[Dual Porpoise]

Originally Posted by Eug 

It's your definition, because that's just an extremely specific definition that most people (including economists) don't use.

Erm, no, but please, I've shared the mainstream economics definition, pray tell me your definition.

Originally Posted by Eug 

...in the confines of your unnecessarily restrictive definition.

Again, not mine. The field of economics, but come on - I'm sure they will be entertained and informed by hearing yours.

[Kerrigan]

I would like to remind everyone that "capitalist" and "capitalism" are Marxist terms and that the correct terminology to use for the United States (and Western Europe) is "Mixed/Free Market".

And, though I suspect that no one will listen because we are all running around like chickens with our heads cut off, the free market will persist despite this rescue package. This talk that "capitalism is shattered" is premature, as is the ushering in of a recession. Right now, as I have pointed out to much criticism, the standard economic indicators are --for reasons nobody really knows-- not all that bad. Before you jump all over that statement, ask yourself, do you even know what the indicators are that economists use, or did you have to wikilearn them just now?

When the figures come out for this quarter, then we will be in a better position to figure out just what has happened to the finance industry and how it has affected the economy as a whole. Until then, we don't really know what is going to happen.

[Dual Porpoise]

Originally Posted by Kerrigan 

I would like to remind everyone that "capitalist" and "capitalism" are Marxist terms and that the correct terminology to use for the United States (and Western Europe) is "Mixed/Free Market".

Woah there! Wait a minute. While Marx did coin the term 'capitalism', it is a term which can (broadly) be applied to the US economy. 'Mixed' or 'Free Markets' are quite different (although overlapping and not mutually exclusive) - are you implying a) that the US is not, in the main 'capitalist', or b) that the term "Mixed/Free Market" is somehow equivalent?

[Kerrigan]

What I'm implying here is that it is technically incorrect terminology when discussing economics. I'm certainly no economist but I have taken my share of upper level econ classes as part of a double major, and "capitalism" just isn't in the lexicon. In fact, picking up my copy of Advanced Macroeconomics sitting here at my desk and thumbing to the index, the only mention of the word "capital" in the sense of capitalism is in a brief inset on Karl Marx.

The only place in higher education where I have had to discuss capitalism is in philosophy. So I'm sorry, but Capitalism is just not a proper economic term and does not get us anywhere in serious economic discussions. It is best left for philosophers and literary critics. And it's not even worth laboring this point.

[Dual Porpoise]

I'm not sure where you get that idea. The US is certainly a capitalist economy, as is most of the rest of the world. You may want to review a few of your earlier economics texts - this is a bit of a wood and trees issue - it's like saying plant biology books don't mention forests, even though you know trees are found in forests - it's assumed that anyone reading advanced macroeconomics is familiar with the idea that we're talking about advanced capitalist macroeconomics, not advanced communist economics (I'm pretty sure your book doesn't deal with communist macroeconomics, right?).

Capitalism is an economic system where most production of goods and services is undertaken by private owned companies for profit - this is called 'production for profit' and is one of the cornerstones of capitalism.
The second is that most work is done by people working for wage labor.

Those two things are the defining characteristics of the modern definition of capitalism, and have little to do with Marx's critique. As I mentioned, your book assumes you are talking about capitalism, not some other economic system.

[vmarks]

Originally Posted by Dual Porpoise 

Aren't capitalists rich by definition? I mean, a capitalist is someone who lives by renting out their capital, rather than by wage labor, right?

This is a strange definition of capitalist. Is a socialist then someone who lives by renting out their.... social? No, sorry. Definition breaks.

Originally Posted by Dual Porpoise 

It's not really my definition, Eug, it's the definition of the profession of economics.

No, that's the source of your misunderstanding. A rich person could be rich because they are a worker who is highly waged. A capitalist MUST be rich, because by definition he lives of income generated by his capital without his having to undertake labor.

Nonsense. I'm a capitalist, and I'm certainly not rich.

I could someday become rich, but I am not today.

Capitalism as defined by Dr. Walter Williams, professor of Economics and Law (he's in both departments) at George Mason University, is this:

I have a few dollars, and you have a product. You want my dollars and I want the product. You value the dollars more than you do your product, and I value the product more than I value keeping my dollars, so we exchange them.

Seriously, that's it. Free exchange of property, with strong property rights and a monetary system in the middle. Capitalism.

