Capitalism / Consumerism ?
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Chris Austin wrote:
That is pretty broad. How would you define investment? Does it have to be in the market at large? Would you consider purchasing fixed income assets as investing? How about acquiring capitol and sitting on it to build equity outside of stocks and bonds?
I meant the traditional economist idea of investment measured as a function of interest rate and income. By savings I mean savings as measured by disposable income less expenditure. I admit it's a loose definition. When savings exceeds investment (in the above sense), then this is associated with economic downturns. There are multiple definitions of investment - economic, financial, real-estate, corporate, etc... I am referring to the economic definition that can be calculated using macroeconomic quantities. Since you raised the point, then under the current economic crisis, Joe the Worker who is ferretting away his savings is contributing to the immediate problem at the moment. Savings in an economy undergoing deflation worsens the problem.
So this bloke, Joe the Worker, may be one of those people who believes in saving for a "rainy day". His "rainy day" might not yet have arrived but you are suggesting that as these savings are part of the problem. He could should spend at the high street but he may not be in need of anything. He could should invest in the usual places, but he might be putting that money, or at least some of it, at what he might consider, as an unacceptable risk. How should he behave at this moment in time? And why should he? when you consider that his money right now might be more safe stuffed into his mattress.
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So this bloke, Joe the Worker, may be one of those people who believes in saving for a "rainy day". His "rainy day" might not yet have arrived but you are suggesting that as these savings are part of the problem. He could should spend at the high street but he may not be in need of anything. He could should invest in the usual places, but he might be putting that money, or at least some of it, at what he might consider, as an unacceptable risk. How should he behave at this moment in time? And why should he? when you consider that his money right now might be more safe stuffed into his mattress.
Richard A. Abbott wrote:
So this bloke, Joe the Worker, may be one of those people who believes in saving for a "rainy day". His "rainy day" might not yet have arrived but you are suggesting that as these savings are part of the problem. He could should spend at the high street but he may not be in need of anything. He could should invest in the usual places, but he might be putting that money, or at least some of it, at what he might consider, as an unacceptable risk. How should he behave at this moment in time? And why should he? when you consider that his money right now might be more safe stuffed into his mattress.
It's true that his money might be more safe in the short-term under his mattress, but in the long term it won't. Right now, the economy is experiencing a devaluation of assets - stocks AND houses. are all losing value. Unemployment is rising which means that there are less consumers. Less consumers mean that companies build up inventories and reduce sales. This leads to decreased profitability and more unemployment along with increased inventories. What happens is that the deflationary spiral continues unless there is demand for goods. Since banks are not lending and people are increasing savings demand for goods drops further. It is a continuing spiral. The only way to stop it is for banks to lend and people to stop saving. So while the money under his mattress may be good in the short-term, his assets like stock and real-estate continue to devalue at a rate that more than likely exceeds his savings. The long-term picture is therefore grim. He should therefore spend an amount that is within his budget and, along with government stimulus, the recovery should begin which will lead to an eventual increase in his assets and therefore to economic growth.
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Hobbies no doubt has the "feel good factor", but the psychology of shopping should never be underestimated, especially if you are of the gentler sex. It has enormous therapeutic value albeit at the potential cost of overextending the family budget.
Richard A. Abbott wrote:
but the psychology of shopping should never be underestimated, especially if you are of the gentler sex
Men play games; women shop.
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
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Richard A. Abbott wrote:
So this bloke, Joe the Worker, may be one of those people who believes in saving for a "rainy day". His "rainy day" might not yet have arrived but you are suggesting that as these savings are part of the problem. He could should spend at the high street but he may not be in need of anything. He could should invest in the usual places, but he might be putting that money, or at least some of it, at what he might consider, as an unacceptable risk. How should he behave at this moment in time? And why should he? when you consider that his money right now might be more safe stuffed into his mattress.
