Or so Zogby would have you believe.
They did a poll where they made statements about "basic economic" issues and saw that the left-leaning people got the answers wrong.
Now, you're probably expecting these basic statements to be something very clear and non-controversial. Something like "Inflation is the gradual increase in the price of goods" and such.
No such luck. Let's go over the statements and correct answers.
"Restrictions on housing development make housing less affordable"
According to the WSJ, smart people would agree. Dumb people, on the left, disagree.
I guess that depends on the restrictions. Restrictions requiring developers to make a certain portion of their buildings as accessible to low-income earners would make housing more affordable, wouldn't it?
Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree)
Unenlightened? Whatever. Yes, services are more expensive because we license engineers and plumbers and what not. You could also have unlicensed people work in your house and end up having to pay for most of your jobs to be done twice. Then add in the cost of the damages to your house done by the first guy. Depends on what you count.
Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree).
This depends very much on exactly where your numbers come from and which segment of society you mean. Are we talking wage disparity? Access to health care? Longevity? The inflation accounted income for the lowest quintile of Americans has dropped since a peak in the early 1970s. Rich people are doing fine, though.
3) Rent control leads to housing shortages (unenlightened answer: disagree).
Again, it depends on the "rent control" in question. Done properly, it's merely a way of keeping your landlord from holding you hostage in your own home, gouging against the expense of moving. Done improperly, it can cause shortages because no one wants to rent out houses anymore.
4) A company with the largest market share is a monopoly (unenlightened answer: agree).
If this was the statement, not paraphrased, then I agree that the answer is no. A company has to have all, or nearly all, of the market share to be a monopoly.
Third World workers working for American companies overseas are being exploited (unenlightened answer: agree).
The "unenlightened" would agree? Who are the fucking idiots who don't think third world workers are being exploited? Are the union leaders being assassinated in Colombia not enough of a hint? Or the sports shoe sweatshops? What world is Zogby living in that doesn't have exploited third world workers?
Free trade leads to unemployment (unenlightened answer: agree).
Actually, yes it does. When NAFTA came to my home town, it shut down two steel plants, a Union Carbide and a bunch of other plants. Those people became unemployed. Even in the Libertarian Faery Dust version of things, free trade causes unemployment, but the Faery Dust comes and retrains the 50-year-old steel worker as an IT consultant.
Yes. Free Trade also causes employment - in Mexico and other such places. But don't pretend it doesn't cause unemployment, at the very least in the immediate sense.
That kind of pretense is simply unenlightened.
Minimum wage laws raise unemployment (unenlightened answer: disagree).
Minimum wage causes unemployment, does it? I'd like to see them prove it. What it does, in my considered opinion, is distribute income away from multi-billion dollar corporations toward their employees. This creates local expenditures (local goods) rather than remote ones (yacht, villas and the like).
After going through this list, I'm going to have to argue that the guys at Zogby are a bunch of right-wing, wealthy, ideologically-locked jackasses too full of their own pomposity and arrogance to evaluate anyone else. Their conclusion is that, basically, anyone who disagrees with their biases (the same biases that have led the United States in to its current financial disaster) must be stupid.
Best of luck, assholes.
Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts
Monday, June 14, 2010
Wednesday, December 17, 2008
Respect for that guy McGuinty
I'm always surprised by the people I end up having to respect.
David Hasselhoff flies around the world at his own expense for Make-a-Wish. Ricky Martin runs a foundation in Thailand getting prostitution bound children in to schools.
And now, Dalton McGuinty, the guy who tried to pretend the outgoing Tory government's deficit didn't exist and put a "Health Care Levy" on us, has gone and told the banks to bugger off if they want a tax cut.
Oh, no, please don't take away the high-paying financial sector jobs!
Look, I'm going to tell you the same thing I'm telling the auto industry guys: there's only so much work to do. If you have too many people, we know you're going to lay off the extras. What does it matter how much money we give you. And mark my words, this is not like the auto industry bailout which is technically a loan. No. The banks want a four percent tax cut. That's a direct gift.
Good for you, Dalton.
David Hasselhoff flies around the world at his own expense for Make-a-Wish. Ricky Martin runs a foundation in Thailand getting prostitution bound children in to schools.
And now, Dalton McGuinty, the guy who tried to pretend the outgoing Tory government's deficit didn't exist and put a "Health Care Levy" on us, has gone and told the banks to bugger off if they want a tax cut.
Oh, no, please don't take away the high-paying financial sector jobs!
Look, I'm going to tell you the same thing I'm telling the auto industry guys: there's only so much work to do. If you have too many people, we know you're going to lay off the extras. What does it matter how much money we give you. And mark my words, this is not like the auto industry bailout which is technically a loan. No. The banks want a four percent tax cut. That's a direct gift.
Good for you, Dalton.
Saturday, December 13, 2008
Conservatives Tried Subprime
I guess we're just fortunate that we had a Liberal government for all those years that the Americans were desperately trying to loot their economy for the sake of the rich. While they were setting up mortgages to people who had no business having mortgages, we had a Liberal government that wasn't letting that happen in Canada.
