One thing for everyone to keep in mind. If the US Federal government was subject to the same accounting rules that private industry is now subject to, its total accumulated actual debt would be shown about 5 times higher than what it now shows--pretty much all due to having to put the long-term estimated liabilities for SS, Medicaid, Medicare, and Federal Pensions on its books. (NOTE: This situation is not something that just happened recently. The problem really became acute approx. 45 years ago with the establishment of Medicare, Medicaid, and the annual indexing of SS benefits combined with the decision not to consider these as future liabilities on the Fed's books.)
Marginal tax rates near 50%. Here is one (only, and likely tending to one-sided) view on it.
http://www.freedomandprosperity.org/Papers/sweden/sweden.shtml
Bucyrus wrote: Yes many countries, including this one, are governed by a mix of socialism and capitalism. My point is that the two philosophies, although they can coexist, compete with each other rather than working together.
Yes many countries, including this one, are governed by a mix of socialism and capitalism. My point is that the two philosophies, although they can coexist, compete with each other rather than working together.
And under Capitalism competition is a good thing, ya? But it does seem to work better in some countries better than here. Scandenavian countries seem to be doing ok for instance.
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henry6 wrote: Bucyrus wrote: I don't see socialism and capitalism working together as you hope for. How can they work together? They are in direct opposition, and mutually exclusive. How can both sides in a tug-of-war work together? Only have time to comment on this at the moment. Aren't most European countries a mix of capitalism and socialism unde the banner of democracy? We are but just not to the extent that they are. Yet. I believe, for instance, that universal health care should not be made available because the so called lowley poor can't afford it but because big business needs a healthy, non distracted work force for consistancy and quality. If that's socialism, than so be it!
Bucyrus wrote: I don't see socialism and capitalism working together as you hope for. How can they work together? They are in direct opposition, and mutually exclusive. How can both sides in a tug-of-war work together?
I don't see socialism and capitalism working together as you hope for. How can they work together? They are in direct opposition, and mutually exclusive. How can both sides in a tug-of-war work together?
Only have time to comment on this at the moment. Aren't most European countries a mix of capitalism and socialism unde the banner of democracy? We are but just not to the extent that they are. Yet. I believe, for instance, that universal health care should not be made available because the so called lowley poor can't afford it but because big business needs a healthy, non distracted work force for consistancy and quality. If that's socialism, than so be it!
Well that would be socialism, but there is a way to fix healthcare without socializing it. The problem is that it is not in the interest of the insurance industry, the medical industry, or the government to go down the proper road to fix healthcare. So it will either remain overpriced under the current system or we will socialize it and it will need to be rationed because it will be in short supply. I am surprised at the reason you give for wanting socialized healthcare.
henry6 wrote: Bucyrus wrote: henry6,For what reason can you not agree with most of what I said? What is the part you can agree with? First, I my fear is that the post has wandered too far away from the railroad theme to be sustained.I cannot agree with your assessments of what happened duirng the credit crunch. I do blame overzealous investment bankers on pressuring for loans, credit, and mortgages to people who really didn't understand what thier ulitmate burden and responsibility would be nor the consequences should things go wrong. I also don't agree that there shouldn't have been more, or at least enforced, oversight and regulation. To me, and many others, those investment bankers knew that they could get away with their personal fortunes while the government would have to hold the bag. If there had been oversight and enforcement of exisiting regulations then the government, with public monies, would not be bailing them out. And I hardly believe the government forced the pushing of these loans by lenders. About the only thing I can agree on is that the present situtation will force the price of housing down.What I really wish could have happened is that everyone with one of these so called bad mortgages were given a direct payment from 50 to 90% of thier mortgage value and put the onus of payment to the lenders on the borrowers. This would have sorted out the good and the bad boys on both sides of the problem. The follow thorugh, however, would be stricter oversight and regulations by government and the removal of the so called leaders of the financial industry with penelty for any criminal misdeeds (which have to be proven). Yes, we have lost control of our government and allowed it to lose control of our country. We have to get things back under control. I believe, unlike what has been presented here, that those in charge of our business community have, in the name of economical operations and profit, have at all costs, moved the country's money overseas. Even the Robber Barons of the 19th and 20th Century worked at building American industry and communities, not tearing them down and sending Main St., USA and its supporting factories to Asia or elsewhere. If our population cannot buy houses, cars, appliances, etc., because big business doesn't employ them, then there will be more down turns in American life and big business and its investors cannot complain about being looked at with suspicion with a feeling they be regulated. But I really feel that this crisis, coupled with a lot of economic and evnironmental matters especially in the area of transportaion, is leading to a greater middle ground of cooperation and and joint projects. The best of Capitalism and Socialism will be operate in consortium to bring the USA through the 21st Century without capitulating or giving way to anyother country. There probably will be pendulum like swings one way or the other at times, but overall, both business and government know today that survival of both is in each others hands. Each side has to trust the other a little bit more, but each side has to accept more responsiblity, too, to make it happen.
Bucyrus wrote: henry6,For what reason can you not agree with most of what I said? What is the part you can agree with?
henry6,
For what reason can you not agree with most of what I said? What is the part you can agree with?
First, I my fear is that the post has wandered too far away from the railroad theme to be sustained.
I cannot agree with your assessments of what happened duirng the credit crunch. I do blame overzealous investment bankers on pressuring for loans, credit, and mortgages to people who really didn't understand what thier ulitmate burden and responsibility would be nor the consequences should things go wrong. I also don't agree that there shouldn't have been more, or at least enforced, oversight and regulation. To me, and many others, those investment bankers knew that they could get away with their personal fortunes while the government would have to hold the bag. If there had been oversight and enforcement of exisiting regulations then the government, with public monies, would not be bailing them out. And I hardly believe the government forced the pushing of these loans by lenders. About the only thing I can agree on is that the present situtation will force the price of housing down.
