Obama XV: Now, with 20% more rage

[5mn_Major]

Re: Obama XV: Now, with 20% more rage

At least tax cuts can be reversed...creating new government agencies and giving out more benefits will never be reversed. We'll never know how much we could save by cutting back on benefits...it will never happen.

So here's what we do.

The economy has totally stalled. Those who have money are not spending nor hiring. You create something and call it a stimulus. Through the stimulus you force spending into the economy...which then circulates and generates hiring and business income and tax revenue.

As with company dividends, tax cuts are an option when govt coffers are full...you let them expire when coffers are empty. In just the same way, you let the stimulus expire when the economy revives and govt tax revenue is running at decent levels.

The solution is not ideal...but its the best in a bad situation.

 

[solovsfett]

Re: Obama XV: Now, with 20% more rage

What I find interesting is just about every report I've seen or heard on the Bush tax cuts lately (even on Fox News) is that there wasn't a single Republican when it was passed that thought the cuts were sustainable. Often saying that they had no way to pay for them.

Yeah those are probably the GOP'ers who were perfectly content with GW's spending spree

 

[pirate]

Re: Obama XV: Now, with 20% more rage

So here's what we do.

The economy has totally stalled. Those who have money are not spending nor hiring. You create something and call it a stimulus. Through the stimulus you force spending into the economy...which then circulates and generates hiring and business income and tax revenue.

As with company dividends, tax cuts are an option when govt coffers are full...you let them expire when coffers are empty. In just the same way, you let the stimulus expire when the economy revives and govt tax revenue is running at decent levels.

The solution is not ideal...but its the best in a bad situation.

I would not, simultaneously, create so much uncertainty for businesses with changes in health care costs, taxes and government oversight that they prefer to sit on resources vs. extend them.

 

[LynahFan]

Re: Obama XV: Now, with 20% more rage

So here's what we do.

The economy has totally stalled. Those who have money are not spending nor hiring. You create something and call it a stimulus. Through the stimulus you force spending into the economy...which then circulates and generates hiring and business income and tax revenue.

As with company dividends, tax cuts are an option when govt coffers are full...you let them expire when coffers are empty. In just the same way, you let the stimulus expire when the economy revives and govt tax revenue is running at decent levels.

The solution is not ideal...but its the best in a bad situation.

Create "something?" What does that mean?

And if Obama/Congress is serious about creating something new to help the economy, they would be politically wise to avoid calling it "stimulus." That term is a bit poisoned right now - sounds to too many people like a code word for "increased borrowing and resulting debt expansion that may or may not keep unemployment below 9% - we really have no friggin' clue."

Edit to add: I'm not at all automatically opposed to the Gubmint "doing something" to help the economy. I might even look the other way if they bent a few Constitutional clauses, so long as whatever they do is limited in scope and duration (as you suggested), accounts for the reality of market forces and other economic principles, and provides substantial benefits that far outweighs any increase in debt. I just have no idea what that might be, myself.

 

[MinnFan]

Re: Obama XV: Now, with 20% more rage

So here's what we do.

The economy has totally stalled. Those who have money are not spending nor hiring. You create something and call it a stimulus. Through the stimulus you force spending into the economy...which then circulates and generates hiring and business income and tax revenue.

Ummm, pretty sure we just tried that and it cost more than the entire Iraq War. Not really seeing how that helped. In fact, when has that ever worked? To put it simply, Keynes was wrong. The gov't spends for a political return instead of an economic one.

If you want people to spend, get rid of the uncertainty and excess regulation and you will see things start to move.

 

[ScoobyDoo]

Re: Obama XV: Now, with 20% more rage

Ummm, pretty sure we just tried that and it cost more than the entire Iraq War. Not really seeing how that helped. In fact, when has that ever worked? To put it simply, Keynes was wrong. The gov't spends for a political return instead of an economic one.

If you want people to spend, get rid of the uncertainty and excess regulation and you will see things start to move.

Comments like that crack me up. The banking crisis and the oil spill, Enron and Bernie Madoff are all a result of a lack of regulation.

 

[MinnFan]

Re: Obama XV: Now, with 20% more rage

Comments like that crack me up. The banking crisis and the oil spill, Enron and Bernie Madoff are all a result of a lack of regulation.

Really?? Pretty sure there are regulations on the books that are supposed to prevent those things from happening. Its the lack of enforcement of regulations that allowed them to happen.

