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How Has The Wall St. Meltdown Affected You? - Page 4

post #121 of 199
Quote:
Originally Posted by trumptman View Post

Would you agree that if the progressive income tax truly paid for itself there wouldn't be an 11 trillion dollar debt with an additional 40-50 trillion in unfunded liabilities called Medicare and Social Security?

How can the system that generated the debt be considered sound?

Somehow federal taxes used to pay for government, as short a time as 8 years ago. But one party believes that tax cuts pay for government, and that's the party that took power 8 years ago.
post #122 of 199
Quote:
Originally Posted by BRussell View Post

Somehow federal taxes used to pay for government, as short a time as 8 years ago.



I think you mean a long as 70 years ago. I would say that "federal taxes used to pay for government" can most objectively be measured by debt accumulation year-to-year. The federal government has been piling up debt non-stop* since about 1938-1940. Slower at some times than others, but always adding to that credit card balance and usually making interest only payments on it.

*Actually pretty much non-stop over that period. There were small debt reductions in 1946, 1947, 1948, 1951, 1956, 1957 and 1961. These years appear to be a mixed bag politically speaking:

- 46-47 has the Rs controlling** the House and Senate and the Ds controlling the WH.
- 48, 51 and 61 has the Ds controlling** everything
- 56-57 has the Ds controlling** the House and Senate and the Rs controlling the WH

**Controlling here is used in the highly dubious sense that they had a majority. It carries all sorts of other assumptions (or questions if you prefer) like:

- Are all Rs the same (fiscally)? Are all Ds the same (fiscally)? Have they changed over time (in other words are the Ds and Rs of today the same...philosophically and fiscally...as the Ds and Rs of yesteryear)?
- How much "control" does either party truly have (even with a majority)?


Quote:
Originally Posted by BRussell View Post

But one party believes that tax cuts pay for government, and that's the party that took power 8 years ago.

It's really not accurate to blame a single party* for this.

*Most people only look at what party held the White House during the times of faster or slower debt accumulation. But Congress is who spends the money. So a more complete analysis would look at what party (assuming we want to continue with this silly argument that that there is truly a difference between them) was controlling what across all of this time. For example, a simplistic look at this chart would claim that Republican presidents are bigger spendthrifts:

http://www.cedarcomm.com/~stevelm1/USDebt.png

But that would be rather simplistic indeed, especially when you look at something like this:

http://en.wikipedia.org/wiki/United_...ol_of_congress

Things get more complicated. And even more so when you look at the charts that show debt as a % of GDP:

http://en.wikipedia.org/wiki/Image:USDebt.png

The one constant throughout all of this is that debt keeps piling up. It seems to have commenced not long after/during FDR's socialist/fascist Federal government power grab (including the destruction of the Gold standard by the way).

This page seems to be trying to pull all of that together: http://www.cedarcomm.com/~stevelm1/usdebt.htm
post #123 of 199
Quote:
Originally Posted by trumptman View Post

Hardee. Accusations without explanations might be considered ad-homs. If you are going to accuse, please explain otherwise it is just a very convoluted way of declaring I don't get it.

What?

Do I have to spell it out for you?

I was merely pointing out that you are ignoring the fact that there is a budgetary side of the tax-spend equation -- one you conveniently ignored.

And by saying someone ignored something is not an ad hom -- I am not putting a negative description onto you (like say, calling someone a liar would be)...
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post #124 of 199
Quote:
Originally Posted by BRussell View Post

Somehow federal taxes used to pay for government, as short a time as 8 years ago. But one party believes that tax cuts pay for government, and that's the party that took power 8 years ago.

We could go into an array of concerns and discussion on this. We could note how inflation is a secret tax increase, how confiscating gold at $20 an ounce and then declaring it to be worth $30 a ounce is wealth destruction, you name it. Even when the budget was supposedly balanced (due to Republicans for a few years) some would simplyl claim that was also just the fed making revenues go up with easy money that fed the stock bubble, thus driving up the tax revenues associated with that.

My point is simple. You cannot shoot down a new tax proposal, in this instance a consumption tax based off the fact that it somehow is not perfect when the previous system is far from perfect. The proposal was dismissed because it couldn't instantly be shown to address the $11 trillion dollar deficit created by the current system. That isn't a strike against a consumption tax. It is a strike against the progressive tax and that needs to be assigned appropriately.

