2009-11-18 11:49![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
digitaldiscipline
digitaldisciplineThe twit-sized version:
"Some people wonder why dollar signs make me see red. Wonder no more: http://bit.ly/2bY744"
Taking these in order....
1. Estate Tax: This one is a mixed bag for me. On the larger hand, we've already paid taxes on the money we've made and the shit we've purchased; taxing it again when it is bequeathed to someone else when we kick the bucket is double-dipping. On the smaller hand, exceedingly large estates/inheritances give us things like Paris Hilton. I can't speak for anyone else, but I'd rather have well-maintained highways than trust-fund douchebaguettes. If there's a progressive tax structure for these, I guess that would be the least evil implementation, but not ideal.
This is more a matter of being punitive towards financial success, rather than simple responsibility.
2. Cash for Clunkers: I can't really amplify what the author(s) put. Spending money to save billion-dollar industries while encouraging individuals to assume more debt load, independent of all the waste involved in getting rid of those old cars, even if they're recycled....
3. Low Interest Rates: I remember getting 4-5% on my savings account as a kid. Now, something like that seems outlandish. Way to fuck people out of trying to save money for their future, hedge against a sudden expense or job loss.
4. Devaluation of Currency: Ahh, inflation. By saving the $10 I could have spent on two movie tickets last year, I can now afford one ticket with the $10.14 it has become this year. On the flip side, knowing how to game this system has been good to me, since hard commodities like precious metals are shooting up in value relative to a weakening dollar. Counter-intuitively, buying a static lump of metal that earns no interest sitting in a box has a much better ROI than investing in a CD or something that's designed to increase in value.
5. Debt Repayment: The tax credit for interest paid on the mortgage doesn't suck, but it's tricky to balance where that tax benefit matches our outweighs simply paying off the mortgage itself in terms of paying the interest itself in the long term. The less you owe on your house, the better a position you'll be if and when it's time to sell.
6. FHA Insurance/Subsidies: This one, I'm not sure I can get behind the criticism. Yes, insuring risky homebuyers isn't a fantastic idea, but bigger loans ought to come at a higher interest rate, since if they get defaulted on, that's a whole lot more scratch that's not being recouped.
7. Capital Gains: This one, however, is complete bullshit. Investing isn't work. It's making money off the efforts of others, the only "work" involved is studying to make a wise investment. If you're just trying to make a quick buck by playing the market, you pay for that privilege in the form of Cap Gain taxes. If you're serious about investing in a company for the long term, you don't pay this tax. No sympathy from me for the stock flippers and speculators. When these risk-taking jackoffs pull an Enron or Bear Stearns by getting too smart for their own good, the sane, rational investors ought to be able to have a blanket party for them. I'll bring the blanket and some Cheetos.
8. Student Loan Subsidies: I don't think too many folks assume student loans casually, and they're one of the few debts that even declaring bankruptcy doesn't free you of the obligation to repay, IIRC. So what if my state college education didn't cost as much as an Ivy League degree? I don't have to pay their tuition any more than they have to pay mine.
9. Health Insurance: At this point, I can't even pretend that the author hasn't flown off deep into Right Wingnutville. There's nothing even remotely like "criminalizing" a lack of carrying health insurance even up for discussion. They fail at sarcasm, for one thing, and seem to conveniently overlook the fact that the older, unhealthier insurance consumers probably paid in their share of premiums over the years, even though their premiums may not currently be commensurate with the risks/costs they represent.
10. Why? On this one, I completely agree: "So why does the government do this? Because politicians play to the interests of business, who want you to spend, spend spend."
"Some people wonder why dollar signs make me see red. Wonder no more: http://bit.ly/2bY744"
Taking these in order....
1. Estate Tax: This one is a mixed bag for me. On the larger hand, we've already paid taxes on the money we've made and the shit we've purchased; taxing it again when it is bequeathed to someone else when we kick the bucket is double-dipping. On the smaller hand, exceedingly large estates/inheritances give us things like Paris Hilton. I can't speak for anyone else, but I'd rather have well-maintained highways than trust-fund douchebaguettes. If there's a progressive tax structure for these, I guess that would be the least evil implementation, but not ideal.
This is more a matter of being punitive towards financial success, rather than simple responsibility.
2. Cash for Clunkers: I can't really amplify what the author(s) put. Spending money to save billion-dollar industries while encouraging individuals to assume more debt load, independent of all the waste involved in getting rid of those old cars, even if they're recycled....
