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  1. #211
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    Steve Forbes in an opinion piece for Politico takes the Durbin amendment of the Dodd Frank financial bill to the tool shed:

    I fought against the Durbin Amendment at Bonner & Associates.

    To help free market, bury the hatchet

    We all want America’s economy to improve and realize that crony capitalism — where Washington politicians, not free markets, decide who succeeds — is a barrier to prosperous growth. Yet industries still dispatch lobbyists to Capitol Hill to get a legislative or regulatory “fix” when there’s a marketplace dispute. Consider the recent settlement between retailers and payment card companies over fees that merchants pay to accept plastic.

    The retail industry has continuously complained about the fees card companies charge them to use a convenient, secure and fast payment network, which has benefited both merchants and consumers.

    Retailers a few years ago successfully pushed Congress to slap price controls on these fees through the Durbin Amendment to the Dodd-Frank Wall Street reform bill. The Durbin Amendment, rushed through Congress with no debate, has muddied the marketplace by failing to deliver the promised benefits to consumers and small businesses in the form of lower prices, while increasing profits for the biggest retailers. Even the Federal Reserve Bank and a diverse coalition of groups sounded the warning bell that consumers would most likely face higher costs as a result of this Soviet-style effort to regulate fees.

    However, the two sides — retailers and payment card companies — continued to negotiate and recently announced a legal settlement. U.S. merchants got what they had long said they wanted: Debit interchange rates are capped. So merchants can now require minimum and maximum transaction amounts at their points of sale.

    Retailers now have the ability to route transactions over whichever network they choose — increasing competition for their business. They also can impose a fee on consumers who pay with plastic. With these key gains, retailers have the power they need to minimize acceptance costs and manage point-of-sale economics in their favor.

    One would think this would finally end the multiyear dispute.

    Unfortunately, before the ink on the settlement had dried, two major retail trade organizations and some large retailers have rejected it and are now running to their friends on Capitol Hill claiming the deal “didn’t go far enough.” In an act of crony capitalism obesity, they’re back for more.

    This brouhaha shows how far we have strayed from the most basic economic principles that created prosperity in America for generations. Washington’s war on the free market, capital investment and financial services must end. Congress must get out of the way.

    Dodd-Frank-Durbin exemplifies Capitol Hill’s hostility to the free market. It delivered a hard blow to our financial services industry by making it more difficult for banks, especially the non-giants, to perform their traditional roles. Banks are drowning in new regulations — talk about regulatory waterboarding!

    Worse, Dodd-Frank-Durbin created yet another government agency, the Consumer Financial Protection Bureau, to set prices, “settle” disputes and “protect” consumers. No wonder Americans can’t get adequate access to money for their businesses, cars or education.

    Washington must allow businesses and industries to settle their disputes on their own. For example, the retailer and payment card industry discord has always been a commercial dispute between two groups of businesses. Litigation among parties doing business together is never a preferred option.

    But while this legal process has been slow and expensive — it worked. The parties have found the common ground they need to move forward. Resolving this dispute opens new opportunities to collaborate, which will encourage innovation and improve the value they can offer consumers. Mobile payments, e-commerce, expanding acceptance and security enhancements are just a few of the areas we can advance collectively.

    Going forward, the credit card industries will focus their full attention and invest in opportunities like these — which create real value for everyone who makes or receives payments.

    At the same time, businesses should resist the temptation to seek legislative advantages that could not be achieved in the marketplace. That process has increased congressional usurpation of free-market functions. It lets Washington become the final arbiter in business disputes — which means today’s victor may find itself on the menu for legislative mischief tomorrow.

    No wonder European big government ideologues are smiling: The more businesses plead for favors, the more powerful government gets.

  2. #212
    Dreaming the life onemoretime's Avatar
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    Quote Originally Posted by Shimmy View Post
    I agree with most of the article, except for the part where they're more or less attacking Obama for it. This article shows the American's desire for a more equal distribution of wealth and a stronger middle class in their country.
    Americans already in the middle class by and large don't want a truly more equal distribution of wealth. More than anything, we want to be able to persist in the belief that we can attain an individual fortune, provided we work hard and have a little luck. As such, we mostly want the rich to give money to us and people we consider like us, but will not countenance any policy that gives money to people we consider beneath us. That is what is meant by a "stronger middle class." A "more equal distribution of wealth" is nothing more than "a bigger piece of the pie for me."

    Romney and Obama (as personifications of the Republicans and the Democrats) both, at the very least, claim to want this for the U.S. as well. However, their chosen methods are so extremely diffent that they become mutually exclusive. However, with America having only two big parties there is no middle path alternative and no incentive to compromise for either of them.
    Their methods are almost identical. The biggest difference is in what particular organizations get to best profit off of the public largesse.

