Why is it so hard for the general populace to understand basic economics

[grhayes]

I posted the story "the little red hen" a few days back
http://forums.hannity.com/showthread.php?t=1331131

But it seems at least the majority of liberals do not understand the simple laws of supply and demand.

Most children can understand this topic Kids trade comic books, cards and all sorts of things. But for liberal adults they seems to be totally lost in the concept.

The dollar has the same laws to live with. The dollar bill is a product it is subject to inflation and deflation.

If others have a hole lot of it they purchase products and once they have an ample amount of what it is they want then they have little need for more dollars so the value of that product goes down.

So if you buy oil from other nations and give them lots of money for that oil your dollars buying value in the end goes down, if you buy lots of products from over seas again the value goes down, if you put jobs over seas like with NAFTA and CAFTA that Clinton came up with then you are putting money over their in wages again with all that money going over their your dollar value goes down.

If you borrow wopping large amounts of money from foreign nations like China you are promising them more in return. For which the value of your dollar goes down in value.

If you start printing lots of money then people have more of it and just like any other item its value is part dependent on the scarcity of it. You all so get the fact that once people have bought what they want then they don't need to buy as much. Some people horde and try and upgrade but most have start to save the money at that point which sends sales and demand down and the price goes down also until the residual inventory drops to a low enough point. The price then begins to clime slightly. These days it tends to be that new products hit the market first. This is the product of a competitive market place. Which is primarily responsible for the greatest part of our advancement in technology.

Can anyone tell me why those few basic concepts that have been understood by society for thousands of years seem to be something a liberal just can't seem to wrap their minds around.

[Fed up in NH]

I posted the story "the little red hen" a few days back
http://forums.hannity.com/showthread.php?t=1331131

But it seems at least the majority of liberals do not understand the simple laws of supply and demand.

Most children can understand this topic Kids trade comic books, cards and all sorts of things. But for liberal adults they seems to be totally lost in the concept.

The dollar has the same laws to live with. The dollar bill is a product it is subject to inflation and deflation.

If others have a hole lot of it they purchase products and once they have an ample amount of what it is they want then they have little need for more dollars so the value of that product goes down.

So if you buy oil from other nations and give them lots of money for that oil your dollars buying value in the end goes down, if you buy lots of products from over seas again the value goes down, if you put jobs over seas like with NAFTA and CAFTA that Clinton came up with then you are putting money over their in wages again with all that money going over their your dollar value goes down.

If you borrow wopping large amounts of money from foreign nations like China you are promising them more in return. For which the value of your dollar goes down in value.

If you start printing lots of money then people have more of it and just like any other item its value is part dependent on the scarcity of it. You all so get the fact that once people have bought what they want then they don't need to buy as much. Some people horde and try and upgrade but most have start to save the money at that point which sends sales and demand down and the price goes down also until the residual inventory drops to a low enough point. The price then begins to clime slightly. These days it tends to be that new products hit the market first. This is the product of a competitive market place. Which is primarily responsible for the greatest part of our advancement in technology.

Can anyone tell me why those few basic concepts that have been understood by society for thousands of years seem to be something a liberal just can't seem to wrap their minds around.

I think it is less that liberals don't understand basic economics, and more they choose to ignore them. Because they believe themselves to be on the side of 'goodness' & 'niceness', basic math concepts don't apply and everything will work out just peachy keen, because Obama says so, and he would never lie to us.............

[shunted]

If you borrow wopping large amounts of money from foreign nations like China you are promising them more in return. For which the value of your dollar goes down in value.



Actually, this isn't necessarily true. This is a basic economic fact.

Real economics is a complicated subject and requires a great deal more knowledge than one gets from basic economics. The field has advanced tremendously and you appear to have the belief that what one would get in Economics 101 is sufficiently rich to understand things like tax policy, trade policy, selling T-bills etc. This isn't the case.

[Jeemie]

Can anyone tell me why those few basic concepts that have been understood by society for thousands of years seem to be something a liberal just can't seem to wrap their minds around.

I saw no evidence that the right understood those concepts any better than the left did.

Certainly not in practice...

[Oddball]

Actually, this isn't necessarily true. This is a basic economic fact.

Real economics is a complicated subject and requires a great deal more knowledge than one gets from basic economics. The field has advanced tremendously and you appear to have the belief that what one would get in Economics 101 is sufficiently rich to understand things like tax policy, trade policy, selling T-bills etc. This isn't the case.Nonsense.

The core economic concepts are so easy to understand that elementary school children can understand them.

The rest of that dreck smacks of such academic haughtiness that I care not to comment.

[F_Rat-46]

Actually, this isn't necessarily true. This is a basic economic fact.

Real economics is a complicated subject and requires a great deal more knowledge than one gets from basic economics. The field has advanced tremendously and you appear to have the belief that what one would get in Economics 101 is sufficiently rich to understand things like tax policy, trade policy, selling T-bills etc. This isn't the case.


It is only a complicated subject because politicians have made it complicated, thus the reason for the tax laws to be, what, 60 plus thousand pages?

[Ted Ryfiak]

Nonsense.

The core economic concepts are so easy to understand that elementary school children can understand them.

The rest of that dreck smacks of such academic haughtiness that I care not to comment.

I totally agree with you Oddball but I will comment.
Too many people have forgotten the role of manufacturing as it pertains to the overall economy in the US. Manufacturing product, in the US, by US citizens, generates a circular flow of money that allows ALL other businesses to survive. The goods must meet 3 basic criteria to create the circular cash generation: 1] Add value to raw materials. 2] Create goods that don't last too long. [cars, clothes, appliances, houses, toys] 3] Generate enough profits to keep the company in business and growing to match the population growth. The key to this is: keep the jobs in the US. The US government must do whatever it takes to help with this because that is what pays the bills in this country. The corporations that have outsourced US jobs have only looked to maximize their profits without regard to the health of the nation’s economy. That is, in my opinion, “Greedy Capitalism”. It’s time to replace that with “Patriotic Capitalism” which looks past the immediate corporate profit and considers the health of the US economy also. That may mean not quite as large a profit margin but it will guarantee the re-creation of countless jobs that we have lost, the success of the lending institutions because people will make their payments and the revival of our overall economy because people will start spending money again. The bottom line is: Jobs are the most important part of the equation. If people have them – everything else works. Think about it.

[grhayes]

Actually, this isn't necessarily true. This is a basic economic fact.

Real economics is a complicated subject and requires a great deal more knowledge than one gets from basic economics. The field has advanced tremendously and you appear to have the belief that what one would get in Economics 101 is sufficiently rich to understand things like tax policy, trade policy, selling T-bills etc. This isn't the case.

BS it is the exact way and means we used to bring the USSR down. A social market can never compete with a free market system. Even China is moving today closer and closer to a free market system.

Don't you read history books or do you just listen to what the left are telling you.

If I am so wrong about it why is the most wealth people on the right and not the left. The right understands this if what the left is preaching so wildly is so true then how come they don't have most the money and are wanting to bleed the one on the right dry.

Do you think the people on the right got their money by not understanding economics?

[shunted]

It is only a complicated subject because politicians have made it complicated, thus the reason for the tax laws to be, what, 60 plus thousand pages?

Economics is a social science. At its core it is a study of humans and their behavior. It is complicated because the state of knowledge about humans and their behavior has grown tremendously. The mathematical models of economics are complicated and this complication did not come from politicians.

What is interesting is that basic economics tells us that the study of economics must be such that few people can do it because their incomes are so high. The law of supply and demand tells us this. If it was so easy that a child can understand it then it would not have economic value. No one would be able to make hundreds of thousands of dollars studying economics.

[Oddball]

I totally agree with you Oddball but I will comment.
Too many people have forgotten the role of manufacturing as it pertains to the overall economy in the US. Manufacturing product, in the US, by US citizens, generates a circular flow of money that allows ALL other businesses to survive. The goods must meet 3 basic criteria to create the circular cash generation: 1] Add value to raw materials. 2] Create goods that don't last too long. [cars, clothes, appliances, houses, toys] 3] Generate enough profits to keep the company in business and growing to match the population growth. The key to this is: keep the jobs in the US. The US government must do whatever it takes to help with this because that is what pays the bills in this country. The corporations that have outsourced US jobs have only looked to maximize their profits without regard to the health of the nation’s economy. That is, in my opinion, “Greedy Capitalism”. It’s time to replace that with “Patriotic Capitalism” which looks past the immediate corporate profit and considers the health of the US economy also. That may mean not quite as large a profit margin but it will guarantee the re-creation of countless jobs that we have lost, the success of the lending institutions because people will make their payments and the revival of our overall economy because people will start spending money again. The bottom line is: Jobs are the most important part of the equation. If people have them – everything else works. Think about it.
I've thought about it.

I've heard that same populist line since I started paying attention. First about Japan...then Hong Kong...then Indonesia...then Taiwan.

Turns out that all of those countries AND America are economically much better off for being trading partners.

[7426k]

It is only a complicated subject because politicians have made it complicated, thus the reason for the tax laws to be, what, 60 plus thousand pages?

I think it got a bit complex long before the current tax code. There's a reason why Moral Sentiments and Wealth of Nations aren't written on the back of a napkin.

[shunted]

BS it is the exact way and means we used to bring the USSR down. A social market can never compete with a free market system. Even China is moving today closer and closer to a free market system.

Don't you read history books or do you just listen to what the left are telling you.

If I am so wrong about it why is the most wealth people on the right and not the left. The right understands this if what the left is preaching so wildly is so true then how come they don't have most the money and are wanting to bleed the one on the right dry.

Do you think the people on the right got their money by not understanding economics?

I simply made a claim about economics being complicated. It is a complicated subject. I think this is self evident but apparently I am wrong. If economics is so simple to understand then why do investment funds, banks, etc. spend so much money studying it? The law of supply and demand tells us that not everyone can do it because if everyone could do it it wouldn't have such a high economic value.

[Ted Ryfiak]

No one should be making that kind of money for studying economics because that doesn't add any value to goods and services actually needed and therefore has to be considered overhead which only adds to the cost of product made in the USA which is another reason our corporations have to find cheap foreign sources that don't pay for economic advisers to tell them what common sense does.
I tried to present the basic idea in a fairly complicated way but it is still pretty simple when you get down to it.

[Oddball]

I think it got a bit complex long before the current tax code. There's a reason why Moral Sentiments and Wealth of Nations aren't written on the back of a napkin.
...or Human Action. :lol:

Still, just because someone uses 1,000 words to explain a relatively simple concept, when 10 will do, doesn't automatically transmogrify that simple concept into the complex and sublime.

[Ted Ryfiak]

The people that are better off are only the few owners and managers at the top of the heap. The "populist line" probably refers to the average citizen that actually needs the job - right? Japan and China protect their jobs. Their economy doesn't support the rest of the world. Ours does. Anyone that thinks we can survive by buying foreign product, marking it up and selling it to each other is deluded.

[7426k]

...or Human Action. :lol:

Still, just because someone uses 1,000 words to explain a relatively simple concept, when 10 will do, doesn't automatically transmogrify that simple concept into the complex and sublime.

So you think Smith and Ricardo and Hayek were just.....

too wordy?

[7426k]

No one should be making that kind of money for studying economics because that doesn't add any value to goods and services actually needed and therefore has to be considered overhead which only adds to the cost of product made in the USA which is another reason our corporations have to find cheap foreign sources that don't pay for economic advisers to tell them what common sense does.
I tried to present the basic idea in a fairly complicated way but it is still pretty simple when you get down to it.

No one "should" be making that kind of money for studying economics? "Should"? Who decides how much they "should" make, komrade"

Perhaps a simple model based on marginal disutility of labor would suffice in telling us what economists "should" earn?

[F_Rat-46]

The people that are better off are only the few owners and managers at the top of the heap. The "populist line" probably refers to the average citizen that actually needs the job - right? Japan and China protect their jobs. Their economy doesn't support the rest of the world. Ours does. Anyone that thinks we can survive by buying foreign product, marking it up and selling it to each other is deluded.

I'm better off and I'm far from being at the top of the heap. And right now, China's economy is keeping us from going into the ditch. Who do you think is lending us money?

[Oddball]

So you think Smith and Ricardo and Hayek were just.....

too wordy?
Waaaaaaaay too wordy.

P.J. O'Rourke's quite brief and concise synopsis of Wealth of Nations covers all the bases and is much more engaging than Adam Smith's constantly digressive doorstop.

[7426k]

The people that are better off are only the few owners and managers at the top of the heap. The "populist line" probably refers to the average citizen that actually needs the job - right? Japan and China protect their jobs. Their economy doesn't support the rest of the world. Ours does. Anyone that thinks we can survive by buying foreign product, marking it up and selling it to each other is deluded.


Mr Smoot? You have a call on line one.

It's Mr Hawley calling.

[Oddball]

Mr Smoot? You have a call on line one.

It's Mr Hawley calling.
Hey!!....Quit horning in on my racket, or I'll sic my union rep on you!! :lol:

[Jeemie]

I'm better off and I'm far from being at the top of the heap. And right now, China's economy is keeping us from going into the ditch. Who do you think is lending us money?

Um...you might not be aware of this but...you're arguing his point.

[Jeemie]

Mr Smoot? You have a call on line one.

It's Mr Hawley calling.

I don't believe this.

There's got to be a way we can be competitive in an open world market without degrading our manufacturing base and/or slapping up protective tarriffs.

I think probably what this poster is railing about more than anything is our debt-fueled consumption economy that replaced much of what we had that provided real economic value.

We still provide real economic value...but damn if we don't consume a lot of junk and export pretty pieces of worthless paper in return.

[grhayes]

Let me tell you how really messed up it is I worked for a year at the port of Houston when I first moved to Texas. We shipped grain to other countries. A lot of what we shipped was aid to China.

Of that grain that went there they repackaged as Uncle Ben's or other brands and shipped back to us for us to buy. With obviously a load of mark up.

So we gave them the rice and they sell it back to us. hmmm.

I'm not against foreign aid and that is probably one of the better ways I think even to allow another country to get money as aid rather than just give it to them because they did have to do some amount of work for the cash return.

But it does lie as a good example of the money our country hemorrhages out.

The real issue is look at Obama's plans. They violate every single primary principle of good economics they entirely counter intuitive to building up the US dollar and creating more jobs. He has been saying what he was going to do before he even got elected to office. Why do you think every single time he opens his mouth the stock market goes down.

Kids in elementary school understand his plan is bad. What is wrong with these adults that can not grasp such a simple concept.

Seriously we have kids that trade all sorts of cards be it pokiman, magic, baseball, football,.... My son collects coins. Kids can understand this while for some reason so many adults miss this simple concept.

[Safiel]

I don't believe us.

There's got to be a way we can be competitive in an open world market without degrading our manufacturing base and/or slapping up protective tarriffs.

I think probably what this poster is railing about more than anything is our debt-fueled consumption economy that replaced much of what we had that provided real economic value.

We still provide real economic value...but damn if we don't consume a lot of junk and export pretty pieces of worthless paper in return.

There is a very good way. Slash that massive parasite that is sucking the life out of the economy, that massive parasite known as government. When you have a parasite sucking 38% of the lifeblood out of the economy, there is no hope for prosperity. The government must be massively reduced, whole reams of regulation that tie business up in red tape must be repealed. And the government must end its destructive policy of inflation.

The government is NOT the answer. The government is the PROBLEM.

[daveNYC]

Do you think the people on the right got their money by not understanding economics?


Depends, how many of them were in the banking industry?

[grhayes]

Depends, how many of them were in the banking industry?
You mean the industry that big GOV decided to stick its nose in the same one Obama reported there were no issues with Fannie Mae and Freddie Mac while McCain was yelling there is a ****ing problem.
That same banking industry???

Tell big GOV to keep its nose out and industry usually does just fine.

Maybe you should think about this. The only way a free trade economy can actually fail is if someone intentionally stops it by doing something like outlawing it. So when Obama says we may not recover the only way that can happen is if he has plans to prevent it from doing so.

[Jeemie]

If I am so wrong about it why is the most wealth people on the right and not the left.

This is an unsupported assertion.

How would you attempt to go about proving it?

[7426k]

Maybe you should think about this. The only way a free trade economy can actually fail is if someone intentionally stops it by doing something like outlawing it.

This is the kind of absolute adherence to ideology that makes me love this place.

[Jeemie]

Maybe you should think about this. The only way a free trade economy can actually fail is if someone intentionally stops it by doing something like outlawing it.

This is another unsupported assertion.

How would you go about proving it?

[grhayes]

This is another unsupported assertion.

How would you go about proving it?

It is easy to prove. A free trade economy will always resume once people have fear of loosing nothing else. They start from nothing to begin with after all. People will by nature trade when two people have something the other wants.


Have you ever seen a government start a free trade system in history or just regulate them. I am sure you heard the term barter. That is a free trade system. Then you add money to it rather than direct goods. Then usually along comes government wanting their cut.

Besides what was money really invented for? A way for government to keep better track of their share or their cut?

[PhantomPholly]

Liberals worship a deity whose economic theory is "wishonomics."

It is the theory that, if enough people WISH REAL HARD, then an ethical utopia for everyone can arise out of the unethical taking from those who actually produce something useful and giving it to those who do not.

In the event that you try to point out that you cannot ever succeed in creating moral virtue out of excessive sin, they will begin to get agitated - eventually screaming to drown you out so as not to distract them from WISHING REAL HARD.

[lassidor]

"Why is it so hard for the general populace to understand basic economics "

I think the general populace does understand basic economics. Most of us understand that our expenses must be less than or equal to our income. Most of us use math to do our economics.

Large Scale economics is anything but simple. The problem being economist use sociallogy to do economics. They also invent terminalegy to fudge their numbers and hide the truth. Economist can make the same numbers look anyway they want. They also don't agree with each other when looking at the same numbers and what they mean.

[Oddball]

Liberals worship a deity whose economic theory is "wishonomics."

It is the theory that, if enough people WISH REAL HARD, then an ethical utopia for everyone can arise out of the unethical taking from those who actually produce something useful and giving it to those who do not.

In the event that you try to point out that you cannot ever succeed in creating moral virtue out of excessive sin, they will begin to get agitated - eventually screaming to drown you out so as not to distract them from WISHING REAL HARD.That and they subscribe to what David Bergland called the PANG (People Are No Good) syndrome.

"People", that is, except for themselves and those who "think" (for lack of a better term) as do they, and the world's victims, upon whom the no good people prey.

Messed up little puppies, those collectivist authoritarians.

[grhayes]

I think there is a multitude of issues. But you seen how many people bought houses way outside their means that says something there. About a serious lack of understanding. But you also have realize not everyone who lost a home was outside their means events caused it such as loss of income and the job market drying up and them not having other skills to fall back on. Illness and other reasons are also to blame. Storms here in Texas and other states. A hole host of issues. But still a large number was purely because they bought outside their means. Why not banks were financing house at up to 125% of value. That means you could buy a home worth 100K and get a loan for 125K people did this and bought stuff like cars, furniture and other crap.

But then there is another issue someone brought up the wish utopia. Most people don't get the one truth in economics people trade. Eventually someone will make something out of need or want for themselves and someone else will potentially want it. When someone wants it bad enough the other person is going to want something back in exchange for it in most cases. Free Trade systems exist in every single country in the world. Last I remember barter is actually illegal in the US but how many of us do it anyway. Every country in the world has a black market , be it DVDs, guns, drugs or whatever, look at Russia during the cold war jeans levies and cigarettes American, panty hose... James dean was a hit in their country.

Trade springs up out of no where it is like a weed that can't be killed people are the root and the only way to get rid of trade is to kill all the people. But with no people you have no need for a government.

The country of San Marino has the world oldest working constitution it is a republic. While all other nations have changed it has survived. It happens to be land locked surrounded by italy and has the smallest population of any country. The second oldest by a country is the US. They are both republics.
While others have come and gone ours has endured and lasted. Must not be that bad the way it is.

You can't stop trade unless you kill all the people as history and society has proven time and time again people will still trade outside the controls and confines the government lays forth. If it was not true we would not have the drugs, and tons of other stuff for sell on our black market and nor would any other country.

What will happen if the dollar bill becomes in all effect worthless? What will people do? Not eat? Not live? Or do you think the people are going to look for something of value to trade? Do you think that will get reported to the government? It doesn't in most cases today why would it under worse conditions?

[Oddball]

What will happen if the dollar bill becomes in all effect worthless? What will people do? Not eat? Not live? Or do you think the people are going to look for something of value to trade? Do you think that will get reported to the government? It doesn't in most cases today why would it under worse conditions?
At that point gubmint will be pretty much toothless...After all, how do they pay anyone to enforce anything??

[shunted]

Liberals are people of passion. Economics requries thinking and logic. So don't be surprised that a liberal can't get 2 + 2 = 4.

Most economists are left leaning so your statement doesn't make sense.

