Top 10 Ridiculous Examples of Corporate Greed

[EdwardBaiamonte]

Under the current system there is not much limit to how much money the banks can create:.

the Federal Reserve is designed for that. Ever heard of it??

 

[EdwardBaiamonte]

Under the current system there is not much limit to how much money the banks can create: with a 10% reserve requirement the ratio is at least 10 to 1s.

10% is set by Federal Reserve. Fascinating right?

 

[EdwardBaiamonte]

And no , banks don't really know when debt has grown too much, else the 07 crisis wouldn't have happened.

You mean they didn't know but now they have a much better idea thanks to the 07 crisis.

 

[EdwardBaiamonte]

( Japan has been stagnated for more than two decades).

not really true of course in the last 2 decades the people have steadily acquired all the new technological gadget which does not sound like economic stagnation at all.

Also , they are liberal Keynesian socialist which has caused their GDP stagnation.
Until they turn capitalist and adopt basic conservative principles like a balanced budget amendment they will have tiny GDP growth

 

[Andylusion]

banks create money out of thin air

That's hilarious. And wrong.

No , it is not: paying with cash is not the same as paying with credit. Paying with credit actually creates money. The accounting transaction are completely different for both operations:
When paying with cash the assets of one bank decrease and the assets of the other bank increase.
Bank A( -reserves , + liabilities ( deposit))
Bank B( +reserves, - liabilities ( deposit)
When paying with a credit card the assets and and liabilities of one bank remain constant
Assets : (+ Loans , - Reserves), Liabilities ( + deposits , - liabilities ( deposits) )
while the assets of the other bank increase ( + Reserves , - liabilities( deposits) ) .

The operation at bank B is in effect identical to a customer making a deposit. This is the way in which banks create money endogenously.
This operation is not restricted by their reserves, since reserve requirements are checked at the end of the reporting period. At which point the bank will get the reserves from the Fed or borrowing from other bank ( which in turn has already created money endogenously).

Thus banks have by far ,greater power to create money than the Fed.

I'm sorry, but you are simply wrong. Yes, deposits can be put back into circulation, increasing the total money supply, because money can be in the system twice.

However, there is a limit to this. Money can only be loaned out at a percentage, and all loans eventually are paid back. So the re-loaning of money is limited.

Further, banks do many things with the money, not all of which are loans. Such as paying staff, upkeep on buildings, expanding operations, and purchasing of assets.

So the ability of each individual bank, is extremely limited.

Increasing the money in circulation through loaning, does not create money out of thin air.

Only the Department of Treasury, can actually increase total amount of hard currency in the system. If a bank could actually make money out of thin air, then it would be impossible for any bank to fail. The moment my reserves got low, I'd just print out more.

Indeed, at this point bank A would have to borrow from the Fed or from bank B, but only 10% of the loan

Wrong. Loans are fully funded.

as there is no reserve requirement for corporate deposits in the US,

Link?

Fully funded? By my previous example: if $100 were deposited in bank A and a loan was made its balance shee would be:

Liabilities ( deposits ) -100
Assets ( reserves) 0
Assets ( loans ) 100

And bank B:
Assets (reserves ) 100
Liabilities ( deposits ) -100

Bank B can now loan $100 to anyone , even if customer A decided to withdraw all of his funds the next day. In that case the only requirement for bank A would be to borrow $10 from the FED or bank B.


Link:
FRB: Reserve Requirements
Also the first 15 millions are exempt of any reserve requirements.

Fully funded?

Yes. That means that banks can't create money out of thin air to lend.
It means banks have to borrow in order to lend.

Bank B can now loan $100 to anyone , even if customer A decided to withdraw all of his funds the next day. In that case the only requirement for bank A would be to borrow $10 from the FED or bank B.

Nope.
If a customer deposits $100 and withdraws it the next day, the bank would need to borrow $100 to lend $100.

Even so, if we consider the multiplier effect those $100 will be turned into $1,000.
The bank can now borrow from any of the banks that have the remaining $900 in deposits and that will still leave $800 in deposits . That will happen even if the FED doesn't put a dime into the system ( or if you prefer to see it the other way : even if the Fed just allocates the reserves for the day and is repaid

Again, banks have more to do in the process of creating money than the Fed.

Credit and debt are necessary to make an economy grow, but too much debt ( specially private debt will make the economy tank ).

No, that isn't true. The economy grow before we had credit and debt. I reject any stupidity that claims the economy can't grow without it. Apple Computer doesn't borrow money. They operate on a cash on hand basis, and always have. Many companies have grown dramatically without credit or debt.

It is entirely possible to grow as a nation, without the use of debt. Yes, our economy has tons of debt, encouraged by horrible tax incentives. Just because that is how it currently is, doesn't mean it must be that way.

Again, the flaw in your theory is that the debt has to be paid back. You can't just continue the lend and re-lend, and re-lend, over and over infinitely. The money has to be paid back. Banks know this. Their ability to borrow and lend out, is always limited.

Society has used credit for millenia. It is really hard to grow without credit. I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple.

There is a healthy balance of debt to gdp ratio (about 80%) . Right now the US has exceeded that point. Japan crossed it many years while China's debt is also skyrocketing.

No , no flaw in my way of thinking: If debt grows too much the financial sector gets a bigger share of the gdp and for many households and companies the debt becomes unpayable. The result of this is permanent stagnation ( Japan has been stagnated for more than two decades).

And no , banks don't really know when debt has grown too much, else the 07 crisis wouldn't have happened and japan's private debt would not have grown so much.

Under the current system there is not much limit to how much money the banks can create: with a 10% reserve requirement the ratio is at least 10 to 1 ( the reserve requirement has a lot of exceptions) . That is why the Austrian economists are against it. I am not against it. I just think banks can allocate capital into the wrong sector just as easily as the government does.

Again, the fact society has used credit, doesn't mean it can't exist without credit.

How about Facebook. Apple computer never used any debt of any kind, until Steve Jobs died.

Qualcoimm, also never used debt until about 2013. Chipotle, Panera, even Buffalo Wild Wings, all have been operating debt free to the present day.

Thousands of major companies operate debt free.

The banks didn't allocate resources in the wrong sector. Investors choose where to allocate resources. They demanded the investments they got. Moreover, the investors didn't allocate resources in the wrong sector either. They knew the government, operating on left-wing principals would bail them out, under the guise of "saving the economy from a great depression".

Pretend I'm an investor, and you are the government. If I know for a fact, that you are so stupid, that if a bad investment, that you'll bail me out.... am I the one allocating to the wrong sector?

No, I'm not. I'm allocating my investments in the best possible place.

If the investment works out, I get all my money back plus massive interest.

If the investment doesn't work out, you government morons will bail me out and I'll get all my money back.

