Not on the main island:
Wealth & Income Inequality
- Thread starter Eboue
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i love it when oversea wealth is parked in my municipality
@berbatrick having lived in HK for almost 2 decades, I’m well aware of the housing issues in the city.
But that has very little to do with inheritance tax or the lack thereof. The government has run a big surplus every year for over a decade and the housing issue has more to do with politics than a lack of funds available.
It’s a complicated issue but to cut a long story short, the elections in HK involve a 1200ppl committee and most of them are either connected with China or rich.
But that has very little to do with inheritance tax or the lack thereof. The government has run a big surplus every year for over a decade and the housing issue has more to do with politics than a lack of funds available.
It’s a complicated issue but to cut a long story short, the elections in HK involve a 1200ppl committee and most of them are either connected with China or rich.
I’m not going to bother to try to explain how the financial market works 
You are equating a person missing mortgage to huge banks failing, seriously? Just google up "what is banks weren't bailed out?" and read up the other side of the story.
It's cutting the nose to spite the face. Bailing out banks might have prevented a broader spillover to rest of economy and helped mitigate. Considering the alternative, you won't find any central bank who'll risk the consequences of what may happen if they aren't bailed out.
There is a big difference between punishing guilty vs preventing more turmoil. Banks as such are integral to the society. Highly paid bankers, probably not. I support the bailout fully...but still think the personal consequences to the bankers, rating agencies were not even close to what they deserved.
There's a point to be had though that we engage in a predominantly capitalist system wherein the rich are therefore a lot more likely to have their own mistakes and failings go unpunished than those who don't have any financial safety nets. If you're on the left and genuinely want to reign the banks in, then yeah, fair enough, but if you're on the right and want to have a free market capitalistic state with no government intervention, then you have to be willing to deal with the consequences of that. So what you largely end up with is a system where banks and the like can run wild with the knowledge that if they fail, they won't suffer from the pitfalls of capitalism, even though they've made their fortune by benefiting from its advantages.
If they want a state funded safety net then frankly their profits should be nationalised for a start. I'm sceptical that modern banks are that necessary for most taxpayers anyway. The behemonths with the multi million dollar executive bonuses could certainly be mostly torn up and thrown out if its now taken for granted as a taxpayer funded enterprise. A lot of bullshit the average citizen has no use for.
Is it any different in socialism? Or any other ism?
Governments do that all the time. Waste taxpayers money in wars, building walls and assorted stuff. Bailout ain't the only waste in history.
It's not an excuse, but I'd be pro more regulations and pro more accountability. Which is what is happening now.
Well...the whole point of socialism is that you'll see people being bailed out across the board, so to speak. So while the government will obviously step in to ensure a bank doesn't fail if it's going to hurt the common person, if they're truly socialist they'll also look to step in and help poorer people when they're struggling as well. Naturally it's not so simple in practice, but my critique here is that the problem with our current structure is that while we mostly live in capitalist societies, a lot of rich and powerful figures within the finance industry were essentially able to use capitalism for their own self-benefit without ever then suffering the negative consequences which can come with the free market when you fail. Whereas those with less power are punished to a far greater extent and don't find themselves getting bailed out to the same level if they fail.
This is a massive false dichotomy. It presents this false idea that the only two possible options were the exact bailouts that happened or and only or not doing anything. That was the extortionate lie of the finance industry - give us what we want or the whole economy is fecked.
What this fallacy fails to recognize is that government could have formulated their billion/trillion bailout much differently to benefit the poor and working class who got screwed by the greed of the finance. 4 million people lost their homes while banks and other major corporate entities received all the benefits. Instead of those responsible paying, the most vulnerable paid their cost for them. The Obama Admin could have structured the bailout in such a way that those 4 million families didn't lose their homes to foreclosure. You stimulate the economy and save the irresponsible banks by the bottom up not the top down. You don't give the banks billions in free money because they just extorted the country. The problem is the US government has been bailing out corporations since the 1980s from the top down allowing the big corps and the banks to suck down all the profits while passing along all the risks.
It was either moving back to status quo or jumping blind into a rolling out a unproven and untested new solution which if didn't work will lead to meltdown on a far more massive scale. Hank Paulson clearly says that the actions were on side of caution. No sane person would enter into a gamble of such massive scale with consequence unknown...esp with a market already in turmoil. After all these years, do we even have a firm idea of what the other options and their impact might have been? Don't think so. A failure of RBS or BoA would be far more catastrophic on it's own and that's not even considering what a loss of confidence in banking sector would do as a ripple effect.
