Pissy over bail outs

[gumOnShoe]

It seems to me that for many of you bail outs have become the *new* Iraq War hot button issue for the next four years that you'll all dwell on and moan about no matter what.

And, given that you're all likely to bitch about it later I'll just say now, I supported the Iraq war, I still believe the outcome was better than the situation we replaced. I also supported and continue to support the bail outs.

At the same time I recognize that neither one of these endevours were planned or executed perfectly and we have a lot of paying back to do because of both. HOWEVER, the difference here is that regardless of whether unemployment hit 10% (which it did), the bail outs were necessary if we didn't want to have a great and global depression.

What we faced was just as bad and equally scary as a massive bank run. Had the entirety of the firms that were bailed out been allowed to fail then what we'd have right now is absolutely no flow of money between banks, hundreds more failed businesses and probably millions more out of work or with a severely decreased quality of life. The Depression lasted 10 years, and right now, even if we haven't totally reversed we've at least leveled out.

In case you were wondering, the next few years are going to suck. The Obama administration is going to continue to be cautiously optimistic in the hope that being that way will ease everyone and soothe fears.

You can argue right now that what needs to happen is that the flotsam and jetsam should be allowed to wash away, and on some level you are probably right, but if we allow everything to simply break apart it'll be a lot longer until everything comes back.

So, since we generally want to frame a question here, I'm curious as to how many of you think this nation would have been better off had we not bailed out the banks? I'm also curious as to how many of you actually agree with me.

To narrow it down, I'm talking specifically about companies like AIG getting bailed out, not the automotive companies which is another issue you can argue in and of itself in another topic.

[morefngdps]

There should have been just two choices: Go all the way with the bailouts or do nothing at all and let them fail.

I'd go with the second option and allow capitalism to self-repair. As these banks failed it would have created a huge power vacuum in the industry, allowing entrepreneurial banks to rise and fill the void over about 1-5 years. These new companies would learn from their predecessor's mistakes, allow for more competition, and be incredibly more viable than broken companies such as AIG.

If your company fails, then it FAILS. Why would the government be there to pick up the pieces, why not let a new, better company come in and take the reins?

[gumOnShoe]

At 1/6/10 09:11 PM, morefngdps wrote: As these banks failed it would have created a huge power vacuum in the industry, allowing entrepreneurial banks to rise and fill the void over about 1-5 years. These new companies would learn from their predecessor's mistakes, allow for more competition, and be incredibly more viable than broken companies such as AIG.

If your company fails, then it FAILS. Why would the government be there to pick up the pieces, why not let a new, better company come in and take the reins?

I can't help but feel that is stupidly idealistic. There is no guarantee any banks would come back in 1-5 years strongly. Its much more likely to have taken at least a decade, though both of our numbers are speculative. But the point is, the money would simply dry up and disapear. The consumer confidence in banks would drop and the total lack of loaning or money anywhere would keep people from depositing in any banks and they all would have suffered, just like in the Great Depression.

Finally, you suggest banks learn from other banks mistakes. Which also, is pretty laughable because history has shown that to be false. Also, it was due to a very small group of lenders that the companies were in trouble. Aside from that really risky loaning of loans, most of the banks were fundamentally sound.

Also, the government picks up the pieces when the issue becomes a public problem. If a plane crashes it doesn't just affect the passengers and pilot, it affects whoever it lands on, the family of those who die, the company that owned the plane the people who did business with that company etc.

[morefngdps]

At 1/6/10 09:24 PM, gumOnShoe wrote:
I can't help but feel that is stupidly idealistic. There is no guarantee any banks would come back in 1-5 years strongly. Its much more likely to have taken at least a decade, though both of our numbers are speculative. But the point is, the money would simply dry up and disapear.

What money would dry up and disappear? You mean the available credit to people?

With a huge vacuum the already existing, yet not large enough/stupid enough to be affected by the problems the failing banks are having, would easily rise up and fill in the space. The only matter there is how quickly the banks can expand to fill the gap, which is why I said 1-5 years for predominant regional banks to rise.

The consumer confidence in banks would drop and the total lack of loaning or money anywhere would keep people from depositing in any banks and they all would have suffered, just like in the Great Depression.

Banks expanding so quickly tends to lead to easy loans for people, especially when the fed drops the interest rate (which they did, and was necessary at this time.)

