Bailout Bill

[Jamie_B]

[quote name='Bunghole' post='707319' date='Sep 30 2008, 09:07 PM']How A Clinton-Era Rule Rewrite Made Subprime Crisis Inevitable
BY TERRY JONES

INVESTOR'S BUSINESS DAILY

Posted 9/24/2008

One of the most frequently asked questions about the subprime market meltdown and housing crisis is: How did the government get so deeply involved in the housing market?

The answer is: President Clinton wanted it that way.

Fannie Mae (FNM) and Freddie Mac, (FRE) even into the early 1990s, weren't the juggernauts they'd later be.

While President Carter in 1977 signed the Community Reinvestment Act, which pushed Fannie and Freddie to aggressively lend to minority communities, it was Clinton who supercharged the process. After entering office in 1993, he extensively rewrote Fannie's and Freddie's rules.

In so doing, he turned the two quasi-private, mortgage-funding firms into a semi-nationalized monopoly that dispensed cash to markets, made loans to large Democratic voting blocs and handed favors, jobs and money to political allies. This potent mix led inevitably to corruption and the Fannie-Freddie collapse.

Despite warnings of trouble at Fannie and Freddie, in 1994 Clinton unveiled his National Homeownership Strategy, which broadened the CRA in ways Congress never intended.

Addressing the National Association of Realtors that year, Clinton bluntly told the group that "more Americans should own their own homes." He meant it.

Clinton saw homeownership as a way to open the door for blacks and other minorities to enter the middle class.

Though well-intended, the problem was that Congress was about to change hands, from the Democrats to the Republicans. Rather than submit legislation that the GOP-led Congress was almost sure to reject, Clinton ordered Robert Rubin's Treasury Department to rewrite the rules in 1995.

The rewrite, as City Journal noted back in 2000, "made getting a satisfactory CRA rating harder." Banks were given strict new numerical quotas and measures for the level of "diversity" in their loan portfolios. Getting a good CRA rating was key for a bank that wanted to expand or merge with another.

Loans started being made on the basis of race, and often little else.

"Bank examiners would use federal home-loan data, broken down by neighborhood, income group and race, to rate banks on performance," wrote Howard Husock, a scholar at the Manhattan Institute.

But those rules weren't enough.

Clinton got the Department of Housing and Urban Development to double-team the issue. That would later prove disastrous.

Clinton's HUD secretary, Andrew Cuomo, "made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis," the liberal Village Voice noted. Among those decisions were changes that let Fannie and Freddie get into subprime loan markets in a big way.

Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks.

Since they could borrow at lower rates than banks due to implicit government guarantees for their debt, the government-sponsored enterprises boomed.

With incentives in place, banks poured billions of dollars of loans into poor communities, often "no doc" and "no income" loans that required no money down and no verification of income.

By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market ­ a staggering exposure.

Worse still was the cronyism.

Fannie and Freddie became home to out-of-work politicians, mostly Clinton Democrats. An informal survey of their top officials shows a roughly 2-to-1 dominance of Democrats over Republicans.

Then there were the campaign donations. From 1989 to 2008, some 384 politicians got their tip jars filled by Fannie and Freddie.

Over that time, the two GSEs spent $200 million on lobbying and political activities. Their charitable foundations dropped millions more on think tanks and radical community groups.

Did it work? Well, if measured by the goal of putting more poor people into homes, the answer would have to be yes.

From 1995 to 2005, a Harvard study shows, minorities made up 49% of the 12.5 million new homeowners.

The problem is that many of those loans have now gone bad, and minority homeownership rates are shrinking fast.

Fannie and Freddie, with their massive loan portfolios stuffed with securitized mortgage-backed paper created from subprime loans, are a failed legacy of the Clinton era.[/quote]


Dont believe the hype

[url="http://www.prospect.org/cs/articles?article=did_liberals_cause_the_subprime_crisis"]http://www.prospect.org/cs/articles?articl...subprime_crisis[/url]

[quote]Did Liberals Cause the Sub-Prime Crisis?

