Re: OT: Tax Day Tea Party
Ron Shepard
follow, or delete, these OT posts there.]
In article <CERFl.567$N5....@nwrddc01.gnilink.net>,
"Dan White" <nos...@nospam.invalid> wrote:
>
> > I'd agree that America should have done a better job at reigning in the
> > deficit, as Bill Clinton did but Ronald Regean the the Bushes did not.
>
> You may be right about the rest of your post, but the above is a gross
> distortion of history.
In what respect do you think this a distortion?
$.02 -Ron Shepard
bk4...@hotmail.com
wrote:
Ronald Reagan was the only president since the early 1900's who
clearly understood the Constitutionally mandated role of a LIMITED
government and spoke about it often. Remember, "Government cannot
solve your problems. Government IS the problem." RR was also the
ONLY president since the early 1900's who had a strong focus
concerning the national debt. And yet even he was unable to resist
the pressure of the bankers.
Clinton didn't do shit (as John pointed out) and no modern president,
not Reagan, not the Bushes, not Clinton, not Obama has had the balls
to be honest with the American public about our situation. I can only
think of two **candidates** in my lifetime who have been that honest.
Ross Perot and Ron Paul. Ross Perot got my vote back then, and I see
no other alternative for 2012 than Ron Paul.
Bob Keller
Ron Shepard
John Black <jbl...@texas.net> wrote:
> In article <ron-shepard-54D3...@forte.easynews.com>, ron-
> she...@NOSPAM.comcast.net says...
> > In article <s2DFl.192101$rp7....@en-nntp-02.dc1.easynews.com>,
> > JakartaDean <deanb...@forteinc.com> wrote:
> >
> > In the case of the
> > housing collapse, investors were buying too little collateral, with
> > too high of a risk, with too much money. Then they simply relabeled
> > that risk (in "credit default swaps"), making it appear to be more
> > valuable that it was, and sold it all around the world. There used
> > to be rules against doing that, but we started changing those rules
> > in the 80's in order to artificially stimulate economic growth.
>
> And banks were forced to make subprime loans or face federal prosecution for
> redlining or for running afowl of the CRA. When they complained about the
> risk, they were told its all backed by Fannie and Freddie.
I don't think that subprime loans were backed by Fannie and Freddie,
were they? Isn't that what made them subprime. The interest rates
were much higher than normal because the risk was higher than
normal, and often these were three-year balloon mortgages rather
than normal 15 or 30 year mortgages. And this still does not touch
on the issue of credit default swaps, which played a central role in
the collapse.
Besides, it isn't clear to me how foreclosures alone had any effect
on the collapse. The bank holds the title to the property, so they
not only keep whatever payments were made to the bank (higher than
normal interest rates for subprime mortgages), but they get the
property too. All in all, that's a pretty good deal for the banks,
isn't it?
The problem is that the banks were getting too little collateral.
That means, for example, that their assessors weren't doing their
jobs. Then they took these high-risk loans, repackaged them,
relabeled them as low-risk loans, and sold them to other banks and
other types of investors looking to make big profits with little
investments. A few years ago, all of that would have been illegal.
Now, after 25 years of deregulation, it isn't clear how much, if
any, of this was illegal.
> > One
> > of the first things that happened when we did that was the savings
> > and loan scandal (which John McCain was actually involved in, so
> > this isn't really ancient history -- do a google search for
> > details).
>
> Sigh, this canard again? McCain's "acutal involvement" in the savings and
> loan scandal was that he was accused and then completely exonerated.
McCain himself said about his meetings with the bank regulators,
"The appearance of it was wrong. It's a wrong appearance when a
group of senators appear in a meeting with a group of regulators,
because it conveys the impression of undue and improper influence.
And it was the wrong thing to do."
As I said, McCain was involved in this deregulation process, so this
is not some ancient history you would read in a book from the
1920's, it is about what happened to people still holding office
today.
> So scandalous Ron...
Hmmm?
It would have been impossible for McCain not to have been
investigated in the Keating scandal. He was personal friends with
Keating, he met with regulators on Keating's behalf, he vacationed
with Keating, he was one of the senators from Keating's home state
(the other, a Democrat, was also involved in the scandal), and his
wife's family had been involved with several business deals with
Keating. After he met with banking regulators, Keating's S&L stayed
in business for two more years.
As I said before, do a google search to find the details. The
information is all online.
> > But despite that early failure, deregulation continued
> > through the 90's and more recently with the assumption that the
> > markets were self-regulating and that nothing really bad would
> > happen because of the "laws" of economics. Greenspan's testimony
> > was an admission that that central idea of self-regulating free
> > markets do not work and cannot possibly work.
>
> This is a hilarious fiction. So we have been living under UNREGULATED FREE
> MARKET CAPITALISM for a long time now, especially the last 8 years. We are
> in a bit of a mess now proving this whole free market thing didn't work out
> so now its time to get rid of all that and try something "new". Do I have
> it right?? Ridiculous. We've been living under enough regulation to fill
> the empire state building and constant government meddling in the market.
> Some of that meddling contributed greatly to the whole sub-prime crisis with
> aggressive procecution of CRA coupled with government guarntees of risk that
> private banks would never assume themselves. An actual free market could
> never have gotten us into a mess this big.
As I said before, download and read Greenspan's testimony. This is
what he said (under oath).
> "I think the responsibility that the Democrats have may rest more in
> resisting any efforts by Republicans in the Congress, or by me when I was
> president, to put some standards and tighten up a little on Fannie Mae and
> Freddie Mac."
> -- Pres. Bill Clinton 9/24/2008
Yes, Clinton was part of the deregulation process too. Because of
that, and NAFTA, everyone used to say he was the best Republican
President of the 20th century. Clinton and Greenspan take
responsibility for their mistakes. Not everyone else involved has
done that.
$.02 -Ron Shepard
Ron Shepard
<a721ca0e-1ef1-44af...@s22g2000prg.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> Ronald Reagan was the only president since the early 1900's who
> clearly understood the Constitutionally mandated role of a LIMITED
> government and spoke about it often. Remember, "Government cannot
> solve your problems. Government IS the problem." RR was also the
> ONLY president since the early 1900's who had a strong focus
> concerning the national debt.
Reagan tripled the deficit and quadrupled the national debt during
his term. He was the largest "borrow and spend" president in our
nation's history, measured either in terms of absolute dollars when
he was in office, or in terms of percentage of the GDP for even the
presidents since then up until the current collapse. I don't know
how the current collapse will measure in comparison, I expect Bush
will beat him out even in terms of percentages in 2008, and Obama
will inherit all of that. Carter inherited a terrible economy in
1976, Clinton inherited a terrible economy in 1992, and now Obama
has inherited the worst economy since the great depression. I hope
we get out of this in the next few years, but who knows what will
happen? I don't.
> And yet even he was unable to resist
> the pressure of the bankers.
The pressure from the bankers was to deregulate, and that is what he
wanted to do anyway. I'm not sure what kind of conflict you think
there was between the Reagan era politicians who advocated
deregulation and the bankers who wanted deregulation.
>
> Clinton didn't do shit (as John pointed out)
Remember what happened in 1995? The republican controlled congress
shut down the government because they did not want to pass the
Clinton reforms in the budget. It was only after intense public
pressure that they relented. And even then, it was only after
Clinton would promise to balance the budget after 7 years (his
original target was 10 years). In fact, it only took 3 years before
the country was back in the black (for the first time since 1968,
under Johnson's last budget). The budget surplus increased for his
last three years in office, even through the dot.com bust. It was
probably only because of those budget surpluses that there was not a
recession during his last term.
You might say that he "didn't do shit", but he did accomplish
something quite remarkable. Certainly after the record setting
deficits through the 80's, I never thought I would see a balanced
federal budget in my lifetime.
> and no modern president,
> not Reagan, not the Bushes, not Clinton, not Obama has had the balls
> to be honest with the American public about our situation. I can only
> think of two **candidates** in my lifetime who have been that honest.
> Ross Perot and Ron Paul. Ross Perot got my vote back then, and I see
> no other alternative for 2012 than Ron Paul.
I don't know. Clinton and Perot were saying the same things in
1992. When I saw them talk, I thought they were sharing the same
charts and graphs. I don't know much about Ron Paul, other than he
has a strong, manly, first name.
Obama certainly is not painting a rosy picture of our future when he
talks about pain and sacrifice. I have to admit that I don't really
understand how bad things are, but he doesn't seem to be pulling his
punches when he talks about this mess. He is claiming to cut the
current deficit in half in 5 years. I don't know how to put that in
perspective, but it does not seem unreasonable.
$.02 -Ron Shepard
Ron Shepard
JakartaDean <deanb...@forteinc.com> wrote:
> > Thomas Jefferson said, ""A private central bank issuing the public
> > currency is a greater menace to the liberties of the people than a
> > standing army...We must not let our rulers load us with perpetual
> > debt."
> >
> I'm guessin' he didn't get his way on the standing army thing either ;-)
I think Jefferson must have wrote that before he borrowed the money
to buy the Louisiana Purchase from France, putting the country in
perpetual debt. :-)
As far as a standing army, I don't think the US had one until after
WWII, right?
$.02 -Ron Shepard
bk4...@hotmail.com
wrote:
Barney Frank said, "I do think I do
not want the same kind of focus on safety and soundness that we have
in OCC [Office of the Comptroller of the Currency] and OTS [Office of
Thrift Supervision]. I want to roll the dice a little bit more in this
situation towards subsidized housing...".
He also said, "These two entities — Fannie Mae and Freddie Mac — are
not facing any kind of financial crisis, the more people exaggerate
these problems, the more pressure there is on these companies, the
less we will see in terms of affordable housing.”
Ron, you need to drop your partisanship. Don't ignore B. Frank's
comments, there is PLENTY of blame to go around, on both sides of the
aisle AND elsewhere. Washington D.C. has become a den of power and
privilege seekers. We are no longer a government "Of the People, by
the People". I am not speaking only of "this current financial
crisis".
Bob Keller
"Who is John Galt?"
Ron Shepard
<90790c00-e6c4-4d2e...@f41g2000pra.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> Barney Frank said, "I do think I do
> not want the same kind of focus on safety and soundness that we have
> in OCC [Office of the Comptroller of the Currency] and OTS [Office of
> Thrift Supervision]. I want to roll the dice a little bit more in this
> situation towards subsidized housing...".
What does this have to do with the federal reserve banks?
> He also said, "These two entities ‹ Fannie Mae and Freddie Mac ‹ are
> not facing any kind of financial crisis, the more people exaggerate
> these problems, the more pressure there is on these companies, the
> less we will see in terms of affordable housing.²
This wasn't recent was it? I think it was in 2003 when there was some
pressure from the bankers for further deregulation regarding minority
housing. In previous posts we already addressed the possible connection
between this and the current collapse. Can you explain how a small
number of foreclosures (where the banks end up with both the interest
payments and the property, BTW) resulted in a $6 trillion economic
collapse? After reading Greenspan's testimony (and other sources), I
can see the role that deregulation played, where, for example, it allows
the banks to relabel high-risk investments as low-risk and sell those
mislabeled investments to others, or where they benefit from making
profits on high-risk investments while taxpayers take all the risks. The
experts don't see a direct connection between the collapse and loans to
minority neighborhoods. They find no correlation between bank failures
and the number of such loans made by those banks. Some of the failed
banks made no such loans at all, for example, because they were not
located in those neighborhoods.
> Ron, you need to drop your partisanship.
I didn't know I was being partisan, and the federal reserve system
itself is nonpartisan. Alan Greenspan, for example, was appointed by a
republican and served under both republican and democratic presidents.
> Don't ignore B. Frank's
> comments, there is PLENTY of blame to go around, on both sides of the
> aisle AND elsewhere.
I'm not ignoring them, I think they are irrelevant. I did not bring
Barney Frank into the discussion. Maybe whoever did is being partisan,
but it wasn't me.
I do think deregulation was the problem, and it did not occur all at
once. It occurred over the past 25 years, under administrations of both
parties, under majority leadership in congress of both parties, and it
involved people such as Greenspan who held nonpartisan positions. So
this idea is nonpartisan. Idealogical, perhaps, but nonpartisan.
> Washington D.C. has become a den of power and
> privilege seekers. We are no longer a government "Of the People, by
> the People". I am not speaking only of "this current financial
> crisis".
I don't disagree with this idea. My main problem with the economic
collapse is that I do not understand the role that these central banks
play in the economy. To me, wealth is not created by bankers, or
investors, or politicians. All those people play a role, but they don't
actually create the wealth. The people creating the wealth are the
workers who build the products, the farmers who grow the food, the
inventors who develop the technology, the truck drivers who deliver the
products to market, and so on. These are the people who over the past
25 years have seen their wages slip below the inflation rate while
income has soared for the top 2% of people who make their money from
investments rather than from creating wealth. So when I hear about some
group of investment bankers who just drove their firms into bankruptcy
sneaking off with a multimillion dollar bonuses (not a salary, bonuses),
while union workers in factories are being required to take salary cuts
(not bonus cuts, salary cuts), it sort of bothers me. It seems
backwards. It seems like right now we should be rewarding those who are
actually creating the wealth, not punishing them.
What would have happened if *all* of the TARP money being poured into
the banks, insurance companies, and investment firms was instead put
directly into stimulus through work projects? Think about the recovery
process during the great depression. There was 8 years of slow
recovery, and then there was massive deficit spending to build ships,
tanks, and airplanes to support the WWII effort that ended the
depression. Those ships, tanks, and airplanes did not solve directly
any economic problems, it was just pumping that money directly into the
system through work stimulus programs that accomplished the results.
What if that same thing had happened in, say, 1932 rather than 1942. We
could have taken those ships, tanks, and airplanes out the factory door
and dumped them straight into the ocean as far as the economics were
concerned, it would have done the same thing to the economy, it would
have been the end of the depression. So, what if we were to do
something similar now, only instead of dumping everything into the ocean
we actually build things that we need, things we can use right now, and
things that we will need in the future to sustain the economic growth.
Wouldn't that be a good idea? The banks will eventually get the money,
but it would come to them from the bottom up, from the people who
actually create the wealth in the first place, rather than from the top
down.
As I said before, I'm not an economist, so I don't understand all of
this. Maybe you can explain it to me?
$.02 -Ron Shepard
John Black
44d9d6...@s22g2000prg.googlegroups.com>, bk4...@hotmail.com says...
> Clinton didn't do shit (as John pointed out) and no modern president,
> not Reagan, not the Bushes, not Clinton, not Obama has had the balls
> to be honest with the American public about our situation. I can only
> think of two **candidates** in my lifetime who have been that honest.
> Ross Perot and Ron Paul. Ross Perot got my vote back then, and I see
> no other alternative for 2012 than Ron Paul.
Hey Bob, I voted for Perot also back in the day. He got the largest 3rd
party vote I've ever seen. He had some traits and ways of talking that were
easy to make fun of and he picked a horrid VP candidate. But the man was
essentially correct with all of his charts and whatnot. The scary thing is
the only thing that has changed since he made those charts is that the
issues they were dealing with have all gotten much much worse. We never
learned a thing.
John Black
John Black
she...@NOSPAM.comcast.net says...
> You might say that he "didn't do shit", but he did accomplish
> something quite remarkable.
Clinton was fairly moderate. I give Clinton credit for doing some things
right for sure. What I would give to have him back right now...
John Black
John Black
she...@NOSPAM.comcast.net says...
> I'm not ignoring them, I think they are irrelevant. I did not bring
> Barney Frank into the discussion. Maybe whoever did is being partisan,
> but it wasn't me.
The main point about bring up Barney Frank is how crazy it is that he is one
of the main people in charge of fixing this mess as Chairman of the House
Banking Committee while at the same time being someone who disagreed with
all people who have been trying to warn him of this for the past 6 years at
least.
John Black
bk4...@hotmail.com
wrote:
> In article
> <90790c00-e6c4-4d2e-85d5-31e14c46d...@f41g2000pra.googlegroups.com>,
>
> "bk42...@hotmail.com" <bk42...@hotmail.com> wrote:
> > Barney Frank said, "I do think I do
> > not want the same kind of focus on safety and soundness that we have
> > in OCC [Office of the Comptroller of the Currency] and OTS [Office of
> > Thrift Supervision]. I want to roll the dice a little bit more in this
> > situation towards subsidized housing...".
>
> What does this have to do with the federal reserve banks?
>
Your message that I replied to didn't have anything to do with federal
reserve banks, so why should my reply?
Hint->it doesn't.
Bob Keller
Ron Shepard
John Black <jbl...@texas.net> wrote:
But this doesn't make sense, does it? He was arguing to keep
regulations in place about minority housing. He was arguing against
deregulation which would have given the bankers free reign to start
redlining again. Whether this particular regulation has anything to do
with the current economic collapse is doubtful, but his position was to
keep existing regulations in place, not to deregulate. In 2003, he was
not chairman of any committee, he was in the minority party. And things
were different in 2003 than they are in 2009. In 2003, we had just had
four years of budget surpluses (under Clinton), followed by only two
years of budget deficits (under Bush). Whether you are the federal
government or running your home finances, you can do lots of stuff with
budget surpluses that you can't do with deficits. Frank was arguing to
keep in place (since 1977) a particular policy regarding minority
housing, the other side wanted to deregulate and eliminate that policy.
$.02 -Ron Shepard
Ron Shepard
John Black <jbl...@texas.net> wrote:
> Hey Bob, I voted for Perot also back in the day. He got the largest 3rd
> party vote I've ever seen. He had some traits and ways of talking that were
> easy to make fun of and he picked a horrid VP candidate. But the man was
> essentially correct with all of his charts and whatnot. The scary thing is
> the only thing that has changed since he made those charts is that the
> issues they were dealing with have all gotten much much worse. We never
> learned a thing.
Well, we "learned a thing" for a few years. We did have four years of
budget surpluses under Clinton, for whatever reasons. Then we forgot
about how important balanced budgets are and went back to the old
"borrow and spend" ways when we didn't need to. Voters seem to have a
very short memory about things like this. If there isn't an economic
collapse raining down on them, they seem to forget about these things
and vote for the wrong people who advocate the wrong policies.
$.02 -Ron Shepard
bk4...@hotmail.com
wrote:
> In article <MPG.2452c09db71df3a6989...@news.motzarella.org>,
> John Black <jbl...@texas.net> wrote:
>
> > In article <ron-shepard-C32D87.15103017042...@news60.forteinc.com>, ron-
> > shep...@NOSPAM.comcast.net says...
Read the quotes again. He was arguing AGAINST adding the regulation
the republicans were pushing for.
Bob Keller
John Black
she...@NOSPAM.comcast.net says...
> In article <MPG.2452b4ea5...@news.motzarella.org>,
> John Black <jbl...@texas.net> wrote:
>
> > Hey Bob, I voted for Perot also back in the day. He got the largest 3rd
> > party vote I've ever seen. He had some traits and ways of talking that were
> > easy to make fun of and he picked a horrid VP candidate. But the man was
> > essentially correct with all of his charts and whatnot. The scary thing is
> > the only thing that has changed since he made those charts is that the
> > issues they were dealing with have all gotten much much worse. We never
> > learned a thing.
>
> Well, we "learned a thing" for a few years. We did have four years of
> budget surpluses under Clinton, for whatever reasons.
The "whatever reasons" did not involve learning anything. If it had, you
would have seen federal expenditures decrease even a little during those
years. Again the surplus was a mirage of the bubble of not only capital
gains taxes but payroll taxes which brings up another point. The budget was
not really balanced because it included payroll tax revenue which was never
supposed to be used for the general budget.
> Then we forgot
> about how important balanced budgets are and went back to the old
> "borrow and spend" ways when we didn't need to.
I'm glad we all agree balanced budgets are important. Honestly.
Unfortunatley we have the wrong crew in power if that is a priority.
John Black
John Black
she...@NOSPAM.comcast.net says...
> In article <MPG.2452c09db...@news.motzarella.org>,
> John Black <jbl...@texas.net> wrote:
>
> > In article <ron-shepard-C32D...@news60.forteinc.com>, ron-
> > she...@NOSPAM.comcast.net says...
> > > I'm not ignoring them, I think they are irrelevant. I did not bring
> > > Barney Frank into the discussion. Maybe whoever did is being partisan,
> > > but it wasn't me.
> >
> > The main point about bring up Barney Frank is how crazy it is that he is one
> > of the main people in charge of fixing this mess as Chairman of the House
> > Banking Committee while at the same time being someone who disagreed with
> > all people who have been trying to warn him of this for the past 6 years at
> > least.
>
> But this doesn't make sense, does it? He was arguing to keep
> regulations in place about minority housing. He was arguing against
> deregulation which would have given the bankers free reign to start
> redlining again. Whether this particular regulation has anything to do
> with the current economic collapse is doubtful, but his position was to
> keep existing regulations in place, not to deregulate.
This is all correct expect for the part about it not making sense. What you
call regulations were laws that forced banks to make subprime loans (in
addition to Fannie and Freddie's policies of guaranteeing and buying up
large quantities of those loans). People were trying to tell him this was
not a good idea and might just lead to a big crisis someday.