Several people have said that economics is easy and basic to understand. (I know you aren't saying this here.) But then why do companies pay so much for the economists they hire? Basic economics tells us that the economics can't be something that anyone can do because then the law of supply and demand would kick in and pay for economists would be very low.

It seems the people making the argument that economics is easy and basic don't understand basic economics.

[grhayes]

At that point gubmint will be pretty much toothless...After all, how do they pay anyone to enforce anything??

The fastest way we could get rid of current people in office is to sit on our ass for about a month. The government would just start printing out money and the economy would tank completely at which point people will stop accepting cash as payment. Try and run a government in those conditions you can't.

If the working class money makers of America said FU to Obama and said we are going to sit this one out and let you pay our bills what would happen?

[Safiel]

It seems the people making the argument that economics is easy and basic don't understand basic economics.

Trouble is, much of the "economics" floating around out there is so twisted and convoluted because it is in reality a bunch of twisted and convoluted BS.

Austrian Economics is easy to understand and follow, because it builds logically upon self evident axioms. It does not require more than the simplest level of math.

The other failed economics schools are inevitably tied into illogical knots because they ARE illogical.

[grhayes]

I have a friend of mine who is a well read and educated guy. We once had a conversation about economics. He basically said that in Saudi Arabia the government gives everyone a car, house, free education, free healthcare so on and so on. Then he said that the US should do the same thing. I basically argued that it can't be done. His answer? The US is far richier than Saudi Arabia, so we can afford it.

Liberals are people of passion. Economics requries thinking and logic. So don't be surprised that a liberal can't get 2 + 2 = 4.

First, if it was true about Saudi you need to look at the per capita income. Meaning how much the country makes per the average individual. You can't say because nation A make more money than nation B we can do it. If nation B has 2 citizens and makes a million dollars and A has a million citizens and makes 2 million dollars. Nation A is never going to be able to give everyone the same thing nation B does.

[grhayes]

Trouble is, much of the "economics" floating around out there is so twisted and convoluted because it is in reality a bunch of twisted and convoluted BS.

Austrian Economics is easy to understand and follow, because it builds logically upon self evident axioms. It does not require more than the simplest level of math.

The other failed economics schools are inevitably tied into illogical knots because they ARE illogical.

The problem isn't economics being convoluted or even hard to understand. The problem is there are people who intentionally make things convoluted to support whatever agenda it is they are trying to push. In other words as it always boils down to the problem is with a person not with an object, or concept or anything else it is the person who is the problem. That problematic person can be on the giving or receiving end of information.

[Tigerdrafted]

Actually, this isn't necessarily true. This is a basic economic fact.

Real economics is a complicated subject and requires a great deal more knowledge than one gets from basic economics. The field has advanced tremendously and you appear to have the belief that what one would get in Economics 101 is sufficiently rich to understand things like tax policy, trade policy, selling T-bills etc. This isn't the case.

Economics has transitioned from the study of how people satisfy their unlimited wants with their limited resources to the study of how Governments can manipulate human behavior and outcome without causing chaos.

The field has advanced to an unprecedented level of intellectual arrogance by those who seek to validate central planning economic models which are based on unvalidated assumptions. Economist lack the necessary industrial experience to even begin making a realistic model.

The Obama Energy plan is the most extreme case of an unrealistic model.

I'm looking into one aspect of his plan.

Cap and Trade carbon credits will raise the price per KW-HR of electricity that everyone pays simply because 80% of our base load power is generated from coal.

Aluminum companies such as Alcoa use lots of electricity. There are others. I would expect their stock to drop.

Consumers will end up paying an energy tax since most utilities are regulated and they will have just cause to up their rates.

The good news, nuclear power will become more economical.

I don't know how many times I have heard a liberal say that if we produce more green, it will become cheaper. This is a flawed assumptions. Not now and perhaps not nearly in the next 50 years. Whenever there is a run on anything, the commodity price goes up.

[shunted]

The field has advanced to an unprecedented level of intellectual arrogance by those who seek to validate central planning economic models which are based on unvalidated assumptions. Economist lack the necessary industrial experience to even begin making a realistic model.


Gotta love the conspiracy theorists. The whole field is made up of people with an agenda to validate central planning?

It doesn't make sense that economists make so much money when they work for private industry if they only seek to validate central planning. Since you've seen what the field of economics is all about why hasn't private industry figured this out? Maybe you should become a consultant for industry and let everyone in on the big scam. Surely companies would pay handsomely to be shown that they are wasting their money hiring intellectually arrogant people who only seek to validate central planning.

[Oddball]

It doesn't make sense that economists make so much money when they work for private industry if they only seek to validate central planning. Since you've seen what the field of economics is all about why hasn't private industry figured this out? Maybe you should become a consultant for industry and let everyone in on the big scam. Surely companies would pay handsomely to be shown that they are wasting their money hiring intellectually arrogant people who only seek to validate central planning.Q: When have authoritarian central planners ever listened to economists who work in true private industry??

A: Never...Those economists are the the ones the central planners regulate to no ends, then scapegoat the unfree "free market" when all their Utopian plans crash and burn.

[7426k]

Q: When have authoritarian central planners ever listened to economists who work in true private industry??

A: Never...Those economists are the the ones the central planners regulate to no ends, then scapegoat the unfree "free market" when all their Utopian plans crash and burn.

That would come as quite a surprise to all of the Fed presidents.

[grhayes]

The biggest problem the free market has is government interference. The only part I can say someone should do and wont even say it is a task for the government is ensure that people are not creating and selling stocks and securities in fake or fraudulent companies and so on.

Otherwise government should not be screwing with interest rates, The monetary system needs to be stable so that the grow and such of the economy can be accurately measured and not screwed with.

[Tigerdrafted]

Q: When have authoritarian central planners ever listened to economists who work in true private industry??

A: Never...Those economists are the the ones the central planners regulate to no ends, then scapegoat the unfree "free market" when all their Utopian plans crash and burn.

I agree. I think the fundamentals are there and if used appropriately, things can be understood in context based upon the underlying assumptions.

Central Planners are the first to say that economics is a complicated science, because they don't want anyone to dispute any policy on principle. They would have us only agree to disagree and then get out of the way.

There is no doubt that the economy as a system is complex. Made even more so by government ownership and the corporate income tax.

They talk about absolutes when they discuss their baseline objectives for normative models which cannot be mapped to any real activities or resources. It's a soup and they just keep adding ingredients and the market place of reality is their nemesis.

[lassidor]

Gotta love the conspiracy theorists. The whole field is made up of people with an agenda to validate central planning?

It doesn't make sense that economists make so much money when they work for private industry if they only seek to validate central planning. Since you've seen what the field of economics is all about why hasn't private industry figured this out?

Industry has figured that out. It's why they hire their own economist. When your in battle with someone else you need guns that are just good as theirs if not better. If this isn't the case why would business hire any economists when good accountants could do the job for a lot cheaper.

[Oddball]

That would come as quite a surprise to all of the Fed presidents.
The Fed presidents are the biggest freebooters of them all.

[Tigerdrafted]

Gotta love the conspiracy theorists. The whole field is made up of people with an agenda to validate central planning?

It doesn't make sense that economists make so much money when they work for private industry if they only seek to validate central planning. Since you've seen what the field of economics is all about why hasn't private industry figured this out? Maybe you should become a consultant for industry and let everyone in on the big scam. Surely companies would pay handsomely to be shown that they are wasting their money hiring intellectually arrogant people who only seek to validate central planning.

You have to learn how to make observations. You speak with a double tongue as well. Is it just a conspiracy when by your own words you stated that private hasn't figured out economics? It seems as if you are implying that private industry can't find it's way to the bathroom.

Central planners have done a great injustice to private industry by raising corporate taxes. When you raise corporate tax rates, you don't penalize large capital corporations who have the means to skirt those tax increases and also have the means and power to play with Washington. All you do is limit the investment of small business. You have placed all your eggs in a number of large corporations who can only hire so many people.

I have stated that so many times. Private industry knows the market. They have it figured out. You don't and neither do the Liberals.

[7426k]

The Fed presidents are the biggest freebooters of them all.

The Fed presidents are often economists who "worked in true private industry" previously.

in other words, you are claiming they don't listen to...themselves.

[Oddball]

They talk about absolutes when they discuss their baseline objectives for normative models which cannot be mapped to any real activities or resources....
Nor can any of their claimed "results" be objectively proven. Instead, they sit back, stroke their chins and yammer on about aggregate this and nominal that.

MLM pimps make more honest livings.

[7426k]

You have to learn how to make observations. You speak with a double tongue as well. Is it just a conspiracy when by your own words you stated that private hasn't figured out economics? It seems as if you are implying that private industry can't find it's way to the bathroom.

Central planners have done a great injustice to private industry by raising corporate taxes. When you raise corporate tax rates, you don't penalize large capital corporations who have the means to skirt those tax increases and also have the means and power to play with Washington. All you do is limit the investment of small business. You have placed all your eggs in a number of large corporations who can only hire so many people.

I have stated that so many times. Private industry knows the market. They have it figured out. You don't and neither do the Liberals.

if you don't penalize large corporations when you increase corporate taxes, why do large corporations lobby so hard not to have their taxes raised?

If the tax increases were really just a way to fetter out smaller competition, the larger corporations would be screaming to have their taxes hiked.

[Oddball]

The Fed presidents are often economists who "worked in true private industry" previously.I don't consider working for lesser freebooters, like Goldman Sachs, to be working in true private industry, any more than Tessio and Clemenza are "freelance capos" for Don Vito.

Speaking of those smartest-nitwits-in-the-room, how'd Robert Rubin's tenure with BoA shake out??

[7426k]

Nor can any of their claimed "results" be objectively proven. Instead, they sit back, stroke their chins and yammer on about aggregate this and nominal that.

Yet you still accept the premise that when the price of beer goes up, people buy less beer?

And you accept that when the money supply is increased, the price of beer and everything else goes up.

And when the price of beer goes up, the demand for wine goes up....

And you believe that you can predict the response of the public to government actions.

And yet you yammer about the inability of people to study aggregated behavior.

Whose being pimped here, Tom?

[7426k]

I don't consider working for lesser freebooters, like Goldman Sachs, to be working in true private industry, any more than Tessio and Clemenza are "freelance capos" for Don Vito.


LOl, ok. You get your own special definition of "true private industry".

Well then, that sure makes a discussion complex. Now we can't even have aggregated information about what words mean.

[Tigerdrafted]

If the tax increases were really just a way to fetter out smaller competition, the larger corporations would be screaming to have their taxes hiked.

Not necessarily. You mean large corps would be screaming to have corporate taxes raised if they knew it would benefit them.

I'm not saying that they seek higher tax legislation. They do what they have to and congress makes means for them to exist. Usually after the fact of a market down turn or a shortage situation. What I am saying is that the corporate tax rate inadvertently benefits the larger corporations who have the government contracts, and tax attorneys.

Not necessarily part of a corporate business plan to seek out higher tax rates. If you observe, how can you deny it. Tax increases and tax breaks to large corporations.

[Tigerdrafted]

And yet you yammer about the inability of people to study aggregated behavior.

Whose being pimped here, Tom?


The central planers are doing a lot more than study. They are in acting policies on my dime. We are being pimped out.

[7426k]

Not necessarily. You mean large corps would be screaming to have corporate taxes raised if they knew it would benefit them.



I'm not saying that they seek higher tax legislation. They do what they have to and congress makes means for them to exist. Usually after the fact of a market down turn or a shortage situation. What I am saying is that the corporate tax rate inadvertently benefits the larger corporations who have the government contracts, and tax attorneys.

Not necessarily part of a corporate business plan to seek out higher tax rates. If you observe, how can you deny it. Tax increases and tax breaks to large corporations.[/QUOTE]

They just aren't smart enough to realize that they would benefit form higher corporate taxes - that's the Tigerdrafted thesis?

[7426k]

The central planers are doing a lot more than study.

That's because they've studied aggregated behavior and they understand a bit about how it works.

[Long Island Bob]

The Fed presidents are often economists who "worked in true private industry" previously.

in other words, you are claiming they don't listen to...themselves.


hmm
- Bernanke was a college professor
- Greenspan spent five years as a consultant and them started working for the Fed.
- Volcker started with the Fed. right out of college
- Miller only served a year or so, but yes he had a long career att a defense copany
- Burns alternated in government and academia.



Unless you clarify your terms better I'm gonna have to side with oddball.

It seems that not many of our fed reserve chairmen have impressive private sector resumes.

[Springboard]

Everyone has a place in which they spring from. Most people spring from what they were taught by their parents. When you were growing up did you not watch and listen to what your parents we doing and saying. When you went to college did you not think that your professor had all the answers. Did you ever really have an opinion of your own as a young adult or was it just fragments of others? A little food for thought.

[Oddball]

hmm
- Bernanke was a college professor
- Greenspan spent five years as a consultant and them started working for the Fed.
- Volcker started with the Fed. right out of college
- Miller only served a year or so, but yes he had a long career att a defense copany
- Burns alternated in government and academia.
And don't even get me started about that meathead Bernanke.

Dr. Ron Paul regularly turns him into the stammering boob he is in congressional committee hearings, to the point that Barney Frank had to run interference and interrupt his last cross examination until Paul's time had expired.

Good God, at least Greenspan was a decent fillibusterer.

[7426k]

hmm
- Bernanke was a college professor
- Greenspan spent five years as a consultant and them started working for the Fed.
- Volcker started with the Fed. right out of college
- Miller only served a year or so, but yes he had a long career att a defense copany
- Burns alternated in government and academia.



Unless you clarify your terms better I'm gonna have to side with oddball.

It seems that not many of our fed reserve chairmen have impressive private sector resumes.

I referenced Fed presidents, not chairmen. But since you mentioned chairmen:

Greenspans time as a "consultant" included five years working for the conference board and almost thirty years as a consultant to industry. He was also a corporate director for Alcoa and a wide host of other companies. If he was an untrusted authoritarian of central planning, it was the kind of central planning inherent in any large compnay

[Tigerdrafted]

They just aren't smart enough to realize that they would benefit form higher corporate taxes - that's the Tigerdrafted thesis?

You are trying to diffuse the logical argument that I made by posting an overly simplistic intuitive question. The simple fact is, that higher corporate income tax rates benefit large corporations because inevitably they become too good to fail and government then offers them a way out with tax subsidies and large contracts.

[7426k]

You are trying to diffuse the logical argument that I made by posting an overly simplistic intuitive question.

no, you are claiming that these entities are acting against their onw self interest out of ignorance.

And lets be frank, that's absurd.

[dosmo66]

if you don't penalize large corporations when you increase corporate taxes, why do large corporations lobby so hard not to have their taxes raised?

If the tax increases were really just a way to fetter out smaller competition, the larger corporations would be screaming to have their taxes hiked.

Large corporations lobby because they can! I don't think It's that they aren't hurt by higher taxes. it's just that they are hurt less than smaller business, who have less ability to withstand any losses. But the feds don't care. Small business have less power to let their voice be heard. They are practically ignored by the federal government, even though they provide over 50% of the jobs in this country.

Large corporations don't always mind competition from small business. It's other large corporations that they view as a threat.

This may sound unsophisticated to those of you who study economics. What I know just comes from real-life observation. Theories aside, some aspects of economics are a matter of common sense and experience.

[dosmo66]

[quote=Ted Ryfiak;49911351]
"The key to this is: keep the jobs in the US. The US government must do whatever it takes to help with this because that is what pays the bills in this country. The corporations that have outsourced US jobs have only looked to maximize their profits without regard to the health of the nation’s economy."



If companies eliminated all outsourcing and continued to pay all union wages, the price of their product would rise so high few people would buy it! :rolleyes:
I'll grant you I'm shocked at the "golden parachutes" of some CEOs, :mad:but that doesn't make profit a four letter word!

A company has to make enough profit to reinvest in its' business and develop new products. This is not a selfish desire that disregards the health of the nation's economy. This is what has enabled the U.S. to develop products in demand the world over. And thanks to "outsourcing", workers in third world countries can live better and the market for American goods has widened.

This is what has given Americans ( yes, even the "ordinary working man") a standard of living that many in the world only dream of. This has given us the healthiest economy in the world.
:dance:
The last thing we need is politicians trying to run businesses! Politicians are good at politics. But many of them have never held a job outside of government...never worked for a business, let alone run one. :snooty:They produce....nothing.

In fact, if politicians were businessmen, they would be just as motivated to prevent waste of funds as they are to spend them..

[Tigerdrafted]

no, you are claiming that these entities are acting against their onw self interest out of ignorance.

And lets be frank, that's absurd.

I never made any such claim. The truth is that large corporations have accepted the fact that in order to do business, it has to come through Washington because the Democrats won't change and if you looked at the political trend, it doesn't seem likely that we will ever change our corporate income tax policy to a lower flatter one with no subsidies. Large corporations have learned to play the game with Congress. They don't act out of ignorance. They do what they have to survive. It is not in their interest to change the political ideology in hopes of a victory and future change in the tax code. They respond on the margin and near future terms. To do that, they lobby for tax credits and loop holes and government contracts.

[Long Island Bob]

no, you are claiming that these entities are acting against their onw self interest out of ignorance.

And lets be frank, that's absurd.

Of course I agree with 7 on this one but technically speaking it is not absurd for firms to act agaisnt teir own selfinterst outof ignorance.

However since the market is rational, under free market conditions such firms would eventually fail and be replaced by firms that did not behave irrationally.

My point being "the market is rational" and "the market is efficient" do not mean all free market players are right all the time.

It means that under free market conditons those who are wrong are wiped out of the market and soon are not players on the scene.

[Tigerdrafted]

Of course I agree with 7 on this one but technically speaking it is not absurd for firms to act agaisnt teir own selfinterst outof ignorance.

However since the market is rational, under free market conditions such firms would eventually fail and be replaced by firms that did not behave irrationally.

My point being "the market is rational" and "the market is efficient" do not mean all free market players are right all the time.

It means that under free market conditons those who are wrong are wiped out of the market and soon are not players on the scene.

7 made up this rationalization because nobody stated that corporations would act against their self-interest.

[7426k]

7 made up this rationalization because nobody stated that corporations would act against their self-interest.
You stated they would act against their own self interest by supporting corporate tax cuts.

Whether you realized the implications of what you wrote is another question.

But since we agree that large corporations lobby for lower corporate taxes, it would logically and undeniably follow that large corporations believe that lower corporate taxes will benefit them.

If you would like to argue, as you have, that doing so is acting against their own self-interest and they just don't realize it, be my quest.

[shunted]

You have to learn how to make observations. You speak with a double tongue as well. Is it just a conspiracy when by your own words you stated that private hasn't figured out economics? It seems as if you are implying that private industry can't find it's way to the bathroom.



I have stated that so many times. Private industry knows the market. They have it figured out. You don't and neither do the Liberals.

I think you did not comprehend my post and you don't understand the implications of some of your beliefs. You previously wrote:

The field has advanced to an unprecedented level of intellectual arrogance by those who seek to validate central planning economic models which are based on unvalidated assumptions. Economist lack the necessary industrial experience to even begin making a realistic model.

If economists lack the necessary industrial experience to even begin making realistic models then why are so many employed in the private sector? My post pointed out that your view of economics and economists suggest that private industry hasn't figured out that what economists do is all a sham.

You have figured it out but not industry. I'm suggesting that you should become a highly paid consultant to industry and let them know that you've figured out what is really behind what economists do. You believe in some conspiracy by economists. I don't. If you're view is correct then you should be able to make lots of money off of it. Economically speaking, you have knowledge that is worth a lot of money.

Of course you can't make money off of your knowledge about what economists really do because it isn't true.

[shunted]

I like the statements people make about economics being so easy to understand. If it is so easy then why do companies pay so much for the services of economists?

Have any of you who are not economists ever read a graduate level textbook in economics? It's not basic, simple stuff. It's hard to imagine why anyone has the belief that economics is so simple when the market for economists indicates that it isn't so easy and simple. Their wages are high and the law of supply and demand leads to the conclusion that what they do isn't something that can be done by anyone.

[Oddball]

I like the statements people make about economics being so easy to understand. If it is so easy then why do companies pay so much for the services of economists?
Never heard of the dividsion of labor, have you?

Even though I understand how my car works, my time is more effectively and profitably spent plying my particular trade and hiring a mechanic to fix my car.

[Oddball]

Large corporations lobby because they can! I don't think It's that they aren't hurt by higher taxes. it's just that they are hurt less than smaller business, who have less ability to withstand any losses. But the feds don't care. Small business have less power to let their voice be heard. They are practically ignored by the federal government, even though they provide over 50% of the jobs in this country.

Large corporations don't always mind competition from small business. It's other large corporations that they view as a threat.

This may sound unsophisticated to those of you who study economics. What I know just comes from real-life observation. Theories aside, some aspects of economics are a matter of common sense and experience.
For a post so dervoid of common sense, that last sentence is a hoot!!

[7426k]

Never heard of the dividsion of labor, have you?

