Alternative to a "bailout"
Right now, you will hear many people talking about the "bailout", and how it is so important for our economy. While i do agree that unless something is done, and done soon massive layoffs will be the reality. But, that is not to say simply throwing money at the situation is the only option.
There are a few options, yet none are really being talked about because the Keynesian's currently control economic power. Here are some alternatives...
1.) Completely cut corporate tax's along with with capital gains tax until LIBOR rates drop without cutting interest rates. This will have two effects. First off it will lower cost to do business, regardless of the sector. Secondly, it will spur investment, and lure true investment whales out of their caves. Instead of just throwing money at the situation (which is a possible solution), we could let the market sort this out itself, all while reforming futures/options trading rules.
2.) Do nothing. In the world of government intervention, the government mysteriously staying out of such a drastic situation would be irresponsible at best. It is partly their fault we are in this mess, and when we factor out the consumer hunger for credit, it was all governments fault. It would result in massive unemployment, most likely cut the stock market in half (S & P). Of course, we would probably come out of it within a year, as foreclosures would be postponed (some counties are backlogged for over 3 months in advance), in favor of mortgage reform for. They could go even further by cutting spending, as well as taxes to improve consumer spending; it would most improve employment.
It should be noted that as i am morally against the bailout, we as a nation are in way over our head, and it makes absolutely no sense to allow people to suffer. Our government should transition itself out of economic intervention, and write some naughty legislation that puts greedy cocksuckers in jail for committing fraud, or using deceptive actions to profit. We really do not need more regulation, only effective legislation that fines, jails, and takes away the license of any individual or company that prey's on consumers.
Here is an example: New Page 2
An exert:
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Summary
This is a chance to invest in a potential ??franchise? that focuses on an underserved market with a ton of room for expansion whose stock remains under the radar of Wall Street because of flawed perceptions about its line of business. At current prices, the stock is very cheap, especially considering the company??s consistent earnings growth over time and distinct competitive advantage. One can definitely view this as an opportunity to invest in a company that 15 or 20 years down the road will be a Wal-Martesque standard in its business throughout the United States.
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The Basics
Car-Mart (CRMT) is the only public ($190 million market cap) Buy Here Pay Here used car dealer. As a Buy Here Pay Here used car dealer, it finances the cars it sells, and as the name indicates, buyers will often pay their installments on a weekly, biweekly or monthly schedule in cash at the dealership. They focus on small towns (50,000 individuals or less) and individuals with lower incomes (around 30K). Cars average about $7,500, and Car-Mart makes about $1,100 in pre-tax profit on each car.
Terms of the loans average 26 months, and the average interest rate is about 12%, but often will go as high as 19% outside of Arkansas. In Arkansas, where 60% of their receivables come from and 34 of its stores are, loans are capped at 5% above prime due to usury laws. CRMT has been profitable since it was founded 24 years ago, and has grown from around 40 dealerships five years ago to 80 dealerships currently. It operates in 7 states in the South-Central US- primarily in Arkansas, Texas, Oklahoma, Kentucky, and Missouri.
It is con artists like this who create such problems. Another type of scum are the payday loan brokers.
Any thoughts?
Alternative to a "bailout"
Certainly the alternative's should have been considered, prior to a large unilateral 'bailout!'
CRMT: is and interesting analogy! It sort of reflects Sears & Roebuck many years ago (if u think about it). Pretty much catered to the same working class of people with the same collection philosophy. And woolaa---they are still around! I recall the day we had credit cards from each store we shopped at, as opposed to, certain ones-like Visa, AMEX, and MC.
Basically, make each pig swarm around in their own mudd until they figure a way out. Like each person in this nation has to when we make bad judgement errors!
Frankly, the Gov't knew this was going on. Like 9/11 hoping time will pass and it would happen on another person's watch!
I do not think the fear that people need to be feeling in general was allowed to set in, at all, prior to the Gov't taking over! That is not good. People are going to have to learn to be fiscally responsible, at some age! Instead of hiding and hoping someone else has to take care of it!
This is a nation of gluttening appetites for money and greed. If the Gov't (us) were allowed to have more input into the matter, things may be different. It would look bad for republican candidates if the economy went in the toilet less than 60 days prior to election!
If left alone and everyone had to merge or undo the merges we've endured over the past few decades, this nation would correct itself. Instead of the debt we've incurred.
When Bears & Stern went down 6 months ago, there was the Red Flag. Nothing was really done then, except a precedent for what is going on now.
If CRMT, Sears or any successful business that has stood the test of time had to run this country, the balance sheets would have to add up and make sense!
