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Socializing Profit
Posted by: McQ on Friday, December 05, 2008

So what's happening in the great bailout scam?

I mean, looking at what's going on, I simply don't know what else to call it. Does anyone understand the plan (to include those supposedly executing it)? Where is the money going, what are the controls on its disbursement and use, who is really in charge of all of this?

I know who claims to be in charge, but I continue to be convinced that those making such claims don't have a clue.

Anyway, these three paragraphs caught my eye during my morning reading:
Stock intended to eventually earn taxpayers a profit as part of the Bush administration's massive bank bailout has lost a third of its value - about $9 billion - in barely one month, according to an Associated Press analysis. Shares in virtually every bank that received federal money have remained below the prices the government negotiated.

Most of the Treasury Department's investments since late October have been in preferred bank stocks, more than $180 billion worth, with investments in giants like Citigroup and JPMorgan Chase, and many small community banks. But the government also negotiated options to buy up to 1.2 billion shares of common bank stock that was valued at $27 billion.

The Treasury Department said it did not expect these common stock options to be profitable immediately and negotiated them so taxpayers could share in the wealth if the bank stocks recover.
So the "taxpayers" are down 9 billion in share value?

Sweet. Well done, so far.

It is really the last paragraph which just frosts me to no end. First, if you believe "taxpayers" are going to benefit from any 'profit', I want what you're smoking. Any profit will disappear into government coffers to be wasted elsewhere should they ever materialize. Taxpayers have one function - provide funds. There is no reciprocal payback of gains to taxpayers except as Congress deems appropriate - most likely in new government programs, spending or pork.

Why do I say that? Because that key little phrase that was popularized by Barack Obama's discussion with Joe the Plumber has again shown up - "share the wealth". You see, when "wealth" is "shared", those who originally were on the hook for the funds will be the ones asked (not really asked but you know what I mean) to "share" when and if any profits show up.

And, naturally, we all know what the vehicle through which this "sharing of the wealth" will be accomplished. Yup, the same one now cluelessly throwing money around like a drunken sailor on shore leave - no offense intended to sailors, drunken or otherwise.
 
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Now you know why the Chinese consider it a curse to suggest:

"May you live in interesting times"

The only way I can figure to justify this nonsense is the FDIC, FSLIC, and the SIPC. We, the taxpayers, were already on the hook for a whole of the deposits in these institutions, so if (and it may be a big if) this bailout nonsense headed off an even bigger obligation, then it’s possibly worthwhile.

That thought only makes it slightly less sickening.

I think of it like this, imagine you were an youngish entrepreneur, working hard, doing everything right, and growing your business, while competing against older, established, and much bigger competitors. If you make a mistake, you crash and burn, go bankrupt, lose everything, because, with great opportunity comes great risk, you know this and you accept it.

But if your much bigger competitor makes a mistake, they get a mulligan, and now, you are not only competing against them, you’re competing against your own government.

This is what I call regulatory capture, when big business and government are so intermingled that the very thought of "free market" and the American economy are antithetical.

It’s not because they are too big to fail, it’s because they are so well entrenched they have already bought their mulligans.

But the next time someone talks about favoring free market policies in this country, without realizing they are favoring even more favoritism for those who have bought our government, I’m going to puke.

There is no free market, and within this not free market, the battle is between the people (labor and small businesses) and corporations (government), so when someone favors a leg up for labor, it’s not socialism, it’s counterbalance.

I’m a capitalist, and if we had capitalism, I’d favor any policy that protected the integrity of the capitalist system. Since we don’t have capitalism, I just push for balance between the competing interests.

In this debacle, home value declines are the cause and pain of the economic decline, so what is the corpomental response? Stabilize the real estate market by restructuring loans to stave of foreclosures? Let the foreclosures happen and cover the losses of the lenders who are going to own the properties as well. One side of this equation is going to have it’s cake and it too (wall street), while the other side (not people who took bad loans, but the one’s who are, and will continue to make their mortgage payments) is going to wee their biggest asset decline by 30% on average (some as little 0% growth and some as high as 70% value loss) before this thing is over.

