Capitalism Guarantees Rising Inequality

[SAYIT]

New construction, should ALWAYS be cheaper than buying an existing house. Think about it..... if it wasn't..... no one would ever build a house.

Argument from incredulity
That's an absurd assumption. Someone might build a house because they want a brand new house, or specific customization, or for whatever reason they want what they want.

Build or Buy? A Housing Market Dilemma - US News


Argument from incredulity
The type that incorrectly calculates what that market value is. Have you never seen a construction company abandon a residential housing project, specifically because the market did not bear what they originally thought it would?
9 Worst Recession Ghost Towns in America | The Fiscal Times

Androw, simply because you cannot imagine it existing does not mean it does not exist.


Argument from incredulity
The new owners may not know how gaudy and odd their tastes are. Maybe they thought it was a good idea to build a house that looked like an igloo? Just a possibility. I've seen some ugly specialty built houses.



If the consumer can find two fungible products that the consumer wants; then yes, generally consumer will purchase the cheaper one.



Classic faulty syllogism.

In fact.... one of the reasons people knew there was a bubble, was because the market prices were so much higher than construction prices, they were saying you could build an empty lot, and build TWO homes for the cost of buying one existing home.

I would be interested in you substantiating that assertion.

Someone sat in on a logic class. Glad someone understands how assertions and arguments work. Just don't expect to get far on this forum since about 1 person for every 5,000 people on here have a clue how to reason, how to assess formal and informal logic, fallacies of thinking and so on. Basically they don't know how to think.

Our education system produces people who know how to run off at the mouth/keyboard but are puzzled when you tell them there's steps one should take to verify the accuracy of propositions. Too many want to scrutinize their opponent's position eager to tell you what to think without offering convincing argument. And too few care to hear scrutiny of their own position, which makes genuine debate impossible.

Meaningless ad hominem. Provides no relevant information to the matter at hand: socialism

 

[gnarlylove]

And of course there is a desire for profit. Again, if there was no desire for profit, they would not have invested money into creating the company in first place.

All the jobs that exist, only exist because of a desire for profit. If you were running a lemonade stand, there would be only one reason to invest the money into buying the equipment and supplies, and hire people to operate a second lemonade stand. Profit.

I can accept most of what your post said. But this section I've quoted above raises some issues. And it illustrates nicely our divergence in how we think about human beings and the world.

You believe self-satisfaction through pursuit of capital is the prime virtue. But all the great world teachings consistently accuse selfish pursuits of muddying the waters. A person can operate a Lemonade stand for an infinite array of reasons. You identified one and called it the only one. A person can operate a Lemonade stand because she desires to service her community, who has helped raise her, educate her, and provide her with the social settings that have generated her feelings of gratitude. A person can operate a Lemonade stand because they wish to see children smile, ignoring the profit motive and being merely concerned with breaking even because the smiles from customers delights them beyond monetary possibilities.

In a warm and cherished community the people embrace one another based in gratitude and love. Profit pits each person in a community against each other for the sake of personal gain. Competition exists for each job, and for each winner, there are dozens of losers.
In fact, the primary reason society has dismal people and dismal situations is the profit motive. In seeking and attaining great amounts of wealth the rich have learned it's profitable to hoard money, thus failing to circulate it from whence it came: society. Profit does not exist in a vacuum. It is the product of land, resources, labor, time and energy of all contributors in society, a global society now. Without each working part there is no profit generated. And in capitalism, the people who decide what to do with the profits is about 20-30 people, meaning, as is obvious, they pay themselves handsomely as if they were gods an "masters of the universe."

This is the pinnacle of profit: demagoguery. And without shame too: Are ?masters of the universe? born or bred? - FT.com

But I suspect you refuse to listen to obvious conclusions about profit. Instead let me reference the fact that all the great teachings of the last 4,000 years has taught that selfish pursuits (profit) is the root of all evil.

The Bible teaches "the love of money (profit) is the root of all evil." In many modern versions, "the love of money" is actually replaced by the word "profit."

The Buddha taught to end desire to attain satisfaction.

The Tao teaches this in verse 19:

Give up sainthood, renounce wisdom
and the people will be a hundred times happier.
Throw away morality and justice
and people will do the right thing.
Throw away industry and profit
and there will be no thieves.

All of these are superficial outward forms alone;
they are not sufficient in themselves.
Just stay at the centre of the circle
and let all things take their course.

It is more important to see the simplicity,
to realise one’s true nature,
to cast off selfishness and temper desire.