I sort of think that cutting capital gains tax would not help, as much as, one would think. If anything, it would be cutting tax to the companies that already have contructive financing and know how to 'cook the books' so to speak! Instead of widespread tax cuts, make them earn them, somehow. Show, it is needed to receive it: Like welfare! Let the corporations stand in line like you would if you needed a hand out! If corporations had to be as responsible and were handled as you are as an individual, it would push one into being financially responsible!
You do not solve money problems with more money, just like tossing it in a fire. This is not a cure!
Run the U.S.A. like a business that has to balance the books.
We did this 'bailout' thing in California about 5 years ago. Set aside all our debt (with Gov. Arnie) and started over. Guess, what, we now have the debt set aside to pay and now they are talking impeach Arnie! Why, because the State 'bailout' plan did not work. So, who thinks this national one will.
Clearly, an alternative should have been attempted first and made the littles suckers sweat a tiny bit, like Enron, even if it really did not good, ultimately!
Regardless, something will have to shake loose. Our economy sold to China or India: They owned most of the U.S.A. before we started buying it back. So, when I am in debt, I sell things to pay off debt! Whatever it takes! :twocents: pr :rastasmoke:
Alternative to a "bailout"
good material once again!
your option #1 is out of the question, that will mean massive reform of all of our political spectrum, from foreign policy to every other costly program the government runs.
cutting coporate taxes is just not going to happen as long as we got a govt thats been runnin on deficit constantly with exception of a few years. we have 2 wars going on and many many govt programs that just cost too much... u cant just give the taxes a break cuz then these programs and wars will hit a dead end and politicians wont do this at all
and i think your #2 option which sounds totally reasonable is basically whato ron paul has been calling for... just quit fuckin around with something u ought not to mess with in the first place and toughen laws on fraud and deceptive practices.
and i agree a short term shock is better for us in the long run than just delaying this shock with this amount of money for a later one and a bigger one and perhaps a more fatal one...
the government has spoiled the people and likes to keep it that way... and people seem not to get it most of the time either... we dont want to chip in 700 billion, but we want the "credit" without having the backup to afford it... result is this mess and our national debt which has become the norm for us.
Alternative to a "bailout"
It could be interesting to see a day when economics is a regular class in all basic school programs. Why it isn't already is a mystery to me.
If we want our national books to be balanced and keep them that way it means we all have to do our part and stop living beyond our means. putting yourself in debt for something that will eventually pay dividends is acceptable, going in debt just because you had to have that navigator with the 24 inch spinners, even though you could never afford it, is not ok.
We need to start teaching the new generations how to be good consumers. Since weve chosen to be a consumer nation we should strive to be better at it.
In a society where most of the population understands how it's economy works the situation we find ourselves in would never happen, people just wouldn't do business with the people who are gonna run their companies into the ground.
I guess I don't have all the answers but I do know that this whole buyout thing just sounds way too communist to me.
Alternative to a "bailout"
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Originally Posted by flyingimam
your option #1 is out of the question, that will mean massive reform of all of our political spectrum, from foreign policy to every other costly program the government runs.
I know, wouldn't that be wonderful?
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cutting coporate taxes is just not going to happen as long as we got a govt thats been runnin on deficit constantly with exception of a few years. we have 2 wars going on and many many govt programs that just cost too much... u cant just give the taxes a break cuz then these programs and wars will hit a dead end and politicians wont do this at all
Yet the treasury already creates a deficit. There really is not a difference between lowering taxes and spending a shit load, or not lowering taxes and spending a shit ton. If they were to lower taxes, deficit spending would just increase just as it is when they perform the bailout.
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and i think your #2 option which sounds totally reasonable is basically whato ron paul has been calling for... just quit fuckin around with something u ought not to mess with in the first place and toughen laws on fraud and deceptive practices.
No, i put that out there because that is of course an option (although a horrible one). It would bring us to the "stone age" as many have been touting. If there were no corporate taxes/ capital gains, and an extremely low income tax, then option 2 would be quite possible though.
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and i agree a short term shock is better for us in the long run than just delaying this shock with this amount of money for a later one and a bigger one and perhaps a more fatal one...
This is the fatal one. You have to remember that growth based on Keynesian economic modeling relies on the expansion of credit. When interest rates are manipulated to achieve economic growth, a boom usually follows (Known as the Austrian Business Cycle Theory). This is provided by the example of people taking 12% loans and what not. 12% loans should not be provided to people who have no income (which was done routinely), as the very thought of credit expansion to that segment of the population is in essence fraud.
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the government has spoiled the people and likes to keep it that way... and people seem not to get it most of the time either... we dont want to chip in 700 billion, but we want the "credit" without having the backup to afford it... result is this mess and our national debt which has become the norm for us.
This is the problem. We live beyond our means. Factor in the makeup of net exports and you will get a clearer picture.
