Economy death watch
 

Economic death, that doesn't sound good. http://www.discussworldissues.com/fo...lies/frown.gif

if there is consumer part of the business like with Rock, the gov should protect them.

but the shareholders on the other hand - their investment failed, and they should pay ie stay with nothing... as should the corporate creditors etc and not the taxpayer...

Good times. http://www.discussworldissues.com/im...ons/icon14.gif

problem with consumers is that there is very little visibility on banks viability (to anyone, just look at NR, or Bear Sterns), so to expect them to know that their bank on the corner is conservative enough to sail through the tough times is just encouraging everyone to bank with the biggest boy on the street and that's it... effectively encouraging banking monopoly/oligopoly...

thus in such situations I'd expect the state & taxpayers (after all we are this way protecting ourselves, and a lot easier to execute than NHS - another taxpayer funded "all benefit" service) to honor the savings/money in the actual accounts... but all the rest, take it away and restructure...

eventually when the storm passes when restructured bank is viable again, perhaps the taxpayer can return most of the investment and a lot of personal pain and total market confidence destruction has been avoided by state intervention.

The problem is that a failed bank damages the economy as a whole, and damages society. It's something of a catch-22 ... you don't want to bail them out to encourage more speculation, but you have to in order to prevent further failures and a lack of confidence in other banks.

Perhaps a solution would be nationalizing them, but that is not consistent with US economic policy ... but I can't think of anything else you could do that would still be a big enough penalty to discourage the ownership doing it (except sending them to jail http://www.discussworldissues.com/fo...ilies/cute.gif )

Just remember that in the stock market, the largest downswings... AND UPSWINGS... happen in a bear market. It never goes straight down...

Nationalizing the DEBT is what we'd like to avoid, though...

Originally posted by snoopy369
Nationalizing the DEBT is what we'd like to avoid, though... Nationalizing the debt is what always occurs. Just look at the 1987 Savings & Loan crisis. The average guy on the street gets hung out to dry while the bankers get get bags of money from the Federal government. Not really a good solution, in fact I find it completely unjust, but it is the American way. **** the little guy but save the fat cats.

My own opinion is if the taxpayers are going to have to flush money down the toilet then I'd rather give it to average Joes. That doesn't do a thing to restoring market stability though.

As to the OP, we haven't even entered a bear market yet! We're not dead yet!

Originally posted by Oerdin


Since you can't nationalize or send people to jail the only remaining option would be regulations to discourage the speculative behavior which caused the problems. The problem is that the speculative behavior is not entirely bad, as it fuels positive economic growth (particularly in an economy that has little left to grow in except speculation ... it's not like we produce much anymore); and it's very hard to determine where to draw the regulatory lines. And again, this is not the free-market way (nor is bailouts, of course); it would be much better to find a free-market solution to this free-market problem.

In some ways, I think the best solution could very well be to have a separation between Speculative Banks and NonSpeculative Banks. Re-work the Federal Reserve legislation to the following:

1. The Federal Reserve will only support banks who agree to follow regulations blah blah blah no speculation blah blah higher reserve levels blah blah etc.
2. Banks not following these regulations are still permitted to exist, and may do whatever they want speculation-wise; but they will not be bailed out and their reserves are not FDIC-insured. They may continue to borrow money from non-Fed sources, but may not borrow money from the Fed.
3. No bank that is Fed-supported may own, or be owned by, or be jointly owned with a non-Fed supported bank, directly. Indirect ownership is only allowed in the normal ways where one bank's fall would have no effect on the other banks.

I think you could end up with a situation, similar to mutual funds, where you have 'safe' banks that offer lower returns but are quite safe, and 'speculative' banks that offer higher returns and are somewhat risky. It depends on the returns and the regulations of course - but that would give some of the advantages of the free-market solution while still having safe, regulated banks at the core of the system. You'd have to also have regulations regarding how much the safe banks can lend to risky banks, but that's simple to enact.

Let the good times roll...

I still think stricter lending guidelines is a better way to go or failing that restricting the issuance of "mortgage backed securities" or possibly rules to make it easier for buyers to know if the loans are risky/nonperforming. As I understand it several unscrupulous companies deliberately made finding out what was actually in the repackaged mortgage backed securities as difficult as possible so that risky loans could be bundled, repackaged, and then sold off to punters who wouldn't figure it out until it was to late.

If it makes you feel any better, most of those taxes don't come from the average joe http://www.discussworldissues.com/fo...ilies/wink.gif

Originally posted by Patroklos
If it makes you feel any better, most of those taxes don't come from the average joe http://www.discussworldissues.com/fo...ilies/wink.gif That's simply not true. If you take the total tax burden on all levels and add in tax receipts from corporations too (in other words all tax income) then you're way off the mark. You're only talking about income tax.

Originally posted by Dauphin
The richest 10% pay something like 90% of the taxes. http://www.discussworldissues.com/fo...milies/eek.gif Even Rush Limbaugh only claims that they pay less than 65%.

And he's ignoring state and local taxes to boot. When you look at the total tax burden which everyone pays the numbers are much more balanced.

Still on his record.

Originally posted by Dauphin

Care to share those numbers? Don't hold your breath. http://www.discussworldissues.com/fo...lies/bored.gif

What a ****ing cop-out.

Originally posted by Oerdin
I ain't looking them up but logic says all those property taxes, sales taxes, and local fees (effectively taxes for government services) add up to a pretty penny. Nobody denies that they "add up," but you were suggesting that state & local tax burdens were so regressive as to make the total tax burden even significantly less progressive than the federal tax scale. That's what we were calling bull**** on, and you conveniently cop out now.

After all, I'm guessing the well-off own more realty, buy more non-exempt goods, and engage in more activities entailing fees than the poor do...