We did manage to get a Conservative government in 2006 and they did their best to completely ruin our economy, but it was too little too late. The subprime bubble was already bursting and, try as they might, Harper and Flaherty couldn't quite get us in to the disaster.
They did their best by creating 40-year, no-money-down mortgages, but they had to cancel that offering when it became obvious how disastrous the long term effects were.
But make no mistake about it. Leaving Conservatives in charge of our economy is a disaster. They'll sell everything off so they can give tax cuts to wealthy people. They'll run up massive, unnecessary debt.
And if they had their way, they'd have dumped our economy straight in to the drain to create huge, fake economic booms for the sake of their banking friends.
We did manage to get a Conservative government in 2006 and they did their best to completely ruin our economy, but it was too little too late. The subprime bubble was already bursting and, try as they might, Harper and Flaherty couldn't quite get us in to the disaster.
They did their best by creating 40-year, no-money-down mortgages, but they had to cancel that offering when it became obvious how disastrous the long term effects were.
But make no mistake about it. Leaving Conservatives in charge of our economy is a disaster. They'll sell everything off so they can give tax cuts to wealthy people. They'll run up massive, unnecessary debt.
And if they had their way, they'd have dumped our economy straight in to the drain to create huge, fake economic booms for the sake of their banking friends.
Wednesday, November 19, 2008
Let Big Auto Fail?
Really, let's think about it.
They've made whole fleets of useless, oversized cars. They've protested every attempt at imposing mileage standards. And now they're in trouble. They're prophesying doom and gloom for a whole plethora of vertically integrated suppliers and resources.
Here's the thing, though.
Either people want to buy those cars or people don't. Either people can afford those cars or people can't. All that government intervention can do is allow the automakers to make more cars that people apparently aren't buying.
Let's say that again.
All that government intervention can do is force more unwanted cars in to existence.
Why would we spend our national treasure in this manner? (Yes, I know it's actually low interest loans, but that still counts as money.) Why would we spend unwanted things in to existence? Why would we favour such use of precious mineral and energy resources?
If the big three automakers are failing, it's because they produce things that no one wants. If they want to attract more customers, make products that are desirable. Something in the fuel efficient, cost effective area might work better. If you want to save these companies, you're barking up the wrong tree. They have to save themselves.
On the flip side, it's just barely possible that we just don't need so many cars - or maybe we just don't need to be trading them in every two years. Maybe the credit isn't there to afford that lifestyle anymore. In that case, you're just building cars for nobody. Sure, the government can make them cheaper by floating low-interest loans through the car companies, but that's not going to make that big a difference.
Sorry, Big Three. If no one wants your products, why should taxpayers donate their savings to making them anyway?
It just doesn't make sense.
They've made whole fleets of useless, oversized cars. They've protested every attempt at imposing mileage standards. And now they're in trouble. They're prophesying doom and gloom for a whole plethora of vertically integrated suppliers and resources.
Here's the thing, though.
Either people want to buy those cars or people don't. Either people can afford those cars or people can't. All that government intervention can do is allow the automakers to make more cars that people apparently aren't buying.
Let's say that again.
All that government intervention can do is force more unwanted cars in to existence.
Why would we spend our national treasure in this manner? (Yes, I know it's actually low interest loans, but that still counts as money.) Why would we spend unwanted things in to existence? Why would we favour such use of precious mineral and energy resources?
If the big three automakers are failing, it's because they produce things that no one wants. If they want to attract more customers, make products that are desirable. Something in the fuel efficient, cost effective area might work better. If you want to save these companies, you're barking up the wrong tree. They have to save themselves.
On the flip side, it's just barely possible that we just don't need so many cars - or maybe we just don't need to be trading them in every two years. Maybe the credit isn't there to afford that lifestyle anymore. In that case, you're just building cars for nobody. Sure, the government can make them cheaper by floating low-interest loans through the car companies, but that's not going to make that big a difference.
Sorry, Big Three. If no one wants your products, why should taxpayers donate their savings to making them anyway?
It just doesn't make sense.
Tuesday, November 18, 2008
Republicans Confused
Some of them are still stuck on the idea that everything is Clinton's fault. But after eight years, that's getting ridiculous. So ... let's blame the faltering economy on ... drum roll ... Obama!
Yes, we'll compare the yo-yo of the day-trading on Wall St. with the yo-yo of campaign polling twitches and declare a correlation between Obama being in the lead and the Dow Jones going down.
Why look! There was a 14% down tick during the last two weeks! That's the day traders and brokers registering their disapproval of Obama! (Actually, I'm kind of okay with the idea that brokers and traders disapprove of the next president.)
On the other hand, there's the occasional Republican supporter who acknowledges that Bush was a failure. Seeing as he ran as a conservative and failed to ever balance a budget, this seems to me a long time in coming, but as long as you get there eventually I suppose you can say it's all about the journey. I'm not sure how a single person can acknowledge what a lousy budget-balancer Bush was and simultaneously credit him with huge tax cuts. I suppose this is part of the general and international tendency of conservatives to demand tax cuts without naming what services they will also cut. They like to eat their cake and have it too.
Ah, lovely is self destruction.
