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Boston Bubble Brief: The Real Story for MA - Apr 2009
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Wed Jun 17, 2009 10:29 pm GMT    Post subject: Reply with quote

I live about 30 or so miles away from Boston, and I see a big growing difference just between city prices and the suburbs. Just take tolls, commuter rail or MBTA passes and parking in the city. Five years ago, the mud lot by the Moakley courthouse was $7. Now I think it is $13 or $14 dollars.

The unions are killing us, and what they fail to realize is that because they have driven everything to cost more, they themselves get less and less. It is sort of diminishing returns when unions get paid too much because the State gets more and more into debt and taxes, fees, and tolls go up and to get simple work done costs a fortune because even unskilled labor needs to live and pay the expensive cost of living so it drives up the cost of janitors, teachers, and other industries. Then, when the public sector gets to fat, taxes go so far up that it drives away private industry and we lose private sector jobs, then the politicans do what Obama is doing and talks about "JOBS SAVED". What bullshit. Basically, he calls a job some public sector job or some boondoggle construction job that will end at the end of the project. Because he adds to the public dole, it just makes matters worse because it adds another unnecessary person to the costs. Mike Dukakis did this in the early 80's because he thought it was better to give someone a government job than to pay them Welfare. Now those chairwarmers are coming up for retirement. This whole socialism is killing us. Instead of making us more competitive and increasing PRIVATE SECTOR jobs, they just added more weight to the public sector sled that the private sector has to pull. Now take health care, when someone without health coverage goes to the hospital, the costs get transferred to those who do pay for health care, so basically we are subsidizing those without coverage. Typically, this is just for emergency services. Obama wants to add more people into the system and the only way to do that is to screw the people who actually pay the tab even worse. I think it is ridiculous that he actually thinks that the public sector can outperform the private sector in containing costs.

Inflation is being driven up by unionized labor, oil speculators and global demand for raw materials from emerging nations. The way this will adjust is a total debasement of our currency. If we had McCain in, he would have cut taxes on small businesses, and they would have hired and started to compete globally. It would have pulled talent away from the big lazy corporations and adjusted the bloated market though capitalism. Instead, we chose a socialist who is going to make us worse than Europe. Europeans will exceed us because they don't carry a strong military. I love how Obama blames the "fat cats" and not the millions of deadbeats who bought more than they could afford and are so lazy and stupid that he allows them to play Mickey the Dunce and the victim and the "responsiblity" is on the very small percentage of people that actually pay taxes.

The basic premise that home ownership or health care being an entitlement and not something you earn or pay for should have been established long ago. Now that the babyboom is aging and needing the health care it is too late. If they thought they were entitled to it, they should have been paying in more a lot longer ago. Playing the "We're the United States, we can do whatever we want" and printing money to dillute our debt will just make us a second tier country.

What the union members need to do is MOVE to another area where you don't have too many of themselves. Too much of a concentration of one skill drives the price down in a capitalistic model (which is not what they want) so they pull the political levers and maintain "prevailing wages" which force States to put more and more and more on the credit card which eventually makes the State less competitive. So they need to move once they trashed the place.

The United States was the God dam inventor of the modern free trade capitalistic model, it would be ridiculous for us to scrap it and become a second tier socialistic nation where an old union tradesman becomes a government official and has such a warped sense of values that they just promote their self serving parasitic ways instead of thinking about how to generate value that people will send money to their region to have.
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balor123



Joined: 08 Mar 2008
Posts: 1204

PostPosted: Thu Jun 18, 2009 2:13 am GMT    Post subject: Reply with quote

I wonder how these old threads get revived...

Anyway, you have multiple unions fighting with each other for their share of the loot (taxes). As one union wins the other unions get less so they have to fight for more. While they are partly fighting each other, raises for all unions employees still helps them because the amount they get extra is greater than the amount they lose since they aren't alone in the system. There's non union workers, who are paying the cost. That drives up the cost of living and doing business for everyone else. Businesses don't vote so they can't fight the unions and neither can a bunch of other people who are affected (tourists, people who aren't old enough, etc). The result is that businesses and people move to other states where there aren't unions.