It's true that his money might be more safe in the short-term under his mattress, but in the long term it won't. Right now, the economy is experiencing a devaluation of assets - stocks AND houses. are all losing value. Unemployment is rising which means that there are less consumers. Less consumers mean that companies build up inventories and reduce sales. This leads to decreased profitability and more unemployment along with increased inventories. What happens is that the deflationary spiral continues unless there is demand for goods. Since banks are not lending and people are increasing savings demand for goods drops further. It is a continuing spiral. The only way to stop it is for banks to lend and people to stop saving. So while the money under his mattress may be good in the short-term, his assets like stock and real-estate continue to devalue at a rate that more than likely exceeds his savings. The long-term picture is therefore grim. He should therefore spend an amount that is within his budget and, along with government stimulus, the recovery should begin which will lead to an eventual increase in his assets and therefore to economic growth.
73Zeppelin wrote:
stocks AND houses. are all losing value.
Gold isn't. And, FWIW, housing isn't losing value everywhere, at least not at the same rate. Here in the U.S. bubble-markets like California, Florida, Arizona and some others in the northeast are contributing a very large percentage of the average declines in housing prices. Both of these factoids suggest to me, that when we deal with real goods we are not seeing a decline in value - except where it was artificially inflated. I don't think that most folks who want to hoard their wealth bury it in the back yard or hide it in their mattress. They buy gold or other unlikely-to-depreciate assets. Or, of course, they stick it in a Swiss bank. But that's obviously becoming less and less attractive as they cave to the taxman. The point I'm getting around to is that putting your money in a savings account, isn't hoarding, though an awful lot of the unibrowed politicans are starting to talk as if it is. It's just an investment that most people understand. Indeed, a savings account is just like a Neaderthal: simple and ugly.
73Zeppelin wrote:
He should therefore spend an amount that is within his budget and, along with government stimulus, the recovery should begin which will lead to an eventual increase in his assets and therefore to economic growth
So if you had a couple of hundred thou in gold bullion (sounds like a lot, doesn't it? How about we say 200 golden eagles (or gold maples for you) - would you trade it in for stocks, or start buying all kinds of consumer goods?
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
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73Zeppelin wrote:
stocks AND houses. are all losing value.
Gold isn't. And, FWIW, housing isn't losing value everywhere, at least not at the same rate. Here in the U.S. bubble-markets like California, Florida, Arizona and some others in the northeast are contributing a very large percentage of the average declines in housing prices. Both of these factoids suggest to me, that when we deal with real goods we are not seeing a decline in value - except where it was artificially inflated. I don't think that most folks who want to hoard their wealth bury it in the back yard or hide it in their mattress. They buy gold or other unlikely-to-depreciate assets. Or, of course, they stick it in a Swiss bank. But that's obviously becoming less and less attractive as they cave to the taxman. The point I'm getting around to is that putting your money in a savings account, isn't hoarding, though an awful lot of the unibrowed politicans are starting to talk as if it is. It's just an investment that most people understand. Indeed, a savings account is just like a Neaderthal: simple and ugly.
73Zeppelin wrote:
He should therefore spend an amount that is within his budget and, along with government stimulus, the recovery should begin which will lead to an eventual increase in his assets and therefore to economic growth
So if you had a couple of hundred thou in gold bullion (sounds like a lot, doesn't it? How about we say 200 golden eagles (or gold maples for you) - would you trade it in for stocks, or start buying all kinds of consumer goods?
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
Oakman wrote:
putting your money in a savings account, isn't hoarding
If that is for a rainy day then I suppose if it is a modest amount then that presumably would be fine. Not that the amount you could earn from it is worth very much considering what base rates are. But are those political animals following their own advice or is it a case of "do as I say but not as I do". Anyhow, during the early 1990's there was a fall in the value of houses, although this was accompanied by very much higher interest rates, people found themselves in negative equity but the majority stayed put and rode out the storm. And with government help (e.g. The Real Estate Rescue Plan), there is no reason to believe this storm can't be ridden with the same or similar kind-of spirit. I fully appreciate that events on the ground are not at all similar, but sooner or later that light at the end of the tunnel will be spotted and it will get brighter.
