Bail-outs, socialism, federalism, corporate welfare, and you.

Discussion in 'Politics, Religion, Social Issues' started by fivepoint, Nov 12, 2008.

  1. fivepoint macrumors 65816

    fivepoint

    Joined:
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    IOWA
    #1
    • The government just passed an unprecedented 700 billion dollar plan to bail-out the financial industry. The total cost of which is expected to exceed 1.4 trillion when all is said an done.
    • An effort led by Nancy Pelosi, apparently backed by President-Elect Barack Obama, is already considering a bail-out of the United States' three major automobile manufacturers, who have proven (even in strong economic times) that they can barely make a profit.
    • The legislature, led by Nancy Pelosi is also in the middle of crafting a 'homeowner bailout' plan which essentially forgives greedy homeowners who purchased a house far too large for them to afford, and rewards with thousands upon thousands of dollars worth of interest rate reduction... while those of us who pay on time, get nothing.


    So... who is going to pay for all of this? You and me. You, me, your children, mine. The people who work hard for a living. The people who pay 1/3 of their income to taxes. The people who bought a house within their means in an effort to build equity and have ownership in something.

    Us. We will be paying for their greed, for the government's manipulation of the free market, for their incompetence. WE will pay.


    What are your thoughts on all of this?
    Does it bother you at all?
    Does the sting of government taking from you, and giving to someone else feel right to you?
    Do you support these plans?
    How do you think the constitution fits into all of this?
    Does the government even have the right?
    Do you think people will ever learn?
    Or maybe they will learn to keep doing what they're doing... since they seem to be benefiting from it?
    Maybe you and I should stop making payments on our house today so that we can get our interest rates lowered?
    Does this make you mad?
     
  2. aristobrat macrumors G5

    Joined:
    Oct 14, 2005
    #2
    Do you know if anyone like factcheck.org has done a study that shows how much you and I will pay if these actions aren't taken?

    For example, if the Major 3 go under and lay-off all of their employees (which I read trickles down to 4 other people losing their jobs (at the companies that build parts for them, dealerships, etc) for every Major 3 employee to lose their job), how much will you and I pay for their unemployment benefits, job training to qualify them for other jobs, etc.

    I feel like it's really hard to make a non-emotional decision without knowing the cost of doing it vs. the cost of not doing it.
     
  3. Cleverboy macrumors 65816

    Cleverboy

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    #3
    I seriously question whether you understand the context of what has happened. You're looking at attempts at repair and crying foul, yet you were probably all too silent (as others have been) as the actual hollowing out of our economy was occuring.

    1. We conducted TWO wars without any sacrifice to finance it
    2. We established huge tax cuts to the wealthiest Americans without significant decrease in spending
    3. We established massive educational programs, adding yet new spending
    4. We ignored an out of date regulatory structure on the markets

    What are we paying for? The mistakes of this administration in being asleep at the wheel, and holding ideology over sound economic principles. Before these bail-outs, there was one quote where he said that every man, woman, and child in America... due to the current debt, would be on the hook for $30,000. Meanwhile, White House war costs were flying under the radar and needed infrastructure costs were being ignored.

    I don't have time right now to arrange a quote, but if you get a chance, check out "The Audacity of Hope: Thoughts on Reclaiming the American Dream". Listen to his opinions on FDR and the new deal, and how he predicts America will run into serious financial problems given the current course it was on when he wrote the book. If you can give his opinions a decent hearing, I think you'll find that there was a fire burning for 8 years that was allowed to continue without adequate stewardship.

    What is occuring RIGHT NOW, is not something ANY of the participants in solving it, would have wanted to do. But, that's the position we're now placed in to attempt to insure this disaster does not have truly devastating consequences for America's future.

    Obama, our new President-Elect, has a very good head on his shoulders. Every American, both liberal and conservative, would be well advised to read his views on where this country needs to go... and his rational, clear-minded reasoning, on exactly why.

    ~ CB
     
  4. iShater macrumors 604

    iShater

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    Chicagoland
    #4
    While agree with you that this will cost us in the long run, I disagree on the should/shouldn't do it, and the rationale behind it.

    1) The Wall St. bailout was an ill-thought plan that our two stooges in charge of the financial markets (the third being Mr. Greenspan asleep at the wheel) sold as the only way to fix the market. And notice how within a week they changed the plan from buying toxic assets to investing in banks ala Euro style. I think it costs us money and didn't really force anybody to do anything.

    2) The Auto industry made mistakes and plain old business mistakes, and they should NOT be bailed out. I think there is a difference between offering low-interest loans to help convert factories to build more eco-cars as part of a national energy policy as long as the money is open to all auto-companies that operate and have plants in the US. It should not be used to let GM buy Chrysler (and thus bailing out a private equity firm). If that doesn't fly, let bankruptcy court work it out. Heck let another wealthy private equity buy the companies, and force them to shed assets and restructure so that they can actually compete on their products, not on who gets money from the government.