I fail to see how the lack of loaned money would lead to people not depositing in banks. Yes, consumer confidence is lowered for a time, but banking is a necessary industry for people (much like automobiles), and over time that would be restored. This would be a limiting factor on how much the new banks can grow, not a bank killer.

Stop invoking the Great Depression corollary to Godwin's Law.

Finally, you suggest banks learn from other banks mistakes. Which also, is pretty laughable because history has shown that to be false. Also, it was due to a very small group of lenders that the companies were in trouble. Aside from that really risky loaning of loans, most of the banks were fundamentally sound.

Uh, examples of history showing that to be false?

Example of my point being true:

I'll take from your great depression. One cause was that farmers bought far too much equipment on credit during the war, after the war demand sharply fell so much so that they didn't need the equipment and no longer had the means to fund their purchase.

Farmers no longer do this.

Also, the government picks up the pieces when the issue becomes a public problem. If a plane crashes it doesn't just affect the passengers and pilot, it affects whoever it lands on, the family of those who die, the company that owned the plane the people who did business with that company etc.

I don't see the metaphor here. Maybe I'm just dumb.

Banking industry = plane crashing?

Maybe you've never taken a logic class but, if that's not a false analogy I really don't know what is.

[Elfer]

The problem is that the bailout has only temporarily leveled you out. It's not like money was actually pumped into the economy, the government just bought up a bunch of worthless assets for seven hundred billion dollars so that the banks wouldn't fall apart right away. The problem there is that money was already spent before the financial crisis began.

You're not seeing an increase in productivity, and you're certainly not seeing anything even resembling an increase in national savings. Right now the US is driving itself dangerously close to a point where investors will lose confidence in the US dollar, and then you'll really be screwed for a while. The only way to get around this is to cut spending and increase taxes to stop debt from piling up. Unfortunately for you, this is the least popular political move possible, and any politician that makes it will get slammed by the opposition.

Basically, you're all going to get financially screwed for the sake of a popularity contest. Too bad.

[gumOnShoe]

At 1/6/10 10:01 PM, morefngdps wrote: What money would dry up and disappear? You mean the available credit to people?

The available credit to banks and for people. If banks can't get the loans they need overnight then there's a systemic failure for the entire industry, which is what the bail out was engineered to stop.

With a huge vacuum the already existing, yet not large enough/stupid enough to be affected by the problems the failing banks are having, would easily rise up and fill in the space. The only matter there is how quickly the banks can expand to fill the gap, which is why I said 1-5 years for predominant regional banks to rise.

But those banks aren't likely to rise into that power vacuum soon, or take on any of the loans that were considered risky and they don't bring new capital to the market. And again, the loans that need to be lent out to small businesses don't get lent out for 1 - 5 years. How does that affect who has money and who can deposit?

The consumer confidence in banks would drop and the total lack of loaning or money anywhere would keep people from depositing in any banks and they all would have suffered, just like in the Great Depression.

Banks expanding so quickly tends to lead to easy loans for people, especially when the fed drops the interest rate (which they did, and was necessary at this time.)

There's no guarantee they'd be able to expand quickly at all. That's an assumption on your part. I'm saying its not likely they would. Nor is it likely they'd loan anyone any money. That's why our economy is moving much slower. Lending is down. There are tons of people who want to buy houses and cars who simply aren't being loaned the money to do so.

I fail to see how the lack of loaned money would lead to people not depositing in banks.

People who don't get checks can't deposit money. All of the money comes and goes from the banks at some point because that's how the fed decides to issue money. If the banks stop lending there is no new capital and venture businesses are the first to go. Then, what you have is a rolling fall where markets dry up slowly and companies have to cut workers which means less money and less businesses and finally deflation. Once the economy starts to deflate, its almost impossible to stop. People make less money, people buy less, businesses let go of more people, etc.

Yes, consumer confidence is lowered for a time, but banking is a necessary industry for people (much like automobiles), and over time that would be restored. This would be a limiting factor on how much the new banks can grow, not a bank killer.

You underestimate the ability of the common man to be paranoid and not trust the banks.

Stop invoking the Great Depression corollary to Godwin's Law.

In this case its related, so too bad.

I don't see the metaphor here. Maybe I'm just dumb.

The point I'm making is that a bank crashing will not just be 1 bank crashing. It'll be the bank and anyone who relies on the bank and anyone who relies on someone who relied on the bank etc.

