Hiring does require risk taking

Discussion in 'Economy' started by MaggieMae, Dec 4, 2009.

  1. MaggieMae
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    MaggieMae Reality bits

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    John Boehner made the argument yesterday that companies weren't hiring because of the uncertain future. Paraphrasing, he put it this way:

    --How will new regulations on businesses affect the cost of doing business?

    --How will the cost of a new health care initiative affect the cost of doing business?

    --How will a new energy plan (particularly cap & trade) affect the cost of doing business?


    But doesn't business always take into consideration risk factors? Nothing ever stays the same. Can anyone predict, ever, that every business in America will survive even under the best of circumstances? Profits are needed to sustain a profit margain AND to cushion the blow if there are future downturns. When did the private sector ever hold back from taking risks in order to generate profit?

    Boehner is just blowing smoke, as usual, to score political points. The PROBLEM with the rising unemployment TODAY, the reason businesses aren't hiring, is because they are unable to enew their myriad methods for maintaining cash flow, part of which, in addition to profits, is available credit to buy the products they need to keep their businesses afloat.

    And that problem can still be laid directly at the feet of the giant investment "banks" like Goldman Sachs and Bank of America who continue to be tight fisted with their lending practices to the smaller community banks which the private sector relies upon for credit. The Big Banks like BofA are rushing to pay off their TARP loans because they don't want re-regulation of their operations. That tells me that they're still trying to hide something,

    Let's also be realistic about what the future job market will look like.

    --Many of those who are now jobless will never get those same jobs back. Layoffs that have occurred by small businesses and factories barely holding on by continuing to produce soon-to-be obsolete products have gone out of business for good. Retraining of those employees will be required directed toward the jobs of the future.

    --There are only so many technical and management opportunities available, and new and recent grads will continue to be looking for work until a new work environment begins to take place. And that can only happen by large investments in the future of those entrepreneuring ventures and joint ventures who TAKE THE RISKS involved in establishing new, modern, upgraded businesses adaptable to the needs of the 21st Century.
     
  2. Maple
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    Maple Senior Member

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    Yes, Business take risks but they are also able to manage those risks, with the health care proposal and the Cap and Trade they are uncertain about the risks. With uncertainty comes fear, and fear slams the breaks on expansion and job growth.
     
    Last edited: Dec 4, 2009
  3. Truthmatters
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    There needs to be regulations put in place to replace Glass Steagal and to force the banks to lend again.

    If they refuse to act as banks and start lending money then they need to be chopped up and regulated into intities that will loan money.
     
  4. MaggieMae
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    How do you "manage" a risk unless you've got the resources to accommodate those risks?
     
  5. uscitizen
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    uscitizen Senior Member

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    Why hire more people to make things no one will be buying?
     
  6. MaggieMae
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    Exactly. There needs to be a clear set of rules between investment banks (which take risks with Wall Street investors money) and community banks that serve the public interest. The problem was that when the investment houses suddenly realized their assets were worthless, they then passed the memo to real banks that, sorry, we thought we had that much money to re-invest in you, but turns out we didn't, so good luck with that on your end. And the ripple effect has of course been disastrous.
     
  7. MaggieMae
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    That's why ultimately there will be a clean slate. Out with the old, in with the new.
     
  8. code1211
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    code1211 Senior Member

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    Don't want to be a downer here, but, if we assume that the credit business and their lending practices had allot to do with this, it would seem logical that if we wish to avoid a relapse into the days when we were at the

    {{{{{{{{{{{{JARRING CHORD}}}}}}}}}}}}}}}}}

    Brink of the Abyss,

    lending practices should be tightened up so that people who can actually repay the loans are the ones that are getting the loans.

    "Sub prime" did not refer to the rate of interest, it refered to the nature of the burrower.

    Now, since politicians must have a "them" for them to act as if they are protecting "us", the credit industry was bad when it gave loans to destroy the economy and now they are bad when they don't give loans. The important thing to have when constructing an "us vs. them" mentality is an available "them".

    People like Charlie Rangle, Owner of 4 mansion residences around the world presumably financed on the income of a public servant, rails against the lending industry whenever he gets the chance as either being irresponsible or unfairly restrictive. Either way, he is on the side of US against THEM. Always he is a disingenuous thief trying to figure out how to get the next pay off to buy another mansion.

    Who is the real villain in this?
     
  9. MaggieMae
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    The "villians" are all over the place. We became a greedy society, believing we could have it all and never have to pay it back. Maybe the question should be "Who are the vultures who knew this all along and decided to play old-fashioned bait and switch on an ignorant public?"
     
  10. code1211
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    code1211 Senior Member

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    Whoa there, big fellow!

    When I was growing up, my parents constantly were preaching responsibility and the belief that if something seemed to good to be true, then it was probably not true.

    WC Fields made a movie called "You Can't Cheat an Honest Man". People were gaming the system and were trying to get something for nothing. The lenders were working within the law and the laws were made by our legislators who got sweetheart deals from the lenders. The holier than thou Chris Dodd chief among these.

    "The ignorant public" truly is ignorant, but even the most dense had to know that they could not afford a loan that they could not repay. The ignorant public was the not the "Honest Man" from the Fields movie. They were gaming the system as much as the lenders were. As such, it was easy to cheat them.

    The loan originators were employed to rob the banks and the folks getting the loans were at least as guilty as the getaway car driver. They didn't plan the heist, but they knowingly intended to profit from it.
     

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