Conservatives blame the housing crisis on a 1977 law that helps-low income people get mortgages. It's a useful story for them, but it isn't true.

The idea started on the outer precincts of the right. Thomas DiLorenzo, an economist who calls Ron Paul "the Jefferson of our time," wrote in September that the housing crisis is "the direct result of thirty years of government policy that has forced banks to make bad loans to un-creditworthy borrowers." The policy DiLorenzo decries is the 1977 Community Reinvestment Act, which requires banks to lend throughout the communities they serve.

The Blame-CRA theme bounced around the right-wing Freerepublic.com. In January it figured in a Washington Times column. In February, a Cato Institute affiliate named Stan Liebowitz picked up the critique in a New York Post op-ed headlined "The Real Scandal: How the Feds Invented the Mortgage Mess." On The National Review's blog, The Corner, John Derbyshire channeled Liebowitz: "The folk losing their homes? are victims not of 'predatory lenders,' but of government-sponsored -- in fact government-mandated -- political correctness."

Last week, a more careful expression of the idea hit The Washington Post, in an article on former Sen. Phil Gramm's influence over John McCain. While two progressive economists were quoted criticizing Gramm's insistent opposition to government regulation, the Brookings Institution's Robert Litan offered an opposing perspective. Litan suggested that the 1990s enhancement of CRA, which was achieved over Gramm's fierce opposition, may have contributed to the current crisis. "If the CRA had not been so aggressively pushed," Litan said, "it is conceivable things would not be quite as bad. People have to be honest about that."

This is classic rhetoric of conservative reaction. (For fans of welfare policy, it is Charles Murray meets the mortgage mess.) Most analysts see the sub-prime crisis as a market failure. Believing the bubble would never pop, lenders approved risky adjustable-rate mortgages, often without considering whether borrowers could afford them; families took on those loans; investors bought them in securitized form; and, all the while, regulators sat on their hands.

The revisionists say the problem wasn't too little regulation; but too much, via CRA. The law was enacted in response to both intentional redlining and structural barriers to credit for low-income communities. CRA applies only to banks and thrifts that are federally insured; it's conceived as a quid pro quo for that privilege, among others. This means the law doesn't apply to independent mortgage companies (or payday lenders, check-cashers, etc.)

The law imposes on the covered depositories an affirmative duty to lend throughout the areas from which they take deposits, including poor neighborhoods. The law has teeth because regulators' ratings of banks' CRA performance become public and inform important decisions, notably merger approvals. Studies by the Federal Reserve and Harvard's Joint Center for Housing Studies, among others, have shown that CRA increased lending and homeownership in poor communities without undermining banks' profitability.

But CRA has always had critics, and they now suggest that the law went too far in encouraging banks to lend in struggling communities. Rhetoric aside, the argument turns on a simple question: In the current mortgage meltdown, did lenders approve bad loans to comply with CRA, or to make money?

The evidence strongly suggests the latter. First, consider timing. CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. In the mid-1990s, new CRA regulations and a wave of mergers led to a flurry of CRA activity, but, as noted by the New America Foundation's Ellen Seidman (and by Harvard's Joint Center), that activity "largely came to an end by 2001." In late 2004, the Bush administration announced plans to sharply weaken CRA regulations, pulling small and mid-sized banks out from under the law's toughest standards. Yet sub-prime lending continued, and even intensified -- at the very time when activity under CRA had slowed and the law had weakened.

Second, it is hard to blame CRA for the mortgage meltdown when CRA doesn't even apply to most of the loans that are behind it. As the University of Michigan's Michael Barr points out, half of sub-prime loans came from those mortgage companies beyond the reach of CRA. A further 25 to 30 percent came from bank subsidiaries and affiliates, which come under CRA to varying degrees but not as fully as banks themselves. (With affiliates, banks can choose whether to count the loans.) Perhaps one in four sub-prime loans were made by the institutions fully governed by CRA.

Most important, the lenders subject to CRA have engaged in less, not more, of the most dangerous lending. Janet Yellen, president of the San Francisco Federal Reserve, offers the killer statistic: Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts. With this in mind, Yellen specifically rejects the "tendency to conflate the current problems in the sub-prime market with CRA-motivated lending.? CRA, Yellen says, "has increased the volume of responsible lending to low- and moderate-income households."

