Our nation’s financial crisis


Tonight’s New York Times: In Frantic Day, Wall Street Banks Teeter; In one of the most dramatic days in Wall Street history, Merrill Lynch agreed to sell itself to Bank of America for about $50 billion, while Lehman Brothers headed toward bankruptcy.

Tonight’s Wall St. Journal: Crisis on Wall Street as Lehman Totters, Merrill Is Sold, AIG Seeks to Raise Cash. Fed Will Expand Its Lending Arsenal in a Bid to Calm Markets; Moves Cap a Momentous Weekend for American Finance.

Looks like a real meltdown. Let’s try to make sense of it… especially how it might impact things locally.


  1. William Siemers said:

    The new mortgage relief plan for those at least 3 months behind on their mortgage is a real boondoggle. Fannie and Freddie and 27 other mortgage service providers will offer refinancing to those about to go into foreclosure. So first thing: quit making your mortgage payments and get three months behind.

    Customers must owe at least 90% of the home’s value.
    Interest will be reduced, term extended and principal reduced so that payments (including taxes and insurance are no more than 38% of income. So if you are working overtime, stop it. If you have two incomes, someone should quit. Then head down to your lender and get a new payment amount.

    And it doesn’t matter if you refinanced and bought a second home or a bmw with the proceeds of your mortgage…you can keep them. This program looks only at income, not at assets.

    Ain’t life grand…It’s the big rock candy mountain.

    November 17, 2008
  2. Peter Millin said:

    So much for working hard and playing by the rules…

    November 17, 2008
  3. Ray Cox said:

    You said in #596..
    “The executives are as much to blame for this then the UAW.
    The UAW pushed hard for what it could get and the big three awarded it to the union, so who is really to blame here.”

    This is exactly what I meant in my earlier comments. While the unions pushed for huge, unrealistic compensation, the management gave in to it. They traded short term labor peace and profits for reckoning at a later day….that day had arrived. They agreed to union demands that were unsustainable. I cannot see why we should support the companies and allow that to continue. It seems clear that the model is unsustainable.

    Under the capitalistic system we must allow businesses that are not providing a product that consumers want, or are managed poorly, to go out of business. We no longer see PanAm planes in the sky—same for TWA, Braniff and other airlines. We no longer can buy things from Montgomery Ward. America cannot prop up companies that don’t work.

    Maybe GM can be acquired by others and operated in a more efficient manner, producing a product that suits current needs and looks to the future as well. But I don’t think having the American taxpayers fork over billions and billions of dollars into the current company format will work at all.

    November 17, 2008
  4. Jane Moline said:

    Peter: I have no idea what you are talking about. I am not an author of tax legislation, and I have not punished anyone with taxes. You are very quick to assume so much, yet unwilling to discuss–your comments are either links to other sites or caustic attacks. You denigrate every method of paying for government, and every government program. So, are you an anarchist or just generally grumpy?

    November 17, 2008
  5. Paul Fried said:

    DavidH: I’m glad to see we agree on so much, and that you’re OK with so much regulation. Doesn’t sound like free market to me, though. Sounds like you’d need some big government to enforce those regulations. So you’re in favor of all those regulations, as well as in favor of money, which is regulated by the feds and not printed in someone’s backyard. You’re in favor of closing tax loopholes (which usually benefit the rich), and which seem to you social engineering (intended to promote more of this ‘n’ that). Many progressive Dems would be in favor of same. Nice to find so much common ground.

    Now I suppose that if the government foresees trouble with global warming, or peak oil, or water shortages as there were in Georgia (USA), you might be OK with regulations such as fuel standards, or bans on lawn watering, or fines–or is this too much social engineering also?

    Peter: I agree with you that if it’s more of a bargain for govt to buy GM etc. outright, it would make more business sense for them to do this, and as the Republicans say, government should think more like business. That’s why I also support universal-single-payer: If a business could outsource a service and save money, they often do it if it helps their bottom line. If government can provide health care via a medicare model and save money compared to all the overhead and CEO pay and profit margins of for-profit health care, then government should start thinking more like business and just do it. Warren Buffett says he’s not a worry-wart who thinks and re-thinks his decisions; he analyzes and commits. Government should do the same with health care, with buying the automakers, and with nationalizing the oil companies. It’s a no-brainer.