The objective at that time was not to stimulate the economy but give it confidence. It was a time of stress of unclear consequences and the actions taken were the right one in those set of circumstances. You can do a lot of armchair economizing in hindsight, but the only mistake done was on how the bailout was structured. The intention behind the bailout was for it to be used to boost the mortgage market and give it confidence more, but the money wasn't used to that effect. It did work in stabilizing the markets, but failed to mitigate the impact of the crisis.
Preach it, man.
Absolutely we did. In fact we had a firmer idea of how bottom up would have benefited the people than what the elite's chosen top-down plan at the time. And considering what a disaster giving hundreds of billions of undeserved free money to the financial sector and mega-conglomerates has become now especially when combined with another round of unnecessary and greedy tax cuts for the rich it, its clear that the top-down bailout was about the worst possible option to the financial crisis.
I find it amusing how you claim to not like giving away free money undeserved but here you are defending bailing out the richest and most powerful corps with billions in free money as the best of all possible solutions.
You are really missing the point here and this argument is too full of fallacies for me to breakdown completely at the moment. You just made a half dozen unproven assertions and the bold ignores my original point.
The government could just as easily have prevented BoA failing WHILE ALSO saving 4 million families' homes. Or saved the homes and told BoA to feck itself. Stimulating from the bottom-up rather than with top-down trickle down bullshit would have saved 4 million family homes instead of just gifting those 4 million property assets to the banks and mortgage lenders.
Its just a massive fallacy unsupported by facts and logic to declare that the only way to save the economy was to conduct the top-down bailout the US gov. conducted.
Iceland Found Another Way to Clean Up a Financial Crisis
"Unlike the US, the country let its banks fail and bailed out lots of consumers."
https://www.bloomberg.com/opinion/a...nd-another-way-to-clean-up-a-financial-crisis
This highlights the problem with your logic from back in 2010:
https://ritholtz.com/2010/08/bailout-counter-factual/Barry Ritholtz said:
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What are these alternative proposals that were up there at that time? Any links?
I said it was the safest of all solutions. Never said it was the best. Getting back to status quo and mitigating the turmoil should have been the priority and it was.
That counterfactual argument is insane. Who know what the "right thing" is? If AIG or BofA or RBS weren't bailed out, I'm sure it would be far worse. Bank of America had 58 million customers. And if a bank of that magnitude were let to fail, the public would lose confidence in banks per se and you'd see a run on withdrawals on Chase and every other bank...causing just more and more instability. There is no fallacy here...just plain common sense.
- We can predict would happen when we restore status quo and bail out banks.
- We have no clue what would happen on any other alternative including whatever that "right thing" is.
Jumping into a unknown territory with markets already in turmoil ain't really the wisest course.
Pillow. I literally gave you two links in the post you replied to. This is what I feel the problem is. I literally just gave you links that already counter everything you just wrote but you didn't even bother reading.
Do you have proof of the bolded or is that just received wisdom?
The Iceland one, seriously? You really think letting US stock markets crash and letting the $ devalue should have been the right way forward? They let all foreign creditors and holders fail. Do you even realize what would happen if foreign investors lose faith in US and USD? You'd just be triggering a broader worldwide effect unlike anything Iceland could ever dream of. It's a absolute disaster of a example to make in this situation.
See Paulson interview above. Same happened in UK too. And that's why the "too big to fail" came into picture. Lehmann was let go. Northern Rock was let go. But BofA and RBS were not. Because of scale and the systemic ripple effects would be far more damaging. And providing we break up the too big to fail entities into smaller chunks, we can reduce the need for bailout and let them fail if the perform badly.
What is extra funny here is that the same WS cnuts who scream "communism!" every time the state intervenes with regulations were only too fecking happy for some commie-style intervention after they fecked up.
*sigh* You didn't even read that the other article let alone spend the time actually thinking about these issues before replying. I guess I'll just link for posterity. I love how you think bailing out the average person first is such a horrible idea for everything. You are literally arguing there was no way to save 4 million family homes but we absolutely had to save all the fecking selfish cnuts who caused the crisis billions of ill-gotten profits.
""The net result of this would have been more turmoil, lower stock prices, and a sharper, but much shorter economic contraction. It would have been painful and disruptive — like emergency surgery is — but its better than an exploded appendix.