Yellen is hardly alone in concluding that the real problems came from the institutions beyond the reach of CRA. One of the only regulators who long ago saw the current crisis coming was the late Ned Gramlich, a former Fed governor. While Alan Greenspan was cheering the sub-prime boom, Gramlich warned of its risks and unsuccessfully pushed for greater supervision of bank affiliates. But Gramlich praised CRA, saying last year, "banks have made many low- and moderate-income mortgages to fulfill their CRA obligations, they have found default rates pleasantly low, and they generally charge low mortgages rates. Thirty years later, CRA has become very good business."

It's telling that, amid all the recent recriminations, even lenders have not fingered CRA. That's because CRA didn't bring about the reckless lending at the heart of the crisis. Just as sub-prime lending was exploding, CRA was losing force and relevance. And the worst offenders, the independent mortgage companies, were never subject to CRA -- or any federal regulator. Law didn't make them lend. The profit motive did.

And that is not political correctness. It is correctness.[/quote]

[Jamie_B]

[quote name='rudi32' post='707316' date='Sep 30 2008, 09:00 PM']lol its all good.

on a serious note, as long as you are not retiring in the next 5 years I wouldn't worry. My financial advisor said to actually increase my 401k and buy more stock. the trick is to diversify, have cash, stock and bonds, and to pick the correct stocks. We havent hit bottom yet, we will soon, then the economy will rebound as it always does. Just pick the right place to invest and you can actually come out of this nice.[/quote]

[Homer_Rice]

Quickly:

rudi32: I could cite Ethiopia, and other examples. But I'm not wasting my time. Stop embarassing yourself. You're clueless. Really.

Backer: Actually, CHD's comment is a favorable one. Mark to market accounting is sane.

Bung: good pieces re Dem complicity. Aside from the obvious intent of some folks to pin this on minorities and poor people, the key notion to take from this is that centrist Bill Clinton (think DLC) and other large segments of the Dem party are, too, servants of the financial class.

For everyone: It's very important to understand that this is not a housing crisis. It's a systemic crisis of the entire financial system (of the developed world) that has been triggered by the collapse of the housing bubble. Huge difference. A couple of years ago, I think in response to bengalrick or Bung (or maybe both) I used an analogy of an overinflated and popping balloon when asked what the trigger might be. Be worth dredging up again.

Lastly, as I suggested to Backer earlier: This is not so much about Reps and Dems as it is about populists and financiers. Think WJ Bryan and the gold/silver debates of the late 19th century. In some ways, we are reliving all the stuff that led up to the 1907 bust and the 1913 Fed Reserve Act. A tad simplistic, but you get the idea.

Get some sleep, CHD!

Edit: Actually managed a successful search! Entire threads are worth reading, imo.

From March, 2006: [url="http://forum.go-bengals.com/index.php?showtopic=14815&st=0&p=227341&hl=balloon%20popping&#entry227341"]The End to US Dollar Hegemony[/url]

From March, 2008: [url="http://forum.go-bengals.com/index.php?showtopic=40881&st=40&p=637970&hl=balloon%20popping&#entry637970"]TNR On Obama[/url]

[Chris Henrys Dealer]

[quote name='BengalBacker' post='707341' date='Oct 1 2008, 01:32 AM']CHD.

You're one of my favorite posters, particularly in this forum. The economy is your life and you know much more about it than most of us. Particularly me. Here's the but.

But, as far as your apparent belief that this bill should have been passed, I can't help but think that your perspective is very different than the rest of us.

You live in Canada, it's not your seven hundred billion.

The success of the market is, directly, your livelihood.

Now I know that the success of the market determines all of our livelihoods, and the entire world economy is at stake, but again, it's not your seven hundred billion. How 'bout you Canucks split it with us?

[/quote]

Thanks BB. Yeah, I am on the other side of the fence. but I'll explain later why I think it needed to get passed. It is affecting us in Canada as well. If the US gets the flu, the world gets a cold.

but my point above was about politicians wanting to do away with mark to market accounting which is insane in my mind.