I can't wait for the attempt to rebuild the Republican party that involves the social conservatives demanding more and the fiscal conservatives telling them to shut up while the power brokers of the party really just want to loot the treasury.
Yes, we'll compare the yo-yo of the day-trading on Wall St. with the yo-yo of campaign polling twitches and declare a correlation between Obama being in the lead and the Dow Jones going down.
Why look! There was a 14% down tick during the last two weeks! That's the day traders and brokers registering their disapproval of Obama! (Actually, I'm kind of okay with the idea that brokers and traders disapprove of the next president.)
On the other hand, there's the occasional Republican supporter who acknowledges that Bush was a failure. Seeing as he ran as a conservative and failed to ever balance a budget, this seems to me a long time in coming, but as long as you get there eventually I suppose you can say it's all about the journey. I'm not sure how a single person can acknowledge what a lousy budget-balancer Bush was and simultaneously credit him with huge tax cuts. I suppose this is part of the general and international tendency of conservatives to demand tax cuts without naming what services they will also cut. They like to eat their cake and have it too.
Ah, lovely is self destruction.
I can't wait for the attempt to rebuild the Republican party that involves the social conservatives demanding more and the fiscal conservatives telling them to shut up while the power brokers of the party really just want to loot the treasury.
Friday, November 14, 2008
Quick Investment Lesson From Mr. Harper
Okay, Mr. Harper, we've all been inundated with your economic credentials.
He is also famous for advising Canadians, while the subprime mortgage crisis was taking down international stock markets, that there were probably some "good deals" out there.
So Mr. Harper, explain this to me. Explain why, during a lull in real estate prices, your Finance Minister is selling off Crown lands.
Fill in the blanks, here: Buy ____, Sell ____.
Unless, of course, you have a separate plan. Perhaps your plan is to sell off these Crown lands for billions of dollars to your corporate friends, then give them billions of dollars in tax breaks so the end result for the Canadian tax payer is simply that we have less stuff.
I know you have a great deal of economic knowledge, so I'm sure you're not selling off Crown property at fire sale prices because you're stupid. But if you're not stupid, the only other real option is that you're defrauding the Canadian public.
h/t to Red Tory.
"... an accountant at Imperial Oil"
"He took up post-secondary studies again at the University of Calgary, where he completed a Bachelor's degree in economics."
"He later returned there to earn a Master's degree in economics, completed in 1993."
He is also famous for advising Canadians, while the subprime mortgage crisis was taking down international stock markets, that there were probably some "good deals" out there.
So Mr. Harper, explain this to me. Explain why, during a lull in real estate prices, your Finance Minister is selling off Crown lands.
Fill in the blanks, here: Buy ____, Sell ____.
Unless, of course, you have a separate plan. Perhaps your plan is to sell off these Crown lands for billions of dollars to your corporate friends, then give them billions of dollars in tax breaks so the end result for the Canadian tax payer is simply that we have less stuff.
I know you have a great deal of economic knowledge, so I'm sure you're not selling off Crown property at fire sale prices because you're stupid. But if you're not stupid, the only other real option is that you're defrauding the Canadian public.
h/t to Red Tory.
Monday, November 10, 2008
The Free Market needs Socialized Medicine
It doesn't seem obvious at first. In fact, it seems contradictory. How could it be possible that a free market system could co-exist, and even benefit by, a government run, single-payer, health care system?
Let's first of all establish what "free market" means. I've received a recent and inspiring education from Rational Reasons and a bunch of other sources on the subject of "free markets" and "libertarianism".
If we were living in a free market system (which we aren't) it would mean that consumers are free to choose the best products. Natural economic supply and demand would work together with the consumer's judgment of quality to select the supplier or manufacturer who is doing the best job. If we impede the flow of the free market too much - say by creating incentives for the existence of large companies or by subsidizing certain raw materials - we will damage the ability of the free market to adjust itself to maximum efficiency.
On paper, you have to admit that this sounds pretty good.
As an example of where the free market would fail, if every soap I can buy changes my skin complexion such that I have to go through a four week period of skin rashes and boils when I change soaps, we can't really pretend that there's a free market in soap.
My argument is that, in a free market, people have to have the same freedom to move about from job to job. If my employer can keep me attached to him unfairly – say by blacklisting me, beating me up or burning down my house – then we don't really have a free market. It would allow terrible employers to continue to employ people that the employers don't deserve to have employed.
This is how I see private payer health care, as an unfair tether.
The fact that health care is provided by an employer allows an employer to unfairly attach me to his company. He can pay me less than a proper market rate - therefore damaging the power of the free market - simply by the fact that I could find myself dead if my next employer's health insurance declares my disease to be "pre-existing". Even worse, the situation creates a powerful bias against small companies and self-employment because private health insurance becomes prohibitively expense for individuals and small groups of people. This creates incentives for the existence of larger companies that otherwise might have no business existing in a free market.
The only possible way to keep the free market going is to remove the private money from health insurance. Health insurance should be paid by a government. Even if you wanted to allow private clinics to provide services in competition with the government, you have to keep private money as far away as possible from the paying side of the operation.
This is the only way to guarantee that labour is sufficiently lubricated to make this whole dream of the benefit of the "free market" come true for the vast majority of the people.
