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EdwardT
Trad climber
Retired
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Hey Dirtbag - Let's see those districts "where no one lives"!
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dirtbag
climber
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Topic Author's Reply - Mar 6, 2015 - 01:34pm PT
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Wow sketch, so I said districts instead of regions.
Sue me.
Do you have any other grand point to make?
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dirtbag
climber
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Topic Author's Reply - Mar 6, 2015 - 01:36pm PT
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It's ok, tgt, someday another white man will be president .
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EdwardT
Trad climber
Retired
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I said districts instead of regions.
Oh! Okay.
Sue me
Easy there, sport. It's no biggie.
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JEleazarian
Trad climber
Fresno CA
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Isn't this what happens in a capitalist economy? there are winners, and losers. It seems like the conservatives cheer this, because it means that losers pay for being losers. Those people who lose jobs keep the salaries of everyone down due to the increased availability of labor.
What is the alternative? Gov't programs to help struggling companies? Isn't that what we did with GM?? Didn't the Conservatives scream and cry over that, that GM and all its suppliers should have been allowed to fail?
Thank you, Ken, for engaging in discussing one of the most important aspects - and strengths - of the American economic system.. I'll admit my bias - for three decades I limited my practice to business insolvency and bankruptcy. The bankruptcy laws of the United States are one of its greatest strengths, because it allows resources misdirected to less productive uses to be redirected into more productive uses.
In more statist economies, the government intervenes to maintain the status quo, with the result the country's economic system is stuck in a time warp where the price of goods and services relative to the wages of workers is higher than it otherwise would be. The reason should be obvious. Those industries possessing greater political power will force everyone else to pay to maintain their inefficient ways.
My favorite example - because even those on the left agree - is our sugar price supports. Those price supports work by limiting the amount of imported sugar to keep domestic prices artificially high. Econometricians of all political leanings have estimated that for every domestic job it saves, it loses anywhere between 10 and 100 because it causes American producers who use sugar as a major input to have a competitive disadvantage relative to those who pay a competitive price.
Try changing the system, though, and the political clout of the status quo comes through. Those dependent on the artificially high sugar price exert greater political influence because the price affects them greatly. The overall effect on the economy, and on Americans as a whole, is much greater on the negative side, but because that negative effect is dispersed, it isn't a big issue for most people.
Yes, Ken, the cost of losing is borne by the workers and suppliers, temporarily, and by the owners permanently. To take your example, if GM went under, what do you think would have happened to employment in Detroit? GM would have filed a Chapter 11. GM would have continued to produce and sell cars while the Chapter 11 process moved along. It would result either in confirmation of a plan where the shareholders lost everything, the secured creditors were paid the value of their collateral, the unsecured creditors took a major haircut, and the assets transferred to new investors, or it would have been converted to a Chapter 7 liquidation, where the shareholders lost everything, the secured creditors got the value of their collateral, the unsecured creditors took a bigger haircut, and the assets transferred to new owners.
Gee, isn't that exactly what happened? The real objection to the government's GM plan was that the government's thumb on the scales unfairly paid some creditors who weren't entitled to those rights under law, but in truth, the outcome would have taken longer, but been the same for the employees and the use of the assets. As many foreign automakers have discovered, making cars in the USA has a tremendous advantage if you want to sell those cars in the USA.
If we didn't have the sorts of bankruptcy laws we have here, and instead had a government that tried to keep every industry going as it is, we'd still be propping up buggy whip makers, and cleaning up one hell of a lot of horse manure. Ironically, the self-styled "progressives" tend to support economically reactionary policies designed to maintain the status quo and stop changes that enrich ordinary people by getting them more and better goods for less.
We have unemployment, job training and re-training, and welfare programs for employees who lose their jobs because they work in industries or firms that cannot support them financially. We have no such programs for investors generally except in politically favored industries and market segments.
For example, we want to encourage home ownership so the government guarantees most of the credit financial institutions extend to home buyers. When the government then instructs those lenders to relax their underwriting criteria, is it any surprise that we end up with bursting bubbles? Then there are all the "green energy" subsidies, etc. Those investors get welfare. In my opinion, the government would do well to get out of the "corporate welfare" business.
I could go on, but I have work and climbing to do, so I'll sign off until next week.
John
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rottingjohnny
Sport climber
mammoth lakes ca
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Lezarian...Interesting post but as i recall , the American taxpayer , aka , working stiffs , bailed out the too big to fail banks...Kind of shoots down your black and white view doesn't it..?
