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Why we need politicians that can think
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mac



Joined: 07 Mar 1999
Posts: 5371

PostPosted: Sat Oct 22, 2011 1:42 pm    Post subject: Why we need politicians that can think Reply with quote

Many of you know that I am scornful of the reaction of some conservatives that we need politicians with no experience in government. That is not because I think there are no problems in government, it is because I think that the problems in government are stubborn and difficult, and require deep thinking, not reactionary beliefs. Most of the solutions will be uncomfortable to both parties, and will require cooperation. The simmering problem in California is local government cutbacks, stemming from the greedy practices that led to a housing bubble that, when it collapsed, took housing prices and local government revenues with it. Here is a very interesting, and long article, from Vanity Fair that was recommended by a friend. I endorse that recommendation. No heroes in local government here, but difficult problems. Like the stubborn and inconvenient fact that police and fire protection account for 75% of all discretionary spending in a city like San Jose, which has the second highest per capita income in the Country. Dropping property taxes has meant that San Jose has lost 2000 of 7500 public employees. The root causes, in addition to the housing bubble, are employee greed and lack of fiscal acumen in the administrative and political arenas.

The shrinking pot of money for local government, which also occurred during the Great Depression, helps explain both the nature of the first stimulus bill, and why it hasn't restored the economy as much as anticipated. Continued local cuts are much higher than the stimulus. While there are some signs of economic recovery, it should not let us lose our focus on the need for smart, ethical people, who understand municipal finance, in local offices. Inexperience people like Cain, who don't understand government, or the importance of doing government well and efficiently, are a stunningly bad idea. Only in a movement that embraces anti-intellectual thinking would we hand the most difficult problems to people that don't think deeply. We already tried that with George Bush.
http://www.vanityfair.com/business/features/2011/11/michael-lewis-201111.print
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stevenbard



Joined: 11 Nov 1993
Posts: 4231

PostPosted: Sat Oct 22, 2011 4:27 pm    Post subject: Reply with quote

Mac, you could look at it the other way, in which it was geedy politicians wouldn't let builders build more homes. This would have kept prices low for sure. Then the greedy polititians grew govt at it's fastest pace in history because of the artificially high prices created by allowing mortgage rates to fall to historic lows coupled with a shortage of housing, and the deregulation of banks.

Government deregulated the banks and we were off to the races to see just how big govt could grow. The greedy politicians did not want to stop such an economic surge because it meant bigger govt. This of course was un-sustainable.

If the banks didn't have taxpayer backstops provided by govt, we'd have had the same mortgage default rate as prior to 2006. Bankers just did what bankers do, like any business, if their own money was on the line they wouldn't have made stupid decisions. Same problem with Solyndra and Fiskar. It wasn't their money on the line.

Cain is not a polititician, he is a problem solver. I think this would be refreshing. After all, can you name a single politician who's done a good job? (in office now)
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mac



Joined: 07 Mar 1999
Posts: 5371

PostPosted: Sat Oct 22, 2011 5:07 pm    Post subject: Reply with quote

Bard--you are exactly the anti-intellectual I am talking about. Did you read the Vanity Fair article? You're certainly not making a comment upon it with either facts or reasoning. You have no grasp of the history of this recession, and you post falsehoods even more often than Isobars.

Yes, I can name many politicians who do a good job. Most of them are at local government, and the pressure to raise money gets higher at every step up the ladder. The Republican Supreme Court, led by the sexual harasser Thomas, a former corporate lawyer for Monsanto, has made it even easier for big corporate money to corrupt politics.

Your reasoning on "geedy" politics and building more housing is obscure, and wrong. Certainly developers have an inordinate influence in local government because they give money to get the rules relaxed. But that has absolutely nothing to do with the current plummeting of housing prices. Our housing supply was and is overbuilt, for a number of reasons. First, tax policies let owners take deductions on housing used as an investment rather than as a residence. That artificially stimulated demand. Second, deregulation of banking led directly to a tenfold increase in sub-prime loans. The drafting of the de-regulation language de-criminalized most of the corrupt processes that were going on, in particular the conflicts of interest that allowed rating agencies to rate high risk loans as safe securities once they had been cut up into tranches. That drafting, of course, was done by Senator Phil Gramm--a Texas Republican. So there are millions of bad loans out there, courtesy of that legislation, and the housing price deflation is not quite over. Because the collapse of the sub-prime loans, second loans that were reasonably risks then are failing now as more home owners who weren't irresponsible find themselves underwater. If there wasn't an oversupply of housing the market would adjust. I guess you don't understand supply and demand and pricing very well.

Some on the right have blamed the housing bubble collapse on Fannie and Freddy, trying to shift attention away from Gramm. While Fannie and Freddy finally succumbed to pressure to make sub-prime loans, and had some serious ethical problems among politicial appointees, they came late to the party and were a tiny part of the $10 trillion that disappeared.

In keeping with your overall anti-intellectual approach, you've again made it clear that you didn't study the Great Depression, or any of the famous bank runs in our nation's history. While a theoretical economist from the Austrian school would claim that the lack of a bail-out would have resulted in a "market correction", that classical theory ignores the collapse of confidence that occurs in bank panic. The actions of Obama, Bush and Congress in establishing TARP minimized the damage. Much of the TARP loans have been repaid, and it cost far less than either of the wars, and the restructuring of the auto industry promises some modest increases in American jobs--and appropriate downward pressure on wages in manufacturing jobs. By the way, the bill presented to Congress by Bush had virtually no safeguards to guarantee repayment. Those safeguards were developed by the Obama financial team.

