Wall Street is weird (big surprise?)
Some years ago, a company called Chrysler Corporation was valued at under $4 per share. The highly paid analysts didn’t think much of its future, and common wisdom was that its lineup of aging cars and unpopular trucks would end up slowly disappearing.
At that time, I had a copy of the press book for the LH series, and thought the stock would skyrocket. I didn’t have any money to spend then, but the stock did soar. First, the New York Times had to print a huge feature on the upcoming cars and how they would revolutionize big cars. Then the stock shot up. Those wealthy analysts who were paid to know the depths of the industry apparently had missed the upcoming Intrepid - though I, a humble writer of the odd truck review for Army-Navy Store and Outdoor Merchandiser magazine, knew about it.
Then of course there were the perennial “Apple will declare bankruptcy” articles, culminating in Michael Dell’s comment that Apple would best serve its shareholders by liquidating. Okay, we had some rough times until the Second Coming of Jobs, but here’s a little clip from today’s edition of the excellent on-line publication Macintouch:
[Apple] posted revenue of $7.46 billion and net quarterly profit of $1.07 billion, or $1.19 per diluted share. … International sales accounted for 42 percent of the quarter’s revenue….
Apple shipped 2,496,000 Macintosh computers during the quarter, representing 41 percent unit growth and 43 percent revenue growth over the year-ago quarter. … “We’re proud to report the best June quarter for both revenue and earnings in Apple’s history,” said Steve Jobs, Apple’s CEO.
Oh, and the analysts? Until the iPod set records, most of them were down on Apple, too. Apple was soon to declare bankruptcy for years. The same story was run about Ford, General Motors, and Chrysler, even now that Chrysler is owned by some of the richest men in the world, men who I suspect would not hesitate to bankrupt tens of thousands of people at once, but who I also suspect would prefer not to publicly admit making a huge mistake. Not that they did — I believe they knew what they were getting, and they know there’s huge profits in there somewhere, someday.
Most recently, General Motors was down in the gutter. One analyst dropped expected share prices from $27 to $7 in one day. Do these guys just make things up? The result was GM’s share prices dropping rather quickly. None seem to care that GM is investing in its future across the world, rationalizing its engineering to avoid duplication and bolstering its international presence. GM is working hard to get into emerging markets in India, China, and Russia, and I suspect they’ll succeed. The company is still turning around, perhaps despite its CEO, and probably thanks mainly to Bob Lutz.
And what of Rick Wagoner? Well, the market showed no response when he took his full 2007 compensation, which as I recall was around $24 million. It did, however, shoot the stock up by an amazing $6 a share - going back over the $10 line - when Wagoner announced that he’d slash lots of other people’s salaries and jobs. Oh, the analysts love it when you slash. Their favorite movie must have been Friday the 13th or the Texas Chainsaw Massacre. Slash and burn, they never learn. Back in the 1990s, GM slashed jobs too; while Chrysler invested heavily. You know what their pick was - but you also know who won the huge profits a few years later.
One of the scary news items today was the Federal bailout of Fannie Mae and Freddie Mac. The same people that objected to - and still object to - the government’s loan guarantees to Chrysler, which saved at least 100,000 American jobs and was in some ways the least the government could do after Chrysler saved billions of dollars in World War II, refusing to profit from patriotism - these same people are bidding up the stock market and approving of the bailouts. They still don’t want GM or Ford to be bailed out; they love to predict bankruptcy for what they see as the rusty relics of years past. But given them some paper-pushers who made a bunch of bad bets, and they’re all for spending a few billion taxpayer dollars. After all, it’s not much more than a little slice of Iraq war, right? Now, Obama’s ideas about putting $5 billion towards Detroit automakers to help them survive their own bad decisions… that’s just plain wrong. But $25 billion or so towards a bunch of bankers (or up to $1 trillion, depending on the source), now, that’s a great idea. It might save, um, actually, nobody has told us why we’re doing it, exactly. Apparently we need a cheap source of junk mortgages.
