4 ms·

What were you expecting? Things were always going to get worse before they got better. This is the restructuring of a global economy that had become far too rel

by tdavis 18y ago

What were you expecting? Things were always going to get worse before they got better. This is the restructuring of a global economy that had become far too reliant on debt. More companies and industries will go under; more jobs will be lost. Remember, the employees may not have chosen the company strategy, but they chose to be with that company. I will dance on the grave of every company and industry that dies now because it means the restructuring is working. Nobody is putting them on life support. Nobody is saying, "It's okay you royally fucked up." They're dying, as they should be.

programnature 18y ago
There are a lot of exciting opportunities to restructure things that have sucked for a long time. This is a good thing. However, your logic doesn't make any sense. A bank can be totally solvent, but be wiped out by a bank run due to forces outside of their control. Similarly plenty of otherwise profitable businesses can be wiped out when the entire economy heads south. This is called throwing the baby out with the bathwater. What I am expecting in governance that doesn't dig us into a deeper hole. By the way, the worse the US economy gets, the worse the world economy gets. Do you really want a nuclear pakistan/india go off the deep end?
- tdavis 18y ago
  When the entire economy tanks, sure, it's going to take some businesses with it. There's a difference, though, when your business is so reliant on the poor choices that got us into this mess that it goes out of business practically over night when everyone finally realizes, "Wait, this isn't working anymore." The auto companies aren't much better off; the best was, what, 6 months to survive without a bailout? There will be collateral damage. That's just part of the deal. As I mentioned, this is a global event so yes, I realize the worse the US economy gets the worse the World economy gets, at least relatively speaking. I would prefer that one of the nuclear countries not go off the deep end and trigger a nuclear war, but I have no reasonable belief that they will either.
  - silencio 18y ago
    Actually, from what I have heard/read (i.e. http://www.cnn.com/2008/POLITICS/12/11/congress.auto.bailout/ http://www.cnn.com/2008/POLITICS/12/11/congress.auto.bailout...) about the proposed bailout, was that it was meant to keep the companies afloat until March-ish. Without, the outlook is a lot grimmer than 6 months, given March is more like 3-4 months away.
- s_baar 18y ago
  The banking system isn't solvent if people can lose their money based on competing on-demand claims to the same cash. I honestly don't know why we don't shift to a time-deposit system. It would work nearly exactly the same in every way and we wouldn't need an FDIC as much or worry about bank runs.
  - eru 18y ago
    Some of the apparent sight deposits already have some clauses that make them more like term deposits. I.e. I read the fine print on my savings account and that talks of certain limits and (mild) penalties for withdrawing too much money at once.
- nradov 18y ago
  That's not true, at least not in the US. Solvent banks can access effectively unlimited liquidity from the Federal Reserve in order to prevent bank runs. http://en.wikipedia.org/wiki/Federal_reserve#Lender_of_last_resort http://en.wikipedia.org/wiki/Federal_reserve#Lender_of_last_... On the other hand, investment banks (which are legally different from banks) can be wiped out by runs very quickly if they take on too much leverage. Or at least that's what used to happen before the federal government decided the largest ones were too big to fail and bailed them out.
jimbokun 18y ago
"They're dying, as they should be." I think looking at it only in terms of economic efficiency is a little bit callous. I'm fine with bad corporations "dying." However, what about the actual human beings that will not have jobs, and their children? Detroit is already starting to look like a third world country. What will it be like by the time all three auto makers get through the bankruptcy procedure? I think the argument for a "bailout" for the people who still support it is that it is simply cheaper to keep the auto companies alive a little while longer than what the government would pay out in benefits for all of the resulting unemployed workers. And that it is a more efficient "stimulus" than the government just spending money on other projects directly. Maybe we will have to pay those benefits eventually in any case. But as bad as things are now it might actually make sense to keep the auto companies alive, even for just another year or so, while the rest of the economy maybe starts to improve. You can argue that we should be more libertarian about these things, and the government should not be involved in "social safety nets" or whatever. But that is not the government we have, and it is not going to be the government we have any time soon. Given that, the question of whether a bail out is cost effective from the federal government's standpoint is not as clear cut.
- cstejerean 18y ago
  I'm perfectly fine with the government bailing out the people. They probably need help. So give them a nice severance package, relocation assistance, job training, actual jobs, whatever. But don't pump billions into keeping a failed company on life support for another year.
  - lliiffee 18y ago
    I would love to see this calculated quantitatively. I've heard that the bailout amounts to $50,000 per worker. That sounds pretty good... However, if the bailout is able to keep everyone in $70,000 other jobs for a year, that might be a better deal, even if it just means postponing the inevitable. I recognize that this is very complex, one should account for e.g. if the economy will be recovered in a year, and more able to take the hit of these industries going under, how much more value the workers might produce in new jobs, etc. It's beyond me to calculate, but I would love to see an analysis that presupposes that this is straightforward charity for those workers, and how to get the best bang for our redistributive buck.