Profit is not virtuous. The desire to amass wealth is a vice. All world religions have taught this exact truth and yet a modern religiosity has challenged that called capitalism. W see the global results: unimaginable luxury for a few while the majority struggle to pay their bills and survive. Constant war because war is profitable and massive rates of incarceration because it too is profitable. Rampant drug abuse is a good thing because it fuels the industries of rehabilitations, methadone, pharmaceuticals like oxycotin, the police and prisons and the companies who supply the prison population. This is a vision of a society that is dystopian for the majority and utopian for a few.

 

[georgephillip]

How many compassionate conservatives on Wall Street are securitizing those sub-prime loans compared to 2006 when 84% of sub prime mortgages were issued by private lenders? Private lenders whose mouthpiece is "Inside Mortgage Finance". If you're actually gullible enough to believe their account, maybe you can work for the FBI.

Only one of the top 25 sub prime lenders in 2006 was subject to affordable housing laws; maybe you're convinced Countrywide was issuing "Nontraditional" mortgages to make Barney Frank happy and not to package them off to Wall Street?

Virtually all of government's contribution to the housing bubble and its collapse, from 1998's repeal of Glass-Steagall to 2004's federal preemption of state anti-predatory lending laws was done to advance the acquisition of private profit at public expense, and that's where your mistakes begin.

First off, most of wall street are all democrats, and liberals.

Again, Glass-Steagall had nothing to do with it. None of the provision of Glass-Steagall EVEN APPLIED to the banks that crashed, with only a few exceptions. Countrywide would not have been affected by Glass Steagall. Indymac, Bear Stearns, AIG, Wachovia, the list goes on and on. None would have been covered by Glass-Steagall.

You talk about mistakes, and yet you keep bringing up completely and totally irrelevant policies that had absolutely nothing to do with the entire problem. You might as well bring up that CAFE standards were not applied to banks either. That has just as much baring on the sub-prime crash as Glass-Steagall.

As for predatory lending, it would not have changed anything. The bubble was already created by 1998. You can't blame a policy change in 2004, for a price bubble, and sub-prime boom, that started in 1997. You are just floundering around again, grasping at anything.

And lastly, you are becoming an idiot. Can you prove the information from Insider Mortgage Financial, which would know more about the mortgage market, than you could dream to know, wrong? If not, then shut up. You don't know jack, and you just becoming a dumb asshole on the forums.

Who Really Drove the Economy Into the Ditch?
By Joseph Fried
Page 109-110.

Years before Sub-prime mortgage crisis erupted, F&F were promoting subprime lending - industry wide. In 1997, Matt Millar, a Director of Single-Family Affordable Lending at Freddie Mac, addressed private lenders at an Affordable Housing Symposium. He said that Freddie could usually find a way to buy and securitize their affordable housing loans "Though the us of Loan Prospectors research and creative credit enhancements"

Then Mr Miller added "But what can you do if after all this analysis the product you are holding is not up standards of the conventional secondary market? [in other words, what if Freddie can't legally buy the loans - even after putting lipstick on them with loan prospector?]

Matt Miller had a solution: Freddie would work with "several firms" in an effort to find buyers for these extra-smelly loans. These flunky firms would, at the behest of Freddie, buy the garbage loans that were so bad they could not be called conforming.

And then you see the sub-prime market in 1997 take off.

Again, all the evidence is against you. Freddie and Fannie were pushing these loans. The government was pushing these loans. And all you can do is fart around saying "If you're actually gullible enough"... well if you are so mindlessly stupid that all the evidence in the world is just "a Private lenders mouthpiece", then you are too plain stupid to be discussing this topic.

Fannie Mae Foundation Oct 2000.
"Case Study: Countrywide Financial Inc."
Page 119

Countrywide tends to follow the most flexible underwriting criteria permitted under GSE and FHA guidelines. Because Fannie Mae and Freddie Mac tend to give their best lenders access to the most flexible underwriting criteria, Countrywide benefits from its status as one of the largest originators of mortgage loans and one of the largest participants in the GSE programs. …

When necessary—in cases where applicants have no established credit history, for example—Countrywide uses nontraditional credit, a practice now accepted by the GSEs.

Now whatcha going to do? Straight from Fannie Mae, Countrywide is engaging in sub-prime lending that the GSEs promoted.

Is Fannie Mae a 'Private lenders mouthpiece'? Huh?

Page 118, the page before.