Using a very simple analogy, let's assume you and I both have a stash of TV's.

You have 5 brand spanking new Sony HD 56 Inch LCDs. All brand new and shiny, a joy to watch tv on, when you're watching porn when Mrs Backer is out of the house, it almost feels like you're in it. These cost you $2,000 each, for a total of $10k, and you could easily go out to the market and sell them for $2k each.

I have 5 old Soviet Manufactured, Sorny Trinitropolevs. ns. 30 inches, they all weigh about 105 pounds each, the picture sucks ass, and a family of racoons is living in the back of one of them. However, I bought these 12 years ago when they were brand spanking new and paid $2k for them each as well. However, if I went to the market today and tried to sell them, I'd get maybe max $50 each.

Now under mark-to-market, we would value our holdings at the market price. your stash of tv's is worth 10k, mine, $250 total. Makes sense right?


Now under the rules that the fine folks in Washington are proposing, they want to remove mark-to-market, and allow banks to use fair value assumptions when there is a lack of a market.

So in the above example, I turn around and say, "well, the market for Soviet era made tv's is really not well known, I'm the expert on it, so I am valuing my Trinitropolevs at $1,200 each, for a total of $6,000."

Now that's complete bullshit. But it allows me to inflate my balance sheet. It allows me to paint a picture that I am worth more than I really am.

And that's what the concern here is. Now this problem has arisen, because banks and others can't value Collaterized Debt Obligations. They don't know how to value them, there is no market, it's frozen, hence they are taking massive writedowns, and their stocks are suffering as no one trusts their balance sheets. Now while the thinking behind this might have been, lets give them some respite, and allow them to stabilize their balance sheets, how is this not basically giving the banks licence to bullshit again?

Goldman Sachs have come through this sub-prime mess in relatively good shape. Now while many allege that's due to the incredible power that GS have and how they can move and manipulate markets, another reason is also their stringent risk mgmt. Goldman Sachs CEO, Lloyd Blankfein apparently has a rule...if a trader can't value something they are holding in their inventory. They have to go out and sell 10% of it immediately. Whatever the price is, that is what it is valued at. As a result, they know their balance sheet, they know when to mark shit down, (or rather in their case, sell them to other companies, to get them off their books)

Before Merrill Lynch got sold to Bank of America, they sold a shitload (6 billion I think) of their toxic CDO's to a Hedge Fund called New Star. Merill had originally priced them at 95 cents on the dollar, then written them down to 46 cents on the dollar.

Now under current rules, new star values them at 22 cents on the dollar. if that is scrapped, what's stopping them saying, their is no market for them, in reality they're worth about 44 cents on the dollar, so we are valuing them there. Now all of a sudden, $6 billion worth of securities is put on the books at $12 billion. Now it might be one day. Not now though. And with this accounting trick you've inflated your holdings.

And inflating holdings and worth is what has got us into this mess no? Why embark on that path again?

[Chris Henrys Dealer]

History always repeats itself!

In 1836, Andrew Jackson forced the closing of the Second Bank of the U.S. by revoking its charter. Read his statement below....


"Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves." - Andrew Jackson, 7th US President

[Homer_Rice]

[quote name='Chris Henrys Dealer' post='707381' date='Oct 1 2008, 09:22 AM']History always repeats itself!

In 1836, Andrew Jackson forced the closing of the Second Bank of the U.S. by revoking its charter. Read his statement below....


"Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves." - Andrew Jackson, 7th US President[/quote]
I'm an advocate of a National Bank along the lines of the 1st and 2nd. But the politics of renewing the charter of the 2nd was pretty messy. Jackson/Van Buren admins did more harm than renewing, imo. But Biddle ought to have been more patient. Another case of a bum rush gone sour.