He also says that "Despite the miracles of capitalism, it doesn't do well in popularity polls. One of the reasons is that capitalism is always evaluated against the non-existent, non-realizable utopias of socialism or communism. Any earthly system, when compared to a Utopia will pale in comparison. But for the ordinary person, capitalism, with all of its warts, is superior to any system yet devised to deal with our everyday needs and desires. "


"Since it's not considered polite, and surely not politically-correct to come out and actually say that greed gets wonderful things done, let me go through a few of the millions of examples of the benefits of people trying to get more for themselves. There's probably widespread agreement that it's a wonderful thing that most of us own cars. Is there anyone who believes that the reason we have cars is because Detroit assembly line workers care about us? It's also wonderful that Texas cattle ranchers make the sacrifices of time and effort caring for steer so that New Yorkers can have beef on their supermarket shelves. It is also wonderful that Idaho potato growers arise early to do back-breaking work in the hot sun to ensure that New Yorkers also have potatoes on their supermarket shelves. Again, is there anyone who believes that ranchers and potato growers, who make these sacrifices, do so because they care about New Yorkers? They might hate New Yorkers. New Yorkers have beef and potatoes because Texas cattle ranchers and Idaho potato growers care about themselves and they want more for themselves. How much steak and potatoes would New Yorkers have if it all depended on human love and kindness? I would feel sorry for New Yorkers. Thinking this way bothers some people because they are more concerned with the motives behind a set of actions rather than the results. This is what Adam Smith, the father of economics, meant in The Wealth of Nations when he said, "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interests."

"Market capitalism is the best thing that ever happened to the common man. The rich have always had access to entertainment, often in the comfort of their palaces and mansions. The rich have never had to experience the drudgery of having to beat out carpets, iron their clothing or slave over a hot stove all day in order to have a decent dinner. They could afford to hire people. Capitalism's mass production and marketing have made radios and televisions, vacuum cleaners, wash-and-wear clothing and microwave ovens available and well within the means of the common man; thus, sparing him of the boredom and drudgery of the past. Today, the common man has the power to enjoy much (and more) of what only the rich could afford yesteryear. "

[tie]

Originally Posted by Dual Porpoise 

Erm, no, but please, I've shared the mainstream economics definition, pray tell me your definition.

My Mac says, "a wealthy person who uses money to invest in trade and industry for profit in accordance with the principles of capitalism." It doesn't say that he can't work. (This seems a silly debate to have, though. Are you really arguing that Rockefeller wasn't a capitalist?)

[Dual Porpoise]

Originally Posted by tie 

My Mac says, "a wealthy person who uses money to invest in trade and industry for profit in accordance with the principles of capitalism." It doesn't say that he can't work. (This seems a silly debate to have, though. Are you really arguing that Rockefeller wasn't a capitalist?)

Sure - I'll take that - what we were talking about is whether a capitalist is by definition rich. That definition agrees with me that a capitalist is rich, and that he gains profit from investments.
Obviously these categories are not black and white, and a Rockefeller could have held a minimum wage job on a construction site and still be a capitalist - the point is that he had enough money not to have to work - work was something he chose to do, he was not compelled to to make a living.

[Dual Porpoise]

Originally Posted by vmarks 

This is a strange definition of capitalist. Is a socialist then someone who lives by renting out their.... social? No, sorry. Definition breaks.

No, it's a normal definition of capitalist. I think you're confusing the economic definition of capitalist (someone who makes their living from capital) with the political one (someone who advocates for a capitalist economy).

Originally Posted by vmarks 

Nonsense. I'm a capitalist, and I'm certainly not rich.
I could someday become rich, but I am not today.

Then I think you are a capitalist in the political sense, but not the economic one. If you earn your living primarily by wage labor then you are a worker - if you are rich enough not to have to work, and your capital provides income for you, then you are a capitalist. Let's agree to use these terms carefully, since I think that's the source of our disagreement - I agree with you that the political term for a cheerleader of capitalism exists, do you agree that the term has a separate, economic meaning?

Originally Posted by vmarks 

Capitalism as defined by Dr. Walter Williams, professor of Economics and Law (he's in both departments) at George Mason University, is this:
I have a few dollars, and you have a product. You want my dollars and I want the product. You value the dollars more than you do your product, and I value the product more than I value keeping my dollars, so we exchange them.

That's not really a definition, it's a description, or an example, and it hardly sums up what capitalism is. If anything, that's a description of a market.

Originally Posted by vmarks 

Seriously, that's it. Free exchange of property, with strong property rights and a monetary system in the middle. Capitalism.

No, that's a market economy. The two are not necessarily the same, although they often coincide.

Originally Posted by vmarks 

He also says that "Despite the miracles of capitalism, it doesn't do well in popularity polls. One of the reasons is that capitalism is always evaluated against the non-existent, non-realizable utopias of socialism or communism. Any earthly system, when compared to a Utopia will pale in comparison. But for the ordinary person, capitalism, with all of its warts, is superior to any system yet devised to deal with our everyday needs and desires. "

That's a matter of opinion. He's entitled to his.