What I really wish could have happened is that everyone with one of these so called bad mortgages were given a direct payment from 50 to 90% of thier mortgage value and put the onus of payment to the lenders on the borrowers. This would have sorted out the good and the bad boys on both sides of the problem. The follow thorugh, however, would be stricter oversight and regulations by government and the removal of the so called leaders of the financial industry with penelty for any criminal misdeeds (which have to be proven).
Yes, we have lost control of our government and allowed it to lose control of our country. We have to get things back under control. I believe, unlike what has been presented here, that those in charge of our business community have, in the name of economical operations and profit, have at all costs, moved the country's money overseas. Even the Robber Barons of the 19th and 20th Century worked at building American industry and communities, not tearing them down and sending Main St., USA and its supporting factories to Asia or elsewhere. If our population cannot buy houses, cars, appliances, etc., because big business doesn't employ them, then there will be more down turns in American life and big business and its investors cannot complain about being looked at with suspicion with a feeling they be regulated.
But I really feel that this crisis, coupled with a lot of economic and evnironmental matters especially in the area of transportaion, is leading to a greater middle ground of cooperation and and joint projects. The best of Capitalism and Socialism will be operate in consortium to bring the USA through the 21st Century without capitulating or giving way to anyother country. There probably will be pendulum like swings one way or the other at times, but overall, both business and government know today that survival of both is in each others hands. Each side has to trust the other a little bit more, but each side has to accept more responsiblity, too, to make it happen.
Thanks for your feedback.
I surely agree with you and NKP guy when you say that capitalism has been suddenly altered permanently and that we are standing on the edge of a precipice. But I don't agree that one must understand what derivatives and credit default swaps are in order to understand what caused the housing crisis. The actual culprits would love to have us believe that. And I am certainly not blaming "...a poor yutz who just wants to own a house, even if he can't afford it," as NKP guy suggests. That is another red herring, to say that those who criticize the government motive of providing taxpayer subsidized housing are picking on the poor and homeless.
Your preference to see the government give direct payments to the mortgage holders is interesting. That would indeed shake out the truth of who is and is not capable of paying their loan. Otherwise we will have beauacracies deciding which mortgages to buy out, and because nobody can predict the future, we will never know whether the borrowers could have serviced the loans that the government bought.
But the way I look at it, it really does not make much difference how well this works or if it works at all-or-if it makes the problem worse, which it very well might. The reason that it doesn't make any difference is because the main motivation has been fulfilled. That is that a hungry government, expanding out of control, has just had another 3/4 -trillion dollars laid on its plate. Government talks a lot about corporate greed these days. But a government that cannot stop feeding itself on other people's money is the true embodiment of greed. I will bet you that ¾-trillion will not be enough. There is no such thing as enough when it comes to funding the public sector.
More socialism requires a bigger government, and government has a self-interest in getting bigger and expanding its power. So the government system naturally pulls to the left. On Friday, socialism got a lot bigger in the U.S., and capitalism got correspondingly smaller.
It had always seemed like the most probable vector for socialism to make a big inroad to our system would be socialized medicine. Energy, housing, and transportation are also in the sights of socialism, but healthcare has long been considered the low hanging fruit. On Friday, socialized housing leapt to the front of the line. And as an indication of the stealthy and predatory nature of socialism in general, it snuck in through the back door, completely circumventing our representative republic system. Oh sure, congress debated the spending, but the debt was created completely out of the public's view and without their consent, starting back in the 1990s. The government created a lot of cheap housing for people who could not afford it, and now they have asked the public to pay for it.
You say you blame the housing crisis on overzealous lenders and not on government pressure. The popular perception is that the blame lies with the borrowers who borrowed too much or the lenders who pressured the borrowers to borrow too much; the so-called predatory lenders. But those are red herrings intended to deflect the blame from the government policy and the specific politicians who produced it. Predatory lenders do not make loans to people who cannot pay them back. Predatory lenders make loans to people who can pay them back, but should not borrow the money. And in a normal free market system, people cannot possibly borrow more than they can afford, because lenders will not lend them more than they can afford.
I disagree that more oversight would have prevented the need for this bailout. You cite the investment bankers who made a lot of money and left the government holding the bag. My point is that the government should not have been holding the bag in the first place. "Holding the bag" was the guarantee that took the risk away from the lenders and placed it on the public.
And the government did indeed pressure lenders, under threat of prosecution, to make loans to under-qualified borrowers on the basis that failing to do so amounted to discrimination. Both the federal pressure to make loans and the federal assumption of risk were introduced through the Community Reinvestment Act and through Freddie Mac / Fannie Mae.
I realize that this entire explanation may seem to fly in the face of what you have come to believe. But this story is now even beginning to seep into the mainstream news media. So it won't be long before it is widely understood by the public. Take a good look at this article that Greyhounds posted above from the New York Times in 1999. It not only describes in detail what I have said here about the government causing the housing crisis, but also heaps praise upon the motive as if it were government altruism. Leave it to the NYT to endorse the Nanny State. Now we have a textbook case of seeing where it leads:
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&s...
P.S. Not only are we well on our way to socialized housing, but we are also heading down the road to socializing financial risk; perhaps the most dangerous of all possible forms of socialism. As the economy turns down, the tax revenue streams will go dry, leaving all levels of government unable to cut spending and gasping for relief, and one by one, calling for a public bailout. Bailouts will become the new form of taxation, which is grabbing the revenue in big gobs and charging it to our future livelihoods.