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Craig Fry
Trad climber
So Cal.
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THANKS in advance!!!...
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k-man
Gym climber
SCruz
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When the government then instructs those lenders to relax their underwriting criteria, ...
Did that really happen?
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Norton
Social climber
quitcherbellyachin
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When the government then instructs those lenders to relax their underwriting criteria, ...
why did your Republicans who had the Presidency, House, and Senate from 2000-2006
fail to tighten the mortgage underwriting standards, JohnE?
also, when they had complete control why did they not increase regulation on financial
derivatives, John?
and remember what happened? The US economy went into the Great Recession
because they were too busy holding hearings investigating their own Iraq Nation Building?
when do you, John, stand up and defend the horrible record your Republicans have?
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rottingjohnny
Sport climber
mammoth lakes ca
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I think rock jox voted for that Young character..?
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Larry Nelson
Social climber
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JEleazarian wrote:
In my opinion, the government would do well to get out of the "corporate welfare" business.
Amen to that. The government never should have bailed out the automakers. The government should not have bailed out the banks. The government should be wary of subsidizing any industry.
As John has appreciated before because of his expertise in bankruptcy law: Capitalism without bankruptcy is like religion without Hell.
The partnership of government with big business totally perverts capitalism.
Why is it that the bigger the business, the more they invite government regulation? This is a hard fast rule and is pretty much true across the board.
Check out the definition of economic liberalism in Wikipedia. Ironically it means the opposite of what most believe.
Economic liberalism is often associated with support for free markets and private ownership of capital goods, and is usually contrasted with similar ideologies such as social liberalism and social democracy, which generally favor alternative forms of capitalism such as welfare capitalism, state capitalism or mixed economies http://en.wikipedia.org/wiki/Economic_liberalism
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Larry Nelson
Social climber
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I had the displeasure of crossing paths with Don Young 25 years ago in Alaska. Getting on a Twin Otter in the Kenai airport during the winter, I was having a conversation with a nice lady. A guy in a suit sits next to her and says "Hi, I'm Don Young and I am running for Congress" He then hijacked a nice conversation and the dialogue turned into a monologue of his opinions. Typical politician. I soon just leaned back, closed my eyes and I don't really know when he stopped talking to me. I think he got my point.
One of the reasons I liked Sarah Palin at first is that she was peeing in the Wheaties of the old republican establishment in Alaska. Took awhile, but then it became obvious that she was in a little over her head. Of course a whole boatload of Washington DC pols of both parties are in over their heads as well.
The longer these people spend in Washington DC, the more out of touch they are to the people. They are all residents of DC and just vacation to their "home districts".
“The ever expanding power of the federal government, the absorption of many of the functions that states and cities once considered to be the responsibilities of their own, must now be a source of concern to all those who believe as did the Irish Patriot, Henry Grattan: ‘Control over local affairs is the essence of liberty.’”
John F. Kennedy
Edit: I just started watching "House of Cards" on Netflix. Classic.
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apogee
climber
Technically expert, safe belayer, can lead if easy
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House of Cards is fun!
Edit:
"...that she was WAAAAAAAAAYYYYY the f*#k over her brainless, little head."
Fixed that for ya.
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Ken M
Mountain climber
Los Angeles, Ca
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We have no such programs for investors generally except in politically favored industries and market segments.
REALLY? You must not own anything that gets very favored capital gains treatment.
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Ken M
Mountain climber
Los Angeles, Ca
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John, I really think you ignore history.
The GM problem came at the height of the recession, where a major hit on employment could easily have sent us into a real depression.
There was a great uncertainty about the path of bankruptcy, and as evidence, YOUR POST, in which you hypothesize several different options---which means that there was and is uncertainty, even now, about what would have happened.
That does not even touch on the corollary effect on the economy as a whole from such a hit. We were in free-fall. The action was not to start stripping things off, it was to pull a ripcord.
I don't disagree that the MANNER in which we saved the banks was flawed. However, had we not saved the banks, our economy would have collapsed, and we'd have entered a depression that would have made the great depression seem minor.
Bernanke, from the movie "too big to fail":
[Click to View YouTube Video]
https://www.youtube.com/watch?v=XS1QPtO4KdM
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climbski2
Mountain climber
Anchorage AK, Reno NV
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Giuliani is looking like a complete idiot today...
jess sayin
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