At 1/6/10 10:09 PM, Elfer wrote: The problem is that the bailout has only temporarily leveled you out. It's not like money was actually pumped into the economy, the government just bought up a bunch of worthless assets for seven hundred billion dollars so that the banks wouldn't fall apart right away. The problem there is that money was already spent before the financial crisis began.

Yes. The bail out was only to stop global ruin. It wasn't there to make everything perfect again. As to whether we stay level rise or dip at this point, I don't know. But this is infinitely better than what it could have been and would have been.

You're not seeing an increase in productivity, and you're certainly not seeing anything even resembling an increase in national savings. Right now the US is driving itself dangerously close to a point where investors will lose confidence in the US dollar, and then you'll really be screwed for a while. The only way to get around this is to cut spending and increase taxes to stop debt from piling up. Unfortunately for you, this is the least popular political move possible, and any politician that makes it will get slammed by the opposition.

I agree, but that's another issue. No one would have invested in the United States had our economy crashed and our money would have been massively devalued if people feared we couldn't make payments back. It would have been a lot worse.

Anyhow, I'm hoping the bush tax cuts just expire and the trillion dollars is funneled back into the system. Its probably the safest political move. "We're just letting the dying policy of a bad president end. These taxes aren't new."

Basically, you're all going to get financially screwed for the sake of a popularity contest. Too bad.

I can't predict the future, but at least we have a chance at one now.

[Elfer]

At 1/7/10 07:28 AM, gumOnShoe wrote: Yes. The bail out was only to stop global ruin. It wasn't there to make everything perfect again. As to whether we stay level rise or dip at this point, I don't know. But this is infinitely better than what it could have been and would have been.

Eh, global ruin is a pretty harsh prediction. All that would have happened would have been a bigger initial hit in the US, and a reasonable hit in other nations who owned US assets. I think you're making a vast overstatement of the effect this would have had on other countries, since most countries besides the US would still be willing to loan money to people with viable business plans, since that's what they were doing before anyway.

The reason that the banks in the US got screwed is that they loaned money to people who had no way of paying it back so that they could buy stuff that wasn't worth anything. That, and of course rampant government spending without real production. Yes the bailout has superficially helped in the short run, but those toxic assets are still worth nothing and the government can't pay back that debt if they keep doing what they're doing.

I agree, but that's another issue. No one would have invested in the United States had our economy crashed and our money would have been massively devalued if people feared we couldn't make payments back. It would have been a lot worse.

This is the point I'm trying to make: People still fear that you can't make payments back, investors are going to lose confidence in the dollar, and your money is still going to be devalued. All the government did was print imaginary money, called it savings, and handed it to the banks. Why do you think China is building so much infrastructure right now? They know it's not "worth" what they're paying for it, and much of it is mostly unused right now, but when the US economy does fold, they'll at least have buildings, roads and bridges instead of a heap of worthless t-bills.

In any case, now would be a good time to divest yourself from any US equities you might be holding on to.

Anyhow, I'm hoping the bush tax cuts just expire and the trillion dollars is funneled back into the system. Its probably the safest political move. "We're just letting the dying policy of a bad president end. These taxes aren't new."

Yeah, I'm sure that's how it's going to end up being spun in the next campaign.

[gumOnShoe]

At 1/7/10 09:08 AM, Elfer wrote: Eh, global ruin is a pretty harsh prediction.

All right, the U.S. and places like Canada that rely on the U.S. for exports would have been really hard hit and unemployment would have been much much higher.

since most countries besides the US would still be willing to loan money to people with viable business plans, since that's what they were doing before anyway.

There's still issues with how prevalent the US currency is. I don't know how that would have affected the global market, but oil would have been really funky.

The reason that the banks in the US got screwed is that they loaned money to people who had no way of paying it back so that they could buy stuff that wasn't worth anything. That, and of course rampant government spending without real production. Yes the bailout has superficially helped in the short run, but those toxic assets are still worth nothing and the government can't pay back that debt if they keep doing what they're doing.

And you have people like more above who seem to think a collapse followed by a period of easy lending will fix the problem, whereas that's exactly what happened last time. The economy started to sink early last decade, everyone was encouraged to spend when they shouldn't have been and we ended up with a shitty bubble.

I'll take anemic or very slow growth at this point over a total collapse and roller coaster ride.