Quote:
Originally Posted by hardeeharhar View Post

What?

Do I have to spell it out for you?

I was merely pointing out that you are ignoring the fact that there is a budgetary side of the tax-spend equation -- one you conveniently ignored.

And by saying someone ignored something is not an ad hom -- I am not putting a negative description onto you (like say, calling someone a liar would be)...

Actually if that is what you prefer, yes I asked you to spell it out for me. I made the point it was declared that I was ignoring something in noting progressive taxation has still driven up the debt. I'm not ignoring spending. The contention was that the consumption tax wouldn't address the national debt while I guess the contention would have been that a progressive system will, only it hasn't. Revenues have gone up but so have expenses each year. The claim cannot be that problems with progressive taxation is the means of dismissing consumption taxes. That makes no sense regardless of expenses.

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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post #125 of 199
Quote:
Originally Posted by pfflam View Post

OnTopicButSeeminglyNot [ie: OTBSN]:... This why Warren Buffet deserves some respect: he actually finds it absurd that he pays less percentage in taxes than his secretary. It isn't about 'fairness' its about systems and balance.

That quote from WB (when taken in it's entire context) is not in favor of a progressive taxes... It was commenting on all the loopholes available to "wealthy investors" and how at the end of the day their "over-all" tax burden ends up being a lower rate (even though their supposed tax rate is higher than their secretaries.)
From out there on the moon, international politics look so petty. You want to grab a politician by the scruff of the neck and drag him a quarter of a million miles out and say, "Look at that!" -...
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From out there on the moon, international politics look so petty. You want to grab a politician by the scruff of the neck and drag him a quarter of a million miles out and say, "Look at that!" -...
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post #126 of 199
Quote:
Originally Posted by gastroboy View Post

The day they don't?

America has never quite ended the golden days of slavery, when the hard working plantation owner delegated the whipping of the lazy indolent slaves to shiftless middle men.

Thankfully then the plantation owner was adequately rewarded for his efforts and the government of the day both supported him and made sure the slaves were not overly rewarded for their reluctance to work.

Thanks to present day government interference in this satisfactory management-employee relationship, employers have been forced to turn to paying underaged workers, illegal aliens and the descendants of the slaves.*

The only good thing is that they can keep the payment to a minimum with constant promises that they will get something better.

* If they get difficult, there is always outsourcing to China etc. They'll work for the smell of an oily peanut.

This is pure, unrefined exaggeration.

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post #127 of 199
Quote:
Originally Posted by Northgate View Post

What's interesting about editing animation versus narrative live-action is that they're two completely different disciplines. And I'm currently doing both. My day job is the animation gig. At night I'm finishing post on our first feature film. Two different disciplines.

Animation editing is most influential in the pre-production/animatics phase. This is where the director, storyboard artists, and the editor build the visual sequence as a collaborative team. Once all that is figured out it goes to production. Post-production for the editor is simple assembly.

Feature narrative work is the exact opposite. Compared to animation, the editor really makes his/her impact at the end of the production process. And it's really a process of reduction. You're really shaping a film from pre-existing material (which can often be compromised by the realities of physical production). In a lot of ways, the editor is the final writer on the project whereas an animation editor is a member of the original writing team.

[sorry about the off topic stuff][/mybad]

What fascinates me is the kind of stuff Pixar and, say Brad Bird are doing. The editing continues till the very end of the process. They will still throw out whole sequences if the picture suffers from their inclusion, where the majority of animated movies are wholly driven by cost concerns. The right way to make a movie (actually any kind of movie) is "story first". Another example of fine, uncompromising animation is the work of Hayao Miyazaki. "Sprited Away" is just mind-blowing, unbelievable stuff. Looking forward to Ponyo on the Cliff by the Sea.

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post #128 of 199
Quote:
Originally Posted by KingOfSomewhereHot View Post

That quote from WB (when taken in it's entire context) is not in favor of a progressive taxes... It was commenting on all the loopholes available to "wealthy investors" and how at the end of the day their "over-all" tax burden ends up being a lower rate (even though their supposed tax rate is higher than their secretaries.)