by tdavis 18y ago

programnature 18y ago

There are a lot of exciting opportunities to restructure things that have sucked for a long time. This is a good thing. However, your logic doesn't make any sense. A bank can be totally solvent, but be wiped out by a bank run due to forces outside of their control. Similarly plenty of otherwise profitable businesses can be wiped out when the entire economy heads south. This is called throwing the baby out with the bathwater. What I am expecting in governance that doesn't dig us into a deeper hole. By the way, the worse the US economy gets, the worse the world economy gets. Do you really want a nuclear pakistan/india go off the deep end?

tdavis 18y ago
When the entire economy tanks, sure, it's going to take some businesses with it. There's a difference, though, when your business is so reliant on the poor choices that got us into this mess that it goes out of business practically over night when everyone finally realizes, "Wait, this isn't working anymore." The auto companies aren't much better off; the best was, what, 6 months to survive without a bailout? There will be collateral damage. That's just part of the deal. As I mentioned, this is a global event so yes, I realize the worse the US economy gets the worse the World economy gets, at least relatively speaking. I would prefer that one of the nuclear countries not go off the deep end and trigger a nuclear war, but I have no reasonable belief that they will either.
- silencio 18y ago
  Actually, from what I have heard/read (i.e. http://www.cnn.com/2008/POLITICS/12/11/congress.auto.bailout/ http://www.cnn.com/2008/POLITICS/12/11/congress.auto.bailout...) about the proposed bailout, was that it was meant to keep the companies afloat until March-ish. Without, the outlook is a lot grimmer than 6 months, given March is more like 3-4 months away.
s_baar 18y ago
The banking system isn't solvent if people can lose their money based on competing on-demand claims to the same cash. I honestly don't know why we don't shift to a time-deposit system. It would work nearly exactly the same in every way and we wouldn't need an FDIC as much or worry about bank runs.
- eru 18y ago
  Some of the apparent sight deposits already have some clauses that make them more like term deposits. I.e. I read the fine print on my savings account and that talks of certain limits and (mild) penalties for withdrawing too much money at once.
nradov 18y ago
That's not true, at least not in the US. Solvent banks can access effectively unlimited liquidity from the Federal Reserve in order to prevent bank runs. http://en.wikipedia.org/wiki/Federal_reserve#Lender_of_last_resort http://en.wikipedia.org/wiki/Federal_reserve#Lender_of_last_... On the other hand, investment banks (which are legally different from banks) can be wiped out by runs very quickly if they take on too much leverage. Or at least that's what used to happen before the federal government decided the largest ones were too big to fail and bailed them out.

jimbokun 18y ago

"They're dying, as they should be." I think looking at it only in terms of economic efficiency is a little bit callous. I'm fine with bad corporations "dying." However, what about the actual human beings that will not have jobs, and their children? Detroit is already starting to look like a third world country. What will it be like by the time all three auto makers get through the bankruptcy procedure? I think the argument for a "bailout" for the people who still support it is that it is simply cheaper to keep the auto companies alive a little while longer than what the government would pay out in benefits for all of the resulting unemployed workers. And that it is a more efficient "stimulus" than the government just spending money on other projects directly. Maybe we will have to pay those benefits eventually in any case. But as bad as things are now it might actually make sense to keep the auto companies alive, even for just another year or so, while the rest of the economy maybe starts to improve. You can argue that we should be more libertarian about these things, and the government should not be involved in "social safety nets" or whatever. But that is not the government we have, and it is not going to be the government we have any time soon. Given that, the question of whether a bail out is cost effective from the federal government's standpoint is not as clear cut.

cstejerean 18y ago
I'm perfectly fine with the government bailing out the people. They probably need help. So give them a nice severance package, relocation assistance, job training, actual jobs, whatever. But don't pump billions into keeping a failed company on life support for another year.
- lliiffee 18y ago
  I would love to see this calculated quantitatively. I've heard that the bailout amounts to $50,000 per worker. That sounds pretty good... However, if the bailout is able to keep everyone in $70,000 other jobs for a year, that might be a better deal, even if it just means postponing the inevitable. I recognize that this is very complex, one should account for e.g. if the economy will be recovered in a year, and more able to take the hit of these industries going under, how much more value the workers might produce in new jobs, etc. It's beyond me to calculate, but I would love to see an analysis that presupposes that this is straightforward charity for those workers, and how to get the best bang for our redistributive buck.