More corporate welfare...

[Nocturnal]

I swear to god that I'm going to choke the next person who bitches about health care or some other program and insists that the free market is the way to go.

http://biz.yahoo.com/ap/080123/economic_stimulus_business_boon.html?.v=1

Essentially congress is proposing that the losses that homebuilders posted in 2008 and 2007 will be able to retroactively applied to profits from the previous 5 years instead of the normal 2.

Rewarding reckless greed with a nice little cushion from the averge tax payer. My home value is a little down this year, where is my free money?

Under the proposal, the AP reports, "companies would for two years be allowed to carry back losses incurred in 2007 and 2008 against profits accrued over the previous five years, instead of the usual two year timeframe." Under current rules, companies can effectively call up the Internal Revenue Service and declare a do-over, applying losses racked up in 2008 against income reported in 2007 and 2006, and then claim a retroactive tax refund. The utility of this benefit rises as the size of the loss increases. If, for example, you're forced drastically to write down the value of land you've acquired, the loss in 2008 could easily swamp the profits reaped in 2007, 2006, and several years before.

The technical term for this is a tax-loss carryback. But it should perhaps be known as a bubble-head tax break. Companies that vaulted into a hot sector and then used lots of leverage to increase their profits in said sector (the Internet, real estate) light up the charts during the boom years. But come the pop, their fortunes plummet rapidly down the same steep slope. And because accounting rules require companies to mark assets to market, erstwhile high-flyers frequently report massive losses.

The proposed tax break is hard to justify for several reasons. It does nothing for slow and steady companies that keep their heads and simply rack up profits year after year—and pay their taxes accordingly. Rather, it rewards the most reckless participants in the bubble. If you borrowed a ton of money to build spec houses in Miami and reported $2 billion in profits between 2002 and 2007 but gave up all those profits by notching a $2 billion loss this year, the extended carryback has a great deal of value. If you've been building affordable housing in Wichita, Kan., and booked $300 million in profits in those years, and then, through careful management of costs, managed to eke out a $5 million profit this year, it has no value. The big public homebuilders, whose shares rallied on the news of this potential tax break, didn't pay any windfall taxes on the bubble-era earnings. Why should they get an extraordinary post-bubble windfall?

Homebuilders argue that they need relief because their sector, which provides a great deal of domestic employment, is on the ropes, and they're finding it more difficult to raise capital. Which is as it should be. After bubbles pop, those who screwed up really badly fail and get taken over by creditors or opportunistic investors. Those who have sound underlying franchises but merely got a little carried away can survive if they take painful restructuring moves. This is what is known as market capitalism. For all the talk of a credit crunch, capital is still available—it's just not available on the easy terms managers had come to expect during the late Greenspan years. Citigroup, Merrill Lynch, and plenty of other firms tied to the mortgage/finance complex have taken steps to shore up their balance sheets and replenish lost capital. But investors, having been burned, demand more downside protection and better guaranteed returns. Thornburg Mortgage was forced to pay 18 percent interest for an emergency round of capital raising that allowed it to stave off bankruptcy. This is also what is known as market capitalism.

[chalupa]

This just makes me fucking sick.

We manage our company to show slow and steady growth, year in and year out. If we took a beating, there would be not help from anyone, anywhere.

Fuck Congress.

[Bo Jackson]

Agreed. And the last group of people I would want to cut a break is homebuilders. The majority are disgusting, vile human beings. True story.

[Fungus Amungus]

What the fuck does this have to do with the free market?

[Nocturnal]

What the fuck does this have to do with the free market?

Free Market, laissez faire capitalism, etc.

Companies take risks and they either make money or lose it. The government shouldn't be a security blanket. That's what it has to do with the free market.

The market is only free for the average person. The priveledged seem to have no issue getting a nice handout.

[Bo Jackson]

This has everything to do with the free market. It's just like government subsidies being given to farmers for not growing anything.

[Bergs]

I swear to god that I'm going to choke the next person who bitches about health care or some other program and insists that the free market is the way to go.

Fucking universal healthcare, the free market is the way to go! :p

Seriously though, when the government decides that its necessary to save people from themselves they always cause way more harm than good. This situation is no different. Propping up the weak and negligent will hurt the economy in the long run. Nobody responsible will ever be held accountable and ineptitude will continue to be the accepted norm.

[Soak A Toa]

I really doubt that this is where everyone's anger should be focused.

The banks are to blame.