NKP guy wrote: My intention in my earlier post on this topic was to try to say that long-winded expositions of economic theory are wasted; the game has changed in the USA. Capitalism as believed in by some here has been altered, permanently. May I suggest that if you don't know what credit default swaps or derivitives are, or can't explain them, then you have no idea at all how this mess developed or if the current efforts to fix the mess will work. Otherwise, you're just parroting what you've heard or read.Let's not blame a poor yutz who just wants to own a house, even if he can't afford it.So.......how many of us are ready to post comments on credit default swaps and derivitives? No wonder the American people are confused and angry.
My intention in my earlier post on this topic was to try to say that long-winded expositions of economic theory are wasted; the game has changed in the USA. Capitalism as believed in by some here has been altered, permanently.
May I suggest that if you don't know what credit default swaps or derivitives are, or can't explain them, then you have no idea at all how this mess developed or if the current efforts to fix the mess will work. Otherwise, you're just parroting what you've heard or read.
Let's not blame a poor yutz who just wants to own a house, even if he can't afford it.
So.......how many of us are ready to post comments on credit default swaps and derivitives? No wonder the American people are confused and angry.
I have to agree with you, NKP...as I am one of those who don't know what credit default swaps and deriviteis are really all about. I do understand that it involves the buying and exchanging of credit accounts like mortgages from the local or "hometown" lender to an investment bank or firm, then reselling up to another investment instrument or organization. From there, all I understand is that the local or "hometown" lender reaped his profit and washed his hands of the transaction and now a second (or third or fourth or...) party holds the paper which is or can be in turn resold to the next level, etc. My question here is: is principal involved in the value of the account or only the interest due?
I further agree that the game has changed. Capitalism has been altered but not killed off here in the United States. It now has to partner with others to grow itself. Patriotism (mine) tells me the partnering should be within our contury, thus, with governments. However, I get the feeling that hard core (for lack of a better term) Capitalists just as soon sell to the highest bidder no matter where the money comes from, even if from a foreign government. But it should be noted that other free world countries in Europe and elsewhere do work with such a parochial partnership keeping the money, the porperty, the power, inside their own countries. United States companies have been literally thrown out of foreign countries or at least forced into local partnerships with private enterprises and/or governments. (Canada has strict rules of Canadian ownership demanding so much of a product has to be of Canadian origin. Even in such things as music: recordings in Canada have to be of an exclusive arrangemtent and "mixing" even though it may be the same song or musical piece as in, say, the U.S. or UK; and this extends to "imported" recordings, too.)
One of the agreements, if you will, concerning deregulation of a lot of businesses, (rail, banking, communications, etc.) was that such deregulation would allow for greater competiton, thus lowereing prices and increasing quality as a win/win situation for both business and consumer. What has happend has been that it allowed the swallowing of all competition into larger and larger corporations, eliminating competition, driving prices up in many markets, eliminating jobs in many communities, lowering product quality and giving nothing but lip service to service! Thus, even some of those who were for deregulation in the past are having second thoughts.
And so, we now stand on the precipice of a new era in government, politics, and business.
greyhounds wrote: ......then we've lost control of our government and it now controls us.
......then we've lost control of our government and it now controls us.
Now THAT sums up the current political/social/economic situation in a well-written, concise proverbial nutshell.
henry6 wrote: I can't agree with most of what you said, Buycrus. But worse, I fear you have crossed the line which is going to get this otherwise envigorating, civil, and intellegent conversation locked!
I can't agree with most of what you said, Buycrus. But worse, I fear you have crossed the line which is going to get this otherwise envigorating, civil, and intellegent conversation locked!
OK, two questions.
Why did Buycrus cross a line when NKP Guy didn't cross a line? Was it because you disagree with one and agree with the other?
What specifically did Buycrus say that you disagree with? Those are the facts. That's what happened.
Bucyrus wrote: NKP guy wrote: I've been fascinated by these comments and have not only learned a lot, I've been ruminating on ideas I'm not comfortable with.For decades now I've read similar comments from railfans about the railroad industry and capitalism vs socialism. I think the past few weeks have been a fulcrum point, a watershed. All of our theories about the relationship of gov't and the economy are now outdated. With the intervention today of the federal gov't in the economy we are on new ground. Just as liberals hate to admit that socialism doesn't work, I think recent events have proved that capitalism (in this case, worship of the "free market") doesn't, either. Don Phillips is consistently the best writer at Trains magazine. I abhored John Knieling's views on economics and railroads, but I read his thought-provoking essays. Phillips disturbs a number of people here, but I agree with his views. Win a few, lose a few.Politics, economic theory, and railroads are all tied together. Never in American history were they not related. We are living through a time when the very nature of Wall Street and the American economy are changing forever. In the words of an old favorite hymn, "New ocassions teach new duties; time makes ancient good uncouth." Get ready to see some of your pet economic theories abandonned or junked. I strongly agree with nearly everything you say, especially your point about the last few weeks being a watershed for a big change in the government / economic system. I would say the earth moved yesterday in regard to our political system. You said, "Just as liberals hate to admit that socialism doesn't work, I think recent events have proved that capitalism (in this case, worship of the "free market") doesn't, either." I disagree with the second part of your point. Much of what follows is covering the same ground that Greyhounds covered five posts back, but it bears revisiting especially because the wool is being so profoundly pulled over the public's eyes on this matter. Assuming that you are referring to the current credit crisis, it quite dramatically proves that socialism does not work. It proves nothing about capitalism, however, unless you believe the ones who caused the crisis and their allies in the media when they try to shift the blame onto the lenders who created the bad loans and onto Wall Street who ultimately purchased those loans. During the V.P. debate, when Gwen Ifill asked Sarah Palin whether the current housing crisis was caused by the lenders or the borrowers. The correct answer is, "neither." Here is my simplified explanation of what caused the housing crisis, which is a big driver of the current financial crisis: The government pressured lenders to make risky loans and then assumed that risk on behalf of the taxpayers.The reason the loans were bad is because the government, through Freddie and Fannie, guaranteed them. The guarantee meant that the loans did not need to be made to