Politics

[wizards8507]

Does your employer not let you direct your 401k investments? If you're in the market, then YOU'RE the one gambling, not "them." It happens to be a smart gamble as a buy-and-hold investor should be able to average at least 10% annually over their investing life if they start at 25 and retire at 65. This is why the argument over privatization of social security is so intellectually dishonest. Your money won't be "gambled on Wall Street" unless you elect for it to be, and you'd be an idiot not to considering the negative return you get in the current social security apparatus.

Separately: Derivatives are only "evil" to those who don't understand them. If you're a bank, a single mortgage is a far riskier holding than 0.1% of 1,000 mortgages. Derivatives MITIGATE risk, they don't increase it. Arguing about derivatives and how awful they are is symptomatic of this country's financial illiteracy.

 

[Buster Bluth]

I think I was incorrect, it's not a tax on derivatives per se:

Ralph Nader: Why a tax on stock trades should be part of a fiscal cliff deal - The Washington Post

 

[woolybug25]

I am not sure about the exact number and I will try this find my source. It came up when that Citibank written bill got attached to the spending bill.

My problem is the gambling with our money. They can gamble with their own money and lose it all they want. The guts of Dodd Frank have been removed even as toothless as it was. Crashing my retirement fund isn't something I am going to enjoy.

I wouldn't say Dodd Frank was toothless. It led to massive provision increases and cost the banking industry billions of dollars. It's also why you see so many new fees for things like debit cards.

The thing is, people always say they "don't want them to gamble with their money", but that's exactly what shareholders are asking for. Every loan, mortgage and financial vehicle banks have are a gamble with a variety of risk levels. Right now, almost every bank in America is being told that they need to open up their risk profile, put more assets on the balance sheet and provide better PPNR (pre provision net revenue). Well, we can't raise rates or force companies to borrow more money in a stagnant economy. So many banks, especially smaller banks, has to make that nut in fees. Fees are generated through selling loans, mortgages and derivatives (gasp) to other banks and investors. That's exactly what all banks are being asked to do. People can like it or not, but banks have to make money. Everyone forgets that when they pay low rates on their mortgages or feel entitled to free checking accounts, that those benefits are directly correlated to banks "gambling" with their deposits by investing them in the vehicles within their disposal.

 

[Wild Bill]

This is the sort of thing that gets us nowhere in conversation.

Every man in the history of civilization is a man on contradiction. I don't ignore Thomas Jefferson's views on liberty because he owned slaves. I don't ignore Nader's views on the role of corporations in the world because he might participate in a fund that buys their stock.

Every man is not a contradiction.

Would you ignore a pro-life windbag's views on abortion if he owned office buildings that were leased to abortion clinics? This windbag has made MILLIONS (and still is) off the backs of the same corporations he's been criticizing for years. He could have invested in something different, right? Instead, he chose to invest in companies like Cisco who has laid off about 10,000 employees since 2011. I'm sure he enjoyed the stock price increase over the same period of time.

My comment simply pointed out his hypocrisy. It did nothing to end the conversation.

 

[Cackalacky]

I wouldn't say Dodd Frank was toothless. It led to massive provision increases and cost the banking industry billions of dollars. It's also why you see so many new fees for things like debit cards.

The thing is, people always say they "don't want them to gamble with their money", but that's exactly what shareholders are asking for. Every loan, mortgage and financial vehicle banks have are a gamble with a variety of risk levels. Right now, almost every bank in America is being told that they need to open up their risk profile, put more assets on the balance sheet and provide better PPNR (pre provision net revenue). Well, we can't raise rates or force companies to borrow more money in a stagnant economy. So many banks, especially smaller banks, has to make that nut in fees. Fees are generated through selling loans, mortgages and derivatives (gasp) to other banks and investors. That's exactly what all banks are being asked to do. People can like it or not, but banks have to make money. Everyone forgets that when they pay low rates on their mortgages or feel entitled to free checking accounts, that those benefits are directly correlated to banks "gambling" with their deposits by investing them in the vehicles within their disposal.

