Post #351,170
11/24/11 9:35:24 AM
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Banks contributions to GDP growth were illusory.
http://krugman.blogs.../a-gigantic-scam/
A Gigantic Scam
ThatÂs pretty much what Andrew Haldane, the executive director for financial stability at the Bank of England, is calling a large part of modern finance:
[...]
The original article - http://www.voxeu.org...x.php?q=node/7314
Implicit subsidies
There is a second, equally important, reason why the measured value-added of the financial sector in the national accounts may be seriously over-stated. We now know that the risk being taken by banks was not in fact borne by them, fully or potentially even partially. Instead it has been borne by society. That is why GDP today lies below its pre-crisis level. And it is why government balance sheets, relative to GDP, are set to double as a result of the crisis in many countries.
But if banking risks are not borne by banks, they will not be priced by banks, or investors in banks, either. The implicit support of the taxpayer and society will show up as an explicit profits bonus to the financial system. Lower risk means lower funding costs, which in turn means fatter banking profits. If there are expectations that the government cavalry always stands at the ready, excess returns will be harvested both pre and post-crisis.
Elsewhere, we have sought to estimate those implicit subsidies to banking arising from its too big-to-fail status. For the largest 25 or so global banks, the average annual subsidy between 2007-2010 was hundreds of billions of dollars; on some estimates it was over $1 trillion (Haldane 2011). This compares with average annual profitability of the largest global banks of about $170 billion per annum in the five years ahead of the crisis.
Government subsidies  whether implicit or explicit  cannot be said to have added to economic well-being in aggregate. At best, they are a sectoral re-distribution of resources from the general taxpayer to the banks. If raising taxes or lowering government revenues has deadweight welfare costs, this transfer is actually welfare-reducing. That effect, too, is completely missed by existing statistical measures of the contribution of the financial sector.
If banks are essential to functioning of the economy, then they should be regulated like utilities. As they used to be. The "magic of the market" won't constrain the desire of bank management to earn every larger profits as they take on ever-increasing risk. TANSTAAFL - large rewards don't happen without large risks.
It still astounds me that people who claim to understand economics don't understand supply-and-demand and risk-and-reward... See Madoff, CDOs, CDSs, etc. Fancy math and glitzy marketing doesn't change that.
Cheers,
Scott.
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Post #351,172
11/24/11 9:42:39 AM
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well I hope that you have a call into Barney Frank's office
and let Obama know that its time to flush the Sachs Whitehouse merry go round and let the repos understand that 3-10 times deposits is fine but 33 is too much. Took you this long to understand what I was saying years ago so hopefully the rest of the democratic party will figure it out will not be far behind
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,177
11/24/11 10:12:05 AM
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We're not saying the same thing.
Banks are essential and they had to be bailed out in 2008. Greenspan and the rest of the regulators were asleep at the wheel, and Gramm and his buddies the Congress, and Clinton, were negligent and/or worse in cutting up the banking regulations that protected the economy from banking crises since the 1930s.
The issue is the way the bailouts were done.
They should have been temporarily nationalized, the management fired, and they should still have government restrictions on compensation until they demonstrate they have their capital reserves restored.
I doubt you feel the same.
Cheers,
Scott.
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Post #351,179
11/24/11 10:21:52 AM
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nope they should have been banged flat
fdic bailouts only not selective protection of the "right rich"
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,183
11/24/11 11:13:44 AM
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We tried that in the 1930s. Didn't work so well.
You can't let the banking system collapse without huge consequences.
Insured deposits are only a small part of the banking system these days. "Shadow banking" makes it worse - http://en.wikipedia...._financial_crisis
One can't simply wash one's hands and say "tough luck". One has to address the system as it exists.
Cheers,
Scott.
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Post #351,185
11/24/11 11:28:24 AM
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Analogy
Joe takes a child, ties a rope around its waist, and hangs it over a cliff.
Bob says, "Dude! You can't do that! Pull that kid back up."
Steve says, "I've been telling you from the beginning they shouldn't be hanging kids off a cliff. Now you want to keep holding on to the rope. If you really thought it was wrong you'd untie the rope right now. You're part of the problem."
--
Drew
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Post #351,188
11/24/11 11:57:39 AM
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banks would have collapsed system would not
why does handing banks shitloads of taxpayer money help the system? Is the system better now? You want to tax the rich until they are poor, letting the banks fail would have done that and the deficit would be a whole lot smaller
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,190
11/24/11 12:07:41 PM
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Lookit all that straw
If you're going to exaggerate what we want, try: "You want to throw rich people out of their 38th floor boardrooms to pop like over-ripe grapes when they hit Wall Street below."
--
Drew
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Post #351,192
11/24/11 12:18:38 PM
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Who says that's an exaggeration?
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Post #351,224
11/25/11 8:54:39 AM
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What he said.
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Post #351,228
11/25/11 9:45:19 AM
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who is exagerating when fair share is north of 70% of income
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,230
11/25/11 9:46:22 AM
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You understand what "marginal rate" means, right?
