Economic Crisis; Solutions

[Overdog]

What are some ideas as to ways we can solve the current economic crisis?

 

Seems to me we've had this problem before. The government subsidized agriculture back in the 60's and 70's and created huge agricultural surpluses and about 100,000 farmers that the free market would never have created. To solve the problem Regan stopped the subsidies and paid farmers in surpluses of crops. It was called Payment in Kind. Eventually, those excess farmers all went out of business and we had the "Farm Aid" concerts, etc., that some of you may remember.

 

It seems to me the best way to address the economic problem we now face is for the government to buy up the foreclosures and sell the properties back to the construction industry over time (at some discount of course) in exchange for them not building new houses. This would be similar to the Payment in Kind program.

 

The market is adjusting to a housing surplus, and it cannot be stopped. The current financial rescue plan just passed by the senate will not stop it, and will just be a huge waste of money.

 

Now, this idea would probably be even more expensive than the 700 billion, but it would be a solution.

 

What are your ideas?

[Buffy]

It seems to me the best way to address the economic problem we now face is for the government to buy up the foreclosures and sell the properties back...

 

The current financial rescue plan just passed by the senate will not stop it, and will just be a huge waste of money.

Well, actually, that *is* the plan. The only issue is that the holders of the mortgages will only sell the most "toxic" (i.e. over-valued) mortgages to the government. That's why the Senate bill included provisions for acquisition of *equity* in the firms that are selling these mortgages: they have to give up some of their equity in order to have the privilege of getting more for those mortgages than they're worth.

 

It's definitely *far* from ideal, but this is Governmental Sausage Making in action: its better than the alternative!

 

Those that are against the plan are simply not seeing the fact that credit in this country is drying up faster than spit on the asphalt in August. For those of us who have small businesses, the lucky ones don't need lines of credit to make payroll, but those are in the minority. If this thing fails, it will be all of about 60 days before unemployment and business failures shoots through the roof.

 

Its not about "letting the fatcats off the hook" or "small government" or even "Nancy Pelosi is being mean to us!" Its all about *survival*.

 

We desperately need to roll back the elimination of government oversight and regulation of financial institutions, and more importantly, start collecting the statistics that the Bush Administration *stopped* in order to hide how much money those fatcats were stealing earning!

 

The hidden crisis in the latest round is that because only the biggest banks and institutions can buy up the banks that are failing, we're headed toward the same sort of mindless consolidation that leads to dysfunctional markets. Just like with Oil or Pharmaceuticals, when you have consolidated down to a handful of participants that dominate the market, there's no need for collusion to ensure that markets aren't "efficient" (meaning that prices don't go down when demand drops or supply increases because its not in the "interests" of the participants to do so, and they can *assume* that the few other players will find mutual benefit in doing nothing).

 

With only 3 banks left in the whole country, are you *sure* you're ever going to get a good deal? Why should they not charge you $5 for every withdrawl? There'll be no pressure not to!

 

And folks think that this doesn't affect them....

 

So, trust busting big time: That's why I'm a Republican, Teddy R's massive "restructuring" of the Oil and all those other horrid so-called "natural" monopolies of a century ago....

 

The death-knell of the republic had rung as soon as the active power became lodged in the hands of those who sought, not to do justice to all citizens, rich and poor alike, but to stand for one special class and for its interests as opposed to the interests of others, :hyper:

Buffy

[Racoon]

What can we do??

 

 

For starters you can make punishment of hardcore financial crooks more than that of a person in posession of Marijuana..

 

I never understood how white collar criminals, who steal and bilk millions out of peoples savings and retirements, get less Jail/Prison time than some 23 yr. old punk kid on the street w/ an ounce of lettuce.

(See Enron and WorldCom as examples)

 

Make the Crimes more Punishable..

 

;):hyper::hihi:

[LaurieAG]

What are some ideas as to ways we can solve the current economic crisis?

What are your ideas?

 

Hi Overdog,

 

Considering that there are between 500 and 700 trillion dollars of derivatives floating (actually the real money is actually 'floating' on the derivatives) around the global financial system today, the only way to solve the problem is to use the same method i.e. 'economic rocket science' that caused all of these problems to solve them.