John Black
Dan White
news:ron-shepard-71FE...@forte.easynews.com...
>
> I think Jefferson must have wrote that before he borrowed the money
> to buy the Louisiana Purchase from France, putting the country in
> perpetual debt. :-)
>
I believe Andrew Jackson was the only president in American history to have
presided over a debt free nation.
dwhite
Ron Shepard
"Dan White" <nos...@nospam.invalid> wrote:
> I've been reading all the threads above, and all I can say is that
> historically the Republican party advocates smaller government with less
> spending (as did the Founding Fathers).
That is their marketing hype, what they say during their political
campaigns to get people to vote for them. But their actions speak
louder than words.
> [...] Now, I think you can debate whether this spending is
> wise (hence two parties) but I do not believe you can debate the division
> between the two parties in regard to government spending -- it's fact.
The "facts" were posted. You are listening to the campaign rhetoric
instead of looking at the facts.
> John Black said he would love to have Clinton back. I say forget Clinton
> and let's get Newt Gingrich's 1995 congress back.
That was the congress that shut down the government for two months
because they were revolting against Clinton's proposed budget cuts.
Clinton won that battle, and we know what happened afterwards, we got
four years of budget surpluses for the first time since 1968.
> [...] Prior to Gingrich, Democrats controlled congress for 40 YEARS,
But not the Senate. The Republicans won the senate majority in 1980,
1982, 1984, 1994, 1996, 1998, 2000, 2002, and 2004. The majority they
won in the 2000 election only lasted until May 2001 when Jeffords the
Vermont senator switched from Republican to Independent (because of
disagreements over funding priorities) and he caucused with the
Democrats thereafter.
> > I'd agree that America should have done a better job at reigning in the
> > deficit, as Bill Clinton did but Ronald Regean the the Bushes did not.
>
> I'd amend that statement as:
> "I'd agree that America should have done a better job at reigning in the
> deficit, as Newt Gingrich (under Clinton) did
No, the Gringrich congress fought Clinton tooth and nail in opposition
to his budgets. They even shut down the government in December 1995.
> As the saying goes, "Congress controls the purse strings."
But it is the President who submits the budgets to congress. That is
why the presidents priorities are so important.
> [...] I
> don't want to get into a big argument, Dean, but to show statistics that
> indicate who had a bigger deficit misses the point. You implied in your
> statement that Clinton was some kind of deficit hawk
He was. Remember "It's the economy, stupid" during his campaign. He
actually did the stuff he said he would do after he was elected. His
first budget veto was in 1995, a bill from the Gringrich congress, and
he vetoed the bill because it was filled with excess spending on
earmarked projects (pork). He had threatened to use the veto for
several months before that because of excess spending by the congress.
> while the other three
> fellows spent money with abandon. Nothing could be further from the truth!
You've seen the facts. Facts == truth. Particularly with Bush 43, who
also had both houses in congress during his first 6 years (except for 1
year after Jeffords left their caucus). If I remember correctly, Bush
did not veto a single spending bill during that period, despite record
setting budget deficits.
As for Reagan, I remember one year when his budget proposal included a
large increase in defense spending, something like 20%. Congress
eventually passed a budget with a smaller 5% increase. Reagan accused
them of slashing the defense budget by 15%.
$.02 -Ron Shepard
John Black
she...@NOSPAM.comcast.net says...
> In article <MPG.2451c3b3f...@news.motzarella.org>,
> John Black <jbl...@texas.net> wrote:
>
> > In article <ron-shepard-54D3...@forte.easynews.com>, ron-
> > she...@NOSPAM.comcast.net says...
> > > In article <s2DFl.192101$rp7....@en-nntp-02.dc1.easynews.com>,
> > > JakartaDean <deanb...@forteinc.com> wrote:
> > >
> > > In the case of the
> > > housing collapse, investors were buying too little collateral, with
> > > too high of a risk, with too much money. Then they simply relabeled
> > > that risk (in "credit default swaps"), making it appear to be more
> > > valuable that it was, and sold it all around the world. There used
> > > to be rules against doing that, but we started changing those rules
> > > in the 80's in order to artificially stimulate economic growth.
> >
> > And banks were forced to make subprime loans or face federal prosecution for
> > redlining or for running afowl of the CRA. When they complained about the
> > risk, they were told its all backed by Fannie and Freddie.
>
> I don't think that subprime loans were backed by Fannie and Freddie,
> were they?
Yes, they absolutely were. That was one of their primary purposes in life!
:-) Almost all roads lead back to Fannie and Freddie. They were
essentially and arm of the government and enabled the whole subprime crisis
by buying back any crap, taking risks with taxpayer money that no "free
market" bank would ever take with its own money. I'll paste in a NY Times
article at the end from 1999 that actually explains and sets the table for
the whole thing.
> The interest rates
> were much higher than normal because the risk was higher than
> normal, and often these were three-year balloon mortgages rather
> than normal 15 or 30 year mortgages. And this still does not touch
> on the issue of credit default swaps, which played a central role in
> the collapse.
I'll concede that credit default swaps played a role, just not one as big as
some people think. I'm fine with regulating those.
> Besides, it isn't clear to me how foreclosures alone had any effect
> on the collapse. The bank holds the title to the property, so they
> not only keep whatever payments were made to the bank (higher than
> normal interest rates for subprime mortgages), but they get the
> property too. All in all, that's a pretty good deal for the banks,
> isn't it?
You'd think, but a couple of things make that not true. One is that a lot
of these mortgages were bundled into "derivative" investments and then sold
as units. This was another tool of Fannie/Freddie. The good investments
were bundled with the bad and literally could not be untangled. No one
could price these things, in part because of "mark to market" rules put in
place because of Enron (another example of bad regulation, not
deregulation). Steve Forbes defined mark to market as you now have 10
minutes to sell your house. Whatever price you can get for it in 10 minutes
is what its worth. Consequently banks were forced to writeoff huge losses
because the market was paralyzed if only temporarily. The other factor is
the collapse of the housing bubble caused many of the homes to be worth less
than the mortgage balance. So the bank paid $300,000 for a house now only
worth $200,000.
I'm not an economist as well but my take is the crisis was the coming
together of many things: subprime social engineering required by CRA and
other laws and enabled by Fannie and Freddie. This in turn caused a housing
bubble that could not be sustained. The inevitable collapse of the housing
happened to coincide which a worldwide recession caused by very high
unsustainable oil prices (though the two were not completely independent
events). $145 oil was going to bring down the global economy on its own and
was probably the fuse that blew up the housing bubble that had been a
ticking time bomb for years. Add into the mix credit default swaps, mark to
market accounting regulation, complicated bundlings of mortgage derivatives
and kaboom.
> The problem is that the banks were getting too little collateral.
> That means, for example, that their assessors weren't doing their
> jobs. Then they took these high-risk loans, repackaged them,
> relabeled them as low-risk loans, and sold them to other banks
You're on to something. Who did they sell them to? :-)
Here is what in hindsight is an unbelievable article. It explains how the
whole subprime mess happened (or at least was enabled). You can see there
were people warning about doing this even back then but they were just evil
(fill in the blank)s.
http://query.nytimes.com/gst/fullpage.html?res=
9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=print
New York Times
September 30, 1999
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
In a move that could help increase home ownership rates among minorities and
low-income consumers, the Fannie Mae Corporation is easing the credit
requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15
markets -- including the New York metropolitan region -- will encourage
those banks to extend home mortgages to individuals whose credit is
generally not good enough to qualify for conventional loans. Fannie Mae
officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been
under increasing pressure from the Clinton Administration to expand mortgage
loans among low and moderate income people and felt pressure from stock
holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been
pressing Fannie Mae to help them make more loans to so-called subprime
borrowers. These borrowers whose incomes, credit ratings and savings are not
good enough to qualify for conventional loans, can only get loans from
finance companies that charge much higher interest rates -- anywhere from
three to four percentage points higher than conventional loans.
''Fannie Mae has expanded home ownership for millions of families in the
1990's by reducing down payment requirements,'' said Franklin D. Raines,
Fannie Mae's chairman and chief executive officer. ''Yet there remain too
many borrowers whose credit is just a notch below what our underwriting has
required who have been relegated to paying significantly higher mortgage
rates in the so-called subprime market.''
Demographic information on these borrowers is sketchy. But at least one
study indicates that 18 percent of the loans in the subprime market went to
black borrowers, compared to 5 per cent of loans in the conventional loan
market.
In moving, even tentatively, into this new area of lending, Fannie Mae is
taking on significantly more risk, which may not pose any difficulties
during flush economic times. But the government-subsidized corporation may
run into trouble in an economic downturn, prompting a government rescue
similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift
industry growing up around us,'' said Peter Wallison a resident fellow at
the American Enterprise Institute. ''If they fail, the government will have
to step up and bail them out the way it stepped up and bailed out the thrift
industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a
mortgage with an interest rate one percentage point above that of a
conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate
that currently averages about 7.76 per cent. If the borrower makes his or
her monthly payments on time for two years, the one percentage point premium
is dropped.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not
lend money directly to consumers. Instead, it purchases loans that banks
make on what is called the secondary market. By expanding the type of loans
that it will buy, Fannie Mae is hoping to spur banks to make more loans to
people with less-than-stellar credit ratings.
Fannie Mae officials stress that the new mortgages will be extended to all
potential borrowers who can qualify for a mortgage. But they add that the
move is intended in part to increase the number of minority and low income
home owners who tend to have worse credit ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among minorities during the economic
boom of the 1990's. The number of mortgages extended to Hispanic applicants
jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's
Joint Center for Housing Studies. During that same period the number of
African Americans who got mortgages to buy a home increased by 71.9 per cent
and the number of Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans for homes
increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag
behind non-Hispanic whites, in part because blacks and Hispanics in
particular tend to have on average worse credit ratings.
In July, the Department of Housing and Urban Development proposed that by
the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be
made up of loans to low and moderate-income borrowers. Last year, 44 percent
of the loans Fannie Mae purchased were from these groups.
The change in policy also comes at the same time that HUD is investigating
allegations of racial discrimination in the automated underwriting systems
used by Fannie Mae and Freddie Mac to determine the credit-worthiness of
credit applicants.
===
John Black
Dan White
> In article <p8cGl.1403$b11...@nwrddc02.gnilink.net>,
> "Dan White" <nos...@nospam.invalid> wrote:
>
>> I've been reading all the threads above, and all I can say is that
>> historically the Republican party advocates smaller government with less
>> spending (as did the Founding Fathers).
>
> That is their marketing hype, what they say during their political
> campaigns to get people to vote for them. But their actions speak
> louder than words.
Well republicans used to be more conservative, so I'll agree with you there.
More recently they've been "liberals light."
>> John Black said he would love to have Clinton back. I say forget Clinton
>> and let's get Newt Gingrich's 1995 congress back.
>
> That was the congress that shut down the government for two months
> because they were revolting against Clinton's proposed budget cuts.
> Clinton won that battle, and we know what happened afterwards, we got
> four years of budget surpluses for the first time since 1968.
I remember that well. It would have been more constructive to have "shut
down" the government for two years rather than two months. Yes, Clinton did
so many great things, like the leadership he showed with welfare reform. He
was such a great leader on that issue, wasn't he? Let's give him all the
credit for that one (sarcasm off).
>
>> [...] Prior to Gingrich, Democrats controlled congress for 40 YEARS,
>
> But not the Senate. The Republicans won the senate majority in 1980,
> 1982, 1984, 1994, 1996, 1998, 2000, 2002, and 2004. The majority they
> won in the 2000 election only lasted until May 2001 when Jeffords the
> Vermont senator switched from Republican to Independent (because of
> disagreements over funding priorities) and he caucused with the
> Democrats thereafter.
>
>> > I'd agree that America should have done a better job at reigning in the
>> > deficit, as Bill Clinton did but Ronald Regean the the Bushes did not.
>>
>> I'd amend that statement as:
>> "I'd agree that America should have done a better job at reigning in the
>> deficit, as Newt Gingrich (under Clinton) did
>
> No, the Gringrich congress fought Clinton tooth and nail in opposition
> to his budgets. They even shut down the government in December 1995.
Well some people have an aversion to some of the largest tax hikes in
history (retroactive even), especially when the President campaigned on just
the opposite. Again, by your logic I'm sure you would give Clinton the
credit for welfare reform. Ask Dick Morris about it.
>
>> As the saying goes, "Congress controls the purse strings."
>
> But it is the President who submits the budgets to congress. That is
> why the presidents priorities are so important.
Yes, I understand that. What matters is what is realistic for a president
to get (horsetrading I suppose). That's where his popularity and political
capital come in.
>
>> [...] I
>> don't want to get into a big argument, Dean, but to show statistics that
>> indicate who had a bigger deficit misses the point. You implied in your
>> statement that Clinton was some kind of deficit hawk
>
> He was. Remember "It's the economy, stupid" during his campaign. He
> actually did the stuff he said he would do after he was elected. His
> first budget veto was in 1995, a bill from the Gringrich congress, and
> he vetoed the bill because it was filled with excess spending on
> earmarked projects (pork). He had threatened to use the veto for
> several months before that because of excess spending by the congress.
Please Ron. I remember why I gave up on politics in a billiards group. I
can't discuss anything here when your point of view is that Clinton did what
he said he would do, and that he was for lower spending than the
conservatives. I thought the "era of big government" was over. What
happened? He just couldn't combat the tax and spend conservatives?
>
>> while the other three
>> fellows spent money with abandon. Nothing could be further from the
>> truth!
>
> You've seen the facts. Facts == truth. Particularly with Bush 43, who
> also had both houses in congress during his first 6 years (except for 1
> year after Jeffords left their caucus). If I remember correctly, Bush
> did not veto a single spending bill during that period, despite record
> setting budget deficits.
I'm not disagreeing with that. I said I agreed with the Bush 43 part of it.
It's kind of the point of the tea parties. Republicans have abandoned their
principles in favor of taking the easy way out - just give everybody
anything they want so you can get reelected.
>
> As for Reagan, I remember one year when his budget proposal included a
> large increase in defense spending, something like 20%. Congress
> eventually passed a budget with a smaller 5% increase. Reagan accused
> them of slashing the defense budget by 15%.
>
Well if he proposed a budget with 20% spending, and they passed only 5%,
then they slashed HIS defense budget. I don't know the particulars. In any
case, Clinton virtually perfected the art of labelling reductions in growth
as cuts.
So I was going on about Clinton and military budgets and decided to snip it
all. I need some sleep!
G'night,
dwhite
Dean
> > In article <MPG.2451c3b3f94c91cb989...@news.motzarella.org>,
> > John Black <jbl...@texas.net> wrote:
> > > In article <ron-shepard-54D3FA.11590316042...@forte.easynews.com>, ron-
> > > shep...@NOSPAM.comcast.net says...
>
> > I don't think that subprime loans were backed by Fannie and Freddie,
> > were they?
>
> Yes, they absolutely were. That was one of their primary purposes in life!
> :-) Almost all roads lead back to Fannie and Freddie. They were
> essentially and arm of the government and enabled the whole subprime crisis
> by buying back any crap, taking risks with taxpayer money that no "free
> market" bank would ever take with its own money. I'll paste in a NY Times
> article at the end from 1999 that actually explains and sets the table for
> the whole thing.
>
buying up poor assets looks like a definite contributive factor.
> > The interest rates
> > were much higher than normal because the risk was higher than
> > normal, and often these were three-year balloon mortgages rather
> > than normal 15 or 30 year mortgages. And this still does not touch
> > on the issue of credit default swaps, which played a central role in
> > the collapse.
>
> I'll concede that credit default swaps played a role, just not one as big as
> some people think. I'm fine with regulating those.
>
Obviously, the jury's still out on this one. Most of what I've read
has focused on the lack of regulation over the swaps, in particular
the ability of sleezy broker XYZ to offer gold-plated mortgages to
buyers, which were both safe and offered high interest rates. They
turned out be junk, so weren't safe. However, it was win-win for the
buyer and seller, at least it appeared so at the time. The seller not
near full value for his mortgages, and the buyer got either a high-
yielding investment which he might have suspected the government would
come in to protect if it turned out to be unsafe (i.e. moral hazard).
This is obviously an untenable situation, and argues in favour of
regulation, in my opinion.
> > Besides, it isn't clear to me how foreclosures alone had any effect
> > on the collapse. The bank holds the title to the property, so they
> > not only keep whatever payments were made to the bank (higher than
> > normal interest rates for subprime mortgages), but they get the
> > property too. All in all, that's a pretty good deal for the banks,
> > isn't it?
>
> You'd think, but a couple of things make that not true. One is that a lot
> of these mortgages were bundled into "derivative" investments and then sold
> as units. This was another tool of Fannie/Freddie. The good investments
> were bundled with the bad and literally could not be untangled. No one
> could price these things, in part because of "mark to market" rules put in
> place because of Enron (another example of bad regulation, not
> deregulation).
Here's another view: http://www.economist.com/opinion/displaystory.cfm?story_id=13446745
> Steve Forbes defined mark to market as you now have 10
> minutes to sell your house. Whatever price you can get for it in 10 minutes
> is what its worth. Consequently banks were forced to writeoff huge losses
> because the market was paralyzed if only temporarily. The other factor is
> the collapse of the housing bubble caused many of the homes to be worth less
> than the mortgage balance. So the bank paid $300,000 for a house now only
> worth $200,000.
>
I don't see any alternative to mark-to-market. If someone can come up
with a better but still objective way of defining the value of an
investment I'd be open to it, of course, but I don't see how that's
possible. Just (Especially?) Steve Forbes says it is good isn't
enough for me.
> I'm not an economist as well but my take is the crisis was the coming
> together of many things: subprime social engineering required by CRA and
> other laws and enabled by Fannie and Freddie. This in turn caused a housing
> bubble that could not be sustained. The inevitable collapse of the housing
> happened to coincide which a worldwide recession caused by very high
> unsustainable oil prices (though the two were not completely independent
> events). $145 oil was going to bring down the global economy on its own and
> was probably the fuse that blew up the housing bubble that had been a
> ticking time bomb for years. Add into the mix credit default swaps, mark to
> market accounting regulation, complicated bundlings of mortgage derivatives
> and kaboom.
>
My personal opinion is that there was a huge credit bubble, and it had
been building for years. I only knew the credit cards / second
mortgage part, not the subprime loan bit, but it was a long time
coming, which of course makes it worse when it hits. I haven't heard
that oil prices had much impact, as oil isn't really an important part
of the economy any more -- I know that's hard to believe, but oil
prices haven't shocked the economy since, IIRC, 1983.
> > The problem is that the banks were getting too little collateral.
> > That means, for example, that their assessors weren't doing their
> > jobs. Then they took these high-risk loans, repackaged them,
> > relabeled them as low-risk loans, and sold them to other banks
>
> You're on to something. Who did they sell them to? :-)
>
> Here is what in hindsight is an unbelievable article. It explains how the
> whole subprime mess happened (or at least was enabled). You can see there
> were people warning about doing this even back then but they were just evil
> (fill in the blank)s.
>
> http://query.nytimes.com/gst/fullpage.html?res=
> 9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=print
I liked the article. Suggests the moral hazard which underpinned some
of the bad transactions.
Dean
pltr...@spamlessxhost.org
wrote:
>That was the congress that shut down the government for two months...
Just in the interest of accuracy, only about one-third of federal government
employees were furloughed, and the duration was three weeks.
(http://www.rules.house.gov/archives/98-844.pdf)
-- Larry
bk4...@hotmail.com
wrote:
> In article <p8cGl.1403$b11....@nwrddc02.gnilink.net>,
> "Dan White" <nos...@nospam.invalid> wrote:
>
> > I've been reading all the threads above, and all I can say is that
> > historically the Republican party advocates smaller government with less
> > spending (as did the Founding Fathers).
>
> That is their marketing hype, what they say during their political
> campaigns to get people to vote for them. But their actions speak
> louder than words.
And THAT is why so many republicans are pissed off. McCain was a
LIBERAL! No republican president since Reagan has actually talked
small government or done much FOR small government, and Reagan didn't
even accomplish much to that end.
> As for Reagan, I remember one year when his budget proposal included a
> large increase in defense spending, something like 20%. Congress
> eventually passed a budget with a smaller 5% increase. Reagan accused
> them of slashing the defense budget by 15%.
Again, can you say "partinsanship", Ron? That technique has been
pulled by BOTH parties ad infinitum and ad nauseum for decades. Take
off your liberal-colored glasses, Ron. I would have thought that
someone as intelligent as you wouldn't fall for the same stupid
political spin tactics that the rest of the dumbed-down general public
laps up.
Bob Keller
Ron Shepard
John Black <jbl...@texas.net> wrote:
> The budget was
> not really balanced because it included payroll tax revenue which was never
> supposed to be used for the general budget.
Yes, this is yet another bit of Reaganomics we still have with us.
