New numbers have been released that foreclosures are on the rise in major metropolitan area's. What? I thought we were in a period of economic recovery? It would seem that the words of Obama Christ are not showing the truth in reality.
Ultimately, there is plenty of evidence on the ground level of this country that government cannot and is not being a savior for the economy. It never has, and never will be able to do it, nor should it. People cannot overspend on homes, and expect for the government to save them. The same goes for corporations and state governments who have mismanaged their resources and made bad financial decisions that lead them to where they are. It is a bad idea to dump all the problems onto the federal government because all we are left with is a garbage dump of a government.
Government spending is out of control to the point that our nation is on the brink of foreclosure itself. That is the real state of the Union. Our government has gone past the point where they can say, "we need to stop spending." Stop spending is not an option? How is not spending when we have no money, not an option?! The government is past the point of being able to service its debts, and its people are following that lead.
Right now people are loosing their homes. Some are loosing their homes because they were greedy. So, lesson learned. Some are loosing their homes because they have lost their jobs. What doesn't make sense to me is we have people loosing their jobs on one hand, yet I see job openings all over the place. Name one state or county that doesn't have a job board filled with job opportunities.... go ahead I'm waiting.
There are jobs. There are opportunities for entrepreneurship. Perhaps the real crisis in this country is not lack of employment, it is lack of humility. So what if times are tough - be tougher! If you are loosing your home, guess what, is working in fast food worse than being homeless? Is delivering pizza to make ends meet worse than eating in a soup kitchen? There are jobs, perhaps we should be willing to work the fields (instead of the illegals) to provide for our families.
Perhaps our country isn't being humbled enough, hence this second wave of foreclosures. Perhaps people should be homeless if that becomes the means for them to appreciate what they had when they had when they had it. Opportunity is still all around us - but foreclosure is still happening. Perhaps we should stop looking to mommy and daddy government to save us, and grow up as a people.
James, you may want to do some reading on the reasons for the foreclosure crisis, the actual unemployment statistics, and the likely effect of drastic cutbacks in government spending. It might be enlightening for you.
ReplyDeleteSo what happens if we make big cutbacks in government spending in an attempt to cut the deficit? 1) Government will buy less stuff, meaning a decrease in the number of goods and services being sold, meaning an increase in unemployment and more foreclosures. 2) Government will lay off employees thus increasing unemployment directly and leading to more foreclosures. What about entrepreneurs? Sure, why not start a new business while a significant number of people cannot afford to buy your product or service? Try getting a bank to loan you money for startup or expansion costs when your prospects are poor and they can make a lot more speculating in the market. Humility is probably what we lack - the humility to admit that the free-market economic gospel we have believed for the last 30 years is a load of nonsense.
Charles, read between the lines when you get a chance, not just the surface rhetoric. The government cannot sustain and should not be the focus of our economy. Therefore, if the government cuts back on spending it should not rock our world. Right now, we seem to rise and fall with the whims of the government.
ReplyDeleteThe real reasons for this financial problem is greed. You can call it some government regulation, you can say it is the banks problems, regardless, the issue is greed regardless of how it manifest itself.
You're right, if the government stopped its spending, there would be some without jobs.... guess what, they are still without jobs right now. There will be a shift to take place, a painful shift, but a necessary one, when we the people take responsibility for our jobs. Obama and state governments should not stand up and make promises for new jobs - that is not their place.
I have started three businesses with no bank funding whatsoever. I have supported my family, and my business has grown in spite of this bad economy. You are clearly not an entrepreneur based on your ignorant rhetoric about how a business SHOULD operate at the mercy of banks.
If there has been a fault in the economy over the past 30 years, it is not because of free market practices, it is our getting away from them towards Obama care, and financial system overhauls, and bailouts. Name one socialist practice that is envogue right now with socialist nations? Europe is collapsing because of their anti-capitalist doctrines and they are just now starting to abandon them. China is emerging and increasing their economy, not because of communism, but because they are getting away from.
Don't tell me what I am not reading about the causes of financial meltdown. It has everything to do with straying from the free market. And in my opinion, it has been longer than 30 years that we have been straying - starting with FDR.