Even though I understand how my car works, my time is more effectively and profitably spent plying my particular trade and hiring a mechanic to fix my car.
But if your mechanic wasn't providing a service of value - if, for instance, when you brought your car to the mechanic he just washed the window and charged you $500 - would you continue to hire a mechanic to fix your car at $500? Or would you instead pay someone else a couple bucks to wash your window?

[7426k]

I don't know where you get the idea that economist are all left of center. Economist are all over the place.

If you ever read left of center economic books you will know that they do not base their arguements on logic. The first thing most lefty economist do in their books is trash economics. They say that the laws of economics are not real. Then they proceed to make their arguments.

Compare that with right of center economist. If it is an book aimed to the general public, they quickly explain the laws of economics and proceed to make their arguments accordingly.

For the left, they use the laws of economics when it makes their arguments and refute those very same laws when the laws of economics does not agree with them.

Liberal economist have their minds made up before hand and try to find anything that justify their arguments. Facts be damned.

Which laws do liberal economists say are not real?

[Oddball]

If you ever read left of center economic books you will know that they do not base their arguements on logic. The first thing most lefty economist do in their books is trash economics. They say that the laws of economics are not real. Then they proceed to make their arguments...

For the left, they use the laws of economics when it makes their arguments and refute those very same laws when the laws of economics does not agree with them....which in turn ARE real...But if economics isn't real to begin with...(cue mobius loop).

Liberal economist have their minds made up before hand and try to find anything that justify their arguments. Facts be damned.Tell me about it!! :lol:

[Oddball]

But if your mechanic wasn't providing a service of value - if, for instance, when you brought your car to the mechanic he just washed the window and charged you $500 - would you continue to hire a mechanic to fix your car at $500? Or would you instead pay someone else a couple bucks to wash your window?Let's leave Paul Krugman and Ben Bernanke out of this.

[Tigerdrafted]

I think you did not comprehend my post and you don't understand the implications of some of your beliefs. You previously wrote:

The field has advanced to an unprecedented level of intellectual arrogance by those who seek to validate central planning economic models which are based on unvalidated assumptions. Economist lack the necessary industrial experience to even begin making a realistic model.

If economists lack the necessary industrial experience to even begin making realistic models then why are so many employed in the private sector? My post pointed out that your view of economics and economists suggest that private industry hasn't figured out that what economists do is all a sham.

You have figured it out but not industry. I'm suggesting that you should become a highly paid consultant to industry and let them know that you've figured out what is really behind what economists do. You believe in some conspiracy by economists. I don't. If you're view is correct then you should be able to make lots of money off of it. Economically speaking, you have knowledge that is worth a lot of money.

Of course you can't make money off of your knowledge about what economists really do because it isn't true.

Your quote button is not working. I can't tell if you are quoting me or someone else.

[Tigerdrafted]

You stated they would act against their own self interest by supporting corporate tax cuts.

Whether you realized the implications of what you wrote is another question.

But since we agree that large corporations lobby for lower corporate taxes, it would logically and undeniably follow that large corporations believe that lower corporate taxes will benefit them.

If you would like to argue, as you have, that doing so is acting against their own self-interest and they just don't realize it, be my quest.

Higher corporate income tax rates favor large corporations.

[shunted]

Never heard of the dividsion of labor, have you?

Even though I understand how my car works, my time is more effectively and profitably spent plying my particular trade and hiring a mechanic to fix my car.

I don't think you understand basic economics. You see economists make a lot of money. They make way more than the median income. Basic economics tells us that these sorts of jobs are desirable. Now, if economics is so easy to understand then the job market for economists will be flooded with qualified applicants because the jobs pay so much - at least initially. The pay for economists will go down over time because of the surplus in labor for the market.

Now, the labor market for economists hasn't gone down much and there must be a reason for this. Since the job isn't socially unacceptable and since the job pays quite well and wages haven't come down there must be a reason for this. Hmmm.....perhaps its because economics isn't so easy to understand and thus there isn't an oversupply of economists.

We see that basic economic reasoning - the sort of reasoning that is so simple to understand according to people on this board - tells us that economics is not easy to understand.

[7426k]

Higher corporate income tax rates favor large corporations.

OK, you keep saying that.

But large corporations keep advocating for lower income tax rates.

So this means one of three things:

1. They are right - lower income tax rates are in their own self-interest.

2. They are wrong - lower income tax rates are against their interest but they are not as insightful as you and hence haven't figured that out yet. And when I say "they" I mean the entire span of large corporations that advocate for lower corporate taxes (which is to say, all large corporations)

3. Or, they intentionally advocate against their own self-interest.

Which do you choose as the most likely explanation?

[7426k]

Let's leave Paul Krugman and Ben Bernanke out of this.

Lol.....:))

But if you paid someone $500 for something, and they delivered you nothing of value -would you pay them $500 the next time? That is the equivalent of saying private firms are paying economists large amounts of money even though they derive no benefit from the services those economists provide.

or, we could presume that you and Tiger are BOTH smarter and more insightful than all the heads of large corporations.

[shunted]

I don't know where you get the idea that economist are all left of center. Economist are all over the place.

If you ever read left of center economic books you will know that they do not base their arguements on logic. The first thing most lefty economist do in their books is trash economics. They say that the laws of economics are not real. Then they proceed to make their arguments.

Compare that with right of center economist. If it is an book aimed to the general public, they quickly explain the laws of economics and proceed to make their arguments accordingly.

For the left, they use the laws of economics when it makes their arguments and refute those very same laws when the laws of economics does not agree with them.

Liberal economist have their minds made up before hand and try to find anything that justify their arguments. Facts be damned.

The conspiracy continues.

Liberal economists don't use logic. Yes, you are onto something here. This makes perfect sense. They go to graduate school and work to get their Ph.D. but don't use any logic in their study. Their major professor, of course, is also a liberal and so just passes his/her liberal student even though the liberal student doesn't use logic. The graduate school is OK with this because it too is liberal.

It is only liberal economists that have their minds made up beforehand. And these liberal economists are doing this all the time.

Now, if the field of economics is riddled with so much illogical thinking, and filled with so many dishonest people then wouldn't the wages of economists in the free market be going down? Companies wouldn't know if they could trust the results of the economists they hire.

[Tigerdrafted]

OK, you keep saying that.

But large corporations keep advocating for lower income tax rates.

So this means one of three things:

1. They are right - lower income tax rates are in their own self-interest.

2. They are wrong - lower income tax rates are against their interest but they are not as insightful as you and hence haven't figured that out yet. And when I say "they" I mean the entire span of large corporations that advocate for lower corporate taxes (which is to say, all large corporations)

3. Or, they intentionally advocate against their own self-interest.

Which do you choose as the most likely explanation?

You don't have to look far to find interesting arguments why corporate income tax rates favor large corporations. What interest they have in the tax policy can be another issue. I would hate to look into all the corporate PAC money. Most seems to go to both sides of the isle. If you want to explain the trend based on some simple rationality argument, well you may be hard pressed to find conclusive evidence that Large corporations favor higher tax policy. It would seem what they favor is to play the game at hand.

[QUOTE][What do these numbers show? It could be that the government is not so greedy when it comes to large corporations. More likely is that the sort of tax avoidance that Enron elevated to an art has become part of the package of tools that companies use to manage their earnings. And the bigger you are, the more likely you are to evade aggressively—hiring accounting firms, lobbyists, and lawyers; setting up subsidiaries in the Cayman Islands; etc.

Congress may have enough resources to investigate one Enron that is slyly ducking its income taxes, but it certainly doesn't have enough to investigate a whole Fortune 500 that is doing the same.

/QUOTE]http://slate.msn.com/id/2078581/

[7426k]

You don't have to look far to find interesting arguments why corporate income tax rates favor large corporations.


I didn't ask if there were" interesting arguments".

So you choose either 2 or 3:

2. They are wrong - lower income tax rates are against their interest but they are not as insightful as you and hence haven't figured that out yet. And when I say "they" I mean the entire span of large corporations that advocate for lower corporate taxes (which is to say, all large corporations)

3. Or, they intentionally advocate against their own self-interest.

Except you think the advocacy for lower corporate taxes is somehow suspect -that what they are REALLY advocating for is higher taxes to push out competition, with the understanding of some unequal application that favors them?

[Oddball]

Lol.....:))

But if you paid someone $500 for something, and they delivered you nothing of value -would you pay them $500 the next time? That is the equivalent of saying private firms are paying economists large amounts of money even though they derive no benefit from the services those economists provide.

or, we could presume that you and Tiger are BOTH smarter and more insightful than all the heads of large corporations.
I'll defer to Crash Davis on that one....

If you think that you're winning because you're getting laid, or not getting laid, or prancing around the locker room in women's underwear, then you are.

On top of that, millions of people out there perceive some kind of value in being Amway distributors, and millions more buy their overpriced products, and I don't see Rich DeVos being frog marched anytime soon.

[7426k]

I'll defer to Crash Davis on that one....

If you think that you're winning because you're getting laid, or not getting laid, or prancing around the locker room in women's underwear, then you are.

On top of that, millions of people out there perceive some kind of value in being Amway distributors, and millions more buy their overpriced products, and I don't see Rich DeVos being frog marched anytime soon.

well, since we can generally define "winning" as profitability and market share, I think it's safe to say that these companies are winning.

And they must believe that hiring economists help them win or we they would have no reason to pay the median corporate economist $110,000.

[Tigerdrafted]

I didn't ask if there were" interesting arguments".

So you choose either 2 or 3:

2. They are wrong - lower income tax rates are against their interest but they are not as insightful as you and hence haven't figured that out yet. And when I say "they" I mean the entire span of large corporations that advocate for lower corporate taxes (which is to say, all large corporations)

3. Or, they intentionally advocate against their own self-interest.

Except you think the advocacy for lower corporate taxes is somehow suspect -that what they are REALLY advocating for is higher taxes to push out competition, with the understanding of some unequal application that favors them?

I don't have to choose either 1, 2 or 3. You are trying to change the subject. I never stated what position large corporations have towards taxes. The fact of the matter is not contingent upon a particular position in favor of or against higher tax rates since the shear power of large coporations to buy influence mitigates the effect that any corporate tax rates have on their market share.

So I go back to my premise. Higher corporate tax rates benefits large corporations. I believe that has been quite easily proven.

[Oddball]

well, since we can generally define "winning" as profitability and market share, I think it's safe to say that these companies are winning.

And they must believe that hiring economists help them win or we they would have no reason to pay the median corporate economist $110,000....and if I believe that I keep Jobu's glass full of rum, I can hit the curve ball.

[7426k]

I don't have to choose either 1, 2 or 3. You are trying to change the subject. I never stated what position large corporations have towards taxes. The fact of the matter is not contingent upon a particular position in favor of or against higher tax rates since the shear power of large coporations to buy influence mitigates the effect that any corporate tax rates have on their market share.

So I go back to my premise. Higher corporate tax rates benefits large corporations. I believe that has been quite easily proven.

So then, you keep changing the subject away from the obvious question and towards a premise you somehow find proven, despite the subject:

If large corporations benefit from higher tax rates, why do they advocate for lower tax rates?

In your logic, they must either be acting against their own self interest. In fact, an intelligent and self - interested large corporation should be advocating for higher taxes for its industry.

But I can't seem to find any such corporations, which brings us full circle: You somehow think you know more than the large corporations about the business said large corporations are in.

[7426k]

...and if I believe that I keep Jobu's glass full of rum, I can hit the curve ball.

Ah yes, Tom and Tiger are just better informed than the thousands of people running every large American corporations that hires economists and advocates for low corporate tax rates.

That's believable.

[Oddball]

Just as I don't get to surmise the motivations of corporate CEOs, you don't get to put words in my mouth.

It was you who proffered the premise that those CEOs believed that corporate economists are useful. My remarks remained in that context of belief.

If one of those corporate officers were here to tell me what it was that brought them to that belief, then I would have a little more to work with than your mythical ad-hoc-ergo-propter-hoc premise.

[7426k]

Just as I don't get to surmise the motivations of corporate CEOs, you don't get to put words in my mouth.


I didn't. You have yet to give any type of explanation (other than the sheer force of your own brilliance) as to why the median salary of a corporate economist is 110,000 when they don't benefit the company.

It was you who proffered the premise that those CEOs believed that corporate economists are useful. My remarks remained in that context of belief.
I state, with certainty in fact, that the median CEO values the median corporate economists' contribution at about $110,000 plus benefits.

You continue to believe, with no explanation beyond your own brilliance, that this is not the case. You can state your disdain for economists and call economists pimps etc...all day long. I don't think economists really care what you think. I do think they care what companies think - and those companies think enough of their services to pay them well above the average wage for their services.

I'll take the money and your disdain.

[Oddball]

When did I say they don't benefit the company?

You're the one who set the context of belief, not me.

People hire clinical hypnotists at a rate of $200+ an hour because they believe the hypnotist is the one changing them, too.

[7426k]

When did I say they don't benefit the company?


Well let's see, you compared economists to Amway distributors:
On top of that, millions of people out there perceive some kind of value in being Amway distributors, and millions more buy their overpriced products, and I don't see Rich DeVos being frog marched anytime soon.

Defined economists in relation to Crash Davis:
I'll defer to Crash Davis on that one....

If you think that you're winning because you're getting laid, or not getting laid, or prancing around the locker room in women's underwear, then you are....

Claimed you must know as much as economists even though people do pay them:
Even though I understand how my car works, my time is more effectively and profitably spent plying my particular trade and hiring a mechanic

Referred to economists as pimps.

And once started a thread to dance on the grave of a dead economist.

Now, you'd like to argue that you DO think economists benefit companies? OK then. carry on....


You're the one who set the context of belief, not me.

People hire clinical hypnotists at a rate of $200+ an hour because they believe the hypnotist is the one changing them, too.

Oh, wait - you already flip-flopped! Now you don't believe economists benefit a company - you find them to be comparable to hypnotists.

I guess those thousands of economists hired by fortune 500 companies just have their leadership hypnotized.

[PhantomPholly]

Gotta love the conspiracy theorists. The whole field is made up of people with an agenda to validate central planning?

It doesn't make sense that economists make so much money when they work for private industry if they only seek to validate central planning. Since you've seen what the field of economics is all about why hasn't private industry figured this out? Maybe you should become a consultant for industry and let everyone in on the big scam. Surely companies would pay handsomely to be shown that they are wasting their money hiring intellectually arrogant people who only seek to validate central planning.

Obviously you've never worked in an academic environment. From other posts of yours I'm unconvinced you've ever worked.

However, it doesn't take a conspiracy to understand why Economists create complicated models.

They get paid to do it.

Economics 101 - follow the money.

Economics is simple. People just don't like the answers it gives, so they "shop for a different answer."

[Tigerdrafted]

So then, you keep changing the subject away from the obvious question and towards a premise you somehow find proven, despite the subject:

If large corporations benefit from higher tax rates, why do they advocate for lower tax rates?

In your logic, they must either be acting against their own self interest. In fact, an intelligent and self - interested large corporation should be advocating for higher taxes for its industry.

But I can't seem to find any such corporations, which brings us full circle: You somehow think you know more than the large corporations about the business said large corporations are in.


No you are the one who insists that large corporations must favor higher corporate taxes since they must see the forseable benefit, else they must be acting out of ignorance. You assume that both observations are in the same category and must therefore be mutually exclusive. I Don't

It can be true that large corporations do push for lower tax rates and knowingly benefit from higher tax rates. That would be what you call two mutually exclusive observations which can both be true since on the one hand, lower tax rates obviate the need for greater tax attorney fees and higher tax rates rule out the competition. You are lumping both observations into the same category. They are not in the same category.

[Oddball]

Well let's see, you compared economists to Amway distributors:


Defined economists in relation to Crash Davis:


Claimed you must know as much as economists even though people do pay them:Can you somehow explain the leap in logic it takes to turn motivations as to why someone might hire an economist -or any other professional consultant for that matter- into a commentary on the economist himself, or how that translates in any way to me claiming that I know more than they??
Referred to economists as pimps.Some are. But I'm one who blames the armed robber, not the arms.
Now, you'd like to argue that you DO think economists benefit companies? OK then. carry on....
You're the one doing the arguing here, not me.

Oh, wait - you already flip-flopped! Now you don't believe economists benefit a company - you find them to be comparable to hypnotists.

I guess those thousands of economists hired by fortune 500 companies just have their leadership hypnotized.
Uh-huh...And can you explain what in hell all this digression and derailment has to do with the basic concept of the division of labor??

[shunted]

Obviously you've never worked in an academic environment. From other posts of yours I'm unconvinced you've ever worked.

However, it doesn't take a conspiracy to understand why Economists create complicated models.

They get paid to do it.

Economics 101 - follow the money.

Economics is simple. People just don't like the answers it gives, so they "shop for a different answer."

Whether or not I have ever worked does not have anything to do with the veracity of the statements I made. Your ability to make valid conclusions appears to be quite poor.

Economics is so simple that it takes 5+ years to get a Ph.D. in it. It is so simple that companies pay their economists way more than the median income in the country. Yep, just follow the money. So simple.

Since you've figured out that it is so simple you should be a consultant to major corporations. It would require little work on your part and the income is fabulous.

Here is an introductory text on economic analysis. (http://www.introecon.com/) Do you have the mathematical knowledge to understand it? Do you know the calculus behind it?

[grhayes]

Whether or not I have ever worked does not have anything to do with the veracity of the statements I made. Your ability to make valid conclusions appears to be quite poor.

Economics is so simple that it takes 5+ years to get a Ph.D. in it. It is so simple that companies pay their economists way more than the median income in the country. Yep, just follow the money. So simple.

Since you've figured out that it is so simple you should be a consultant to major corporations. It would require little work on your part and the income is fabulous.

Here is an introductory text on economic analysis. (http://www.introecon.com/) Do you have the mathematical knowledge to understand it? Do you know the calculus behind it?

It doesn't take 5 years to read all the same books and understand it. that is all the classes that college adds to it just to get the money out of the student.

Companies don't pay because they want to it is because some people are smart enough to demand the money.

If everyone used the same method to make money then they spread of wealth would be fairly equal! The complexity in math for economics doesn't get past first year calculus and statistics at best both are a joke.

If you want some decent math start working in nuclear physics and working on core design principles to allow the greatest power over time usage and least amount of waste and so on.
Prove Goldbach's conjecture odd or even. Learn how to do the long formula that lead to E=MC^2..

[Oddball]

If you want some decent math start working in nuclear physics and working on core design principles to allow the greatest power over time usage and least amount of waste and so on.
Prove Goldbach's conjecture odd or even. Learn how to do the long formula that lead to E=MC^2..
Hey...Not so rough!!

How 'bout easing into it by working on some drag coefficient formulas for laminar flow wings!! :lol:

[Tigerdrafted]

It doesn't take 5 years to read all the same books and understand it. that is all the classes that college adds to it just to get the money out of the student.

Companies don't pay because they want to it is because some people are smart enough to demand the money.

If everyone used the same method to make money then they spread of wealth would be fairly equal! The complexity in math for economics doesn't get past first year calculus and statistics at best both are a joke.

If you want some decent math start working in nuclear physics and working on core design principles to allow the greatest power over time usage and least amount of waste and so on.
Prove Goldbach's conjecture odd or even. Learn how to do the long formula that lead to E=MC^2..

You can use any math to any science. It all depends on what system you are trying to figure out.

I don't think physics has a monopoly on advanced mathematics and I don't think any of the pioneers in any field will limit themselves to a level of mathematics. Math is just a tool.

I think the real knowledge is in parametric modeling. I can calculate how much Reactor coolant flow you need to remove the core heat.

Actually I have the correlation for cooling a BWR. I'm new in the field though and they don't let me do all that fun stuff.

I have my own equation also. I developed it myself. I'm still waiting for the ship to come in. So far no calls.

[shunted]

It doesn't take 5 years to read all the same books and understand it. that is all the classes that college adds to it just to get the money out of the student.

Companies don't pay because they want to it is because some people are smart enough to demand the money.

If everyone used the same method to make money then they spread of wealth would be fairly equal! The complexity in math for economics doesn't get past first year calculus and statistics at best both are a joke.

The mathematics used in econometrics is beyond first year calculus. The statistics used in economics is way beyond calc based statistics.

Your statement about why economists make so much money is wrong. It isn't as simple as 'they are smart enough to ask for it'. If such were the case then wages for McDonald's workers would be much higher.

Your statement about what is done in graduate school for economics is very much naive. Graduate school is much more than just reading some books.

The belief that economics is simple isn't evidenced by the free market demand for economists. It isn't evidences by the wages economists are paid. It isn't evidenced by the mathematics necessary to understand advanced economics. It is an extremely naive thing to believe.

Some people on this board have delved into conspiracy theories. They have claimed that there is a conspiracy by liberals to make economics seem difficult when it isn't. They've conspired to fool companies into paying high wages for their services, some have claimed. That's just nuts.