[Kerrigan]

Originally Posted by Dual Porpoise 

I'm not sure where you get that idea. The US is certainly a capitalist economy, as is most of the rest of the world. You may want to review a few of your earlier economics texts - this is a bit of a wood and trees issue - it's like saying plant biology books don't mention forests, even though you know trees are found in forests - it's assumed that anyone reading advanced macroeconomics is familiar with the idea that we're talking about advanced capitalist macroeconomics, not advanced communist economics (I'm pretty sure your book doesn't deal with communist macroeconomics, right?).

Capitalism is an economic system where most production of goods and services is undertaken by private owned companies for profit - this is called 'production for profit' and is one of the cornerstones of capitalism.
The second is that most work is done by people working for wage labor.

Those two things are the defining characteristics of the modern definition of capitalism, and have little to do with Marx's critique. As I mentioned, your book assumes you are talking about capitalism, not some other economic system.

OK, I'm sorry, you're right, and every economics professor and economist I've ever conferred is wrong. You may want to notify them, though, as they are unaware of your decree as to what is and what is not technical terminology.

You may also want to notify them of your strange contrarian suggestion that the US is not a free market.

[Eug]

So anyways...

AIG is up 43% at close today, compared to yesterday's close. And many people made way more than that off this stock this week. People could have theoretically made 100% profit in one day. Yesterday at lunch time it was barely over $2.10, but it went over $4.40 this afternoon.

I don't agree short-selling should be banned, but I do think they should enforce their no-bare-shorts rule, and I do wonder if it was a mistake to revoke the uptick rule.

[Dual Porpoise]

Originally Posted by Kerrigan 

OK, I'm sorry, you're right, and every economics professor and economist I've ever conferred is wrong. You may want to notify them, though, as they are unaware of your decree as to what is and what is not technical terminology.

So are you really saying that you have met economics professors who say that the US is not a capitalist economy? Which ones? I will certainly inform them, and their deans!*

Originally Posted by Kerrigan 

You may also want to notify them of your strange contrarian suggestion that the US is not a free market.

Well, I didn't say that it's not a free market, but of course, it isn't a completely free market, it is very heavily regulated. At best you could say that some sectors are moderately free. Free market economics is certainly talked about a lot, but please, show me a sector of the US economy apart from the illegal drug trade that is really free.
I know, I know, what we mean by 'free market' is that it is relatively free. Certainly freer than Soviet Russia, but not as free as Somalia. Go figure.

* I'l also bet that I don't actually get a list of real world professors Kerrigan has met who say that the US economy is not capitalist, at least, not in any verifiable form.

[ironknee]

so is it right that all this will cost tax payers 1 trillion dollars?

fiscal conservative at it's best!

btw, it's all obama's fault...or is it clinton?

[selowitch]

It never changes. Republicans' hearts are broken at the thought of one of their beloved conglomerates facing tough times and are always ready with the warm blanket of welfare when contributors to their campaigns get into trouble. But when it comes to showing compassion for individuals and working families -- forget it, you're on your own, buddy. Suck it up. Accept personal responsibility and quit whining.

Give me a break. The hypocrisy is sickening.

[Wiskedjak]

Originally Posted by ironknee 

so is it right that all this will cost tax payers 1 trillion dollars?

fiscal conservative at it's best!

btw, it's all obama's fault...or is it clinton?

Fiscal conservatism? I think the Bush Administration just committed the single largest act of Communism in the history of our planet.

[Dual Porpoise]

Originally Posted by Eug 

I don't agree short-selling should be banned

So talk me through why short selling is a good thing. I mean, I'm not looking for an argument based on the fundamental liberty to do anything you want, no matter how obnoxious it is - we make laws against that kind of thing all the time.

What does short selling contribute to the economy? How does it advance anything at all in a market economy?

[Eug]

Short selling isn't "obnoxious". It's a legitimate investment tool, but only if the rules make sense, and the rules are enforced.

We had neither in this situation. First of all the uptick rule was removed last year, and secondly, the ban on naked short selling was basically never enforced.

Furthermore, it arguably provides a reasonable check to unjustified stock price inflation.

For the record, I have never shorted any stock. However, I have nothing against the concept of hedge funds and other people shorting stock, as long as the rules make sense and are actually followed. To put it another way, just because insider trades do happen even now, I don't think allowing people to buy stock is a bad thing.

[ironknee]

Originally Posted by Wiskedjak 

Fiscal conservatism? I think the Bush Administration just committed the single largest act of Communism in the history of our planet.

indeed but it's all obama and clinton's fault...

anyone know what the national debt is with all this?

[SDW2001]

Originally Posted by OldManMac 

Just more corporate socialism.