And by the way, I don’t favor handouts to people who were too dumb (or optimistic) to read their mortgage contracts, but I have no problem with suggesting that we let the big financial houses close and offer potential foreclosure homeowners to refinance at high rates with longer terms (40 year? 50? In California, they have been 100 year mortgages) and lower payments. Because the fact is, if those houses on your street don’t foreclose, your property value might not tank, and if real property value had not taken the beating it has, this would have been just another mild cyclical downturn, instead of having the potential of being a once in a century economic catastrophe.

Ack.... I fell off my soapbox







 
Written By: CaptinSarcastic
URL: http://
sWLLZu mtaduqzoleoi, [url=http://uwhjyhzzwdxo.com/]uwhjyhzzwdxo[/url], [link=http://ossewgqhinlg.com/]ossewgqhinlg[/link], http://uwtbrjswnylb.com/
 
Written By: yqfopuzesg
URL: http://ckhtvkduxayo.com/
As a former drunken sailor no offense is taken. However, I feel compelled to point out that even in my most boozed up moments I never spent other peoples money.
 
Written By: Moby
URL: http://
"between the people (labor and small businesses) and corporations (government), so when someone favors a leg up for labor, it’s not socialism, it’s counterbalance."

Hmm... not sure exactly how you are defining labor. Are you talking about Unions?

If that’s the case it would be difficult for the large corps to be much more in bed with government than the big unions.

So expand on what you mean by labor, please.
 
Written By: blue
URL: http://
So now our government is officially speculating in the stock market with taxpayer money, yet this is much too risky for the taxpayer himself to do with part of his/her social security money. Obviously the wisdom and expertise of the government makes a big difference. And I am sure the sage advice and counsel of the lobbyists (and their campaign contributions and career counseling for defeated/retired politicians) from these same banks was quite helpful.
 
Written By: timactual
URL: http://
If that’s the case it would be difficult for the large corps to be much more in bed with government than the big unions.
Yes, I mean unions in part, but individual taxpaying workers in general, but as much as unions WANT to be in bed with government, they have failed miserably when compared to industry interests. Industry pays to belong to the brothel that is government, unions pretty much have to settle for the streetwalkers of government prostitution.

 
Written By: CaptinSarcastic
URL: http://
I’m not sure I can go there with you... when I think of some of the biggest problems we face as a country I see the face of unions and how they have colluded with the government to trash our country. The Teachers Union being one of the biggest culprits.

 
Written By: blue
URL: http://
I see the face of unions and how they have colluded with the government to trash our country. The Teachers Union being one of the biggest culprits.
At the risk of sounding like Abbey Hoffman, that’s just what the man wants you to see.

Unions are potentially as bad as industry influence to preclude any possibility of a free market in this country, but here’s the thing, THERE IS NO FEE MARKET in this country, there are only competing interests for favor in the unfree market, and unions have been losing competition BADLY, anecdotal evidence of union malfeasance aside.

I think of the two competing interests within a economic construct that was once based on capitalism, and the nominal desciptor of capitalism is still used, like a vestigial leg on a whale. It’s useless and inaccurate, but it’s still there.

 
Written By: CaptinSarcastic
URL: http://
"At the risk of sounding like Abbey Hoffman, that’s just what the man wants you to see."

Funny, I thought I saw it when I was up at my son’s public school. If by "the man" you are referring to me, the guy who drove to the school and dealt with very bad teachers and got "zero" resolution, then maybe you have a point.

Have you ever worked Math problems related to global warming? Are you aware that the English books have students dissect paragraphs about global warming?

Do you know they teach Universal Health Care in English class?

"Unions are potentially as bad "

Drope the word potentially and we can find some agreement.

There has never been such a things a "Free Market" as you are trying to use it.

"I think of the two competing interests within a economic construct that was once based on capitalism, and the nominal desciptor of capitalism is still used, like a vestigial leg on a whale. It’s useless and inaccurate, but it’s still there."

So your solution would include going after the corporations and not the crappy unions.

Personally, I would think that if you really care about the Free Market you would find both at fault and fix both problems.

Unless one really is a socialist.

