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Blowdryer posted:I sent what mo_steel said (which was awesome by the way), and this is what I got back.  - Frank Luntz Friends don't let friends hold beliefs made up by creepy guys like Frank Luntz. Radd McCool fucked around with this message at 18:33 on Oct 22, 2012 |
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Oct 22, 2012 18:30
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Blowdryer posted:I sent what mo_steel said (which was awesome by the way), and this is what I got back. I know Barry Rithotlz did quite a few pieces regarding the big lie. It should help a bit with sources if you need. Also call out their bullshit on why if the GOP is all about getting more regulations, why cant we get them now?
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Oct 22, 2012 19:07
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I'm having a discussion with some people on another forum about changes we would make to boost the economy and things of that nature. One of the guys can be economically conservative at times, but some of his ideas (removing the SS tax cap, investing heavily in infrastructure) would be perceived as 'liberal.' One of his ideas, though, I think I understand, but I'm not quite clear on:quote:Eliminate the Corporate Tax Code. Replace with a system that treats all corporations as Income Pass Through entities. This does SOOOOOOOOOO many good things, most notably it gets rid of distinction between Current Income and Long Term Income for all individuals. Oh, and btw, it also closes almost every loophole that corporations use to cheat the system and get rid of paying taxes. quote:in regards to #1. The WACC (weighted average cost of capital) for most corporations indicates that using current earnings to fund future expansion has the highest internal cost necessitating that it only be done as a last resort. Ergo, most corporations opt for either a debt issue or stock issue to fund expansion. The change to treating the corporations as an income pass through does not change that fact. It also does not prevent them from using the revenue from current income for expansion. It requires no more accounting than the current system does because publicly traded corporations already have to fill form 10K and those that issue dividends have to set up X-Dates. And because the income pass through is pretty much the exact same thing as a dividend, we can use the same system, neat huh? There's no need to worry about the corporations paying tax for the shareholders, the shareholders will receive their dividend based upon earnings of the company at fiscal year end much the same way that an individual receives dividends from a dividend paying Corporations (own it before X-Date) Speaking of which, a lot of corporations have fiscal year ends that are NOT December 31. And as such I would make that the day the X-Date so speak for the receiving of income based on a per share basis (ya know, just like a dividend). It's an idea that I don't recall reading around D&D, which makes me a but skeptical. It seems that, at it's core, you would do away with corporate taxes and just more heavily tax the individuals that would receive the money. Could someone clarify?
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Oct 22, 2012 19:28
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Blowdryer posted:
I'd ask him for clarification on the following before responding with too much: What loans were they forced to give out? What law forced them to give them out? What percentage of all subprime loans were those forced loans? Sources as well, if you would. That said I think I know what he's getting at given my track of discussions on the subject (and in particular the point of banks being "forced" to give loans). He's likely referring to is the Community Reinvestment Act. The CRA is often painted as a major source of bad loans and an example of how government interference in the marketplace caused the crisis, but that's a highly selective misreading of the situation and the evidence doesn't really bear that conclusion out. The CRA is a law that was passed in the late 70's that was meant to make sure that banks that received deposits from a community were also reinvesting into that community. There were serious concerns that banks weren't investing in poorer areas even though they had banks in those locations, causing credit shortages in low and mid-income neighborhoods. Some banks also outright refused to loan at all to geographic areas around them, a process called redlining. It doesn't force banks to give out loans they know to be bad, and in fact explicitly states that following the law should be "consistent with safe and sound banking operations". Among subprime loans, most of them weren't subject to CRA regulations, particularly because a lot of loan originators were independent mortgage companies who didn't take deposits and thus didn't have to follow the regulations.  Image Source: http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/n08-2_park.pdf ------ As for regulating Fannie (FNMA) and Freddie (FHLMC), there are a few things to consider here. "Fannie" was, for a long time, the only bank that really handled secondary mortgages because they were considered too risky for most private financial institutions to want any part in. "Freddie" ended up taking on a similar role after it was created. While both institutions were privately owned and operated for decades before the crisis, most people viewed them as implicitly protected by the U.S. government. This allowed them to secure funds more easily on the market than any of their competitors could, which in turn gave them easier access to higher levels of leveraging. As more companies started to enter the secondary mortgage market there was an effort to pare down or eliminate the two banks, and is likely the real direction behind the Republican efforts at regulation. To the extent that they