Saffire

The problem is the debt compounds faster than the GDP increases. Plus there's the simple fact that the size of the government is unsustainable in the long term and politicians are unlikely to cut spending enough to make a difference. Obama even characterized McCain's spending freeze (which would only temporarily stop the growth of government spending) as taking a "hatchet" to the national budget. If that's not indicative of where government spending is going to go, I don't know what is! What will eventually happen is the US debt will either be downgraded by various independent ratings firms or the world will get off the dollar as the reserve currency of choice, causing its value to collapse. Either way, very bad economic times are ahead. And America's empire will crumble.

I disagree, I think capitalism can place value on environmental factors. Look at the current situation where a government owns land, and a business wants to strip-mine it for a mineral. The government will then sell the "mining rights" to that company, and they will disregard the environment while they extract the mineral. But under a capitalist system, the land would be owned by either an individual or another company. Here, there is incentive for the land owner to maintain its value even after it has been mined, because it can later be sold for another purpose - for instance, as a place to build homes. Nobody likes pollution even in a capitalist society because it causes the value of property to drop. People would buy insurance against it, and the insurance companies would be incentivized to prevent polluters from entering the area by buying surrounding land, or at least moderate their pollution output with financial incentives.

I don't get why Capitalism is considered a "greed-based" system. Aren't socialists more greedy than Capitalists? After all, they take peoples' money at gunpoint, whereas capitalists make money through the free exchange of value.

Care to elaborate? How do you define socialism? I would argue that socialism is the cause of the problem. It's strange to me that collectivists think that if we just have the right combination of rules and leaders, a society will function properly. That's naivete of the highest order.

Trying to eradicate bias either in campaign advertising or media isn't a good goal, because it causes people to not think for themselves - they just assume a source is right, and they stick with it. What we need to do instead is abolish the public school system and allow for "round voting". Getting rid of any campaign finance laws should also become a top priority. Here's why: 1. The Public school system preaches the gospel of statism, which teaches children that the government deserves credit for all sorts of things - from the freeing of the slaves, to the ending of the Depression, to the progressive movement... children are taught that if only they elect the right leaders, they'll be fine. Absurd! Government should be viewed with maximum skepticism, because at its root is the application of force, which entails violence. Anything else isn't "liberal" education. 2. Round voting allows you to vote FOR a candidate, rather than against a candidate (ie "lesser of two evils" problem is ended). Let's say your ballot looks like this: Adolf Hitler ® Darth Vader (D) Thomas Jefferson (L) Currently Hitler and Vader are neck-and-neck in your state, which is a swing state. So you are afraid that by voting for Jefferson, you are "throwing away" your vote. Round voting means you can choose Jefferson as your first choice. If Jefferson doesn't win, your ballot can still count because you chose Hitler as your second choice. Ideally this would let people vote third-party without having to worry about helping another candidate by not contributing to his opponent. Jefferson has a shot at winning, but if Hitler is elected only the continent is destroyed, instead of the planet. 3. Campaign finance laws require massive hurdles for average citizens to overcome in order to run for an office. Non-compliance with any of these laws means huge fines or forfeiting your campaign. The rich and well-connected will always find ways around them.

Chris Evans

http://www.guardian.co.uk/business/2008/oct/18/banking-useconomy This guy is my new hero! :D

Well the strength of our economy wouldn't necessarily suffer as a result of increased savings or reduced spending in the consumer discretionary goods area. What would happen is this money would be left in the bank, which would lend it out for productive purposes. Or it could be spent on more useful devices like appliances or upkeep. Don't think that an economy's wherewithal is linked to just one segment (in this case consumer spending).

Peter Schiff: Don't Blame Capitalism http://www.washingtonpost.com/wp-dyn/content/article/2008/10/15/AR2008101503166.html

I really do hope Obama wins with a majority of Democrats in the House and Senate, not because I like him or his policies (indeed, I loathe both presidential candidates), but because it's going to be fascinating to see how they handle the economy. Democrats have long had this reputation (nebulous as it may be) for being "good on the economy". So here's their chance to prove it. This is as close to a scientific experiment as you can get! Let the legislation flow through the branches of government like loose stool!

StephenG, nobody will fault you for believing the economy's health is the result of "animal spirits" (as was suggested by Keynes). But the truth is, the only time faith plays a role in aggregate is when investors are choosing where to put their money. When a government interferes with capital markets (in our case by banning short selling, nationalizing banks, or changing the tax code every few years), it causes investors to see added risk. Investors avoid countries whose governments can't seem to keep their hands off the markets. Everything else about a market is somewhat predictable using mathematical calculations... but politicians' actions are fickle and impossible to predict. Hence the added risk premium. What you call "faith" in the economy is really nothing more than investors (in aggregate) seeing less risk than there actually is. What causes this? The federal reserve keeping interest rates too low. Normally the rates are set by the market, but when they are forced too low by the government it causes people to borrow and invest money where they wouldn't otherwise have done it. Why risk your money on flipping expensive homes when you can get a higher guaranteed return by just leaving it in the bank? What I'm trying to say is "Animal spirits" is really nothing more than a risk calculation. The government drove the risk too low for too long. Now it's trying to guarantee bank loans - ZERO risk.

The idea that the government can create jobs is just as pervasive (and creepy) as the idea that government can create money. "Don't have a job? Oh, no problem, I'll print money and make you WORK for it!" It's literally slavery.