I get it. I do. I realize there is risk in everything. Growing up I had a low risk 8%yielding savings account. A few years later it dropped to 5%. Down and down it went to less than 0.5% today. Forcing me to either have no growth or accept the risk of investing in other vehicles with wildly varying degrees of risk. I understand that the dealings as you have described are necessary but I don't see the ability to write several derivative contracts on the same asset, particularly one that is toxic ( known to some and unknown to others and possibly even made toxic for profit) is smart or worthy of being allowed to happen. I don't have a degree in financing. I grew up in a credit union and continue to learn from people like you. My ear is always open and when someone like Warren Buffet calls them WMDs, I do what I can to understand something that will eventually make my life harder or easier depending on the how the wind is blowing at such time that I need it. Watching my parents low risk investments and retirement fund disappear over night because a few people de use to take their process too far is hard to watch.

My problems with the derivatives stem from the complexity, the concept of notional value versus true value and their distortion of the markets. I don't fully understand it but it is worrisome. I appreciate any info that might ease my concern.

 

[phgreek]

Yes but they were only allowed to grow so big because the government was backing them every step of the way. The government has the game rigged in favor of big corporations getting bigger. Excess government regulations end up hurting small and medium sized businesses more because they cannot afford to find the loopholes and escape clauses whereas giant firms with an army of lawyers essentially help Congress write legislation so they know the bills, where the loopholes are, and can afford to shift through them.

Also the culture of bailouts helps banks grown bigger as they will take greater risks than they normally would and sometimes those risks pay off with giant rewards, but like a gambler on a hot streak in Vegas at some point the luck dries up. At that point those banks and investment firms are so bloated they can plead "too big to fail" and get a bail out. People then often demand more government oversight, extra regulations, and more intervention however that is like treating an alcoholic with whiskey.

'

I think in my haste I was not clear...and I have you and wizards thinking I want MORE government and regulations. Not what I want. You can have fewer regulations if they are done right. I don't care how we got where we are today...although yes, it is instructive regarding how to avoid it in the future. If the government colluded, so to speak, with big banks' consolidation, that does not mean government can't fix this...and thats not to say I think more regulations are the answer. But rather we need the government to initiate the break-up activities, and we do need some smart regulations to make sure we don't end up here again, and to make sure there are some basic conduct expectations regarding what people call "investments". It can be done in a way that encourages small business ingenuity. Some thoughts...After breakup activities, I think if you want to create a non-traditional investment, you should have to prove it in a sandbox for X period GOING FORWARD, w/o consumer investment...could be done just based on analyticals, and require little in real capital. You should have to meet certain stability (which means risk) criteria, and the amount of leverage (which means risk) allowed by COMPANIES engaged in business within the financial sector needs to be defined/capped. None of that is averse to small business participation...

 

[BobD]

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[GoIrish41]

<iframe width="560" height="315" src="//www.youtube.com/embed/xh5yCKlK2Ak" frameborder="0" allowfullscreen></iframe>

Shameful!

 

[Polish Leppy 22]

Stunning. Guy can't help himself.

Obama: Like Rest Of America, Black America "Better Off Now Than It Was When I Came Into Office" | Video | RealClearPolitics

 

[chicago51]

As far as the big banks go:

Bernie Sanders unveils plan to break up Wall Street banks - Washington Times

Will go nowhere but at least the policy is being debated.

I do agree with a transactions tax on derivatives and other risky financial transactions.

 

[wizards8507]

I do agree with a transactions tax on derivatives and other risky financial transactions.

Translation: You probably don't know what a derivative is. Derivatives are used to manage and mitigate risk, not increase it. For example, a security backed by 1,000 mortgages is less risky than a single mortgage. Owning gold is made less risky if you have a derivative instrument that hedges fluctuations in the price of gold. A credit default swap is essentially insurance against nonpayment from creditors. A derivative of investment X is based on the notion that X carries some risk, while the derivative thereof helps manage that risk. Owning just asset X is much riskier than owning X and some type of hedging instrument against X.