Guarantee people health care and you guarantee them freedom.
The mantra from the libertarians is that it is the freedom to choose that will make the economy work properly. In order to really have the freedom to choose, the people must know that, regardless of their choice, they will be secure of body and health. Consequently, we must sacrifice a small, irrelevant part of "choice" (i.e. who pays for the health care) in order to open up a whole world of choice in something orders of magnitude more important - where you want to work.
Let's first of all establish what "free market" means. I've received a recent and inspiring education from Rational Reasons and a bunch of other sources on the subject of "free markets" and "libertarianism".
If we were living in a free market system (which we aren't) it would mean that consumers are free to choose the best products. Natural economic supply and demand would work together with the consumer's judgment of quality to select the supplier or manufacturer who is doing the best job. If we impede the flow of the free market too much - say by creating incentives for the existence of large companies or by subsidizing certain raw materials - we will damage the ability of the free market to adjust itself to maximum efficiency.
On paper, you have to admit that this sounds pretty good.
As an example of where the free market would fail, if every soap I can buy changes my skin complexion such that I have to go through a four week period of skin rashes and boils when I change soaps, we can't really pretend that there's a free market in soap.
My argument is that, in a free market, people have to have the same freedom to move about from job to job. If my employer can keep me attached to him unfairly – say by blacklisting me, beating me up or burning down my house – then we don't really have a free market. It would allow terrible employers to continue to employ people that the employers don't deserve to have employed.
This is how I see private payer health care, as an unfair tether.
The fact that health care is provided by an employer allows an employer to unfairly attach me to his company. He can pay me less than a proper market rate - therefore damaging the power of the free market - simply by the fact that I could find myself dead if my next employer's health insurance declares my disease to be "pre-existing". Even worse, the situation creates a powerful bias against small companies and self-employment because private health insurance becomes prohibitively expense for individuals and small groups of people. This creates incentives for the existence of larger companies that otherwise might have no business existing in a free market.
The only possible way to keep the free market going is to remove the private money from health insurance. Health insurance should be paid by a government. Even if you wanted to allow private clinics to provide services in competition with the government, you have to keep private money as far away as possible from the paying side of the operation.
This is the only way to guarantee that labour is sufficiently lubricated to make this whole dream of the benefit of the "free market" come true for the vast majority of the people.
Guarantee people health care and you guarantee them freedom.
The mantra from the libertarians is that it is the freedom to choose that will make the economy work properly. In order to really have the freedom to choose, the people must know that, regardless of their choice, they will be secure of body and health. Consequently, we must sacrifice a small, irrelevant part of "choice" (i.e. who pays for the health care) in order to open up a whole world of choice in something orders of magnitude more important - where you want to work.
Friday, October 17, 2008
Harper's Six Points: Emptiness
He's not going to do anything.
That's probably because he doesn't know what to do.
There are two possibilities regarding this election. Either super-awesome economist Stephen Harper saw this economic disaster coming and wanted to get the election in before his party started taking fallout, or super-awesome economist Stephen Harper didn't see it coming.
I don't know which is worse for Harper.
When I look at his six point plan, I don't see any substance. It's all about meeting with people (and pretending that he's initiating the meetings, when most of them are already planned by others).
A comment on an earlier post pointed to Harper's plan as a copy of Dion's five point plan with a little bit more.
But it's not. Dion's five-point plan had substance.
In amongst the talking which, yes, is important, there was some doing as well. There was a $1B Manufacturing Fund. The first item was to rework Canada's financial regulations to prevent the market manipulation that led to this mess in the U.S.
Go figure. Dorky professor guy had a plan to do something while super-awesome economist guy has no clue what to do.
That's probably because he doesn't know what to do.
There are two possibilities regarding this election. Either super-awesome economist Stephen Harper saw this economic disaster coming and wanted to get the election in before his party started taking fallout, or super-awesome economist Stephen Harper didn't see it coming.
I don't know which is worse for Harper.
When I look at his six point plan, I don't see any substance. It's all about meeting with people (and pretending that he's initiating the meetings, when most of them are already planned by others).
A comment on an earlier post pointed to Harper's plan as a copy of Dion's five point plan with a little bit more.
But it's not. Dion's five-point plan had substance.
In amongst the talking which, yes, is important, there was some doing as well. There was a $1B Manufacturing Fund. The first item was to rework Canada's financial regulations to prevent the market manipulation that led to this mess in the U.S.
Go figure. Dorky professor guy had a plan to do something while super-awesome economist guy has no clue what to do.
Thursday, October 16, 2008
Colour Me Shocked: Deficits
They're going to blame the economy, naturally, and that's probably fair enough. But we're still looking at four years of deficits.
But still: Flaherty = Deficits.
I don't see why TD's chief economist said the following:
Really? I think we had fifteen years of straight deficits in Ontario, if you count from when Bob Rae began intentionally destroying the NDP to when we finally booted the Progressive "Conservatives" out of office.
What's four years?
They've already had to cancel a couple of military vessels and an arctic sovereignty protecting icebreaker. What will they cancel next? The responsible thing might even be going in to deficit. At that point, they're as screwed as McGuinty having to break his no-tax-increase promise when faced with the PC deficit he took over.
