Capitalism Isn't The Problem

Discussion in 'Economy' started by PoliticalChic, Jan 15, 2010.

  1. PoliticalChic
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    PoliticalChic Gold Member

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    Why do you believe that the free enterprise/ capitalistic system is to blame for Wall Street and Mortgage Meltdown?

    a. Because you have not only been steeped in the propaganda from the school system, and the main stream media, but have accepted same.
    b. Your belief system can only function through the use of what little you are allowed to know, and your conclusions make sense due to this limited knowledge.

    Don’t overlook the basic protocol of any debate: the denouement requires that we both agree on the terminology, the definition of the subject of the debate.
    In this case, “capitalism.”

    John Stossel show of January 14, 2010 was called “Crony Capitalism.”

    1.Department of Energy Weatherization Boss, Office of Energy Efficiency and Renewal
    “Swat teams will go down every block and see that every business and building is more energy efficient.” This is Kathy Zoi.

    $16.8 billion Stimulus Fund for Green Energy development. Only one window maker is on the list of those given green stimulus funds: Serious Materials- $548, 000
    But their windows are no more efficient than Pella, Anderson and Marvin.

    Some six times in the last year, the President and the Vice-President have visited the factories of Serious Materials, providing photo ops, and news conferences as to how efficient their product is, how they are creating ‘green jobs’ and better products.

    Strange, according to government watchdog group Freedom Foundation of Minnesota.
    This group wonders why Serious merited this largesse; their question is not based on policy issue, but on conflict of interest. Ms. Zoi is the wife of Serious Materials vice-president. The American Spectator : AmSpecBlog : Conflict of Interest for Obama's Weatherization Czar

    a. Serious Materials first made the news when a Republic Windows and Doors in Chicago closed and laid off some 200 union workers. The workers occupied the factory and refused to leave, until they got their jobs back. Serious Materials took over the factory to great fanfare, promising to rehire the laid-off workers. The promise never materialized. The American Spectator : AmSpecBlog : Neither Extortion Nor Subsidies Keep Failing Business Afloat

    2. “The Big Ripoff,” by Tim Carney: in a supposed free enterprise system, Congress obviates free enterprise by picking winners and loser. While promising to ‘reform’ the healthcare system by reducing costs, this Congress subsidizes drug companies and forbids re-importation of prescription drugs. This is not capitalism.
    Amazon.com: Customer Reviews: The Big Ripoff: How Big Business and Big Government Steal Your Money

    a. Serious Materials is connected with the administration, a vice-president married to an administration official, and reopens a factory in Chicago, and give thousands in contributions to the administration, and hires a lobbyist…and is rewarded with stimulus funds, and gets administration officials in their advertisements.

    b. This example of crony-capitalism is not unusual. And contrary to the term ‘crony-capitalism,’ is not capitalism.

    3. Let’s be very clear. Capitalism in its simplest configuration is this: profit informs the amount of risk one will take, and loss informs prudence in investment.

    a. When government assumes the ‘risk’ element, we are no longer speaking of capitalism. When Congress writes laws to pick winners and loser, that is not capitalism.

    b. When the steel industry contributes to politicians and hires lobbyists, and government places tariffs on foreign steel, we all pay the higher costs. Now, you may say that the United States cannot afford to lose its steel industry for national security and I may agree. Politically connected special interests influence the government to change the rules of the marketplace. This happens regularly. But this is not capitalism.

    c. The story of the success of Serious Materials is not a success story of capitalism. It is corrupt crony-capitalism.

    d. Bailouts of Wall Street, where taxpayers cover losses is not capitalism.

    e. Government take-over of GM as a gift to unions which support the administration is not capitalism. Russ Roberts, Professor at George Mason University, asks why bail out GM? We were told that there would be terrible ramification if it were to fail, but he asks, “What is the evidence?”

    4. Even when companies try to behave as capitalistic enterprises, corrupt government practices make it very clear that to remain successful, they must engage in crony-capitalism.
    a. In 1998, Microsoft had no lobbyists, and contributed little to either party. The administration began prosecution as a monopoly, causing tremendous problems for Gates, and roiling the markets in the process. Microsoft learned its lesson. Contributions were forthcoming and now has a huge lobbying arm. This is not capitalism.

