Letting someone else pick up the Tab.

Discussion in 'Politics' started by Drifterwood, Mar 11, 2009.

  1. Drifterwood

    Gold Member

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    Don't take this as being aimed just at the US, the UK is just as bad.

    This financial crisis is very simple. We borrowed too much money. We effectively borrowed it from people who save, both at home and abroad. We borrowed through "wholesale" money markets. When they realised that we had borrowed it for things that just aren't worth what we paid for them, mostly houses, they decided they wanted their money back.

    And the base mantra of banking is that you don't throw good money after bad.

    This isn't as simple as saying, we need credit to flow again, because who in their right fucking mind is going to lend these people money again? Not only that, because they fucked up, normal working capital for everyday sensible business has also had the tap turned off. Enter the Governments, and don't give me any neocon shit, they have to come in and underwrite the shit loans to shit payers because if they don't we all go down.

    Now my point. If you have borrowed more money than you can now afford to repay, or more than the asset you bought will be worth for some time to come, what are you going to do?

    Correct, we allow people to walk away from their debts. We have this laissez faire attitude to risk being acceptable without responsibility for the consequences. Well, I for one have had enough of this. If you were just a spoiled spendthrift or a dumbo who lost all rational perception of value, tough shit, you can spend the rest of your life repaying it. You are the ones that the Government is bailing out along with the dumbfuck banks that lent you the money.

    Of course when I say the Government, I mean those who pay taxes and create real sustainable wealth. Time for us to get pissy irrespective of political party.

    If you fucked up get used to a world without credit.

    :mad:

    Please continue.
     
    #1 Drifterwood, Mar 11, 2009
    Last edited: Mar 11, 2009
  2. B_starinvestor

    B_starinvestor New Member

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    Well said. Once again, the irresponsible being bailed out by the responsible. Exhausting, frustrating and infuriating.
     
  3. AllHazzardi

    AllHazzardi Member

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    It goes back beyond just debt. Debt was one of the side effects. With the prices of resources being pushed up by wasteful usage, the cost of living increased, which increases the cost of making products, which increases the cost of living, which.....

    In the end, everything comes back to resources. Everything comes down to one particular resource, these days. Energy. But clean coal technology isn't a good idea for the same reason oil wasn't. They're both limited resources. Any limited resource we decide to use will eventually result in the exact same situation of vastly increased prices. We should've invested into resource independent energy technology the moment we realized it was possible. Had we done that then, the cost of energy would be vastly reduced, and as a result, so would the cost of living, products, and business operation. The more resource independent and energy efficient we can be, the cheaper we will live.

    The problem is the desire for "cheap". In a normal "free market" the BEST product will win. But in our market, the cheapest product wins. In order to make products cheap, companies use more available resources(pushing demand for it up and supply down, resulting in increased prices), as well as cut costs of production(often in the form of jobs) in order to compete in this "cheap for the win" market. Cheapness is expensive though. It was desire for cheap that made us stick to gas cars instead of fully converting to electric cars. If you argue that electric isn't as powerful as gas, that's true, but is really only because the technology hasn't been sufficiently developed due to lack of demand for it. Beyond that, if "cheap" wasn't the goal, we would likely be in flying cars and not needing to repair the roads, which saves us a lot of money in the long run.

    If you want to blame anything for our problems, blame attitude. The attitude that makes companies compete by cheapness rather than quality. If companies made superb quality products, the whole world would buy them. Every shirt that has said "Made in USA" I have owned has had the seams pull apart after a single washing. You can also point at the attitude of the people in not educating themselves about GOOD products so they can make a responsible choice between a cheap version and a well-priced for quality version. Most people just choose cheap. Unless it's food, in which case I feel it's more of a toss-up.
    It is, in the end, desire for cheapness on all accounts that has landed us in this eventual hole, because cheapness is an illusion. Cheapness isn't less costly than quality, it's more costly. Not just to the consumer in the case of products that are cheap and last shorter times which is more costly to the consumer (most people realize this), but also far more expensive to companies which rely on energy systems and resources. If a company makes a cheap short-life product out of iron that is unusable after 2 years for whatever reason, they are consuming the same volume of material per product, but 3 times as fast as a higher quality product that lasts 6 years. When not everything is or can be recycled, the result is rising cost of materials due to supply and demand. If the price of iron goes up, the company must pay more money, and must increase prices accordingly because now their worker's wages go up(because the products they need to buy have been affected by the rising price of the wastefully-used cheap-and-plentiful material) and they need to make more money to compensate for the increased wages and cost of resource. Companies then pass on this cost to the consumer through their prices, and the consumer still needing the product has no choice but to pay for it. But since now consumers need more money, and eventually need more money than they can earn, people start going into debt. Now instead of just paying the increased cost of the products, they must pay interest on the cost as they cannot afford to pay without debt. This means people can't save as much money, and the cost of materials and labor for a house has gone up, so there's no way to buy a house for the average person without loans. This puts people further into debt, and because those loans were available, housing prices went up even further. Real Estate Bubble, Mortgage Bubble, Stock Market Bubble. Everything can be linked back to some irresponsible, inefficient, or wasteful usage of resources.

    The good news is, if everything can be linked to resources, we know what we need to do. We just need to research technology to make us resource-independent. If we have that technology, the entire process will reverse itself accordingly.
     
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