[Economy] U.S. = Russia?

[Johan]

Interesting perspective. (http://www.ft.com/cms/s/0/09f8c996-2930-11de-bc5e-00144feabdc0.html)

Is the U.S. like Russia? In depth analysis is at THIS link, primarily. (http://www.theatlantic.com/doc/200905/imf-advice)

adds Prof Johnson, “there’s a deeper and more disturbing similarity: elite business interests – financiers, in the case of the US – played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse.” Moreover, “the great wealth that the financial sector created and concentrated gave bankers enormous political weight.”

Now, argues Prof Johnson, the weight of the financial sector is preventing resolution of the crisis. Banks “do not want to recognise the full extent of their losses, because that would likely expose them as insolvent ... This behaviour is corrosive: unhealthy banks either do not lend (hoarding money to shore up reserves) or they make desperate gambles on high-risk loans and investments that could pay off big, but probably won’t pay off at all. In either case, the economy suffers further, and, as it does, bank assets themselves continue to deteriorate – creating a highly destructive cycle.”

I'll just say this: American capitalism is rotten at its core. The game has been rigged for decades, and it STILL is. Our leadership is trying desperately to salvage the status quo of the present system, much of which, in my opinion, needs to be allowed to die off and wash out to sea.

He argues that the refusal of powerful institutions to admit losses – aided and abetted by a government in thrall to the “money-changers” – may make it impossible to escape from the crisis. Moreover, since the US enjoys the privilege of being able to borrow in its own currency it is far easier for it than for mere emerging economies to paper over cracks, turning crisis into long-term economic malaise. So we have witnessed a series of improvisations or “deals” whose underlying aim is to rescue as much of the financial system as possible in as generous a way as policymakers think they can get away with.

Print and borrow...print and borrow. Bush...Obama...no damn difference.

[zarathstra]

Interesting perspective. (http://www.ft.com/cms/s/0/09f8c996-2930-11de-bc5e-00144feabdc0.html)



I'll just say this: American capitalism is rotten at its core. The game has been rigged for decades, and it STILL is. Our leadership is trying desperately to salvage the status quo of the present system, much of which, in my opinion, needs to be allowed to die off and wash out to sea.

The professor makes an interesting point, but where does Russia come in? Is it mentioned in part of the article you didn't quote? I ask because I'm a bit of a Russophile and I love to get into discussions about the Mother Country.

[Johan]

The professor makes an interesting point, but where does Russia come in?

Link within the article. (http://www.theatlantic.com/doc/200905/imf-advice)

I'll add it to the OP.

[Stmfuller]

I heard an interesting argument recently about taking the billions of dollars we were giving in bailouts and giving it to every family in the us instead of the corporations. I guess it would give each of us about 400k or so. What would we do with it? pay off our bills, loans, debts, and go shopping reinvigirating the economy.
But why would the government for the people etc do that for us?
They wouldn't, because they stopped being for the people a long time ago.

[Ancalagon]

I heard an interesting argument recently about taking the billions of dollars we were giving in bailouts and giving it to every family in the us instead of the corporations. I guess it would give each of us about 400k or so. What would we do with it? pay off our bills, loans, debts, and go shopping reinvigirating the economy.
But why would the government for the people etc do that for us?
They wouldn't, because they stopped being for the people a long time ago.

Well, $750b / 306m Americans = $2450 per American. To get 400k, the bail out would need to be at least 122400 000 000 000.

But yeah, I still think the bailout is probably not in America's long term best interests. But good luck getting anyone to do anything about it.

[Narradisall]

Well, $750b / 306m Americans = $2450 per American. To get 400k, the bail out would need to be at least 122400 000 000 000.

But yeah, I still think the bailout is probably not in America's long term best interests. But good luck getting anyone to do anything about it.

Pfft, I think our bailout was nearly as big as yours and theres only 60mil people in the UK.....

... so much for my hoverbike....

[Ancalagon]

Pfft, I think our bailout was nearly as big as yours and theres only 60mil people in the UK.....

... so much for my hoverbike....

I'm also a resident of the UK.

I mean.... yeah there is a lot more dough in the bailout than $750b, but not enough for each and every American to get 400k. 10k, maybe. Even with the 60m people in the UK (I heard 70m?), not enough for 400k each unfortunately.

But yeah, I agree with the OP, in that the bailout is mostly meant to maintain the status quo, it allows the banks and other financial institutions to avoid having to take responsibility. Everyone knows that, as entities in a free market, private banks should be allowed to fall, and the government should find other ways to maintain the market. But this is cronyism, which unfortunately trumps capitalism.

[Johan]

10k, maybe.

That's about right. I've read that the bailout could fund about $11,000 per American man, woman and child, and that our overall promissory obligations could fund around $1500 per man, woman and child on the planet.