Keep your promise or do what's right?
Best of luck, chuckleheads.
But still: Flaherty = Deficits.
I don't see why TD's chief economist said the following:
“Many economists have said it's acceptable to run a modest deficit for a short period of time, but there's virtually nobody on record as saying it's acceptable to run deficits for many years in a row,” Mr. Drummond said.
Really? I think we had fifteen years of straight deficits in Ontario, if you count from when Bob Rae began intentionally destroying the NDP to when we finally booted the Progressive "Conservatives" out of office.
What's four years?
They've already had to cancel a couple of military vessels and an arctic sovereignty protecting icebreaker. What will they cancel next? The responsible thing might even be going in to deficit. At that point, they're as screwed as McGuinty having to break his no-tax-increase promise when faced with the PC deficit he took over.
Keep your promise or do what's right?
Best of luck, chuckleheads.
Monday, October 13, 2008
Only Liberals are ever Conservative
It's one of those things that liberals and progressives should be shouting from the rooftops: the people calling themselves "Conservatives" are always reckless with money. It's always the left that has to come in and balance the budget when it's done being ruined by the right.
Now we could go in to great detail about Harris and Eves and Flaherty driving Ontario in to the ground, or Clinton cleaning up after Bush after which the other Bush came in and trashed everything again.
If we put in a Conservative government in Canada tomorrow, we will have deficits. They'll blame the economy, even as they quietly shut down the 40-year, no money down mortgages they created, but they will have deficits.
Conservatives just aren't conservative.
But then I heard this today.
The speaker is, of course, Barack Obama, the "most liberal senator in America" according to the same people who tell us he's a terrorist, an Arab, a Muslim and wants to impose Sharia law on the United States.
That should tell you everything you need about the crap the mainstream media and the rightwing fringe (who are the same people in the United States) tell us about "liberals".
Vote tomorrow.
Vote wisely.
Or your children will pay for it.
Now we could go in to great detail about Harris and Eves and Flaherty driving Ontario in to the ground, or Clinton cleaning up after Bush after which the other Bush came in and trashed everything again.
If we put in a Conservative government in Canada tomorrow, we will have deficits. They'll blame the economy, even as they quietly shut down the 40-year, no money down mortgages they created, but they will have deficits.
Conservatives just aren't conservative.
But then I heard this today.
“Everyone was living beyond their means – from Wall Street to Washington to even some on Main Street."
“CEOs got greedy. Politicians spent money they didn't have. Lenders tricked people into buying homes they couldn't afford and some folks knew they couldn't afford them and they bought them anyway."
The speaker is, of course, Barack Obama, the "most liberal senator in America" according to the same people who tell us he's a terrorist, an Arab, a Muslim and wants to impose Sharia law on the United States.
That should tell you everything you need about the crap the mainstream media and the rightwing fringe (who are the same people in the United States) tell us about "liberals".
Vote tomorrow.
Vote wisely.
Or your children will pay for it.
Monday, October 06, 2008
The Sky is Falling: Blame Mortgagees
A common refrain I'm hearing in reference to this apparent disaster we're in is that the fault lies with the people who took out mortgages that they can't afford. In that vein, we should do nothing to help out because these people deserve it.
It's not often referenced in real newspapers but it's there in the mouths of right-wing pundits, bloggers and Republicans (who like to blame "minority lending" specifically).
I hate to tell you, but it's not working out that way.
First of all, this crisis is spreading far, far beyond the actual people who took out those bad mortgages. It's hardly morally acceptable to say that retired senior citizens who have responsibly paid off their mortgages deserve to have their retirement funds destroyed.
Second, the people who took out those mortgages received professional financial advice that told them the risk was easily manageable.
We received professional advice when we went to get our mortgage. We were advised as to a maximum house value and mortgage payment based on salary data our bank required of us. (We live in Canada where there are rules about these things). We looked at those numbers and said, that's okay, we'll get a much smaller house than the maximum we're allowed. We're conservative that way.
The people who took out these subprime mortgages were advised that they could afford these houses using some financial trickery (overappraising the house, using the extra money as mortgage payments, selling the house for more). Not everyone is smart enough to see through this tale, especially when all of the financial advice is consistent (consistently bad, but how do you know? Think "trepanning" or "bloodletting".)
Do people deserve to be punished when an entire industry has intentionally and maliciously led them astray, en masse, for its own aggrandizement?
I wouldn't think so, but you may differ.
I don't mind watching all those subprime mortgage brokers suffer. They won't, mind you, but it wouldn't bother me if they did.
What bothers me is that the rest of us are going to hurt while they fly high. That's why the government has to step in and return confidence to this arena - and that will require heavy-duty regulation.
It's not often referenced in real newspapers but it's there in the mouths of right-wing pundits, bloggers and Republicans (who like to blame "minority lending" specifically).
I hate to tell you, but it's not working out that way.
First of all, this crisis is spreading far, far beyond the actual people who took out those bad mortgages. It's hardly morally acceptable to say that retired senior citizens who have responsibly paid off their mortgages deserve to have their retirement funds destroyed.