    Peter, you write, “An elitist IMHO is a person that uses his/her knowledge to talk down to another people and make them feel stupid due to their lack of knowledge.” Well, this makes me think of how some right-wing-nuts are always blaming the poor for not pulling themselves up by their own bootstraps, even if they don’t have boots. And the situation you describe might be a case in which people demand the right to have stupid ideas and ininformed opinions be respected just as much as well-thought-out ones. If I liked to listen to Rush Limburger and be a dittohead, and then I parrot every silly idea I hear, this doesn’t mean I can accuse someone of being an elitist whenever they point out the flaws in my reasoning. If there are actually flaws, well, if the shoe fits….

    But this is exactly how the elitist complaint works some of the time. It’s when some conservatives demand equal rights for stupidity. And then they start sounding exactly like some of their own complaints about affirmative action. They just want affirmative action for stupidity.

    Now in a way, I think they kind of have a little bit of a point. Here’s why: Most of us start out stupid. If you’re a certain kind of Christian who takes the Bible very literally, you tend to think Jesus was God, so he didn’t start out stupid, but omniscient and omnipotent to boot. But the rest of us start out stupid, and gosh, let me tell you, it’s a constant struggle. It’s why I like to read a lot. There are so many things I don’t know about, and there’s only so much time. So I’ll admit it right now, I am among the ranks of the stupid, but at least on my good days, I try to be honest about it.

    I do think that everyone should have rights; I can’t say stupid people shouldn’t, because there I am, among the stupid. I can’t say people don’t have the right to be stupid, because there are all those areas of knowledge that I know I’ll never get to in my lifetime. I never learned Aramaic, I can’t dance and Irish jig, and although my father has offered to help me learn to change my brakes, I might never take him up on it. I have a right to draw the line and choose what I’m gonna learn next, darn it.

    But if someone who is smarter than me in some area shines their light into the darkenss of my ignorance, like the lightbulb that goes on when you open the refrigerator door, gosh, I don’t think anyone has the right to demonize them and call them a snob. Instead, I should just say, “Thank you, kind sir!” Or, “Thank you, kind mam!”

    It’s like they used to say that green was the new black; now conservatives want to say smart is the new snob, and evil is the new good. Some of it goes back to Reagan, and “Greed is good.”

    Some of it, John G., goes back to the snake in the garden, telling Adam and Eve that if they eat from the tree of the knowledge of good and evil, then they could be like gods and declare that greed is good, and Bush and Cheney should not be impeached, and in order to preserve the constitution we need to violate it with wiretaps, and torture, and all kinds of foul and unnatural deeds. These all come from the Father of Lies, who is, as JohnG. and I know, Satan himself.

    Which is why those bumperstickers that said “Cheney and Voldemort ’08” were so appropriate. Some folks didn’t get the joke, and then they act as if the creators of such bumperstickers are elitist snobs, when in fact they may be angels of mercy who helped to save us.

    God bless those people, wherever they are! God bless and save us all!

    (Name that Dickens character….)

    November 17, 2008
  6. David Henson said:

    Small government Paul – focused on doing a few things very well – now we are agreed

    November 18, 2008
  7. Peter Millin said:


    On elitist:
    Being and elitist has nothing to do with being smart or being a teacher. Elitists use their knowledge (and other peoples ignorance) to tell them what to do and how to do it.
    This is far from people using the information given and decide to act on it or not.
    Elitist : Here is an SUV and here is a Hybrid. Drive the hybrid because it is better for the environment.

    Supposedly Stupid People: BUT I don’t want to drive a hybrid because I like my SUV and I am willing to pay for it by paying more for fuel, taxes and upkeep.

    Elitist: If you don’t want to drive hybrid we will raise taxes on SUV’s and punish you for not switching to a hybrid. Plus it will make my hybrid cheaper.

    November 18, 2008
  8. Jerry Friedman said:

    Peter: So an elitist is someone who wants to reduce our dependence on foreign oil, thereby reduce our “need” in foreign wars, also to reduce the pollution and greenhouse gasses? The way you describe them, I wish there were more elitists.

    November 18, 2008
  9. Peter Millin said:

    You are right on wanting to reduce our depends on foreign oil…but shouldn’t that be up to the individual to decide when and how?
    Instead we pretend that government knows best and punish those that disagree.

    Why not let the market decide on the price of gasoline or other fuels??

    And I certainly don’t buy all the hoopla on global warming, especially if certain interest groups are to profit from it.