My investments are the best possible results for me. I invested brilliantly. The only 'wrong' was the idiots in government who made my investments brilliant, by guaranteeing them in the name of "preventing a great depression".

 

[EdwardBaiamonte]

Thousands of major companies operate debt free.

IBM grew to be the biggest most profitable company in history without debt

 

[CultureCitizen]

No , it is not: paying with cash is not the same as paying with credit. Paying with credit actually creates money. The accounting transaction are completely different for both operations:
When paying with cash the assets of one bank decrease and the assets of the other bank increase.
Bank A( -reserves , + liabilities ( deposit))
Bank B( +reserves, - liabilities ( deposit)
When paying with a credit card the assets and and liabilities of one bank remain constant
Assets : (+ Loans , - Reserves), Liabilities ( + deposits , - liabilities ( deposits) )
while the assets of the other bank increase ( + Reserves , - liabilities( deposits) ) .

The operation at bank B is in effect identical to a customer making a deposit. This is the way in which banks create money endogenously.
This operation is not restricted by their reserves, since reserve requirements are checked at the end of the reporting period. At which point the bank will get the reserves from the Fed or borrowing from other bank ( which in turn has already created money endogenously).

Thus banks have by far ,greater power to create money than the Fed.

I'm sorry, but you are simply wrong. Yes, deposits can be put back into circulation, increasing the total money supply, because money can be in the system twice.

However, there is a limit to this. Money can only be loaned out at a percentage, and all loans eventually are paid back. So the re-loaning of money is limited.

Further, banks do many things with the money, not all of which are loans. Such as paying staff, upkeep on buildings, expanding operations, and purchasing of assets.

So the ability of each individual bank, is extremely limited.

Increasing the money in circulation through loaning, does not create money out of thin air.

Only the Department of Treasury, can actually increase total amount of hard currency in the system. If a bank could actually make money out of thin air, then it would be impossible for any bank to fail. The moment my reserves got low, I'd just print out more.

Fully funded? By my previous example: if $100 were deposited in bank A and a loan was made its balance shee would be:

Liabilities ( deposits ) -100
Assets ( reserves) 0
Assets ( loans ) 100

And bank B:
Assets (reserves ) 100
Liabilities ( deposits ) -100

Bank B can now loan $100 to anyone , even if customer A decided to withdraw all of his funds the next day. In that case the only requirement for bank A would be to borrow $10 from the FED or bank B.


Link:
FRB: Reserve Requirements
Also the first 15 millions are exempt of any reserve requirements.

Fully funded?

Yes. That means that banks can't create money out of thin air to lend.
It means banks have to borrow in order to lend.

Bank B can now loan $100 to anyone , even if customer A decided to withdraw all of his funds the next day. In that case the only requirement for bank A would be to borrow $10 from the FED or bank B.

Nope.
If a customer deposits $100 and withdraws it the next day, the bank would need to borrow $100 to lend $100.

Even so, if we consider the multiplier effect those $100 will be turned into $1,000.
The bank can now borrow from any of the banks that have the remaining $900 in deposits and that will still leave $800 in deposits . That will happen even if the FED doesn't put a dime into the system ( or if you prefer to see it the other way : even if the Fed just allocates the reserves for the day and is repaid

Again, banks have more to do in the process of creating money than the Fed.

Credit and debt are necessary to make an economy grow, but too much debt ( specially private debt will make the economy tank ).

No, that isn't true. The economy grow before we had credit and debt. I reject any stupidity that claims the economy can't grow without it. Apple Computer doesn't borrow money. They operate on a cash on hand basis, and always have. Many companies have grown dramatically without credit or debt.

It is entirely possible to grow as a nation, without the use of debt. Yes, our economy has tons of debt, encouraged by horrible tax incentives. Just because that is how it currently is, doesn't mean it must be that way.

Again, the flaw in your theory is that the debt has to be paid back. You can't just continue the lend and re-lend, and re-lend, over and over infinitely. The money has to be paid back. Banks know this. Their ability to borrow and lend out, is always limited.

Society has used credit for millenia. It is really hard to grow without credit. I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple.

There is a healthy balance of debt to gdp ratio (about 80%) . Right now the US has exceeded that point. Japan crossed it many years while China's debt is also skyrocketing.

No , no flaw in my way of thinking: If debt grows too much the financial sector gets a bigger share of the gdp and for many households and companies the debt becomes unpayable. The result of this is permanent stagnation ( Japan has been stagnated for more than two decades).

And no , banks don't really know when debt has grown too much, else the 07 crisis wouldn't have happened and japan's private debt would not have grown so much.

Under the current system there is not much limit to how much money the banks can create: with a 10% reserve requirement the ratio is at least 10 to 1 ( the reserve requirement has a lot of exceptions) . That is why the Austrian economists are against it. I am not against it. I just think banks can allocate capital into the wrong sector just as easily as the government does.

Again, the fact society has used credit, doesn't mean it can't exist without credit.

How about Facebook. Apple computer never used any debt of any kind, until Steve Jobs died.

Qualcoimm, also never used debt until about 2013. Chipotle, Panera, even Buffalo Wild Wings, all have been operating debt free to the present day.

Thousands of major companies operate debt free.

The banks didn't allocate resources in the wrong sector. Investors choose where to allocate resources. They demanded the investments they got. Moreover, the investors didn't allocate resources in the wrong sector either. They knew the government, operating on left-wing principals would bail them out, under the guise of "saving the economy from a great depression".

Pretend I'm an investor, and you are the government. If I know for a fact, that you are so stupid, that if a bad investment, that you'll bail me out.... am I the one allocating to the wrong sector?

No, I'm not. I'm allocating my investments in the best possible place.

If the investment works out, I get all my money back plus massive interest.

If the investment doesn't work out, you government morons will bail me out and I'll get all my money back.

My investments are the best possible results for me. I invested brilliantly. The only 'wrong' was the idiots in government who made my investments brilliant, by guaranteeing them in the name of "preventing a great depression".

I disagree with you on several levels:
1. Banks did made a bad investment by giving predatory loans to both ninjas or people with low income.
Indeed, they were bailed out. As far as I know banks paid back, that would at least make them even regarding the bailout.


While you might think you are allocating your investment in the best possible way. That doesn't mean it is being allocated in the best possible way for the system as a whole: this seems to be the viewpoint of both Austrians an Libertarians, but I disagree. The simplest case is investing in a bubbling asset or in a market where there is little competition, while many people are able to make a profit from them, many more are harmed on the way.

At some point of history child labour was seen as a good thing. How could it not be good? We have a child who lives in poverty and we are offering him a way to be better off. Ah , true he gets paid less than an adult, and he will probably not be able to get any education because he is working.
Sometimes the best choice offered by the market are not necessarilly the best choices for a society as a whole.

 

[Andylusion]

I'm sorry, but you are simply wrong. Yes, deposits can be put back into circulation, increasing the total money supply, because money can be in the system twice.