We're in over our head with debt, and de-leveraging will continue. But having some understanding of economics and how we got here is essential. You are one of the rabid righties who scream about Obama and deficits, without understanding that the source of over 2/3 of the deficits are Bush policies. While he may be out of the oval office, his damage continues.

Try reading an article that isn't sent to you by a right wing organization that has a fiscal stake in what is going on.
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jpbassking



Joined: 19 May 1998
Posts: 2386
Location: Leo

PostPosted: Sat Oct 22, 2011 5:26 pm    Post subject: Reply with quote

mac wrote:
.. The drafting of the de-regulation language de-criminalized most of the corrupt processes that were going on, in particular the conflicts of interest that allowed rating agencies to rate high risk loans as safe securities once they had been cut up into tranches. That drafting, of course, was done by Senator Phil Gramm--a Texas Republican. .


mac, are you referring to the Gramm-Leach-Bliley Act?

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mac



Joined: 07 Mar 1999
Posts: 5371

PostPosted: Sat Oct 22, 2011 6:00 pm    Post subject: Reply with quote

That's it. It essentially repealled Glass-Steagall, and forbid regulation of most of the financial transactions that were thereby allowed. The 3 names afre the conference committee, but by most accounts Gramm and his staff did all the drafting.

The Obama administration, and the attorneys general in many states have looked at criminal charges against some of the banks and bond rating agencies. While many of them are loathe to lose such a high profile case, the clear answer to why all the action is in civil courts, not in criminal courts, is Gramm's language compromised the ability of anyone to bring criminal charges.
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stevenbard



Joined: 11 Nov 1993
Posts: 4231

PostPosted: Sat Oct 22, 2011 6:30 pm    Post subject: Reply with quote

Mac, NOW we have too much housing, but prices wouldn't have risen so fast had they been able to build as needed 10-12 years ago. And if it weren't so hard to get permits, politicians would have no power. Do you understand the irony? We wouldn't have so much housing today, had politicians been stiffled. In my estimation, without significant govt interference, housing prices would be half of todays values.

Mac, you over-complicate everything, and you are disrespectful. I'm usually not as disrespectful of you as an individual, but you are so smart, you outsmart yourself.

Today govt has ruined widows and pensioners with zero interest rates, while inflation rumbles and bankers are bailed out. The middle class are decimated. The people who saved carefully earn nothing, another criminal irony.

Better government? When in history has that happened? Study history, because those who ignore history, are doomed to repeat it....George Santayana.
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mac



Joined: 07 Mar 1999
Posts: 5371

PostPosted: Sat Oct 22, 2011 10:47 pm    Post subject: Reply with quote

little bard, you are disrespectful of Obama and say scathing things about what you describe as liberals. You get what you put out.

Now to the housing market. If there were no zoning the housing market would be much more flexible and responsive. We would probably have more multi-unit projects, and as much litigation over land use. We would also have housing that would fall down in an earthquake, would burn more rapidly, and would leak energy like crazy. It might be cheaper--and worth even less--but not for long.

The limitation to the housing supply in urban areas is accessible land. Unless the government was building highways, we would long ago have run out of close in land. Who knows, without government building roads, giving subsidies for buying houses, and zoning, we might still have red cars and public transit. But you wouldn't be able to get to the shoreline in Malibu and windsurf because there wouldn't be a Coastal Commission making sure that you had access. And because you would wipe out air quality regulation, you wouldn't be able to breathe when you got there.

The point, my head-in-the-sand windsurfer, is that we have a brokered interest state representative republic with substantial government intervention in the economy to protect what a substantial number of people think are important things. Highways, public safety, fire protection, police protection, clean air, access to the coast, and education for a few. We are not going to drop all of those things because the John Birch Society has had a resurgence. I for one am alive today because of safety regulation. I survived a head-on car collision that would have killed me in your world. No car manufacturer in this country improved safety or emissions without regulation. And I will fight your type of foolishness as long as I am alive.
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stevenbard



Joined: 11 Nov 1993
Posts: 4231

PostPosted: Sat Oct 22, 2011 11:26 pm    Post subject: Reply with quote

So you think conservatives want to carry around assault rifles and live in anarchy while wearing loin cloths?

If we brought back non banking regs to the year 2000, got a flatter tax, and reduced govt by 10% that would be armagedon to you?

I want the bankers to pay the ultimate price, as you do. And I'm glad that you were saved, (you should have driven a Hummer), but 10% less govt, coupled with good management, might mean better govt. Sometimes less is more.

Head is now buried in the sand until it's windy again...
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mac



Joined: 07 Mar 1999
Posts: 5371

PostPosted: Sat Oct 22, 2011 11:45 pm    Post subject: Reply with quote

If you had bothered to read the article, you would know that San Jose has already reduced staffing by 30%. The State of California over 10%, as the Federal government. Back in the sand where you feel comfortable.
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isobars



Joined: 12 Dec 1999
Posts: 14322

PostPosted: Sun Oct 23, 2011 7:48 am    Post subject: Reply with quote

If mac is so upset about the housing/banking collapse, he has only his own party to blame. George Bush repeatedly and with increasing alarm urged the Congress to generate tougher regulations on lending -- it's all in the public record -- but the Democrat-controlled Congress adamantly refused. He can thank his sick friend Nancy Pelosi for her major part in that fiasco.
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