    3) In my opinion this should have been the plan from day one. It should have fixed the SOURCE of the melt-down. To lay the blame on greedy people is pure BS. The whole system that even allows for an interest rate to adjust and double a payment is pure usury and deceptive. We have different situations: a) The greedy investor who bought homes to flip and made a bad call, this is a business decision, you took risks based on that, you lose. b) The normal home buyer who because of illness/layoff etc, fell behind on payments and will lose a home. This calls for an extension of unemployment benefits and better healthcare protection. c) People who got conned into loans by greedy brokers/banks, and there should be a way to force those banks to go back to previous agreement conditions or force a limit that will not end up in foreclosure.

    /end rant
     
  5. jplan2008 macrumors regular

    Joined:
    Feb 15, 2008
    #5
    Your ideas of punishment and survival of the fittest in the markets ignore who will get punished if the car co's fail. Not the executives who made the idiotic decisions, but all of us. Three million+ jobs lost, plus the multiplier effect aristobrat mentioned. This would hurt us and future generations to come. I do think there should be lots of strings -- more than congress will attach, and probably more than you would agree with.

    They were left in the free market, and the disaster happened. If they had been forced by the government to develop fuel efficient vehicles, they would be thriving, and our planet would be better off.

    http://www.salon.com/env/feature/2008/11/12/barack_obama_detroit/
     
  6. Cleverboy macrumors 65816

    Cleverboy

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    #6
    I'm still pissed that Ford could admit to its problems pushing its SUVs instead of looking forward... and still not push harder to catch up to what was happening. The automotive industry is one of the backbones of the American economy. I believe there SHOULD be strings attached to any bail-out, but if we let all of our pillars crumble, the foolish shouldn't wonder what happened when the house begins to fall. --An event described in the automotive vernacular as being "totaled".

    I love the fact that some people in this forum remained unconvinced that the amount of wreckless spending on the part of this administration would be a threat, due to America's amazing GDP. That just went down. Why do people need to see the house in flames before they consider buying a fire extinguisher?

    ~ CB
     
  7. leekohler macrumors G5

    leekohler

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    Chicago, Illinois
    #7
    Yeah- it really makes me mad. I'm still renting because I haven't been able to afford to buy. I played by the rules, and now my money is going to bail out crooks and prop up over-inflated property values. I say no- let the property values drop. If we don't let it happen, it's just going to get worse in the long run and happen again. Made a bad investment? Oh well, that's what happens. I saw this coming years ago. Why didn't anyone else?

    At the same time, I do know that this is gonna hurt a lot no matter what.
     
  8. sfh macrumors regular

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    May 27, 2008
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    Sacramento CA
    #8
    Whatever happened to self responsibility?
    When will people take credit for their own mistakes and misjudgment?

    There should have never been a bailout, if anything they should have locked the interest rates on ARM loans. If people cant afford that they should not be able to keep their homes.

    As for the big 4 whatever happened to laissez faire? Our Govt. needs to stay out of the picture...
     
  9. atszyman macrumors 68020

    atszyman

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    Location:
    The Dallas 'burbs
    #9
    For a football columnist I like Gregg Easterbrook's take

    (bold added by me).

    Why is it that you never hear of the foreign auto-makers balking about increased standards? Why do the big three seem to need special treatment in order to meet standards that foreign companies seem to be able to handle?

    The Geo Metro was making 50+ MPG in the early to mid 90s, why is it that 35 MPG is such a big advertising point in 2008? I realize that the Geo was a tiny car with a tiny motor, but we've had nearly 20 years of time to improve upon that formula.

    I admit that the market was not the most intelligent and the SUV craze was a cash cow, but it's not like the rising price of oil wasn't foreseen decades ago. If any thought by the big three had been spent, they'd have efficient engines and designs laying around ready to roll out the minute that oil started to spike. But it seems no one wants to think long term anymore, it's all about the quick buck. Great when you can negotiate huge signing bonuses and golden parachutes but for the vast majority of people, long term planning would be much better for the company, investors, and employees than an eventual bankruptcy or the peaks and valleys that come from short sightedness.
     
  10. sfh macrumors regular

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    May 27, 2008
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    Sacramento CA
    #10
    +1
    I played the game right why should I have to pay for others stupidity?
    I had the chance 2 years ago to buy a house but the only way I could do it was with an ARM loan, needless to say I didn't buy then because I could not afford the payments if they went up.