Ultimately, I think we're just propping up a corrupt, decayed system of money and power.

[Generation ABXY]

While I'm no fan of the corporate bailouts, I've heard the idea of giving the money directly to the people and I think it is an equally bad idea. I mean, apart from the fact that we'd basically be borrowing money from ourselves, I can hardly imagine the potential effects on inflation (of course, I'm also one of those people who thinks, for all the good it does, minimum wage also causes inflation). Yeah, you could still pay off your bills, but you'd still likely be spending that much more on general goods and future purchases.

[Narradisall]

I'm also a resident of the UK.

I mean.... yeah there is a lot more dough in the bailout than $750b, but not enough for each and every American to get 400k. 10k, maybe. Even with the 60m people in the UK (I heard 70m?), not enough for 400k each unfortunately.

But yeah, I agree with the OP, in that the bailout is mostly meant to maintain the status quo, it allows the banks and other financial institutions to avoid having to take responsibility. Everyone knows that, as entities in a free market, private banks should be allowed to fall, and the government should find other ways to maintain the market. But this is cronyism, which unfortunately trumps capitalism.

Oh I didn't mean there was enough for 400k each for us, but we'red probably end up with more than the US is what I meant. How much is a hoverbike going for these days anyway?

I agree its meant to maintain the status-quo, but I don't agree it should have been done. Even at 10k, thats roughly a third of the average debt of every single person in the UK. I don't know if they snuck another 10mil in to knock it up to 70, but you also have to take into account that millions of those will be under 18 (or even 16).

Its done now though. I just hope they don't continue to throw good money after bad, as they are pushing national debt to painful levels for when the taxes next rise to cover this (April 2010 onwards most likely).

[Johan]

I've heard the idea of giving the money directly to the people and I think it is an equally bad idea.

As one of those "people" I think it's a great idea. So do my six kids (I told them they could have a cut) and my wife. :D

[thomas]

Ultimately, I think we're just propping up a corrupt, decayed system of money and power.

There's a system which isn't?

[muddi900]

Well, $750b / 306m Americans = $2450 per American. To get 400k, the bail out would need to be at least 122400 000 000 000.

But yeah, I still think the bailout is probably not in America's long term best interests. But good luck getting anyone to do anything about it.

Yes, but the per household pay off would be significantly larger.

[Ancalagon]

Yes, but the per household pay off would be significantly larger.

I guess so. I mean, if you assumed an average of 4 people per household, its $40k. Thats a lot of money to me, I mean yeah it wouldnt pay a house off or anything, but if I was in debt or something, $40k would keep the wolves at bay.

Johan's right though - the whole thing is just to prop up an aging and corrupt system. Pity that Obama didnt do as much as he could to turn things around.

[MalReynolds]

canada is barely spending anything ... weird

[Stmfuller]

Well, $750b / 306m Americans = $2450 per American. To get 400k, the bail out would need to be at least 122400 000 000 000.

But yeah, I still think the bailout is probably not in America's long term best interests. But good luck getting anyone to do anything about it.
yeah, that's what I get when "facts" rumble around in my head for a couple of days. It's why when I do my own taxes I still let a computer do the math.

I mean, of all the lousy ideas that we have had from the disaster, giving money back to the people forces the $$ back into the economy one way or another. Chances are there are fewer and fewer people these days that are completely debt free and wouldn't at least put a little bit of the cash back into bills.

[Johan]

There's a system which isn't?

Certainly you wouldn't argue that all governmental systems currently in existence are equally corrupt, would you? :confused: Degrees of corruption vary tremendously, but if that's unimportant, then move to Mexico and let me know how that works out.

[thomas]

Certainly you wouldn't argue that all governmental systems currently in existence are equally corrupt, would you? :confused: Degrees of corruption vary tremendously, but if that's unimportant, then move to Mexico and let me know how that works out.

Certainly you wouldn't argue that a street cop taking money from some chump dealer, in comparison to a police chief taking bribes from drug lords, are equally corrupt, would you?

Also, I would have gone with Zimbabwe instead of Mexico.

[Ancalagon]

Certainly you wouldn't argue that a street cop taking money from some chump dealer, in comparison to a police chief taking bribes from drug lords, are equally corrupt, would you?

Also, I would have gone with Zimbabwe instead of Mexico.

You need to have a system for it to be corrupt. But yeah, I guess zimbabwe has the remnants of a social system and government.

I'd argue that the corruption in the USA/UK is just as bad if not worse, since it involves high level officials either abusing their power for their own ends, or taking bribes. Or using their power to benefit their friends without concern for the good of the country. Yeah, that happens in Africa too, pity its so common in the USA/UK though.

Hell, thats what the whole bailout was. "You ran out of money because your business idea was based on a risky idea that should have been illegal anyway? No worries, we'll give you the money you need to survive."