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I think one of the key differences between capitalism and pathologic consumerism is as follows. Under "healthy" capitalism, producers produce goods that are bought by consumers. Producers profit and consumers have the freedom to purchase goods. This is good for producers and for consumers, as long as all consumers have equal access to the good - producers generate wealth and consumers benefit by having access to important, let's call them fundamental, goods. Under pathologic consumerism, what we can observe is the emergence of two separate classes - a wealthy class who have too few needs (i.e. insufficiently needy) and a poorer class that are overly needy as a result of having too little wealth. It almost sounds like socialism, but it's not. Capitalism should provide for real human needs, not excessive needs or, put another way, frivolous goods. One possible way to differentiate consumerism from capitalism then, is when the market for frivolous goods exceeds the market for essential goods in the presence of a substantial demographic that has insufficient access to fundamental goods. Equvalently, a priveleged subclass of economic agents begin to dictate what the "free market" provides, resulting in an asymmetric goods market that favours frivolous over core goods. EDIT: As an example, mortgages would be a fundamental good, securitized mortgages would be a frivolous good.
modified on Wednesday, March 4, 2009 3:54 AM
I just read a book that largely argued what you just said, that the problem today is that consumerism needs to create artificial wants to create markets, and the people with real needs, have no power to access that market.
Christian Graus Driven to the arms of OSX by Vista.
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Chris Austin wrote:
That is pretty broad. How would you define investment? Does it have to be in the market at large? Would you consider purchasing fixed income assets as investing? How about acquiring capitol and sitting on it to build equity outside of stocks and bonds?
I meant the traditional economist idea of investment measured as a function of interest rate and income. By savings I mean savings as measured by disposable income less expenditure. I admit it's a loose definition. When savings exceeds investment (in the above sense), then this is associated with economic downturns. There are multiple definitions of investment - economic, financial, real-estate, corporate, etc... I am referring to the economic definition that can be calculated using macroeconomic quantities. Since you raised the point, then under the current economic crisis, Joe the Worker who is ferretting away his savings is contributing to the immediate problem at the moment. Savings in an economy undergoing deflation worsens the problem.
Thanks for humoring me and my straw-man. I'd appreciate it if you indulged a few more elementary questions. Does contemporary macroeconomic theory place a measure of goodness on investing in liquid vs illiquid assets? Does it prefer equities over realized periodic returns?
73Zeppelin wrote:
Since you raised the point, then under the current economic crisis, Joe the Worker who is ferretting away his savings is contributing to the immediate problem at the moment. Savings in an economy undergoing deflation worsens the problem.
I guess to myself and other savers who are in a good position to ride out this recession because of our cash on hand this seems to be a bit of and Ivory Tower attitude toward the problem. And, it doesn't take much to see that companies that did save during the boom times are in a better long term position than those that failed to do so. Personally, I look at people who bought into the equities scheme and feel bad that it may set them back many years. What does classical macroeconomics have to say about considerable savings rates during good times? I suspose, I could use Intel as example to prove both points of view :). 1) They saved billions of dollars in the recent years and 2) have elected to use this time when they are running below capacity to upgrade and invest in their plants.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
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I just read a book that largely argued what you just said, that the problem today is that consumerism needs to create artificial wants to create markets, and the people with real needs, have no power to access that market.
Christian Graus Driven to the arms of OSX by Vista.
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Oakman wrote:
putting your money in a savings account, isn't hoarding
If that is for a rainy day then I suppose if it is a modest amount then that presumably would be fine. Not that the amount you could earn from it is worth very much considering what base rates are. But are those political animals following their own advice or is it a case of "do as I say but not as I do". Anyhow, during the early 1990's there was a fall in the value of houses, although this was accompanied by very much higher interest rates, people found themselves in negative equity but the majority stayed put and rode out the storm. And with government help (e.g. The Real Estate Rescue Plan), there is no reason to believe this storm can't be ridden with the same or similar kind-of spirit. I fully appreciate that events on the ground are not at all similar, but sooner or later that light at the end of the tunnel will be spotted and it will get brighter.
OT: I find this whole discussion entirely fun. It's one of the few ernest conversations we've had recently on this board where people have asked sincere and thoughtful questions.
Richard A. Abbott wrote:
If that is for a rainy day then I suppose if it is a modest amount then that presumably would be fine.