By the pay, unions aren't restricted to blue collar workers. There are some engineers who are unionized, such as those working for Boeing, though they very rarely go on strike. Doctors are also unionized. They don't need to strike because they can control the supply of doctors and there's no real good check and balances for cost of medicine (doctors, drugs, etc). When was the last time you asked a doctor how much they would be billing the insurance company? Right... now try going off insurance and see what you pay. You can't even get an answer about how much a procedure will cost!

As for retiring baby boomers, you are correct but the system isn't fixed yet. I gladly pay for health insurance now but I'm not going to buy two policies. I rely on my employer. The key is to get in before risks have been realized and most employers don't offer portable policies. In that sense the government plan is good. Let's just hope that they share the costs by age group so we're not paying for baby boomer's healthcare and our own. The issue of how much to pay for healthcare is still broken though.
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balor123



Joined: 08 Mar 2008
Posts: 1204

PostPosted: Thu Jun 18, 2009 3:11 am GMT    Post subject: Reply with quote

Come to think of it, minimum wage is also a form of unionization. Something else that I want to add to the previous comments that I made is that unionization doesn't just affect you through reduced government services and increased taxes. It also raises costs elsewhere. Private employers have to compete with government jobs and other employers, who might have restrictions on how they compensate their employees if they want government contracts.
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mpr



Joined: 06 Jun 2009
Posts: 344

PostPosted: Sat Jun 20, 2009 1:44 am GMT    Post subject: Reply with quote

john p wrote:

If we had McCain in, he would have cut taxes on small businesses, and they would have hired and started to compete globally. It would have pulled talent away from the big lazy corporations and adjusted the bloated market though capitalism. Instead, we chose a socialist who is going to make us worse than Europe.


John p: I really enjoy many of your posts on this site, especially some
of the analogies (specific heat of bricks etc) which I often find insightful
as well as colorful.

So I'm really surprised at this rant. How can you write such drivel ?

Its amazing that after everything that's happened people can still push
the "free markets always good, government always bad" ideology.
Macro economic criticism of Obama's policies is fine, but the "socialist"
name calling and ranting is ridiculous.

john p wrote:

The United States was the God dam inventor of the modern free trade capitalistic model, i


I think the British might have something to say about that Smile
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GenXer



Joined: 20 Feb 2009
Posts: 703

PostPosted: Sat Jun 20, 2009 12:43 pm GMT    Post subject: Reply with quote

Quote:
Its amazing that after everything that's happened people can still push the "free markets always good, government always bad" ideology.
Macro economic criticism of Obama's policies is fine, but the "socialist"
name calling and ranting is ridiculous.


Name one thing that John said which is not true.

Government is always bad when it is in the hands of a wealth redistributionist and class warfare specialist. Name one thing that came out of Obama's politburo which is good for the people and businesses of this country.

Many democrats are now realizing that Obama is hurting not only the 'working' people he's supposed to help, but the private businesses, which can only result in more pain for the working people. Everything he touches turns to waste and mismanagement, including the economy (he oursourced jobs he was supposed to save by selling GM), healthcare (he's on his way), and foreign policy (he's a laughing stock of the whole world).

So please forgive some of us who see that what Obama is doing is pandering to the unions at the expense of the 'working' people (GM stock for bond deal is a good example), and paying back his friends in the financial industry at the expense of the 'working' people. Unemployment is 9.1% and rising, and the teleprompter is controlling the printing press. Mortgage crisis was precipitated by socialist policies (and Obama was personally involved in suing the banks to make them loan to the unqualified borrowers).

To be fair, under Bush the government was also pursuing policies which were not capitalist in any shape or form - under him the Fed messed with the money supply, but Obama is personally involved in taking from those who work and giving it to those who don't. If this is not socialism, tell me what is.