Peter Schiff: Just Stop Paying Your Mortgage! http://www.signonsandiego.com/uniontrib/20081010/news_lz1e10schiff.html

Obama is the opposite of a terrorist. He's a pussy who tells people whatever they want to hear to make them feel good inside. Like a nanny comforting a child. It's disgusting. And Chuck, personally I enjoy seeing them tear each other up using Ad Hominems. It forces voters to figure out what's true and false about their policies and principles. Plus they're both scumbags and who better to tell us than themselves?

Well I don't support McCain at all, in fact I'd be pretty happy to see Obama win if for nothing more than to see the Republican party reconsider Ron Paul's message. Objectively speaking though, McCain's STATED policies would probably slow the growth of government somewhat. But I have to remind myself that he's a liar.

All the focus groups following the debate seemed to think Obama won it, which is surprising to me because I thought McCain was the clear winner. But then again maybe I've underestimated the stupidity of "undecided" voters. Americans want bigger government, and they will have bigger government. We're in for a wild ride!

Well I think as a percentage of spending, college will decline the most of any consumer discretionary spending over the next ten years. Right now college is so insanely expensive that financial advisers actually have to convince people who JUST graduated school that they've got to start saving up for their unborn children's college education! The prestige of a university degree is becoming diluted as more and more Americans have them. And government subsidization is inflating the price for everyone, especially the "luxury" college market (private schools).

Now Obama is saying we shouldn't view students as interest groups. Subsidizing students to go to college is what makes college expensive in the first place. Get rid of the government subsidies, and force the colleges to drop their tuition. You think the housing bubble was big? Wait till you see the higher education bubble burst.

Chuck, It strikes me as irrational that Wall Street should donate money to political candidates in an effort to deregulate, when (as you suggest) deregulation is the cause of massive losses on Wall Street. My point is that the risk of losses is enough. Regulation is unnecessary. The risk of losses is diminished when the Fed keeps interest rates ridiculously low for extended periods of time - after all, borrowing money is easy! Why not take your chances in the stock market or flipping houses?

Line of the night goes to Obama: "No longer will we borrow $700 billion from China and send it to Saudi Arabia... it's mortgaging our childrens' future." :laugh3: But it's A-OK to borrow $700 billion from China to prop-up the price of mortgages? Maybe that was a Freudian slip.

It's remarkable to me that McCain can't bring himself to call a spade a spade. Obama is a socialist. I suppose such an accusation might be considered overarching or crude, but the primary reason he can't make it is the fact that he's also a socialist. McCain is a victim of his own lack of principles. EDIT: Obama repeats the lie that taxpayers will "make their money back" on the $700 billion bailout bill. EDIT: McCain makes the similar claim that a Great Depression era government program bought mortgages and that "we need to increase home values". Sorry Senator, you can't increase value. All you've got is a printing press. EDIT: Obama calls a spending freeze a "hatchet". Notice it's not an actual cut, just a freeze on the increase in spending. Remarkably Orwellian misuse of the English language.

MrCool, (I still don't know your real name) you should enjoy these debates because it's a historical curiosity. Right now it's like watching a slow-motion trainwreck. I can't help but watch. ;)

The problem with the derivatives, the mortgage backed securities, etc... all goes back to the mortgage origination business (Fannie Mae and Freddie Mac). We can complain that Wall Street was overpaid and they didn't recognize the risk. But keep in mind the reason for this was because they weren't used to the idea of mortgages being risky to begin with! And by their very nature they shouldn't be risky; your mortgage is the first thing you pay off every month. Wall Street has always used leverage. It has always used derivatives and insurance. These are actually good for allocating capital quickly and spreading risk more evenly. So we shouldn't over-regulate these instruments because of a single bad experience. First we should get rid of the Fed. Let interest rates float and the market determine it. De-regulate the mortgage industry. The solutions to this are so SIMPLE and yet we complicate it with a witch hunt: Republicans, Democrats, Wall Street, etc.

Stocks are valued based on expectations of future performance in the company (ie growth), not what the company is currently valued at according to accountants. I buy shares of a company because I expect those shares to increase in value at some point in the near future... I short shares of a company because I expect it to become worth less in the future. Long and short are entirely necessary aspects of the market... so when the government banned short-selling, they were basically saying "you can only buy shares of these companies, not sell them". Which is silly, because it's a denial of reality. Derivatives (particularly credit default swaps) are meant to be a way for businesses to spread risk to other people who can better afford to take it on. So the banks that can afford to insure your bonds are the ones writing the CDS contracts and selling them. The problem comes when the people writing these contracts AREN'T capable of holding their end of the bargain. The reason they weren't able to pay out is because they didn't foresee a situation where ALL banks would become potentially insolvent due to their mortgage backed securities holdings. It's like if I were to insure all the homes in my neighborhood. I'd be making a pretty decent amount of money every year, and I wouldn't actually be working for it! I'd have enough to pay for a couple of disasters. But one day, there's a fire that burns down EVERY home in my neighborhood. I don't have the money to pay for it, and I just declare bankruptcy. Well, normally I'd declare bankruptcy. But in this case I'll go begging the government for money to keep me in business. In an ideal scenario, derivatives aren't "fluff", they're actually useful contracts designed to reduce overexposure risk. But this was a "black swan event" (in finance lingo). Nobody expected normally safe mortgage backed securities to be as risky as they were. And that's where the financial system is at fault in the same way the government is - the ratings agencies (Moody's) were telling everyone these MBS's are safe to own. That wasn't true.

My top places to check out right now are Singapore and Hong Kong. There's no way I'm letting my tax dollars go to pay for someone else's overpriced mortgage. Or an unnecessary war-culture. Bye Bye America! It was nice knowing you.