Taxing derivative transactions would INCREASE the risk of banks' balance sheets, not decrease it. Any politician who tells you otherwise is either flat-out lying or he doesn't understand derivatives himself.

 

[Corry]

Translation: You probably don't know what a derivative is. Derivatives are used to manage and mitigate risk, not increase it. For example, a security backed by 1,000 mortgages is less risky than a single mortgage. Owning gold is made less risky if you have a derivative instrument that hedges fluctuations in the price of gold. A credit default swap is essentially insurance against nonpayment from creditors. A derivative of investment X is based on the notion that X carries some risk, while the derivative thereof helps manage that risk. Owning just asset X is much riskier than owning X and some type of hedging instrument against X.

Taxing derivative transactions would INCREASE the risk of banks' balance sheets, not decrease it. Any politician who tells you otherwise is either flat-out lying or he doesn't understand derivatives himself.

Great post. I really had no clue what a derivatives are and you laid it out in a way that my public school education can understand. Question, if taxing derivatives increases risk, wouldn't it make it less likely for banks to do risky things? If so isn't that the point?

 

[Buster Bluth]

Translation: You probably don't know what a derivative is. Derivatives are used to manage and mitigate risk, not increase it. For example, a security backed by 1,000 mortgages is less risky than a single mortgage. Owning gold is made less risky if you have a derivative instrument that hedges fluctuations in the price of gold. A credit default swap is essentially insurance against nonpayment from creditors. A derivative of investment X is based on the notion that X carries some risk, while the derivative thereof helps manage that risk. Owning just asset X is much riskier than owning X and some type of hedging instrument against X.

Taxing derivative transactions would INCREASE the risk of banks' balance sheets, not decrease it. Any politician who tells you otherwise is either flat-out lying or he doesn't understand derivatives himself.

As I brought up, I misspoke. It wasn't a derivative tax, it was a speculation tax. It is not a tax solely on derivatives with the understanding that derivatives are a bad thing.

"A financial transaction tax would apply to purchases and sales of derivatives, options and stocks. The tax would be small, half a penny or less on each dollar of the transaction value, depending on the product. This idea is often called a “speculation tax,” because it would hit hardest at frothy high-volume trading as opposed to sober long-term investment."

"A speculation tax isn’t a new idea, either. Congress enacted one in 1914, and it remained in effect until 1966; initially it imposed a tax of 2 cents on every $100 sale or transfer of stock."

Ralph Nader: Why a tax on stock trades should be part of a fiscal cliff deal - The Washington Post

The result would be up to $350 billion in annual revenue. Let's just assume it's $300 billion because I hate "up to" sales pitches.

To put it in perspective, you could give every city in the country that has a population of 100,000 or more a billion dollars every year. Over night, you'd decentralize power away from the federal government.

But obviously handing a city that sort of cash is idiotic. Governments would be, to be frank, unintelligent about it. They'd use it to continue their unsustainable practices by shoring up pension funds or highway construction funds.

However you could throw a few regulations on the money and have it be used on the large upfront costs necessary to rebuild downtowns, rebuild streetcar networks, finally build state-of-the-art high-speed rail between cities, etc etc etc etc. To put it simply, the $300 billion could undo all of the wealth destruction the highways caused in like a decade. To put it in a political buzzword statement: Wall Street is going to rebuild Main Street.

It's a bit of a half-baked idea, but I really love it so far. We're killing ourselves as a country with our unsustainable development model, and we (largely) can't switch back to an economically sustainable model because the upfront costs are too high for for local governments. This changes that game. What would it cost to build a HSR network in Texas (connecting Dallas, Austin, San Antonio, and Houston) at ~200 mph? Five billion? Do it. What would it cost to build a HSR network in the midwest to be able to go from Chicago to Cleveland at ~200mph? A billion? Do it. What would it cost to put down a streetcar line linking downtown and first-ring neighborhoods (or light rail and suburbs) and attract private investment in a manner that's sustainable? $500 million? Do it. Do it over and over and over again and employ millions while shifting us away from a strip mall hellscape back to a proper urban nation.

