BF2S Forums We Have Nothing to Show For All of Our Debt

Harmor wrote:

Reaganomics and its principles were never properly implemented (remember we had a Democratic congress all though the Regean administration - thanks Tip O'neal).  And because of it spending, as you noted, increased unabated.  (NOTE: Spending increased too under Bush so I'm not suggesting that Republicans are innocent here - RINOs are the problem).

And a review for those not familiar with Reagonomic Principles:

• Reduce government spending,
• Reduce income and capital gains marginal tax rates,
• Reduce government regulation
• Control the money supply to reduce inflation.

Now obviously we didn't follow or implement those principles. 

One note, I'm for responsibly spending for the military to protect our country; if we don't have security we don't have much of a country (look at Mexico for an example).

Again, not your words. Evolve past monkeyhood.

Phrozenbot wrote:

I assume he feels being over-leveraged would mean the risk of more major banks collapsing and thus another depression.

Why is it the governments job to set a limit? Doesn't each bank know what it can handle better than the government does? By setting a limit, isn't the government instead setting a standard? Banks over-leverage for numerous reasons. Some do it on a gamble to get out of trouble, some do it because they know the government will pick up the tab, and still others do it simply because they're just a part of the herd.

Whatever the reasons, any limit is arbitrary. Why even put the regulation on paper if it's exactly as arbitrary as designing a zone around ground zero where a mosque can't be built?

Harmor wrote:

One note, I'm for responsibly spending for the military to protect our country; if we don't have security we don't have much of a country (look at Mexico for an example).

We could certainly spend much less on our military without reducing the quality of our fighting force. It is more expensive to pay for the upkeep of bases overseas than here in CONUS.

We also have two oceans as a buffer. I'm unaware of any nation capable of mounting a major assault on us. We really do have a tactical advantage when it comes to defense. Should the military fail to protect us, we would have a nasty insurgency to deal with as well :P

and btw whats a RINO :o

quick question:

if you have a car payment or home loan...are you in debt to that amount?  or if you can afford the monthly payments comfortably is that basically considered not in debt?

Phrozenbot wrote:

...and btw whats a RINO

RINO : http://en.wikipedia.org/wiki/Republican_In_Name_Only

11 Bravo wrote:

quick question:

if you have a car payment or home loan...are you in debt to that amount?  or if you can afford the monthly payments comfortably is that basically considered not in debt?

It's debt.

Turquoise wrote:

JohnG@lt wrote:

Phrozenbot wrote:

I assume he feels being over-leveraged would mean the risk of more major banks collapsing and thus another depression.

Why is it the governments job to set a limit? Doesn't each bank know what it can handle better than the government does? By setting a limit, isn't the government instead setting a standard? Banks over-leverage for numerous reasons. Some do it on a gamble to get out of trouble, some do it because they know the government will pick up the tab, and still others do it simply because they're just a part of the herd.

Whatever the reasons, any limit is arbitrary. Why even put the regulation on paper if it's exactly as arbitrary as designing a zone around ground zero where a mosque can't be built?

I disagree.  Limits are relative, not arbitrary.  This most recent collapse could be used to determine a reasonable limit by observing the likelihood of failure among different levels of leveraging.  This is most certainly something that could be logically and empirically determined through evidence.

But there are all different types of leverage, and all different types of risk. Investing in high yield bonds is relatively risky and this is reflected in their return rate. However, they only have approximately a 10% failure rate which more than makes up for the negatives.

Why do you feel that you should be able to set the risk level for any company? You don't own them, and neither does the government.

11 Bravo wrote:

JohnG@lt wrote:

11 Bravo wrote:

quick question:

if you have a car payment or home loan...are you in debt to that amount?  or if you can afford the monthly payments comfortably is that basically considered not in debt?

It's debt.

ya but acceptable debt?

Why is any debt acceptable on a personal level? Unless it's due to an investment and you will make up your loss in interest payments with a return, you're wasting your income for the sake of convenience.

Purchasing a home financed with debt is semi-ok depending on the market in the area. If prices are expected to go up and you make a profit over the interest paid (which means the home has to more than double in value after thirty years) then it's ok debt. Purchasing a car with debt could go either way. If it's an investment that allows you to travel to work it pays for itself (but it's still better to pay cash). Financing things like restaurant bills, jet skis or Christmas toys are just a waste of money. There's no return on the interest paid other than convenience. Better to save up in advance and purchase these things out of your savings.