James makes a solid point. The rising Asia market in China, India, Malaysia and elsewhere is a result of embracing the free market.
ReplyDeleteSame with Brazil, Chile and Columbia down in South America. The nations thriving there are the ones not following Chavez and Morales over the cliff.
Case in point in Argentina.They have been run by a socialist party from right after WWII until the late 1980's. Then they elected fre market types and prosepered all through the 90's and in the early 2000's was rivaling Brazil in pace of modernization and a grwoing middle class. Then trhe Kirchner's were elected. Since the midle of this decade they have been drifting sideways economically. They have rampant inflation and extensive unemployment again. The Kirchners are socialist. I this all coincidence?
Charles you must not have any children, becasue if you did you would not be OK saddling them with this kind of future government debt. Since government is consuming more than it can afford fromthe people, that is the only way to pay for a national government of this size.
So how does government get out of debt?
ReplyDeleteWe've been told for quite some time that if we cut taxes, particularly on the wealthy and corporations, that it wouldn't add to the deficit and that the beneficial effects of that additional revenue in their pockets would trickle down to the rest of us. Obviously that didn't work. So if government keeps taxes at their current levels and slashes spending, that will obviously increase unemployment and consumption and the economy will slow down even further and reduce the revenue coming in to government through the remaining taxes, necessitating even further spending cuts, damaging the economy even more, etc., etc.
If however, we raise taxes on the wealthy and remove the loopholes that permit corporations and some wealthy individuals to avoid all or most of their tax liability, the government will get that revenue and be able to use it to reduce the deficit (assuming they don't add to spending). The conventional theory of course, is that these folks will leave the country and stop investing. Well, they have already shipped our best paying jobs overseas and most of their investment is already overseas, so that's almost a moot point.
There's also the question of how the government's money should be spent. This is similar to the situation each of us face in our family finances. Do we spend most of our income on fancy toys that provide no lasting benefit, or do we simply put the money in the bank, or do we invest in our children's education or improve our homes? Most of us realize that unless we spend a good part of our incomes on things like insuring our family's health, educating our kids, improving our homes, maintaining our cars, etc., we will pay more later. The government has much the same situation. If we allow our infrastructure, education system, and public health to deteriorate while we spend billions bailing out banks and occupying foreign lands, we will pay for those mistakes later.
Pahoran, ever read about how Argentina paid off it's huge debt to the IMF with a loan from Chavez and has been growing by leaps and bounds since? They were hurt far less by the global economic meltdown than we were.
Charles, how do you get out of debt?
ReplyDeleteYes I have read up on it. Argentina has long beem corrupt. The took loans from the IMF to rebuild after economic collapse.
ReplyDeleteKirchner's have taken money from Chavez to pay back that loan, but thee are two things:
1. Their success as a nation has been dwindling since the Kirchner's were elected. Their tenure of power has been highly controversial there. Theie growth came in the interim between longtime socialist rule and the Kirchner's, both of the late husband and the current madam.
2. Taking money from Chavez is NOTHING to be proud of. That is not a point of bragging. Chavez is a brown Mussoulini. He is a fascist who has made much of his money by nationalizing private property from the oil industry by theft.
One of those principles we hold sacrosanct in the US and much of the Westen world is the right to recieve fair market value for property when a government exercises eminent domain for its use.
Seizing private property by means of "expropriation" is nothing more than theft. Thats all it is. Taking money from someone who stole it makes the recipient an accomplice to the crime.
So how do we get out of debt? The first is to stop the spending. When you are in a boat taking on water, before you can get the water out you must first stop the leaking in.
Second, we must unleash development of our mineral and forest resources opn federal land. These items can be taxed for their harvest. That money can pay off the national debt. We have ALOT of mineral wealth for energy and metallurgy. It is high time we exploit it to pay off the debt.
Or we can be irresponsible and just borrow from people who would like to control American sovereignty and keep our children into economic servitude to other nations.
When you say there is a question of how the government's money should be spent. First off I disgaree with that premise. it is not the governments money. It is money taken from people (lawfully or otherwise) for agreed upon uses, but it is not the "gopvernments" money.