    5. Big industry and big government have a thriving relationship. Sometimes this is difficult to see, as when the government seems to support legislation and regulation seemingly aimed at reeling in business excesses. But look closely. New regulations favor big industry which can afford new testing and procedures, and this effectively prevents new competitors from appearing.

    a. When government instituted new regulations on tobacco companies, including preventing ‘flavored’ cigarettes. Bad for Philip Morris? No, it prevented smaller tobacco companies from fulfilling the new regs: Wall Street realized what was happening. Between the time the new regulations were proposed and the law passed, Philip Morris stock rose 35%. And just the law excluded ‘mint flavor,’ another advantage for PM.
    Smoke Signals: Why a Tobacco Giant Is Backing a Tough New Antismoking Bill - TIME

    b. Passing a huge restriction on any lead in clothing or toys for children. Any lead, even in buttons, zippers, although there was no way for the lead to harm any child sucking on these parts. The law required testing, certifying, and creating a registry for every part of every product. And any amount of lead ended the lawful use of the product. OK for Mattel, but not for any small clothing or toy manufacturer. And Mattel lobbyists helped write the law, as did Hasbro, so it happened to conform to the lab protocols used by Mattel.

    No matter that charities such as Goodwill, and even garage sales and resales of used items could be legal, and lost millions.
    http://seattletimes.nwsource.com/html/homegarden/2009286944_zhom01toysafety.http Even the Consumer Product Safety Commission notified Congress that the Lead Law went way too far. Anne Northup: There Is No Joy in Toyland - WSJ.com..

    So, before you damn capitalism for the ills extant, be sure you are speaking of capitalism.
     
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  2. Toronado3800
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    Toronado3800 VIP Member

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    Wow, that's quite a bit of typing you did!

    1. In general if I say capitalism is the problem with the banking industry I am blaming human nature. Some employees take advantage of the way they can rake in big money during good times and not loose it during bad.

    My theory is folks who run banks get paid well enough that if they bank fails they don't end up financially ruined.

    The same as GM doesn't come take back the money paid to an employee who installed a wiring harness poorly banks don't take back last year's bonus from executives who picked too risky of investments.

    1a. there is also the problem with folks cooking the books to qualify for this or that. Or folks who invest more than a safe amount of account holder's funds in a "sure fire" development.

    2. Crony Capitalism we agree on.

    Also the use of goofy political photo ops. Want George W. on your carrier or Michael Dukakis in your tank?

    3. Government eliminating financial risks..... Its like using a car loan to limit your risk.

    Imagine you own a ten year old car free and clear. The engine blows. This car is your way to work and to pick your kids up. You don't have 20k in the bank so you purchase a new auto with borrowed funds even though its a TERRIBLE financial decision when taken by itself.

    However the borrowing of funds to purchase that 20k car ensures you keep your job, and your house, and in the bigger sense makes sure child services doesn't take your kids you'll no longer be able to feed.

    I compare it to the government because the government sure can "lend" money to GM. On the surface it seems like a bad decision. Take into account the number of angry suddenly unemployed GM workers who want to turn to outright socialism and while it is open to some debate its a justifiable decision.

    At some point if you keep destroying your cars you need to move near public transit or if GM keeps needing bailed out it needs downsized so we can let it fail.

    *******
    I do agree there is nothing wrong with pure capitalism, if not for failings of human nature in corruption, excessive risk taking, or saving for security.
    The same statement can be applied to socialism. If folks would just show up and work w/o financial rewards that system would work to.

    Am I at all on topic?
     
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  3. Bfgrn
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    Bfgrn Gold Member

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    Well Pol Chic, maybe this will make some sense to you...

