Capitalism

[El Kabong]

Intrest rates don't bother me, people should know what they can and cannot afford....both parties (Republicans, Democrats, Lenders, Borrowers) are in the wrong and therefore they all deserve blame.

[killersheep]

Intrest rates don't bother me, people should know what they can and cannot afford....both parties (Republicans, Democrats, Lenders, Borrowers) are in the wrong and therefore they all deserve blame.

So the argument you originally provided now reads

The free market will fix the problems Republicans, Democrats, Lenders and Borrowers created.

My question is how will the free market fix the problems Republicans, Democrats, Lenders and Borrowers created?

[El Kabong]

Well the market has already lowered prices on houses, it has already weeded out most of the bad loans, people are out of their homes they couldn't afford and people are out of jobs they abused. Once there is an upturn in the economy which could be in a year, could be sooner people will be ready to buy those houses, hell people are already ready to buy those houses to sell later and make profit on.


Government will of course regulate (too late) but what it really needs is to have and use oversight which it had the opportunity to do before the shit hit the fan (with OFEO an oversight committee created to look over Freddie Mac) but certain politicians blocked the oversight of Fannie and Freddie.
http://www.youtube.com/watch?v=YL36nwCSYUM



and Sarbanes-Oxley is bad for us

[killersheep]

Well the market has already lowered prices on houses, it has already weeded out most of the bad loans, people are out of their homes they couldn't afford and people are out of jobs they abused. Once there is an upturn in the economy which could be in a year, could be sooner people will be ready to buy those houses, hell people are already ready to buy those houses to sell later and make profit on.


Government will of course regulate (too late) but what it really needs is to have and use oversight which it had the opportunity to do before the shit hit the fan (with OFEO an oversight committee created to look over Freddie Mac) but certain politicians blocked the oversight of Fannie and Freddie.
http://www.youtube.com/watch?v=YL36nwCSYUM

So the free market is fixing the problem by reducing home prices?
I also don't understand what you mean by "weeded out most of the bad loans".
I am trying to wrap my head around this, if unemployment continues to rise what does it matter if homes are cheaper?

[El Kabong]

Unemployment will rise more once taxes are raised.


The free market is just going to ride it out buddy...eventually things will turn around, they always do. Government may try to expedite the process but they are spending too much money as it is. And eventually we'll all make the same mistakes all over again and by we I mean the government.

Feel free to explain your side buddy

[Kirkland Laing]

Unemployment will rise more once taxes are raised.


The free market is just going to ride it out buddy...eventually things will turn around, they always do. Government may try to expedite the process but they are spending too much money as it is. And eventually we'll all make the same mistakes all over again and by we I mean the government.

Feel free to explain your side buddy

Unemployment will rise but not because taxes are going up. Again, that's just more GOP bs you've swallowed. When Clinton raised taxes on top earners and cut them for the middle class, dire predictions about the collapse of the US economy were made by the GOP. Instead the economy grew faster than under any president for decades and Clinton created 22 million jobs. Bush cut taxes, economic growth and revenues collapsed and he created four million jobs. Obama wants to return tax rates to the Clinton era.

Following on from my previous post, here's how the abandonment of regulation caused the current meltdown :


Here's an IM conversation between Rahul Dilip Shah and Shaun Mooney, a pair of analysts at the credit rating agency Standard & Poor's, chatting via IM back in 2007 about a deal involving securities that were made up of chunks of unregulated mortgage loans :

RDS: btw: that deal is ridiculous
SM: I know right ... model def does not capture half of the risk
RDS: we should not be rating it
SM: we rate every deal
SM: it could be structured by cows and we would rate it


Credit rating agencies rate the creditworthiness of bonds and various types of securities. They gave securities constructed of the very worst subprime loans a AAA rating, the same as US government bonds have. A AAA rating allows these bonds to be held as part of banks' asset bases, the capital base they must maintain to remain solvent. Great move, eh? This AAA worthless paper is now causing the meltdown in global financial markets.


Number two :


Among the documents uncovered by the committee was an internal board presentation delivered by [Raymond] McDaniel to Moody’s [credit rating agency] directors in October 2007. According to the presentation, he told his board: Analysts and managing directors “are continually ‘pitched’ by bankers, issuers, investors.” At times, he conceded, “we drink the Kool-Aid.”