Nice breakdown of the mark-to-market concept, CHD. Ritholtz does a pretty good job, too: [url="http://bigpicture.typepad.com/comments/2008/10/mark-to-market.html"]Understanding the Significance of Mark-to-Market Accounting[/url]

Really, imo, a lot of these derivative products just need to be outlawed. And if not outlawed, then taxed at such a level that folks prefer to move their money into more productive investments for the real economy. Be fairly easy to set up a nice combo of taxes (on speculative garbage) and tax credits (on say, infrastructure investments) such that we can direct the flow of capital into ventures that benefit the entire nation. French call it [i]dirigisme[/i]. ([url="http://en.wikipedia.org/wiki/Jacques_Rueff"]Long Live Jacques Rueff![/url] Oh, wait, he's dead. )

[Jamie_B]

Im somewhere between Homer and CHD (but they both understand this stuff much more than I) I think the bailout needs to happen but not without putting some checks in to make sure the vulchers cant raid the cookie jar again.

And Rudi if your finical advisor is telling you its all gonna be better that were just going through a cycle I would get a new one, this isnt a cycle this is structural.

[Homer_Rice]

[quote name='rudi32' post='707407' date='Oct 1 2008, 10:30 AM']Ok homer IYO im clueless, but Im making out like a bandit, so Ill see ya at the end.[/quote]
Oh yeah! Well I'm making out with a purty gal. So who's doing better?

Oh, forgot to add: "Nee-nee, nee-nee, nee-nee!"

[Jamie_B]

[quote name='rudi32' post='707423' date='Oct 1 2008, 10:27 AM']maybe, but you can listen to them and try to make money or you can panic. I am trying to make money in the situation. No matter what happens, some people will always make money. All I am saying is I am not going to panic, I am trying to move things around and make some money in the current situation. We all know its bad, to sit and post articles about it gets old. I would rather the all wise homer post articles about how to make $ in the current market.[/quote]


Thats fine but imo your just moving money around and playing hot potato with it, its just a matter of time till the potato burns you.

Im doing what I saw Suze Orman suggest on TV yesterday, Im putting up to the matching amount (6%) into my 401 that my company matches, the rest is going into savings for developing a cash reserve. Just in case.

FIX THE SYSTEM!!

[GoatGreen]

[quote name='rudi32' post='707423' date='Oct 1 2008, 10:27 AM']maybe, but you can listen to them and try to make money or you can panic. I am trying to make money in the situation. No matter what happens, some people will always make money. All I am saying is I am not going to panic, I am trying to move things around and make some money in the current situation. We all know its bad, to sit and post articles about it gets old. I would rather the all wise homer post articles about how to make $ in the current market.[/quote]


I doubt many financial advisers would say anything less than "keep buying" to their customers.

I suspect they would repeat that mantra, even as they jump from the roofs of their offices on Wall Street.



Whenever someone is telling you something, consider their own interests. Realtors are probably saying that "now is the time to buy a house" too. And that may or not be true. But that's not the point. The point is, no matter what time it is, to a realtor, its a good time for you to buy property.

[Chris Henrys Dealer]

Yeah, imo, for those who aren't active traders (willing to check positions hourly) and with a very high risk tolerance, I'd just advocate raising cash. paying off bills, and waiting till this thing eases down sometime in 2010

Trading rules and relationships between markets and products have completely blown up. especially in equities (bonds and derivatives are more the play on institutions, so it's a tiny, tiny bit more rational currently)

still like gold though longer term..(the actual physical metal, not gold companies or producers)

[Jamie_B]

Im also concidering buying some of my company stock at the reduced price I get for being an employee and perhaps selling it once my required holding period is up, that will have to wait till I can see what my paycheck are (Im at a new company as of 2.5 weeks ago) and see if I can afford to do that.

[Homer_Rice]

[quote name='rudi32' post='707423' date='Oct 1 2008, 11:27 AM']maybe, but you can listen to them and try to make money or you can panic. I am trying to make money in the situation. No matter what happens, some people will always make money. All I am saying is I am not going to panic, I am trying to move things around and make some money in the current situation. We all know its bad, to sit and post articles about it gets old. I would rather the all wise homer post articles about how to make $ in the current market.[/quote]
Some of us have concerns that transcend the venal, especially if it means making money off the misfortune of others. You take care of your soul, I'll watch out for mine.

