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Old 01-01-2013   #41
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Here is a link to some tables that show US Fed Gov revenue in dollars over the years.

http://www.truthfulpolitics.com/http...tion-adjusted/
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Old 01-01-2013   #42
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the baby boom is figured from the end of WWII to about 20 years later, give or take. That would mean a lot of baby boomers were in the start of their productive years in the 70s.
There was a significant acceleration in 1952, and the peak was 1957.

In 1996 the 76 million Americans that make up the baby boom generation were between 32 and 50. In 1986 they were between 22 and 40. In 1976 they were between 12 and 30. How much income tax do you figure they paid, collectively, in those 3 years? Big difference, I'd guess.

Put it another way... in 1980 the 1955-1960 cohort that forms the core of the baby boom was 20-25 years old. From then on, their collective income and collective tax payments would have increased just a bit, don't you think? Then there's all those tax deductions their parents stopped taking when the kids graduated from college. Not saying demographics were the only factor, but I'd guess they have at least as much impact on the increase in federal tax revenue from 1980-2000 as tax policy, maybe more.

Still trying to figure out how this got from torture to tax policy...
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Old 01-01-2013   #43
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Yes it does. I figure the private individual is wiser at spending his money than a gov bureaucrat is at spending somebody else's. So it is best to let the private individual keep most of it.
Private investment allowed the housing bubble to expand beyond the simple, minimal losses of bad mortgages into the subprime crisis. Private investment is currently allowing housing prices to bubble again even as median wage nosedives. Private investment is a great engine, but a terrible steering wheel.
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Old 01-01-2013   #44
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Originally Posted by motorfirebox View Post
Private investment allowed the housing bubble to expand beyond the simple, minimal losses of bad mortgages into the subprime crisis. Private investment is currently allowing housing prices to bubble again even as median wage nosedives. Private investment is a great engine, but a terrible steering wheel.
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Central bank, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Central_bank

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The primary function of a central bank is to manage the nation's money supply (monetary policy), through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis. Central banks usually also have supervisory powers, intended to prevent bank runs and to reduce the risk that commercial banks and other financial institutions engage in reckless or fraudulent behavior. Central banks in most developed nations are institutionally designed to be independent from political interference.
Monetary policy, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Monetary_policy

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Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability.[1][2] The official goals usually include relatively stable prices and low unemployment. Monetary theory provides insight into how to craft optimal monetary policy. It is referred to as either being expansionary or contractionary, where an expansionary policy increases the total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Contractionary policy is intended to slow inflation in hopes of avoiding the resulting distortions and deterioration of asset values.
Supply and demand, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Supply_and_demand

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The four basic laws of supply and demand are:[1]
If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.
If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.
If demand remains unchanged and supply increases, a surplus occurs, leading to a lower equilibrium price.
If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher equilibrium price.
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Old 01-01-2013   #45
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Private investment allowed the housing bubble to expand beyond the simple, minimal losses of bad mortgages into the subprime crisis. Private investment is currently allowing housing prices to bubble again even as median wage nosedives. Private investment is a great engine, but a terrible steering wheel.
None of that exists in a vacuum though. It is, after all, government policy to maintain very low interest rates to boost borrowing and there are many policies specifically designed to boost the housing sector.
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Old 01-01-2013   #46
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Private investment is currently allowing housing prices to bubble again even as median wage nosedives.
Are housing prices bubbling again? Maybe in Phoenix, but surely not in Detroit or Chicago. In any event, if private capital wants to buy up foreclosed single-family homes and convert them to rentals, why shouldn't they? Bit of a bandwagon, yes, but not much there in the way of collective liability. Rental stock is needed, the homes typically need a fair bit of work, and getting the work done puts people to work. Hard to see it as a terrible thing.

Speaking of a "nosedive" in median wages is a bit exaggerated. Inflation-adjusted median wages have held n a fairly narrow band between $50-55k since the early 90s, and the push toward the higher end of that bad from 2005-2008 was arguably driven by unsustainable bubble conditions, just like the similar push from 1998-2000. Demographics play a role here as well: income peaks at around age 50, a point the peak of the baby boom passed in 2007. I expect median incomes will decline noticeably as the boom moves past that peak and the leading edge of the boom starts retiring.
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Old 01-02-2013   #47
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Are housing prices bubbling again? Maybe in Phoenix, but surely not in Detroit or Chicago.
Actually...

