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***OFFICIAL ECONOMICS DISCUSSION***

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  1. #76
    sarbox68's Avatar
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    I think you understand the over-arching economics models better than I do... but here's a stab at your questions...

    1. There are public options in the form of MedX, VA, etc. In the case of MedX, as the sole insurer of a pretty large portion of the population it wields some significant negotiating clout. But here are some market distorting factors:
    - The health care infrastructure that it draws from doesn't exist as a result of the rates that it sets. MedX benefits from doctors, hospitals, drugs, etc. that exist in spite of the business it sends their way. How?
    - Because MedX says to doctor, we'll reimburse you X. Doc says, okay, but I can't live the life style I want on X and pay for everything I need to pay for (malpractice insurance, capital investment in equipment, etc) so I will charge my non MedX patients X+Y to subsidize the difference. This same market distorting effect carries over to drugs, hospitals, etc.
    - MedX has incredible opaque finances because it's back-stopped by the govt, and therefore heavily politicized. Worst case, the govt will likely print money before they'll reneg on services under the option. This has broad implications for the economy at large, and an option not available to any public insurer.
    - MedX doesn't have to adhere to the same regulatory and market fracturing regulations that the govt holds private insurers to. Therefore it's actually more of a "free market" option than the supposed free market one in terms of regulatory burden.

    And there are many others. The problem is you can't look at any of the public programs (all of which have horrendous administrative flaws... just talk to any doctor about their experiences billing and collecting through MedX) and extrapolate it to being a universal insurer. It won't work. You eliminate all the private-side business that makes the health care infrastructure possible, and they'll be nobody for MedX to send people to. (Ask any hospital administrator if they could survive based solely on MedX reimbursement rates.)

    Bottom line - changing from private to public is a huge undertaking... no less than if the UK said "screw the NHS, tomorrow we're all moving to private insurance". It's a dramatic infrastructure shift that proponents are severely underestimating. And going halfsies (a "competitive public option") just exacerbates the existing market distortions.

    2. France as got fabulous health care. So does Japan. Both are suffering from the same greying of the population problem that we are. The difference is, the govt has backed the healthcare entitlement. And governments aren't very good at delivering bad news. Ever been in Paris during a strike? One of those where the farmers park their tractors blocking all the in-roads to protest even modest reductions in subsidies? Yeah... that's the mentality your dealing with. The recent switch in ruling party after 50 odd years in Japan was in part because their economy is a disaster. Sarkozy tried valiently to reign in the French entitlement culture (of which the healthcare system is a significant part of the economic burden) when he first came in to office, but has retreated since in the face of rabid opposition. Merkel has tried the same thing w/ Germany -- same response. The problem hasn't been fixed, and it's only getting worse... it's just once a govt has given a level of entitlement to people, it's damn hard to take it away. So they're just kicking the can down the road like we are with Social Security.

    But goddamn the free healthcare is dope while it lasts...

    3. Here's the fundamental problem that nobody likes to think about. Health care costs money. Finding new options for treatment costs money. And just because someone is sick and something may help, doesn't mean there's the means to pay for it. A couple of examples that might help this not come off as completely cold-hearted corporate apologism...
    - Think about Lipitor. Something like over 70% of the US population is obese, with most having the symptom of high cholesterol. That means a large portion of these people could benefit from Lipitor because a) they have high cholesterol and b) Lipitor exists. That doesn't mean that the resources exist to pay for all 240 million of those people to receive Lipitor. So you ration.
    - "Personalized Medicine" is the emergine practice of recognizing that drugs react differently to people because, well, we're all unique. This is especially true in therapeutic categories such as oncology, where classes of chemo have very different efficacy levels for, in many cases, unknown reasons. You COULD apply the broadest range of treatment options to all patients to give them a shot a the, in many cases, <5% efficacy rates that just MIGHT save them. Moral? Don't know. Economically sustainable? No way in hell.
    - We're living significantly longer in large part to expanded treatment options. The last 10-15 years of an individual's life are now dramatically more expensive from a health care consumption standpoint than they ever were. Well... people aren't saving that much more to offset these costs. They're not even working that much longer. So how exactly do we cover these costs?
    - Finally, let's say I ask you for $100. I tell you that you're guaranteed to get $105 back by the end of the week. Would you do it? How about 90% chance you'll get $110 back by the end of the month? What about you won't see anything for 2-3 years and even then there's a 98+% chance you'll lose it all? How much would you want then? $300? $1,000? Well, if you like the latter scenario, you'd do well at a drug company trying to find new treatments. For every blockbuster there are literally hundreds of drugs that have 9 figure investments to get to clinical trials and then fail, resulting in a complete loss of investment. Right now, the private investment community bears that risk. You really want to shift that to the taxpayers? Bottom line -- drug discovery is expensive, and the global model of consumption is changing faster than the companies can adapt. Ever wonder why it's "big pharma"? That's 'cause they're the only ones who can afford the necessary economies to bring therapeutics to market. The dirty secret is that pipelines are empty... they're just not finding the broad-based breakthroughs. The discoveries that are proving out are much more likely to be highly focused therapies or orphan treatments that have a very narrow market -- meaning Economics 101 has to recover cost + risk from a lot less people, meaning much higher costs per treatment.

    I think the fundamental problem is that sustained health requires medical care. Medical care fueled by continued innovation is expensive and risky. However distasteful it may be to equate life and health with money, you cannot separate the two. Well, you can and become a Christian Scientist or adopt some other sect that chooses not to partake in modern medicine. But outside of that, it costs to create, it costs to distribute and costs to treat. Every potential cure has to be countered by someone willing and able to pay for it. And there's no rule of nature that says those two will perpetually be aligned.

    As to whether all ntaions' care involves insurance... by definition insurance is nothing more than a "promise of reimbursement in the case of loss." It's the guarantee that someone other than you will pay for the medical services you consume when you need them. So universal care IS insurance - the burden of risk is just transferred to the tax payer. In a perfect world of streamlined government efficiency that would result in some cost savings, but also creates a whole host of other issues in the transition. And unless the government is going to pay all the doctors, run all the hospitals, operate all the pharmacies, manage all the supply chains, research and create all the drugs, arbitrate and insure against all malpractice, etc. you're still just f-king at the fringes while the rest of the machine plods along.

    To really fix the real problem - long-term cost containment - we're going to have to make major structural changes that will require EVERYONE to leave their own sacred cows at the door. So far nobody has solved that problem, and although the govt sponsored plans to better at hiding the issue (just like we do... do you really know how depleted the Social Security trust fund is?) and our private sector brings a degree of transparency that puts it all front and center, the issue's the same everywhere. And kinda like climate change, nobody wants to make the hard decisions that tell people they can't have what they're used to and to which they think they're entitled.
  2. #77
    Yeah the sacred cows always gonna get you. It almost seems that any of modern culture's premature demise will be purely due to sacred cows. I speculate that more primitive and conspicuously dependent cultures are a little better at airing them out

    What are your thoughts on the future of costs.? They say that in like a decade costs will double, and it seems to me that if even the places like France can't control costs then no matter what is done now, health care is going to become 10x a bigger issue down the road

    What is your opinion on how to actually fix the system?
  3. #78
    Very interesting thread, and I just wanted to add my opinion if no one minds.

    Regarding progressive taxation, I don't see that as fixing the problem necessarily. While I fully agree that today's economy is modelled on consumption and without you create a vicious cycle of industries going belly-up and more and more job losses, which reduce consumption even more, I don't see how the idea of taxing the wealthy more will solve this problem.
    A progressive taxation system will take more off those who earn more, correct? Where will these taxes go? Since the largest percentage of people work for private companies they will not benefit at all. Plus, the larger taxes will eventually cost corporations more, because the same higher paid people will want even higher pay as a result of the taxation system, and the result would be increased prices.

    Wouldn't raising the minimum wage be a better option? This way, even though costs would still increase, percentage wise it would be much less, and the money does end up with the middle class, which will consume more and thus increase turnover. Taxation will only put the money firmly in the government's pocket. To give you an example, most Eastern European countries had a progressive taxation system but as soon as they switched to a flat tax on income, wages increased for the lower and middle classes, as well as consumption sky-rocketing.
    The problem, as I see it, is that there are not enough regulations, nor reguatory bodies to actually enforce them. This is how you end up with the too-big-to-fail issue. Plus, another huge problem is the way society wants instant gratification, and free access to loans has given us the opportunity to get what we want, when we want it without thinking about the consequences. By this, I am not referring to buying a home, but more to buying a home that is way out of your price range, or even going on vacation on debt. If there were more regulations regarding eligility for loans based on income, then it would be less likely for this problem to occur. This is how a lot of European countries regulate loans, by only allowing the lendee to be granted a loan whose monthly payments do not exceed a certain percentage of their income, after deducting living costs and any other loan repayments they may have. While this system does not cater to great public opinion it does prevent a lot of foreclosures.

    Regarding the healthcare system, a combination between a public system, to which everyone contributes, and a private system for those who want and can afford better quality care would probably be the best option. One thing that has to go is the "I'm going to sue the doctor because I'm not happy that I got a slight bruise when he fixed my broken leg" mentality. This need to make free and easy money has gotten out of hand. I am not saying to forbid law suits against the medical profession, because doctors also need to be accountable, or otherwise the rate of neglijence will go up, but not to the point where they are afraid to sneeze in a patient's presence for fear of a law suit. This is all translated into higher healthcare costs.
    And I completely agree with sarbox that cost containment is essential, and I am sure a lot of people will not be happy with the idea that they may get lower quality healthcare, but, again as sarbox pointed out, it is a problem of sustainability. The real problem is that there are too many people and not enough resources to support them.
  4. #79
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    Quote Originally Posted by sarbox68
    I agree with you Wuf. Also have a lot of respect for your opinion. We differ on conclusions i.e. I've spent a ton of time in China, esp the outer provinces and the bulk of that country is dirt poor w/out even access to clean water, basic health care etc. The Chinese are a sig contributor to global GDP, but as are most of the emerging markets which will make up 90%+ of the growth in global GDP by 2010. There's a ton of reasons, but none of them make me have any interest in adopting China's approach to social and economic management. But at the end of the day, you have an informed opinion, and your response reflect that. Much <3 for that sh!t.

    I fear the days of old school investigative journalism are behind us - in part because consumers don't want it. Partisanship is more fun and the internet presents the opportunity to find support for virtually any idiotic position or misinformed premise. It blurs if not eliminates the idea of "right" and "wrong." Whatever I want to believe, I can gravitate to the folks that have selectively distorted the facts in support of my opinion.

    Classic example... the "death panels" argument in the health care debate is beyond ignorant and manipulative. On the other side, I had dinner with 3 very liberal friends (also very educated) who swore to the death that 30% of the US population is uninsured. Nice as a talking point, but completely incorrect -- it's actually at best 40m, if you stretch and include the invincibles who don't WANT to pay for insurance 'cause they'd rather buy beer and video games... and that's against a 2009 census number of a little over 300mil which puts it at slightly over 10%. But that wasn't the talking point their liberal advocates had fed them...

    Bottom line... the US increasingly lacks the intellectual curiosity to pursue the truth. Instead, they display a preference for the comfort of spoon fed partisanship on both sides... which sucks. And gone are the days of a quality news media that holds both sides accountable for the bullsh!t strictly because, well, they should.

    I like Stewart in big part because he calls both sides on their crap. I dislike Maher in part because he soft pedals liberals while skewering w/ sometimes questionable premise and data those who don't agree. But at least he's transparent in his platform and doesn't pretend to be "fair and balanced."

    I think we're in some deep sh!t if we opt for just more of the same.....

    Oh... BTW, re: your point on news sources. I solve the problem by a daily feeding on everything from CNN, BBC, WSJ, IHT, Al Jazeera, Hareetz, and about 20 other sources. Funny thing... if you read the same coverage from all of these perspectives, you can actually still piece together something that's close to the truth. Wonder how long that will last...
    great post
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  5. #80
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    Quote Originally Posted by wufwugy
    What are your thoughts on the future of costs.? They say that in like a decade costs will double, and it seems to me that if even the places like France can't control costs then no matter what is done now, health care is going to become 10x a bigger issue down the road

    What is your opinion on how to actually fix the system?
    re: costs... the Right has to accept that the status quo is unsustainable, and that costs are the major problem -- get their head out of the f-kin sand a little quicker than they have on climate change. The Left has to accept that this is not yet another oppty for them to rail about the big, bad evil corporation. Profits are not the core driver of unsustainable cost here. It's more people, living longer, consuming more healthcare, from more options through an inefficient infrastructure (both public and private). Please... move on from "business is the devil" and actually try and solve something for realzies....