3. Low Interest Rates: I remember getting 4-5% on my savings account as a kid. Now, something like that seems outlandish. Way to fuck people out of trying to save money for their future, hedge against a sudden expense or job loss.
4. Devaluation of Currency: Ahh, inflation. By saving the $10 I could have spent on two movie tickets last year, I can now afford one ticket with the $10.14 it has become this year. On the flip side, knowing how to game this system has been good to me, since hard commodities like precious metals are shooting up in value relative to a weakening dollar. Counter-intuitively, buying a static lump of metal that earns no interest sitting in a box has a much better ROI than investing in a CD or something that's designed to increase in value.
5. Debt Repayment: The tax credit for interest paid on the mortgage doesn't suck, but it's tricky to balance where that tax benefit matches our outweighs simply paying off the mortgage itself in terms of paying the interest itself in the long term. The less you owe on your house, the better a position you'll be if and when it's time to sell.
6. FHA Insurance/Subsidies: This one, I'm not sure I can get behind the criticism. Yes, insuring risky homebuyers isn't a fantastic idea, but bigger loans ought to come at a higher interest rate, since if they get defaulted on, that's a whole lot more scratch that's not being recouped.
7. Capital Gains: This one, however, is complete bullshit. Investing isn't work. It's making money off the efforts of others, the only "work" involved is studying to make a wise investment. If you're just trying to make a quick buck by playing the market, you pay for that privilege in the form of Cap Gain taxes. If you're serious about investing in a company for the long term, you don't pay this tax. No sympathy from me for the stock flippers and speculators. When these risk-taking jackoffs pull an Enron or Bear Stearns by getting too smart for their own good, the sane, rational investors ought to be able to have a blanket party for them. I'll bring the blanket and some Cheetos.
8. Student Loan Subsidies: I don't think too many folks assume student loans casually, and they're one of the few debts that even declaring bankruptcy doesn't free you of the obligation to repay, IIRC. So what if my state college education didn't cost as much as an Ivy League degree? I don't have to pay their tuition any more than they have to pay mine.
9. Health Insurance: At this point, I can't even pretend that the author hasn't flown off deep into Right Wingnutville. There's nothing even remotely like "criminalizing" a lack of carrying health insurance even up for discussion. They fail at sarcasm, for one thing, and seem to conveniently overlook the fact that the older, unhealthier insurance consumers probably paid in their share of premiums over the years, even though their premiums may not currently be commensurate with the risks/costs they represent.
10. Why? On this one, I completely agree: "So why does the government do this? Because politicians play to the interests of business, who want you to spend, spend spend."
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Interest rates & Inflation are two sides of the same coin because the inflation rate is the increase in the amount of money minus the growth of the amount of stuff produced in the economy while the interest rate is the increase in the amount of money. Interest rates can only be high without inflation if the money being saved is being invested in things that lead to a large growth in the economy.
Debt Repayment - It seems to me that the tax credit on mortgage interest was introduced before unconventional mortgages existed. In the framework of a 25 year amortization they make it easier to pay the mortgage down. In the context of interest only mortgages & such they don't encourage that same behaviour. Of course abolishing the tax credit would be politically disasterous and changing it in a sensible way probably impossible due to the nature of the right wing wingnuts that dominate your political landscape.
Commodities increase in price for two reasons:
1) Supply exceeds demand. Oil is good example of this. It's worth a lot less now than when we were in a boom.
2) When an economy tanks people run to certain commodities - notably precious metals - when they're scared to invest in companies that make things. You'll note that the price of gold spiked when the economy was tanking in 1980 (allowing it to be shorted helped) and again in the current recession.
In the short term raising interest rates does reduce inflationary pressure because it encourages the purchase of monetary instruments (like bonds) at the expense of investing the money in capital or expansion but in the long term high interest rates is high inflation.
Mortgages - that's a tricky one. Assuming a sane economy, mortgages are a good thing, especially for poor people, because they allow people to make an investment that they can benefit from in their old age (because the mortgage is paid off) with money that they would otherwise spend on rent. The problem arises when a speculative bubble gets created. Short term (not short amortization) mortgages, using property as security for credit, flipping properties rather than buying a place you're going to live in for 40 years, etc. are where things go wrong.