Home prices rising is not a bad thing, but it's not an indicator of economic health for those who aren't already well off. Renting a home is an economic burden, not an investment; home prices rising while median wages fall is how you continue to widen the already-growing wealth gap. The trickle of construction jobs derived from private equity scooping up these devalued homes doesn't go any significant distance towards reversing that.

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None of that exists in a vacuum though. It is, after all, government policy to maintain very low interest rates to boost borrowing and there are many policies specifically designed to boost the housing sector.
Sure. But a high-risk mortgage in default is just a high-risk mortgage in default. It only becomes an economy-wrecking problem when the finance industry and the ratings agencies conspire to fraudulently make that high-risk mortgage appear low-risk, thereby attracting significant investment.

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I'm not arguing that government oversight is a magic tonic that will always fix everything. I'm arguing against the idea that private investment is a magic tonic that will always fix everything.
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Old 01-02-2013   #48
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Originally Posted by motorfirebox View Post
Private investment allowed the housing bubble to expand beyond the simple, minimal losses of bad mortgages into the subprime crisis. Private investment is currently allowing housing prices to bubble again even as median wage nosedives. Private investment is a great engine, but a terrible steering wheel.
The first thing that popped into my head after reading this was an image of us private individuals as the sturdy draft horse pulling the plow under the wise direction of an experienced plowman, the career professional government bureaucrat. The next thing that popped into my head was the thought of the sturdy draft horse character in Animal Farm who was guided by the pigs. Old Boxer didn't do so hot.

When stripped to its essentials, the recent big economic crash was caused by a bunch of people who couldn't pay their mortgages. These were people who under normal circumstance would not have received mortgages because they were bad risks. Lenders established the criteria that marked them as bad risks because lenders don't like to lose money on loans and they had learned that people fitting those criteria were much less likely to pay back the loan. So why did the lenders lend money to people they knew were much less likely to pay it back? They lent it because is was government policy to strong arm them into making the loans. The gov did that in the pursuit of the political goal of expanding home ownership, and the wise gov figured the way to do that was to make sure more people were able to get home loans, and the way to do that was to force lenders to lower lending standards.

So that is it. Regardless of all the shenanigans that went on with lack of oversight, impunity, sharp practice etc., there would have been no crisis if all those uncreditworthy borrowers had repaid their loans as reliably as the credit worthy borrowers had been doing for years and years. But they didn't because home ownership doesn't confer financial responsibility upon a person, a person who is financially responsible is able to own a home. Those gov types couldn't figure that out.

George Orwell was a very bright guy.
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Old 01-02-2013   #49
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When stripped to its essentials, the recent big economic crash was caused by a bunch of people who couldn't pay their mortgages.
No, that was a mere symptom.
That was (a) the grand scale resource misallocation away from (re)investment in production capacity and infrastructure into consumption.
The banks were (b) incompetent enough to fail entirely in their (systemic) risk management as a system. They believed to have managed their risks with diversion, but the diversion was nil at the aggregate level of the entire banking sector and on top of that they were connected to each other enough (with pointless reciprocal lending) that they turned into dominoes.

So the big story was the gross incompetence of the banking sector and the lack of effective government oversight.

To blame it on lenders is disingenuous.
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Old 01-02-2013   #50
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Default Meandering if not diverted thread here

This thread started as 'Torture versus collateral damage; the bigger evil?', a valid exchange has followed, although now it appears to more of a debate on economics. I can discern links earlier on, not so much now.

Now please carry on.

One day I will try to separate out the diversion.
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Old 01-02-2013   #51
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So the big story was the gross incompetence of the banking sector and the lack of effective government oversight.
The entities that made the bad loans did so because they were forced to by the gov. Gov oversight made sure that they made the gov imposed quotas of loans to people who were poor risks. So the big story was the gross incompetence of the gov.