Does it have to be for a rainy day? I subscribe to the school of thought that one should save to make all purchases. As a real example, my wife and I want to build a new lani style patio on our home. Rather than borrow the money, we are saving a portion of our 'allowance' until we can pay cash for it. We did the same when we purchased the cars that we drive. In the end, to me anyway, it's not hoarding but living responsibly.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
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OT: I find this whole discussion entirely fun. It's one of the few ernest conversations we've had recently on this board where people have asked sincere and thoughtful questions.
Richard A. Abbott wrote:
If that is for a rainy day then I suppose if it is a modest amount then that presumably would be fine.
Does it have to be for a rainy day? I subscribe to the school of thought that one should save to make all purchases. As a real example, my wife and I want to build a new lani style patio on our home. Rather than borrow the money, we are saving a portion of our 'allowance' until we can pay cash for it. We did the same when we purchased the cars that we drive. In the end, to me anyway, it's not hoarding but living responsibly.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
Chris Austin wrote:
I find this whole discussion entirely fun
Likewise, and with Zep and Carson here, it is also informative. And not a bad word in sight. :-D
Chris Austin wrote:
Does it have to be for a rainy day?
No it doesn't. But that is an expression. See Here[^]. For example, your washing machine is just out of warranty, there is nothing wrong with it at the moment. However, as God made little green apples (another unfortunate expression), some day it is going to go wrong, and always when you most need it. Saving money for a rainy day will enable that washing machine to be repaired (or replaced) sooner rather than later.
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73Zeppelin wrote:
stocks AND houses. are all losing value.
Gold isn't. And, FWIW, housing isn't losing value everywhere, at least not at the same rate. Here in the U.S. bubble-markets like California, Florida, Arizona and some others in the northeast are contributing a very large percentage of the average declines in housing prices. Both of these factoids suggest to me, that when we deal with real goods we are not seeing a decline in value - except where it was artificially inflated. I don't think that most folks who want to hoard their wealth bury it in the back yard or hide it in their mattress. They buy gold or other unlikely-to-depreciate assets. Or, of course, they stick it in a Swiss bank. But that's obviously becoming less and less attractive as they cave to the taxman. The point I'm getting around to is that putting your money in a savings account, isn't hoarding, though an awful lot of the unibrowed politicans are starting to talk as if it is. It's just an investment that most people understand. Indeed, a savings account is just like a Neaderthal: simple and ugly.
73Zeppelin wrote:
He should therefore spend an amount that is within his budget and, along with government stimulus, the recovery should begin which will lead to an eventual increase in his assets and therefore to economic growth
So if you had a couple of hundred thou in gold bullion (sounds like a lot, doesn't it? How about we say 200 golden eagles (or gold maples for you) - would you trade it in for stocks, or start buying all kinds of consumer goods?
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
Oakman wrote:
The point I'm getting around to is that putting your money in a savings account, isn't hoarding, though an awful lot of the unibrowed politicans are starting to talk as if it is.
Really? Who have you heard starting down that road? I've stopped reading the paper or watching the news lately so I am sure I've missed it. OT. I forgot to followup with you on Variable Star. It was the fist book written by Spider Robinson that I had read and I have to say, Spider is one hell of a story teller. I failed to resist the urge to run out and get more of his books and disturb my book queue. I ended up reading Very Bad Deaths just after finishing Variable Star and found it a very fun story. Fourtantly, I was able to regain control and get back to the reading list. Now I am reading Anathem by Stephenson and enjoying it.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
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There's been plenty of comments lately that capitalism as an economic model is broken (naturally enough given the present state of the world's economy). However a recent comment by one economist set me thinking - as he stated, "capitalism is about the acquiring of capital". What this meant to me is that the present dominant economic model in the world is not actually capitalism, but consumerism. The two look very similar, but have fundamentally different objectives. If that's the case, then I'd actually agree that the present economic model (of consumerism) is broken. Following that the economic stimulus packages that promote spending (including those that advocate tax breaks) are nothing more than trying to reinflate a bubble that has already burst. Has anyone seen any good descriptions that distinguish between consumerism and capitalism, or that has seen sensible well-reasoned alternate arguments as to what the likely impacts of the "let's get them spending" ecomoronic stimulust packages will be, as opposed to current "just make things better" line. Please note I'm all for economic stimulus - studying the Great Depression makes you realise that doing nothing, doing too little or doing it too late are the most moronic ideas of all. And I realise I'm not going to change governmental policy on this one. Instead I just want to improve my understanding of what these attempts at economic stimilus will really result in.