    ------------------------------------------------------------------

    I want to say this: There is no stronger advocate for free-market capitalism than myself. I believe that the free market is the most efficient and democratic way to distribute the goods of the land, and that the best thing that could happen to the environment is if we had true free-market capitalism in this country, because the free market promotes efficiency, and efficiency means the elimination of waste, and pollution of course is waste. The free market also would encourage us to properly value our natural resources, and it's the undervaluation of those resources that causes us to use them wastefully. But in a true free-market economy, you can't make yourself rich without making your neighbors rich and without enriching your community.

    But what polluters do is they make themselves rich by making everybody else poor. They raise standards of living for themselves by lowering the quality of life for everybody else, and they do that by evading the discipline of the free market. You show me a polluter; I'll show you a subsidy. I'll show you a fat cat using political clout to escape the discipline of the free market and to force the public to pay his production costs. That's what all pollution is. It's always a subsidy. It's always a guy trying to cheat the free market.

    Corporations are externalizing machines. They're constantly figuring out ways to get somebody else to pay their costs of production. That's their nature. One of the best ways to do that, and the most common way for a polluter, is through pollution. When those coal-burning power plants put mercury into the atmosphere that comes down from the Ohio Valley to my state of New York, I buy a fishing license for $30 every year, but I can't go fishing and eat the fish anymore because they stole the fish from me. They liquidated a public asset, my asset.

    The rule is the commons are owned by all of us. They're not owned by the governor or the legislator or the coal companies and the utility. Everybody has a right to use them. Nobody has a right to abuse them. Nobody has a right to use them in a way that will diminish or injure their use and enjoyment by others. But they've stolen that entire resource from the people of New York State. When they put the acid rain in the air, it destroys our forest, and it destroys the lakes that we use for recreation or outfitting or tourism or wealth generation. When they put the mercury in the air, the mercury poisons our children's brains, and that imposes a cost on us. The ozone in particular has caused a million asthma attacks a year, kills 18,000 people, causes hundreds of thousands of lost work days. All of those impacts impose costs on the rest of us that in a true free-market economy should be reflected in the price of that company's product when it makes it to the marketplace.

    What those companies and all polluters do is use political clout to escape the discipline of the free market and to force the public to pay their costs. All of the federal environmental laws, every one of the 28 major environmental laws, were designed to restore free-market capitalism in America by forcing actors in the marketplace to pay the true cost of bringing their product to market. That's what we do with the Riverkeepers -- we have 147 licensed Riverkeepers now and each one has a patrol boat, each one is a full-time, paid Riverkeeper -- each one agrees to sue polluters.

    At Riverkeeper, we don't even consider ourselves environmentalists anymore. We're free marketers. We go out into the marketplace, we catch the cheaters, the polluters, and we say to them, "We're going to force you to internalize your costs the same way that you internalize your profits, because as long as somebody is cheating the free market, none of us get the advantages of the efficiency and the democracy and the prosperity that the free market otherwise promises our country. What we have to understand as a nation is that there is a huge difference between free-market capitalism, which democratizes a country, which makes us more prosperous and efficient, and the kind of corporate-crony capitalism which has been embraced by this White House, which is as antithetical to democracy, to prosperity, and efficiency in America as it is in Nigeria. [applause]

    There is nothing wrong with corporations. Corporations are a good thing. They encourage us to take risks. They maximize wealth. They create jobs. I own a corporation. They're a great thing, but they should not be running our government. The reason for that is they don't have the same aspirations for America that you and I do. A corporation does not want democracy. It does not want free markets, it wants profits, and the best way for it to get profits is to use our campaign-finance system -- which is just a system of legalized bribery -- to get their stakes, their hooks into a public official and then use that public official to dismantle the marketplace to give them a competitive advantage and then to privatize the commons, to steal the commonwealth, to liquidate public assets for cash, to plunder, to steal from the rest of us.

    And that doesn't mean corporations are a bad thing. It just means they're amoral, and we have to recognize that and not let them into the political process. Let them do their thing, but they should not be participating in our political process, because a corporation cannot do something genuinely philanthropic. It's against the law in this country, because their shareholders can sue them for wasting corporate resources. They cannot legally do anything that will not increase their profit margins. That's the way the law works, and we have to recognize that and understand that they are toxic for the political process, and they have to be fenced off and kept out of the political process. This is why throughout our history our most visionary political leaders -- Republican and Democrat -- have been warning the American public against domination by corporate power.