[7426k]

No you are the one who insists that large corporations must favor higher corporate taxes since they must see the forseable benefit, else they must be acting out of ignorance. You assume that both observations are in the same category and must therefore be mutually exclusive. I Don't

No, I correctly surmise that people and corporations want lower taxes. You seem to think - no, actually you DO think that corporations would be better off if we raised their taxes, they are just not smart enough to realize it.

It can be true that large corporations do push for lower tax rates and knowingly benefit from higher tax rates. That would be what you call two mutually exclusive observations which can both be true since on the one hand, lower tax rates obviate the need for greater tax attorney fees and higher tax rates rule out the competition. You are lumping both observations into the same category. They are not in the same category.

Lol..ok then. They push for things that are against their own interest. Why would lower taxes require more attorneys Tiger?

That makes perfect sense.

[7426k]

Can you somehow explain the leap in logic it takes to turn motivations as to why someone might hire an economist -or any other professional consultant for that matter- into a commentary on the economist himself, or how that translates in any way to me claiming that I know more than they??
Some are. But I'm one who blames the armed robber, not the arms.
you've stated quite clearly that you know more than them. Companies hire them to fulfill their singular responsibility - to increase returns to shareholders.


You're the one doing the arguing here, not me.

I'm not arguing. I'm simply pointing out where you are wrong.


Uh-huh...And can you explain what in hell all this digression and derailment has to do with the basic concept of the division of labor??

It doesn't. it as to do with the inability of you to admit you are wrong.

[7426k]

It doesn't take 5 years to read all the same books and understand it. that is all the classes that college adds to it just to get the money out of the student.

Companies don't pay because they want to it is because some people are smart enough to demand the money.

If everyone used the same method to make money then they spread of wealth would be fairly equal! The complexity in math for economics doesn't get past first year calculus and statistics at best both are a joke.

If you want some decent math start working in nuclear physics and working on core design principles to allow the greatest power over time usage and least amount of waste and so on.
Prove Goldbach's conjecture odd or even. Learn how to do the long formula that lead to E=MC^2..

Did you just state that the complexity of math in economics doesn't get past first year calculus?

Wow. have you ever picked up Romer's graduate macro text?

[7426k]

The mathematics used in econometrics is beyond first year calculus. The statistics used in economics is way beyond calc based statistics.

Your statement about why economists make so much money is wrong. It isn't as simple as 'they are smart enough to ask for it'. If such were the case then wages for McDonald's workers would be much higher.

Your statement about what is done in graduate school for economics is very much naive. Graduate school is much more than just reading some books.

The belief that economics is simple isn't evidenced by the free market demand for economists. It isn't evidences by the wages economists are paid. It isn't evidenced by the mathematics necessary to understand advanced economics. It is an extremely naive thing to believe.

Some people on this board have delved into conspiracy theories. They have claimed that there is a conspiracy by liberals to make economics seem difficult when it isn't. They've conspired to fool companies into paying high wages for their services, some have claimed. That's just nuts.

The irony in the claims in this thread are threefold:
1. People who claim to understand economics are attempting to avoid the most basic concept of labor economics, and indeed introductory Micro.

2. People who claim to understand economics fail to realize that it was the conservative backlash that created the current mathematical race to complexity in economics. Pre-1945, just about anyone with some basic math skills, intro algebra and a touch of calculus could follow the most advanced texts of the day. Indeed, people are even denying that such mathematic complexity exists. For good or bad, it most certainly does.

3. People who claim to understand economics are convinced that people who have driven up the wage of corporate economists to a median of 110K have done so by being hoodwinked.

But let's be honest, I've been here a while and I'd expect nothing less.

[Tigerdrafted]

No, I correctly surmise that people and corporations want lower taxes. You seem to think - no, actually you DO think that corporations would be better off if we raised their taxes, they are just not smart enough to realize it.



Lol..ok then. They push for things that are against their own interest. Why would lower taxes require more attorneys Tiger?

That makes perfect sense.

You misquoted me again.

Both observations are not mutualy exclusive. Therefore corporate tax opinions are independent of the fact that they benefit at the expence of small buisiness with higher tax rates. Which is my point which are trying so hard to diffuse.

PS You don't need math for that.

[Tigerdrafted]

A science is only as complicated as the system being studied. Mathematical expressions are only there to show how the parameters are related. There should not be validated theories locked up in a black hole of disputable corelations and polititians should not base large scale policies based on disputable theories

[shunted]

The irony in the claims in this thread are threefold:
1. People who claim to understand economics are attempting to avoid the most basic concept of labor economics, and indeed introductory Micro.

2. People who claim to understand economics fail to realize that it was the conservative backlash that created the current mathematical race to complexity in economics. Pre-1945, just about anyone with some basic math skills, intro algebra and a touch of calculus could follow the most advanced texts of the day. Indeed, people are even denying that such mathematic complexity exists. For good or bad, it most certainly does.

3. People who claim to understand economics are convinced that people who have driven up the wage of corporate economists to a median of 110K have done so by being hoodwinked.

But let's be honest, I've been here a while and I'd expect nothing less.

I was naive enough to think that people would retract the ridiculous claim that economics is simple.

We have a group of people here that talk about free market principles and how it is always the best solution but they believe that corporations have been hoodwinked into paying economists a lot of money for providing them with information that a child figure out. So much for faith in the free market. I thought for sure the labor market argument would work with the people on the board. Their adherence to the notion that economics is simple trumps their belief in simple economics. Amazing. It's hard to believe there can be such cognitive dissonance.

There are people that started out saying economics is simple and then changed this to 'real' economics is simple but that liberals have made it complicated. One fool said that conservative economists use logic but not the liberal ones. Another said that economics just uses basic calculus. This is grotesquely wrong but it is fun to see people who believe that economics can be understood by a child and then read that it only requires a knowledge of calculus. I don't know any children who know calculus.

What hasn't been said by any of the fools who think that economics is simple is an admission that the subject is far more complicated than what a child can understand. There has been concrete proof given that basic economics indicates - through the labor demand for economists - that economics is complicated. But no one is willing to admit they are wrong.

[grhayes]

I was naive enough to think that people would retract the ridiculous claim that economics is simple.

We have a group of people here that talk about free market principles and how it is always the best solution but they believe that corporations have been hoodwinked into paying economists a lot of money for providing them with information that a child figure out. So much for faith in the free market. I thought for sure the labor market argument would work with the people on the board. Their adherence to the notion that economics is simple trumps their belief in simple economics. Amazing. It's hard to believe there can be such cognitive dissonance.

There are people that started out saying economics is simple and then changed this to 'real' economics is simple but that liberals have made it complicated. One fool said that conservative economists use logic but not the liberal ones. Another said that economics just uses basic calculus. This is grotesquely wrong but it is fun to see people who believe that economics can be understood by a child and then read that it only requires a knowledge of calculus. I don't know any children who know calculus.

What hasn't been said by any of the fools who think that economics is simple is an admission that the subject is far more complicated than what a child can understand. There has been concrete proof given that basic economics indicates - through the labor demand for economists - that economics is complicated. But no one is willing to admit they are wrong.

Lets put it this way. You can run simulations with children in class rooms of fairly complex models a good part of the children understand it.

The complexity of economics has to do with more the detail of scale that the complexity of the individual problems.

Look at a single product. Well call it snorts.
You need materials to build snorts well call that logs.
The cost of logs is going to change depending on how much there are available, the cost it cost the supplier to get them and what they are looking for in a profit margin, Which also means if you buy more of something you are likely to get a better price on it. The price also is dictated by how many other people also want logs, and if there are alternatives to it and so on.

Increase of complexity now comes only when you look at the next level what your selling price is going to be set to which is also going to be a very similar formula as the part above.

What people seem to skip is the idea each consecutive formula can be compiled to a variable for the following formula.

Of course you have market trend verses money in the economy such as are people going to be spending the same or less in a month or two from no or longer. Then market saturation which is technically a part of the demand formula.

Most people don't get the point of why taxing businesses is stupid or pointless. If I make 1000000 dollars and I sold 10000 items this year the cost to the consumer would be 100 dollars. So now you tax me 10%. I take that 100,000 dollars you taxed me and add it to the price of the product so instead of costing 100 dollars it cost 110 dollars. Which reduces the number of people who want the product and means I now have to find a new best sell price and because the investment per a item is also going to be higher because I no longer have to make as many because less people want them I also got to add that in. Then I also have to account for the taxes on the higher price so add another dollar. by the time you are done you get a price around 111.111 or some garbage so the business never actually pays the taxes on it. Then when the customer is in the store he pays his sales tax on top of that. Well say it is also 10% giving you a grand total price of 122.22 for something that cost 100 dollars and if the business had not been taxed would only have cost 110 dollars.

It only seems complicated, even with estimated or predictive buying and sales trends and market turns and so on.

That's why businesses you software to simulate and predict the economy trends for a lot of stuff. What makes it complex is the number of items not so much the difficulty of the problem it is more an issue with scope.

The one part of the market that is impossible to predict the extent of is people's fear. Most conservatives spend less when a democrats are in office. If the market is going south and you have someone in office that is going to raise taxes on top of it, people pull their money out and go for cash and gold. Which is why gold is at 900+ right now.

[Oddball]

you've stated quite clearly that you know more than them. Companies hire them to fulfill their singular responsibility - to increase returns to shareholders.Ahh...Projection of motivations.

I'm not arguing. I'm simply pointing out where you are wrong.Par for the course.

It doesn't. it as to do with the inability of you to admit you are wrong.Dr. Freud...Call your office!! :))

So, you admit deliberately hijacking the explanation of an elementary concept, in order to lamely attempt to paint me into a corner on a completely unrelated topic.....Wow! :))

[shunted]

Most people don't get the point of why taxing businesses is stupid or pointless. If I make 1000000 dollars and I sold 10000 items this year the cost to the consumer would be 100 dollars. So now you tax me 10%. I take that 100,000 dollars you taxed me and add it to the price of the product so instead of costing 100 dollars it cost 110 dollars. Which reduces the number of people who want the product and means I now have to find a new best sell price and because the investment per a item is also going to be higher because I no longer have to make as many because less people want them I also got to add that in. Then I also have to account for the taxes on the higher price so add another dollar. by the time you are done you get a price around 111.111 or some garbage so the business never actually pays the taxes on it. Then when the customer is in the store he pays his sales tax on top of that. Well say it is also 10% giving you a grand total price of 122.22 for something that cost 100 dollars and if the business had not been taxed would only have cost 110 dollars.


No, no, no, no. You don't even understand basic economics.

It is not always the case that business can pass along the tax to consumers. Things are more complicated than, "business will pass the cost onto consumers". It's fun and a bit sad to see people talk about how basic economics is and then demonstrate that they don't understand basic economics. (Note: I am not stating a preference for business taxes. I'm stating that the quoted reasoning is wrong.)

[grhayes]

No, no, no, no. You don't even understand basic economics.

It is not always the case that business can pass along the tax to consumers. Things are more complicated than, "business will pass the cost onto consumers". It's fun and a bit sad to see people talk about how basic economics is and then demonstrate that they don't understand basic economics. (Note: I am not stating a preference for business taxes. I'm stating that the quoted reasoning is wrong.)

At what point do you not think taxes don't get passed on to the consumer. If a business is able to reduce the price of the product and it is selling fine they just keep the price up and use the extra margin to pay the taxes.

In fact name one single product that the taxes you are not paying the business tax on. Please name just one. There isn't a single one.

[shunted]

At what point do you not think taxes don't get passed on to the consumer. If a business is able to reduce the price of the product and it is selling fine they just keep the price up and use the extra margin to pay the taxes.

In fact name one single product that the taxes you are not paying the business tax on. Please name just one. There isn't a single one.

If a company lacks the pricing power to raise prices then they can't raise prices. Even if they just got hit with higher taxes. Sometimes a company just has to live with the fact that its margins are lower. Sometimes greater efficiency makes up for the increase in price.

Currently we are in a situation in which the pricing power of companies is deteriorating.

[grhayes]

If a company lacks the pricing power to raise prices then they can't raise prices. Even if they just got hit with higher taxes. Sometimes a company just has to live with the fact that its margins are lower. Sometimes greater efficiency makes up for the increase in price.

Currently we are in a situation in which the pricing power of companies is deteriorating.

If a company takes a lower margin that means it also could have been passed to the consumer in lower costs. Which means the money still came the hell out of the price of the product which the consumer paid.

As I said name one single item as proof.

[7426k]

You misquoted me again.

Both observations are not mutualy exclusive. Therefore corporate tax opinions are independent of the fact that they benefit at the expence of small buisiness with higher tax rates. Which is my point which are trying so hard to diffuse.

PS You don't need math for that.

Your point requires either ignorance or diabolical slyness on the part of large corporations. I find neither to be a likely scenario.

[7426k]

Ahh...Projection of motivations.

Par for the course.

Dr. Freud...Call your office!! :))

So, you admit deliberately hijacking the explanation of an elementary concept, in order to lamely attempt to paint me into a corner on a completely unrelated topic.....Wow! :))

No, I admit that:

1. You hold contrary and mutually exclusive views of several of the most basic economic principles.
2. You hold in disdain all economists to the point that you will dance on their grave....except for the few economists you actually agree with (who, by the way, are part of the primary force in mathematical economics)
3. You are unable to explain why large corporations would pay economists $110,000 on average - and refuse to accept the most obvious reason. You don't need a ph.d in economics to know that reason.

You offer a host of interesting perspectives on economic topics, but your obvious and blatant disdain for anyone who disagrees with your interpretation of economic principles is pointless and useless - and it does nothing to further your points.

[shunted]

If a company takes a lower margin that means it also could have been passed to the consumer in lower costs.

If the pricing power of a company is such that it doesn't need to lower prices even though it can then it won't. Companies, generally, will keep high margins on products if they can. It all depends on their pricing power. It depends on the economic conditions of the market and what the demand and supply are.

Generally, one gets into trouble by using words like 'always'.

[grhayes]

If the pricing power of a company is such that it doesn't need to lower prices even though it can then it won't. Companies, generally, will keep high margins on products if they can. It all depends on their pricing power. It depends on the economic conditions of the market and what the demand and supply are.

Generally, one gets into trouble by using words like 'always'.

My point is at the end of the day it doesn't matter the cost of that taxes comes out of the revenues for the product which was paid to the company by the consumer.

Unless you can show a product the consumer is paying for and the company is coming up with the tax money from another source you loose.

[7426k]

My point is at the end of the day it doesn't matter the cost of that taxes comes out of the revenues for the product which was paid to the company by the consumer.

Unless you can show a product the consumer is paying for and the company is coming up with the tax money from another source you loose.

Put a coke machine and pepsi machine (near perfect substitutes) side by side.

They charge the same price for their beverages, $1.00

Now, place a ten percent revenue-based corporate tax on Coke.

If coke is a revenue-maximizing firm, what is the new price of Coke, iunc

[grhayes]

Put a coke machine and pepsi machine (near perfect substitutes) side by side.

They charge the same price for their beverages, $1.00

Now, place a ten percent revenue-based corporate tax on Coke.

If coke is a revenue-maximizing firm, what is the new price of Coke, iunc

Fictional markets aren't going to win this argument. People are not that stupid.

[shunted]

My point is at the end of the day it doesn't matter the cost of that taxes comes out of the revenues for the product which was paid to the company by the consumer.

Unless you can show a product the consumer is paying for and the company is coming up with the tax money from another source you loose.

No.

Suppose a company sells widgets for $100. Suppose this is the price that maximizes profit and the government decides to no longer tax the company that makes widgets. The company could lower its price and pass the savings to consumers. But $100 is the profit maximizing price and so the company decides not to lower the price because that would no longer maximize its profits.

The reverse can happen. Using the coke and pepsi analogy given before we can think of a situation in which this could happen. Had the government imposed a windfall tax on Exxon last year it would not have been able to pass those taxes on to consumers. If it did it would have lost lots of business and money.

Your view is wrong. It often times is the case that a company passes savings and/or price increases on but it isn't always the case. One should be careful when using 'always'. Counter examples tend to be easy to find.

But back to the point of this thread. Economics is not simple and most of the people on this board seem to have a hard time with even the simple parts of economics. No one seems to be capable of saying, "Well, I spoke in hyperbole. Economics really isn't that simple." or, "I was wrong. I retract the statement."

The belief that economics is easy or that its complication comes from liberals is clearly wrong. It isn't a defensible position. (Not necessarily including grhayes in this part.)

[shunted]

Fictional markets aren't going to win this argument. People are not that stupid.

It's an example to demonstrate a point. The example was apt and the question posed by the example remains unanswered by you. It is surprising that you would make this claim about the use of fictional markets when you previously wrote:

.....If I make 1000000 dollars and I sold 10000 items this year the cost to the consumer would be 100 dollars. So now you tax me 10%. I take that 100,000 dollars you taxed me and add it to the price of the product so instead of costing 100 dollars it cost 110 dollars.....

[grhayes]

It's an example to demonstrate a point. The example was apt and the question posed by the example remains unanswered by you. It is surprising that you would make this claim about the use of fictional markets when you previously wrote:

It is not a reasonable comparison. In no market do you get a tax on one product that you don't get on an equal product.

Your best argument against that to help you out is import taxes. But as I said "EQUAL" products or even more precisely the same product.

You will never see two pepsi machines sitting next to each other one that there is a tax on and one there isn't.

Unless you can actually formulate a valid argument just stop.

[7426k]

Fictional markets aren't going to win this argument. People are not that stupid.
Oh, I see.

you think the above was a fictional market.

[7426k]

It is not a reasonable comparison. In no market do you get a tax on one product that you don't get on an equal product.

You should really avoid such statements. In a worldwide economy, those sorts of things play out a million times per day.

[shunted]

Unless you can actually formulate a valid argument just stop.

This is too good.

You've said that one shouldn't use fictional markets to make a point when you've said:

Look at a single product. Well call it snorts.
You need materials to build snorts well call that logs.

In reference to the high pay of economists you said:

Companies don't pay because they want to it is because some people are smart enough to demand the money.

Brilliant argument. Economists make so much money not because it is a subject that is in demand and relatively few people understand it is simply because they ask for more money. So much for free market efficiency!

You also said:

The complexity in math for economics doesn't get past first year calculus and statistics at best both are a joke.

That was a real hoot. Obviously you don't know much about econometrics.

You also said:

The problem isn't economics being convoluted or even hard to understand. The problem is there are people who intentionally make things convoluted to support whatever agenda it is they are trying to push. In other words as it always boils down to the problem is with a person not with an object, or concept or anything else it is the person who is the problem. That problematic person can be on the giving or receiving end of information.

It's hard to understand how you can believe such a thing when clearly you don't have the basic notions of pricing power down. You claim, naively, that anytime a company has it's taxes raised then it will raise it's prices on products and thereby pass on the tax to consumers.

You've been wrong on most of the things you say. You don't understand economics and you don't have the intellectual honesty to admit that you are wrong when you say economics isn't hard to understand.

You said this and this was wrong, as pointed out, but you won't retract the statement or acknowledge being wrong on it. Now you claim that I can't formulate a valid argument. Priceless.

If you borrow wopping large amounts of money from foreign nations like China you are promising them more in return. For which the value of your dollar goes down in value.

[grhayes]

You should really avoid such statements. In a worldwide economy, those sorts of things play out a million times per day.

Your right which is why I mentioned the import tax yes i know that was to restrictive and not general enough because other governments have their own taxes.

However, I also said you will never find two Pepsi machines sitting side by side one being taxed and the other not. Granted it can happen but the reasonable person isn't going to compete in a market area if another person has a greater advantage over them. Instead they find other areas or even products services and such to market.

[grhayes]

This is too good.

You've said that one shouldn't use fictional markets to make a point when you've said:

In reference to the high pay of economists you said:

Brilliant argument. Economists make so much money not because it is a subject that is in demand and relatively few people understand it is simply because they ask for more money. So much for free market efficiency!

You also said:

That was a real hoot. Obviously you don't know much about econometrics.

You also said:

It's hard to understand how you can believe such a thing when clearly you don't have the basic notions of pricing power down. You claim, naively, that anytime a company has it's taxes raised then it will raise it's prices on products and thereby pass on the tax to consumers.

You've been wrong on most of the things you say. You don't understand economics and you don't have the intellectual honesty to admit that you are wrong when you say economics isn't hard to understand.

You said this and this was wrong, as pointed out, but you won't retract the statement or acknowledge being wrong on it. Now you claim that I can't formulate a valid argument. Priceless.

I was wandering how long it would take for someone to hit me on those areas. Congrats finally something worth while.