Second, the people who took out those mortgages received professional financial advice that told them the risk was easily manageable.
We received professional advice when we went to get our mortgage. We were advised as to a maximum house value and mortgage payment based on salary data our bank required of us. (We live in Canada where there are rules about these things). We looked at those numbers and said, that's okay, we'll get a much smaller house than the maximum we're allowed. We're conservative that way.
The people who took out these subprime mortgages were advised that they could afford these houses using some financial trickery (overappraising the house, using the extra money as mortgage payments, selling the house for more). Not everyone is smart enough to see through this tale, especially when all of the financial advice is consistent (consistently bad, but how do you know? Think "trepanning" or "bloodletting".)
Do people deserve to be punished when an entire industry has intentionally and maliciously led them astray, en masse, for its own aggrandizement?
I wouldn't think so, but you may differ.
I don't mind watching all those subprime mortgage brokers suffer. They won't, mind you, but it wouldn't bother me if they did.
What bothers me is that the rest of us are going to hurt while they fly high. That's why the government has to step in and return confidence to this arena - and that will require heavy-duty regulation.
Tuesday, September 30, 2008
Don't Bail Them Out
There's no good reason to bail out the gamblers on Wall St.
From a free market perspective, they all deserve to go bankrupt. Every CEO and Executive who was in charge of one of those companies knew that they were trading and investing in bad mortgages. They knew they were gambling irresponsibly. They lobbied to have the regulations changed so that they could gamble irresponsibly.
They deserve neither sympathy nor money. But if you want to give them sympathy, go ahead. You can cry all over the outside of the tinted windows of their limousines and then wonder if they're even looking at you.
No, these people deserve none of the taxpayers' money.
The question is: what of the rest of us? If we let these firms collapse - as we should according to the laws of the free marker - what of the the rest of us?
Certainly the people who took out mortgages for houses they could never afford do not deserve to keep those houses. Sure, they were tricked and cajoled in to "leveraging" their nothing. Sure, the Wall Street bandits suckered them in for the sake of a commission. That means those Wall Street bandits should go to jail (and definitely don't deserve a bailout). But it doesn't mean those people deserve those houses.
So irrational Wall Street brokers deserve to go bankrupt. Some of the should go to jail.
The people with houses they can't afford will not get to keep them.
Fair is fair.
What about everyone else? Will the economy really fall apart if the U.S. taxpayer doesn't bail these people out? Somehow I doubt it. The U.S. has earned a long recession due to its attempt to stave off the recession that should have occurred in and around September 11, 2001. This can not be avoided. It's part of the natural cycle of the economy.
But will the whole world go in to a depression because the United States has a financial crisis involving irresponsible Wall Street gamblers losing money?
Somehow I doubt it. Somehow I think someone will create a financial instrument that will let it go on without the craziest, most irresponsible thieves on Wall Street. Somehow, I think we can live without billionaire investment brokers who don't actually produce anything.
But I don't think anyone really knows for sure, and the people who want this bailout to go through also have the power to punish the rest of society if it doesn't go through the way they want it.
That's what we have watch for.
From a free market perspective, they all deserve to go bankrupt. Every CEO and Executive who was in charge of one of those companies knew that they were trading and investing in bad mortgages. They knew they were gambling irresponsibly. They lobbied to have the regulations changed so that they could gamble irresponsibly.
They deserve neither sympathy nor money. But if you want to give them sympathy, go ahead. You can cry all over the outside of the tinted windows of their limousines and then wonder if they're even looking at you.
No, these people deserve none of the taxpayers' money.
The question is: what of the rest of us? If we let these firms collapse - as we should according to the laws of the free marker - what of the the rest of us?
Certainly the people who took out mortgages for houses they could never afford do not deserve to keep those houses. Sure, they were tricked and cajoled in to "leveraging" their nothing. Sure, the Wall Street bandits suckered them in for the sake of a commission. That means those Wall Street bandits should go to jail (and definitely don't deserve a bailout). But it doesn't mean those people deserve those houses.
So irrational Wall Street brokers deserve to go bankrupt. Some of the should go to jail.
The people with houses they can't afford will not get to keep them.
Fair is fair.
What about everyone else? Will the economy really fall apart if the U.S. taxpayer doesn't bail these people out? Somehow I doubt it. The U.S. has earned a long recession due to its attempt to stave off the recession that should have occurred in and around September 11, 2001. This can not be avoided. It's part of the natural cycle of the economy.
But will the whole world go in to a depression because the United States has a financial crisis involving irresponsible Wall Street gamblers losing money?
Somehow I doubt it. Somehow I think someone will create a financial instrument that will let it go on without the craziest, most irresponsible thieves on Wall Street. Somehow, I think we can live without billionaire investment brokers who don't actually produce anything.
But I don't think anyone really knows for sure, and the people who want this bailout to go through also have the power to punish the rest of society if it doesn't go through the way they want it.
That's what we have watch for.
Saturday, September 27, 2008
Economic Crisis Prevents Stupidity
That's what the headline should read. Instead they entitled it: "A nation of debtors".
