It's clear I know nothing about economics.

[tw]

Quote: Originally Posted by Woodsman Brilliant summation there, you should be on TV

I usually am, but my girlfriend keeps telling me to get off and sit on the couch like a normal person. girlfriends, yeesh...

[aehurst]

Quote: Originally Posted by tw I usually am, but my girlfriend keeps telling me to get off and sit on the couch like a normal person. girlfriends, yeesh...

Anyone who knows as much about 19th century philosophers and economists as you do may need a little direction.

[NovaScotian]

Second that. Post 131 really did it for me. Remember the header of this very long thread is "It's clear I know nothing about Economics".

[eValuone]

Aehurst, NovaScotian, et al.,

May we revisit "3-2=?"

There is a strong clue here that som'at is amiss!

Do our kids grasp an innate which our societies have taught else ought?

Will economics have meaning (still) if we show that 'minus' is no longer an objective 'concept?' (Accounting, etc.)

What if 'minus' is REALLY a bogus idea?

Yours truly can list an unlimited number of 'reasons' why minus is a bad idea, if we assume Henri Louis Bergson's basic philosophy is decent.

If we take above as grail, then it's no wonder we have said title of this thread and are spending so much thought on it.

If this is unworthy as commentary, I just want to thank all of you for your efforts. I have learned so much, so much, here.

Best always,

eValuone.

[ArcticStones]

I just read a fascinating analysis by George Soros of the accellerating global financial crisis. Interestingly, this article also contains specific policy suggestions for reversing the current destructive trends.

However, since it’s clear I know nothing about economics, I must confess that George Soros’ discussion leaves me still uncomprehending macro-economics.

[NovaScotian]

Fascinating indeed, though like you my ignorance shows through.

[aehurst]

Quote: Originally Posted by ArcticStones I just read a fascinating analysis by George Soros of the accellerating global financial crisis. Interestingly, this article also contains specific policy suggestions for reversing the current destructive trends. However, since it’s clear I know nothing about economics, I must confess that George Soros’ discussion leaves me still uncomprehending macro-economics.

Perhaps Soros would be more convincing if he didn't have that annoying habit of spelling his name backward.

Certainly we need a stimulus package.

Certainly we need to keep the banks afloat and solvent. Number of ways to do that, but I am not sure reducing the reserve requirements is one of them. Wasn't that part and parcel of the problem we're in now (banks didn't have reserves to cover their losses)? Why not just change the "mark to market" rules. Same difference.

Certainly we need to take a hard look at how we do mortgages. Not sure the Danish system is necessary and/or better, but gotta get mortgages out of the "now you see it, now you don't" investment schemes and tighten up on lending criteria. Maybe add some criminal offenses to the books for the most deserving thieves.

Certainly we need more international cooperation with the IMF... but my guess is that's not going to be as easy as he makes it sound. The surplus nations are not likely to volunteer to contribute more to the IMF... much less balance their import/export balance of trade. Many years to implement I think.

He lost me on the energy policy having a lot to do with the current crisis. Sure, invest in energy independence as part of the stimulus package, but his carbon credits, taxing imported energy, etc., smacks of Al Gore and is in fact protectionism.

Maybe the best thing we can do is all stand up, raise our right hands, and swear to never again elect anyone who thinks trickle down economics is anything but an attempt to shift taxes to those least able to afford them. Then, let's all go out and buy a new Mac.

[cwtnospam]

Quote: Originally Posted by aehurst ... smacks of Al Gore and is in fact protectionism.

Is that necessarily a bad thing? Is it even protectionism? Call it whatever you like, but we all need protection from institutions that are larger than governments and state clearly that they have no responsibility to us, only to their shareholders, and even then only to their largest shareholders.

[aehurst]

Quote: Originally Posted by cwtnospam Is that necessarily a bad thing?

Nope, just not sure what it has to do with bank liquidity and getting the economy moving. Strikes me as more of a personal agenda on Mr. Soros' part.

Quote: Is it even protectionism?

Adding tariffs on imported energy is, by definition, protectionism. Protecting our industry by artificially forcing the price up on foreign competition is protectionism. Whether this is justified or not is subject to debate. Agree we need to move strongly with investment in developing alternative energy sources.

Quote: Call it whatever you like, but we all need protection from institutions that are larger than governments and state clearly that they have no responsibility to us, only to their shareholders, and even then only to their largest shareholders.

Don't think I'll be investing anything with a corporation which is not interested in making a profit.

[cwtnospam]

Quote: Originally Posted by aehurst Don't think I'll be investing anything with a corporation which is not interested in making a profit.

What does that have to do with them having no responsibility to us, only to their shareholders, and even then only to their largest shareholders? There was a time when corporations not only talked about their civic responsibilities, but actually did something about them. That's when we developed the idea that if it was good for "Corporate America" then it was good for all of us. A hopelessly anachronistic thought today.

[aehurst]

Quote: Originally Posted by cwtnospam What does that have to do with them having no responsibility to us, only to their shareholders, and even then only to their largest shareholders? ...

Of course the corporations have a deep, heartfelt concern for their employees and mankind .... it's just they feel a little stronger about maximizing profits than they do about feeling good about their contribution to society.

Quote: There was a time when corporations not only talked about their civic responsibilities, but actually did something about them. That's when we developed the idea that if it was good for "Corporate America" then it was good for all of us. A hopelessly anachronistic thought today.

Many corporations do charitable works, try to be environmentally friendly and return value to the communities they serve. No way, though, that profits are going to take second chair to anything. So, yes, a hopelessly anachronistic thought!

[Woodsman]

Quote: Originally Posted by aehurst Many corporations do charitable works, try to be environmentally friendly and return value to the communities they serve.