I just love Koalas - they go great with Bacon.
Lee Humphries wrote:
studying the Great Depression makes you realise that doing nothing, doing too little or doing it too late are the most moronic ideas of all.
A study of the great depression would establish to a sane, unbiased mind that stimulus spending just does not work. Doing nothing at all in 1929, or later, would have completely prevented the great depression. The markets would have corrected themselves in their own way and things would have been fine within a year or two. Calvin Cooledge proved that during the '20s. As to consumerism, it is a natual product of capitalism. The only problem we have is that consumers believe themselves to be protected from harm by the government. If people who over consume were allowed to suffer the consequencies for their own ignorance, the problems of over-consumption would largely go away. All these problems point back at government, not at capitalism. Capitalism works just fine. It provides the greatest amount of wealth and security for the greatest number of people. And, in addition to that, works completely independently of the state. The state does not want you to believe that, and does everything it can to cripple capitalism and blame capitalism for it, but it is true.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
modified on Wednesday, March 4, 2009 5:29 PM
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Chris Austin wrote:
I find this whole discussion entirely fun
Likewise, and with Zep and Carson here, it is also informative. And not a bad word in sight. :-D
Chris Austin wrote:
Does it have to be for a rainy day?
No it doesn't. But that is an expression. See Here[^]. For example, your washing machine is just out of warranty, there is nothing wrong with it at the moment. However, as God made little green apples (another unfortunate expression), some day it is going to go wrong, and always when you most need it. Saving money for a rainy day will enable that washing machine to be repaired (or replaced) sooner rather than later.
Richard A. Abbott wrote:
No it doesn't. But that is an expression. See Here[^]. For example, your washing machine is just out of warranty, there is nothing wrong with it at the moment. However, as God made little green apples (another unfortunate expression), some day it is going to go wrong, and always when you most need it. Saving money for a rainy day will enable that washing machine to be repaired (or replaced) sooner rather than later.
Oh sure, I get where you are coming from and am familiar with the expression. I probably was unclear. What I meant to ask is the following: Is it okay, by your reckoning, to save for things beyond the rainy day i.e. purchases. Another real example is that my wife and I have a rainy day savings account that is entirely separated from our other accounts. But, in our day to day accounts we try to save for large purchases so that when the bill comes in we just pay it off and sleep well at night. In the porch example I gave earlier, we will end up saving more than what many people may consider a modest amount in order to make the purchase.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
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Richard A. Abbott wrote:
No it doesn't. But that is an expression. See Here[^]. For example, your washing machine is just out of warranty, there is nothing wrong with it at the moment. However, as God made little green apples (another unfortunate expression), some day it is going to go wrong, and always when you most need it. Saving money for a rainy day will enable that washing machine to be repaired (or replaced) sooner rather than later.
Oh sure, I get where you are coming from and am familiar with the expression. I probably was unclear. What I meant to ask is the following: Is it okay, by your reckoning, to save for things beyond the rainy day i.e. purchases. Another real example is that my wife and I have a rainy day savings account that is entirely separated from our other accounts. But, in our day to day accounts we try to save for large purchases so that when the bill comes in we just pay it off and sleep well at night. In the porch example I gave earlier, we will end up saving more than what many people may consider a modest amount in order to make the purchase.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
Personally, I prefer to save for something, I am not a fan of using credit for the sake of. Just recently (last month or so) I have purchased 2 x Toshiba Satellite L300-1AS Laptops and a Colour Laser printer. Paid cash for them, and also paid my quarterly gas and electric bills. Not much change from £1400 and no need whatsoever to use any of my guaranteed overdraft or credit cards nor to pull in any financial resources from other savings. I did not need to buy those laptops then, it could have waited, but I did get a good discount from their usual price (over £100 off each). So, yes, I'm all in favour of saving no matter how dark the clouds look on that horizon, and more so if very large expenditure is expected.
