Does anyone think this is a good idea? It doesn't seem to produce any long term jobs. Is it mainly to destroy capitalism and move towards socialism?
Does anyone think this is a good idea? It doesn't seem to produce any long term jobs. Is it mainly to destroy capitalism and move towards socialism?
The biggest spending bill in US history is going to be the Iraq War. This brought incalculable damage to the US.
"Mainly to destroy capitalism" might work as a punchline but not as an argument.
The stimulus bill is common sense policy after 8 years of reckless disregard and economic (so-called) solutions like tax cuts for the wealthy which have left the US is financially dire straits.
It's basically investment in the US infrastructure which has been steadily eroding for years.
On edit, here is a video of Obama laying out his plan. http://www.truthout.org/012409Bvideo. Please watch. Which part is objectionable?
Why is 1 trillion dollars for the war in Iraq A-OK, but investment in the US is not?
For me it is a bad idea. And you are so right, capitalism is not allowed to take its major correction, and we are now trying to save something that should have allowed to crumble, by socialism. The Big Banks were BAD economy. Just the mere fact that its executives thought it OK to still continue with paying themselves big bonuses, says how BAD it has become. Completely out of whack with reality. We need new banks that are transparent in their dealings, that we can recognize as banks for the people when you walk into the bank, rather than banks for its executives.
Not arguing one way or the other at the moment, but I believe throwing up the cost of the Iraq War in your argument is a red herring. I've never seen any evidence that defense spending played any role in creating the recession. A number of factors contributed to it, but not defense spending.
Furthermore, whether one agrees with the spending or not, defense spending creates jobs. Jobs are not only directly created, but also indirectly created through defense contractors and positive economic impacts upon communities near military installations.
Agreed. In fact, defense spending would actually revive the economy, as money would be circulating among manufacturers and jobs would be created as you have indicated. This is felt in Iraq by the communities who are being employed by the military, either in jobs, or provision of services.
I absolutely have seen economists of national repute citing the Iraq War for being a drain on the economy that contributed to the current crisis. You can google as well as I can so I'll let you get to it. There is also the common sense factor -- the Iraq War money, if not spent, would theoretically still be in the coffers, ready to go to the stimulus package. Not a red herring at all.
Your second point: Military spending (let's call a spade a spade) creates some jobs but not as efficiently as spending in other areas, since most of what is produced -- bombs and hundred million dollar fighter planes etc -- cannot be used in any constructive means. It is basically welfare for military corporations. Whereas spending on infrastructure and investment in the future -- roads, bridges, schools, renewable energy research, etc. is actively used by everyone.
These bailouts and stimulus plans are going to cost us a lot more than the Iraq War. Please not that defense spending does not mean the Iraq war only.
Also, these problems were not caused by tax cuts, they were caused by government intervention. Do you know how the crisis started? It was because of bad loans being made by banks because there was a high potential on return. It was high risk, high reward, but the problem was that they knew the government would back them if the loans failed, so they went ahead and made the bad loans in the interest of their companies (you can't blame them for that.) The government was way too involved in the system because of Fannie and Freddie, GSEs that guaranteed these loans to the banks. Note that Fannie and Freddie were created by FDR, a Keynesian and not a conservative. Also not that the left-wing was the one that was pushing for a bigger Fannie and Freddie, which led to this mess.
The other major problem comes in with the Federal Reserve system. Greenspan's low rates allowed for all this artificial growth (the bubble) and it was all eventually bound to fall.
Not exactly. (On edit, I overlooked the bailouts -- but the point still holds.) Iraq war's eventually monetary cost is expected to be 1 trillion dollars. Stimulus package asks for 900 billion. And don't forget that the stimulus package get the US more health care coverage, more investment in the future, etc -- things that save money in future.
(Not to mention:
-the incalculable human costs of the Iraq War-- the ruined lives, the high rate of suicide of soldiers, the tens of thousands of disabled US citizens it created, the years of Post Traumatic Stress Syndrome to be suffered, & all this means to the families involved, etc.
