Quote: Original post by Oluseyi
Capitalism doesn't work without losers.

You're going to have to explain what you mean by this, because the central core of capitalism is that trade does not happen unless both parties deem the trade to be advantageous, i.e. win-win.

Quote: Original post by Oluseyi

Quote: If you got preyed upon and swindled, at the very least your credit scores shouldn't be punished for it, IMO.

Capitalism doesn't work without losers.

That statement is neither true nor relevant.

Capitalism is merely an economic system in which the means of production are owned by private individuals. It does not require losers to succeed. In fact, one could define a successful capitalist system as one in which nobody loses. The win/lose thing is more a feature of a free market system, but again it is not a requirement of a free market system.

The statement is not relevant because the original argument was regarding people who gambled with their rent money and lost. That's not capitalist, that's just stupid and greedy. Most of those who lost their homes because they could not afford they payments when they gambled that their assets would rise in value were not preyed upon and swindled.

Gambling does not work without losers. Never bet your rent money.

Quote: Original post by Oluseyi

Quote: Original post by Alpha_ProgDes
People in the poverty level get there taxes back in full anyway. So I'm saying the government keeps 10% of those taxes. If my FICA was cut in half, I'd feel alot better about spending as opposed to constantly checking my bank account. The rich can get a break too.

Have zero withholding, put the money that would have been withheld into a savings account, then pay your liability in full at the end of the year, having earned some interest on your contribution.

That's great at the end of the year, what am I to do until then?

Quote:

Quote: People losing houses left and right. So now those people needs more gov't assistance than before.

Losing your house doesn't mean you can't pay rent.

I used to live in MD. And rent and mortgage are not that far apart.

Quote:

Quote: We can give the businesses over 400 billion dollars (plus the stimulus!) but can't pay mortgages for a year (i would think paying the mortgages would be cheaper)????

The stimulus was a mistake. We should make another?

It's handling is a mistake. And all the stimulus has not been handed out yet. Nor has the TARP money. Putting the money in the hands of those who need to spend it is better than keeping businesses afloat solely.

Quote:

Quote: If you got preyed upon and swindled, at the very least your credit scores shouldn't be punished for it, IMO.

Capitalism doesn't work without losers.

When they lost their house, they were already "losers". I don't see how adjusting their credit scores has any bearing on that though.

Quote:

Quote: If you're getting such a major tax cut, then why do you need a tax refund too?

Tax refund? A tax refund is only issued when an individual has overpaid taxes - typically people who have tax withheld from their paychecks. If you pay in full at the end of the year, you never get a tax refund. You can still use a tax cut.

Everybody can use a tax cut. But if you're getting back 50% of what they currently take from you in FICA, then you don't need a tax cut.

Quote:

Quote: Original post by Alpha_ProgDes
Aren't we already borrowing heavily?

Shouldn't we stop?

The contemporary American "way of life" is fueled by credit, and it has led to the current recession. You can't seriously suggest that our government continue to engage in a credit-fueled buying spree (taking on everyone's debt) so we can feel a little bit better about ourselves.

Agreed. The mindset of spending and lavishly living = comfortably needs to change. My statement was a response to the previous poster, who made it sound like we weren't already heavily spending.

Quote:

Quote: Once you foreclosure on a house and have no one to buy it, how is that any better than having people stay in their homes and having the gov't pay it?

It's a lot better. The individual forfeits the equity vested in the house, the bank receives an asset that it can sell for at least fractional cost. It doesn't matter if it isn't bought immediately; it will be bought eventually.

True. But the crisis is because of toxic assets and people not buying now.

Quote: (The key weakness in your economic perspective that I see is an overemphasis on the individual consumer, and not enough focus on the economy at large.)

You call it "weakness". I can call frustration and consumer protection [smile]

Quote:

Quote: Given that those people are not controlling Wall Street or manipulating the numbers for financial forecasts. Yes it should work better.

No, it won't.

Risk is an important factor in investing, and lending is a form of investment: "I'll give you $X for Y months with interest of I each month so that you end up paying me back $(X + y * I)." Knowing whether the borrower is someone who pays his debts is important, so that you don't end up lending a large amount of money to someone who squanders it, reducing your ability to recoup your investment and then lend to others.