I think you mean corporate welfare. But that's not true either. Sorry for the cliche, but the fact of the matter is that AIG really is too big to fail. They are an insurance and finance GIANT. They have assets everywhere. It's conceivable that if AIG went under, the entire US financial system could utterly collapse. What do I mean by that? Try having 1/3 of all mortgages called in. Try having your credit cards called in. No capital for building, short term bank 2 bank and b2b lending, massive bankruptcies on not just Wall Street, but Main Street. It could be Cold War Russia. There could be friggin' bread lines. I'm deadly serious.

[OldManMac]

Originally Posted by SDW2001 

I think you mean corporate welfare. But that's not true either. Sorry for the cliche, but the fact of the matter is that AIG really is too big to fail. They are an insurance and finance GIANT. They have assets everywhere. It's conceivable that if AIG went under, the entire US financial system could utterly collapse. What do I mean by that? Try having 1/3 of all mortgages called in. Try having your credit cards called in. No capital for building, short term bank 2 bank and b2b lending, massive bankruptcies on not just Wall Street, but Main Street. It could be Cold War Russia. There could be friggin' bread lines. I'm deadly serious.

Im sure you are deadly serious, but I think your reaction is wrong. We can't keep rewarding the same people who are screwing the system up, which is what this bailout amounts to. Here's another take on it. http://www.thenation.com/doc/20081006/greider

[Eug]

Would it somehow have been possible to just let AIG Financial fail? By most accounts, the rest of the company was relatively OK.

Yeah, AIG Financial had links to a bazillion different banks, but hey, they'd be taking the fall, but all in little pieces, as opposed to US taxpayers (and unfortunately taxpayers outside the US too).

P.S. The AIG Financial Products website doesn't work properly in Safari. Bah!

[stevesnj]

so i need to bailed out of my current financial woes...do I qualify to be bailed out or do I just have to pay to bail out Billion dollar companies??

[Eug]

Sorry, in order to qualify for a bailout, you need to lose a few hundred billion dollars first.

[stevesnj]

Originally Posted by Eug 

Sorry, in order to qualify for a bailout, you need to lose a few hundred billion dollars first.

Darn !!

[ShortcutToMoncton]

…and you need to have made more than 5 million last year…

[tie]

It makes me sick that more than $3,500 from my pocket (and from every American's pocket) is going into the pockets of the richest Americans. Brad DeLong suggests tying the package to tax reform on high earners. Examples:
1. Cancellation of current golden parachutes
2. "Look backs in the future--pay over $1M conditioned on the long-term profitability of the enterprise over more than a decade", i.e., "A 100% tax on all personal compensation over $1 million a year that does not take the form of restricted common stock in the entity issuing the compensation, untradeable for ten years."

[ShortcutToMoncton]

Only a dirty socialist would argue that this $700 billion in government bailout money shouldn't also be given to the ultra-rich and rich.

Are you guys dirty socialists?

greg

[tie]

I don't agree much with Krugman, but do today.

...And if the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place.

That’s what happened in the savings and loan crisis: the feds took over ownership of the bad banks, not just their bad assets. It’s also what happened with Fannie and Freddie. (And by the way, that rescue has done what it was supposed to. Mortgage interest rates have come down sharply since the federal takeover.)

But Mr. Paulson insists that he wants a “clean” plan. “Clean,” in this context, means a taxpayer-financed bailout with no strings attached — no quid pro quo on the part of those being bailed out. Why is that a good thing? Add to this the fact that Mr. Paulson is also demanding dictatorial authority, plus immunity from review “by any court of law or any administrative agency,” and this adds up to an unacceptable proposal.

I’m aware that Congress is under enormous pressure to agree to the Paulson plan in the next few days, with at most a few modifications that make it slightly less bad. Basically, after having spent a year and a half telling everyone that things were under control, the Bush administration says that the sky is falling, and that to save the world we have to do exactly what it says now now now.

[Sayf-Allah]

Has it been mentioned that some of that 700 billion dollars your government is going to put into the economy is going to go into the hands of foreign banks and investors?

So basically the American tax payer is going to be paying so that foreign banks can get rid of their bad investments.

[ShortcutToMoncton]

I can't believe that the Democrats are all the bottom of all this! Those dirty socialists!

[Wiskedjak]

Damn Clinton for setting this up to happen 8+ years ago!!!

[SDW2001]

Originally Posted by OldManMac 

Im sure you are deadly serious, but I think your reaction is wrong. We can't keep rewarding the same people who are screwing the system up, which is what this bailout amounts to. Here's another take on it. http://www.thenation.com/doc/20081006/greider

The Nation?

It's very easy to say "HEY! Those rich bastards are goin' to get away with this S***? Come on...let 'em fry!"