    This White House (Bush/Cheney) has done a great job of persuading a gullible press and the American public that the big threat to American democracy is big government. Well, yeah, big government is a threat ultimately, but it is dwarfed by the threat of excessive corporate power and the corrosive impact that has on our democracy. And you know, as I said, you look at all the great political leaders in this country and the central theme is that we have to be cautious about, we have to avoid, the domination of our government by corporate power.

    Teddy Roosevelt, a Republican, said that America would never be destroyed by a foreign power but he warned that our political institutions, our democratic institutions, would be subverted by malefactors of great wealth, who would erode them from within. Dwight Eisenhower, another Republican, in his most famous speech, warned America against domination by the military industrial complex.

    Abraham Lincoln, the greatest Republican in our history, said during the height of the Civil War "I have the South in front of me and I have the bankers behind me. And for my country, I fear the bankers more." Franklin Roosevelt said during World War II that the domination of government by corporate power is "the essence of fascism" and Benito Mussolini -- who had an insider's view of that process -- said the same thing. Essentially, he complained that fascism should not be called fascism. It should be called corporatism because it was the merger of state and corporate power. And what we have to understand as Americans is that the domination of business by government is called communism. The domination of government by business is called fascism. And our job is to walk that narrow trail in between, which is free-market capitalism and democracy. And keep big government at bay with our right hand and corporate power at bay with our left.

    In order to do that, we need an informed public and an activist public. And we need a vigorous and an independent press that is willing to speak truth to power. And we no longer have that in the United States of America. And that's something that puts all the values we care about in jeopardy, because you cannot have a clean environment if you do not have a functioning democracy. They are intertwined; they go together. There is a direct correlation around the planet between the level of tyranny and the level of environmental destruction.

    The only way you can protect the environment is through a true, locally based democracy. You can protect it for a short term under a tyranny, where there is some kind of beneficent dictator but, over the long term, the only way we can protect the environment is by ensuring our democracy. That has got to be the number-one issue for all of us: to try to restore American democracy, because without that we lose all of the other things that we value.

    September 10, 2005
     
  4. Oddball
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    Oddball BANNED Supporting Member

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    Why didn't that phony baloney cake-eating jackass just say "some of my best friends are capitalists"? :rolleyes:
     
  5. PoliticalChic
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    PoliticalChic Gold Member

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    "Wow, that's quite a bit of typing you did!"
    And quite a bit yourself, brother.

    When I find a topic that interests me it's difficult to stop. I wrote one on tobacco that put folks to sleep.

    "...rake in big money during good times and not loose it during bad."
    Exactly my point: government should not force its social engineering perspective into the market, as in the mortgage meltdown, and then cover the loses. Both are bad ideas.

    "...banks don't take back last year's bonus from executives who picked too risky of investments.
    But the government threatened banks who used feduciary responsibility, and ACORN did the same. Both entities claimed the greater good was obviation of 'redlining.'


    a. Congress passed a bill in 1975 requiring banks to provide the government with information on their lending activities in poor urban areas. Two years later, it passed the Community Reinvestment Act (CRA), which gave regulators the power to deny banks the right to expand if they didn’t lend sufficiently in those neighborhoods. In 1979 the FDIC used the CRA to block a move by the Greater NY Savings Bank for not enough lending.

    b. In 1986, when the Association of Community Organizations for Reform Now (Acorn) threatened to oppose an acquisition by a southern bank, Louisiana Bancshares, until it agreed to new “flexible credit and underwriting standards” for minority borrowers—for example, counting public assistance and food stamps as income.

    c. In 1987, Acorn led a coalition of advocacy groups calling for industry-wide changes in lending standards. Among the demanded reforms were the easing of minimum down-payment requirements and of the requirement that borrowers have enough cash at a closing to cover two to three months of mortgage payments (research had shown that lack of money in hand was a big reason some mortgages failed quickly).
    Obsessive Housing Disorder by Steven Malanga, City Journal Spring 2009

    Freddy and Fanny would but up the mortgages, and the government would back them.