But isn't that assuming that the system works? Which it obviously doesn't. Also to clear someone credit report of that one debt in most cases won't affect a lenders or investors ability to ascertain whether or not that person or entity can pay back a loan. If anything, the correction allows them to better reach that conclusion.

Quote: Original post by HostileExpanse

Quote: Original post by Oluseyi
Capitalism doesn't work without losers.

Capitalism doesn't work when full of people who are paid to cheat either (AKA, all of those who got million-dollar salaries and comfy retirement packages while they misled investors and ultimately ran their company into the ground)....

Yes.

(The two statements don't conflict.)

What proportion of people losing their homes were genuinely swindled, and what proportion knowingly took on more debt than they could afford? What proportion failed to perform basic due diligence, and what proportion had risks deliberately misrepresented to them?

Are we also going to reimburse all of Madoff's victims? Victims of advance fee fraud ("419"/Nigerian Scams)? Even if you got scammed, well, shit. You got scammed. Sucks to be you. The only responsibility of the system (government) is to improve regulation so that it is more difficult for scammers to misrepresent themselves as legitimate, not to reimburse you.

Quote: Original post by capn_midnight

Quote: Original post by Oluseyi
Capitalism doesn't work without losers.

You're going to have to explain what you mean by this, because the central core of capitalism is that trade does not happen unless both parties deem the trade to be advantageous, i.e. win-win.

That's not the central core of capitalism - not even in ideal.

Quote: Original post by Bregma
Capitalism is merely an economic system in which the means of production are owned by private individuals.

This is the idealistic central core of capitalism. Of course, it bears comparatively little relevance to the way we actually engage in capitalism.

Quote: Original post by Bregma
...one could define a successful capitalist system as one in which nobody loses.

Please try, I'd like to see it.

Capitalism doesn't work without losers. Goods do not spring from nothingness into existence. Private individuals put their capital to work providing goods and/or services based on projected or continuing demand for them. Sometimes that demand doesn't exist, or evaporates - sometimes a superior alternative comes along. For private individuals to be able to leverage their capital in the market, competition must exist, and competition dictates that there be winners and losers. Otherwise you have a stagnant market in which only established participants may participate.

Quote: Original post by Bregma
The statement is not relevant because the original argument was regarding people who gambled with their rent money and lost. That's not capitalist, that's just stupid and greedy.

No, it's not. Risk is a part of capitalism. Sometimes you make a bold move predicated on a calculated risk that a certain phenomenon will continue long enough for you to earn a yield that will shore up your initial lack of sufficient capital. This is why entrepreneurs mortgage their homes to start businesses. Some of the greatest entrepreneurial stories involve people who took incredible risks and were fortunate enough to succeed, but most don't. Most lose.

Quote: Original post by Bregma
Most of those who lost their homes because they could not afford they payments when they gambled that their assets would rise in value were not preyed upon and swindled.

Ergo, they're losers. Why should we then subsidize their losses? They engaged in capitalistic enterprise and failed. So what?

Quote: Original post by HostileExpanse

Quote: Original post by trzy
The bill for the Iraq war will be dwarfed by the Obama administration's thoroughly non-stimulating spending.

You mean this war?

The cost of the Iraq war is known. No need to make up phony numbers. The current cost stands at over $600 billion and has been accumulated over 6 years. A staggering sum to be sure, but it pales in comparison to the 1.8 trillion dollar budget deficit for this year, with trillions more projected for following years. Already the economy has shed more jobs than Obama's team predicted it would without "stimulus" spending. The stimulus was a flop.

Quote: Original post by Alpha_ProgDes
That's great at the end of the year, what am I to do until then?

What do you do currently?

