[Brave Ulysses]

Originally Posted by ezkcdude Now? You think spending just got out of control now? That's hilarious. I can't take anything you say seriously. Just to humor you, though. There is a huge difference between the government borrowing and people re-financing their homes or getting subprime loans - and that's the interest rate. I discussed this earlier. The government will auction off 30-yr treasury bonds to the Chinese or Saudis to pay for this, and the interest rate will be around 4.5%. That's vastly different than someone who took out a subprime loan that would readjust to rates closer to those for a credit card. But, of course, we discussed all this already.

For the record, I think it is a continuation of the same from the government, only the position of borrowing and spending has now become an official platform of the president and government. I'm not one to claim the Bush administration was largely responsible for allowing this to deteriorate to what it has.

So, you can ignore my opinion, but it's a lot more justified to ignore yours as you really don't seem to have a good grasp of the details beyond Obama's talking points, which you blindly accept, and because you have displayed no interest or concern in the potential problems with the stimulus and the means to an end. Now you could just be playing everyone, and being devil's advocate here, which is fine, but to say that you can't take ME seriously is truly ironic considering your arguments in this thread.

Add in that, that justifying the ridiculous spending by saying, "well, they were spending way too much before, so who cares" is well.... stupid.

[Banana]

What I find increasingly depressing is, as Taskiss has quite astutely pointed out, is that both parties are just hawking their own brand of spending in spite of the simple fact that they've been doing that already for decades, for several crisis (S & L Crisis, anyone?) and the debate persist in the false dilemma of choosing between spending more money or cutting more tax. And when it is pointed out, it's always in context of 'they fucked it up!' and never 'we supported bad policies and we fucked up!'

As for debt being "managed" as some would argue, I do have to remind that we had deficit budgets for decades (some will argue Clinton's surplus weren't really surplus but only a slowing of debt increase, but even granting it at prima facie, it's only two years out of decades). It's not remotely similar to someone financing their house at a better interest rest; it's more closer to re-financing five houses so they can buy one more house on the credit card and make minimum payment. Even if they got a great deal on the re-financing, they are not managing money; they're just gambling it away.

One would expect after listening to David Walker a bit, a serious reconsideration would be in order. But hey, I guess he's just a lowly former comptroller, right? He doesn't know shit like Obama and Bush did, right? They're our gods, right? Sure as hell looks like that way to me...

[ezkcdude]

Originally Posted by Taskiss The problem is "bad" debt. Your arguments seem to indicate you either don't realize that or you don't believe it, but that doesn't change the facts.

No, what you don't get is that there is a difference between the bad consumer debt and lending practices and the national debt, which is due to numerous factors - but not bad mortgages.

[ezkcdude]

Originally Posted by Banana As for debt being "managed" as some would argue, I do have to remind that we had deficit budgets for decades (some will argue Clinton's surplus weren't really surplus but only a slowing of debt increase, but even granting it at prima facie, it's only two years out of decades). It's not remotely similar to someone financing their house at a better interest rest; it's more closer to re-financing five houses so they can buy one more house on the credit card and make minimum payment. Even if they got a great deal on the re-financing, they are not managing money; they're just gambling it away.

I think you've got it completely backwards. The debt that the government has is "good" debt - i.e. low interest rates. The debt that home owners have accrued is bad debt, with exhorbitantly high interest rates. The re-financing actually made it worse.

[ezkcdude]

Originally Posted by Brave Ulysses F So, you can ignore my opinion, but it's a lot more justified to ignore yours as you really don't seem to have a good grasp of the details beyond Obama's talking points, which you blindly accept, and because you have displayed no interest or concern in the potential problems with the stimulus and the means to an end. Now you could just be playing everyone, and being devil's advocate here, which is fine, but to say that you can't take ME seriously is truly ironic considering your arguments in this thread.

Unfortunately, you have it exactly backwards, as do your colleagues.

[ezkcdude]

Originally Posted by Taskiss If someone was smart, they would have identified this years ago and positioned themselves (by disciplining themselves to set their budget at 1/2 their income) to take advantage of the incredible opportunities now available. If you DON'T have bad debt (and you have a credit rating in the 800's), your ship has come in, let me tell you.