However, there is a limit to this. Money can only be loaned out at a percentage, and all loans eventually are paid back. So the re-loaning of money is limited.

Further, banks do many things with the money, not all of which are loans. Such as paying staff, upkeep on buildings, expanding operations, and purchasing of assets.

So the ability of each individual bank, is extremely limited.

Increasing the money in circulation through loaning, does not create money out of thin air.

Only the Department of Treasury, can actually increase total amount of hard currency in the system. If a bank could actually make money out of thin air, then it would be impossible for any bank to fail. The moment my reserves got low, I'd just print out more.

Fully funded?

Yes. That means that banks can't create money out of thin air to lend.
It means banks have to borrow in order to lend.

Bank B can now loan $100 to anyone , even if customer A decided to withdraw all of his funds the next day. In that case the only requirement for bank A would be to borrow $10 from the FED or bank B.

Nope.
If a customer deposits $100 and withdraws it the next day, the bank would need to borrow $100 to lend $100.

Even so, if we consider the multiplier effect those $100 will be turned into $1,000.
The bank can now borrow from any of the banks that have the remaining $900 in deposits and that will still leave $800 in deposits . That will happen even if the FED doesn't put a dime into the system ( or if you prefer to see it the other way : even if the Fed just allocates the reserves for the day and is repaid

Again, banks have more to do in the process of creating money than the Fed.

Credit and debt are necessary to make an economy grow, but too much debt ( specially private debt will make the economy tank ).

No, that isn't true. The economy grow before we had credit and debt. I reject any stupidity that claims the economy can't grow without it. Apple Computer doesn't borrow money. They operate on a cash on hand basis, and always have. Many companies have grown dramatically without credit or debt.

It is entirely possible to grow as a nation, without the use of debt. Yes, our economy has tons of debt, encouraged by horrible tax incentives. Just because that is how it currently is, doesn't mean it must be that way.

Again, the flaw in your theory is that the debt has to be paid back. You can't just continue the lend and re-lend, and re-lend, over and over infinitely. The money has to be paid back. Banks know this. Their ability to borrow and lend out, is always limited.

Society has used credit for millenia. It is really hard to grow without credit. I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple.

There is a healthy balance of debt to gdp ratio (about 80%) . Right now the US has exceeded that point. Japan crossed it many years while China's debt is also skyrocketing.

No , no flaw in my way of thinking: If debt grows too much the financial sector gets a bigger share of the gdp and for many households and companies the debt becomes unpayable. The result of this is permanent stagnation ( Japan has been stagnated for more than two decades).

And no , banks don't really know when debt has grown too much, else the 07 crisis wouldn't have happened and japan's private debt would not have grown so much.

Under the current system there is not much limit to how much money the banks can create: with a 10% reserve requirement the ratio is at least 10 to 1 ( the reserve requirement has a lot of exceptions) . That is why the Austrian economists are against it. I am not against it. I just think banks can allocate capital into the wrong sector just as easily as the government does.

Again, the fact society has used credit, doesn't mean it can't exist without credit.

How about Facebook. Apple computer never used any debt of any kind, until Steve Jobs died.

Qualcoimm, also never used debt until about 2013. Chipotle, Panera, even Buffalo Wild Wings, all have been operating debt free to the present day.

Thousands of major companies operate debt free.

The banks didn't allocate resources in the wrong sector. Investors choose where to allocate resources. They demanded the investments they got. Moreover, the investors didn't allocate resources in the wrong sector either. They knew the government, operating on left-wing principals would bail them out, under the guise of "saving the economy from a great depression".

Pretend I'm an investor, and you are the government. If I know for a fact, that you are so stupid, that if a bad investment, that you'll bail me out.... am I the one allocating to the wrong sector?

No, I'm not. I'm allocating my investments in the best possible place.

If the investment works out, I get all my money back plus massive interest.

If the investment doesn't work out, you government morons will bail me out and I'll get all my money back.

My investments are the best possible results for me. I invested brilliantly. The only 'wrong' was the idiots in government who made my investments brilliant, by guaranteeing them in the name of "preventing a great depression".

I disagree with you on several levels:
1. Banks did made a bad investment by giving predatory loans to both ninjas or people with low income.
Indeed, they were bailed out. As far as I know banks paid back, that would at least make them even regarding the bailout.


While you might think you are allocating your investment in the best possible way. That doesn't mean it is being allocated in the best possible way for the system as a whole: this seems to be the viewpoint of both Austrians an Libertarians, but I disagree. The simplest case is investing in a bubbling asset or in a market where there is little competition, while many people are able to make a profit from them, many more are harmed on the way.

At some point of history child labour was seen as a good thing. How could it not be good? We have a child who lives in poverty and we are offering him a way to be better off. Ah , true he gets paid less than an adult, and he will probably not be able to get any education because he is working.
Sometimes the best choice offered by the market are not necessarilly the best choices for a society as a whole.

You mean the loans that the federal government was actively suing them to make?
And by the way, the biggest bailouts of the entire recession were Freddie and Fannie. You know, the government owned banks?

Banks paid back bailout money, with other bail out money.
Banks Repaid Fed Bailout With Other Fed Money: Government Report
This is a well known issue. Most of the money paid back, came from other government programs.

This wacky idea that somehow banks paid back all the money, is ridiculous. Use your brain. If the banks actually paid back all the money, then how the heck did the national debt double? The left wing likes to claim that the only reason Obama had all these $1.3 Trillion dollar deficits, is because of the bailouts supposedly caused by Bush. But then you turn right around and claim the banks paid it all back. Then how the heck did we have all that debt? Logic fail?

If the banks did in fact pay back all the bailout money, and Obama still managed to have trillion dollar deficits for 5 years.... doesn't that make him even more incompetent than we ever imagined? He got all the money back, and still managed to have a trillion dollar deficit?

 

[CultureCitizen]

Thousands of major companies operate debt free.

IBM grew to be the biggest most profitable company in history without debt

Their income statement says otherwise:

Interest Expense 468,000

IBM Income Statement | Balance Sheet | Cash Flow | International Business Machines Stock - Yahoo Finance

 

[CultureCitizen]

Even so, if we consider the multiplier effect those $100 will be turned into $1,000.
The bank can now borrow from any of the banks that have the remaining $900 in deposits and that will still leave $800 in deposits . That will happen even if the FED doesn't put a dime into the system ( or if you prefer to see it the other way : even if the Fed just allocates the reserves for the day and is repaid

Again, banks have more to do in the process of creating money than the Fed.

Credit and debt are necessary to make an economy grow, but too much debt ( specially private debt will make the economy tank ).

No, that isn't true. The economy grow before we had credit and debt. I reject any stupidity that claims the economy can't grow without it. Apple Computer doesn't borrow money. They operate on a cash on hand basis, and always have. Many companies have grown dramatically without credit or debt.