were viewed as government-backed institutions, that was a problem that should have been resolved (though both banks spent significant sums of money lobbying Congress on both sides to prevent such an outcome). As CDOs began to boom in the financial markets, these two GSEs grabbed onto the coattails to try and stabilize their positions because they were losing market share to private banks who could offer loans with no proof of income, assets or job. In order to try and keep up in the market with the other firms, they took on even more leverage. During the boom in subprime mortgages, the GSE banks lost market share in subprime loans because private companies flooded the market in an effort to bundle ever more loans to sell off as investments. All that said, the GSEs were involved, but mostly as a market afterthought: the major financial institutions were all over this poo poo and the GSEs had little choice but to tag along or fail, so they tagged right along. quote:Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble. Source: http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html In short, regulating the two GSEs alone wouldn't have done much to stop the crisis. Any loans they had would've likely just been scooped up by private firms instead who were vying for this garbage left and right during the bubble. I tried to get the specific source from IMF referenced above, and they have some interesting publications, but I'm unwilling to drop $500 to see data on a subject that's pretty well covered already.  That said, if folks have more interest in the crisis itself and want to do some reading, a few years ago I read All The Devils Are Here and found it to be a very informative and easily readable account of the various aspects that fed into the collapse, with some focus on the major players as well (Countrywide, etc.) Mo_Steel fucked around with this message at 19:39 on Oct 22, 2012 |
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Oct 22, 2012 19:37
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He has moved onto the fed after I dismantled the CRA cause.quote:For instance, Greenspan's role as Chairman of the Federal Reserve took place during a time where the Fed oversaw the lowering of Federal funds rate at only 1% for more than a year which allowed large amounts of easy credit based capital to be "injected" into the financial system and the US economy and thus create an unsustainable economic boom. This in turn helped create a new bubble to replace the previous Dot.com bubble which had earlier exploded. The only problem is, bubbles, most of which are spurred on by meddling in the economy by the Fed, always burst.
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Oct 23, 2012 01:19
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Blowdryer posted:He has moved onto the fed after I dismantled the CRA cause. The Fed's policy did indeed contribute towards the creation of bubbles, that is true. However, bubbles existed prior to it's creation. There's really not much wrong in the quoted paragraph.
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Oct 23, 2012 01:21
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Blowdryer posted:He has moved onto the fed after I dismantled the CRA cause. Why haven't you just called him a liar who spews talking points that have been proven to be false? I'm being totally serious here: he is willing to lie to your face. Do not engage.
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Oct 23, 2012 01:29
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Zeitgueist posted:The Fed's policy did indeed contribute towards the creation of bubbles, that is true. However, bubbles existed prior to it's creation. Alright then, conceded that to him " You also had people as early as 2002-3 predicting the collapse of the Housing market, as well as many financial institutions. This wasn't an overnight "omg wtf happened???" moment. This was crisis over several years in the making. You had Ron Paul taking to then Treasury Secretary John Snow warning him about this in 2003. http://youtu.be/GpBIhHi7KEA"
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Oct 23, 2012 01:29
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Blowdryer posted:Alright then, conceded that to him Again, this is accurate(minus Ron Paul, who is never ever right about anything ever), people did see the collapse coming. It's not hard to recognize a bubble, you just try and ride it and bail before everyone else does. The thing is that your friend is weaving in truth and lies, and you can't let him ignore when he gets called out on the bullshit. You have to confront him and make him acknowledge when he's wrong.
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Oct 23, 2012 01:32
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Augure posted:Why haven't you just called him a liar who spews talking points that have been proven to be false? I'm being totally serious here: he is willing to lie to your face. Do not engage. It's a kid from my college and he doesn't know that he's lying he's just dumb. I only engaged him in hopes of trying to make the world a better place really.
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Oct 23, 2012 01:34
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Blowdryer posted:It's a kid from my college and he doesn't know that he's lying he's just dumb. I only engaged him in hopes of trying to make the world a better place really. Tell him he's lying anyway. He may not believe you but some 3rd party observer might.
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Oct 23, 2012 01:36
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Blowdryer posted:It's a kid from my college and he doesn't know that he's lying he's just dumb. I only engaged him in hopes of trying to make the world a better place really. Good. He's at a point in his life where his beliefs are less set in stone. Make sure he doesn't get to ignore where he's wrong.