But seeing as how you asked, here are some money making ideas:

1) [b]Become a gigalo.[/b] Market your ample charm to old ladies for big bucks.
2) [b]Foreclosures!!![/b] Buy some houses. Rent 'em out to current occupants.
3) [b]Become a kingpin of Depression retailing.[/b] Invest in companies that produce apples and pencils. Then buy some corner real estate. Rent out spaces on those corners.
4) [b]Royalties![/b] Write popular songs. See if you can come up with a catchy tune like, "Brother, can you spare a dime?"
5) [b]Entertainment.[/b] Sell drugs to people who have given up on life.
6) [b]Become a mercenary.[/b] I hear a "contractor" makes pretty good dough from Blackwater. Additional benefits: you may not even have to go overseas.

Hope this helps.

[Jamie_B]

[quote name='Homer_Rice' post='707451' date='Oct 1 2008, 11:11 AM']Some of us have concerns that transcend the venal, especially [color="#FF0000"]if it means making money off the misfortune of others.[/color] You take care of your soul, I'll watch out for mine.

But seeing as how you asked, here are some money making ideas:

1) [b]Become a gigalo.[/b] Market your ample charm to old ladies for big bucks.
2) [b]Foreclosures!!![/b] Buy some houses. Rent 'em out to current occupants.
3) [b]Become a kingpin of Depression retailing.[/b] Invest in companies that produce apples and pencils. Then buy some corner real estate. Rent out spaces on those corners.
4) [b]Royalties![/b] Write popular songs. See if you can come up with catching tune like, "Brother, can you spare a dime?"
5) [b]Entertainment.[/b] Sell drugs to people who have given up on life.
6) [b]Become a mercenary.[/b] I hear a "contractor" makes pretty good dough from Blackwater. Additional benefits: you may not even have to go overseas.

Hope this helps.[/quote]

YES!

[BengalBacker]

Actually I shouldn't have quoted CHD's mark to market post, as my post really had nothing to do with that. I meant in general terms.

My only point is, anyone who isn't an American taxpayer doesn't have to worry about paying the seven hundred billion, therefore their perspective will be different from anyone who is an American tax payer.

[bengalrick]

CHD, if your business as a trader doesn't go well, you would be well equipped at being an economics professor... your explaination on the "mark to market" singlehandidly explained it in sharp contrast and totally turned me off the idea...

One question I have for you, as I am totally on the fence on this... What is your take on cutting or withdrawling the taxes on corporate gains? I know it isn't a popular approach to most liberals, but it would certainly be a huge shot in the arm that would help everyone and it wouldn't put the taxpayers on the line for an investment that the majority of us either don't like or don't know what to think...

[rudi32]

[quote name='Homer_Rice' post='707451' date='Oct 1 2008, 11:11 AM']Some of us have concerns that transcend the venal, especially if it means making money off the misfortune of others. You take care of your soul, I'll watch out for mine.

But seeing as how you asked, here are some money making ideas:

1) [b]Become a gigalo.[/b] Market your ample charm to old ladies for big bucks.
2) [b]Foreclosures!!![/b] Buy some houses. Rent 'em out to current occupants.
3) [b]Become a kingpin of Depression retailing.[/b] Invest in companies that produce apples and pencils. Then buy some corner real estate. Rent out spaces on those corners.
4) [b]Royalties![/b] Write popular songs. See if you can come up with a catchy tune like, "Brother, can you spare a dime?"
5) [b]Entertainment.[/b] Sell drugs to people who have given up on life.
6) [b]Become a mercenary.[/b] I hear a "contractor" makes pretty good dough from Blackwater. Additional benefits: you may not even have to go overseas.

Hope this helps.[/quote]


How is investing in gold and certain other options that I am doing making money off others. get off your high horse. Its my money and where I want to invest is my buisness. You should know that investments are risky, the $ I make isn't from others, so thx homer my soul is doing just fine

[Homer_Rice]

[quote name='bengalrick' post='707486' date='Oct 1 2008, 01:21 PM']CHD, if your business as a trader doesn't go well, you would be well equipped at being an economics professor... your explaination on the "mark to market" singlehandidly explained it in sharp contrast and totally turned me off the idea...