The possibilities don't stop there. Maybe there's a major brownfield site the city needs to clean up (because some corporation in the 1960s contaminated everything and abandoned it while moving the jobs oversees...). Here's the check, do it. Put the area back on the market for investment. The list goes on and on. Revisit the progress in ten years and see how much of this country we've put back together.

 

[Wild Bill]

The result would be up to $350 billion in annual revenue. Let's just assume it's $300 billion because I hate "up to" sales pitches.

To put it in perspective, you could give every city in the country that has a population of 100,000 or more a billion dollars every year. Over night, you'd decentralize power away from the federal government.

But obviously handing a city that sort of cash is idiotic. Governments would be, to be frank, unintelligent about it. They'd use it to continue their unsustainable practices by shoring up pension funds or highway construction funds.

However you could throw a few regulations on the money and have it be used on the large upfront costs necessary to rebuild downtowns, rebuild streetcar networks, finally build state-of-the-art high-speed rail between cities, etc etc etc etc. To put it simply, the $300 billion could undo all of the wealth destruction the highways caused in like a decade. To put it in a political buzzword statement: Wall Street is going to rebuild Main Street.

It's a bit of a half-baked idea, but I really love it so far. We're killing ourselves as a country with our unsustainable development model, and we (largely) can't switch back to an economically sustainable model because the upfront costs are too high for for local governments. This changes that game. What would it cost to build a HSR network in Texas (connecting Dallas, Austin, San Antonio, and Houston) at ~200 mph? Five billion? Do it. What would it cost to build a HSR network in the midwest to be able to go from Chicago to Cleveland at ~200mph? A billion? Do it. What would it cost to put down a streetcar line linking downtown and first-ring neighborhoods (or light rail and suburbs) and attract private investment in a manner that's sustainable? $500 million? Do it. Do it over and over and over again and employ millions while shifting us away from a strip mall hellscape back to a proper urban nation.

The possibilities don't stop there. Maybe there's a major brownfield site the city needs to clean up (because some corporation in the 1960s contaminated everything and abandoned it while moving the jobs oversees...). Here's the check, do it. Put the area back on the market for investment. The list goes on and on. Revisit the progress in ten years and see how much of this country we've put back together.

Collecting an additional $300 billion per year in federal tax revenue and regulating how it's spent at the local level takes power away from the feds?

 

[Bluto]

Collecting an additional $300 billion per year in federal tax revenue and regulating how it's spent at the local level takes power away from the feds?

If they are dedicated funds with specific programs in mind then that's a great idea. I've worked on over a dozen large scale creek and wetland restoration projects over the last four years that were paid for via this type of funding stream by the EPA and State Coastal Conservancy. Many counties in Northern California are also forming Open Space Districts funded by a dedicated half cent sales tax. The sole purpose of these districts is to preserve and restore large tracks of land deemed critical open space for ag and or wildlife habitat. It's a good way to insure that tax revenues are spent on what voters initially intended them to be spent on as opposed to them just going into the general fund where they become fair game for all kinds of dumb ideas.

 

[Wild Bill]

If they are dedicated funds with specific programs in mind then that's a great idea. I've worked on over a dozen large scale creek and wetland restoration projects over the last four years that were paid for via this type of funding stream by the EPA and State Coastal Conservancy. Many counties in Northern California are also forming Open Space Districts funded by a dedicated half cent sales tax. The sole purpose of these districts is to preserve and restore large tracks of land deemed critical open space for ag and or wildlife habitat. It's a good way to insure that tax revenues are spent on what voters initially intended them to be spent on as opposed to them just going into the general fund where they become fair game for all kinds of dumb ideas.

It may be a great idea, I'm just not sure how it takes power away from the feds.

 

[Buster Bluth]

Collecting an additional $300 billion per year in federal tax revenue and regulating how it's spent at the local level takes power away from the feds?

