Thursday, August 27, 2009

The Audacity of Change

Recently at TLATL a spirited debate over the radical healthcare reform proposed by the Obama administration and opposed weakly by the properly neutered GOP was had in our comments section of News Nits. As with many good parties, sometimes the welcome particpants get a little too drunk, stay a little too late and end up in the kitchen unwilling to go home or go to bed, so it was shut down.

In any event, the debate was complex and interesting, ranging from exploring if healthcare insurance should be considered a "right" to wondering if a program run by the federal government would even be effective at all.

In more recent posts, a video of an incompetent high up in Goldman Sachs whose job it is to oversee/investigate/audit the disbursement of public funds raised little discussion. But the same people who have poorly run the bailout fund would be running the new healthcare system in our country, which would quickly subsume 100 million Americans. So is that OK? As long as our appointed, endorsed economists are from the Ivy League and win Nobel Prizes? As long as they write for the NYT like Paul Krugman? As long as (the GOP insists) the new giant government program is bi-partisan? As long as the guy we voted for is in office? How quickly, it seems, promises are reversed and award-winning models crumble.

President Obama, for example, has maintained or even increased every single bad Bush administration policy of importance. Our aggressive foreign policy continues to expand. Although the smoke screen has been laid by closing Guantanamo (the order was signed, but it has not been executed because it's logistically maybe impossible) and by Eric Holder investigating the Bush-era behavior of the CIA (an investigation that will go nowhere), Obama has just reinstated the policy of "rendition", which essentially outsources torture. Also, Ben Bernanke (a Bush appointee) has received the full backing of Obama. No change is good change. I thought the Bush family had broken promises. This should destroy all hopes for us honest voters that meaningful change to the power establishment can be brought about by smooth talking, globalist lawyers.

This video is the best concise summary I have come across concerning not just the bailouts but the inpenetrable core of our country's financial system. And Ron Paul wants to audit the Fed, he must be crazy... Crazy like a pear!


kevin said...

sorry i missed the last debate. i'm only through half the comments so far, but i haven't read that much passion since "Bioheart: the soul of a Woman".

anyway, i didn't love what this guy said, and i'm surprised you did ry. cancelling the debt every 3 years? uhhhh, what? who cancels it, the all powerful gov't? does that mean they own the banks? where's the incentive not to take out too much debt?

what do sumer and babylon both have in common? they're all dead and none of them owned iphones. yeah, let's model them since they're so smart.

seriously - cancelling all debt a few times a decade sounds like he's trying too hard to be an edgy economist thinking outside the box. that's going from a top down approach 'fixing the economy' to later when he wishes lehman was allowed to go out of business, which is a bottoms up approach.

he implies all those nobel folks are idiots since the system crumbled, but there are other reasons too that we had a recession, like lack of regulation and fraud. obviously the last year has been a horrible economic time, but if we're talking macroecon, back the microscope up a bit and be fair and look at both the negative and positive (like, wealthiest nation in history for starters).

but crumbled is a bit too strong i think. we had a recession. it's getting better now slowly. it's happened before. it'll happen again. let's not cast out all the nobel guys every time there's a recession.

i'm overcompensating because i missed out on the last debate. however, that guy totally reminded me of the shorty from princess bride. inconeiveable!

Ryan said...

Kevvie, I'm glad you're back, as you were missed in the previous debate.

If you want "in", you're going to need to slow down and bring something debatable to the table. This last post was mostly incoherent.

1) I don't think that guy mentioned anywhere that he thinks we should cancel the debt every 3 years. I"m not sure where you're getting this.

2) It's not about whether the nobel folks are all idiots, they're obviously not. It's about concentrated power and lack of diversity of ideas. The top of the financial community is a self-cleansing, self-selecting group that goes unchallenged and is backed by our fearless leaders. That is a problem. Why shouldn't we cast them out?

3) "(like, wealthiest nation in history for starters)." You don't know enough about history or culture to make a statement like that. That's something Sean Hannity would say.

4) It's happened before, it will happen again, '' shrug ''. That's a lame position. Why don't you try understanding why it happens? Or at least justify your position in terms of when it has happened, because boom-bust has actually not always happened, it's not a natural macro-business phenomenon.

5) It's getting better slowly. How? What are you seeing? I have seen no evidence that it is, only predictions. Every shred of evidence says it's still getting worse.