The homebuilders are suffering because the banks, giving their bullshit sub-prime mortgages under adjustable rates, gave a false sense of demand. Now we have homeless who can't pay, banks covering their own asses with the Fed (where's the fucking moral suasion?), and the homebuilders are up shit's creek with unsold houses, some belonging to banks unable to "liquify" them.

Congress is trying to ease the pain the homebuilders were dealt by the financial institutions in this country. We need the homebuilders to stay alive or we'll REALLY be in trouble.

[chalupa]

I really doubt that this is where everyone's anger should be focused.

The banks are to blame.

The homebuilders are suffering because the banks, giving their bullshit sub-prime mortgages under adjustable rates, gave a false sense of demand. Now we have homeless who can't pay, banks covering their own asses with the Fed (where's the fucking moral suasion?), and the homebuilders are up shit's creek with unsold houses, some belonging to banks unable to turn them into liquidity.

Congress is trying to ease the pain the homebuilders were dealt by the financial institutions in this country. We need the homebuilders to stay alive or we'll REALLY be in trouble.
No, we don't. We need the people that went into the boom to experience the bust so that the markets can finally go through a full correction, or we will just enter into another boom cycle again. There was too much capital and liquidity after the .com bust, so another cycle began.

Slow and steady investment in manufacturing, with the average worker experiencing a lesser salary but with good benefits, is the best thing for the country. The only way to get there is to let things run their course.

I'm chalupa, and I approved this message.

[Soak A Toa]

No, we don't. We need the people that went into the boom to experience the bust so that the markets can finally go through a full correction, or we will just enter into another boom cycle again. There was too much capital and liquidity after the .com bust, so another cycle began.

Slow and steady investment in manufacturing, with the average worker experiencing a lesser salary but with good benefits, is the best thing for the country. The only way to get there is to let things run their course.

I'm chalupa, and I approved this message.

I retract my final statement, but maintain the rest of it. However, I'd advise you to beware the laws of nature because they can act against the US economy too. Manufacturing jobs are being sent over seas and the unemployment created by this crisis won't be corrected easily, especially with consumer and foreign confidence at such lows. Where will this investment come from, what do you propose?

[kevinsmith]

Free Market, laissez faire capitalism, etc.

Companies take risks and they either make money or lose it. The government shouldn't be a security blanket. That's what it has to do with the free market.

The market is only free for the average person. The priveledged seem to have no issue getting a nice handout.

Just to play devil's advocate:
A person makes mistakes sometimes, they fuck up or shit goes bad. They need help. You think it's perfectly acceptable for the government to help them out in their time of need with welfare and what not, so they can get back on their feet, right?
So why not, when a business, which is also made up people who can make mistakes and things can go wrong, also do something to help these people out. Otherwise, we'd have a bunch of people lose their jobs, the economy gets hurt worse, and more money goes out for welfare.

[chalupa]

Just to play devil's advocate:
A person makes mistakes sometimes, they fuck up or shit goes bad. They need help. You think it's perfectly acceptable for the government to help them out in their time of need with welfare and what not, so they can get back on their feet, right?
So why not, when a business, which is also made up people who can make mistakes and things can go wrong, also do something to help these people out. Otherwise, we'd have a bunch of people lose their jobs, the economy gets hurt worse, and more money goes out for welfare.

I'ma smack you in the jaw, you keep talking like that.


:wave:
Manufacturing jobs are being sent over seas and the unemployment created by this crisis won't be corrected easily, especially with consumer and foreign confidence at such lows. Where will this investment come from, what do you propose?

I propose a period of really rough economic times, with lots of unemployment and falling wages, coupled with a recession -- though if managed well not a depression. We need renegotiated union contracts and some way of addressing health care and insurance costs (probably through tort reform), so that the cost of doing business outside of wages and materials, can be brought under control. Wages need to come down for unskilled and semi-skilled positions, but need to be counter-balanced with good health plans and other benefits.

All told, the cost of doing manufacturing in the US needs to drop, and then we need to couple that with some kind of protectionist policy/incentive program to keep jobs here. Free trade is not moving enough of its benefits down the line to the average person, and free trade coupled with mass illegal immigration only serves to depress the position of the middle class on which this country was built.

Communities suffer disproportionately from unemployment versus a higher cost of living. Translation of what I am saying -- people who pay higher prices for normal goods but have jobs are better off than those who are on welfare and shop at WalMart. We would have to go through a period of unemployment, but if manufacturing jobs were to return, communities would benefit in the long run.

Trust me, I live it every day.

So...given my grand, sweeping plan, where do we start?

I don't have an answer, and every individual thing I proposed is going to piss a lot of people off.