    November 18, 2008
  10. Jerry Friedman said:

    Peter: Our dependence on foreign oil is a danger to everyone in the U.S. and probably the world. Therefore, it’s good policy to discourage its use. It is up to the individual to decide when and how so long as they are willing to pay higher taxes for it. That’s how tax theory works. Increase taxes on socially bad policies, like tobacco and foreign oil, reduce taxes on socially good policies like marriage (via dependent children) and business. (I am not claiming that these are in fact social “goods” or “bads”, but that’s how tax theory works). People can smoke so long as they pay more taxes, people can drive SUVs so long as they pay more taxes. Ideally, tobacco taxes would directly fund anti-smoking programs. Similarly, oil taxes should fund alternative fuel development.

    If something is undeniably a social good or bad, I have no problem with the government using taxes to encourage or discourage it. The debate should be focused on whether it’s good or bad, and there I’d be a shrewd skeptic. Since you and I seem to agree that our dependence on foreign oil is bad, we don’t need to debate that. I don’t pretend that the government knows best. On this topic, the government is demonstrably right. If the rest of the U.S. economy wasn’t a wreck, I’d favor very high gas taxes. That would force us to stop our oil addiction much sooner than our present velocity of “crawling”.

    You can choose not to believe in global warming to your peril. Thankfully, the government (which does not profit from global warming) disagrees with you.

    November 18, 2008
  11. Paul Fried said:

    We’ve been arguing free markets vs. certain kinds of “meddling” or regulation or incentives to move things in certain directions. Those discussions are often perhaps fruitless in the abstract (the devil’s in the details; some regulations or incentives may be good, others may have remained on the books, but be outdated, etc.).

    But beyond all of that, I distrust any discussion of free markets because of how the idea has been abused, and a double standard, by some of the loudest (or most powerful) voices in their favor.

    We’ve had so-called “free market” advocates complaining when foreign countries subsidize agriculture, or certain industries; they cry “unfair!” — and then little foreign countries get loans on the condition that they not provide government subsidies for crops; but the US subsidizes corn, soybeans and peanuts very heavily, and these little countries can’t compete.

    In terms of agriculture policy, we need a radically new approach that doesn’t subsidize, but that allows farmer unions to negotiate fair prices. We need to move away from monoculture corn and soy commodities that are transported long distances, and toward more local agriculture from which farmers can receive larger shares of the profits.

    Bruce Morlan and I have talked about how Adam Smith never dreamed of a world with multinational corporations. When he talked about the invisible hand of the market, he was thinking of much smaller businesses that were more nimble and able to respond to market factors.

    Now we have huge corporations that artificially influence the market to favor their existing products and the highest possible profit margins. These do not respond to the invisible hand. They have become a new invisible hand.

    The problem with monopolies is like this: GM, Ford and Chrysler they know they have a larger profit margin from sales of SUV’s and trucks, so if you’re sure you want a Focus, they’ll sell you one, but they’d rather sell you an SUV. GM made electric cars for California, but they only leased them; when California repealed the zero emissions requirement under various pressures, they crushed the cars, as did other makers of electric cars for that market.

    The invisible hand of the market did not kill the market for electric cars; the automakers and oil companies did, artificially.

    If you are a large corporation selling a mediocre product, and another upstart comes along to challenge you with a better product, Adam Smith would say that the invisible hand of the market should favor the upstart; demand would rise, and the larger business would go under if it didn’t adapt.

    Instead, the large corporation may buy up the small one, or if they don’t want to sell, the larger may bury the upstart under patent challenges and lawsuits. This is not the invisible hand of the market.

    That’s why free markets are not really free, but are propaganda to make people feel good about the status quo. (We all love that word “freedom.”) We need regulated markets, and we need them more than we have usually had them; we need regulations that are regularly evaluated and updated to adapt to changing circumstances. We need them because corporate interests are too powerful and manipulative to allow the free market and its invisible hand to work.

    November 18, 2008
  12. Peter Millin said:

    Ripping us away from oil without providing a valid alternative will plunge our economy even further in to chaos.
    Jerold you obviously forgot what high oil and food prices have done (and still doing) to those that have the least.
    Question is, who will decide which behavior to punish with taxes and which don’t we punish?

    Will that be the government elitist, the intellectual elite or elitists in general?


    I am not smart enough to know how free our markets are. BUT what I do know is that EVERY single market in the history of mankind that was centrally regulated and influenced has collapsed and gone broke.

    So I would say that the history of a centralized market economy clearly disproves your argument.

    November 18, 2008
  13. David Henson said:

    Japan and Germany did not go to war over oil – meaning many wars have occured for all kinds of reasons we probably should not over blame oil.