It is entirely possible to grow as a nation, without the use of debt. Yes, our economy has tons of debt, encouraged by horrible tax incentives. Just because that is how it currently is, doesn't mean it must be that way.

Again, the flaw in your theory is that the debt has to be paid back. You can't just continue the lend and re-lend, and re-lend, over and over infinitely. The money has to be paid back. Banks know this. Their ability to borrow and lend out, is always limited.

Society has used credit for millenia. It is really hard to grow without credit. I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple.

There is a healthy balance of debt to gdp ratio (about 80%) . Right now the US has exceeded that point. Japan crossed it many years while China's debt is also skyrocketing.

No , no flaw in my way of thinking: If debt grows too much the financial sector gets a bigger share of the gdp and for many households and companies the debt becomes unpayable. The result of this is permanent stagnation ( Japan has been stagnated for more than two decades).

And no , banks don't really know when debt has grown too much, else the 07 crisis wouldn't have happened and japan's private debt would not have grown so much.

Under the current system there is not much limit to how much money the banks can create: with a 10% reserve requirement the ratio is at least 10 to 1 ( the reserve requirement has a lot of exceptions) . That is why the Austrian economists are against it. I am not against it. I just think banks can allocate capital into the wrong sector just as easily as the government does.

Again, the fact society has used credit, doesn't mean it can't exist without credit.

How about Facebook. Apple computer never used any debt of any kind, until Steve Jobs died.

Qualcoimm, also never used debt until about 2013. Chipotle, Panera, even Buffalo Wild Wings, all have been operating debt free to the present day.

Thousands of major companies operate debt free.

The banks didn't allocate resources in the wrong sector. Investors choose where to allocate resources. They demanded the investments they got. Moreover, the investors didn't allocate resources in the wrong sector either. They knew the government, operating on left-wing principals would bail them out, under the guise of "saving the economy from a great depression".

Pretend I'm an investor, and you are the government. If I know for a fact, that you are so stupid, that if a bad investment, that you'll bail me out.... am I the one allocating to the wrong sector?

No, I'm not. I'm allocating my investments in the best possible place.

If the investment works out, I get all my money back plus massive interest.

If the investment doesn't work out, you government morons will bail me out and I'll get all my money back.

My investments are the best possible results for me. I invested brilliantly. The only 'wrong' was the idiots in government who made my investments brilliant, by guaranteeing them in the name of "preventing a great depression".

I disagree with you on several levels:
1. Banks did made a bad investment by giving predatory loans to both ninjas or people with low income.
Indeed, they were bailed out. As far as I know banks paid back, that would at least make them even regarding the bailout.


While you might think you are allocating your investment in the best possible way. That doesn't mean it is being allocated in the best possible way for the system as a whole: this seems to be the viewpoint of both Austrians an Libertarians, but I disagree. The simplest case is investing in a bubbling asset or in a market where there is little competition, while many people are able to make a profit from them, many more are harmed on the way.

At some point of history child labour was seen as a good thing. How could it not be good? We have a child who lives in poverty and we are offering him a way to be better off. Ah , true he gets paid less than an adult, and he will probably not be able to get any education because he is working.
Sometimes the best choice offered by the market are not necessarilly the best choices for a society as a whole.

You mean the loans that the federal government was actively suing them to make?
And by the way, the biggest bailouts of the entire recession were Freddie and Fannie. You know, the government owned banks?

Banks paid back bailout money, with other bail out money.
Banks Repaid Fed Bailout With Other Fed Money: Government Report
This is a well known issue. Most of the money paid back, came from other government programs.

This wacky idea that somehow banks paid back all the money, is ridiculous. Use your brain. If the banks actually paid back all the money, then how the heck did the national debt double? The left wing likes to claim that the only reason Obama had all these $1.3 Trillion dollar deficits, is because of the bailouts supposedly caused by Bush. But then you turn right around and claim the banks paid it all back. Then how the heck did we have all that debt? Logic fail?

If the banks did in fact pay back all the bailout money, and Obama still managed to have trillion dollar deficits for 5 years.... doesn't that make him even more incompetent than we ever imagined? He got all the money back, and still managed to have a trillion dollar deficit?

You seem to assume I supported the bailout. I don't.
Actually Toddsterpatriot pointed out a couple of articles that stated the banks had paid ( at least ) part of their debt. He was quite cynical about it , and since then I strongly suppose he works in the financial sector.

So , if you are able to produce any links , I'll get back at discussing the bailout with him.

Thanks,
CC

 

[Andylusion]

Thousands of major companies operate debt free.

IBM grew to be the biggest most profitable company in history without debt

Their income statement says otherwise:

Interest Expense 468,000

IBM Income Statement | Balance Sheet | Cash Flow | International Business Machines Stock - Yahoo Finance

No, actually it doesn't. He did not say IBM has never had debt. He said IBM grew to the biggest and most profitable company in history, without debt. Now I couldn't verify that, but I have heard that before.

IBM started in 1911. They became the top corporation in America, by the 1980s at the latest.

From what I understand, they never used any debt whatsoever, for the vast majority of 1911 to 1980s. You are looking at today when they are swimming in debt. True.... and IBM has fallen from being the top corporation in America. CVS is ahead of IBM honestly, and IBM right now, is in bad shape.

Regardless, it really irritates me when left-wingers go down this road of "this is the way it is" without looking at why.

Look at Apple computer.
Why Apple Is Borrowing $6.5 Billion And What Obama's Trying To Do About It


Yes, Apple computer is borrowing billions of dollars, that's true. Doesn't that make you ask 'why'?

Apple computer posted $18 Billion dollars in profit for just one quarter.
Apple computer has a massive $178 Billion in cash reserves.

But they are borrowing $6.5 Billion? Doesn't something there not add up?

Then you find out the obvious..... Apple is doing this to avoid taxes.

See, the left wing jacks up taxes on corporations, then provides tax incentives to borrow money, and now you look around and go:

"All the corporations are borrowing.... it must be necessary!"

No, you created conditions where people borrow money to avoid your crazy policies. This is like Obama care jacking up health insurance premiums, and driving business away from providing health insurance, and then claiming "see people need ObamaCare subsidized insurance!"... no you created a system where people use it, by ruining what we had.

 

[Toddsterpatriot]

Even so, if we consider the multiplier effect those $100 will be turned into $1,000.
The bank can now borrow from any of the banks that have the remaining $900 in deposits and that will still leave $800 in deposits . That will happen even if the FED doesn't put a dime into the system ( or if you prefer to see it the other way : even if the Fed just allocates the reserves for the day and is repaid

Again, banks have more to do in the process of creating money than the Fed.

Credit and debt are necessary to make an economy grow, but too much debt ( specially private debt will make the economy tank ).

