Capitalism

[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

[Kirkland Laing]

...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

Show me exactly what the Democrats did to create the crisis, using facts and evidence. Don't just post a youtube of some guy blocking regulation on F and F. Explain to us exactly what part F anf F played in the crisis -- using facts and evidence now.

[El Kabong]

Just look at their fucking business models, they bough bad loans repackaged them and sold them off....they garunteed money to mortgage bankers and with Clinton demanding banks do more sub-prime loans (under threat of penalty) the banks eventually tried to make money off of F and F by making their commission and then getting money from F and F they KNEW they weren't going to get from the borrower.


But I guess that won't be enough for you....it never is

[Kirkland Laing]

Just look at their fucking business models, they bough bad loans repackaged them and sold them off....they garunteed money to mortgage bankers and with Clinton demanding banks do more sub-prime loans (under threat of penalty) the banks eventually tried to make money off of F and F by making their commission and then getting money from F and F they KNEW they weren't going to get from the borrower.


But I guess that won't be enough for you....it never is

Your above post makes no sense whatsoever. Your description of the relationship between banks, mortgage companies and Fannie and Freddie is one I've never seen before and as somebody who's worked in the financial industry for decades I can confidently say has no basis in reality. I can't even understand what you're trying to claim there.


Again Lyle, the current crisis originated in a bunch of bad loans made after 2002. Nothing to do with Clinton. Clinton called for banks to lend more to minorities (no penalties were ever threatened, if you claim they were provide facts and evidence) but so has every president since Carter including the current one. lending to monorities is actually good business for banks, very profitable. What happened after 2002 was that regulations on mortgages and what could be done with them were scrapped, resulting in a slew of bad loans.

Bush scrapped laws that made mortgage companies keep the mortgages they made for 30 years and allowed them to sell these mortgages on. This ended the mortgage peoples' need to make safe loans and resulted in an explosion of them. To sell the loans the mortgage companies gave tow or three year teaser rates that meant the mortgage payment was often less than rent money. Once the loans reset to the real rate the mortgagees' defaulted en masse causing the securities contrucrted of these loans to become toxic, worthless, causing the current mess. Here's a graph that explain this nicely. Note that the explosion in resets coincides exactly with the start of the current meltdown.




Here's a picture of the GOP fuckwits using a chainsaw and tree shears in a photo op trumpeting them scrapping mortgage and bank regulations, taken in 2002 :

[El Kabong]

....you want to think the Democrats did nothing to create this go right ahead. Barney Frank, Frank Raines, Christopher Dodd, Chuck Schumer etc.....oh they were all innocent which is why they got so much money out of Fannie and Freddie

[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.

[killersheep]

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.

1) I would like to see statistics that show higher taxes negatively impact employment.

2) Can you clarify that a bit for me? I'm a simpleton and didn't really understand. I still don't see how the "free market riding it out" fixes the problems created by "republicans, democrats, borrowers and lenders"

[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.

1) I would like to see statistics that show higher taxes negatively impact employment.

2) Can you clarify that a bit for me? I'm a simpleton and didn't really understand. I still don't see how the "free market riding it out" fixes the problems created by "republicans, democrats, borrowers and lenders"

1) I don't do much research on the net so I can't give you the statistics (maybe kirkland will help you out there), but I can explain to you why it is so - actually it's a known economic fact - it goes like this:

When government increases taxes, there would be lesser money to spend in the hands of the consumers (ie; disposable income), and consequently they spend less. As overall consumption is reduced, the sales of companies catering to them also suffers correspondingly, thereby leading to cut in production. When production is cut, generally there will be more layoffs then if would have been otherwise, and consequently, unemployment increases correspondingly, though not necessarily in a straightforward manner.

But keep in mind that this is just a simple economic model (that is, every other things being equal) and there are many other factors that affect employment. But in most case, increased taxation is usually inversely proportional to employment.


2) This is much more complicated issue that takes volumes to explain to ordinary folks. All I can say for now is that economic system is inherently made that everything ultimately leads to the most efficient, in a sort of survival of the fittest type of way, where the least efficient ones naturally die out in favor of the more or most efficient ones. This is the process that Lyle meant when he said that economy will clear itself up. Obvious example is any business activity: if you can't give your customer a cheaper and better quality goods than your competitors, you will simply lose out, right? This process goes on and on at every corner of the economy that businesses operating at any given moment are the winners or suvivors in this economic dog-eat-dog jungle. But that doesn't assure them that they will be the winners tomorrow because competition is an on-going, never ending economic process mercilessly cutting out the less efficient from the system. This ugly and merciless process is what we're seeing now. It has turned ugly because of the regulators' oversight, and this is what tend to happen when the economy is left alone by itself. This is the reason for the heated debates going on now as to whether more regulation is needed (which contradicts the free economy principle) or not. Obviously, because of what happened, the inclination of the authorities is for more regulation - fortunately - because as I've said before, economic cleansing process tends to be long and messy if left alone...

[killersheep]

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.

1) I would like to see statistics that show higher taxes negatively impact employment.

