Sorry I didn’t read all the posts above, but I quickly started to think Yadiyadayada, its the fault of this or that etc…
And I’ve said this a thousand times already I know, but if anyone has even the slightest idea of Fiat currency and times before that, then the picture is clear enough without having to scrape around for reasons of fault as there is simply one.
Without Fiat currency the process of speculation is severely inhibited as you would need physical silver or gold coin in order to begin to speculate. I’m sorry to say I’m quite tired of repeating things, but there are few economists that would disagree, Fiat currency in the hands of greedy people, i.e. everyone will only ever create such bubbles.
They knew this when they wrote the U.S. constitution, which was the reason for section 10.
I didn’t suggest that the super rich be taxed into oblivion. I suggested that they be prevented from setting up offshore corporations that allow them to avoid paying taxes in the countries whose infrastructures they rely on to do business.
I used Nike as a simplified example. As you correctly pointed out, now there are multinationals who have manufacturing plants in different countries. It’s not as clear cut now as in the 30’s when you could put a tariff on foreign steel to protect domestic industries. What do you do with a US shoe, which is partially made in China, Bangladesh, Thailand and assembled in Guam? That’s just a shoe. Imagine something more complex like a computer or a car. Is a Honda that is assembled in Tennessee a Japanese made car or an American made? It’s a Japanese multinational that assembled it here. It’s a very messy situation.
The only issue with incentives and tax breaks to companies is that there has to be money to fund it. You can’t just continually offer tax breaks and incentives to keep the companies if another state tries to steal them. However your idea does have merits. The thing is that it’s already being done in the US. Those plants I mentioned in the deep south of the US were built on promises of no taxes for 5 years, new factories being subsidized, etc etc. It ends up costing taxpayer money to attract new jobs. While that’s a net benefit normally, right now I’m not so sure how well it would work. I’ll have to think about it some more and do more research on it.
I can’t see it violating any WTO agreements since it isn’t necessarily US companies but all companies. If you give incentives it won’t be a problem. Saying “you can’t sell in our market unless you build a factory” runs into the problems of violating our WTO commitment and a central planning issue. How do you decide where to place the factories? Will they pay local minimum wage or less since there are people clamoring for the jobs?
As far as Korea goes, their thing is slightly different. The banking industry there was basically connected through the Chaebol system and the government would tell them who to lend to and for how much. Japan has a similar system I think. It didn’t work well because it locks up capital in large companies who weren’t innovating and small companies had to scramble for capital. The small guys were paying ridiculous interest rates of 20% or more for necessary capital while the big boys had negative interest rates.
A lack of government regulation over the banking system is what allowed this situation to develop and it is government regulation of the banking system that everyone agrees will be part of the solution. [/quote]
It wasn’t lack of regulation. It was a lack of enforcement of the current regulations. The only thing worse than not having regulation is having regulations that aren’t enforced. If you think the company is on the up and up because the SEC is actively watching to make sure everyone is legitimate and they aren’t, you’ll take worse risk than if you know there is no one watching. It’s pretty clear the SEC hasn’t been doing their job since the 80’s. First was the tech stock bubble, now the sub-prime loan stuff. If I assume that the SEC is policing the US market and they aren’t, then my risk assessment will be off. I will be at a riskier position than I expected to be, and then people will stampede away when the game is up.
[quote=“bob”]
Massive government investment will be required to move the economy out of the situation we are now in. Everybody seems to agree to that as well. Where is the money supposed to come from, increased taxes on the middle class? On investors? I don’t think so. It has to come from somewhere and the sensible place is from a tax on luxuries. It’s not a perfect solution but it is better than the alternatives.[/quote]
I don’t know where you got the idea that everyone agrees on anything. The closest they got was economists of all shades urging Congress to get the sub-prime stuff off of bank’s balance sheets so they would be liquid again. Then they could start lending again to companies. What did the stimulus package do to help that along? Why do we need some kind of “New New Deal”? The first New Deal didn’t work, and only lengthened the time it took for us to recover. Had it not been for the Japanese attacking to stimulate the economy, the US wouldn’t have recovered so quickly.
If the US keeps printing dollars it will be worth more as toilet paper than a currency. Where are you going to find 800 billion to fund the first stimulus that President Obama has just signed. Borrowing? We are already 11 trillion in the hole. New taxes? On whom? You seem to think the only idea out of this is new taxes. The Great Depression has shown that you don’t raise taxes in a recessionary period. It results in less income coming in, more jobs being lost, and the recovery time lengthens. I have a radical idea, we slash all benefits and fire most of the government. Keep the bare minimum, like it was planned from the beginning, until we pay off the debt we have.
I have a really radical question though. Why does it seem that the majority of citizens believe that markets can’t and shouldn’t go down. There hasn’t been a real recession in the US for 20 years. I wonder if that’s also one of the major contributing factor to the horror show we are witnessing now?