Ever hear of credit default swaps?

[Banana]

Originally Posted by ezkcdude No, what you don't get is that there is a difference between the bad consumer debt and lending practices and the national debt, which is due to numerous factors - but not bad mortgages.

So somehow a individual with a bill from his credit cards of $13,748 is different from a group of taxpayers holding a collective bills to tune of $10 trillion (and increasing)? Even if we were to grant that $10 trillion isn't bad debt as compared to the credit card debt, you still have to answer the question of whether we can meaningfully afford to keep up passing deficits after deficits and *adding* to the debt load every time an appropriation bill is considered. Were it an individual, the individual wouldn't get very far and would be declared insolvent and bankrupt, if not to jail for frauds and cooking the books, but the government get a free ride....

Originally Posted by ezkcdude I think you've got it completely backwards. The debt that the government has is "good" debt - i.e. low interest rates. The debt that home owners have accrued is bad debt, with exhorbitantly high interest rates. The re-financing actually made it worse.

You do realize that by arguing that way, you lend credibility to my assertion that re-financing may not actually fix the problem and may only serve to obfuscate the real problem? As I pointed out, it really doesn't matter if they got a great deal on the re-financing; they're just borrowing even more to spend more without any kind of debt management at all. There's not even a plan to keep it under control, even if it's a 100-year plan, and they've had raised the cap on debt repeatedly. And we're still talking about debts outstanding; we haven't even considered the new debt that will be added thanks to bailout bill and stimulus package, which could be 15% to 20% of the whole debt! Seriously, can you name me an individual who is able to refinance so he can borrow 15% more on top of a pre-existing debt load that's been receiving only minimum payments?

But I suppose in your world, the government can do no wrong, while it is the corporations that are Satan's spawn and within that framework, anything government does, it's for good of people. Well, sorry, but I decided that there are just as many bad politicians as there are corrupt CEOs and there's no reason to not suppose they're in bed together.

[ezkcdude]

Originally Posted by Banana So somehow a individual with a bill from his credit cards of $13,748 is different from a group of taxpayers holding a collective bills to tune of $10 trillion (and increasing)? Even if we were to grant that $10 trillion isn't bad debt as compared to the credit card debt, you still have to answer the question of whether we can meaningfully afford to keep up passing deficits after deficits and *adding* to the debt load every time an appropriation bill is considered. Were it an individual, the individual wouldn't get very far and would be declared insolvent and bankrupt, if not to jail for frauds and cooking the books, but the government get a free ride....

Yes, there is a material difference. One runs you into the ground in months or a few years. The other takes decades. Since the time scale of our immediate financial problem is on the order of months, we cannot be concerned right now with what will happen in decades. After this crisis is over, we must begin to pay down the debt. I'm not advocating reckless spending forever. You and the GOP are cleverly conflating the two issues to advance a political agenda. Luckily, most people see through that.

But I suppose in your world, the government can do no wrong, while it is the corporations that are Satan's spawn and within that framework, anything government does, it's for good of people. Well, sorry, but I decided that there are just as many bad politicians as there are corrupt CEOs and there's no reason to not suppose they're in bed together.

I didn't say any of that, of course.

[Taskiss]

Originally Posted by ezkcdude No, what you don't get is that there is a difference between the bad consumer debt and lending practices and the national debt, which is due to numerous factors - but not bad mortgages.

The national debt is no different than any other kind of debt, it's still outstanding obligation someone has deferred. The word "bad" is a characterization for debt that doesn't have security...and is likely to never be capable of being repaid.

Someone doesn't have to have the immediate ability to repay in order to have fiscal responsibly, they have to have the ability to repay the principal and accrued interest via scheduled payments or other agreed upon mechanism. However, if they can't or won't pay, then that's "bad debt".

I'm not worried about the national debt, we are pushing that off on our future generations, and that's not fiscally irresponsible, it's morally irresponsible. They will be able to pay it off and/or defer it - it's their obligation to THEIR future generations they'll be passing on, so it'll all work out. That doesn't make it "responsible" though, that's just absolving the national debt as being capable of being characterized as "bad debt".