    Paul you might want to read ‘The Future and It’s Enemies’ http://www.dynamist.com/ The new free market is probably best seen as a lot of individual choices getting better results that planners.

    November 18, 2008
  14. john george said:

    William- Re. your post #606, here is a link that is a very interesting perspective of what is going on with the Big 3 buy-out and what is driving it.


    I wondered what was driving the Democrats to back this so much. I think it is a fear of losing the UAW and the money pipeline it provides to the party. I think that what has appeared to be corporate greed is really political greed. Sorry if I offend anyone by this statement, and I may be completely off, but unless there is a change in the hearts of individuals, there will be no change in either our business community or our government.

    November 18, 2008
  15. john george said:

    Ray- Sorry, I meant to reference your comment #603 in my last post but missed the omision before I posted it. I think you will enjoy the link, also.

    November 18, 2008
  16. Jerry Friedman said:

    Peter: You wrote, “Ripping us away from oil without providing a valid alternative will plunge our economy even further in to chaos.”

    The hyperbole of “ripping us away” was never used nor implied by me, and I don’t think by anyone else. Increasing taxes to discourage use of fuel inefficient cars is no more ripping us away from oil than increased taxation on cigarettes is ripping us away from tobacco. Increasing taxes causes a slow shift. Criminalizing oil use would be ripping us away. It’s unbecoming of you to mischaracterize my statements as “ripping away.”

    With increased costs on fuel inefficient cars, American consumers will have another incentive to buy fuel efficient cars. It will reward alternative-fuel innovators as American consumers are motivated to buy their cars. This is the slow shift.

    You wrote, “Jerold you obviously forgot what high oil and food prices have done (and [are] still doing) to those that have the least.”

    I’d ask you to consider what our dependence on foreign oil, and our lackluster efforts to free ourselves, has done to increase oil and food prices. Clearly, if we did not rely on foreign oil then fuel prices would not be an issue today. Fuel is a major cost in food, for tractors, factories, transportation, and any other machine in the chain of commerce that uses oil. If you run the numbers, it’s remarkable how much gas it takes to grow a pound of wheat. A pound of meat costs ten times more.

    Since I am not advocating “ripping away” but I am advocating using taxes to discourage the purchase and use of fuel inefficient cars, since U.S. car makers have done next-to-nothing to divest ourselves from foreign oil, and since this oil dependence is a major factor in the oil and food prices you and so many people lament, I think I’ve answered your concerns except one.

    I have already said that I agree with you: we should be shrewd skeptics of tax policies when they are used to affect society. We can talk about that regarding non-oil controversies. Regarding oil, particularly foreign oil, there is no controversy. I see no reason to raise this issue here unless you think we should depend on foreign oil.

    Finally, from your posts I have come to consider the people who buy SUVs and other fuel inefficient cars as the elitists. Some may have genuine need, such as farmers and contractors. Those without genuine need are casting their consumer-dollar-vote to stay dependent on foreign oil. In my opinion, theirs is an elitist position.

    November 18, 2008
  17. William Siemers said:

    John G..
    Coincidentaly, I check, and occaisionally post, on a forum on AL.com to see what’s happening in gulf shores where I have a beach house. Talk about a different political culture than the one on LG!

    As far as Obama and the UAW. He does have some obligations to unions but I don’t think he will be rolling over for their every demand. He made it clear on 60 minutes that he expects concessions from ALL stakeholders in return for the auto bailout. And the first group he mentioned was the UAW.

    Regarding the card check bill…This is not simply a bill about secret ballots. Unions have a right to sign up members without a secret ballot now. During this time employers can do whatever they (legally) want to prevent success of the card check campaign. Then employeers can call for a secret ballot election when card signatures equal more than 50% of the expected bargaining unit. And of course the way they find out if it is really 50% is to check the signatures. Please know that 1 in 5 employees involved in a unionizing effort will lose their job.

    These elections are often delayed as long as possible to give employers time for meetings, parties and picnics with employees on company time, one on one discussions (where it is not unusual to hear that the business will close if a union is certified), etc. And this is after a majority of the workforce has indicated they want a union.

    So what’s fair? The union can’t use signed membership applications for proof of a majority. Employers can delay bargaining until the applications are checked to determine a majority. And then delay the election for another year or so to insure they have time to ‘educate’ their workforce. I don’t know the answer…maybe they should allow a secret ballot when the union asks for it…regardless of the number of card checks they have.