6) Never get involved in a land war in asia. (Oops, we're doing that too!).

kevin said...

ry - let's take look in the blog mirror, and realize that we're in the TLATL. we don't need to justify every sentence that gets said here and go back and forth until everyone gets bored out of their skull. that's why crossfire went off the air.

also - chill out with calling people incoherent and stuff like that. it gets you nowhere and turns people off.

i was going off memory with that video, but you're right, he doesn't say every 3 years:
"when a new ruler would take the throne for the 2nd year, he had a 3 prong solution...he would
annul the personal debt. by wiping the bad debts off the book, he'd create a clean slate"

"when every new ruler took the throne, they'd cancel the debts"

anyway, compare that to what i said originally. my point remains: i think that's a crappy way to set up commercial law. where's the incentive to take on only responsible debt? at least with our system, bankruptcy provides negative effects from declaring, and people try to avoid it. if that's how they did it in sumer, who in their right mind would ever lend money? this guy's world is only possible with a much more powerful government hand.

regarding wealthiest nation in history, again you're getting so literal as to miss the point (and slowing down the conversation). even if we're literally the 3rd wealthiest nation in history, we've still used this current system to accomplish an extraordinary amount. (and, "wealthiest nation in history" is mentioned all over the place, (including the national review))

given our historical accomplishments, only focusing on recent mistakes is unfair when casting judgement on the system as a whole (called the recency effect). it's one of the reasons why our system was designed to enact change slowly.

i don't like the good ol boys network at the top of the financial world, but i don't think they should all be cast out (what are you suggesting there btw?).

i'm not gonna do the research on historical macro econ trends, but recessions have happened throughout our country's entire history, starting a mere 20 years after we became a country: (

also - thanks for calling my position lame btw (seriously - why so derogatory?). but my belief that recessions are cyclical doesn't equate to me not understanding why they happen.

"every shred of evidence says it's still getting worse"

my fun throw back to that would be "that's a lame position. you don't know enough about all the shreds of evidence to make a claim like that".

however, anecdotally, my company has lifted it's hiring freeze from the last 2 quarters because of high levels of new profit. but my statement came from general news reports. here's one that contains a few shreds:

anyway, i agree with this guy's point that the powerful protect the rich, which blows (esp if you're not powerful). i don't agree that we need to learn a lot about economics from sumer and babylon and leviticus and develop regular patterns of cancelling out debts.

Ryan said...

Kev, don't come here in a mocking tone, making up things that haven't been said and saying vague, unsubstantiated things and then get all out of sorts when I say you're incoherent.

We are all trying to strike the right balance, like a pickup game of bball, no one enjoys a game where someone is just messing around. If the occasional elbow is thrown, we've shown the composure and respect to make amends and call our own fouls. The more than 50 comments of the last big debate shows that people are willing to participate in rigorous debates when there's no BS.

You do need to justify what you say, otherwise you're slowing debate down and preventing honest discussion. That's not the same as being funny or lighthearted, or less blunt like I'm trying. This may not be Crossfire, but it's not Dharma & Greg either.

Invoking arguments like we're the richest nation in the history of the universe means nothing because it can't be proven or even debated and it's irrelevant anyway. I am not taking it literally, because there's nothing literal about it. Injecting it is argumentative and a waste of time. We could be talking about the quality of drinking water and you could say, the quality of drinking water may suck, but it can't be that bad, we're the richest nation ever. See what I mean? It doesn't make a point, even if you could define it better.

You should watch the video again maybe. You'll see the guy wasn't saying anything about commercial law. He was using historical examples to show how debt levels grow faster than economies and become crushing, and that this has been known for thousands of years.

For solutions today, he laid out a clear, free market solution of letting the market purchase toxic debts at a discount and renegotiate then based on the ability to pay. He didn't say we should have Jewish rulers who cancel debt magically or every X years, so don't argue against that.

Ryan said...

The history of success in our nation has nothing to do with the strong government you seem to defend. And you know exactly what I think should be done with the elite power structure, at the very least, the Fed should be audited and the globalist banks should not be bailed out with taxpayer money. In a better world, the Fed would be disbanded entirely.

You are also confusing your company's own success with the state of the economy across the nation, as well as predictions with reports of what is happening. The White House and various other financial experts have been predicting upturns for awhile, yet unemployment and all major indicators continue to get worse. THe only positive blip was attributed to cash for clunkers, which just means future growth will be slower because of it.

That's like standing on the second floor of a house in New Orleans and insisting there's no flood, while people on rafts float by below. It's no help. Obviously it will get better sometime but not because of government action rather in spite of it. I read lots of news every day, which is why I can say there has been no good news yet, and all you can do is have fun with it.

I think you are trying to express something about the risk/reward relationship in terms of the effects of bankruptcy? I'm actually not sure what you are saying. Do you think banks should be encouraged to take really big risks with depositors' money? Or do you think they should be able to manage the risk to avoid catastrophic failures?

Everything this guy said in the video has been substantiated by our current reality and by history. Goldman Sachs turned their greatest profit in 140 years last quarter. The average compensation per employee this year is $700,000. JP MOrgan Chase also recorded record profits.