I would start with finding a way to limit the size of govts so we can move tax breaks to companies that "buy and sell american" and then move from there, probably by putting the brakes on a lot of free trade agreements.


...let the flaming begin.

[Nocturnal]

Just to play devil's advocate:
A person makes mistakes sometimes, they fuck up or shit goes bad. They need help. You think it's perfectly acceptable for the government to help them out in their time of need with welfare and what not, so they can get back on their feet, right?
So why not, when a business, which is also made up people who can make mistakes and things can go wrong, also do something to help these people out. Otherwise, we'd have a bunch of people lose their jobs, the economy gets hurt worse, and more money goes out for welfare.

The reverse is more important. This wouldn't be as bad if the general feeling wasn't "personal responsibility" is a must.

Still, a business takes a calculated risk. That is what capitalism is all about. I don't think a huge coporation has the same need for help as a regular person.

[Chewy]

The reverse is more important. This wouldn't be as bad if the general feeling wasn't "personal responsibility" is a must.

Still, a business takes a calculated risk. That is what capitalism is all about. I don't think a huge coporation has the same need for help as a regular person.
and lets be honest here too, CEO's in many of these bailouts don't lose anything on the deal either. I see more value in taking care of the person not the corporation.

[Soak A Toa]

I propose a period of really rough economic times, with lots of unemployment and falling wages, coupled with a recession -- though if managed well not a depression. We need renegotiated union contracts and some way of addressing health care and insurance costs (probably through tort reform), so that the cost of doing business outside of wages and materials, can be brought under control. Wages need to come down for unskilled and semi-skilled positions, but need to be counter-balanced with good health plans and other benefits.

All told, the cost of doing manufacturing in the US needs to drop, and then we need to couple that with some kind of protectionist policy/incentive program to keep jobs here. Free trade is not moving enough of its benefits down the line to the average person, and free trade coupled with mass illegal immigration only serves to depress the position of the middle class on which this country was built.

Communities suffer disproportionately from unemployment versus a higher cost of living. Translation of what I am saying -- people who pay higher prices for normal goods but have jobs are better off than those who are on welfare and shop at WalMart. We would have to go through a period of unemployment, but if manufacturing jobs were to return, communities would benefit in the long run.

Trust me, I live it every day.

So...given my grand, sweeping plan, where do we start?

I don't have an answer, and every individual thing I proposed is going to piss a lot of people off.

I would start with finding a way to limit the size of govts so we can move tax breaks to companies that "buy and sell american" and then move from there, probably by putting the brakes on a lot of free trade agreements.


...let the flaming begin.

The gist of what you're saying is that we need to make manufacturing in American affordable again. Well that certainly isn't going to happen with worker unions whose production quality can almost never be regulated, even if the cost of providing health/living benefits were to go down. You can't compete with overseas labor in that area, considering that Asian markets are practically utilizing slave labor.

I think our answer lies in efforts to keep education costs down. A middle class able to afford higher education will maintain the higher paying jobs. If the education costs aren't kept down, R/D is going to head to where the manufacturing is set up.

[chalupa]

The gist of what you're saying is that we need to make manufacturing in American affordable again. Well that certainly isn't going to happen with worker unions whose production quality can almost never be regulated, even if the cost of providing health/living benefits were to go down. You can't compete with overseas labor in that area, considering that Asian markets are practically utilizing slave labor.

I think our answer lies in efforts to keep education costs down. A middle class able to afford higher education will maintain the higher paying jobs. If the education costs aren't kept down, R/D is going to head to where the manufacturing is set up.

On top of the slave labor problem, skilled labor is going overseas, too. The plan for us just retrain our workforce so everyone gets better jobs is not panning out in the way it was sold to the public.

I think we need to combine semi-protectionist trade policy with massive reworking of health and tax programs.

Yes, I am flying in the face of free markets, but how are we benefiting from a free trade/free market approach when other countries use slave labor?

The playing field is not level, and we are not even taking environmental concerns into consideration.

Unions are a problem, but around where I live, the unions are gone anyway...there are not a lot of manufacturing jobs to be had, and we were once a manufacturing powerhouse. Many, many, many years ago.

[kevinsmith]

and lets be honest here too, CEO's in many of these bailouts don't lose anything on the deal either. I see more value in taking care of the person not the corporation.

I'd rather keep my job than have to live on a government handout while trying to find another job in tough economic times.

[Fungus Amungus]

My comment on the free market was the OP was complaining of the free market and how he obviously hates the arguement. When this proposal is the exact oppisite of the free market, yet he doesn't like it. The post contradict itself.

[Spike Lee]

Or hes calling out the double standard from the right.