credit-worthy borrowers. Not only did the government guarantee the loans, but it also pressured lenders to make the loans to people who could not afford them-the so-called sub prime loans. It may appear as though the lenders are to blame because they made the bad loans, but the creation of bad loans is just the normal business consequence when the government removes financial risk from the lenders, in effect, acting as a co-signer on the loans. Yet many are blaming the crisis on insufficient government regulation of the financial business. On the contrary, the government pressure on lenders to make loans to un-credit-worthy borrowers amounted to excessive government regulation, not insufficient government regulation. And additionally, the government guarantee amounts to socialism if it needs to be executed and honored, as has proven to be the case. Basically the government guarantee on all loans opened to door to create bad loans. The bad loans created a lot of new housing that drove down house values. So we have an oversupply of housing that has driven its value below the price of its creation. Yesterday the government bought all that excess housing with taxpayer money in order to take it off the backs of the private financial sector, which was being dragged down by carrying it. We are being told that when the housing market recovers, those excess houses that the government bought will be put back on the market and sold. We are told that some houses might even sell at a profit, enabling the government to pay back the taxpayers for the bailout.However, the government's motive that led to the creation of the bad loans was to provide affordable housing, which amounts to housing for those who can't afford it. To make it affordable, the government takes money from those who have excess and gives it to people who don't have enough to buy a house. So, as the government holds all the houses it bought yesterday, I don't see a motive for them to hold out for a good price once the market recovers. On the contrary, the motive will be the same motive that created the crisis in the first place. That is to sell the houses below market value for the benefit of those who cannot afford to pay market value. Indeed, there is no motive for the government to make a profit on the houses because, fundamentally, the public sector has no profit motive. If anything, the motive will be to come back to the taxpayers and ask for more money. We will be lucky if half the money we gave them yesterday even goes for the intended purpose of buying up the so-called toxic mortgages. The likely scenario is that the government will hold their houses off the market for a while, not only to allow the market to recover, but to allow time for them to make decisions about the process. Then the government will burst the dam and allow all their houses to suddenly flood the market at discounted prices. They will probably even engage in social engineering, setting the house prices according to the ability of buyers to pay or giving similar advantages to the financially disadvantaged, since that was their plan from the very start of this mess. The sudden influx of discounted housing will drive down the value of everybody's house like nothing we have ever seen in the normal course of free market forces. Nothing can distort a market like the government can. I would say that, despite the current housing crisis, this would be the best possible time to sell your house if you consider it to be an investment to any extent. Here is a chronological outline:1) The government uses its power to make a guarantee that causes the creation of houses, which their buyers cannot afford.2) The process creates a bubble of excess housing.3) The bubble of excess housing drives down all home values.4) The government uses taxpayer money to purchase the excess housing.5) With the excess housing taken off the market, all home values rise to previous levels.6) The government redistributes the excess housing at below market prices.7) The excess discounted housing drives down all home values a second time.
NKP guy wrote: I've been fascinated by these comments and have not only learned a lot, I've been ruminating on ideas I'm not comfortable with.For decades now I've read similar comments from railfans about the railroad industry and capitalism vs socialism. I think the past few weeks have been a fulcrum point, a watershed. All of our theories about the relationship of gov't and the economy are now outdated. With the intervention today of the federal gov't in the economy we are on new ground. Just as liberals hate to admit that socialism doesn't work, I think recent events have proved that capitalism (in this case, worship of the "free market") doesn't, either. Don Phillips is consistently the best writer at Trains magazine. I abhored John Knieling's views on economics and railroads, but I read his thought-provoking essays. Phillips disturbs a number of people here, but I agree with his views. Win a few, lose a few.Politics, economic theory, and railroads are all tied together. Never in American history were they not related. We are living through a time when the very nature of Wall Street and the American economy are changing forever. In the words of an old favorite hymn, "New ocassions teach new duties; time makes ancient good uncouth." Get ready to see some of your pet economic theories abandonned or junked.
I've been fascinated by these comments and have not only learned a lot, I've been ruminating on ideas I'm not comfortable with.
For decades now I've read similar comments from railfans about the railroad industry and capitalism vs socialism. I think the past few weeks have been a fulcrum point, a watershed. All of our theories about the relationship of gov't and the economy are now outdated. With the intervention today of the federal gov't in the economy we are on new ground. Just as liberals hate to admit that socialism doesn't work, I think recent events have proved that capitalism (in this case, worship of the "free market") doesn't, either.
Don Phillips is consistently the best writer at Trains magazine. I abhored John Knieling's views on economics and railroads, but I read his thought-provoking essays. Phillips disturbs a number of people here, but I agree with his views. Win a few, lose a few.
Politics, economic theory, and railroads are all tied together. Never in American history were they not related. We are living through a time when the very nature of Wall Street and the American economy are changing forever. In the words of an old favorite hymn, "New ocassions teach new duties; time makes ancient good uncouth." Get ready to see some of your pet economic theories abandonned or junked.
I strongly agree with nearly everything you say, especially your point about the last few weeks being a watershed for a big change in the government / economic system. I would say the earth moved yesterday in regard to our political system. You said, "Just as liberals hate to admit that socialism doesn't work, I think recent events have proved that capitalism (in this case, worship of the "free market") doesn't, either." I disagree with the second part of your point. Much of what follows is covering the same ground that Greyhounds covered five posts back, but it bears revisiting especially because the wool is being so profoundly pulled over the public's eyes on this matter.
Assuming that you are referring to the current credit crisis, it quite dramatically proves that socialism does not work. It proves nothing about capitalism, however, unless you believe the ones who caused the crisis and their allies in the media when they try to shift the blame onto the lenders who created the bad loans and onto Wall Street who ultimately purchased those loans. During the V.P. debate, when Gwen Ifill asked Sarah Palin whether the current housing crisis was caused by the lenders or the borrowers. The correct answer is, "neither."
