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Wait, the people who figured out how to capture all the money out of the existing system don't want to see that system changed? I'm confused... it's almost as

Wait, the people who figured out how to capture all the money out of the existing system don't want to see that system changed? I'm confused... it's almost as if they were speaking in their self-interest.

dmix 18y ago
If the government did nothing companies such as JPMorgan would nearly go bankrupt. The investors at the top would be responsible for bringing down 100+ year old companies. On top of destroy legacies, they would personally lose a serious amount of money. The difference is that there will be consequences to their actions; they and the majority of the country will suffer. With that precedent, would it be likely that it would happen again? From my impression, the main goal tends not to be whether they can come out of this with a much better system instead its how the they can reduce the amount of damage that will be done.
- calambrac 18y ago
  Anyone who's saying "let it all fall down" either thinks that they're outside of the drop zone, or has a serious martyr complex. Their argument is that making (other) people just bend over and take it is better for the overall economy (i.e., them). I don't think these people should care about destroying legacies (a company shouldn't be sacred just because it's old, that's pointless sentimentalism), but it seems that they would care about losing a serious amount of money, so the obvious conclusion is that they see themselves losing more in the bailout (the article says as much). The important question is: do we believe them (they are pretty good with money, after all), or do we try it another way? I personally think we should try it another way, but (from my current relatively comfortable observation post) that's probably more out of curiosity than any reasoned belief.
  - dmix 18y ago
    He may not just be outside the "drop zone". You could argue his motivation for taking that position is because he trusts his ability to rebuild himself in an free market recovering from the ground up, instead of an economy that is stabilized by government intervention but has limited growth potential. Both approaches involved regular people "bending over", either through a bad economy or through taxes/inflation.
    - calambrac 18y ago
      i.e., serious martyr complex.
      - dmix 18y ago
        Martyr assumes an ultimate sacrifice. His argument seemed to be out of self-interest, where he'll ultimately benefit from a different approach compared to losing everything because he's idealistic. (I'm trying to avoid a free market vs government debate and provide a contrarian perspective to the article.)
        calambrac 18y ago
        Martyrs kill themselves because they think they're getting a boatload of virgins in the afterlife. Arguing for an action that will bankrupt you because you think you'll rise out of the ashes like a Phoenix? Seems pretty close to me.
        eds 18y ago
        Uh, no. Martyrs don't often kill themselves, and virgins in the afterlife have nothing to do with martyrs. But I do (really) applaud your acrobatic linguistic effort to battle out this point.
        calambrac 18y ago
        http://www.straightdope.com/columns/read/2329/does-the-koran-really-promise-islamic-martyrs-72-virgins http://www.straightdope.com/columns/read/2329/does-the-koran... But you're right, that was a bit lame of me to reach for. A martyr complex is simply a psychological need to suffer for a cause. If I'm wrong about that, let me know why, seriously.
    - calambrac 18y ago
      You edited to add the "Both approaches" sentence, so I'll respond to that, too: I wasn't arguing that the bailout means no bending over; I would hope that there was still plenty of that, just for the right people. I'd prefer it be the executive who ran his company into the ground and is now scared shitless of living on 500k a year, rather than my neighbor with 2 kids who lost his job b/c of said executive's incompetence. But maybe you're right, maybe everyone's going to end up with it. We'll see.
  - grandalf 18y ago
