| Author | Comment | me2
Goliath
Posted: 23 Oct 2008
11:12 GMT
Total Posts: 171 | Hello, all, I thought it might be a good idea to have a place where we can publish our thoughts about the economy or our government. If you have any posts, put them here. If you want to know my views on economics, look up the Mises institute, and if you're interested in knowing about my political views, I'm a die-hard conservative. Just listen to Rush Limbaugh, I share most of his views.
I will now post my first essay
There is a minor incident going on today which many people view as a major crisis. Why the disagreement? The ‘crisis’ occurred some years ago, when the federal government instituted a law that forces banks to give subprime mortgages, and the current goings-on are merely a result of this decision.
Before detailing the problem, we must define a subprime mortgage. It is a loan to a person with a bad or poor credit record. Often the people in question are under one of the following circumstances: (1) They have no job: (2) They might lose their job: or (3) Their job does not pay well. To help ‘insure’ banks against losses, these loans generally charge a higher interest rate. Unfortunately, this is often not enough, as evinced by the current ‘crisis’. This is due to the fact that many of the people who received these loans defaulted on them.
Now, one might argue that the percentage of losses would be so small as to be insignificant, and a good point it would be. However, even though the losses by a bank might only be 2-3%, those losses initiate a vicious circle. (1) As the assets decrease, the shareholder equity decreases by a similar amount. (2) As shareholder equity decreases, banks must liquidate assets to pay for stock withdrawals. (3) As assets are liquidated, shareholder equity further decreases, causing a fresh wave of stock sales. (4) The cycle repeats itself endlessly, causing a bank failure as the institution’s assets evaporate.
The government’s plan would only create more problems without solving any. The Fed would buy up the bad debt. This, however, would not solve anything, as it would just pre-liquidate the assets and facilitate step (2) in the cycle. It would create additional taxpayer burden, as well as wasting scarce resources. In short, the plan would only prop up the bank for a short time, and make its death longer and more painful.
The true solution would be to facilitate the bankruptcy procedure to make it easier for buyer to obtain the good part of the bank. The largest bank failure in America, that of Washington Mutual, was done with no loss to stockholders or government, merely because the ‘good bank’ was cut away easily and precisely when it was sold.
It therefore is a fact that government has created this ‘crisis’ through bad legislation (although the making of said law was the true crisis) and desires to create another via the passing of another piece of foul legislation. The result, however, will fortunately be a recession. A recession is good for an important reason: it is the only way, short of depression, to eliminate bad debts and investments made in the economy. The unfortunate result of a recession is not directly economic, but rather political, as our beloved politicians would most certainly use the ‘crisis’ to their own ends, and then indirectly further damage our economy by passing similar laws to the one that began the current incident. This could result in a different type of vicious cycle: one that could very well cripple the economy if allowed to go on indefinitely.
The only way to prevent this is to force the government to keep its nose out of our economic order and put it where it belongs.
I swear I wrote this, it was not someone else's work. Please post only your own ideas, not those of someone else.
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<--- Going out with a bang. | me2
Goliath
Posted: 23 Oct 2008
11:16 GMT
Total Posts: 171 | I have another essay.
People panic. There is no clearer example than the market today. A few banks fail, and there is utter pandemonium on Wall Street. Perhaps the fault lies not so much in the hands of legislation or bad judgment by the banks (although these certainly are important factors) as it does in our beloved, subjective, liberal media and our equally loved Congressmen who tell us that we need a bailout. Perhaps the reason is beyond that. We shall find out. Why has the market tanked? People panicked when the media exaggerated the failure of the big investment banks. A few subprime loans went sour, and look what happened. Seriously, there is no way a few defaulted loans could have caused all of this. There is only one answer: the media spread the message of ‘gloom, despair, and agony’ to all who were foolish enough to listen.