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Oct 23, 2012 01:39
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Blowdryer posted:He has moved onto the fed after I dismantled the CRA cause. It's true that the low borrowing rate of the Federal Reserve bank did contribute to the ability of banks to access credit, however a few things should also be noted in this assessment. First, there are more factors than simply the availability of credit that go into how much banks are capable of investing. One important aspect is how much banks are required to keep on hand to mitigate risk. Because these investments were improperly rated and understood even among financial analysts, the risk in these investments was understated and often times not properly accounted for. Additionally, banks attempted to downplay the regulations on minimum capital requirements in an effort to increase their profits: money that banks sit on to account for potentially risky loans and positions is money that the bank cannot use to invest to make more money. Banks routinely argued for less regulation and restriction, created subsidiary companies to move risk off their financial documents, and used these new financial tools in a way that reduced their on hand reserves. Because of this, even if credit were not as readily available due to the Fed setting a low borrowing rate, it is likely that banks would still have faced substantial losses and possible bankruptcy due to a lack of capital reserves during the collapse of the housing market and the subsequent collapse of other banks and insurance institutions. I agree that the impact would probably have been lessened or perhaps taken longer to finally take form, but I do not agree that the solution would be to end monetary policy capability by the Federal Reserve, nor that the housing and derivatives bubbles were directly caused by cheap credit. Secondly, the timing of the rate being so low is important. The increase in subprime lending took place mostly between 2004-2006, when the Fed Discount rate rose from 2.25 to 6.25 over that same period.  The same trend follows for the increase in securities creation and exchanges:  With the rate increasing from 2004 to 2006, if the Fed rates were a significant factor of this financial crisis we should expect to see a reduction in the growth of these factors. Instead they grew unabated until the housing bubble collapsed on itself and the derivatives market followed it. Source (Fed rates): http://www.newyorkfed.org/markets/statistics/dlyrates/fedrate.html I agree that the Fed's policies could've played a role in accelerating the situation, but I don't view it as a primary factor. Better oversight of the financial markets, stronger capital requirements for banks, an effective risk rating process for banks that doesn't scream vested interest, those are things that had they been in place would've helped strongly curtail any potential collapse. And they're things we absolutely should still do.
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Oct 23, 2012 01:57
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JamesJBuffalkill posted:It's an idea that I don't recall reading around D&D, which makes me a but skeptical. It seems that, at it's core, you would do away with corporate taxes and just more heavily tax the individuals that would receive the money. Could someone clarify? I'm far from being an expert, but as much as I can surmise this proposal is very much a point of consensus among economists. Here's a quick little sketch (of a podcast) showing agreement between five professional economists with quite different political inclinations: Six Policies Economists Love (And Politicians Hate) It seems that in every respect it's better for society to just directly tax those who benefit from corporate profit rather than going after corporations themselves. It's a shame it's not politically tenable. The other five points on that list are all interesting too, particularly the scandalously regressive taxation embodied in mortgage interest tax relief.
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Oct 23, 2012 12:16
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Now that I've covered fannie/freddie, the fed, the CRA, and banking practices, it seems the last piece of the puzzle is regulation.quote:"As more companies started to enter the secondary mortgage market there was an effort to pare down or eliminate the two banks, and is likely the real direction behind the Republican efforts at regulation." He was quoting what I sent from Mo_steel. Here are some other things he said that I would like to address. quote:The GOP WANTED regulations on Fannie and Freddie as early as 2004 but the Democrats in Congress continued to fight against them. quote:Sean, the problem with that argument is that you have to completely ignore other factors such as Freddie and Fannie, and second off, you have to likewise assume that all banks, or a vast majority conducted risky practices that the benevolent government attempted to prevent from happening. If the government was so infallible, omniscient, and benevolent as you claim, why didn't they force regulations on them to prevent the risky practices you claim the banks did completely on their own? The answer is because the government is not the king bystander that tried to avoid the crisis but rather the culprit. quote:You also had people as early as 2002-3 predicting the collapse of the Housing market, as well as many financial institutions. This wasn't an overnight "omg wtf happened???" moment. This was a crisis several years in the making. You had Ron Paul taking to then Treasury Secretary John Snow warning him about this in 2003. http://youtu.be/GpBIhHi7KEA
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Oct 23, 2012 15:46
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Can anyone enlighten me as to what's happening with GM at the moment, and what good/bad the bailout did and its potential for longterm success? In my mind I'm thinking the bailout was successful at slowing the economic downturn and gives GM a chance for future success. Friend of mine posted:The GM Bailout did not work. GM is not doing well at all. The Board of Directors is trying to get the Government to accept a deal that would allow GM to purchase the Government's shares at a substantial loss so the company can make the necessary changes needed to become solvent. As long as its Government Motors decisions will be made based on politics and not to ensure long-term fiscal security. I feel like he's basically saying we're losing money what we lent GM, but I think that's okay as the point was more about stopping the downturn than making sure GM is the #1 car company.