This is the point I'm trying to make: People still fear that you can't make payments back, investors are going to lose confidence in the dollar, and your money is still going to be devalued. All the government did was print imaginary money, called it savings, and handed it to the banks. Why do you think China is building so much infrastructure right now? They know it's not "worth" what they're paying for it, and much of it is mostly unused right now, but when the US economy does fold, they'll at least have buildings, roads and bridges instead of a heap of worthless t-bills.

Its a problem I'm still very worried about, and its yet another reason to point out that the bailouts aren't the real problem. They were an artificial stabilizer that have given us an opportunity and time to fix this. Now that people think we appear to be on safer ground though, they think everything should be building again, but we still have problems to fix.

- The tax collection problem still needs to be fixed.
- Regulations need to be put back in place that prevent risky lending.

In any case, now would be a good time to divest yourself from any US equities you might be holding on to.

If everyone does this we'll be in worse shape though. So I'm not sold on the idea. Then again, I'm a U.S. citizen.

Yeah, I'm sure that's how it's going to end up being spun in the next campaign.

Here's to hoping they expire, regardless of the rhetoric.

[Samuel-HALL]

All companies, corporations, and individuals should be held accountable for every decision made and every will enacted. The bail outs should not have happened. Those companies who made poor business decisions and unsound investments should have failed miserably. And yes, every single employee who worked for those companies should have lost their jobs and pensions and 401k. I know it's rough, but it's also just. The right thing is often not easy. It's even harder when we live in a culture that, for fifty years now, has encouraged failure and punished success; even harder when we are run by a government who knows that a deep depression would free our nation from the grips of ever widening government control. Do not forgot that the reason our government proposed the bailouts is the same reason our government proposed the patriot act - to expound and widen federal power and control.

It is impossible to support the bail outs and also support personal responsibility and accountability. If one chooses the side of socialist ideals and supports the bailouts, then so be it. That same person, however, cannot pretend that they support logic, responsibility, or justice. It's one or the other, baby.

[poxpower]

At 1/7/10 12:03 PM, Samuel-HALL wrote: And yes, every single employee who worked for those companies should have lost their jobs and

pensions and 401k. I know it's rough, but it's also just.

It's not "just".
It's bullshit. It's just Enron again. You have a bunch of greedy guys running a company and when it fucks up, they don't care because they're already rich beyond measure.

So everyone under them takes a hard hit and they walk away unscathed.

It's a huge mess that was brought about LEGALLY but a bunch of dudes at the head of huge companies. You can't suddenly punish hundreds of thousands of employees for these guy's stupidity.
The worse part is that we can't do anything. Salary caps? Big fucking deal. You can't jail a guy for running a company like a dumbass if he did it legally, so what do you do if his company employs 300 000 honest workers?

They've chosen to bail them out to buy some time so they change their habits, but that hasn't worked too well as they've just payed back the money with more imaginary money and some are raking in huge bonuses.

Bankers in any country have way too much power given the nature of their business.

to expound and widen federal power and control.

For what?
?
??

It is impossible to support the bail outs and also support personal responsibility and accountability.

Well they did irresponsible things under a legal system, what can you do?
It's like the government forgot to make it illegal to kill 7 year olds. Once it's done, what can they do? Retroactively jail you?

Those bankers will walk away Scott-free and there's nothing anyone can do and they don't give a shit whether the economy fails completely or not because they're swimming in money already. They're basically ransoming the American people for more money :o

[Samuel-HALL]

At 1/7/10 03:26 PM, poxpower wrote: It's not "just".
It's bullshit. It's just Enron again. You have a bunch of greedy guys running a company and when it fucks up, they don't care because they're already rich beyond measure.
So everyone under them takes a hard hit and they walk away unscathed.

I'm not taking the side of idiot businessman who couldn't even follow basic principles of business. Don't get me wrong. Personally, I think the idiots should be tried and jailed. They operated on a system of non-value, and that's what they received. The point that I am making is not one of defense, but of consequence. Not on an emotional level, but a logical one.

A company existed. It's owners and operators made poor and often unethical business decisions, leading to the financial collapse of the company. Shitty investments and idiot practices made once economically viable companies into just the opposite. That is what happened, and that's allthat happened. Happens every day. Dozens of times a day, probably. It's the cycle of a business, and also an economy. The only thing that makes this any different is that the companies that failed were very big companies, and that some of the shitty decisions these companies made were influenced and encouraged by tax incentives.