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Oakman wrote:
putting your money in a savings account, isn't hoarding
If that is for a rainy day then I suppose if it is a modest amount then that presumably would be fine. Not that the amount you could earn from it is worth very much considering what base rates are. But are those political animals following their own advice or is it a case of "do as I say but not as I do". Anyhow, during the early 1990's there was a fall in the value of houses, although this was accompanied by very much higher interest rates, people found themselves in negative equity but the majority stayed put and rode out the storm. And with government help (e.g. The Real Estate Rescue Plan), there is no reason to believe this storm can't be ridden with the same or similar kind-of spirit. I fully appreciate that events on the ground are not at all similar, but sooner or later that light at the end of the tunnel will be spotted and it will get brighter.
Richard A. Abbott wrote:
If that is for a rainy day then I suppose if it is a modest amount then that presumably would be fine.
Any amount should be. Money in a savings account is available to the bank to be invested. They do that either by loaning the money out or buying some instrument that pays them a better rate of interest than they're paying to the savings account. In any case, somewhere along the line, savings is loaned out to someone who uses it to purchase goods - something he can't afford to pay for out of a single paycheck. My point is, it gets spent. The no-necks in Congress seem to think that if I keep a few thousand in a savings account, the bank has that money downstairs in the vault and isn't passing it along. But, according to what I understand, that's what banks are for: using capital to fund worthwhile capital expenditures. Some people go to a bank as say, "I have some extra capital," how much will you pay me for the use of it? And some people come to the bank and say, "I want to fund this great idea, how much will you charge me for the use of your capital?" The problem has come about it seems to me is two-fold: A. Banks have been allowed to pretend they have ten times more capital that they actually have available. In some circles this is called leveraging. In others it is called lying through your teeth. And B. People have been allowed by banks to use their capital even though no-one in their right mind could think they were able ever to pay it back. In some circles this is called absolute idiocy; in Congress it is called expanding the opportunities for home ownership. Now since banks can count all of the loans they made as assets and they're loaning out money (and charging for the loan) at 10 times the rate they are taking it in (and paying to take it in) their balance sheets look great! Until someone stops paying on a loan - the banks of course, knew this might happen so they insured the loan against that contingency. As Zep pointed out, they probably did everything in their power to default the loan, because they insured it for (in some cases) up to sixty times it's value :wtf: But now a whole bunch of loans made to people who should never have gotten them are being defaulted on and when the banks go to the insurance companies (one, really, AIG) to collect their insurance, they discover that it has been leveraging, too - and it can't pay off on a tenth of what it has promised to hand out. What I have been trying to under
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Oakman wrote:
The point I'm getting around to is that putting your money in a savings account, isn't hoarding, though an awful lot of the unibrowed politicans are starting to talk as if it is.
Really? Who have you heard starting down that road? I've stopped reading the paper or watching the news lately so I am sure I've missed it. OT. I forgot to followup with you on Variable Star. It was the fist book written by Spider Robinson that I had read and I have to say, Spider is one hell of a story teller. I failed to resist the urge to run out and get more of his books and disturb my book queue. I ended up reading Very Bad Deaths just after finishing Variable Star and found it a very fun story. Fourtantly, I was able to regain control and get back to the reading list. Now I am reading Anathem by Stephenson and enjoying it.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
Chris Austin wrote:
Who have you heard starting down that road?
Are you sitting down? Barney Frank.
Chris Austin wrote:
It was the first book written by Spider Robinson that I had read and I have to say, Spider is one hell of a story teller.
My feeling is that he's gone down hill, in part because he's switched from short stories which are, I think, his natural millieu, to novels which pay much better. I recommend some of his early "Callahan" books and even stop by alt.callahans if you want to experience something quite fascinating. Recently I've been reading Ian Douglas - novels based on the idea that the Navy, not the Airforce is the natural service to control our space fleet and take the marines out there with them. The first in the series has the US fighting off an attack from Mexico which is backed by the UN (relocated to Geneva) and France which tries to take over the joint Russo-American Mars colony under the blue and white flag of the UN. Nothing deep there, but fun reading 'em and he gets the feelings of men in combat down pretty well.
