Today in the economy

[Kirkland Laing]

I'm kind of getting into this late but let me take a shot here.

1. Democrat/Republican is interchangeable for blame here. There is plenty of blame to be spread around. We won't be able to get away from this until we can put a wedge between elected officials and lobbyists. What is your vote compared to hundreds of thousands of dollars for re-election?

2. I was against all of the bailouts from jump street. If you are too big to fail your to big to manage. Nationalize them and sell them off or let them fail. But since we did bail them out and the legislation protected the bonuses then I'm staunchly against the Gov't using a punitive tax. If they are guilty of fraud then prosecute them. But we set a dangerous precedent by canceling contracts and changing the tax code to be punitive. I really don't see what "fair" has to do with it.

Nobody complained about precedent when the government abrogated union contracts for their bailout. Why not do the same for bankers?

And military force is no use against terrorism. Quite the opposite in fact.

I assume you are referring to UAW and the bailout of the auto industry. Now just for the record I was against that one too. Considering that UAW pensions and inflated salaries are part of the problem was it too much to ask them to tighten their belt as well? Anyway the changing of UAW contracts was done in order to get the bailout not punitively changed after the fact. Do you not see the difference in changing a labor agreement in order to get a loan necessary not to go bankrupt and abrograting contracts in a punitive nature? I'm not defending the bonuses but shouldn't Geitner/Dobbs and every senator/congressman that voted for it w/o reading the bill all of said something a long time ago?

In regards to military force our leaders simply have not used it wisely. When given a well defined mission the United States Military can out perform most government agencies. Like I said no nation building and no regime change. Terrorist organizations need funding, training, equipment and safe harbor. Obama should put the world on notice. Any of the above mentioned will earn a punitive military strike. More importantly since most terror orgs originate from radical islam and the middle east lets get off foriegn oil. The more we can insulate ourselves from the region the better.

Detroit car worker wages only add a small amount to the cost of the car versus other car company labour rates, just a few percent, far less than the discount firms like GM have to give on their cars to get people to buy them versus better competition. The problem with Detroit for decades has been the management but they're still flying around in private jets. They can pass an amendment to the AIG bailout legislation or write new legislation -- either way people under investigation for fraudulent deals who've bankrupted their company should not be paid bonuses for doing so. It goes against everything America and capitalism is supposed to stand for. Politicians now claiming "it's in the legislation, there's nothing we can do about it" are full of it. It's not like AIG has any serious negotiating position, they're under investigation in two countries, bankrupt and 80% owned by the government. They can't make the claim that they need to pay those bonuses to keep valuable staff because the staff are the diametric opposite of valuable, qed.

Military force just creates terrorism. If you bomb any country that's helping terrorism you're just going to end up with a more radical government who'll give more support to terrorism. 9/11 was an attempt by Middle Eastern people to use force to change America's behaviour and make them less likely to interfere in their countries. How well did that work out? Bombing let's say Iran would just make the Iranian regime more radical than it currently is. US energy companies don't want us to get off foreign oil and they run US energy policy so no real attempt will ever be made to alter the status quo. America will continue to be involved in the Middle East for decades which will obviously spawn more terrorism.

[VictorCharlie]

Kirk, for one I find it curious the personal involvement you take in America considering that you don't fly the Stars and Stripes under your name. Do you live in the US? Secondly I'm not hearing you give reasonable solutions. If AIG is guilty of fraud then they will be prosecuted and then one way or the other the bonuses will be re-couped. If there is a legal means of getting the bonuses back then so be it. But to allow the feds to change the tax laws to punish is a dangerous step. If you know our govt then you know you give them a inch they will take a mile. Considering how inept our federal govt has been both past and present why grow their scope and impact? Lastly our military has been utilized poorly. We could make aiding and abetting terrorist groups so horrible a crime even Iran would think twice. Now I can safely assume this attitude doesn't suit you so what is your solution to dealing with islamic radicals? You can't really feel that there is the chance for rationale thought or real two way dialogue, do you?

