Economic Crossroads

[duack 14]

Welcome to page 5!!!!

I think the main reason for the whole depression is the irresponsible consumer. since the early 90's spending has been too high in pretty much all developed econmies so now its time to pay the price for it. thats one reason why the bailout funds are going to banks and not consumers, because consumers will only spend more in that case. but the bailout shouldnt go to banks either because banks are most likely to suck up all the advanteges of it and not pass it on to most people. very simply, everyone is aware of the business cycle and boom periods shouldn't last longer than 10 years. this time it lasted 17 years so the economy is going to come down hard. the only reason it lasted for 7 years longer wasnt because everyone had more money it was because everyone was borrowing more money so it just has to be paid back and everything will eventually stablise.

btw shadow assassin i totaly agree with you when you say the nsw government is dumb. you know i heard that they are actually considering replacing double-decker trains with single deck ones? its rudicolous!

[Psycho_Teddy 25]

Indeed, the irresponsible consumer has a part to do with this crisis, but I feel that they're not the single cause of it.  Obviously, if you know that you don't have a job, and take out a NINJA (No INcome, Job, or Assets) loan for $300,000, you're going to get screwed down the road.  However, banks that raise interest rates by 30% for one day of late payment also share part of the blame.  It's a combination of the two.  The state of this country is such that it cannot survive any longer without big brother telling you no.  It's a transition from the old system, where most people were honest, and you could count on people and companies to keep their respective promises, which is why so many people are still against "big government" policy.  But the problem is, we are no longer self-sufficient, and it's something that our people have not realized yet.

At least Europe gets it... >.>

[duack 14]

Yeah but from studying economics in high school, I was told that government regulation makes the economy less efficient. See one reason it's good and bad is because if the government restricted lending, they could prevent another disaster from occuring but at the same time there are responsible, smart people who borrow beyond their means but end up creating a business and making lots of money. There's also this thing called the "Pitchford Thesis" that states that private sector foreign debt is okay so long as the money goes towards capital deepening and investments because these will more likely have a higher return than cost.

[Meg 368]

To bail out the car companies or not to bail out the car companies.  That is the question.

On one hand, I can certainly see the argument that the American car companies are mis-managed and bad management doesn't deserved to be bailed out.

Four years ago, I bought the first non-American car that I have ever owned.  I bought it for one simple reason:  The American companies were not making hybrids.   Had there been a functional American hybrid, I would have purchased it.  But they were so short sighted that was not one of my options.

Am I sorry I bought it?  No way.   I think my Prius is great.   It works for me.   Does it haul a 40-foot sailboat?  No, it doesn't.  But since I don't own a sailboat, I don't care.

By my calculations I have, so far, saved over $4,000 in gas money and over 1,500 gallons of actual gasoline.  (based on the mileage of the car I used to have.)  I'm happy with it.

But there is another issue with the downfall of the American car manufacturers and with our whole manufacturing sector in general:  the effect on national security.

During WWII, our factories were cranking out what?  About an airplane a day?   Don't we want to retain the ability to manufacture big honking machinery?   Or are we going to outsource it to countries that may or may not like us in 10 years?

[hym 358]

Originally posted by: SkiGeek To bail out the car companies or not to bail out the car companies.  That is the question.

On one hand, I can certainly see the argument that the American car companies are mis-managed and bad management doesn't deserved to be bailed out.quote>

Yeah, mismanagement is an issue, but it also needs to be mentioned that the US automakers have been expected to deal with something that will kill just about every business--completely unrealistic union demands.  Several decades ago, business was good and the UAW demanded a slice of the pie for the workers.  Okay, that's not inherently bad.  Problem was, when stuff started to sour, the union leaders wouldn't budge.  They still wanted the same, absolutely asinine perk levels, despite the fact that trends were indicating the companies couldn't truly afford that.  So, yes, they've been mismanaged.  But part of it is the absolutely asinine policies of the union leaders they've had to work with.  Is it any wonder that the Japanese automakers are building their factories in the Southern states where there is less desire to unionize?

But there is another issue with the downfall of the American car manufacturers and with our whole manufacturing sector in general:  the effect on national security.