Yeah definitely. There are a ton of areas that need reform and it'd be a shame if a local government said "Hey just throw this money at it!" and pushed the problem back. I don't want to prolong the unsustainability of programs. I think that's just being fiscally responsible, no? How else would you prevent local authorities from being moronic?

Hypothetically of course, this money is to tackle enormous upfront costs (not operating costs) of correcting our policy failures of the last half-century. Basically, "here's the money you need to make obvious policy change that you would like to make."

For example, I wouldn't want to see these funds go towards operating costs of HSR. But the construction costs, from planning the thing, to eminent domain acquisitions, to building it...100% paid for. Ohio almost built a "HSR" linking Cincinnati, Dayton, Columbus, and Cleveland, it would cost $500mil and travel an average speed of 39 mph. Yep, 39 mph. Kasich wisely axed the thing. But what would it cost for get an average speed of 150mph? $3 billion? Here's the check, build it. What would it cost to build the HSR network connecting every large city in the Midwest, $60 billion? Shhiiiiiit, that's paid for in weeks. It's expensive to build things the right way, in a way that often decreases operating costs, we're taking that problem out of the equation because $3 trillion over ten years is such a huge sum of money.

Obviously I just argued the merits of the regulations and the initiative, and somewhat dodged your point. I think that any time a local government doesn't have to apply for a grant to get pennies (relatively speaking) for a project and are instead given the money directly to (generally) do as they see fit, it's decentralizing power. If one can avoid putting the money in the same old inefficient system, I think that count as decentralization. Especially when the sums are so huge. Perhaps it's just an efficiency increase though, by skipping the middle man (federal agencies and state agencies).

 

[ShawneeIrish]

GQ 20 Craziest Politicians

Some highlights:

Rep. Hank Johnson (D-Georgia) In a hearing about adding military personnel on Guam, said, "My fear is that the whole island will become so overly populated that it will tip over and capsize."

State Rep. Kelly Kiesling (R-TN) Sent out an e-mail to constituents, from an official government account, passing along a conspiracy theory that Obama officials planned a "staged assassination attempt on the life of President Obama that would be blamed on 'white supremacists' and subsequently used to enrage black and Hispanic communities, driving them to rioting all across the nation."

Rep. Steve King (R-Iowa) "For every [undocumented immigrant] who's a valedictorian, there's another one hundred out there who weigh 130 pounds—and they've got calves the size of cantaloupes, because they're hauling seventy-five pounds of marijuana across the desert."

GQ Presents: America's 20 Craziest Politicians

 

[Buster Bluth]

It may be a great idea, I'm just not sure how it takes power away from the feds.

I see what you're saying and I agree.

I guess I look at it like this: if the upfront costs are tackled and we make the fiscally unsustainable become sustainable, then municipalities are, to a TBD degree, freer from the federal government's funding leverage. That to me is power decentralization in a sense.

But maybe a better way to look at it is the federal government's deficit-neutral fund for funding upfront costs in fixing bad policies and revitalizing our cities.

 

[irishog77]

Buster-- 2 comments:

-In what you're describing, wouldn't a local municipality taking hundreds of millions/billions of dollars from the federal government be like a kid taking a handout, from his parents, in the thousands of dollars and then the family declaring, "we're doling this for both our benefits?" I mean you could argue it's like a parent paying for school, camp, sports, vacations, tutors, and college, I suppose. But what your advocating sounds more like a son who has already had all those things paid for...and now needs 100 thou start up money to now "really get going and on track." It sounds like Larry (Tom Hulce) in the movie Parenthood.

-The scenario you described, in its basic form, sounds intriguing. I think we all should be (rightfully) pessimistic, for lack of a better term, in seeing it come to fruition. Aren't the people hired by the government to administer Cash for Clunkers still employed by the federal government? How much of the new money for the VA has gone to hire doctors and actually improve patient care, instead of going to fund pensions and hire more goverment/union labor that serve no real function in administering health care? We could almost literally go on forever about the waste that has been added on to every bill and initiative that has gone before our congress. If there was somehow a way to spend the money on a legitimate budget (not an imaginary government budget), with narrow parameters, and a legitimate stop-fund date, then yeah, it may be a good idea. Unfortunately, I think your plan, however sound or wise it may be in its content, is almost as realistic as world peace.