[Kirkland Laing]

Kirk, for one I find it curious the personal involvement you take in America considering that you don't fly the Stars and Stripes under your name. Do you live in the US? Secondly I'm not hearing you give reasonable solutions. If AIG is guilty of fraud then they will be prosecuted and then one way or the other the bonuses will be re-couped. If there is a legal means of getting the bonuses back then so be it. But to allow the feds to change the tax laws to punish is a dangerous step. If you know our govt then you know you give them a inch they will take a mile. Considering how inept our federal govt has been both past and present why grow their scope and impact? Lastly our military has been utilized poorly. We could make aiding and abetting terrorist groups so horrible a crime even Iran would think twice. Now I can safely assume this attitude doesn't suit you so what is your solution to dealing with islamic radicals? You can't really feel that there is the chance for rationale thought or real two way dialogue, do you?

I used to live in the US and still pay taxes to the IRS which gives me a right to complain about how the country is run. There's no guarantee that AIG will be prosecuted for anything. The government has gone to great lengths not to open any investigations of Wall Street and will almost certainly continue to do so, something that greatly damages the US economy in the long run.

The US has a tax code with so many loopholes that if you do make a lot of money you can pay a single digit/low teens tax rate every year, and these loopholes have been gained by lobbying. I don't see why the country can be effectively cheated and looted but the first time it makes an effort to end the cheating and looting then changing tax laws is suddenly something you can't do -- it was fine to move things in the opposite direction for the last thirty years.

The governemt has handles the financial crisis ineptly because the mechanisms they used to have for regulating finance have been dismantled, most notably over the past seven years. There are some areas where the government needs to grow its scope and impact.

Bombing foreign countries will just create more terrorism, qed. Military action to prevent terrorism failed dismally in Iraq, Bush was reduced to putting terrorists on the US payroll so they wouldn't kill as many American soldiers. America can't say abetting terrorist groups is punishable by military action when America also supports terrorist groups, but in general if you try and use military force to enforce your will some people on the other end of that action are going to violently disagree with you. Even George Bush's Secretary of Defence has advocated negotiating with the Taliban.

In general I'd like to see America extend and prolong its position in the world for as long as possible and not piss it up the wall in as short a time as possible, but that's what America's leaders seem determined to do.

[VictorCharlie]

So like I said whats your solution?

[VictorCharlie]

On a different topic...Whats your opinion on a flat tax? Also use of income verus usage taxes (sales tax etc)?

[Kirkland Laing]

On a different topic...Whats your opinion on a flat tax? Also use of income verus usage taxes (sales tax etc)?

I'd be delighted to see everybody pay the same level of tax. I'd prefer a slightly progressive tax where high earners pay a little more but a flat rate would be an outstanding improvement on the current situation and I'd settle for that. I''d like to see, say, hedge fund manager John Paulson pay the same rate of tax as, say, the median US household*.

The median US household (Joe 150 million out of 300 million in earnings) made about $50 000 last year, and what with social security, medicare, income tax, State taxes, sales taxes and all the other taxes pays almost 50% of his fifty thousand in tax.

Paulson made $3.7 billion in 2007 and will end up paying about 5% of it in taxes. He'll also be able to defer payment for up to 30 years so that 5% will earn enough in interest to pay for itself. If Paulson's rate was the same as the average American there'd be a significant increase in tax revenue and he'd still make enough money to get his groceries in.

I'm not really bothered how taxes are raised but i'd like to see everybody pay at least a roughly similar rate.

[Kirkland Laing]

So like I said whats your solution?

Go back to the way we were before finance and banking were allowed to remerge early this century, something that hadn't been allowed since the Depression when FDR brought in rules and regulation. Keep banking and its deposits under a tight leash and don't let them bet their capital on risky investments. If people want to do that, let them do it but regulate financial firms like investment banks so that the failure of one or more firms can't blow up the system and cost taxpayers money. Put the trading of derivatives (securities based on things like mortgages, stock markets) under regulation too. They're the things that have bankrupted the banks and are cosing the taxpayer trillions. Put them under some form of regulation for the first time ever. Basically go back to roughly where we were before Reagan. It's not like the financial industry wasn't profitable then, it's that it was making actual profits then and not gaming the system. Regulate the system so that it can't be gamed.

Actually investigate bankers and politicians and prosecute them, give them actual prison terms in actual US prisons, not country clubs. That would end almost all criminality overnight, or at least wouldn't allow the entire system to edge into criminality. You'd still get the odd Madoff but with regulation these guys would be limited to tens of millions of fraud, not tens of billions.