The snorts issue Lincoln logs but the issue wasn't the fictitious product but the fictitious market. How many times have you actually seen to completely equal products sit side by side. As I pointed out in the one reply. To Pepsi machines and one being taxed more or less than the other. you probably never see that mostly because vendors competition is contract issues. But say to vendors did and one vendor had a lot more business than the other vendor then yes he most likely with our current tax system will also pay more taxes which he passes on to the customer and he makes less profit because of the competition. However, if he was more interested in volume sales he could lower the price of the product and make more money. The problem here is he is now limited in how far he lowers that price because he does have that tax to pay and he still has to make a profit to be a business worth running.
(PS if you didn't get it I made your point up there of it being possible to have to equal products side by side and one getting taxed more.) There is a reason I want people to argue their point. Others get to learn from it. Who knows maybe I will to.

In other words taxes hurt the consumer because they do take that choice away from the retailer or business to lower their price to some extent. Taxes also cause other products to go up in price.

In the end no matter what the tax is paid out of the final price of the product you don't have businesses taking out loans they never repay just to pay the taxes on products. Well hold on hmmm with the economy the way it maybe I should watch what I say there. They don't usually.

As to economist and what their pay is. How many economist do you think don't do some negotiating on their pay. Hell I know that I negotiated my pay during the time I was working for others. Granted some are going to just take what they give. But I don't think I would hire an economist who wasn't trying to get the best he could get. If he is good he researched the company found out what prior people made and so on. Worked up a comparison to other businesses in the area what they are offering and had a good idea of what he wanted when he goes in. I did that at least and I'm not even economist.

Also just cause you are in a free market doesn't mean people can't agree on pricing schemes and so on such as owe say price fixing isn't that basically what unions do price fix labor. Or monopolies when you are extremely good at your job and a large number of people want you. You tend to have a lot more to say about how much you get.

By the way I was wrong on points and I know it is irritating as hell when someone doesn't admit it. But the issue I was having is like I said formulate your attack.

I could have been a lot more specific on the Pepsi and Coke issue. The idea is more you don't have one government setting two different set of rules up for people but even as I myself proved above that isn't entirely true.

So now the big question. How many issues would go away if government didn't tax business and only had a flat spending tax f say 10% for the individual. Talking no income tax no business tax ... The only tax being that if consumers spend money they have to pay 10%. Understand this would mean most of the IRS could go away. People would most spend more money which means they would be paying that 10% a lot.

[7426k]

Your right which is why I mentioned the import tax yes i know that was to restrictive and not general enough because other governments have their own taxes.

However, I also said you will never find two Pepsi machines sitting side by side one being taxed and the other not. Granted it can happen but the reasonable person isn't going to compete in a market area if another person has a greater advantage over them. Instead they find other areas or even products services and such to market.

I would argue that it happens with gas stations and their supply chain every day.

edited to add: I appreciate the civil turn this thread has taken. Thanks.

[LoudAnimalAttack]

Its because they are taught Keynesian economics as the truth. They never learn Austrian economics. Ludwig von Mises and Murray Rothbard are the best economists few have heard of. Sad.

[7426k]

Its because they are taught Keynesian economics as the truth. They never learn Austrian economics. Ludwig von Mises and Murray Rothbard are the best economists few have heard of. Sad.

I'm pretty sure most people who are familiar with Keynes (the real one, not the rightwing strawman) are also familiar with von Mises.

[LoudAnimalAttack]

I'm pretty sure most people who are familiar with Keynes (the real one, not the rightwing strawman) are also familiar with von Mises.

Thats the problem. People are taught economics in school. They aren't ever taught that there are differences and different opinions. They teach Keynes' economics as the one and only.

[7426k]

Thats the problem. People are taught economics in school. They aren't ever taught that there are differences and different opinions. They teach Keynes' economics as the one and only.

They don't teach Keynesian economics as the one and only. In fact, most of what is taught these days is more akin to monetarism than Keynesian thought.

[shunted]

In other words taxes hurt the consumer because they do take that choice away from the retailer or business to lower their price to some extent. Taxes also cause other products to go up in price.

I don't enough about economics and tax theory to really comment on this. I don't know if a 0% tax rate on businesses is optimal. The country needs roads, police, a judicial system, a military, etc. These things need to be paid for. I don't what the best way to do this is.

However, it seems to me that if businesses are taxed equally so that Coke doesn't have a tax advantage over Pepsi then a tax on the two companies can be such that it beneficial to society. I think, but can't prove, that a tax on business might be equivalent to a consumption tax. In which case, what does it matter if it is in the form of a consumption tax or a business tax?

A windfall tax on Chevron and Exxon would not have hurt consumers given the market conditions that exist. It would have benefited society because that money could have been spent on making the road system better and thus, in some way, helping out Chevron and Exxon by making it more palatable to drive cars.

Also just cause you are in a free market doesn't mean people can't agree on pricing schemes and so on such as owe say price fixing isn't that basically what unions do price fix labor. Or monopolies when you are extremely good at your job and a large number of people want you. You tend to have a lot more to say about how much you get.

But right now labor doesn't have much power. Since Reagan the shift has been toward corporate power over labor. We had great increases in productivity under Bush II but no corresponding rise in wages. What I see in the country is collusion amongst oligopolies on some goods and services. A case in point would be the cost of text messaging.

Both of the cases you mention are why a sensible, functioning government is necessary. You don't want things to get out of control.

So now the big question. How many issues would go away if government didn't tax business and only had a flat spending tax f say 10% for the individual. Talking no income tax no business tax ... The only tax being that if consumers spend money they have to pay 10%. Understand this would mean most of the IRS could go away. People would most spend more money which means they would be paying that 10% a lot.

The problem I have this sort of scheme is that Bill Gates should pay a higher percentage of his wealth in tax because he has a tremendous amount of wealth. If Gates got taxed 90% on his wealth (just making up a number here) he would still be absolutely stinking rich. His life would not be adversely affected in any way. The country is such that he was able to make so much money. He should be willing to part with a higher percent of his money.

I'm all for tax simplification. I'm against the government making regulations simply to keep an industry going. (Accountants and lawyers don't want tax simplification and giving the size of these industries I don't think we will see simplification anytime soon.) I'm in favor of less government where there should be less government or where government is ineffective.

My gripe on this thread is that the person who started actually thinks that economics is simple and that complex issues can be reduced to knowledge that a child can understand. This isn't helpful. Complex issues generally require complex analysis.

Thank you for your response.

[LoudAnimalAttack]

They don't teach Keynesian economics as the one and only. In fact, most of what is taught these days is more akin to monetarism than Keynesian thought.

How many of your teachers have even question the need for a Federal Reserve? Monetarism isn't much better than Keynesianism. Austrian economics is the most free-of-govt, and makes the most sense. Forget that I even mentioned Keynes, my main argument is against Central Banks in general. How can you have a "free market", with a Central Bank debasing the currency?

[7426k]

How many of your teachers have even question the need for a Federal Reserve?

We're not discussing my experience, per se. Probably half of econ professors raise the idea of a monetary system without the Fed. in micro, it's not really relevant. But it's been awhile.

at any rate, an intro undergrad prof's job is to describe the principles of macro as it is now, not how it was between 1873 and 1907 and not how they hope it might be in the future. In upper level and grad classes, it is a far more common discussion.

Monetarism isn't much better than Keynesianism. Austrian economics is the most free-of-govt, and makes the most sense.

Well when you start from the premise that Austrian economics makes the most sense, it's not hard to arrive at the conclusion that austrian economics makes the most sense.

Forget that I even mentioned Keynes, my main argument is against Central Banks in general. How can you have a "free market", with a Central Bank debasing the currency?

It;'s a bit hard to blame central banking on Keynes, since central banking predated Keynes by about 300 years.

[PhantomPholly]

Whether or not I have ever worked does not have anything to do with the veracity of the statements I made. Your ability to make valid conclusions appears to be quite poor.

Economics is so simple that it takes 5+ years to get a Ph.D. in it. It is so simple that companies pay their economists way more than the median income in the country. Yep, just follow the money. So simple.

Since you've figured out that it is so simple you should be a consultant to major corporations. It would require little work on your part and the income is fabulous.

Here is an introductory text on economic analysis. (http://www.introecon.com/) Do you have the mathematical knowledge to understand it? Do you know the calculus behind it?

I am a consultant at a major corporation, and were I an economist I would have to take a pay cut. I majored in Mathematics, and while the theoretical nuances of their advanced models are no doubt fascinating they are also irrelevant for the 95% solution. Thus, in a field where projects fail over 50% of the time I have been successful in saving my clients 5-20 times my fee 100% of the time. That is better results than any economist I have ever heard of.

I'll take your answer as an affirmative that you have never worked for a living.

:))

[7426k]

I am a consultant at a major corporation, and were I an economist I would have to take a pay cut. I majored in Mathematics, and while the theoretical nuances of their advanced models are no doubt fascinating they are also irrelevant for the 95% solution. Thus, in a field where projects fail over 50% of the time I have been successful in saving my clients 5-20 times my fee 100% of the time. That is better results than any economist I have ever heard of.

I'll take your answer as an affirmative that you have never worked for a living.

:))

If you save your clients 5 to 20 times your fee, you need a raise.

How many "economists" do you know well enough to know their success rate?

[LoudAnimalAttack]

It;'s a bit hard to blame central banking on Keynes, since central banking predated Keynes by about 300 years.

Yes, you are correct, but the Federal Reserve was designed by people who obviously followed Keynes.

Remember some of the key players:

Paul Warburg
Sen. Nelson Aldrich

[7426k]

Yes, you are correct, but the Federal Reserve was designed by people who obviously followed Keynes.

Remember some of the key players:

Paul Warburg
Sen. Nelson Aldrich

The Federal reserve was designed by people who followed Keynes?

Keynes first published work was produced in 1922. That was 9 years after the Fed and almost 3 centuries after the first modern Central banks.

[LoudAnimalAttack]

Don't you find it a little strange that Paul Warburg's brother Max was also a key player at the German Reichsbank, which was partly responsible for the hyperinflation in the Weimar Republic? Not to mention he had connections with IG Farben?

[LoudAnimalAttack]

The Federal reserve was designed by people who followed Keynes?

Keynes first published work was produced in 1922. That was 9 years after the Fed and almost 3 centuries after the first modern Central banks.

What are you talking about man? He was editor in chief of the Economic Journal as far back as 1910.

[7426k]

Don't you find it a little strange that Paul Warburg's brother Max was also a key player at the German Reichsbank, which was partly responsible for the hyperinflation in the Weimar Republic? Not to mention he had connections with IG Farben?

No. An educated German family has one brother helping advocate for a central bank in the US and another brother doing the same in Germany? Why is that "strange"?

[LoudAnimalAttack]

The Federal reserve was designed by people who followed Keynes?

Keynes first published work was produced in 1922. That was 9 years after the Fed and almost 3 centuries after the first modern Central banks.

Whoops, sorry man....I meant the Bretton Woods accords, sorry about that its late and i'm tired as hell. sorry.

[LoudAnimalAttack]

No. An educated German family has one brother helping advocate for a central bank in the US and another brother doing the same in Germany? Why is that "strange"?

What about IG Farben? c'mon man you know IG Farben and the fuel additive it gave to the Germans.

[PhantomPholly]

The irony in the claims in this thread are threefold:
1. People who claim to understand economics are attempting to avoid the most basic concept of labor economics, and indeed introductory Micro.

2. People who claim to understand economics fail to realize that it was the conservative backlash that created the current mathematical race to complexity in economics. Pre-1945, just about anyone with some basic math skills, intro algebra and a touch of calculus could follow the most advanced texts of the day. Indeed, people are even denying that such mathematic complexity exists. For good or bad, it most certainly does.

3. People who claim to understand economics are convinced that people who have driven up the wage of corporate economists to a median of 110K have done so by being hoodwinked.

But let's be honest, I've been here a while and I'd expect nothing less.

Part of the problem we are having today is similar to the problem the military experienced under the brilliant economics of McNamara. He had these wonderful mathematical tools that told him the way to make the military more efficient. Problem was, the tool was mis-applied.

Liberal geniuses like you and your new pal keep claiming that if the math gets complicated enough we will achieve perpetual motion. Then, when it fails (again), they claim that they didn't have enough money or that people just didn't try hard enough or any number of other excuses.

So, I'll simplify it so that even you can understand it: You cannot get the correct answer with the wrong assumptions, and you cannot build an ethical utopia based on unethical assumptions.

In our most recent meltdown, one or more liberal genius determined that although 3,000 years of attempts to "make housing affordable" had failed using price controls they could really make it work this time by making credit more available. The result was immediate and dramatic - housing prices skyrocketed to over 250% of their stable 100 year history (http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27leon_graph2.html), becoming an unattainable dream for more Americans than in the past 60 years.

In the mean time, the bankers knew full well the bubble wouldn't last and turned yet again to mathematics to find them a way out that would get past the regulators. This was merely an elaborate Ponzi scheme, and the defrauding of investors around the world should by rights be resulting in trials and executions.

So here comes Obozo promising a chicken in every pot and spending trillions in pork which will enslave our next generation with debt and raising taxes in a guaranteed formula to kill the economy just in time for the upcoming spiraling inflation which will result from massive increases in the money supply.

And you say economics is difficult? Well, I might not be able to predict the exact combination of variables that would get that last 3% of performance out of the economy, but I sure as heck know a simple solution to our current economic crisis.

1. Balance the Budget.
2. Pass a Balanced Budget Amendment.
3. Pass the FairTax.
4. Repeal the 16th Amendment.
5. Cancel all un-Constitutional Federal programs.
6. Make "Collosal Theft" a crime punishable by death, and let the executions begin. The next mathematical genius who comes up with the next scheme might then think twice and try experiments on a smaller scale before making their ideas generally available.

You see, it is because the ethics have fled government that our economy stinks despite the highest level of productivity in the history of the world. This isn't difficult.

1. Reward hard work and savings.
2. Punish theft and fraud.

There is your economic lesson for the day.


:wall:

[7426k]

What are you talking about man? He was editor in chief of the Economic Journal as far back as 1910.

Yeah. and he published some unreadable scribe along the way.

The first thing that anyone actually read was Probability, circa 1922.

Can you find some of his pre-1913 writings that advocate central banking?

[LoudAnimalAttack]

Yeah. and he published some unreadable scribe along the way.

The first thing that anyone actually read was Probability, circa 1922.

Can you find some of his pre-1913 writings that advocate central banking?

sorry man. i said i mis-wrote what i meant. i meant the Bretton Woods accords. sorry about that. its late and im tired as hell.

[PhantomPholly]

If you save your clients 5 to 20 times your fee, you need a raise.

How many "economists" do you know well enough to know their success rate?

I have all that I need in life, although retirement has recently receded due to government irresponsibility.

I've never heard of a single economist with a 100% success rate. Be sure and let me know if you hear of one.

[7426k]

Part of the problem we are having today is similar to the problem the military experienced under the brilliant economics of McNamara. He had these wonderful mathematical tools that told him the way to make the military more efficient. Problem was, the tool was mis-applied.

Liberal geniuses like you and your new pal keep claiming that if the math gets complicated enough we will achieve perpetual motion. Then, when it fails (again), they claim that they didn't have enough money or that people just didn't try hard enough or any number of other excuses.

Actually, Phantom, if you read what I wrote instead of what you wished I'd write you might learn that my primary and fundamental issue with modern economics is the reliance on mathematical modeling over social science.

So, I'll simplify it so that even you can understand it: You cannot get the correct answer with the wrong assumptions, and you cannot build an ethical utopia based on unethical assumptions.

If you suspect I'd disagree with that, you misread everything I post.


In our most recent meltdown, one or more liberal genius determined that although 3,000 years of attempts to "make housing affordable" had failed using price controls they could really make it work this time by making credit more available. The result was immediate and dramatic - housing prices skyrocketed to over 250% of their stable 100 year history (http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27leon_graph2.html), becoming an unattainable dream for more Americans than in the past 60 years.

Housing prices had varied dramatically several times in the past, and caused more than one recession.

In the mean time, the bankers knew full well the bubble wouldn't last and turned yet again to mathematics to find them a way out that would get past the regulators. This was merely an elaborate Ponzi scheme, and the defrauding of investors around the world should by rights be resulting in trials and executions.

It "got around the regulators" because the regulators intentionally turned a blind eye.

So I guess we agree that the problem is...we need stronger /better regulation?

So here comes Obozo promising a chicken in every pot and spending trillions in pork which will enslave our next generation with debt and raising taxes in a guaranteed formula to kill the economy just in time for the upcoming spiraling inflation which will result from massive increases in the money supply.


You can't get spiralling inflation from a deflationary asset move.

And you say economics is difficult? Well, I might not be able to predict the exact combination of variables that would get that last 3% of performance out of the economy, but I sure as heck know a simple solution to our current economic crisis.

1. Balance the Budget.
2. Pass a Balanced Budget Amendment.
3. Pass the FairTax.
4. Repeal the 16th Amendment.
5. Cancel all un-Constitutional Federal programs.
6. Make "Collosal Theft" a crime punishable by death, and let the executions begin. The next mathematical genius who comes up with the next scheme might then think twice and try experiments on a smaller scale before making their ideas generally available.

Lol, OK. You are a stinking genius and you have solved all of our problems.

There is your economic lesson for the day.:whistle:

[7426k]

I have all that I need in life, although retirement has recently receded due to government irresponsibility.


So you work out of the kindness of your heart and you leave money on the table?

Such a lib.

[7426k]

What about IG Farben? c'mon man you know IG Farben and the fuel additive it gave to the Germans.

If you have a point in that, you'll need to explain it.

[LoudAnimalAttack]

If you have a point in that, you'll need to explain it.

What I mean is that I think there is a globalist agenda that is led by the central banks to profit from war. IG Farben was a chemical company from Germany that Max Warburg worked at. IG Farben supplied nazi germany with 84% of its explosives and all of its zyklon-b. One of IG Farbens partners was JD Rockefellers Standard Oil Co.

IG Farben was the 4th largest company in the world at the time. Max Warburg worked at IG Farben. Max Warburg also worked at the Reichsbank. Paul Warburg, his brother was a key designer of the Federal Reserve. One of Paul Warburgs' close associates was the Rockefeller family who had a representative at the formation of the Fed at the Jekyll Island meeting.

Rockefeller's Standard Oil Company had a patent and was the only company that at the time was able to produce a jet fuel additive that was needed for planes to fly. Without it, the planes couldn't fly, it was a key ingredient in "jet-fuel" or at that time plane fuel.

Rockefeller's Standard Oil Co. sold the fuel additive to IG Farben, and thus IG Farben gave the fuel to the German airforce. Without the fuel, Germany would have had no airforce, and they could have never bombed London and other cities by plane obviously.

[shunted]

I am a consultant at a major corporation, and were I an economist I would have to take a pay cut. I majored in Mathematics, and while the theoretical nuances of their advanced models are no doubt fascinating they are also irrelevant for the 95% solution. Thus, in a field where projects fail over 50% of the time I have been successful in saving my clients 5-20 times my fee 100% of the time. That is better results than any economist I have ever heard of.

I'll take your answer as an affirmative that you have never worked for a living.

:))

Unsurprisingly the point was lost on you. If economics is so simple then you can make a lot of money for doing very little work. In fact you could train some unemployed bums to do it and make a lot of extra money for doing very little work.

Your statement about the theoretical nuances of their (mathematical) models doesn't make sense. Which models, specifically, are you talking about? There are a vast number of models in mathematics. What is the 95% solution?

I majored in mathematics as well. My area of specialty is commutative algebra. So what?