No, that isn't true. The economy grow before we had credit and debt. I reject any stupidity that claims the economy can't grow without it. Apple Computer doesn't borrow money. They operate on a cash on hand basis, and always have. Many companies have grown dramatically without credit or debt.

It is entirely possible to grow as a nation, without the use of debt. Yes, our economy has tons of debt, encouraged by horrible tax incentives. Just because that is how it currently is, doesn't mean it must be that way.

Again, the flaw in your theory is that the debt has to be paid back. You can't just continue the lend and re-lend, and re-lend, over and over infinitely. The money has to be paid back. Banks know this. Their ability to borrow and lend out, is always limited.

Society has used credit for millenia. It is really hard to grow without credit. I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple.

There is a healthy balance of debt to gdp ratio (about 80%) . Right now the US has exceeded that point. Japan crossed it many years while China's debt is also skyrocketing.

No , no flaw in my way of thinking: If debt grows too much the financial sector gets a bigger share of the gdp and for many households and companies the debt becomes unpayable. The result of this is permanent stagnation ( Japan has been stagnated for more than two decades).

And no , banks don't really know when debt has grown too much, else the 07 crisis wouldn't have happened and japan's private debt would not have grown so much.

Under the current system there is not much limit to how much money the banks can create: with a 10% reserve requirement the ratio is at least 10 to 1 ( the reserve requirement has a lot of exceptions) . That is why the Austrian economists are against it. I am not against it. I just think banks can allocate capital into the wrong sector just as easily as the government does.

Again, the fact society has used credit, doesn't mean it can't exist without credit.

How about Facebook. Apple computer never used any debt of any kind, until Steve Jobs died.

Qualcoimm, also never used debt until about 2013. Chipotle, Panera, even Buffalo Wild Wings, all have been operating debt free to the present day.

Thousands of major companies operate debt free.

The banks didn't allocate resources in the wrong sector. Investors choose where to allocate resources. They demanded the investments they got. Moreover, the investors didn't allocate resources in the wrong sector either. They knew the government, operating on left-wing principals would bail them out, under the guise of "saving the economy from a great depression".

Pretend I'm an investor, and you are the government. If I know for a fact, that you are so stupid, that if a bad investment, that you'll bail me out.... am I the one allocating to the wrong sector?

No, I'm not. I'm allocating my investments in the best possible place.

If the investment works out, I get all my money back plus massive interest.

If the investment doesn't work out, you government morons will bail me out and I'll get all my money back.

My investments are the best possible results for me. I invested brilliantly. The only 'wrong' was the idiots in government who made my investments brilliant, by guaranteeing them in the name of "preventing a great depression".

I disagree with you on several levels:
1. Banks did made a bad investment by giving predatory loans to both ninjas or people with low income.
Indeed, they were bailed out. As far as I know banks paid back, that would at least make them even regarding the bailout.


While you might think you are allocating your investment in the best possible way. That doesn't mean it is being allocated in the best possible way for the system as a whole: this seems to be the viewpoint of both Austrians an Libertarians, but I disagree. The simplest case is investing in a bubbling asset or in a market where there is little competition, while many people are able to make a profit from them, many more are harmed on the way.

At some point of history child labour was seen as a good thing. How could it not be good? We have a child who lives in poverty and we are offering him a way to be better off. Ah , true he gets paid less than an adult, and he will probably not be able to get any education because he is working.
Sometimes the best choice offered by the market are not necessarilly the best choices for a society as a whole.

You mean the loans that the federal government was actively suing them to make?
And by the way, the biggest bailouts of the entire recession were Freddie and Fannie. You know, the government owned banks?

Banks paid back bailout money, with other bail out money.
Banks Repaid Fed Bailout With Other Fed Money: Government Report
This is a well known issue. Most of the money paid back, came from other government programs.

This wacky idea that somehow banks paid back all the money, is ridiculous. Use your brain. If the banks actually paid back all the money, then how the heck did the national debt double? The left wing likes to claim that the only reason Obama had all these $1.3 Trillion dollar deficits, is because of the bailouts supposedly caused by Bush. But then you turn right around and claim the banks paid it all back. Then how the heck did we have all that debt? Logic fail?

If the banks did in fact pay back all the bailout money, and Obama still managed to have trillion dollar deficits for 5 years.... doesn't that make him even more incompetent than we ever imagined? He got all the money back, and still managed to have a trillion dollar deficit?

This is a well known issue. Most of the money paid back, came from other government programs.

Baloney.

More than half of $4 billion in federal funds disbursed this year to spur small-business lending by community banks was used to repay bailout funds that the banks received under the government's Troubled Asset Relief Program.

They paid back over $200 billion, a portion of $4 billion doesn't mean you can say "Most of the money paid back, came from other government programs" Unless you use liberal bad math.

If the banks actually paid back all the money, then how the heck did the national debt double?

Because Obama spends like a drunken sailor.

He got all the money back, and still managed to have a trillion dollar deficit?

Yes.

 

[Toddsterpatriot]

No, that isn't true. The economy grow before we had credit and debt. I reject any stupidity that claims the economy can't grow without it. Apple Computer doesn't borrow money. They operate on a cash on hand basis, and always have. Many companies have grown dramatically without credit or debt.

It is entirely possible to grow as a nation, without the use of debt. Yes, our economy has tons of debt, encouraged by horrible tax incentives. Just because that is how it currently is, doesn't mean it must be that way.

Again, the flaw in your theory is that the debt has to be paid back. You can't just continue the lend and re-lend, and re-lend, over and over infinitely. The money has to be paid back. Banks know this. Their ability to borrow and lend out, is always limited.

Society has used credit for millenia. It is really hard to grow without credit. I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple.

There is a healthy balance of debt to gdp ratio (about 80%) . Right now the US has exceeded that point. Japan crossed it many years while China's debt is also skyrocketing.

No , no flaw in my way of thinking: If debt grows too much the financial sector gets a bigger share of the gdp and for many households and companies the debt becomes unpayable. The result of this is permanent stagnation ( Japan has been stagnated for more than two decades).

And no , banks don't really know when debt has grown too much, else the 07 crisis wouldn't have happened and japan's private debt would not have grown so much.

Under the current system there is not much limit to how much money the banks can create: with a 10% reserve requirement the ratio is at least 10 to 1 ( the reserve requirement has a lot of exceptions) . That is why the Austrian economists are against it. I am not against it. I just think banks can allocate capital into the wrong sector just as easily as the government does.

Again, the fact society has used credit, doesn't mean it can't exist without credit.

How about Facebook. Apple computer never used any debt of any kind, until Steve Jobs died.

Qualcoimm, also never used debt until about 2013. Chipotle, Panera, even Buffalo Wild Wings, all have been operating debt free to the present day.

Thousands of major companies operate debt free.