    I got my stuff together and saved my money until I could afford the house and then found a new one. Now my house payment is lower than the average rent in our area and I am secure knowing I can pay my bills for years to come.
     
  11. freeny macrumors 68020

    freeny

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    #11
    nice read on cnn with Ron Paul-
    http://www.cnn.com/2008/POLITICS/11/11/paul.republican/index.html

    here's a snippet-

    " Once the Republicans were in power, though, the promises faded, and all policies were directed at maintaining or increasing power by trying to whittle away at Democratic strength by acting like big-spending Democrats.

    The Republican Congress never once stood up against the Bush/Rove machine that demanded support for unconstitutional wars, attacks on civil liberties here at home, and an economic policy based on more spending, more debt, and more inflation -- while constantly preaching the flawed doctrine that deficits don't matter as long as taxes aren't raised.

    But what the Republican leadership didn't realize was that ALL spending is a tax on middle-class Americans through price inflation and that eventually the inevitable consequence is paying for the extravagance with a financial crisis."
     
  12. jplan2008 macrumors regular

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    Feb 15, 2008
    #12
    Your alternative is no shared responsibility, but shared punishment. If banks lose more from foreclosing than re-negotiating, and entire communities lose more from the problems of the banks and the homeowners, then those of us not responsible for the problem will pay more in the end than we would by paying in the short-term for a solution.

    Individual homeowners made plenty of mistakes. But they were also encouraged, cajoled, and enticed into these loans because of unregulated, unrepentant greed on the behalf of corporations. They were also encouraged by the government.

    I'm not sure what you're suggesting? Locking in the interest rates at 10-20-30%, while the fed drops the rate below 1%? Why? Or do you mean changing them to a non-usury fixed rate?

    It was laissez-faire tendencies that caused the problem. Anyway, we don't have a laissez faire system. We give huge amounts of corporate welfare. The new bankruptcy laws favor the rich. And now, those that have favored giving corporate welfare are laissez-faire proponents, because they don't want corporations to have to be accountable, only individuals and entire communities.
     
  13. rdowns macrumors Penryn

    rdowns

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    #13

    I'm one of those responsible people. What about the irresponsible ones near me who will cause my property value to decline and taxes to go up? Either way, I lose. A bailout of some sort is a better loss to me.
     
  14. MacNut macrumors Core

    MacNut

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    CT
    #14
    Either way it is going to hurt wether we take the band aid off slowly or rip it of now. What we are doing is just adding more band aids to the problems that will have to come off at some point. It is really gonna hurt when all these band aids eventually get ripped off. We should get through the huge pain now rather than prolong it. No more bailouts, lets deal with the pain now and work through it.

    We never used to bail out bankrupt companies in the past, why start now.
     
  15. Anuba macrumors 68040

    Anuba

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    #15

    • Yes. A bummer, but unfortunately necessary. The alternatives are worse. Or wait, did you really think that you and millions of other Americans would be able to keep your jobs if you let the financial industry go down? You don't think the American people is complicit in this at all, living on credit like there was no tomorrow?

      Absolutely vital. If you let them go out of business, you won't even have spare parts for the cars you're currently driving. 3.5 million jobs hang in the balance, and if the Big Three go bankrupt you'll have 3.5 million more on welfare, which is a much more costly form of bailout. And again, the American people are very much complicit here. They voted to have a blithering moron from an oil dynasty for president. Twice. And he gave them what they wanted, namely an environmental policy that's 50 years behind the times. He wiped his ass with the Kyoto agreement. He kept gas prices at half of what gas costs in the rest of the developed world, and gave tax credits on large SUVs. And with gas cheaper than mineral water, Americans kept demanding bigger and bigger cars. Forget Hummers and Navigators and F-150's, we want MONSTER TRUCKS! And the American auto industry responded by manufacturing precisely the gas guzzling behemoths that Americans were asking for. There was just one problem though... nobody outside the US wanted these monsters, in fact some of them are flat out illegal to drive in many countries due to excessive CO2 emissions. In other words, all these cars were absolutely useless for export. This isn't how it used to be. Back in the 50's, 60's and 70's, American cars were popular around the world, they were status symbols and fairly common in Europe, but today they're unsellable.

      Meanwhile, the standard of living was improving greatly in places like China and India, as a result of American companies having shipped all the jobs overseas. The Chinese started trading in their bicycles for cars. The demand for oil reached unprecedented heights, and prices skyrocketed. So Americans started whining about gas prices (which, again, were the lowest in the world, except for Dubai) and said -- hey, we don't want these big SUVs anymore. Give us those Japanese hybrid cars, and European hatchbacks that run on green diesel and stuff. Well, they were already manufacturing those in droves so they were happy to sell them to you. GM was going to have the Chevy Volt out by 2010, but...