“Regulation over” implies action. First the banks needed to be regulated over so that they didn’t imperil the financial underpinnings of the world economy. Then they needed to be regulated over to prevent them from rewarding themselves for imperiling the underpinnings of the world economy, and now they need to regulated over to ensure that they lend the money they were extended through tarp so as to not continue imperiling the underpinnings of the world economy. It’s a lot of imperiling and regulating that is going on. The imperiling wasn’t neccesary, the regulating appears to be. I think everybody but the bankers agree on that much (quite alot actually).
No regulation implies that there are laws on the books. Enforcement means something is done about it. For example, Taiwan has lots of laws, but little enforcement. The SEC had lots of regulators doing… who fucking knows. So the issue is enforcement, which is a better term than “regulated over”.
The banks are private enterprises, who until recently have done well for themselves. Why do you think that the government, an organization that can’t keep a balanced budget in the best of times, would do better? If any of the government officials did this horribly in the private sector they would be fired. How do you expect them to manage a bank?
Plus the banks didn’t cause this, despite your insistence. Dumbass American citizens have been spending above and beyond what they could hope to afford for over a decade. Why is it the bank’s fault and not the dumbass American? Aren’t they the real reason the financial underpinnings of the worlds economy is in peril? Isn’t it the fact that people were speculating on houses they couldn’t afford at an unsustainably low interest rate that did it?
Now, the banks deserve their fair share of beatings over this, and shouldn’t get a pass or more than what’s appropriate, for: not checking the financial documents before they loaned money out, for passing bad loan packages to Freddie Mac, and for leveraging themselves so badly. Let’s not forget who else gets to take a big bite of the shit sandwich though, Rep. Barney Frank and the others who pressured Freddie Mac to buy sub-prime loans in the first place. Sub prime loans are risky because they involve risky borrowers. Making Freddie Mac purchase those loans to get more “disadvantaged” citizens into homes was a horrible idea in retrospect. Noble yes, but financially stupid.
And last but not least, Wall Street for packaging up these sub-prime loans into packages and chopping them up to millions of little pieces to make them less risky. They did that to help drive profits for the investors who demanded double digit growth or better, every year no matter what. That’s why they got themselves over leveraged so badly.
And finally the government, for not doing a damn thing about purchasing the sub-prime mortgages from the banks to get them off the balance sheets in 4 months. You want to get banks lending, then get that toxic crap off their balances so they can lend without the fear of being dragged down further by the sub-prime loans. That’s what the US government said they were going to do in October. They got a stimulus bill passed in three weeks, but haven’t done anything about that. You wonder why half the TARP money is gone and there isn’t any improvement.
I didn’t suggest that the super rich be taxed into oblivion. I suggested that they be prevented from setting up offshore corporations that allow them to avoid paying taxes in the countries whose infrastructures they rely on to do business.[/quote]
No, you suggested a tax on so-called luxuries. I consider cigarettes, alcohol and potato chips luxuries, so tax the shit out of the stupid white-trash who continue to buy those. I consider anything more than a three-bedroom house a luxury, or a second car a luxury, so tax the crap out of the middle class for those. Once again though, we get into this sour-grapes attitude though of only the rich don’t deserve what they have or use.
So-called progressive tax systems are inherently unfair, and you want to make them even more “progressive”. If it costs $100 to use a government service, why should one person effectively pay $10 for it while another pays $1,000, simply because one earns more money? That’s ridiculous. Would you shop at 7-11 if you walked in there and the person in front of you got to pay 2NT for a bottle of Coke while you were charged 200NT? No, you’d go to Family Mart or one of the other convenience stores, and pretty soon, 7-11 would have to bring its prices in line or lose a lot of business. The difference is though that government has a massive monopoly. Also, as has already been mentioned, it does a piss poor job of handling the money, so why should it get to manage banking or anything else either?
Some of these super rich, even if they’re paying a fraction of a percent are still paying more for infrastructure than most people. Here’s an idea: privatise the lot of it and make it a user-pays system.
I definitely put “financial deregulation” up there at the top. Thanks to Gramm’s push to repeal the Glass-Steagall Act, we have a lot more conflict of interests in banking.
Bingo! If you can afford to drink alcohol and smoke cigarretes you can afford to pay a big freaking tax on them to pay for all the damage you do to yourself, your family, your society and the economy that supports you. Since myself becoming an investor and marxist philosopher I of course drink only cognac. It is too cheap. Why, did you know that I can go to costco and pick up a twenty sixer of martel for NTD900. It’s disgraceful.
Of course the super rich frequently don’t “deserve” as much as they have. What the hell does “deserve” have to do with it?
Leave it to neoconservatives to make masochism for masochism’s sake respectable again. Just keep it in mind though, bob, as you march off into the valley of pain to save the human race that your leaders may not be practicing, Tom Daschle style, what they preach.
Make that two of us. Seconded.