Indeed. American consumers suddenly can't buy as much as they used to because - pay attention here - "Consumers are feeling the pinch as lenders tighten credit card limits and home equity lines of credit"
Who in their right mind runs credit card debt? I can understand this happening in some kind of emergency but it seems to be a way of life for a certain large chunk of the population that prefers to live way beyond its means - and via credit card interest ends up in at an ever shrinking level of "means".
If one of the results of this whole mess is that the general population realizes what a crazy, ignorant stupid thing it is to willfully pile up credit card debt for the sake of having the coloured iPod, the bolted down truck bed and the absolute latest Intel processor ... well, then, at least something good will have come of it.
Once we free ourselves of slavery to this kind of debt, we can work on controlling the corporations that rule us through our indebtedness and take steps to force them to improve our society, rather than improve themselves at our expense.
Indeed. American consumers suddenly can't buy as much as they used to because - pay attention here - "Consumers are feeling the pinch as lenders tighten credit card limits and home equity lines of credit"
Who in their right mind runs credit card debt? I can understand this happening in some kind of emergency but it seems to be a way of life for a certain large chunk of the population that prefers to live way beyond its means - and via credit card interest ends up in at an ever shrinking level of "means".
If one of the results of this whole mess is that the general population realizes what a crazy, ignorant stupid thing it is to willfully pile up credit card debt for the sake of having the coloured iPod, the bolted down truck bed and the absolute latest Intel processor ... well, then, at least something good will have come of it.
Once we free ourselves of slavery to this kind of debt, we can work on controlling the corporations that rule us through our indebtedness and take steps to force them to improve our society, rather than improve themselves at our expense.
Wednesday, September 03, 2008
Hypocrisy or Irony?
(When there's enough sick people to take care of, you end up doing all your blogging at once, in the evening, when you get them to bed.)
It's hard to tell, sometimes, whether what you're seeing is hypocrisy or irony. If Kurt Vonnegut had written the plot, I'd know. If it were Mike Harris telling me that teacher testing was meant to "improve education" when we had Snobelen on tape telling us that we wants to take the government "out of the education business", I'd know it was hypocrisy.
So when the Conservatives tell me that they changed meat packing plant inspections because of their belief in the free market, I have to wonder if they really believe in the free market.
The Conservatives go completely off message when they send $80 million to a dead Ford plant in Windsor in a painfully, embarrassingly transparent attempt to buy votes. If the free market is really working properly, Mr. Harper, why don't you let that Ford plant die while the people who are invested in proper technology prosper? Why are you propping up a company that the all-knowing, benevolent god you call the Free Market has decided to kill?
Is that hypocrisy, or are you merely running your government ironically now? Next up you'll be telling us that it's okay for a Prime Minister to manipulate election dates to his own best advantage, or dropping those anti-abortion bills, or appointing Senators, or stealing MPs from other parties right after election day, or ... well, never mind.
(h/t to Jay at the Sleveen Institute)
It's hard to tell, sometimes, whether what you're seeing is hypocrisy or irony. If Kurt Vonnegut had written the plot, I'd know. If it were Mike Harris telling me that teacher testing was meant to "improve education" when we had Snobelen on tape telling us that we wants to take the government "out of the education business", I'd know it was hypocrisy.
So when the Conservatives tell me that they changed meat packing plant inspections because of their belief in the free market, I have to wonder if they really believe in the free market.
The Conservatives go completely off message when they send $80 million to a dead Ford plant in Windsor in a painfully, embarrassingly transparent attempt to buy votes. If the free market is really working properly, Mr. Harper, why don't you let that Ford plant die while the people who are invested in proper technology prosper? Why are you propping up a company that the all-knowing, benevolent god you call the Free Market has decided to kill?
Is that hypocrisy, or are you merely running your government ironically now? Next up you'll be telling us that it's okay for a Prime Minister to manipulate election dates to his own best advantage, or dropping those anti-abortion bills, or appointing Senators, or stealing MPs from other parties right after election day, or ... well, never mind.
(h/t to Jay at the Sleveen Institute)
Monday, July 14, 2008
When is it class warfare?
Class warfare simply means that people are choosing their sides in a fight based on how much money they have ... or at least how much money they think they have. It's probably important to note, before we begin, that most people have an inflated sense of their position in the economy. I'm reminded of a survey done a while ago in the United States showing that 39% of the population felt that they were in the top 1% of all annual incomes.
But equally well, we must remember that "class warfare" isn't generally declared when the rich want a larger share of the pie. If the upper class takes control of government, lowers personal and income taxes while cutting education and health care, this is not called "class warfare". This is called "economics", "modernization" and sometimes the "free market" or "economic freedom".
Rest assured that you have never heard Global Television or CBC in Canada, or Fox, CNN, ABC and NBC in the U.S., complain that what Mike Harris or George Bush did was in fact "class warfare". Even as these invoked regressive tax measures and cut government services and ran up huge deficits for future people to pay off, there was never a word of class warfare.
But just you try to increase taxes on the wealthy (Hint: you're not wealthy, not by these standards, or do you really think you're in the top 1%?) and the accusations of class warfare will fly.
Point out the latest stats from Stats Canada showing that income has risen most quickly for the rich and shrunken for the poor and the papers will be quick to excuse this on all sorts of flimsy grounds.