[LoudAnimalAttack]

Here's an exerpt from wikipedia:
During the planning of the invasion of Czechoslovakia (http://en.wikipedia.org/wiki/Czechoslovakia) and Poland (http://en.wikipedia.org/wiki/Poland), IG Farben cooperated closely with Nazi officials and directed which chemical plants should be secured and delivered to IG Farben.[14] (http://en.wikipedia.org/wiki/Ig_Farben#cite_note-13)
In 1941, an investigation exposed a "marriage" cartel between John D. Rockefeller (http://en.wikipedia.org/wiki/John_D._Rockefeller)'s United States-based Standard Oil (http://en.wikipedia.org/wiki/Standard_Oil) Co. and I.G. Farben.[15] (http://en.wikipedia.org/wiki/Ig_Farben#cite_note-14)[16] (http://en.wikipedia.org/wiki/Ig_Farben#cite_note-15) (see[17] (http://en.wikipedia.org/wiki/Ig_Farben#cite_note-16) and[18] (http://en.wikipedia.org/wiki/Ig_Farben#cite_note-17)) It also brought new evidence concerning complex price and marketing agreements between DuPont (http://en.wikipedia.org/wiki/DuPont), a major investor in and producer of leaded (http://en.wikipedia.org/wiki/Tetra-ethyl_lead) gasoline, U.S. Industrial Alcohol Co. (http://en.wikipedia.org/w/index.php?title=U.S._Industrial_Alcohol_Co.&action=edit&redlink=1) and their subsidiary, Cuba Distilling Co. (http://en.wikipedia.org/w/index.php?title=Cuba_Distilling_Co.&action=edit&redlink=1) The investigation was eventually dropped, like dozens of others in many different kinds of industries, due to the need to enlist industry support in the war effort. However, the top directors of many oil companies agreed to resign and oil industry stocks in molasses companies were sold off as part of a compromise worked out. (see[19] (http://en.wikipedia.org/wiki/Ig_Farben#cite_note-18)[20] (http://en.wikipedia.org/wiki/Ig_Farben#cite_note-19) but see[21] (http://en.wikipedia.org/wiki/Ig_Farben#cite_note-20))
IG Farben built a factory (named Buna Chemical Plant) for producing synthetic oil (http://en.wikipedia.org/wiki/Synthetic_oil) and rubber (http://en.wikipedia.org/wiki/Rubber) (from coal (http://en.wikipedia.org/wiki/Coal)) in Auschwitz (http://en.wikipedia.org/wiki/Auschwitz_concentration_camp), which was the beginning of SS (http://en.wikipedia.org/wiki/Schutzstaffel) activity and camps in this location during the Holocaust (http://en.wikipedia.org/wiki/The_Holocaust). At its peak in 1944, this factory made use of 83,000 slave (http://en.wikipedia.org/wiki/Slave) laborers.[22] (http://en.wikipedia.org/wiki/Ig_Farben#cite_note-21) The pesticide Zyklon B (http://en.wikipedia.org/wiki/Zyklon_B), for which IG Farben held the patent (http://en.wikipedia.org/wiki/Patent), was manufactured by Degesch (http://en.wikipedia.org/w/index.php?title=Degesch&action=edit&redlink=1) (Deutsche Gesellschaft für Schädlingsbekämpfung), which IG Farben owned 42.2 percent of (in shares) and which had IG Farben managers in its Managing Committee.
Of the 24 directors of IG Farben indicted in the so-called IG Farben Trial (http://en.wikipedia.org/wiki/IG_Farben_Trial) (1947-1948) before a U.S. military tribunal at the subsequent Nuremberg Trials (http://en.wikipedia.org/wiki/Nuremberg_Trials), 13 were sentenced to prison terms between one and eight years. Some of those indicted in the trial were subsequently made leaders of the post-war companies that split off from IG Farben, including those who were sentenced at Nuremberg (http://en.wikipedia.org/wiki/Nuremberg).

[LoudAnimalAttack]

If you have a point in that, you'll need to explain it.

What I mean is that I think there is a globalist agenda that is led by the central banks to profit from war. IG Farben was a chemical company from Germany that Max Warburg worked at. IG Farben supplied nazi germany with 84% of its explosives and all of its zyklon-b. One of IG Farbens partners was JD Rockefellers Standard Oil Co.

IG Farben was the 4th largest company in the world at the time. Max Warburg worked at IG Farben. Max Warburg also worked at the Reichsbank. Paul Warburg, his brother was a key designer of the Federal Reserve. One of Paul Warburgs' close associates was the Rockefeller family who had a representative at the formation of the Fed at the Jekyll Island meeting.

Rockefeller's Standard Oil Company had a patent and was the only company that at the time was able to produce a jet fuel additive that was needed for planes to fly. Without it, the planes couldn't fly, it was a key ingredient in "jet-fuel" or at that time plane fuel.

Rockefeller's Standard Oil Co. sold the fuel additive to IG Farben, and thus IG Farben gave the fuel to the German airforce. Without the fuel, Germany would have had no airforce, and they could have never bombed London and other cities by plane obviously.

[LoudAnimalAttack]

If you have a point in that, you'll need to explain it.

In addition to IG Farben's link with Standard Oil look at some other connections:

World War 1: The US gov't had no support from the public to entire WW1. But then came the sinking of the RMS Lusitania. After the Lusitania sunk, the public demanded a response, as over 1000 died. The German embassy put an ad in the NY Times warning that the boat would be a target. Read the article on wikipedia: " Included in this cargo were 4,200,000 rounds of Remington 0.303 rifle cartridges, 1250 cases of 3 inch (76 mm) fragmentation (http://en.wikipedia.org/wiki/Fragmentation) shells, and eighteen cases of fuses".

Vietnam War: The Gulf of Tonkin incident has been proven to be fabricated and never occurred. Rockefeller profited massively from Vietnam war as key trade restriction were removed between US and Soviets. One of Rockefeller's co's set up plants in USSR and manufactured weapons and then passed them on to n. vietnam.

[grhayes]

I don't enough about economics and tax theory to really comment on this. I don't know if a 0% tax rate on businesses is optimal. The country needs roads, police, a judicial system, a military, etc. These things need to be paid for. I don't what the best way to do this is.

However, it seems to me that if businesses are taxed equally so that Coke doesn't have a tax advantage over Pepsi then a tax on the two companies can be such that it beneficial to society. I think, but can't prove, that a tax on business might be equivalent to a consumption tax. In which case, what does it matter if it is in the form of a consumption tax or a business tax?

A windfall tax on Chevron and Exxon would not have hurt consumers given the market conditions that exist. It would have benefited society because that money could have been spent on making the road system better and thus, in some way, helping out Chevron and Exxon by making it more palatable to drive cars.
I agree taxes when used to benefit all people are not a bad thing people get something in return. First however, not everything should be paid by taxes. Even roads would get built with out taxes. That just being an example not that we should not pay for roads out of taxes.
However, spread the wealth is not that. It takes money from some and gives it to others. That means people are being forced to work for other people against their will. That is slavery.


But right now labor doesn't have much power. Since Reagan the shift has been toward corporate power over labor. We had great increases in productivity under Bush II but no corresponding rise in wages. What I see in the country is collusion amongst oligopolies on some goods and services. A case in point would be the cost of text messaging.

Both of the cases you mention are why a sensible, functioning government is necessary. You don't want things to get out of control.
Price fixing is illegal if you are a business, labor should be treated the same way after all they are selling something their skills and abilities. The big issue is some people will work for anything. You have cultural issues were people come from other countries and the populace in those countries has be trained to be subservient. Which is why I think education is the biggest issue this country has. We are teach and training our children in school liberal ideals that we should be serving the government rather than it should be working for us A hole lot more problems with the US education system.


The problem I have this sort of scheme is that Bill Gates should pay a higher percentage of his wealth in tax because he has a tremendous amount of wealth. If Gates got taxed 90% on his wealth (just making up a number here) he would still be absolutely stinking rich. His life would not be adversely affected in any way. The country is such that he was able to make so much money. He should be willing to part with a higher percent of his money.

I'm all for tax simplification. I'm against the government making regulations simply to keep an industry going. (Accountants and lawyers don't want tax simplification and giving the size of these industries I don't think we will see simplification anytime soon.) I'm in favor of less government where there should be less government or where government is ineffective.

My gripe on this thread is that the person who started actually thinks that economics is simple and that complex issues can be reduced to knowledge that a child can understand. This isn't helpful. Complex issues generally require complex analysis.

Thank you for your response.

I thought liberals were for equality. The equality our constitution offers is the equality for you to do what you can. Bill gates earned every sent he made. If we are truly equal we should get taxed the same thing. However, I say that isn't entirely true Bill Gates has a lot more property and assets to protect so it does cost more in the hole to protect his stuff than say a person who has one home and one car. Which is why I think it should be a flat tax 10% for all working people.

If you do tax Bill Gates 90% as you say what do you think he will do. In crease the price of windows. No one else can produce a Windows OS. I know if I was in his place a few years ago when everyone was trying to sue him. I would have closed up shop in the US and moved it to another country that appreciated my business and stopped all US product support. Then were would you be? You should be lucky he is actually a real nice person you would know that if you met him in person. He used his brains to produce a product that no one else came up with. He used his brains to create a business deal that was lucrative. Other people could have done all the stuff he did but chose not to.

Look at Linux. There is almost nothing I can't do on my Linux systems that I can do on windows. That includes watch any DVDs, video, games I got more games for my Linux system than for Windows. Why because all the emulators that also work on Linux. Pretty much most windows games work on Linux. Not many that don't these days. Usually the ones that don't just are not that popular. Office i can run MS office or I can use open office or K office, every programming language is pretty much on linux. Servers, dang I would have to spend 100K to get all the server software I get with Linux free.

So why bitch at Bill Gates because he is rich the consumer made him that way. It isn't like they don't have a choice they had quite a few, MAC, Linux, OS2, and others. So now you people gave him your money out of free will and now you want it back essentially. Do you get the insanity of that?

Me I have been running stuff like Linux and free BSD since 1991 along with I even wrote my own OS at one point.

The constitution gave people the right not to have everything the next person has, not to have health care or anything else, it promises one thing opertunity to use what you got. It is your choice that lead you down what ever path it is you are on at this time just like it was my choice. When you have an administration doing what they are today, they are actually taking away those choices to were you can make more money and so on.

[7426k]

What I mean is that I think there is a globalist agenda that is led by the central banks to profit from war. IG Farben was a chemical company from Germany that Max Warburg worked at. IG Farben supplied nazi germany with 84% of its explosives and all of its zyklon-b. One of IG Farbens partners was JD Rockefellers Standard Oil Co.

IG Farben was the 4th largest company in the world at the time. Max Warburg worked at IG Farben. Max Warburg also worked at the Reichsbank. Paul Warburg, his brother was a key designer of the Federal Reserve. One of Paul Warburgs' close associates was the Rockefeller family who had a representative at the formation of the Fed at the Jekyll Island meeting.

Rockefeller's Standard Oil Company had a patent and was the only company that at the time was able to produce a jet fuel additive that was needed for planes to fly. Without it, the planes couldn't fly, it was a key ingredient in "jet-fuel" or at that time plane fuel.

Rockefeller's Standard Oil Co. sold the fuel additive to IG Farben, and thus IG Farben gave the fuel to the German airforce. Without the fuel, Germany would have had no airforce, and they could have never bombed London and other cities by plane obviously.

OK then. I didn't know you were aiming towards global conspiracy or I would have avoided the discussion.

[shunted]

If you do tax Bill Gates 90% as you say what do you think he will do. In crease the price of windows.

To recoup the money in taxes (at a 90% rate) he would have to raise the price of Windows programs by 1000%. Microsoft certainly does not have that sort of pricing power. Nothing would happen to the price. Windows is most likely being sold at the optimal price. A tax on Gates would not change this optimal price.

Back when the highest rate was 90% (1950s) the prices of objects was not outrageously high. When this top tax rate was reduced guess what happened to prices as a result? Nothing. When Reagan lowered taxes on the top x% of the country nothing happened to prices. When Clinton raised taxes nothing happened to prices. When Bush II lowered taxes nothing happened to prices.

I thought liberals were for equality.

This is my main gripe on political discourse in this country. Complex issues rarely can be reduced to such statements. Like most people I am neither liberal or conservative. I go by what I think is right. In my opinion it is right for the super wealthy to pay a higher percent of their wealth in taxes because they can afford it. They have much more to lose if the terrorists win so they should be willing to pay much more in taxes.

[PhantomPholly]

Actually, Phantom, if you read what I wrote instead of what you wished I'd write you might learn that my primary and fundamental issue with modern economics is the reliance on mathematical modeling over social science.

If you suspect I'd disagree with that, you misread everything I post.

Ok, I can see that - not what I got out of what you wrote but I'll take you at your intent.

Housing prices had varied dramatically several times in the past, and caused more than one recession.

lol - now who's not reading? House prices over the past 120 years, adjusted for inflation (http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27leon_graph2.html). Aside from the recent housing "bubble" which began immediately upon passage of the Clinton CRA bill, home prices rarely varied more than 5-10% except for a 30% drop during the Great Depression. They were so flat that people took them for a given - an assumption which proved economically fatal.

It "got around the regulators" because the regulators intentionally turned a blind eye.

So I guess we agree that the problem is...we need stronger /better regulation?

You won't get an argument from me on that. Really, all we need is a Fraud law broad enough to create lifetime sentences for regulators and financiers who create these Ponzi schemes / allow this sort of thing to happen. Really, who allows Wall Street to go take our home mortgages down to Las Vegas and use them as chits in an all-or-nothing bet? That is simple insanity, or if you accept that they KNEW the outcome, far worse.

You can't get spiralling inflation from a deflationary asset move.

Not sure what "asset" you are referring to - printing paper money with no real asset behind it is like printing more stock in a failing company - it just hastens the fall of the stock price.

Lol, OK. You are a stinking genius and you have solved all of our problems.

There is your economic lesson for the day.:whistle:

In fact I am NOT a genius - that is the sad part. Joe the Plumber is a better economist than anyone in Congress. You could make gross changes to my recommendation, so long as they curbed Federal Spending and simplified taxes greatly, and would revive our economy in short order.

On rethinking it, I would advocate a Constitutional Amendment detailing a cap of 10% of GDP for Federal Spending each year, and that non-military spending might never exceed military spending (creating a downward push on non-military spending, since we have proven that we can maintain the world's strongest military for less than 5% of GDP). Such a condition would force Congress to focus on making the tough decisions that they are being paid to make, rather than simply saying, "I'll have steak AND lobster..."

That, in addition to a Balanced Budget Amendment (they could both be part of the same Amendment) which applies not only to the Federal but also to State and Local governments, would put an end to the Organized Crime which has seized our government.

[PhantomPholly]

So you work out of the kindness of your heart and you leave money on the table?

Such a lib.

I get paid well above the median or mean. I don't wish to discuss my line of work in detail, but when I do what I specialize in cost savings to my clients are often in the millions of dollars spread over a few years - and these sorts of savings are typical for folks like me who are successful at what we do. That I only get paid a small percentage of a single year's savings is typical for the field, unless I were to become suddenly gifted in sales as well as my specialty. It isn't rocket science, it just takes good logic, patience, and a willingness to push through a culture's natural resistance to change.

In other words, I'm getting paid slightly above market rate. I could make a better rate, but would end up on the bench more often.

'course, if I had a silver tongue like yours...

:razz:

[PhantomPholly]

Unsurprisingly the point was lost on you. If economics is so simple then you can make a lot of money for doing very little work. In fact you could train some unemployed bums to do it and make a lot of extra money for doing very little work.

If you want to imagine that you are so brilliant I can't follow your drivel, feel free. The young always imagine their elders never considered what is brand new to them.

Your statement about the theoretical nuances of their (mathematical) models doesn't make sense. Which models, specifically, are you talking about? There are a vast number of models in mathematics. What is the 95% solution?

Again, the fact that you don't understand what I am talking about makes it clear you lack experience, and therefore judgment. Almost any working stiff could read that same sentence and know exactly what I mean - that if you stick to solid principles and keep it simple, the result will be pretty close to as good as it gets. Chasing the other 5% MIGHT yield a "Michelangelo," but more likely it will result in an unsellable albatross and an empty belly.

And, it really doesn't matter which model. Start with solid principles, you will end up pretty close to the better models - because the models are merely trying to express the principles.

Well, enough mentoring for tonight. Have a nice life, come back in a few years and tell us how those theories worked out for ya!

:mrgreen:

[7426k]

Ok, I can see that - not what I got out of what you wrote but I'll take you at your intent.



lol - now who's not reading? House prices over the past 120 years, adjusted for inflation (http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27leon_graph2.html). Aside from the recent housing "bubble" which began immediately upon passage of the Clinton CRA bill, home prices rarely varied more than 5-10% except for a 30% drop during the Great Depression. They were so flat that people took them for a given - an assumption which proved economically fatal.
INflation adjusted housing values, using real dollars (same scale as the NYT, but in moneys from shiller data: http://mysite.verizon.net/vzeqrguz/housingbubble/united_states_1890-2008.png
Housing prices varied from a low of about 80,000 to a high of about 160,000 before the depression, they varied from about 130 to 160.

The real estate spike started in 1999 and the 1990 peak was reached again in 2000. Which CRA reform occurred in 1999 (or 1998) that caused this?



You won't get an argument from me on that. Really, all we need is a Fraud law broad enough to create lifetime sentences for regulators and financiers who create these Ponzi schemes / allow this sort of thing to happen. Really, who allows Wall Street to go take our home mortgages down to Las Vegas and use them as chits in an all-or-nothing bet? That is simple insanity, or if you accept that they KNEW the outcome, far worse.

Sometimes we vehemently agree;)

[7426k]

I get paid well above the median or mean. I don't wish to discuss my line of work in detail, but when I do what I specialize in cost savings to my clients are often in the millions of dollars spread over a few years - and these sorts of savings are typical for folks like me who are successful at what we do. That I only get paid a small percentage of a single year's savings is typical for the field, unless I were to become suddenly gifted in sales as well as my specialty. It isn't rocket science, it just takes good logic, patience, and a willingness to push through a culture's natural resistance to change.

In other words, I'm getting paid slightly above market rate. I could make a better rate, but would end up on the bench more often.

'course, if I had a silver tongue like yours...

:razz:

Bleh...I never should have gone down the road about your work. My apologies. It sounds like you do some pretty interesting stuff.

If you're comfortable sharing, is it physical/engineering based or is it financial?

[PhantomPholly]

INflation adjusted housing values, using real dollars (same scale as the NYT, but in moneys from shiller data: http://mysite.verizon.net/vzeqrguz/housingbubble/united_states_1890-2008.png
Housing prices varied from a low of about 80,000 to a high of about 160,000 before the depression, they varied from about 130 to 160.

The real estate spike started in 1999 and the 1990 peak was reached again in 2000. Which CRA reform occurred in 1999 (or 1998) that caused this?

Hmmm, similar chart but only indicates a 150% increase in prices during the "bubble." Even splitting the difference, the rise would be 200%.

Clinton signed into law changes to the preexisting CRA (Community Reinvestment Act), putting teeth into it. Loan bundling had just started getting serious around '93 - I helped Fleet Finance analyze about $5 billion worth of Managed Assets / Commercial Real Estate fallout from the S&L crisis / bailout. Anyway, the strengthened CRA plus other factors gave strong incentive to relax credit, making money more plentiful. More money chasing the same houses = higher prices. The bundling might not have been catastrophic if credit criteria had remained stable, but instead it exploded.

Almost all of our REAL issues come down to ethics. You don't loan money to people who can't / won't repay. You don't allow financial institutions to disguise their finances. You should not punish the productive and reward the nonproductive. You cannot build an ethical utopia by stealing. Etc.

Our current Congress is intent on violating every principle possible in the minimum amount of time. I suppose maybe that's a good thing - it shows they have enough humanity left in them to know that they are aware that once enough people catch on to their theft they will be stopped. It's just too bad our whole country, in fact the whole world, has to suffer because we allowed "freedom of speech" to mean "every idea has equal value."

Sometimes we vehemently agree;)

Absolutely!

[7426k]

Hmmm, similar chart but only indicates a 150% increase in prices during the "bubble." Even splitting the difference, the rise would be 200%.

Clinton signed into law changes to the preexisting CRA (Community Reinvestment Act), putting teeth into it. Loan bundling had just started getting serious around '93 - I helped Fleet Finance analyze about $5 billion worth of Managed Assets / Commercial Real Estate fallout from the S&L crisis / bailout. Anyway, the strengthened CRA plus other factors gave strong incentive to relax credit, making money more plentiful. More money chasing the same houses = higher prices. The bundling might not have been catastrophic if credit criteria had remained stable, but instead it exploded.

And what year do you peg those Clinton reforms?

The two graphs are based on the same Shiller data, but I'd have to look closer to find the discrepancy. It might be real v. nominal dollars - or using a different inflation measure.

[Tigerdrafted]

Higher tax rates and regulations all lead to greater monopolization and the centralization of wealth. An economic system would work best with ZERO income tax, replaced with a national sales tax. Albeit somewhat regressive, but hey, that's the way it has to be.

Taxes should be predictable and in proportion. The corporate income tax is none of that. Things are the way they are and will be tending towards a greater centralization of wealth. The rest of us will be feudal serfs.

How did liberalism become so feudal? Like an old wolf in sheep's clothing.

[PhantomPholly]

And what year do you peg those Clinton reforms?

The two graphs are based on the same Shiller data, but I'd have to look closer to find the discrepancy. It might be real v. nominal dollars - or using a different inflation measure.

1999 was when the changes I refer to were signed into law. Wikipedia has some info, not sure of the accuracy but it is here. (http://en.wikipedia.org/wiki/Community_Reinvestment_Act)

"On signing the Gramm-Leach-Bliley Act, President Clinton said that it, "establishes the principles that, as we expand the powers of banks, we will expand the reach of the [Community Reinvestment] Act."

In other words, if banks wanted to benefit from extending their financial services, they had to comply with the CRA in extending credit to "underserved markets" (people with bad credit scores). That was the only significant change to finance around that time; the chart shows an almost immediate change in house prices. While that is not PROOF, a reasonable hypothesis for a dramatic change after 100 years of stability can be traced to the only variable which suddenly changed. I would be very happy if the government would "run the experiment" of repealing that bill to see if the market began correcting itself....