And today, we would have a much healthier economy:
• Functioning Banking System: Clean banks not laden with bad paper would be actually making loans to qualified borrowers;
• Healthier Housing Sector: An unsubsidized real estate sector — no tax credits to first time buyers, no ultra low interest rates — would have had much lower prices, with far less bad mortgages floating around. We would be much further along in the foreclosure process. More of the folks who bought more house than they could afford would have moved into homes they can afford;
• Much Smaller Federal Deficits: The trillions of dollars of bailout costs on the books of Uncle Sam would not exist. Not he Tarp, not the government guarantees, not the GSEs, none of it.
• Right-sized Finance Sector: Instead of an outsized banking sector, finance in the US would be more proportional relative to the overall economy. Resources and assets (including programmers, quants, and engineers) would go to more appropriate firms.
• Bond holders Lose: Here is an insane idea: If you lend money to a firm that goes out of business, you lose most of that money (You do get a high priority in the liquidation). The US Taxpayer does not step in to guarantee the loss. Crazy, I know, but it is crazy enough that it just might work!
• Counter-parties Lose: See above
• Managements Lose: It seems that for the most part, most of the upper level bankers who helped bring about the crisis are still working for the same banks. A study found that “92% of the management and directors of the top 17 recipients of TARP funds” are still working for the same banks. Reorg would have caused these people to be fired; perhaps the bankruptcy judges would have clawed back some of the execs ill gotten gains.
• Moral Hazard: Bankers expectations that they can behave recklessly because Uncle Sam will bail them out, is dramatically reduced.
While we certainly can compare what was done with doing nothing, the proper counter-factual is to compare what was done with what should have been done.
Throwing trillions of dollars at the crisis, and hoping for the best will provide a short term improvement over doing nothing; trillions of dollars have that sort of power.
The proper comparison, however, should be versus what should have been done. Performing that analysis leads one to a very different set of conclusions""
You literally just repeated the fallacious counter-factual Ritholtz debunked. Have you read Lowenstein and Roubini and Ritholtz?
Exactly. Its very ironic and revealing when the ill-gotten billions of profits from a hustle are threatened then the "creative destruction" of capitalism is suddenly absolutely unacceptable. Can't let all the execs and c-levels lose their millions-to-billions in personal profits so we have to force the taxpayers to guarantee 100% of bonds and debt from finance but feck those 4 million families that just lose their homes. Trying to save them would break the economy somehow.
Socialize losses, privatize profits.
I have read that article before and have done so again in full before replying. Just saying it is meaningless when applies to US markets. Making an argument that it worked for Iceland so it must work well everywhere discounts the scale, intricacies and complexity of markets and is just plain false extrapolation. Yeah, I fixed a cycle, I should be able to fix a space station...kind of analogy.
Let me break it down in simple terms and point out what your famed article fails to say:
1. Iceland let the banks failed...simply because they couldn't bail them out. The banks weren't too big to fail, but rather they were too big to save. They default was greater than the GDP of the country. It was not a choice, but rather a necessity.
2. The cost of letting the banks fail was sovereign bankruptcy and Iceland had to negotiate a $4.6 billion bailout from IMF and other Nordic countries to restructure its economy.
3. Iceland raised taxes as direct result of this.
Curious that your article fails to mention this at all. You know what sovereign bankruptcy means, don't you? And this is your blueprint for USA?
Now let me point the difference between Iceland and USA:
1. All 3 major Iceland banks failed. Not in USA. - Letting BofA fail will have a cascade effect on other big banks who were in a relatively better position. There will be a run on withdrawing deposits and money market funds. This would not be restricted to big banks. Small/Regional banks will be dragged in too. You're just dragging the rest down and widening the problem.
2. Letting Kroner devalue has no impact outside Iceland. Letting $ devalue would have impact all across the world.
Let me break it down in simple terms and point out what your famed article fails to say:
1. Iceland let the banks failed...simply because they couldn't bail them out. The banks weren't too big to fail, but rather they were too big to save. They default was greater than the GDP of the country. It was not a choice, but rather a necessity.
2. The cost of letting the banks fail was sovereign bankruptcy and Iceland had to negotiate a $4.6 billion bailout from IMF and other Nordic countries to restructure its economy.
3. Iceland raised taxes as direct result of this.
Curious that your article fails to mention this at all. You know what sovereign bankruptcy means, don't you? And this is your blueprint for USA?
