Obama, the Wimp ... can't resist

[Feanor]

I know. If only we could peek in on an alternate universe in which the only difference is that there were no bailouts or stimuli and see what would've happened. I have my doubts as to whether the gloomy predictions that allegedly necessitated the spending would've come to fruition. On the other hand, we might see you holding my place in line at the soup kitchen while I run down the alley and pee. We gotta stick together, you know.

I wonder then as I wonder now why the US treasury didn't bail out the sub-prime mortgagors. Suppose they had just said, Look banks, we won't let the mortgages default, so all your effing derivatives won't fail and you don't need hand-outs from us. But no, they gave the cash to the banks who are now forclosing on the poor saps who they duped into taking them in the first place, all the while crowing about how they're paying back the government and handing out fresh bonuses to their top brass.

Stimulus is a standard measure against recession. It can work. But there are good and bad ways to do it. After 9/11 George W. further eased credit and told the consumer, Spend, spend, spend. At it work sort of, although it left the US consumer in debt up to his eyeballs. But this go-round easy credit isn't enough; the consumer know he's already
carrying more debt than he can handle. Tax cut won't work either: the poor will pay down their credit cards and rich will invest their tax savings off-shore. I hate to put it quite this way, but the Obama government needs to "tax and spend". The incidence of tax should, of course, be mainly on the rich and corporations. I hear the US corporations are sitting on cash of almost $2 TRILLION and not investing it. No wonder it's a "jobless recovery". If the Obama goverment had any balls it would say, Bugger you guys: we're going to grab your cash and invest it in infrastructure. But of course Obama has no balls.

[GMichael]

If the Obama goverment had any balls it would say, Bugger you guys: we're going to grab your cash and invest it in infrastructure. But of course Obama has no balls.

I don't think I can get behind this. As much as it might help, we just can't have the government taking money from businesses as it/he sees fit. That's a pretty slippery slope.
I wouldn't mind seeing tax increases if it meant the hiring back of the many police, firemen and teachers who have lost their jobs lately. While they're at it, they could spend some of it to fix up the roads. Creating more jobs seems key to me.

[Feanor]

I don't think I can get behind this. As much as it might help, we just can't have the government taking money from businesses as it/he sees fit. That's a pretty slippery slope.
I wouldn't mind seeing tax increases if it meant the hiring back of the many police, firemen and teachers who have lost their jobs lately. While they're at it, they could spend some of it to fix up the roads. Creating more jobs seems key to me.

It seems to me, GM, that your are contradicting yourself between paragraph 1 and paragraph 2.

Ask yourself, if you don't tax people or companies, what are they going to do with the money?

• Nothing: i.e. they save it -- hold it as cash. This what many US corporations are doing today with almost 2 trillion bucks
• Speculate (gamble) with it, i.e. buy whatever -- Picaso paintings, hog belly futures, credit default swaps -- in the hope that the thing will increase in value; (or in the case of CDS that they will profit when a company goes bust). This happened a lot before the last crisis and was one of its principal causes
• They spend it on luxuries, (or pay out dividends to shareholders who spend it on luxiries). There are two kinds of luxuries:
  • Domestically producted -- which might or might not lead to more domestic production
  • Foreign produced
• Invest it in productive capacity (or inventories): there are two kinds of productive capacity:
  
  • Domestic
  • Foreign, (off-shore)

The conservative myth is that all tax savings will be invested in domestic productive capacity. As you see, above, this is only one of the options and not the one being chosen by businesses today. If the government does hand out tax reductions it is able to target the money on, say, green energy development, or improving the school system so our kids might still find a job in the global economy.

[GMichael]

It seems to me, GM, that your are contradicting yourself between paragraph 1 and paragraph 2.

Ask yourself, if you don't tax people or companies, what are they going to do with the money?

• Nothing: i.e. they save it -- hold it as cash. This what many US corporations are doing today with almost 2 trillion bucks
• Speculate (gamble) with it, i.e. buy whatever -- Picaso paintings, hog belly futures, credit default swaps -- in the hope that the thing will increase in value; (or in the case of CDS that they will profit when a company goes bust). This happened a lot before the last crisis and was one of its principal causes
• They spend it on luxuries, (or pay out dividends to shareholders who spend it on luxiries). There are two kinds of luxuries:
  • Domestically producted -- which might or might not lead to more domestic production
  • Foreign produced
• Invest it in productive capacity (or inventories): there are two kinds of productive capacity:
  
  • Domestic
  • Foreign, (off-shore)

The conservative myth is that all tax savings will be invested in domestic productive capacity. As you see, above, this is only one of the options and not the one being chosen by businesses today. If the government does hand out tax reductions it is able to target the money on, say, green energy development, or improving the school system so our kids might still find a job in the global economy.

I don't feel that taxing is the same as just grabbing up trillions. I therefore do not see my comments as a contradiction.
Taxing is needed. As long as the money goes to create jobs, I'm all for it. But I don't feel that any government should be able to just grab up all the cash of any company as they see fit. Why be in business if the government can just scoop up all your profits if you do a good job? So they can give it to the companies who screwed up and are in trouble now?

[Feanor]

I don't feel that taxing is the same as just grabbing up trillions. I therefore do not see my comments as a contradiction.
Taxing is needed. As long as the money goes to create jobs, I'm all for it. But I don't feel that any government should be able to just grab up all the cash of any company as they see fit. Why be in business if the government can just scoop up all your profits if you do a good job? So they can give it to the companies who screwed up and are in trouble now?

True and I agree, GM. I was indulging in a little hyperbole when I said the gov should "grab" their money. On the other hand tough tax rates, (which would need Congressional approval of course), might be what's called for.

Actually, I'd like to see a scheme whereby a company would receive a tax credit if they did, indeed, in fact, and measurably, invest their profits in the domestic economy.

[GMichael]

True and I agree, GM. I was indulging in a little hyperbole when I said the gov should "grab" their money. On the other hand tough tax rates, (which would need Congressional approval of course), might be what's called for.

Actually, I'd like to see a scheme whereby a company would receive a tax credit if they did, indeed, in fact, and measurably, invest their profits in the domestic economy.

Now you're talkin'.
A tough tax rate on companies that are fat and ugly could not only bring money in to the government, it could also light a fire under their asses to invest some of that cash in the domestic economy. Credits for them doing so on their own would help as well.