Number three :


Mr. Waxman’s committee also cited an internal e-mail exchange between S.&P. [credit rating agency] employee [Frank] Raiter, who had been asked to rate a collateralized debt obligation [AAA worthless paper] called “Pinstripe,” and Richard Gugliada, an S.& P. managing director. Mr. Raiter had requested highly detailed data about each individual mortgage loan, known as loan level tapes, to assess the creditworthiness of the loans in the security, but Mr. Gugliada wrote: “Any request for loan level tapes is totally unreasonable!!! It is your responsibility to provide those credit estimates and your responsibility to devise some method for doing so.”
Mr. Raiter responded: “This is the most amazing memo I have ever received in my business career.”

[El Kabong]

...your failure to say the Democrats had any hand in this is amazing. I know the Republicans had their part in this but it wasn't all them...not by a long shot.

But of course I won't ever try and tell you anything different than you already believe

[killersheep]

Unemployment will rise more once taxes are raised.


The free market is just going to ride it out buddy...eventually things will turn around, they always do. Government may try to expedite the process but they are spending too much money as it is. And eventually we'll all make the same mistakes all over again and by we I mean the government.

Feel free to explain your side buddy

I'm just trying to understand your side for now, to be quite honest I am still formulating my view of macroeconomics which is ultimately what we are talking about here. I haven't seen a correlation between unemployement and higher taxes, perhaps you can send me a link that shows that to be a fact. I still don't see how "the free market riding it out" is fixing the problem.

So far for me it is important for me to distinguish between capitalists and businessmen.

Capitalists are people like your boss and my boss, millionaires, self made men, creating business and opportunity for others by provided goods and services. I can't speak for you, but I really admire what my boss has made.

Businessmen are people like CEOs of fortune 500 companies that ultimately rely completely on the work, idea's and funds of others. Unlike your boss and my boss, they don't fail, just take a look at the recent news and ask yourself how a CEO can make an 8 digit bonus for losing a company money. Fundamentally this is where the problem with wealth distribution, this is not the American dream, this is an abuse of control.

As a liberal nothing is in stone for me, I must be convinced however to believe, and as of now I don't see how the free market "waiting it out" is helping to fix the problem.

[pacfan]

Questions:

1) I haven't seen a correlation between unemployement and higher taxes, perhaps you can send me a link that shows that to be a fact.

2) I still don't see how "the free market riding it out" is fixing the problem.
As a liberal nothing is in stone for me, I must be convinced however to believe, and as of now I don't see how the free market "waiting it out" is helping to fix the problem.

Ok, killasheep, this is for you.

Answers:

1) Taxation is one of the tools govt. use to cool down overheating economy (aside from collecting money, of course). As such, it does tend to negatively affect employment though that's not it's primary intention. So the answer is yes and no at the same time.

2) Yes, the free market does usually tend to clear itself up over the long run but if let alone, it does so in a very messy way. It's just like flooding out a mound of garbage down into a city - the garbage will scatter all over but eventually with much rain flushing it, it'll all flow down into the sea.

[Kirkland Laing]

Well the market has already lowered prices on houses, it has already weeded out most of the bad loans, people are out of their homes they couldn't afford and people are out of jobs they abused. Once there is an upturn in the economy which could be in a year, could be sooner people will be ready to buy those houses, hell people are already ready to buy those houses to sell later and make profit on.


Government will of course regulate (too late) but what it really needs is to have and use oversight which it had the opportunity to do before the shit hit the fan (with OFEO an oversight committee created to look over Freddie Mac) but certain politicians blocked the oversight of Fannie and Freddie.
http://www.youtube.com/watch?v=YL36nwCSYUM

F anf F had nothing to do with this Lyle. They're just a cog in the system, and were actually prevented from buying the dodgy subprime stuff by government regulation. Fannie lost 56% of her business in less than two years from 2003 onwards when the GOP allowed (freshly unregulated) mortgage firms to sell mortgages direct to (freshly unregulated) investment banks and similar financial institutions. F and F are only ever mentioned because they're the only way (other than an irrelevant 30 year old Jimmy Carter Act) that the GOP can tie this to Democrats, when in fact not one of the decisions that caused the current mess was made by a Dem, all being made by Republicans.

Once Wall Street got their hands on them they turned them into securities. But these securities still shouldn't have been allowed on the market except as junk bonds. Instead Wall Street firms bribed the (freashly unregulated) credit ratings agencies to give them a high rating. I'll go and get some of the evidence that's come out of the current hearings about this. Somebody emailed it to me but I junked it. There'll be a lot of this over the next months and it might be wort starting a thread for it.