 

[Redbar]

SIAP, apparently North Korea's internet which is routed through China has been completely turned off since Sunday night. Some people can't have nice things I guess. Measured response?

 

[phgreek]

SIAP, apparently North Korea's internet which is routed through China has been completely turned off since Sunday night. Some people can't have nice things I guess. Measured response?

Do you think thats USA or China.

For obvious reasons I can see our people doing something like that. But...

I can see China wanting to isolate them if they think we gave them a bug.

It would be just like the two of them (N. Korea and China) to isolate N. Korea and blame us....

 

[Redbar]

Do you think thats USA or China.

For obvious reasons I can see our people doing something like that. But...

I can see China wanting to isolate them if they think we gave them a bug.

It would be just like the two of them (N. Korea and China) to isolate N. Korea and blame us....

"U.S. officials on Monday declined to say if the United States was responsible for the outage.

On Friday, President Obama said he would "respond proportionately" to the cyberattack on Sony Pictures Entertainment, which the FBI confirmed was launched by North Korea.

However he was very clear Sunday that the hacking was not an act of war. Speaking on CNN's State of the Union, he said, 'I think it was an act of cyber vandalism that was very costly, very expensive. We take it very seriously. We will respond proportionately.'" From USA Today.com

 

[phgreek]

"U.S. officials on Monday declined to say if the United States was responsible for the outage.

On Friday, President Obama said he would "respond proportionately" to the cyberattack on Sony Pictures Entertainment, which the FBI confirmed was launched by North Korea.

However he was very clear Sunday that the hacking was not an act of war. Speaking on CNN's State of the Union, he said, 'I think it was an act of cyber vandalism that was very costly, very expensive. We take it very seriously. We will respond proportionately.'" From USA Today.com

Yea I saw most of that...just trying to get a pulse on what others think...we may never know who punched N. Korea...but I'm leaning toward China....

 

[Polish Leppy 22]

John Boehner kissing Nancy Pelosi is almost as nauseating as a 2016 Bush vs Clinton race.

He is useless.

 

[Polish Leppy 22]

If Bill O'Reilly wrote this, I wouldn't have posted it. Bill Maher wrote it, and that's saying something.

Bill Maher on Paris: "This Is Like Groundhog Day, Except If The Groundhog Kept Getting His Head Cut Off" | Video | RealClearPolitics

"Liberals need to face the truth about Islam."

 

[woolybug25]

If Bill O'Reilly wrote this, I wouldn't have posted it. Bill Maher wrote it, and that's saying something.

Bill Maher on Paris: "This Is Like Groundhog Day, Except If The Groundhog Kept Getting His Head Cut Off" | Video | RealClearPolitics

"Liberals need to face the truth about Islam."

It always baffles me that folks want to damn an entire religion of 1.57 BILLION people, claiming that the vast majority are radical. Which is literally impossible mathmatically. If even half were radicals hell bent on destroying western values than they would do it. If you combined USA's, China's and Russia's military (roughly 8 million people)... you would have .5% of the muslim faith.

Wrap your head around that...

 

[Whiskeyjack]

We have to stop saying when something like this that happened in Paris today, we have to stop saying, well, we should not insult a great religion. First of all, there are no great religions. They're all stupid and dangerous.

Maher doesn't think much better of Christianity. Pick your allies carefully, Leppy.

 

[Wild Bill]

It always baffles me that folks want to damn an entire religion of 1.57 BILLION people, claiming that the vast majority are radical. Which is literally impossible mathmatically. If even half were radicals hell bent on destroying western values than they would do it. If you combined USA's, China's and Russia's military (roughly 8 million people)... you would have .5% of the muslim faith.

Wrap your head around that...

At what point do non-followers start worrying?

 

[woolybug25]

At what point do non-followers start worrying?

It's been one of the largest religions for hundreds of years.

I think you missed my point entirely.