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Post #351,233
11/25/11 9:49:55 AM
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Re: You understand what fair is right?
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,235
11/25/11 10:06:46 AM
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Yes.
It's not fair for the rich to take ever larger proportions of national income. The tax rates on high incomes have been too low for too long. Capital gains and "carried interest" should not be taxed at lower rates than "ordinary" income - doing so invites distorted "investments" and money shufflings that are only done to reduce taxes.
We have over 100 years of modern economics data that tells us that all of those "reforms" aren't good for the country, nor for the rich (because the economy grows more slowly). High GDP growth is strongly correlated with more progressive tax rates and the reverse is strongly correlated with real incomes for the majority that stagnate or fall.
All of this is easy to see (review AngryBear for some of the data). Don't fall for the senseless talking points by the know-nothings on the Right. Talking points about "fairness" for those who have done very well for the last 30 years while the majority have not aren't reality.
Cheers,
Scott.
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Post #351,236
11/25/11 10:11:44 AM
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stale data set
"It's not fair for the rich to take ever larger proportions of national income" the percentage has moved 5 points the other way since 2008
trying to strain to gloss over that hurts your argument
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,239
11/25/11 10:39:55 AM
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Still a lot higher than the '40s-'70s historical norm.
http://economistsvie...troversies-a.html
From June - http://economix.blog...fitable-recovery/
In their newly released study, the Northeastern economists found that since the recovery began in June 2009 following a deep 18-month recession, Âcorporate profits captured 88 percent of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1 percent of that growth.
The study, ÂThe ÂJobless and Wageless Recovery From the Great Recession of 2007-2009, said it was Âunprecedented for American workers to receive such a tiny share of national income growth during a recovery.
According to the study, between the second quarter of 2009, when the recovery began, and the fourth quarter of 2010, national income rose by $528 billion, with $464 billion of that growth going to pretax corporate profits, while just $7 billion went to aggregate wages and salaries, after accounting for inflation.
The share of income growth going to employee compensation was far lower than in the four other economic recoveries that have occurred over the last three decades, the study found.
[...]
ÂAggregate employment still has not increased above the trough quarter of 2009, and real hourly and weekly wages have been flat to modestly negative, the report concludes. ÂThe only major beneficiaries of the recovery have been corporate profits and the stock market and its shareholders.Â
HTH.
Cheers,
Scott.
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Post #351,240
11/25/11 10:45:00 AM
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Corporate profits is not individual earnings
the millionaire count is still negative
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,251
11/25/11 2:32:58 PM
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"Corporations are people my friend." HTH.
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Post #351,252
11/25/11 2:37:54 PM
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mebbe so, never saw one shopping at walmart tho
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,253
11/25/11 2:43:38 PM
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They shop at Nieman-Marcus.
Attempting to get back on topic: Corporate profits don't go to much of the bottom tax brackets. They go to management and to shareholders - people who have been paying taxes that are too low.
HTH.
Cheers,
Scott.
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Post #351,254
11/25/11 2:51:01 PM
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go to management sure
when I had investments in the market I never got a dime of profit as a shareholder, so what shares do you own that are receiving too much profit that I can tax?
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,255
11/25/11 2:59:17 PM
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You're making a nice impression of a brick wall today.
Try Krugman's column today. Maybe that'll help.
http://www.nytimes.c...are-the-99-9.html
I think I'm done. Got chores to do... ;-)
Cheers,
Scott.
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Post #351,256
11/25/11 3:22:09 PM
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you brought up shareholders by and large shareholders are us
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,278
11/25/11 11:59:01 PM
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Wrong
http://www2.ucsc.edu...power/wealth.html
In terms of types of financial wealth, the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. When you say, "by and large shareholders are us," are you blind, stupid or mendacious? I like you, man, but that's a fucking whopper by any standard.
--
Drew
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Post #351,286
11/26/11 6:51:43 AM
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Hey, maybe he's REALLY rich and we didn't know!
Listen to a story 'bout a man named Jed
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Post #351,301
11/26/11 4:47:20 PM
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do you have a 101k?
if you do what do you think its invested in?
http://www.palmbeach...-sink-751950.html free example
what drove the tech bubble back in the day? 401k money
pension funds have a chunk. State and municipal folks invest heavily. Look at the Alaska perm fund, 40% is in the market. Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,315
11/26/11 8:35:20 PM
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You mean 401k?
Read the quote again: The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate.
There may be 50 times more people who have some money in stocks, but of the total dollar value of the stocks, it's mostly held by the rich.
People with money on 401s don't drive investment activity. --
Drew
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Post #351,325
11/27/11 12:46:24 AM
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Yes it does drive...
People with money on 401s don't drive investment activity. Yes they do... investment into the "401K's" managers pocket.
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Post #351,376
11/28/11 10:18:48 AM
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Ed Zachary!