Since Countrwide's founding in 1969, the company has been involved in the entry-level home-buying market. Between 1969 and 1992, most of its lending conformed to Fannie Mae, Freddie Mac, and FHA guidelines and loan limits. FHA loans constituted the largest share of Countrywide's activity, until Fannia Mae and Freddie Mac began accepting loans with higher LTVs and greater underwriting flexibilities

What's your excuse now? What random irrelevant crap are you going to barf on the forum now, to dodge the words direct from Fannie Mae saying that Countrywide followed the guidelines until Fannie and Freddie started accepting loans with higher loan to value ratios, and more flexible standards?

Grow up dude. Just grow up. Stop being that 10 year old that blames absolutely everyone else for what went wrong.

Fannie and Freddie were designed to influence the mortgage market, and that's exactly what they did, and that's what crashed it.

Let us start by determining exactly how many "sub prime mortgages" were involved before deciding if private lenders or GSEs deserve the blame:

"First, central to Wallison's argument that affordable housing policies (including those advocated by Rep. Frank in 1992) caused the mortgage crisis is his claim that the federal government is responsible for 19.2 million 'subprime' mortgages (with Fannie Mae and Freddie Mac being responsible for 12 million of those).

"But what Wallison fails to tell the Atlantic's readers is that he is using his own made-up definition of 'subprime,' a definition that no one outside of his think tank, the American Enterprise Institute, uses.

"By way of comparison, the non-partisan Government Accountability Office has estimated that there were only 4.58 million subprime and other high risk loans outstanding, with very few of these attributable to the federal government.

For the Last Time, Fannie and Freddie Didn't Cause the Housing Crisis - David Min - The Atlantic

 

[Toddsterpatriot]

How many compassionate conservatives on Wall Street are securitizing those sub-prime loans compared to 2006 when 84% of sub prime mortgages were issued by private lenders? Private lenders whose mouthpiece is "Inside Mortgage Finance". If you're actually gullible enough to believe their account, maybe you can work for the FBI.

Only one of the top 25 sub prime lenders in 2006 was subject to affordable housing laws; maybe you're convinced Countrywide was issuing "Nontraditional" mortgages to make Barney Frank happy and not to package them off to Wall Street?

Virtually all of government's contribution to the housing bubble and its collapse, from 1998's repeal of Glass-Steagall to 2004's federal preemption of state anti-predatory lending laws was done to advance the acquisition of private profit at public expense, and that's where your mistakes begin.

First off, most of wall street are all democrats, and liberals.

Again, Glass-Steagall had nothing to do with it. None of the provision of Glass-Steagall EVEN APPLIED to the banks that crashed, with only a few exceptions. Countrywide would not have been affected by Glass Steagall. Indymac, Bear Stearns, AIG, Wachovia, the list goes on and on. None would have been covered by Glass-Steagall.

You talk about mistakes, and yet you keep bringing up completely and totally irrelevant policies that had absolutely nothing to do with the entire problem. You might as well bring up that CAFE standards were not applied to banks either. That has just as much baring on the sub-prime crash as Glass-Steagall.

As for predatory lending, it would not have changed anything. The bubble was already created by 1998. You can't blame a policy change in 2004, for a price bubble, and sub-prime boom, that started in 1997. You are just floundering around again, grasping at anything.

And lastly, you are becoming an idiot. Can you prove the information from Insider Mortgage Financial, which would know more about the mortgage market, than you could dream to know, wrong? If not, then shut up. You don't know jack, and you just becoming a dumb asshole on the forums.

Who Really Drove the Economy Into the Ditch?
By Joseph Fried
Page 109-110.



And then you see the sub-prime market in 1997 take off.

Again, all the evidence is against you. Freddie and Fannie were pushing these loans. The government was pushing these loans. And all you can do is fart around saying "If you're actually gullible enough"... well if you are so mindlessly stupid that all the evidence in the world is just "a Private lenders mouthpiece", then you are too plain stupid to be discussing this topic.

Fannie Mae Foundation Oct 2000.
"Case Study: Countrywide Financial Inc."
Page 119



Now whatcha going to do? Straight from Fannie Mae, Countrywide is engaging in sub-prime lending that the GSEs promoted.

Is Fannie Mae a 'Private lenders mouthpiece'? Huh?

Page 118, the page before.

Since Countrwide's founding in 1969, the company has been involved in the entry-level home-buying market. Between 1969 and 1992, most of its lending conformed to Fannie Mae, Freddie Mac, and FHA guidelines and loan limits. FHA loans constituted the largest share of Countrywide's activity, until Fannia Mae and Freddie Mac began accepting loans with higher LTVs and greater underwriting flexibilities

What's your excuse now? What random irrelevant crap are you going to barf on the forum now, to dodge the words direct from Fannie Mae saying that Countrywide followed the guidelines until Fannie and Freddie started accepting loans with higher loan to value ratios, and more flexible standards?