One question I have for you, as I am totally on the fence on this... What is your take on cutting or withdrawling the taxes on corporate gains? I know it isn't a popular approach to most liberals, but it would certainly be a huge shot in the arm that would help everyone and it wouldn't put the taxpayers on the line for an investment that the majority of us either don't like or don't know what to think...[/quote]
Please explain why reducing cap gains taxes would be beneficial.

[Homer_Rice]

[quote name='BengalBacker' post='707482' date='Oct 1 2008, 01:20 PM']Actually I shouldn't have quoted CHD's mark to market post, as my post really had nothing to do with that. I meant in general terms.

My only point is, anyone who isn't an American taxpayer doesn't have to worry about paying the seven hundred billion, therefore their perspective will be different from anyone who is an American tax payer.[/quote]
It's a good point, too. I was simply in a hurry to get out the door this am.

There is this, though: the dollar's position as the primary currency for clearing international trade does represent some challenges for other nations if we cannot defend the value of the dollar. What all these injections into the financial system portend is the possibility of a real hyperinflationary spiral. That cannot be allowed to happen. If it does, countries will disappear from the map.

[Homer_Rice]

[quote name='rudi32' post='707487' date='Oct 1 2008, 01:21 PM']How is investing in gold and certain other options that I am doing making money off others. get off your high horse. Its my money and where I want to invest is my buisness. You should know that investments are risky, the $ I make isn't from others, so thx homer my soul is doing just fine[/quote]
I took a shit this morning. Named it Adolph.

[bengalrick]

[quote name='Homer_Rice' post='707488' date='Oct 1 2008, 12:29 PM']Please explain why reducing cap gains taxes would be beneficial.[/quote]

I am not sure, and am asking people that would know (You and CHD are tops on my list) to help me figure out what ways to get out of the mess, aside from letting it crash or from charging my unborn grandkids the bill for the BS going on...

In my thinking, it would stimulate the economy, by allowing many people that are scared to invest (mostly the ultra rich) invest in great numbers... Its not something taht will attack the main issue (liquidity) but it would give investors around the world more confidence in their investments in the US...

[Jamie_B]

[quote name='bengalrick' post='707499' date='Oct 1 2008, 01:13 PM']I am not sure, and am asking people that would know (You and CHD are tops on my list) to help me figure out what ways to get out of the mess, aside from letting it crash or from charging my unborn grandkids the bill for the BS going on...

In my thinking, it would stimulate the economy, [color="#FF0000"]by allowing many people that are scared to invest (mostly the ultra rich) invest in great [/color]numbers... Its not something taht will attack the main issue (liquidity) but it would give investors around the world more confidence in their investments in the US...[/quote]


Havnet we figured out by now that trickle down doesnt work?

[bengalrick]

[quote name='Jamie_B' post='707500' date='Oct 1 2008, 01:18 PM']Havnet we figured out by now that trickle down doesnt work?[/quote]

The markets need confidence and liquidity, and I think that lower those taxes will do both... I am not saying to only do that...

I like Homer's idea of focusing on building up our infrastructure as well...

Imo, it is better than allowing the low and middle class bail out the upper class... This way, the upper class will be taking the risk instead of you and I... I am speaking in very general terms though, and admittidly this isn't my most knowledgable topic, so I mainly want to listen at this point, before making any irrational decisions...

[|Montana Bengal|]

[quote name='Jamie_B' post='707500' date='Oct 1 2008, 12:18 PM']Havnet we figured out by now that trickle down doesnt work?[/quote]
My favorite quote about trickle down economics is that it is essentially the very wealthy peeing on everyone else (yeah, I know that is generalizing).

[Jamie_B]

[quote name='Montana Bengal' post='707515' date='Oct 1 2008, 02:22 PM']My favorite quote about trickle down economics is that it is essentially the very wealthy peeing on everyone else (yeah, I know that is generalizing).[/quote]