Reagan did three things to social security during his term. He
increased the SS tax rate on workers, he started taxing for the
first time SS benefits (i.e. SS benefits were treated as income for
some retirees), and he started including the surpluses in the SS
fund in the federal budget in order to make his ever larger deficits
look smaller than they were. And all these things are still done
today.
Of these, I think it is the second that is the most unfair.
The first issue, the tax rate on the workers, should reflect the
true costs of the program. SS is a combination of an insurance plan
and a savings plan. If a worker pays into the system for 50 years,
he starts to receive benefits when he retires, so it is like a
savings plan in that respect. But when he dies, those benefits do
not go to his estate, like a savings plan would, they just stop. Or
if he lives another 50 years after he retires, he would continue to
receive benefits that entire time, eventually receiving much more
than he paid into the system when he was working. So in this sense,
SS is like an insurance policy, it pays you as long as you are
alive, and its costs therefore depend on when workers retire and how
long they draw benefits. As medical technology advances, lifespans
will increase, and SS benefits will be paid to retirees for longer
periods of time. So the SS tax rate needs to adjust accordingly.
The last issue, which you pointed out, is an accounting convention.
The money in the SS surplus is there, it is simply a convention
whether it is counted or not as part of the budget deficit/surplus.
It was not counted that way in the 40's through the 70's. One
reason for this was that there was little or no SS surplus during
that time. It was only when the baby boomers started paying into
the system that the surplus began to grow large enough to be
significant to the yearly budget numbers. So when you compare, say
Carter's relatively small deficits to Reagan's large deficits, that
only tells part of the story, another part is that Carter (and
everyone before him) did the bookkeeping a little different than
Reagan (and everyone afterwards), and using the same conventions,
Reagan's deficits were actually larger than they appear.
However, even if you subtract the SS surplus from Clintons budget
numbers, he still had budget surpluses for two of his last years.
Perhaps that puts in better perspective what we as a country
actually accomplished during that time. If you include the SS
surpluses, as is now the convention, then he had budget surpluses
for four of his last years. Another way to measure economic health
is to look at unemployment rates. This measure has nothing to do
with accounting conventions or artificial bubbles in the stock
market. By that measure, Clinton also did very well during his 8
years in office. It is always surprising to me how some people try
to discount what happened during the 90's. We really did have a
good economic situation during that time, whether you look at
salaries (minimum wage was increased twice under Clinton),
unemployment rates, budget surpluses (with or without SS), or the
total number of employed workers. It wasn't perfect, of course, we
still ran trade deficits (and we still do), and if you look at
wealth accumulation there is still this ongoing problem that the
workers who create the wealth do not manage to keep their share of
it, but it really demonstrated how to do a few things right.
$.02 -Ron Shepard
Ron Shepard
"Dan White" <nos...@nospam.invalid> wrote:
> Please Ron. I remember why I gave up on politics in a billiards group. I
> can't discuss anything here when your point of view is that Clinton did what
> he said he would do, and that he was for lower spending than the
> conservatives. I thought the "era of big government" was over.
Well, look at what happened in 2001 when the other guys took control
of both houses of congress and the executive branch. They went back
to their old "borrow and spend" policies, they expanded government,
and they passed budgets with record-breaking deficits.
> What
> happened? He just couldn't combat the tax and spend conservatives?
That should be "borrow and spend conservatives". When they run
these large budget deficits, year after year, even in times of
economic prosperity, they are borrowing from future generations who
will have to pay the bills.
Look at the facts, not the rhetoric. It is remarkable now with
information on the internet how quickly you can find the actual
facts. Of course there is a lot of crap out there too, but still,
it is remarkable what kind of information you have access to with
the click of a button.
$.02 -Ron Shepard
Ron Shepard
<cfbbe8d1-b8fe-43f9...@b6g2000pre.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
Ok, but my previous post was about Alan Greenspan's testimony.
Greenspan was the chairman of the federal reserve board, so it
wasn't like it was unrelated either.
Frank, on the other hand, or the quote above, or Fannie Mae or
Freddie Mac, have nothing to do with the federal reserve system at
all. So when the above quote appeared in the middle of a thread
about central banks, it just seemed out of place to me. It might be
an interesting topic, its just a different interesting topic. I'm
still trying to understand what role central banks actually play in
the current economic crisis. If you, or anyone, can explain that to
me it would be welcome. In particular, do you have any comment
about my previous post about putting all of the TARP money into
stimulus projects rather than into the banking system?
$.02 -Ron Shepard
Ron Shepard
John Black <jbl...@texas.net> wrote:
> > I don't think that subprime loans were backed by Fannie and Freddie,
> > were they?
>
> Yes, they absolutely were.
Ok, now I see what you are talking about. When I was talking about
subprime loans, I was talking about the predatory loans where the
interest rates are double the normal rates, and they are often
3-year balloon loans, where everything must be paid back after three
years. This is the kind of thing that loan sharks used to do and it
used to be illegal. Now, with deregulation of the banking industry
over the past 25 years, this is legal.
The Fannie Mae loans aren't like that. They are supposed to cover
banks that give the loans to people who just barely don't qualify
for normal loans. The interest rate is (I think) 1% higher than
prime for the first year, and then they revert to the normal
interest rate. And these F&F insured loans are normal 15- or
30-year mortgages, not those short-term balloon loans. I don't
think these predatory loans are part of any government program, they
are entirely part of the private sector economy -- the old loan
sharks just set up their office inside of a bank. Of course, now
that the TARP funds are being used to buy these mortgages, I guess
they are becoming part of the public economy in that way.
So you are right that the F&F loans are 1% higher than prime, but
those weren't the subprime loans that I was talking about. These
other loans are the ones causing problems in the current economic
collapse. These high-risk loans have been relabeled as low-risk,
and they have been sold throughout the system. Who bought them?
With the old laws, it would only have been mortgage banks, and those
banks would have known the true risk levels associated with them.
Now, after deregulation, everyone bought them, from investment banks
to mutual funds to insurance companies, and it was impossible to
know the true risks.
$.02 -Ron Shepard
Ron Shepard
<2f00a063-5864-453f...@s22g2000prg.googlegroups.com>,
Dean <jakar...@gmail.com> wrote:
> > http://query.nytimes.com/gst/fullpage.html?res=
> > 9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=print
>
> I liked the article. Suggests the moral hazard which underpinned some
> of the bad transactions.
Yes, but just like with your personal finances, when the federal
government has budget surpluses (as it did in 1999) it can do things
differently when when it is running record-breaking deficits. With
personal finances, when times are good you save a little as you go,
you pay down your debt, and you invest (including a few high-risk
high-payoff investments) so that you can continue to make money in
the future. When times are bad, then you dip into your savings and
you borrow money. The NYT article is discussing how higher risks
were being taken during a time of economic prosperity and budget
surpluses. But that is exactly when those kinds of risks should be
taken.
$.02 -Ron Shepard
bk4...@hotmail.com
wrote:
> In article
> <cfbbe8d1-b8fe-43f9-a836-c4df4c329...@b6g2000pre.googlegroups.com>,
No, your previous post was about F&F and interest rates. The second
half of that post was you indicting McCain. So my point was that
Barney Frank is on record as saying there was nothing wrong with F&F
when in fact there sure as hell was. You continue to find fault with
McCain even though someone posted quotes showing him being completely
exonerated, while you completely ignore the B. Frank quotes I
provided. Thus my suspicion of your partisanship.
Now in the above paragraph you want try to shift the focus to central
banks and then again to TARP money. I won't take the bait.
Bob Keller
Ron Shepard
<c23a338d-ff3d-4962...@p6g2000pre.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> Yes, Dean, we agree mostly. But there is a big disconnect right
> here. First of all, inflation is created every single time The Fed
> prints new money - when the money supply is increased the value of
> everything goes down (I know you know this).
I think when economists talk about this, there are two kinds of
inflation. One is related to the relative value of the dollar with
other currencies in the world, and the other is the average costs of
commodities in units of dollars. These two things are correlated,
but because economic "laws" aren't really hard and fast laws, they
are not the same thing.
> But you are accepting
> that as a "given" we have to accept some inflation. I don't because
> it's only a necessity under a controlled, fiat money system.
Here is the way I look at this. I'm not an economist, so don't take
this as gospel, but I think it is worth considering.
There is a risk of bad things happening if the money supply is too
tight, and there is a risk of bad things happening if the money
supply is too loose. So the optimal money supply depends on how bad
are those consequences. If the supply is too tight, then we go into
a recession, people lose their jobs, businesses shut down, crime
goes up, people start jumping off buildings because they lost their
money. We've read about this in the past, and we have seen some of
this occurring now (for different reasons than money supply, but you
know what I'm talking about). If the money supply is too loose,
then money that you stick in your mattress today isn't worth as much
next year. That's not a good thing, but if you don't stick money
into your mattress (or the equivalent), then it doesn't affect you
so much. So when you weigh the effects of too little or too loose
of a money supply, you can see why the errors tend to go to the too
loose side.
The same thing happens when you play position for a difficult shot.
Say if the cue ball rolls too far you end up snookered with no shot,
but if it rolls a little too short then you have a makable shot,
just a little more difficult. So you purposely play for the cue
ball to end up a little short of "perfect" just in case you miss the
speed a little, you still have a chance to win.
> You are
> putting your faith in "smart guys" to do the right thing.
This gets back to my previous comments about economic "laws" vs.
physics "laws". Ultimately with the economy, it all comes down to
what people want to happen. There are no absolute truths, no
compelling laws.
I don't know if you watched when Jim Cramer was on the Daily Show,
but that was an interesting exchange. Here is a link:
http://www.thedailyshow.com/video/index.jhtml?videoId=220538&title=Ji
m-Cramer-Pt.-2
The point here is that Cramer admits that hedge fund managers game
the system so that they can make profit. My point above is that
ultimately with economics, that's all there is, gaming the system.
There are no absolute laws that govern it because it is entirely an
artificial, manmade, environment to begin with. We all have some
idea about what if fair or not, and there are laws that determine
what is legal or not, but in the end it is a manmade game.
> I have no
> such faith, I want a much more hands-off approach.
That is because you think there is some kind of absolute law that
governs economics, and that if people would just get out of the way,
it would all work. There is no such law. It is all artificial.
It is like the old joke about the poker game. The first guy says he
is going over to Fred's house and play poker that night. The other
guy says that the game is fixed, that they used marked cards. The
first guy says he knows that, but it is the only game in town.
That is the economy. It is the only game in town.
> Why should the entire
> economy react to the Fed when they adjust interest rates by 1/4% - do
> you think one organization having that power over the free market is
> good?
In capitalism, money is a commodity, like ounces of gold or barrels
of oil or bushels of corn. Interest rates are the cost of that
commodity. When there is a demand for that commodity, then changing
the cost causes the economy to react.
> Secondly, you stated above that without the current infusions of cash
> into the economy we would see a 'terrible economic contraction'. I
> wholeheartedly disagree. Now, you could gather 100 economists into a
> room and get 100 different opinions on this!
No, they would all agree that infusions of cash are needed. Where
they disagree is how that cash should enter into the system. Some
argue that it should go to the banks, and then the banks will lend
it to everyone else (with interest rates being the cost of that
transaction). Others say that it should go directly into stimulus
programs like building roads and bridges or whatever. This way, the
banks get the money when people deposit into savings accounts, but
now the banks pay interest on it rather than get interest on it.
I'm inclined to think that the latter way is better than the former
way (e.g. see my previous comments about how the great depression
ended), but I'm certainly not one of those 100 economists.
> So let me just suggest
> you do a little research - they are plenty of people who claim that
> the 1930's recessions would have ended after 1-2 years without
> government interference, for example.
But we already had over 100 years of experience of what happened in
those situations without government interference. That is why the
central banks were started in the first place, to stop that very
kind of collapse from happening every 10 years.
> No inflation at all is good, a little once in a while is acceptable, a
> lot is a national emergency
Perhaps, but it is a moving target, difficult to hit exactly right,
and the consequences are very different for making mistakes in the
two different ways.
> > - long term government debt is bad (should be standard fiscal policy)
> Yes
> > - it's okay for governments to spend a little more than they take in,
> NO. I think at least 90% of what the government does is outside the
> Constitutional mandate. If they got back to that, it would be easy
> for them to NEVER spend more than they take in (as history proves
> correct).
There is no constitutional mandate. If so, where is it in the
constitution? In fact, the constitution is written to result in a
very fluid and reactive government, and if it had not been written
that way, it would have been obsolete long ago (about the time of
the Louisiana Purchase, and certainly by the time of the Civil War).
> > but this needs to be offset by savings during good times (aims at
> > previous point)
> This is a government of the people, there is no such thing as savings
> - the money would be returned to the people immediately or never have
> been taken from them in the first place.
I don't know what this means. If the people wanted to build, say,
an interstate highway system in the 1950's, how would this have been
possible otherwise? And if it was possible otherwise, then why
hadn't it already been done?
$.02 -Ron Shepard
Ron Shepard
<42371c4e-532b-490d...@x1g2000prh.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> I don't have anything against bankers as business,
> but we need to put them back in their place and get their fangs out of
> government and control of the economy.
This would require more regulation of banks, not less. In modern
doublespeak vocabulary, that is "socialism."
> I think some form of
> central bank is necessary, but if the management of the economy is
> it's primary purpose then it should be a REAL branch of the government
> and not PROFIT from it.
I think the Fed is nonprofit. They make money when they loan it
out, and they pay money when they borrow it (e.g. when you buy a
T-bill, the Fed pays you interest). But in the end, I think they
are required to break even. Anyone know how exactly this works?
> It should simply set the STANDARDS or policy
> and let private industry (businesses and banks) execute that policy.
> That is how government is supposed to function.
Maybe if there were no money involved, then people could be trusted
to always do the right thing without laws and regulations.
$.02 -Ron Shepard
Ron Shepard
"Mark0" <markmc...@charter.net> wrote:
> > He is claiming to cut the
> > current deficit in half in 5 years. I don't know how to put that in
> > perspective, but it does not seem unreasonable.
>
> What's unreasonable is how you are reasoning a 10 Trillion dollar deficit
> in 2019 to be reasonable....
Do you think we had a $10 Trillion deficit in 2008, or that we will
have one in 2009?
My comments above were comparing the current situation to the great
depression. If the stimulus that occurred at the end of the great
depression had occurred at the beginning, then it would not have
lasted 10 years, it would have lasted only a couple of years. If
the current stimulus does the same thing to the current collapse,
then Obama could well cut the current deficit in half in 5 years. I
have no idea how all of this will play out, but the 5 year goal does
not seem unreasonable to me.
$.02 -Ron Shepard
Ron Shepard
John Black <jbl...@texas.net> wrote:
> You watch
> Countdown, Real Time and the Daily Show and consider yourself informed.
I would say "entertained" is a better word (at least for the Daily
Show, I don't watch the others). Just don't use that word on the
other side, else you will have to publicly apologize to Rush. :-)
$.02 -Ron Shepard
bk4...@hotmail.com
wrote:
> In article
> <42371c4e-532b-490d-bf7b-5fe098beb...@x1g2000prh.googlegroups.com>,
>
> "bk42...@hotmail.com" <bk42...@hotmail.com> wrote:
> > I don't have anything against bankers as business,
> > but we need to put them back in their place and get their fangs out of
> > government and control of the economy.
>
> This would require more regulation of banks, not less. In modern
> doublespeak vocabulary, that is "socialism."
You assume it would require more regulation which may or may not be
true. First of all, as has already been demonstrated to you
concerning the Barney Frank comments the word "regulation" can mean
opposite things depending on the context. I know you won't get that so
let me try to summarize it again right here - Frank was opposing
cutting regulation, but the regulation that was in place was to
restrict F&F from denying certain loans, so in that case cutting
regulation would have meant stricter financial controls - get it?
Secondly, I do not agree with your premise that more regulation would
be required, i.e. more socialism. The fangs belong to the Federal
Reserve itself, not necessarily the banks that own the Fed. Making
the Fed a "true" government entity and non-profit do much to remove
the fangs. So it's not even about to regulate or not.
>
> > I think some form of
> > central bank is necessary, but if the management of the economy is
> > it's primary purpose then it should be a REAL branch of the government
> > and not PROFIT from it.
>
> I think the Fed is nonprofit. They make money when they loan it
> out, and they pay money when they borrow it (e.g. when you buy a
> T-bill, the Fed pays you interest). But in the end, I think they
> are required to break even. Anyone know how exactly this works?
Ron, Ron, Ron. You are not following along. We've already discussed
this and shown that the Fed does make a profit. In fact, Dean has
even come about to suspect the Fed may be making much more profit than
the circuitous explanations of their workings imply. On top of that
is the fact that the U.S. Treasury could print money for free rather
than forcing taxpayers to pay interest for it.
>
> > It should simply set the STANDARDS or policy
> > and let private industry (businesses and banks) execute that policy.
> > That is how government is supposed to function.
>
> Maybe if there were no money involved, then people could be trusted
> to always do the right thing without laws and regulations.
Where did you see me say anything WHATSOEVER about 'no laws and
regulations'. The relevant point in my sentence above is that the
government should never be IN BUSINESS, in any way shape or form.
THAT is the point of the Constitution - to LIMIT the government. The
government is supposed to be limited to setting **standards** for
business (that would the laws and regulations!) and then let the free
market run. The Fed - a quasi-form of government, but definitely a
for-profit business - violates that principle. As does the TSA and
others but thats a whole 'nother topic.
Bob Keller
bk4...@hotmail.com
wrote:
> > Why should the entire
> > economy react to the Fed when they adjust interest rates by 1/4% - do
> > you think one organization having that power over the free market is
> > good?
> In capitalism, money is a commodity, like ounces of gold or barrels
> of oil or bushels of corn. Interest rates are the cost of that
> commodity. When there is a demand for that commodity, then changing
> the cost causes the economy to react.
Lovely. Now how about answering my question? Start with either a yes
or no, and then talk about the fact that one organization, The Fed, is
is control of the economy, and whether that is good or bad, and why.
> > Secondly, you stated above that without the current infusions of cash
> > into the economy we would see a 'terrible economic contraction'. I
> > wholeheartedly disagree. Now, you could gather 100 economists into a
> > room and get 100 different opinions on this!
>
> No, they would all agree that infusions of cash are needed.
That is a preposterous statement! Maybe you could argue that all
Keynesian economists would say that - you seem to think there aren't
any other types any more. Here's just one example to prove you wrong.
http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx
Bob Keller
Ron Shepard
<86d4a5b6-5b7b-4279...@s38g2000prg.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> > Ok, but my previous post was about Alan Greenspan's testimony.
> > Greenspan was the chairman of the federal reserve board, so it
> > wasn't like it was unrelated either.
> >
> > Frank, on the other hand, or the quote above, or Fannie Mae or
> > Freddie Mac, have nothing to do with the federal reserve system at
> > all. So when the above quote appeared in the middle of a thread
> > about central banks, it just seemed out of place to me. It might be
> > an interesting topic, its just a different interesting topic. I'm
> > still trying to understand what role central banks actually play in
> > the current economic crisis. If you, or anyone, can explain that to
> > me it would be welcome. In particular, do you have any comment
> > about my previous post about putting all of the TARP money into
> > stimulus projects rather than into the banking system?
> >
> > $.02 -Ron Shepard
>
> No, your previous post was about F&F and interest rates.
Maybe you are thinking of a different thread? Here is what I said
in that previous post:
"While Greenspan's policies in the Federal Reserve played an
important role in the collapse over the past year, I think it is
important to listen to what he said afterwards. He gave testimony
to congress that I think was a fair assessment of which of his
assumptions were wrong and how they contributed to the collapse. Do
a google search to find the text of his testimony."
As I said correctly above, this was about Alan Greenspan, former
chairman of the Federal Reserve Board. I did not mention Barney
Frank, Fannie Mae, or Freddie Mac at all in that post, and I did not
bring them into this thread in any way at all (partisan or
otherwise).
> The second
> half of that post was you indicting McCain.
Here is my sentence:
"One
of the first things that happened when we did that was the savings
and loan scandal (which John McCain was actually involved in, so
this isn't really ancient history -- do a google search for
details)."
I mentioned McCain in a parenthetical statement about deregulation
in order to establish a timeframe. That was the only time "McCain"
appears in my entire post. I was indicting deregulation, not John
McCain. Did you actually read my post?
BTW, Greenspan was mentioned several times in that post, and I was
not indicting him either, I was recommending that everyone download
his testimony and read it. It is remarkable.
> So my point was that
> Barney Frank is on record as saying there was nothing wrong with F&F
> when in fact there sure as hell was.
But Barney Frank, Fannie Mae, and Freddie Mac were not mentioned at
all in my post. That must have been in some other thread, or later
in a post in this thread by someone else.
> You continue to find fault with
> McCain
No, I recommended that you do a google search to read the actual
facts. That is not exactly finding "fault" is it?
> even though someone posted quotes showing him being completely
> exonerated,
As I said too.
Look above to see everything that I said about McCain in my post.
That's the whole thing, nothing else about him was there. There is
no "fault" or "indictment" anywhere of him, my criticism was
directed toward deregulation in general, and my evidence was Alan
Greenspan's testimony to congress.