Grow up dude. Just grow up. Stop being that 10 year old that blames absolutely everyone else for what went wrong.

Fannie and Freddie were designed to influence the mortgage market, and that's exactly what they did, and that's what crashed it.

Let us start by determining exactly how many "sub prime mortgages" were involved before deciding if private lenders or GSEs deserve the blame:

"First, central to Wallison's argument that affordable housing policies (including those advocated by Rep. Frank in 1992) caused the mortgage crisis is his claim that the federal government is responsible for 19.2 million 'subprime' mortgages (with Fannie Mae and Freddie Mac being responsible for 12 million of those).

"But what Wallison fails to tell the Atlantic's readers is that he is using his own made-up definition of 'subprime,' a definition that no one outside of his think tank, the American Enterprise Institute, uses.

"By way of comparison, the non-partisan Government Accountability Office has estimated that there were only 4.58 million subprime and other high risk loans outstanding, with very few of these attributable to the federal government.

For the Last Time, Fannie and Freddie Didn't Cause the Housing Crisis - David Min - The Atlantic

affordable housing policies (including those advocated by Rep. Frank in 1992) caused the mortgage crisis

They didn't cause it.....they did contribute.

Fannie and Freddie Didn't Cause the Housing Crisis

They didn't cause it.....they did contribute.

Glass-Steagall

They didn't cause it.....they didn't contribute.

 

[crisismangement]

Does that not suggest to you that outsourcing isn't the big boogie man that you claim? If all the jobs could be outsourced, and yet we have the highest standard of living in the world, the poorest people own cars and big screen TVs and smart phones, the median wage is $50K, when $30K makes you the top 1% of wage earners in the world.....

Does that not show that apparently outsourcing isn't this huge threat?

Outsourcing is not a threat at all. It creates as many jobs, more actually, than it causes us to lose. We tend to outsource menial jobs, which in turn creates less labor intensive jobs in the US and the loss of wage is minimal. The left wing twits are arguing over nothing, or more precisely they object to a good thing. We get more jobs, they get more jobs and as their economies grow they become consumers of our goods and services.

The crap the left wing twits throw out about the USSR NOT being true communism is bogus. The cruel dictatorships we see in countries that are "not true communism" is what happens in any "workers utopia". That dictatorship is always the result in any attempt at socialism or communism.

 

[kaz]

Studies show data which supports between 1.1 and 1.7 new jobs in the US for every job off shored.

First that statistic was used by you to indicate how many jobs have been created since the global crisis. Now you are using it in regards to jobs that are outsourced. Now which is it? It cannot be both since outsourcing has been occurring since the late 70s and the crisis began in 07.

I have never seen it used it to suggest anything other than outsourcing does not cost the US jobs. You are wrong, and I challenge you to link me to that fictitious post. You do know it doesn't exist, why lie?

Absolutely. Offshoring jobs both creates and protects American jobs.

1) It creates them by lowering prices for consumers. Who then have more money to buy more things. It also invigorates other economies creating more of a market for our products, and those people are more pro-American business because they work for American businesses.

2) Offshoring protects jobs because we are in a global economy and our competitors are doing it. If we don't, our corporations will suffer with higher cost, have to charge higher prices, and will suffer sales losses which will lead to job cuts.

I have done a lot of IT offshoring, and there have been way fewer job losses than you think even in the offshored group. You can't just move a job offshore, there need to be onshore components. And then you free skilled workers to do more value added work. And you leave more money in the business side to invest in new projects which create jobs.

As a career manager and manager consultant, I can tell you American management kicks ass. We aren't being protected by politicians, we are being limited by them.

 

[georgephillip]

Actually several of us did, with links, proving that the Mae/Mac and bank regulaters did in fact insist on sub prime loans, and our current left wing president sued to insure they did so as a lawyer in Illinois.

Sub prime loans with or without loan standards like employment history, income, down payments, credit rating, and assets?

Do you agree with the following timeline?

"1997–2005:Mortgage fraud increased by 1,411 percent.[32]
2000–2003: Early 2000s recession (exact time varies by country).
2001–2005: United States housing bubble (part of the world housing bubble).
2001: US Federal Reserve lowers Federal funds rate eleven times, from 6.5% to 1.75%.[33]
2002–2003: Mortgage denial rate of 14 percent for conventional home purchase loans, half of 1997..."