    I don't pretend to know how to fix it, but here's some ideas to chew on:
    1. Separate "coverage" from "cost containment". They are two distinct issues. We can fix the coverage problem immediately by allowing MedX to be the "insurer of last resort" for anybody who can't afford / can't get coverage. It doesn't address the cost problem, but combining these two issues 'cause it makes a bigger hammer for your underlying beef is not very bright. Fix coverage and now we can move on to the real problem (which isn't coverage....)
    2. Make health insurance regulation a federal not state issue. Eliminate the state level regulatory powers and have one set of federal guidelines to run by. Don't know how this fits with constitutional limits. But MedX already benefits from that -- it doesn't have to manage compliance against 50 distinct sets of regulatory frameworks. Private insurers do, and it's expensive as f-ck.
    Pro: Would allow private insurers to reduce their infrastructre significantly, as they currently maintain discrete ops in every state. This would reduce costs.
    Con: It would result in closing down infrastructure which means people will get laid off.
    2. Take malpractice adjudication out of the jury system. Patent complaints are not handled by a jury because their complexity makes the process flawed. Same thing w/ malpractice, except it's complexity and the emotional issues that lead juries to award jackpot judgements. All malpractice or standards of care claims should be screened by a federal panel of doctors/HC professional appointed on a rolling basis by bipartisan panel (use the judgeship model). They first decide whether a claim meets a certain threshold of validity. If it doesn't, it's punted, killing most of the frivolous stuff before it starts. If it has merit, the case is presented to the panel. Judgements are limited purely to cost of future care and a capped (i.e. $250,000 maximum) supplemental award for "pain and suffering". Attorney fees are paid only on documented hours and expenses, w/ "standards" applied to ensure those costs are contained (think bankruptcy court process) -- which eliminates the jackpot incentive for the lawyers. Any supplemental punitive damages that the panel wishes to mete out to the offender in the form of additional damages would go to a govt trust that is used to offset costs of healthcare -- not give someone a payday. Oh... and consider doing what Canada does where the loser is responsible for the winner's court costs.
    Pro: Less people would sue, malpractice insurance costs would go down, you'd piss lawyers off
    Con: You'd piss lawyers off... wait, that's actually a pro
    3. Now we have controls on malpractice tort proceedings, govt can lean on the malpractice insurance folks to bring costs in line. Use the threat of a public option (think govt flood or earthquake insurance) to force realignment... and if necessary execute against the threat.
    Pro: You've just reduced a huge overhead for doctors, thereby reducing the amount of revenue they need to offset it
    Con: You're putting the govt in the biz of malpractice insurance
    4. I'm sick of subsidizing Canada's and Europe's low pharmaceutical costs. They negotiate w/ drug companies as a single buyer with the associated clout. We're forced (because private insurers are not allowed to collude) to take a fragmented approach to the drug companies, and they recognize it as an opportunity to subsidize what they're not making on these other deals. Build a "favored nation" clause into all of the MedX drug plans, meaning no pharma company can offer anyone else a better price on BRANDED drugs (generics are much less of an issue due to their low price point). Then allow docs, healthcare orgs, etc to purchase under the govt contract if they choose.
    Pro: We finally get the same costs as those damn Canadians (or at least force them to pay the same amount that we do)
    Con: Your f-kin with the natural flow of procurement
    5. Invest stimulus dollars in HC infrastructure. With this problem breathing down our neck, the pork that recent stimulus $ have been spent on makes me sick. We're subsidizing people to buy cars?!? So the UAW doesn't have to recognize that its overpaid, underskilled and completely uncompetitive? Bullsh!t. Every single $ we have available should earmarked for investment in HC or energy infrastructure as these are our Waterloos. Make the investments in information infrastructre, records management, communications, physician education, primary research, etc.
    Pro: $ saved from efficiency, higher effectiveness and a foundation for future benefit
    Con: A few less people can get paid $30/hour to bolt wheels on cars
    6. Consider... just consider... the merits of some of the aspects of systems like the NHS. The UK used to heavily subsidize physician education so docs don't leave buried in $300K+ in student loan debt. Then they hired them as employees at salary and benefits vs creating a million entrepreneurs all running around maintaining their own practices. Kaiser has this model in many states, and it can be very effective at controlling costs. It also allows them to consolidate purchase of things like malpractice insurance, amortize capital equipment over more physicians etc.
    Pro: More cost effective and easier to manage
    Con: Docs tend to make less money; Americans scream bloody murder 'cause they can only go to a Kaiser doctor and they don't like that guy 'cause he's Indian/Chinese/Laotian fill in the blank.
    7. Oh, and EVERYBODY pays for health insurance. It's taken out from $ one in your first paycheck thru the last $ you get before you retire. It's not an option, just like Social Security isn't. You can get a "tax credit" against what you paid in a given year -- meaning if you carry private insurance you can get back what was withheld. But if you're going to have MedX backstop coverage, no actuarial model will work that doesn't have everyone pay all the time.
    Pro: You boost the amount of money available to cover public costs
    Con: People don't get to say, oh hey, I'd rather buy that TV/cel phone/get cable/a nicer car/go on vacation etc than pay for health insurance. Tough sh!t... it's in the public good and if you lived in other countries w/ universal care you'd never see those $ in the first place... Oh wait, that's a nother Pro...
    8. And finally, with all the above in place, use the threat of broader public option as a stick to require private insurers to a) accept preexisting conditions, b) prevent from dropping them for any reason outside of fraud or failure to pay premium and c) performance against a scheduled reduction in cost. Use the de-reged Utility model as a guideline whereby Edison or PG&E are commericial orgs but accountable to the utility commission for rates and service levels. Just threaten for now... if that doesn't work, don't be afraid to pull the trigger.

    Oh and Wuf... I'd love to here your assessment on the positive/negative impacts of minimum wages. I remember from my Econ undergrad (many years ago) that price floors and ceilings create distortions in a variety of ways. I just don't remember what they were.
  6. #81
    wow, I am way underqualified to contribute anything to this debate, but I just wanted to say that the last couple of post have been very informative and I actually feel smarter having read them.
    You-- yes, you-- you're a cunt.
  7. #82
    I'll for sure have a response, but maybe not today
  8. #83
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    Quote Originally Posted by boost
    wow, I am way underqualified to contribute anything to this debate, but I just wanted to say that the last couple of post have been very informative and I actually feel smarter having read them.
    bingo, where the funking waggles has sarbox been hiding?
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  9. #84
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    Quote Originally Posted by a500lbgorilla
    Quote Originally Posted by boost
    wow, I am way underqualified to contribute anything to this debate, but I just wanted to say that the last couple of post have been very informative and I actually feel smarter having read them.
    bingo, where the funking waggles has sarbox been hiding?
    Off selling shower curtains to pygmies. Little bastards are tough as sh!t to find, and even harder to get on the phone.

    Thx for the kind words chief!
  10. #85
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    post more damnit!
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  11. #86
    Sar, I've enjoyed talking to you in IRC in the past and wanted to say I'm feeling every word you've contributed. Nice one.
  12. #87
    Oh and I've been (very loosely) following the healthcare debate over there from this side of the pond and I don't know whether to laugh or cry.

    My favorite so far has been the Obama Healthcare policy, Nazism / Fascism link. Simply astonishing.
  13. #88
    This is a great thread but, IMO, probably needs more than one thread - Economics is damn complex yo. Anyways, my thoughts are....

    1. I am not qualified to say much
    2. Economics is damn complex yo
    3. If we're discussing specifics would this be a good point to talk about the sigmoid curve?
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  14. #89
    Quote Originally Posted by flush76
    Regarding progressive taxation, I don't see that as fixing the problem necessarily.
    Not by a long shot. However, they are one very important aspect

    While I fully agree that today's economy is modelled on consumption and without you create a vicious cycle of industries going belly-up and more and more job losses, which reduce consumption even more, I don't see how the idea of taxing the wealthy more will solve this problem.
    This US is based on consumption thing is a buzz word; it has virtually no meaning because all economies have a base in consumption. It just so happens that the US economy is dynamic and strong enough that we're able to consume more than many others. This 'consumption economy' is basically an economy that doesn't thrive on exports, but that doesn't mean it's some kind of bad. We don't export a whole lot because we're rich enough to import a lot, and we are big enough to consume our own product. Some countries are small enough that they just have no reason to consume much of their product. This has a lot to do with resource distribution.

    A progressive taxation system will take more off those who earn more, correct? Where will these taxes go? Since the largest percentage of people work for private companies they will not benefit at all.
    The money will go to public sector jobs. Or it will pay for the stupid wars. Or pay down the deficit. The US has a massive tax shortfall due to those who voted for Reagan and Bush who slashed taxes paid by the highest income brackets (did you know that Bill Gates pays a lower rate than his secretary?). The US needs substantially higher tax revenue, the vast majority of it should come from the high class, stupid spending (like on war) needs to stop, and if this change is not made then we will eventually see why it needed to be made.

    Plus, the larger taxes will eventually cost corporations more, because the same higher paid people will want even higher pay as a result of the taxation system, and the result would be increased prices.
    Naw, they would just stop hoarding, more will be spent on demand than supply (which is what we need big time), they will have less power to make money off of nothing, and more money would flow through the system creating a stronger economy

    Taxation will only put the money firmly in the government's pocket.
    Good. The US government is after all the biggest business on the planet. Keep in mind that government = public sector, and that there is not some kind of inherent difference between public and private sectors. What we want is a very strong government that provides as much as it can for the people. Don't fall prey like the rest of the population has to the rhetoric that started with Reagan about how gov't is bad. That is complete fallacy, and is responsible for assloads of negative policies.

    To give you an example, most Eastern European countries had a progressive taxation system but as soon as they switched to a flat tax on income, wages increased for the lower and middle classes, as well as consumption sky-rocketing.
    I hadn't heard of this, would like to see some data, but am positive that it's different than what you think. Here's a plausible example: Progressive taxes are notorious for providing massive loopholes for the wealthy, flat taxes, OTOH, are not avoided that easily. So a government with a ton of loopholes in progressive tax policy would actually become more productive if they switched to flat taxes. Overall it would be a much better policy to just close those tax gaps, but that's also more difficult.

    Plus, another huge problem is the way society wants instant gratification, and free access to loans has given us the opportunity to get what we want, when we want it without thinking about the consequences. By this, I am not referring to buying a home, but more to buying a home that is way out of your price range, or even going on vacation on debt. If there were more regulations regarding eligility for loans based on income, then it would be less likely for this problem to occur. This is how a lot of European countries regulate loans, by only allowing the lendee to be granted a loan whose monthly payments do not exceed a certain percentage of their income, after deducting living costs and any other loan repayments they may have. While this system does not cater to great public opinion it does prevent a lot of foreclosures.
    The thing is that it's not so much about instant gratification or eligibility for loans. The problem ALL stemmed from higher up, and they actually created a system that promoted false eligibility. Everybody was told that their homes were going up so quickly in value that they were making massive income simply by owning one, and the banks didn't really care because they were repackaging them and wiping their hands clean. Blaming the people for their gratification is missing the point.

    However, blaming the people for being idiots who vote for politicians without understanding the issues is fair game.
  15. #90
    Quote Originally Posted by sarbox68
    Oh and Wuf... I'd love to here your assessment on the positive/negative impacts of minimum wages. I remember from my Econ undergrad (many years ago) that price floors and ceilings create distortions in a variety of ways. I just don't remember what they were.
    You give me too much credit. I've never had any formal training in economics, this is only a hobby. After the banks began collapsing, I wanted to know why. So I began looking at all the issues being discussed, reading material and watching lectures by professors of finances and economics, and spending time on a message board with a handful of econ professionals and students. Doing so gave me a pretty decent understanding of the philosophical and political aspects of that which was involved with the Crisis of 08, but not much else.

    Having said that, I can provide an opinion on minimum wage...

    Don't like em

    They're a form of protectionism, and while they can protect certain populations, they're bad for everybody else. They increase unemployment, increase ethnic and socioeconomic segregation, and are ultimately pointless. Wages correlate with skill, but when they are imposed upon by a price floor, the number of unskilled people able to work decreases. They also increase product cost, and due to this jobs get shipped overseas in order to compete in the US market, and that's a whole 'nother set of problems.

    Here in the US, we love the minimum wage because it means us good ol white folk born into suburbia don't have to be good at anything to continue our way of life. Take away minimum wage, and in no time, many of us will find that poor people with the same skill as ours are taking our jobs. This is a good thing, and an important aspect to liberty and equality.