Actually, he directly advocates progressive taxes, specifically a progressive consumption tax.
post #129 of 199
Quote:
Originally Posted by giant View Post

Actually, he directly advocates progressive taxes, specifically a progressive consumption tax.

A MUCH, MUCH different thing than our current progressive INCOME tax!
From out there on the moon, international politics look so petty. You want to grab a politician by the scruff of the neck and drag him a quarter of a million miles out and say, "Look at that!" -...
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From out there on the moon, international politics look so petty. You want to grab a politician by the scruff of the neck and drag him a quarter of a million miles out and say, "Look at that!" -...
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post #130 of 199
Quote:
Originally Posted by KingOfSomewhereHot View Post

A MUCH, MUCH different thing than our current progressive INCOME tax!

iT's DiFfErEnT tHaN lOtS oF tHiNgS!

Unfortunately, you said:
Quote:
Originally Posted by KingOfSomewhereHot View Post

That quote from WB (when taken in it's entire context) is not in favor of a progressive taxes...

which is wrong
post #131 of 199
Quote:
Originally Posted by giant View Post

...which is wrong

Except that I/we were commenting with regard to our CURRENT system, which is a progressive income tax.

But, OK, If you say WB is in favor of our current tax structure, then it must be so.
From out there on the moon, international politics look so petty. You want to grab a politician by the scruff of the neck and drag him a quarter of a million miles out and say, "Look at that!" -...
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From out there on the moon, international politics look so petty. You want to grab a politician by the scruff of the neck and drag him a quarter of a million miles out and say, "Look at that!" -...
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post #132 of 199
Quote:
Originally Posted by KingOfSomewhereHot View Post

Except that I/we were commenting with regard to our CURRENT system, which is a progressive income tax.

Your post:
Quote:
Originally Posted by KingOfSomewhereHot View Post

That quote from WB (when taken in it's entire context) is not in favor of a progressive taxes... It was commenting on all the loopholes available to "wealthy investors" and how at the end of the day their "over-all" tax burden ends up being a lower rate (even though their supposed tax rate is higher than their secretaries.)

As you can see, the post that you typed is about the "quote from WB" and claims that "when taken in it's [sic] entire context" it supposedly shows that he "is not in favor of a progressive taxes." Unfortunately, its context is him arguing in favor of progressive taxes.

Furthermore, he specifically states that he isn't talking about "loopholes," either. From the interview:
Quote:
Warren: Mine came to-- 17.7 percent. That-- that was the-- that was line 61 I think-- or, no, line 43-- is the percent of taxable income, plus payroll taxes, 17.7 percent. The average for the office was 32.9 percent. There wasn't anybody in the office from the receptionist on that paid as low a tax rate. And I have no tax planning. I don't have an-- I don't have a-- an accountant. I don't have tax shelters. I just follow what the U.S. Congress tells me to do.

In other words, your attempt to correct pfflam was just completely factually wrong on every count.

Finally,
Quote:
Originally Posted by KingOfSomewhereHot View Post

But, OK, If you say WB is in favor of our current tax structure, then it must be so.

Maybe you can point out which part of my post you are referring to. Here the post is in full:
Quote:
Originally Posted by giant View Post

Actually, he directly advocates progressive taxes, specifically a progressive consumption tax.
post #133 of 199
Quote:
Originally Posted by SpamSandwich View Post

This is pure, unrefined exaggeration.

Well there you go.
post #134 of 199
I thought my personal stock holdings are too depressing to discuss.

And then I got my 401(k) quarterly statement.
Gangs are not seen as legitimate, because they don't have control over public schools.
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Gangs are not seen as legitimate, because they don't have control over public schools.
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post #135 of 199
I was thinking of converting my paper losses into actual losses.

This down turn is why you average into the stock market over a long period of time. If your employer matches contributions then you're way ahead.
post #136 of 199
Quote:
Originally Posted by FloorJack View Post

I was thinking of converting my paper losses into actual losses.

This down turn is why you average into the stock market over a long period of time. If your employer matches contributions then you're way ahead.

Yup. It's a good thing my employer doesn't match. It just pays 14.2%!
Gangs are not seen as legitimate, because they don't have control over public schools.
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Gangs are not seen as legitimate, because they don't have control over public schools.
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post #137 of 199
So you'all complain, rejoice how the meltdown affects You.