    "...folks cooking the books to qualify..."
    They were encouraged to do so.

    "According to the FBI, reports of mortgage fraud soared tenfold nationwide from 2001 to 2007. No one knows precisely how deep the problem ran, but some mortgage servicers, examining portfolios of subprime mortgages that went bad in 2007, found that up to 70 percent of them had involved some kind of misrepresentation. Loans that required no verification of the borrower’s income infamously became known as “liar loans.” One mortgage lender who compared 100 of these loans with IRS tax filings found that in 60 percent of cases, the applicants exaggerated their incomes (or underreported them to the IRS). Occupancy fraud, in which investors intent on buying new homes and then quickly flipping them for a profit lied about their intentions, accounted for about 20 percent of all fraudulent mortgage applications. Since the mortgage meltdown began in 2006, builders in some regions have found that as many as a quarter of the buyers of the homes that they sold in new developments lied about their purposes. This multitude of scams required the complicity of businesses that ultimately destroyed themselves and shattered an entire industry."
    Whatever Happened to the Work Ethic?
    Whatever Happened to the Work Ethic? by Steven Malanga, City Journal Summer 2009


    "... government sure can "lend" money to GM. On the surface it seems like a bad decision."
    I contend that the decision was purely a 'bribe' to the unions: keep voting us in.
    Photo ops are for companies that give money to the party.

    I find this the most interesting part of your post:
    " ...pure capitalism, if not for failings of human nature in corruption, excessive risk taking, or saving for security.
    The same statement can be applied to socialism. If folks would just show up and work w/o financial rewards that system would work to."

    Two very different concepts. First, we need a definiton of 'pure.' Unrestrained rights of ownership, a kind of feudalism, is not my idea of capitalism that would succeed. Government must make sure that citizens have rights that are not abused.
    Review the history of Kuo Min Tang China, and see capitalism out of hand. The reaction was Mao and 70 million killed.

    Now, as for socialism...it is based on a lack of understanding of human nature. Only capitlism allows for the rewards, profits, for behavior that benefits the individual and the society.

    Bradford proved this by replacing socialism with capitalism:
    "According to Gov. Bradford, this new policy “had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been.”
    Ameriborn News: William Bradford created capitalism
     
  6. Neubarth
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    Neubarth At the Ballpark July 30th

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    Capitalism can be a good system as it seems to get the best results out of the working class.

    Communism has been proven to get the worst results out of the working class.

    The greatest cause of failure in both systems is corruption.

    The only way to deal with corruption is to be ruthless with it, and execute all who are corrupt. Communist China has been doing this for the past twenty years and is making tremendous headway in cleaning up the criminal element in their society. It does appear that criminal propensity is, to some degree, a genetic trait.

    I would have no problem with being on a firing squad that took out all of the Corrupt Big Bankers and Politicians who have brought this country to its knees just like I would have no problem shooting a pedophile who murdered a four year old child after he sexually molested her.

    Shit like that needs to be eliminated.

    The sooner this nation understands that, the better we will become.
     
  7. Diuretic
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    Diuretic Permanently confused

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    Capitalism can be a good system as it seems to get the best results out of the working class.

    That's nice for the capitalists. Not so nice for the working class.

    Communism has been proven to get the worst results out of the working class.

    Since communism defines a society without class it would seem that any form of professed "communism" that still defines society in class terms isn't communist at all.

    China isn't communist, it's state capitalist in the mould of the Stalinist USSR. It's ruled by a totalitarian regime.

    Western capitalism has been able to thrive for various reasons but one is that its historical exploitative nature has been ameliorated, ironically enough by governments and unions rather than by the capitalists themselves.

    After the GFC - which is possibly still continuing - capitalism has been severely wounded. Unfortunately for the capitalists its true ways have been exposed, the comments in this thread and others show that.

    Unfortunately for the critics of capitalism other factors and individuals are being blamed for those excesses, but that's because the system is controlled by the oligarchs who use education and media to airbrush reallity.