It's a huge mess that was brought about LEGALLY but a bunch of dudes at the head of huge companies. You can't suddenly punish hundreds of thousands of employees for these guy's stupidity.

No one is being 'punished'. It's simply a logical consequence to an event that happened.

They've chosen to bail them out to buy some time so they change their habits, but that hasn't worked too well as they've just payed back the money with more imaginary money and some are raking in huge bonuses.
Bankers in any country have way too much power given the nature of their business.

So would you say the bail outs have not achieved the recourse that were promised, when they were first presented?

It is impossible to support the bail outs and also support personal responsibility and accountability.

Well they did irresponsible things under a legal system, what can you do?

You could let their companies face a free market. Hey, even better would have been if Corporate America and the federal government had not worked hand in hand to make that kind of market impossible. Those companies were not economically viable. That's why they failed. You can mark it down to any reason you want. Poor leadership, bad investments, ignorant ideals.

All the bailouts did, in my opinion, was sustain and preserve the political and economical infrastructure that will allow companies to bloat and rot all over again. Only now, the federal government has a vested stake in ensuring, no matter what, that these companies stay afloat. They have demonstrated outright defiance against the will of the market, and the ideals that made us a first world country to begin with. What of competition? Nothing at all? Just preserve them for the sole reason that they're big? Preserve them because they once held the hope and image of a successful company? No matter how many new laws you have to write, or how much it costs?

[poxpower]

At 1/7/10 03:47 PM, Samuel-HALL wrote:

I'm not taking the side of idiot businessman who couldn't even follow basic principles of business.

Well they did something right because they're at the head of multi-billion dollar conglomerates :o
They just got greedy because laws enable it.

No one is being 'punished'. It's simply a logical consequence to an event that happened.

Yeah you're punishing Americans for the greed of a select few.
It's over, those guys have already won. Now you have to think about how to serve the American public. Forget about getting back at those guys or their companies, they're untouchable.

Unless some rogue vigilante starts shooting them.
>_>
<_<

hmmm

So would you say the bail outs have not achieved the recourse that were promised, when they were first presented?

I have no idea but I hear "no".

Those companies were not economically viable. That's why they failed.

That's why they have to change the laws, not just let the companies die.

Just preserve them for the sole reason that they're big?

They employ a lot of people and so it's kind of like welfare to bail them out, except you keep people working on... something.
Something not very productive from what I gather.

The money might be better spent turning a couple of investment bankers into pothole-fillers but hey, whatchagonna do?

[Samuel-HALL]

At 1/7/10 05:03 PM, poxpower wrote:

At 1/7/10 03:47 PM, Samuel-HALL wrote: I'm not taking the side of idiot businessman who couldn't even follow basic principles of business.

Well they did something right because they're at the head of multi-billion dollar conglomerates :o
They just got greedy because laws enable it.

Well I would agree with you, on that point. The federal government enabled greed in the private sector to such a ridiculous point that they all started to believe it would remain viable. It did not, however.

No one is being 'punished'. It's simply a logical consequence to an event that happened.

Yeah you're punishing Americans for the greed of a select few.

I personally don't feel losing your job because a company shuts down in a gigantic atrocity that requires the federal government to throw their weight around enough to write and enact brand new laws dictating what private business can and can't do. I don't think losing your job because a business ceases to be viable is so effing horrible that the federal government needs to buy up the private sector 'for the good of the working American'. The fed doesn't, last time I checked my history, do anything to help anyone other then their own selves and own power. The depression that a non-invasive government would have allowed would have been a wonderful restructuring of the market. It would have been the end of decades of corrupt business decisions and enabling federal laws.

Those companies were not economically viable. That's why they failed.

That's why they have to change the laws, not just let the companies die.

They were not justified. The entire reason the bail outs were pushed was because it allowed the federal government to circumvent and manipulate the natural flow of the market - which is exactly what they had been trying to do for decades anyway. The market was fucked up by the federal governments policy on what the private sector was 'legally' allowed to get away with...only to have the federal government step in to 'save' the economy.

All they've done is preserve the system that allowed it to happen in the first place, and establish a precedent that encourages and requires market manipulation to avoid a massive depression.

Just preserve them for the sole reason that they're big?

They employ a lot of people and so it's kind of like welfare to bail them out, except you keep people working on... something.
Something not very productive from what I gather.