The problem today is bad debt. Folks have borrowed more than they will ever be able to repay. The people they owe will hurt because they won't be paid, and other industries are suffering 'cause they're geared up to produce and the folks that are normally buying can't. The "keeping up with the Jones's" impulse meets the immovable object -- the lack of credit.

It's then all got to come to a grinding halt until things reboot into the new paradigm OR the government must provide the money to flow through the system to soften the blow as things slow down... but slow down they will. It's not only inevitable, it's absolutely required. The funds to soften the blow will come from our kids, 'cause we sure as hell don't want to pay - that's the whole reason we're throwing money at it in the first place, so we (the current generation) don't have to personally suffer.

It'll probably work though. Put enough money into the system and producers will continue producing, the workers will be paid and they'll consume (not at the same rates, but they'll still consume) and things will recover... and not a damn thing will be learned by the public.

My parents lived through the depression. They learned the hard way. They lived for today, saved for tomorrow, and will leave their kids a tidy chunk of change. The boomers (as a group) are leveraging that money as well as the future value of their assets, buying like there is no tomorrow... and they'll be lucky to retire, much less than pass anything along. If this current situation REALLY hurt, folks would learn from it... but they won't.

No skin off my nose, but that's not what I'd do were I given the ability to structure the national response.

[ezkcdude]

Originally Posted by Taskiss The national debt is no different than any other kind of debt, it's still outstanding obligation someone has deferred. The word "bad" is a characterization for debt that doesn't have security...and is likely to never be capable of being repaid.

If you think all debt is the same, then I have a loan to sell you.

[Taskiss]

Originally Posted by ezkcdude Ever hear of credit default swaps?

Sure, Lehman Brothers and AIG made them famous.

You make my points for me. Thanks!

Originally Posted by ezkcdude If you think all debt is the same, then I have a loan to sell you.

All debt is the same, by definition. It's an outstanding obligation.

"I am in your debt"...

It's only the nature of the denomination, the parties involved, and the mechanism of reconciliation that differ.

[ezkcdude]

Originally Posted by Taskiss The problem today is bad debt. Folks have borrowed more than they will ever be able to repay. The people they owe will hurt because they won't be paid, and other industries are suffering 'cause they're geared up to produce and the folks that are normally buying can't. The "keeping up with the Jones's" impulse meets the immovable object -- the lack of credit.

I agree with this. Where did you get the idea that I thought the consumer debt was good? I've repeatedly argued to the contrary. Maybe our signals are just crossed.

[ezkcdude]

Originally Posted by Taskiss Sure, Lehman Brothers and AIG made them famous. You make my points for me. Thanks!

Exactly. I was trying to make your point better than you did, because I agreed with it. I'm actually of the opinion that the people who profited from credit default swaps did the country a favor by forcing the housing bubble to burst.

[Banana]

Originally Posted by ezkcdude Yes, there is a material difference. One runs you into the ground in months or a few years. The other takes decades. Since the time scale of our immediate financial problem is on the order of months, we cannot be concerned right now with what will happen in decades. After this crisis is over, we must begin to pay down the debt. I'm not advocating reckless spending forever.

Aha, but the *point* is that we've *already* been doing that for decades. You are quick to wag the finger at Republicans while forgetting that Democrats helped them along the way and as well vice versa; both benefit from having the debt held in our name so they can claim "success" for their various pet projects or "resolutions" to a given crisis. As been already pointed before, when faced with a crisis, the response is always "spend more money" in various forms whether it be cutting taxes, bailing out stupid people, or creating new regulatory agency, without any accounting at all for what happen. Walker already said that we're verging on insolvency, and that was a couple years ago, before the whole subprime mortgage mess even started! And we've proposing to spend even more? Insanity.

You and the GOP are cleverly conflating the two issues to advance a political agenda. Luckily, most people see through that.

Thanks for telling me that I have a political agenda. I didn't know that. I didn't even know GOP and I shared an agenda, too!