[Reform2009]

I posted the story "the little red hen" a few days back
http://forums.hannity.com/showthread.php?t=1331131

But it seems at least the majority of liberals do not understand the simple laws of supply and demand.

Most children can understand this topic Kids trade comic books, cards and all sorts of things. But for liberal adults they seems to be totally lost in the concept.

The dollar has the same laws to live with. The dollar bill is a product it is subject to inflation and deflation.

If others have a hole lot of it they purchase products and once they have an ample amount of what it is they want then they have little need for more dollars so the value of that product goes down.

So if you buy oil from other nations and give them lots of money for that oil your dollars buying value in the end goes down, if you buy lots of products from over seas again the value goes down, if you put jobs over seas like with NAFTA and CAFTA that Clinton came up with then you are putting money over their in wages again with all that money going over their your dollar value goes down.

If you borrow wopping large amounts of money from foreign nations like China you are promising them more in return. For which the value of your dollar goes down in value.

If you start printing lots of money then people have more of it and just like any other item its value is part dependent on the scarcity of it. You all so get the fact that once people have bought what they want then they don't need to buy as much. Some people horde and try and upgrade but most have start to save the money at that point which sends sales and demand down and the price goes down also until the residual inventory drops to a low enough point. The price then begins to clime slightly. These days it tends to be that new products hit the market first. This is the product of a competitive market place. Which is primarily responsible for the greatest part of our advancement in technology.

Can anyone tell me why those few basic concepts that have been understood by society for thousands of years seem to be something a liberal just can't seem to wrap their minds around.


I am glad that you are not getting it. I thought I was the only one that did not get it or I was missing something. It just seems like a bunch of clowns are running our nation and printing money like there is no tomorrow. What type of experience, whether it is business or politcal, does Obama have? What is the most he ever made? Does he have a clue what the consequences are in being so much in debt? Why is he rewarding the lazies and the underachievers in our society? He and his cronies have caused so much damage in the very short time he took office. The scary part of this whole thing is that he is justifying it and believes in his own bullsh$t. He needs to get impeached, hopefully sooner than later.

[7426k]

1999 was when the changes I refer to were signed into law. Wikipedia has some info, not sure of the accuracy but it is here. (http://en.wikipedia.org/wiki/Community_Reinvestment_Act)

"On signing the Gramm-Leach-Bliley Act, President Clinton said that it, "establishes the principles that, as we expand the powers of banks, we will expand the reach of the [Community Reinvestment] Act."

In other words, if banks wanted to benefit from extending their financial services, they had to comply with the CRA in extending credit to "underserved markets" (people with bad credit scores). That was the only significant change to finance around that time; the chart shows an almost immediate change in house prices. While that is not PROOF, a reasonable hypothesis for a dramatic change after 100 years of stability can be traced to the only variable which suddenly changed. I would be very happy if the government would "run the experiment" of repealing that bill to see if the market began correcting itself....
People with bad credit scores are not covered by the CRA. The CRA requires banks to sell conforming loans, and conforming requirements don't change by neighborhood.

But Gramm-Leach probably played a role in that it allowed firms to comingle the secure world of mortgage loans with the high risk world of investment banking.

[PhantomPholly]

People with bad credit scores are not covered by the CRA. The CRA requires banks to sell conforming loans, and conforming requirements don't change by neighborhood.

But Gramm-Leach probably played a role in that it allowed firms to comingle the secure world of mortgage loans with the high risk world of investment banking.

Sorry, that doesn't wash. Was there some discrimination occurring? Yes. Was that the only reason banks refused more frequently to give loans in some neighborhoods? No.

Too, somewhere in there (someone pointed it out in another thread, but I don't recall at the moment exactly where it is) that Fanny and Freddie and other banks were somehow rewarded for making certain types of loans, and punished for not doing so. That, along with other changes to regulations allowing immediate sale of loans helped the "sub-prime" market explode.

You cannot just read the title and "description" of the bill. You CAN understand some fundamental principles - such as that providing a profit motive for institutions to make bad decisions is both unethical and dangerous. Another is that "trying to make housing more affordable / home ownership more achievable" ALWAYS fails if it involves trying to "trick" the market, no matter what mechanism or scheme you use. Over 3,000 year's of recorded history, it has been tried time and time again using every conceivable trick. You can't trick the market, at least not for long - and so such tricks should simply be banned or classified as Fraud.

[shunted]

Sorry, that doesn't wash. Was there some discrimination occurring? Yes. Was that the only reason banks refused more frequently to give loans in some neighborhoods? No.

Too, somewhere in there (someone pointed it out in another thread, but I don't recall at the moment exactly where it is) that Fanny and Freddie and other banks were somehow rewarded for making certain types of loans, and punished for not doing so. That, along with other changes to regulations allowing immediate sale of loans helped the "sub-prime" market explode.

You cannot just read the title and "description" of the bill. You CAN understand some fundamental principles - such as that providing a profit motive for institutions to make bad decisions is both unethical and dangerous. Another is that "trying to make housing more affordable / home ownership more achievable" ALWAYS fails if it involves trying to "trick" the market, no matter what mechanism or scheme you use. Over 3,000 year's of recorded history, it has been tried time and time again using every conceivable trick. You can't trick the market, at least not for long - and so such tricks should simply be banned or classified as Fraud.

Fannie and Freddie did only a small portion of the total amount of sub prime loans. Loans due to the CRA have a lower default rate (at least until recently). There have been lots of studies to show that CRA is not the reason for the meltdown in mortgages. There are no studies that show the opposite. There is only supposition and conjecture not backed by hard evidence.

The CRA did not force banks to form mortgage backed securities. The CRA did not cause the mortgage meltdown in Europe and elsewhere. Clearly, the global crisis was not caused by the CRA.

[Tigerdrafted]

Your point requires either ignorance or diabolical slyness on the part of large corporations. I find neither to be a likely scenario.

Give up on the ignorance argument OK? I proved my point well.

I would assume that in most cases, large corporations benefit more from lower corporate income tax rates. However, they receive an unfair advantage over small businesses when corporate income tax rates are raised because they have more means to circumvent those tax rates. In the long run there are fewer smaller firms and fewer large corporations with higher corporate tax rates.

The benefit in which they derive over smaller business from higher tax rates may not outweigh the benefit that they receive from lower tax rates. Your point diffused because you assume that the non competitive benefit they receive from higher rates must be greater than the benefit that they receive from lower tax rates and that therefore as YOU SAY, they must be ignorant to not see such.

Not true.

The truth is that higher corporate income tax rates provides an unfair competitive advantage to larger corporations simply because they have more resources to deal with the higher tax rates. I never said that benefit outweighed any benefit that they would receive from lower rates. Did I?

Therefore, your point is moot.

[Oddball]

The truth is that higher corporate income tax rates provides an unfair competitive advantage to larger corporations simply because they have more resources to deal with the higher tax rates.
Or onerous regulatory hurdles.

For example, only the biggest and most well capitalized pharmaceutical company can afford the 1/2 billion dollars it takes to overcome FDA red tape and dithering, to bring a new medication to market.

Likewise, many treatments for rather rare maladies get shelved (so-called orphan drugs) because the creator cannot ever recoup the costs of getting FDA approval.

[Tigerdrafted]

Or onerous regulatory hurdles.

For example, only the biggest and most well capitalized pharmaceutical company can afford the 1/2 billion dollars it takes to overcome FDA red tape and dithering, to bring a new medication to market.

Likewise, many treatments for rather rare maladies get shelved (so-called orphan drugs) because the creator cannot ever recoup the costs of getting FDA approval.

Yep. That's the downside to regulations. In theory if you had a law that would provide some guarantee that no bad drugs would ever be sold to the public who are assumed to have no awareness, then it must be a good law and if anyone is against such a regulatory law, then they must not care for the individual who assumes that every thing they put in their mouth must be good for them and if it's not, then it's not their fault.

If left alone, individuals could find ways to determine what drugs are in their best interest. But then it always comes down to that one who doesn't and gets all kinds of media sympathy.

[Reform2009]

Fannie and Freddie did only a small portion of the total amount of sub prime loans. Loans due to the CRA have a lower default rate (at least until recently). There have been lots of studies to show that CRA is not the reason for the meltdown in mortgages. There are no studies that show the opposite. There is only supposition and conjecture not backed by hard evidence.

The CRA did not force banks to form mortgage backed securities. The CRA did not cause the mortgage meltdown in Europe and elsewhere. Clearly, the global crisis was not caused by the CRA.

What is the CRA?

[Tigerdrafted]

Fannie and Freddie did only a small portion of the total amount of sub prime loans. Loans due to the CRA have a lower default rate (at least until recently). There have been lots of studies to show that CRA is not the reason for the meltdown in mortgages. There are no studies that show the opposite. There is only supposition and conjecture not backed by hard evidence.

The CRA did not force banks to form mortgage backed securities. The CRA did not cause the mortgage meltdown in Europe and elsewhere. Clearly, the global crisis was not caused by the CRA.

Because they were deregulated in 2001, other banks were then allowed to buy the suprime mortgages and bundle them and then sell them to investors as CDOs with tripple A ratings. It was believed that Fannie and Freddie were not providing enough loans to lower income families. I watched the documentary on CNBC.

Government looked the other way because it seemed to be working like the perpetual motion machine that they had been dreaming about for so long.

[7426k]

Sorry, that doesn't wash. Was there some discrimination occurring? Yes. Was that the only reason banks refused more frequently to give loans in some neighborhoods? No.

I don't believe there was much outright discrimination. The fact that policies and lending practices disparately impacted minorities isn't up for debate - it's a fact.

Too, somewhere in there (someone pointed it out in another thread, but I don't recall at the moment exactly where it is) that Fanny and Freddie and other banks were somehow rewarded for making certain types of loans, and punished for not doing so. That, along with other changes to regulations allowing immediate sale of loans helped the "sub-prime" market explode.

As has been pointed out numerous times, Freddie and Fannie do not make loans. To anyone. Ever. Some banks were "punished" by having their expansions reduced if they were not taking steps to alleviate the disparate impacts of previous policies.

[7426k]

Give up on the ignorance argument OK? I proved my point well.


you proved nothing but your ignorance or slyness. I'm not sure which.

I would assume that in most cases, large corporations benefit more from lower corporate income tax rates.

Higher corporate income tax rates favor large corporations.


Eh...OK then.

[Oddball]

Fannie and Freddie did only a small portion of the total amount of sub prime loans. Loans due to the CRA have a lower default rate (at least until recently). There have been lots of studies to show that CRA is not the reason for the meltdown in mortgages. There are no studies that show the opposite. There is only supposition and conjecture not backed by hard evidence.

The CRA did not force banks to form mortgage backed securities. The CRA did not cause the mortgage meltdown in Europe and elsewhere. Clearly, the global crisis was not caused by the CRA.
The CRA formed the framework around which politicians, bureaucrats, and race hustlers could browbeat lending institutions into creating mortgages for those who didn't meet hitherto before good and sensible lending criteria, all under the misguided (at least) rubric of "affordable housing".

Once those criteria were abandoned for a few, it was only a matter of time before such became the norm.

[Tigerdrafted]

The CRA formed the framework around which politicians, bureaucrats, and race hustlers could browbeat lending institutions into creating mortgages for those who didn't meet hitherto before good and sensible lending criteria, all under the misguided (at least) rubric of "affordable housing".

Once those criteria were abandoned for a few, it was only a matter of time before such became the norm.

I looked up CRA since I didn't know what it was. It looks like you are on to the root cause. As usual big brother

The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.[1][2][3] Community activists had lobbied the US Congress to pass the Act in order to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.[4]

The Act requires the appropriate federal financial supervisory agencies to encourage regulated financial institutions to meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation. (See full text of Act and current regulations.[1]) To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions
Contents [hide]
1 Enforcement
2 History
2.1 Original Act
2.2 Legislative changes 1989
2.3 Legislative changes 1992
2.4 Legislative changes 1994
2.5 Regulatory changes 1995
2.6 Legislative changes 1999
2.7 Regulatory changes 2005
2.8 Proposed regulatory changes
3 Controversies and criticisms
3.1 Effectiveness
3.2 Housing advocacy groups
3.3 Predatory Lending
3.4 Relation to 2008 financial crisis
4 References
5 External links





http://en.wikipedia.org/wiki/Community_Reinvestment_Act

[Tigerdrafted]

The same federal agencies that are responsible for supervising depository institutions are also the agencies that conduct examinations for CRA compliance. These agencies are the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS). The Federal Financial Institutions Examination Council (FFIEC) coordinates inter-agency information about the CRA.[2][11] Information about the CRA ratings of individual banking institutions from the four responsible agencies (Federal Reserve, FDIC, OCC and OTS), is publicly available from the website of the FFIEC.[12] These ratings were first made available by the Clinton administration to enable public participation and public comment on CRA performance.[13] In 1981, to help achieve the goals of the CRA, each of the Federal Reserve banks established a Community Affairs Office to work with banking institutions and the public in identifying credit needs within the community and ways to address those needs.[5]

CRA regulations give community groups the right to comment on or protest about banks' non-compliance with CRA.[6] Such comments could help or hinder banks' planned expansions. Groups at first only slowly took advantage of these rights.[14] Regulatory changes during the Clinton administration allowed these community groups better access to CRA information and enabled them to increase their activities.[


I knew it was Clinton.

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

[shunted]

The CRA formed the framework around which politicians, bureaucrats, and race hustlers could browbeat lending institutions into creating mortgages for those who didn't meet hitherto before good and sensible lending criteria, all under the misguided (at least) rubric of "affordable housing".

Once those criteria were abandoned for a few, it was only a matter of time before such became the norm.

There are no studies to show this. There are lots of studies that show that the CRA did not negatively impact default rates. The rush to subprime was done mostly by the investments banks - Goldman, Morgan Stanley, etc. - and these institutions were not subject to the CRA.

Your belief is not supported by facts. It is mere supposition and guesswork. It is also wrong.

[Tigerdrafted]

There are no studies to show this. There are lots of studies that show that the CRA did not negatively impact default rates. The rush to subprime was done mostly by the investments banks - Goldman, Morgan Stanley, etc. - and these institutions were not subject to the CRA.

Your belief is not supported by facts. It is mere supposition and guesswork. It is also wrong.

So is your belief. You said that there are studies that show that CRA did not negatively impact the default rates? What, that there is no statistical significance? Please, a blind man can see that CRA was the root cause.

Also, I don't trust studies done by liberal think tanks that exist merely to further a lost cause.

Do you think I was born yesterday?

[shunted]

So is your belief. You said that there are studies that show that CRA did not negatively impact the default rates? What, that there is no statistical significance? Please, a blind man can see that CRA was the root cause.

Also, I don't trust studies done by liberal think tanks that exist merely to further a lost cause.

Do you think I was born yesterday?

I am referring to studies done by economists published in reputable academic journals. Articles that have not been refuted by anyone. Articles that demonstrate methodology and proper citations. There are no such articles to show that the CRA is responsible for the current downturn.

The CRA did not apply to Lehman Brothers, Goldman Sachs, etc. It did not apply to the mortgages in Eastern Europe, Ireland, Spain, Portugal, and Spain. The CRA is not the reason the world financial system is in such disarray.

[Tigerdrafted]

I am referring to studies done by economists published in reputable academic journals. Articles that have not been refuted by anyone. Articles that demonstrate methodology and proper citations. There are no such articles to show that the CRA is responsible for the current downturn.

The CRA did not apply to Lehman Brothers, Goldman Sachs, etc. It did not apply to the mortgages in Eastern Europe, Ireland, Spain, Portugal, and Spain. The CRA is not the reason the world financial system is in such disarray.

There will be. It's too soon to have any reports come out. As far as all the reputable economists published data blurb. Blah blah blah. That sounds like propaganda as usual. The fact is from the link I posted, there are economists that say CRA was a contributing factor. You can stick that "Reputable" remark down the sewer pipe for all I care. It means nothing.

[Oddball]

There are no studies to show this. There are lots of studies that show that the CRA did not negatively impact default rates. The rush to subprime was done mostly by the investments banks - Goldman, Morgan Stanley, etc. - and these institutions were not subject to the CRA.

Your belief is not supported by facts. It is mere supposition and guesswork. It is also wrong.
Of course there are no studies to show this....Who is going to fund them....the politicians and bureucrats who cause the mess?

The rush to subprime was done because it was allowed, and certain lending institutions were subtly and not-so-subtly pressured into adopting lending practices that were foolhardy. The investment banks and hedgers merely created a big Ponzi scheme based off of the paper drawn up, as a product of the bad banking practices.

Your belief that the establishment, and their toadies in the media and academe, are going to police themselves and do mea culpas when policies are created that do damage to the economic well-being of the nation is incredibly naïve.

[Tigerdrafted]

I am referring to studies done by economists published in reputable academic journals. Articles that have not been refuted by anyone. Articles that demonstrate methodology and proper citations. There are no such articles to show that the CRA is responsible for the current downturn.

The CRA did not apply to Lehman Brothers, Goldman Sachs, etc. It did not apply to the mortgages in Eastern Europe, Ireland, Spain, Portugal, and Spain. The CRA is not the reason the world financial system is in such disarray.

In November of 1999 then democratic president Clinton signed into law a bill known as the Gramm, Leach, Bliley act. This bill was the sweeping financial reform needed to make America competitive. It repealed some of the financial regulations defined by the 1933 Glass Steagall, and the 1956 Bank Holding Act.

There was one section of the bill which almost saw its demise. That was section Vi the Community Reinvestment Act Provisions. This section required increased bank examinations to verify the quotas of high risk loans were being met by those participating in the de-regulation activities. The smaller financial intuitions were targeted with higher examinations to verify they did not rise to the next dollar level plateau without maintaining the proper quota for high risk loans.

The quota of high risk loans required by the CRA is what fueled the sub-prime lending market. All types of incentives were used to get the market rolling so quotas could be met. Eventually as prospectus buyers started to evaporate, other incentives were needed to bring in more higher risk buyers. The process continued with ridiculous practices like interest only mortgages, adjustable rate mortgages, balloon mortgages, non income qualifying mortgages (or liar mortgages), and just about any other non qualifying activity that can be considered. The though was that this would generate a market where the house price would increase dramatically over a few months and the home owner could refinance the mortgage with a better credit history, at lower interest, using the equity built up over the past few months.

The housing Boom and Financial instability

This CRA activity resulted in a housing boom in the US, where thousands of homes were constructed, which surpassed the market need. These high risk loans were being included and sold in financial portfolios throughout the financial industry. The buyers would purchase the portfolio and then merge parts of one portfolio with parts of another to create another marketable portfolio, and so on and so on... When the actual interest came to bear on the buyer who was of high financial risk anyway, they could not find credit available to refinance their home and the home failures started. Bankruptcy cases started to be rampant in the US, in 2005 just prior to the 2006 revisions, over 2 million bankruptcies were filled. With the new tougher laws in 2006 many informal (deadbeat) bankruptcies occurred (people just walked away). 2007 saw a greater increase as did 2008. The high risk CRA program instigated by the democrats was falling apart.

This rampant housing market failure resulted in failure within the traded portfolios, which most American financial intuitions were holding. No longer income these failed loans produced negative ratios of cash to debt for most financial institutions. The Texas ratio (as its referred to) for financial intuitions rose above 50% for most with some being well into the hundreds (example Integrity Bank of Alpharetta Ga 372% Texas Ratio). With the failure of the housing market, these banks have no cash to loan, meaning all of their money is tied up in bad debt and partially completed construction.


The bailout still prone to failure

If the congressional package offered as a bail out does not repeal the CRA and end the quotas, then the bail out will be just money thrown at a problem which is not fixed, and we will revisit this very issue until the CRA goes away.

You hear time and time again Senator Obama refer to banking de-regulation as the issue that cause this problem. In some twisted way that statement is true but only because the democrats tied the CRA to the de-regulation legislation in 1999. Then president Clinton threatened to veto the legislation unless the CRA was addressed to the satisfaction of the democrats.

Without the CRA being tied to the banking reform of 1999, there quite possibly would not have been a sub-prime mortgage market, capable of putting the US financial institution in is current chapter 11 state.

Deregulation is needed to make our financial market competitive, however quotas for supporting high risk loans are not needed. It was the very regulation of the industry by the CRA act that caused the banking failure in the first place. Any bail out package that does not repeal the CRA is doomed to failure as the root cause has not been eliminated.

http://www.opednews.com/articles/Root-cause-to-the-financia-by-Bobby-Hawk-080928-421.html

I think this report sums it up. The CRA is the root cause.

[shunted]

Of course there are no studies to show this....Who is going to fund it?

The rush to subprime was done because it was allowed, and certain lending institutions were subtly and not-so-subtly pressured into adopting lending practices that were foolhardy. The investment banks and hedgers merely created a big Ponzi scheme based off of the paper drawn up, as a product of the bad banking practices.