    November 19, 2008
  18. john george said:

    William- That is a coincidence on the al.com link. I know what you are saying about a different culture down there. I heard one time that you can know if you are a red-neck or not if an acceptable defense at a murder trial is, ” Your honor! He just needed killin’!”

    As far as the union/management fights that go on, I’m not sure we will ever see a resolve to this squabble in our lifetime. I appreciate Obama so far. I hope he sticks to his guns (oops! don’t everyone get up in arms! oops, again!). It would be refreshing to see a pragmatist come into authority in DC.

    November 19, 2008
  19. Peter Millin said:

    This is very scary. A politician that claims that tax dollars don’t belong to us.

    Regardless of your political affiliation this should get your heart rate up.

    November 20, 2008
  20. Holly Cairns said:

    Usually rejected ballots aren’t in the spotlight, but this time it was so close we are looking at them.

    Peter said:

    The right to vote is not just a right…it is also a responsibility.
    If you are too stupid to fill in an oval your vote shouldn’t count…period.

    The next step is to set up a literacy test at each polling station. Can you see any problems with that idea?

    November 20, 2008
  21. Jerry Friedman said:

    Holly: You wrote,

    The next step is to set up a literacy test at each polling station. Can you see any problems with that idea?

    Other than it discouraging illiterate or otherwise poorly educated, dyslexic or otherwise vision-impaired, oppressed, inattentive, mentally impaired (but not too impaired to vote), and non-English speaking (will the literacy test come in every language, or only popular languages?), no, I don’t see any problem with that idea.

    November 20, 2008
  22. john george said:

    Well, let’s see. here. The thread theme is “Our Nation’s Financial Crisis”, and here we are dragging out various approaches to voting. I suppose the last election is going to affect what direction our economy is going to go politically, but I’m looking for some actual economic direction, and that, I think, or at least hope, is apolitical. I think it is unfortunate that certain economic principles have been politicised to the point that they are more divisive than functional. If our country’s economic future is tied up in the way the political winds happen to blow, then I’m not sure I can find hope in that.

    November 20, 2008
  23. Holly Cairns said:

    I’m with you on that, Jerry.

    John G., I like it better when you are hopeful. 🙂
    Matthew 19:26.

    John G. said:

    I suppose the last election is going to affect what direction our economy is going to go politically, but I’m looking for some actual economic direction, and that, I think, or at least hope, is apolitical. I think it is unfortunate that certain economic principles have been politicised to the point that they are more divisive than functional.

    Before the last election we were already headed on a fast train in a certain economic direction. We’ve lost a lot of freedoms and the middle class will now struggle to make it… me thinks.

    I’m looking for leadership, too, and communication. What is going on? Why does Paulson have so much unchecked power? Why bailout AIG but not help the auto workers/ 1 in 8 jobs in the USA? Etc. I’d like communication so I know we’re all in this together. I worry that the least able to advocate for themselves will be left behind if we reach a financial breaking point. What is the opportunity cost of what we’re doing lately?

    November 21, 2008
  24. Paul Fried said:

    In terms of the financial crisis and its local effects, I’d like to see more information on the following:
    1) Updates on local foreclosures.
    2) Local banks and their policies regarding working with homeowners to renegotiate terms, or to allow rental of a home instead of eviction.
    3) Local banks and the extent to which their corporate institution is participating in the bail-out.
    4) Are local banks lending again, or are they, as news stories claim, hoarding their money to some extent?
    5) Are there local entrepreneurs who are trying to open businesses, or start something on Division or Highway 3, but unable to obtain financing?
    6) How can local businesses with savings act wisely in ways that might increase employment– investing in local sectors with growth potential — and help stimulate the local economy (instead of “hoarding” and contributing to its demise)?

    November 22, 2008
  25. Stephanie Henriksen said:

    Numbers are spinning on the blogs, such as this:

    700 Billion or $700,000,000,000 divided by the current population of the U.S 305,710,740 = $2,290.00 per person.

    Happy Thanksgiving everybody. After watching the Palin video a few times, I have no taste for turkey this year.

    November 25, 2008
  26. Jerry Friedman said:

    Stephanie: I think that the term “billion” is lost to many people because I believe that our math skills have gone down. Despite it being poor English, perhaps it should be expressed as “700 thousand, thousand, thousand.” That way, more people might realize how much that really is.

    I’m with you. After I learned that every year, 45,000,000 turkeys are killed for the day we are to be thankful, I lost my appetite for turkey. I can’t be thankful at the expense of another’s life.

    November 25, 2008
  27. Paul Fried said:

    $2,290.00 per person would not even cover a month of the Palin wardrobe, Stephanie….