2) Can you clarify that a bit for me? I'm a simpleton and didn't really understand. I still don't see how the "free market riding it out" fixes the problems created by "republicans, democrats, borrowers and lenders"

1) I don't do much research on the net so I can't give you the statistics (maybe kirkland will help you out there), but I can explain to you why it is so - actually it's a known economic fact - it goes like this:

When government increases taxes, there would be lesser money to spend in the hands of the consumers (ie; disposable income), and consequently they spend less. As overall consumption is reduced, the sales of companies catering to them also suffers correspondingly, thereby leading to cut in production. When production is cut, generally there will be more layoffs then if would have been otherwise, and consequently, unemployment increases correspondingly, though not necessarily in a straightforward manner.

But keep in mind that this is just a simple economic model (that is, every other things being equal) and there are many other factors that affect employment. But in most case, increased taxation is usually inversely proportional to employment.


2) This is much more complicated issue that takes volumes to explain to ordinary folks. All I can say for now is that economic system is inherently made that everything ultimately leads to the most efficient, in a sort of survival of the fittest type of way, where the least efficient ones naturally die out in favor of the more or most efficient ones. This is the process that Lyle meant when he said that economy will clear itself up. Obvious example is any business activity: if you can't give your customer a cheaper and better quality goods than your competitors, you will simply lose out, right? This process goes on and on at every corner of the economy that businesses operating at any given moment are the winners or suvivors in this economic dog-eat-dog jungle. But that doesn't assure them that they will be the winners tomorrow because competition is an on-going, never ending economic process mercilessly cutting out the less efficient from the system. This ugly and merciless process is what we're seeing now. It has turned ugly because of the regulators' oversight, and this is what tend to happen when the economy is left alone by itself. This is the reason for the heated debates going on now as to whether more regulation is needed (which contradicts the free economy principle) or not. Obviously, because of what happened, the inclination of the authorities is for more regulation - fortunately - because as I've said before, economic cleansing process tends to be long and messy if left alone...

1) I understand this perfect world argument, however I can't seem to find a simply chart that tracks tax levels vs. unemployment.

2) Survival of the fittest implies a monopoly QED Rockafeller, this is not a solution either, and at this point would you agree free markets by themselves cannot solve the problems created by republicans, democrats, borrowers and lenders?

[Kirkland Laing]

1. Higher taxes don't neccessarily mean higher unemployment. Clinton raised taxes and created 22 million jobs in eight years. Bush cut them and created five, although that will probably be closer to four by the time he leaves office.

You'll find right wing nutjob organisations like the Heritage Foundation or AEI (funded by billionaires to argue for tax cuts for billionaires) which will publish studies showing that tax increases will kill jobs, but in reality that would only be the case if you raised the rate from 36% to 86%. The rate was actually 90% during the 1950s and 60s and US GDP was growing about 10% a year then, now it's 3 ish (when the economy isn't melting down anyway.)

So inreality tax increases aren't going to stop job creation or cause a drop in economic growth. In fact the actual evidence over the last two decades shows clearly that the tax rate is too low and that moderate tax increases are actually greatly beneficial to the economy.

2. The free market was left to sort out the last big market crash in 1929 and there was no intervention for a year, which caused the whole thing to snowball into a Depression. There is not one reputable economist who would claim that if governments hadn't intervened in the last couple of months that we'd have avoided another Depression. The Reagan-era free market philosphy is now over, governments are going to insist on much more effective regulation of financial markets otherwise another meltdown will just happen again in a decade or so.

[pacfan]

1) I understand this perfect world argument, however I can't seem to find a simply chart that tracks tax levels vs. unemployment.

2) Survival of the fittest implies a monopoly QED Rockafeller, this is not a solution either, and at this point would you agree free markets by themselves cannot solve the problems created by republicans, democrats, borrowers and lenders?

1) You're right about the perfect world assumption - things don't always operate as perfectly as the laboratory based theory might suggest. Generally speaking, the taxation-umemployment correlation holds. This is especially true during times of recession where any reduction in consumption will adversely affect the already battered businesses - and employment with it. But conversely, during good times, as my infallible economic adviser Kirkland's statistics has shown, consumers and businesses can usually absorb additional tax without adversely affecting employment. Actually during prosperous times, the government usually impose additional tax just to slow down things a bit, but they are aimed at trimming the excesses in the system - nipping them will make the economy more efficient which in turn stimulates employment. (Killership, if you need any charts, try asking Kirkland; if he can't find one, you can be sure they're not there.)

2) Free market can solve anything but - take note - in a very bloody manner. So in a practical sense, the answer is no. Because nobody would want to go thru an unnecessarily bloody purge in the system when it can be done in a more humane mannner. You can't just let all those big banks to fall one by one and let the whole world go thru an excruciating depression just to let the economy start on a clean slate, particularly when there are other much less bloody ways to do it. That defeats the very purpose of the economy - to enhance mankind's standard of living, and with it, his well-being...

[CFH]

I'm telling you fuckers, democratic Socialism. Get on board or get sent to one of our "re-education" camps.