    And the lack of minimum wage doesn't harm anybody with actual skill because that shit gets paid for. For the most part, if you're good at what you do, you make more money. And if you're not good at what you do, I think that somebody else should have your job for cheaper if there is a demand.

    But really, for me it all boils down to segregation. I am super anti-racism, and minimum wages are one of the things that promote it. I believe that the correct social policy is the one that provides for every human on the planet. I'm not a patriot, I'm a humanitarian. Even if certain policy makes life in middle America worse, but makes life in third world countries better, I am for it. I've said before that I do not believe that the pleasure of a billion people justifies the suffering of one person, and so because minimum wage oppresses poor people I am against it

    OTOH, there are roles for wage fixing, and where and how they're fixed changes effects. But that's all elaborate stuff
  16. #91
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    There's an interesting over-arching perceived birth right in the 1st world in general that says "I'm entitled to this standard of living because, well, I was born here." Funny thing is, there's a few billion other people that are waking up and finally seeing a path out of their respective sh!thole. One of the few things I have agreed w/ Michael Moore on post-Roger & Me was in "Stupid White Men". In a nutshell it was that the idea that our standard of living is sustainable when the rest of the world starts to want it's piece of the pie is one that's never been tested, doesn't really make a lot of sense, and probably won't happen. This isn't a pure zero sum game, as technology and efficiency etc. allow us to make the pie a bit bigger... but nowhere near what it needs to be to allow even China & India's middle class to reach even the level of what we domestically refer to as "poor". His argument was we have to more aggressively re-distribute wealth so that the highschool graduate (or drop-out) in the 313 can still have their piece of the dream.

    I think the reality is we're going to have to really start earning our priviliged place in the world. And it ain't gonna be by doing sh!t that some dude in Pakistan can do for 12 cents a day. In general, the first world is over-paid and over-entitled and has been able to get away with it because of conditions that have effectively permitted command and control over the global economy.

    Those days are done. China & India are both rising in big part because they're hungrier than we are... or the French, or the Germans, or the Swedes. They got sh!t, they see what we have and want more of that. And they're going to bust their @ss to get there. While the French are screaming sacrilege at the addition of 2 more hours on to the 35 hour work week, and we're scrambling to find kids that want to work hard enough to pursue the maths and sciences... they're on a trajectory to pump out more PhD's and people w/ skill sets that could be said to justify our living standard than we are.

    I agree with you on minimum wages. I think we'll be forced to change whether we like it or not. And while we're arguing with each other over greater entitlements and whether gay people can marry, some key players in the developing world are focused on one thing, and one thing only... taking care of business.
  17. #92
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    Quote Originally Posted by wufwugy
    However, blaming the people for being idiots who vote for politicians without understanding the issues is fair game.
    You can also blame people for being idiotically following their blind greed. Funny thing, in all the hand wringing about people getting stuck w/ homes that are upside down, nobody has raised the issue of clawing back the ridiculous profits that went to the individuals that sold the home to them at an obscene profit in the first place. That's because while we're okay at blaming executives for being greedy, we get really uncomfortable at pointing the finger at ourselves and exorcising our own blatant opportunism.

    Everyone's a f-kin victim when their hand gets caught in the cookie jar.
  18. #93
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    Top commune thread of all time. Which is saying something because that dude with the wookie armor avatar made a pretty epic one way back when.
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  19. #94
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    Quote Originally Posted by a500lbgorilla
    Top commune thread of all time. Which is saying something because that dude with the wookie armor avatar made a pretty epic one way back when.
    Don't think I was around then. Wookie pics???
  20. #95
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    Oh, and BTW... how many posts do I need to have before I can actually say "fuck" instead of "f-ck"?
  21. #96
    sarbox, what do you think is actually going to happen with the future of health care costs? You've made it sound like we're effectively screwed. You've made it sound that even with ample improvement, if we are unable to burn many of our sacred cows at the altar (which we wont) then costs will continue to rise, coverage will continue to fall, and no country is immune

    So can you illustrate where you think things are going? It really seems to me that you're implying that no matter what, there's no realistic way to actually fix the problem, and eventually it will come to a head
  22. #97
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    Quote Originally Posted by sarbox68
    You can also blame people for being idiotically following their blind greed.
    sentence of the year imo.
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  23. #98
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    Just a quick observation on the health care/ economics debate. I am really saddened and disheartened to see the amount of anger, ignorance and hate that is unleashed over these issues. As a free society, we should be exercising our individual liberty responsibly to correct unsustainable systems (this should not be debatable as it relates to the current health care debate and recent economic attitudes) and voluntarily agree as a whole that some sacrifice will be needed for the greater good and prosperity of us all. However, when I see the protests and some of the current debate, I think a sizeable portion of the population would rather go to war, either with another country or themselves, than change their habits. This is extremely disappointing.
    "Don't judge a man until you have walked a mile in his shoes. Then you are a mile away, and have his shoes." - Anon.
  24. #99
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    So the western world (incl now the US) considers three main pillar entitlements – retirement, health care and education. I think it’s a little instructive to see what can be learned from the other two in this case…

    So go back in the day, the norm for a lot of gainfully employed Americans was the gold watch and the pension. The unions esp saw this as sacrosanct and loaded up on “after I stop working” goodies – pensions that guaranteed 60-80% of final years income for life, guaranteed health insurance outside of MedX, etc. A number of years ago, it became pretty apparent that this model was completely unsustainable. So now very few of us non-union folks have any kind of pension or health care guarantee beyond MedX. And even the unions, who can be counted on to be the last bastion of delusion, are recognizing that this just doesn’t fit in today’s global economy.

    That’s not to say you couldn’t make a pretty convincing moral argument for the elderly enjoying their golden years in style. But it’s untenable with nobody to pay for it, so we shifted more responsibility to the individual through IRA/401(k) etc. individual investing options. Basically we said the following – if you want a retirement beyond the basic level (that provided by Social Security), it’s your responsibility to pay for it – and the basic level is all you’re entitled to. Now this new model is anything but risk free – you got regulatory problems (bad people f-k up the market which f-ks up the individual investor), you got consumption problems (as a culture, we don’t like to save … we want to buy stuff… actually more stuff than we can afford) and behavioral problems (it’s the “get rich quick” mentality of greed…) But all that said, we still came to that conclusion ‘cause we finally got through our thick heads that the status quo was a pipe dream. And our generation has responded by accepting that the cost of saving for retirement is part of the cost of living -- and money that comes out first from what we have available for "lifestyle". My folks just didn't see the world that way...

    Now we’ve still got problems funding social security. And we’re going to have to stop kicking that can down the road and recognize that benefits must follow ability to pay. But we seem mostly okay with fine-tuning that (if you ignore the AARP, nobody’s yelling “Hitler” about extending the retirement age to 69 or 70 to account for people living longer or talking about eliminating the cap for Social Security deductions) … there’s beef, but it’s somewhat rational. Our Western European friends still haven’t figured this one out yet and have been much less successful in even starting the inevitable public discussion about getting retirement to a sustainable entitlement.

    How does this map to healthcare?
    - Expectations around entitlement do change and sometimes have to.
    - A basic level guaranteed to everyone (like the Social Security model) is an option. Complete flexibility in choice of care just isn't sustainable, anymore than a gold-plated pension is. This will likely mean an HMO-like basic standard of care (w/out the dropping for pre-existing, etc.) as the model for universal coverage -- funded by the entire colletive. A lot of people won’t necessarily like it, but that’s really kinda moot. Then let people who can and/or choose to purchase higher level care do so.
    - Having homeless senior people wandering the streets is bad for the community. That’s why we have Social Security w/ a basic safety net. Same for people who don’t get that nagging cough checked (TB resurgence anyone?) because they don’t have the means or access or end up in the Emergency room for every ailment (which is an incredibly inefficient allocation of resources) for the same reason.

    Our biggest battle IMHO is changing expectations. Health care is like retirement – more people, living longer, consuming more, with more options, etc. – means more demands on resources. And yet w/ Healthcare the libs go pointing at systems doomed for failure in the not too distant future (France, Japan, etc) as “the way things should be”. That’s about as intelligent as pointing to the stock market between ’98 and ’00 and saying “THAT’S the way the market should be… regulate and make it so!”.

    There’s also analogue with Education, the 3rd entitlement pillar. Private prep schools for everyone would be fantastic. Unlimited resources to public schools would be equally awesome. But it’s not sustainable and never going to happen. That doesn’t mean there isn’t real incremental benefit to better public education. But scarcity of resources demands pragmatic allocation.

    Now, we still guarantee and provide base line education access to everyone. Everyone doesn’t get to go to Harvard or Stanford… or even community college for that matter. And, although again, we struggle with a lot of issues w/ poor service delivery in education, failing standards, competing claims for resources, we recognize the need for a model that provides a basic level, and then recognizes merit and circumstances for who moves on from there. All the things that go wrong in the execution of that model is for a different post, but the mindset is there.

    I really believe we have to get to that mindset for HC to be sustainable. Fortunately, there is a level of cost and operational complexity that can be pressured from a variety of points to bring costs down and therefore deliver more care for the same resources. This isn’t true in Social Security, and presents less options in Education. All of which means we got more cost targets to go after, and some very significant ones – I threw out a number of ideas in my earlier post, and that’s just a start. We CAN identify a level of care that becomes a universal safety net and that is sustainable -- it just isn't necessarily going to look the way a lot of people would like it to, and it's going to require whacking the sh!t out of those sacred cows.

    The good part that this is that we will make the change. We'll either do it earlier, while the issue is still manageable, our we'll be forced to do it once the problem has evolved to crisis proportions. But equilibrium will happen whether we like it or not.

    One other thought on sustainability… I really, really hope that China and India fulfill their innovation promise, because the world could be a much, much better place (esp in dealing w/ issues like HC and climate change) w/ several 100 million more highly educated people working hard on these problems. Innovation does good in exponential ways... It may also give the 1st world the necessary kick in the butt to get off of our entitled asses and realize we’ve got our work cut out for us.
  25. #100
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    I just skimmed through this for the first time and laughed my ass off.
  26. #101
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    Quote Originally Posted by boost
    wow, I am way underqualified to contribute anything to this debate, but I just wanted to say that the last couple of post have been very informative and I actually feel smarter having read them.
    QFT
  27. #102
    Here's why we need to tax the shit out of the richies

    http://www.alternet.org/workplace/14...%2430_billion_

    It's great to know that during the worst economic crisis since the Great Depression, the wealth of the 400 richest Americans, according to Forbes, actually increased by $30 billion.
    People don't realize exactly how much fucking wealth we actually have and how much of that is concentrated in just a few hands. Billionaires should not even come close to existing. If you think they should, I have a serfdom to sell you
  28. #103
    Here's a post in a different forum on this topic by a Dane imma cut n paste

    ***********

    Hmm. Let's compare the economies of Denmark and the US.

    Denmark is among the top 3 countries in the world with highest tax. Our general income tax is around 40%, which rises to 55% when one earns more than 335.800 DKK annually. In 2006, 20% of the 4,7 million tax payers in Denmark paid "Top Tax" as we call it. On top of that, there is a VAT of 25% on all consumer goods, 180% tax on cars, and probably some other taxes I can't remember at the moment. Gasoline costs around 10 DKK (appr. 2 dollars) for a litre because of taxes aswell.

    We have a higher nominal per capita GDP than the US (62,097 vs 47,440), but a lower per capita PPP GDP (37,304 vs 47,440). The numbers are in USD. The economic growth in Denmark was 0.3% in 2008 vs a 0.4% growth in the US the same year. (Sources: wikipedia)

    Unemployment in the US reached more than 9% in November 2009, while it was less than 4% in Denmark in June 2009. I doubt it has increased more than a few 0.1% since June, else I would have heard about it. If someone has numbers for Danish unemployment in November this year, feel free to submit them.
    In 2008, just before the recession, our unemployment rate was 1.8%. It was 4.6% in the US that same year. (Sources: Wikipedia, "Danmarks Statistisk (Statistics Denmark)", and CIA World Factbook.)

    13% of Americans live below the national poverty line, I can't find any figures for Denmark, all sources I have looked at say "N/A". (Source: Wikipedia)

    We have very few billionaires in Denmark compared to the US, also billionaires per capita.

    The Gini index for 2008 placed Denmark as #1 in the world with a score of 21.7, USA was 38th with a score of 45.0.

    All university education in Denmark is free. We have free medical care, we have a "Treatment Guarantee", meaning, depending on the type of illness / need for operation, if a public hospital don't treat a Danish citizen within X number of weeks, the government must pay for treatment at a private hospital, either in Denmark or abroad.

