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Forums - General Discussion - Tea Parties: Whats really going on?

akuma587 on 19 April 2009

1) Several thousand point drops mean the stock market reaches 0. The market itself can also collapse in case you aren't aware. But, sure, the market can recover from that no problem. The market can't file for bankruptcy. You think people were freaked out and did crazy things after 9-11? They would be going ballistic if the market collapsed.

2) China has a vested interest in our economic success. They are royally fucked if we get royally fucked. We are by and large the reason why their economy is so successful. Don't expect them to pull any maneuvers like what you have claimed. They would be shooting themselves in the foot.

3) I am concerned about hyperinflation. But the dollar has been facing far more DEFLATIONARY pressures over the past year than inflationary pressures. Deflation can be as dangerous or more dangerous than high inflation.

And we should do something about the national debt. Once the economy stabilizes, we should significantly reduce government spending (stop money from going out) and significantly raise taxes (increase the money that comes in). That is the only way we will ever make a dent in $10 Trillion in debt.



We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls.  The only thing that really worried me was the ether.  There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke

It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...."  Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson

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Kasz216 on 19 April 2009

You know the Herbert Hoover thing really doesn't make any sense.

I mean... we have the FDIC now. So a bank failing doesn't hurt the "little guys" in that regard.

Also during the beggining of the Great Depression their was tons of credit out there... even with banks failing. It's just nobody wanted to borrow. That's why FDR's Kensyian polcies really didn't do anything other then give people "hope". The poor didn't end up spending most of their extra money. They saved it.

Food prices and other stuff were dropping. Currently those prices are inflating due to the global food crisis.

Basically the hope on this plan succeeding is hoping that poor people are a lot stupider with their money then they were during the great depression.



Zizzla_Rachet on 19 April 2009
Kasz216 said:
You know the Herbert Hoover thing really doesn't make any sense.

I mean... we have the FDIC now. So a bank failing doesn't hurt the "little guys" in that regard.

Also during the beggining of the Great Depression their was tons of credit out there... even with banks failing. It's just nobody wanted to borrow. That's why FDR's Kensyian polcies really didn't do anything other then give people "hope". The poor didn't end up spending most of their extra money. They saved it.

Food prices and other stuff were dropping. Currently those prices are inflating due to the global food crisis.

Basically the hope on this plan succeeding is hoping that poor people are a lot stupider with their money then they were during the great depression.

But what good would poor people spending their money do...Make them rely on Goverment help more?

 



 



akuma587 on 19 April 2009
Kasz216 said:
You know the Herbert Hoover thing really doesn't make any sense.

I mean... we have the FDIC now. So a bank failing doesn't hurt the "little guys" in that regard.

Also during the beggining of the Great Depression their was tons of credit out there... even with banks failing. It's just nobody wanted to borrow. That's why FDR's Kensyian polcies really didn't do anything other then give people "hope". The poor didn't end up spending most of their extra money. They saved it.

Food prices and other stuff were dropping. Currently those prices are inflating due to the global food crisis.

Basically the hope on this plan succeeding is hoping that poor people are a lot stupider with their money then they were during the great depression.

American stupidity and foolhardiness with their money is one thing you can count on always Kasz.  Consumer spending has already started to pick up.

And you bring up a perfectly good point with the FDIC.  If all these banks did fail, the government would be on the hook for EVERY BANK ACCOUNT that failed along with them.  That amount is probably higher than the amount paid out to bail out the banks.  And the bailout money can at least be paid back (and some banks are already starting to pay it back http://www.abcnews.go.com/Business/Politics/Story?id=7337061&page=1 ).  The government would probably have had to spend MORE money if it hadn't bailed out the banks than if it had let them fail and the FDIC stepped in to payback all those insurance policies.

So anyway you look at it, the government was going to be paying out a shitload of money.  To claim that we would have spent less money if we wouldn't have bailed out the banks is extremely myopic and shows a misunderstanding of the banking system.

 



We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls.  The only thing that really worried me was the ether.  There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke

It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...."  Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson

HappySqurriel on 19 April 2009
akuma587 said:
Kasz216 said:
You know the Herbert Hoover thing really doesn't make any sense.