The banks didn't allocate resources in the wrong sector. Investors choose where to allocate resources. They demanded the investments they got. Moreover, the investors didn't allocate resources in the wrong sector either. They knew the government, operating on left-wing principals would bail them out, under the guise of "saving the economy from a great depression".

Pretend I'm an investor, and you are the government. If I know for a fact, that you are so stupid, that if a bad investment, that you'll bail me out.... am I the one allocating to the wrong sector?

No, I'm not. I'm allocating my investments in the best possible place.

If the investment works out, I get all my money back plus massive interest.

If the investment doesn't work out, you government morons will bail me out and I'll get all my money back.

My investments are the best possible results for me. I invested brilliantly. The only 'wrong' was the idiots in government who made my investments brilliant, by guaranteeing them in the name of "preventing a great depression".

I disagree with you on several levels:
1. Banks did made a bad investment by giving predatory loans to both ninjas or people with low income.
Indeed, they were bailed out. As far as I know banks paid back, that would at least make them even regarding the bailout.


While you might think you are allocating your investment in the best possible way. That doesn't mean it is being allocated in the best possible way for the system as a whole: this seems to be the viewpoint of both Austrians an Libertarians, but I disagree. The simplest case is investing in a bubbling asset or in a market where there is little competition, while many people are able to make a profit from them, many more are harmed on the way.

At some point of history child labour was seen as a good thing. How could it not be good? We have a child who lives in poverty and we are offering him a way to be better off. Ah , true he gets paid less than an adult, and he will probably not be able to get any education because he is working.
Sometimes the best choice offered by the market are not necessarilly the best choices for a society as a whole.

You mean the loans that the federal government was actively suing them to make?
And by the way, the biggest bailouts of the entire recession were Freddie and Fannie. You know, the government owned banks?

Banks paid back bailout money, with other bail out money.
Banks Repaid Fed Bailout With Other Fed Money: Government Report
This is a well known issue. Most of the money paid back, came from other government programs.

This wacky idea that somehow banks paid back all the money, is ridiculous. Use your brain. If the banks actually paid back all the money, then how the heck did the national debt double? The left wing likes to claim that the only reason Obama had all these $1.3 Trillion dollar deficits, is because of the bailouts supposedly caused by Bush. But then you turn right around and claim the banks paid it all back. Then how the heck did we have all that debt? Logic fail?

If the banks did in fact pay back all the bailout money, and Obama still managed to have trillion dollar deficits for 5 years.... doesn't that make him even more incompetent than we ever imagined? He got all the money back, and still managed to have a trillion dollar deficit?

You seem to assume I supported the bailout. I don't.
Actually Toddsterpatriot pointed out a couple of articles that stated the banks had paid ( at least ) part of their debt. He was quite cynical about it , and since then I strongly suppose he works in the financial sector.

So , if you are able to produce any links , I'll get back at discussing the bailout with him.

Thanks,
CC

Actually Toddsterpatriot pointed out a couple of articles that stated the banks had paid ( at least ) part of their debt.

All of it plus a couple dozen billion in profits to the US Treasury.

 

[CultureCitizen]

Under the current system there is not much limit to how much money the banks can create:.

the Federal Reserve is designed for that. Ever heard of it??

And the Fed is actually a mixed entity partly private and partly public, which might just be the worst of both worlds.

 

[CultureCitizen]

And no , banks don't really know when debt has grown too much, else the 07 crisis wouldn't have happened.

You mean they didn't know but now they have a much better idea thanks to the 07 crisis.

Sory , that was just a way of speaking. Appologies Ed. What I really meant is they they don't care at all if the debt grows too much as long as there is proffit to be made.

 

[CultureCitizen]

Thousands of major companies operate debt free.

IBM grew to be the biggest most profitable company in history without debt

Their income statement says otherwise:

Interest Expense 468,000

IBM Income Statement | Balance Sheet | Cash Flow | International Business Machines Stock - Yahoo Finance

No, actually it doesn't. He did not say IBM has never had debt. He said IBM grew to the biggest and most profitable company in history, without debt. Now I couldn't verify that, but I have heard that before.

IBM started in 1911. They became the top corporation in America, by the 1980s at the latest.

From what I understand, they never used any debt whatsoever, for the vast majority of 1911 to 1980s. You are looking at today when they are swimming in debt. True.... and IBM has fallen from being the top corporation in America. CVS is ahead of IBM honestly, and IBM right now, is in bad shape.

Regardless, it really irritates me when left-wingers go down this road of "this is the way it is" without looking at why.

Look at Apple computer.
Why Apple Is Borrowing $6.5 Billion And What Obama's Trying To Do About It


Yes, Apple computer is borrowing billions of dollars, that's true. Doesn't that make you ask 'why'?

Apple computer posted $18 Billion dollars in profit for just one quarter.
Apple computer has a massive $178 Billion in cash reserves.

But they are borrowing $6.5 Billion? Doesn't something there not add up?

Then you find out the obvious..... Apple is doing this to avoid taxes.

See, the left wing jacks up taxes on corporations, then provides tax incentives to borrow money, and now you look around and go:

"All the corporations are borrowing.... it must be necessary!"

No, you created conditions where people borrow money to avoid your crazy policies. This is like Obama care jacking up health insurance premiums, and driving business away from providing health insurance, and then claiming "see people need ObamaCare subsidized insurance!"... no you created a system where people use it, by ruining what we had.

No , I am not using your silogism:

"All the corporations are borrowing.... it must be necessary!" ... your words , not mine.

In order to achieve growth production and monetary base have to grow.
Shrink the monetary base and you get a '29 style crisis.
Increase household debt too much and you get a '07 crisis.
Increase the corporate debt too much and ... well, we'll have to wait untill Chinas corporate debt busts to see what happens ( and how they handle that ).

Your point on Apple seems hard to proove, and even if it is true, what about the investors ? None of them required debt to purchase Apple stocks ?

Corporate debt aside , how many homeowners do you know were able to buy their house without any credit?
I do know some, but they usually had some land and built their own house in their spare time.

 

[Andylusion]

No, that isn't true. The economy grow before we had credit and debt. I reject any stupidity that claims the economy can't grow without it. Apple Computer doesn't borrow money. They operate on a cash on hand basis, and always have. Many companies have grown dramatically without credit or debt.

It is entirely possible to grow as a nation, without the use of debt. Yes, our economy has tons of debt, encouraged by horrible tax incentives. Just because that is how it currently is, doesn't mean it must be that way.

Again, the flaw in your theory is that the debt has to be paid back. You can't just continue the lend and re-lend, and re-lend, over and over infinitely. The money has to be paid back. Banks know this. Their ability to borrow and lend out, is always limited.

Society has used credit for millenia. It is really hard to grow without credit. I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple.

There is a healthy balance of debt to gdp ratio (about 80%) . Right now the US has exceeded that point. Japan crossed it many years while China's debt is also skyrocketing.