> while you completely ignore the B. Frank quotes I
> provided.
I did not ignore your quotes, I thought I responded to them.
> Thus my suspicion of your partisanship.
This is more about ideology than partisanship. In any case, I'm not
hiding anything, you know full well what are my ideological beliefs,
even my posts in these threads will show you what I believe, how
wealth is actually created, etc. But you do have to read my posts
to see what I say.
> Now in the above paragraph you want try to shift the focus to central
> banks and then again to TARP money. I won't take the bait.
Look at the thread title, or look at the original posts in this
thread. Those are exactly the topics being discussed, so there is
no clever switchoroo being done by me or anyone else.
As far as whether TARP money would be better spent on stimulus
projects rather than wall street banks, I'm sorry you won't "take
the bait", I think that would be an interesting discussion.
$.02 -Ron Shepard
bk4...@hotmail.com
wrote:
> As far as whether TARP money would be better spent on stimulus
> projects rather than wall street banks, I'm sorry you won't "take
> the bait", I think that would be an interesting discussion.
Based on your efforts so far I can't imagine even attempting it. You
should be a politician.
Bob Keller
Ron Shepard
pltr...@spamlessxhost.org wrote:
> >That was the congress that shut down the government for two months...
>
> Just in the interest of accuracy, only about one-third of federal government
> employees were furloughed, and the duration was three weeks.
> (http://www.rules.house.gov/archives/98-844.pdf)
Yes, I should have been more precise. It was "over" two months, but
it was only really for one week in November and then three more
weeks in December through January. There was a break of three weeks
in the middle under a continuing resolution. It was a pain in the
ass though if you needed, say, to renew your passport or apply for
an FHA loan or a student loan or something. I knew people who
needed to do those things and couldn't.
$.02 -Ron Shepard
Ron Shepard
<92106867-c4e2-4cd3...@z23g2000prd.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> > As for Reagan, I remember one year when his budget proposal included a
> > large increase in defense spending, something like 20%. Congress
> > eventually passed a budget with a smaller 5% increase. Reagan accused
> > them of slashing the defense budget by 15%.
>
> Again, can you say "partinsanship", Ron? That technique has been
> pulled by BOTH parties ad infinitum and ad nauseum for decades. Take
> off your liberal-colored glasses, Ron. I would have thought that
> someone as intelligent as you wouldn't fall for the same stupid
> political spin tactics that the rest of the dumbed-down general public
> laps up.
I think you missed my point. Reagan did not shrink government, he
grew it faster and larger than any president since WWII. And it did
not happen by accident, his own budgets that HE submitted to
congress were bloated and filled with funding for his pet projects.
Reagan never once submitted a balanced budget to congress during his
entire eight years in congress, not even close to balanced. To know
this and to believe otherwise would be, I don't know, like falling
for the same old stupid political spin tactics or something. :-)
$.02 -Ron Shepard
bk4...@hotmail.com
wrote:
> In article
> <92106867-c4e2-4cd3-91f7-b309bae89...@z23g2000prd.googlegroups.com>,
You miss MY point. I've already admitted that Reagan grew the
government. You know that and then you try to throw my "spin tactics"
line back at me!? That's fucking disgusting Ron, and I expected much
better from you.
And if that was your only point then why even mention that 'Reagan
accused them of slashing the defense budget by 15%' - an obvious spin
tactic that both parties use and is irrelevant to the your point that
he grew the government?
Bob Keller
Dan White
>
> I think you missed my point. Reagan did not shrink government, he
> grew it faster and larger than any president since WWII. And it did
> not happen by accident, his own budgets that HE submitted to
> congress were bloated and filled with funding for his pet projects.
> Reagan never once submitted a balanced budget to congress during his
> entire eight years in congress, not even close to balanced.
Yeah, he had pesky little pet projects like bankrupting the Soviet Union and
winning the Cold War. Let's let Clinton take credit for the peace dividend
and all those balanced budgets.
dwhite
Ron Shepard
<6d515e03-8203-4075...@w35g2000prg.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> On Apr 18, 1:53 pm, Ron Shepard <ron-shep...@NOSPAM.comcast.net>
> wrote:
>
> > > Why should the entire
> > > economy react to the Fed when they adjust interest rates by 1/4% - do
> > > you think one organization having that power over the free market is
> > > good?
>
> > In capitalism, money is a commodity, like ounces of gold or barrels
> > of oil or bushels of corn. Interest rates are the cost of that
> > commodity. When there is a demand for that commodity, then changing
> > the cost causes the economy to react.
>
> Lovely. Now how about answering my question?
I answered the first part of your question. I don't have an opinion
on the second. If I had, I would not have hesitated to tell you. :-)
> > > Secondly, you stated above that without the current infusions of cash
> > > into the economy we would see a 'terrible economic contraction'. I
> > > wholeheartedly disagree. Now, you could gather 100 economists into a
> > > room and get 100 different opinions on this!
> >
> > No, they would all agree that infusions of cash are needed.
>
> That is a preposterous statement! Maybe you could argue that all
> Keynesian economists would say that - you seem to think there aren't
> any other types any more. Here's just one example to prove you wrong.
> http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.
Your link does not work for me, but I assume from the title that it
involves the great depression. Your question above was not about
the great depression, it was about the current economy. I do not
know of any economists who are advocating anything other than what I
said currently. The controversy in the current situation seems to
be how and where to inject the capital, not whether it should be
injected at all.
I have already explained how I think knowledge of the end of the
great depression might be used to advantage in the current
situation. I'm not an economist, but it seems to be mostly common
sense. Do you have any opinion about that? Is there some reason
why applying what worked then might not work now?
$.02 -Ron Shepard
Dan White
> In article <2jomb6x...@recgroups.com>,
> "Mark0" <markmc...@charter.net> wrote:
>
>> > He is claiming to cut the
>> > current deficit in half in 5 years. I don't know how to put that in
>> > perspective, but it does not seem unreasonable.
>>
>> What's unreasonable is how you are reasoning a 10 Trillion dollar deficit
>> in 2019 to be reasonable....
>
> Do you think we had a $10 Trillion deficit in 2008, or that we will
> have one in 2009?
>
> My comments above were comparing the current situation to the great
> depression. If the stimulus that occurred at the end of the great
> depression had occurred at the beginning, then it would not have
> lasted 10 years, it would have lasted only a couple of years.
Are you pulling this out of personal opinion? What makes you believe this?
I'm not being sarcastic. I really don't know. All I've heard is that after
70 years of studying what happened, some (many?) economists have concluded
that FDR's policies extended, not ended, the depression. His stimulus
didn't occur at the end of the depression, WW2 did. His stimulus was the
reason it lasted so long, as the theory goes.
dwhite
dwhite
Dan White
It's is almost unthinkable how much information is out there at the other
end of a keyboard. Like I've said, a little knowledge is dangerous, and the
numbers are not the final arbiter of all things. The things a party spends
money on matters. For instance, if you are fighting a war and your military
is decimated, then to hell with the budget. You have to make sure the
country is defended no matter what. On the other hand, nobody should bust a
budget on discretionary pet items.
Both parties started trying to outdo each other in how much money they could
dole out. But, you can't out liberal a liberal and the republicans just
didn't understand that. I'm glad the mainstream is patronizing the tea
parties. If the momentum continues, congress is in for a hell of a
surprise. Hell, our liberal billionaire governor Corzine is getting his
pants beat off by double digits by conservative challengers in NEW JERSEY of
all places! Dodd is also a gonner in a big way.
dwhite
Ron Shepard
<9c32cdb2-ce17-4e1e...@r31g2000prh.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> And another good video about the Fed.
> http://www.youtube.com/watch?v=hlmXUiEgNO8&feature=related
> Bob Keller
Ok, there is a lot of stuff in here that I don't understand, so let
me start with one question.
Ron Paul says that the current economic collapse was caused by low
interest rates. Can you explain in simple words that I can
understand how that happens? If the interest rates had been a
little higher, how would things be different? Or if interest rates
were very much higher, say 15% like they were in the early 80's, how
would that have prevented credit default swaps from occurring? Or
if interest rates were raised now, after the collapse, how would
that help the recovery process?
$.02 -Ron Shepard
Dan White
news:6d515e03-8203-4075...@w35g2000prg.googlegroups.com...
That is a preposterous statement! Maybe you could argue that all
Keynesian economists would say that - you seem to think there aren't
any other types any more. Here's just one example to prove you wrong.
http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx
Bob Keller
Yes, that was the kind of study I'd wondered whether Ron had seen. On the
other hand, you might give a good listen to Larry Kudlow. You probably know
him from either the Reagan admin, cable TV (MSNBC?) or the radio. He says
the most important positive thing going on right now is the loosening of the
money supply. It was way too tight under Bush and is now being let out, and
it is long over due. Also, Kudlow believes Keynesian economics has been
proven to be complete bunk. He's very clear about that. In fact, the
spending hasn't even really started yet and the economy is starting to
recover. That won't keep BO from taking credit, of course!
dwhite
John Black
5b4698...@s22g2000prg.googlegroups.com>, jakar...@gmail.com says...
> I don't see any alternative to mark-to-market. If someone can come up
> with a better but still objective way of defining the value of an
> investment I'd be open to it, of course, but I don't see how that's
> possible. Just (Especially?) Steve Forbes says it is good isn't
> enough for me.
I think I heard they already have a plan to "fix" it. Lets see what they
come up with because I haven't followed the details.
John Black
John Black
she...@NOSPAM.comcast.net says...
> In article <MPG.24531f5ac...@news.motzarella.org>,
> John Black <jbl...@texas.net> wrote:
>
> > > I don't think that subprime loans were backed by Fannie and Freddie,
> > > were they?
> >
> > Yes, they absolutely were.
>
> Ok, now I see what you are talking about. When I was talking about
> subprime loans, I was talking about the predatory loans where the
> interest rates are double the normal rates, and they are often
> 3-year balloon loans, where everything must be paid back after three
> years. This is the kind of thing that loan sharks used to do and it
> used to be illegal. Now, with deregulation of the banking industry
> over the past 25 years, this is legal.
Not sure what you are talking about. There are no 3 year mortgages. This
has nothing to do with the housing crisis.
>
> The Fannie Mae loans aren't like that. They are supposed to cover
> banks that give the loans to people who just barely don't qualify
> for normal loans. The interest rate is (I think) 1% higher than
> prime for the first year, and then they revert to the normal
> interest rate. And these F&F insured loans are normal 15- or
> 30-year mortgages, not those short-term balloon loans.
A big part of the problem were ARM (adjustable rate mortgages). Maybe that
is what you are talking about? but they are not 3 year loans. And F&F
certainly do deal with them.
> So you are right that the F&F loans are 1% higher than prime, but
> those weren't the subprime loans that I was talking about. These
> other loans are the ones causing problems in the current economic
> collapse.
FYI he word "prime" in subprime does not refer to the prime rate. And F&F
were a major player dealing buying and guaranteeing the loans causing
problems in the current economic collaspe.
John Black
bk4...@hotmail.com
wrote:
> In article
> <6d515e03-8203-4075-b003-d64bb28db...@w35g2000prg.googlegroups.com>,
>
> "bk42...@hotmail.com" <bk42...@hotmail.com> wrote:
> > On Apr 18, 1:53 pm, Ron Shepard <ron-shep...@NOSPAM.comcast.net>
> > wrote:
>
> > > > Why should the entire
> > > > economy react to the Fed when they adjust interest rates by 1/4% - do
> > > > you think one organization having that power over the free market is
> > > > good?
>
> > > In capitalism, money is a commodity, like ounces of gold or barrels
> > > of oil or bushels of corn. Interest rates are the cost of that
> > > commodity. When there is a demand for that commodity, then changing
> > > the cost causes the economy to react.
>
> > Lovely. Now how about answering my question?
>
> I answered the first part of your question. I don't have an opinion
> on the second. If I had, I would not have hesitated to tell you. :-)
It was all ONE question. Read it again and think about it.
>
> > > > Secondly, you stated above that without the current infusions of cash
> > > > into the economy we would see a 'terrible economic contraction'. I
> > > > wholeheartedly disagree. Now, you could gather 100 economists into a
> > > > room and get 100 different opinions on this!
>
> > > No, they would all agree that infusions of cash are needed.
>
> > That is a preposterous statement! Maybe you could argue that all
> > Keynesian economists would say that - you seem to think there aren't
> > any other types any more. Here's just one example to prove you wrong.
> >http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depress....
>
> Your link does not work for me, but I assume from the title that it
> involves the great depression. Your question above was not about
> the great depression, it was about the current economy. I do not
> know of any economists who are advocating anything other than what I
> said currently. The controversy in the current situation seems to
> be how and where to inject the capital, not whether it should be
> injected at all.
>
> I have already explained how I think knowledge of the end of the
> great depression might be used to advantage in the current
> situation. I'm not an economist, but it seems to be mostly common
> sense. Do you have any opinion about that? Is there some reason
> why applying what worked then might not work now?
>
OMG, what double-speak. First you put down my link because it's about
the depression and then a couple sentences later you say 'gee, maybe
we should look to the great depression for clues. OMG!
The article is about economists of today who looked to the great
depression and drew the conclusion that stimulating the economy will
not help but will prolong the depression. Therefore, your claim that
all economists would "agree that infusions of cash are needed" is
wrong. Please just admit that one simple point. Don't go on
dissecting points from the article and how you agree/disagree, etc.
PLEASE, Ron, FIRST just admit you were wrong to claim that all
economists think injecting cash is necessary. I hope you have that
much intellectual honesty at least.
Here is the article since you can't get to it.
FDR's policies prolonged Depression by 7 years, UCLA economists
calculate
By
Meg Sullivan
| 8/10/2004 12:23:12 PM
Two UCLA economists say they have figured out why the Great Depression
dragged on for almost 15 years, and they blame a suspect previously
thought to be beyond reproach: President Franklin D. Roosevelt.
After scrutinizing Roosevelt's record for four years, Harold L. Cole
and Lee E. Ohanian conclude in a new study that New Deal policies
signed into law 71 years ago thwarted economic recovery for seven long
years.
"Why the Great Depression lasted so long has always been a great
mystery, and because we never really knew the reason, we have always
worried whether we would have another 10- to 15-year economic slump,"
said Ohanian, vice chair of UCLA's Department of Economics. "We found
that a relapse isn't likely unless lawmakers gum up a recovery with
ill-conceived stimulus policies."
In an article in the August issue of the Journal of Political Economy,
Ohanian and Cole blame specific anti-competition and pro-labor
measures that Roosevelt promoted and signed into law June 16, 1933.
"President Roosevelt believed that excessive competition was
responsible for the Depression by reducing prices and wages, and by
extension reducing employment and demand for goods and services," said
Cole, also a UCLA professor of economics. "So he came up with a
recovery package that would be unimaginable today, allowing businesses
in every industry to collude without the threat of antitrust
prosecution and workers to demand salaries about 25 percent above
where they ought to have been, given market forces. The economy was
poised for a beautiful recovery, but that recovery was stalled by
these misguided policies."
Using data collected in 1929 by the Conference Board and the Bureau of
Labor Statistics, Cole and Ohanian were able to establish average
wages and prices across a range of industries just prior to the
Depression. By adjusting for annual increases in productivity, they
were able to use the 1929 benchmark to figure out what prices and
wages would have been during every year of the Depression had
Roosevelt's policies not gone into effect. They then compared those
figures with actual prices and wages as reflected in the Conference
Board data.
In the three years following the implementation of Roosevelt's
policies, wages in 11 key industries averaged 25 percent higher than
they otherwise would have done, the economists calculate. But
unemployment was also 25 percent higher than it should have been,
given gains in productivity.
Meanwhile, prices across 19 industries averaged 23 percent above where
they should have been, given the state of the economy. With goods and
services that much harder for consumers to afford, demand stalled and
the gross national product floundered at 27 percent below where it
otherwise might have been.
"High wages and high prices in an economic slump run contrary to
everything we know about market forces in economic downturns," Ohanian
said. "As we've seen in the past several years, salaries and prices
fall when unemployment is high. By artificially inflating both, the
New Deal policies short-circuited the market's self-correcting
forces."
The policies were contained in the National Industrial Recovery Act
(NIRA), which exempted industries from antitrust prosecution if they
agreed to enter into collective bargaining agreements that
significantly raised wages. Because protection from antitrust
prosecution all but ensured higher prices for goods and services, a
wide range of industries took the bait, Cole and Ohanian found. By
1934 more than 500 industries, which accounted for nearly 80 percent
of private, non-agricultural employment, had entered into the
collective bargaining agreements called for under NIRA.
Cole and Ohanian calculate that NIRA and its aftermath account for 60
percent of the weak recovery. Without the policies, they contend that
the Depression would have ended in 1936 instead of the year when they
believe the slump actually ended: 1943.
Roosevelt's role in lifting the nation out of the Great Depression has
been so revered that Time magazine readers cited it in 1999 when
naming him the 20th century's second-most influential figure.
"This is exciting and valuable research," said Robert E. Lucas Jr.,
the 1995 Nobel Laureate in economics, and the John Dewey Distinguished
Service Professor of Economics at the University of Chicago. "The
prevention and cure of depressions is a central mission of
macroeconomics, and if we can't understand what happened in the 1930s,
how can we be sure it won't happen again?"
NIRA's role in prolonging the Depression has not been more closely
scrutinized because the Supreme Court declared the act
unconstitutional within two years of its passage.
"Historians have assumed that the policies didn't have an impact
because they were too short-lived, but the proof is in the pudding,"
Ohanian said. "We show that they really did artificially inflate wages
and prices."
Even after being deemed unconstitutional, Roosevelt's anti-competition
policies persisted — albeit under a different guise, the scholars
found. Ohanian and Cole painstakingly documented the extent to which
the Roosevelt administration looked the other way as industries once
protected by NIRA continued to engage in price-fixing practices for
four more years.
The number of antitrust cases brought by the Department of Justice
fell from an average of 12.5 cases per year during the 1920s to an
average of 6.5 cases per year from 1935 to 1938, the scholars found.
Collusion had become so widespread that one Department of Interior
official complained of receiving identical bids from a protected
industry (steel) on 257 different occasions between mid-1935 and
mid-1936. The bids were not only identical but also 50 percent higher
than foreign steel prices. Without competition, wholesale prices
remained inflated, averaging 14 percent higher than they would have
been without the troublesome practices, the UCLA economists calculate.
NIRA's labor provisions, meanwhile, were strengthened in the National
Relations Act, signed into law in 1935. As union membership doubled,
so did labor's bargaining power, rising from 14 million strike days in
1936 to about 28 million in 1937. By 1939 wages in protected
industries remained 24 percent to 33 percent above where they should
have been, based on 1929 figures, Cole and Ohanian calculate.
Unemployment persisted. By 1939 the U.S. unemployment rate was 17.2
percent, down somewhat from its 1933 peak of 24.9 percent but still
remarkably high. By comparison, in May 2003, the unemployment rate of
6.1 percent was the highest in nine years.
Recovery came only after the Department of Justice dramatically
stepped enforcement of antitrust cases nearly four-fold and organized
labor suffered a string of setbacks, the economists found.
"The fact that the Depression dragged on for years convinced
generations of economists and policy-makers that capitalism could not
be trusted to recover from depressions and that significant government
intervention was required to achieve good outcomes," Cole said.
"Ironically, our work shows that the recovery would have been very
rapid had the government not intervened."
-UCLA-
bk4...@hotmail.com
> <bk42...@hotmail.com> wrote in message
>
> news:6d515e03-8203-4075...@w35g2000prg.googlegroups.com...
> That is a preposterous statement! Maybe you could argue that all
> Keynesian economists would say that - you seem to think there aren't
>
> Bob Keller
>
> Yes, that was the kind of study I'd wondered whether Ron had seen. On the
> other hand, you might give a good listen to Larry Kudlow. You probably know
> him from either the Reagan admin, cable TV (MSNBC?) or the radio. He says
> the most important positive thing going on right now is the loosening of the
> money supply. It was way too tight under Bush and is now being let out, and
> it is long over due. Also, Kudlow believes Keynesian economics has been
> proven to be complete bunk. He's very clear about that. In fact, the
> spending hasn't even really started yet and the economy is starting to
> recover. That won't keep BO from taking credit, of course!
>
> dwhite
Liberals just cannot get it in their head that government control is
going to fuck things up - it's just that simple.
Hey, here's an interesting aside - wonder if you know about this?
Would you believe me if I told you that I am a Classical Liberal? He,
he, he. Wiki "Classical Liberalism". Liberal used to mean some of
the things that conservatives claim today. So they had to change the
term to 'classical liberal' when liberals took over the term
'liberal'. LOL
Hmmm, is that what they are doing to the word 'progressive' today?
Bob Keller
bk4...@hotmail.com
wrote:
> In article
> <9c32cdb2-ce17-4e1e-bdb0-4169543af...@r31g2000prh.googlegroups.com>,
>
> "bk42...@hotmail.com" <bk42...@hotmail.com> wrote:
> > And another good video about the Fed.