So far, nothing has shown that capitalism does not work. The latest crisis is a perfect example of a government-run and government-mandated socialist system of redistribution of wealth through mortgages to those who do not qualify (lest we forget that Fannie and Freddie and Ginnie all were ran by government hacks), and while banks have some blame (risk models, etc), once the government gets into ANY business, it tends to screw it up. Show me ONE program ran by the government which can compete on the open market with private equivalents. Would you want to drive Government Motors car? How about government-ran healthcare?
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mpr



Joined: 06 Jun 2009
Posts: 344

PostPosted: Sat Jun 20, 2009 1:13 pm GMT    Post subject: Reply with quote

GenXer wrote:

So far, nothing has shown that capitalism does not work. The latest crisis is a perfect example of a government-run and government-mandated socialist system of redistribution of wealth through mortgages to those who do not qualify (lest we forget that Fannie and Freddie and Ginnie all were ran by government hacks), and while banks have some blame (risk models, etc), once the government gets into ANY business, it tends to screw it up.


There's really too much to deal with in what you wrote, but let me start here.

Quick review of history: Its true that Fannie and Freddie, thanks to their
implicit (now explicit) treasury backing and therefore reduced cost of funds,
squeezed private players out of the securitization of conforming prime
mortgages. And it has always struck me as strange that the supposedly
super-capitalist US had a quasi-nationalized mortgage system.
(Now of course actually nationalized).

However the subprime mortgage meltdown was caused by
private originators and banks originating and securitizing subprime
mortgages. According to you "free market always works" folks this
shouldn't have happened, because even though the government
(via Fannie and Freddie) squeezed the private players out of the
conforming loan business this shouldn't have meant that they
started making money losing loans.

And please dont say that this was caused by the govt pushing private
players to make these loans. This was not the cause of the
overwhelming amount of subprime lending.

What was happening of course was that as the loans were
originated, packaged and sold (for example) to villages in Norway
and even other banks they essentially got stripped of information.
The final buyer didn't know what they were really buying, except that
it was rated AAA. One could blame the ratings agencies I suppose, but their
models were public info I believe.

So this was certainly a free market driven misallocation of capital,
and you capitalist chest thumpers had better deal with that.

The fact that markets can malfunction is not news, and this is
especially true in situations of asymmetrical information. That's
why we have regulation like rules against insider trading.
The US hasn't had complete laisse faire capitalism since at least
the age of the robber barrons.
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GenXer



Joined: 20 Feb 2009
Posts: 703

PostPosted: Sat Jun 20, 2009 1:26 pm GMT    Post subject: Reply with quote

If you read the original Austrian school ideas about capitalism, they knew perfectly well that crashes happen. The capitalists would decrease the money supply when crashes occur (which are considered NATURAL part of the free markets), and increase it when expansion resumed. Those who should fail were allowed to fail. This is capitalism. Anything else is not. Meddling by the government is socialism, and it has NEVER ever worked to save anybody from crashes. Crashes would occur regardless. They are like a force of nature. According to Socialists crashes shouldn't occur. But Capitalists respond by saying that if you meddle, even worse crashes will occur. It is arguable that the Great Depression was caused by needless meddling by the socialist government. I would argue that if the government continues to meddle as it is doing right now, nothing good will come of it (and nothing good HAS come of it). As for regulations, the only thing that needs to be 'regulated' but can not be is human stupidity. This is why bubbles and crashes occur, but you can not stop it with regulations. I think Capitalism is a fine concept - it is people's understanding of it that is faulty.
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balor123



Joined: 08 Mar 2008
Posts: 1204

PostPosted: Sat Jun 20, 2009 4:56 pm GMT    Post subject: Reply with quote

GenXer wrote:

Name one thing that John said which is not true.

The part about how much better McCain would have been. You can't make it to that position without some amount of self-serving and even if you were the one who ignored all contributions you still have congress to deal with.

GenXer wrote:

Show me ONE program ran by the government which can compete on the open market with private equivalents. Would you want to drive Government Motors car? How about government-ran healthcare?