    What the U.S. needs is a little bit of both of them. On the one hand the american government spends ridiculous amounts of money it doesn't have, and I agree with Romney they should cut government spending. On the other hand, Americans, especially the 'super-rich' do pay very little taxes in the U.S. and could easily contribute more to the society. In fact, a lot of bilionairs don't even opose to the idea, as long as their money is well spend and not thrown away.
    The government has as much money as it possibly could need; that's the nice part of controlling a reserve fiat currency. The "debt" simply is a means of keeping taxes low, shoveling dollars to powerful agents who need those dollars (to purchase oil, for example), without inducing high levels of inflation. And there's nothing more a rich man hates than inflation.

  3. #213
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    From the economist:

    The housing market

    Pulling its weight at last


    Investors help turn the housing market into a source of growth



    STEVE SCHMITZ surveys the street outside his newly bought four-bedroom house and enthuses over what he sees. Stucco houses with tidy gardens, just like his, line the road. A minivan is parked outside one, an SUV sits in the driveway of another. An elementary school is just a few blocks away. It is as idyllic as a new homeowner could wish in this western suburb of Phoenix.

    Mr Schmitz, however, is no ordinary homeowner. The house is just one of more than 1,000 which his company, American Residential Properties, has acquired since 2008 in Phoenix, Las Vegas and California. ARP bought the house for roughly half its peak selling price of more than $300,000 in a “short sale”: in essence, a sale forced on the owner to avoid foreclosure. After carpet cleaning and repainting it was quickly rented for $1,300 a month, about half what the original owner had been paying for a mortgage.

    Investors like Mr Schmitz are an important part of why America’s long-suffering housing market may at last have turned the corner. Their purchases have helped shrink the glut of vacant, foreclosed homes (see chart 1). Meanwhile, the stock of new homes for sale is the lowest on record. That has revived construction: housing starts in June were the highest since 2008, up 9% since December (see chart 2), and the shares of companies that build homes have risen sharply. GDP expanded at a tepid 1.5%, annualised, in the second quarter, according to a government announcement on July 27th. Housing was one of the bright spots, contributing 0.2 percentage points to that growth.

    This is a welcome change. Housing is typically one of the most powerful engines in the early stages of recovery, with purchases of homes revving up spending on furniture, carpets and garden landscaping. Until the middle of last year, though, it had had the reverse effect on the recovery. Even now its share of GDP, at 2.7%, is half the average of the past 30 years, never mind the boom of 2006. Macroeconomic Advisers, a consultancy, reckons housing will make a substantial contribution to growth this year and next.


    Still, this upturn in housing is different from the boom. Back then, private and government-backed lenders, convinced that home prices would never fall, were eager to help Americans achieve their dream of homeownership by lending on ever easier terms. The proportion of households that own their own home rose from 65% in 1995 to 69% in 2006. Since then it has fallen back to 65.5%, and Laurie Goodman, an analyst with Amherst Securities, reckons it would be 63.3% after excluding 2.8m homeowners who are in, or probably heading towards, foreclosure.

    The number of homes in foreclosure is still painfully high and could, in fact, pick up in the coming months. Lenders had held back while dealing with charges of mishandling the paperwork, but settled those charges with state and federal officials in February. Moreover, some 11.3m homeowners with a mortgage, 24% of the total, owe more than their house is worth, putting them at greater risk of delinquency. Nonetheless, CoreLogic, a research firm, notes that those numbers are now edging down as home prices, which are rising in 19 out of 20 big cities, pick up. With time, then, the $692 billion of “negative equity” now weighing down borrowers should also shrink.

    High unemployment has temporarily depressed the underlying demand for homes; new household formation is running well below its long-term trend of 1.3m per year, according to Ivy Zelman, an independent housing analyst.

    In the meantime, many households have decided to rent. Traditionally such people have chosen apartments, but a growing share are now renting single-family houses. Ms Zelman’s firm reckons that, between 2005 and 2011, the number of households that owned a house fell by roughly half a million; the number that owned or rented an apartment rose by 2.5m; and the number that rented a house shot up by 3.2m, an increase of 27%.

    The National Association of Realtors reckons that about 30% of sales of existing homes are now to all-cash buyers, up from 20% in 2009. Most of these buyers are investors. These are predominantly small players, many of whom are planning to rent for only a few years until they can sell the property for a profit. That was originally Mr Schmitz’s plan. It changed when he met his first ten tenants. “It was an ‘Aha’ moment. They were 85% married, two jobs, two kids, two cars, a dog, a garage full of stuff, a house full of furniture,” he says. “We said this is not an apartment dweller, this is a renter that didn’t exist prior to the crash—because prior to the crash, if you could fog a mirror someone would lend you $300,000 to buy a house.”