No , no flaw in my way of thinking: If debt grows too much the financial sector gets a bigger share of the gdp and for many households and companies the debt becomes unpayable. The result of this is permanent stagnation ( Japan has been stagnated for more than two decades).

And no , banks don't really know when debt has grown too much, else the 07 crisis wouldn't have happened and japan's private debt would not have grown so much.

Under the current system there is not much limit to how much money the banks can create: with a 10% reserve requirement the ratio is at least 10 to 1 ( the reserve requirement has a lot of exceptions) . That is why the Austrian economists are against it. I am not against it. I just think banks can allocate capital into the wrong sector just as easily as the government does.

Again, the fact society has used credit, doesn't mean it can't exist without credit.

How about Facebook. Apple computer never used any debt of any kind, until Steve Jobs died.

Qualcoimm, also never used debt until about 2013. Chipotle, Panera, even Buffalo Wild Wings, all have been operating debt free to the present day.

Thousands of major companies operate debt free.

The banks didn't allocate resources in the wrong sector. Investors choose where to allocate resources. They demanded the investments they got. Moreover, the investors didn't allocate resources in the wrong sector either. They knew the government, operating on left-wing principals would bail them out, under the guise of "saving the economy from a great depression".

Pretend I'm an investor, and you are the government. If I know for a fact, that you are so stupid, that if a bad investment, that you'll bail me out.... am I the one allocating to the wrong sector?

No, I'm not. I'm allocating my investments in the best possible place.

If the investment works out, I get all my money back plus massive interest.

If the investment doesn't work out, you government morons will bail me out and I'll get all my money back.

My investments are the best possible results for me. I invested brilliantly. The only 'wrong' was the idiots in government who made my investments brilliant, by guaranteeing them in the name of "preventing a great depression".

I disagree with you on several levels:
1. Banks did made a bad investment by giving predatory loans to both ninjas or people with low income.
Indeed, they were bailed out. As far as I know banks paid back, that would at least make them even regarding the bailout.


While you might think you are allocating your investment in the best possible way. That doesn't mean it is being allocated in the best possible way for the system as a whole: this seems to be the viewpoint of both Austrians an Libertarians, but I disagree. The simplest case is investing in a bubbling asset or in a market where there is little competition, while many people are able to make a profit from them, many more are harmed on the way.

At some point of history child labour was seen as a good thing. How could it not be good? We have a child who lives in poverty and we are offering him a way to be better off. Ah , true he gets paid less than an adult, and he will probably not be able to get any education because he is working.
Sometimes the best choice offered by the market are not necessarilly the best choices for a society as a whole.

You mean the loans that the federal government was actively suing them to make?
And by the way, the biggest bailouts of the entire recession were Freddie and Fannie. You know, the government owned banks?

Banks paid back bailout money, with other bail out money.
Banks Repaid Fed Bailout With Other Fed Money: Government Report
This is a well known issue. Most of the money paid back, came from other government programs.

This wacky idea that somehow banks paid back all the money, is ridiculous. Use your brain. If the banks actually paid back all the money, then how the heck did the national debt double? The left wing likes to claim that the only reason Obama had all these $1.3 Trillion dollar deficits, is because of the bailouts supposedly caused by Bush. But then you turn right around and claim the banks paid it all back. Then how the heck did we have all that debt? Logic fail?

If the banks did in fact pay back all the bailout money, and Obama still managed to have trillion dollar deficits for 5 years.... doesn't that make him even more incompetent than we ever imagined? He got all the money back, and still managed to have a trillion dollar deficit?

This is a well known issue. Most of the money paid back, came from other government programs.

Baloney.

More than half of $4 billion in federal funds disbursed this year to spur small-business lending by community banks was used to repay bailout funds that the banks received under the government's Troubled Asset Relief Program.

They paid back over $200 billion, a portion of $4 billion doesn't mean you can say "Most of the money paid back, came from other government programs" Unless you use liberal bad math.

If the banks actually paid back all the money, then how the heck did the national debt double?

Because Obama spends like a drunken sailor.

He got all the money back, and still managed to have a trillion dollar deficit?

Yes.

Then you are not reading what I am reading. According to the GAO, 40% of all institutions involved in TARP, repaid their bailouts with other government loans and programs.

You seem to have locked onto one example, and assumed no other example exists. The point of that $4 Billion program, being used to pay back government bailouts, was that if they are using that program... a program supposedly that earmarked those funds for small business loans... to pay back bailouts... then obviously they are likely using other programs the same way, which is exactly what the GAO shows.

 

[Andylusion]

And the Fed is actually a mixed entity partly private and partly public, which might just be the worst of both worlds.

I'm not sure how you would conclude that. There is nothing private about it's operation. It's controlled by congress for everything.

The only thing having private investors does, is bring capital into it's operations, which of course requires dividends. What exactly is the downside?

 

[Andylusion]

Thousands of major companies operate debt free.

IBM grew to be the biggest most profitable company in history without debt

Their income statement says otherwise:

Interest Expense 468,000

IBM Income Statement | Balance Sheet | Cash Flow | International Business Machines Stock - Yahoo Finance

No, actually it doesn't. He did not say IBM has never had debt. He said IBM grew to the biggest and most profitable company in history, without debt. Now I couldn't verify that, but I have heard that before.

IBM started in 1911. They became the top corporation in America, by the 1980s at the latest.

From what I understand, they never used any debt whatsoever, for the vast majority of 1911 to 1980s. You are looking at today when they are swimming in debt. True.... and IBM has fallen from being the top corporation in America. CVS is ahead of IBM honestly, and IBM right now, is in bad shape.

Regardless, it really irritates me when left-wingers go down this road of "this is the way it is" without looking at why.

Look at Apple computer.
Why Apple Is Borrowing $6.5 Billion And What Obama's Trying To Do About It


Yes, Apple computer is borrowing billions of dollars, that's true. Doesn't that make you ask 'why'?

Apple computer posted $18 Billion dollars in profit for just one quarter.
Apple computer has a massive $178 Billion in cash reserves.

But they are borrowing $6.5 Billion? Doesn't something there not add up?

Then you find out the obvious..... Apple is doing this to avoid taxes.

See, the left wing jacks up taxes on corporations, then provides tax incentives to borrow money, and now you look around and go:

"All the corporations are borrowing.... it must be necessary!"

No, you created conditions where people borrow money to avoid your crazy policies. This is like Obama care jacking up health insurance premiums, and driving business away from providing health insurance, and then claiming "see people need ObamaCare subsidized insurance!"... no you created a system where people use it, by ruining what we had.

No , I am not using your silogism:

"All the corporations are borrowing.... it must be necessary!" ... your words , not mine.