I didn't say any of that, of course.

Based on your posts in this thread, it does support that impression, unfortunately. I'll gladly concede that you are quick to blame Repubs for their stupidity but when it's Dems who's being stupid this time around, you say it's now necessary, and you keep shift the blame back to the failed banks by citing credit default swaps, which can be a) a red herring as this has nothing to do with the stimulus package and b) ignore the possibility that the banks were abetted by their politicians friends.

[ezkcdude]

Originally Posted by Banana Aha, but the *point* is that we've *already* been doing that for decades. You are quick to wag the finger at Republicans while forgetting that Democrats helped them along the way and as well vice versa; both benefit from having the debt held in our name so they can claim "success" for their various pet projects or "resolutions" to a given crisis. As been already pointed before, when faced with a crisis, the response is always "spend more money" in various forms whether it be cutting taxes, bailing out stupid people, or creating new regulatory agency, without any accounting at all for what happen. Walker already said that we're verging on insolvency, and that was a couple years ago, before the whole subprime mortgage mess even started! And we've proposing to spend even more? Insanity.

It seems disingenuous for the GOP to all of a sudden to become deficit hawks in the midst of the current crisis. I don't see how doing nothing will fix this mess.

Based on your posts in this thread, it does support that impression, unfortunately. I'll gladly concede that you are quick to blame Repubs for their stupidity but when it's Dems who's being stupid this time around, you say it's now necessary, and you keep shift the blame back to the failed banks by citing credit default swaps, which can be a) a red herring as this has nothing to do with the stimulus package and b) ignore the possibility that the banks were abetted by their politicians friends.

I'm not blaming Republicans for the financial crisis. Are you blaming Democrats for it?

[Taskiss]

Originally Posted by ezkcdude I agree with this. Where did you get the idea that I thought the consumer debt was good? I've repeatedly argued to the contrary. Maybe our signals are just crossed.

Our "solutions" differ dramatically. You propose to spend to recover, I propose to let equilibrium balance the scales.

One solution incurs additional debt, one doesn't.

[Banana]

Originally Posted by ezkcdude It seems disingenuous for the GOP to all of a sudden to become deficit hawks in the midst of the current crisis.

So, because they didn't do the right thing then, they shouldn't do the right thing *now*? That's ad hominem, you know....

I don't see how doing nothing will fix this mess.

Taskiss said it eloquently- let it return to equilibrium on its own. Anything we do will just move away from the equilibrium.

I'm not blaming Republicans for the financial crisis.

Well, geez, what am I to make of all your posts about how repubs are hypocritical in opposing the package? See the first phrase of your post I just replied to.

Are you blaming Democrats for it?

Far from it. I blame *government*, because they are the one who started the whole policy of encouraging subprime loans, helping along banks, and having Greenspan cutting the interest rates to "fix" the recession after the dot com bust, which only turned into a housing bubble that had to be burst. More to point, it is the monetary policies that got us in trouble all time. But some people would like to make it a partisan issue and quibble over how one party fucked it up and their team has to fix it. The more people quibble and cheer their team, the more politicians from *both* parties benefit from this.

[ezkcdude]

Originally Posted by Taskiss Our "solutions" differ dramatically. You propose to spend to recover, I propose to let equilibrium balance the scales. One solution incurs additional debt, one doesn't.

I disagree. Your solution of "do nothing" will result in decreased tax revenue for years because unemployment will be so high and the economy will be stagnant. Debt can increase in two ways - increasing spending and/or decreased revenue. Republicans like to focus on the first one, and assume supply-side economics takes care of the second.

[Taskiss]

Originally Posted by ezkcdude I disagree. Your solution of "do nothing" will result in decreased tax revenue for years because unemployment will be so high and the economy will be stagnant. Debt can increase in two ways - increasing spending and/or decreased revenue. Republicans like to focus on the first one, and assume supply-side economics takes care of the second.

Decreased tax revenue would do what, exactly? Make government smaller? One can hope! Nope, gov will do what gov always does, keeps the pork and drops services. Oh well, our services will drop. Time to do without.