Let's assume that you currently have 23% of your income withheld against FICA, but at the end of the year your actual tax liability is 21%. You have effectively given the government a free loan for 2% of your income for a year. In contrast, let's say you looked at IRS tax schedules for the year previous, estimated that you would have 20% tax liability and put at least that much aside. That means that you would have use of 3% of your income over the duration of the year. Assuming 1.25% interest on the savings account into which you deposited your "set aside" amount and with compounded interest each month, at year's end you would have 20.3% of your income available to cover tax liability, leaving you to pay only 0.7% out of pocket. If you were prudent and set aside more than your projected liability - say the same 23% that you would have withheld otherwise - you'd end up with 23.34%, leaving yourself with a 2.34% surplus, 0.34% more than the 2% you got back from the government.

I mean, you realize that you really only pay taxes at the end of the calendar year (up to April 15), and that withholding is just asking the government to keep some of your money for you to pay your taxes when due, right? That you don't actually pay taxes per-paycheck, right?

Quote: I used to live in MD. And rent and mortgage are not that far apart.
Move. Downsize. Figure it out. What if you'd lost your job?

Quote:

Quote: We can give the businesses over 400 billion dollars (plus the stimulus!) but can't pay mortgages for a year (i would think paying the mortgages would be cheaper)????

The stimulus was a mistake. We should make another?

It's handling is a mistake. And all the stimulus has not been handed out yet. Nor has the TARP money. Putting the money in the hands of those who need to spend it is better than keeping businesses afloat solely.

Quote:

Quote: If you got preyed upon and swindled, at the very least your credit scores shouldn't be punished for it, IMO.

Capitalism doesn't work without losers.

When they lost their house, they were already "losers". I don't see how adjusting their credit scores has any bearing on that though.

Adjusting their credit score indicates that they made a poor investment, and that a prudent lender would take extra precautions before lending them money. Of course, the entire housing fiasco occurred because lenders weren't prudent and ignored poor credit scores, banks played hide-the-sausage with risk, and borrowers ignored their own poor fiscal health and took on more debt than they could afford. I read of a borrowing process in which the borrower simply declares their ability to afford - a stated income loan (also called a "liar's loan") at the expense of slightly higher interest. Read this New York Times article for an economic reporter's personal account of how he ended up in foreclosure, then pardon me if I'm not so quick to believe that everyone was "swindled."

Quote: Everybody can use a tax cut. But if you're getting back 50% of what they currently take from you in FICA, then you don't need a tax cut.

I'm trying to think of a situation in which someone gets back 50% of their withholding, and I can't. Who are these mythical people who get 50% tax returns?

Quote: True. But the crisis is because of toxic assets and people not buying now.

Houses aren't "toxic assets." "Toxic assets" is a euphemism for "mortgage backed derivatives we can't sell because nobody knows how much a fragment of a fragment of the value of a stock combined with fragments of fragments of other stock values, all backed by fragments of the values of several thousand mortgages is actually worth."

Housing purchases have ticked up slightly in past months. People who still have liquidity and with strong credit are taking advantage of bargain prices, and banks are having to take writeoffs to accept fractional values of houses. (Why? Because banks aren't in the business of selling houses. They prefer liquid assets - cash, stocks - that can be loaned and invested.)

Quote: You call it "weakness". I can call frustration and consumer protection [smile]

Hey, I'm frustrated, too. But I don't advocate blowing the whole system up because John and Sally down the street lost their house. Hell, I'm unemployed, and my benefits barely pay my rent (remember, I live in the most expensive city in the US), but economic fluctuations are market corrections. We lived through a period of irrational exuberance and now we're paying the cost. Asking that we shift that burden onto "someone else" (whether the government or foreign countries) only shows that we've learned nothing of the perils of "buy today, pay in 'the future'".

Quote: But isn't that assuming that the system works? Which it obviously doesn't. Also to clear someone credit report of that one debt in most cases won't affect a lenders or investors ability to ascertain whether or not that person or entity can pay back a loan. If anything, the correction allows them to better reach that conclusion.

Personally, I'm doubtful. You don't know how these people secured their loans. You don't know if they misrepresented their ability to pay (stated-income), whether they made estimations based on anticipated raises... I say leave the stain in.

Quote: Original post by trzy

Quote: Original post by HostileExpanse

Quote: Original post by trzy
The bill for the Iraq war will be dwarfed by the Obama administration's thoroughly non-stimulating spending.