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Oct 23, 2012 17:33
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Glimm posted:Can anyone enlighten me as to what's happening with GM at the moment, and what good/bad the bailout did and its potential for longterm success? GM has already paid back several billion dollars to the State. http://abcnews.go.com/WN/general-motors-repays-81-billion-government-loans/story?id=10437944 http://www.politifact.com/truth-o-meter/statements/2012/mar/21/barack-obama/president-barack-obama-campaign-video-says-auto-co/
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Oct 23, 2012 18:48
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I'm debating with an Israeli who is under the profound belief that Obama (due to his 'weakness' on Iran) doesn't support Israel enough, and is convinced that Iran is relatively close to a nuclear weapon, with which they will proceed to attack. I've asked exactly what more Obama should be doing (in light of sanctions and cyberattacks), but is there a credible source on a realistic timetable until Iran actually could have a functioning weapon? I was under the impression that their uranium is barely enriched over research grade and is years away from weapons grade.
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Oct 23, 2012 18:48
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gaan kak posted:I'm debating with an Israeli who is under the profound belief that Obama (due to his 'weakness' on Iran) doesn't support Israel enough, and is convinced that Iran is relatively close to a nuclear weapon, with which they will proceed to attack. I've asked exactly what more Obama should be doing (in light of sanctions and cyberattacks), but is there a credible source on a realistic timetable until Iran actually could have a functioning weapon? I was under the impression that their uranium is barely enriched over research grade and is years away from weapons grade. The problem is that no one knows. You can find Israeli's wanting US to invade Iran because "they'll have the bomb in months" going back decades. Iran has been within reach of nuclear armament since the war with Iraq ended 20 years ago. Most of the wailing is based on the assumption that Iran has secret bunkers that we don't know about. Data that we do have isn't conclusive but it definitely doesn't point to Iran being armed anytime soon.
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Oct 23, 2012 18:54
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gaan kak posted:I'm debating with an Israeli who is under the profound belief that Obama (due to his 'weakness' on Iran) doesn't support Israel enough, and is convinced that Iran is relatively close to a nuclear weapon, with which they will proceed to attack. I've asked exactly what more Obama should be doing (in light of sanctions and cyberattacks), but is there a credible source on a realistic timetable until Iran actually could have a functioning weapon? I was under the impression that their uranium is barely enriched over research grade and is years away from weapons grade. There's literally no evidence that they're working on a nuclear weapon at all, last I checked. Between Iran and Israel, one of those countries has nuclear weapons and says they will use them. That country is not Iran.