Unless you're getting a return on the debt and leveraging it into a profit, there is no reason whatsoever to go into debt.

11 Bravo wrote:

what i am saying is i know people who say they dont consider their student loan debt for example, they consider it an investment.

Entirely depends on the degree they received and the job that it allows them to get. If they majored in English and their starting salary ends up being $30k then it wasn't a very good investment. They could've skipped college, gotten a job in construction and made more money

11 Bravo wrote:

nah i dont consider a home loan debt.  what you supposed to do live in a box?  and you need a car to get to the job.  and in most cases you need the education to get said job.  therefore i dont consider any of that "bad" debt.

You can rent. Most of the time it's much better to rent than own a home. Depending on where you live, a car is a bad investment since public transportation is less expensive and just as effective. Every situation is different, but the biggest myth in America is that everyone should strive to be a homeowner. All that does is lock you down to a certain geographic location and limit your options for work. Instead of being mobile and having the chance to take a job in California, or Texas or Oklahoma if the money is better there than where you are, you're stuck. If the economy tanks in your area or town and you get stuck with an underwater home, you're doubly fucked.

Phrozenbot wrote:

JohnG@lt wrote:

Phrozenbot wrote:

I assume he feels being over-leveraged would mean the risk of more major banks collapsing and thus another depression.

Why is it the governments job to set a limit? Doesn't each bank know what it can handle better than the government does? By setting a limit, isn't the government instead setting a standard? Banks over-leverage for numerous reasons. Some do it on a gamble to get out of trouble, some do it because they know the government will pick up the tab, and still others do it simply because they're just a part of the herd.

Whatever the reasons, any limit is arbitrary. Why even put the regulation on paper if it's exactly as arbitrary as designing a zone around ground zero where a mosque can't be built?

I personally thought the major investment banks were too over-leveraged, but that is the market place to decide, not the guberment. Obviously, they dug themselves into a whole and should have went bankrupt, but who is to say a bank can't invest an enormous amount of money into something sound and make excellent profits, without failing? I see limits as detrimental and ineffective. It is like the FDIC. It gets insured by the government and that supposedly will make us feel safe with that bank.

Like you said in another post, S&L crisis should have been let alone. Liars poker really does tie in with the last crisis. Wall Street was doing Washington a favor by financing the mortgage industry with the governments intent for everyone to be a homeowner. It's amazing what a flip in interest rates can do...

Even here, most of the responsibility for the bank 'failures' can be blamed on government regulation. Everything from requiring ratings agencies to judge debt on securities they don't have the talent to understand, to the government pushing for laxer underwriting to qualify more people for home ownership, to destroying industries like the high yield bond market and forcing investment firms into even riskier securities like mortgage backed bonds (because these are ok, it's more important to get everyone into a home rather than fund small and medium businesses). Everything the government touches turns to utter shit.

JohnG@lt wrote:

Turquoise wrote:

JohnG@lt wrote:

Why is it the governments job to set a limit? Doesn't each bank know what it can handle better than the government does? By setting a limit, isn't the government instead setting a standard? Banks over-leverage for numerous reasons. Some do it on a gamble to get out of trouble, some do it because they know the government will pick up the tab, and still others do it simply because they're just a part of the herd.

Whatever the reasons, any limit is arbitrary. Why even put the regulation on paper if it's exactly as arbitrary as designing a zone around ground zero where a mosque can't be built?

I disagree.  Limits are relative, not arbitrary.  This most recent collapse could be used to determine a reasonable limit by observing the likelihood of failure among different levels of leveraging.  This is most certainly something that could be logically and empirically determined through evidence.

But there are all different types of leverage, and all different types of risk. Investing in high yield bonds is relatively risky and this is reflected in their return rate. However, they only have approximately a 10% failure rate which more than makes up for the negatives.

Why do you feel that you should be able to set the risk level for any company? You don't own them, and neither does the government.

But, as we've seen, they own the government.  The only counterbalance is to set a few limits on their actions.