Congress is going ahead, full steam, with rescuing Fannie Mae and Freddie Mac, and the White House loves the plan. But then, Congress is probably relying on the analysts’ advice. Perhaps we need a new Congress and White House that have more perspective - and don’t assume that financial institutions deserve our hard-earned dollars while ordinary Americans (or big automakers that hire ordinary Americans) should be subject to the free market.
We need changes to our system - now. We’ve been ignoring reality too long, in Washingon, Detroit, and New York - and in all those places where people keep their eyes shut to reality and listen to the siren songs of the “experts” and “populists.”
Interesting article. I, like yourself, didn’t have the cash to invest in Chrysler when the stock bottomed out…total bummer!
The thing that really ticks me off–putting it mildly–is that the same bunch of arrogant individuals that created the very mess that we’re facing are now telling us the solution. Typical government as usual.
Here’s the unadulterated facts:
–We don’t have a free market economy in this country!
–Our government can’t even follow the basic blueprint of it’s operational procedures; something called The United States Constitution!
Most people don’t understand the foundational principles or role of our government, because if they did, there would rioting and protesting over the unconstitutionality of these “bailouts”. Instead, everyone is arguing over which private entity gets access to the government’s coffers and who doesn’t. The net outcome–no matter which way the wind blows–is an ever increasing burden on the backs of “We the people”, aka US taxpayers.
There’s a lot of truth in the old saying, “People get the government that they deserve”.
Wasn’t it the non partisan Pew Research Group, back in the ealry ’70s that took three chimpanzee monkeys and taught them to accurately throw darts. Once the behavior was learned, the chimps were given the Wall Street Journal stock market page as targets. Each chimp got three darts. Once a week, they shot their three darts, placing them on the stock market page. The stocks listed closest to the darts were analyzed, like purchases, over the course of a week. As a control, the group also took advice from three different stock brokerages for three different stocks from each. Over the course of a 26 week regimen, the chimps did marginally better! Which is to say that Dave has again made a spot on observation. Buying stock is as good as a crap shoot, and anyone with a modem and a keyboard can suddenly become an influential news prognosticator of a company’s future.
The proposed Federal “bail out” does not adequately address the real core of the current crisis, and that is over extended home owners. Yes, people in some cases didn’t make the right choice, HOWEVER, it was sold to them because the Federal Government was exerting huge pressure on loan issuers to “go ahead, plenty of money, no worries.” Which is just now reaching down into the criminal investigations on places like Country Wide Homes, which issued hundreds of loans, when the information on the applications CLEARLY showed the people could not afford, or were shaky, in some cases, inadequate income were simply ignored! That, besides being an ugly immoral situation, it is clearly against the law! As this bail out stands, it is going to award billions, OF YOUR MONEY, to places that DO NOT DESERVE to get it, such as Country Wide Loans! Freddie Mac and Fannie Mae are government loans mechanisms, and the holder of over a Trillion (One Thousand Billion!) in mortgages that probably would have never gotten past a “regular” mortgage overview. It bothers me greatly that I have NOT seen even a rudimentary offer of an analysis of this bail out bill. It is just like a greased pig as it heads down a tube through the slippery slope of Congress. It is somewhat like a shark feeding frenzy, and the receivers, along with the issuers are just slobbering to get there teeth into all that money. What are they thinking? That the United States can’t go bankrupt? That the money will ALWAYS be there, just open the spigot a little more? Maybe, IF we weren’t tangled up in an illegal conceived war, and the current administration cared about the value of the dollar, and wasn’t quietly encouraging the continued speculation of the price of a barrel of oil. The actual state of our economy is tettering on the edge of a depression. So far, all we have heard is smoke, mirrors, lies, sex and video tape with a Federal Reserve that seeks MORE power over your already thin money. If the present situation doesn’t really stabilize, then when this DEPRESSION hits, it will sink the whole world, into far greater depths than can be imagined over what occurred in 1929!