I mean... we have the FDIC now. So a bank failing doesn't hurt the "little guys" in that regard.

Also during the beggining of the Great Depression their was tons of credit out there... even with banks failing. It's just nobody wanted to borrow. That's why FDR's Kensyian polcies really didn't do anything other then give people "hope". The poor didn't end up spending most of their extra money. They saved it.

Food prices and other stuff were dropping. Currently those prices are inflating due to the global food crisis.

Basically the hope on this plan succeeding is hoping that poor people are a lot stupider with their money then they were during the great depression.

American stupidity and foolhardiness with their money is one thing you can count on always Kasz. Consumer spending has already started to pick up.

And you bring up a perfectly good point with the FDIC. If all these banks did fail, the government would be on the hook for EVERY BANK ACCOUNT that failed along with them. That amount is probably higher than the amount paid out to bail out the banks. And the bailout money can at least be paid back (and some banks are already starting to pay it back http://www.abcnews.go.com/Business/Politics/Story?id=7337061&page=1 ). The government would probably have had to spend MORE money if it hadn't bailed out the banks than if it had let them fail and the FDIC would have had to step in.

So anyway you look at it, the government was going to be paying out a shitload of money. To claim that we would have spent less money if we wouldn't have bailed out the banks is extremely myopic.

 

 

They're only on "the hook" if they can't recover the deposit money through bankrupcy, and (while I could be wrong) I suspect that the FDIC becomes one of the first creditors that is repaid when a bank fails ...



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Kasz216 on 19 April 2009
Zizzla_Rachet said:
Kasz216 said:
You know the Herbert Hoover thing really doesn't make any sense.

I mean... we have the FDIC now. So a bank failing doesn't hurt the "little guys" in that regard.

Also during the beggining of the Great Depression their was tons of credit out there... even with banks failing. It's just nobody wanted to borrow. That's why FDR's Kensyian polcies really didn't do anything other then give people "hope". The poor didn't end up spending most of their extra money. They saved it.

Food prices and other stuff were dropping. Currently those prices are inflating due to the global food crisis.

Basically the hope on this plan succeeding is hoping that poor people are a lot stupider with their money then they were during the great depression.

But what good would poor people spending their money do...Make them rely on Goverment help more?

 

It's a multiplier effect. 

The thought is... the poor waste their money.  The companies who get this wasted money invest it to make new jobs... which lets the poor get more jobs... to waste more money... which leads to more jobs.  Then when they're too old to work...  Social security and medicare are there... or something.


There is also the government giving the companies money.  In which the companies invest it and create jobs, the poor get jobs, get money, spend money, which creates more jobs... etc.

Largely which method is better is going to depend on how fiscally responsible the people under you are.

 

If people are wasteful...  the first method is better because companies will know exactly where people will waste their money and can expand properly.

If like in the great depression people are fiscally responsible the second method is better.  Since people that money is all going to be invested. 

Of course  one has to ask if either method really works anymore.

Afterall a lot of the stuff people waste their money on are made in other countries.

How much does it help our economy if the poor spend all this extra money... and the companies who get it spend all their money on factories in China.

That's what i don't understand... and am waiting to see.

Kensyian economics made a lot more sense when globalization wasn't so huge.



akuma587 on 19 April 2009
HappySqurriel said:
akuma587 said:

American stupidity and foolhardiness with their money is one thing you can count on always Kasz. Consumer spending has already started to pick up.

And you bring up a perfectly good point with the FDIC. If all these banks did fail, the government would be on the hook for EVERY BANK ACCOUNT that failed along with them. That amount is probably higher than the amount paid out to bail out the banks. And the bailout money can at least be paid back (and some banks are already starting to pay it back http://www.abcnews.go.com/Business/Politics/Story?id=7337061&page=1 ). The government would probably have had to spend MORE money if it hadn't bailed out the banks than if it had let them fail and the FDIC would have had to step in.

So anyway you look at it, the government was going to be paying out a shitload of money. To claim that we would have spent less money if we wouldn't have bailed out the banks is extremely myopic.