    I know people can ideologically oppose certain kinds of government systems, but using scare tactics without looking at any facts is not a good idea IMO.

    I'd say we manage to make a nice society in Denmark, even though we have a high tax rate and very few dollar-billionaires.

    **********

    imma move to denmark imo
  29. #104
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    Wuf, what do you propose the top tax bracket should be taxed at?
  30. #105
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    Quote Originally Posted by wufwugy
    imma move to denmark imo
    Lolz... I get the point of these types of comparisons but they fall flat on one incredibly big point -- We can't all fit in f-king Denmark.

    It's a fallacy of scale. Denmark has 5.4m people. Los Angeles has 9.8m. I'd be willing to bet that if you took all the productivity of 1/2 of Los Angeles, isolated it from any global obligation and let it do it's own happy, self-funding microcosmic thing, you could get a pretty groovy life.

    Hell... we've got 3-4 Denmarks of just people here illegally - the vast majority of which are limited to manual labor skills that are increasingly incongruous w/ 1st world economies. (To your point, those jobs are better sent to the developing world as agriculture and manufacturing are the building blocks of nascent economies...)

    Scale, and it's related exponential complexity, make these kind of analogies at best a fun fact.

    There's also the "fun fact" of innovation. In 2006, the US was granted approx 155,000 patents, bringing their total share of global patents to approx 25.9% (total in force approx 1.25m). Denmark was granted about 1,800 for a grand total of about 12,000 in force.

    Thank god we're not relying on Denmark for health care (or any other kind of) innovation...
  31. #106
    Quote Originally Posted by Lukie
    Wuf, what do you propose the top tax bracket should be taxed at?
    Not sure.

    Paul Krugman has off the cuff said something like 50-60% without loopholes. A big problem back in Eisenhower's day was massive loopholes for the top brackets.

    Something that is super important though is adding several high brackets. Like 1MM, 10MM, 100MM.
  32. #107
    Quote Originally Posted by sarbox68
    There's also the "fun fact" of innovation. In 2006, the US was granted approx 155,000 patents, bringing their total share of global patents to approx 25.9% (total in force approx 1.25m). Denmark was granted about 1,800 for a grand total of about 12,000 in force.
    What are the numbers when controlled for population?

    On the flip side, Denmark has a higher percentage of Nobel laureates than US

    Scale, and it's related exponential complexity
    Being that this is the jist of your argument, can you explain this inherent difference between a nation of 5MM vs one of 50 or 500MM? If you're talking about overpopulation, that's one thing, but how, in this context, is total size relevant when each component is scaled proportionately?
  33. #108
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    Quote Originally Posted by wufwugy
    Scale, and it's related exponential complexity
    Being that this is the jist of your argument, can you explain this inherent difference between a nation of 5MM vs one of 50 or 500MM? If you're talking about overpopulation, that's one thing, but how, in this context, is total size relevant when each component is scaled proportionately?
    No, it's not about overpopulation (at least in the US.)

    There's the really complex answer, but the simple one will prolly give you the jist.

    First the analogy. You have a machine that consists of three discrete parts. It stops working. How difficult is it to find the offending problem and fix it? Now you have a machine with 300 parts. It stops working. What's the implication for finding and fixing the root cause problem accounting for inter-dependencies?

    Denmark has one national government. We have one national plus 50 state, plus god knows how many county and local govts... a factor of size. If 1% of the Danish population needs healthcare, you only need to build and maintain infrastructure for 54,000 people. Same 1% in the US means a process, supply chain and infrastructure that will support 3.5 million. To take this one example of complexity implications back to my original machine analogy... in this example the machine that is Denmark would have 54 moving parts... the US machine would have 3,500. Which do you think is easier to maintain?

    And this model repeats itself over and over... from Government - Denmark 1 national + some amount of local, US 1 National, 50 state, hundreds of county and tens of thousands of city, to skill absorption - have 10,000 people lose viable skills and it's one thing to retrain and integrate, make it over a million people and the infrastructure that supports them (think US auto industry) and you're dealing with a problem of a whole different magnitude, to education - 15 universities in Denmark... we have more than that in LA County alone - even to fracturing of political POV and it's impact on the ability for govt to get anything real done - figure at least every county is going to have unique characteristics and demands on federal and state policy and resources, making it an exponentially more difficult equation to balance given the number of states, counties, cities etc. The examples are endless...

    And of course the patent count is partly a factor of more people. But at 305m/5.5 m you'd expect a 55:1 "all things being equal" ratio. The fact that it's almost twice that speaks to the US as still being the predominant attractant of innovation.

    It's also interesting to note that Denmark is doing everything they can to keep immigration only to the skilled that can help them maintain their economic nirvana (the dirty unwashed do put such an unwelcome weight on the system...) See recent shift to the political right driven in major part by broad dissatisfaction with the impact of growing numbers of unskilled illegal immigrants and asylum seekers. Recent policy includes things like preventing any Danish national under the age of 24 from marrying a non-EU citizen. Hell.. we don't even do that -- we just don't allow you to bring your mail-order Colombian bride into the country without a f-kload of paperwork. We also share a huge, extremely porous border with a developing country... wait, correct that... developing hemisphere.

    BTW... Norway is #1 I think from the latest ranking of "best countries to live in". Beautiful country if you're into that whole wild nature thing. You should def visit if you haven't already.[/quote]
  34. #109
    Both US and Denmark operate under a similar paradigm of scaling bureaucracies based on size and region.

    While I don't disagree at all that larger scales make things exponentially more difficult, I see no evidence for paradigm shifts. It's easier to meet the needs of fewer people, but not because the paradigm by which needs are met is any different.

    There is, however, an argument to made about how Denmark is able to keep the median artificially high due to protectionism, but that's a different topic, and US certainly has its own brand of wealthy class protectionism. But according to your logic, breaking the US into, say, 70 different regional nations would allow us to be like Denmark, and this implies that it's not a resource problem, but a bureaucracy problem.

    I have no issue with this, just with the idea that there is some resource problem that keeps the US from being more like Denmark. It's essentially the overpopulation thing, but well veiled.
  35. #110
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    We may just have to respectfully disagree on this one Wuf. I think scale does change the paradigm – the challenges, decisions, inflection points, etc are not just more but different, and all get amplified with the related unintended consequences because of the size.

    Just healthcare as an example. If we had one set of federal rules that were the be all and end all of insurance regulation, we could tweak them relatively easily. Denmark has the equivalent of this. But we don’t. We have federal rules and programs. Then we layer on completely distinct sets of regulations for 50 states. Malpractice torts aren’t tried in federal court against a single legal framework, they have to be defended against in 50 different state jurisdictions. Legislation at the federal and state levels can conflict (see medical marijuana) and law-making rules aren’t even uniform. And all of this rides on the whim of a diverse population that’s large enough to have significant representations of a wide range of groups – all with competing priorities (as humans are want to have.)

    A lot of the cost problems that I highlighted earlier are outcomes of these factors. Our tort system is driven by several big groups of special interest at the expense of others. Our approach to having doctors as entrepreneurs vs institutional employees is another outcome of groups wanting flexibility, earning power and self determination vs others focused on efficiency and cost savings. And many of them are big enough (due to scale) to make their preferences felt and directly impact some level of public policy.

    The best first “public option” would be for the government to recognize that it’s created a structural mess, step in and grossly simplify the process. One set of rules, one set of regulations, one regulatory body, one adjudication body. That’s a real public option that sets us up to do more with what we have. Creating another public entity outside of the same crap dysfunctional system of and by itself will not.

    And you wanna see the next layer of complexity (and associated paradigm shifts) that comes w/ scale in a representative government? Spend some time poking around India’s challenges as the largest democracy in the world. Some days they just gotta WISH they’d decided to be China so they could just tell everyone to STFU and do what they tell ‘em….
  36. #111
    Sounds to me like you're describing bureaucratic inconsistencies
  37. #112
    http://seminal.firedoglake.com/diary/9644

    In an article at CNN.com, we learn how much money is being spent in an attempt to prevent real health care reform:

    The health care sector has spent $263 million this year lobbying Congress for changes to reform plans, a government watchdog group estimates.

    That’s a huge amount of money. How many people could purchase health insurance with that much money? According to USA Today, the average health insurance premium for an individual is $4824. Dividing $263 million by $4824 tells us that 54,500 individuals could have purchased health insurance with the funds spent by the health care sector in their lobbying effort this year.
    There is ample money in the hands of the super wealthy to provide care for everybody, but instead they'd rather spend it on things that provide them with the ability to buy a twentieth vacation house
  38. #113
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    Yeah, but the money in politics issue is on both sides of the argument. Organized labor spends an absolute f-kload on lobbying... and in many cases (like the teacher's unions...) to protect obscene inefficiencies and underperformance. That's not a "rich" thing, it's a human "selfish" thing... the only real solution to which is to ban money in politics completely, and allow only publicly funded elections.

    I'd vote for that in a second. Too bad there are way to many special interest groups on both the right and the left for that ever to have a chance of passing....
  39. #114
    Yes, pretty much the most important thing politicians could do is pass campaign finance reform. I know little about any details, but something that would result in public financing and a realistic cap, would be great.

    But like you said, it will never happen. I think the likelyhood that before I die, the US will be a full blown corporatocracy is very high anyways. We've been heading in that direction quite strongly for the last several decades, and even the most recent economic activity (read: unregulated financial bailouts) are the worst examples of this corporatocracy. IMO, in the future, we'll look back and claim that once the financial institutions were too big to fail, was the tipping point in the US corporatocracy. Either that or if campaign contribution caps are ever fully lifted, like what Chief Justice John Roberts wants to do

    We won't see positive steps away from this though. Obama is already owned by Goldman Sachs, and we'll probably see Bush 2.0 elected in 2016 via the big money waiting till then to funnel massive support just like they did with Bush W in 2000
  40. #115
    You have to wonder if campaign finance reform would really do anything though. Wouldnt the media outlets simply give free air time to which ever candidate they back? Sure they couldnt run their commercials cuz that would be a donation worth the value of the time slot, but they sure could have them as a guest on their shows all the time.
    You-- yes, you-- you're a cunt.
  41. #116
    Yeah, it basically wouldn't work for the simple fact that money and power go together. Even with perfect reform, it would end up being quashed over time by many methods, one of which being the one you mentioned

    This is why the ultimate cure for political issues comes from education and urbanization IMO. The US does actually have a chunk of people who don't put up with propaganda and unyielding power, and that mindset does correlate with education and urbanization

    But on a side note, one thing that baffles me to no end, is simply how weak the Democrats are. I mean Harry Reid is the quintessence of the Democratic Party right now, and he's politically pathetic. Always bending over, always giving up, never getting anything done. If Dems came out hard like the GOP and controlled the debate, the right-wing propaganda machine would be done for. The amount of support that the Dems have right now despite the fact that they pussyfoot around everything is amazing. Make the Dem leaders people like Barney Frank, Anthony Weiner, even Al Franken, and we'd see a dramatic shift in public opinion and policy because the rhetoric would not back down.

    Instead we have pieces of trash like Harry Reid who couldn't butter a piece of bread without grabbing his ankles. No matter what happens, though, I highly suspect that the Dems are becoming the new GOP. I think there's already more Dems bought by corporate money than there are those who survive on grassroots and liberal money. The problems are almost all Senate related, though. Senators are disproportionately distributed, and much easier to buy/control.
  42. #117
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    re: the media thing... The FCC can enforce a baseline minimum "equal access" with little difficulty. We can get in the argument over who spins what, but welcome to the world of non-state controlled speech. And without the money to fund paid access I believe you disrupt a portion of the massive spend on sound bite advertising (which is horribly distorted and disingenuous from both sides of the aisle)

    That obv still leaves editorial and opinion media. But that's a freedom of speech issue, and I'll defend the WSJ's right to produce whatever editorial they want to the same degree that I would the Huffington Post -- even tho' I think both are frequently one-sided and distorted. I disagree that, for example, conservative radio is controlling the debate. The Arbitron numbers will carry out that these guys are feuling the less than 1% of the pop that are their core. And its a message that's effectively funded by that core, as it's paid for by advertisers who will stop paying for it the second they don't believe it creates demand for their product. (i.e. the station puts out stuff nobody wants to listen to.) That's one of the beauties of capitalism.