"2003-2007: The Federal Reserve failed to use its supervisory and regulatory authority over banks, mortgage underwriters and other lenders, who abandoned loan standards (employment history, income, down payments, credit rating, assets, property loan-to-value ratio and debt-servicing ability), emphasizing instead lender's ability to securitize and repackage subprime loans.[28]
2004:

"U.S. homeownership rate peaked with an all time high of 69.2 percent.[38]
HUD increased Fannie Mae and Freddie Mac affordable-housing goals for next four years, from 50 percent to 56 percent, stating they lagged behind the private market; from 2004 to 2006, they purchased $434 billion in securities backed by subprime loans.[16]

"October:SEC effectively suspends net capital rule for five firms - Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns and Morgan Stanley. Freed from government-imposed limits on the debt they can assume, they levered up 20, 30 and even 40 to 1.[39]"

Timeline of the United States housing bubble - Wikipedia, the free encyclopedia

The Federal Reserve failed to use its supervisory and regulatory authority over banks, mortgage underwriters and other lenders, who abandoned loan standards

Standards were lowered? Sounds familiar.

Standards were lowered to increase private profits stemming from an epidemic of mortgage fraud on behalf of Wall Street and the 1%. Sounds like business as usual.

 

[Toddsterpatriot]

Sub prime loans with or without loan standards like employment history, income, down payments, credit rating, and assets?

Do you agree with the following timeline?

"1997–2005:Mortgage fraud increased by 1,411 percent.[32]
2000–2003: Early 2000s recession (exact time varies by country).
2001–2005: United States housing bubble (part of the world housing bubble).
2001: US Federal Reserve lowers Federal funds rate eleven times, from 6.5% to 1.75%.[33]
2002–2003: Mortgage denial rate of 14 percent for conventional home purchase loans, half of 1997..."

"2003-2007: The Federal Reserve failed to use its supervisory and regulatory authority over banks, mortgage underwriters and other lenders, who abandoned loan standards (employment history, income, down payments, credit rating, assets, property loan-to-value ratio and debt-servicing ability), emphasizing instead lender's ability to securitize and repackage subprime loans.[28]
2004:

"U.S. homeownership rate peaked with an all time high of 69.2 percent.[38]
HUD increased Fannie Mae and Freddie Mac affordable-housing goals for next four years, from 50 percent to 56 percent, stating they lagged behind the private market; from 2004 to 2006, they purchased $434 billion in securities backed by subprime loans.[16]

"October:SEC effectively suspends net capital rule for five firms - Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns and Morgan Stanley. Freed from government-imposed limits on the debt they can assume, they levered up 20, 30 and even 40 to 1.[39]"

Timeline of the United States housing bubble - Wikipedia, the free encyclopedia

The Federal Reserve failed to use its supervisory and regulatory authority over banks, mortgage underwriters and other lenders, who abandoned loan standards

Standards were lowered? Sounds familiar.

Standards were lowered to increase private profits stemming from an epidemic of mortgage fraud on behalf of Wall Street and the 1%. Sounds like business as usual.

Standards were lowered to increase private profits

Standards were lowered to comply with the CRA.
It wasn't until later that they figured out how to make a profit on these weaker loans.

 

[kaz]

Standards were lowered to increase private profits stemming from an epidemic of mortgage fraud on behalf of Wall Street and the 1%. Sounds like business as usual.

Power hungry politicians trying to buy votes caused a crisis then pointed fingers at businesses rather than accept the blame for their own actions. Then they appeal to the greed and wealth envy of their minions to pound the message home.

Yep, business as usual.

 

[dnsmith35]

I think you don't understand capitalism then. The reason the rich people are rich is because they earned it. SO what did they do to earn it? Outsourcing. They threatened and in many cases did leave the US to build factories in low wage areas. This allowed them to marginally reduce the price to consumers which was a bonus to the average person but given wages were 5-10 dollars less per hour, they were able to reap the obvious profits from such a move. Soon the overhead was paid for by the cheap labor and the profits never stopped rolling. Hence, outsourcing is a masterful success according to capitalism.

So in America if you want a job and a factory to hire you, you need to say, "our community is willing to work for bargain wages (far below minimum standards) so that our labor is competitive with the labor of China, Bangladesh and the like. Only if Americans accept lower wages will factories and industry return. So magically agreeing we should have higher wages and cheering for capitalism is like jeering at your ice cream cone because it tastes like shit when you fail to realize your ice cream literally is a pile of shit.

