Compromise on Bush Tax Cuts

[ParanoiA]

If a bank lends out your savings as mortgages and the mortgages default, you lose your savings. You can maybe take the property in lieu of your money, but your money is gone. The previous owner of the house got it when they sold it to the person who borrowed the money from you(r bank). Now, let's assume the banks wouldn't have gotten bailed out and they went bankrupt. Your savings deposits would be gone. The only reason they're not is because the government backed them up. Now, let's say the bank bankruptcies had occurred and stimulated a chain reaction of credit-defaults to every employer. Then everyone's wages would have gotten frozen, causing further defaults on bill-payments, discretionary-spending, etc. So the fact that the government intervened basically provided the economy with the money to avoid chain-reaction bankruptcy. I.e. without the government spending, you would be bankrupt at this moment. So how is your money yours?

 

So many problems with this paragraph, so I'll pick and choose my battles here.

 

First, if I lost my savings, then where did this bailout money come from? The government's money is the tax payer's wallet. The short answer is: the winners bailed out the losers. One person's savings is lost, one person's is not. And that must be, because money doesn't get "lost", it flows to someone else. That someone is taxed, in one form or another, and their money flows back to the treasury. You're trying to make believe here that everyone was going to suffer and we got bailed out by a space alien with his own american currency. No, that was our money to bail us out. It's always been our money. "our" and "us" consists of the american taxpayers - some of us lost more, some of us won more, some of us didn't even notice.

 

All government does is confiscate citizen property and redistribute it in consolidated or concentrated forms - such as the bailouts.

 

Reading this makes me wish the government had done nothing. That way people would see exactly what they would have following total collapse.

 

Same here. Those who trade liberty for security deserve, and will get, neither. All bad debt should have been purged. But it wasn't, so we'll keep making more and more bubbles and they'll bust faster and faster. Fraudulent credit does much of this.

 

The good thing about the bailouts was that it prevented people from exploiting the instability to get rich quick at others' expense. If banks would have sold foreclosed properties for pennies on the dollar, people would have bought up loads of properties and behaved like medieval kings (provided they could afford the tax bill).

 

You mean like how one business swallows another? Yes, that's called capitalism. Capitalism does not forgive bad debt and poor investment. You don't have a problem with it when it's some business you didn't invest in, or some factory you never knew existed - but suddenly when it's a market ALL of us are invested in (housing), well now we can't have that. Yes, we must make ourselves an exception - we're too good and precious to play fairly. So we invent notions of exception to make it ok to steal from the winners to pay for the losers.

 

We called it bailouts. Using fear, uncertainty and doubt to scare the american people into selling liberty for illusions of security.

 

FUD works. Works real well.

 

 

The point is that things would have gone much differently without the government intervention, so it's really inappropriate for people to claim the right to keep what they earned as if it was earned in a totally free market. What needs to be done is to figure out a set of rules to ensure the free market stays free by, for example, ensuring that everyone is able to keep a homestead that they can't lose due to taxes or foreclosure. In other words, if the government bails out the rich/middle-class then it should also fix the game to give the poor freedom of choice in whether to play into economic exploitation or not. In fact, everyone should have the choice because freedom means not being compelled against your will to participate in someone else's enterprise.

 

What needs to be done is to have an actual free market, with actual honest banking. I'm not sure the financial crisis could have happened without fractional reserve banking - the heart of the easy credit without substance problem that enabled these mortgage products.

[Pangloss]

The tax cut extension passed the House late tonight, and is headed to the President's desk for signature.

 

http://www.politico.com/news/stories/1210/46531.html