 

The derivatives should be rolled into 'MARS COLONISATION INC.' by the global governments so that not one red cent can be claimed on planet earth, the payouts can only happen, if they ever do, when the receipts are presented at the MARS REDEMPTION CENTER in person by the holder.

 

This is the only real way to solve it because anything else just perpetuates the mindless greed and market manipulation not to mention despoiling our planet as a side effect.

[Cedars]

Math is not my strong point. But the numbers just dont add up for me.

 

"As bad as the mortgage crisis has been, 94 percent of all Americans are still paying off their loans. The problem is Wall Street placed its huge bets and side bets with all of those fancy securities on the 6 percent who are not. "

 

"It is [credit default swaps] an insurance contract, but they've been very careful not to call it that because if it were insurance, it would be regulated. So they use a magic substitute word called a 'swap,' which by virtue of federal law is deregulated," Greenberger adds.

 

The problem was that if it were insurance, or called what it really is, the person who sold the policy would have to have capital reserves to be able to pay in the case the insurance was called upon or triggered. But because it was a swap, and not insurance, there was no requirement that adequate capital reserves be put to the side."

 

A Look At Wall Street's Shadow Market, 60 Minutes - CBS News

 

This stinks of Enron, and rolling blackouts. It reeks of "with intent to defraud". It smells of conspiracy.

 

I just didnt see enough voluntary loan restructuring by these very companies who have their hands out for taxpayer backing. They want taxpayers to invest in their toxic profits? Then sell me a package I can enter into with all the facts.

 

Let the bad players fall. Pick up the pieces AFTER the fall. The penalty the wise and unaffected have to pay (like the 94% of americans who will fund this bailout in spite of paying their debts) is too great a price to pay for toxic investments. So much for a free market; why is it only free during the good times of record profits?

[Overdog]

Hmmm. No solutions. Well, I bought a years supply of food, a 30-30 with lots of ammo, and a water purification system.

[Turtle]

Hmmm. No solutions. Well, I bought a years supply of food, a 30-30 with lots of ammo, and a water purification system.

 

:Guns: :eek: Who ya gonna shoot there Over/Under Dog? :hyper: You're not alone though; gun sales here are through the roof. :doh: I bet there's a lot of prayin' goin' on too, if Obama got it right. :hyper:

 

Anyway, gas prices have plunched & it's because people cut out the uneccessary driving. Solution #1 then is cut out the fat at home & don't wait for Congress to do it too so it trickles down to you. If folks can afford to cut back, then they can afford to not go back to the wasting.

 

You'll need more than guns & water Dawg, and here's a place to revisit on that: >> Philosophy of Disaster Preparedness

 

I'm hearing that Holiday sales are down too and to a large degree it's because people aren't spending ,as much as it is having nothing to spend. This Holiday, buy green. Besides that gun, water purifier, and ammo, buy some solar panels, deep-cell battery, and an inverter & use them. Buy garden tools & seeds and put in a garden this next Spring. Buy practical items and leave off the crappola. Boycott McDonalds Happy Meal toys and their ilk. Buy some stamps and write your government officials and tell them what you want & that you are watching them.

 

Take your own action & take it now. Lead, follow, or get out of the way. B)

[Chiantiglace]

There are a few things the government could be doing to solve all of this, but for some reason they seem to be blind to it, why all the bickering and just make the right choice.

 

Soft paternalism all around will fix things, unfortunately it won't be a quick fix that everyone is pleading for.

 

Why not find a way to have other companies invest their money into the mortgage system. Large companies like google, microsoft, etc. that can build programs to buy up bad mortgages and foreclosures. That way by separating out the tasks it is itself another free market. Once the credit system is fixed the houses can then be bought back slowly with interest of course. The government could easily give tax breaks to these companies for picking up the slack, like a right off for charity.

 

Give people wit money incentive to fix the situation. Right now there is no trust, especially in the government so you can't rely on any private party to pick up some slack, they all think they are going to get murdered by taxes, and with a democrat majority the larger companies will be getting hit pretty hard.