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To blame it on lenders is disingenuous.
Your right, and I didn't.
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Old 01-02-2013   #52
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This thread started as 'Torture versus collateral damage; the bigger evil?', a valid exchange has followed, although now it appears to more of a debate on economics. I can discern links earlier on, not so much now.
What more can you say about torture beyond it being a tool of the weak and the twisted?
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Old 01-02-2013   #53
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The entities that made the bad loans did so because they were forced to by the gov. Gov oversight made sure that they made the gov imposed quotas of loans to people who were poor risks. So the big story was the gross incompetence of the gov.
AFAIK you're writing about two agencies/entities/organisations here. This doesn't explain why the entire banking sector got involved. To them, it was incompetence on many levels.

There's much style, yet very little substance in banking.
I've come to the conclusion that banks are likely inherently incompetent. My professional experience with banks is that there's no correlation between quality of a credit application and it being approved. They could just as well employ monkeys for approving or disapproving applications: Nobody would notice if they don't tell anyone.
The personal highlight experience of mine was a 99.9% crap credit application being approved. The only good thing about the application was the passport photo of the young blonde asking for the credit!
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Old 01-03-2013   #54
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So that is it. Regardless of all the shenanigans that went on with lack of oversight, impunity, sharp practice etc., there would have been no crisis if all those uncreditworthy borrowers had repaid their loans as reliably as the credit worthy borrowers had been doing for years and years. But they didn't because home ownership doesn't confer financial responsibility upon a person, a person who is financially responsible is able to own a home. Those gov types couldn't figure that out.
False. The financial shenanigans played by the financial sector could begin with any widely-replicated form of debt. You could do it with school loans. You're blaming the matches for burning down the house, when in reality the landlord stripped out the sprinkler system and fireproofing to sell for a quick buck--and left the renters to burn.

I honestly don't know what any of this has to do with torture, but the factual misrepresentations here are too much to ignore.

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Old 01-03-2013   #55
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Detroit's housing market may have shown a bounce but the base of the bounce was desperately low, and it's still a deeply distressed market that's not even conceivably near a bubble. What you're seeing there is less a matter of "home prices rising" than the removal of many the ultra-discounted foreclosure properties from the market. Removing that low-end bulge raises the average and makes the numbers look better, but it doesn't make that market healthy.

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Home prices rising is not a bad thing, but it's not an indicator of economic health for those who aren't already well off. Renting a home is an economic burden, not an investment; home prices rising while median wages fall is how you continue to widen the already-growing wealth gap. The trickle of construction jobs derived from private equity scooping up these devalued homes doesn't go any significant distance towards reversing that.
Would you have the government tell private equity that houses shouldn't be bought until median wages rise (not likely for a long time, what with the baby boom generation passing the earnings peak and approaching retirement)? How would it help to have those potentially rentable homes sitting around vacant and deteriorating?

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I'm not arguing that government oversight is a magic tonic that will always fix everything. I'm arguing against the idea that private investment is a magic tonic that will always fix everything.
Private investment is not a magic tonic, but it's a prerequisite to fixing anything. Government "oversight" is as likely to harm as to help. Government certainly played a role in the last recession, but it wasn't for lack of oversight, it was in the provision of perverse incentives. Intervening to flatten out the 2000/2001 recession, which should have been much deeper given the dimensions of the bubble preceding it, and most particularly intervening to prevent derivatives markets from failing (as they should have in 2001) effectively removed the perception of risk from the financial equation. Keeping interest rates way too low for way too long in an environment where the perception of risk was missing effectively guaranteed excessive speculation. The idea that you can create perverse incentives on that scale and then control the destructive effects with government oversight is an illusion. It can't be done. No amount of regulation or oversight will compensate for bad management of macro incentives. It's easy in retrospect to say that this or that gap could have been plugged, but another would have been found. Once the perverse incentive is in place the speculators will always be a step ahead of the regulators. The need is not for more regulation, it's for better management of incentives.
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Old 01-03-2013   #56
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Fuchs:

Like I said, the whole thing boils down to bad home loans. Everybody piled in but if those loans had been repaid at the rates good home loans were, the problems would not have happened.