Here is my simplified explanation of what caused the housing crisis, which is a big driver of the current financial crisis: The government pressured lenders to make risky loans and then assumed that risk on behalf of the taxpayers.
The reason the loans were bad is because the government, through Freddie and Fannie, guaranteed them. The guarantee meant that the loans did not need to be made to credit-worthy borrowers. Not only did the government guarantee the loans, but it also pressured lenders to make the loans to people who could not afford them-the so-called sub prime loans. It may appear as though the lenders are to blame because they made the bad loans, but the creation of bad loans is just the normal business consequence when the government removes financial risk from the lenders, in effect, acting as a co-signer on the loans.
Yet many are blaming the crisis on insufficient government regulation of the financial business. On the contrary, the government pressure on lenders to make loans to un-credit-worthy borrowers amounted to excessive government regulation, not insufficient government regulation. And additionally, the government guarantee amounts to socialism if it needs to be executed and honored, as has proven to be the case.
Basically the government guarantee on all loans opened to door to create bad loans. The bad loans created a lot of new housing that drove down house values. So we have an oversupply of housing that has driven its value below the price of its creation. Yesterday the government bought all that excess housing with taxpayer money in order to take it off the backs of the private financial sector, which was being dragged down by carrying it.
We are being told that when the housing market recovers, those excess houses that the government bought will be put back on the market and sold. We are told that some houses might even sell at a profit, enabling the government to pay back the taxpayers for the bailout.
However, the government's motive that led to the creation of the bad loans was to provide affordable housing, which amounts to housing for those who can't afford it. To make it affordable, the government takes money from those who have excess and gives it to people who don't have enough to buy a house. So, as the government holds all the houses it bought yesterday, I don't see a motive for them to hold out for a good price once the market recovers.
On the contrary, the motive will be the same motive that created the crisis in the first place. That is to sell the houses below market value for the benefit of those who cannot afford to pay market value. Indeed, there is no motive for the government to make a profit on the houses because, fundamentally, the public sector has no profit motive. If anything, the motive will be to come back to the taxpayers and ask for more money. We will be lucky if half the money we gave them yesterday even goes for the intended purpose of buying up the so-called toxic mortgages.
The likely scenario is that the government will hold their houses off the market for a while, not only to allow the market to recover, but to allow time for them to make decisions about the process. Then the government will burst the dam and allow all their houses to suddenly flood the market at discounted prices. They will probably even engage in social engineering, setting the house prices according to the ability of buyers to pay or giving similar advantages to the financially disadvantaged, since that was their plan from the very start of this mess. The sudden influx of discounted housing will drive down the value of everybody's house like nothing we have ever seen in the normal course of free market forces. Nothing can distort a market like the government can. I would say that, despite the current housing crisis, this would be the best possible time to sell your house if you consider it to be an investment to any extent.
Here is a chronological outline:
1) The government uses its power to make a guarantee that causes the creation of houses, which their buyers cannot afford.
2) The process creates a bubble of excess housing.
3) The bubble of excess housing drives down all home values.
4) The government uses taxpayer money to purchase the excess housing.
5) With the excess housing taken off the market, all home values rise to previous levels.
6) The government redistributes the excess housing at below market prices.
7) The excess discounted housing drives down all home values a second time.
henry6 wrote: Railroads are chartered and under the thumb of the FRA an STB; air traiffic is controlled by the FAA; waterways have been built and are operated by the Army Corps of Engineers and patrolled by the Coast Guard; highways, city streets, and country roads are built and maintained by their respective governments' agencies. Anybody who wants to untangle any or all of that raise your hand.
Railroads are chartered and under the thumb of the FRA an STB; air traiffic is controlled by the FAA; waterways have been built and are operated by the Army Corps of Engineers and patrolled by the Coast Guard; highways, city streets, and country roads are built and maintained by their respective governments' agencies. Anybody who wants to untangle any or all of that raise your hand.
First it was the Coast Guard, now it's "raise your hand". I don't understand the relavence of either. I have raised my hand and not one of you saw it.
Seriously, Trains used to have a very good contributor named George W. Hilton. Hilton was a PhD Economist on the UCLA faculty. I believe he's retired now, but I haven't heard of his passing. Hilton was also a railfan who wrote books such as "The Electric Interurban Railways in America", "American Narrow Gauge Railroads", "The Monon Route", and a book about the Great Lakes train ferries. I've got the first three of those books and they are three of my favoite books - and not just railroad books, I do read about other things. These are three of my favoirite books on any subject.
I like Hilton because, as an economist, he could explain "why". He'd not only tell the story of the interurbans and the narrow gauges, he could, and would, tell you why it happened. Why did the interurbans and narrow gauges get built, why did they operate as they did, why did they use the equipment they did, and why did they fail. Same with the Monon (Hilton was of the opinion it should have been ripped up. It was his "hometown" railroad and he was fascinated with it enough to write a book about it, but, as an economist, he saw it for what it was. It was a redundant facility with meager growth prospects.) Same with the lake ferries but I don't have that book.
Hilton understood the economics of transportation.
The STB is a successor to the old Interstate Commerce Commission which spent many decades harming the US economy. Hilton said the ICC was very effective. It could cause a lot of economic harm with some pieces of paper. Any government agency that could do that was certainly "effective". "Effective" in a very bad way, but "Effective" none the less.
Hilton was once asked what should be retained of the ICC. His reply was that "The 'Blind Man's' lunch counter in the basement" should stay. Aparently, disabled folks were given priority in the operation of concession facilities in Federal buildings. A "blind man" had the lunch counter concession in the ICC building and Hilton thought he did a good job with lunch. All else should go away in the interest of the economic well being of the USA.