It's not "do nothing", it's live within a budget and tighten the belt when funds grow short. It's my inclination to pick up after myself (and my generation) that I propose, instead of making it a burden for the next guy.

I wasn't against a small stimulus, and I'd not be against bailing out an auto manufacturer or two or three, but to bail out the whole freaking country, or to even start going down that road? Nope, not my idea of "good idea" to say the least.

[ezkcdude]

Originally Posted by Taskiss Decreased tax revenue would do what, exactly? Make government smaller? One can hope! Nope, gov will do what gov always does, keeps the pork and drops services.

Aren't you an advocate of paying off the debt we have now? Just do the math. Decreased tax revenue = not paying down the debt. GOP doesn't like to look at both sides of the balance sheet. McCain voted for a 2.5 trillion dollar tax cut.

[Taskiss]

Originally Posted by ezkcdude Aren't you an advocate of paying off the debt we have now? Just do the math. Decreased tax revenue = not paying down the debt. GOP doesn't like to look at both sides of the balance sheet. McCain voted for a 2.5 trillion dollar tax cut.

If we can, then yeah, paying down the debt is a good idea, but at the moment I think we have more important things on our plate.

And, where is the "gop" thing coming from? I really don't consider myself anything other than a "conservative". I've voted more often for folks on the dem side of the ticket than the gop. I tend to vote dem for the legislative and judicial branches and gop for the executive, but that's 'cause of who is better for whatever office is being voted on more than because of party policy. If one party is for "the people" and other is for "business", then my inclinations run thusly:

legislative branch should be for "the people" by virtue of it's requirements.
judicial branch should DEFINITIVELY be for "the people", for what I believe are obvious reasons.
executive should be pretty much a balance between "the people" and "business", and to balance off the heavy representation of "the people" in the legislative and judicial, I tend towards the gop perspective of supporting "business", but the person running is the most important consideration.

Of course, "the people", "business", "conservative" and "liberal" are generalizations and I tend to use the terms as they were characterized in the 70's rather than the way they are characterized today.

I think the entire nation would benefit from the lesson there is to be learned by the consequences of the behavior of the past 30 years or so, and I don't think mitigating the pain will help folks learn the lesson that needs to be learned.

[ezkcdude]

Originally Posted by Taskiss If we can, then yeah, paying down the debt is a good idea, but at the moment I think we have more important things on our plate.

Are you serious? Now you're using exactly my argument why we need to spend. We truly have a fundamental ideological difference here. Good we live in a democracy where we can put it to a vote.

[Banana]

Originally Posted by ezkcdude I disagree. Your solution of "do nothing" will result in decreased tax revenue for years because unemployment will be so high and the economy will be stagnant. Debt can increase in two ways - increasing spending and/or decreased revenue. Republicans like to focus on the first one, and assume supply-side economics takes care of the second.

So I take it that the past solution of borrowing and spending worked dandy? That it pulled us out of recession after the dot com bubble but only to put us in a housing bubble is what we wanted to be?

And revisit your history; Great Depression was unnecessarily prolonged by both Hoover's and FDR's public programs which hurt more than helped that it took WW2 to take them out of it (and that is something even most mainstream economists agree on. The New Deal was at best, a mixed bag.

Sorry, but I have no, if any at all, faith that this "stimulus" package will be really different than its many predecessors.

PS Why don't we just drop this whole silly schtick of "Republicans v. Ezkcdude"?

[ezkcdude]

Originally Posted by Banana So I take it that the past solution of borrowing and spending worked dandy? That it pulled us out of recession after the dot com bubble but only to put us in a housing bubble is what we wanted to be?

What pulled us out of the recession was the lowering of interest rates by the Fed. That also contributed greatly to the current crisis. Could it have been predicted? Probably not. Will it happen again. Hopefully not.

[ezkcdude]

Originally Posted by Banana And revisit your history; Great Depression was unnecessarily prolonged by both Hoover's and FDR's public programs which hurt more than helped that it took WW2 to take them out of it (and that is something even most mainstream economists agree on. The New Deal was at best, a mixed bag.