Excellent analysis by you all. In one generation we’ve went from men like Harry Truman and KT Keller to men and women with loyalties to nothing other than themselves and their clique of friends.
In the past, CEO’s and managers spent their whole lives at a company, and that company meant something to them. Now, it’s all about short term stock price, and everything, including the long term health of the company, the employees’ lives, are sacrified on that altar. Nothing is sacred. Everything has a price tag. It’s the same with our so-called policial leaders. Leaders like Truman, or Ike, or JFK, really cared about their nation. Some things, like our honor, our security, weren’t for sale. Now, everything has a price tag if it suits the globalist muckety mucks. Obama, ironically, is taking a classicly conservative view with his auto industry plan. As a conservative, rather than a Bush free-trade kool-aid drinker, I commend him. The auto industry is vital to our national prestige and security. If we had a rational government, the Chrysler “merger” with Daimler–where a strong American compmany can be taken over by fraud and destroyed–would never have been allowed.
All the regs enacted after 1929, limiting buying stock on margin and other dangerous practices, have been eliminated by the Bush admin. We are indeed ripe for another crisis. Bush has broken our currency, spending a trillion dollars in Iraq. If we’re not careful, we will be like South America in the 70’s with worthless currency.
I beleive in free trade, but government has to ensure it is in fact free, that the people are protected, that the national interest is protected. China sure understands that, Europe sure understands that. It can’t be totally free, otherwise we would have child labor, poison in all our foods, and all our industries would be destroyed by rapacious foreign competitors that hold to no standards whatsoever, all our land and property would be owned by foreign interests. No legitimate government will allow those extremes to take place, yet our current administration is close to it.
I don’t know what the answer is. Where is the outrage? The regular media is silent, so-called Republicans are in lock step with the globalist-free-trade crowd (either like blind lemmings headed for a cliff, or lining their pockets). The people are more concerned with the latest Bat Man movie or American Idol or “i phone.” The unions are useless. Other than Obama, the Democrats are too busy worrying about buying organic coffee beans for the Convention to focus on a serious issue.
I’m impressed and in full agreement. Not that I’m against organic coffee beans… but the Democrats allowed the “felony is OK” telecom bill to pass, and appear to be about to pass through the insane Freddie Mac/Fannie Mae bailouts. (I have yet to hear an argument WHY we should be bailing them out.)
I will say one thing, though - even in Keller’s time, plenty of CEOs were anti-patriotic sleaze out to profiteer all they could get. Truman helped keep them at bay before he became president. Henry Ford was no patriot; our main enemy in that war, after all, was a man who held Ford in the highest esteem, awarded him his party’s highest honor, and credited Ford with inspiring his solution to the world’s problem. World War I was a hideous example of profiteering and corporate hoarding of war materials - as sharp a contrast to World War II as the current war (or is it a police action? I don’t recall anyone declaring war.)