      Cry me a river. The stereotypical single mom with 3 jobs and 7 kids isn't the only one who pays taxes, you know. Companies pay taxes too. A big chunk of that bailout money was theirs to begin with. Americans are funny that way; you're big on small government, privatization and letting the free market have its way... but when they stumble, you talk endlessly about corporate "greed" and the little guy getting screwed over -- talking points that are straight out of Karl Marx's Das Kapital: "Capital is dead labor, which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks."
     
  16. Cleverboy macrumors 65816

    Cleverboy

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    #16
    I'm pretty certain, almost all the analysts are saying that we need to fix the problem, and now is NOT the time to pretend it will go away if we suddenly adopt a purist philosophy on the free market.

    ~ CB
     
  17. MacNut macrumors Core

    MacNut

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    #17
    Where do we stop, how many companies do we bailout only to watch them make the same mistakes again. I am not certain that a GM bail out will fix the problem's at GM. We might just be throwing money into a fire never to be seen again.
     
  18. leekohler macrumors G5

    leekohler

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    #18
    You're missing the main point here- and that is lack of accountability. What's happening here should be considered criminal. These companies screw up, in many ways intentionally, and they get bailed out over and over, with no consequences or even regulations. That is what is really wrong here. Those responsible need to be held accountable- ESPECIALLY when we're paying for their mistakes.
     
  19. MacNut macrumors Core

    MacNut

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    #19
    That is the real issue, if we are going to bail out the big 3 there will need to be restrictions set in what they can do with that money.

    We need to stop writing blank checks with no accountability.
     
  20. jplan2008 macrumors regular

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    #20
    But how do we hold them accountable? The ones who made the mistakes within the companies will get their golden parachutes no matter what. It's a pretty immature "so there!" to say we don't care about 3 million +++ jobs today, which would affect most of us negatively, and an entire industry of the future just to have the illusion of punishing those that made the mistakes.

    To the extent that the government's lack of regulations caused this mess, in part, those that are responsible have been thrown out of office. To the extent that there need to be stronger-than-ever-before strings attached, we need to let congress know that.
     
  21. leekohler macrumors G5

    leekohler

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    #21
    If we're bailing companies out, no golden parachutes for CEOs. That should absolutely be a condition of their receiving federal bailout money. We can certainly demand that. As a matter of fact, they should have to pay back their entire salaries, but I won't hold my breath on that one.

    People who are suspected of egregious deception should be tried and if found guilty, sent to prison and all of their assets seized.
     
  22. Anuba macrumors 68040

    Anuba

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    #22
    Yes, of course they should. The problem isn't the bailout method itself -- it has worked in other countries before -- it's that it's been done in that All-American tradition of No Government Interference. They have completely misunderstood the bailout concept. It's kind of like that Seinfeld episode where Elaine gets sick of the fact that her former schoolmate Sue Ellen Mishke never wears a bra, so she gives her a bra, and then she uses the bra as a top.

    The money is supposed to come with a huge list of conditions that have to be met, you don't just GIVE them the money.
     
  23. jplan2008 macrumors regular

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    #23
    Sure, I agree with all that. I think the money should be considered a loan, and if the companies engage in certain actions, it becomes payable immediately. For example, any lobbying, golden parachutes, etc. And, to prevent the same thing happening in the future in a variety of industries, more regulation. That teaches a bigger lesson than letting the auto industry collapse. I don't know what the strings were for the first $25 BN loan for re-tooling were -- I'm sure not enough, so now is the time to add to them.
     
  24. robanga macrumors 68000

    robanga

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    #24
    The responsible always end up getting effected by the actions of the non-responsible. It is one of those cold hard facts of life. I would hope that our government looks at some very good analysis of what the cause and effects are of either doing nothing, or doing too much. They need to look at data from both sides of the argument.
     
  25. nplima macrumors 6502a

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    #25
    +1

    when a company becomes bankrupt, its assets change hands. That's what's needed here. The stockholders did their best, chose the best managers they could and still their companies failed. They lose what they have, someone (the creditors) will pick up the pieces and start again. The bailouts work against everyone by stopping this process.

    If GM goes under, I'm sure that some Japanese or Chinese company will buy whatever is left. I'm certain that if that happens, a buyer would not bring millions of workers from abroad to replace 3.5M people who are directly or indirectly affected by GM/Ford going bust.

    Over her ein Europe what we've seen with the financial markets was that a bunch of banks went under, but some of them got large chunks of their business bought by other banks. By investing in the banks, the state nationalized the rotten part of that business, while someone else got the good bits. If only there was no expectation of a Bailout, some investors would show up. As it is, they would be stupid not to wait.
     

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