During WWII, our factories were cranking out what?  About an airplane a day?   Don't we want to retain the ability to manufacture big honking machinery?   Or are we going to outsource it to countries that may or may not like us in 10 years?quote>

Well, the defense contractors don't seem to be in any imminent danger of collapse.  Still, it points to a reality that a lot of manufacturing workers don't want to accept--they're expendable.  From an employment perspective, the ways in which machines trump humans is staggering.  Most manufacturing jobs can be replaced by a machine, and you get none of the headaches that comes with employing humans (such as idiots who whine about their job all day long).

Like it or not, modern robotics has rendered humans mostly a liability to manufacturing, and until people are willing to accept that, America's manufacturing sector will continue to suffer.

[Meg 368]

Originally posted by: hym

Yeah, mismanagement is an issue, but it also needs to be mentioned that the US automakers have been expected to deal with something that will kill just about every business--completely unrealistic union demands.  Several decades ago, business was good and the UAW demanded a slice of the pie for the workers.  Okay, that's not inherently bad.  Problem was, when stuff started to sour, the union leaders wouldn't budge.  They still wanted the same, absolutely asinine perk levels, despite the fact that trends were indicating the companies couldn't truly afford that.  So, yes, they've been mismanaged.  But part of it is the absolutely asinine policies of the union leaders they've had to work with.  Is it any wonder that the Japanese automakers are building their factories in the Southern states where there is less desire to unionize? quote>

I don't know what the perk levels are so I can't say if they are asinine or not.   It would be interesting to see them.

All parties, union or not, need to see things realistically.   There hasn't been a lot of that going on.

My problem with the car companies is that that guys running them have been steering the companies in the wrong direction.   They deliberately chose to ignore hybrid technology, figuring that Americans were in love with the big macho SUVs.   This is called a bad business decision.

Yeah, there will always be a market here for the big trucks.  Well, maybe not always but at least as long as any of us will be alive.  But they forgot that some of us don't need that kind of vehicle and don't want to pay for more vehicle than we need.  Bigger isn't always better. 

This is the same mindset that has gotten people in trouble in the housing market.  Many people (not all) got themselves into mortgages they can't handle, partly because they were determined to get more house than they need.  in an effort to "live large", people have given up "living well".  But I digress.

Years ago, when Chrysler was having issues, they got a loan.  They paid it back early, which sounds great.  Problem is, they did this by putting a lot of emphasis on next quarter's profit report.   Focusing on short term profit is all fine and dandy except for one thing:  if you totally ignore the long term picture, it will bite you in the rear at some point.   Well, that point has arrived.

For those of you who are not having deja vu (which would be everyone who doesn't remember the early 80s), let me refer you to this article from 1983.

I agree with something I heard today:  if these companies want government money, okay, but they should get paid a government worker's salary, not a CEO's salary.  Because I certainly see no reason for my tax dollars to go for paying a six figure salary to some guy who is so short sighted that he is making incompetent business decisions.

[hym 358]

Originally posted by: SkiGeek

Originally posted by: hym

Yeah, mismanagement is an issue, but it also needs to be mentioned that the US automakers have been expected to deal with something that will kill just about every business--completely unrealistic union demands.  Several decades ago, business was good and the UAW demanded a slice of the pie for the workers.  Okay, that's not inherently bad.  Problem was, when stuff started to sour, the union leaders wouldn't budge.  They still wanted the same, absolutely asinine perk levels, despite the fact that trends were indicating the companies couldn't truly afford that.  So, yes, they've been mismanaged.  But part of it is the absolutely asinine policies of the union leaders they've had to work with.  Is it any wonder that the Japanese automakers are building their factories in the Southern states where there is less desire to unionize? quote>

I don't know what the perk levels are so I can't say if they are asinine or not.   It would be interesting to see them.quote>

I don't know the exact particulars, but this is some of the stuff I do know:

-GM and Ford literally lost the right to lay off unionized employees if they needed to cut staff.  Your union job was guaranteed unless one of two things happened: A) the company retires you B) union leaders explicitly give the company the right to "lay you off"

-If GM retired you, you were immediately put on the most lucrative retirement package of any US company, bar none.  In fact, the cost GM paid in retiring an employee was so high that retirement checks were almost worth as much as regular salary...and you weren't even working for GM anymore.  When it came to cutting labor costs, Ford had even less leverage than GM did, and GM had almost none.

-Chrysler, when negotiating salaries for an auto assembly plant, had to threaten to close the whole plant, and put 2,000+ employees out of a job, just to get the UAW representatives to accept that, maybe, just maybe, the janitors didn't need to make $100,000+ per year for cleaning restrooms.  (To say nothing of the fact that all of the auto assembly workers make $100,000+ a year also.)