So your professional experience with banks is there is no correlation between the quality of a credit application and it being approved. Have you made home loan applications in the United States with some frequency in the past 20 or so years?
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Old 01-03-2013   #57
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Default On thread diversions...

I think Entropy effectively addressed the OP's original question: torture is intentional, collateral damage is accidental. Apples and oranges.

The point of thread diversion arrived here, as far as I can tell:

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We regressed morally at so many levels during this conflict. We made a deal with the devil (Pakistan) that allowed AQ senior leadership to escape and plot for another 10 years. We declared war on Iraq based on less than compelling evidence (the 1% doctrine), and shifted forces from an unfinished conflict i Afghanistan to Iraq. We publically endorsed torture as official policy, which as you have pointed out will put our forces at much greater risk at an unknown time in the future. We hired thousands of low quality contractors, many of them based on their political affiliations, to provide poor service at a high price. In many cases creating significant set backs to the overall operation. We aggressively pursued social and political engineering trying to create mirror image societies insteand of facilitating self-determinatio. We foolishly embraced a doctrine that has failed repeatedly throughout history, and now want to capture those lessons for future conflicts. Instead of collective sacrifice, we gave our citizens a tax cut for political expediency at the start of two wars and wonder why we can't manage our budget. We threw billions of borrowed dollars at the problem with no real strategy, and when it didn't work we surged billions more and now are looking for an acceptable exit.

I'm coming to the point where I think a nation's values (real values, values its people live by) are more important than its size, its economy, or the size of its military. Actually the values increase in importance as a nation gains power.

Maybe the pending economic crisis will drive us back to our core values that made us great to begin with.
That sparked a digression into the impact of tax rates on government revenues.

Not that it's any less a digression, but I must say I think it would be a good idea to have entry into a war accompanied by a mandatory war tax, partly because that would help pay for a war, but far more because it would make politicians think twice, or thee or four times, before they decide to go to war.

The idea that moral degradation or a lack of moral courage could result in the use of torture may have merit. It's also true, though, that the idea of "moral courage" can also be twisted into a conviction that the morally courageous know what is right and must do what is right no matter where that leads. People who know they are right are a good deal scarier to me than people who accept that they might be wrong, or at least not completely right, even though doubt may in some circles appear to signify a lack of moral courage.

I don't know that moral courage or moral degradation have anything to do with the current economic problems.
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Old 01-03-2013   #58
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False. The financial shenanigans played by the financial sector could begin with any widely-replicated form of debt. You could do it with school loans. You're blaming the matches for burning down the house, when in reality the landlord stripped out the sprinkler system and fireproofing to sell for a quick buck--and left the renters to burn.

I honestly don't know what any of this has to do with torture, but the factual misrepresentations here are too much to ignore.
Pushed beyond your limits you were, sort of like Cincinnatus leaving his plow. Well maybe not exactly but I had to work a Latin word in here somehow.

Nope not false, true. Regardless of the things that were done, those loans were bad and the would not have been made if the gov hadn't forced them to be made. So that is it. Bad loans made under duress that eventually went bad. Some surprise that that led to trouble.

Note: regarding all the games that were played with those bad loans that the gov forced to be made-see Dayuhan's last paragraph in post 53.
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Old 01-03-2013   #59
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I don't know that moral courage or moral degradation have anything to do with the current economic problems.
It may have everything to do with it. Our elites seem to have come not only to the conclusion that in order to gain and retain power they have to tell people that they can have their cake and eat it too; they seem to have come to believe it themselves.
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Old 01-03-2013   #60
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Like I said, the whole thing boils down to bad home loans.
You have to add in the perception that if you pool enough dubious loans together they somehow cease to be dubious. Add that to a huge supply of free money (interest rate below inflation rate = free money), and the incentive to take risks on loans becomes overwhelming. If you set up a situation where people can borrow at 1.5% and lend at 7% with zero perceived risk, no amount of regulation or oversight is going to keep speculators from riding that out of control.
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