The point we're discussing is why no credit is available. Bad government regulations are established as part of the problem. I have not seen anywhere that we've discussed that there's serious investment in industry and agriculture, where is it?
From my local perspective, I see examples. Here are a couple from my tenants:
- An industrial laser research & development firm is getting private money to expand production.
- A building contractor is investing in marketing for a new business plan.
- A collection agency has seen a slight improvement, such that they can now afford to take on new business. It costs them a lot to comply with fed regs for taking on new accounts.
You'd think there'd be 10,000,000 new jobs by now with all this investment. But there's not.
Dang near everyone I know wants to expand business, but not hire. They want volume & profit, not burdens & risk. Obamacare scares the smaller companies, who don't have the resources to research its effects. Larger companies are better prepared to cope, eg, Truven.
There's no industrial investment anywhere close to the levels as when the tax rate was 95% for those earning the equivalent of 2.5 million.
The effective tax rate was never that high because it was offset by incentives (aka "loopholes") for investment. But they distorted the market in ways which wasted money, especially in real estate where bad investments were profitable because of the tax dodges. An effective tax rate of 95% would kill off all business.
The only solution to the problem is getting private lenders to make industry grow unless Le Bank Du Sam kicks in. As I explain below, if no one's going to do anything to make the regulations fixed, we have no solution whatsoever.
Expanding government is often necessary when the private sector is abusing and neglecting the system and there's no other choice. The problem however is to make the regulations properly written.
I think your cure is worse than the disease. You would give the same gov which is mucking things even greater control.
So why is a business that's doing poorly due to factors not of its own doing such a risk that no one wants to invest? Who WILL invest? Who will invest in who? What businesses are lent to and which aren't? I agree that lenders should be ready to step right in and make whatever changes is necessary to make sure they get repaid. What's the risk if you can take over yourself if the "trustee" is not doing his job correctly? If you don't think it will work as an idea in itself, you wouldn't be lending.
Investment is going on. But it's greatly restricted both directly & indirectly by dysfunctional taxation & regulation.
I suppose that's for another thread, my point is that this risk evaluation system is just a big Gordion Knot that kicks small time players in the jewels and blames them for lying on the ground doing nothing but writhe in pain. Someone has to take a risk for business to succeed. If private lendors won't do it, you have no choice but Banque Du Sam.
Again, if gov is the problem, I'm not inclined to give them even more power.
What do you expect? The finest times in America were when the Tax rate for the rich was near 100% and forced them to invest their capital to avoid losing it.
Correlation is not causation. There were many factors:
- The effective tax rate on the wealthy was far far lower than 90%. It's a myth that a significant number of taxpayers ever mismanaged their affairs so badly that they actually paid the high nominal rates.
- Regulation was far less.
- Foreign competition was less intense.
- Our balance of trade was better.
- People were satisfied with less: smaller houses, more primitive health care, fewer cars, party line phones, no air conditioning, black & white TV, no internet, etc
The system behaves in a way which ultimately allows the big players to rig the system no matter who's in charge unless proper controls are in place. Much like any social system in history.
The problem here is the incompetence factor as well as possibly having big players rig and game the system to benefit themselves, like with crippling regulations that they can deal with but small timers can't.
This is where regulation can be useful: curb political corruption, prevent monopolies, ban insider trading, etc
Perhaps it was intentionally designed to fail that badly by people who profit off such failures. This is why the government itself must be regulated properly and have a private overwatch community that can effectively organize action, otherwise, the sheep get to eat astroturf.
Doing less means more cartels and more price fixing and more loan sharking. It's like dealing with a bully. If you don't hit him in the right spot, he'll hurt you even worse. You must knock him out in a single, organized and planned blow if you want to take him out. If a bad solution is given to a problem, the problem gets worse. Does not mean the concept of enforceable solutions is bad. Again, I repeat, we need "Vanguards" to write such legislation and draft it.
Run properly and with efficient legislation that accounts for the issues aforementioned, yes.
Run by Democrats more like it.
Really? Obama knows nothing of business, having never been in it. The party is rife with crony capitalism.
Nah....tis time to make Libertarians the problem. <--- The theme of this thread
Party politics and incompetency and potential game-rigging may have all played a part in Fannie's bungling.
Since party politics & incompetence are intrinsic to a democracy, that's why the best solution is to eliminate government run lenders like Fannie.
That's a problem with the regulations, redesigning the deals on the principal should be all considered part of the lending process based on market factors beyond the lendee's control. We agree at least that the government is too incompetent to draft legislation. This is why we need leaders to do it for them and to have the politicians jump on board.
It sounds like you're suggesting that lobbyists write the laws, & then legislators enact them.
If done with transparency, that idea has some merit.
Okay, so what's there to do then? Who will write the legislation? Who will promote it? Who will effectively try to support it and get the sheep to listen? No one? Uh oh........looks like the Private sector is too weak and feeble and lazy and unwilling to do anything about its own situation?
Government creates the legal & tax environment.
The private sector operates in it. What happens isn't about "lazy" or "unwilling".
The rules of the game are dysfunctional. The voters & politicians largely don't understand.
I maintain that understanding is improved if more people are in business, & fewer are on the dole (eg, welfare, stimulus, bail-outs).
Since Dems, Pubs & Grees are all wedded to big government & the nanny state, the only way to achieve that is to make Libertarians "the problem".
Is there such thing as "All of it"? Maybe what you need is an actual party platform with a rigorous though somewhat flexible agenda, with prepared draft legislation and a charming charismatic leader to promote it. Unfortunately, no Libertarians either want to do this or have gotten this idea in their heads yet.
All parties field the best candidates they can.
Some win. Most lose. We are who we are.
Government CAN do things right, and the chaos of too much liberty will most likely result in power grabs and wealth inequality that make the current system look tame.
I place no hope in the approach that gov "can do things right". I'd design public policy, taxation & laws based upon what gov is likely to do.
I can't improve human beings, so I prefer a system which takes their failings & strengths into account.