[duack 14]

Wait Im a bit confused now. Are you guys for or against capital replacing labour? And also wasn't the bailout aimed towards financial markets?

Anyway here are my two cents - although labour costs have put American car manufacturers in a bad position, you have to remember that the average Japanese citizen makes more than the average American but at the same time, the Japanese car industry is more efficient than that of America. It really comes down to micro-management with things such as protection levels, the US car industry has been protected for too long so this has made it innefficient, as it has failed to keep up with global competitiveness and whats worse is that the more innefficient it is, the more it has to be protected which just creates a terrible cycle that is difficult to break out of.

Also, as a consumer, I would prefer not to buy an American car because of their poor safety standards in comparison to Japanese models.

[Easy Bakes 253]

Note to GM, Ford Chyrsler :

Make a decent car that lasts more then 75k miles and you will sell them.

People are buying forgien cars becuase they are better, they last longer and dont have major recalls 3 times a year because they  catch on fire randomly.

[saltandsauce 0]

umm, big infrastructure projects like the Hoover dam, empire state building and Sydney harbour bridge were built a bit later on in a recession as in- after about 4 years of mile long soup kitchens and dole queues. we aren't at that stage of the big dole queues (UK)

see this is when debt is considered acceptable you can hear yuppies talking about their mortgage

"i've got a £120,000 mortgage"

"i've got £140,000 mortgage and £5,000 of debt on top of that!"

"HAH that's nothing i have £60,000 of debt NOT ncluding my mortgage for a historic 8 bedroomed house"

that has somehow been acceptable in the UK that's like saying "i have a tumour" "i have cancer" "i have 2 days to live"

we have Globalisation to thank for this what started off as americas problem has become the world's problem and what's worse is manufacturing cannot pick up the slack since old manufacturing jobs have been automated

having said it's the USAs prblem it's also the property shows that somehow convinced us that buying a hovel and holding on to it and putting some curtains that cost £2.50 and getting £40,000 when you sell it 5 years later and speculators that caused the UKs bubble

[Easy Bakes 253]

saltandsauce

having said it's the USAs problem it's also the property shows that somehow convinced us that buying a hovel and holding on to it and putting some curtains that cost £2.50 and getting £40,000 when you sell it 5 years later and speculators that caused the UKs bubble quote>

Part of that speculation were the realtors upselling homes to  people that couldnt afford that particular house to rise thier commisions.So many  to place  blame for the current system collapsing, too many point at one specific cause, but when one crashed it all seems to have tumbled to ruin. 

Time to buy a fire proof mattress as a retirement fund

[Shadow Assassin 336]

umm, big infrastructure projects like the Hoover dam, empire state building and Sydney harbour bridge were built a bit later on in a recession as in- after about 4 years of mile long soup kitchens and dole queues.quote>

That's what I said on the previous page.

Stuff like that definitely helps keep the economy afloat in bad times, encouraging some sort of stability, rather than falling deeper and deeper into a spiral of... well, depression.

Extreme measures may have to be taken (especially against NIMBYs when it comes to infrastructure projects that will be beneficial to all), though.

[duack 14]

we have Globalisation to thank for this what started off as americas problem has become the world's problem and what's worse is manufacturing cannot pick up the slack since old manufacturing jobs have been automated

quote>

 

Yep, bad for developed nations, good for developing nations. Probably the first time something has ever been that way

[belfastuniguy 18]

Yep, bad for developed nations, good for developing nations. Probably the first time something has ever been that wayquote>

Not really, developing nations are dependent on us developed nations being cash rich and spending on consumer goods.

Citigroup plunges on uncertainty

Citigroup's shares have lost half of their market value this week

Shares in Citigroup, one of the biggest banks in the US, plunged on Friday amid uncertainty about the firm's future.

The firm's stock rose in early trading but later tumbled to end the day 20% lower at $3.77 as investors awaited the outcome of a meeting of board members.

The Wall Street Journal reported that Citigroup was considering selling parts of the firm. There are also rumours it might merge with another firm.

Earlier in the week the firm announced 52,000 job losses worldwide.

These cuts came on top of previously announced reductions of 23,000 positions.

The total of 75,000 job cuts represent a loss of about 20% of the firm's staff, leaving it with 300,000 jobs worldwide "in the near term".

