Indecision 2008: The Political Discussion Thread

[Beckwin]

create a worse off situation than an equivalent capitalist/laissez faire structure

Yes, because the Robber Baron era was definitely the pinnacle of freedom and living conditions in America.

Anyways, I can't really believe all the QQing over such a positive speech that is IMO a great assessment of what race means in life and politics today. If you think Obama gives off too much of a holier-than-thou vibe because he's generally humble and refuses to mudsling then that's your prerogative I guess, but that's really shitty reasoning to bash on someone, lol.

The "hollow words" argument is a lame one as well; you can't back up things that haven't happened yet and by and large his Senate history and background otherwise line up with his rhetoric.

And saying socialism = !freedom is weak as well. Socialism provides freedom from property in ways that laissez-faire capitalism cannot.

[Quicklet]

This isn't a fighting game. We're talking about what countries have people who are treated well and have good economies. Ours is in the shitter because we let banks and investment agencies do whatever they wanted with credit, meaning the moment anything went badly for the real people who got these lines of credit extended to them. If we had a government that didn't just stay hands off and said "you can't set these products like you have" and enforced that, we wouldn't be in the mess we are in. I'm not talking about the theory that you guys keep thinking of, I'm talking about what has happened.

The problem with talking about "what has happened" is that if you don't have an accurate theory explaining why those things happened, you have no rational basis on which to decide how to react and on which to convince other people that a certain course of action will result in the best outcome.

I'm not quite sure what you're getting at with the bolded statement, seems like an unfinished sentence, but what I think you're getting at is that the people who took mortgages out were at no fault for facilitating this credit contraction. Anyways, I have no idea what kind of economic paradigm you subscribe to, but here is my take on why "the economy is in the shitter:"

- Our banking system (and practically all banking systems in the free world) are fractional reserve banking systems. They provide loans without actually having the collateral to back up all of those loans, and so they will loan 5-10x as much as they have in reserve, with the expectation that they will receive the money back when the loan is called in. It should be obvious what the inherent problem with this is and why bank runs were so common back in the days of the gold standard. When people were unable to pay back large amounts of loans, the banks would be left with obligations that they couldn't fulfill (to other banks / depositers / the central bank), and when word spread of this, everyone would lose faith in the credit backing of the bank and would withdraw their money, basically bankrupting the bank. The process is more complicated than this because I haven't bothered to explain the cyclic inflationary/deflationary effects of what happens, but the short answer is that this is the reason for the business boom-bust cycle.

- Flash forward to today. We are on a fiat monetary system, basically meaning that the amount of money in our economy is determined by the federal reserve. The willingness of banks to lend credit is generally determined by the fed funds rate. After the dot-com bubble burst and Bush pushed through his first economic stimulus package, the fed funds rate was pushed as low as 1% in 2003/2004. This precipated the enormous real estate bubble. Because everybody gets caught up in these boom cycles and the economy becomes overvalued, banks were all too eager to lend money because, hey, money was cheap. A lot of people were eager to get in on the real estate market to either try and flip properties for more money or just because they thought their property would keep going up and up in value forever. Lenders were too eager to lend, and buyers were too eager to buy. Now, the problem is that a lot of buyers agreed to Adjustable Rate Mortages without considering that their monthly payments would double or triple when the fed funds rate went back up to 5% (which it did in 2006). If there is any part of this credit crunch that you could blame on creditors, this is the one part: it is a lack of foresight on the part of creditors to provide loans to people who obviously would not be able to pay for them if interest rates went up. The fact that this practice was so common is what has made this credit crunch so widespread. You cannot lay the entire blame on banks/investment firms. There is blame for people who wanted to make a quick buck and got in over their heads. There is obvious blame for the entire system which continues to cause these cycles and will keep doing so in the future.

- The fed bailout that is being done now may soften the fall, but it is also weakening the dollar and could precipitate another overvaluation/inflation of assets in the economy, setting us up for another economic crunch 5-10 years from now. In addition, there is a significant sector of loans that have not been accounted for yet: this is the marked increase in private student loans in the past few years. Because most of these loans do not have to be repaid so long as the person is still in school, there is a possibility that in several years, a large default rate on these loans (some of which have annual rates over 10%) could recreate/exascerbate the credit crunch being seen now.

Unfortunately, like always, this economic downturn will be demagogued by all the candidates one way or another without actually addressing the fundamental problem that is the federal monetary policy. Things may improve before the end of Bush's term / the beginning of the next president's term, but from what I've seen, I would expect another upturn (possibly with a marked amount of inflation) followed eventually by the same type of situation we're in now. So really, when you say that the government stays hands off, that's incorrect. The government is *constantly* affecting monetary policy and the direction of the economy, so blaming these economic problems on a "hands off" stance is actually only looking at a limited amount of timespan / a limited scope.