-the incalculable human benefits of the stimulus package-- healthier children, financially better off working families, jobs, less national worries from less reliance on foreign energy, etc.)
Yes, but what about all of the other bailouts? They all add up to way more than $1 trillion. Also, theis government intervention will only create more market distortions and perhaps even a trade war, which will cost us even more indirectly.
Don't get me wrong I do not and have never supported the Iraq war, but I also do not support this stimulus. Socialized healthcare and such is not good as in the end it only hurts the people through taxes and loss of freedoms.
About national healthcare, you should rethink your position. Every developed country besides the US has it, and it leads to more freedom, not less (much more economic freedom, for example) and greatly helps, not harms, people (especially low income working people with children) and countries in general.
About this stimulus package, let's turn to Nobel-prize winning economist Paul Krugman. He says this stimulus package is vital to avoid deflation, is not too big but may be too small, and that the danger to the economy and the US as a nation doesn't come from the stimulus package, but from obstructionist Republicans being led by right wing media dittoheads that are the destructive and dangerous force in this crisis.
All you need to do is to study the Canadian healthcare system, and perhaps you may change your mind about freedom. When you go socialist, there are freedoms that are sacrificed, i.e. the right to the very best doctor there is. With Medicare this is presribed to you, and since the really good doctors do not want to be paid less than they think they are worth, they will try their best to contract out of the scheme, OR to move to the United States. Another freedom that is sacrificed is the medication that is prescribed to you. You may prefer to get the patented medicine, whereas the scheme will only compensate you for the generic version. Etc. Etc.
The US is a capitalist country. What it has built up to date has worked well. If there is any problem at the moment is that it is out of balance due to excesses that need to be corrected. To prop up these excesses, is not going to correct the imbalance. Common sense and we do not need a Nobel-prize winner to tell us that. The Banks have become too big, when you try and do your very basic transactions you do not have a face in front of you to deal with anymore. Banks need to be broken down to their bare essentials, back to the old way of putting your savings in the Bank, instead of the complicated financial instruments, and investment products, etc. etc.
I think you are dead wrong. The ULK has had socialised health care for 60 years and it works. It means that, if you are sick, you get treated. Sure you might have to wait if your illness is non-urgent. You can choose to pay extra and go private should you so wish. The point is, however, that you GET TREATED - regardless of your insurance status. To many British citizens (including me) the US system of healthcare is a complete disgrace. It is not efficient - look at your health insurance liabilities - and it is certainly not equitable.
Chris, I think that is a bit idealistic. I know of friends from the UK who make arrangements to have their operations in the Middle East, as they are worried about germs in surgery theatres in the UK. I have heard of friends from the UK who had their surgery in other countries, as the doctors that fit into that "same size fits all" system are of the opinion that the surgery can wait, whereas a second opinion in a second country says differently. UK and US are two vastly different countries. Imagine what it would be like if US citizens would be instructed to pay the same income tax as UK citizens. Think there would be another civil war, remember the original big feud between US and UK at the beginning of the US history about taxes?
I don't know what you think our income tax rates are, and why you think the US is so vastly different - when you take into account personal allowances, tax bands and local taxes, there is not so much difference. I think you need to look again at your history - the war between the US and the UK was not about tax rates at all. It was far more complex, but even taking the tax point - it was about taxation without representation.
I thought that a number of the UK movie stars elected to move to the US as tax rates are much more favourable in the US than in the UK? Perhaps I am to be corrected in this then? I also thought that the US was more of a capitalist country with certainly much lower tax rates than in Canada. That is why Canadians like to work in the US as the ambitious yuppie types in Canada cannot stand the socialist type of Government with huge taxes. I always thought the tax rates of Canadians and UK citizens were comparable. Both countries being more focussed on social services. But maybe I was wrong in this and need to be corrected then.
The base tax rate here is 22%. Now, when you consider that this includes health provision and pension provision it is not very high at all. There is also a personal allowance (ie non taxed) of £6500.
There is a higher rate of tax (40%) for higher earners which is why the super-rich choose to live abroad. The US is not really that much different (35%), though the rate kicks in at a higher level.