Raising capital

Chief executive Vikram Pundit told employees on Friday that the firm did not want to change its business model, Reuters reported, citing two employees.

Shares in the firm have fallen sharply since the start of the year and are trading more than 80% down since January.

Saudi Prince Al-Waleed Bin Talal's decision to buy about $350m (£236m) of its shares on Thursday did not calm investors' nerves.

The firm insisted on Thursday that it had "very strong capital and liquidity position and a unique global franchise".

But Mr Pandit has come under increasing pressure from critics who doubt his ability to turn around the company and survive the financial crisis.

There are fears that Citigroup will not be able to access much-needed funds unless it sells part of the business or combines with another company.

With shares severely down, raising money on the open market is "pretty much off the table" said equity analyst William Fitzpatrick of Optique Capital Management.

Investor confidence

Citigroup has lost more than $20bn in the past year because of the global financial crisis.

The bank has reported four straight quarterly losses and some analysts believe the bank will not return to profitability until 2010.

Investors are worried that further losses could threaten the bank's future.

"Its fear and panic at this point, " said Gerard Cassidy, a banking analyst at RBC Capital.

Despite the sweeping job losses, the bank has maintained that its underlying business "remains strong and revenues have been stable".

But Jason Goldberg, a Barclays Capital analyst said: "We worry if the lack of investor confidence leads to a lack of customer confidence".

Citigroup is one of nine financial institutions receiving funds from the US government's bail-out programme.quote>

 

US shares plunge to five-year low

Investors are worried about the extent of the slowdown

Wall Street plunged more than 5% on Wednesday to its lowest level in over five years on rising economic worries.

October consumer prices fell 1% on the month before - the biggest such fall in 61 years, which has reinforced fears of rapid slowdown.

Adding to the gloom, the US Federal Reserve slashed its economic growth forecasts for 2009.

The Fed is expected to cut its key interest rate to 0.5% in December - it cut rates twice in October to 1%.

Economists say that this rapid fall in consumer prices has given the US central bank the room it needs to cut interest rates to battle the economic slump.

"It's certainly the Fed confirming what the market has realised - that the recession is here," said Bruce Zaro, of Delta Global Advisors in Boston.

At the close, the Dow Jones average was down 427 points to close at 7,997.28, below the 8,000-level for the first time since 2003.

The reduction in consumer prices also reflected a significant decline in energy prices - fuel costs fell for a third month in a row.

DOW JONES INDUSTRIAL AVERAGE: JAN-DEC 2008

There was also uncertainty about the fate of the "Big Three" US carmakers - GM, Ford and Chrysler.

Chief executives from the three firms have been on Capitol Hill this week asking for an urgent $25bn (£16.6bn) bail-out package as a "bridge" to help them survive.

The car firms say they need the aid quickly, otherwise they risk collapsing - with the loss of millions of jobs throughout America.

Republicans and the White House are opposed to aid for the car industry coming out of the $700bn bank bail-out. Politicians are now looking to find a compromise plan to aid the industry.

Carmakers were among the biggest fallers, with GM shares down 15% to a 66-year low, while rival Ford slumped to a 26-year low.

Investors are worried about the possibility that there will be no quick proposal from Congress to resolve the problems hounding the industry before the current law-making session draws to a close.

US car executives have spent two days this week on Capitol Hill pleading their case for the $25bn aid package to both Senate and House committees.

Falling shares

Prospects for a bail-out have been uncertain but politicians have begun to talk about crafting some compromise deal.

Investors are concerned about how a possible bankruptcy among US carmakers could further hurt an already fragile economy.

Meanwhile, financial shares were hit by persistent worries about the impact that the contracting economy will have on banks. Bank of America dropped 14% and JP Morgan Chase was 11% lower.

Citigroup shares tumbled 23% to a new 13-year low. This week the firm announced it was shedding 53,000 more jobs. Its shares have lost 53% of their value in November.

William Larkin, of Cabot Money Management, Salem, Massachusetts, said of Citi: "People are looking at their business model and wondering how on earth they're going to be able to survive in this."

Earlier European markets closed with losses of more than 4%. quote>

Oil prices seen steady below $50

Oil is far below the record of $147 a barrel reached in July.

Oil prices steadied on Friday after hitting their lowest level in three-and-a-half years.

US sweet crude climbed 51 cents to $49.93 a barrel after hitting a low of $48.25. London Brent crude gained $1.11 to settle at $49.19 a barrel.