Also, when you say that, you didnt specify whichof the four main levels of government you are referring to. Remember it is supposed to be a pyramid of power, with the most at the bottom which represents individuals, families and free associations (business and non business alike). Next up on the pyramid comes municipaliites (cities, towns, rural districts, etc). Above that and smaller still is States. Finally at the top with the smallest size but equally powerful in scope for its rightful duties is the national level.
For clarity when we refer to "government" in future dialogue, can we agree to specifiy which level is being referred to?
James, any government (all levels, Pahoran) get out of debt the same way any of us would - they either decrease spending or increase revenue or some combination of the two. In the kind of economic downturn we are in now, the government needs the economy - the real economy, not just Wall Street - to revive so that businesses need to expand and hire people and people have disposable income to buy goods and services and make business profitable. Without that, the government (all levels) will continue to take in less and less revenue because there will be less income to tax, fewer sales to tax, and declining property values to tax.
ReplyDeleteThere are also essential operating expenses and essential investments that must be made at every level in order to prevent large future shortfalls and problems. If we don't maintain roads, water and sewer systems it will cost more to replace them in the future. If we don't provide good educations to our nation's young people, they will be less able to compete for high-paying jobs in the global economy.
I agree that heavy borrowing is unsustainable in the long term. We have drastically reduced revenue at the federal level while increasing spending, often as not for unproductive programs like bailouts for banks, pharmaceutical and insurance companies, cold war weaponry, and foreign wars and occupations. Cutting expenditures for necessary investments in health, education and infrastructure while leaving those unproductive and wasteful spending programs and tax cuts in place is stupid and immoral.
Charles- I love that you continue to harp on the bailouts as if capitalists or free-marketers, or conservatives wanted these bailouts. I may be wrong, but I don't believe a single conservative on here thought they were a good idea. In fact, I find it strange that you complain about the inability for businesses to get loans for start up and expansion. That would require more money from the government into the hands of the banks.
ReplyDeleteI do agree with you that we should get ourselves out of foreign countries. Especially those we are not at war with. Lets stop loaning money and manpower and goods to these countries when we don't have the money to pay for it. We paid $41,912,000,000.00 in foreign aid in 2009, and the cost of giving foreign aid in the form of troops was an additional $15,446,000,000.00 in 2008(most recent info I found). http://www.census.gov/compendia/statab/cats/foreign_commerce_aid/foreign_aid.html
Imagine if we gave that money to china instead each year... we could save our own country from foreclosure, and our handsome President from unemployment.
It actually amazes me to know that if we gave this money in addition to the interest only payments we are making to china, we will have paid them back in under 15 years!
ReplyDeleteHi Crayon Face. You correctly point out that both leftists and libertarian conservatives opposed the bank bailouts, but the ruling parties are subservient to those who pay for their campaigns, speaking engagements and golf trips so the government wastes money on bailouts.
ReplyDeleteI don't however, believe that more money in the hands of banks would encourage loans to business, particularly small business. For one thing, the government and the Fed have put billions into the banks and they are squirreling it away or speculating with the money, not loaning it out. Furthermore, there's no reason for businesses to apply for loans since they don't have increasing orders for goods and services due to the economic meltdown.
As for foreign aid, it amounts to less than 1% of the federal budget. It's the military adventurism that is expensive. Approximately 54% of the federal budget is spent on the military so any effort to cut spending needs to start there.
Like a family living beyond its means, the federal government owes trillions, much of it to China and Japan. However, instead of pulling back and living within its means and doing what it can to increase its income, our federal government is still trying to maintain its superpower status and act as the world's policeman. Again, libertarians like Ron Paul and leftists like Ralph Nader and Bernie Sanders agree that we should not only end our wars in Central Asia, but close the rest of our overseas bases and scale back our military to the size actually needed to protect America not rule the world.
Actually I would say that any effort to cut the national budget should start with the welfare stuff that is supposed to be the perogative of States and the people respectively. Let us start by abolishing Medicare, medicaid and socaial security. take the money and hand it to the States. Then people can vote in their States how to dole it out. States would have more money for their budgets if the national government stopped collecting it from them in the first place.