    Are falling housing prices an example of "losing money"? If government policies artificially inflate housing prices, does that mean houses are worth more?
    - justindz 18y ago
      Considering the value of a transferable good is based on what others are willing to exchange for that good, yes, inflated house prices means they are worth more. It does not mean that houses are worth more at any point in time, but it does mean that they are at that point in time. Falling housing prices are not an example of losing money. They are an example of losing potential money, since there is no actual loss until sold. That's simplified--interesting things happen with valuation, property taxes, exotic mortgages, etc. Edit: removed redundant paragraph. As someone who dodged the housing deflation (not because I'm a genius, but because I got strangely lucky) by getting out before the value went south and moving to a rental at an attractive price as new lots started to idle in my area, I am sympathetic to what you're suggesting, though. Housing prices were not artificially inflated. They may have been inflated, but there's nothing artificial about the fact that the demand side of the equation was willing to pay the high rates. Everyone agrees the housing prices were inflated, but I'd suggest it was a feedback loop involving government policy, a need for financial institutions to create value w/o necessarily creating wealth for competitive reasons and a desire on the part of investors to turn a profit on a sky-rocketing asset without a full understanding of the reasoning and the risk involved. I might be missing some factors. But I do generally dislike everyone who calls in to C-SPAN in the morning suggesting that only one thing they already happened to dislike for some specific reason was the culprit.
      - grandalf 18y ago
        "Housing prices were not artificially inflated." Well, considering that during the time that housing prices increased there was a large mortgage interest deduction, an implicit bailout of Fannie/Freddie, a huge capital gains tax loophole on selected home sales, as well as a variety of programs designed to allow people who wouldn't normally have been able to afford a house to buy one, I'd beg to differ. The above are all demand stimulating laws. For some reason people believe that paying interest to a bank (instead of rent to a landlord) is the American dream, and significant government revenue was allocated to creating home ownership. Why wouldn't any smart speculator double down on the idea that by betting on home prices increasing he's got the government on his side and stands to make a mint? Now, those speculators (and in this group I include anyone who bought a house expecting it to increase faster than twice the rate of inflation) are being bailed out by the policymakers who made their gambles possible!
cturner 18y ago
> capture all the money out of the existing system I suspect that you're having a go at the investors in this comment. Your suggestion that they 'capture' the money 'out of the .. system' is flawed, because wealth is not a zero-sum game. Creating wealth doesn't mean that you're taking it off someone else. Certainly that's the case in the dynamics of investment. However, your comment could be read as a pithy attack on powerful governments who took us into this mess and are using the chaos created to further their reach into it, and if that's what you meant - touche!
- calambrac 18y ago
  You suspect wrongly, I'm not having a go at anyone, at least not with that sentence. The use of "all" is hyperbole, of course, and I intentionally said "money" instead of "wealth" because there is a limited supply of it, and being wealthy usually implies you control more of it than other people.
gaius 18y ago
It is not the case that any wealth has been extracted. Rather it is the case that money lead people to believe they had more wealth than they did. What we are seeing now is money more accurately reflecting the underlying wealth. There isn't much, if any, actual "loss".
- mattchew 18y ago
  Wealth is being extracted in the form of +trillion dollar bailouts. The loss comes from the taxpayer (and eventually, dollar holders), so it isn't quite what the OP meant, but there is one hell of an extraction taking place.

