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asylum seeker
Joined: 22 Jul 2007
Location: On your computer screen.
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 Posted: Tue Oct 07, 2008 8:00 pm Post subject: American taxpayers' money going to a good cause |
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Good to see corporate executives are making good use of the bailout money:
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WASHINGTON (AP) � Days after it got a federal bailout, American International Group Inc. spent $440,000 on a posh California retreat for its executives, complete with spa treatments, banquets and golf outings, according to lawmakers investigating the company's meltdown.
AIG sent its executives to the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy. The resort tab included $23,380 worth of spa treatments for AIG employees, according to invoices the resort turned over to the House Oversight and Government Reform Committee. |
http://ap.google.com/article/ALeqM5iCBEplezRU4MUlI3wKRd0IZ9GCgQD93M2CP00 |
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canuckistan
Mod Team
Joined: 17 Jun 2003
Location: Training future GS competitors.....
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| Posted: Tue Oct 07, 2008 8:03 pm Post subject: |
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A perfect storm of their own making and not an "evildoer" in sight.
Right Georgie? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Oct 07, 2008 8:05 pm Post subject: |
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| The government prints money, which diminishes the savings of Americans, to give to bankers (and in this case an insurance company that got involved in highly complicated mathematical finance) who turn around and lend the money back to the Americans, with interest. This is all done without any democratic checks and balances as the Fed is "independent" of government control. What an outrageous system. |
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nathanrutledge
Joined: 01 May 2008
Location: Marakesh
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| Posted: Tue Oct 07, 2008 9:03 pm Post subject: |
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| mises wrote: |
| The government prints money, which diminishes the savings of Americans, to give to bankers (and in this case an insurance company that got involved in highly complicated mathematical finance) who turn around and lend the money back to the Americans, with interest. This is all done without any democratic checks and balances as the Fed is "independent" of government control. What an outrageous system. |
This is a very misleading comment. The money in the bailout is not newly printed money. It is released into the market by the Treasury repurchasing Treasury Bonds. It removes the money by selling Treasury Bonds. It is illegal for the Bureau of Printing and Engraving to just print money. In this situation, we are not facing INflation as much as we are facing DEflation, both of which are bad. By releasing the money into the market, it is helping to stop deflation, which, if left alone, would INCREASE the power of savings. Right now, they are trying to stabilize the money supply, not cause inflation. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Oct 08, 2008 12:57 am Post subject: |
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| This is a very misleading comment. The money in the bailout is not newly printed money. |
I was making reference to the system as a whole. But the Fed dumped hundred of billions aside from the bailout last week. Look at the recent M3 data:
http://picasaweb.google.com/post1gallery/Post1Lowem#5254589811541583746
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| In this situation, we are not facing INflation as much as we are facing DEflation, both of which are bad. |
We have inflation in consumer prices and deflation in assets. This is a nightmare.
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| By releasing the money into the market, it is helping to stop deflation, which, if left alone, would INCREASE the power of savings. Right now, they are trying to stabilize the money supply, not cause inflation. |
The fight against deflation will be short, at best. Look at the chart above. The Fed can't raise interest rates as did Volker because of the term and holders of debt. It is a no win situation at this point.
The monetary system we have is a direct assault against the poor and middle class. A new system is needed. |
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arjuna
Joined: 31 Mar 2007
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| Posted: Wed Oct 08, 2008 10:18 am Post subject: |
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| mises wrote: |
| The monetary system we have is a direct assault against the poor and middle class. A new system is needed. |
The brainwashing has been so thorough that even the poor don't get it. |
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nathanrutledge
Joined: 01 May 2008
Location: Marakesh
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| Posted: Wed Oct 08, 2008 4:05 pm Post subject: |
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The M3 data is the money supply, not the monetary base on which all the credit is based. The Fed is pumping hard cash into the economy, which has an exponential effect on credit, which is the exact thing that is needed to free up the credit market and the economy as a whole. The lack of cash dollars in the economy causes a lack of credit dollars in the economy causes businesses not being able to make payroll and the won to fall so far versus the dollar.
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We have inflation in consumer prices and deflation in assets. This is a nightmare.
The fight against deflation will be short, at best. Look at the chart above. The Fed can't raise interest rates as did Volker because of the term and holders of debt. It is a no win situation at this point. |
The Fed can EASILY raise interest rates at this point. The pressure for rates to go up naturally is in place. There is a shortage of cash, so people are willing to pay the higher interest rates to get the cash they need. If the Fed releases more money, the rate drops, if they take it back in, it raises. But all this has to be balanced against causing a recession. The result of the 1981-83 interest rate hike was a recession. Yes, inflation was controlled, but at the expense of production. Right now, they are attempting to do both (which, IMO, is impossible).
It is impossible to claim that we have inflation in consumer prices RIGHT NOW. We DID have inflation earlier in the year, but that was before the massive bank failures and general market disarray. According to the BLS, the CPI dropped .1% in August, and the stats for September will be available on October 16th. I'd bet that it fell in September too. Energy prices have fallen recently, people in general don't have cash to purchase things, everything is in place for deflation.
Yes, we have deflation of assets. But, IN THE LONG RUN, this will be a good thing. The deflation is not the kind where a normal value item falls to a ridiculously low value, but where something at a ridiculously high value falls to a normal value. It is just an example of the market righting itself.