    One of Mr Schmitz’s tenants, Paula, had bought a house in 2007. She and her husband picked out every detail, from the site to the cabinet knobs, and watched it being built, slab by slab. After the recession hit, her husband, a trucker, saw his business dry up and his costs soar with the price of fuel. They fell behind on their payments and, to avoid foreclosure, sold the house for little more than a third of what they paid in a “short sale” just before Christmas in 2010. “I was sick to my stomach,” she recalled. But when Mr Schmitz, the buyer, asked if she and her husband would like to remain as tenants, it was “our Christmas miracle. It was win-win.” Their rent is now roughly half their original mortgage payment, and “We kept our dignity.”

    As a tenant she doesn’t have to worry about big repairs, but she also has no voice in the local homeowners’ association. She hopes to be a homeowner again once her finances are set to rights, though she has also concluded that owning a home with no equity is overrated. “You spend half your life paying that mortgage and it’s nobody’s home until that mortgage is paid off.” Mr Schmitz is convinced that this is a permanent part of the new residential property market. Many investors seem to agree; in May, his firm raised $224m from investors to plough into new purchases.

    Rentals may provide a boost for housing now, but they probably will not do so over the long term. Returns for landlords are attractive, because homes can be bought for so much less than the cost of building them. But as the stock of foreclosed properties shrinks, prices will normalise. Ms Zelman says most people renting houses now would own them if they had the income and the credit. One survey last year found that 81% of adults still consider a home the best long-term investment, down only slightly from 1991 despite all that has happened.

    These days, though, banks demand bigger down-payments and better credit scores to lessen the risk of having to buy back a delinquent loan from Fannie Mae and Freddie Mac, the now government-controlled agencies that securitise and guarantee most residential mortgages. It could be a while before many homeowners can realise that dream.

  4. #214
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    Quote Originally Posted by Lateralus View Post
    I have a problem with the man. He's barely human, and only human due to the fact that he has human DNA. He has not lived a life anything close to the life of the typical human. That makes him unfit to lead.
    Please, please tell me that you think the same way about Obama. Obama has no clue how to run anything. The OP's article makes some good points about how this is not the fault of either party, but the fault of our system slipping. But Obama is a complete mess and has NO idea what to do to fix the problem. He has done very little positive since being in office. Romney at least has shown good results in fixing problems in the past.

  5. #215
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    [YOUTUBE="udzymvKOyCY"]Liberal Response to Republican Idiocy[/YOUTUBE]

    The fear of poverty turns people into slaves of money.

    "In this Caesar there are many Mariuses"~Sulla

    Conquer your inner demons first before you conquer the world.

  6. #216
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    @Zarathustra @onemoretime

    If you have some time to spare, listen to the podcast in the link.

    It's the best argument I've heard for what needs to be changed to get things moving again.

    And why we haven't been able to bounce back after the recession.

    Pethokoukis Podcast: An interview with economist Scott Sumner on market monetarism

    In this edition of my Ricochet-AEI podcast, I chat with economist Scott Sumner, professor of economics at Bentley University and author of the must-read TheMoneyIllusion blog.

    Professor Sumner is probably best known for his advocacy of “market monetarism,” a contrarian critique of the Federal Reserve, that says a) mismanaged monetary policy — not the housing bust or Wall Street greed — caused the Great Recession, and b) its continued tight money policy is a big reason why the economic recovery is so weak and unemployment is so high. Think of it as an update on Milton Friedman’s approach to monetary policy.

    Time magazine recently described Sumner as “most vocal supporter of NGDP targeting .. a strategy whereby the Federal Reserve, instead of trying to keep inflation stable and unemployment low, would announce its intention of taking any action necessary to maintain a long run nominal GDP growth rate target. This would mean that instead of buying up a certain amount of bonds like the Fed has done with QEs 1 and 2, it would set a target for the effect of those bond purchases and then, in theory, buy up as many securities as necessary to make it happen.”

    That’s right, Sumner wants a more active Fed to boost the economy — and thinks other free-market conservatives should, too.

  7. #217

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    A lot of what's in this thread is pretty US partisan and therefore I could easily say its US "conservatism", to be honest I've always thought that this movement has in theory and practice had more to do with "anti-liberalism", also as defined by Americans, I actually think there's an odd symbiotic relationship there too.

    It matters only because the US is a cultural hegemon and either deliberately seeks to or inadvertantly exports its models of societal expectations and political economy globally.

    I dont even believe that "conservatism", as this thread represents, has anything in common with Russell Kirk or Nisbet advocated (Nisbet described it as opposed to both statism and individualism, this was before the Reaganite revolution and a lot of developments since).