How about what your tax dollars are bailing out, and some that don't play the market.

AIG, posted before, no one cares about, $400,000 pedicures a ta resort, and now an $86, 000 hunting trip to Europe.

Are you guys fucking for real?

No wonder they play you, they know you don't care or are to (sic) stupid to care.
post #138 of 199
On CNN today, foreclosed on a families home, worth $109,000, sold at auction for $20,000 by the bank, put on the market for $49,000 and the family is shit out of luck.

Asked why the bank couldn't renegotiate the loan, a realtor is dumbfounded.

Why? The bank doesn't own the mortgage, it's spread out all over the fucking place, the bank only does the paper work.

Creative fucking accounting the unregulated way.

God fucking bless America.
post #139 of 199
post #140 of 199
What the fuck does that mean?
post #141 of 199
Quote:
Originally Posted by screener View Post

What the fuck does that mean?

It's titled "The Money Tree" by Winston Smith. Been used on many cases where the rich white asshats have sucked our coffers dry...1929...Keating....Enron....The Meltdown of 2008....

But they'll just print more...what could happen?

Jesus we're fucked.

But try to channel this rage, screener. It doesn't bode well.
post #142 of 199
Quote:
Originally Posted by @_@ Artman View Post

It's titled "The Money Tree" by Winston Smith. Been used on many cases where the rich white asshats have sucked our coffers dry...1929...Keating....Enron....The Meltdown of 2008....

But they'll just print more...what could happen?

Jesus we're fucked.

But try to channel this rage, screener. It doesn't bode well.

Or from the old saying " Money doesn't grow on trees ".
Without the need for difference or a need to always follow the herd breeds complacency, mediocrity, and a lack of imagination
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Without the need for difference or a need to always follow the herd breeds complacency, mediocrity, and a lack of imagination
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post #143 of 199
On first impression, it's the homeowners fault for believing the bank, loan rep, whatever.

These people where told the interest was what it was.

They had no idea their mortgage would be broken up, included with how many others and be repackaged into investments by some offshore company only interested in profit and damned the debtor.

This is where small town banks have come to, where the banker knows his depositors, clients.

Where the local Police Chief puts a halt to foreclosures because of the lack of compassion by the banks, foreclosing on New Years Eve Day, putting renters on the street because landlords are in default.

And in the example originally posted, selling the property to another when the new price could be afforded by the original owner.

The banks get bailed out by you, when renegotiating, if an option, could have been better for all.

And you're not pissed?
post #144 of 199
Okay Screener, take a deep breath.

This thread was clearly created to explore the personal effects of the situation on AI members.

That doesn't mean that those replying have any less compassion about the plight of others than yourself.
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The evil that we fight is but the shadow of the evil that we do.
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post #145 of 199
I suspect that several of my colleagues will not be able to retire when they'd planned, now. And believe me. I really, really want them to retire.
Gangs are not seen as legitimate, because they don't have control over public schools.
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Gangs are not seen as legitimate, because they don't have control over public schools.
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post #146 of 199
Quote:
Originally Posted by midwinter View Post

I suspect that several of my colleagues will not be able to retire when they'd planned, now. And believe me. I really, really want them to retire.

I feel sorry for people that get to the last years of working and by that time they are so sick of the bullshit they can barely function. But they can't quit and get a new job because they need X years of service to get Y benefit. It must be a miserable situation to be in.
post #147 of 199
Quote:
Originally Posted by Frank777 View Post

Okay Screener, take a deep breath.

This thread was clearly created to explore the personal effects of the situation on AI members.

That doesn't mean that those replying have any less compassion about the plight of others than yourself.

Noted. A good nights sleep was better.

Although this pissed me off,
Quote:
Last edited by lundy; Today at 01:36 AM. Reason: Calling others stupid, yet can't spell "too"

Nice huh?
post #148 of 199
Quote:
Originally Posted by midwinter View Post

I suspect that several of my colleagues will not be able to retire when they'd planned, now. And believe me. I really, really want them to retire.

Ha. I know exactly how you feel. Although I think most of the old-timers around here are probably not in stocks, but have some type of defined-benefit pension.
post #149 of 199
Quote:
Originally Posted by screener View Post

On CNN today, foreclosed on a families home, worth $109,000, sold at auction for $20,000 by the bank, put on the market for $49,000 and the family is shit out of luck.