The last time prices were below $50 was in May 2005. Fears are growing that a recession will hurt demand for fuel.

Falling oil prices has led to speculation that oil cartel Opec could cut output at a meeting next week.

Members of Opec are to meet on November 29, after opting to cut output by 1.5 million barrels per day in October.

Fears are growing that a global recession could dampen demand for oil. On Wednesday, the Federal Reserve said it expected the US economy to shrink in the first half of next year, adding to fears over lower demand for fuel.

Figures from the Energy Information Administration released on Wednesday showed US stocks of crude oil increased by 1.6 million barrels last week - twice as much as expected.

See the changing price of oil

quote>

Moscow super skyscraper halted

The Russia Tower had been due for completion by 2012

The Russian company building Europe's tallest building has halted work on the project, citing the global financial crisis.

The Norman Foster-designed Russia Tower being built in Moscow's new central business district by developer Russian Land would be 600m (1,970ft) high.

Company head Shalva Chiriginsky said that work was being halted because of the credit crunch.

Norman Foster and Partners told the BBC it had not been informed of the freeze.

The tower was due to be completed by 2012 as part of the new business district dubbed Moscow City. Building work started in September 2007.

It would have 118 floors with housed offices, a five-star hotel and residential apartments.

Moscow is already home to the tallest building in Europe, the 268-metre Naberezhnaya Tower.

'No credit'

Announcing that there were also difficulties with another of the company's big Moscow projects, the reconstruction of the Russia Hotel, Mr Chiriginsky said his company was having to cut its workforce.

He told Interfax, one of Russia's most trusted news agencies, that Russian Land projects had "suffered" from being directed at the "super-luxury" segment of the market.

"Our problem is that we cannot carry out these projects in the current economic situation and given the current state of financial institutions in the country and abroad," he said.

"The interest rate is high and there are no credit resources."

Nobody at Russian Land was available to speak to the BBC on Friday.

Asked about Mr Chiriginsky's comments, a Norman Foster Partners spokesperson in London replied: "We haven't received any instruction about the project being on hold." quote>

 

 

MORE AT BBC SPECIAL PAGES

[Meg 368]

For those who don't know of him, Ted Leonsis is an AOL billionaire who owns the Washington Capitals.  (They sometimes pretend to be a hockey team.)  Here is a recent entry from his blog:

What are They Thinking?

My family uses AIG as an insurance company on our homes and personal effects.

 

We received in the mail today a huge Tiffany box with two champagne glasses within as a thank you for our business and for good cheer this holiday season.

 

Arrgghhh! Are you kidding me?

 

Please! Save the money and keep some people employed. Give the money to charity. Take less money from the taxpayers. Why do I need two more champagne glasses? Dumbest thing I have seen this week. This holiday season, my family has decided to do the following: We will donate monies to a local charity instead of giving gifts to friends and associates and let them know we have given cash to help the needy in their name. Last year, we did something similar in that we purchased two PlayPumps in our children’s names from PlayPumps International instead of personal gifts.

We don’t need any more stuff and people out there need some basics and help. Don’t exchange these kinds of gifts this holiday season. Please help where it is really needed.quote>

Finally, a rich guy who has a clue.

(okay, so his hockey team isn't that great but it's not like anyone in DC cares about hockey anyway.)

[TV-VCR 14]

U.S. bails out Citi with $20 billion capital, guarantees

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Mon Nov 24, 2008 11:27am EST

By Dan Wilchins and Jonathan Stempel

NEW YORK (Reuters) - The U.S. government moved to bail out Citigroup Inc, agreeing to shoulder most potential losses from $306 billion of its toxic assets and inject $20 billion of new capital, its biggest effort yet to prevent a big bank from failing.

The bailout, announced on Sunday, will give the U.S. government a 7.8 percent equity stake and marks the latest government effort to contain a widening financial crisis that has already brought down Bear Stearns, Lehman Brothers Holdings Inc and Washington Mutual Inc.

Shares of Citigroup surged as much as 72 percent on Monday. The price of insuring $10 million of Citigroup bonds through credit-default swaps fell by about one-half to $257,000 per year.

"Clearly, this will stabilize the (banks) group near term, and the stocks this morning should reflect it," Oppenheimer & Co analyst Meredith Whitney said. "We are still cautious on the potential future dilution from further prospective capital raises for the group as well as continued higher losses related to credit and asset deflation."