 

 

They're only on "the hook" if they can't recover the deposit money through bankrupcy, and (while I could be wrong) I suspect that the FDIC becomes one of the first creditors that is repaid when a bank fails ...

Some of these banks were so overleveraged it was frightening.  Some of them had a 30:1 liability to asset ratio.  If the government had to salvage what was left of a bank like that, there might not be very much left.  Now amplify that to 5-10 large financial institutions going under whose assets are inextricably tied together.  You really think any of their assets are going to be worth anything when the banks that owe them money have also gone bankrupt?

This same thing would ripple outwards to the foreign banks as well if their governments hadn't stepped in to increase their liquidity.  Its like having a deck of cards where you start burning up all the individual cards.  No one wants the deck of cards anymore if half the cards are missing.

 



We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls.  The only thing that really worried me was the ether.  There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke

It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...."  Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson

akuma587 on 19 April 2009
Kasz216 said:

Afterall a lot of the stuff people waste their money on are made in other countries.

How much does it help our economy if the poor spend all this extra money... and the companies who get it spend all their money on factories in China.

That's what i don't understand... and am waiting to see.

Kensyian economics made a lot more sense when globalization wasn't so huge.

Extremely valid point.  This is why something like a payroll tax cut wouldn't be as effective as an increase in government spending.  When the government spends money on something, at least 80-90% of that initial spending will go directly to domestic spending (assuming its not being used for something like waging a war abroad).  Now some of that money they spend may turn around and be sent overseas when the people who receive that money the goverment spends (i.e. employees of a construction firm or teachers working for a school) go to Wal-Mart, but that dollar has already been spent once in the economy and has had more of an effect than if you had given that money directly to that person who went to Wal-Mart.

If you just cut payroll taxes, people would go to Wal-Mart and spend that money which would get shipped overseas without as much of a domestic boost.  That dollar would ripple through the domestic economy less than in the previous example and have a smaller multiplier effect.

This was why any economic stimulus plan that revolved solely around tax cuts was foolish and less helpful to the economy than a plan that used predominantly spending and tax cuts as a secondary stimulus measure.

 



We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls.  The only thing that really worried me was the ether.  There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke

It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...."  Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson

Kasz216 on 19 April 2009
akuma587 said:
Kasz216 said:

Afterall a lot of the stuff people waste their money on are made in other countries.

How much does it help our economy if the poor spend all this extra money... and the companies who get it spend all their money on factories in China.

That's what i don't understand... and am waiting to see.

Kensyian economics made a lot more sense when globalization wasn't so huge.

Extremely valid point.  This is why something like a payroll tax cut wouldn't be as effective as an increase in government spending.  When the government spends money on something, at least 80-90% of that initial spending will go directly to domestic spending (assuming its not being used for something like waging a war abroad).  Now some of that money they spend may turn around and be sent overseas when the people who receive that money the goverment spends (i.e. employees of a construction firm or teachers working for a school) go to Wal-Mart, but that dollar has already been spent once in the economy and has had more of an effect than if you had given that money directly to that person who went to Wal-Mart.

If you just cut payroll taxes, people would go to Wal-Mart and spend that money which would get shipped overseas with out as much of a domestic boost.  That dollar would ripple through the domestic economy a less than in the previous example and have a smaller multiplier effect.

This was why any economic stimulus plan that revolved solely around tax cuts was foolish and less helpful to the economy than a plan that used predominantly spending and tax cuts as a secondary stimulus measure.

 

That I agree with.  Not even sure why we had a tax cut... I guess to balance negative feelings of spending so much.  Not that it's helped much.

Not sure enough of it is going to stuff that will actually stay in the country.

 



Viper1 on 19 April 2009

The FDIC is who took over IndyMac when it failed.

Besides, the government wouldn't need to buy out every mortgage from a failed bank because they would be delegated during bankruptcy to another healthy bank at real or below market value. In other words the market would have saved itself.

Those bankrupt banks would have then had the ability to pull out of bankruptcy now that those illiquid mortgages are off their books and returned to good operating standing.


PS: "and some banks are already starting to pay it back..." <- That's because the Federal Reserve secretly dumped out several billion dollars. I'll let you take a wild guess where a lot of it went.



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