Asked why the bank couldn't renegotiate the loan, a realtor is dumbfounded.

Why? The bank doesn't own the mortgage, it's spread out all over the fucking place, the bank only does the paper work.

Creative fucking accounting the unregulated way.

God fucking bless America.

First, they didn't foreclose on a home worth $109,000. They forclosured on a home worth $49,000 with a $109,000 loan on it.

It was sold by the bank for $20,000 because it likely was not left in new or sellable condition or else the bank would not have left $30k on the table. The bank is not going to rehab it because they are in the lending business, not the remodeling business. The bank does service the mortgage or else they wouldn't have been able to foreclose.

The family gets to walk away from an overpriced asset with no debtors prison or other nonsense hanging over their head. There is no judgement or garnishment of their future earnings. They get a little mark on their credit.

In two or three years after renting a house at a reasonable price rather than paying too much for an overpriced mortgage, they now buy a home with their repaired credit and with 20% down. They will probably pay a whole quarter to half percent more on their interest rate as "punishment" for their sins.

I don't know about you but I would much rather pay 6.5% on a $50k note than 6% on a $109k note.

God Bless America indeed.

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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post #150 of 199
It's true that people who put no money down on their house risked and lost almost nothing in a foreclosure. Many would have rented otherwise.

Contrast that with my father in law that would like to move into a retirement type development but his paid off house is so down in value, because he's surrounded by foreclosures, that he can't sell his house.
post #151 of 199
He can sell it. He can list it for $1 and have it sold tomorrow. He can't sell it at the overinflated price he might now have set as an anchorpoint in his head, but that isn't why it won't sell.

I say this as an owner of four properties that have had their value drop a over a combined $600k. However I don't sweat it because I didn't count it at the peak. It wasn't real money. THe real money for housing is based off income ratios and rents so those are what I counted.

Everything is subject to supply and demand or at least it will be until the government controls it out either via direct control or through destruction of wealth via monetary policy.

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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post #152 of 199
Quote:
Originally Posted by BRussell View Post

Ha. I know exactly how you feel. Although I think most of the old-timers around here are probably not in stocks, but have some type of defined-benefit pension.

I think that's probably true, BUT WHY WON'T THEY RETIRE?!?! Seriously. Last year, a 75 year-old member of our faculty retired. You know who's still here? THE GUY WHO WAS HIS PROFESSOR AS AN UNDERGRAD!!!
Gangs are not seen as legitimate, because they don't have control over public schools.
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Gangs are not seen as legitimate, because they don't have control over public schools.
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post #153 of 199
Quote:
Originally Posted by trumptman View Post

First, they didn't foreclose on a home worth $109,000. They forclosured on a home worth $49,000 with a $109,000 loan on it.

It was sold by the bank for $20,000 because it likely was not left in new or sellable condition or else the bank would not have left $30k on the table. The bank is not going to rehab it because they are in the lending business, not the remodeling business. The bank does service the mortgage or else they wouldn't have been able to foreclose.

The family gets to walk away from an overpriced asset with no debtors prison or other nonsense hanging over their head. There is no judgement or garnishment of their future earnings. They get a little mark on their credit.

In two or three years after renting a house at a reasonable price rather than paying too much for an overpriced mortgage, they now buy a home with their repaired credit and with 20% down. They will probably pay a whole quarter to half percent more on their interest rate as "punishment" for their sins.

I don't know about you but I would much rather pay 6.5% on a $50k note than 6% on a $109k note.

God Bless America indeed.

Agreed.
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"The selfishness of Ayn Rand capitalism is the equivalent of intellectual masturbation -- satisfying in an ego-stroking way, but an ethical void when it comes to our commonly shared humanity."
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post #154 of 199
Quote:
Originally Posted by trumptman View Post

He can sell it. He can list it for $1 and have it sold tomorrow. He can't sell it at the overinflated price he might now have set as an anchorpoint in his head, but that isn't why it won't sell.

I say this as an owner of four properties that have had their value drop a over a combined $600k. However I don't sweat it because I didn't count it at the peak. It wasn't real money. THe real money for housing is based off income ratios and rents so those are what I counted.