The fact remains that the US system of health is ridiculous. It means that millions of people have no entitlement to health provision and it means that HUGE sums are paid by employers in health insurance. Even the most ardent capitalist politicians realise it is unsustainable.
I found the following OECD 2005 data:
Well, that is a bit confusing and it really doesn't seem to compare like with like.
Yes, the US has lower tax rates - no doubt. I don't think they are that much lower and I certainly don't think that they provide the same services.
Most people in the UK are firmly of the opinion that the NHS is a good thing and woe-betide any politician who advocates moving towards a US style private health system. It is inefficient and inequitable - there is absolutely no doubt about it.
If you want to look at some stats then consider the WHO rankings. The US spends about 14% of the GDP on health (about 2.5 times more per head than the UK) and ranks 72 out of 191 in the 'health efficiency' table (the UK comes in at 24).
You can also consider various performance indicators - infant mortality rates for example, and you will find that the US is pretty damn poor.
Just because every developed country has it does not mean its good. Look at the cost that the people in these countries are paying for healthcare in terms of taxes and freedoms and you will see that it isn't as great as it sounds. What we need to do is embrace free market healthcare, which we currently do not have, by lifting regulations and taxes on businesses and people, which will make it more affordable to all.
As for Paul Krugman, he is award-winning, but again that doesn't mean hes right. He is a Keynesian and Keynesian policies have only proved to fail since those ideas were really put to place in the 1900s. It is still popular among some, but it is bound to fail as socialism and government intervention is only bankrupting the E.U., United States, etc. You also need to realize that this deflation is caused by a drop in demand which is a normal outcome of a recession. The recession was caused by Keynesianism and more market distortion will only lead to another, worse bubble forming. The best thing to do is pull through the rough patch now in order to prevent an even worse rough period in the future. There are some good kinds of stimulus to help the markets such as tax cuts because they don't distort the markets, but all bailouts and such do is help the failing and hurt the successful- which really isn't a fair idea and it certainly isn't capitalism.
Also, there are tons of award-winning economists that oppose the stimulus or would have had they been alive. Need examples? Google Friedrich Hayek, Milton Friedman, Peter Schiff (commentator), Ludwig Von Mises, Adam Smith, Marray Rothbard, Carl Menger, Henry Hazlitt, and tons of others. Larry Kudlow is another person against the massive stimuli. Basically, all the true capitalists, Austrian economists, Supply-siders, Chicago School economists, and free marketers are against it.
@Bikerman, you need to really look at how much of that tax is going towards healthcare. In the United States, taxes are still there but that is because we spend on a lot of other things that other countries don't spend on. I am against a lot of this spending as a believer in free market capitalism and small government and I am opposed to the income and corporate tax in general.
When I looked further it would appear that corporate taxes in the US are higher than in the UK, so this probably fits in with being more of capitalists than the UK. The stats provided before is probably limited to personal taxes. Another factor would also be benefits, such as in South Africa and Canada you do not get taxed on the money that you pay for medical services in excess of a certain percentage of your taxable earnings, you can then claim the balance with the necessary documentation. Not sure whether that is also the case in the US.
I am all for this too. And you are right of course. In Canada for example Income Tax offices are of the nicest you can find in the world (i.e. money is misspent on infrastructure), there are layers of Government and other bureaucrats in all the social service offices, including education, taking away from where the money should be targeted.
I think this stimulus package is a good idea - regardless of whether or not it helps the economy. As a truck driver I go all over the country, and to quote Johnny Cash, I've traveled every road in this here land. And I can tell you that our roads and bridges are in serious need of overhauls and upgrades. If this spending package gets that done, I'm all for it.
We depend too much on foreign oil. If this spending package gets us onto clean, renewable energy sources, I'm all for it.
Our schools are failing, they are over crowded and in some places the buildings are falling apart, especially in poorer neighborhoods in the inner cities. If this spending bill gives our kids a boost, I'm all for it.
And since our government is already responsible for roads and schools, and already subsidizes the energy infrastructure in this country, I don't see where the socialism argument comes into it.