Oh, they're working. On producing bullshit goods and services that no one wants, with a price tag no one can afford. Thank you so much for saving gm! Thank god I still have the opportunity to purchase a vehicle that costs twice what I make in a year! God forbid the company below GM pick up the business and the customers and the employees.

The money might be better spent turning a couple of investment bankers into pothole-fillers but hey, whatchagonna do?

Rickshaw drivers, employed by pothole-fillers.

[Elfer]

At 1/7/10 05:46 PM, Samuel-HALL wrote: Oh, they're working. On producing bullshit goods and services that no one wants, with a price tag no one can afford. Thank you so much for saving gm! Thank god I still have the opportunity to purchase a vehicle that costs twice what I make in a year!

This reminds me of an outstanding Ford commercial I saw recently. The people in it go on about how Ford quality is equal to Honda and Toyota, and they sum it up with "If they can't beat Ford, then Ford must be hard to beat."

Good job guys. You've basically managed to say "In some ways, our company is not worse than our Japanese competitors."

[Imperator]

At 1/7/10 05:46 PM, Samuel-HALL wrote: Oh, they're working. On producing bullshit goods and services that no one wants, with a price tag no one can afford. Thank you so much for saving gm! Thank god I still have the opportunity to purchase a vehicle that costs twice what I make in a year!

While I may be the only example of this:
I drive a Ford Escort. Used to drive a Honda Accord.

And in my experience, Honda can kiss my ASS!

I've only driven 3 cars for any significant amount of time but let me say that given the choice, I'll buy Ford for the quality, reliability and generally low maintenance of the vehicle.

That said:
The Honda's engine was absolutely fantastic.
After 2 years of driving the Accord the battery died on me, must've been sometime in 2006. The battery was the ORIGINAL battery, and it's an 89 Accord. So battery life gets a BIG SMILEY FACE from me.

The drawbacks just seemed to be everywhere else:
Apparently after spending all their time making a superb battery and engine, Honda ran out of money and decided to just build the rest of the vehicle from papier mache, because the damn thing broke down more often than the gas needed to be filled. The engine itself being rather durable was perfectly fine, everything else was rusting off to the point where I visited the local mechanic almost weekly.

And I swear to god, the rust on the outside of the thing must have been a product defect, because every Accord I see has rust in the exact same places as mine. 89 Accords, 94 Accords, brand spankin new Accords, to the point where I'm wondering if it isn't just intentional, like buying pre-faded pre-rippped designer jeans.

The final off-put is the fact that because it's an import, repairs cost a fucking arm and leg. So every trip to the chop shop results in replacement parts that make me wonder whether it wouldn't just be cheaper to make the friggin part myself.

On the flip side:
The Escort gets about the same milage.
Repairs are cheap.
While I don't expect the engine or battery to be made of the same Super-durable material as the Honda engine, everything else seems to be made of the same quality instead of tinfoil and spitwads. As a result it's never let me down, despite being only a couple years younger than the Honda.
And everything else is comparably identical.

And if nothing else, at least when tits go inevitably up and I need to send the Escort to the shop I know that replacing the windshield wipers won't require me to take out a bank loan.

So when it comes down to it, is at least based on a personal experience, however limited or naive it may seem, I'd wager the whole "domestic is CRAP, foreign is QUALITY" is more of a hogwash stereotype and party line than an actual factual based scruitiny of quality. I'd bet there are as many shitty cars being run off of Honda's line as there are quality cars on GM's line....lest we forget that the GM Geo was the very definition of "fuel efficiency" well before it ever became a major issue and selling point.......

[Dawnslayer]

Okay, I'm just going to point something out here. Take it how you will.

The American auto industry:
-Daimler-Chrysler - Got a bailout. Still had to sell Chrysler Corporation to somebody else.
-General Motors - Got a bailout. Went under anyway; now under majority government ownership.
-Ford Motor Co. - Did not ask for a bailout, although their business was just as bad. And they're still here.

Feel free to dispute the implication of this.

[gumOnShoe]

Hey guys, what part of auto bail out not this topic did you not understand?

They are very different issues, and this isn't going to degenerate this way. If you want to talk about the auto bailout make a new topic.

[LazyDrunk]

If banks were once too big to fail, wouldn't that be an admission of guilt for lack of government oversight? Shouldn't these businesses have been broken up by anti-trust laws, if that were truly the case?

Fuck, even the term bailout signifies a losing battle. Patch the fucking boat.