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Oct 23, 2012 18:55
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gaan kak posted:I'm debating with an Israeli who is under the profound belief that Obama (due to his 'weakness' on Iran) doesn't support Israel enough, and is convinced that Iran is relatively close to a nuclear weapon, with which they will proceed to attack. I've asked exactly what more Obama should be doing (in light of sanctions and cyberattacks), but is there a credible source on a realistic timetable until Iran actually could have a functioning weapon? I was under the impression that their uranium is barely enriched over research grade and is years away from weapons grade. It is the consensus of the American intelligence community that Iran suspended its pursuit of a nuclear weapon in 2003 and has not resumed it. They continue to pursue nuclear energy, but aren't working towards weaponization. Mossad largely agrees with that assessment. http://www.nytimes.com/2012/02/25/world/middleeast/us-agencies-see-no-move-by-iran-to-build-a-bomb.html?_r=0
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Oct 23, 2012 19:15
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Going to break this one up a bit as there are a few points being brought into play.Blowdryer posted:Now that I've covered fannie/freddie, the fed, the CRA, and banking practices, it seems the last piece of the puzzle is regulation. Without him citing specific regulatory calls I can only speak broadly, and broadly speaking conservatives are opponents of government interference in the marketplace akin to the impact of Fannie and Freddie as GSEs. If he wants to talk specifics that's great, ask him what particular bills he thinks would've help prevent the financial crisis or ameliorate the consequences of it in a significant manner, given the GSEs comparatively small holdings of subprime mortgages. I want to clarify that his characterization at the end is a strawman that I'm not proposing: regulating Fannie and Freddie and transforming them either into a strictly governmental entity or a strictly private entity would've been a good step, and efforts to improve their accounting practices and improve transparency supported by Republicans are examples of regulations that would be a good idea. We can still do these things, and if he is in favor of increasing regulatory oversight of financial markets including Fannie and Freddie I'm all in favor. For those two specifically, the CBO has some suggestions, but a lot of these things really shouldn't be specific to solely the GSEs; we needed better oversight and regulation on the whole financial market, and given the GSEs share of subprime lending, even if they hadn't been caught up in it the other banks still would have been, possibly even moreso by taking over the GSEs share of the market themselves. quote:Here are some other things he said that I would like to address. Let's not pretend this was a Democrat or Republican only issue here. Fannie and Freddie lobbied both sides of the aisle, and both parties had argued and continue to support the notion that home ownership is a crucial part of the American Dream and a foundational goal of our society. This one is not an issue of clear party lines, but rather a pervasive culture of deregulation that impacted and still impacts Democrats and Republicans throughout the government. And that includes the GSEs as well as the private sector. There were bills approved in the Senate and House that were hamstrung by Republicans and Democrats alike. While I agree that more effective regulation of the two entities would have been a good thing, I dispute that it would've significantly reduced the impact of the financial collapse that occurred. quote:One of the earlier responses. I'm certainly not claiming the government is infallible, omniscient or benevolent in this. Quite the contrary: the pervasiveness of deregulation and regulatory capture within the government is a severe problem with a capacity to allow businesses to exploit lacking oversight for their own profits in the future. I absolutely think the government did far too little to try and prevent the crisis and knew far less than it should have known. Why didn't they force regulations? Because regulators and Congress and the Executive branch of government were recipients of a lot of lobbying on the behalf of banks who argued they didn't need to be regulated, and a number of high-profile regulators inside the government supported that view erroneously. The few regulators who did try to make significant attempts at applying regulations to the financial markets were shut out and prevented from putting those regulations in place. Brooksley Born was the head of the CFTC from 1996 to 1999 and pushed for regulation of off-market derivatives which were pretty much completely invisible to regulators, and other regulators and the financial industry fought back arguing that her efforts would stifle growth and that the market was capable of sustaining itself without oversight. Fannie and Freddie should've been regulated is something I completely agree with; but it's more pervasive than that. The whole financial marketplace needed significantly better regulation and oversight to have had any chance at preventing this crisis before it got out of control, and we didn't get it because of the popular view that markets can police themselves and regulation isn't needed and government involvement in the marketplace only causes problems. quote:This was before my response addressing fannie/freddie. I agree, people did see parts of this coming. Very very few people had any idea of the full scale of the problem, including financial companies and regulators. Better oversight would've given a clearer picture of the problem as it grew in it's entirety, and might've allowed for regulators to actually take preventative action before things got out of hand. But in order for that to work, you need regulators with teeth (and a willingness to use them) and strong oversight of financial activity. We had neither, and the banks fought to keep it that way so they could continue making extraordinarily high profits at what we know now is the expense of the rest of the economy. I hope he'll join me in supporting tougher regulations on all lending institutions and better oversight to help prevent future bubbles from forming.
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Oct 23, 2012 19:28
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Here's where I am with another fellow on FB.quote:let's address the area of American Economy and Prosperity. According to the U.S. Bureau of Labor Statistics, the National Unemployment Rate was as follows: Sept 2001 5 %, Jun 2003 6.3%, Mar 2007 4.4%, Nov 2008 6.8 %, Oct 2009 10%, Nov 2010 9.8%, Sept 2012 7.8% (Note that this number is not accurate because 23 million unemployed people dropped out of workforce. If you compute these people, the rate would be 10.1%). This is hardly a picture of prosperity. Outsourcing jobs to countries like China who are “currency manipulators” and artificially hold their currency down to reduce cost of their products is hardly an image of prosperity. Allowing them to copy and steal patents, ideas, and products and selling them back to the U.S. is not an image of prosperity. Going from 23 million on food stamps to 47 million on food stamps is not an image of prosperity. Also, 50% of college graduates can’t find a job after graduation that is not an image of prosperity. Out of 100 people age 65, 1 is wealthy, 4 are financially independent, 41 still working, 54 are dead broke. Our deficit has gone from 10 trillion dollars (Bush Era) to 16 trillion dollars (Average of 4 trillion a year Obama Era). We owe China over a trillion dollars and collectively 15 trillion to other nations. Finally, the U.S. Dollar is weaker than the Euro (1 US dollar = 0.7710 euros) , so why you say that our economy is strong and we as a nation are prosperous is a misconception. All I can really do is quote and link to articles placing the blame on 8% unemployment largely on the Government laying off and refusing to rehire workers. Basically the main issue is that this is all Obama's fault.