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| The monetary system we have is a direct assault against the poor and middle class. A new system is needed. |
What would you suggest, out of curiosity? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Oct 08, 2008 4:27 pm Post subject: |
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| The M3 data is the money supply, not the monetary base on which all the credit is based. The Fed is pumping hard cash into the economy, which has an exponential effect on credit, which is the exact thing that is needed to free up the credit market and the economy as a whole. The lack of cash dollars in the economy causes a lack of credit dollars in the economy causes businesses not being able to make payroll and the won to fall so far versus the dollar. |
This is exactly what I said, but with more words. What you aren't saying is that this is extremely dangerous. We are trading "freed up credit markets" for a significantly lower valued dollar tomorrow. Have you been following this at all? Virtually every serious commentator on the subject is warning of a serious collapse in the value of the US dollar.
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| The Fed can EASILY raise interest rates at this point. |
No, it can't. When Volker raised rates and blew the preceding decade of terrible policy out of the economic tailpipe most American government debt was 30 year and held by Americans. It is now, the vast majority, three year and held by foreigners. The government would not be able to meet her financing obligation. While there is some upward room to move, there is not much. And there is certainly not anything near the flexibility that Volker had.
I'm going to go smoke to cure my lung cancer.
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| There is a shortage of cash, so people are willing to pay the higher interest rates to get the cash they need. |
No. There is no shortage of cash. Banks are unwilling to lend. Corporations are hording cash. This is a crises in the shadow banking system.
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| But all this has to be balanced against causing a recession. |
We've been in a receding economy since November of last year, if an honest assessment of inflation is used. See Robuni on this.
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| It is impossible to claim that we have inflation in consumer prices RIGHT NOW. |
Why? I see inflation in my day to day life all around me. My roasted chicken lunch has gone up in price 3 times since July. From 4.75 to 5.99 now. I see inflation in my shopping with milk, bread and fruit. I see inflation in the prices of beer at my local watering hole.
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| We DID have inflation earlier in the year, but that was before the massive bank failures and general market disarray. According to the BLS, the CPI dropped .1% in August, and the stats for September will be available on October 16th. |
The CPI is a political figure. It is almost totally useless at this point. Much like the GDP figures and every other data the Bush administration has produced. I think only Fox News takes it seriously at this point. The last GDP upward revision (which was quickly downward revised) on the eve of McCain's speech at the Republican convention was the final nail for the accuracy of the American government's stats.
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| Yes, we have deflation of assets. But, IN THE LONG RUN, this will be a good thing. |
A good thing for people who don't own equities, 401k, homes etc. If you are about to retire (10-15 years) and everything you've been storing away to live on is now worth 30% less, or so, you're fucked.
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| What would you suggest, out of curiosity? |
Well, I have been smart and astute enough to be warning of this crises for about 3-4 years. I am not smart enough to offer suggestions on a totally new monetary arrangement. But it is an assault on the poor. It does create inequality. The financial system is a parasite on the real economy. It is not working. It may be that different people running the system will be enough, but I doubt it. |
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RJjr
Joined: 17 Aug 2006
Location: Turning on a Lamp
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| Posted: Wed Oct 08, 2008 7:30 pm Post subject: |
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It was predictable that they would waste the money. At least they didn't blow it all in one place. 
African-American cotton farmers in the southeast had to work their asses off and sweat in the fields in 2008 so these white guys could party like it's 1859. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Oct 08, 2008 10:16 pm Post subject: |
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| RJjr wrote: |
| African-American cotton farmers in the southeast had to work their asses off and sweat in the fields in 2008 so these white guys could party like it's 1859. |
Maybe you posted this in the wrong thread? |
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RJjr
Joined: 17 Aug 2006
Location: Turning on a Lamp
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| Posted: Wed Oct 08, 2008 10:27 pm Post subject: |
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| mises wrote: |
| RJjr wrote: |
| African-American cotton farmers in the southeast had to work their asses off and sweat in the fields in 2008 so these white guys could party like it's 1859. |
Maybe you posted this in the wrong thread? |
Nope. If I was black, I would be so pissed at the AIG guys. Actually, I am anyway. What they've done is a case of same shit, different generation. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Oct 08, 2008 10:36 pm Post subject: |
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| You make absolutely no sense. |
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RJjr
Joined: 17 Aug 2006
Location: Turning on a Lamp
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| Posted: Wed Oct 08, 2008 11:53 pm Post subject: |
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In 1859, blacks in America worked hard but watched the fruits of their labor go to support some white men living a lavish lifestyle that the blacks themselves could rarely enjoy even though blacks were forced to pay for it.
In 2008, blacks in America worked hard but watched the fruits of their labor go to support some white men living a lavish lifestyle that the blacks themselves could rarely enjoy even though blacks were forced to pay for it. |
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Leslie Cheswyck
Joined: 31 May 2003
Location: University of Western Chile
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| Posted: Thu Oct 09, 2008 4:52 am Post subject: |
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| You mean AIG owns a lot of black people? |
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Join Me
Joined: 14 Jan 2008
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| Posted: Thu Oct 09, 2008 5:13 am Post subject: |
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Anyone who thinks giving taxpayers' money to a bunch of bankers is the right way out of this mess needs to read this article.
http://www.forbes.com/feeds/ap/2008/10/07/ap5516554.html
These bastards at Lehmans were giving each other multi million dollar bonuses while trying to get us (those of us who are American taxpayers) to bail out their bankrupt business. |
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