The politicians could have stopped it by explaining everything as it was, but did they? Of course not. This is rich stuff! They want to capitalize on this, especially the democratic and liberal senators like Biden, Reid, and Obama. The republicans are not exempt from this either, though. The presidential candidates both focus on the economy and how they will fix it- the government will save us all. Well, we may ask, who started the entire crisis? Banks? No, they were not previously in the habit of making bad loans. Citizens? Why would a citizen wish to destroy his own welfare? The press? No, they don’t have the power to do this. Where else, then, can the blame be put than on our sacred politicians? Who passed the legislation that forced banks to give loans to anyone that asked for them- even if they had a bad credit record? Let’s see: we ruled out pretty much every one except Congress and the court system, and the courts enforce, rather than create, laws- so that means that our senators and representatives are responsible, and they alone, for the incidents taking place today. How, then, can we possibly trust them to fix our precariously unbalanced economy, when they themselves caused all the problems? I submit to you that we just cannot do this. And yet, we have allowed all the liberal leaders, from both parties, to seduce us into believing that they can, and will be, our saviors. What awful logic! What foul reasoning! As we hurtle ever onward toward a state of complete and total government control, another problem assails us: healthcare. How can one possibly expect such a failed system to work? It has been tried in Europe, with disastrous consequences. Persons with life threatening illnesses have died because there was a large backlog of patients and they had to wait their turn, behind someone who could have waited with no major repercussions! Some healthcare system that is. And yet the “messiah”, Barack Obama, flaunts it as a great thing, and the worst part is that people believe him. Why should we trust our failed politicians? They have given us no reason to do so. They lie, cheat, steal, and perhaps even murder. Certainly some politicians’ enemies have ‘disappeared’ very mysteriously, and although there is no actual evidence to prove that they are guilty, it does seem quite suspicious. What our country really needs is not a bailout, but rather a replacement of our legislators with some who would care for America instead of their pocketbooks.
Let us investigate the root cause. We have been pretty hard on the media, and even harder on politicians. The heart of the cause, however, is the average citizen. The reason is that the average citizen is the one who votes in the politicians, thereby supporting them; and watches the news shows or reads the newspaper, thereby lending his support to the media! I am not saying that one should not vote for a person, or that one should not keep up with events, but the individual is responsible for what he chooses to do, whether it is casting his vote or deciding what new to watch. You cannot blame lying politicians or media for the error of the individual. A person is misinformed if, and only if, he chooses to be misinformed. There is no way for a person to plea ignorance. What with the wide availability of literature and the Internet, anyone can look up data on a given person and make a responsible decision based on that data. One more point before I finish. If everyone had behaved responsibly, would there be any subprime ‘crisis’? Of course not. No one would even have had a subprime loan because their good standards would have given them a good record, and therefore, all could have hade prime-rate mortgages. Therefore, we can plainly see that it is up to us as citizens to be responsible in our decisions, rather than up to the government to solve all our problems because we were irresponsible. If we had not been irresponsible in the first place, the government would not have had any reason to bail us out at all. In short, irresponsibility by the nation as a whole, and on the level of the individual is the causation of every problem that that nation has.
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<--- Going out with a bang. | allynfolksjr
Administrator
Posted: 24 Oct 2008
09:56 GMT
Total Posts: 1892 | Wow. I will respond to these sometime after my midterm today.. | sirlewk
Probe
Posted: 24 Oct 2008
11:44 GMT
Total Posts: 1 | First off, just let me say that if I were to break down your arguments I quite possibly would be inclined to agree with you on a number of them. However, you make a number of rather broad assertions and conclusions without providing sources or statistics to back them up. In my experience the best way to discuss these sorts of things is to provide short and brief arguments with supporting resources so that others have a chance to counter each point, or possibly to concede them.
The assumption you seem to be making is that points you believe to be fact are universally agreed upon. On this fallacy you have based the arguments for the issues which you really wish to discuss.
For instance, you make the assertion that state provided healthcare in Europe is a disaster and go on to use this stated "fact" as a supporting argument for other points. You have supported this assertion with minimal amounts of anecdotal evidence but this in no way equates to prove. I am sure that this point along could fill numerous threads with debate.
I'm certainly interested in political discussion, however the only way to maintain civility in mixed audiences is to leave nothing for assumption and stay away from "meta-debates". | me2
Goliath
Posted: 27 Oct 2008
10:20 GMT
Total Posts: 171 | The main issue today anyway is not healthcare, but rather a lack of responsibility on the part of the common citizen. People are the products of their own decisions. Its a simple fact. You don't need facts to figure it out, all you need to do is sit down and reason it out logically and you will arrive at the same conclusion. If you are that concerned about healthcare anyway, google-search it and look at the results you find.
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<--- Going out with a bang. | allynfolksjr
Administrator
Posted: 27 Oct 2008
13:32 GMT
Total Posts: 1892 | Lack of responsibility? | me2
Goliath
Posted: 6 Nov 2008
12:36 GMT
Total Posts: 171 | Failing to take responsibility.
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<--- Going out with a bang. | allynfolksjr
Administrator
Posted: 6 Nov 2008
13:06 GMT
Total Posts: 1892 | Yay Democrats! | me2
Goliath
Posted: 10 Nov 2008
10:48 GMT
Total Posts: 171 | I know.
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<--- Going out with a bang. |
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