|
|
Post by keaveny on Oct 9, 2008 9:33:57 GMT -5
Link the dollar to gold?! You realise we used to do that and stopped because it's literally impossible right? We don't have nearly enough to back the currency. Of course rich guys employ people, because it makes them rich. The misconception that giving them more money means they employ more people is false. It sounds great and thats why its survived this long, but the reality shows a complete disconnect. There is no correlation. I should've added two additional points. Gold Standard has been made virtually impossible now. The assumption of giving rich guys more money meaning more jobs is falicious. I should've added give benefit to the rich guys who through grant systems (rather than "tax breaks") fund job creation and training of incumbent workers. I figured I was long winded enough and didn't add. |
|
|
|
Post by keaveny on Oct 9, 2008 9:47:08 GMT -5
Link the dollar to gold?! You realise we used to do that and stopped because it's literally impossible right? We don't have nearly enough to back the currency. By the way, some advocate a way in which to return to the Gold Standard. And Alan Greenspan himself warned against the fiat "printing press." Seems to me it has come home to roost. |
|
|
|
Post by Brandon on Oct 9, 2008 12:31:51 GMT -5
Obama UneasinessFrom the "virtue lies between excess and neglect" file: Obama referenced government getting involved in mandating that mortgage providers renegotiate principal amounts with home owners. I hope he doesn't mean what it sounds like he means. That would be disastrous. I am all for revolutionary ideas but not that type of revolution. I understand why you would dislike this idea, but it isn't simply a reduction in principal, it is an attempt to correct inaccurate appraisals. In a nutshell... What this means is that home appraisals over the last 10 years have not been accurate, just like the balance sheets of the banks (as a result of the "bubble"). So, after the market begins to work itself out, home values could be reappraised and the principal on loans would be adjusted accordingly. This has been supported by both candidates as McCain jumped on board at the last debate. The reason for this is not just to win votes and/or further destroy the banks, it is an attempt to return the default rate of mortgages back to normal levels and stabilize the housing market. As an aside, it is looking more and more like the govt. is going to gain some more control of the banks during all this through preferred stock ownership, which could stir up some more interesting debate  Obama UneasinessI am for things like:... ...6) Build more bike paths. And something similar to your bike path suggestion was built into the bailout bill in the energy efficiency tax credits section. I'm not sure of the exact details, but your employer (I think) gets tax credits for reimbursing bike commuters for 1) purchase of a bike 2) bike repairs or 3) bike equipment. I'm leaving out details (like the maximum amount of the credit, which I think is pretty small), and if your willing to pay a consulting fee I'll do a little more research  |
|
|
|
Post by Aussie Rob on Oct 9, 2008 12:47:38 GMT -5
Would a return to the gold standard (in any form) provide us with enough flexibility to respond to changing economic conditions though? I would worry that with much of the global economy out of our direct control, that we wouldn't be able to respond.
I guess im a fan of monetary policy. It's worked well for nearly a century, and although economic downturns are inevitable....it allows us to be flexible enough to get through it.