The STB unfortunately retained more of the iCC than the lunch counter. If reasoned economic thought and analysis got rid of the ICC, it can get rid of the STB. I don't have a PhD, but I'd sure like to try to junk that useless agency of intrusive, oppresive, harmful government.
oltmannd wrote: No, gov't involvement isn't new. That's been a contant. That so much is gov't owned and operated is (relatively) new.And, I don't think there is anything intrinsic about what's been done to put us in an "irreversible" state. Do you have an example?
No, gov't involvement isn't new. That's been a contant. That so much is gov't owned and operated is (relatively) new.
And, I don't think there is anything intrinsic about what's been done to put us in an "irreversible" state. Do you have an example?
CSSHEGEWISCH wrote:Judging by the state of the economy, I'm not sure that the private sector is very good at allocating economic resources, either.
Now we're risking getting off a railroad topic while discussing railroads, but...The private sector does very well allocating economic resources when the government doesn't interfere. The present state of the economy is primarily due to a housing market problem. This housing market problem can be directly traced to "Government Sponsored Enterprises" such as Fannie Mae which directed housing loans to people who couldn't afford housing loans. The New York Times, of all institutions, had it pegged in 1999:
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&partner=permalink&exprod=permalink
What the government did was decouple the decision process for making a loan from the ability of the borrower to repay the loan. The concern of the lending bank became not wether the loan would be repaid, but wether the loan could be sold to the "Government Sponsored Enterprise." Since the GSE would buy really questionable loans this lead to a lot of really questionable loans.
And, if the bank didn't go along and approve the high risk loans it got in hot water with the government.
Q.E.D. Government interferance in the allocation of economic resources in housing, railroading, whatever, is a path to disaster.
BTW, this Raines Guy mentioned in the article just was hit with a $27 million fine for cooking the books while he was in charge of the GSE. It's another Enron, but since it was a "Government Sponsored Enterprise" this time the Drive By Media is giving it a pass.
henry6 wrote: greyhounds wrote: Well, then yours is a point without a point.Nobody ever said the State of New York didn't build the Erie Canal. Basically, it was the equivalent of a toll road and I don't think anyone here has any objections to state governments building toll roads that are fully paid for through the tolls.As to the US Coast Guard, I still don't see its relavence. (It's less than 100 years old having been created in 1915). It's basically a law enforcement/defense organization and, as such, is a proper function of the Federal Government. It has been kept out of the Department of Defense because its best for our individual liberty if the DOD doesn't do domestic law enforcement.If you want to use the military as an "Involvement" by the Feds in transportation a better example might be the 3rd Calvary Regiment. (Still on active duty today.) It was formed as a regiment of mounted riflemen in the 1840's to guard the Oregon Trail. This "Guarding" of transportion preceedes the Coast Guard by many decades. The push to seperate the military from civilian law enforcement came after the Civil War when great resentment was created in the South by Federal military occupation forces.I have never expressed objections to government involvements such as "Guarding". I don't object to state toll roads or state government facilities paid for entirely by user fees, as was the case with the Erie Canal.What I have repeatedly expressed in this thread are my objections to:1) Any Federal transportation plan - economic planning by central governments does not work.2) The diversion of general revenue funds to government planned projects. This is what was done with the river transportation system and it proved to be the ususal boondogle. There is no way the politicians can redistribute the money in an effective, efficient manner.I think you would do well to look at the history of Federal involvement in transportation. Start with the Transportation Act of 1920. We lived with that thing for 60 years. It took a stab at central planning through the regulatory process. The result was a disaster. The Act was obsolete from the beginning but some people did benifit from the restrictions it put on the rail network. This made it difficult to change through the political process, which is why the political process shouldn't be involved in such things. By preventing the development of an integrated transportation network it did, and continues to do, great harm to the US Economy by making the US less competitive in the world market.Then go on and take a look at the establishment of Parcel Post transportation. Learn how it destroyed the private express companies and degraded the passenger train network. I don't agree that my point is a point without a point. One of the problems here is that the conversation has become unwieldly with you, me, oltmann, and a few others, each with opinions concerning varying degrees of government(s) invlovement in transportation so that a statement made to one does not fit an answer to another. There is one opinon which has been posted that says transporation should only be part of the private sector on one hand while the other side one says that it is the reponsibilities of government; and there are those who are in between. There have been comments that government(s) participation is new. The only real points I have wanted to make are that governemts have always been involved in transportation in many different ways and degrees and for many different reasons and not to endorse any one system; sort of trying to find a definition of where government involvement begins and ends. Some of the facts of government involvement stem from Congressional power to oversee intersate commerce (which lead them to form the Coast Guard, channel rivers and harbors, build and operate canals and waterways; and to oversee railraods and air traffic) to the Executive Branch power to wage war (thus the Interstate Highway System). My posts have been to show examples of the different levels and different projects and different ways governments have affected transportation projects. I have not tried to defend any one invlovement but to defend the fact that there has been involvement. The only real opinion I have on all this is that what has emerged is a most likely irreversable situation whereby transportation is a joint function of government and private capital and on a case by case basis.