 

And why are we bailing out the auto-industry. They have been making poor research choices for decades now? Didn't everyone see this coming already? I grew up in North Carolina where 15-20 years ago everyone either had a ford, chevy or dodge and they all had their family pride in their trucks. Now when I visit all I see is toyota and nissan. Thats how a free market works, these companies made poor choices and are suffering the consequences, its not our job to hold them up. If we wanted to hold them up we would continue buying their piece of **** vehicles. Why should we pay more taxes because they didn't want to create energy efficient vehicles. Let me just say there is no saving these companies if they are going to fail without the bailout. All the bailout will do is prolong their collapse and at our expense. In the long run it will end up costing far more jobs then it will save because of so many small businesses laying off people because they can't pay their bills.

 

This is why Jefferson thought government should be continuously overthrown, how do we do that now?

[Overdog]

...

This is why Jefferson thought government should be continuously overthrown, how do we do that now?

 

I don't know, but I can't believe what I see happening in this country. It seems the government has sold out Joe Taxpayer, and government efforts to avoid or postpone the inevitable free-market cure for the excesses of the past will be ruinous.

 

The Fed spending trillions of dollars of Joe Taxpayers money without congressional approval makes me wonder who's in charge of this country. It seems obvious that Congress's "power of the purse" is irrelevant or inconsequential compared with the Feds ability to spend our taxes.

 

It looks to me like the Fed and Corporations "too big to fail" own all of us, including the government!

[charles brough]

Hmmm. No solutions. Well, I bought a years supply of food, a 30-30 with lots of ammo, and a water purification system.

 

Here is a real optimist! He expects it to be over in a year! (. . .just kidding!) I also believe it will be over that soon!

 

Here is why: The government is flooding the system with new money. As long as problems grow worse, and they will, the government will of course continue to do that. About 6 months after the stock averages start rising, t(soon) the mass of money that is now flowing into treasury bonds and paper by panicky individuals and business will start to flow OUT of it into all these now-very-cheap assets such as houses. The dollar will fall in value making prices recover and what we produce cheaper to the rest of the world.

 

We are making one big mistake due to the classist privatizing privateers in government. They would have us believe owning stock in financial and auto production businesses is "evil" ("socialism"). Our problem is that money we use to help the financial and auto corporations with could be retired from the system as we recover if the government would always take back a stake in the corporations it helps. Otherwise, we build the foundation for hyper-inflation in the future.

 

charles brough

the Atheistic Science Institute - home page

 

P.S. Overdog, how about a propane tank, stove and light as well? Did you overlook getting an electric generator?

[Racoon]

The reason to bailout GM and Ford and Chrysler should be to keep making cars in America, thus providing jobs and wages to people involved..

 

The US already gave out 700 billion to the people who got us into this mess in the first place..

So whats 16 billion more when it keeps regular Americans employed??

 

 

Its all fuxxed up.

 

But as soon as you hand out money to the Auto industry, then the Airlines are next.. then major chains are next..

 

Looks like Government control over everything doesn't seem too far fetched anymore. :phones::phones::phones:

[Moadib]

The solution is an old one but a good one. Companies with bad business policies or unworkable structure should go bankrupt.

AIG is the easiest. If its "too big to fail...its too big. In my opinion, if AIG totally failed and didnt even try to restructure or downsize, 500 smaller companies or new companies would expand to snatch up market share within a year. Bankruptcy and a good downsizing would be my more appealling. As a sidebar stockholders should pay more attention to the pay structure of the companies they buy.

The lesson - Companies should not spend, invest, or pay CEOs above their means

The auto industry is a case of you made the bed now you lie in it. For far too long auto unions have been over payed and under worked.No comany can pay its labor 3 times as much and have 3 times the downtime and continue to pay its employees 3/4 of their salary after they retire and expect to compete. Every cent a union workers make over nonunion workers, is a cent less competetive the product the union produces becomes. The auto industry is best served claim bankruptcy and restructuring their labor agreements and business model

The lesson - Union should not bite the hand that feeds them.