But one can't do that. Not with a company like AIG. Do you realize that Wednesday night saw utter and complete panic on Wall Street? Speaking of other takes, try this on for size.

I am a conservative and very, very hesitant to see the government bailout anyone. But this had to be done.

[SDW2001]

Originally Posted by stevesnj 

so i need to bailed out of my current financial woes...do I qualify to be bailed out or do I just have to pay to bail out Billion dollar companies??

No, though I understand the sentiment. You failing would not affect the entire US economy. AIG failing would potentially cause a complete economic collapse. Try "New Great Depression." On Wednesday night, the credit markets completely seized.

According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening. The total money-market capitalization was roughly $4 trillion that morning.

The panicked selling was directly linked to the seizing up of the credit markets - including a $52 billion constriction in commercial paper - and the rumors of additional money market funds "breaking the buck," or dropping below $1 net asset value.

Breaking the buck would amount to a disaster:

While many depositors treat money market accounts as fancy savings accounts, they are different. Banks buy a variety of short-term debt, including commercial paper, with the assets. It is an important distinction because banks use the $1.7 trillion commercial-paper market to fund their credit card operations and car finance companies use it to move autos.

Without commercial paper, "factories would have to shut down, people would lose their jobs and there would be an effect on the real economy," Paul Schott Stevens, of the Investment Company Institute, told the Wall Street Journal.

From here.

We were literally on the precipice of financial devastation. Now, if you want to talk about making sure these people don't get bonuses and golden parachutes for nearly wrecking the world financial system, I'm on board.

[SDW2001]

Originally Posted by tie 

It makes me sick that more than $3,500 from my pocket (and from every American's pocket) is going into the pockets of the richest Americans. Brad DeLong suggests tying the package to tax reform on high earners. Examples:
1. Cancellation of current golden parachutes
2. "Look backs in the future--pay over $1M conditioned on the long-term profitability of the enterprise over more than a decade", i.e., "A 100% tax on all personal compensation over $1 million a year that does not take the form of restricted common stock in the entity issuing the compensation, untradeable for ten years."

1. For whom? By whom? On what grounds? I might support this for companies that need to be bailed out.

2. Uh....welcome to Soviet Russia. Seriously? I realize what you're trying to do, but this is not the way to do it. Now, we could talk about publicly traded companies being forced to tie their bonus structures to performance of the company itself. However, the benchmarks couldn't just be profit and loss driven, because that kind of thinking is what helped get us here in the first place.

It occurs to me that a lot of this is the fault of the investors in these companies. By "investors" I mean both individuals and those that manage money. Why would someone buy stock in a company that is losing billions and whose CEO is making obscene amounts of money? Answer: Greed and short-term thinking. As long as the stock is going up, no one cares. IT's not ownership of stock..it's straight up gambling.

[Wiskedjak]

Originally Posted by SDW2001 

No, though I understand the sentiment. You failing would not affect the entire US economy.

Wouldn't people not being able to pay their mortgages count as affecting the entire US economy?

[Sayf-Allah]

Originally Posted by Wiskedjak 

Wouldn't people not being able to pay their mortgages count as affecting the entire US economy?

Isn't that the "foundation" of the current crisis?

[Sayf-Allah]

One of the first "results" of the bailout plan:

Record one-day jump in oil price

So not only do taxpayers pay to save the rich, but the price of oil goes up resulting in the taxpayers having to pay more for everything (goods, hear etc etc).

Great work Bush!

[tie]

Originally Posted by SDW2001 

1. For whom? By whom? On what grounds? I might support this for companies that need to be bailed out.

For whom? Well, we're bailing out all the financial companies. We're even giving our tax dollars to foreign banks. So cancel them for all the American companies. If they don't like it, they don't have to take the money.

2. Uh....welcome to Soviet Russia. Seriously? I realize what you're trying to do, but this is not the way to do it. Now, we could talk about publicly traded companies being forced to tie their bonus structures to performance of the company itself. However, the benchmarks couldn't just be profit and loss driven, because that kind of thinking is what helped get us here in the first place.

It occurs to me that a lot of this is the fault of the investors in these companies. By "investors" I mean both individuals and those that manage money. Why would someone buy stock in a company that is losing billions and whose CEO is making obscene amounts of money? Answer: Greed and short-term thinking. As long as the stock is going up, no one cares. IT's not ownership of stock..it's straight up gambling.

It occurs to me that you don't have any solution. You are happy to blame it on "greed and short-term thinking" but don't want to do anything to rein that greed in. Putting a ten-year window on compensation would help. "Welcome to Soviet Russia"? What do you call giving $1 trillion to the richest of the rich?