Your belief that the establishment, and their toadies in the media and academe, are going to police themselves and do mea culpas when policies are created that do damage to the economic well-being of the nation is incredibly naïve.

You don't understand how academia works. I do not have the belief of self policing. I have the belief that if someone conducts a study and makes a conclusion that is obviously false then people will point this out. You can't find anyone (economist) who has or can point out why these studies are false.

People who claim that the CRA is responsible for the world wide financial mess we are in do so without facts. They use only supposition based on ideological assumptions.

The CRA had nothing to do with the banking collapse that is going on in Europe. Europe is in worse shape than we are. What is naive is to believe that the CRA - a piece of legislation that did not involve the main purveyors of subprime loans - cause a worldwide crisis.

To blame a worldwide economic crisis on the CRA is foolish. It had nothing to do with subprime loans. It had nothing to do with the crisis in Europe. This assumes that the worldwide financial system was placed in peril because some under served (not undeserved) people got loans as a result of the CRA. This is naive.

The CRA did not apply to Goldman Sachs. It did not apply to the other investment banks. It did not apply to the independent mortgage brokers. It did not cause mortgages to be packaged as securities and it did not cause people to buy mortgage securities. It did not cause subprime lending. It did not cause banks to get over leveraged. It did not cause the housing/banking crisis in Europe. It did not cause the present deflation.

You can not cite any evidence to the contrary. All you can do is posit that it must be true. This is not evidence. It is not convincing. There are lots of people who write news articles that say, "See the CRA caused this." You won't find any economists who think this. You won't find any experts who agree with this assessment. Therefore your belief is foolish.

[Oddball]

The though was that this would generate a market where the house price would increase dramatically over a few months....
Well, they got that part right. But then comes....
and the home owner could refinance the mortgage with a better credit history, at lower interest, using the equity built up over the past few months. Presuming, of course, that someone who didn't put any time into building good credit would suddenly care to do so, after securing a mortgage that didn't need good credit to begin with....

The sheer idiocy of technocratic social engineers will never cease to amaze me!! :))

[7426k]

Of course there are no studies to show this....Who is going to fund them....the politicians and bureucrats who cause the mess?

It doesn't need to be funded. Someone just needs to write it and get it published. In fact, peer-reviewed journal articles are specifically NOT funded.

[Oddball]

You don't understand how academia works. I do not have the belief of self policing. I have the belief that if someone conducts a study and makes a conclusion that is obviously false then people will point this out. You can't find anyone who has or can point out why these studies are false.
Acedamia works like any other big insiders club...They live in their own little bubble and cover one anothers' asses with their "peer review"....Which itself functions as little more than a bunch of Hollywood types sitting around giving each other Academy Awards.

People who claim that the CRA is responsible for the world wide financial mess we are in do so without facts.
Apparently, you missed the facts that were just posted. But since those facts don't comport with your particular political POV, you'll be certain to reject them out-of-hand.

The CRA had nothing to do with the banking collapse that is going on in Europe. Europe is in worse shape than we are. What is naive is to believe that the CRA - a piece of legislation that did not involve the main purveyors of subprime loans - cause a worldwide crisis.

To blame a worldwide economic crisis on the CRA is foolish. It had nothing to do with subprime loans. It had nothing to do with the crisis in Europe. This assumes that the worldwide financial system was placed in peril because some under served (not undeserved) people got loans as a result of the CRA. This is naive.

The CRA did not apply to Goldman Sachs. It did not apply to the other investment banks. It did not apply to the independent mortgage brokers. It did not cause mortgages to be packaged as securities and it did not cause people to buy mortgage securities. It did not cause subprime lending. It did not cause banks to get over leveraged. It did not cause the housing/banking crisis in Europe. It did not cause the present deflation.
Europe is in trouble because many of their investors and hedgers, just like their counterparts in America, played the credit default swap Ponzi scheme that was facilitated and enabled by the CRA.

[Tigerdrafted]

You don't understand how academia works. I do not have the belief of self policing. I have the belief that if someone conducts a study and makes a conclusion that is obviously false then people will point this out. You can't find anyone (economist) who has or can point out why these studies are false.

People who claim that the CRA is responsible for the world wide financial mess we are in do so without facts. They use only supposition based on ideological assumptions.

The CRA had nothing to do with the banking collapse that is going on in Europe. Europe is in worse shape than we are. What is naive is to believe that the CRA - a piece of legislation that did not involve the main purveyors of subprime loans - cause a worldwide crisis.

To blame a worldwide economic crisis on the CRA is foolish. It had nothing to do with subprime loans. It had nothing to do with the crisis in Europe. This assumes that the worldwide financial system was placed in peril because some under served (not undeserved) people got loans as a result of the CRA. This is naive.

The CRA did not apply to Goldman Sachs. It did not apply to the other investment banks. It did not apply to the independent mortgage brokers. It did not cause mortgages to be packaged as securities and it did not cause people to buy mortgage securities. It did not cause subprime lending. It did not cause banks to get over leveraged. It did not cause the housing/banking crisis in Europe. It did not cause the present deflation.

You can not cite any evidence to the contrary. All you can do is posit that it must be true. This is not evidence. It is not convincing. There are lots of people who write news articles that say, "See the CRA caused this." You won't find any economists who think this. You won't find any experts who agree with this assessment. Therefore your belief is foolish.

Still drinking the liberal kool aid aren't you? Can you not read the post I put up? Enough of the did to did not arguments. Geez

CDO's were packaged and sold all over the world. We started it. Made in America.

[7426k]

http://www.opednews.com/articles/Root-cause-to-the-financia-by-Bobby-Hawk-080928-421.html

I think this report sums it up. The CRA is the root cause.

When you s tart from the premise that the CRA mustr be the problem, it's not hard to dig up some other random person who agrees with you and post it here.

In this case, you have found a random op-ed from a website dedicated to allowing any old joe to publish an op-ed, and an author putting up their first one.

In other words, you might as well just link to a post in this thread as your evidence.

[Tigerdrafted]

When you s tart from the premise that the CRA mustr be the problem, it's not hard to dig up some other random person who agrees with you and post it here.

In this case, you have found a random op-ed from a website dedicated to allowing any old joe to publish an op-ed, and an author putting up their first one.

In other words, you might as well just link to a post in this thread as your evidence.

Oh that's right coming from the person that just called me ignorant. What's your point kimosabie?

[7426k]

Oh that's right coming from the person that just called me ignorant. What's your point kimosabie?

I didn't say you were ignorant - I said you were either ignorant or sly, chief.

And I pointed out that your "Evidence""was a random op-ed blog. You might as well link to any old page on the internet.

[Oddball]

CDO's were packaged and sold all over the world. We started it. Made in America.
Bingo!!

America sneezes and the world gets a cold.

[Rohn]

Well, they got that part right. But then comes....
Presuming, of course, that someone who didn't put any time into building good credit would suddenly care to do so, after securing a mortgage that didn't need good credit to begin with....Or even have the ability to do so after taking on a mortgage they never had before!:wall:

The sheer idiocy of technocratic social engineers will never cease to amaze me!! :))This is your opinion, but while I may agree I would never seek to antagonize those whom I was trying to influence.:D

[Tigerdrafted]

THE REAL SCANDAL
HOW FEDS INVITED THE MORTGAGE MESS
By STAN LIEBOWITZ
Did what gov't asked: Countrywide CEO Angelo Mozilo.
February 5, 2008


I didn't say you were ignorant - I said you were either ignorant or sly, chief.

And I pointed out that your "Evidence""was a random op-ed blog. You might as well link to any old page on the internet.

sly yes.

In the 1980s, groups such as the activists at ACORN began pushing charges of "redlining" - claims that banks discriminated against minorities in mortgage lending. In 1989, sympathetic members of Congress got the Home Mortgage Disclosure Act amended to force banks to collect racial data on mortgage applicants; this allowed various studies to be ginned up that seemed to validate the original accusation.

In fact, minority mortgage applications were rejected more frequently than other applications - but the overwhelming reason wasn't racial discrimination, but simply that minorities tend to have weaker finances.

Yet a "landmark" 1992 study from the Boston Fed concluded that mortgage-lending discrimination was systemic.

That study was tremendously flawed - a colleague and I later showed that the data it had used contained thousands of egregious typos, such as loans with negative interest rates. Our study found no evidence of discrimination.

Yet the political agenda triumphed - with the president of the Boston Fed saying no new studies were needed, and the US comptroller of the currency seconding the motion.

No sooner had the ink dried on its discrimination study than the Boston Fed, clearly speaking for the entire Fed, produced a manual for mortgage lenders stating that: "discrimination may be observed when a lender's underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants."


Ironically, an enthusiastic Fannie Mae Foundation report singled out one paragon of nondiscriminatory lending, which worked with community activists and followed "the most flexible underwriting criteria permitted." That lender's $1 billion commitment to low-income loans in 1992 had grown to $80 billion by 1999 and $600 billion by early 2003.

Who was that virtuous lender? Why - Countrywide, the nation's largest mortgage lender, recently in the headlines as it hurtled toward bankruptcy.

In an earlier newspaper story extolling the virtues of relaxed underwriting standards, Countrywide's chief executive bragged that, to approve minority applications that would otherwise be rejected "lenders have had to stretch the rules a bit." He's not bragging now.

For years, rising house prices hid the default problems since quick refinances were possible. But now that house prices have stopped rising, we can clearly see the damage caused by relaxed lending standards.

This damage was quite predictable: "After the warm and fuzzy glow of 'flexible underwriting standards' has worn off, we may discover that they are nothing more than standards that lead to bad loans . . . these policies will have done a disservice to their putative beneficiaries if . . . they are dispossessed from their homes." I wrote that, with Ted Day, in a 1998 academic article.

Sadly, we were spitting into the wind.

These days, everyone claims to favor strong lending standards. What about all those self-righteous newspapers, politicians and regulators who were intent on loosening lending standards?

As you might expect, they are now self-righteously blaming those, such as Countrywide, who did what they were told.

Stan Liebowitz is the Ashbel Smith professor of Economics in the Business School at the University of Texas at Dallas.



I found one from an economist.

http://www.nypost.com/seven/02052008/postopinion/opedcolumnists/the_real_scandal_243911.htm?page=0

[Oddball]

This is your opinion, but while I may agree I would never seek to antagonize those whom I was trying to influence.:D
Social engineers are always right and know it all....Just ask them, they'll tell you.

Influencing them to the contrary is a waste of effort.

[shunted]

THE REAL SCANDAL
HOW FEDS INVITED THE MORTGAGE MESS
By STAN LIEBOWITZ
Did what gov't asked: Countrywide CEO Angelo Mozilo.
February 5, 2008




sly yes.



I found one from an economist.

http://www.nypost.com/seven/02052008/postopinion/opedcolumnists/the_real_scandal_243911.htm?page=0

The NY Post? This isn't where scholarly work is done. There are lots of studies - you know, things where statistical analyses are done - that show that CRA recipients did not cause this mess. These studies haven't been refuted by economists publishing in research journals.

http://www.frbsf.org/publications/community/cra/cra_good_goals_flawed_concept.pdf (http://www.frbsf.org/publications/community/cra/cra_good_goals_flawed_concept.pdf) This is a pdf report by a conservative economist who is a critic of the CRA. He doesn't agree with the popular criticisms of the CRA. The criticisms that uninformed people like Hannity are espousing.

He writes:
There have recently been broader critiques of the CRA: that it encouraged banks to make subprime mortgage loans (which were then securitized) and thus the CRA bears major responsibility for the housing bubble of 1999–2006, and then for the mortgage-related securities crisis that began in 2007.

I believe that these broader critiques are badly aimed. It appears that the bulk of the subprime lending of the earlier years of this decade was made by nonbank lenders—that is, by “mortgage banks” that either securitized the mortgages themselves or that quickly sold the mortgages to securitizers. These nonbank lenders were not covered by CRA requirements. Further, the major financial difficulties that were related to investments in these mortgage securities were experienced mostly by investment banks (such as Bear Stearns, Lehman Brothers, Morgan Stanley, and Merrill Lynch) and by a large insurance conglomerate (AIG)—none of which was
covered by the CRA. Where banks did experience difficulties that were related to subprime mortgages, such as CitiBank, WaMu, Wachovia (having absorbed Golden West in 2006), IndyMac, and Countrywide, it appears that they were heavily involved in subprime lending because of its perceived profitability (and their underappreciation of the risks) and not because of CRA pressures.

The CRA has multiple flaws, but responsibility for the subprime mortgage lending and securities debacle does not appear to be one of them.

Here is a speech given by a Bush appointee to the Fed Board. (http://www.federalreserve.gov/newsevents/speech/kroszner20081203a.htm)

From the speech:

Only 6 percent of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas. ... This result undermines the assertion by critics of the potential for a substantial role for the CRA in the subprime crisis.
...
We found that loans originated under the NWA program [a portfolio of CRA-covered loans] had a lower delinquency rate than subprime loans. Furthermore, the loans in the NWA affordable lending portfolio had a lower rate of foreclosure than prime loans. The result that the loans in the NWA portfolio performed better than subprime loans again casts doubt on the contention that the CRA has been a significant contributor to the subprime crisis.
...
[F]oreclosure filings have increased at a faster pace in middle- or higher-income areas than in lower-income areas that are the focus of the CRA.

But hey, don't let facts get in the way of ideology.

The default rate on CRA loans is less than for subprime loans. The subprime mess was the result of institutions not covered by the CRA. And, of course, the CRA had nothing to do with the mess in Europe. The mortgage boom and collapse in Latvia, Bulgaria, England, etc. has nothing to do with the CRA.

The CRA did not cause people to buy securitized mortgages. The CRA did not cause this mess.

[Rohn]

Social engineers are always right and know it all....Just ask them, they'll tell you.

Influencing them to the contrary is a waste of effort.I think it's the only way we can ever hope to effect meaningful change. The social engineers outnumber us, influence is the most powerful tool in our arsenal.

[Oddball]

I think it's the only way we can ever hope to effect meaningful change. The social engineers outnumber us, influence is the most powerful tool in our arsenal.
No they don't.

Overbearing and arrogant as they may be, they are still a vast minority.

[Rohn]

No they don't.

Overbearing and arrogant as they may be, they are still a vast minority.Allow me to clarify that I'm including their followers who are more open to influence.

[7426k]

THE REAL SCANDAL
HOW FEDS INVITED THE MORTGAGE MESS
By STAN LIEBOWITZ
Did what gov't asked: Countrywide CEO Angelo Mozilo.
February 5, 2008




sly yes.



I found one from an economist.

http://www.nypost.com/seven/02052008/postopinion/opedcolumnists/the_real_scandal_243911.htm?page=0

You found an op-ed. ....
from the New York Post.

[PhantomPholly]

I don't believe there was much outright discrimination. The fact that policies and lending practices disparately impacted minorities isn't up for debate - it's a fact.

I'm not disputing that - but it is also a fact that "whites" were also similarly discriminated against if they lived in these areas. That was what the bill purported to eliminate - I do not argue that - but that was unfortunately not the impact of the bill.

It is the unintended side effects (if indeed they ARE unintended) that happen each and every time the arrogant politicians try to fool the market - which is why they should be prohibited from doing so.

As has been pointed out numerous times, Freddie and Fannie do not make loans. To anyone. Ever. Some banks were "punished" by having their expansions reduced if they were not taking steps to alleviate the disparate impacts of previous policies.

That is not my understanding. I'm too tired to research it yet again, but I think we could look through old posts and find the links. The rewards and punishments were more broad than you infer with this statement, of that I am confident.

[7426k]

I'm not disputing that - but it is also a fact that "whites" were also similarly discriminated against if they lived in these areas.

To some degree, I would agree. But in large part, blacks were expressly discriminated against. The original long-term FHA loan, for example:

1. Could not be used to purchase urban homes.
2. Was not available to Blacks.

This meant that blacks were not able to access what we now consider the "traditional" mortgage by moving into the suburbs, nor were they able to rebuild in their own communities. The impact of that lack of access can not be overstated - and after FHA reforms, banks began redlining the very same places that they were excluded from years earlier.

[wildcat87]

THE REAL SCANDAL
HOW FEDS INVITED THE MORTGAGE MESS
By STAN LIEBOWITZ
Did what gov't asked: Countrywide CEO Angelo Mozilo.
February 5, 2008




sly yes.



I found one from an economist.

http://www.nypost.com/seven/02052008/postopinion/opedcolumnists/the_real_scandal_243911.htm?page=0

http://www.fdic.gov/news/news/speeches/archives/2008/chairman/spdec0408_2.html



Remarks by FDIC Chairman Sheila C. Bair Before the Consumer Federation of America
December 4, 2008

Good morning and thank you for inviting me to speak.

The main reason I'm here is to have a vigorous discussion with you about the consumer issues we now face as a result of the financial crisis.

But first I want to clear up some myths that have been circulating lately ... in particular, that the Community Reinvestment Act caused the financial crisis.

And then I want to share a few thoughts on how we can improve and modernize consumer protections for financial services.

I'd also like to share a few thoughts on our continuing partnership to fight unnecessary foreclosures.

I think we can agree that a complex interplay of risky behaviors by lenders, borrowers, and investors led to the current financial storm. To be sure, there's plenty of blame to go around.

However, I want to give you my verdict on CRA: NOT guilty.

Point of fact: Only about one in four higher-priced first mortgage loans were made by CRA-covered banks during the hey-day years of subprime mortgage lending (2004-2006). The rest were made by private independent mortgage companies and large bank affiliates not covered by CRA rules.

You've heard the line of attack: The government told banks they had to make loans to people who were bad credit risks, and who could not afford to repay, just to prove that they were making loans to low- and moderate-income people.

Let me ask you: Where in the CRA does it say to make loans to people who can't afford to repay? Nowhere!

And the fact is, the lending practices that are causing problems today were driven by a desire for market share and revenue growth ... pure and simple.

CRA isn't perfect. But it has stayed around more than 30 years because it encourages FDIC-insured banks to lend in low- and moderate-income (or LMI) areas and, I quote, "consistent with the safe and sound operation of such institutions."

Another question: Is lending to borrowers who can not afford to repay "consistent with the safe and sound operations"? No, of course not.

CRA always recognized there are limitations on the potential volume of lending in lower-income areas due to safety and soundness considerations, and that a bank's capacity and opportunity for safe and sound lending in the LMI community may be limited.

That is why the CRA never set out lending "target" or "goal" amounts.





http://topics.nytimes.com/topics/reference/timestopics/people/b/sheila_bair/index.html



Sheila C. Bair was appointed by President Bush to head the Federal Deposit Insurance Corporation in mid-2006, just as the housing market was peaking.

She brought one of the most varied backgrounds of anyone to lead the agency, cultivating fans in financial circles from Wall Street to Washington and on both sides of the aisle. She is probably the only head of the F.D.I.C. to have written risk-capital policy briefs for bankers and short stories for Highlights for Children magazine.

A native of Independence, Kan., Ms. Bair got a taste of policy-making and pragmatic politics while working for former Senator Robert Dole, the Kansas Republican. After losing a close race for Congress in Kansas in 1990, she worked as a commissioner at the Commodities Trading Commission and later joined the New York Stock Exchange as its top government relations officer.

In 2001, President Bush appointed her assistant secretary for financial institutions at the Treasury. She soon left for the University of Massachusetts at Amherst, where, as a professor of public policy, she became known for her work on consumer protection issues.

[asda1]

Who cares about the hen when that bread looks so tasty. Besides the hen doesn't need all that bread for himself.

[PhantomPholly]

To some degree, I would agree. But in large part, blacks were expressly discriminated against. The original long-term FHA loan, for example:

1. Could not be used to purchase urban homes.
2. Was not available to Blacks.

This meant that blacks were not able to access what we now consider the "traditional" mortgage by moving into the suburbs, nor were they able to rebuild in their own communities. The impact of that lack of access can not be overstated - and after FHA reforms, banks began redlining the very same places that they were excluded from years earlier.

This is true in some degree as I have already acknowledged - but side-steps the point, that being that the EFFECTS of the bill were immensely more far-reaching and adverse than the STATED INTENT of the bill.

A Congress which cannot balance it's own budget should not be allowed to meddle in the free market. Once they step beyond preventing theft and fraud into the realm of "social engineering," they necessarily lose their ethical backing and must inevitably promote corruption.

[Tigerdrafted]

The Sheila Baer argument was week. She fails to see the underlying problem with the cra. Quotas drove predatory lending. She failed to address the main argument against the cra. Notice that I did not bash the agency that published her view. I addresed her argument. On my iPhone no less with fat finger too

[CJHoward]

Hey, I'm too lazy to read the whole thread.

Did we discuss how money's imaginary value affect the whole economics 101 thing?

I mean there's no gold standard, and Bernacke(sp)/Greenspan more or less set the value of that dollar... more or less, here in the states.

Then, there's also the fact that my dollar buys a loaf of bread today, and will buy a loaf tomorrow, more or less. Our attention span is too short.