There are hundreds of thousand of regulations on the books and somehow you think that we are under-regulated?

*If you think that there should be a specific regulation against what Madoff did then I hope you'll propose one for Social Security considering its the exact same scam.

 

[Rover]

Re: Obama XV: Now, with 20% more rage

*If you think that there should be a specific regulation against what Madoff did then I hope you'll propose one for Social Security considering its the exact same scam.

Comment above is proof that you're dealing with a moron. Madoff didn't have a dedicated revenue stream to pay the money he claimed he had. Social security does, has for the last 75 years and will for another 30. Furthermore, it also tells you when it will be running short under current conditions, something I'm guessing Madoff's clients would have liked a heads up about.

 

[ScottM]

Re: Obama XV: Now, with 20% more rage

Comments like that crack me up. The banking crisis and the oil spill, Enron and Bernie Madoff are all a result of a lack of regulation.

Umm no. At least with respect to the financial meltdown, and Madoff, they were mainly a result of regulators failing to enforce rules already on the books. The SEC had some constructive knowledge of Madoff's schemes and did nothing. The OTS had no idea what was going on within AIG, even though it was their primary regulator. On the plus side, that type of "we need more regulations!" thinking will allow guys like me to retire early, in some no-tax offshore haven. The regulators need more people with MBAs and PhDs in Mathematics than they do lawyers and other enforcement types who always clean up after the fact.

 

[Craig P.]

Re: Obama XV: Now, with 20% more rage

Even if it is correct to say that what was needed was enforcement of existing regulations rather than new ones...

It is still the case that the real problem was the culture in certain circles that "any regulation is too much regulation," which tends to lead to lax enforcement both due to management outlook and to underprovision of enforcement resources.

So while Scooby may be incorrect in the details, he's right broadly speaking.

 

[ScoobyDoo]

Re: Obama XV: Now, with 20% more rage

Umm no. At least with respect to the financial meltdown, and Madoff, they were mainly a result of regulators failing to enforce rules already on the books. The SEC had some constructive knowledge of Madoff's schemes and did nothing. The OTS had no idea what was going on within AIG, even though it was their primary regulator. On the plus side, that type of "we need more regulations!" thinking will allow guys like me to retire early, in some no-tax offshore haven. The regulators need more people with MBAs and PhDs in Mathematics than they do lawyers and other enforcement types who always clean up after the fact.

Agreed. I stand corrected. We have an enforcement problem and enforcement COSTS TAX MONEY.

So, I agree. Deregulate what you can and boost enforcement.

See, I can be persuaded.

 

[Rover]

Re: Obama XV: Now, with 20% more rage

Even if it is correct to say that what was needed was enforcement of existing regulations rather than new ones...

It is still the case that the real problem was the culture in certain circles that "any regulation is too much regulation," which tends to lead to lax enforcement both due to management outlook and to underprovision of enforcement resources.

So while Scooby may be incorrect in the details, he's right broadly speaking.

In regards to Madoff, then I agree with ScottM that the SEC had the tools at its disposal to shut him down, but they didn't. I'd speculate part of the reason was a more lenient view on enforecment, as well as the notion that its insider trading ala the Martha Stewart case that gets them excited and this didn't quite fit, and Madoff flew a bit below the radar with moderate (but consistant) returns as opposed to doubling people's money every year.

Regarding AIG I disagree completely with the notion that the regulation was in place to stop them. If anybody had tried, all the free market apostles would have been screaming bloody murder that the gubmint was targeting a company for making money. There's no law against taking the opposing side of every swap option in the US ; nor was the derivative market regulated.

Now, that's where the new law comes into play. Companies "too big to fail" can be shut down before they crash and take everybody with them. Capital requirements are higher so you can't be leveraged 100% and have no money to even cover one day of operations. You need to be able to cover the derivative deals you enter into.

Some things scream out for regulation. For example, with Sarbanes-Oxley its no longer the firm that gets charged with cooking the books (like Arthur-Andersen), its the executives who signed off on the fraud. You're seeing a lot less inaccurate filings nowadays, and that's because of the threat of prison time for anybody involved.

 

[ScottM]

Re: Obama XV: Now, with 20% more rage

Regarding AIG I disagree completely with the notion that the regulation was in place to stop them. If anybody had tried, all the free market apostles would have been screaming bloody murder that the gubmint was targeting a company for making money. There's no law against taking the opposing side of every swap option in the US ; nor was the derivative market regulated.