Everything is subject to supply and demand or at least it will be until the government controls it out either via direct control or through destruction of wealth via monetary policy.

Sure but when looking to retire in a hand full of years he's not looking to get into a sizable mortgage. Had the subprime fiasco not happened then the bubble would not have burst and he would not have several dozen foreclosed houses in two block radius of his house.
post #155 of 199
Quote:
Originally Posted by FloorJack View Post

Had the subprime fiasco not happened then the bubble would not have burst and he would not have several dozen foreclosed houses in two block radius of his house.

Nick, you know more about this than I do, but weren't the housing bubble and the subprime thing indelibly linked?
Gangs are not seen as legitimate, because they don't have control over public schools.
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post #156 of 199
I'm sure there are several foreclosures in the retirement community as well by those foolish enough to get into a mortgage in their retirement years.

As an investor we all wish we could have bought at the bottom and sold at the top. This is why I focus more on cashflow instead of price of the asset. I can feel better if something puts money in my pocket every month even if it is worth 50% of what I paid or 200% of what I paid.

Timing things is hard. Managing expectations is hard. My mother, who is a lifelong alcoholic had some "health issues" related to her drinking.(Mostly it hurts when you fall down) She had bought a condo down by the ocean at the market bottom for $90k. We convinced her to come back to where I live when her "health problem" occurred and also just due to her age and the rising costs. She managed to get out of her condo for $450k, and we dropped it into a very nice retirement home where she paid cash of $200k and put the rest in the bank.

She is now unhappy because she can't leave and go move to a condo in Lake Havasu City. Well she can but she might have a small mortgage. She might have to accept less than what she has now. She will have to sell her house for less than she bought for it even though she managed to time the market just about perfect with my help.

In otherwords, losses suck. Slowdowns and downturns suck. People don't respond well or even rationally to them.

This is why everything I own is an inflation hedge. People respond better when you inflate the money supply than when you allow reality to happen. They don't get freaked out when they have 2% growth with 6% inflation but do when they have -4% growth. Sure they are exactly the same but people don't act the same.

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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post #157 of 199
Quote:
Originally Posted by midwinter View Post

Nick, you know more about this than I do, but weren't the housing bubble and the subprime thing indelibly linked?

Everything is linked and everyone is to blame. I've bemoaned the lack of true conservatism even among conservatives.

The bubble is pure incrementalism of dozens of decisions at dozens of levels. People became more creditworthy because of their homes. This distorts the data that the banks use. The banks wanted to believe that distorted data because home loans were bringing such great returns in fees and initiation charges, and the loan itself. Democrats wanted to trumpet democratized lending. Republicans wanted to use it to show economic strength. A bubble is what it is.

People even made ridiculous improvements to their homes. Improvements not based on usability but on the "return" they thought it would get them. They went with granite instead of formica and figured the returns over 30 years instead of just what they could afford and would use. They is pretty much everybody.

We could go Repubican/Democratic on this, but the real issue goes much deeper. It goes into the nature of currency because you can't create a financial bubble unless you have the fed which is supposed to be free of both of them. Volcker was appointed by Carter but probably got Reagan elected. Greenspan was appointed by Bush and Clinton and caused the stock/internet and housing bubble in my view. Bernarke was appointed by W. Bush and has won my grudging admiration as someone who has done pretty well with the cards he has been dealt. He can't go into past and fix it but he isn't making it worse and knows the way the game is being played. That is important in my view.

We could go even further back. Nixon clearly brought the inflation on that Carter appointed Volcker to fight, but then Nixon was trying to inflate away the costs of the Kennedy/Johnson Vietnam war that he was elected to end. Then we could go further back and...

Currency is a messy business. It ought to be above party and so should the fed. The reality is that people are people and the bubble is a very human mess from all sides.

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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post #158 of 199
From a friend doing research, he found this old gem...

Quote:
709. BANKS, Fictitious Capital. The banks themselves were doing business on capitals, three-fourths of which were fictitious; and to extend their profit they furnished fictitious capital to every man, who having nothing and disliking the labors of the plow, chose rather to call himself a merchant, to set up a house of $5,000 a year expense, to dash into every species of mercantile gambling, and if that ended as gambling generally does, a fraudulent bankruptcy was an ultimate resource of retirement and competence.