You mean this war?

The cost of the Iraq war is known. No need to make up phony numbers. The current cost stands at over $600 billion and has been accumulated over 6 years. A staggering sum to be sure, but it pales in comparison to the 1.8 trillion dollar budget deficit for this year, with trillions more projected for following years. Already the economy has shed more jobs than Obama's team predicted it would without "stimulus" spending. The stimulus was a flop.

Nonsense. Obama got elected, and he generously repaid his special interest groups. What is the problem? Everybody wins, right?

The cool thing is, by dragging the economy further down, people will only be more willing to hand over their money and power to their glorious leader.

While we are at the naive economic questions, one thing I don't really understand, what would actually happen if the US declared bankruptcy, ie. stop returning foreign debt ?

I mean hyperinflation might sound bad but the US actually has good production capacity and skilled labour force, they should be able to replace the importers for consumer goods.

Only problem I see is oil/energy, which would be a big problem, and in quick period due to the ultra low currency, but exporting should rise, at least to EU and middle east, so some import of the oil could be returned.
And of course the standard of the citizens would fall dramatically in very small period of time but it's going to anyway, and falling gradually just means it will take longer to hit the bottom and start going up again.

Of course it cause could chaos inside the country, or at least a shock period and I'm certainly missing on large issues, not to mention that I doubt other worlds large powers will stand by idly watching their debt getting erased, but with so much money printed and debts, inflation is bound to happen, currency will be deprecated, taxes rise and the longer you keep the currency artificially high (eg. not backed by the production, but financial sector) the longer you prevent industry from recovering. Other world powers are already calling for a new reserve currency, how long till they dump USD by a really significant amount, especially if it looses it's status as oil trading currency ?
IDK, it would be interesting, if any country could pull this, US could due to the educated (and non educated) workers and (still) developed industry. Not to mention that not having access to all that oil would force the economy to find alternatives immediately, produce power efficient solutions, etc.
On the other hand, the entire economy could collapse without power, food production could shrink, accompanied with extremely high import prices - you could have another great leap forward.

I really know too little about US economy to make any claims, so it's only a question type hypothetical. From my own perspective - seeing how locally the financial sector fucked the industry completely around here and how the country couldn't survive 3 months without imports (from electricity to food), I can see the effects of artificial currency, and the worst of all is the fact that almost all of the credits have a clause that ties them to euro. So if we had the infrastructure anywhere near the US or the production capacity (relative to the size of course), I would be the first to march for a 'debt reset' option, but this way it's slow decay to a major shit hole produced by a struggle to keep the currency artificially high at the price of system illiquidity.

Quote: Original post by Eelco

Quote: Original post by trzy

Quote: Original post by HostileExpanse

Quote: Original post by trzy
The bill for the Iraq war will be dwarfed by the Obama administration's thoroughly non-stimulating spending.

You mean this war?

The cost of the Iraq war is known. No need to make up phony numbers. The current cost stands at over $600 billion and has been accumulated over 6 years. A staggering sum to be sure, but it pales in comparison to the 1.8 trillion dollar budget deficit for this year, with trillions more projected for following years. Already the economy has shed more jobs than Obama's team predicted it would without "stimulus" spending. The stimulus was a flop.

Nonsense. Obama got elected, and he generously repaid his special interest groups. What is the problem? Everybody wins, right?

The cool thing is, by dragging the economy further down, people will only be more willing to hand over their money and power to their glorious leader.

Obama try to keep consumption level,otherwise in EU situation will be much worse than now,especially in German and France,the main exporters from EU to US.Holland (afaik) has enough trade market on the East (Russia etc),but than smaller country than more probability of national economy default(just look what happens now in Baltic countryes).

Quote: Original post by Krokhin
Obama try to keep consumption level,otherwise in EU situation will be much worse than now,especially in German and France,the main exporters from EU to US.Holland (afaik) has enough trade market on the East (Russia etc),but than smaller country than more probability of national economy default(just look what happens now in Baltic countryes).

Ah yes, Obama is doing it for europe.

Why not? It isnt any sillier than the mainstream explanations.