Thank you ChryCo Fan and kudos to DaveAdmin as well. Mentioning KT Keller and Harry Truman harks back to probably the greatest patriotic period of the USA. Men who stood for something, and invested in their work, company, and stood by their Country. They were not for sale, nor would they buy into these so called “bail outs” just to cover the political as@ pects of those who were the enablers of the current economic mess to begin with! Imagine if you will, that the mere mention of Harry Truman in 1943 would shake many corporate offices that were engaged in making war materials. The reason is that Mr. Truman already had the answers to the pointed questions he and his Senate committee would ask. KT Keller, who represented the greatest quality in a huge corporation, not only earned the deep abiding respect of Mr. Truman, actually sent detailed reports TO Mr. Truman about what Chrysler was doing, and as a result, in ALL the war efforts of the mighty Chrysler Corporation during World War II, SAVED MONEY, and then SENT IT BACK to the treasury!! Where do you recall such an action being done today? Even if it did occur, by reviewing this administrations policies, the money would end up in some slush fund, reported as being “spent”, at least it seems that way to me. The current bail out, as reported today by the TRIBUNE NETWORK is offering UNLIMITED funds to both Freddie Mac and Fannie Mae. Are you kidding me? UNLIMITED?? Who is paying for this little gem? What constraints then do either of the largest mortgage holders have in issuing even MORE lousy loans? Or re-mortgaging those loans that should have never been issued in the first place. The only stop measure reported was that the Federal Reserve Chairman could affect the “SALARIES” of both entities at his pleasure. Huh?? Is this the watch dog we tax payers truly need? Who is watching the Fed? Aren’t Freddie and Fannie BOTH government entities? Who is really concerned with the public interest IF, and no doubt WHEN, Freddie and Fannie start their voracious use of this UNLIMITED funding. To what end is there any control in place? From this side, I see NONE! It is frightening if you stop a few seconds to think this through. An open ended black hole, with unlimited funding, straight from the Treasury. Throw your tax dollars in, and NEVER see where they go, or to WHOM they go. Neat stuff. I think I will form a mortgage lending entity………. Clearly an open invitation for depression. Refinance thousands of loans that are junk. So they already can’t pay, but NOW, they don’t have to worry, because the TAX PAYERS are going to pay. Sounds tremendously poorly thought through, as written by those desperate institutions like Country Wide Loans that sought to make millions with no respect for convention, or people they affected. The Criminal Investigations have been withheld far too long. And DaveAdmin is absolutely correct. What WAR? The only person I ever heard declare it a “war” was in the speech G W Bush made to Congress right after 9-11. To make WAR you need a congressional declaration of it. The last time this occurred was on December 8, 1941. The Constitution allows the President as the Commander in Chief of the entire Military Armed Forces. Somehow, I seriously doubt that the founding members of our Republic (we are NOT a democracy) had unlimited war powers to be solely vested in the President alone. Yet, in Korea, Viet Nam, Kuwait, and now Iraq we find ourselves hamstrung, because we did not enter to WIN, outright, and are using the military to seek a POLITICAL solution. In my view, once you unholster your weapons, the only action becomes the need to use it to knock out the other guy, permanently.
I’ve long been of the opinion that we shouldn’t be subsidizing mortgages for anyone but veterans. I agree it’s wonderful to have your own house, but it’s artificially pushed people out of energy (and materials) efficient apartments… created massive urban sprawl… destroyed mass transit economics… resulted in tremendous use of heating oil, electricity, and gas… taken untold square miles of farmland and forest out and replaced them with concrete and grass lawns that are maintained by wasteful gas-powered edgers and mowers and tons of fertilizer and weed killer whose runoff ends up in the water supply… I’ve nothing against the freedom to own a house, but I don’t see why my tax dollars should be subsidizing it. After World War II, it made sense - we had to house our veterans and there was precious little living space for them. Putting them into slums would have been shameful. But it ended up with a life of its own, and those who didn’t have the cash for a house ended up with “easy credit.”
‘Course I also think that realtors should be required to include taxes when they provide that “low monthly cost of ownership.”
Reasonable people can disagree on alot of the issues of finance, taxes, war and peace. But there should be a vigourous debate before we spend billlions of tax dollars to bail out these entities. All we hear is “they’re too big to fail.” If there is a valid reason, it should be explained to the American people.
We have whole PALLETS of cash coming off aircraft and disappearing in Iraq. Senators steering defense contracts to their husband’s firms. Haliburton getting $17 per meal for soldiers, where privatizing food services is supposed to SAVE money. A war that’s gone on for five years–longer than World War two, where 350 billion a month is being sucked out of our treasury. Senators getting rich with land deals, congressmen with cash in freezers. Both parties with their hands in the till, the people too drugged by ritalin, too distracted by entertainment to take their country back. The same news stories on every channel. Politicians on both sides are empty shells–seemingly running as candidates for high school class president than the leader of the free world. Frightening. I’m afraid the corruption is worse than any time in our past, even during the railroad barron days of Pres. Grant.
