SamuelRSmith said: halogamer1989 said: Because socialism never works    Tell me, what system got us into this mess?

Bush has not been very conservative; the Republican party over the past decade or so has basically been a different version of the Democratic party; they increased government spending. That is not the way to go.

My idea of stimulating the economy is to cut government spending and taxes. The government has a bunch of useless programs out there that they could easily get rid of. Then, the government can cut taxes, which will let people keep more of their money and allow them to be able to afford more goods.

Think about it; by taking money from the citizens and giving it to the businesses, are they really helping? People need money in order to buy the products that these businesses are producing, so the government's solution is to take it away and give it to the companies who have shown that they have no idea how to manage anything. Then, the people have less money, and the businesses have more money that they'll most likely blow on useless things.

Look at FDR's New Deal and the Great Depression. If FDR hadn't come along, it still would have been a horrible time, but he just made it worse. He extended it, and it wasn't the New Deal that finally got us out of it; it was WWII. That should show that government spending is not the answer. How about Reagan? Look at how well we did then, and look at what Reagan did. That worked.

SamuelRSmith said: halogamer1989 said: Because socialism never works  Tell me, what system got us into this mess?

Whatever it was, it wasn't Capitalism.

The government has put so many barriers into place for a free-market economy to work. What we're experiencing now is years of retarded decisions by government officials, businessmen, and citizens.

Injecting newly-printed money into the system won't fix problems. Especially given where the bailout is going.

The government shouldn't bail anyone out. It's not their job to magically 'save' the system by creating an imbalance. When the system fails, it needs to correct itself, not be intervined on. Free market capitalism says 'you screwed up, you fix it' which is why Capitalism didn't create this problem - an imbalance in government red tape did.

Where did this issue start? When the government authorized banks (and even incentivized them) to offer loans to high-risk applicants that were minorities in some form or fashion. Banks never did this because it's a bad idea...Till congress in the late 90's got them to do it more and more often. That was government-sponsored, not bank-created. That's where American socialism failed.

How can we fix this system and save the economy? By having the government downsize, and offer more tax breaks to those that will spend more money - the poor & middle class. America has an atrocious track record with businesses between the corporate tax rate, union prevalance, and a litany of other issues....It needs fixed by a market correction, not government intervention.

the problem with "letting the market correct itself" is that people will be unemployed and won't be able to support their families until "the market corrects itself". The government is just trying to make sure people will be able to survive until the market does correct itself.

Remember that almost half of the bailout money, 350 billion or so, IS going into tax cuts, and the rest of it will be going into infrastructure, school loans, etc. etc.

Also remember that there are TWO bailouts; the 700 billion dollar one that was passed to help out the banks, and the one Obama is pushing (the 800 billion dollar one) that hasn't been passed yet.

SamuelRSmith said: halogamer1989 said: Because socialism never works    Tell me, what system got us into this mess?

Pro-Buisness Socialism that seeks to stop all recessions that can be stopped, damn the future?

That's really what both US parties practice.  It just matters which companies you like more.

What ever happened to the system of companies succeeding or failing based on how much money they are able to make in the business they are in.

No company is big enough to fail because if they do at least 10 different companies will rise in their place with better business models and will innovate the industry. The formula of "no one can do X other than company Y" is a recipe for stagnation and failure.

Now I'm not saying that some industries vital to national defense should be left to die, but since when were banks that?

that's great on paper and everything but what happens is when a large company fails, (like AIG) too many people would be left out on the street and if it takes longer than 6 months to a year for another to take its place, then those people would be SOL.

If there are enough companies around, then the government won't give two craps about it. For example, Merryl Lynch went under and then got bought out by Bank of America. Sames goes with Wamu getting bought out by Chase.

Circuit City is going out of business, and the Government isn't bailing them out because there are other companies out there that do the same thing (or better)

Democratic governments (on the whole) tend to have an unfortunate bias to doing far too much because the uninformed electorate are unwilling to accept the government "doing nothing" and are unwilling to wait for the results of previous governmental action before demanding that "more needs to be done." The irony in this is that quite often the best thing the government can do is nothing, and often problems are made far worse (or morph into different problems) because further actions are taken before people know the results of their initial actions.

Now, the question I have to ask people is whether the end results of the economic stimulus are actually rational worthwhile goals.

Before the economic collapse, large portions of the western world had a negative savings rate and were going into deeper and deeper debt for luxuries that they didn’t need and couldn’t afford. Because of the fear caused by the credit market freezing and the drop in the stock market people have started to actually save money and pay down their debts for the first time in decades. Does it really make sense to try to get people to return to the unhealthy habits of mortgaging their future for junk they don’t need?