I actually agree. WWII was the biggest stimulus in American history.

[Banana]

Originally Posted by ezkcdude What pulled us out of the recession was the lowering of interest rates by the Fed. That also contributed greatly to the current crisis. Could it have been predicted? Probably not.

Um, which is exactly my point; it will keep happening again and again as long as we rely on monetary & Keynesian policy and central banking, which are exactly what is responsible not only for this crisis but for any financial crisis since Federal Reserve's inception. Prior to each "crisis" there was usually a monetary expansion and over-leveraging of credit, so it was a matter of time when chickens came to roost before the pyramiding of credit backed by nothing but promises collapsed.

Will it happen again. Hopefully not.

Originally Posted by Ben Bernanke, then a Federal Reserve governor, at Univ of Chicago, Nov 8, 2002 Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.

Should bank keep loaning out more money to a guy who defaulted on his payments but said, "I'm sorry. I won't do it again"? Not once, but many times? That's what we're essentially doing here. Hence my vote of no confidence in any kind of spending packages.

Originally Posted by ezkcdude I actually agree. WWII was the biggest stimulus in American history.

Probably, but not healthy one. Some economist have this odd delusion that wars are good for economy, that they wipe the slate clean but they fail to consider that in process of waging war, we are destroying wealth and thus further improvising ourselves, and this distracted people from New Deal's failure, yet we're still stuck with it.

[ezkcdude]

Originally Posted by Banana Should bank keep loaning out more money to a guy who defaulted on his payments but said, "I'm sorry. I won't do it again"? Not once, but many times? That's what we're essentially doing here. Hence my vote of no confidence in any kind of spending packages.

I understand that argument from the point of view of criticizing the bank bailout or the GM bailout, but fail to see how that analogy relates to the stimulus package, which is intended to be a jobs program. Are you placing blame on the people who have been laid off as a result of a slowing economy?

[Banana]

The issue with stimulus package, as with bailout package is funding. In order to make this happen, we have to borrow and spend even more and we're talking close to one trillion dollars here, around 10% of our outstanding debt, or 1/6 of our Federal budget.

Even if it's supposed to be an investment into job creation it will have the unintended consequence of wreaking economy even more with malinvestments resulting from the package, as it did with Fed's interest cuts and bailout package.

[ezkcdude]

Originally Posted by Banana Even if it's supposed to be an investment into job creation it will have the unintended consequence of wreaking economy even more with malinvestments resulting from the package, as it did with Fed's interest cuts and bailout package.

If you think that, then you're already assuming the economy will heat up again, right? You're worried about inflation. Well, if that comes to pass, then the stimulus (and other measures) will have worked. And the Fed will have to put on the brakes by lowering interest rates. That's just a normal function of monetary policy. When the economy inevitably picks up the pace, tax revenues will increase, and hopefully the debt will not grow at the rate it is now. I don't think it has to be a doom and gloom scenario like you are painting.

To me the alternative of doing nothing will lead to fewer tax revenues and increase of national debt which is far worse.

[JohnnyTheA]

Originally Posted by Banana PS Why don't we just drop this whole silly schtick of "Republicans v. Ezkcdude"?

I agree with that. In fact, I don't think this is a partisan issue at all. Both repubs, dems, and all of our institutions share blame for this problem. Wide-scale corruptions on all levels and NOBODY complaining about it because most people were making money. Now we all have to pay in one way or another.

The Stimulus worries me, but what about the banking crisis itself? They still have not given very many details about how they will fix that. Home prices are still sliding down so the problem is still getting worse. For THAT problem, I think some sort of government intervention is warrented, but I don't know exactly how and I don't think Obama knows right now either. Its so big. They can absorb all the bad loans (with a Go-ment run "bad bank") and let the existing banks start over. They can put money into restructuring the bad mortgages. They can let the system crash completely. They can nationalize the current banks. There are so many ways to go... No matter WHAT kind of stimulus you do, if Joe-Blow can get a line of credit for a simple business, we are in a lot of trouble.

JTA