It’s very frightening what has happened here, in Canada, in Britain. We have lsot common sense, we are obsessed with things that mean nothing, while we ignore the things that will destroy our way of life. People need to wake up.
The worst attitude is the “if we leave, we lose” — which McCain said yesterday, in essence. He claimed we’ve won the war, we are winning the war, and we will win the war - and then claimed that Obama, by planned withdrawal of most troops from Iraq and handing over the reins to the government that’s asked us to leave, would lose the war because he has no integrity and would sacrifice the war to the election (two fallacies there - ending the war automatically loses it, and anyone who wants to end the war is just posturing.) Y’know, I used to respect and support McCain, too, but since he started running for this election (around four years ago), he’s been throwing mud and making all sorts of irrational statements. I don’t agree with a lot of Obama’s talk either but at least he seems to be trying to stay above the sleaze.
We are indeed in a new gilded age, but the sheer size of government, lack of serious newspaper reporting, and widespread apathy do seem to be making it worse.
What’s going on in Canada? Am I missing something?
Buying a home once required putting 20% down. People had to work many years to afford to buy, the banks made sure the borrower could afford the loan. It encouraged responsible borrowing. That went out the window in the last few years and is a huge part of this problem.
It was Pres. Bush that advocated for everyone and his brother owning his own home. Irregardless of whether one could afford the home, or would work towards affording it, the policy seemed to promote the American dream of homeownership as a RIGHT, rather than something earned.
Congress voted to authorize the military action, and have continued to fund it–even the Democratically controlled Congress. That is a de facto declaration of war. Maybe that is convenient to keep it at arm’s length, out of sight, out of mind for most Americans who go on with daily life. Maybe it’s a way to hide resposibility. We haven’t been asked to make the sacrficies demanded in past conflicts, we aren’t reminded every day why we fight, what’s at stake. Perhaps if we were, more attention would be brought to bear on why this has lasted so long, why it took so long to formulate an effective counter-insurgency strategy. If the American people were alerted to the fact this is a real war, where–ultimately–our nation’s survival is at stake (given the stated goals of our real enemies, given what history teaches as the result of failed and bankruptingly expensive wars, namely violent revolutions–1789, 1905, 1917) they would come to demand better leadership, leaders committed to winning and ending the corruption.
If Obama can orchestrate a withdrawal, with at least some semblance of stability in Iraq, he will have “won”. I agree with your point. McCain’s statements are rather inartful. I think he means Obama would withdraw too quick, and thus destabilize Iraq. We ahve to leave at some point and that can’t automatically be equated with defeat.
My own belief is that both sides have created a huge pork barrel which is bankrupting us. Bush was not the first to proclaim that everyone should own their own home; but his family certainly benefitted from deregulation AND from expensive government bailouts.
Now, as for me… I do believe there is a free market only as long as government enforces one, and also that government is needed for certain key services that nobody else can provide. In those beliefs I can have lots of arguments with some friends from these forums. OTOH I also wonder why, with massive deficits, we’re spending money on operas, art exhibits, etc. at the government level… or various government services from ag to mining for private companies (including foreign companies)… etc. And why exactly are we still paying (through tax breaks) oil companies to explore for oil without demanding a cut when they find a gusher?
This is all pretty far from the original weblog.
“inartful”? No, quite artful in the way they imply that Obama is a sleaze who is selling out his country to win an election. Only when you analyze the comments do the logical problems become evident, and not many people do logic analysis.
In Canada, sad to say, the same decline of national culture, same paralysis of political correctness, same lack of vision in leaders, and empty posturing that is afflicting the entire Western world.
I don’t disagree about logic. That may be a lost art (in politics anyway).