Over the long term, house price increases have tracked fairly closely to inflation and the growth in people’s purchasing power. Over the past couple of decades the price of homes decoupled from inflation and grew at a rate far faster than the growth in people’s wages. As a result of this house-price inflation many hard-working families with decent incomes have been locked out of ever buying homes. Does it really make sense to try to stop house prices from falling when so many people are still locked out of buying their own home and living the "American Dream"?

I’m not trying to be a jerk and to claim that other people’s suffering is a great thing, but trying to return to an unhealthy state in the economy simply because it is less frightening than the alternative is a pretty moronic thing to do.

Kasz216 said: SamuelRSmith said: halogamer1989 said: Because socialism never works    Tell me, what system got us into this mess? Pro-Buisness Socialism that seeks to stop all recessions that can be stopped, damn the future? That's really what both US parties practice.  It just matters which companies you like more.

Definitely, Kasz has hit it on the head that corporate welfare is one of the key causes of the current situation we are in.

Although I will say that Republicans differ from Democrats in that they tend to drive the car with one hand on the wheel or with two hands off the wheel completely when it comes to regulating the market.

The way we look at our financial institutions in particular has to be completely overhauled.  Organizations like the SEC and FDIC that were created over 70 years ago and were neutered within the last 30 years are expected to regulate the behemoth that is our financial sector.  These organizations were essentially like chauffeurs to the current crisis we are in.

I find it strange that so many of the conservative oriented posters are taking a pro-regulation stance.  I feel like I am in the bizarro world.

I would say that AIG is too big to bailout. All this is costing taxpayers hundreds of billions which will never be returned, but which will have to be repaid as foreign debt or destroyed and cause ANOTHER recession. Bailouts and bailouts will, at best, cause something called "stagflation".

You are right that those people will have a problem if they don't find a job quickly, but think how hard and costly is it for a small business to hire a worker. The government should fix this problem, instead of throwing welfare at the banks and big corporations that caused the crisis.

I think all of you are underestimating how bad it would have been if the financial sector would have gone under. Literally, every one of the independent Wall Street institutions, (there were seven including Lehman Brothers, Bear Sterns, AIG, and Merril Lynch) had to change the type of financial institution they were into a traditional bank (like Bank of America, Wells Fargo, etc.) so that they could get easier money from the government and would not collapse to the ground. There are no more independent Wall Street institutions in existence because none of them would have survived if they hadn't changed. Some of those had been independent for almost 100 years. If all seven of those had been allowed to collapse, the market would have gone into a freefall.

You can talk all you want and point at your economic textbook about how the market self-corrects and should be left alone, but a textbook and reality are two completely different things. There is a difference between allowing unsound businesses to fail and allowing an entire sector of the market to fail, especially the financial sector. Do you honestly think the financial sector could pick up the pieces and move on if all those institutions had failed? You would have seen a run on the banks like none other, possibly even worse than the Great Depression.

People sometimes assume that markets run on rationality. It does not. The market is in many ways an inherently irrational thing. It can be like a person who mixes uppers and downers and decides it is a good idea to drink alcohol too. Not to mention the market has fundamentally changed since the entire idea of laissez faire capitalism was invented. If anything, the market is even more irrational now than it used to be since information can be transported instantly and since an economic catastrophe in one country can trigger catastrophe overnight elsewhere. Laissez faire capitalism was invented in a time when it took at least six weeks just to send information from America to Britain.

The U.S. economy was essentially like a person addicted to methamphetamine for the past few years. Everyone knew he had a problem, but nobody said anything. Eventually the problem started getting so bad that people knew it was going to crumble. And then when it did crumble it exploded in a fit of violent rage. You don't just let a person like that go back on the streets. You put them in rehab. And rehab doesn't just mean you let them "work it out on there own." Rehab is not cheap, but without rehab it can often be even worse if somebody doesn't intervene.

The flip side of that is when the economy is doing well, you have to raise taxes and cut government spending so that you can run a surplus. Too many of you are blaming the housing crisis alone for this. One of the reasons why there is such a dark cloud looming over everything is because the government has been running up deficits like a kid with a stolen credit card for years.

Controlling the economy is like controlling a drug addiction. You avoid the highs and lows. You raise taxes when you are doing well so that you can save up money for the bad times. You cut taxes and/or increase spending when times are bad to get your way out of it. It makes no sense why everyone is poo pooing spending now while they have been happy as clams to sit by on the sidelines for so long.