How about USPS? At least up until the recent bubble that caused it to become inefficient like most other US companies. Obama wants government-run health insurance, not healthcare.
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balor123



Joined: 08 Mar 2008
Posts: 1204

PostPosted: Sat Jun 20, 2009 5:03 pm GMT    Post subject: Reply with quote

mpr wrote:

However the subprime mortgage meltdown was caused by
private originators and banks originating and securitizing subprime
mortgages. According to you "free market always works" folks this
shouldn't have happened, because even though the government
(via Fannie and Freddie) squeezed the private players out of the
conforming loan business this shouldn't have meant that they
started making money losing loans.


The free market was working. It let those players become big and then it tried to kill them. Government got in the way. I don't have a problem with that but I wish they didn't reward them while they were at it. They didn't even make them sweat a little.

mpr wrote:

The fact that markets can malfunction is not news, and this is
especially true in situations of asymmetrical information. That's
why we have regulation like rules against insider trading.
The US hasn't had complete laisse faire capitalism since at least
the age of the robber barrons.


Free markets solve all problems but not always in desirable ways, recent crash serving as evidence. It is far from efficient in many cases and regulation should address these places. The problem we have is that government isn't addressing inefficiencies but rather supporting them thanks to the design of our political process (another work for this is corruption). At the very least the government is ineffective as a result. It is also hard to get right but that doesn't mean we should stop trying.
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GenXer



Joined: 20 Feb 2009
Posts: 703

PostPosted: Sat Jun 20, 2009 5:37 pm GMT    Post subject: Reply with quote

I agree that McCain may not have been better than Bush in some ways, and I'm sure he would have tried to 'compromise' on healthcare, but I don't think he would have moved so fast on socializing everything in sight. I'd argue that anybody would have been better than a man who believes that redistribution is fair.

USPS is not really a government program - it is business. We don't know how much it costs to run it! That's the point. It may not be very competitive given the expenses and inefficiencies. I don't know the numbers, but I'm willing to bet that a private enterprise would be much better than USPS. The problem is that the government does not trust this task to a private enterprise.

This is not semantics - Obama does want to control the healthcare. He wants to replace all health insurances with a government ran plan. Its really simple. If you think it through, you'll see that the only result of his policies would be the complete dominance of government ran health insurance, meaning that the government will be running healthcare.

The problem with any regulation is that it causes more problems than it solves. You can never predict the future, and regulation intends to do just that. There will ALWAYS be bank busts and economic crashes, and the more regulation the government imposes, the less flexibility would the companies have to deal with such crises in the future.
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mpr



Joined: 06 Jun 2009
Posts: 344

PostPosted: Sat Jun 20, 2009 5:57 pm GMT    Post subject: Reply with quote

balor123 wrote:

The free market was working. It let those players become big and then it tried to kill them. Government got in the way. I don't have a problem with that but I wish they didn't reward them while they were at it. They didn't even make them sweat a little.


Yes, I would tend to agree that with Fannie and Freddie the market
actually behaved rationally. It believed that they had treasury backing
and it was right. One could argue about whether these institutions
should have existed in the first place, but letting them fail or
anything close to that would have been a disaster. That's why Paulson
didn't even pretend to let them go close to the brink.

balor123 wrote:

Free markets solve all problems but not always in desirable ways, recent crash serving as evidence. It is far from efficient in many cases and regulation should address these places. The problem we have is that government isn't addressing inefficiencies but rather supporting them thanks to the design of our political process (another work for this is corruption). At the very least the government is ineffective as a result. It is also hard to get right but that doesn't mean we should stop trying.