And on the topic of socialized health care - I make about $700 a week. I pay about $35 a week for health insurance. If my taxes get raised by 5% to pay for government provided health care, I will still be paying about $35 a week. My health insurance provider tells me what doctors I can see, and what procedures I can have done. If the government takes over health care they will tell me what doctors I can see and what procedures I can have done. So, as far as I can see it doesn't matter who runs the health care system - I'm still going to get screwed, and still going to have to pay the same amount for the privilege.
With all due respect, this is a very ignorant response. You need to realize that all of the money for those things is going to come out of your pocket as well. Not only that, but the current stimulus has a lot more than just infrastructure spending and energy. Also, if the economy fails and all of this money is simply created to fund these programs, you will also see inflation, which is the indirect tax to your wallet.
The socialism argument comes in when the government tries to intervene even more and move even farther away from capitalism. The public school system and infrastructure systems are already both socialized, but the stimulus' other parts are socializing the private sector in areas the government should have no right to intervene.
Infrastructure is important and I agree we need to invest in that, but first we really need to cut other spending that is not necessary. This stimulus just has too much pork and it really is too costly even after the cuts.
And if we ease regulations and cut taxes for you and stop favoring certain companies over others, you will have more money in your pocket and competition will drive down prices at the same time. How does that sound?
Good point. And I can imagine the same with bailing out of the banks. We will just get screwed in a much bigger way. Government bailing out and protecting the Banks (with money of the people). The Banks being the guys who are to raise capital for Government to spend on projects. Talk about conflict of interest!
And if all of those things were privatized, they would still come out of my wallet in the form of tolls, school tuition, and higher energy bills. One way or another they still have to be paid for, you don't get anything for free.
Here is a breakdown of the spending in the stimulus bill.
I don't see any socializing of the private sector here. What I see is increased funding for government programs that already exist in order to provide loans and grants to private industry to fund growth in those sectors.
Listen, idealistically, I'm a free market Libertarian. I'd love to see the government shrunk down to nothing and free market ruled by economic Darwinism. But I also live in this world, not an idealized utopia, and I have to deal with the practicalities of life and politics as they currently exist. And what currently exists is an economy that is imploding. With every monthly unemployment report, every new story about layoffs and plant closings people pull in on their spending - either because they have no money, or because they are afraid that they will be the next to lose their jobs. When people stop spending, business stops making money, and they start laying off more people, or closing their doors and going out of business, which just leads to the next depressing round of news stories and makes people clutch their pocketbooks all the harder. It's a downward spiral, a feedback loop leading toward Global Depression.
The only way to get us out of the loop is to inject a large amount of money into the economy to create new jobs, to get the unemployed working again, and to get consumer confidence up so those people who still have jobs will start spending again. Since the Multi-National Mega Conglomerates don't seem willing to risk the cash to shock the market's heart back into pumping again the only other organization with that sort of money and power is the government. Therefore, in a time of crisis, we have to work with the tools available to us to get things moving again.
So SPEND, SPEND, SPEND! Get us moving again, get the money circulating, get us out of the economic ICU, and we can worry about the doctor's bill later.
The Big Bank Bailout was a huge failure. That was a step in the wrong direction because it did get the government directly involved in private enterprise and propped up failing a business model. The Auto Industry Bail out - meh... I'm still not sure how I feel about that one. On the one hand if the Big Three had crumbled they would have taken a huge chunk of the economy with them... on the other hand, they screwed up big time and should have had to pay the piper.
This new Stimulus package I accept as a necessary evil. It injects cash into areas we have been neglecting for years, and does it just when the economy needs it most. To go on with the medical analogy - under normal circumstances running a large amount of electrical current through your body would be a very bad idea... but when your heart has stopped beating you sure as hell hope there will be someone on hand with a defibrillator- "CLEAR!"
And you never responded about the part of the economy failing. Do you really think it is fair for the government to bankrupt the people after it bankrupts itself? - because that is essentially what will happen if we continue this trend of living beyond our means and spending money like it grows on trees.