You are sadly inept at understanding your own creeds and how the interact but that's to be expected when you call anything that disagrees with your brainwashed mentality as "extremism" thereby effectively covering your ears to valid points about flaws that are inherent in capitalism.

btw, I would burst into tears if you could define my position and link it to extremism. I'd put myself in prison if you had such an argument. But I don't have to worry about that since you are more concerned about useful lies, not profound truths.

Then you should be crying now and turn yourself in. Your description of why rich people got richer, outsourcing. It is obvious you do not understand nor do you read the studies that prove you so wrong. Oh, and I leave the being brain washed to people like you who have swallowed left wing rhetoric hook, line and sinker. The difference? You read your sources and believe them. I do research for myself and take the data of studies and draw my own conclusions when it relates to economics. I am going to over look your insulting remarks this time because I haven't got the time to be messed with.

Don't blame the 1% for America's pay gap - The Term Sheet: Fortune's deals blogTerm Sheet

Did I mention the pay gap? No. Then what does your research have to do with my point? Nothing.

This comment in your first paragraph suggests you are concerned about pay inequality, "This allowed them to marginally reduce the price to consumers which was a bonus to the average person but given wages were 5-10 dollars less per hour" This site discusses WHY they make 5-10 $$$ less per hour.

The fact remains: it is more profitable to leave communities in the US, reducing opportunities in the US, so a board of directors can pursue greater sums of money. When US companies outsource, they are showing money is more important then the a community, then their employees who have worked for them for decades. Why? Capitalism says to pursue your own interests, your own self maximization. So it makes perfect sense to dismiss the ramifications of uprooting good jobs for millions of Americans: the primary objective is seeking one's own profit maximization.

The fact remains: leaving the country to cut costs keeps companies from going bankrupt, and does not negatively effect the jobs overall in the US. http://http://www.washingtonpost.com/blogs/wonkblog/wp/2012/07/12/study-offshoring-creates-as-many-u-s-jobs-as-it-kills/

 

[dnsmith35]

Studies show data which supports between 1.1 and 1.7 new jobs in the US for every job off shored.

First that statistic was used by you to indicate how many jobs have been created since the global crisis. Now you are using it in regards to jobs that are outsourced. Now which is it? It cannot be both since outsourcing has been occurring since the late 70s and the crisis began in 07.

I guess that you have run out of argument so now you are resorting to absolute false hoods. I have never used that statistic for anything other than representing the relative number of jobs created in the US for every job off shored. This did not come from a blog, or an opinion piece, IT CAME FROM A STUDY. Studies trump opinions every time.

 

[kaz]

Standards were lowered to increase private profits stemming from an epidemic of mortgage fraud on behalf of Wall Street and the 1%. Sounds like business as usual.

LOL. So the Clinton administration coerced banks into lowering their lending standards so more people could buy homes and flooded the banks with endless virtually zero interest loans to fund it. Then the banks lowered them, but it wasn't because of that, it was because of some Marxist talking point.

Actually, comrade, banks are owned by everyone who owns mutual funds. Teacher pension accounts hold them. The evil 1% actually largely have their wealth tied up in the businesses that made them wealthy. Your grandmother probably owns part of the banks.

 

[dnsmith35]

In his classic work Knowledge and Decisions, Thomas Sowell espoused a sophisticated, largely Hayekian approach, revealing how the efficient spread of relevant knowledge is shaped by our social institutions, and often warped and misshapen by government. [ame=http://www.amazon.com/exec/obidos/ASIN/0465037380/reasonmagazineA/]Knowledge And Decisions: Thomas Sowell: 9780465037384: Amazon.com: Books[/ame]

Now, in The Housing Boom and Bust (Basic Books)[ame]http://www.amazon.com/exec/obidos/ASIN/0465018807/reasonmagazineA/[/ame], Sowell contemplates the greatest expansion of government power in a generation, which was itself occasioned by the greatest economic crisis in as long. A quick but thorough guide to the causes of the crises, Sowell's book shows how government policies led to a huge increase in highly risky housing loans. As he notes, the immense local variability in housing prices and failed loans reveals that the government mistook a set of local problems for a national one, and then imposed a single troublesome national solution. Sowell argues that while foolish decisions to indulge in complicated investment vehicles affected the specifics of how the financial contagion spread, at its root the housing problem is one of bad mortgages. And those came from bad decisions by government and by borrowers themselves.