This fictitious capital, probably of one hundred millions of dollars, is now to be lost, and to fall on somebody: it must take on those who have property to meet it, and probably on the less cautious part, who, not aware of the impending catastrophe have suffered themselves to contract, or to be in debt, and must now sacrifice their property of a value many times the amount of their debt.

We have been truly sowing the wind, and are now reaping the whirlwind. If the present crisis should end in the annihilation of these pcnnyless and ephemeral interlopers only, and reduce our commerce to the measure of our own wants and surplus productions, it will be a benefit in the end.

But how to effect this, and give time to real capital, and the holders of real property, to back out of their entanglements by degrees requires more knowledge of political economy than we possess. I believe it might be done, but I despair of its being done. The eyes of our citizens are not sufficiently open to the true cause of our distress. They ascribe them to everything but their true cause, the banking system; a system, which, if it could do good in any form, is yet so certain of leading to abuse, as to be utterly incompatible with the public safety and prosperity.

At present, all is confusion, uncertainty and panic.

To RICHARD RUSH. FORD ED., x, 133. (M., June 1819.)

The Jeffersonian Cyclopedia By Thomas Jefferson, John P. Foley
post #159 of 199
Quote:
Originally Posted by trumptman View Post

Everything is linked and everyone is to blame. I've bemoaned the lack of true conservatism even among conservatives.

The bubble is pure incrementalism of dozens of decisions at dozens of levels. People became more creditworthy because of their homes. This distorts the data that the banks use. The banks wanted to believe that distorted data because home loans were bringing such great returns in fees and initiation charges, and the loan itself. Democrats wanted to trumpet democratized lending. Republicans wanted to use it to show economic strength. A bubble is what it is.

Thanks. That's what I thought. My point, in response to Floorjack, is that you can't just say "well, if the subprime thing hadn't exploded, the bubble would've continued" when, in fact, the subprime thing was a big chunk of what made the bubble bubble.

Toil and trouble.
Gangs are not seen as legitimate, because they don't have control over public schools.
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Gangs are not seen as legitimate, because they don't have control over public schools.
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post #160 of 199
Quote:
Originally Posted by trumptman View Post

Everything is linked and everyone is to blame. I've bemoaned the lack of true conservatism even among conservatives.

The bubble is pure incrementalism of dozens of decisions at dozens of levels. People became more creditworthy because of their homes. This distorts the data that the banks use. The banks wanted to believe that distorted data because home loans were bringing such great returns in fees and initiation charges, and the loan itself. Democrats wanted to trumpet democratized lending. Republicans wanted to use it to show economic strength. A bubble is what it is.

People even made ridiculous improvements to their homes. Improvements not based on usability but on the "return" they thought it would get them. They went with granite instead of formica and figured the returns over 30 years instead of just what they could afford and would use. They is pretty much everybody.

We could go Repubican/Democratic on this, but the real issue goes much deeper. It goes into the nature of currency because you can't create a financial bubble unless you have the fed which is supposed to be free of both of them. Volcker was appointed by Carter but probably got Reagan elected. Greenspan was appointed by Bush and Clinton and caused the stock/internet and housing bubble in my view. Bernarke was appointed by W. Bush and has won my grudging admiration as someone who has done pretty well with the cards he has been dealt. He can't go into past and fix it but he isn't making it worse and knows the way the game is being played. That is important in my view.

We could go even further back. Nixon clearly brought the inflation on that Carter appointed Volcker to fight, but then Nixon was trying to inflate away the costs of the Kennedy/Johnson Vietnam war that he was elected to end. Then we could go further back and...

Currency is a messy business. It ought to be above party and so should the fed. The reality is that people are people and the bubble is a very human mess from all sides.

You should teach economics at a University. I'm always surprised how granular your understanding of all this is. I may not always agree with your conclusions, but I do find I learn a lot about the details from your posts.

Ok. Gotta put my partisan hat back on...
"The selfishness of Ayn Rand capitalism is the equivalent of intellectual masturbation -- satisfying in an ego-stroking way, but an ethical void when it comes to our commonly shared humanity."
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"The selfishness of Ayn Rand capitalism is the equivalent of intellectual masturbation -- satisfying in an ego-stroking way, but an ethical void when it comes to our commonly shared humanity."
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