This guy wants you to believe that since "family incomes" have risen, everything is okay. Because working twice as many hours for slightly more money is great! He also excuses it because poor people have all of those pension plans and government transfers that StatsCan doesn't count. (Except StatsCan says quite specifically that they do count government transfers) Makes you wonder if rich people have RRSPs, stock options and tricky life insurance policies that don't count either. Maybe I'll just say that without substantiating it at all. That's apparently legitimate journalism.
This 2006 report from TD bank is pretty straightforward. Productivity gains in Canada resulted in huge amounts of generated wealth. 71% of that wealth went to the people who were already in the top quintile. Meanwhile the rest of us are waiting for all those "wait time" promises to come true at our nearest hospitals. Go ahead, grep the report for "class warfare". You won't see it anywhere in there.
You won't see it anywhere at all until people start fighting back. And then you'll hear about how bad "class warfare" is for the "economy".
But equally well, we must remember that "class warfare" isn't generally declared when the rich want a larger share of the pie. If the upper class takes control of government, lowers personal and income taxes while cutting education and health care, this is not called "class warfare". This is called "economics", "modernization" and sometimes the "free market" or "economic freedom".
Rest assured that you have never heard Global Television or CBC in Canada, or Fox, CNN, ABC and NBC in the U.S., complain that what Mike Harris or George Bush did was in fact "class warfare". Even as these invoked regressive tax measures and cut government services and ran up huge deficits for future people to pay off, there was never a word of class warfare.
But just you try to increase taxes on the wealthy (Hint: you're not wealthy, not by these standards, or do you really think you're in the top 1%?) and the accusations of class warfare will fly.
Point out the latest stats from Stats Canada showing that income has risen most quickly for the rich and shrunken for the poor and the papers will be quick to excuse this on all sorts of flimsy grounds.
This guy wants you to believe that since "family incomes" have risen, everything is okay. Because working twice as many hours for slightly more money is great! He also excuses it because poor people have all of those pension plans and government transfers that StatsCan doesn't count. (Except StatsCan says quite specifically that they do count government transfers) Makes you wonder if rich people have RRSPs, stock options and tricky life insurance policies that don't count either. Maybe I'll just say that without substantiating it at all. That's apparently legitimate journalism.
This 2006 report from TD bank is pretty straightforward. Productivity gains in Canada resulted in huge amounts of generated wealth. 71% of that wealth went to the people who were already in the top quintile. Meanwhile the rest of us are waiting for all those "wait time" promises to come true at our nearest hospitals. Go ahead, grep the report for "class warfare". You won't see it anywhere in there.
You won't see it anywhere at all until people start fighting back. And then you'll hear about how bad "class warfare" is for the "economy".
Thursday, June 19, 2008
Deregulation is just Thievery
I'm beginning to feel that I can make it a blanket statement: "If a man comes on the news espousing 'deregulation', that man is a thief."
It's coming out now, in regards to this spike in the price of oil, that the real culprit is simply deregulation. There's a bit from NBC that you can listen to here. They talk a lot of about "single commodity futures" and the various personalities that were involved in making deregulation of oil trading happen.
But the crunch is not the single commodity future. It's not monopolization (as it was in California). It's deregulation. The "Enron Loophole" as it's being called, allows trade in certain energy futures to be conducted without any oversight of the S.E.C.
It doesn't matter, at that point, what the mechanisms are. Whether it's single commodity futures, sub-prime mortgages or Savings and Loan, if someone isn't watching stock brokers and traders with an eagle eye then we're going to have cheating eventually. Eventually, we'll be hosing the general populace. There are a host of ways to cheat and the average person is absolutely helpless to understand any of it.
That's why the S.E.C. was created - to police a complicated financial system using people who new how the game could be gamed. Take away the S.E.C. and you end up with $140 barrel oil when market principles tell us it should be around $80.
My point isn't just about oil though, it's about deregulation. Deregulation is sold as a way to "increase competition" and let the free market take care of everything. Never, ever believe it.
It's coming out now, in regards to this spike in the price of oil, that the real culprit is simply deregulation. There's a bit from NBC that you can listen to here. They talk a lot of about "single commodity futures" and the various personalities that were involved in making deregulation of oil trading happen.
But the crunch is not the single commodity future. It's not monopolization (as it was in California). It's deregulation. The "Enron Loophole" as it's being called, allows trade in certain energy futures to be conducted without any oversight of the S.E.C.
It doesn't matter, at that point, what the mechanisms are. Whether it's single commodity futures, sub-prime mortgages or Savings and Loan, if someone isn't watching stock brokers and traders with an eagle eye then we're going to have cheating eventually. Eventually, we'll be hosing the general populace. There are a host of ways to cheat and the average person is absolutely helpless to understand any of it.
That's why the S.E.C. was created - to police a complicated financial system using people who new how the game could be gamed. Take away the S.E.C. and you end up with $140 barrel oil when market principles tell us it should be around $80.
My point isn't just about oil though, it's about deregulation. Deregulation is sold as a way to "increase competition" and let the free market take care of everything. Never, ever believe it.
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