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By this logic, any loan anyone has ever taken has been a bad idea.

by natrius 18y ago

natmaster 18y ago
The idea of a loan, is that you'll pay it back at some point.
- natrius 18y ago
  Government debt is typically paid back at some point. What makes you think it won't be this time?
  - natmaster 18y ago
    http://en.wikipedia.org/wiki/United_States_public_debt http://en.wikipedia.org/wiki/United_States_public_debt Also, who are we taking a loan from? China already owns most of America; now the Federal Reserve is just printing more money to make it look like the government can spend the money - but the reality is, it is just a redistribution of wealth from those who hold cash (middle class, and rich people can invest in other assets) to whoever the government mandates "needs" it. (The way they define needs, is if you are so bad at running your business it is on the verge of bankruptcy, so you need a ton of cash to go have a relaxing vacation costing millions.)
    - natrius 18y ago
      Linking to a Wikipedia article does not in any way answer my question. You've presented a possible reason why borrowing money to bail out corporations could be harmful, but you haven't demonstrated that it's worse than the alternative. Sure, bailouts are bad. So are depressions.
      - kajecounterhack 18y ago
        Quote: Government debt is typically paid back at some point. What makes you think it won't be this time? Answer: As of November 19, 2008, the total U.S. federal debt was $10.6 trillion.[2], with about $37,316 per capita (that is, per U.S. resident). The October 3rd, 2008 bailout bill (H.R.1424), section 122, raised the U.S. debt ceiling from $10 trillion to $11.3 trillion. Of this amount, debt held by the public was roughly $6.3 trillion.[3] In 2007, the public debt was 36.8 percent of GDP [4], with a total debt of 65.5 percent of GDP.[5] The CIA ranked the total percentage as 27th in the world.[6] 36.8% of our GDP. Okay. How are we paying that off if every year the deficit only grows? In addition, you said depressions are bad but they happen. And yes they're market failures and natural periods of economic purge. But bailouts are different - they basically stop that market failure that should have happened to happen. A bailout is a subsidy. Then companies that shouldn't be able to compete continue to do so, and that leaves room for more problems in the future.
        Retric 18y ago
        How are we paying that off if every year the deficit only grows? You can effectively pay back the loans even with a deficit. 36.8% of GDP payed back at 1% per year would be (Interest - inflation - 1%) = ~.03 * 36.8 = 1.14% of GDP. Which is bad but below the average annual increase in GDP over the last 30 years. The deficit would increase every year, the debt would increase every year, but debut as a percentage of GDP would decrease. One of the failings of democracy's is it's so easy for people in office to pay for current spending by increasing debt and then pass the buck to the next administration. The real story about the deficit is graphing as a percentage of GDP over time, doing so tells a different story than you might expect. http://zfacts.com/p/318.html http://zfacts.com/p/318.html PS: A little blast from the past http://usgovinfo.about.com/library/weekly/aa101500b.htm http://usgovinfo.about.com/library/weekly/aa101500b.htm
benzim 18y ago
The Author said "So Obama will spend upwards of a trillion dollars of stimulus in a combination of tax cuts, building roads, bridges, and hopefully public transportation. And it can't hurt and maybe it will help." I can think of plenty of ways this could hurt. Obama could create new entitlements that burden America for generations. The money could be used to prop up failing businesses, creating a situation where success is determined by who has the best lobbyists. Not every loan is a bad idea, but plenty of them are. There is no guarantee the effect of this loan will be positive.
- natmaster 18y ago
  And by setting a precedent for bailing out bad businesses not only are the people who have to pay for this hurt, but everyone in the future because businesses will be encouraged to be corrupt rather than produce goods. This is like in the prisoners dilemma, but you force the American people to not rat anyone out - so the corrupt businessman can get all the benefits at the cost of the American people.

By this logic, any loan anyone has ever taken has been a bad idea.

by natrius 18y ago

By this logic, any loan anyone has ever taken has been a bad idea.

natmaster 18y ago

The idea of a loan, is that you'll pay it back at some point.

natrius 18y ago
Government debt is typically paid back at some point. What makes you think it won't be this time?
- natmaster 18y ago
  http://en.wikipedia.org/wiki/United_States_public_debt http://en.wikipedia.org/wiki/United_States_public_debt Also, who are we taking a loan from? China already owns most of America; now the Federal Reserve is just printing more money to make it look like the government can spend the money - but the reality is, it is just a redistribution of wealth from those who hold cash (middle class, and rich people can invest in other assets) to whoever the government mandates "needs" it. (The way they define needs, is if you are so bad at running your business it is on the verge of bankruptcy, so you need a ton of cash to go have a relaxing vacation costing millions.)
  - natrius 18y ago
    Linking to a Wikipedia article does not in any way answer my question. You've presented a possible reason why borrowing money to bail out corporations could be harmful, but you haven't demonstrated that it's worse than the alternative. Sure, bailouts are bad. So are depressions.
    - kajecounterhack 18y ago
      Quote: Government debt is typically paid back at some point. What makes you think it won't be this time? Answer: As of November 19, 2008, the total U.S. federal debt was $10.6 trillion.[2], with about $37,316 per capita (that is, per U.S. resident). The October 3rd, 2008 bailout bill (H.R.1424), section 122, raised the U.S. debt ceiling from $10 trillion to $11.3 trillion. Of this amount, debt held by the public was roughly $6.3 trillion.[3] In 2007, the public debt was 36.8 percent of GDP [4], with a total debt of 65.5 percent of GDP.[5] The CIA ranked the total percentage as 27th in the world.[6] 36.8% of our GDP. Okay. How are we paying that off if every year the deficit only grows? In addition, you said depressions are bad but they happen. And yes they're market failures and natural periods of economic purge. But bailouts are different - they basically stop that market failure that should have happened to happen. A bailout is a subsidy. Then companies that shouldn't be able to compete continue to do so, and that leaves room for more problems in the future.
      - Retric 18y ago
        How are we paying that off if every year the deficit only grows? You can effectively pay back the loans even with a deficit. 36.8% of GDP payed back at 1% per year would be (Interest - inflation - 1%) = ~.03 * 36.8 = 1.14% of GDP. Which is bad but below the average annual increase in GDP over the last 30 years. The deficit would increase every year, the debt would increase every year, but debut as a percentage of GDP would decrease. One of the failings of democracy's is it's so easy for people in office to pay for current spending by increasing debt and then pass the buck to the next administration. The real story about the deficit is graphing as a percentage of GDP over time, doing so tells a different story than you might expect. http://zfacts.com/p/318.html http://zfacts.com/p/318.html PS: A little blast from the past http://usgovinfo.about.com/library/weekly/aa101500b.htm http://usgovinfo.about.com/library/weekly/aa101500b.htm

benzim 18y ago

The Author said "So Obama will spend upwards of a trillion dollars of stimulus in a combination of tax cuts, building roads, bridges, and hopefully public transportation. And it can't hurt and maybe it will help." I can think of plenty of ways this could hurt. Obama could create new entitlements that burden America for generations. The money could be used to prop up failing businesses, creating a situation where success is determined by who has the best lobbyists. Not every loan is a bad idea, but plenty of them are. There is no guarantee the effect of this loan will be positive.

natmaster 18y ago
And by setting a precedent for bailing out bad businesses not only are the people who have to pay for this hurt, but everyone in the future because businesses will be encouraged to be corrupt rather than produce goods. This is like in the prisoners dilemma, but you force the American people to not rat anyone out - so the corrupt businessman can get all the benefits at the cost of the American people.