I get what you're saying, although as a matter of semantics I wouldn't
say "solve all problems" - maybe "resolves all imbalances".
Hopefully more reasonable regulation will come out of all this.
Unfortunately it isn't possible to give all the people the lumps you'd
like them to take immediately. Otherwise you get "free market"
situations like Lehmann which nearly took down the whole
system. Fannie and Freddie or AIG would have been much worse.
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GenXer



Joined: 20 Feb 2009
Posts: 703

PostPosted: Sat Jun 20, 2009 6:14 pm GMT    Post subject: Reply with quote

Fannie and Freddie are full of Democratic party hacks. Last time I checked, the executives got paid hundreds of millions for allowing the risky lending practices to continue all the while they were cooking the books. Lehman would have taken the whole market with it? Prove it! Of course you can't. It was a bluff to give the government more control over the private sector. This bubble couldn't be avoided. They should have been all allowed to fail. Nothing would have happened. The government saved its own hacks and donors, at the expense of the taxpayers. This is what happened, and nothing more. Nobody is buying stories that if AIG et al have not been bailed out the financial system would have collapsed. There is no proof for this - its just fear mongering. In fact, a collapsed financial system would have been better than printing trillions of dollars to give to unions, corrupt state governments, and to federal programs which are all a big waste of money (oh, and to sell more treasuries to the Chinese to finance our financial debacle). You can not be this naive.
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Lawrence



Joined: 20 Jun 2009
Posts: 3

PostPosted: Sat Jun 20, 2009 10:43 pm GMT    Post subject: Reply with quote

Don't mean to just jump in to this discussion... been following a number of these threads for a while and am sometimes quite amazed by people's views on the world....


GenXer wrote:
So far, nothing has shown that capitalism does not work.


balor123 wrote:
Free markets solve all problems but not always in desirable ways


Do you guys really suggest that a society based on pure capitalism with no social aspect to it would work? Do you really believe that it would provide the best possible world for people (i.e. you, me, your children, etc.) to live in?

Or is the concept of a "best possible world" somehow beyond what we are discussing here?

---Lawrence
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GenXer



Joined: 20 Feb 2009
Posts: 703

PostPosted: Sat Jun 20, 2009 11:29 pm GMT    Post subject: Reply with quote

Best possible world = utopia. Let me put it this way. The one world which socialists are trying to build does not work. It has been shown that it does not work. What else do they want to accomplish? How about assuming gradual control over all aspects of our lives, because they know better than individuals what everybody wants? Do you want that kind of world instead of the one where everybody is free to pursue their lives with minimal interference from the all-knowing government?

'Pure' capitalism is good, but nothing is ever pure. The one practiced now is nowhere near that. So what many are pointing to as an example of 'pure' capitalism is actually an example of pure socialism. I do not claim to know what is best for OTHER people and their children. And I don't want anybody to tell ME what is best of me and my children. I think that everybody should be responsible for themselves, as long as they do not interfere with the lives of others. Live and let live. I'm no libertarian, but the more I listen to people's ideas on how to make the world a 'better place', the more I prefer that they keep their version of the 'perfect world' to themselves.

The idea that a government knows anything about 'world building' is ludicrous, and is completely discredited by history. Just take a look at this state as a microcosm of what happens when a government runs amok - would you want your children to pay for the excesses and summer villas of the local 'government' hacks? If this is not proof enough, I'm not sure what is. If anybody thinks that Obama's vision of the world is good, they need to have their heads examined, because in this version our kids will have a mortgage they will never be able to pay off - isn't that what got us into the current financial mess to begin with?
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Boston ITer
Guest





PostPosted: Sat Jun 20, 2009 11:49 pm GMT    Post subject: Reply with quote

I'm kinda finding a lot of this discussion between capitalism and socialism to be a bit confusing.

For one, the idea of commerce and the exchange of goods and services has been, not only a fabric of this society but also a *natural* trait for humanity, as a whole, for over the centuries. People trade and is the actually one of the reasons for increasing globalization, over different historic cycles, with the last mega cycle ending circa WWI. And then re-inventing itself in the post-WWII era.

The idea behind socialism is this sort of containment policy on the robber barons (i.e. Standard Oil of the 1880-1900) with an idea of preventing anyone of the monopolies from forming an empire over the laypersons thus suppressing any competition. Where the present day politicians are failing is that they don't understand cause-and-effect and thus, want to make a high-cost welfare state, corporate or individual, in place of one which embraces both the exchange of goods/services and maintains a type of civil order where the bottom of society isn't reduced to joining the criminal class.
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