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I'll let an economist explain to you why all a progressive tax system does is incentivize the government to implement policies that exacerbate income/wealth inequality:
Quote:
[Economist Anatole] "Kaletsky argues that over-reliance on progressives taxes creates “a perverse incentive for governments to promote income inequality. If the solvency of the state and the ability to fund basic services for the poorest people in society depends on the rich getting even richer, it is tempting for even the most progressive politicians to support widening inequalities."
That's what's inherently wrong with a progressive tax system such as we have here in the US; it distorts and exacerbates inequality by necessity in order to maximize tax revenue. The Europeans and Scandinavians have figured that out, and therefore rely most heavily on regressive taxes such as VAT and MUCH flatter income tax brackets (e.g., a middle class income is in the highest income tax bracket right there along with the top 1%). (Link to info posted above.)
It goes back further than that. Clinton, Cisneros, and Cuomo set the stage for the 2008 financial crisis. Here's what REALLY happened, complete with links to the Federal Reserve's H.4.1s:
I don't know why this Fannie and Freddie myth persists. Fannie and Freddie do not originate mortgage loans. They purchase loans from mortgage originators in order to provide liquidity to mortgage markets. They have stringent standards about the types of mortgages that can be added to their portfolios. The 2008 crisis saw a lot of trouble with prime loans, which are primarily what Fannie and Freddie hold, not just subprime loans.
Obama never did that cost analysis. That in itself irresponsible. There are a lot of bankrupt companies out there that got that Obama handout.
Cash for clunkers anyone?
You mean Obama never did it personally? I'd agree with that since Obama doesn't have a doctorate in economics. I'm sure Christina Romer and Austan Goolsbee did do that analysis, however.
Fannie and Freddie don't originate mortgage loans. They're simply in the business of buying loans from banks. Fannie and Freddie actually had rather strict requirements about what type of loans could be included in their portfolios.
Incorrect. I posted links to Cuomo's press release and HUD documents stating exactly the opposite.
Furthermore, here's a Fannie Mae document bragging about partnering with Countrywide to provide loans to those who had no credit record.
Published by Fannie Mae Foundation in 2000:
Quote:
"...Countrywide tends to follow the most flexible underwriting criteria permitted under GSE and FHA guidelines. Because Fannie Mae and Freddie Mac tend to give their best lenders access to the most flexible underwriting criteria, Countrywide benefits from its status as one of the largest originators of mortgage loans and one of the largest participants in the GSE [Affordable Lending] programs. When necessary—in cases where applicants have no established credit history, for example—Countrywide uses nontraditional credit, a practice accepted by the GSEs."
Most flexible underwriting criteria. For example, no established credit history, among other issues that would normally get a loan rejected as too high-risk.
And guess who originated the low down payment loan? Yep, yet again, Fannie and Freddie, in the mid-1990s:
It doesn't matter whether you put your money in a savings account, a 401K or an index fund. Either way, the money isn't simply sitting there. It's being loaned out, being used to purchase U.S. treasuries, commercial paper, state and municipal bonds, etc. This is why savings translates into investment. The only way this doesn't happen is if you put your money in a mattress.
This is how we got on this topic anyway: you said that increased savings would slow down the economy. I countered by saying that consumption (buying movie tickets, shopping at H&M, buying a car, etc.) isn't the only way money gets into the economy.
OK. There has to be some leakage where your money goes to a venture fund and/or might create new or expand business. Or as you say goes out and buys other passive savings/investment vehicles. These are things that a bank or other financial institution may or may not do with money.
My point being from the individual standpoint buying stocks is more like saving, and not actively owning or managing the stock company.
When the middle class doesn't spend we all slow down. If the middle class took all their discretionary income and bought stocks, stocks would inflate, but the general economy would slow down.
Incorrect. I posted links to Cuomo's press release and HUD documents stating exactly the opposite.
Quote:
Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.
During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.
But you could have simply Googled Romer's paper on the macroeconomic effects of the stimulus package? *shrugs*
Doesn't address what I said at all. Obama borrowed money to destroy capital and give money to companies that went bankrupt.
Huge waste.
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