In short make the US financial system and capital markets the most honest and transparent in the world, something that investors flock to and the reason they're so big, not let them edge the country towards becoming a banana republic as is happening now.


Increase taxes on the top 0.1% (people making tens of millions a year) to 65% for ten years to pay off the debt accumulated by the last eight years of diastrous/crooked governance. Then drop the rate to 50%. This would have zero effect on future economic growth. In the fifties the marginal rate for top earners was 90% and the US managed 9% yearly economic growth at the time. All this onsense about cutting taxes to increase growth is disproved by reality and has just ended up creating large capital bubbles in markets and consequent disasters. Plus earnings of the top 0.1% have gone up five or ten times since just 2000, so they're still earning far more at 65% tax than they were in 2000. Give a tax cut to 99% of Americans to redistribute income that's been redistributed upwards over the past 30 years. This is the only way to get things really going again.



Stop bombing other countries as a foreign policy tool. Cut military spending (two thirds of all US taxes) by about 80% and invest that money in alternative energies that don't involve hydrocarbons, creating untold millions of non-offshorable jobs that pay well. Basically pay US military wages and defence worker wages and end the hundreds of billions of welfare paid to the US war industry every year, in fact give the military a pay rise so they don't need food stamps to survive. Make sure there are no homeless veterans and they all get proper health care. Negotiate a treaty with other countries to limit weapons spending/work or abolish it. The US maintains its position and the world gets to spend military cash on useful things. Everybody would go for this for various reasons. The US empire is in the same situation the Brits were in 1918 where the war industry is now a huge cost to the country rather than a benefit, so America would benefit by far the most. Terrorism then takes carwe of itself. No interfering in other countries, no violent response, no large numbers of people willing to fund terrorists.

There you go, all problems solved. Nobody trying to bomb you, the economy fixed and the governemtn running the financial industry rather than vice versa.

[VictorCharlie]

I can get behind a lot of that. I am very concerned with the idea of cutting taxes with the national debt and a soon to be bankrupt social security and medicaire/medicaid. I don't pretend to be an economic expert but I don't understand how you lower taxes for anyone and dramatically increase spending to improve ones financial system. We obviously agree that our energy policy dictates a lot of our foreign policy. I just think you kind of get into a chicken before the egg scenario. I also see radical islam as something that is spreading out of the middle east. I am not so sure that simply removing ourselves from the region will totally alleviate the issue with islamic terrorists. I'm curious about your thoughts on health care?

[Kirkland Laing]

I can get behind a lot of that. I am very concerned with the idea of cutting taxes with the national debt and a soon to be bankrupt social security and medicaire/medicaid. I don't pretend to be an economic expert but I don't understand how you lower taxes for anyone and dramatically increase spending to improve ones financial system. We obviously agree that our energy policy dictates a lot of our foreign policy. I just think you kind of get into a chicken before the egg scenario. I also see radical islam as something that is spreading out of the middle east. I am not so sure that simply removing ourselves from the region will totally alleviate the issue with islamic terrorists. I'm curious about your thoughts on health care?

Social security is the only government programme in profit. It has two trillion in the bank. It won't need an extra dollar in taxes until 2041 at the earliest and even then will only need a $20 a month increase by everybody. But everybody will be earning hundreds of dollars extra then anyway and SS will have gone up much less than other expenses. SS is the best, most effective social insurance programme in the world. Britian privatised its pensions in the 1980s, something that ended in disaster for British pension plan holders as the newly-deregulated pensions industry robbed them blind. Pension companies were eventually charged with "mis-selling" pensions and fined a pittance for robbing Britain's state system and pension plan holders of billions. If I ever walk into a bank with a stocking mask on and a sawn off shotgun, rob the bank and am arrested on the way out I hope to be charged with "mis-selling" the bank and given the opportunity to avoid prison by paying a fine of 1.something % of the amount I robbed.

Unsurprisingly britian is now looking into a US-style SS system, along with all other major economies that haven;t already copied it.

Can you imagine if Bush had got his way and privatised SS in 2005? SS payments would now be slashed, millions would be destitiute, there's be huge pressure to bail out the system with more trillions of money etc. etc. Keep the bankers out of it. Things are already heading towards a banana republic as they are.


I'll do healthcare tomorrow as I've got to speak to some fucking American bankers now.