    It all just reads like a complete and utter fabrication and mish mash of whatever works for big money, big business and corporations defending their wealth and seeking to increase it, not by efficiency, not by productivity, not by innovation but by tax cuts or the race to the bottom, seeking to compete with welfare regimes or wage and benefits norms in what are undisputeably tyrannies.

    Part of this involves framing as "liberal complaints" things which should be common concerns or complaints, such as all the evidence that the market can not operate without any countervailing or counterweight authority besides the price mechanism and selfishness as steers.

    The word liberal itself for most conservatives is prejorative to begin with, something you would not call a friend, so framing the discussion that way actually neutralises some people, who identify strongly as conservatives, from thinking critically on certain topics because they believe to do so is to "act liberal". There are times which that is true, it is like seperate churches or cults seeking to evangelise to one another but there is a seperate camp of critical thinking surely.

  8. #218
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    I'm waving at you from the middle.

  9. #219
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    Quote Originally Posted by DiscoBiscuit View Post
    @Zarathustra @onemoretime

    If you have some time to spare, listen to the podcast in the link.

    It's the best argument I've heard for what needs to be changed to get things moving again.

    And why we haven't been able to bounce back after the recession.

    Pethokoukis Podcast: An interview with economist Scott Sumner on market monetarism
    I'll check out the podcast, but my initial impression: I've heard something similar -- i.e., the Fed needs to be more active (perhaps the details differed, but that part was the same) -- from @reason, and, at least in the form he presented it, I didn't buy it.

    Back in college, when I was obsessed with this topic, I didn't think the Fed would be able to fix the problem. They would try to, but, seeing as how their expansive monetary policy for the prior two-and-a-half decades was largely responsible for creating the problem, more expansive monetary policy wasn't going to fix the problem. Now, I'm not saying the Fed should have tight monetary policy (a la the Great Depression [which, thankfully, we learned from]), but I just don't know if a new QE 10x as large as the last would necessarily fix the problem. What it would do is really hit the value of the dollar relative to other world currencies, causing import inflation and commodity prices to rise, and thus inflation to pick up significantly. It is an interesting thought, and worth thinking about, but I just don't know if the real world problems would find themselves truly solved by simply flooding the economy with dollars (although, perhaps maybe they would... things are stable enough now, and perhaps a giant commitment to inflate from the Fed would be just the thing to get confidence back in the system... and, as I know you care about this topic, Disco, this would essentially be a way to fuck over older Americans [rightfully/deservedly] who have a lot of savings/pensions in dollars by inflating away the value of their savings in order to promote current and future growth, in favor of the younger generations, who don't have much if any savings to see inflated away, and who would benefit from the jobs that would be created in the here-and-now... [FYI: I wrote the preceding after rereading what I'd previously written, so it might seem a bit disjointed with the remainder of what I write...]... oh, one more thing: if it worked, in the end, it would benefit stockholders [while hurting bond, currency, and pension holders], as corporate profits inflate with the currency as well, and the stock market follows in tow). The real world problems exist in the first place largely because too many dollars have already flooded the economy for too long. I don't know if the same thing that got us into the problem is gunna be the thing that gets us out. The real world problems that it created might not just magically turn around and be fixed by opening the spigot much, much wider. Also, all the Fed would really be doing in this scenario is buying the government's debt en masse, and thus devaluing/inflating the currency. You do this too much, and you turn into Zimbabwe or Weimar Germany. Still, one of my policy solutions for a long time now has been continuous inflation/devaluation of the dollar, as this crisis is basically a symptom of an unbalanced global economy, in which the developing world and the developed world living standards need to converge, in some sense, and the best way to do this, essentially, is to inflate/devalue your currency. The problem is, the developing economies don't want the developed economies to do this too much, because then they won't have as much of a competitive advantage, and we won't import as much from them and/or outsource as much to them, and too many of their economies are dependent on such imbalances. As a result, they will inflate their currencies, and now you've got a currency war on your hands (not to mention food and oil riots across the developing world, due to the resultant commodity inflation). Talk of this was already pretty heavy 2-3 years ago, and that was sans a QE 10x the size that we ended up doing. Still, I suppose, if it comes down to it, we could out-inflate them (they'll start having food riots long before we will), which could result in them realizing, "Ok, the era of driving growth by exporting to America and Europe is over", and they might just accept the appreciation of their currencies, and the resultant diminished export surpluses, as one of the inevitable consequences of the rebalancing of the global economy.

    Anyway, I'll stop speaking without having listened now, and check out the podcast and let you know my thoughts.

  10. #220
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    I basically agree with Scott Sumner. I identify myself as a market monetarist. I've frequented Sumner's blog, The Money Illusion for the last couple of years. Here are some more market monetarist blogs:



    There are others, but that's more than enough.
    A criticism that can be brought against everything ought not to be brought against anything.

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