    My whole point of of public funding is not that I'm worried about "big bad corporations"... it's that the cost of campaigning effectively limits the field to either those with money, those who can pander or those sanctioned by party bosses. So we frequently end up with inept, pwned and monied... and rarely those with the intellectual chops to effectively govern a country this large and diverse. I want a bigger field to choose from, much more of a meritocracy, no pure financial ties to special interests and, ideally, the requirement that the platform war be fought via something a little more substantive than 30 second TV spots.

    This makes big labor, corporations and other special interests on both the left and right out work a bit harder than just writing a check to be part of it. Howeer, we're still going to have to navigate a minefield of 1st amendment issues as they relate to PACs, purchase of advertising by supporters (should tax exempt bodies like Unions and churches be allowed to pay for political or position advertising at all? You've also got to find a way to cap corporate spend... really any spend that aggregates sums of money from multiple people - and that's going to be a legal nightmare....)

    But hey -- let's at least take the easy first step and make the elections publicly funded AND enforce via the FCC a mandatory equal level of access for all candidates as a baseline. And of course, find a way to make the people at large engage in some form of genuine and informed debate..... over real issues no less... without just a script from their respective party...

    Wuf - The idea of companies that are too big to fail is hardly unique to us or the present day. A "corporation" is nothing more than a legal fiction that creates a framework for people to engage in a mode of business that (ideally) creates wealth. It's nothing more than a natural evolution of how we transact with each other, and an economies of scale necessity to respond to the infrastructure, investment and innovation requirements of a global economy.

    Countries have been supporting their "corporations" for decades, in big part because they correctly correlate them to jobs. You'll be hard pressed to find a 1st world country that doesn't engage in protectionism and subsidize directly or indirectly. The banking system does represent a unique challenge, and it is too big to fail. I'm all for increasing regulation at the expense of liquidity. Bailing out the US auto industry was more repulsive to me, as the armeggeddon story coming from the UAW is complete bullsh!t. However, at the end of the day, it was a giveaway to Big Labor, and one that sadly just postpones the inevitable painful restructuring that that part of our economy will have to go through.
  43. #118
    What I meant by 'too big to fail' was within current US context. IOW, the banks take all the profit and none of the losses because they get bailed out. This is an extremely destructive paradigm that lends its hands towards corporatocracy. This hasn't happened before in recent history, and not to nearly the same extent as now.

    Even over the last year, the income gap has widened dramatically, and the super wealthy have a much tighter grip on things. This will all happen again because we've shown that the banks can do whatever they want, take all the profits, but when shit goes bad the taxpayers get the buck because if they failed then the entire system would go down, and the banks are powerful enough to make sure that they ultimately take no heat

    We're witnessing the largest corporate welfare and thievery in all modern history, as we speak. This paradigm by which the banks take all the profits, but none of the losses is what I mean by 'too big to fail'.

    And on a different note, I'm all for bailouts. Without them we would currently be in Great Depression 5.0 or something crazy, but those bailouts should instead be loans predicated on adequate return on funds. This isn't what's happened though. Quite the opposite, actually.

    And no, I'm not scared of corporations either, they're very important economic engines, but I am scared of corporate power run amok. The authoritarianism of a corporatocracy is no less bad than a theocracy or dictatorship.

    The recession has been over for quite some time for the banks. This garbage about how employment lags financial credit is bullshit. It only lags when your system does nothing but pour money into supply during a demand recession, like ours. The problem is not that people can't get credit, but that people have crap for income so consumption is down. Suppliers are going out of business because wages are too low and debt is too high. Credit would be flowing like crazy if instead of billionaires we had a high median income.

    But we can't have that because fifty vacation homes is not enough for the top .01%


    And I have a little different look on the media. While AM radio doesn't control the debate, the 'liberal' media is far from liberal. Like I said before, our choice is between conservative and tabloid media with a only fraction of real journalism or liberal personality.

    But more importantly, this freedom of speech stuff is way out of hand. While that is a very necessary tenet of a free society, propaganda is manhandling the country. When writing up the Bill of Rights, Jefferson and Mason probably didn't even know what propaganda was.

    Propaganda media has been paramount in the right-wing's militant views on murdering abortion doctors, opposing science, anti-environmentalism, warmongering, the list goes on and on.

    I mean, c'mon, Fox is an established hand of the GOP and has defended their right to lie about news in court (and won). They are propaganda 101, and I am baffled that this doesn't frighten the shit out of people. I guess people forget that without propaganda machines, oppressive and warmongering regimes just aren't that successful.
  44. #119
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    Dude… conversating with you is always fun ‘cause you always has good sh!t to respond to…

    Banks all gain/no risk. Couldn’t agree with you more. I am fundamentally for reward following risk as the underlying tenet of true free market capitalism. What we have with the banks is some f-ked up federal risk guarantee system that encourages exactly the wrong type of risk taking. We gotta just cut that sh!t out, and I’m fundamentally disappointed that our govt has completely missed the f-kin boat on this one. What greater oppty to do you need as a catalyst for change and the requisite support of public opinion than what we just went through? I don’t want to see nationalized banks (altho’ that’s pretty much what we’ve indirectly got at this point…) What I want to see is regulation that sets very clear and distinct boundaries of operations around acceptable and publicly regulated levels of risk – and then enforce the f-ck out of them.

    BTW… I have the same fundamental issue w/ CEO compensation. I don’t give a sh!t that a guy who runs a billion $ MNC gets paid 1,000 times or whatever the multiple what the guy drives the fork lift. It’s fundamentally no different than me getting paid nothing to shoot hoops (‘cause I suck) while Lamar Odom takes home $14.5m (and yes, he did pick the wrong Kardashian… and I do have problems w/ the fact that we pay this much to a dude who basically puts a ball in a hoop, but that’s a different topic altogether). It is fundamentally an issue of skill, merit, ambition, drive, sacrifice, blah blah blah. The problem I have is where the CEO stands to make outlandish rewards w/out the same degree of personal risk.

    If I start a company, risk my livelihood, savings and god knows how many years of 120 hour work weeks, and I make a bazillion dollars because I succeed… I got no beef. In that same paradigm, if I fail, I stand to lose everything. That’s the way risk/reward should work at those levels. But our current CEO comp paradigm isn’t even close to that.

    Still a demand recession. I agree with you to a point. The only thing I’ll add is a major part of the demand problem is Americans are dealing with an outsized consumption hangover. Let’s put individual blame where it belongs. Americans don’t like to save. They like to over consume. And they choose (nobody holds a gun to their heads, and opening a 5th credit card account because you can is not a graduate degree level decision….) to over leverage themselves to maintain a standard of living beyond what they can afford. Are there exceptions? Sure, but our savings rate being one of the lowest in the developed (and in some cases developing) world isn’t indicative of regionally low wages. It’s just we want to much sh!t, like to buy stuff, and basically suck at anything beyond instant gratification. That’s a personal choice issue all the way.

    And now people have borrowed themselves into a massive hole on the idiotic idea that the magic money man would somehow keep the trail of goldfish and pixie dust flowing, and are having to pay the piper for their own stupid financial mismanagement. I don’t see this as a bad thing. We need to learn as a culture to live within our means. And that includes a healthy savings rate.

    Bailouts. Yuppers – completely agree with you. Any bailout we structured should have come with the appropriate risk-premium claim on future returns and assets. Again – I’d stop short of formally nationalizing. But goddamn it… if the credit market won’t backstop liquidity which is why you’re at the govt’s door in the first place – then I want an outsized premium on those loans, backed by future equity, dividends or claims on liquidatable assets.

    Propaganda. Meh, we’ll disagree on this one too. Yellow journalism has been around since monks were scribing sh!t in draughty cloisters. And definitely since the advent of the newspaper. I believe Jefferson and Mason knew damn well what propaganda was. Just read the press coverage of the 2nd Continental Congress. Of the preceding and subsequent appointments and elections. We’ve been honing this sh!t for centuries. And it’s anything but uniquely American. We just started doing it several hundred years ago. Go talk to the Europeans … they had this sh!t cold long before we did.

    I think if anything it’s better now because there are far more voices. Albeit the internet is sliding us completely off the journalistic integrity abyss, we’ve got more sources, more voices and higher visibility for alternative points of view than we ever had. Fox News is one f-king TV channel of the god knows how many sources available. Bottom line – simple people will believe simple sh!t, on both sides of any argument. You’re not gonna change that unfortunately, and that’s why propaganda has always worked and will continue to.
  45. #120
    About the outsized consumption hangover...

    I hold almost the antipodal view. I understand the point, but the most educated perspectives I've found on this issue come from people like Elizabeth Warren and Robert Reich, and according to them, the problem of credit and debt and savings rate is one of income distribution. I can't source this any better than simply saying to watch the Elizabeth Warren lecture I posted a while back. Problem is that it's an hour long, but she's one of the most knowledgeable financial specialists, and the lecture is all about the massive decline of median incomes since the 50s. Back then the US middle class had very high incomes and savings rates.

    The 'decline of median incomes' thing is a little misleading though. They have actually been stagnant, but that doesn't factor in median lifestyle, and this is where I think the disconnect lays with regards to 'gratification' society. As far as I can tell, median consumption has skyrocketed, and this has effectively made the stagnant median incomes plummet. And I do not agree to blame the individual for this. While the person must take responsibility for their own actions, the economic paradigm handed down form higher up and which we've been born into is one that pushed for this consumption increase.

    Not only is the US individual savings rate negative, but so is the US Fed. We would not be a debt economy if they didn't structure it that way. They put as much money into the hands of the wealthy as they can, borrow as much from foreigners and the Treasury (taxpayers) as they can so they can give to the individual and make it look like incomes aren't hurting, they created a paradigm that saturates the market with advertisements and must-have products and spread lies about housing prices, and we buy into it because we're human

    Back when US savings rate was like 10%, owning a home was something that you could only get a loan for if you had a hefty down payment and a secure income, and your wife didn't work so if you happened to lose your job the ability to find new employment effectively doubled. But just a few years ago you didn't need savings to purchase a home. You didn't even need much of anything because of all the lies that your home was increasing in value so dramatically that you were actually making more money in investment than the mortgage was costing. And everybody works, have no savings, are in credit-card debt, and this is all standard middle class activity

    I'm not fond of blaming the median class for doing what median classes do, when the problematic system was created by special interests and powers. After the Crisis of 08, I started watching a load of lectures and panel discussions with professors and financiers from all over the globe, and the common theme among them all was that the root of the problem is income distribution. They all said the middle class has been gutted, and the problem will remain unless median incomes rise enough
  46. #121
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    Quote Originally Posted by wufwugy
    IMO, the fastest way to go from knowing nothing about the political aspect of economics to knowing a decent amount is to watch a bunch of lectures and interviews and panel discussions with professionals (usually professors) of economics, finances, politics, etc

    Good names to start with are Elizabeth Warren, Paul Krugman, Robert Reich, Joseph Stiglitz.... Here's one of the ones I remember the most because Elizabeth Warren is super smart, a great speaker, and the US history of the middle class is very interesting (the focus of this lecture).

    http://www.youtube.com/watch?v=akVL7QY0S8A
    This is really interesting, ty
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  47. #122
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    Meh… I think we’ll just fundamentally disagree on this one. Not on the structural issues with middle class... both migration from lower up but also the sustainability. I disagree on the fundamental role our evolving culture of consumption within the middle class plays.

    I’ve seen firsthand far more times than I can even remember the fundamental cultural differences when it comes to consumption. “Standard middle class activity” is because the American culture has made it so. It manifests itself in so many ways that are individual decisions. To see them as the sole pre-destined outcome doesn’t work for me because a) I refuse to buy into the idea that individuals are destined to be nothing more than lemmings and b) because there are far too many examples of exceptions.

    The concept of “must haves” is truly laughable in our culture. And yes, I could blame it all on a media brain-washed populace, but I won’t because I really think that’s both blatant apologism and a very convenient absolution for personal responsibility. Our system doesn’t pre-dispose us to this sh!t, we choose to adopt that mind-set. And the best evidence of that case is the rapid ascension to the middle class of immigrants who bring to this country consumption ethics that value long-term perspectives, personal responsibility for multiple generations and more importantly, a lack of obsession with the latest shiny discretionary piece of crap that someone wants to dangle in front of them.

    On the flip side, I know too many people who have no savings, no assets and yet re-up their new car lease as regular as clockwork. Who have all the gadgets and trappings of a level of stuff they aspire to, with no willingness to look past the short term and make the decisions (and present day sacrifices) that would stand a more likely chance of getting them there eventually on a firmer footing. Call it cultural, call it the idiocy of crowds, peer pressure in its worst form or just greed or entitlement. All of the above still rest with the individual.