 
Written By: blue
URL: http://
So your solution would include going after the corporations and not the crappy unions.

Personally, I would think that if you really care about the Free Market you would find both at fault and fix both problems.

Unless one really is a socialist.
My solution is to support balance, whatever our system is, the construct seems to work best with the pendulum closest to the center between the competing interests. I’m a socialist when the pendulum swings to the right, I’m a rightist when the pendulum swings to the left.

Perhaps you read this in my initial comment...
Since we don’t have capitalism, I just push for balance between the competing interests.
Then more anecdotes...
Have you ever worked Math problems related to global warming? Are you aware that the English books have students dissect paragraphs about global warming?

Do you know they teach Universal Health Care in English class?
No argument, these are bad things, and shouldn’t happen (and don’t have to happen just because there are unions), but have you found anything on the other side of the equation that frosts your arse?

Those abuses of huge corporations don’t make you want to abolish corporations, you just want justice targeted to situations when corporation abdicate their responsibilities, or break the law. For example, when a corporation makes a balance sheet decision that it’s better to settle lawsuits for negligent deaths than to correct a known problem that will result in deaths. And yet with drastically weakened unions, you still want them weaker, rather than addressing the specific malfeasances of unions when they occur.

And you don’t even seem to recognze your own bias.

There are a zillion variable here, and I know that correlation is not causation, but I would point out that the greates across the board in this nations 232 year history came when labor representation was at it’s highest. If you want to argue that we were going to peak during those years and labor just kept us from peaking even higher, knock yourself out.

But no, I don’t want to restrict or hurt big companies, I just want to separate them from government, which, at this point in our history, would be like trying to separate Rosie O’Donnel from a donut, except at least the donut doesn’t WANT to be eaten


 
Written By: CaptinSarcastic
URL: http://
Maybe you can clarify for me what my bias is?

All I said was...

"I think of some of the biggest problems we face as a country I see the face of unions and how they have colluded with the government to trash our country. The Teachers Union being one of the biggest culprits."

I think most of our issues boil down to poor education. How is that bias? I think our teacher union’s and government have colluded to produce a poor system.

Please explain to me how any of that denies the fact that corporations are not a problem and shouldn’t be punished if they break the law?

"Since we don’t have capitalism, I just push for balance between the competing interests."

Yes, I read that and like your comment about the Free Market we have never had pure capitalism.

"There are a zillion variable here, and I know that correlation is not causation, but I would point out that the greates across the board in this nations 232 year history came when labor representation was at it’s highest."

Hmm... I would argue that the highest point would be due to hard work and American creativity... not labor unions.


"And you don’t even seem to recognze your own bias."

Hmm... I was thinking the same thing.

"But no, I don’t want to restrict or hurt big companies, I just want to separate them from government, which, at this point in our history, would be like trying to separate Rosie O’Donnel from a donut, except at least the donut doesn’t WANT to be eaten"

And my point would be that it is just as difficult to do that with unions, which are just as bad. And again for me, our biggest problems boil down to poorly educated Americans.
 
Written By: blue
URL: http://
Monopolies are illegal in the USA. So is price collusion.

So why does our government allow unions to create a monopoly on labor and even require companies to negotiate with them?

Furthermore, large companies can be hit by lawsuits by a single consumer and pay millions to them. For things as stupid as spilling hot coffee on yourself. Its not as if we are back in the 1900’s with little kids working the looms.

Also, corporations pay taxes - maybe unions should pay the same rate of tax on their "profits" that they squeeze from the corporation? Yeah, yeah, the workers pay taxes later on, but so do shareholders.

I just don’t get the love affair with the unions people have. Especially when the most powerful unions now around are government employee unions. Because we all know that DMV offices are sweatshops where workers are exploited.
 
Written By: Harun
URL: http://
So why does our government allow unions to create a monopoly on labor and even require companies to negotiate with them?
Unions are nothing other than labor cartels. Captian Sarcastic is a commie.

Any other questions?
 
Written By: Don
URL: http://
Unions are nothing other than labor cartels. Captian Sarcastic is a commie.


(-:
 
Written By: CaptinSarcastic
URL: http://

 
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