[Charla]

If there is any part of this credit crunch that you could blame on creditors, this is the one part: it is a lack of foresight on the part of creditors to provide loans to people who obviously would not be able to pay for them if interest rates went up. The fact that this practice was so common is what has made this credit crunch so widespread. You cannot lay the entire blame on banks/investment firms. There is blame for people who wanted to make a quick buck and got in over their heads. There is obvious blame for the entire system which continues to cause these cycles and will keep doing so in the future.

It's useful to focus on the blame placed on creditors because it represents shortsightedness. Shortsightedness is easier to correct than greed (exhibited by people who wanted to make a quick buck and got in over their heads), and far easier to correct than structural problems with the entire system (because making any significant change to the system would entail a great deal of disruption and therefore cause problems for many of those who are dependent on its stability). What's more, either the greed or the structural problems alone would be insufficient to cause a significant catastrophe such as this without the shortsightedness (or some other additional problem).

On top of that, both the shortsightedness and the greed could have been inhibited by sufficient oversight and regulation. As such, one can blame the entire situation on the inattentive or otherwise incompetent overseers, leaving aside for the moment the issues of structural problems with the system.

[Quicklet]

There are oversight/regulation possibilities that I probably wouldn't be opposed to, i.e. requirements that lenders must have proof of income documents before agreeing to provide loans over a certain amount, or something of that nature. My only worry is that if the regulations were TOO stringent, it could stifle high-risk lenders and hurt low-credit people trying to move up (for example, if there were some minimum FICO score required to be able to take on an ARM or a loan over a certain amount).

In the end, even with regulations it seems like it would be a hard thing to regulate to cover all possibilities without unintentionally hurting some people as well.

[Maxxthepenguin]

PMing you the essay that I PMed Swampdonkey. You seriously don't know how fucked up the government's laissez-faire and let the lobbyists decide attitudes really ended up being.

EDIT: I reread your post, you know more than I thought about it, but there are important details missing.

[Correction]

"tl;dr" version of Quicklet's point on where the fault lies on the current economic crisis.

http://docs.google.com/TeamPresent?doci ... true&pli=1

[Charla]

"tl;dr" version of Quicklet's point on where the fault lies on the current economic crisis.

http://docs.google.com/TeamPresent?doci ... true&pli=1

Behold the awesomeness of the internets! (which somehow manages to support everyone's arguments at once)

[Maxxthepenguin]

"tl;dr" version of Quicklet's point on where the fault lies on the current economic crisis.

http://docs.google.com/TeamPresent?doci ... true&pli=1

^bingo

This pretty obviously was pure greed and shortsightedness and could go bad and screw up the economy easily. The essay I keep talking about (actually, written by my father) is detailing that process, how it happened, why it happened, and how it ended up becoming a pillar of our economy. A regulator should have come in and said 'no you cant do this shit'. It would have fixed the problem. With that system in place, our economy could be wrecked by the smallest blow. This isn't about personal responsibility because it fucked up everything for everyone. It is the government's duty to stop that.

I also want to clarify: When I say hands off, I mean they play too nice with the companies and are too hands off of the details. The government should have looked at this process and this product and noticed how easily it could build itself up and just how easily it could be torn down and just said 'no, you cant make money like this'.

[evilbau]

I think Quicklet's explanation was pretty good, with one last missing important point. The securities with the packaged mortgages of them have an expected default rate which wasn't realistic. As a result, any investor holding this type of investment on their books (and there are a lot, traditionally good money even without the speculation) got hit, even if they weren't in the real estate business as a lender. This affected the market widely in ways they perhaps (imo) they shouldn't have. I have written that the way financial institutions are stacking and leveraging debt is getting very dangerous and like a house of cards. But boy, when it works they sure do make a lot of money (the entire 90s until a year ago haha).

About Obama's speech, boy did I call it (not to you guys). I thought that the best way for Obama to counteract Hillary's undermining of his credibility (i.e. 3 am phone ad, suggesting he could be her VP, the 'battleground states' argument) was for him to come out with a Unity message. He is half white and half black, he should not be identified as the black candidate, but a man of mixed race proving the American melting pot works and healing force for the nation. I wasn't sure he was going to go for it because of his aversion to bring race into the contest, but it definitely is the right moment now to do so. Good political move, and a compelling vision in itself.

[Lordender]

http://i4.photobucket.com/albums/y11...5655571065.gif

ftw

[SwampdonkeyPLD]

Cemantics

lol

I hereby coin the phrase "SwampdonkeyPLDism", which means to blindly accept and repeat propaganda because it conveniently fits one's preconceived notions.

How is me calling Obama a socialist and someone else calling him collectivist, and then myself saying cemantics, propaganda? It seems anything you don't agree with is propaganda. And if everything I say is off a fact sheet, then whats the problem? Facts are facts no matter what side your on.

Liberty before prosperity, eh?

It worked for us!

[aurik]

Cemantics

lol

I hereby coin the phrase "SwampdonkeyPLDism", which means to blindly accept and repeat propaganda because it conveniently fits one's preconceived notions.