    The recent housing market is a great example. Look at how it manifested itself. People didn’t go “great… I can now get into a house without a down payment… let me look at what I can afford.” Instead they went, “great… let me look for the largest, newest, shiniest thing I can possible get approved for… and if bank A won’t give me the loan, I’ll go down the street to Banks B, C or D until I find someone who will.”

    That my friend is individual greed of consumption, and the selective willingness to “suspend rationality” that might contradict with the desired outcome. This same motivation drove people to ride the equity bubble. To load up on low interest rate credit. And to continually push the envelope on what their income can provide them now, today, to hell with ten years or a lifetime from now.

    (One of the other interesting things that is frequently left out of the housing debate is where the purchase money went? The middle class effectively sold houses to other members of the middle class. One individual party at some point made virtually every penny of the profit that was realized off of the housing boom. $ spent on resale homes eclipsed those spent on new developments, where you could make the argument that a "corporation" pocketed all the wealth. So all of these profits were technically still floating around in the broader middle class pool. Then when the new owners walked away from the home in foreclosure, nobody clawed back the original profits. The bank and taxpayer took the hit, which you could translate into a direct subsidy of the middle class.)

    One solution is for the government to step in and severely restrict personal credit. I’m not sure it needs to right now, because the market’s taken care of it. But in time, that will loosen. That won’t solve the personal savings issue (and of course will dramatically curb responsible use of personal credit which is an essential foundation for most small businesses) because I really believe we have gone through a dramatic cultural consumption shift, as fundamental as we see between depression era and boomers, that just doesn’t place a priority on anything beyond instant gratification. But at least we’d take away one pair of pointy scissors while their running around the room looking for their latest fix.
  48. #123
    sarbox, this is just what popped into my head as I read your post and is in no way substantiated by any source:

    If person middle class citizen A buys a house and then rapes middle class citizen B by selling it to him at an inflated value, then A mores up the ladder doing the same with a more expensive property while B does a similar thing to C we have a sort of pyramid scheme working. Sure A is participating in this, but Im not so sure he ever walks away with fat pockets because he is hopelessly trading up the entire time. The only people who can climb the ladder and abuse the people lower in the period with impunity even after the bubble busts are the people who can in fact afford the houses they are buying. And on top of that have big enough cushion for when the bubble does bust so it doesnt matter if the mortgage they end up in is upside down. The only people that fit this bill are the super rich. I could be way off on this, but it just seems like not that many middle class people walked away a winner from this.

    So Im not saying that A B and C are not to blame, but I am just saying that in the end they were the ones screwed while the uber wealthy got a financial slap on the wrist an are still living large. I mean it really does resemble one big pyramid scheme in which the end result is an evaporated middle class.
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  49. #124
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    Boost - You make a very good point. A couple of additional things to consider.

    1. There is a segment of that middle class that refused to buy into the ponzi and effectively cashed out. Their prudency was rewarded by the fact that they retained their profit. They were the prudent middle class, who made exorbitant profit on their investment and kept it.
    2. There are also those in the middle class that, even with obscene profiteering from their initial investment, still followed a cadence of buying what they could afford. In the vast majority of cases, they will be able to ride out the real estate downturn (because they spent within their means) and will be in a position of ownership when the market inevitably cycles back up.
    3. The vast majority of real estate transactions did not involve anyone from the supposed "super rich". Wuf's 20 vacation homes is mostly hyperbole, and even still applies to such a relatively small portion of the real estate market, and an even smaller fraction of the actual transactions as to render it almost irrelevant. This was a bubble created by lower, middle and upper-middle class selling predominantly to buyers in the same classes. At the very top you'll have those who migrated to properties owned by the super wealthy but it's so marginal as to almost be irrelevant to the broader issue.

    And yes, I'm sure there are speculators who had the capital to play large in the current bubble, as there were in all the other bubbles that preceded it. But how many of them had the perfect timing to exit before their holdings were slashed to sh!t as well? If the Tech bubble was any indicator, it's probably not a lot.
  50. #125
    Quote Originally Posted by sarbox68
    And the best evidence of that case is the rapid ascension to the middle class of immigrants who bring to this country consumption ethics that value long-term perspectives, personal responsibility for multiple generations and more importantly, a lack of obsession with the latest shiny discretionary piece of crap that someone wants to dangle in front of them.
    This is a really good point. However, the logic here (which is good logic) also implies that it's largely a nurture issue. That's part of what I've been getting at. No matter how much blame can be put on the US culture of gratification, it is a *culture* and it has been nurtured into us. That doesn't mean that there's nothing that we as individuals cant do about it for ourselves. On the contrary, we have some power over our own destiny, but we are also nurtured into a certain destiny

    The thing about nature vs nurture is that nurture essentially forms a new nature. Creating a middle class that collectively overconsumes may be a nurture, but it essentially takes over as being the nature of the system

    I hope you get what I'm saying. I definitely blame individuals for making individual mistakes. I know people who don't pay attention to important stuff and have gotten screwed because of it, but when evaluating the system as a whole, I am struck less by the individuals' desires to consume, and more by the structuring of the system by those with power to create an economy that moves forward based on overconsumption
  51. #126
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    Quote Originally Posted by wufwugy
    The thing about nature vs nurture is that nurture essentially forms a new nature. Creating a middle class that collectively overconsumes may be a nurture, but it essentially takes over as being the nature of the system
    I like this.

    I actually hold hope that the recent shock will sufficient to force the change in the culture. And there is some evidence that Gen Y is less materialistic and driven by over-consumption (also holds a much stronger concept of broader global self...) than the immediate generations that preceded it. I think that's really good news... because nuture you can change. Nature is something you're stuck with...

    Interesting thing is, other countries are being forced to transition their cultures towards a higher level of consumption. This has been a big root of Japan's economic problem over the past few decades. They just don't have the domestic consumption power to fuel themselves out of their funk. China and India will learn very quickly (as they're starting to...) that their middle class aspirations are not going to be fed by American consumers... they're going to have to start carrying their own transactional weight.
  52. #127
    sarbox, I'm not sure if you're saying that the banks and special interests didn't play a role in the crash. You're right that many were not specifically involved in real estate transactions, but the banks are absolutely at fault for providing the credit upon which those transactions could go forward. Not to mention, they were making loads of profits on re-working those loans. I'm not a finances guy and I don't understand things like credit default swaps, derivatives, hedge funds, etc. so I won't try to go into specifics, but word around town is that the real issue comes from the interworkings of some super wealthy financiers.

    I'm sure the guys at the top of Wall Street sat around with their cognacs and hooker titty blow, and devised a plan by which they could make hundreds of billions, crash the whole thing, then make even more billions because they got so big and powerful that corporate welfare would become the name of the game. I'm serious. I think they knew exactly what they were doing, and they knew that they wouldn't have to pay for it once the system collapsed because they run the entire financial system (which runs the economy), and they own the right politicians.

    This actually isn't outlandish at all. This type of shit happens all the time, but we tend to only see it on small scale. The last decade, at least since Clinton signed Gramm-Leach-Bliley, to now, has been the biggest financial pyramid scheme the world has ever seen. Even calling it a ponzi scheme isn't that off. While some details are different, it's generally the same idea. This is crazy shit. It's almost like we take corporate welfare and corporate power run amok for granted. The fact that executives and politicians have not been burned at the stake is frightening.

    Dude, the top earners in the US have made $30B since last September. WTF!? They create a system in which the collective loses several trillion, but they continue making money? And I'm sorry, but I can't source that number. I forgot the source, and it's not something that can be googled that easily. One thing that is easily sourced, however, is that banks recorded record profits earlier this year (which I'm sure you already know). Meanwhile, unemployment keeps going up

    And FWIW, I fully support armed rebellion. I sincerely believe that the country is in the early stages of a full blown corporatocracy. The special interests have played this perfectly. There was once a time when the Boston Tea Party was a grassroots rebellion, but the ruling powers have learned that if they can create astroturf movements they effectively quash grassroots, and get their very own serfs to defend them, tooth and nail.

    A couple hundred years ago, we had clear cut taxation without representation. We gathered arms and rebelled. We won. But today, we have secret taxation *with* representation, and that representation leads the 'rebellion' against themselves. History has shown peoples successfully defeat the former, but I'm not so sure about the latter
  53. #128
    Quote Originally Posted by sarbox68
    Quote Originally Posted by wufwugy
    The thing about nature vs nurture is that nurture essentially forms a new nature. Creating a middle class that collectively overconsumes may be a nurture, but it essentially takes over as being the nature of the system
    I like this.

    I actually hold hope that the recent shock will sufficient to force the change in the culture. And there is some evidence that Gen Y is less materialistic and driven by over-consumption (also holds a much stronger concept of broader global self...) than the immediate generations that preceded it. I think that's really good news... because nuture you can change. Nature is something you're stuck with...
    .
    I have that hope as well, but I believe it to be a short-lived one. A couple examples...

    The Great Depression was way worse than this. By the time FDR and his Congress got in the game, the nation was full of shantytowns and 'standard' policies were largely abandoned by politicians. FDR and the new Congress worked together very well, and passed reforms like crazy. This was the beginning of an era that would send the US into colossal economic success. But it eventually crumbled. It lasted for a couple decades, but corporate power finally began getting their hold on a political party, and the income gap began widening dramatically. This has not halted since.

    Now, you say you hope this has stopped now, and we will see a paradigm shift, but I ask, how can we realistically look for this shift when our reform and mindset is substantially weaker than the time when we had the most success in devising reform?

    Another example comes from an analogy about voters. A recent study has shown that there is strong correlation with how voters vote throughout their entire lives based on the political climate while they were aged 18-25. Basically, young voters are caught up in the political climate of their time and they then pretty much stick with the viewpoints of that time till they die. Things like young voters during Kennedy and Bush W tend towards Dem, and ones during Reagan and Carter tend towards Repub. This is because of the political climate reinforcing certain viewpoints about certain parties at the point in time

    What I am getting at is that we're continually creating new generations. Maybe you and I or Y generation will change their ways, but the generations coming right after them likely will not. On top of that, it's so easy to forget the past. Democrats continually forget how badly they get swift-boated, and the GOP constituency has already forgotten that they voted for the guy who reigned over a series of the worst political policies of their lifetimes.

    I fully expect the populous to forget about all this soon enough, and shift focus onto the next big thing. Especially since journalism is just a bunch of tabloids and propaganda. The banks aren't worried. They're already planning the next bubble. Actually, recently, word came out about a brand new idea being pushed by banks about doing the exact same thing they did with derivatives and swaps with real estate but with life insurance and funerals. This was a couple months ago, and the forum on which the article was linked had an archive crash, so I can't source it, unfortunately. The article was great though. Knowing anything about the housing bubble made it read like the freaking Onion, but was legit
  54. #129
    Quote Originally Posted by DanAronG
    Quote Originally Posted by wufwugy
    IMO, the fastest way to go from knowing nothing about the political aspect of economics to knowing a decent amount is to watch a bunch of lectures and interviews and panel discussions with professionals (usually professors) of economics, finances, politics, etc

    Good names to start with are Elizabeth Warren, Paul Krugman, Robert Reich, Joseph Stiglitz.... Here's one of the ones I remember the most because Elizabeth Warren is super smart, a great speaker, and the US history of the middle class is very interesting (the focus of this lecture).

    http://www.youtube.com/watch?v=akVL7QY0S8A
    This is really interesting, ty
    Holy shit so the first time I watched this was back when I didn't even know what consumption meant with regards to economies, and I completely forgot that she obliterates the notion that our problems are from systematic overconsumption. She quite succinctly provides the data that shows that over the last 4 decades, consumption in fact has not increased, but gone DOWN, yet the costs for necessities like housing, health care, child care, have skyrocketed.
  55. #130
    ya, whats scary about the life insurance thing is there is no possible way that the life insurance companies and survive this.
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  56. #131
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    Quote Originally Posted by wufwugy
    And FWIW, I fully support armed rebellion.
    And here, sir, is where you completely lose me. Unfortunately, given my chosen career for the past 25 years, you and I would be on opposites sides of the line on this, and I have every confidence that I am the far better trained of the two.

    If you believe that the US would be able to maintain a fraction of it's global leadership and economic standing in the light of armed internal conflict, you are either incredibly uninformed or completely irrational. You have already pointed out that our economy relies heavy on financing form other sources... 100% of which would evaporate in the scenario you describe.

    Take a year out of your life, leave the internet and classroom videos aside, and visit the world that's already gone down this path in the name of populous rebellion. If you need a list of banana republics and failed populist autocracies, I'd be happy to provide the, as well as connect you to the people that can help ensure your safety while you're there.