[Nocturnal]

My comment on the free market was the OP was complaining of the free market and how he obviously hates the arguement. When this proposal is the exact oppisite of the free market, yet he doesn't like it. The post contradict itself.

Or hes calling out the double standard from the right.

Ding ding,

Point is that the market is only "free" when it's convenient.

[kevinsmith]

Hmm...people complain when the economy tanks and somehow expect presidents to be able to do something about it to prevent problems.
When the government does do something that can help keep jobs, help keep sectors of the economy from going under, they complain about it...:err:

[Spike Lee]

Hmm...people complain when the economy tanks and somehow expect presidents to be able to do something about it to prevent problems.
When the government does do something that can help keep jobs, help keep sectors of the economy from going under, they complain about it...:err:

See above for more infor regarding what you posted.

[Fungus Amungus]

Ding ding,

Point is that the market is only "free" when it's convenient.

I'm sorry I don't think like a liberal. Your "double standard" point made you look more like an idiot than anything. Although I agree with the fact this proposal promotes more problems than solutions, I believe that the a company should go under if they don 't make profits. It's thier fault that customers don't want to do business. No amount of government intervention will fix a business' faults.

[Spike Lee]

Noc does not want them to fix their faults, he is saying how come the right is so willing to bail corporations out but no 'handout' to people.

[Mr. Heskey]

Noc does not want them to fix their faults, he is saying how come the right is so willing to bail corporations out but no 'handout' to people.

Maybe because the corporations provide millions of jobs and products at a cheap price?

[Spike Lee]

But that goes againt laizze faire and it interferes with bussiness. You as a conservative should oppose such thing.

[kevinsmith]

The Right: Willing to help out large corporations but doesn't like welfare to the poeple. Result: Hypocritical.

The Left: Willing to give all kinds of money to the poeple but thinks the corporations where they work should sink if they fuck up. Result: Hypocritical.


The Right thinks the left is hypocritical for their belief on the subject.
Result: Hypocritical.

The Left thinks the right is hypocritical for having their belief on the subject.
Result: Hypocritical.

[chalupa]

Maybe because the corporations provide millions of jobs and products at a cheap price?

The bailout is not for manufacturing, it is for developers, construction, and speculators. Big difference.

...and let's find out how many of the home construction workers that will keep their jobs are undocumented illegals.

[Mr. Heskey]

But that goes againt laizze faire and it interferes with bussiness. You as a conservative should oppose such thing.

I was pointing it out from a government perspective. I agree, the government shouldn't help people or businesses unless in extreme situations.


If millions are homeless and starving? Yes government intervention is necessary.
If millions will lose their job from a corporation that tanks? Yes government intervention is necessary.

[Chewy]

I'd rather keep my job than have to live on a government handout while trying to find another job in tough economic times.Your assuming the jobs the corporations holds are mostly in the US.

William Norman Grigg, in an article entitled "Exporting U.S. Jobs," in The New American, September 22, 2003, addressed the impact of the loss of jobs on America’s laboring class. Millions of employees are being threatened with the loss of homes, cars and medical benefits. Several companies have been forced into bankruptcy as a result of not being able to compete with the movement of manufacturing businesses, from electronics to furniture, to China. According to the August 25, 2003 Financial Times, China is becoming the leading location for foreign investment, attracting $52.7 billion. Workers are being paid 50 cents an hour, which American industry cannot compete with. The American Textile Manufacturers Institute has pointed out that textiles from Communist China and Vietnam are flooding the American market. In 2008, all import quotas on Chinese textiles will be removed and the Chinese will completely dominate the market.

http://www.finalcall.com/artman/publish/article_1137.shtml

Big Business was not interested in keeping the average Joe's job a float, they were more interested in outsourcing them. Bailing them out so that Pret Sindu in Mumbai has a job makes no sense either while Bill Smith is in line for Government issued food stamps.

[Nocturnal]

I'm sorry I don't think like a liberal. Your "double standard" point made you look more like an idiot than anything. Although I agree with the fact this proposal promotes more problems than solutions, I believe that the a company should go under if they don 't make profits. It's thier fault that customers don't want to do business. No amount of government intervention will fix a business' faults.

What are you talking about? The above makes zero sense.


The government is stepping in to bail out companies that should go out of business. These companies made bad choices, and now want to cry to the government for a handout.



If millions are homeless and starving? Yes government intervention is necessary.
If millions will lose their job from a corporation that tanks? Yes government intervention is necessary.

Yes. We can't give poor kids healthcare, but bailing out the investment bankers sailed through congress instantly.