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Oct 23, 2012 21:02
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Well that guy is basically right, except for the part where we owe 15 trillion to other countries besides China, "public" debt is only about 10 trillion and something like 60% of that is held in the US (the other 6 trillion is intragovernment debt, mostly SS trust stuff IIRC), he's just got the reasons wrong.
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Oct 23, 2012 21:06
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rscott posted:Well that guy is basically right, except for the part where we owe 15 trillion to other countries besides China, "public" debt is only about 10 trillion and something like 60% of that is held in the US (the other 6 trillion is intragovernment debt, mostly SS trust stuff IIRC), he's just got the reasons wrong. Only about $5 trillion is owed to foreign investors, of which China is the biggest with about 8% of the total debt. The vast majority of the debt is held domestically, about 2/3, with the biggest holder being the US government.
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Oct 23, 2012 21:12
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Zeitgueist posted:Only about $5 trillion is owed to foreign investors, of which China is the biggest with about 8% of the total debt. The vast majority of the debt is held domestically, about 2/3, with the biggest holder being the US government. Pretty much; this image might be slightly dated but should be pretty accurate. 
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Oct 23, 2012 21:44
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Sounds like, on a per capita basis, we should be complaining more about Japan than China. Of course, no politician would do that.
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Oct 23, 2012 21:51
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Golbez posted:Sounds like, on a per capita basis, we should be complaining more about Japan than China. Of course, no politician would do that. We used to bitch about Japan owning all our debt in the same way, actually.
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Oct 23, 2012 22:59
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Chantilly Say posted:We used to bitch about Japan owning all our debt in the same way, actually. True. I suppose things have changed in 20 years. Or, we just found a new Eastern boogeyman to focus on.
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Oct 24, 2012 00:28
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I'm sure in another decade or two it'll be another country. Maybe India?
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Oct 24, 2012 03:51
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I'm sorry, this has been discussed, and I've looked through the thread at certain points to piece it together...But, when Mitt Romney goes as far as to keep referencing THE DEBT in a foreign policy debate, what is going on here? As it pertains to this thread, I always hear my (R) leaning relatives spout off about THE DEBT. If you say 'we need our domestic programs' they say 'we can't afford them! look at the debt!" Its like the imagery of being on the front porch wearing a barrel as your possessions are carted off is what they think we are heading towards. That is obviously the cartoon-y interpretation, but is the idea that eventually our debt is going to result in...the whole economy stopping? Looking at that graph on this page, it shows that the debt is mostly owed to American citizens. I'm trying to make a connection in order to defeat the "DEBT WILL END US ALL" argument: Do they think that eventually the entity of the U.S. government will seize to exist in the eyes of the population waiting to get its share back? Or people will just stop investing here/in the US (The credit downgrade is something I'm thinking of...)? Again, my thoughts are all over the place on this issue, I think I just need a good succinct run-through, because the argument "we just can't afford the programs we have" sounds intuitively correct to me, even if I have some vague notions of the economist perspectives that go against that.