dmix 18y ago

If the government did nothing companies such as JPMorgan would nearly go bankrupt. The investors at the top would be responsible for bringing down 100+ year old companies. On top of destroy legacies, they would personally lose a serious amount of money. The difference is that there will be consequences to their actions; they and the majority of the country will suffer. With that precedent, would it be likely that it would happen again? From my impression, the main goal tends not to be whether they can come out of this with a much better system instead its how the they can reduce the amount of damage that will be done.

calambrac 18y ago
Anyone who's saying "let it all fall down" either thinks that they're outside of the drop zone, or has a serious martyr complex. Their argument is that making (other) people just bend over and take it is better for the overall economy (i.e., them). I don't think these people should care about destroying legacies (a company shouldn't be sacred just because it's old, that's pointless sentimentalism), but it seems that they would care about losing a serious amount of money, so the obvious conclusion is that they see themselves losing more in the bailout (the article says as much). The important question is: do we believe them (they are pretty good with money, after all), or do we try it another way? I personally think we should try it another way, but (from my current relatively comfortable observation post) that's probably more out of curiosity than any reasoned belief.
- dmix 18y ago
  He may not just be outside the "drop zone". You could argue his motivation for taking that position is because he trusts his ability to rebuild himself in an free market recovering from the ground up, instead of an economy that is stabilized by government intervention but has limited growth potential. Both approaches involved regular people "bending over", either through a bad economy or through taxes/inflation.
  - calambrac 18y ago
    i.e., serious martyr complex.
    - dmix 18y ago
      Martyr assumes an ultimate sacrifice. His argument seemed to be out of self-interest, where he'll ultimately benefit from a different approach compared to losing everything because he's idealistic. (I'm trying to avoid a free market vs government debate and provide a contrarian perspective to the article.)
      - calambrac 18y ago
        Martyrs kill themselves because they think they're getting a boatload of virgins in the afterlife. Arguing for an action that will bankrupt you because you think you'll rise out of the ashes like a Phoenix? Seems pretty close to me.
        eds 18y ago
        Uh, no. Martyrs don't often kill themselves, and virgins in the afterlife have nothing to do with martyrs. But I do (really) applaud your acrobatic linguistic effort to battle out this point.
        calambrac 18y ago
        http://www.straightdope.com/columns/read/2329/does-the-koran-really-promise-islamic-martyrs-72-virgins http://www.straightdope.com/columns/read/2329/does-the-koran... But you're right, that was a bit lame of me to reach for. A martyr complex is simply a psychological need to suffer for a cause. If I'm wrong about that, let me know why, seriously.
  - calambrac 18y ago
    You edited to add the "Both approaches" sentence, so I'll respond to that, too: I wasn't arguing that the bailout means no bending over; I would hope that there was still plenty of that, just for the right people. I'd prefer it be the executive who ran his company into the ground and is now scared shitless of living on 500k a year, rather than my neighbor with 2 kids who lost his job b/c of said executive's incompetence. But maybe you're right, maybe everyone's going to end up with it. We'll see.
- grandalf 18y ago
  Are falling housing prices an example of "losing money"? If government policies artificially inflate housing prices, does that mean houses are worth more?
  - justindz 18y ago
    Considering the value of a transferable good is based on what others are willing to exchange for that good, yes, inflated house prices means they are worth more. It does not mean that houses are worth more at any point in time, but it does mean that they are at that point in time. Falling housing prices are not an example of losing money. They are an example of losing potential money, since there is no actual loss until sold. That's simplified--interesting things happen with valuation, property taxes, exotic mortgages, etc. Edit: removed redundant paragraph. As someone who dodged the housing deflation (not because I'm a genius, but because I got strangely lucky) by getting out before the value went south and moving to a rental at an attractive price as new lots started to idle in my area, I am sympathetic to what you're suggesting, though. Housing prices were not artificially inflated. They may have been inflated, but there's nothing artificial about the fact that the demand side of the equation was willing to pay the high rates. Everyone agrees the housing prices were inflated, but I'd suggest it was a feedback loop involving government policy, a need for financial institutions to create value w/o necessarily creating wealth for competitive reasons and a desire on the part of investors to turn a profit on a sky-rocketing asset without a full understanding of the reasoning and the risk involved. I might be missing some factors. But I do generally dislike everyone who calls in to C-SPAN in the morning suggesting that only one thing they already happened to dislike for some specific reason was the culprit.
    - grandalf 18y ago
      "Housing prices were not artificially inflated." Well, considering that during the time that housing prices increased there was a large mortgage interest deduction, an implicit bailout of Fannie/Freddie, a huge capital gains tax loophole on selected home sales, as well as a variety of programs designed to allow people who wouldn't normally have been able to afford a house to buy one, I'd beg to differ. The above are all demand stimulating laws. For some reason people believe that paying interest to a bank (instead of rent to a landlord) is the American dream, and significant government revenue was allocated to creating home ownership. Why wouldn't any smart speculator double down on the idea that by betting on home prices increasing he's got the government on his side and stands to make a mint? Now, those speculators (and in this group I include anyone who bought a house expecting it to increase faster than twice the rate of inflation) are being bailed out by the policymakers who made their gambles possible!

cturner 18y ago

> capture all the money out of the existing system I suspect that you're having a go at the investors in this comment. Your suggestion that they 'capture' the money 'out of the .. system' is flawed, because wealth is not a zero-sum game. Creating wealth doesn't mean that you're taking it off someone else. Certainly that's the case in the dynamics of investment. However, your comment could be read as a pithy attack on powerful governments who took us into this mess and are using the chaos created to further their reach into it, and if that's what you meant - touche!

calambrac 18y ago
You suspect wrongly, I'm not having a go at anyone, at least not with that sentence. The use of "all" is hyperbole, of course, and I intentionally said "money" instead of "wealth" because there is a limited supply of it, and being wealthy usually implies you control more of it than other people.

gaius 18y ago

It is not the case that any wealth has been extracted. Rather it is the case that money lead people to believe they had more wealth than they did. What we are seeing now is money more accurately reflecting the underlying wealth. There isn't much, if any, actual "loss".

mattchew 18y ago
Wealth is being extracted in the form of +trillion dollar bailouts. The loss comes from the taxpayer (and eventually, dollar holders), so it isn't quite what the OP meant, but there is one hell of an extraction taking place.