The problem is these "banks" are functioning as speculators with any losses being guaranteed by the government, yet they keep any profits. Only 11% of their profits were from investment banking (which might actually create wealth in the country) the rest is on trading and speculation.

This is the system you are apologizing for. Regardless of how rich as a nation we are and have been, we would be much richer without this interference. These booms and busts are caused by this government/banking cartel, and when a bust destroys over 50% of the wealth of millions of Americans overnight, turns many more onto the streets without jobs, for those people, there is not recovery within their lifetimes. And this is through no fault of their own, except maybe they were gullible.

Ryan said...

P.S. I'm sorry for comparing your statement to something Sean Hannity would say. That was below the belt. (although, Sean Hannity refers to America as "the greatest nation on earth" about 7 times a show, no matter what they're talking about.)

G. Smith said...

First of all, I wasn't nearly as thunk as you drunk I was on that last one - but I may indeed have missed last call.

Here's my parting shout as I drop my keys by the car door and decide to walk home afterall - STEALTH HAIR FOR BALL!!!

But after a breakfast of fresh fruit and veggies, something's not right, b/c I found myself agreeing with an economist that Ryan posted. We certainly bailed out the wrong people - the money should have gone to people, not the creditors, since they haven't been honest about helping people get out of debt. And now we hear stories of people squatting in their own houses b/c the banks don't have the resources to actually foreclose on them.

There was a lot of talk about personal responsibility, right here on TLATL - and how wrong bailing out individuals would have been. So we bailed out the banks, and now we don't know where the money went. (BTW - the folks who will head up the new health care system, Sebelius, DeParle, Mann, never worked for Goldman Sachs - I'm not sure the government is as monolithic as is suggested)

This guy, I'll call him Vincini, is indeed drunk, though, when he starts talking about modeling our economy off the Babylonians - just as drunk as those that say our economy was properly designed in 1776. Our economy/society doesn't have slave labor, and has a much higher respect for human life. This complicates some of that ancient Babylonian math (although some of it was damn good: a2+b2=c2 anyone?)

My point here, and what I heard Kevin say, is that it is simplistic to suggest that we just adopt a custom that worked 3000 years ago. Greatest or not - we've advanced considerably, and most notably in our concern for the well being of others (and iphones).

As for Obama and change - there is no doubt that in some ways it has been business as usual. He's a centrist Dem., so it is not surprising he picked up the economic recovery where Bush left off.

However, Ryan, your statement:

"President Obama, for example, has maintained or even increased every single bad Bush administration policy of importance."

is probably more insulting than any of your remarks to me or Kevin.

Of importance to whom? Bush vetoed children's health care twice - (I know... when is G going to stop talking about health care?) despite true bipartisan support. Obama passed it within a month, again with bipartisan support. This is a significant policy for 11 million low-income kids and their families. And in the long view, healthy kids makes healthy adults makes productive adults which means less sick days which means stronger economy. Seems important to me.

(here comes health care again) And it is ironic that someone lambasting Obama for breaking promises would be one supporting the mistruths that are threatening to stop one of his campaign promises.

Are we still in two misguided wars? Yes. But does the entire world think of our leader as a force for evil, or force for good? How important this is depends on how much Bush was seen as a lightening rod for hatred of America. But if having someone who welcomes dialogue and diversity of opinion in the White House keeps one militant youth from joining Al Shebab, that seems important. (I know that guy)

Your man Vincini even says that Obama isn't about radically changing our economy (6:05), "he's talking about workman's laws, health reform, racial equality"

And while Vincini's arrogance in this part of the video is clear, at least he's not suggesting that these things aren't important.

Ryan said...

Oofta, this is more painful than I thought it would be, but I have vowed to soften up my approach to suit the feminine sentimentalities around here.

Where, oh where, are you guys getting the idea that the good Dr. Vicini was saying we should model our economy after the ancient ones? It is one thing to learn about the crushing power of debt over time, it is another to then note that those old times changed with the early Roman and Greek cultures where debt was held privately, and it's another to just blur everything together as you two seem intent on doing.

"...of importance" to the continuation of our culture. Bush vetoing that bill would be one of his successes, so Obama reversing course just reinforces my point. My point being, Bush's administration failed miserably in two main aspects: 1) it advanced an obscenely aggressive foreign policy, and 2) it advanced an obscenely aggressive fiscal irresponsibility.

This resulted in us getting involved in two wars in the middle east and setting near-record levels of deficit spending (after inhereting a surplus).

Let me close the loop in case this is still opaque: Obama has expanded our wars in the middle east by increasing the troop levels in Afhganistan (which he will soon probably announce another increase) as well as expanding our war into Pakistan. (I believe I predicted this earlier on TLATL, perhaps Roller remembers?)