The housing issues is the only one of these 3 that govt should give loans or bailout money.The govt all but forced banks to make high risk loans to low income people with questionable credit. Throw on top of that the feds slamming the interest rate to the bottom of the basement, further inflating housing prices and you get lots and lots of high risk lower reward loans on overpriced houses. If a govt promted banks to make risky loans. govt (and politicians) should be held accountable. If a bank bought a bad loan from another bank, on the otherhand, that bank should share responsiblity for the loan. Prehaps a govt program to aid homebuyers in house values considering that the seller, bank, and even the buyers own agent have vested interest in that sale priceof a house being as high as possible. I havent thought this one out all the way but possibly govt could absorb some of the forclosures for public housing and cancel some building projects(not that im for public housing but if they are gunna do it at least dont spend so much of my money on it).If banks slow lending for a year or so is that really all that bad? ive always heard Americans dont save enough and have too much credit...

The lesson - Beware politicians bearing gifts. or when government gets involved in a industry, that indusrty becomes an economic drain and usually faulters or fails.

For some its time to reap what they sow and some its time to tighten their belts and for other its time to access values but for all 3 their is a chapter of bankruptcy that can make the transition easier.

[charles brough]

Moadib,

 

That is good economic theory. When we recover from the financial collapse and the long deflation that would result, as well as the crime, rioting, hunger---not to mention the collapse of the world economy---we would have corrected our economic system so it would be efficient again and could climb out of the depression some five years or so from now to bring real growth rather than just credit growth and debt-pile up. I suspect the political situation would change drastically during that time and re-shape the results differently, however.

 

I don't know what we "should" do because it all depends upon your goals. The goal both conservatives and liberals are reaching for now is to stop the collapse fast at what ever the cost in the future. With that goal in mind, I think they are all doing the right thing and that it will work much sooner than most everyone anticipates.

[Donk]

Giving stimulus money to large companies doesn't work. They'll use it to repair their balance sheets, or buy other companies, or pay bonuses, or simply salt it away in offshore accounts.

 

To get through this, you need to get people spending money. I like the idea of a credit card for every adult: credit limit $1000, zero interest for, say, two years. If they have children, add another $500 per kid. Total cost less than $300 billion.

 

That money gets into circulation fast. Shops hire more people. So do wholesalers, manufacturers... more income all round, so the money gets spent over and over again. A virtuous circle, with the government taking a piece of it back through taxes at each stage.

 

Administration should be left to the bailed-out banks, who are good at doing it. And they should do it free, as a condition of the bailout :)

 

If you want the stimulus to work, don't give it to Wall Street - give it to Main Street!

[Moadib]

Dunno Donk in my opinion anytime the govt gives money away that money is taken from its citizens, passed thru a govt filter that increases cost by 30% or more then given back. It would be like taking pain pills for stomach cancer, makes it less painful but could aggrovate the problem.

If the money is taxed equally its a wash after govt gets payed for.If the money is taxed mainly from the wealthy(job creaters) companies have 3 choses: raise prices cut employees or just make less(yeah right they will pick the 3rd)The 1st two option are just a transfer back to equal taxation with companies charging extra to pay taxes and the 3rd wont happen.I dont think its nearly as bad a situation as they make it out to be. Think of how many of the loud voices stand to make a chunk of change from making it sound worse than it is. that being said i dont think we will make the right choses. I say bring it on! i do well in bad spots and its will be another lesson. Maybe give a man a fish and he eats for a day, teach a man to fish... and socialism breeds laziness

[Moadib]

Louisiana showing good sign on economic side for what im seeing

[Donk]

If the money is taxed mainly from the wealthy(job creaters) companies have 3 choses: raise prices cut employees or just make less(yeah right they will pick the 3rd)The 1st two option are just a transfer back to equal taxation with companies charging extra to pay taxes and the 3rd wont happen.I dont think its nearly as bad a situation as they make it out to be. Think of how many of the loud voices stand to make a chunk of change from making it sound worse than it is. that being said i dont think we will make the right choses. I say bring it on! i do well in bad spots and its will be another lesson. Maybe give a man a fish and he eats for a day, teach a man to fish... and socialism breeds laziness

Sounds like you're a believer in trickle-down economics. "Give to the rich, they'll spend and everyone else will benefit." You might well be the last person on the planet who still believes it. Maybe we should have you stuffed :shrug:

 

And socialism doesn't breed laziness. Ask a Soviet or East German peasant how good things were for them in the old days. Easy welfare does, but that's another kettle of fish. And if you define welfare as "money for no work" there are a lot of your heroes who have been paying themselves more for doing less than anyone ever before in history.