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
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Richard A. Abbott wrote:
If that is for a rainy day then I suppose if it is a modest amount then that presumably would be fine.
Any amount should be. Money in a savings account is available to the bank to be invested. They do that either by loaning the money out or buying some instrument that pays them a better rate of interest than they're paying to the savings account. In any case, somewhere along the line, savings is loaned out to someone who uses it to purchase goods - something he can't afford to pay for out of a single paycheck. My point is, it gets spent. The no-necks in Congress seem to think that if I keep a few thousand in a savings account, the bank has that money downstairs in the vault and isn't passing it along. But, according to what I understand, that's what banks are for: using capital to fund worthwhile capital expenditures. Some people go to a bank as say, "I have some extra capital," how much will you pay me for the use of it? And some people come to the bank and say, "I want to fund this great idea, how much will you charge me for the use of your capital?" The problem has come about it seems to me is two-fold: A. Banks have been allowed to pretend they have ten times more capital that they actually have available. In some circles this is called leveraging. In others it is called lying through your teeth. And B. People have been allowed by banks to use their capital even though no-one in their right mind could think they were able ever to pay it back. In some circles this is called absolute idiocy; in Congress it is called expanding the opportunities for home ownership. Now since banks can count all of the loans they made as assets and they're loaning out money (and charging for the loan) at 10 times the rate they are taking it in (and paying to take it in) their balance sheets look great! Until someone stops paying on a loan - the banks of course, knew this might happen so they insured the loan against that contingency. As Zep pointed out, they probably did everything in their power to default the loan, because they insured it for (in some cases) up to sixty times it's value :wtf: But now a whole bunch of loans made to people who should never have gotten them are being defaulted on and when the banks go to the insurance companies (one, really, AIG) to collect their insurance, they discover that it has been leveraging, too - and it can't pay off on a tenth of what it has promised to hand out. What I have been trying to under
This link is to a powerpoint presentation. Have a look at it, it is informative. Why we need a new Economics[^]. I can easily understand why Obama and Zep agree that government fiscal measures are required. But, in the last few months huge sums of money has been delivered or promised. The banks STILL have not taken the hint that they must start doing their job by lending it out. There are small and medium sized firms around the world who are crying out for this ability to borrow. If banks do not start doing their job pretty soon, those essential companies are at risk of failure, and those companies are the silent heroes (the life blood of a nation) insofar that without them, capitalism dies a quick death and no amount of money for General Motors, Sony... will make a blind bit of difference. This begs a question, that if the banks refuse to lend, why should the ordinary citizen try to help shorten this financial nightmare by spend their savings. Confidence is at a low point, and I'm not sure where to find, or look, for any silver linings. I commented to Zep the other day that the current system is perhaps irrevocably broken and a new system should be researched but Zep essentially disagreed that view, but, alas I am not the only person voicing that view.
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Chris Austin wrote:
Who have you heard starting down that road?
Are you sitting down? Barney Frank.
Chris Austin wrote:
It was the first book written by Spider Robinson that I had read and I have to say, Spider is one hell of a story teller.
My feeling is that he's gone down hill, in part because he's switched from short stories which are, I think, his natural millieu, to novels which pay much better. I recommend some of his early "Callahan" books and even stop by alt.callahans if you want to experience something quite fascinating. Recently I've been reading Ian Douglas - novels based on the idea that the Navy, not the Airforce is the natural service to control our space fleet and take the marines out there with them. The first in the series has the US fighting off an attack from Mexico which is backed by the UN (relocated to Geneva) and France which tries to take over the joint Russo-American Mars colony under the blue and white flag of the UN. Nothing deep there, but fun reading 'em and he gets the feelings of men in combat down pretty well.
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
Oakman wrote:
Are you sitting down? Barney Frank.
sigh. I knew he had been on the banks for hoarding, now he is hounding people who are trying to be sensible?
Oakman wrote:
I recommend some of his early "Callahan" books and even stop by alt.callahans if you want to experience something quite fascinating.