Whitney, who last year warned investors the bank was not as healthy as it appeared, rated the shares as "underperform." Citigroup's stock is still below the $8.90 it fetched a week ago and is down 87 percent this year.

Citigroup received the latest infusion after its shares plunged 60 percent last week to $3.77 amid growing concern it lacked enough capital to survive, and less than a week after it set plans to slash 53,000 from its work force of 353,000.

The stock rose $2.22, or 59 percent, to $5.99 on the New York Stock Exchange after rising as high as $6.50.

ON THE HOOK FOR $250 BLN

The $20 billion of U.S. government capital is in addition to $25 billion it injected into the bank last month. The government is buying preferred stock that will pay an 8 percent dividend.

In exchange for the bailout, Citigroup slashed its quarterly dividend to a penny per share from 16 cents. It cannot raise the dividend for three years without U.S. consent.

Even so, taxpayers are now on the hook for nearly $250 billion of losses resulting from the bank's missteps.

"The authorities will do whatever they feel is necessary to ensure that the Great Depression will not return," said Gavin Graham, director of investments at BMO Asset Management in Toronto. "The effect on confidence is too great." Graham manages about $50 billion and owns some Citigroup debt.

Citigroup will absorb the first $29 billion in losses on a $306 billion portfolio of loans and trading assets, plus 10 percent of any additional losses, for a maximum total exposure of nearly $57 billion. Treasury, the Federal Deposit Insurance Corp and the Federal Reserve would absorb the rest.

In return, Treasury and the FDIC will get $27 billion in preferred shares as well as warrants to buy $2.7 billion in Citi common stock at $10.61 per share.

"To stabilize the equity, we had to put behind us the issue of Citigroup's ability to withstand whatever would come," Chief Financial Officer Gary Crittenden said in an interview.

Citigroup estimated the injection will give it a Tier 1 capital ratio of 14.8 percent, more than twice what the government requires. The government also increased Citi's access to the Fed's discount window, adding liquidity.

TEMPLATE

The Fed, the Treasury Department and the FDIC called the actions "necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy."

Citigroup has one of the farthest international reaches of any U.S. bank, with operations in more than 100 countries. Investors have long speculated the government deemed it too big to fail because a collapse could cause global financial havoc.

The government package may become a template for other U.S. banks expected to face growing losses as the economy contracts. Losses once concentrated in mortgages are bleeding into other areas such as credit cards and commercial real estate.

The rescue magnifies the U.S. government's burden following bailouts of insurer American International Group Inc, Bear Stearns and mortgage finance giants Fannie Mae and Freddie Mac. Treasury also has injected more than $300 billion into banks and other financial institutions.

Already, more than $1 trillion of taxpayer money is at risk, and the Big Three automakers are seeking $25 billion more to avert bankruptcy. President-elect Barack Obama may also seek up to $700 billion for economic stimulus.

Earlier this month, U.S. Treasury Secretary Henry Paulson said a $700 billion industry rescue package to soak up toxic assets from troubled banks, like Citigroup, will instead only be used to inject capital into banks.

That decision sent mortgage and other debt markets into a steep decline.

Citigroup's problems were compounded by its decision to move or buy back tens of billions of dollars of assets that had been held off its balance sheet back onto its books.

Citigroup's market value on Friday was just $20.5 billion, down from more than $270 billion two years ago -- and even below the $25 billion initial U.S. capital injection.

In contrast to other U.S. company bailouts, Chief Executive Vikram Pandit and other top managers were not asked to resign, though the government will have the final say on compensation. Not all investors were pleased.

"You're seeing an inept management team being rewarded by the U.S. government," said William Smith, whose Smith Asset Management in New York has seen its Citigroup stock plunge in value over the years.

(Additional reporting by Glenn Somerville in Washington and Joe Giannone and Jonathan Spicer in New York, editing by Steve Orlofsky/Jeffrey Benkoe)

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Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

quote>

The government didn't learn a thing!!!

[LarksTonguesInAspic 28]

 I saw this morning that Pelosi is ready to swing up to $75 billion for the auto industry. There is also another $700 billion in new spending proposed, outside of approx $800 billion in bailouts already. $1.6 TRILLION in deficit spending. 

Bush wasn't a true conservative in a real sense, many of us have known this for years. This kind of nonsense makes him look like one by comparison.