Now let me point the difference between Iceland and USA:
1. All 3 major Iceland banks failed. Not in USA. - Letting BofA fail will have a cascade effect on other big banks who were in a relatively better position. There will be a run on withdrawing deposits and money market funds. This would not be restricted to big banks. Small/Regional banks will be dragged in too. You're just dragging the rest down and widening the problem.
2. Letting Kroner devalue has no impact outside Iceland. Letting $ devalue would have impact all across the world.
Never said that.All I said was that bailing banks was the right step. Can US have gone extra and bailed out 4 million people? Sure, why not? Never said I'm against it or that it would be a bad idea.
Yes, I've read it. I just couldn't find any stats to back that assumption up. It's just his opinion ... in hindsight.
You missed a few relevant points. I never said the US should have been exactly like Iceland so that's just a strawman. The point is that the Iceland plan was focused on the citizens first. That was the point not that US should have tried to be exactly the same ffs. US also could have had a plan built around the citizens first and the immortal greed entities as only tertiary beneficiaries. That is the point. The entire Paulson plan was built around saving the ill-gotten riches of the finance sector not on doing what was fecking best for the US and World Economy.
Then of course you keep just ignoring the other link I linked.
""The net result of this would have been more turmoil, lower stock prices, and a sharper, but much shorter economic contraction. It would have been painful and disruptive — like emergency surgery is — but its better than an exploded appendix.
And today, we would have a much healthier economy:
• Functioning Banking System: Clean banks not laden with bad paper would be actually making loans to qualified borrowers;
• Healthier Housing Sector: An unsubsidized real estate sector — no tax credits to first time buyers, no ultra low interest rates — would have had much lower prices, with far less bad mortgages floating around. We would be much further along in the foreclosure process. More of the folks who bought more house than they could afford would have moved into homes they can afford;
• Much Smaller Federal Deficits: The trillions of dollars of bailout costs on the books of Uncle Sam would not exist. Not he Tarp, not the government guarantees, not the GSEs, none of it.
• Right-sized Finance Sector: Instead of an outsized banking sector, finance in the US would be more proportional relative to the overall economy. Resources and assets (including programmers, quants, and engineers) would go to more appropriate firms.
• Bond holders Lose: Here is an insane idea: If you lend money to a firm that goes out of business, you lose most of that money (You do get a high priority in the liquidation). The US Taxpayer does not step in to guarantee the loss. Crazy, I know, but it is crazy enough that it just might work!
• Counter-parties Lose: See above
• Managements Lose: It seems that for the most part, most of the upper level bankers who helped bring about the crisis are still working for the same banks. A study found that “92% of the management and directors of the top 17 recipients of TARP funds” are still working for the same banks. Reorg would have caused these people to be fired; perhaps the bankruptcy judges would have clawed back some of the execs ill gotten gains.
• Moral Hazard: Bankers expectations that they can behave recklessly because Uncle Sam will bail them out, is dramatically reduced.
Well you implied it by defending the moronic Paulson/'Bernanke plans and acting like no other alternative was possible. You are the one aggressively defending exactly what happened as the best of all possible worlds because you still fail to acknowledge there are numerous better ways to structure such a bailout. We picked the worst - the one that benefited the elites the most.
You've read all three of these books?
As I said, there was no 'citizen first' plan by Iceland. This was the only course available to them.
I was replying to this directly that there is no evidence that we'd be ssing any of the above benefits if we hadn't bailed out the banks. It was literally uncharted waters and there is no data to support any of the above. No wonder none of the decision makers wanted to jump blindfolded and gamble with country's economy.
"Safest" by default means it was the safest of options (implying of all other alternatives considered).
I explicitly mention the same...
The bailouts had two fold objective. Guaranteeing the confidence in markets and preventing widespread chaos and provide incentive to housing markt. It achieved the former but failed in the later.
The fact that was the only real option available doesn't change the fact that they still went with a citizens first plan and their economy is still much better now than what the neo-classicals thought it would be.
But there was no evidence that what they did would work and we know it was a failure for all but the richest. There was no data to support the Paulson/Bernanke/Geitner steps either yet they gambled on that plan. That's where you miss the boat here Edgar. They did gamble with the country's economy anyway. They simply made sure the cost and risk would fall on the poorest and working class.
Its just worryingly bizarre that in 2008 you would have wanted to trust a fool like Hank Paulson who was so clueless and asleep at the wheel that he had no fecking clue what was going on until it was too late. The most clueless Treasury sec of the last 50+ years who was completely negligent in doing his job and that's whose plan you want to trust without any data?