> >http://www.youtube.com/watch?v=hlmXUiEgNO8&feature=related
> > Bob Keller
>
> Ok, there is a lot of stuff in here that I don't understand, so let
> me start with one question.
>
> Ron Paul says that the current economic collapse was caused by low
> interest rates. Can you explain in simple words that I can
> understand how that happens? If the interest rates had been a
> little higher, how would things be different? Or if interest rates
> were very much higher, say 15% like they were in the early 80's, how
> would that have prevented credit default swaps from occurring? Or
> if interest rates were raised now, after the collapse, how would
> that help the recovery process?
>
> $.02 -Ron Shepard
Those are red herring questions, no-one has made those claims. This
video is about The Fed.
I think what you missed is that Ron Paul claims *****artificially*****
low interest rates......
Watch it again with that in mind.
Bob Keller
bk4...@hotmail.com
wrote:
> In article
> <9c32cdb2-ce17-4e1e-bdb0-4169543af...@r31g2000prh.googlegroups.com>,
>
> > And another good video about the Fed.
> >http://www.youtube.com/watch?v=hlmXUiEgNO8&feature=related
> > Bob Keller
>
> Ok, there is a lot of stuff in here that I don't understand, so let
> me start with one question.
>
> Ron Paul says that the current economic collapse was caused by low
> interest rates. Can you explain in simple words that I can
> understand how that happens? If the interest rates had been a
> little higher, how would things be different? Or if interest rates
> were very much higher, say 15% like they were in the early 80's, how
> would that have prevented credit default swaps from occurring? Or
> if interest rates were raised now, after the collapse, how would
> that help the recovery process?
>
> $.02 -Ron Shepard
Try watching some of the related videos there on youtube, also.......
Bob Keller
John Black
she...@NOSPAM.comcast.net says...
> My comments above were comparing the current situation to the great
> depression. If the stimulus that occurred at the end of the great
> depression had occurred at the beginning, then it would not have
> lasted 10 years, it would have lasted only a couple of years.
The Great Depression is widely understood after decades of analysis to have
been prolonged again and again by disastrous government meddling by both
parties. Lack of stimulous was not the problem.
> If
> the current stimulus does the same thing to the current collapse,
> then Obama could well cut the current deficit in half in 5 years. I
> have no idea how all of this will play out, but the 5 year goal does
> not seem unreasonable to me.
Ron, they plan to increase the deficit by a kazillion dollars a year and
through smoke and mirrors (non partisan CBO does not agree with
administration) they claim it will only be half a kazillion dollars in 5
years. The plan is so out of control that a 14 year old today will have to
pay over $100,000 in taxes over her lifetime to pay just for the interest on
the new debt that Obama proposes (the interest, not the principle, not the
interest or principle of the current dept, and not bugetary expenditures).
Maybe this will give you a visual perspective. Here is the Bush vs Obama
deficit projects (even showing Obama's own projections). Note its the same
people who chided Bush for his deficits that propose to make them many times
larger. Worse is that the *plan* is not to balance anything (its not even a
goal!) but to make them ever increasing. This has to be disaster in the
making by any rational measure. The US is not indestructible. It can be
bankrupted, and Obama seems to want to do that in record time.
http://blog.heritage.org/2009/03/24/bush-deficit-vs-obama-deficit-in-
pictures/
John Black
John Black
she...@NOSPAM.comcast.net says...
> In article <MPG.24530bdc7...@news.motzarella.org>,
> John Black <jbl...@texas.net> wrote:
>
> > The budget was
> > not really balanced because it included payroll tax revenue which was never
> > supposed to be used for the general budget.
>
> Yes, this is yet another bit of Reaganomics we still have with us.
> Reagan did three things to social security during his term. He
> increased the SS tax rate on workers, he started taxing for the
> first time SS benefits (i.e. SS benefits were treated as income for
> some retirees), and he started including the surpluses in the SS
> fund in the federal budget in order to make his ever larger deficits
> look smaller than they were. And all these things are still done
> today.
>
> Of these, I think it is the second that is the most unfair.
>
> The first issue, the tax rate on the workers, should reflect the
> true costs of the program. SS is a combination of an insurance plan
> and a savings plan. If a worker pays into the system for 50 years,
> he starts to receive benefits when he retires, so it is like a
> savings plan in that respect. But when he dies, those benefits do
> not go to his estate, like a savings plan would, they just stop. Or
> if he lives another 50 years after he retires, he would continue to
> receive benefits that entire time, eventually receiving much more
> than he paid into the system when he was working. So in this sense,
> SS is like an insurance policy, it pays you as long as you are
> alive, and its costs therefore depend on when workers retire and how
> long they draw benefits. As medical technology advances, lifespans
> will increase, and SS benefits will be paid to retirees for longer
> periods of time. So the SS tax rate needs to adjust accordingly.
I agree with a lot of what you say about SS except you leave out the part
about it being an unsustainable ponzi scheme. It will be bankrupt in the
next 10 or 15 years and no amount of tax increases or benefit reductions can
really fix it. Its one of the disasters that came from the New Deal, but
since it is a ponzi scheme it *looked* like a great deal for a long time.
The people who got in early got out much more than they put in. Currently
we get on average about what we put in, or a bit less (which is horrid
performance for retirmement money saved). The next phase is collapse of the
pyramid scheme. Medicare is in wosre shape. Instead of acknowledging this
and trying to do something about these before its too late, we've declared
that the New Deal social engineering projects were glorious successes and we
plan to do more and more of them...
> However, even if you subtract the SS surplus from Clintons budget
> numbers, he still had budget surpluses for two of his last years.
> Perhaps that puts in better perspective what we as a country
> actually accomplished during that time. If you include the SS
> surpluses, as is now the convention, then he had budget surpluses
> for four of his last years. Another way to measure economic health
> is to look at unemployment rates. This measure has nothing to do
> with accounting conventions or artificial bubbles in the stock
> market. By that measure, Clinton also did very well during his 8
> years in office. It is always surprising to me how some people try
> to discount what happened during the 90's. We really did have a
> good economic situation during that time, whether you look at
> salaries (minimum wage was increased twice under Clinton),
> unemployment rates, budget surpluses (with or without SS), or the
> total number of employed workers.
Well ok, I do give Clinton a lot of credit -- but a lot of that credit
belongs to the republican controlled congress as well. No way Clinton and
that congress would be doing what Obama and this congress are doing. But
also I think because of the dot.com bubble collapse followed shortly by
9/11, 2001 would have been a big deficit year even if Clinton continued to
be President. Same for the years following. Maybe I'm wrong -- lets trade
him for Obama and find out...
John Black
John Black
she...@NOSPAM.comcast.net says...
> > Secondly, you stated above that without the current infusions of cash
> > into the economy we would see a 'terrible economic contraction'. I
> > wholeheartedly disagree. Now, you could gather 100 economists into a
> > room and get 100 different opinions on this!
>
> No, they would all agree that infusions of cash are needed. Where
> they disagree is how that cash should enter into the system.
Not true at all. Many would not agree that infusions of cash are needed
because its like giving the addict more of his drug. It temporarily makes
him feel better only to make things worse in the long run. And not many of
those 100 would agree we need to spend about a trillion dollars a week in
new social engineering programs, not even Keynes.
Here is a letter *hundreds* of economists wrote to Obama when he made a
similar statement to yours:
"There is no disagreement that we need action by our government, a recovery
plan that will help to jumpstart the economy."
- PRESIDENT-ELECT BARACK OBAMA, JANUARY 9 , 2009
With all due respect Mr. President, that is not true.
Notwithstanding reports that all economists are now Keynesians and that we
all support a big increase in the burden of government, we do not believe
that more government spending is a way to improve economic performance. More
government spending by Hoover and Roosevelt did not pull the United States
economy out of the Great Depression in the 1930s. More government spending
did not solve Japan's "lost decade" in the 1990s. As such, it is a triumph
of hope over experience to believe that more government spending will help
the U.S. today. To improve the economy, policy makers should focus on
reforms that remove impediments to work, saving, investment and production.
Lower tax rates and a reduction in the burden of government are the best
ways of using fiscal policy to boost growth.
" Burton Abrams, Univ. of Delaware
" Douglas Adie, Ohio University
" Ryan Amacher, Univ. of Texas at Arlington
" J.J. Arias, Georgia College & State University
" Howard Baetjer, Jr., Towson University
" Stacie Beck, Univ. of Delaware
" Don Bellante, Univ. of South Florida
" James Bennett, George Mason University
" Bruce Benson, Florida State University
" Sanjai Bhagat, Univ. of Colorado at Boulder
" Mark Bils, Univ. of Rochester
" Alberto Bisin, New York University
" Walter Block, Loyola University New Orleans
" Cecil Bohanon, Ball State University
" Michele Boldrin, Washington University in St. Louis
" Donald Booth, Chapman University
" Michael Bordo, Rutgers University
" Samuel Bostaph, Univ. of Dallas
" Scott Bradford, Brigham Young University
" Genevieve Briand, Eastern Washington University
" George Brower, Moravian College
" James Buchanan, Nobel laureate
" Richard Burdekin, Claremont McKenna College
" Henry Butler, Northwestern University
" William Butos, Trinity College
" Peter Calcagno, College of Charleston
" Bryan Caplan, George Mason University
" Art Carden, Rhodes College
" James Cardon, Brigham Young University
" Dustin Chambers, Salisbury University
" Emily Chamlee-Wright, Beloit College
" V.V. Chari, Univ. of Minnesota
" Barry Chiswick, Univ. of Illinois at Chicago
" Lawrence Cima, John Carroll University
" J.R. Clark, Univ. of Tennessee at Chattanooga
" Gian Luca Clementi, New York University
" R. Morris Coats, Nicholls State University
" John Cochran, Metropolitan State College
" John Cochrane, Univ. of Chicago
" John Cogan, Hoover Institution, Stanford University
" John Coleman, Duke University
" Boyd Collier, Tarleton State University
" Robert Collinge, Univ. of Texas at San Antonio
" Lee Coppock, Univ. of Virginia
" Mario Crucini, Vanderbilt University
" Christopher Culp, Univ. of Chicago
" Kirby Cundiff, Northeastern State University
" Antony Davies, Duquesne University
" John Dawson, Appalachian State University
" Clarence Deitsch, Ball State University
" Arthur Diamond, Jr., Univ. of Nebraska at Omaha
" John Dobra, Univ. of Nevada, Reno
" James Dorn, Towson University
" Christopher Douglas, Univ. of Michigan, Flint
" Floyd Duncan, Virginia Military Institute
" Francis Egan, Trinity College
" John Egger, Towson University
" Kenneth Elzinga, Univ. of Virginia
" Paul Evans, Ohio State University
" Eugene Fama, Univ. of Chicago
" W. Ken Farr, Georgia College & State University
" Hartmut Fischer, Univ. of San Francisco
" Fred Foldvary, Santa Clara University
" Murray Frank, Univ. of Minnesota
" Peter Frank, Wingate University
" Timothy Fuerst, Bowling Green State University
" B. Delworth Gardner, Brigham Young University
" John Garen, Univ. of Kentucky
" Rick Geddes, Cornell University
" Aaron Gellman, Northwestern University
" William Gerdes, Clarke College
" Michael Gibbs, Univ. of Chicago
" Stephan Gohmann, Univ. of Louisville
" Rodolfo Gonzalez, San Jose State University
" Richard Gordon, Penn State University
" Peter Gordon, Univ. of Southern California
" Ernie Goss, Creighton University
" Paul Gregory, Univ. of Houston
" Earl Grinols, Baylor University
" Daniel Gropper, Auburn University
" R.W. Hafer, Southern Illinois
" University, Edwardsville
" Arthur Hall, Univ. of Kansas
" Steve Hanke, Johns Hopkins
" Stephen Happel, Arizona State University
" Frank Hefner, College of Charleston
" Ronald Heiner, George Mason University
" David Henderson, Hoover Institution, Stanford University
" Robert Herren, North Dakota State University
" Gailen Hite, Columbia University
" Steven Horwitz, St. Lawrence University
" John Howe, Univ. of Missouri, Columbia
" Jeffrey Hummel, San Jose State University
" Bruce Hutchinson, Univ. of Tennessee at Chattanooga
" Brian Jacobsen, Wisconsin Lutheran College
" Jason Johnston, Univ. of Pennsylvania
" Boyan Jovanovic, New York University
" Jonathan Karpoff, Univ. of Washington
" Barry Keating, Univ. of Notre Dame
" Naveen Khanna, Michigan State University
" Nicholas Kiefer, Cornell University
" Daniel Klein, George Mason University
" Paul Koch, Univ. of Kansas
" Narayana Kocherlakota, Univ. of Minnesota
" Marek Kolar, Delta College
" Roger Koppl, Fairleigh Dickinson University
" Kishore Kulkarni, Metropolitan State College of Denver
" Deepak Lal, UCLA
" George Langelett, South Dakota State University
" James Larriviere, Spring Hill College
" Robert Lawson, Auburn University
" John Levendis, Loyola University New Orleans
" David Levine, Washington University in St. Louis
" Peter Lewin, Univ. of Texas at Dallas
" Dean Lillard, Cornell University
" Zheng Liu, Emory University
" Alan Lockard, Binghampton University
" Edward Lopez, San Jose State University
" John Lunn, Hope College
" Glenn MacDonald, Washington
" University in St. Louis
" Michael Marlow, California
" Polytechnic State University
" Deryl Martin, Tennessee Tech University
" Dale Matcheck, Northwood University
" Deirdre McCloskey, Univ. of Illinois, Chicago
" John McDermott, Univ. of South Carolina
" Joseph McGarrity, Univ. of Central Arkansas
" Roger Meiners, Univ. of Texas at Arlington
" Allan Meltzer, Carnegie Mellon University
" John Merrifield, Univ. of Texas at San Antonio
" James Miller III, George Mason University
" Jeffrey Miron, Harvard University
" Thomas Moeller, Texas Christian University
" John Moorhouse, Wake Forest University
" Andrea Moro, Vanderbilt University
" Andrew Morriss, Univ. of Illinois at Urbana-Champaign
" Michael Munger, Duke University
" Kevin Murphy, Univ. of Southern California
" Richard Muth, Emory University
" Charles Nelson, Univ. of Washington
" Seth Norton, Wheaton College
" Lee Ohanian, Univ. of California, Los Angeles
" Lydia Ortega, San Jose State University
" Evan Osborne, Wright State University
" Randall Parker, East Carolina University
" Donald Parsons, George Washington University
" Sam Peltzman, Univ. of Chicago
" Mark Perry, Univ. of Michigan, Flint
" Christopher Phelan, Univ. of Minnesota
" Gordon Phillips, Univ. of Maryland
" Michael Pippenger, Univ. of Alaska, Fairbanks
" Tomasz Piskorski, Columbia University
" Brennan Platt, Brigham Young University
" Joseph Pomykala, Towson University
" William Poole, Univ. of Delaware
" Barry Poulson, Univ. of Colorado at Boulder
" Benjamin Powell, Suffolk University
" Edward Prescott, Nobel laureate
" Gary Quinlivan, Saint Vincent College
" Reza Ramazani, Saint Michael's College
" Adriano Rampini, Duke University
" Eric Rasmusen, Indiana University
" Mario Rizzo, New York University
" Richard Roll, Univ. of California, Los Angeles
" Robert Rossana, Wayne State University
" James Roumasset, Univ. of Hawaii at Manoa
" John Rowe, Univ. of South Florida
" Charles Rowley, George Mason University
" Juan Rubio-Ramirez, Duke University
" Roy Ruffin, Univ. of Houston
" Kevin Salyer, Univ. of California, Davis
" Pavel Savor, Univ. of Pennsylvania
" Ronald Schmidt, Univ. of Rochester
" Carlos Seiglie, Rutgers University
" William Shughart II, Univ. of Mississippi
" Charles Skipton, Univ. of Tampa
" James Smith, Western Carolina University
" Vernon Smith, Nobel laureate
" Lawrence Southwick, Jr., Univ. at Buffalo
" Dean Stansel, Florida Gulf Coast University
" Houston Stokes, Univ. of Illinois at Chicago
" Brian Strow, Western Kentucky University
" Shirley Svorny, California State
" University, Northridge
" John Tatom, Indiana State University
" Wade Thomas, State University of New York at Oneonta
" Henry Thompson, Auburn University
" Alex Tokarev, The King's College
" Edward Tower, Duke University
" Leo Troy, Rutgers University
" David Tuerck, Suffolk University
" Charlotte Twight, Boise State University
" Kamal Upadhyaya, Univ. of New Haven
" Charles Upton, Kent State University
" T. Norman Van Cott, Ball State University
" Richard Vedder, Ohio University
" Richard Wagner, George Mason University
" Douglas M. Walker, College of Charleston
" Douglas O. Walker, Regent University
" Christopher Westley, Jacksonville State University
" Lawrence White, Univ. of Missouri at St. Louis
" Walter Williams, George Mason University
" Doug Wills, Univ. of Washington Tacoma
" Dennis Wilson, Western Kentucky University
" Gary Wolfram, Hillsdale College
" Huizhong Zhou, Western Michigan University
Additional economists who have signed the statement
" Lee Adkins, Oklahoma State University
" William Albrecht, Univ. of Iowa
" Donald Alexander, Western Michigan University
" Geoffrey Andron, Austin Community College
" Nathan Ashby, Univ. of Texas at El Paso
" George Averitt, Purdue North Central University
" Charles Baird, California State University, East Bay
" Timothy Bastian, Creighton University
" John Bethune, Barton College
" Robert Bise, Orange Coast College
" Karl Borden, University of Nebraska
" Donald Boudreaux, George Mason University
" Ivan Brick, Rutgers University
" Phil Bryson, Brigham Young University
" Richard Burkhauser, Cornell University
" Jim Butkiewicz, Univ. of Delaware
" Richard Cebula, Armstrong Atlantic State University
" Don Chance, Louisiana State University
" Robert Chatfield, Univ. of Nevada, Las Vegas
" Lloyd Cohen, George Mason University
" Peter Colwell, Univ. of Illinois at Urbana-Champaign
" Michael Connolly, Univ. of Miami
" Jim Couch, Univ. of North Alabama
" Eleanor Craig, Univ. of Delaware
" Michael Daniels, Columbus State University
" A. Edward Day, Univ. of Texas at Dallas
" Stephen Dempsey, Univ. of Vermont
" Allan DeSerpa, Arizona State University
" William Dewald, Ohio State University
" Jeff Dorfman, Univ. of Georgia
" Lanny Ebenstein, Univ. of California, Santa Barbara
" Michael Erickson, The College of Idaho
" Jack Estill, San Jose State University
" Dorla Evans, Univ. of Alabama in Huntsville
" Frank Falero, California State University, Bakersfield
" Daniel Feenberg, National Bureau of Economic Research
" Eric Fisher, California Polytechnic State University
" William Ford, Middle Tennessee State University
" Ralph Frasca, Univ. of Dayton
" Joseph Giacalone, St. John's University
" Adam Gifford, California State Unviersity, Northridge
" Otis Gilley, Louisiana Tech University
" J. Edward Graham, University of North Carolina at Wilmington
" Richard Grant, Lipscomb University
" Gauri-Shankar Guha, Arkansas State University
" Darren Gulla, Univ. of Kentucky
" Dennis Halcoussis, California State University, Northridge
" Richard Hart, Miami University
" James Hartley, Mount Holyoke College
" Thomas Hazlett, George Mason University
" Scott Hein, Texas Tech University
" John Hoehn, Michigan State University
" Daniel Houser, George Mason University
" Thomas Howard, University of Denver
" Chris Hughen, Univ. of Denver
" Marcus Ingram, Univ. of Tampa
" Joseph Jadlow, Oklahoma State University
" Sherry Jarrell, Wake Forest University
" Robert Krol, California State University, Northridge
" James Kurre, Penn State Erie
" Tom Lehman, Indiana Wesleyan University
" W. Cris Lewis, Utah State University
" Stan Liebowitz, Univ. of Texas at Dallas
" Anthony Losasso, Univ. of Illinois at Chicago
" John Lott, Jr., Univ. of Maryland
" Keith Malone, Univ. of North Alabama
" Henry Manne, George Mason University
" Richard Marcus, Univ. of Wisconsin-Milwaukee
" Timothy Mathews, Kennesaw State University
" John Matsusaka, Univ. of Southern California
" Thomas Mayor, Univ. of Houston
" W. Douglas McMillin, Louisiana State University
" Mario Miranda, The Ohio State University
" Ed Miseta, Penn State Erie
" James Moncur, Univ. of Hawaii at Manoa
" Charles Moss, Univ. of Florida
" Tim Muris, George Mason University
" John Murray, Univ. of Toledo
" David Mustard, Univ. of Georgia
" Steven Myers, Univ. of Akron
" Dhananjay Nanda, University of Miami
" Stephen Parente, Univ. of Minnesota
" Douglas Patterson, Virginia Polytechnic Institute and University
" Timothy Perri, Appalachian State University
" Mark Pingle, Univ. of Nevada, Reno
" Richard Rawlins, Missouri Southern State University
" Thomas Rhee, California State University, Long Beach
" Christine Ries, Georgia Institute of Technology
" Nancy Roberts, Arizona State University
" Larry Ross, Univ. of Alaska Anchorage
" Timothy Roth, Univ. of Texas at El Paso
" Atulya Sarin, Santa Clara University
" Thomas Saving, Texas A&M University
" Eric Schansberg, Indiana University Southeast
" Alan Shapiro, Univ. of Southern California
" Frank Spreng, McKendree University
" Judith Staley Brenneke, John Carroll University
" John E. Stapleford, Eastern University
" Courtenay Stone, Ball State University
" Avanidhar Subrahmanyam, UCLA
" Scott Sumner, Bentley University
" Clifford Thies, Shenandoah University
" William Trumbull, West Virginia University
" Gustavo Ventura, Univ. of Iowa
" Marc Weidenmier, Claremont McKenna College
" Robert Whaples, Wake Forest University
" Gene Wunder, Washburn University
" John Zdanowicz, Florida International University
" Jerry Zimmerman, Univ. of Rochester
" Joseph Zoric, Franciscan University of Steubenville
More signing each day=3F
http://www.cato.org/special/stimulus09/cato_stimulus.pdf
http://www.cato.org/fiscalreality
John Black
John Black
she...@NOSPAM.comcast.net says...