Now I am beginning to recognize what you have been driving at, in your skillful wording of what constitutes a “free market.” Without the government controls, we would be back to the likes of Rockefeller, Vanderbilt, Esso, and the Railroads. It also depends on how the controls are interpreted and then applied. The big oil situation has been festering since the beginning of the 20th Century, just getting bigger all the time. A prime example of how big money talks, and those without gasoline walks! Even to the detriment of the country that has allowed them to grow so big. They fail or just do not care, that YES, this economy is finite, and thanks to G W Bush, has been bankrupted. The next step is total collapse. It can be closer than we think.
I recommend Adam Smith’s “The Wealth of Nations.” Smith foresaw certain problems such as the problem of how you deal with environmental issues - the problem of the commons.
We’re on the same page.
Unfortunately many who style themselves as conservatives hold corporations up above humans. I recall many of the neocons I used to hang out with pointing out repeatedly that the law considers a corporation to be a person; as such corporations have all of our rights (but can’t be jailed). From there, they jumped to the conclusion that corporations had all the civil rights of people.
When you talk about industry, it’s interesting, because you remind me that our nation’s founders shared few things in common, other than a belief that the United States needed a vibrant industrial base in order to maintain its security and independence. That belief has been lost and we are now thoroughly dependent on other nations - rationalizing this dependence as a belief in the “free market.”
The term “free market” is like “family values” amorphous in nature. It can be interpreted as “no rules” — as the White House has since 1980, including with exceptions Bush Classic and Clinton — or it can be interpreted as “a competitive marketplace.” There is no real competition with subsidies, whether they be unequal laws (allowing slave and child labor in one place but not another) and no real competition when there is highly limited ownership. All taught in Economics 101 but many people forget the part where the professor talked about “assuming educated customers, adequate numbers of suppliers, full information, interchangeable commodities…(etc.)”
Family values… that’s another blog entry ;)
In a sense then, allowing “lawlessness” under the guise of “business” whereby people mean absolutely nothing, EXCEPT to be cogs in the wheel, when necessary. Lies, sex, video tap, drugs, and “rock and roll.” As long as the human doesn’t fail, his sole reward is some sort of pay, maybe some benefits that can easily be denied. “We’re sorry that you injured yourself doing our job however you didn’t sign the bottom of the 12th page of the 43 pages of explanations of your rights, benefits, and pay plan, so sorry, you’re OUT!” Besides other things all done in the name of profit, by these “living” corporations. Which if you hide behind the law, then you ought to be subject to the law. Can’t arrest a corporation? Hmmm. Well, why not? Stop it in it’s tracks. Because the money is sweet, and the politicos we have lack guts and leadership. Just take a peek at the stuff happening in Mexico, China, Taiwan, Bangladesh, and other “third world” places where giant corporations do business. Getting anything done with the ponderous, overweight, bloated, self interested, lackadaisical, buy 20 minutes with a Senator for $5,000, so called “Government” is a joke. Lack of interest on the part of voters has allowed YEARS of neglect to the point, that citizens are not the focus of government anymore. Government, and the continued existence of bigger and bigger, as more useless and more useless regulatory blockages prevent anyone from getting anything. Time for a 5 year moratorium, go back and clean up the mess we have, get rid of what is NOT focused on people, and put a watch dog citizen controlled entity in charge of the watch dogs at all levels.
When I stated that we don’t have a free market economy in this country, I meant it in the sense that politicians like to throw those words around. As Dave–post #16– points out, “free market” is an amorphous phrase that can be interpreted different ways.
We have a mixed economy comprised of capitalism and central planning. Instead of heading in the direction of pure capitalism, we seem to be heading toward more central planning consistent with a welfare state economy. Our government seems to think micromanaging through the Fed and congress is better than letting the market work things out.
Some folks think corporations are the root of all evil and can run rip shod with zero accountability. When government does the job it is beholden to, corporate misconduct does have consequences, Enron a case in point.
I don’t like seeing American jobs and businesses going to other countries, but you really can’t blame corporations for that, the blame has to be put on our elected representatives. The US has the 2nd highest corporate income tax rate in the world, not a very friendly climate for domestic business.