We could build a lot of bridges for $1 trillion. We could move our economy off oil by building nuclear plants with 150 GW capacity. (According to my calculations, this would be about 1/3 of the US power supply---numbers taken from here and here for costs of nuclear power.)

This plan is incredibly stupid. We are giving our money away, since we aren't getting any ownership stake in return. If Wall Street wants to come crying to the government for $1 trillion, then they should be prepared to give up a whole lot in return.

[SDW2001]

Originally Posted by Wiskedjak 

Wouldn't people not being able to pay their mortgages count as affecting the entire US economy?

That depends on how many people. The fact is that most people can pay their mortgages. We were discussing one person, not a large group.

[SDW2001]

Originally Posted by Sayf-Allah 

One of the first "results" of the bailout plan:

Record one-day jump in oil price

So not only do taxpayers pay to save the rich, but the price of oil goes up resulting in the taxpayers having to pay more for everything (goods, hear etc etc).

Great work Bush!

Could you explain to me how this is Bush's work/fault? Let me guess..."DEREGULATION!"

Originally Posted by tie 

For whom? Well, we're bailing out all the financial companies. We're even giving our tax dollars to foreign banks. So cancel them for all the American companies. If they don't like it, they don't have to take the money.

Question: Do you think the golden parachutes are the problem? I understand it might make you feel better, but they are not the problem. I suppose I can agree that if a company was to take public assistance, certain provisions would have to be met. My problem is with the term "cancel." This begs the question...who is doing the canceling?

It occurs to me that you don't have any solution. You are happy to blame it on "greed and short-term thinking" but don't want to do anything to rein that greed in. Putting a ten-year window on compensation would help. "Welcome to Soviet Russia"? What do you call giving $1 trillion to the richest of the rich?

It occurs to me that no one has a good solution. I'm not "happy" to blame it on anything. It is what it is. The current crisis has a lot to do with corporate short-term thinking in terms of profit and loss. And it has a lot to do with greed, both by corporations and their investors large and small.

I reject the notion that we're "giving $1 Trillion to the richest of the rich." This is simplistic thinking and shows a real ignorance of how our financial system works. The government is going to buy bad debt/paper from certain companies in order to prevent a global financial meltdown. That is not the same as giving money to the "richest of the rich." Man, you Democrats are real pieces of work.

We could build a lot of bridges for $1 trillion. We could move our economy off oil by building nuclear plants with 150 GW capacity. (According to my calculations, this would be about 1/3 of the US power supply---numbers taken from here and here for costs of nuclear power.)

This plan is incredibly stupid. We are giving our money away, since we aren't getting any ownership stake in return. If Wall Street wants to come crying to the government for $1 trillion, then they should be prepared to give up a whole lot in return.

I guess Barack Obama has started posting here? You don't seem to understand: There will be no new bridges without a stable financial system, because there will be no credit. Sure, you can let the whole thing burn, but you better expect the aforementioned global financial meltdown. That meltdown wouldn't just affect "the rich" either. It would affect you. Credit card companies would run out of money. Your mortgage company would run out of money. There would be no short term credit for business. Trying to buy a car? Forget it, 'cause GM just went bankrupt. Even if they hadn't, GMAC couldn't give you a loan and the dealer couldn't finance the cars in his inventory. Want a new coat? Sorry...JC Penny can't finance its inventory any more. Home construction? Done. Retail? Done. The entire American economy? Toast. That will be the price of your class warfare approach. Hope it's worth it, champ.

This is a necessary step, as much as I hate to see it happen. It's this or armageddon.

[stumblinmike]

Prepare the torches and grab your pitchforks!!!

[tie]

Originally Posted by SDW2001 

Could you explain to me how this is Bush's work/fault? Let me guess..."DEREGULATION!"

The increase in the price of oil was because of the weakening dollar, which is because of concern over the effect of this plan on the ballooning national debt. It is Bush's responsibility.

Question: Do you think the golden parachutes are the problem? I understand it might make you feel better, but they are not the problem. I suppose I can agree that if a company was to take public assistance, certain provisions would have to be met. My problem is with the term "cancel." This begs the question...who is doing the canceling?

I don't get your problem with the term "cancel." Can you explain? To answer your question, yes, I think that executive compensation that is not tied to executive performance is a big part of the problem.

I reject the notion that we're "giving $1 Trillion to the richest of the rich." This is simplistic thinking and shows a real ignorance of how our financial system works. The government is going to buy bad debt/paper from certain companies in order to prevent a global financial meltdown. That is not the same as giving money to the "richest of the rich." Man, you Democrats are real pieces of work.

You are wrong. We are buying debt for more than it is worth. Most of the debt isn't worth anything at all. That meets my definition of a "gift." The debt is currently owned by the richest of the rich. Wall Street gave out $40 billion in bonuses last year. Hence my phrasing.