    The plainest example is the Tea Party movement. All that anger directed at the wrong institutions and people.
     
  8. The Rabbi
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    The Rabbi Gold Member

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    Capitalism is a self-correcting system. Abuses end with bankruptcy and dissolution. No need to put anyone up against a firing squad.
     
  9. william the wie
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    Is the wrong topic being debated? The errors of capitalism involve externalities (misdefined property rights) and corruption. Those are problems with the government malfunctioning. So how and why does the government malfunction to reduce our freedom?

    Being a libertarian I think the first question is what government powers increase the survival probabilities of those I love?

    The second question is how to get all levels of government to the positive powers only point?

    The third question is how to keep it there?

    I think a constitutional convention would be required to get answers to those questions. Anything short of that sounds like a circle jerk to me
     
  10. uscitizen
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    Capitalism absolutely has nothing to do with our current economic situation now does it?
     
  11. Old Rocks
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    Old Rocks Gold Member

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    Sure, the people that created this whole fiasco walked away rich, and the rest of us damned near bankrupted.

    There damned well is reason for firing squads. It is unfortunate that some were not used.
     
  12. The Rabbi
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    The Rabbi Gold Member

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    Would you care to name them?
    In this fiasco, the problem is gov't intervention that prevented normal market forces from operating, not the market itself.
     
  13. Sodafin
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    No, the problem was that bankers leant money to people who could not pay it back, and operated far too much on the assumption of rising market prices to cover any losses incurred.

    Had 'the market' been left to its own devices, you might have seen 100,000 Americans lose their homes, many of whom would have been left on the streets a la Buenos Aires a few years ago.
     
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  14. The Rabbi
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    The Rabbi Gold Member

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    You think this is the first time that happened? It isn't. Had the market been left to its own devices, the only people who would have lost their homes are those same bankers. Now they are still living in penthouse apartments thanks to gov't bailouts.
     
  15. Sodafin
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    It never fails - as soon as you read a post written in this style you can bet the author has never studied the topic at hand, has read very few books on the topic, and relies entirely on extremist blogs for his sources of news.
     
  16. Sodafin
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    No,that's nonsense.

    A great number of Americans with mortgages at Freddie Mac and Fanny Mae only stayed in their homes as a result of government intervention.

    You're right that this is not the first time this has happened - thousands of Americans also lost their homes when banks foreclosed during the Great Depression, and were immortalised in Steinbeck's 'Grapes of Wrath', didn't they?
     
  17. The Rabbi
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    The Rabbi Gold Member

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    And those very people are getting foreclosed on now. I don't see that as a problem. I do see the gov'ts attempts to keep them in their homes at all costs as a bigger problem. Again, part of the self correcting nature of capitalism.
    The flip side is all the people who rented and patiently saved up money for a down payment. They are getting punished because in a real market economy they would be able to buy homes for about 50 cents on the dollar, rewarding them for patience and prudence. Instead we are rewarding the stupid.
    And bank failures don't always lead to great depressions. That is an argumentum ad absurdum.
     
  18. Sodafin
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    Some are - but not in anywhere near the numbers that would have happened without the bail-out.

    At one stage 8% (6.5 million loans) of all American homes faced foreclosure - and that is over and above the million that DID foreclose in 2008.

    You have to ask yourself the possible impact of even 20% of those people ending up on the streets...
     
  19. The Rabbi
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    You are making all kinds of unwarranted assumptions, like people foreclosed on end up in the streets. They dont. They move into apartments, they move into parents' homes etc.
    And the 8% figure is absurd. At no time were 8% of all mortgages in America 30 days or more delinquent.
    The bail out saved bankers' homes, not those of buyers. All those bankers out on the street wouldn't bother me too much.
     
  20. Oddball
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    Oddball BANNED Supporting Member

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    Absolute nonsense.

    The mortgage payment bailout didn't suddenly make people able to afford payments for houses that they already couldn't cover. All it really did was buy some time for those who were inclined to strip their houses a little more time to do so.
     

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