greyhounds wrote: Well, then yours is a point without a point.Nobody ever said the State of New York didn't build the Erie Canal. Basically, it was the equivalent of a toll road and I don't think anyone here has any objections to state governments building toll roads that are fully paid for through the tolls.As to the US Coast Guard, I still don't see its relavence. (It's less than 100 years old having been created in 1915). It's basically a law enforcement/defense organization and, as such, is a proper function of the Federal Government. It has been kept out of the Department of Defense because its best for our individual liberty if the DOD doesn't do domestic law enforcement.If you want to use the military as an "Involvement" by the Feds in transportation a better example might be the 3rd Calvary Regiment. (Still on active duty today.) It was formed as a regiment of mounted riflemen in the 1840's to guard the Oregon Trail. This "Guarding" of transportion preceedes the Coast Guard by many decades. The push to seperate the military from civilian law enforcement came after the Civil War when great resentment was created in the South by Federal military occupation forces.I have never expressed objections to government involvements such as "Guarding". I don't object to state toll roads or state government facilities paid for entirely by user fees, as was the case with the Erie Canal.What I have repeatedly expressed in this thread are my objections to:1) Any Federal transportation plan - economic planning by central governments does not work.2) The diversion of general revenue funds to government planned projects. This is what was done with the river transportation system and it proved to be the ususal boondogle. There is no way the politicians can redistribute the money in an effective, efficient manner.I think you would do well to look at the history of Federal involvement in transportation. Start with the Transportation Act of 1920. We lived with that thing for 60 years. It took a stab at central planning through the regulatory process. The result was a disaster. The Act was obsolete from the beginning but some people did benifit from the restrictions it put on the rail network. This made it difficult to change through the political process, which is why the political process shouldn't be involved in such things. By preventing the development of an integrated transportation network it did, and continues to do, great harm to the US Economy by making the US less competitive in the world market.Then go on and take a look at the establishment of Parcel Post transportation. Learn how it destroyed the private express companies and degraded the passenger train network.
Well, then yours is a point without a point.
Nobody ever said the State of New York didn't build the Erie Canal. Basically, it was the equivalent of a toll road and I don't think anyone here has any objections to state governments building toll roads that are fully paid for through the tolls.
As to the US Coast Guard, I still don't see its relavence. (It's less than 100 years old having been created in 1915). It's basically a law enforcement/defense organization and, as such, is a proper function of the Federal Government. It has been kept out of the Department of Defense because its best for our individual liberty if the DOD doesn't do domestic law enforcement.
If you want to use the military as an "Involvement" by the Feds in transportation a better example might be the 3rd Calvary Regiment. (Still on active duty today.) It was formed as a regiment of mounted riflemen in the 1840's to guard the Oregon Trail. This "Guarding" of transportion preceedes the Coast Guard by many decades. The push to seperate the military from civilian law enforcement came after the Civil War when great resentment was created in the South by Federal military occupation forces.
I have never expressed objections to government involvements such as "Guarding". I don't object to state toll roads or state government facilities paid for entirely by user fees, as was the case with the Erie Canal.
What I have repeatedly expressed in this thread are my objections to:
1) Any Federal transportation plan - economic planning by central governments does not work.
2) The diversion of general revenue funds to government planned projects. This is what was done with the river transportation system and it proved to be the ususal boondogle. There is no way the politicians can redistribute the money in an effective, efficient manner.
I think you would do well to look at the history of Federal involvement in transportation. Start with the Transportation Act of 1920. We lived with that thing for 60 years. It took a stab at central planning through the regulatory process. The result was a disaster. The Act was obsolete from the beginning but some people did benifit from the restrictions it put on the rail network. This made it difficult to change through the political process, which is why the political process shouldn't be involved in such things. By preventing the development of an integrated transportation network it did, and continues to do, great harm to the US Economy by making the US less competitive in the world market.
Then go on and take a look at the establishment of Parcel Post transportation. Learn how it destroyed the private express companies and degraded the passenger train network.
I don't agree that my point is a point without a point. One of the problems here is that the conversation has become unwieldly with you, me, oltmann, and a few others, each with opinions concerning varying degrees of government(s) invlovement in transportation so that a statement made to one does not fit an answer to another. There is one opinon which has been posted that says transporation should only be part of the private sector on one hand while the other side one says that it is the reponsibilities of government; and there are those who are in between. There have been comments that government(s) participation is new.
The only real points I have wanted to make are that governemts have always been involved in transportation in many different ways and degrees and for many different reasons and not to endorse any one system; sort of trying to find a definition of where government involvement begins and ends. Some of the facts of government involvement stem from Congressional power to oversee intersate commerce (which lead them to form the Coast Guard, channel rivers and harbors, build and operate canals and waterways; and to oversee railraods and air traffic) to the Executive Branch power to wage war (thus the Interstate Highway System). My posts have been to show examples of the different levels and different projects and different ways governments have affected transportation projects. I have not tried to defend any one invlovement but to defend the fact that there has been involvement. The only real opinion I have on all this is that what has emerged is a most likely irreversable situation whereby transportation is a joint function of government and private capital and on a case by case basis.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
wjstix wrote: The development of the American West is a great example of how government involvement in private enterprise works out well. It's true Americans are married to this myth of the "rugged individualist" doing everything on their own. Unfortunately, it's just that - a myth. Except for a small handful of say fur trappers, generally pioneer settlers didn't come to an area until the government had established a military fort in the area, and generally worked out a means of transportation - rivers and / or roads (often rather primitive but useable). Only then did people come and establish farms (often on free land given to them by the government as homesteaders) and businesses. The government (both federal and states/territories) set up land grants for railroads, giving them reimbursement (and then some) for building rail lines. In return the government got a reduced rate of moving military equipment and personnel which was usefull during the World Wars. Building the railroads increased populations in the areas they served, allowed businesses to be established in shipping out raw materials and receiving finished goods from the east. Without government paving the way for the pioneers, the West as we know it would not exist, it would still very sparsely populated and have much less industry and commerce.
The development of the American West is a great example of how government involvement in private enterprise works out well. It's true Americans are married to this myth of the "rugged individualist" doing everything on their own. Unfortunately, it's just that - a myth. Except for a small handful of say fur trappers, generally pioneer settlers didn't come to an area until the government had established a military fort in the area, and generally worked out a means of transportation - rivers and / or roads (often rather primitive but useable). Only then did people come and establish farms (often on free land given to them by the government as homesteaders) and businesses.