Now, that's where the new law comes into play. Companies "too big to fail" can be shut down before they crash and take everybody with them. Capital requirements are higher so you can't be leveraged 100% and have no money to even cover one day of operations. You need to be able to cover the derivative deals you enter into.

Some things scream out for regulation. For example, with Sarbanes-Oxley its no longer the firm that gets charged with cooking the books (like Arthur-Andersen), its the executives who signed off on the fraud. You're seeing a lot less inaccurate filings nowadays, and that's because of the threat of prison time for anybody involved.

When you have the one of the Fed chiefs say they didn't understand the extent of subprime mortgage lending, and its potential impact on the financial system, you don't have a deficiency of regulation, you have a deficiency in regulators. The regulators and their rules tend to be behind the industries they seek to regulate.

Part of the problem is that the rulemaking process is designed to put everything into a nice tight little box. Then guys like me come along and turn the box upside down, carve a few holes into the box and generally play in the fine grey areas inherent in the limitations of language. If you want a more relevant regulatory structure, I'd suggest it be more "principles-based" like the Euros and some Asians regulators use. It allows a more holistic approach, and the regulators aren't bound to the "black and white" of their often-obsolete rules.

There are some good things in Dodd-Frank dealing with "too big to flail", derivatives, etc. But leaving the overwhelming work to regulators, lobbyists, lawyers, etc., you are bound to prevent the last crisis, and not the one that can boil up in Portugal, Oman or some small cap hedge fund in Greenwich.

 

[pirate]

Re: Obama XV: Now, with 20% more rage

I think everybody is focusing only on regulation, I think reasonable people could agree that having no regulation (or no enforcement) is bad and new regulations can be good provided they are well thought out and prevent the offending activity without a lot of unintended consequences.

Is the depth of a recession the time to dramatically increase government oversight of the financial sector with an anti-business zealot, increase the healthcare cost of every business and change the tax structure of those with disposable income?

Even if each of those is the 'right' thing to do in a vacuum, they cloud the picture for investment and expense structures in businesses and cause people to pull back on personal spending. I'll go as far as to say they have done exactly that. Companies and individuals are sitting on cash while they try to figure out what the heck is going on.

So, they may be the right idea but the timing isn't going to help get the economy started again. That isn't to say we should allow Madoff or derivatives to go crazy again...but the baby is going out with the bath water.

 

[Rover]

Re: Obama XV: Now, with 20% more rage

When you have the one of the Fed chiefs say they didn't understand the extent of subprime mortgage lending, and its potential impact on the financial system, you don't have a deficiency of regulation, you have a deficiency in regulators. The regulators and their rules tend to be behind the industries they seek to regulate.

Part of the problem is that the rulemaking process is designed to put everything into a nice tight little box. Then guys like me come along and turn the box upside down, carve a few holes into the box and generally play in the fine grey areas inherent in the limitations of language. If you want a more relevant regulatory structure, I'd suggest it be more "principles-based" like the Euros and some Asians regulators use. It allows a more holistic approach, and the regulators aren't bound to the "black and white" of their often-obsolete rules.

There are some good things in Dodd-Frank dealing with "too big to flail", derivatives, etc. But leaving the overwhelming work to regulators, lobbyists, lawyers, etc., you are bound to prevent the last crisis, and not the one that can boil up in Portugal, Oman or some small cap hedge fund in Greenwich.

I think its important to prevent such things from happening again. Sometimes that means enacting a law, sometimes better vigilence. Lets go back to the very first effort to regulate the country's financial markets - Alexander Hamilton bringing all state debt under the federal umbrella. While this didn't solve every future problem, it assuredly prevented others from occuring.

Predicting the future is tough, and I don't necessarily expect regulators to be a step ahead of everybody. Furthermore, I readily acknowledge that some practices, even the main one that got us into the housing crisis (people taking on mortgages they couldn't afford) are beyond the law's reach. The problem once again is one of instant gratification. People either expect one law to solve any future problem that may come along, or they'll complain incessantly about it.

 

[USAFA Bulldog]

Re: Obama XV: Now, with 20% more rage

Comments like that crack me up. The banking crisis and the oil spill, Enron and Bernie Madoff are all a result of a lack of regulation.

So someone who is going to break the law and steal some money is going to follow the law and obey the regulations?