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Post #351,248
11/25/11 1:08:38 PM
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Sure, measure from the peak
Where are they compared to historical norms?
More important, when's the last time the income polarization was this extreme?
--
Drew
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Post #351,249
11/25/11 1:19:40 PM
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sure, stop measuring at the peak
1929, 1912, 1880 etc
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,194
11/24/11 12:33:13 PM
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The Fed gave the banks $16T in accounting entries.
http://www.dailykos....-tothe-Recipients!
That "taxpayer money" isn't flooding the economy - it's on ledgers so the banks appear to be solvent. As they actually become solvent again, the Fed will drain that money back out of the banking system.
http://www.federalre...anke20100325a.htm
It's accounting entries. Not real money as far as the real economy is concerned because it's not circulating.
Nice try with the trolling though. ;-)
HTH.
Cheers,
Scott.
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Post #351,225
11/25/11 8:55:35 AM
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Heh. "Real money" We don't have that anymore.
We have bits.
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Post #351,227
11/25/11 9:44:43 AM
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Yup.
Felix said that it should become even less "real" as it's too expensive to exchange coins and bits of paper now.
http://blogs.reuters...reliance-on-cash/
Cheers,
Scott.
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Post #351,243
11/25/11 11:55:37 AM
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From your link, wtf?
For individuals, cash clears at par: if you give me a $100 bill, then IÂm $100 richer and youÂre $100 poorer. No oneÂs going to jump in and charge a fee for facilitating the transaction. And if I then deposit the $100 bill into my checking account, once again I see the full amount appear on my statement.
But the fact that most people never get charged for cash transactions is corrosive, in its own way: it helps to impede the inevitable-yet-glacial move away from cash and towards more secure, easier, and cheaper forms of payments.
One at a time:
more secure
B.S. 1: Physical control over something - anything - is always the most secure. With cash, I have that. With a bankster's bits, I don't. Not to mention the non-trivial invasion of my privacy with respect to how I spend my money if I use anything other than cash.
easier
B.S. 2: Who refuses cash? What's easier than me handing over cash?
cheaper
B.S. 3: Cheaper for whom? There are no fees associated with my transaction if I use cash and many, many times, I get a discount for using cash. This is true for everything from AvGas to flowers for my wife.
This call for the end of cash smacks of "I've got an Econ/Business degree. I can't contribute anything real to society, so I'll charge a fee for everything productive that everyone else does. You gotta let me. It's better. And besides, how am I gonna pay for my Armani if you don't?"
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Post #351,244
11/25/11 12:13:14 PM
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remember the movie popeye?
this is what street and the democrats want to do to us
http://www.youtube.c...tch?v=g0ahJPxfGp4Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,377
11/28/11 10:21:40 AM
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I remember what Chase actually did to me.
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Post #351,247
11/25/11 1:01:42 PM
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You paid cash for your car?
You mail an envelope full of cash to pay your electric bill? Or do you walk to their office each month?
--
Drew
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Post #351,258
11/25/11 3:30:34 PM
11/25/11 3:31:02 PM
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Yes, I did. And at one point
I'd walk around the corner to the local smoke shop that also acted as a payment center for the electric company (and others) and pay cash.
Edited by crazy
Nov. 25, 2011, 03:31:02 PM EST
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Post #351,269
11/25/11 6:41:36 PM
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thats the way po' folks do it
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #351,287
11/26/11 7:01:19 AM
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Yeah, well
I lived on eggs (cheapest most digestible cost effective protein) and mac and cheese (box crap) for a few years.
I always PRESENTED well though, no matter what the situation. During "job training" when I was about 19, we were in a presentation on how to interview. Large crowd with a single speaker. I was in the front row.
I had no experience, a poor high school education (was thrown out about 1/2 way though, but still got a diploma), no training, no nothing. I was a lost cause.
Speaker: When you are in an interview situation, you need to appear relaxed and confident, like you are interviewing them, not the other way around. You do NOT need the money. You need to NEVER appear needy or desperate. You MUST sit a certain way, and look a certain way for the best possible impression.
He then pointed at me, and said:
Do what he is doing right now.
It seems like I relax like a rich confident guy when I'm watching an lecture.
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Post #351,373
11/28/11 10:14:45 AM
11/28/11 10:17:10 AM
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The last car I bought, I did.
I pay cash for everything I possibly can. Unfortunately, thanks to the bankster class, that isn't everything anymore.
The dealer said he could get me 3.0% on a loan. The Credit Union across the street said I could get 2.75% if I filled out all the PII on myself I had available and gave it to them. I told them to FO. I was not about to fill out their 10 page enrollment form at my age. Went to the dealer and said, "I've decided to just pay cash for the car. I've decided the banksters have already gotten enough of my money." The dealer said, "You're damned right they do. And they're not giving any of it back."
(Edit: 2nd paragraph added)
Edited by mmoffitt
Nov. 28, 2011, 10:17:09 AM EST
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