[Der-Lowe]

At 1/6/10 10:09 PM, Elfer wrote: The only way to get around this is to cut spending and increase taxes to stop debt from piling up. Unfortunately for you, this is the least popular political move possible, and any politician that makes it will get slammed by the opposition.

The fiscal contraction will spoil what the bail outs are trying to reduce: the impact of the crisis on the Economy. It would be an especially poor public policy decision to do this now, because there is nothing to mitigate the impact of the fiscal contraction, because you are in a liquidity trap. Moreover, the worse prospects for the Economy will surely affect Investor confidence, reducing autonomous Investment, and further increasing the fall in GDP, and increase in Unemployment.

[Elfer]

The hit that investor confidence would take from contractionary policy is nowhere near the hit it's going to take if people lose confidence in US currency, which will happen if the government keeps running at a wild deficit with no savings and no added production.

In reality, contractionary policy should have been used for years now when you guys were running that big inflationary gap, but the fed kept acting expansionary. The solution, however, is not to continue making the same mistakes until the market collapses in on itself. The solution is to do the hard thing that will fix your problems in the long run.

[Samuel-HALL]

At 1/7/10 10:43 PM, Imperator wrote: While I may be the only example of this:
I drive a Ford Escort. Used to drive a Honda Accord.
And in my experience, Honda can kiss my ASS!
I've only driven 3 cars for any significant amount of time but let me say that given the choice, I'll buy : Ford for the quality, reliability and generally low maintenance of the vehicle.

It's not that I contest the quality and craftmanship of any one brand over the other. As you said, I'm sure piece of shit automobiles roll off the lines of car companies all over the world, on occasion. All vehicles of all brands, due to market manipulation and inflation, cost thousands of dollars more than they should. That was the only point I was making. The federal government exerted much energy to make sure that such a company remained viable, even when it wasn't.

At 1/8/10 11:26 AM, LazyDrunk wrote: If banks were once too big to fail, wouldn't that be an admission of guilt for lack of government oversight? Shouldn't these businesses have been broken up by anti-trust laws, if that were truly the case?

Exactamundo.

At 1/8/10 02:49 PM, Elfer wrote: In reality, contractionary policy should have been used for years now when you guys were running that big inflationary gap, but the fed kept acting expansionary. The solution, however, is not to continue making the same mistakes until the market collapses in on itself. The solution is to do the hard thing that will fix your problems in the long run.

The powers that be in the American government know that there is only one solution. The deep collapse that our economy is requiring is what they government is trying to prevent - not because they give a good fuck about anyone losing their jobs or their homes or their lives, but because that collapse would strike a deep and permanent blow to their grip upon the private sector.

[Dawnslayer]

At 1/8/10 07:09 AM, gumOnShoe wrote: Hey guys, what part of auto bail out not this topic did you not understand?

It was at the end of the post, where the words started running together. I missed it.

[Der-Lowe]

At 1/8/10 02:49 PM, Elfer wrote: The hit that investor confidence would take from contractionary policy is nowhere near the hit it's going to take if people lose confidence in US currency, which will happen if the government keeps running at a wild deficit with no savings and no added production.

A run on the dollar would be expansionary, not contractionary. If it does not generate inflation, it increases the US' net exports, because the real exchange rate improves. If it does generate inflation, then the current zero interest policy starts working, because it brings negative real interest rates.

In reality, contractionary policy should have been used for years now when you guys were running that big inflationary gap, but the fed kept acting expansionary. The solution, however, is not to continue making the same mistakes until the market collapses in on itself. The solution is to do the hard thing that will fix your problems in the long run.

The US hasn't experienced inflation, in 30 years, and is definitely not experiencing any of the sort right now. I don't know what you are talking about.

[Ravariel]

At 1/10/10 12:27 PM, Der-Lowe wrote: The US hasn't experienced inflation, in 30 years, and is definitely not experiencing any of the sort right now. I don't know what you are talking about.

We haven't experienced overinflation, but we still experience a natural inflation of about 3%.

http://www.inflationdata.com/inflation/I nflation_Rate/CurrentInflation.asp

[chairmankem]

At 1/8/10 11:26 AM, LazyDrunk wrote: Fuck, even the term bailout signifies a losing battle. Patch the fucking boat.

And I think that this is the overall significance of the bailout. The United States economy is losing traction to those of other countries bit by bit, and people seem to forget that the ship is slowly sinking, or at least starting to lag behind the other boats.