He has taken some of the largest deficits and debt levels in our history and cemented them into by far and away the largest.

"And it is ironic that someone lambasting Obama for breaking promises would be one supporting the mistruths that are threatening to stop one of his campaign promises."

G, whether or not you are truly insulted by my calling you out on your occassional "baloney" and incoherence, I have substantiated everything I have ever said here, and your incoherence has vanished. If you can find one "mistruth" I have furthered, point it out, otherwise make a retraction of your statement.

It would be nice to get into some interesting ideas here, but it is hard to do so while people are just farting around, and only reacting (I'm guessing?) rather than listening, thinking, and only as a last resort, writing.

I mean, at least let's just start with some honest questions. See if we can't get a little Socratic method going.

Here's a question. Should a small cabal of bankers, backed legally and financially by the government, be allowed to fix prices in "the economy?"

G. Smith said...

Despite my intelligence and now masculinity being consistently questioned, and most advisors suggesting that I waste my time here on tlatl, I'll bite - if only b/c I agree that there hasn't been much of a discussion here lately - just bold statements followed by examples why those statements are inaccurate, biased, or sometimes absurd, followed by the above mentioned insults...

I'm not convinced that the question is an honest one, though. It seems to be both vague, and loaded with bias and assumption. I would have suggested starting with something more thoughtful, like, Who should a plan for economic recovery focus on?

But, in the spirit of dialogue, the only way I'd support this cabal of bankers fixing prices is if the following were true: if they were philosopher kings, people were no longer motivated by greed for material things, but rather advancement of the human condition, and the Klingon empire had already joined the Federation.

Ryan said...

G, it was an honest one, but you're right it was a bad one.

I also noticed you didn't offer any "mistruths" I was furthering, so feel free to do that or retract your statement.

I am going to bow out for awhile. With only two or three people involved, it gets too tight here and I'm not willing to have people take things the wrong way. When Kevin gives up after two tries and G starts calling me a liar with nothing better to say, it's time to take a break for lack of progress.

I did think of a better question, which actually you brought up, if you want to try to get people juiced on it:

What would the differences/effects have been of bailing out people in bad mortgages vs. bailing out the banks?

Peace out.

G. Smith said...

Providing some bail out of people instead of banks, people holding bad mortgages with interest rates they couldn't pay, would have at least allowed people to stay in their homes. Someone (can't find it now) wrote a good piece last winter about why don't we just give everyone with shitty mortgages $30,000 - which this person had calculated was about the equivalent of the TARP money spread out. Likely we would have needed provisions about how that would need to be spent on keeping the house (rather than a lavish Sandals vacation), perhaps in penalties for an interest rate adjustment?

Seems like letting people stay in their homes with boosted financial security would have allowed more spending - leading to a trickle up economic boost.

I also think that much of our economy is driven by faith, and people believing that things are looking up, and so are investing. I think that for most people the real scary part of this economic crisis is personal, am I going to lose my home, how secure am I? The bank bail hasn't really provided that personal reassurance for anyone not involved in the financial industry - which I also agree with Vincini is like a parasite - since we're still hearing about forclosures. And apparently all the shreds continue to say that it hasn't, or won't (although I'm not sure how helpful it is to eliminate all the shreds, precisely b/c our economy is driven by faith in shreds - but I'm no shred expert). But I do believe that if we had bailed out the people who were really in bad shape b/c of shitty mortgages (whoever's fault they were) then there'd be less news about people losing their homes, less fear about the apocalypse, and more courage to invest - which would drive the economy.

Jubilee 2000 had a similar philosophy regarding canceling the debt of developing countries - not completely parallel, but there are similar arguments there. And for that matter, the Babylonians, so maybe Vincini was right afterall?

Lots of pitfalls to this strategy, obviously; very difficult decisions as to who would get bailed out, and who wouldn't, and serious fallout for whatever that decision was. It may lead some to make further risky decisions trusting the gov. will bail them out if it gets too bad, and of course it would be fodder for those claiming Obama is socialist. But all that has happened anyways with the bank bail out, plus taxpayers ended up paying for executive bonuses, which they likely spent on lavish Sandals vacations.

Don't know if this Mon morning QB discussion is interesting. It was my suggestion, so I wanted to respond, but am happy to lay off the posts for a while too. I really enjoyed the conversation about fruit too. Frankly I enjoy reading about other things happening, like spiders and sports, in the Loop, or the Lou, too.

Ryan, the mistruths you furthered were about the need for hc reform, and the nature of this hc bill. That post is closed now but we all know you only said it b/c you're a privileged and elite water chestnut eater, and yes it's your fault that people are poor (crossing my fingers that my sarcasm font is working). I still hope we can have a beer sometime soon. (Times New Roman)