ReplyDeleteI have asked this of you Charles before and you did not answer, so I will ask it again. Will you please define what you are referring to when you say "speculation"? You are not referring to the futures markets are you? Becasue the futures markets are necessary for almost all commodity based business to work.
Farmers will not plant crops with a committed customer who says at the beginning of a season that he will agree to buy the crops for a specified price at the end of the season. The farmer wont even get a loan from a bank without that contract to buy. It is collateral the farmer shows the bank. The contract to buy (the future) facilitates the bank loan to the farmer and then the expenditure of resource and time and energy to make the crop cycle come to pass. There is no point planting a crop without a guaranteed sale at a price sufficient to justify the expenditure. What if the market prices for that crop at the end of the season are only a fraction of what the farmer needs to pay back the bank loan? You can see the need for a futures contract to protect the banker and farmer.
It also sets order to the market as it reduces the chance of a glut of one crop and not enough of another being planted,as the futures bought beforehand give a measure of how much of each item is going to be produced.
Buyer of crops purchase futures in a reciprocal mindset. They dont want to agree to buy a farmers crops at the beginning of a season only to find at the harvest that the market favors the farmer to charge WAY more than the buyer can possibly afford. Either he takes the loss or turns the farmer way. In that case the farmer wont do business with him again, and the purchaser will lose ability to acquire crops to take to the retail market. Futures are needed all the way around. Farming is just one example. Manufacuring and raw materials operate the same way.
The reason I go into all this is becasue you say that banks and the wealthy are guilty of engaging in "speculation". Many leftists i talk to refer to the futures market as this "speculation". I want to know what you define the speculation as. I hope you are not naiive enough to affiliate it with the futures (commodities) market.
Pahoran, you are arguing from a political ideology, not from economic reality. Abolish Medicare, Medicaid and Social Security and you will throw millions of Americans into abject poverty making our economic woes even worse, not to mention the human suffering that would ensue. If your political ideology causes you to advocate something that immoral, you need to ask yourself some serious questions.
ReplyDeleteI explained what I meant by speculation earlier and apparently you didn't read it.
Charles, this would be a shift, not an off switch. Stop jumping to the ridiculous. Try and reconcile the idea pahoran suggested in context with his ofer comments. He is saying that each state, each community should take care of their own. Not that we should make a poor camp where poor people go to die away from society as your comment seems to imply.
ReplyDeleteI meant other comments not ofer.
ReplyDeleteCharles I read you explanation of your understanding of speculation I largely agree, with a caveat. First off, Iam glad you understand the value of futures, as the agruments I har against them by leftsist make my head spin.These people dont realize that when they are pre-ordering an upcoming CD or book from their favorite artistthat hasnt been printed and retailed yet that they are doing this exact tranmsaction.
ReplyDeletehere is my caveat, though I agree that nobody should buy futures that they cant pay for (obvious), I buy futures all the time that I intend to resell athigher value than I paid for them, as they will still offer the buyer a discount over the going market rate at the time of my closing my position. The secondary futures market is just as important as the first as a way for persons and institutions to invest.
Now as to the CDO's and credit swaps I know they are bad juju. The best thing to have done would have been to let the banks fail instead of bailing them out for their risky practices however.
Fannie mae and Freddie mac and FHA hold much blame for what they madated that bnaks deliver, and to the extent that these governmental and quasi-governemntal entities forced banks into creating ways to harbor subprime loans in order to meet political goals, I actually have some sympathy for banks wanting bailouts from that same government, when the instruments created to carry out the mandates pushed uponthem began to fail.
However, even then, what should have happened was not bailouts but privitazation of fannie and freedie and the FHA, and a train of mergers and some bankruptcies. That should have been the way to handle that CDO and credit swap mess, in my opinion.
If we want to balme speculators in this, the national government arms involved were the real "speculators" here.
Once again the importance of Federalism is displayed, as in the 9th and 10th Amendments. The national govt. was tinkering where it should not have and it collapsed major industries and created misery as a result.