The government (both federal and states/territories) set up land grants for railroads, giving them reimbursement (and then some) for building rail lines. In return the government got a reduced rate of moving military equipment and personnel which was usefull during the World Wars. Building the railroads increased populations in the areas they served, allowed businesses to be established in shipping out raw materials and receiving finished goods from the east.
Without government paving the way for the pioneers, the West as we know it would not exist, it would still very sparsely populated and have much less industry and commerce.
Yes. Establishing security and rule of law are necessary functiions of government - and commerce can not function at all without the government providing such functions.
Allocation of economic resources to specific political "winners" is not a necessary function of government. And when the government tries to do it it fails miserably.
You're talkiing two different things. National security, courts, law enforcement, etc. are what the government is for. Allocation of economic resources is not what the government is for and it is not something they can do well.
henry6 wrote: The only real opinion I have on all this is that what has emerged is a most likely irreversable situation whereby transportation is a joint function of government and private capital and on a case by case basis.
Well, it it's irreversable then we've lost control of our government and it now controls us.
What "government capital" (and I'll argue that, like the Social Security Trust Fund, there is no such thing) has been involved in the most recent, largest railroad expansion projects?
1) Transcon double tracking
2) Sunset double tracking
3) Overland triple tracking
4) Powder River capacity expansion
BTW, the UP just told the State of California to take their money and stuff it when the state offered to help fund clearance improvements over Donner Pass.
It's only omnipresent and "irreversable" if we allow it - politicians crave power, that's why they're politicians. They'll take all they can get.
henry6 wrote: The point is that govenrments at any and all levels have participated in the building, maintenance, operation and advancement of all transportation at all times in our history. Yes, the State of New York (governemtent) did bond, build, and operate (still does) the Erie Canal. Bonds and tolls all were handled through the State government agency, yes, so it still was (and is) a state and its agency as the catylist and the owner/operator. As for the Coast Guard, they police all coasts, harbors and waterways and were a function of the Department of Commerce until very recently, and not a seperate military service nder the Department of Defense. This was a set up based on the Congress's duty to regulate interstate commerce and not on the part of the Department of Defense or indiviual military organizations. Argueing with you is easy. Making a point and trying to figure out what your point is and means is difficult and frustrating. You appear to not accept anything but what you believe. Your point about the Erie Canal being paid off by private enterprise is fine, but you ignore that it was, and is, a state government that planned, built, maintains, operates, and administers the whole thing. Private enterprise needed it but the state had to provde it. And did successfully. Granted, today, it is a canal for the liesure class with user monies nowhere paying for it and little if any commercial traffic on any but a small part of it in the Hudson Valley.
The point is that govenrments at any and all levels have participated in the building, maintenance, operation and advancement of all transportation at all times in our history. Yes, the State of New York (governemtent) did bond, build, and operate (still does) the Erie Canal. Bonds and tolls all were handled through the State government agency, yes, so it still was (and is) a state and its agency as the catylist and the owner/operator.
As for the Coast Guard, they police all coasts, harbors and waterways and were a function of the Department of Commerce until very recently, and not a seperate military service nder the Department of Defense. This was a set up based on the Congress's duty to regulate interstate commerce and not on the part of the Department of Defense or indiviual military organizations.
Argueing with you is easy. Making a point and trying to figure out what your point is and means is difficult and frustrating. You appear to not accept anything but what you believe. Your point about the Erie Canal being paid off by private enterprise is fine, but you ignore that it was, and is, a state government that planned, built, maintains, operates, and administers the whole thing. Private enterprise needed it but the state had to provde it. And did successfully. Granted, today, it is a canal for the liesure class with user monies nowhere paying for it and little if any commercial traffic on any but a small part of it in the Hudson Valley.
alphas wrote: A good rule to follow is if a private company won't do it, the government should only do it if its necessary for the safety, security, health or similar of the public. The classic example of governmental transportation bungling was the building of the Pennsylvania "Canal System" which became the one single transportation project that I'm aware of to almost financially sink an entire state. The amazing thing was that the railroad already existed for the first part of the trip [Philly to Columbia with a branch to Harrisburg], and it was incorporated into the canal system. You'd think anyone would have realized that the extension of the railroad to Pittsburgh was the next logical step, not the canal that couldn't operate over the winter and needed the incline plane series to get the boats over the mountains.
A good rule to follow is if a private company won't do it, the government should only do it if its necessary for the safety, security, health or similar of the public.
The classic example of governmental transportation bungling was the building of the Pennsylvania "Canal System" which became the one single transportation project that I'm aware of to almost financially sink an entire state. The amazing thing was that the railroad already existed for the first part of the trip [Philly to Columbia with a branch to Harrisburg], and it was incorporated into the canal system. You'd think anyone would have realized that the extension of the railroad to Pittsburgh was the next logical step, not the canal that couldn't operate over the winter and needed the incline plane series to get the boats over the mountains.
Sometimes private industry won't do it if the project is too large and/or risky for private capital. Hoover Dam is an example of this.
Pennsylvania had a bad case of "canal fever" and built canals all over the state, but the main line canal was interesting in that it was a technological masterpiece but a financial disater.
The Erie Canal was such a success that NY eclipsed Philly as the main port city in the US. Philly has been second fiddle to NY ever since. (Except the last two years in baseball! Mets collapse two years in a row. Couldn't happen to a nicer bunch of guys...)
selector wrote:Imagine Walmart building two of its Super Stores across a highway from each other. Doesn't seem at all likely with private money.
More like a Lowes and a Home Depot across the street from each other....
That is a surprise, Jay. I was wondering if someone would reply and prove me wrong. Close, anyway.
-Crandell
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