I can’t support either candidate, but when I listen to some of Obama’s proposals–like raising capital gains to the >20% level and soaking the wealthy with higher taxes–I think his understanding of economics is as deficient as McCain’s. Both tactics have been used in the past with dismal results. Currently, our country is technically bankrupt and facing the largest deficit ever; now’s not the time to resurrect past mistakes.
Enron is a lousy case given how few people ended up being punished for their misdeeds, and the fact that it was allowed to degrade despite attempts by whistleblowers to stop it before the fatal end.
Why should capital gains be taxed at a minimal level, while my actual wages are taxed at a high level? Why should people who make money by playing with paper pay less tax than those who do work with their hands? This isn’t soaking the rich, it’s restoring the tax system to where it was 20 years ago.
The main problem the US automakers had was our LACK of socialism - that is, lack of free-for-corporations health care for employees.
“We have a mixed economy comprised of capitalism and central planning.” I don’t see any central planning, and don’t know where you got that idea, unless you’re talking about
We tried pure capitalism. It stunk, to put it mildly. We had companies shooting workers with private armies; making their own money that was useless anywhere else; and people with full time jobs starving and homeless because of the balance of power. We also had railroads and other businesses colluding to create monopolies and raise prices. In short, we had small numbers of people holding the rest of the country hostage, as well as regular recessions and depressions. I’m not ready to move back to that.
Those who fail to learn from history are condemned to repeat it.
That history repeats itself is my line. I concur. Pure capitalism has failed. Just look around. Time for some to think about doing what is right FOR THE PEOPLE. Socialism? So, what is wrong with a little socialism, some income distribution, a far fairer tax system, an increase in the SOCIAL SECURITY allotments, bending to the care of the needy, where the system is at the behest of the person, rather than the will of the government? Something wrong with reverence of the old? The “America For Sale” syndrome recently endorsed by an ICON of America, Anheuser-Busch to In-Bev, smacks of the so called “merger of equals.” The same applies to Miller Brewing Company, which sold out to another out of country brewer. For just a few instances. I don’t use beer very much, however, I think I will stick to a different more domestic brand for awhile. It isn’t that this country doesn’t have the money. The down and dirty underside is that Government lies to its citizens all the time. The Social Security Administration, has NEVER been broke, and has never come CLOSE to being broke. FDR created it, supposedly, to keep people from going completely into a poor house in the depression era of the 1930s. In reality, it was the Federal Gov’ts little honey pot, with millions pouring in, with a far lesser amount going out. Last year, the SSA returned 2.2 BILLION surplus into Treasury Bonds. Essentially selling them to itself! Imagine that! Why do we, as the electorate, allow this to occur. Oh, BTW, other years, going back to it’s inception have all done the same thing. It was just sort of convenient, when you wanted to build a couple extra say, aircraft carriers, or develop a new form of war plane, or build some pork barrel project, like Alaska’s “bridge to nowhere,” you could just dip into the Treasury Bonds, and viola, there was all this cash. That way, no one could say you were deep tilling the Social Security Administration. Cute. So, I contend that a “lot” more Social wouldn’t hurt this fat, bloated, overweight, lackadaisical, all focused on itself, bureaucratic irresponsible, unaccountable, deadlocked, cost intensive without benefit government any at all. While the citizens, the money payers might find a little faith restored in it. That might involve leadership though, and THAT sure isn’t out there.
I don’t think Enron is a “lousy” example–perhaps less than stellar–but the point I was trying to get across is that corporations are not completely insulated and enjoy impunity. This is especially true if government performed one of the few Constitutionally mandated jobs entrusted to it–namely, Amendment 14, Section 1–known as the equal protection clause. This is where anti-trust, child labor, and other market-specific laws originated. It is also why these “bailouts” are unconstitutional!