I've heard that before, I'll have to check it out.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
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John Carson wrote:
By convention, profit only refers to the income of firms.
I believe you meant to say the difference from the income and expense of firms, didn't you? We have a very good word for income and that word is income. ;)
John Carson wrote:
then you would need to treat those incomes consistently.
An excellent point. And one you are right to bring up. Be that as it may, I was actually trying to define savings as a method of accumulating capital - which, it seemed to me was the definition of profit that was being offered. I have no trouble accepting someone else's definitions of terms, as long as those definitions don't change as the discussion progresses.
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
Oakman wrote:
I believe you meant to say the difference from the income and expense of firms, didn't you? We have a very good word for income and that word is income.
Alas, accountants have created confusion. They use income with two meanings: revenue and profit. For economists, a firm's income generally is the same thing as its profit. This is consistent with national income accounting, whereby the share of firms in national income is given by their profit, not their revenue.
Oakman wrote:
I was actually trying to define savings as a method of accumulating capital - which, it seemed to me was the definition of profit that was being offered.
It wasn't the definition of profit being offered by me. To quote myself: "That profit may in principle be used either for capital accumulation or for capitalist consumption." If your point is that "workers" may save, thereby accumulate capital and thereby receive a return on that capital, making them "capitalists" in some sense, then I agree.
John Carson
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This link is to a powerpoint presentation. Have a look at it, it is informative. Why we need a new Economics[^]. I can easily understand why Obama and Zep agree that government fiscal measures are required. But, in the last few months huge sums of money has been delivered or promised. The banks STILL have not taken the hint that they must start doing their job by lending it out. There are small and medium sized firms around the world who are crying out for this ability to borrow. If banks do not start doing their job pretty soon, those essential companies are at risk of failure, and those companies are the silent heroes (the life blood of a nation) insofar that without them, capitalism dies a quick death and no amount of money for General Motors, Sony... will make a blind bit of difference. This begs a question, that if the banks refuse to lend, why should the ordinary citizen try to help shorten this financial nightmare by spend their savings. Confidence is at a low point, and I'm not sure where to find, or look, for any silver linings. I commented to Zep the other day that the current system is perhaps irrevocably broken and a new system should be researched but Zep essentially disagreed that view, but, alas I am not the only person voicing that view.
Richard A. Abbott wrote:
Have a look at it, it is informative
I looked for awhile, but even though I have a very understanding boss, I don't think I should spend as long as that takes at one sitting. I'll look at it more later.
Richard A. Abbott wrote:
The banks STILL have not taken the hint that they must start doing their job by lending it out.
In all honesty, I wouldn't lend out a lot of money right now either. The banks got into trouble by making stupidly bad loans. Some really respected people have seen their reputations and their careers go down the toilet for giving money to people who were not credit worthy. Now, banks are being damned because they don't want to loan money to people who, because of the problems with the economy, cannot be considered credit worthy. They will "do their job," I believe. If someone can put down 30% on a house, he'll be able to get a mortage from just about any bank - at very favorable rates. If you want to buy a new car, you can still do so if you have a decent credit score, and/or if you have a nice fat down payment.
Richard A. Abbott wrote:
I'm not sure where to find, or look, for any silver linings.
Me, either. It's easy to identify the problems, with only a little thought. It's much harder to have faith in the tried and true economic theories that propose that doing A and B guarantees C. They say that the mistake generals make over and over again is that set up their defenses to protect themselves against the tactics the enemy used in the last war. (As you probably know, the Maginot Line was supposed to prove an insurmountable obstacle to Germany at the beginning of WWII. They didn't pause for even a day.) I think that I am beginning to detect a similar shortsightedness in those who propose solutions for the troubles. Indeed, a great deal of time is spent arguing about whether the New Deal helped or hurt and that predates the Maginot Line by years!
Richard A. Abbott wrote:
the current system is perhaps irrevocably broken and a new system should be researched
I sometimes fear that I will begin to remind people of fat_boy, with a bee in my bonnet about the devaluing of our currencies, but it appears to me that our modern-day problems are triggered by the ending of the Breton Woods agreement in the late sixties and early 7