ALL of the is socialism. Socialism is the opposite of captialism and it is when the government intervenes in the markets. A lot of these governmental programs hurt our markets and they are forms of socialism.
As for the loans and grants, the thing is the excessive loaning of this money is what caused this crisis in the first place. Greenspan's low rates allowed for excessive growth and the creation of the housing bubble. Because of the government's intervention in the markets we are forced to face this crisis and the best action is to try to just go through it. We may have to struggle through, but we will get through. If we continue to simply do what we did before all we will be doing is creating an even bigger bubble with even more artificial growth that will lead to an even greater crisis.
Not only will we create another bigger bubble, but we will also create a huge debt for our children and as soon as China and other U.S. security investors decide to no longer buy new bonds it will turn into exactly what happened to Bernard Madoff. Oh and there is also the social security mess which is another HUGE cost thanks to socialism and keynesianism. WE HAVE NO MONEY. WE NEED TO REALIZE THAT. Keynes theory is very short-sighted and does not work in the long run. Don't believe me? Look at its implementation since the ideas of the theory were really put into practice by the U.S. in 1913 (creation of the Fed and yes I know Keynes wrote his theory later, but the central bank is a key part of Keynes theory, so I will just start with 1913)- recession of early 20s, Great Depression, recessions of late 50s, early 60s, mid 70s, early 80s early 90s early 2000s and now this. Yea, Keynesian really works....
This mess was created by these policies that have led to bigger and biger bubbles and it will only lead to another one.
Exactly! So of course it is in the interest of all Governments to prop up the Banks, because if the Banks go under they do. Obviously we have a conflict of interest situation here.
I have to speak from my own personal experience, because I am not an economics scholar. So before my argument can be compromised for its ignorance, I want to admit to it. But its not blindness.
I have lived in france, and I have say people are better taken care of by their government. They would probably complain that there isnt enough competition on the free market, IF they could stop enjoying the life that a socialized economy brings them.
As their recent elections reflected a shifting balance towards that pro-american direction, maybe thats what is happening to them. But I only want to use them as a contrast because Americans often quote the hassles of the british system in order to argue against socialism. I rarely hear an example from the more successful socialized economies like in the scandinavian countries being used against socialism either.
I have to think that the current argument that americans have for safeguarding a free market is that we want to keep the option open that one day they will win the big gamble (hopefully before death), whether at the gas station, or on the free market in our own enterprises.
Hardwork can go a long way to making you happy and even rich, but in a toss up, it can also be the most depressing thing that happens to YOU(forget puberty) if the forces against you end up beating you down into a corner. Risk isn't rewarded in real life the way it is in the movies.
At the base, I think socialism aims for a foundation of security in the basic needs. Why can't this be achieved with a capitalist system. If its just words, lets change them.
Capitalists can call themselves Competists, and socialists can call themselves Benefists. With a change in word association maybe the two will come together for a newly evolved system, with competitive benefits. Who isnt happy?
I think the differences between capitalist and socialist are much more than words. Capitalism has worked for a long time in the United States. I think it is still an ideal when it is associated with the ideal of minimal interference of Government in business and less taxes. Millions of people have emigrated from Europe and other countries where there is lots of socialism, to the US, for reasons of capitalism. It would have to be a significant change in the US before it will go for socialism. Socialism has been alive for a very long time in Europe and the UK. I can imagine that similarly it would have to take something really drastic for it to change to capitalism.
But capitalism wasnt invented in the US. Europe had developed it owns versions, before the US came into existence. And their systems evolved toward a humanist model, whereas the US evolved toward the biologically proven, survival of the fittest.
It seems more like its a laissez-faire system that the US is stuck on protecting. Even when it fails, as it has done here before, socialist intervention from the government saves it, and then those interventions are removed so that the old system can operate the way it did.
The significant change for me, would be TO go to socialism. The preconditions necessary seem to be in place.
I always thought capitalism started when the US decided to let go of Europe and dumped all the tea into the harbour? It wasn't going to pay taxes any more, went to war with the UK and that was the end of socialism in the US. What preceded it was feudalism in Europe and the UK, not capitalism? An enormous gap between your land owners and princes and lords, and the poor people. But capitalism in Europe? Are you sure about that?