> In article
> <42371c4e-532b-490d...@x1g2000prh.googlegroups.com>,
> "bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
>
> > I don't have anything against bankers as business,
> > but we need to put them back in their place and get their fangs out of
> > government and control of the economy.
>
> This would require more regulation of banks, not less. In modern
> doublespeak vocabulary, that is "socialism."
>
> > I think some form of
> > central bank is necessary, but if the management of the economy is
> > it's primary purpose then it should be a REAL branch of the government
> > and not PROFIT from it.
>
> I think the Fed is nonprofit. They make money when they loan it
> out, and they pay money when they borrow it (e.g. when you buy a
> T-bill, the Fed pays you interest). But in the end, I think they
> are required to break even. Anyone know how exactly this works?
There are a lot of myths about the Fed. Some are misunderstandings, some
are oversimplifications. Anyway, this guy is often at the top of google's
list for debunking Fed myths. Is he right about everything here? I don't
know but it sounds reasonable.
http://www.geocities.com/CapitolHill/Embassy/1154/flaherty.html
Relevant to your question is the first fact he lists:
Facts: Yes, the Federal Reserve banks are privately owned, but they are
controlled by the publically-appointed Board of Governors. The Federal
Reserve banks merely execute the monetary policy choices made by the Board.
In addition, nearly all the interest the Federal Reserve collects on
government bonds is rebated to the Treasury each year, so the government
does not pay any net interest to the Fed.
John Black
pltr...@spamlessxhost.org
wrote:
>> >That was the congress that shut down the government for two months...
>>
>> Just in the interest of accuracy, only about one-third of federal government
>> employees were furloughed, and the duration was three weeks.
>> (http://www.rules.house.gov/archives/98-844.pdf)
>
>Yes, I should have been more precise. It was "over" two months, but
>it was only really for one week in November and then three more
>weeks in December through January. There was a break of three weeks
>in the middle under a continuing resolution. It was a pain in the
>ass though if you needed, say, to renew your passport or apply for
>an FHA loan or a student loan or something. I knew people who
>needed to do those things and couldn't.
Well, it was also a pain in the ass for those of us who work for the government.
8;)
One more minor related point: if my memory hasn't altogether failed me, every
single year for at least the last ten years, the government has operated under
various continuing resolutions for up to six months. It has become an accepted
way of doing business, as the annual budget battle drains an inordinate amount
of Congressional time and effort.
-- Larry
Dean
wrote:
>
> I think when economists talk about this, there are two kinds of
> inflation. One is related to the relative value of the dollar with
> other currencies in the world, and the other is the average costs of
> commodities in units of dollars. These two things are correlated,
> but because economic "laws" aren't really hard and fast laws, they
> are not the same thing.
>
Really, inflation is the decline of a currency in terms of what it can
buy this year or month or whatever (but years are conventional),
compared to what it could buy last period. It can be measured in two
ways that I'm aware of. The best is called the "GDP deflator," which
attempts to measure all economic output in terms of currency units and
widgets, and divides the ratio over the two periods. This is
obviously very hard to do accurately. The more common measure is the
Consumer Price Index (CPI) which simply measures a fixed basket of
goods in markets across the country (e.g. 0.01 Honda Accord, 2 jars
Kraft Peanut Butter, 5 gallons regular gasoline...) and compares the
total cost between two periods.
As it happens, inflation rates and exchange rates are correlated by
something I learned about in 1990, called Purchasing Power Parity.
The wikipedia article is pretty good. Essentially, Exchange Rate (N
+1) = Exchange Rate (N) * delta (i). (If not clear, N and N+1 are
years and delta (I) is the ratio of inflation rates in the two
economies.) The wiki entry calls this Relative PPP, which is a new
term to me. When I learned about it, it had very good empirical
validation, but there has been a trend in the past decade or two for
countries to try to "manage" their exchange rates, so I don't know how
well it holds up these days.
> > Why should the entire
> > economy react to the Fed when they adjust interest rates by 1/4% - do
> > you think one organization having that power over the free market is
> > good?
>
> In capitalism, money is a commodity, like ounces of gold or barrels
> of oil or bushels of corn. Interest rates are the cost of that
> commodity. When there is a demand for that commodity, then changing
> the cost causes the economy to react.
>
I think the stock market reacts to small changes in central bank
rates, not the economy. Obviously they are related, but the link is
very indirect. The American economy has contracted by something like
4% since October, or something like that, while the DJIA is down,
what, 40%?
Markets react to small changes in interest rates because they are
worked by people trying to beat EACH OTHER. If a change in rates will
reduce the profitability of Company A a little bit, all the dealers
try to sell Company A and buy Company B because they want to make
money. The result is that shares of Company A go down a lot more than
objective analysis would suggest. This, in turn, is because funds and
so on are competing to show the best quarterly numbers, to get more
investors so as to get higher fees. Others, such as Warren Buffet,
might think this is a good time to buy shares in Company A, and it
will eventually stabilize.
The key point here is that the Fed is not driving anything. The
market participants are all willing participants in this dance. THEY
are the ones driving the stock market up or down, not the Fed, and the
economy as a whole is almost completely unaffected. In fact, I
personally think ^H^H^H^H^H believe that it was Alan Greenspan's
reluctance to have share prices lower *ever* that got us into this
mess, in the first instance.
> > Secondly, you stated above that without the current infusions of cash
> > into the economy we would see a 'terrible economic contraction'. I
> > wholeheartedly disagree. Now, you could gather 100 economists into a
> > room and get 100 different opinions on this!
>
> No, they would all agree that infusions of cash are needed. Where
> they disagree is how that cash should enter into the system. Some
> argue that it should go to the banks, and then the banks will lend
> it to everyone else (with interest rates being the cost of that
> transaction). Others say that it should go directly into stimulus
> programs like building roads and bridges or whatever. This way, the
> banks get the money when people deposit into savings accounts, but
> now the banks pay interest on it rather than get interest on it.
> I'm inclined to think that the latter way is better than the former
> way (e.g. see my previous comments about how the great depression
> ended), but I'm certainly not one of those 100 economists.
>
I agree with you about the last big one, but I think the reason the
infusion went into banks is because without banks it's just too hard
to do business -- third world hard. While many banks would survive,
others wouldn't and there would be panic. Further, the investments of
banks, who bought what and who sold what is apparently (and I don't
understand this) hard to unravel. There are so many levels of
transactions on so many things that it takes a long time to sort out
who owes what, to whom, in the event of even one default. In the
meantime, no new lending to business, banks also call in old loans to
boost their cash reserves, and the economy contracts quickly and very
deeply.
If my understanding above is correct, then putting money into banks is
correct. I'm open to a better explanation of the facts, though.
> $.02 -Ron Shepard
Dean
Dean
> On Apr 18, 2:03 pm, Ron Shepard <ron-shep...@NOSPAM.comcast.net>
> wrote:
> Secondly, I do not agree with your premise that more regulation would
> be required, i.e. more socialism. The fangs belong to the Federal
> Reserve itself, not necessarily the banks that own the Fed. Making
> the Fed a "true" government entity and non-profit do much to remove
> the fangs. So it's not even about to regulate or not.
>
I think it might be good to agree on terms, if we can. As I
understand things, there is the Federal Reserve System, which is
comprised of the Federal Reserve Banks and the Federal Reserve Board.
I had a lot more above, about how I think it works, when I *finally*
found something useful on their site. I agree with you, Bob, this
stuff needs to be easier for Americans to find.
http://www.federalreserveeducation.org/fed101_html/structure/tour/tour.htm
I'm still going over it, but the structure makes sense to me, at a
first reading.
> > > I think some form of
> > > central bank is necessary, but if the management of the economy is
> > > it's primary purpose then it should be a REAL branch of the government
> > > and not PROFIT from it.
>
> > I think the Fed is nonprofit. They make money when they loan it
> > out, and they pay money when they borrow it (e.g. when you buy a
> > T-bill, the Fed pays you interest). But in the end, I think they
> > are required to break even. Anyone know how exactly this works?
>
> Ron, Ron, Ron. You are not following along. We've already discussed
> this and shown that the Fed does make a profit. In fact, Dean has
> even come about to suspect the Fed may be making much more profit than
> the circuitous explanations of their workings imply. On top of that
> is the fact that the U.S. Treasury could print money for free rather
> than forcing taxpayers to pay interest for it.
I don't think I said *much* more profit. In the grand scheme of
things, though, I don't think that is very significant. We shouldn't
throw out the *structure* just because the *levels* aren't quite
right. I hope those words are clear, and their significance is also
clear -- in my brief career helping with government regulation, they
were the cornerstones of what we did. I think banks probably deserve
some compensation for funds they are required by law to deposit with
Federal Reserve Banks, as they could otherwise lend this out at a
profit. In theory, if they weren't so compensated they would have to
charge the public more for services. (In practice I think banks have
been doing unconscionably well, off people like you and me, for years
-- so don't think I am overly rosy about the system.)
I'm also not sure that the Fed prints money -- I thought we agreed
Kennedy took that right away? The exact mechanics of how all this
works, again, should be clearer. In fact, I think it's the opacity
that breeds the distrust and anger that feeds sites like the one you
referred me to earlier, globalresearch.ca. Having read more stuff
from that site, BTW, I am now inclined to believe that the article was
probably one-sided at best, misleading/fraudulent at worst. They've
got editors who don't believe Al Queda was behind the 9/11 attacks,
and "researchers" who are still undergraduate students. When all of
their "researchers" are apparently unqualified folks with a common
belief in unusual conspiracies, it tends to test their credibility.
>
> > > It should simply set the STANDARDS or policy
> > > and let private industry (businesses and banks) execute that policy.
> > > That is how government is supposed to function.
>
> > Maybe if there were no money involved, then people could be trusted
> > to always do the right thing without laws and regulations.
>
> Where did you see me say anything WHATSOEVER about 'no laws and
> regulations'. The relevant point in my sentence above is that the
> government should never be IN BUSINESS, in any way shape or form.
> THAT is the point of the Constitution - to LIMIT the government. The
> government is supposed to be limited to setting **standards** for
> business (that would the laws and regulations!) and then let the free
> market run. The Fed - a quasi-form of government, but definitely a
> for-profit business - violates that principle. As does the TSA and
> others but thats a whole 'nother topic.
>
Oddly enough, this seems to be what you have today. The Board sets
policy, and the Banks implement it. Americans have had a healthy
mistrust of government since the beginning, and this is likely the
reason why private banks seem to have a bigger role in your system
than others. But, as I've said, I don't fully understand your system
-- the Who, What and How -- so I can't try to explain the Why.
By the way, I think Ron was merely pointing out that, since money is
involved, enforcement of standards is required -- I think you're in
agreement.
> Bob Keller
Dean
Dean
> That is a preposterous statement! Maybe you could argue that all
> Keynesian economists would say that - you seem to think there aren't
>
> Bob Keller
I found the link very interesting Bob, and I reread it several times.
I also looked at the "New Deal" Wikipedia entry. I think that what
the UCLA economists are saying (not the journalist or headline writer)
is that the NIRA, one of FDR's policies, was misguided. Without it,
the economy would have been some 27% larger that it was in the three
years after implementation. But it's not anti-Kenyesian; they are
talking about a particular industrial policy, not fiscal policy.
It was still a very interesting article.
Dean
Dean
wrote:
> In article
> <86d4a5b6-5b7b-4279-99fe-34f7a0325...@s38g2000prg.googlegroups.com>,
Maybe we could all agree that the plural of anecdote is not fact?
I've enjoyed the discussion, and learned a lot, but I haven't learned
a damn thing from what one poster claims one political figure said at
some time in the past.
Not trying to single you out Ron, this has been on my mind for a while
as a distraction from the discussion.
Dean
Ron Shepard
<d5f1ceba-a906-4a22...@n7g2000prc.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> On Apr 18, 5:32 pm, Ron Shepard <ron-shep...@NOSPAM.comcast.net>
> wrote:
> > In article
> > <9c32cdb2-ce17-4e1e-bdb0-4169543af...@r31g2000prh.googlegroups.com>,
> >
> > "bk42...@hotmail.com" <bk42...@hotmail.com> wrote:
> > > And another good video about the Fed.
> > >http://www.youtube.com/watch?v=hlmXUiEgNO8&feature=related
> > > Bob Keller
> >
> > Ok, there is a lot of stuff in here that I don't understand, so let
> > me start with one question.
> >
> > Ron Paul says that the current economic collapse was caused by low
> > interest rates. Can you explain in simple words that I can
> > understand how that happens? If the interest rates had been a
> > little higher, how would things be different? Or if interest rates
> > were very much higher, say 15% like they were in the early 80's, how
> > would that have prevented credit default swaps from occurring? Or
> > if interest rates were raised now, after the collapse, how would
> > that help the recovery process?
>
> Those are red herring questions, no-one has made those claims. This
> video is about The Fed.
Yes, I understand that. He is accusing the Fed of setting interest
rates too low, and that is what he says caused the economic
collapse. I don't understand that, so I'm asking you (because you
posted the video link originally), or someone, to explain it.
> I think what you missed is that Ron Paul claims *****artificially*****
> low interest rates......
> Watch it again with that in mind.
Well, Ok, add the word artificial to my questions. As I said
before, I think all economics is artificial, so that word neither
adds nor subtracts any meaning to the sentence.
$.02 -Ron Shepard
Dean
>
> Hey, here's an interesting aside - wonder if you know about this?
> Would you believe me if I told you that I am a Classical Liberal? He,
> he, he. Wiki "Classical Liberalism". Liberal used to mean some of
> the things that conservatives claim today. So they had to change the
> term to 'classical liberal' when liberals took over the term
> 'liberal'. LOL
>
> Hmmm, is that what they are doing to the word 'progressive' today?
> Bob Keller
That's an Americanism. To the rest of the world, the person you are
describing is still a liberal. I don't know when you folks decided to
change the word to mean the opposite of what it does mean. Maybe the
time someone invented "collateral damage" or decided that spending
more than you make is the way to control spending?
Dean
Ron Shepard
John Black <jbl...@texas.net> wrote:
> > My comments above were comparing the current situation to the great
> > depression. If the stimulus that occurred at the end of the great
> > depression had occurred at the beginning, then it would not have
> > lasted 10 years, it would have lasted only a couple of years.
>
> The Great Depression is widely understood after decades of analysis to have
> been prolonged again and again by disastrous government meddling by both
> parties. Lack of stimulous was not the problem.
Yet it was the massive deficit spending of the government during
WWII that brought an end to the depression.
If a lack of stimulus was not the problem, then why did that
stimulus solve the problem?
$.02 -Ron Shepard
Dean
> OMG, what double-speak. First you put down my link because it's about
> the depression and then a couple sentences later you say 'gee, maybe
> we should look to the great depression for clues. OMG!
>
> The article is about economists of today who looked to the great
> depression and drew the conclusion that stimulating the economy will
> not help but will prolong the depression.
Well, I've read part of the journal article -- not the PR blurb. It
says "Some economists suspect that President Franklin Roosevelt’s “New
Deal” cartelization policies, which limited competition in product
markets and increased labor bargaining power, 2 kept the economy
depressed after 1933. These policies included the National Industrial
Recovery Act (NIRA), which suspended antitrust law and permitted
collusion in some sectors provided that industry raised wages above
market clearing levels and accepted collective bargaining with
independent labor unions. " [pg. 1]
"Our main finding is that New Deal cartelization policies are a key
factor behind the weak recovery, accounting for about 60 percent of
the difference between actual output and trend output. The key
depressing feature of New Deal policies is not government-sponsored
collusion per se, but rather it is the policy linkage between paying
high wages and being able
to collude. " [pg. 2]
"The key depressing element behind New Deal policies was not monopoly
per se, but rather linking collusion with paying high wages. Our model
indicates that these policies reduced output, consumption, and
investment about 13 percent relative to their competitive steady state
levels. Thus, the model accounts for about half of the weak recovery
in output and helps explain why the initial recovery stalled by the
late 1930s." [pg. 32]
So, if they're right, one of FDR's New Deal policies prolonged the
depression drastically. That policy wasn't fiscal expansion, however,
it was an industrial policy allowing cartels to operate provided the
members agreed to allow union registration and pay wages of 20-45
cents/hour. Although I haven't seen any reference to fiscal policy
yet, they do seem to believe that monetary policy at the time was
acceptable -- in other words something else was holding growth back.
The document can be found here: http://www.economics.hawaii.edu/research/seminars/02-03/02-21.pdf
Dean
> Liberals just cannot get it in their head that government control is
> going to fuck things up - it's just that simple.
>
I don't think anyone is arguing for government control of the
economy. I also don't believe you are saying the government has no
role either -- in product safety, bank regulation, enforcement of
contracts and so on. It's a question of degree, and I thought we were
having a largely interesting discussion of what role the government
has. That included a discussion of where we thought things went wrong
in the past.
Otherwise I'm gonna take my toys home and play by myself ;-)
Dean
Dean
> In article <ron-shepard-47EB18.12074518042...@forte.easynews.com>, ron-
> shep...@NOSPAM.comcast.net says...
>
> I agree with a lot of what you say about SS except you leave out the part
> about it being an unsustainable ponzi scheme. It will be bankrupt in the
> next 10 or 15 years and no amount of tax increases or benefit reductions can
> really fix it. Its one of the disasters that came from the New Deal, but
> since it is a ponzi scheme it *looked* like a great deal for a long time.
> The people who got in early got out much more than they put in. Currently
> we get on average about what we put in, or a bit less (which is horrid
> performance for retirmement money saved).
Umm... I think it's both better and worse than you suggest. It's not
really retirement money saved -- today's deposits go to pay today's
recepients, and the bit left over goes into a fund. On Day 1, of
course, there was no fund, so it was "pay as you go." Over time, to
make it something closer to sustainable, they've started putting money
aside. I don't know that overall balance right now.
That doesn't mean it isn't fixable. As I argued in another post,
let's separate the "structure" of Social Security from the "levels" of
SS benefits and premiums. Obviously, it's possible to keep the
structure as is and reduce benefits and increase premiums until there
is a sustainable fund. Again, Paul Martin claims to have done this in
Canada in the 1990s. This is the option I would support, at some
short-term pain, and some inter-generational inequality (which we have
anyway). A second option would be to change the structure of the
system in some way, but I don't know what that might be. The third
option would be to pretend there is no problem and pass the buck to
someone else, hoping it will go away. This, unfortunately, seems to
be what has happened.
> The next phase is collapse of the
> pyramid scheme. Medicare is in wosre shape. Instead of acknowledging this
> and trying to do something about these before its too late, we've declared
> that the New Deal social engineering projects were glorious successes and we
> plan to do more and more of them...
>
You're probably right, but we're looking at this through the eyes of
politics and finances, and I think it's also important to remember the
impact on society. But, these are individual values and not worth
arguing about. Personally, I've seen working conditions in the third
world, and they are probably much better than what American's had
during the depression -- unless Dorothea Lange and others staged their
photos -- and I'd never want to see people treated that way.
> Well ok, I do give Clinton a lot of credit -- but a lot of that credit
> belongs to the republican controlled congress as well. No way Clinton and
> that congress would be doing what Obama and this congress are doing. But
> also I think because of the dot.com bubble collapse followed shortly by
> 9/11, 2001 would have been a big deficit year even if Clinton continued to
> be President. Same for the years following. Maybe I'm wrong -- lets trade
> him for Obama and find out...
>
Fair enough about congress during the Clinton administration. They
got a lot right, although it wasn't easy on any of them -- and all
prolly could have handled their relationship better. I don't know how
to argue about what would have been, and I don't think I have the
power to replace Obama with Clinton.
On your broader point of the deficit projections under Obama, he would
answer that the requirement to spend that money was forced on him by
the disaster he inherited. I don't know who's right.