In order to achieve growth production and monetary base have to grow.
Shrink the monetary base and you get a '29 style crisis.
Increase household debt too much and you get a '07 crisis.
Increase the corporate debt too much and ... well, we'll have to wait untill Chinas corporate debt busts to see what happens ( and how they handle that ).

Your point on Apple seems hard to proove, and even if it is true, what about the investors ? None of them required debt to purchase Apple stocks ?

Corporate debt aside , how many homeowners do you know were able to buy their house without any credit?
I do know some, but they usually had some land and built their own house in their spare time.

True that you didn't say that directly, but that is the implication you made when you said "I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple." The implication is, because you don't know of a corporation who hasn't used credit, then it must be required for growth.

Shrinking of the monetary base, is unfairly claimed to be responsible for down turns in the economy.

I would argue that claim is confusing the cause, with the effect.

Whenever you have a down turn in the economy, the monetary base nearly always shrinks. As fewer people borrow money, because they are no longer credit worthy, and as business stops borrowing to expand, because the economy sucks, lending declines. As loans are paid back, the money base shrinks. It's an effect of an economic crash, not a cause of an economic crash.

I have never once stopped buying stuff, because I was declined a loan. Never happened. I have stopped buying stuff because work dried up, and I was unemployed. Happened quite a bit.

In fact, most of the first 150 year of US history, we had deflation. And the monetary supply shrank for nearly the entire 1920s... you know the roaring 20s? In fact there were many periods of long running monetary supply reduction, that did not result in economic recessions.

Dude, I own Apple stock. Right now, I own Apple stock. I don't owe anyone anywhere, anything. I bought my car with cash. I have no credit cards. I have no student loans. I have no debt of any kind. Why would you conclude that investors need debt to buy stock? I'm really confused by that. Maybe you could explain what you mean?

 

[Toddsterpatriot]

Society has used credit for millenia. It is really hard to grow without credit. I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple.

There is a healthy balance of debt to gdp ratio (about 80%) . Right now the US has exceeded that point. Japan crossed it many years while China's debt is also skyrocketing.

No , no flaw in my way of thinking: If debt grows too much the financial sector gets a bigger share of the gdp and for many households and companies the debt becomes unpayable. The result of this is permanent stagnation ( Japan has been stagnated for more than two decades).

And no , banks don't really know when debt has grown too much, else the 07 crisis wouldn't have happened and japan's private debt would not have grown so much.

Under the current system there is not much limit to how much money the banks can create: with a 10% reserve requirement the ratio is at least 10 to 1 ( the reserve requirement has a lot of exceptions) . That is why the Austrian economists are against it. I am not against it. I just think banks can allocate capital into the wrong sector just as easily as the government does.

Again, the fact society has used credit, doesn't mean it can't exist without credit.

How about Facebook. Apple computer never used any debt of any kind, until Steve Jobs died.

Qualcoimm, also never used debt until about 2013. Chipotle, Panera, even Buffalo Wild Wings, all have been operating debt free to the present day.

Thousands of major companies operate debt free.

The banks didn't allocate resources in the wrong sector. Investors choose where to allocate resources. They demanded the investments they got. Moreover, the investors didn't allocate resources in the wrong sector either. They knew the government, operating on left-wing principals would bail them out, under the guise of "saving the economy from a great depression".

Pretend I'm an investor, and you are the government. If I know for a fact, that you are so stupid, that if a bad investment, that you'll bail me out.... am I the one allocating to the wrong sector?

No, I'm not. I'm allocating my investments in the best possible place.

If the investment works out, I get all my money back plus massive interest.

If the investment doesn't work out, you government morons will bail me out and I'll get all my money back.

My investments are the best possible results for me. I invested brilliantly. The only 'wrong' was the idiots in government who made my investments brilliant, by guaranteeing them in the name of "preventing a great depression".

I disagree with you on several levels:
1. Banks did made a bad investment by giving predatory loans to both ninjas or people with low income.
Indeed, they were bailed out. As far as I know banks paid back, that would at least make them even regarding the bailout.


While you might think you are allocating your investment in the best possible way. That doesn't mean it is being allocated in the best possible way for the system as a whole: this seems to be the viewpoint of both Austrians an Libertarians, but I disagree. The simplest case is investing in a bubbling asset or in a market where there is little competition, while many people are able to make a profit from them, many more are harmed on the way.

At some point of history child labour was seen as a good thing. How could it not be good? We have a child who lives in poverty and we are offering him a way to be better off. Ah , true he gets paid less than an adult, and he will probably not be able to get any education because he is working.
Sometimes the best choice offered by the market are not necessarilly the best choices for a society as a whole.

You mean the loans that the federal government was actively suing them to make?
And by the way, the biggest bailouts of the entire recession were Freddie and Fannie. You know, the government owned banks?

Banks paid back bailout money, with other bail out money.
Banks Repaid Fed Bailout With Other Fed Money: Government Report
This is a well known issue. Most of the money paid back, came from other government programs.

This wacky idea that somehow banks paid back all the money, is ridiculous. Use your brain. If the banks actually paid back all the money, then how the heck did the national debt double? The left wing likes to claim that the only reason Obama had all these $1.3 Trillion dollar deficits, is because of the bailouts supposedly caused by Bush. But then you turn right around and claim the banks paid it all back. Then how the heck did we have all that debt? Logic fail?

If the banks did in fact pay back all the bailout money, and Obama still managed to have trillion dollar deficits for 5 years.... doesn't that make him even more incompetent than we ever imagined? He got all the money back, and still managed to have a trillion dollar deficit?

This is a well known issue. Most of the money paid back, came from other government programs.

Baloney.

More than half of $4 billion in federal funds disbursed this year to spur small-business lending by community banks was used to repay bailout funds that the banks received under the government's Troubled Asset Relief Program.

They paid back over $200 billion, a portion of $4 billion doesn't mean you can say "Most of the money paid back, came from other government programs" Unless you use liberal bad math.

If the banks actually paid back all the money, then how the heck did the national debt double?

Because Obama spends like a drunken sailor.

He got all the money back, and still managed to have a trillion dollar deficit?

Yes.

Then you are not reading what I am reading. According to the GAO, 40% of all institutions involved in TARP, repaid their bailouts with other government loans and programs.

You seem to have locked onto one example, and assumed no other example exists. The point of that $4 Billion program, being used to pay back government bailouts, was that if they are using that program... a program supposedly that earmarked those funds for small business loans... to pay back bailouts... then obviously they are likely using other programs the same way, which is exactly what the GAO shows.

According to the GAO, 40% of all institutions involved in TARP, repaid their bailouts with other government loans and programs.

Well, if you want to say that the biggest banks repaid over $200 billion in TARP funding while tiny banks, making up more than 40% of TARP banks, repaid about $2 billion in TARP loans with other loan money, I won't argue with that.

You'd still have to admit your claim that "most of the money paid back came from other government programs", because $2 billion is not most of over $200 billion.