The effect on the economy would also be greater by spending the $1 trillion instead of giving it away. $1 trillion in construction is going to do a lot more than $1 trillion back into the pockets of bad bankers. (If you are going to give $1 trillion to bankers, shouldn't you give it to those who know how to invest it well?)

Tell me, what is the logic behind giving our tax dollars to foreign banks? I can't see any.

This is a necessary step, as much as I hate to see it happen. It's this or armageddon.

Yeah, I've heard this line before. The bankers made a ton of money before, and now they want me (the taxpayer) to take on all their losses. And now even though everything was perfectly fine, and Democrats were being anti-American by complaining about the economy, all of a sudden the economy is collapsing too fast for us to consider any alternative plan. No, I don't believe it. Hedge funds are doing fine. Finance is working, it is just changing, and we don't need to prop up the inefficient dinosaurs.

[CRASH HARDDRIVE]

The lefties are right (I suppose it CAN happen every now and then! ) this was a bad move.

Government bailing out industries sets a terrible precedent- but then, we've been here before. And we all know it's because the survival of these huge companies is tied to the survival of the government's own revenue stream, and they'll do anything to keep it going. They're partners in crime.

They (government) see your money and mine as THEIRS, to do with what suits their own interests and survival at all costs FIRST ...your needs, mine and those of any average taxpaying citizen a distant last.

And yeah, it's socialism at it's worst.

Can we now agree that the government nosing into other areas of the private sector is ALSO equally bad, equally self-serving above all else, and equally worthy of being opposed despite the fact that the powers that be will do what they want anyway?

[SDW2001]

Originally Posted by tie 

The increase in the price of oil was because of the weakening dollar,

That's not entirely true. In fact, it's not the majority of the reason oil spiked over the last 6 months. You're correct that the spike yesterday was due to weakening dollar...but there were other factors as well.

which is because of concern over the effect of this plan on the ballooning national debt.

Essentially accurate.

It is Bush's responsibility.

Now that's just silly. Bush does not appropriate, Congress does. Bush supports a bailout, but so does the majority of the Congress. Now don't get me wrong, Bush has been a failure on preventing excessive spending. But placing the blame on him and him alone is simply wrong headed thinking.

I don't get your problem with the term "cancel." Can you explain? To answer your question, yes, I think that executive compensation that is not tied to executive performance is a big part of the problem.

1. My problem is you're having the government do the "canceling." Think of the precedent this sets. So the government can now come along and say "hey Steve jobs! You're a publicly traded company....no more Gulfstream for you!"

2. No. Executive compensation is tied to performance. The problem is that we are measuring performance by quarter to quarter profit and loss....not long term financial health of the company. However, I must again: How far should the government go in mandating what companies pay their CEOs and CFOs?

You are wrong. We are buying debt for more than it is worth.

I'm not wrong, but you're correct that we're buying it for more than its worth.

Most of the debt isn't worth anything at all.

False.

That meets my definition of a "gift."

And you are?

The debt is currently owned by the richest of the rich.

False. It's owned by millions of people. It's in retirement funds, mutual funds, pension funds...everywhere.

Wall Street gave out $40 billion in bonuses last year. Hence my phrasing.

Non-sequitur. Those bonuses, while ridiculous, are not the problem. Those individuals do not "own" the debt.

The effect on the economy would also be greater by spending the $1 trillion instead of giving it away.

Now you're just making crap up. You don't know that at all.

$1 trillion in construction is going to do a lot more than $1 trillion back into the pockets of bad bankers. (If you are going to give $1 trillion to bankers, shouldn't you give it to those who know how to invest it well?)

You just don't understand. While I agree that the money should be paid out in bonuses to the individuals in charge of these failed companies, I also know that the money is going to buy the corporate paper/debt. This means the government is going to own a large part of the toxic debt (mortgage funds, bonds, etc.). This will prevent major corporations from going completely bankrupt, and prevent the credit markets from seizing. Credit is the lifeblood of the American and World economies. Without it, nothing happens. Nothing.

Tell me, what is the logic behind giving our tax dollars to foreign banks? I can't see any.

That's again a simplification of what's happening, and I think you know it.

Yeah, I've heard this line before. The bankers made a ton of money before, and now they want me (the taxpayer) to take on all their losses. And now even though everything was perfectly fine, and Democrats were being anti-American by complaining about the economy, all of a sudden the economy is collapsing too fast for us to consider any alternative plan. No, I don't believe it. Hedge funds are doing fine. Finance is working, it is just changing, and we don't need to prop up the inefficient dinosaurs.

It's like talking to a wall.