    November 25, 2008
  28. Paul Fried said:

    Given that so many people are out of work, and given that we have too many cars on the road with gas mileage that is too high, why don’t we get automakers to slow making new cars (for the most part), and instead, retrofit existing cars with hybrid engines? Give rebates to folks on fixed income (poor or retired) to cover costs. It would put people back to work, and it would reduce our overall CO2 emissions for the remaining life of the car. The automakers know the dimensions of the space that holds the engine. It would be something of an engineering challenge, but if they brought back Apolo 13 safely, one would think it could be done….

    November 25, 2008
  29. Paul Fried said:

    Here’s David Lindorff, commenting on the possibility of an auto bailout, and saying we don’t need GM’s overpriced Volt (big family car) at $40k, but a two-seater for commuters with great mileage. A section quoted below, starting with the possibility that the automakers could be left to close:
    The pieces could be sold off, and allowed to sink and swim on their own. Maybe one of those smaller, more entrepreneurial fragments would see the wisdom of developing what the public really needs.

    The truth is that the entrepreneurs over at Tesla, a start-up in California, have already made that car — a high-performance two-seater commuter car that can go 200 miles on a charge and that doesn’t need an auxiliary engine. Their problem is that small size and too little capital have forced them to pimp it up into a high-priced luxury show-off item for rich people costing $100,000. If they were to team up with a GM spin-off — say Saturn — they could make a stripped-down version of that baby and crank out 100,000 of them to start at a price ordinary people could afford.

    Meanwhile, regarding those poor autoworkers, they have a legitimate complaint. While Republicans like to blame the auto industry’s problems on them, saying they have demanded too much pay, and too much in healthcare benefits, it’s not their fault that GM and Ford executives have been stupid and greedy and short-sighted (besides, the high wages and benefits that the United Auto Workers won over decades of bitter struggle helped to set standards that raised the wages of all workers across the nation). But let’s do the math. There are about 125,000 unionized hourly workers at the two companies. For a lousy $8.7 billion, every one of those people could receive a $70,000 buyout from Congress. Double that if you want to give them two years to adjust and find new work at an electric car plant or something else. That would cost $17 billion, or less than half of what the doomed bailout of GM is going to end up costing.

    And of course, with the rest of us suffering from the massive mismanagement of the nation’s economy by its corporate leaders and their puppets in Washington, there’s no reason why our tax dollars should be subsidizing those particular workers tat that high a level. After all, companies are failing and will be failing all over the place, without such largesse. Besides, if the bailout goes ahead, all it will do is delay the time these workers will be out on the street anyhow.

    The point is, however, there are more cost-effective ways to help out workers in failing businesses than to have the government simply subsidize the continued operation of enterprises that have been destroyed by management. In truth, all the talk in congress and in the Obama camp about rescuing jobs is just a cover for bailouts that are really aimed at rescuing managers and investors, not workers.

    November 25, 2008
  30. David Henson said:

    Paul – you are getting close to be on the money with your last comments. A $25,000 investment debit card should be given to each American over 25 to ‘invest’ (not consume) in any business venture capitalized at a minimum $5,000,000. A ton of money would flow to Tesla and many other fantastic companies and ideas. America would be off the the races. This would be the economic equivalent of what our founding father did politically. Remove control from planners and turn control over to the people. And the real beauty is the impact would be lightening fast.

    November 26, 2008
  31. Peter Millin said:

    After we bailout the auto industry who should we bailout next?
    In case you lost track the money so far spend on bailouts has already exceeded the $700 billion originally proposed with more to come.

    Obama’s “new” economic plan will take the 2009 budget deficit to $ 1 Trillion dollars, that will go on top of the already $ 10 Trillion dollars of national debt. Which of course doesn’t include the guarantees already made to some banks.

    While we watch our dollar become the equivalent of a banana republic currency we can take our promised $ 1000 dollar tax cut and party like it’s 1999.

    Obama’s planned new economic plan has one positive. His investment in infrastructure has proven itself in the last depression to be a sensible way of creating jobs.

    I was hoping to retire at 67 but the way things go I probably stay working until I am dead.

    November 26, 2008
  32. Peter Millin said:

    maybe i have become too cynical.

    Am I the only one that thinks that it is ironic that congress tells companies to produce a sound business plan?
    That congress is upset, that CITI group wants to sponsor a stadium?