> John Black
Dean
Ron Shepard
<b5b6e83d-7fec-4857...@x29g2000prf.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> It was all ONE question. Read it again and think about it.
I read it again and I don't understand. Here are your two questions
along with my (one) answer.
Q1:
> Why should the entire
> economy react to the Fed when they adjust interest rates by 1/4% -
A1:
> In capitalism, money is a commodity, like ounces of gold or barrels
> of oil or bushels of corn. Interest rates are the cost of that
> commodity. When there is a demand for that commodity, then changing
> the cost causes the economy to react.
Q2:
> do
> you think one organization having that power over the free market is
> good?
This is the question I have no opinion about.
Maybe you were confused about my answer because I did not split your
paragraph in my original post like I did above. I thought it was
clear which question I was addressing. Anyway, sorry for the
confusion.
The reason I don't have an opinion is that I don't really know what
are the alternatives to the current system.
I do have reservations about making the Fed a cabinet position,
because I think this would interject partisan politics into the
process, but I think that is something someone else suggested, not
you. There would be tremendous potential for fraud and abuse if the
Fed were a cabinet post.
There might be some way to have two different such institutions that
somehow work in competition with each other, but I haven't seen any
proposals like this. Other parts of the government do work like
this.
> > I have already explained how I think knowledge of the end of the
> > great depression might be used to advantage in the current
> > situation. I'm not an economist, but it seems to be mostly common
> > sense. Do you have any opinion about that? Is there some reason
> > why applying what worked then might not work now?
> >
>
> OMG, what double-speak. First you put down my link
No, I didn't put it down, when I clicked on it I got a "page not
found" error. That's all. Thanks for including the text, I'll read
it and if I have any opinion about it I'll comment on it.
> because it's about
> the depression and then a couple sentences later you say 'gee, maybe
> we should look to the great depression for clues. OMG!
My comments about the great depression where posted on Friday (or
maybe Thursday, I forget). Your above post was just posted on
Saturday, so your "double-speak" accusation doesn't make sense. My
Friday post was not in response to your Saturday post.
> The article is about economists of today who looked to the great
> depression and drew the conclusion that stimulating the economy will
> not help but will prolong the depression. Therefore, your claim that
> all economists would "agree that infusions of cash are needed" is
> wrong.
Ok, not *all* economist, just all of them that you see on TV or read
about discussing the current economic collapse. Your article was
written in 2004, so it obviously is not discussing the current
situation.
For example, here is a link to Nobel Prize winner Paul Krugman's web
site:
http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnis
ts/paulkrugman/index.html
He has lots of editorials about the current situation. He says that
the stimulus plan is too small, and it should be at least twice as
large as the current proposals. He is also an expert on the great
depression.
> Please just admit that one simple point.
Done!
> Don't go on
> dissecting points from the article and how you agree/disagree, etc.
Why not? I thought that is why you posted it.
> PLEASE, Ron, FIRST just admit you were wrong to claim that all
> economists think injecting cash is necessary. I hope you have that
> much intellectual honesty at least.
Yes, you are right, there are apparently two economists who wrote a
paper in 2004 that might not agree. Do you have any evidence of
what they think about the current situation? Do they have web sites
at UCLA that might have their current analysis of the current
situation?
$.02 -Ron Shepard
Ron Shepard
John Black <jbl...@texas.net> wrote:
> > I think the Fed is nonprofit. They make money when they loan it
> > out, and they pay money when they borrow it (e.g. when you buy a
> > T-bill, the Fed pays you interest). But in the end, I think they
> > are required to break even. Anyone know how exactly this works?
>
> There are a lot of myths about the Fed. Some are misunderstandings, some
> are oversimplifications. Anyway, this guy is often at the top of google's
> list for debunking Fed myths. Is he right about everything here? I don't
> know but it sounds reasonable.
>
> http://www.geocities.com/CapitolHill/Embassy/1154/flaherty.html
>
> Relevant to your question is the first fact he lists:
>
> Facts: Yes, the Federal Reserve banks are privately owned, but they are
> controlled by the publically-appointed Board of Governors. The Federal
> Reserve banks merely execute the monetary policy choices made by the Board.
> In addition, nearly all the interest the Federal Reserve collects on
> government bonds is rebated to the Treasury each year, so the government
> does not pay any net interest to the Fed.
Interesting site. Here is another paragraph from that link:
Fact: Independent accounting firms conduct full financial audits of
the Federal Reserve banks and the Board of Governors every year. The
Fed is also subject to certain types of audits from the Government
Accounting Office.
There have been several posts that stated the Fed is never audited
(and at least one of the posted videos said this).
$.02 -Ron Shepard
Ron Shepard
<e7c6844f-d592-441a...@c18g2000prh.googlegroups.com>,
Dean <jakar...@gmail.com> wrote:
My personal way to keep track of liberal vs. conservative is to see
who is empowered. If it empowers an individual, or an elite class
of individuals, at the expense of everyone else, then I generally
label it as "conservative" or "right wing". If it shifts power the
other way, away from the elite class and to everyone else, then I
label it "liberal" or "left wing".
However, there are lots of other ways to try to define these terms,
and certainly not everyone agrees with the above definitions.
As an aside, I learned a few years ago where the terms "right wing"
and "left wing" came from. I have done a google search for this and
I have never found any authoritative corroboration, so take this
with a grain of salt. During the French revolution, there were
meetings of the various factions involved, the peasants, the working
class, the business class, and the noble class. They would meet in
Paris at a big table, and the peasant representatives would sit on
the left, the business representatives in the middle, and the
nobility on the right. So the general terms "left wing" and "right
wind" were associated with the policies that were advocated by the
representatives from the two sides of the table.
$.02 -Ron Shepard
Dean
wrote:
> In article
> <e7c6844f-d592-441a-9a31-91f6b6776...@c18g2000prh.googlegroups.com>,
I had heard it was French, but from the first parliament after the
revolution, when the conservatives sat on the right side of the
chamber (from the Speaker's point of view, presumably) and the
socialists on the left. I didn't even know it was in doubt, so sure
was I that everyone knew that.
Just goes to show you can't believe anything you hear, and only half
of what you see...
Dean
Dan White
news:ron-shepard-8EA0...@forte.easynews.com...
>
> My personal way to keep track of liberal vs. conservative is to see
> who is empowered. If it empowers an individual, or an elite class
> of individuals, at the expense of everyone else, then I generally
> label it as "conservative" or "right wing". If it shifts power the
> other way, away from the elite class and to everyone else, then I
> label it "liberal" or "left wing".
>
See, I can't change your mind about it, and won't try, but you show
tremendous bias if your definition of conservatism is that the elite benefit
at the expense of everyone else. That is a populist's view of conservatism.
The truth is that conservatism preaches individual freedom for everybody.
Ironically, your definition of conservatism is actually liberalism!
Liberals shift power away from the people and toward the government, eroding
EVERYONE's liberties.
dwhite
Dan White
news:MPG.245451957...@news.motzarella.org...
"- PRESIDENT-ELECT BARACK OBAMA, JANUARY 9 , 2009
As such, it is a triumph
of hope over experience to believe that more government spending will help
the U.S. today."
Hey, its the Audacity of Hope! What did everyone expect?
dwhite
bk4...@hotmail.com
> I'm also not sure that the Fed prints money -- I thought we agreed
> Kennedy took that right away?
Just to get the record straight - after Kennedy's assassination
Johnson killed Kennedy's bills. The Fed is in charge of "printing"
all money. However, they pay the Treasury 4 cents per $100 bill to do
the actual printing. I am fuzzy myself what happens after that. But
it's important to realize that the Fed does not have to print money to
get new money into the system. With a few computer keystrokes they
can create trillions of dollars out of thin air and start lending it
out at interest.
No-one has yet mentioned fractional-reserve banking so maybe this is a
good time to start that discussion also. Modern banks have been
allowed to loan out more money than they have in the vault. It used
to be a factor of 10 I think, but it's gone up and up over the years.
Here's a cartoon video that explains it in a non-technical way.
http://www.youtube.com/watch?v=hsWYETNbm14
Bob Keller
bk4...@hotmail.com
wrote:
> > OMG, what double-speak. First you put down my link
>
> No, I didn't put it down, when I clicked on it I got a "page not
> found" error. That's all. Thanks for including the text, I'll read
> it and if I have any opinion about it I'll comment on it.
>
> > because it's about
> > the depression and then a couple sentences later you say 'gee, maybe
> > we should look to the great depression for clues. OMG!
>
> My comments about the great depression where posted on Friday (or
> maybe Thursday, I forget). Your above post was just posted on
> Saturday, so your "double-speak" accusation doesn't make sense. My
> Friday post was not in response to your Saturday post.
You are lying. Here is my comment and your immediate response:
//Here's just one example to prove you wrong.
//> http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depress....
//
//Your link does not work for me, but I assume from the title that it
//involves the great depression. Your question above was not about
//the great depression, it was about the current economy.
Then two sentences later you say:
//>I have already explained how I think knowledge of the end of the
//>great depression might be used to advantage in the current
//>situation.
Which was exactly ***MY*** point!!!!!
So you put down my point and then made the same point yourself two
sentences later. That was all in ONE post, so drop that Friday/
Saturday bullshit. You are being completely dishonest or you are
confused. Either way I'm astonished at this behavior from you Ron, I
really expected better. I will not speak to you further unless you
fess up now.
Bob Keller
bk4...@hotmail.com
Yes, that is precisely what I mean. Governments correct role is
regulation, product safety, the courts, etc.
Stay and play, Dean! We like your toys!
Bob Keller
bk4...@hotmail.com
wrote:
> In article
> <d5f1ceba-a906-4a22-aa1d-d82a83583...@n7g2000prc.googlegroups.com>,
For me, "artifical" means other than what would happen if the free-
market were allowed to operate "freely". The Fed kept interest rates
really low resulting in people buying houses they couldn't actually
afford and generally taking risks they might not have otherwise. So
the economy looks like its really cooking when actually it's heading
for disaster because the rates were "artificially" low.
Bob Keller
Ron Shepard
"Dan White" <nos...@nospam.invalid> wrote:
> "Ron Shepard" <ron-s...@NOSPAM.comcast.net> wrote in message
> news:ron-shepard-8EA0...@forte.easynews.com...
> >
> > My personal way to keep track of liberal vs. conservative is to see
> > who is empowered. If it empowers an individual, or an elite class
> > of individuals, at the expense of everyone else, then I generally
> > label it as "conservative" or "right wing". If it shifts power the
> > other way, away from the elite class and to everyone else, then I
> > label it "liberal" or "left wing".
> >
>
> See, I can't change your mind about it, and won't try, but you show
> tremendous bias if your definition of conservatism is that the elite benefit
> at the expense of everyone else.
No, that is not the right word. It isn't "benefit", it is
"empower". It is who has the choice, who makes the decisions, not
the results of those decisions, good or bad.
I think there are many situations where it benefits the maximum
number of people for an elite group to be empowered to make
decisions, so "benefit" and "empower" are not synonyms. I don't
know if the Fed is an example of that, but it might be. If everyone
printed their own money on their computer printers, I doubt that
things would work very well. So empowering and elite group (the
Fed) to regulate the money supply might be a way to benefit the
maximum number of people.
> The truth is that conservatism preaches individual freedom for everybody.
You are saying that, by your definition, "conservatives" support gay
marriage, support abortion rights, oppose sodomy laws, and support
the elimination of drug laws? All of those things involve matters
of individual freedom.
> Liberals shift power away from the people and toward the government, eroding
> EVERYONE's liberties.
I would disagree with your above sentence because "the government"
is not the same thing as an "elite group". It might be equivalent,
or it might not. If shifting power to the government empowers
individuals, then it would be liberal, but if shifting that power to
the government empowers an elite group, then it would be
conservative. Consider slavery, for example. The slave owners are
the elite group in this case, and allowing slavery to exist would be
"conservative" by my definition. But if the government (state or
federal) eliminates slavery, then that removes power from the elite
group and gives it to the larger number of previous slaves. So
giving the government the power to eliminate slavery would be a
liberal position, giving it power to enable and enforce slavery
would be a conservative position.
In American politics, my definitions of liberal and conservative
don't match with many of the hot button issues. Sometimes they do,
but often they don't. That is why I said originally that not
everyone uses my definitions (or even something similar).
So, what about some of the current hot-button issues?
Lets take gay marriage, for example. My "liberal" would support gay
marriage because it empowers individuals to make personal choices
for themselves. My "conservative" would probably have no opinion
because there is no elite class of people who would benefit one way
or the other. That doesn't exactly match the current politics, does
it? In the USA, opposing gay marriage is a big deal among
conservatives, and liberals mostly don't care one way or the other.
There are lots of other examples like this.
$.02 -Ron Shepard
John Black
she...@NOSPAM.comcast.net says...
I've seen a very good analysis of The Great Depression that showed it to be
actually a series of four separate recessions each with their own causes.
The economy was trying to recover several times and stupid policies from
both sides knocked it back down. And the difference between the war
stimulus and this current stimulus is that a lot of that war stimulus was
Europe buying our arms. This is real demand in exchange for work. You
can't just create jobs by paying people to do things for which there is not
real demand. A great many politicians don't understand that point. The
Soviet Union usually had full employment after all. Even if you think this
kind of stimulus is a good idea, you would hopefully agree that it is not
worth it if it will lead to the nation going bankrupt? Frankly, I can't
believe the Chinese have lent us this much money. Will they really lend us
10 trillion more as we devalue our dollar?? What will happen when they stop
funding our addiction to massive debt?
John Black
Ron Shepard
<8d225e76-71fd-44ab...@y33g2000prg.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> > My comments about the great depression where posted on Friday (or
> > maybe Thursday, I forget). Your above post was just posted on
> > Saturday, so your "double-speak" accusation doesn't make sense. My
> > Friday post was not in response to your Saturday post.
>
> You are lying.
No Bob, I just checked to make sure my post was in *this* thread.
It was. It was posted on 3:10pm on Friday. Here is the text that I
was referring to:
> What would have happened if *all* of the TARP money being poured into
> the banks, insurance companies, and investment firms was instead put
> directly into stimulus through work projects? Think about the recovery
> process during the great depression. There was 8 years of slow
> recovery, and then there was massive deficit spending to build ships,
> tanks, and airplanes to support the WWII effort that ended the
> depression. Those ships, tanks, and airplanes did not solve directly
> any economic problems, it was just pumping that money directly into the
> system through work stimulus programs that accomplished the results.
> What if that same thing had happened in, say, 1932 rather than 1942. We
> could have taken those ships, tanks, and airplanes out the factory door
> and dumped them straight into the ocean as far as the economics were
> concerned, it would have done the same thing to the economy, it would
> have been the end of the depression. So, what if we were to do
> something similar now, only instead of dumping everything into the ocean
> we actually build things that we need, things we can use right now, and
> things that we will need in the future to sustain the economic growth.
> Wouldn't that be a good idea? The banks will eventually get the money,
> but it would come to them from the bottom up, from the people who
> actually create the wealth in the first place, rather than from the top
> down.
That's it. Those were my comments about TARP and what we might
learn from the end of the great depression. Nothing fancy, just
common sense. I'm not even claiming they are right, it is just an
idea that I thought would be interesting to discuss.
> So you put down my point
Did you read my post before? I did not "put down" your point, I did
not insult you, I did not call you a liar or an idiot. I simply
said that your link did not work, but that I had previously posted
my idea about how the knowledge of the stimulus that ended the great
depression during WWII might give ideas about how to end the current
crisis.
> and then made the same point yourself two
> sentences later.
After reading through the text from the link that you posted, it is
clear that my ideas (copied above) are not the same as those in your
link. Your link was about the effect of binding arbitration on
recovery, my post has nothing at all to do with that, it was about
the choice between spending stimulus money one way or another.
> That was all in ONE post, so drop that Friday/
> Saturday bullshit.
It is not bullshit, the text I posted on *Friday* is above. That is
the text that I referred to in the subsequent post which was in
reply to your *Saturday* post.
> You are being completely dishonest or you are
> confused. Either way I'm astonished at this behavior from you Ron, I
> really expected better. I will not speak to you further unless you
> fess up now.
You are clearly upset about something, but I don't know what. But I
have not been dishonest about when I posted the above or about what
I said in that post. And I just checked, and it was indeed in
*this* thread, not one of the other parallel threads, so I was not
confused either (at least not about this).
$.02 -Ron Shepard
Ron Shepard
John Black <jbl...@texas.net> wrote:
> I've seen a very good analysis of The Great Depression that showed it to be
> actually a series of four separate recessions each with their own causes.
> The economy was trying to recover several times and stupid policies from
> both sides knocked it back down.
I have read similar things. For example, in one of the later years,
FDR *reduced* federal spending dramatically, thinking that lowering
the federal deficit would help. It didn't, there was a spike in
unemployment and a dip in productivity as a result.
> And the difference between the war
> stimulus and this current stimulus is that a lot of that war stimulus was
> Europe buying our arms.
Yes, but not with real money, with debt. By that time, Europe had
already been at war for several years, and all of the countries on
both sides were broke. The US eventually forgave much of that debt,
for example as part of the Marshall Plan, and it was never collected.
The US debt grew from $17 billion to $43 billion during the
depression from 1930 to 1940. Then by the end of WWII, it had
expanded to $270 billion. That was the spending that ended the
great depression.
Those numbers look small now, don't they. It was certainly a big
deal at the time in terms of GDP. That $270 billion debt was
smaller (in amount) than even one single year of a Bush deficit
before the collapse.
> You
> can't just create jobs by paying people to do things for which there is not
> real demand. A great many politicians don't understand that point.
I certainly understand how it would seem that way. What I don't
understand in that context is why that wartime spending ended the
depression. That spending was for stuff that was just getting
destroyed (bombs, tanks, ships, etc.), it was not to produce
products that were useful such as, say roads or automobiles or
tractors or trains. If it had been spent on those kinds of things,
things to build up a manufacturing base with consumers who can
afford to buy the products, then I can understand that. But as far
as the economy was concerned, that exact same wartime spending could
have been done 10 years earlier, those ships and tanks could have
been dumped into the ocean, and it would have had the same effect on
the economy. I can see that it did happen, that's a fact, I just
don't understand how such wasteful (for lack of a better term)
spending could have been so useful.
> The
> Soviet Union usually had full employment after all.
Yes, full employment, no homelessness, health care, but slow growth.
They had a different economic system.
> [...] Frankly, I can't
> believe the Chinese have lent us this much money. Will they really lend us
> 10 trillion more as we devalue our dollar?? What will happen when they stop
> funding our addiction to massive debt?
Yes, so do we cut off our foot in order to save our leg, or do we
inject antibiotics and try to save everything? The Chinese have a
different economic system too.
$.02 -Ron Shepard
Ron Shepard
<6fa2ac44-2c01-4c6d...@x29g2000prf.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> You miss MY point. I've already admitted that Reagan grew the
> government. You know that and then you try to throw my "spin tactics"
> line back at me!?
I threw it back at you in the same good natured way that you threw at me
in the first place, right? :-)
> And if that was your only point then why even mention that 'Reagan
> accused them of slashing the defense budget by 15%' - an obvious spin
> tactic that both parties use and is irrelevant to the your point that
> he grew the government?
Because this made it clear that it was Reagan increasing the budgets,
not just congress doing it alone. Without that evidence, you might
think that Reagan was submitting balance budgets to congress all those
years, and they padded them up over his objections.
$.02 -Ron Shepard
Ron Shepard
<026210be-778e-4f46...@y33g2000prg.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> Liberals just cannot get it in their head that government control is
> going to fuck things up - it's just that simple.
Everyone knows that the government can screw things up, just like the
private sector can screw things up. But there is an important
difference. When the government screws up, you can vote the bastards
out, vote new people in, and change things. The people have the power
to do that, the voters have the ultimate power. But when a company
screws up, that's it. They take the money, shut down, and run. Game
over.
That doesn't mean that everything should be run by the government, but I
think it means that some things should be.
For example, in the Iraq war we experimented with the idea of hiring
private contractors to fight the war. In some cases, those private
employees had authority over our actual soldiers. All in all, that
didn't work out very well, did it?
What do you propose along these lines for the Fed? Who else would you
propose to regulate the money supply?
$.02 -Ron Shepard
Dan White
like "conservative" and "liberal." Had I known that I wouldn't have made my
original post. If, on the other hand, your definitions are what you believe
true conservatism preaches, then I take issue. Conservatives are also
concerned with states rights vs. centralized authority in the federal
government. So hot button issues like gay marriage should be debated state
by state, and not mandated by a judge. It's not his job to do that.
Anyway, I'm bowing out of the Fed debate because I don't understand all the
issues enough, and I don't think anybody else here does...and by "here" I
mean planet Earth!
dwhite
"Ron Shepard" <ron-s...@NOSPAM.comcast.net> wrote in message
news:ron-shepard-AA83...@forte.easynews.com...