2 years, tops, before what is left of our system is swallowed by this madness. This will lead to national debt levels unprecedented in world history. Our system is already insufficient to support this kind of gov't-backed defiance of basic economic principle and common sense. You can't debt-spend yourself into prosperity any more than you can tax your way into it.

If this gets much more out of hand, I know what we need to do... I have a pitchfork, grab a torch and meet me at the White House.

(j/k, I am not actually espousing violence).

[Micah 16]

Can anyone give me *history a lesson about why the Soviet Union collapsed? I know there were many factors, but does anyone know the specifics when it came to their deficit?

Edit: a history*

[beebs 129]

Originally posted by: Micah Can anyone give me history a lesson about why the Soviet Union collapsed? I know there were many factors, but does anyone know the specifics when it came to their deficit?quote>

From what I remember from high school/quickly read to refresh my memory, the USSR was building their military at the expense of building their economy, in order to stay at an even level with the United States.

There was also Perestroika which was an attempted economic reform by Gorbachev which (as per wikipedia) led to a spiralling economy. The same article also mentions that republics and local governments in the Soviet Union were withholding taxes from Moscow by 1990.

You can read more on Wikipedia here, like you said there were dozens of factors.

[duack 14]

I think the main reason that the US economy is seriously screwqed is because normally during a reccession the government would increase spending using the money they earned in budget surpluses during strong economic growth. But the fact that the government is in debt just ruins everything.

Micah, i think the main reason that the communists economies failed was because there was no incentive for businesses to produce.

[Micah 16]

So it didn't have to do with debt? Ah, nevermind then. I was going to draw a parody between what's going on with the bailouts in the US with the fall of the SU, but that won't work.

[Meg 368]

Originally posted by: duack

Micah, i think the main reason that the communists economies failed was because there was no incentive for businesses to produce.quote>

and there was no incentive for people to earn money because there was nothing to buy because the businesses weren't producing.

or so I heard.  They didn't teach this when I was in history class 

[beebs 129]

Originally posted by: Micah So it didn't have to do with debt? Ah, nevermind then. I was going to draw a parody between what's going on with the bailouts in the US with the fall of the SU, but that won't work. quote>

Well kinda. From what I recall, the USSR was going bankrupt by trying to keep up with America's military spending. So much so that they began to ignore issues on the homefront (developing industries, etc.) in order to keep the military machine rolling.

duack: Oh sure there was lots of incentive.. I know I would rather produce than have someone show up my door and "remove" me in the middle of the night.

[Odainsaker 2,134]

Even more broadly, centralized planning is hindered by its own single-minded outlook. While it can marshall heroic forces to push through grand projects at any cost, it's narrowly focused vision just doesn't cope with the ongoing myriad of competing interests and differing ideas that comes with a society of a multitude of individuals and cultures. Thinking outside the unity, regardless of whether the ideas produced are right or wrong, is seen as obstructionist and gets people pushed aside or outright purged. It doesn't take long for the central planning authority to become so fixated on its own vision and planning beyond outside considerations that it loses sight of reality, turning the ultimate products of its efforts into monumental exercises in absurdity.  At the same time, top-down commanding forward the collective project by making others "sacrifice for the greater good" inevitably plays out to the worst extremes.  Every centrally planned command state thus far have been horrifying absurdist disasters devouring their own resources and people.  Democracy, individualism, and competitive capitalism, for all their inherent bottom-up and sideways messiness, have been far more capable of bubbling out the most progressive range of talent, energy, and ideas.

[LarksTonguesInAspic 28]

Originally posted by: Odainsaker (text)quote>

 

Very well put. If you aren't a teacher or professor, maybe you should be.

[Barbarossa 51]

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  Edited September 7, 2012 by Barbarossa  

[packersfan 666]

I just learned today, on top of all the other extravagances these big corporations getting bailed out are blowing their bailout money on, that CitiGroup, who received $45 BILLION in government is aid is spending $50 MILLION on a plush corporate jet that seats 12, with plush leather seats, 6000 mile range, etc, etc...WHAT!!!??? I just subsidized a plush corporate jet for a struggling corporation that needs financial bailout? When is enough, enough? I am seriously contemplating refusing to pay taxes until the money is spent on worthier causes. ie. education, transportation, health care, parks....not private corporations' jets, CEO bonuses, and parties....This is [Marc- language]

[belfastuniguy 18]

I believe we already have a thread regarding this...and really tbh...I see like constructive debate in that post. But that's simply my opinion.

[Micah 16]

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