I suppose then someone who is going to intentionally murder someone is also going to bother trying to get guns legally then?

 

[pirate]

Re: Obama XV: Now, with 20% more rage

Rover - I think No Doc, interest only mortgages were within reach of the regulators...nobody in their right mind should have thought that was a good idea. Among the alphabet soup there may have been too much separation as loans were originated and sold faster than anybody could follow the bouncing ball but at the end of the day people knew that was a bad practice likely to blow up at the first sign of trouble.

Sure, as long as house were appreciating at 10% a year it could be assumed people would grow into the obligation but I'd rather see regulators identify 'movements' like those mortgages and develop goalposts than get down into the weeds on other issues and miss obvious something like that.

 

[Rover]

Re: Obama XV: Now, with 20% more rage

Rover - I think No Doc, interest only mortgages were within reach of the regulators...nobody in their right mind should have thought that was a good idea. Among the alphabet soup there may have been too much separation as loans were originated and sold faster than anybody could follow the bouncing ball but at the end of the day people knew that was a bad practice likely to blow up at the first sign of trouble.

Sure, as long as house were appreciating at 10% a year it could be assumed people would grow into the obligation but I'd rather see regulators identify 'movements' like those mortgages and develop goalposts than get down into the weeds on other issues and miss obvious something like that.

Lets take the housing crisis. What should be illegal/could have been prevented? Faking people's incomes at the point of loan origination so they'd qualify for funds. No argument there. Beyond that though, the simple fact is ultimately people are to blame for the housing crisis. Not the government, the banks, Wall St, etc etc. Again, nobody forced you to take on a loan that you couldn't afford. Everybody wants to find somebody else to blame for this, but speculators and people who wanted to live like kings without earning the ability to do so caused this.

When I went for my mortgage, they qualified me for some outlandish amount far above what I was looking to spend. Far from being flattered or suckered, I thanked them and said I really only need xxxx. You have to have the sense to know what you can safely afford monthly. Its not the government's job to tell you.

So, where is regulation needed in this case? If providing fraudulent info, or changing a lender's income to make them look more worthy of a loan, isn't illegal, it needs to be. Also, teaser rates or quickly escalating interest rates need to be cleary explained.

Beyond that though, people need to go into these things with their heads on straight. I fail to see what the feds (and mind you I'm sticking up for the previous admin on this one) could have done to stop people from thinking they were the next Donald Trump.

 

[pirate]

Re: Obama XV: Now, with 20% more rage

I think regulators could have been more stringent on D/I ratios, default risk estimates etc and provided revised guidance on this new variation...you are right, it wasn't illegal, just really risky. It's a classic issue with audit, control, compliance within the company too...are they only watching the implemented policies and procedures or are they also keeping an eye on developing trends and getting out in front of them?

As you know, I'm not a pro-regulator type of guy, in fact this whole back and forth is kind of bizarre, but this wasn't some unseen ultra-complicated scheme like derivatives...this was easily evident and had enough volume to make it an obvious target for some inspection.

 

[ScottM]

Re: Obama XV: Now, with 20% more rage

Lets take the housing crisis. What should be illegal/could have been prevented? Faking people's incomes at the point of loan origination so they'd qualify for funds. No argument there. Beyond that though, the simple fact is ultimately people are to blame for the housing crisis. Not the government, the banks, Wall St, etc etc. Again, nobody forced you to take on a loan that you couldn't afford. Everybody wants to find somebody else to blame for this, but speculators and people who wanted to live like kings without earning the ability to do so caused this.

Part of the problem with that element is that many of the originators/mortgage brokers were ostensibly regulated by the states. Most states didn't even impose "ability to pay" and income verification standards until 2-3 years ago, and the shiat was already hitting the fan. The feds were no better, and just got into that groove last year, and now under Dodd-Frank. Giving false information is already a federal offense, and not many people ended up in jail, unless they were involved in big dollar schemes. I was told by a Secret Service agent that they didn't pursue any mortgage fraud cases of less than $500k due to lack of resources.

Another part of that problem was that loans were funneled into the secondary markets with very little due diligence or oversight by people who should have known better. Brokers and others were able to offload all of the risks of crappy loans. In my own world, mortgage loans that we kept in the portfolio were less likely to default or be fraudulent than those we bought. There was almost a perfect storm of greed, regulatory indifference and stupidity that metastisized throughout the entire financial system.