You seem to be quite mislead on what capitalism and socialism actually are.
First off, capitalism did not cause this crisis because how do you explain, the Federal Reserve, Fannie and Freddie as GSEs, Greenspan being able to set the rate, high taxes, etc? These are all socialist and nationalist entities so DO NOT blame this crisis on capitalism.
Second, look at the history of capitalism and that of socialism. Not only does socialism take away freedom and subsidize failure at the sake of success, but is also fails in the long run because it is not affordable. Socialist programs are also historically of much lower quality than their capitalist counterparts.
Agreed. Socialism goes totally against the grain of selfishness in man, the same selfishness that motivates capitalism. If you are going to get paid at the end of the month, regardless whether you work or not, what would you do? And how would the person who does the hard work feel about this? I would imagine that person would become demotivated, and decide that perhaps the one who is on unemployment has the better idea. Why slog for a socialism type salary, when you may just as well live on social insurance and pay very little taxes.
I couldn't say as surely as I would like to. But I would have to be more trained to feel absolute about anything. And Im not really trained in economics.
I heard the story of the Tulip Bubble in Hollad back sometime in the 1600-1700's.
Heres a wiki story on it: http://en.wikipedia.org/wiki/Tulip_mania
These contracts on the tulips, and the resulting crash that stemmed from greed and futures selling, albeit exaggerated, seem to be a higher level of capitalist free market wizardry.
I cant say its the same as the US capitalism, but it doesnt sound like the other stuff either.[/quote]
I doubt more training would make a difference, if anything, it could possibly just put you on the wrong track. I am very cynical about economists, who in my own mind can fudge figures any way it suits them.
I think you have a good point here. The current dilemma is much of the same, except we are dealing with a credit bubble following credit mania.
i do not konw ,however, as a graduate i have a strong sense about my future job will be depressing.
I would still like to blame the capitalist engine behind the crisis. The crisis exists in countries with a socialized system. So I will easily accept that the crisis is not only "affecting" capitalistic entities.
But I would like to ask you where you see the crisis as beginning? It didn't begin with Frannie or Freddie, or the Fed. They are players in the collapse. And if you dont believe Greenspan was playing to the capitalist tune, then how do you explain him recanting publicly that he made a mistake in thinking the free market could take care of itself?
Yuxan, what are you a graduate in? And what country?
Not sure what you mean as the first part conflicts with the second part. Are you sure that the failure has anything to do with capitalism, or more of lack of capitalism through super financial mismanagement? I would be interested to know what you think the real problem was for the banking crisis? What started it exactly? As I doubt it has been spelt out properly in detail anywhere.
You are probably right, in that the basis of the crisis hasn't been spelled out clearly anywhere. I think the mess is probably too huge to tell where it began. I remember when it was being blamed on futures traders about a year ago. Now its not being blamed on anyone so much, because that only seems to be a waste of time to pinpoint the exact location of where the nuclear weapon exploded, so to speak.
I would like to defend my point of view that this is a problem of a capitalist system. The reason I think I sounded confusing was that I mixed in the same paragraph, a statement that I concede to this argument, that Socialist economies are feeling the crunch also.
BUT, i wanted to say that only to strengthen the point that I understand these two systems are not completely separated from each other.
In response to the advice that I should look at the history of capitalism and socialism, I did, I do, and I will continue to watch, read, and interpret. But this advice didn't help the point that 'socialism takes away freedom and subsidizes failure at the sake of success.'
Socialist societies have as much if not more freedoms and successes as/than a purely capitalist one, that is, if you have a view of success that isn't based solely on profit margins. Socialist economies have produced as many if not more 'success stories', by most definitions of this label, as/than capitalist ones. I think this is probably so because there are more people in the world who were developed under socialistic systems. That ratio, if it exists would be helpful, if anyone reading this has it: ratio of humans 'grown' under capitalism vs socialism.
I doubt the line can be drawn clearly enough for a survey though.