    Politicians telling companies to be financially responsible is like the French telling us to be brave….especially in light of their own inability to balance a budget…..LOL

    December 1, 2008
  33. Paul Fried said:

    David, if the bailout was reverse socialism, it seems you want to expand that to everyone, but convert it to free market use? I suspect that would be the worst kind of mistake. People would feel they were simply gambling with gift money–if you lost it all, well, easy come, easy go. No, better to have people invest carefully with their own hard-earned cash, I think.

    December 2, 2008
  34. David Henson said:

    Just how expensive is the credit crisis (more than WWII the next most expensive)http://www.thebusinessledger.com/Home/Archives/InTheNews/tabid/85/mid/393/newsid393/548/Default.aspx

    Paul – you sounded like the landed aristocracy from 18th century England – the unwashed can’t be trusted. They would be investing on behalf of the US ~ people would take it very seriously. A few ninnies from Harvard just cannot match wits with 10 million individuals (the cold hard facts are that if they could match wits with the unwashed masses then we would have no credit crisis today).

    Want to see what mass infrastructure spending will get you – look how the Katrina money was spent (or MASSIVELY WASTED)

    December 2, 2008
  35. Peter Millin said:

    The whole discussion on the bailout is academic, since we are not talking about real money anyway.

    I am fearful that the current actions of the feds will makes things worse not better. We have build a house of cards with worthless paper money and are now in the process of throwing more add it.
    The goal is to provide temporary relief for political gains and not sound fiscal policy.

    December 2, 2008
  36. Peter Millin said:


    WASHINGTON–(BUSINESS WIRE)–The nation’s premier taxpayer watchdog group, Citizens Against Government Waste (CAGW) today expressed dismay over the exorbitant final price tag for the Capitol Visitors Center (CVC)
    Initially conceived in the early 1990s and projected to cost $71 million, the CVC has become an example of out-of-control government contracting and mismanagement. After costs ballooned and construction schedules spiraled out of control, the three-level, underground monument to congressional excess finally came in at a whopping $621 million and three years behind schedule.


    December 3, 2008
  37. john george said:

    David H.- You have some good points about infrastructure investment. I’ve done a little research on the depression, and it was actually the War that brought us out of it, not the WPA programs. The thing about investing money in infrastructure is that it does not create new wealth. It only spends existing wealth. It might make it handier to get around, but what good is that if you have no job to go to? When the war broke out, there was much investment in manufacturing to produce war machinery. When the war ended, the foundation for consumer manufacturing was already built. It was a pretty simple change over from building war machinery to autos and tractors. You might say we learned how to beat our swords into plowshares. I’m having second thoughts about the wisdom of trusting infrastructure investment to bring us out of the economic fix we are in. Social programs seem to be short lived, because their financial source is in taxes on manufacturing goods and providing services. If there is nothing done to increase our productivity, the economy will stagnate and even more businesses will have to close. The government can provide certain services, but it does not produce any goods, at least at this point in time. Now, if the government takes over the auto industry, look out! If you think we have ineffecient cars now, just wait until then. The oxymoron, “government efficiency”, will definitely come into play.

    December 3, 2008
  38. David Henson said:

    John – the auto industry is interesting because if they go bankrupt with no government money then the end result will be lost pensions, closed down dealers and mass layoffs. So the congress says to auto execs, ‘give us a plan we can fund’ – the plan ‘lose pensions, shut down dealers and mass layoffs.’ Next the congress will say give us a plan where you lose money (just not so much).

    I think your WWII thinking is exactly correct. In fact, I personally (and I know it won’t be popular) think the US adopted much of fascist Germany’s industrial planning post WWII and it is those heavily planned industries that are very sick right now. The two main parties (really their financiers) have been trying to plan their way out of one crisis after another for decades. Thankfully due to the unplanned results from early silicone valley folks working in their garages and a Finnish stroke of genius (Netscape browser) the economy is in fact very dynamic and ready to roll. All that is required, and John your folks could be the ones to make this happen, is for the nation to take a leap of faith. This is why I say give every American a $25,000 debit card to invest on behalf of the US (Decentralize the financial structure). The money will hit 100s or 1000s of great ideas (and duds but that does not matter) – the Internet will identify the great ideas and the funding will move to them lightening fast.

    December 3, 2008
  39. john george said:

    David- Hmmmmm! $25,000 tax free? Could this possibly be the “trickle up” theory I have heard bandied about? In my opinion, the money would be going into the hands of those who could actually accomplish something with it. Considering that many business plans can take off on about 20-30% equity, this could be expanded into about $83,000 per capita, or $160,000 for a couple’s joint venture. And if a few people could join forces in a venture…. That is a huge chunk of change to see generated. I don’t have any odds of seeing it actually happen, though, but it is good food for thought.