How is me calling Obama a socialist and someone else calling him collectivist, and then myself saying cemantics, propaganda? It seems anything you don't agree with is propaganda. And if everything I say is off a fact sheet, then whats the problem? Facts are facts no matter what side your on.

Not everything I disagree with is propaganda, but don't for a second think that your talking points which were ripped straight from right-wing propaganda machines ("talk radio" and the like) are not.

It's vastly unfair to participate in a discussion where you don't really understand the subject matter and rattle off facts from a fact sheet provided by a propaganda site. Since you're self-admittedly not smart enough to understand the issues at hand, how are we ever going to be able to successfully argue the counterpoint? Furthermore, what's the purpose of us making an argument at all when, in the face of contradictory evidence you merely say "well there must be something I don't understand" and then continue to stick to your preconceived notions in a completely non-rational way.

Fact sheets are terrible sources to argue from because they often contain tilted or tailored statistics. For example, the fairtax propaganda site to which you continually refer people. I've gone over the numbers with you several times and pointed out that they just don't add up, but that's not going to stop you from bringing it up again.

[Vistani]

What the fuck is a cemantic? Something to do with concrete?

[SwampdonkeyPLD]

Not everything I disagree with is propaganda, but don't for a second think that your talking points which were ripped straight from right-wing propaganda machines ("talk radio" and the like) are not.

Some are, some aren't. Obviously something like quotes from Obama's speeches and where they were used previously is something ripped from a conservative site. I mean, I'm not going to find that on CNN or the dailykos or something. As long as it's true, I don't see what the problem is.

It's vastly unfair to participate in a discussion where you don't really understand the subject matter and rattle off facts from a fact sheet provided by a propaganda site. Since you're self-admittedly not smart enough to understand the issues at hand, how are we ever going to be able to successfully argue the counterpoint? Furthermore, what's the purpose of us making an argument at all when, in the face of contradictory evidence you merely say "well there must be something I don't understand" and then continue to stick to your preconceived notions in a completely non-rational way.

I said that about one thing, average propensity to save. And that was because the way you explained it was not what I found it out to be. And feel free to point out the tailored statistics when I post bs!

Edit: I might have said that about the regressiveness in the "propaganda" to I suppose.

Fact sheets are terrible sources to argue from because they often contain tilted or tailored statistics. For example, the fairtax propaganda site to which you continually refer people. I've gone over the numbers with you several times and pointed out that they just don't add up, but that's not going to stop you from bringing it up again.

I referred one person there, Tyche, for a generic calculator because I thought he/she wanted a comparison between the two. I don't know of any other place that has that type of comparison. If you bring it up first I will certainly bring it up again, but I'll resist the temptation this time.

[evilbau]

nah i agree with aurik, you do it for more than just 'average propensity to save.' That was just the one he indulged you in, and he pretty systematically explained it out. I see them in your posts too but unless its something worth sinking my teeth into, I just let it slide. That actually goes for a lot of other people's posts too.

[SwampdonkeyPLD]

I think I'd know if I said I didn't understand something else.

And no he didn't explain APS that well. He said something to the effect of "the more a person makes, the more they save." While true, that's not what APS is. I could have mis-interpreted this next part, but it seemed to me he was saying based on that, rich people spend less, which is not true.

[evilbau]

Not the part where you say you don't understand, but the part where you gloss over parts which are valid arguments contradicting your position, reaching back into the well of cooked up 'facts' to present as a rebuttal. You dig in as if its personal instead of intellectual. In all honesty you are less prone to this than say, guartz, who is like the irrational blinder wearing poster child, but i still see it.

The bad thing I notice about message boards is that people often ignore points that are right on, and continue an argument against the weakest advocate. For example, the first few pages of the Denmark thread archibald was right on point but Firas did not engage him. I try to do the opposite, ignoring the obviously uninformed and poorly constructed thoughts in favor of someone who has a little something. Funny enough that is often you.

[SwampdonkeyPLD]

Hmm, I'm assuming your talking about the Fairtax threads where I glossed over something. I think I had at least 10 quotes per post, cut me some slack if I missed something.

[Charla]

And feel free to point out the tailored statistics when I post bs!

Regressive tax: The effective tax rate decreases as the amount to which the rate is applied increases. The Fairtax is applied to consumption, not income. The more you spend the higher the rate, not regressive!

There's one! See, defining regressive as "on the amount to which the rate is applied" makes it tailored (it's not a statistic, but I don't want to take cemantics for granite). The important part isn't whether it's regressive on spending (it's globally progressive but locally flat on spending, with one inflection point at the poverty line), but whether it's regressive on income. As long as spending rate and income have an inverse relation, a flat rate on spending will be regressive on income. Redefining the word regressive in order to ignore income hides that, but doesn't change it. Should I do this on every post that has that in the sig?

While we're at it, whether or not "rich people spend less" is also not the important part. It's whether rich people spend a lower proportion of what they make. That's equivalent to saying they save more (assuming that charitable donations and other categories don't make much difference), which is what APS refers to.

[Vistani]

lmao cemantics for granite, first time I've laughed at that meme.