 

[dnsmith35]

Now, addressing the myth of income inequality reducing consumer spending. It has been opined that since low income consumers spend all their money; and since high income individuals save or invest their money; and based on the undisputed fact that consumer spending equals to 70% of our economy; the conclusion tends to support that demand side economics is the best way to stimulate our economy out of a down cycle. The following chart suggests that is not the actual case.

Observe the red curve. It increases significantly over time albeit in a very erratic fashion. Now observe the blue line curve. It increases at a more regular rate. The indication of that graph, which combines the income inequality curve to the actual consumer spending curve, both represented as a per capita issue.

 

[dnsmith35]

And of course there is a desire for profit. Again, if there was no desire for profit, they would not have invested money into creating the company in first place.

All the jobs that exist, only exist because of a desire for profit. If you were running a lemonade stand, there would be only one reason to invest the money into buying the equipment and supplies, and hire people to operate a second lemonade stand. Profit!

I can accept most of what your post said. But this section I've quoted above raises some issues. And it illustrates nicely our divergence in how we think about human beings and the world.

Your quote of his assertion is the reason that after attaining an MBA with a major in economics I took the next step, the study of Psychology to the Ed.S level. Human behavior characteristics form the basis for economics. Androw is correct, without the profit motive there would be little prosperity as witnessed with every experiment with Socialism/Communism, or more simply ANY EXPERIMENT WITH MARXISM having miserably failed. When an economy veers away from reasonably regulated capitalism the result is the spreading around poverty and misery. The "lofty ideals of Marxism" simply do not work in the real world, and to keep the high achievers in a Marxist economic/government system it must relatively quickly become a dictatorship. That is another simply explained situation. "The from everyone according to his ability and to everyone according to his needs," is doomed to failure BECAUSE of that human behavior. The high achievers get tired of carrying the load for the low on non-achievers and leave, requiring a dictatorship/authoritative government to keep those high achievers producing. Yet, even they stop achieving and the result is: a few leaders get rich and everyone else is stuck in poverty such as the US has never experienced.

GNARLEY - You believe self-satisfaction through pursuit of capital is the prime virtue. But all the great world teachings consistently accuse selfish pursuits of muddying the waters. A person can operate a Lemonade stand for an infinite array of reasons. You identified one and called it the only one. A person can operate a Lemonade stand because she desires to service her community, who has helped raise her, educate her, and provide her with the social settings that have generated her feelings of gratitude. A person can operate a Lemonade stand because they wish to see children smile, ignoring the profit motive and being merely concerned with breaking even because the smiles from customers delights them beyond monetary possibilities..

Your little story discusses only 1 in 100,000 who labor for the reward of helping others. In a capitalist economy, the only one which increases prosperity for the maximum % of its people, produce its share of those, because they have ability or prosperity tend "to do for the least of his people." Altruism is a great trait, but for it to be of value to the needy there must be sufficient prosperity for it to help the greatest number of people.

A successful economic system revolves around the truism, "man has an unlimited desire for wealth." If it doesn't, it fails, MISERABLY.

 

[Misty]

Capitalism is equality. No matter where you live or if you are poor or rich, capitalism guarantees that ANYONE can make as much money as they want.

 

[georgephillip]

Standards were lowered to increase private profits stemming from an epidemic of mortgage fraud on behalf of Wall Street and the 1%. Sounds like business as usual.

LOL. So the Clinton administration coerced banks into lowering their lending standards so more people could buy homes and flooded the banks with endless virtually zero interest loans to fund it. Then the banks lowered them, but it wasn't because of that, it was because of some Marxist talking point.

Actually, comrade, banks are owned by everyone who owns mutual funds. Teacher pension accounts hold them. The evil 1% actually largely have their wealth tied up in the businesses that made them wealthy. Your grandmother probably owns part of the banks.

What point do you imagine you (and grandma) are making here?
Are you implying private banks weren't behind more than 84% of sub prime mortgages in 2006?
Bill left in 2001, remember, Comrade?
The richest 1% of the evil 1% own Wall Street banks, and they're instigating the next crisis as we speak. Maybe you can outsource Goldman Sachs?

 

[georgephillip]

The Federal Reserve failed to use its supervisory and regulatory authority over banks, mortgage underwriters and other lenders, who abandoned loan standards

Standards were lowered? Sounds familiar.

Standards were lowered to increase private profits stemming from an epidemic of mortgage fraud on behalf of Wall Street and the 1%. Sounds like business as usual.

Standards were lowered to increase private profits

Standards were lowered to comply with the CRA.
It wasn't until later that they figured out how to make a profit on these weaker loans.

Exactly.