Given that some corporations do this and some don't -- to a mild or spectacular degree in both categories -- we should be talking about what causes the difference. Is it the corporate form, the shareholder profile, the regulatory mechanisms, the national culture, the vision of the founder, the corporate culture, something else entirely, or any combination thereof?

[aehurst]

Quote: Originally Posted by Woodsman Given that some corporations do this and some don't -- to a mild or spectacular degree in both categories -- we should be talking about what causes the difference. Is it the corporate form, the shareholder profile, the regulatory mechanisms, the national culture, the vision of the founder, the corporate culture, something else entirely, or any combination thereof?

One thing is clear... the corporations who are not making a substantial profit are not spending large sums on charity or improvement of the environment.

It certainly helps if the expenditures are tax deductible... or better yet, a tax credit.

Past that, I don't have a clue. For sure, the views of the board and CEO are major.

Perhaps the extent to which good PR helps the corp increase profits is a player. A non-recognizable name would gain little, while a Walmart or McDonalds might reap big benefits from a good public image.

[NovaScotian]

The big banks and Wall St investment firms don't seem to get it, do they. I've read several articles this morning in which they are lamenting the stimulus package's bonus caps because it will lead to the loss of their top talent who will flee to foreign-owned banks and institutions that don't have a cap. Really. They seem to think that the authors of this financial disaster, the very execs we're talking about, can readily find jobs anywhere. Dreaming in technicolor, or what?

[Woodsman]

Quote: Originally Posted by NovaScotian I've read several articles this morning in which they are lamenting the stimulus package's bonus caps because it will lead to the loss of their top talent who will flee to foreign-owned banks and institutions that don't have a cap. Really. They seem to think that the authors of this financial disaster, the very execs we're talking about, can readily find jobs anywhere.

Even that well-known commie rag, "The Economist", was saying that it's now a buyer's market for financial acrobats, who are thus deluding themselves. However, I think both of you may be too sanguine. Shall we postulate an international freemasonry of arrogant incompetents who will -- even now -- readily give one another jobs, in the expectation of being given one back when their time comes? We should maybe call them the Dysluminati.

[cwtnospam]

Quote: Originally Posted by aehurst Of course the corporations have a deep, heartfelt concern for their employees and mankind ....

You're joking, right?

Quote: Originally Posted by aehurst Many corporations do charitable works, try to be environmentally friendly and return value to the communities they serve. No way, though, that profits are going to take second chair to anything. So, yes, a hopelessly anachronistic thought!

No one is saying that profits need to take second place to anything. That's completely beside the point.

The problem is that short-term profits take first place, followed in far-distant second place by long-term profits. Whatever comes in third place rarely shows up on radar.

The extreme right wing has preached this religion of corporate profits so much and for so long that it's hard to get people to even consider the idea that there should be other corporate responsibilities that are paid anything more than lip service! Instead, they have people believing that it's profits vs everything when it really needs to be that profits are simply one important part among many that constitute a legitimate business.

[ArcticStones]

Nouriel Roubini advocates a more radical approach: Nationalize the banks:

Quote: "The U.S. banking system is close to being insolvent, and unless we want to become like Japan in the 1990s -- or the United States in the 1930s -- the only way to save it is to nationalize it."

Quote: "First -- and this is by far the toughest step -- determine which banks are insolvent. Geithner's stress test would be helpful here... Second, immediately nationalize insolvent institutions. The equity holders will be wiped out, and long-term debt holders will have claims only after the depositors and other short-term creditors are paid off. Third, once an institution is taken over, separate its assets into good ones and bad ones. The bad assets would be valued at current (albeit depressed) values. Again, as in Geithner's plan, private capital could purchase a fraction of those bad assets. As for the good assets, they would go private again, either through an IPO or a sale to a strategic buyer.

[cwtnospam]

The root of the problem is not the banks. They're a symptom. The problem is what it always is when there is a problem with the economy: jobs. There are plenty of jobs if you can work for nothing, and that's the problem.

Trickle down === Trickled on

[NovaScotian]

Several articles I've read today, principally one in the Financial Times, advocate taking off the kid gloves in the restructuring of banks -- namely by letting those who are technically bankrupt anyway by virtue of the value of their toxic holdings exceeding their capitalization should be allowed to fail. They got themselves into it with bad management, so why do you want to preserve them? Instead, focus on those who are genuinely still solvent and rebuild them. Sounds good to me.

[aehurst]

Quote: Originally Posted by NovaScotian Several articles I've read today, principally one in the Financial Times, advocate taking off the kid gloves in the restructuring of banks -- namely by letting those who are technically bankrupt anyway by virtue of the value of their toxic holdings exceeding their capitalization should be allowed to fail. They got themselves into it with bad management, so why do you want to preserve them? Instead, focus on those who are genuinely still solvent and rebuild them. Sounds good to me.

Think this was discussed heavily early on.... let em fail, feds take over with a Resolution Trust Corporation type organization and sell off the assets over time to recover their losses from FDIC insurance. It seemed to have worked well for the Savings and Loan fiasco a couple decades ago.

Have no idea why nobody wanted to do this again. Makes sense to me, too.

I don't like the idea of separating good and bad assets and such... if the bank is insolvent, shut it down and sell the good assets to cover the losses on the toxic ones with the FDIC (taxpayers) eating the difference. Let the stocks fall to zero.

Agree with all on the bonus thing.... I'd show them the door for even suggesting they thought they had earned one.

@CWT

Quote: You're joking, right?

Of course. We established earlier in this thread that only individuals can think. That would extend to only individuals can care, too. Corporations are not individuals. They don't give a rat's tail about anything... and their board members only care about profits.