    Ayn Rand may have been bitter nihilistic lesbian, but she had a valid point. Much of the "wealth" that you point to in your examples is illusory. It's not a direct function of anything that the middle or lower class does or creates. It's a pure manifestation of the system itself. The wealth created by the financial machinations that created the current crisis is not in any way remotely correlated to production of the masses. It's ephemeral. No crisis inducing behavior, and this wealth ceases to exist. And the idea that significant portions of it remain or are transitioned when the current owners are dispatched has been disproven time and time again. From Venezuela to Zimbabwe to Argentina, to a whole host of middle ground regimes who are less drastic examples but where a grab of assets quickly teaches the lesson that intellectual capital cannnot be extracted under durress, and stability and guarantee of private interests are penultimate in the ability to sustain growth.

    Did Clinton and Bush II keep interest rates too low too long? Of course... don't forget it was incredibly popular among the lower and middle class while they were banking double digit annual growth on their assets. And it was this popularity that I believe was a primary reason for him keeping them there far longer than they should have been.

    Do we need to dramatically tigthen controls on banking to mitigate risk? Of course. Do we need to limit access to credit to protect the economy from the collective idiocy of individuals and the profiteering from such profligacy? Again, yes. Are you going to forcibly redistribute wealth in an attempt to salvage the middle class in a dramatic crucible of armed popular rebellion? God help us if you do... because what's left will be very unlikely to resemble anything that you aspire to.
  57. #132
    It's last resort, and would need to be on an epic scale similar to the Declaration of Independence. But this will not happen; my support for this is purely hypothetical. I also hypothetically support armed rebellion for a lot of things. However, it would need to be determined and with a reasonable plan of success.

    But like I said, it's hypothetical. We are so quick to claim our patriotism and independence, yet we forget that our pedigree comes straight out of fierce rebellion. I'm not suggesting this as the best course of action, not even close. I am merely making a hypothetical rabbit trail

    It's not like rebellion is a thing of the past. Jefferson wasn't wrong when he said that sometimes freedom must be won by the blood of patriots and tyrants. All I am saying is that because I believe all signs are pointing towards corporatocracy, we may eventually find history repeating itself
  58. #133
  59. #134
    I appreciate the effort, but you can't expect to be taken seriously after dismissing the analysis of a Harvard professor who specializes in finances and is highly regarded as one of the top analysts in the field

    See that's the thing. I do my best to say stuff that is backed up by people like Elizabeth Warren, who knows more about this subject than everybody who has ever even heard of FTR combined. Pretending like you can provide a contrary view without also providing the analysis of somebody as equally qualified as her is LOLtastic.
  60. #135
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    Quote Originally Posted by wufwugy
    Actually, recently, word came out about a brand new idea being pushed by banks about doing the exact same thing they did with derivatives and swaps with real estate but with life insurance and funerals. This was a couple months ago, and the forum on which the article was linked had an archive crash, so I can't source it, unfortunately. The article was great though. Knowing anything about the housing bubble made it read like the freaking Onion, but was legit
    I guarantee you there will be another bubble. And another one after that. And another one after that. This sh!t didn't just start in 1624. And it will continue long after you and I are dead and buried. As long as greed is an integral part of human nature, manifesting in cultures that embrace the opportunity to attain wealth without work, you will find people willing and able to manufacture the next exploitative opportunity (whether intentional or, as in the case of the '00 equity bubble, partially unintentional...) and literally millions of people just itching to jump on board.

    Hell... in my lifetime alone so far I've gone through 2 major real estate bubbles and 3 equity crashes. I'm sure there'll be others, but the story is always the same... the ones that get hurt the most are the ones that speculate the most. You can pass if of as simple risk and reward, but at the end of the day it's as fiscally sound an idea as buying lottery tickets. Actually, much worse as the downside is almost always greater than the individual is really equipped to bear.

    You can try and regulate this out of the human condition, and I welcome and support every such effort. But you won't make it disappear. And with more people moving into the upper economic circles globally, you're going to see more of this not less, as more people catch the consumption bug.

    For the record, I completely agree w/ Warren's premise that the consumer must become whole before this recession will really be over. But I also believe the consumer bears a tremendous portion of the responsibility for their own piss poor shape. And unless they fundamentally change their behavior, any broad based bailout aimed at the individual level would be just a temporary pass to continue behaviors that would put them right back in the same condition. Funny thing... there's not really that much difference at the end of the day between the people on wall street, k street or main street - in motivation, values or, sadly, the short-sighted nature of their perspectives.
  61. #136
    Quote Originally Posted by sarbox68
    Funny thing... there's not really that much difference at the end of the day between the people on wall street, k street or main street - in motivation, values or, sadly, the short-sighted nature of their perspectives.
    Fuckin A

    I've sometimes wondered if I would change my tune if I suddenly came into an assload of money and power. I wonder if I would stick to my guns and beliefs, or if I would say fuck em and do what's in my selfish interests

    It's hard to say because, like you said, we already heavily trend towards doing what's in our own selfish interest, no matter our situation. I think this varies for different people in different circumstances though, but by how much, I dunno
  62. #137
    ...

    I guess as a 3rd year economics student I had some expectation of intelligent debate upon clicking on the "official economics discussion" thread, but, well, suffice it to say that I've been somewhat disappointed.

    Few things.

    - Just because someone with impressive qualifications said something, it does not make it true. Arguments of the form "well such and such a person said something therefore your argument is automatically wrong and you are an idiot" are not just very bad, but should be ignored entirely.

    - Cherry-picking anecdotal evidence does not get one very far in any type of serious discussion in economics. You need to prove that your point of view is correct in all situations, not just one, where there are an irreconcilably huge number of confounding variables that are impossible to take into account. If we were to accept this logic, you could prove pretty much anything you wanted to; ex. this man eats nothing but cheeseburgers but look, he is buff as hell and there's not an ounce of excess fat on him! Therefore cheeseburgers are not fattening and are part of a healthy diet. = bad argument, and completely invalid.

    More specifically:

    Why is there such a hate-on for billionaires going on in this thread? So many people are easily taken in by conspiracy theories; I only skimmed through most of the posts here but I'm pretty sure I read something along the lines that 'the recent financial collapse was engineered by billionaires/banks/whatever to make themselves more rich'. Ok. I realize that I probably am not going to be able to convince you otherwise by condescension or calling you an idiot. So forgive me if I tell you to educate yourself on the subject further. There is just so much wrong with this that it is not even worth devoting a few more seconds thinking of it, unless you just get a kick out of making outrageous, indefensible claims to get reactions out of reasonable people.

    Anyhow. So you're a socialist. You get a hard-on from even thinking about the concept of a welfare state. Income inequality makes your blood boil. The "unseen hand" of classical economic theory is nothing but black magic to you. You think Adam Smith was a giant douche.

    Too bad. Don't get all butthurt just because someone feels differently than you. I don't hate you for it; why not return the favour.
  63. #138
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    Quote Originally Posted by Penneywize
    ...

    I guess as a 3rd year economics student ...
    Did I miss anything even resembling substance here? I mean, I don't expect graphs and equations... but for a 3rd year economics student, a few vague Econ 101 aphorisms that even I remember from my undergrad (and I'm prolly twice your age...) is pretty weak.

    Some thoughtful content would be nice - even if it's just a theoretical premise or position.
  64. #139
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    Quote Originally Posted by StillDeadMoney
    Why is there an mexican kid screaming at a pissed off horse?
  65. #140
    Quote Originally Posted by Penneywize
    ...
    - Just because someone with impressive qualifications said something, it does not make it true. Arguments of the form "well such and such a person said something therefore your argument is automatically wrong and you are an idiot" are not just very bad, but should be ignored entirely.
    What you're referring to is the fallacy named argument from authority. It is basically when your evidence for an argument is the position of another person. This in itself is fallacious, but within certain contexts is not.

    In a casual discussion like this, referencing authorities is far from fallacious. In fact, it's the best course of action. It's when you get down to the nitty gritty on the scientific level that referencing authority becomes wrong. My objection had nothing to do with disagreeing with Elizabeth Warren, but with not adequately backing that disagreement up.


    - Cherry-picking anecdotal evidence does not get one very far in any type of serious discussion in economics. You need to prove that your point of view is correct in all situations, not just one, where there are an irreconcilably huge number of confounding variables that are impossible to take into account. If we were to accept this logic, you could prove pretty much anything you wanted to; ex. this man eats nothing but cheeseburgers but look, he is buff as hell and there's not an ounce of excess fat on him! Therefore cheeseburgers are not fattening and are part of a healthy diet. = bad argument, and completely invalid.
    Yes, cherry-picking, anecdote, and correlation = causation are all fallacies. They're also irrelevant to what has actually been going on in this thread.

    And your argument about the standard by which theory develops is wrong. On the one hand, you say that the position must be categorically correct, then on the other hand you say no position can be categorically correct. You also make the mistake in stating that one position can even be categorically correct. While this could be true in some profound sense, economics is far from that figured out, and that which is correct is heavily based on the context around it. A lot of what has been said in this thread is wrong under different contexts. Like my ideas for taxes, while great under our current context, would be wrong under different contexts

    Why is there such a hate-on for billionaires going on in this thread? So many people are easily taken in by conspiracy theories; I only skimmed through most of the posts here but I'm pretty sure I read something along the lines that 'the recent financial collapse was engineered by billionaires/banks/whatever to make themselves more rich'. Ok. I realize that I probably am not going to be able to convince you otherwise by condescension or calling you an idiot. So forgive me if I tell you to educate yourself on the subject further. There is just so much wrong with this that it is not even worth devoting a few more seconds thinking of it, unless you just get a kick out of making outrageous, indefensible claims to get reactions out of reasonable people.
    My loathing for billionaires is because over a billion people live in squalor due to not fault of their own. Claiming it to be better than our current system to devise an economic system that solves humanitarian crises via some form of taxation on the super wealthy is the easiest argument I could ever win

    And the idea that conspiracy theories are being thrown around here are wrong. I said it once, and it has nothing to do with the actual method to the system. It is pure speculation, but it in no way negates the fact that the Crisis of 08 was completely a product of money-grabbing by special banking interests. Whether they knew what they were doing or not is a guess, but the educated guess is actually on the side of them knowing what they were doing. See you're telling me that if they didn't know what they were doing then they were so ignorant about reality to not know that they were creating a gigantic, unsustainable bubble that would collapse and produce masses of ruin. That was like the easiest thing to figure out based on simply looking at a couple numbers
  66. #141
    Quote Originally Posted by sarbox68
    Quote Originally Posted by StillDeadMoney
    Why is there an mexican kid screaming at a pissed off horse?
    It's an edit.

    A commendable edit, actually. He posted a bunch of contrary views (some of which were definitely legitimate), but because arguing on the internet is like winning the speshul ulimpiks, he decided to back out
  67. #142
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    Default interesting theory

    Anyone come accross this before?

    http://gregpytel.blogspot.com/2009/0...n-history.html

    It's an interesting concept. Would be interested to hear peoples opinions.
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  68. #143

    Default Re: interesting theory

    Quote Originally Posted by DanAronG
    Anyone come accross this before?

    http://gregpytel.blogspot.com/2009/0...n-history.html

    It's an interesting concept. Would be interested to hear peoples opinions.
    Yes I do believe that the financial system can be likened to a giant pyramid scheme. This is hard to deny since the system is one that trends towards wealth being mostly earned and concentrated at the top, and creates a sort of serfdom of the populace.

    As to the current collapse and all that jazz, yes it's one of the biggest heists, if not they biggest, in history. This is actually rather clear. Special interests made assloads of money, then were given assloads of money when they started losing money. It's the all reward/no risk thing sarbox referenced.