James, I suppose I can give Pahoran the benefit of the doubt, but he didn't imply any sort of gradualism. He said that was the first step he would take.
ReplyDeleteI don't accept your analysis of the causes of the economic crisis, Pahoran, but my question is what would you have done differently to avoid the crisis, and what action do you believe is now warranted to prevent a future crisis. If we get the federal government out of the picture, will that prevent fraud? Will that cause banks to return to conservative prudent investments? When we have huge institutions like Citibank and J.P. Morgan Chase whose failure would plunge the entire financial system into chaos, what should we do when they're in trouble?
If you object to the national government being involved in the economy, should we just let the banks and hedge funds do whatever they want? If not, who will enforce the rules?
Nor do I accept your analysis of the economic crisis.
ReplyDeleteof course I would have the federal government enforce contracts and prosecute fraud. However, just because certain financial isntruments are risky and complex does not make them fraudulent (even if I dont like them either). What should happen is an allowal of those institutions that enage to fail.
We must hold these freedoms sacred:
Freedom to Buy
Freedom to Sell
Freedom to Try
Freedom to FAIL
Yes I would in a fell swoop close national programs like the big three social ones that are bankrupting us and have been for decades, and hand the money to the States. The numbers dont lie, the big three social programs at the national level are unsustainable.
You ask what would do to prevent future crisis? I am so glad you asked, cause I just happen to know some things I would do. Here are a few:
1. Do what I already mentioned. Huge money transfer back to States. Put health, education and welfare programs back into the hands of States and People. Abolish the federal programs that deal with these State, local and private people issues. Focus national government upon its rightful tasks.
2. Enact a flat income tax, with the only deductions for self and numbers of dependants. One rate for all people from those making thousands to those making billions. Generous personal exemption of one and a half times the going poverty rate, plus a flat rate for every dependent, including spouse. Nothing else. No mortgage deduction, charitable giving deduction, nothing. All money earned above the personal and family deductions will be taxed at the same rate.
Require a 3/4 vote in both houses for approval to raise or lower the rate.
3. Repeal the 16th amendment. Put State government back into one house of Congress.
4. Massive approval for mineral extraction for fuel and metallurgy on certain federal lands. Tax the extraction and use that money for only one purpose - pay off the national debt.
5. Lumber harvest expansion on federal lands -for the same purpose only - paying off national debt.
6. Massive expansion of permits for hyrdopower. Technology has dramatically improved since the 1970's. Run-of-river and gravity feed technology elimate the need to build full scale dams in most cases, and where stillneeded, technology has mitigated past problems of navigation for animals, water temperature and silt makeup, etc.
Less than 3% of our nations dams are fitted for energy production. Take money out of federal energy research budgets and spend this money to provide retrofit for dams to produce power that dont. Then collect a federal tax on each killowat hour produced. Hydropower is increadibly cheap once the high initial cost is paid off, and we are simply talking retrofit here.
Use that money for only one purpose - pay off the national debt.
7. End the Federal Reserve, which is neither. Create a central national bank instead, run by Congress. They are supposed to be regulating money value and setting weights and measures of finance, but have been abdicating this Constitutional duty since 1913, when Woodrow Wilson created this cabal.
8. Return to what is called the "gold" standard. In reality we also need silver and copper to provide actual intrinsic value to our money. We have been off it since 1973, if I have my facts right from memory.
9. Establish the Enumerated Powers Act, whereby all national legislation must clearly state on the bill where in the Constitution it authorizes such a bill.
If the will of the people is for the national government to do things that are not spelled out for it by the Constitution, they must first amend the document. The document has a change mechanism in it, any other way is not to be optional. After putting that thing the people want to national government to do into writing, they can then expand the national power into or out of that new realm.
10. Create a uniform flat tax rate for business as was done with individuals.
There are more ideas in my head I could post but I am tired as I just got home from the night shift, the sun is rising and I must retire to the land of Morpheus before the kids see me awake or I will get pounched upon for playing, it is Saturday after all.
ReplyDeleteThats all for now,
Pahoran