Doubly Ironic - Saab General Bulletin Board - Saabnet.com
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Doubly Ironic
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Posted by Reality (more from Reality) on Fri, 6 May 2011 07:00:56 Share Post by Email
In Reply to: Important to see the big picture, Noel, Fri, 6 May 2011 06:16:54
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1. You are the one "spouting economic theory," namely Keynesian Government Interventionism. It didn't work in the 1930's, and it still doesn't work today. All the nonsense government intervention ripping off the middle class to enrich the super-rich is the reason why the economy is doing so badly three years after the crash, and getting worse.

2. The GM situation is fundamentally analogous to the switch from horse drawn cabbies to automobiles in the 1910's. Many people had invested heavily in the horse-drawn industry . . . all that capital went bad when the automobile came along and offered a cheaper ride per mile at faster speed (just like Toyota, Honda, and eventually Ford offered better made cars per dollar). What's the government to do? Is there a role there for government at all? What you are suggesting is tantamount to: let's keep the horse-drawn industry alive so that existing jobs are kept; what you are missing is that the cost of keeping those obsolete jobs alive has to come from taxing the rest of the society, especially those automobile cabbies and businesses that just want more commerce done at lower cost therefore would have chosen the automobile cabbies. Of course, zillions of bureaucrats would have to be involved so the transfer from the more productive sector to less productive sector is not even 100% but have to take a big cut before the less productive sector even receives the loot.

3. "People's home would be lost" is a ludicrous idea. The house would still be there. Some other family would have bought the house for less, and the family moving out would have a lower monthly mortgage or rent expense. What would be lost in this case is the old mortgage that had been too big . . . in other words, such a bailout primarily benefited the bank as it would be able to collect on a mortgage that would have gone bad.

4. "Keep a line of credit open to keep a business open" is an even more brain-dead idea. Keeping unprofitable Joe's Pizza open on line of credit literally sucks money out of the community by taking away money that would have been earned by the profitable Johnny's Pizza that doesn't need to borrow: Joe's has to make interest payment to out-of-town banks out of its revenue where Johnny's doesn't.

5. Times and needs change indeed. That's why consumers should be empowered to make those choices, not the government. When government is empowered to keep alive old obsolete businesses (as judged by consumers not buying their products), what ends up happening is drawn-out economic calamity, corruption and cronyism. You wonder why after decades of Keynesian experiment, our economy is overly dependent on the financial industry. All the nonsense talks about "saving the house" and "saving the business" are in reality forced transfers of wealth from the rest of the economy to the banks. . . not even the truly entreprenurial banks but the TBTF banks that had made the bad loans to begin with.

posted by 76.118.39...

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