Of course, the bottom line on this is that the US entire economic history is founded on credit. Using loans to fund building things with the things being left when the loans go bad (all that fibre that was built in the dot com boom that went dark in the collaps for example made the growth in broadband much more affordable than if the bubble hadn't happened.
As to the root cause of this stuff - business (which means rich people when you get right down to it) doesn't want
1) Estate Taxes ('cos they pay them),
2) Inflation ('cos the value of their money gets hit by inflation just like ours and they have more of it),
3) Student loan subsidies. they mean that any old Tom, Dick or Harry can get a Harvard or a Yale degree just for being smart making it harder for them & their kids to benefit from the Alumni network.
4) Health Insurance. Because the insurance companies & HMO's have been so supportive of health care reform. If businesses had a rational opinion they would want health care on the Canadian (or some European model). We can tell this because a number of industries have tried to sue Canada under NAFTA for unfairly subsidizing workers with our health care system (they've also lost every time but not through want of trying).
OMG
I knew they both existed in the states, but I hadn't considered them together.
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4. Counter-intuitively, buying a static lump of metal that earns no interest sitting in a box has a much better ROI than investing in a CD or something that's designed to increase in value.
The key thing here is that it's only true _sometimes_. My reluctance to invest in metals is based on the experience of my father giving my mother a gold Krugerand in the mid '80s, with the express intent of giving her an investment piece to cash out toward my support (and possibly also paying her some money he owed her). The problem was that the value of gold fell sharply shortly thereafter, stayed largely stagnant for a long time, and took 20 years to recover its original value. My CD will always go up, whether it's slowly or quickly, and the interest compounds. I have already accumulated 25% in returns on those CDs, while many of my 401(k) investments haven't (as of today).
6. bigger loans ought to come at a higher interest rate
The problem is defining "bigger." In Houston, $500k will get you a damned nice house, and I think a higher interest rate on such a place would be warranted. However, in the SF Bay Area, $500k is a low-end starter home, and adding high interest on top of that would make the already-difficult local real estate market breakin nearly impossible for most people.
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2) complete waste. I don't think it convinced anyone to turn in a car they were otherwise going to keep using as their daily driver for more than "I'm not even changing the oil until it dies." And most of those cars were indeed already payed off.
3) No comment.
4) Remember, the lump of metal is worth what you can sell it for, not what you paid for it. If you were clever enough to have actually bought a lump of metal at a shop, it's worth nothing until they buy it back. If you bought "gold shares" or some kind of certificate thing, you probably got scammed. And, the value of gold cannot and will not go up forever, just like the price of real estate did not go up forever. And, they're always mining more gold, the recycling rate's damned good on the stuff, so in essence, they are making more of the stuff all the time.
5) ... not much comment here. Most of my knowledge comes from a time when it was damned difficult to end up upside down, and the majority of folks didn't move for decades, so it was vanishingly rare that there wasn't 20-30% equity built up. The tax credit was almost always worth it. Banks were PAYING PEOPLE to pay off mortgages early.
6) Don't really care. Not in the market.
7) Long-term holding of investments isn't great either -- you buy in with post-tax dollars, and then the rate of tax on the difference between invested and withdrawn is steep. Basically, if it's not growing at a rate at least twice what you can get for the same time in a certificate of deposit, you're treading water. $10000 in a CD for 5 years at 3% gives you $11255. $10000 in stocks that go up 6% a year that then taxes the long-term gains at 40% means you end up with $12029. Which is about as good as a CD earning 3.7%.
8) Not quite sure where he's going with this one. College has BEEN a free ride for some people, and a lot more so in the past 50 years. Where's his resentment for all the people in the Army of "our generation" who put in a couple of quiet years and got GI Bill educations? I've got a beef and a puzzlement of my own, mostly with people that "solve" unemployment with yet another round of education. If you're already over 35, getting that second Master's isn't really going to improve your job prospects as much as the two years further behind you'll get in the process, and the extra $30k you'll owe getting out. I suppose that's people fucking themselves instead of government maybe doing it, so it doesn't bear mentioning.
9) Of course, the whole idea of a public option that people would by default fall into (unless they secured health insurance elsewhere) would solve that whole issue....
10) Government doesn't care. Spending makes the economy look good, accumulating debt while you do it makes the economy look bad. Business especially large business wins both ways. Financing purchases is a fantastic way to get people to pay twice the sticker price for anything they buy....