    December 3, 2008
  40. Paul Fried said:

    David: The government spending after Katrina was the Bush administration’s ninny spending and overseen by political appointees. This is ironice, like Norm Coleman saying in Rochester that we can’t have single-payer universal health care because “you don’t want the people in charge of Katrina managing your health care. The ninny; it was Bush’s dudes who mismanaged that.

    It has absolutely nothing to do with common folk v. aristocracy. The artistocracy are fine at wasting money too.

    You give a blank check to every citizen, and here’s what would happen: A few strong, honest companies might get some badly-needed capital. Other unscrupulous companies would invest in sleek advertising that would make them sound green and sweet and poised to change the world, and many of those would end up being new Ponzi schemes. If you thought Katrina response was mismanaged, you’d see that mismanagement increased exponentially. On top of that, in order to start it, you’d have to print a bunch of money, which would devalue the dollar, which would weaken it against foreign currency too much. Foreigners would come in and buy everything that was or wasn’t nailed down. It would be chaos.

    It would also contradict the basic principles of libertarianism & all: You’d have no right to hand out all that money and tell folks they had to invest, instead of just going and buying a million Christmas lights, or maybe a pink hummer. Some companies would hand out early “dividends” or rebates to those who invested, as incentive, so they’d be able to buy wonderful strange stuff anyway.

    With a free market, you can’t regulate against any corrupting the system. That’s why they want it free.

    Not that it’s going to happen anytime soon.

    December 3, 2008
  41. john george said:

    Paul F.- Your comment, “…With a free market, you can’t regulate against any corrupting the system. That’s why they want it free…” really isn’t a characteristic of the free market system. It is a characteristic of men in general, no matter what the market system is. Laws are only effective if they are uniformly enforced, such as speed limits. If you want to take a look at corruption under strict government controls, take a look at Russia up to the fall of the iron curtain. All the free market change did was to allow the corruption to be done openly rather than covertly. When greed is in a person’s heart, it doesn’t matter if they are a mobster, businessman or government official. They will continue in their corruption as long as it is possible to keep it secret. I especially support laws that protect whistle blowers, but even these can be abused by people with an axe to grind. What we still need in this country is a real revival.

    December 4, 2008
  42. William Siemers said:

    Whether infrastructure spending is creating or spending wealth is not the important issue. What is important is that we have a system of public works including, roads, bridges, sewer systems, public buildings, public transportation, etc., that is in pretty bad shape. Repairs, renovations and new construction have been postponed for many years. The deterioration of our infrastructure threatens this country’s preeminence. Everything from a strong economy to national security rests on a strong infrastructure.

    It seems to me that wise and prudent investment in public works is a necessity, now more than ever. It should be a lynchpin of any stimulus package that is enacted. Sure, jobs will be created and money will flow into the economy…but more importantly, we need to improve our infrastructure in order to keep our country strong.

    December 4, 2008
  43. john george said:

    William- I’m not sure I agree with you as far as the infrastructure. This is paid for with tax money, and since the government gets these taxes from the private sector, unless we have some increase in real value in the private sector, there will be no source for tax money. Take a look at the period from 1929 to 1939 as far as new business developement and average income. There was no growth in this period. The war effort actually produced growth, both of industry and average income. I have no problem with the government maintaining infrastructure, but we need to recognize that this alone will not establish a firmer economic base. An economic base has foundation in industry, not government. One of the errors of the present financial crisis is that income was generated on mortgages with inflated rather than real value. The gamble was that these properties would acrue value rather than lose it. The wager failed, so we have investment companies with money tied to properties that do not equal the value of the debt. For the government to step in and throw money into this, the effect is to cover the loses rather than actually increase our economic base.

    December 4, 2008
  44. Mike Zenner said:

    John G,

    So if I read between the lines in your comments #643 and #649 that the best thing the government can do is start WWIII so it can jump start the economy?

    I feel it is misleading to say that the building of weapons as opposed to infrastructure is what got us out of the depression. I think the actual reason is not the fighting of the war (other than exporting weapons and material to allies) itself, but the resulting destruction of most of the modern world at the time, and the deaths of 10’s of millions of “economic producers”.

    Once the productive capacity of most of the world outside the North American Continent was leveled it was pretty easy to convert industry to supply the rest of the devastated world with much needed goods.

    December 4, 2008

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