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Oct 24, 2012 07:28
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Krabsworth posted:I'm sorry, this has been discussed, and I've looked through the thread at certain points to piece it together...But, when Mitt Romney goes as far as to keep referencing THE DEBT in a foreign policy debate, what is going on here? As it pertains to this thread, I always hear my (R) leaning relatives spout off about THE DEBT. If you say 'we need our domestic programs' they say 'we can't afford them! look at the debt!" Its like the imagery of being on the front porch wearing a barrel as your possessions are carted off is what they think we are heading towards. That is obviously the cartoon-y interpretation, but is the idea that eventually our debt is going to result in...the whole economy stopping? There are a lot of misconceptions about our debt, so I'll try to address the big ones in brief and how our country would respond to each potential problem. It's important to maintain a distinction between deficit and debt as well; the deficit is based on the budget and exists so long as incoming funds are less than spending. Running a deficit contributes to our debt. "What About When Our Bill Comes Due!" - It's important to point out that our public debt is financed by Treasury bills with a set maturity date, so the notion that many people have of China or anyone "calling our bill due" is ignorant at best. We would literally just laugh and tell them to gently caress off because they agreed to the maturity dates when they bought the bills. "We're Headed Down The Road to Greece / Europe!" - Greece and the U.S. are in very different financial positions. When Greece was downgraded, their interest rates on debt financing shot up into the double digits. The U.S. interest rates for our debt is at extremely low levels, meaning we can currently borrow for less than most other countries. These interest rates are a reflection of how the market perceives our ability to repay; they gave no poo poo when we got downgraded because our ability to pay is still very strong. We aren't facing the same problems as Greece and we have a better capability to respond to such problems if they were to arise here anyway. "SIXTEEN TRILLION!" - It's a big scary number. People make a lot of hay out of this as though it being a large number makes it bad, but context matters. In this case, one important context is in relation to GDP. Our debt as a % of GDP is not extraordinarily bad. Germany, Japan, Canada and France all have higher debt-to-GDP ratios and aren't bursting into flames at the drop of a dime. "If interest rates on our debt rise we may not be able to afford other budgetary concerns" - This is a somewhat legitimate concern in my view. A large part of how we handle our debt is by rolling it over into new Treasury bills; thus if the interest rates were to increase we would be spending more on the interest than currently and that could in theory cut into our other spending. Fortunately we have ways we could handle this problem even without cutting back on spending:
Print money - This is generally a bad idea because it leads to increasing inflation but it is an option, because our debt is held in USD. Print money, pay down the debts, then fix the reason for the debts. Go gently caress yourself - We decide not to honor our debts anymore and tell anyone who wants to collect that they can pry it from our military-industrial complex powered body. The world plunges into a recession or depression because the U.S. is a major economic player. This will pretty much never happen but is an option if for some reason the first two aren't options we want to choose. At the end of the day, the notion that we can't afford the programs we have is false. We absolutely can. It's just a matter of prioritizing how we collect and spend money, and right now wealthy people have convinced the rest of the country that the money and programs of the rich can't go towards servicing the debt but the money and programs of the poor and middle classes can. Mo_Steel fucked around with this message at 16:07 on Oct 24, 2012 |
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Oct 24, 2012 16:04
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I just had this article linked when I asked for one of my conservative friends to explain how Romney's tax plan works, in detail.
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Oct 24, 2012 22:06
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Zeitgueist posted:I just had this article linked when I asked for one of my conservative friends to explain how Romney's tax plan works, in detail. What do you want, a technical analysis done by an independent organization with compilations of data and comparative projections against non-partisan baselines? Pffft, whatever commie.  You could link him to the Technical Paper on The People's Budget as an example in response. e: Zeitgueist posted:Your link doesn't work, use this one. Odd, works for me. It's directly linked in the same URL I gave from here as well: http://cpc.grijalva.house.gov/the-peoples-budget/ Mo_Steel fucked around with this message at 01:07 on Oct 25, 2012 |
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Oct 24, 2012 22:31
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Thanks for the response folks. He responded to my info by digging up and then dry humping Reagan's corpse. So I defriended him.
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Oct 24, 2012 22:44
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Mo_Steel posted:What do you want, a technical analysis done by an independent organization with compilations of data and comparative projections against non-partisan baselines? Pffft, whatever commie. Your link doesn't work, use this one.