In my view, the problem with our current government and socialist economies is the inefficiency and inequality that is brought into markets and society. Why do you think China and Russia have moved toward a capitalist economy? Corporations are more efficient, innovative, and can economize better than central planning; because they specialize and focus on a narrow range of product(s) and/or service(s). The market acts as an equalizer if government only plays referee, instead of manager.
“Why should capital gains be taxed at a minimal level, while my actual wages are taxed at a high level?”
Looking at this relatively, they shouldn’t, in my opinion. I would prefer to see zero taxes on personal income or a flat tax. This could only happen if government was downsized to the founders’ original blueprint. What’s the chance of that happening?
“Why should people who make money by playing with paper pay less tax than those who do work with their hands?”
I think you’re eluding to wealth redistribution. Playing with money is nothing more than gambling and it usually results in a net loss. People that work and invest in financial sectors still accept risk, but hopefully through education and training, the risk is minimized to create a net profit. Certainly, if anyone has money entrusted to banks, mutual funds, IRAs, pension funds, etc.; they don’t have expectations of paper being played with!
“I don’t see any central planning, and don’t know where you got that idea, unless you’re talking about…”
In economic speak, central planning is a method to allocate resources by command. Examples: Our military, postal rates, the FED, Social Security, Medicare/Medicaid, government bail-outs of private industry…to name a few. This leads into this statement you made: “We tried pure capitalism. It stunk, to put it mildly.” Neither the US, nor any country, has practiced “pure” capitalism–refer to first sentence.
I sense you’re frustration, and you have the compassion of many others, including myself. I think we can all agree that there is an uneasiness and stench to the atmosphere in our country right now. Which path leads to economic and social nirvana? I don’t know, but I will hedge my bets on the side of capitalism instead of socialism.
I am optimistic over the awareness and citizen mobilization that this election cycle has facilitated. I agree with the statement: “Those who fail to learn from history are condemned to repeat it.” I also love this historical quote by Thomas Jefferson: “That government is best which governs least”
Enron, it is clear, was the tip of the iceberg. Way too much gone before far too little was done. The lack of morals along with a mind set that deliberately seeks to fleece the public, either in government or corporate think is the norm. Politics is a dirty game. Business that engages politicians is also a dirty business. Unfortunately, because of the politics, you can’t tell who is who even IF you have a program, a tutor, several watch dog committees, and an insider that knows how things really work! Hollering “reform” is a slogan. How do you instill honesty, truth, justice, and the “real” American way in humans that wouldn’t know any of it if it came up to them and slapped their collective faces? Set up a reform committee automatically nets you politicians that are angling their way into steering that group into meaningless mires of crap that stick to everything but cover up the real problems. If people like Rockefeller, Vanderbilt, Kennedy, Morgan, Rothschild, and other monopolistic opportunists were able to garner the WHOLE country as they cornered the ENTIRE market then somewhere there OUGHT to be someone of stature that could come to the fore to exude leadership. Unfortunately, we as a country have devolved into what we are today, as a shell of what the true potential could have been. A country of ideals that are only written on paper. A smiling shining light to the world that smokes up the glass while hiding hideous manipulations of the masses of people here. All the while, slowly, surely, unstoppable, ever increasing, far more taxing, manipulative regulations, rules, laws are piled higher and higher on an already far too regulated system that we call “freedom.” The HOUSE OF REPRESENTATIVES in our Bi-Carmel system is supposed to be where the WILL of the people come to fore. It doesn’t. Like a bunch of kindergarten children, hooting, hollering, shouting at the current end of this session. While the Speaker declares that she, single handedly, is “going to save the planet,” while the world she lives in fiddles on, as a former Speaker declares, “drill here, drill now,” advocating drilling rigs in everyone’s back yards, when there really ins’t a shortage of oil. Only a shortage of leadership, that no amount of drilling or not drilling is going to resolve. Unbridled capitalism, like any other “ism” is a danger. Unbridled government is monumentally worse.
[...] there a moral? Perhaps… Wall Street is weird … and perhaps CEOs need to spend more time figuring out how to succeed by hitting the [...]