Next point I believe was affordability. I would like to rip deeply into this one, but I believe every news source available will show a good example of how NEITHER system can claim they are operating 'affordably'. If someone was covering the homeless system, you might catch a glimpse of an affordable economic structure.
And finally, the quality differences. When 10 percent of the population get goat cheese, and the other 90% get nut cheese to spread on their toast, I believe arguments of state-wide quality cease to function properly. And that is just the cheese. There are also the other thousands upon thousands of amenities that a small portion of the people get to enjoy, yet claim they are birthright of the other portion of the population who wont ever get to even see them.
I think this point has been argued better by someone else, but does it make sense?
We are stuck on the planet together. We all need the same basic things to live. If greed separates those who prosper from those who fail, then not only is the system ******, but so are we who live in it.
+++this triple posted for some reason+++
+++this triple posted for some reason+++
I'm curious. The US had an ENORMOUS military expenditure during the last year, of really serious gigantic proportions. How was it funded? Could it be that this could have been responsible for the huge loans from the big banks? Or that there is some link here? I'm still totally perplexed about the reasons why the banks needed bail-out packages, and even more perplexed that the media is not asking questions about this.
Your confused that the media doesn't actually attempt to report real truths, or discover the reason behind national events? I'm shocked.
Thanks Xanatos. Am glad to know I'm not alone. How does one know that you are getting the truth though? How do we know that the Banking crisis was a hoax by the US and UK in order to get the oil price down? How do we know anything at all? How does one every get to the real truth?
The only way I really know is to listen to/read the news story from several places and try and weed out the bias by connecting similarities. Not always easy though.
Lol, you say it didn't begin with the Fed or Fannie and Freddie and say it began with Greenspan. You do realize Greenspan was the head of the Fed right? Capitalism does not support the Fed because it is a central bank that controls the monetary supply and the markets. You really can't blame capitalism for Greenspan's stupid actions because under a capitalist economy, the Fed would never have existed and he would never have had those powers. Most people don't realize this due to Keynesianism, which is a sort of "new capitalism" because it supports central banking and government involvement in the markets. In reality, capitalism does not support these meddling entities though.
Now to answer Dean Hills question about why the banks need bailing out and whether the militaristic expenses played a part:
The war really has nothing to do with why the banks needed bailouts. The reason is tied back to the housing crisis. What happened was that loans were made left and right like crazy due to low rates by the Fed and governmental agencies such as Fannie and Freddie. What ended up happening was companies started to prop up that lent money to virtually anyone, regardless of whether or not they could pay off the loan. These companies would then sell these mortgages to Wall St. and the big banks, who accepted them simply because these companies had track records that showed to pay out. The only reason that they did pay out was because the value of houses continued to increase as demand soared. Wall Street would then repackage many of these mortgages and sell them to other investors. Everything was dandy until demand for houses dipped and with it house values started to go down. What ended up happening is the unqualified people who took the loans now couldn't pay their loans back (they could earlier just because of the appreciation on the house and the build up of equity, which they could use to pay the mortgage.) This meant that a lot of the loans that Wall Street bought defaulted and they basically just lost all of the money they paid to buy that mortgage. At the same time, all of the companies and people who invested in CDOs (the mortgage backed securities that Wall Street sold) got no return on investment (ROI) because all the mortgages were defaulting.
That is why the banks needed to be bailed out. The mortgages they owned were not paying out and further more, once the market realized that, the demand for houses dipped drastically and with it so did price. Now, these banks and other investors are stuck with mortgages that are worth more than the actual houses that they are for (they call these mortgages "toxic".)
The military expenses really have nothing to do with it because those are just government expenditures. In order to make those the United States sold securities such as bonds to investors and foreign nations as well as printed money and indirectly taxed the American people through inflation. That is a really unfair and bad thing for America, but it is another story.
Hope this answered your question- ask more if you need clarity, I kind of rushed through this. It is really important to know how all of this is happening though and I would love to explain it to anyone who wants to learn. Understanding this crisis and how it unfolded really opens ones eyes and in the end it is what makes you realize that free market capitalism is the best option for this country and not socialism.
