain President George W Bush’s outrageous tax breaks for the wealthy.

The United States’ current fiscal problems are rooted in a long period of unfunded spending. Bush’s wars in Afghanistan and Iraq, and the manner in which he conducted the “global war on terror” made matters much worse, contributing to a totally unsustainable situation. Indeed, Obama inherited an almost impossible legacy.

In the weeks since the debt ceiling agreement, it has become increasingly clear that good government might be impossible in the US. The coming months of campaigning for the US presidency will be spent in petty brawling over what should be cut. The example of recent weeks gives us no cause for optimism that US legislators will rise above partisan politics and ask themselves what is best for America.

In these circumstances, it is not surprising that financial markets have returned to extreme volatility. The expenditure cuts mandated by the outcome of the debt-ceiling debate will reduce economic activity, thereby undermining growth and making debt reduction even more difficult. Providing further fiscal stimulus to boost economic growth would carry its own risks, owing to the debt ceiling and another, more ominous factor: the US is already overly indebted, and there are signs that major holders of US government securities are finally tired of being repaid in depreciated currency.

Most importantly, China’s call for the introduction of a new reserve currency stems from its frustration with the failure of major governments - whether in the US or Europe - to govern their economic affairs with realism and good sense. China recognises that the US is in great difficulty (indeed, it recognises this more clearly than the US itself), and that, given the poisonous political atmosphere prevailing in Washington, there will be no easy return to good government, economic stability, and strong growth.

US leadership in world affairs began to weaken with the unilateralism of Bush, and today’s economic problems are reinforcing this tendency. To reverse the United States’ decline, Obama needs bipartisan support for his (quite mainstream) policies, but so far the US congress has shown no stomach for a principled approach to its legislative duties.

If Germany’s half-hearted efforts to stabilise Europe somehow turn out to be successful, the US position will be further eroded, and central banks around the world will begin to regard the euro once again as a reliable alternative to the dollar as a reserve currency. The alternative, as China has suggested, would be to develop a new reserve currency.

These realities represent a power shift of a kind that we have not experienced in our lifetimes. China’s economic power over the US is now substantial, and will limit not only US influence in the financial markets, but also its capacity to use military power.

If this forces the United States back towards what the international-relations scholar Joseph Nye calls “soft power and multilateral diplomacy”, it may well be a good thing. But such approaches are anathema to the US Republican Party, and to its Tea Party faction in particular, and they might unnerve the many Asians who are nervous at China’s growing military might.

The counter-argument - that any sell-off or failure by China to continue to buy US government securities would hurt China as much as the US - is not valid. As each year passes, China’s markets expand worldwide, and its domestic market comes to represent a greater percentage of its own GDP. As a result, China will not need a strong dollar in the long term. Americans need to get their economic house in order before China loses its incentive to support the dollar.

On several occasions in the post-WWII period, the US has learned with great pain that there are limits to the effective use of military power. US objectives could not be achieved in Vietnam. The outcome in Iraq will not be determined until the last American troops have been withdrawn. In Afghanistan, where withdrawal dates have already been set, it is difficult to believe that a cohesive unified state can be established.

As the efficacy of military power is reduced, so the importance of economic power grows. Recognition of these central realities - and bipartisanship in addressing them - is critical for America’s future, and for that of the West.

 

[enragedcow]

I thought I did agree but pointed out that I prefered Gordon Brown's approach that if tax payers bail out banks then tax payers should own bank stock.

FREE MARKET capitalism is no solution imho.

Can you expand on your vision of how free market capitalism would handle;

defence
education
health
public services -
fireservices
police
prison
rubbish collection
planning
judicial system
banks
business
international relations
international trade
land & property rights
how about divorce
commercial law
elections
parliament
voting
citizens rights
unions
health and safety


etc etc...
you know the basics that we all take for granted...

addenda - the monarchy

Atilla this post made it obvious you don't understand what a free market means. a free market does not mean that EVERYTHING is privatized it is simply markets are free to move without government intervention

the government can still have a role and provide the services you mentioned

the ones i bolded stood out because in many places these social goods are provided by the private sector on top of (and in some cases in lieu of) the public sector.

and unions, health and safety are likely to occur naturally in jobs where the worker has some bargaining power such as graduates and the other groups who have bargaining power even without government intervention.

and as mentioned, free market capitalism isn't a solution because it is a system.

certainly naive socialism bordering on communism isn't the solution either.

"the public bailed the banks out therefore should now own the banks" is political nonsense (although powerful nonsense) most ordinary people have no idea how shares work, they wouldn't understand the risks and rewards of ownership. also the government as an economic agent bailed the banks out not the taxpayers, although the funds are sourced from tax they are no longer the taxpayer's funds.

as a little thought experiment; imagine if the banks were not bailed out, go through it logically with a simple IS-LM model and assumptions to remove any anomalies such as corruption etc. i won't type it out because it would take ages and ages.