I will repeat again, there was no existing data to support anything Paulson, Bernanke and the Bush/Obama Administration's did either.
Safest for whom? It was the safest plan to protect all the billions in wealth that was redistributed, to protect cnuts like John Paulson (no relation to Hank) and to protect the wealth of the richest 1% sure. That's who the plan was safest for, not for the bottom 80%. It would be safest in the long term to implement a citizen's first plan. If you already acknowledge that they could and should have protected the people first before the guilty corporations they insured then I am not sure why you even keep posting.
For example forcing the taxpayers to guarantee bond holders and counter-parties 100% on the dollar. As Ritholtz points outs that was absurd. Protecting the rich and elites from the repurcussions of bad decision making. Almost all the guilty parties got to keep their ill gotten wealth whilst avoiding any responsibility for their actions.
Only after a lot of posts. Your initial posts reflected a basic misunderstanding of both the crisis and the bailouts and you still seem to miss the boat on alternatives that were clearly better that economists worth their salt knew about at the time. You put Barry Ritholtz, Nouriel Roubini and Roger Lowenstein together in 2008 and we would have had a much better long term recovery plan than the shite that clueless Paulson and co. regurgitated.
Essentially the bailouts were a massive failure for the poor and working class. They were good at protecting the wealth of the elites but that's it. Socialize the risk and privatize the profits. Economists and people that actually study these things could have come up with far better plans but they gambled on the one that was "safest" for the financial elites.
No need for one, as they were just restoring status quo. What was before still continues. There was no new plan. All they wanted to do was to steady the rocking boat.
There were no alternatives at that time. Nobody knew how Iceland would turn out to be and there was no reason to beleive that any other option would have better benefits.
You have the benefit of hindsight now and still have no data if an Icelandic plan would work as well in US or any other alternative would yield better results. Ritholtz himself does not provide any statistical backing and all it was and is ...is just a theory.
This is all just untrue. There were definitely alternatives because I fecking personally discussed them with my econ professors 2007-08.
Again its patently absurd for you to whine about lack of data for alternatives while pretending you don't need data to support the Bush/Obama plan.
It must be a wonderful subjective world where you just arbitrarily pick and choose what needs data and what doesn't and then act like you are always right.
Like what? Fo you have anything in US markets that was considered as a viable alternative at that time? A paper or proposal document?
I could ask you the same?
What data do you expect to be available on alternatives if you don't expect Paulson et al to produce data supporting their plan c.2008?
Where is your "data" from 07-08 that the Paulson plan is best of all alternatives ?
Status Quo literally means "keep existing state of affairs" There was no change. No need for new plan, no need for data. Paulson clearly mentions his intention was not to have any changes. What data you need for a process which did not change?
You've been the one to mention alternates and other better plans...all with nothing to back them up.
I'm following this with interest, but as I'm totally unqualified I can't actually add much I'm afraid. I do have a question if that's ok, am I right in remembering that Gordon Brown was an influential advocate for QE and zero interest rates? I don't know if I'm just wrong or maybe read something British bigging up the Brits.
How the feck is putting the american taxpayer billions in debt the status quo? There was a drastic change and a shit plan that basically everyone was utterly disgusted by
He's gonna say that taxpayers made a profit on the bailout: https://money.usnews.com/investing/...risis-bailouts-have-earned-taxpayers-billions
Again, I ask...what were the alternatives?
Sorry, im just pointing out what a crock of shit that the bailout was maintaining the status quo is.
Easy to be a armchair citic with benefit of hindsight, eh?
Yes, maintaining the status quo was paramount as the alternative would have been in uncharted territories blindfolded.
The status quo crashed the fecking the economy and your argument seems to be "lets keep the status quo because Paulson said so we dont need any evidence"?
I don't know what to make of this post because it literally doesn't make any sense. You should probably rephrase what you're trying to say
Due to crash, the market had short term liquidity crisis and people were losing faith in banks. This would typically lead to mass withdrawals which no bank (even those who do no need TARP) couldn't handle. So the govt had to step in and guarantee liquidity and ensure no other bank defaults.
At that point in time, ensuring confidence in banks was of paramount importance than punishing the bad actors. The TARP program was not really that effective in mitigating the damage caused by the crisis (funds were distributed/used improperly), but it was crucial in ensuring that the crisis was not worse that what it was.