    Now, I wouldn't say that the financial system should be trashed, not even close. For one, I don't know enough about it to claim that, but more importantly, it has been amply shown that an adequately regulated system actually works quite well

    On a side note, I'd like to point out that the author is kinda wrong when he said it would be better to have let the banks collapse like this was a truly free market. That is far from true. Had this happened we would have seen economic activity plummet due to credit completely freezing up. Job loss numbers would have drawfed the 500k/month we were seeing. US economy runs on credit, and without that comes complete economic catastrophe. I do think, however, that the system relying so much on credit is probably pretty bad and lends its hands towards too much authoritarian control over the populace

    The problem, however, is that the support was given in form of bailout, not loans. But that's what happens when Congress is owned by the banks I guess
  69. #144
    AndrewT Guest

    Default Re: interesting theory

    @DanAronG
    You kinda missed Pytel's key point, which is the second part of a quote from his essay (in bold). He wrote:

    "In a normal free market economy a business that fails should be allowed to collapse. If a business is a giant pyramid scheme, like the current financial system, it must be allowed to collapse and its executives and operators should face prosecution. After all running pyramid schemes is illegal. Letting the banks collapse would have been a far more commercially sound solution than the current approach, provided the governments would have secured and guaranteed socially vital interests directly. For example, individual deposits would be guaranteed if a bank collapsed. Deposit accounts records, along with mortgage and genuine business accounts, would be moved to a specially created agency of the Bank of England which would honour them with government help. If a pension fund collapsed due to a bank collapse, individual pensioners would continue receiving their unchanged pensions from the social security system. This would guarantee social stability and a normal flow of cash into the economy."
  70. #145
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    Default Re: interesting theory

    Quote Originally Posted by wufwugy
    Yes I do believe that the financial system can be likened to a giant pyramid scheme. This is hard to deny since the system is one that trends towards wealth being mostly earned and concentrated at the top, and creates a sort of serfdom of the populace.
    But that doesn't make it a pyramid scheme, that could be said of nearly every big company in the world.

    Quote Originally Posted by wufwugy
    As to the current collapse and all that jazz, yes it's one of the biggest heists, if not they biggest, in history. This is actually rather clear. Special interests made assloads of money, then were given assloads of money when they started losing money. It's the all reward/no risk thing sarbox referenced.

    Now, I wouldn't say that the financial system should be trashed, not even close. For one, I don't know enough about it to claim that, but more importantly, it has been amply shown that an adequately regulated system actually works quite well

    On a side note, I'd like to point out that the author is kinda wrong when he said it would be better to have let the banks collapse like this was a truly free market. That is far from true. Had this happened we would have seen economic activity plummet due to credit completely freezing up. Job loss numbers would have drawfed the 500k/month we were seeing. US economy runs on credit, and without that comes complete economic catastrophe. I do think, however, that the system relying so much on credit is probably pretty bad and lends its hands towards too much authoritarian control over the populace

    The problem, however, is that the support was given in form of bailout, not loans. But that's what happens when Congress is owned by the banks I guess
    Pretty much agree with the rest.

    Any thoughts on the laon to deposit-ratio theory? ie LD ratio over 100% is unsustainable, and guaranteses colapse of financial system.

    If you do agree with that part, was that the simple thing that the current regulatory bodies missed, ie that current regulation wasn't adequate and that this is the evidence of that, and were the banks (not sure who exactly that refers to) aware that the system they were using (ie this LD ratio over 100%) was in itself enough to cause the current financial crisis?

    Or do you believe there is a lot more to it than just this?
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  71. #146
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    Default Re: interesting theory

    Quote Originally Posted by AndrewT
    @DanAronG
    You kinda missed Pytel's key point, which is the second part of a quote from his essay (in bold). He wrote:

    "In a normal free market economy a business that fails should be allowed to collapse. If a business is a giant pyramid scheme, like the current financial system, it must be allowed to collapse and its executives and operators should face prosecution. After all running pyramid schemes is illegal. Letting the banks collapse would have been a far more commercially sound solution than the current approach, provided the governments would have secured and guaranteed socially vital interests directly. For example, individual deposits would be guaranteed if a bank collapsed. Deposit accounts records, along with mortgage and genuine business accounts, would be moved to a specially created agency of the Bank of England which would honour them with government help. If a pension fund collapsed due to a bank collapse, individual pensioners would continue receiving their unchanged pensions from the social security system. This would guarantee social stability and a normal flow of cash into the economy."
    Think you meant to aim that at Wufwugy.
    I'm the king of bongo, baby I'm the king of bongo bong.
  72. #147

    Default Re: interesting theory

    Quote Originally Posted by AndrewT
    @DanAronG
    You kinda missed Pytel's key point, which is the second part of a quote from his essay (in bold). He wrote:

    "In a normal free market economy a business that fails should be allowed to collapse. If a business is a giant pyramid scheme, like the current financial system, it must be allowed to collapse and its executives and operators should face prosecution. After all running pyramid schemes is illegal. Letting the banks collapse would have been a far more commercially sound solution than the current approach, provided the governments would have secured and guaranteed socially vital interests directly. For example, individual deposits would be guaranteed if a bank collapsed. Deposit accounts records, along with mortgage and genuine business accounts, would be moved to a specially created agency of the Bank of England which would honour them with government help. If a pension fund collapsed due to a bank collapse, individual pensioners would continue receiving their unchanged pensions from the social security system. This would guarantee social stability and a normal flow of cash into the economy."
    Yeah, that's fine. I guess I missed that part. Was kind of a kneejerk reaction by me because I'm so used to blogs being Austrian and thinking that the cure for every problem is to let everything collapse
  73. #148
    AndrewT Guest

    Default Re: interesting theory

    Yes. It is a pyramid scheme. By definition. A pyramid scheme is a business model which assumes exponential growth (with base greater than 1). The name "pyramid" comes from graphical representation. Lending with loan to deposit ratio greater than 1 is as classic example of a pyramid scheme as it can be.

    PS. You can have a pyramid scheme in a direct selling business or in a kids game of sending post cards (adding own name to the list and finding other guys to do the same).

    Quote Originally Posted by DanAronG
    Quote Originally Posted by wufwugy
    Yes I do believe that the financial system can be likened to a giant pyramid scheme. This is hard to deny since the system is one that trends towards wealth being mostly earned and concentrated at the top, and creates a sort of serfdom of the populace.
    But that doesn't make it a pyramid scheme, that could be said of nearly every big company in the world.

    Quote Originally Posted by wufwugy
    As to the current collapse and all that jazz, yes it's one of the biggest heists, if not they biggest, in history. This is actually rather clear. Special interests made assloads of money, then were given assloads of money when they started losing money. It's the all reward/no risk thing sarbox referenced.

    Now, I wouldn't say that the financial system should be trashed, not even close. For one, I don't know enough about it to claim that, but more importantly, it has been amply shown that an adequately regulated system actually works quite well

    On a side note, I'd like to point out that the author is kinda wrong when he said it would be better to have let the banks collapse like this was a truly free market. That is far from true. Had this happened we would have seen economic activity plummet due to credit completely freezing up. Job loss numbers would have drawfed the 500k/month we were seeing. US economy runs on credit, and without that comes complete economic catastrophe. I do think, however, that the system relying so much on credit is probably pretty bad and lends its hands towards too much authoritarian control over the populace

    The problem, however, is that the support was given in form of bailout, not loans. But that's what happens when Congress is owned by the banks I guess
    Pretty much agree with the rest.

    Any thoughts on the laon to deposit-ratio theory? ie LD ratio over 100% is unsustainable, and guaranteses colapse of financial system.

    If you do agree with that part, was that the simple thing that the current regulatory bodies missed, ie that current regulation wasn't adequate and that this is the evidence of that, and were the banks (not sure who exactly that refers to) aware that the system they were using (ie this LD ratio over 100%) was in itself enough to cause the current financial crisis?

    Or do you believe there is a lot more to it than just this?
  74. #149

    Default Re: interesting theory

    Quote Originally Posted by DanAronG

    But that doesn't make it a pyramid scheme, that could be said of nearly every big company in the world.
    That's true, but I come from the position that there is something to be said about completely reworking economic theory in the first place. I'm not even close to knowing enough about this stuff to even begin, but I hold contention with an economic paradigm that rewards wealth with more wealth. As far as I can tell, we're working with a closed system, and when wealth goes one place it is detracted (not necessarily linearly) from another. I'm not sure what to think, but I do know that I find our current system of income distribution to be very flawed. If it wasn't then there wouldn't be a ton of poor and a handful of super wealthy

    Any thoughts on the laon to deposit-ratio theory?
    While I love analyzing stuff, I should keep my mouth shut about this. I know virtually nothing about LTD ratio. For all I know, the credit system itself could be unsustainable. I simply just do not know.

    If you do agree with that part, was that the simple thing that the current regulatory bodies missed, ie that current regulation wasn't adequate and that this is the evidence of that, and were the banks (not sure who exactly that refers to) aware that the system they were using (ie this LD ratio over 100%) was in itself enough to cause the current financial crisis?
    I do not know all of which regulatory bodies missed, and there's a lot of stuff.

    What do know though is that possibly the biggest problem was the Gramm-Leach-Bliley Act which overturned the provision in the Glass-Steagall Act that prohibited investment, commercial, and insurance banks/companies from merging. I don't understand the details, but the word is that doing so meant that commercial funds would eventually take the heat when investments were bad enough.

    But there's a whole lot going on. Just simply not regulating the details of finances itself was (and still is) a huge problem; things like derivatives, swaps, hedging, etc. Just imagine the food and drug industry without the FDA. The FDA, while having its flaws, does a pretty good job at keeping private interests from exploiting the system and making shitloads of dough doing so. Imagine how often we'd be seeing epidemics and cheating without the FDA. It would be ridiculous.

    Reality is that all things need intelligent, proactive, and varied regulation. The financial industry simply just lobbied Congress forever and created a system in which regulation was weak compared to what it needed to be to ward off severe exploitation

    Anyways, merging commercial and investment banks and insurance companies was the main problem. In the US, everything's gotta be high risk and for profit, it seems.
  75. #150
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    Not really economics per se, but two examples just from this week of what makes me (and I think a number of centrist / libertarian folks) nuts about how retarded our govt process can be…

    - Congress is currently considering expanding the Community Reinvestment Act, under which about $6 trillion of loans have been made to low- and moderate income borrowers since ’77. As usual, the govt regulators “supposedly” have neglected to track the performance of these loans, and therefore don’t have any visibility into the toxicity of these liabilities. The banks that have lent heavily under them, however, are starting to push back with some pretty unpleasant statistics – Cleveland’s Third Federal S&L reports a 35% delinquency ratio on its CRA portfolio, compared to 2% on its other loans. Chicago’s Shorebank reports 19% of its CRA-related first mortgages are delinquent. BoA CRA loans account for 7% of its mortgage portfolio, but 29% of loan losses in 2008. And now we’re going to expand this program? Didn’t we just learn that providing easy money to groups of people who do not meet the financial requirements to repay their obligations is a sh!t idea? Oh wait… it’ll go over well with a key voting block for the party in power…. Never mind.
    - The left-leaning Economic Policy Institute and some liberal members of Congress are recommending we tax stock and bond trades. I don’t think this is a bad idea… until I read what they’re looking to do with the revenue raised. The est $100-150 billion would be allocated to funding new health-care programs. WTF? I’m all for the true cost of goods and services being passed through to the consumer, as I believe this is the only way sustainable supply and demand works. So we have a financial system that’s f-ck busted from a regulatory standpoint – not just because we lack the rules, but we lack the infrastructure to enforce them. How about, instead of the usual “tax and fund a pet project” bullsh!t, we take the money raised from a transactional tax on equity trades and use 100% of it to fund additional resources for the SEC? Oh, I don’t know, more auditors and lawyers so that they don’t miss the next Bernie Madoff for 14 years at the cost of billions of dollars. But no… the special interests have to be paid first and foremost…

    And this sh!t is anything but isolated, and one of the reasons a lot of people become anti-tax. In CA, we passed a massive (as in 8-10x) tax increase on cigarettes a few years back. Great idea, if the money that was generated had actually been used to offset the healthcare burden that smokers place on the public system. But that would be too much like common sense. So instead, we used the money to fund a new pre-school entitlement. (Rob Reiner is such a f-king genius….) Of course, the expected happened. Price on smokes went up, consumption went down, tax revenue fell, and now we’re stuck with a dumb @ss entitlement that has to fight for limited resources with an already under-funded K-12 infrastructure because our legislators have finally run into some limits on endlessly hiking tax rates.

    Prop 13 in CA is a real problem – an incredibly poorly thought out cap on property taxation that effectively limits the state’s ability to earn revenue in the good times, and makes sure it bears the full brunt of reductions in the bad times. However, Prop 13 was a populist revolt on our state government’s unwillingness and inability to live within their means. Instead of running a budget with the limits and transparency that are required of even any public company, they found it easier to keep caving to interest groups with new programs that could only be funded by increased taxes. Eventually, the general population gave them the big FU with a POS legislation that now has them hogtied in some really crippling ways. Of course, they’ve worked damn hard to make it up through a tortured blanket of stealth taxes stuffed into just about every transaction you can imagine… missing the point that a thoughtful, constrained, and consistent approach in the first place would have kept them out of the problem from the beginning.

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