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Oct 24, 2012 23:21
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I've been typing this up over the last day or so, so I'm not sure it really directly addresses anything relevant anymore. Nonetheless, I put effort into, I'm anxious to get feedback, and I'm hopeful some of these ideas may prove useful when arguing with libertarians about our present economic situation.Krabsworth posted:I'm sorry, this has been discussed, and I've looked through the thread at certain points to piece it together...But, when Mitt Romney goes as far as to keep referencing THE DEBT in a foreign policy debate, what is going on here? As it pertains to this thread, I always hear my (R) leaning relatives spout off about THE DEBT. If you say 'we need our domestic programs' they say 'we can't afford them! look at the debt!" Its like the imagery of being on the front porch wearing a barrel as your possessions are carted off is what they think we are heading towards. That is obviously the cartoon-y interpretation, but is the idea that eventually our debt is going to result in...the whole economy stopping? For every dollar owed, somebody else is owed a dollar. Your inability to service your credit card debts and your father's retirement package devaluing are, in a sense, related events. But all debt sums to zero. Fiat currency - and debt held in fiat currency - are ultimately social constructs. If the math stops making sense, that system collapses - but when that system collapses, we're still left with the same amount of 'stuff' as before. The only thing that gets foggy, in such circumstances, is 'ownership' - which is also a social construct (though possession and the ability to defend and preserve that possession is NOT a social construction). If the math stops working - like happened in '08 - there's a few options. First, debts can be renegotiated. If you owe the bank a million dollars, and the whole market gets hosed in the rear end (to the point where you can't service the loan), they might say 'well, if you can pay off half a million, we'll call it even.' Austerity is, in my interpretation, an effort to avoid that outcome (or sometimes a quid-pro-quo in exchange for debt restructuring). Second, inflation can alleviate the problem. If you borrow a thousand dollars at a time when bread costs one dollar a loaf, you effectively borrowed a thousand loaves of bread. If inflation doubles the cost of bread a week later, you can pay the debt off with one thousand dollars, but that's only equivalent to 500 loaves of bread. In essence, you're up 500 loaves and the bank loses 500 loaves. So inflation reduces wealth disparity, reducing wealth and debt at the same time. Mind you, this is only really effective if income increases proportionately with inflation. Third, the country can borrow more money. When the economy stalls out like this, interest rates for the most sound institutions drop to near-zero. There aren't good investment opportunities out there, and the market is incredibly chaotic, so investors are looking for 'safe' places to weather the storm. As such, the US can borrow a great deal of money at zero (and sometimes even negative) interest rates. While avoiding bankruptcy is important in terms of our nation's fiscal health, borrowing money (and investing it in infrastructure projects) seems the wise thing to me. Moreover, we can 'borrow' money from the fed - essentially, they print money, we spend it, then we repay it. This drives inflation (in a controlled way), getting us some of the benefits of the second option, and taking advantage of the third option. If we only borrow enough to service our debts, we merely extend the stagnant, near-dead economy. If we borrow significantly more, and invest it wisely, we can 'pull ourselves out by our bootstraps*.' As such, the focus on 'The Debt' by Romney (and the debt ceiling by the tea party crowd) is, in my view, misinformed. Yes, we can't simply forget it and put it out of our minds indefinitely, but if there's ever a time to borrow, it is now. Those that feel our debts are the most important issue are the same that fear inflation as the Worst Possible Thing(TM), completely oblivious to the fact that our present problems stem from massive DEFLATION. They also tend to believe, naively, that lower petrol prices indicate a strong, healthy economy (whereas, in my view, higher prices are necessary to 1) match market realities 2) jump-start the move towards sustainability and 3) help mitigate further climate change). *we only have that freedom because of our privileged position as the reserve currency. As such, *I* feel we have an obligation to invest it in a way that not only jump-starts our economy, but reinforces the interwoven relationships we have with other nations (in such a way that it helps bring THEM out of recession as well).
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Oct 25, 2012 18:57
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computer parts posted:The media specifically is pushing it because it's a "new way of warfare". There are people on here who were decrying bombing afghan weddings a decade ago but most of America only cares that it's a *new way* to kill people. The Deh Bala and Wech Baghtu wedding massacres were like, four years ago. I get the sense you are meaning to hand wave away their significance but that's a pretty disingenuous way to do it.
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Oct 25, 2012 19:37
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Danger posted:The Deh Bala and Wech Baghtu wedding massacres were like, four years ago. I get the sense you are meaning to hand wave away their significance but that's a pretty disingenuous way to do it. I'm not talking about handwaving away their significance? The US has been bombing people for over a decade, my point is that back then no one in the media cared but now they only care because it's fancy drones doing the killing.
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Oct 25, 2012 19:49
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computer parts posted:I'm not talking about handwaving away their significance? The US has been bombing people for over a decade, my point is that back then no one in the media cared but now they only care because it's fancy drones doing the killing. No, I'm sure most people object to to the killings themselves.
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Oct 25, 2012 19:57
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