The Evil Bankers are only part of the problem. Much of what has happened was brought about by the federal government when GUESS WHO was in charge. Congress and the Administration mandated that loans were made available to people that normally wouldn't qualify. Over the years, banks assumed billions in toxic debt, which was fine as long as the housing market was good. When it collapsed, they had no where to turn.

The fact is that Democrats were complaining about the economy when we didn't see this coming. In 2004 and 2006, the economy was strong. They were complaining anyway, saying that it was the worst "since the Great Depression." In other words, they were doing it for political purposes. I didn't see any Democrats running around saying that we had to fix the toxic debt problem...did you?

And yes, the economy will collapse without this bailout. Think it through. It's not just the companies themselves, it's the collateral damage. It's pension funds and personal money markets. It's the financing arms of GM and Ford (which are the only profitable divisions of those companies most of the time). One thing leads to another. Wachovia and WaMu go under. 100 regional banks fail. JPMorgan? Gone. When we're done only Bank of America and Citigroup limp out of the pile of bodies. The DOW loses 5,000 in 90 days. Credit dries up. Asia and Europe go under at the same time, because they are interconnected.

But hey, I'm sure it will be fine. It's those effing Rich Evil Bankers. Let 'em fry.

[Sayf-Allah]

Originally Posted by SDW2001 

Now that's just silly. Bush does not appropriate, Congress does. Bush supports a bailout, but so does the majority of the Congress. Now don't get me wrong, Bush has been a failure on preventing excessive spending. But placing the blame on him and him alone is simply wrong headed thinking.

Correct me if I'm wrong (I'm not sure on the following).

Doesn't Bush have to sign everything that the Congress does so that it becomes law (or funded through new laws)? Doesn't he have the final say when it comes to the direction that the US takes?

[tie]

Originally Posted by SDW2001 

That's not entirely true. In fact, it's not the majority of the reason oil spiked over the last 6 months. You're correct that the spike yesterday was due to weakening dollar...but there were other factors as well.

...And that's exactly what I said. I don't understand what your problem is.

Bush does not appropriate, Congress does... But placing the blame on him and him alone is simply wrong headed thinking.

Oh, sorry, I forgot I was talking to a Bush apologist. Tell me, what did you think about the Iraq war? Did we just barely avoid nuclear armageddon by attacking a country that had no WMDs?

1. My problem is you're having the government do the "canceling." Think of the precedent this sets. So the government can now come along and say "hey Steve jobs! You're a publicly traded company....no more Gulfstream for you!"

2. No. Executive compensation is tied to performance. The problem is that we are measuring performance by quarter to quarter profit and loss....not long term financial health of the company. However, I must again: How far should the government go in mandating what companies pay their CEOs and CFOs?

If the government is assuming the risks of these companies, then it has every right to regulate them much more strictly. And it has the responsibility in fact to do so, because the companies are risking taxpayer dollars.

I'm not wrong, but you're correct that we're buying it for more than its worth.

And that's why I call it a gift.

Now you're just making crap up. You don't know that at all.

Of course I do. You can do a whole lot with $1 trillion. That's in the territory of the Iraq war cost, and you only need a quick Google search to find dozens of webpages listing better ideas on how to spend that kind of money.

The Evil Bankers are only part of the problem. Much of what has happened was brought about by the federal government when GUESS WHO was in charge. Congress and the Administration mandated that loans were made available to people that normally wouldn't qualify. Over the years, banks assumed billions in toxic debt, which was fine as long as the housing market was good. When it collapsed, they had no where to turn.

Yeah, I know. It's Clinton's fault. LOL. Now why don't I take you seriously?

[Doofy]

Originally Posted by bloke who tie quoted 

2. "Look backs in the future--pay over $1M conditioned on the long-term profitability of the enterprise over more than a decade", i.e., "A 100% tax on all personal compensation over $1 million a year that does not take the form of restricted common stock in the entity issuing the compensation, untradeable for ten years."

I've got two words for that. The second one is "off". I'll pay myself whatever I see fit, thanks.

[Doofy]

Originally Posted by tie 

Yeah, I know. It's Clinton's fault. LOL. Now why don't I take you seriously?

Clinton was in office in 1913?

[Sayf-Allah]

Originally Posted by Doofy 

I've got two words for that. The second one is "off". I'll pay myself whatever I see fit, thanks.

Fine, but then you'd get no money from the government to bail your company out.

[Doofy]

Originally Posted by Sayf-Allah 

Fine, but then you'd get no money from the government to bail your company out.

I don't want any money from the government to bail me out. In fact, I'd quite like it if the government forgot I existed.

You seem to think that the government is bailing out these banking giants? The banking giants own the government, so they're simply bailing themselves out. They own you too, so be a good little prole and pay your taxes with the rest of the sheeple.