I think it will lead to socialism.
Where is the actual evidence for this? I would like to see the list of loans and how they defaulted. I believe there is a smoke of truth to it, but I also believe that the Banks needed these instruments to bale themselves out of trouble that they had already been in because they had become too big. I would have imagined the first thing that the citizens of the United States should have asked through their elected representatives when these bail-out packages were hurried through, were to appoint a Bank Investigation Body, to investigate everything surrounding the crisis in its nitty gritty detail as well as the workings of the Banks, their financial status and health as well as to set up a Report-Back body to advise citizens of the United States of the exact facts surrounding the bail-outs. Right now as I see it there is no real paper evidence for the problem nor application of the solution.
What do you mean by where is the evidence? It is all around us and everyone, including people from different economic schools, agree that the housing bust was the start of this crisis. I don't understand your question. These are facts, not something I made up. CNBC has a recent documentary on it called "House of Cards" which also explains the same things I did. You can watch it for free on hulu if you want.
The reason the banks needed bailing out because these losses were too big to hold and if they weren't bailed out they would have gone under. Whether or not the government should have let them fail is a matter of opinion. Personally I would've liked to see less bailouts and more failures because it is better for the long run.
You also mention the lack of tracking in where the money went and that is a very good point. That is why it is absurd when Obama just says we need to pass this stimulus as fast as we can, regardless of the fact that no Congressman could read it all because as we saw with the first bailout the money often tends to get lost. This is a huge flaw of government, in that money is always lost in the bureaucracy and it is another argument for why the free market is better.
I need to see the actual statistics. If the stock market goes down, you can see it, the stock prices go down. So if the Bank claims that they need to be bailed out, I would like to see statistics backing it up. How do you know that it is not a Trojan Horse of other bad finance deals that are hidden in the bad debts? So if the general population have to vote for a bail-out package surely they should expect some back-up in lists available to say exactly what the break-down of the debts are by the Bank/s they are bailing out. Also, report back on the bail-out and how the money has been employed. If you buy stock and shares (which the Government has done on behalf of the people) you become a shareholder of that company, and its dealings need to be reported on in a transparent way. As shareholders especially of the bad loans, the shareholders should have full and open disclosure of all those debts.
Thanks. I am really worried about it. One of my chief worries is that the reason how those housing loan bad debt bubble came about was because of lack of detailed accounting in a transparent way. There are plenty of checks everywhere, but lack of complete openness in the form of accounting of loans. Especially the bad ones now. So tracking is really important.
No one is arguing with you that the bailouts should've been more transparent, I think everyone including the government agrees with you on that.
As for the statistics, they are literally everywhere. The fact that housing prices have taken a huge hit as the bubble collapsed ( http://mysite.verizon.net/vzeqrguz/housingbubble/united_states.png ), the fact that the loans defaulted when people couldn't pay them (look at the foreclosure numbers) and the fact that we have these toxic assets all prove it. There really is no argument on this issue.
Thanks. I am really worried about it. One of my chief worries is that the reason how those housing loan bad debt bubble came about was because of lack of detailed accounting in a transparent way. There are plenty of checks everywhere, but lack of complete openness in the form of accounting of loans. Especially the bad ones now. So tracking is really important.[/quote][/quote]
It is important to track the bailout money since it is taxpayer money, but in regular circumstances it is virtually impossible to keep track of every single loan made because it would simply cost the government too much. What we need to do is return to free market principles and make it clear to the banks and big business that they will no be bailed out. We need to cut government ties with organizations such as Fannie and Freddie so that the companies know we won';t back them. As soon as that happens, they will naturally be more careful before making stupid deals.
I don't particularly like the strong move towards big government. The US government is rather inept when it comes to knowing what's best for the people (although they certainly like to think that they do). They also consistently demonstrate incompetence with effectual and responsible spending of our dollars. Why would we possibly want more of intervention???
Exactly .... especially when Governments are notoriously inept at managing money ... give them a trillion dollars and millions become short change! Total disaster in the making ...