|
|
|
|
Post by keaveny on Oct 10, 2008 7:25:03 GMT -5
Obama UneasinessFrom the "virtue lies between excess and neglect" file: Obama referenced government getting involved in mandating that mortgage providers renegotiate principal amounts with home owners. I hope he doesn't mean what it sounds like he means. That would be disastrous. I am all for revolutionary ideas but not that type of revolution. I understand why you would dislike this idea, but it isn't simply a reduction in principal, it is an attempt to correct inaccurate appraisals. In a nutshell... What this means is that home appraisals over the last 10 years have not been accurate, just like the balance sheets of the banks (as a result of the "bubble"). So, after the market begins to work itself out, home values could be reappraised and the principal on loans would be adjusted accordingly. This has been supported by both candidates as McCain jumped on board at the last debate. The reason for this is not just to win votes and/or further destroy the banks, it is an attempt to return the default rate of mortgages back to normal levels and stabilize the housing market. Except that the appraisals, when done, where an accurate reflection of the value of the home (I am not speaking of the unscrupulous appraisals done in cahoots with mortgage brokers for exploitation). The housing market always ebbs and flows, sometimes more than others. Here is the deal: if I borrow $20 from someone what is the likelihood they would agree with me when I tell them I will pay them back $18 because that is what the $20 I originally borrowed is now worth? Or I buy a Suburban at $45,000 before gas prices skyrocket. High gas prices cause Suburban demand to go down and later I could pick one up for $35,000. I can't go to the bank and say, "Hey I financed this at $45,000, but it is only worth $35,000 today. I'd like my principal reduced." It can't work. It would be the destruction of financial institutions that every single American relies upon. It seems to me that even twenty years ago no homeowner cared what the housing market was doing because they bought a house to be a home and not an investment to be used for a few years in order to finance a larger house as an investment. |
|
|
|
Post by keaveny on Oct 10, 2008 7:26:53 GMT -5
Would a return to the gold standard (in any form) provide us with enough flexibility to respond to changing economic conditions though? I would worry that with much of the global economy out of our direct control, that we wouldn't be able to respond. I guess im a fan of monetary policy. It's worked well for nearly a century, and although economic downturns are inevitable....it allows us to be flexible enough to get through it. That is a good question and probably the prime reason we have the fiat system. I just prefer restraint and structure over flexibility. |
|
|
|
Post by Brandon on Oct 10, 2008 12:42:46 GMT -5
Except that the appraisals, when done, where an accurate reflection of the value of the home (I am not speaking of the unscrupulous appraisals done in cahoots with mortgage brokers for exploitation). The housing market always ebbs and flows, sometimes more than others. Here is the deal: if I borrow $20 from someone what is the likelihood they would agree with me when I tell them I will pay them back $18 because that is what the $20 I originally borrowed is now worth? Or I buy a Suburban at $45,000 before gas prices skyrocket. High gas prices cause Suburban demand to go down and later I could pick one up for $35,000. I can't go to the bank and say, "Hey I financed this at $45,000, but it is only worth $35,000 today. I'd like my principal reduced." It can't work. It would be the destruction of financial institutions that every single American relies upon. It seems to me that even twenty years ago no homeowner cared what the housing market was doing because they bought a house to be a home and not an investment to be used for a few years in order to finance a larger house as an investment. This is really a really good "conversation" and there is a bunch of stuff I'd like to throw out there, but I'm going to try and be concise. I fully agree that people "flipping" homes didn't help our current situation. What really caused problems was people flipping this mortgage debt (and equity)...over and over again on world markets. Yes, markets ebb and flow, but this is a very extreme circumstance. Housing values are expected to appreciate, and the depreciation in values like what is going on right now has only been seen one other time in U.S. history, and eventually 25% of the country was unemployed...during the great depression. Ok, now my thought on the loan $20 to get $18 idea. Imagine that you are the one doing the lending. You loan $20 to hundreds of thousands of people on the assumption that most of them will pay you back all $20. You expect 2% of the loans will go bad, and history backs this assumption. You then take out credit yourself expecting the returns stated above. Then, you realize you gave too many loans to people who can't pay them back and you have a 200% increase in bad loans...and in turn you can't pay your bills either. You have a choice to accept $18 instead of $20 (because many people could only afford to pay back $18, but you loaned them $20 anyway) and this is expected to bring you back to 2% of the loans going bad, as opposed to 6%. So, if you do this, you can pay many more of your bills that if you asked everyone for the $20. So, accepting $18 is the best case scenario and is essentially adjusting the principal. This, of course, does not explain the credit crisis but (hopefully) explains why anyone would even consider adjusting the principal on mortgages. I am not arguing that this is the solution, but I am saying that it is a potential one. The demise of our banking system wouldn't be due to adjusting the mortgages IMO, it would be due to the instruments that were set up in the financial sector that built the "bubble." These instruments were backed by mortgages that went bad or were WAY overvalued after the industry was deregulated. This is explained much more eloquently here: topics.nytimes.com/top/news/business/series/the_reckoning/index.htmland here: www.cbsnews.com/stories/2008/10/05/60minutes/main4502454.shtml |
|