"The FBI defines mortgage fraud as 'the intentional misstatement, misrepresentation, or omission by an applicant or other interest parties, relied on by a lender or underwriter to provide funding for, to purchase, or to insure a mortgage loan.'"[111] In 2004, the Federal Bureau of Investigation warned of an "epidemic" in mortgage fraud, an important credit risk of nonprime mortgage lending, which, they said, could lead to "a problem that could have as much impact as the S&L crisis".[112][113][114][115]

"The Financial Crisis Inquiry Commission reported in January 2011 that: '... mortgage fraud... flourished in an environment of collapsing lending standards and lax regulation.

"The number of suspicious activity reports – reports of possible financial crimes filed by depository banks and their affiliates – related to mortgage fraud grew 20-fold between 1996 and 2005 and then more than doubled again between 2005 and 2009.

"One study places the losses resulting from fraud on mortgage loans made between 2005 and 2007 at $112 billion.

"Predatory lending describes unfair..."

Subprime mortgage crisis - Wikipedia, the free encyclopedia

 

[georgephillip]

Standards were lowered to increase private profits stemming from an epidemic of mortgage fraud on behalf of Wall Street and the 1%. Sounds like business as usual.

Power hungry politicians trying to buy votes caused a crisis then pointed fingers at businesses rather than accept the blame for their own actions. Then they appeal to the greed and wealth envy of their minions to pound the message home.

Yep, business as usual.

Politicians from both major parties who depend on the richest 1% of voters to fund their election campaigns and retirements did their parts in creating the crisis, but it was private bankers resorting to an epidemic of control accounting fraud (80% by lenders) that were the biggest culprits in The Mess.

The current Administration then did its part by not prosecuting a single major financial figure in the greatest looting of the US economy since the Great Depression.

"The Mess
The economy was at risk of a deep recession after the dotcom bubble burst in early 2000; this situation was compounded by the September 11 terrorist attacks that followed in 2001. In response, central banks around the world tried to stimulate the economy. They created capital liquidity through a reduction in interest rates.

"In turn, investors sought higher returns through riskier investments. Lenders took on greater risks too, and approved subprime mortgage loans to borrowers with poor credit.

Consumer demand drove the housing bubble to all-time highs in the summer of 2005, which ultimately collapsed in August of 2006. (For an in-depth discussion of these events, see The Fuel That Fed The Subprime Meltdown.)

"The end result of these key events was increased foreclosure activity, large lenders and hedge funds declaring bankruptcy, and fears regarding further decreases in economic growth and consumer spending.

"So who's to blame? Let's take a look at the key players

Biggest Culprit: The Lenders
Most of the blame should be pointed at the mortgage originators (lenders) for creating these problems. It was the lenders who ultimately lent funds to people with poor credit and a high risk of default. (To learn more about subprime lending, see Subprime Is Often Subpar.)

Who Is To Blame For The Subprime Crisis?

 

[Toddsterpatriot]

Standards were lowered to increase private profits stemming from an epidemic of mortgage fraud on behalf of Wall Street and the 1%. Sounds like business as usual.

Standards were lowered to increase private profits

Standards were lowered to comply with the CRA.
It wasn't until later that they figured out how to make a profit on these weaker loans.

Exactly.

"The FBI defines mortgage fraud as 'the intentional misstatement, misrepresentation, or omission by an applicant or other interest parties, relied on by a lender or underwriter to provide funding for, to purchase, or to insure a mortgage loan.'"[111] In 2004, the Federal Bureau of Investigation warned of an "epidemic" in mortgage fraud, an important credit risk of nonprime mortgage lending, which, they said, could lead to "a problem that could have as much impact as the S&L crisis".[112][113][114][115]

"The Financial Crisis Inquiry Commission reported in January 2011 that: '... mortgage fraud... flourished in an environment of collapsing lending standards and lax regulation.

"The number of suspicious activity reports – reports of possible financial crimes filed by depository banks and their affiliates – related to mortgage fraud grew 20-fold between 1996 and 2005 and then more than doubled again between 2005 and 2009.

"One study places the losses resulting from fraud on mortgage loans made between 2005 and 2007 at $112 billion.

"Predatory lending describes unfair..."

Subprime mortgage crisis - Wikipedia, the free encyclopedia

"The FBI defines mortgage fraud as 'the intentional misstatement, misrepresentation, or omission by an applicant

Yup, those Main Street borrowers did that a lot.

The number of suspicious activity reports – reports of possible financial crimes filed by depository banks and their affiliates

See, the banks filed the reports, against borrowers. Thanks for bringing this up.