Ron Shepard
<eaa4cb41-8c90-4b07...@s1g2000prd.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> No-one has yet mentioned fractional-reserve banking so maybe this is a
> good time to start that discussion also. Modern banks have been
> allowed to loan out more money than they have in the vault.
The deposits are insured by the FDIC (up to some max value). The banks
pay a fee for that insurance. So even if the bank doesn't have the cash
in the vault, they could get it if needed.
$.02 -Ron Shepard
bk4...@hotmail.com
wrote:
> In article
> <6fa2ac44-2c01-4c6d-b07f-0532df211...@x29g2000prf.googlegroups.com>,
>
> "bk42...@hotmail.com" <bk42...@hotmail.com> wrote:
> > You miss MY point. I've already admitted that Reagan grew the
> > government. You know that and then you try to throw my "spin tactics"
> > line back at me!?
>
> I threw it back at you in the same good natured way that you threw at me
> in the first place, right? :-)
No, my mention of "spin tactics" wasn't directed at you, I only was
pointing out that both sides do it. You threw it back at me as a
slight against me while twisting my words around, which is why I
called it disgusting, which it was.
>
> > And if that was your only point then why even mention that 'Reagan
> > accused them of slashing the defense budget by 15%' - an obvious spin
> > tactic that both parties use and is irrelevant to the your point that
> > he grew the government?
>
> Because this made it clear that it was Reagan increasing the budgets,
> not just congress doing it alone. Without that evidence, you might
> think that Reagan was submitting balance budgets to congress all those
> years, and they padded them up over his objections.
No, your comment was about the military budget specifically, not "the
budgets". You could have said 'Reagan tried to raise the military
budget 20% but the Democrats in Congress only let him get away with a
5% raise' - period. That would have accomplished what you just said
you meant to state.
Both of which prove (as if anyone but me was still holding out hope
otherwise) that you are a partisan and cannot discuss these issues
objectively.
Bob Keller
bk4...@hotmail.com
wrote:
> You are clearly upset about something, but I don't know what.
I just told you what but you ignored it in your reply and brought your
paragraph about TARP which doesn't have anything to do with my
problem. Read my post and try again.
Bob Keller
John Black
she...@NOSPAM.comcast.net says...
> > You
> > can't just create jobs by paying people to do things for which there is not
> > real demand. A great many politicians don't understand that point.
>
> I certainly understand how it would seem that way. What I don't
> understand in that context is why that wartime spending ended the
> depression. That spending was for stuff that was just getting
> destroyed (bombs, tanks, ships, etc.), it was not to produce
> products that were useful such as, say roads or automobiles or
> tractors or trains. If it had been spent on those kinds of things,
> things to build up a manufacturing base with consumers who can
> afford to buy the products, then I can understand that. But as far
> as the economy was concerned, that exact same wartime spending could
> have been done 10 years earlier, those ships and tanks could have
> been dumped into the ocean, and it would have had the same effect on
> the economy. I can see that it did happen, that's a fact, I just
> don't understand how such wasteful (for lack of a better term)
> spending could have been so useful.
Ron, you are right in that you cannot create prosperity by paying people to
build bombs and then blowing up the bombs. If you could then it would be
very easy to create prosperity for all. But what this kind of thinking
misses is that the jobs created by taking tax dollars necessarily destroys
jobs elsewhere in the economy. The jobs created are easy to see, the jobs
lost are harder to see because they are scattered around the economy.
What is puzzling you above puzzled me for some time until I learned about
the huge demand the war created for food, supplies, and equipment exported
from the US to Europe and Russia. This was a boon to our exports and it was
real demand that created a lot of jobs. The money brought in was foreign
money which could be used to in turn buy foreign goods. I.e wealth was
created. Contrast taking our own money via taxation to fund the building of
bombs or bridges. Doing that merely takes money that would have been
destined for other businesses to give to others.
This idea that FDR stimulus helped get us out of the depression is a
stubborn myth. But listen to FDR's own Tresury Sectretary, Henry Morgenthau
7 years into the New Deal with unemployment still topping 20%.
"We have tried spending money. We are spending more than we have ever spent
before and it does not work. And I have just one interest, and if I am wrong
=3F somebody else can have my job. I want to see this country prosperous. I
want to see people get a job. I want to see people get enough to eat. We
have never made good on our promises ... I say after eight years of this
Administration we have just as much unemployment as when we started =3F And an
enormous debt to boot."
So President Obama has decided to pattern his recovery after a plan that
despite record spending and record debt, produced no improvement in
unemployment.
> > The
> > Soviet Union usually had full employment after all.
>
> Yes, full employment, no homelessness, health care, but slow growth.
> They had a different economic system.
>
> > [...] Frankly, I can't
> > believe the Chinese have lent us this much money. Will they really lend us
> > 10 trillion more as we devalue our dollar?? What will happen when they stop
> > funding our addiction to massive debt?
>
> Yes, so do we cut off our foot in order to save our leg, or do we
> inject antibiotics and try to save everything? The Chinese have a
> different economic system too.
No one wants to make tough choices least of all politicians if they can pass
a disaster down the road to when they are out of office. But yes,
regretably sometimes you have to cut off the foot to save the leg.
Sometimes you have to cut off the foot to save the entire life, which is
more like what we are talking about here. You didn't answer the question
perhaps because you didn't want to complemplate it. What happens if China
decides to stop lending us money? We *plan* to borrow trillions upon
trillions with no end in sight. How will we be able to afford standard
governement services when interest on the debt becomes nearly the entire
budget? There are more questions...
John Black
bk4...@hotmail.com
wrote:
> You are clearly upset about something, but I don't know what.
Let me try and explain it very simply:
I post a link to a paper that looks to the great depression for clues
on what to do today, you dismiss it because it isn't about the
'current economy', and then two sentences later you say, gee, we
should look to the great depression for clues about what to do today.
That's my ONE post and your ONE reply to that very post. There is no
Friday/Saturday whatever.
Bob Keller
John Black
@a5g2000pre.googlegroups.com>, jakar...@gmail.com says...
> On Apr 19, 9:51 am, John Black <jbl...@texas.net> wrote:
> > In article <ron-shepard-47EB18.12074518042...@forte.easynews.com>, ron-
> > shep...@NOSPAM.comcast.net says...
> >
> > I agree with a lot of what you say about SS except you leave out the part
> > about it being an unsustainable ponzi scheme. It will be bankrupt in the
> > next 10 or 15 years and no amount of tax increases or benefit reductions can
> > really fix it. Its one of the disasters that came from the New Deal, but
> > since it is a ponzi scheme it *looked* like a great deal for a long time.
> > The people who got in early got out much more than they put in. Currently
> > we get on average about what we put in, or a bit less (which is horrid
> > performance for retirmement money saved).
>
> Umm... I think it's both better and worse than you suggest. It's not
> really retirement money saved -- today's deposits go to pay today's
> recepients, and the bit left over goes into a fund. On Day 1, of
> course, there was no fund, so it was "pay as you go." Over time, to
> make it something closer to sustainable, they've started putting money
> aside. I don't know that overall balance right now.
>
> That doesn't mean it isn't fixable. As I argued in another post,
> let's separate the "structure" of Social Security from the "levels" of
> SS benefits and premiums. Obviously, it's possible to keep the
> structure as is and reduce benefits and increase premiums until there
> is a sustainable fund.
When you run the numbers you will find that the sustainable fund you
describe will amount to most people getting less out of social security than
they put in. Far less. Its immoral, not to mention stupid to force people
into a retirement program that performs worse than stuffing money into their
mattress. Anyone even today putting that same SS money into a safe fixed
income investment would do much better than SS.
> The third
> option would be to pretend there is no problem and pass the buck to
> someone else, hoping it will go away. This, unfortunately, seems to
> be what has happened.
Yes. Who tried desperately to work on this problem offering to keep every
option on the table if we could just start talking about the problem? Who
was all proud of themselves for "killing social security reform"?
Nevermind...
> On your broader point of the deficit projections under Obama, he would
> answer that the requirement to spend that money was forced on him by
> the disaster he inherited. I don't know who's right.
That is a completely unsupportable position. We didn't need this kind of
stimulus to get us out of previous recessions (and certainly not on this
scale). He is using this crisis (never let a good crisis go to waste says
Obama's chief of staff) to justify enacting the great society and new deal
part 2. One thing has nothing to do with the other.
John Black
bk4...@hotmail.com
wrote:
> What do you propose along these lines for the Fed? Who else would you
> propose to regulate the money supply?
The free market.
Bob Keller
Ron Shepard
<ef1066e7-1d9a-4f01...@a5g2000pre.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> On Apr 19, 2:27 pm, Ron Shepard <ron-shep...@NOSPAM.comcast.net>
> wrote:
>
> > You are clearly upset about something, but I don't know what.
>
> Let me try and explain it very simply:
>
> I post a link to a paper that looks to the great depression for clues
> on what to do today, you dismiss it because it isn't about the
> 'current economy',
I've said this twice now, so here it is again a third time.
I did not dismiss the article, because (as I said at the time) I did
not read it. When I clicked on the link, I got a "page not found
error". I could tell from the link title that it was probably about
the great depression. I had posted the day before about the great
depression, so I mentioned that.
And that's it.
I still do not know why you are upset about my reply. My reply
simply included the information I had at the time. My intention was
to click on your link again later to see if it loaded. But you
posted the text in a subsequent post, so I could read it there
instead.
> and then two sentences later you say, gee, we
> should look to the great depression for clues about what to do today.
There is nothing wrong with studying the great depression recovery.
Did you think I said there was?
> That's my ONE post and your ONE reply to that very post. There is no
> Friday/Saturday whatever.
I must have written something that was unclear. Maybe I did it
again in the above, but when I read this, I don't see any way to
misinterpret it. I really do not understand what you are upset
about. You posted something, I read it and posted something in
reply. That's the way it is supposed to work.
$.02 -Ron Shepard
Ron Shepard
<fe591106-dade-4c60...@b7g2000pre.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> No, your comment was about the military budget specifically, not "the
> budgets". You could have said 'Reagan tried to raise the military
> budget 20% but the Democrats in Congress only let him get away with a
> 5% raise' - period. That would have accomplished what you just said
> you meant to state.
That would have been a good way to say it too. However, a minor
correction, it wasn't Democrats in congress that reduced the budget,
it was both Democrats and Republicans. At that time, the Senate was
under Republican control.
> Both of which prove (as if anyone but me was still holding out hope
> otherwise) that you are a partisan and cannot discuss these issues
> objectively.
The reductions of Reagan's budgets were not completely partisan,
they was bipartisan support too. This occurred during the time of
the Gramm-Rudman-Hollings act:
http://en.wikipedia.org/wiki/Gramm-Rudman-Hollings_Balanced_Budget_Ac
t
Because the budget deficits were so large, relative to past
deficits, everyone, in both parties, was concerned about the
consequences.
$.02 -Ron Shepard
bk4...@hotmail.com
wrote:
> In article
> <ef1066e7-1d9a-4f01-9df5-261e6a64d...@a5g2000pre.googlegroups.com>,
>
> "bk42...@hotmail.com" <bk42...@hotmail.com> wrote:
> > On Apr 19, 2:27 pm, Ron Shepard <ron-shep...@NOSPAM.comcast.net>
> > wrote:
>
> > > You are clearly upset about something, but I don't know what.
>
> > Let me try and explain it very simply:
>
> > I post a link to a paper that looks to the great depression for clues
> > on what to do today, you dismiss it because it isn't about the
> > 'current economy',
>
> I've said this twice now, so here it is again a third time.
>
> I did not dismiss the article, because (as I said at the time) I did
> not read it. When I clicked on the link, I got a "page not found
> error". I could tell from the link title that it was probably about
> the great depression. I had posted the day before about the great
> depression, so I mentioned that.
>
> And that's it.
Yes, you said you couldn't read it. But then your very next sentence
was "Your question above was not about
the great depression, it was about the current economy." THAT is
dismissing my article as irrelevant. Then you have to gall to say
just two seconds later that we should look to the depression which is
exactly what my article (that you dismissed) was about.
>
> I still do not know why you are upset about my reply. My reply
> simply included the information I had at the time. My intention was
> to click on your link again later to see if it loaded. But you
> posted the text in a subsequent post, so I could read it there
> instead.
>
> > and then two sentences later you say, gee, we
> > should look to the great depression for clues about what to do today.
>
> There is nothing wrong with studying the great depression recovery.
> Did you think I said there was?
WHAT in the fuck are you talking about??!!! ***IIIIII**** am the one
who posted an article about that very thing, why in hell would I be
against studying the great depression? You HAVE to be just fucking
with me.
>
> > That's my ONE post and your ONE reply to that very post. There is no
> > Friday/Saturday whatever.
>
> I must have written something that was unclear. Maybe I did it
> again in the above, but when I read this, I don't see any way to
> misinterpret it. I really do not understand what you are upset
> about. You posted something, I read it and posted something in
> reply. That's the way it is supposed to work.
My complaint is so simply a 4-year old could understand it. You have
to be just fucking with me. Stop it.
Oh, and how about admitting that your claim that 'all economist think
we should stimulate the economy with cash', is flat out wrong.
Elsewhere someone posted a letter to Obama signed by 100 economists
who said just that.
Bob Keller
Ron Shepard
<234de104-e924-43c3...@c18g2000prh.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> Yes, you said you couldn't read it. But then your very next sentence
> was "Your question above was not about
> the great depression, it was about the current economy." THAT is
> dismissing my article as irrelevant.
No, that statement did not mean that the great depression article was
irrelevant to the current situation. It meant that an article about the
great depression would not support your claim about the opinion of
economists about the current situation. I said that without reading the
article (which I said at the time). Now after reading the article, it
is clear that I was right about that particular point. The article was
written in 2004, so it could not be an opinion about the current
collapse and recovery, and it was about binding arbitration between
employers and employees, something that does not apply to the current
situation.
So I'll say it again. 1) I did not dismiss your article at that time
because I had not read it (and I said so at the time). 2) I believe
(then and now) that studying the great depression recovery can lead to
insights about the current situation. 3) That particular article does
not support your claim about the opinion of economists regarding the
current collapse and recovery.
> > There is nothing wrong with studying the great depression recovery.
> > Did you think I said there was?
>
> WHAT in the fuck are you talking about??!!! ***IIIIII**** am the one
> who posted an article about that very thing, why in hell would I be
> against studying the great depression? You HAVE to be just fucking
> with me.
This does not answer, or even address, the above question. Did you
think I said that there was something wrong with studying the great
depression? If so, then either I was unclear, or you were just wrong.
Or both. :-) Because I don't think that is true, not last Friday, not
last Saturday, and not today.
> Oh, and how about admitting that your claim that 'all economist think
> we should stimulate the economy with cash', is flat out wrong.
> Elsewhere someone posted a letter to Obama signed by 100 economists
> who said just that.
Yes, I admit that. That list was all the evidence that was needed to
convince me.
If I had known about the existence of such a list, or even if I had
heard or read about a single economists saying something like that, I
would not have made that statement. I should have said something like
"every economist I've seen...".
$.02 -Ron Shepard
bk4...@hotmail.com
wrote:
> In article
> <234de104-e924-43c3-b9de-cba65446b...@c18g2000prh.googlegroups.com>,
>
> "bk42...@hotmail.com" <bk42...@hotmail.com> wrote:
> > Yes, you said you couldn't read it. But then your very next sentence
> > was "Your question above was not about
> > the great depression, it was about the current economy." THAT is
> > dismissing my article as irrelevant.
>
> No, that statement did not mean that the great depression article was
> irrelevant to the current situation. It meant that an article about the
> great depression would not support your claim about the opinion of
> economists about the current situation.
What's the difference between 'irrelevant to the current situation'
and 'not support.....about the current situation'? Seems to be the
same thing to me. An economist looks at the great depression and
draws the conclusion that stimulating the economy today is a bad idea
- therefore he has something to say about the current situation.
You're are just all wet - admit it.
Bob Keller
Ron Shepard
"Dan White" <nos...@nospam.invalid> wrote:
> Ron, I didn't realize you were coming up with your own definitions for terms
> like "conservative" and "liberal."
Everyone does this, that is why those terms sometimes seem so
meaningless. Even you said that modern conservatives were liberal lite,
didn't you? That is because you have your own personal definitions too,
and it disagrees with what modern conservatives think. I posted my
definitions so that we could use the same terms, or at least understand
what the terms mean in the different contexts.
To some people a liberal is someone in favor of personal freedom
(liberty and liberal have the same root). To some people a liberal is
someone in favor of big government programs. To some people, a liberal
is someone who is generous or forgiving. To some people a liberal is
someone who is open minded. To some people a liberal is someone who is
well read or well educated (liberal arts). To some people a liberal is
someone simply in favor of change or progress (a progressive). In those
particular contexts, a conservative would be the opposite of whatever
the liberal is.
But those aren't my definitions of a liberal or a conservative. That's
why I posted my definitions.
$.02 -Ron Shepard
Ron Shepard
<2b86d6d0-a14c-49ed...@z16g2000prd.googlegroups.com>,
"bk4...@hotmail.com" <bk4...@hotmail.com> wrote:
> > What do you propose along these lines for the Fed? Who else would you
> > propose to regulate the money supply?
>
> The free market.
What does that mean in this context? Every bank prints its own money?
Every individual prints his own money? We adopt the Euro and use that
as a world standard currency?
$.02 -Ron Shepard
Ron Shepard
Ron Shepard <ron-s...@NOSPAM.comcast.net> wrote:
I also wanted to add something else to this idea of fractional-reserve
banking. The video you posted seemed to imply that there was 10 times
the amount of money in the economy than was created (or "printed") by
the Fed. That isn't really the case.
Say for example, that a bank has customers that together deposit $100
into the bank. The fractional-reserve and FDIC together say that the
bank can then lend out up to $1000 to other customers (let's say 10
customers borrow $100 each to make the arithmetic simple). But where
does the bank get that $1000 to lend? It must borrow it (from the Fed
or from other banks), right? And how does the bank borrow money? It
has to have collateral. Say the collateral the bank has is its
building, but its building is worth only $500. In that case, the bank
could borrow only $500 from the Fed, and turn around and loan that out
to its customers. But that did not "create" $500 out of thin air, it
was based on the value of the bank's collateral. If the bank building
had been worth $1M instead of $500, then the regulations limit it to
loaning out only $1000.
How is wealth created? Follow the money. At the beginning, things
looked like this:
C B F
0 $1M+100 1000
Then after the loans from the bank to the customer and from the Fed to
the bank, it looks like this:
C B F
10x100 100 $1M
So far, nothing has been created, gained, or lost.
The banks customers who borrowed the money each produce some product (or
service, or whatever), they sell that product, and use that money to pay
back the bank with interest. Say they sold the widgits they made for
$300. So the bank gets, say $120 from each of those customers, and it
looks like this:
C B F
10x200 $1300 $1M
If you add all of that up, it is more than before. Wealth has been
created. It was created by the customers doing the work, not by the
banks. Now, the bank wants its building back, so it repays its loan to
the Fed. With interest, say they pay back $1100 to the Fed.
C B F
10x200 $1M+200 1100
Now the bank owns it building again, and it has $200 in cash, $100 more
than it had in the beginning. The Fed has $100 more than it started
with, and the customers have some money that they didn't have at the
beginning. At no time was there ever more money in the system due to
fractional-reserve banking, the only money that was created was based on
the wealth created by the workers.
So where do the problems come in? How can this system collapse? If the
assessors are doing their jobs, then everything is fine. If one of the
bank customers defaults on his loan, then the bank gets to keep whatever
interest he paid *plus* they get the property he used as collateral. If
a bank can't pay back the Fed for what it borrowed, then its interest
and collateral goes to the Fed. No money magically appears in the
system, and no money magically disappears. But if the assessors fail,
then things get screwed up. If the bank loans out $100 on property that
is worth only $50, and the customer defaults on the loan, then the bank
stands to lose up to $50. If that happens often enough, then the bank
defaults and the Fed gets screwed because the bank's collateral wasn't
worth what it was supposed to be worth.
I think that is sort of what happened in the current collapse with the
credit default swaps. The collateral that the banks were using was not
worth what it was supposed to be worth. It had been labeled one way,
but its true value was less. Because of deregulation, it is not clear
(from what I've read lately) that anything illegal was done. It was the
deregulation that allowed the assets to be relabeled.
This is a simple picture of the system, of course, but this is the basis
for my earlier comments about wealth being created by the workers, not
by the banks, insurance companies, stock market, or other financial
institutions. Worker productivity has been increasing since WWII, and
the number of workers has increased because of population increases and
because of the trend from single-earner households to multiple-earner
households. They have been doing their jobs of creating wealth all that
time. It is the monopoly game played by the financial institutions, the
credit default swaps, that failed the system, and those games were
allowed because of deregulation.
$.02 -Ron Shepard
John Black
she...@NOSPAM.comcast.net says...
> To some people a liberal is someone in favor of personal freedom
> (liberty and liberal have the same root).
That's a "classical" liberal. Modern liberals are not as much in favor of
personal freedoms. I remember a libertarian I was listening to once said,
"If liberals are done with the word, we'd like to have it back".
John Black