One of the conclusion i know you will reach is that a major source of tax revenue would be gone and many many many people would be unemployed (layoffs as well as unemployment from a recession/depression/cataclysm).

apologies for the ad hoc nature of the last few sentences they were afterthoughts lol

 

[Atilla]

Atilla this post made it obvious you don't understand what a free market means. a free market does not mean that EVERYTHING is privatized it is simply markets are free to move without government intervention
I don't understand free markets and this is obvious... Mate the moment you have different levies of tax applied to different goods and services you have government intervention. Perfect competition and free markets are pie in the sky.

Private medical health insurance was subsidised with tax brakes for American companies setting up here in the UK during Thatchers period. These tax subsidies, incentives and breaks came from funds diverted away from the NHS.

That is what one would term introducing private health and competitive health insurance right? Correct me if I am wrong.

Moreover, health insurance would be subject to your current health and there would be upper limits. The patient would then be handed back to NHS if limits reached. This was termed free market health insurance. You now have a choice!


Do you understand what a natural monopoly is? Think about water, gas, electricity and rail network. Think anything with massive infrastructure. Then you can privatise that and apply the free market forces. Really? Ofcourse not but Thatcher still did it anyway...

Do you know what oligopolistic practice and cartels are? I don't know or understand free markets. Sure as hell I don't. Cause it is what ever you want to make it. Do you seriously believe the phone companies, gas or electricity or even the oil companies compete with each other?

Which bleeding planet are you on if you do? They tend towards a price leader and fixing prices because price competition is against all their interests and profit. So they have brand product differentiation and they compete on BS advertising and branding.

the government can still have a role and provide the services you mentioned

No ****!!!

the ones i bolded stood out because in many places these social goods are provided by the private sector on top of (and in some cases in lieu of) the public sector.

and unions, health and safety are likely to occur naturally in jobs where the worker has some bargaining power such as graduates and the other groups who have bargaining power even without government intervention.

and as mentioned, free market capitalism isn't a solution because it is a system.

certainly naive socialism bordering on communism isn't the solution either.

"the public bailed the banks out therefore should now own the banks" is political nonsense No it is not nonsense and you are talking ******** here! (although powerful nonsense) most ordinary people have no idea how shares work Yes they do!, they wouldn't understand the risks and rewards of ownership Like Banks understand risk managenet and exposure. Like they understand rewarding ****ups with their bonus culture... You joking right . also the government as an economic agent bailed the banks out not the taxpayers, although the funds are sourced from tax they are no longer the taxpayer's funds. OMG you are so picky... The world according to GARP comes to mind...



as a little thought experiment; imagine if the banks were not bailed out, go through it logically with a simple IS-LM model and assumptions to remove any anomalies such as corruption etc. i won't type it out because it would take ages and ages.

Clarification required here. NT suggested they should be left to the free market. I've always said they should be saved but with strict controls, terms and conditions until all monies and dues paid back.

One of the conclusion i know you will reach is that a major source of tax revenue would be gone and many many many people would be unemployed (layoffs as well as unemployment from a recession/depression/cataclysm).

apologies for the ad hoc nature of the last few sentences they were afterthoughts lol

Very interesting but you are skirting on the peripheries without saying much. Where do you stand and what do you believe?

I believe one can apply the free market place to just about any product or service. It is a system and a solution to determining the allocation of scarce resources and the distribution of rewards.

However, I believe it is the level playing field that is important and when the system is bent we have disequilibrium in the solution. This is why all the effing bankers and politicians who have screwed up have all the money and people who work hard have very little.

Do you see my point of view?

Would you like me to frame it as "it is obvious you don't understand capitalism or free markets"...

What is it with NT and you that when people have alternative views it is obvious they don't understand...



I like to think I do understand but beg to differ.

 

[new_trader]

What is it with NT and you that when people have alternative views it is obvious they don't understand...



I like to think I do understand but beg to differ.

If you were serious about wanting to learn more about capitalism, watch this lecture. Then research any facts metioned in it to see if they can be verified.

 

[Atilla]

If you were serious about wanting to learn more about capitalism, watch this lecture. Then research any facts metioned in it to see if they can be verified.

Nothing in life is free...

http://wn.com/free_market

 

[spreader_legger]

He's wrong about predatory pricing ... I believe the Japanese used this technique in the automotive sector to gain market share.

So called dumping is not uncommon practice & often participants in the GATT negotiations blame other countries in promoting this practice.

He makes a point, however there are also others

If you were serious about wanting to learn more about capitalism, watch this lecture. Then research any facts metioned in it to see if they can be verified.

 

[new_trader]

Nothing in life is free...

http://wn.com/free_market

I would be willing to bet you didn't even watch the video I posted. Instead you closed your eyes and blocked your ears and did the "lalala" thing...

 

[new_trader]

He's wrong about predatory pricing ... I believe the Japanese used this technique in the automotive sector to gain market share.

The same Japan that has been in a recession for 20+ years?

 

[Atilla]

I would be willing to bet you didn't even watch the video I posted. Instead you closed your eyes and blocked your ears and did the "lalala" thing...

Yes you would be correct - however, it is because I can't not because I don't want to.

But you know I read so much books papers web - and you do know economics is a normative discipline - these links are only alternative views. Not an exact science.