We did need some intervention, but I fear companies will continue to operate recklessly in the future. I think I might do so myself. If I can borrow millions to invest in a shaky business adventure I probably should do so. If I fail then the govt. helps me out, if I suceede then it's all gravy.

The Right: Willing to help out large corporations but doesn't like welfare to the poeple. Result: Hypocritical.

The Left: Willing to give all kinds of money to the poeple but thinks the corporations where they work should sink if they fuck up. Result: Hypocritical.


The Right thinks the left is hypocritical for their belief on the subject.
Result: Hypocritical.

The Left thinks the right is hypocritical for having their belief on the subject.
Result: Hypocritical.

Damn, we need to get some liberals into congress. Most of this stuff is sailing right through. ;)

[kevinsmith]

Damn, we need to get some liberals into congress. Most of this stuff is sailing right through. ;)

Didn't a bunch of you liberals win the last round of elections, much to the enjoyment of many of this board?
;) back.

;)

[Nocturnal]

Didn't a bunch of you liberals win the last round of elections, much to the enjoyment of many of this board?
;) back.

;)

Democrats did win a slight majority. I know not of these liberals you speak of. :p

[shade]

Free Market, laissez faire capitalism, etc.

Companies take risks and they either make money or lose it. The government shouldn't be a security blanket. That's what it has to do with the free market.

The market is only free for the average person. The priveledged seem to have no issue getting a nice handout.

Agree with you 100%.

No hand outs for anyone, in my opinion. This is insane. Our government becomes more soviet every single day.

Now they are trying to have the good without the bad. NOT POSSIBLE :banghead:

[scavenger]

It's like this...

The Republican Party pays lip service to the ideas of the free market, personal freedoms, limited government, and a humble foreign policy. As a result, businesses are friendly with Republicans.

Once any politician has power, he uses it to help his friends. So Republicans, whose friends tend to be heads of big businesses, pass laws that give their friend's company a monopoly, or subsidy their buddies in Big Oil, or keep us in wars that give Halliburton huge profits, or do what they did here. Their devotion to their friends usually far outweighs any actual devotion they might have to limited government and other conservative ideas.

The whole idea of the free market/laissez-faire capitalism is for the government to keep its butt out. No government intervention at all. This situation, therefore, is the complete opposite of capitalism; this is blatant corruption.

I hate it when people blame capitalism for what is actually government intervention, and then use it to justify more government intervention. It's the worst kind of lie there is. Especially if they believe it.

[Bergs]

It's like this...I hate it when people blame capitalism for what is actually government intervention, and then use it to justify more government intervention. It's the worst kind of lie there is. Especially if they believe it.

A stunningly true phrase. One regulation usually requires two more.

[shade]

A stunningly true phrase. One regulation usually requires two more.

I love you both. :redface:

[Mahalo]

I hate it when people blame capitalism for what is actually government intervention, and then use it to justify more government intervention. It's the worst kind of lie there is. Especially if they believe it.

But this is what capitalism really is. Capitalism in practice. In this economic system you have an elite business class and it would be naive and idealistic to think that they'd rather adhere to the pure doctrine of laissez-faire rather than manipulate government into a protectionist racket and make it serve their interests.

[scavenger]

But this is what capitalism really is. Capitalism in practice. In this economic system you have an elite business class and it would be naive and idealistic to think that they'd rather adhere to the pure doctrine of laissez-faire rather than manipulate government into a protectionist racket and make it serve their interests.

The solution is for government to be unable to serve the interests of companies. That's why limited government is one of the key preconditions for a free-market society.

[ROFLStomp]

Personally I believe this whole economic thing wouldn't have happened if businesses and people weren't so stupid. People are idiots for buying homes that they knew they couldn't afford, they instead should have just done some homework instead of mindlessly listening to their banker and peeing in their pants about a new house. Same can go for businesses, who bought too many of these loans and were too greedy with selling houses. Most of these economic problems just need to take their course in about six months to a year. But god forbid people lose their house and jobs, even if it is their fault. Now the government must intervene and our Federal Reserve is slashing our interest rate like a bamboo forest.

But in the big picture, the businesses must come before the people. If 5 major businesses have to declare bankruptcy and now must layoff thousands upon thousands of employees, the government should support them. While I don't necessarily agree with this (a business made a bad move, tough luck, go cry), it can be considered necessary because the need to save all of those people's jobs. Without businesses, people can't go even find a source of income. You get the businesses back on track, then the people can find more jobs. Not you give the people money, and watch them waste that money when they can't get a job since all the businesses closed.