Bush's address

This is a discussion on Bush's address within the A Brief History of Cprogramming.com forums, part of the Community Boards category; Originally Posted by FillYourBrain feeling good about hurting the rich is short sighted. - the rich invest their excess $$ ...

  1. #16
    Malum in se abachler's Avatar
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    Quote Originally Posted by FillYourBrain View Post
    feeling good about hurting the rich is short sighted.

    - the rich invest their excess $$ in companies
    - companies use investment to expand
    - expansion = jobs
    - more jobs is the best way to help the poor
    That is an extremely simplistic view of modern economics. What happened is that dirivitives were introduced into the mortgage backed securities markets. Some large institutions like Freddy and Fanny have requirements for the maximum risk that the instruments they purchase can have. As an example lets say we are investing on the flip of a coin. Heads means the investment pays off at 2:1, and tails means you lose your investment. This creates a risk where 50% of the time you lose 100% of your investment. Frank (cousin of Freddy and Fanny) has a risk management policy that all investments he purchases must have a risk of less than 5%. Well, 'obviously' he cant invest in coin flips, which means all thsi excess capital he in generating from conservative investments has to go somewhere. He could invest it in building lemonade stands and thus employing more people, but creating new busineses is time consuming, risky, and creates competition for your existing businesses and workers. So Frank talks to bob about this problem of being denied his god given right to invest in coin flips by the meddling government. Bob looks at the coin flips and says hey, what if there was a way to guarantee that your investment would come up heads 95% of the time. So what Bob does is instead of sellign Frank an investment in 1 coin flip, he packages 100 coin flips into a dirivative instrument, where there are 2 classes of investment. Tier A gets paid whenever there are 5 or more heads, but they only get 50% of the normal winnings. Tier B gets paid whenever there are fewer than 5 heads but they get 950 times their investment. Now suddenly Frank can invest in this because the risk meets the regulatory restrictions of 95% guaranteed return and all Bob has to do is find a sucker to buy the Tier B investment. Tier B is what is called Toxic Waste in the industry, because you cant pay people to take it and its just an accident waiting to happen. Normally its the finanacial institution that created the instrument that gets stuck holding the toxic waste, and when that risk comes home to roost, they want a $700 billion dollar bailout. Essentially they want the american public to be forced into buying this crap.

    Its one thing to say the rich create jobs, but its another to assume the risk for their risky investment strategies that have proven faulty several times before. If Govt. continuously baisl them out whats next, a $700 Trillion bailout? Wall Street needs to take this one on the chin and reform its use of these complex financial devices. If the people and institutions taking these economy crippling risks get bailed out what is the incentive to stop taking these risks?
    Last edited by abachler; 09-25-2008 at 10:02 AM.
    Until you can build a working general purpose reprogrammable computer out of basic components from radio shack, you are not fit to call yourself a programmer in my presence. This is cwhizard, signing off.

  2. #17
    pronounced 'fib' FillYourBrain's Avatar
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    abachler, you significantly misunderstood the point of my post. I am not defending the bailout. I disagree with it actually. Just trying to slap down the typical hatred-driven kill the rich rhetoric that's going on.
    "You are stupid! You are stupid! Oh, and don't forget, you are STUPID!" - Dexter

  3. #18
    pronounced 'fib' FillYourBrain's Avatar
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    Quote Originally Posted by abachler View Post
    That is an extremely simplistic view of modern economics.
    Your post in no way diminishes the accuracy of this "simplistic" statement of economic fact. Eat-the-Rich is no way to approach economics.
    "You are stupid! You are stupid! Oh, and don't forget, you are STUPID!" - Dexter

  4. #19
    &TH of undefined behavior Fordy's Avatar
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    I'm certainly not a fan of "hate-the-rich" politics and I believe in capitalism, but I don't support the bail-out. The main responsibility of the government in this case is to help those least able to help themselves in relation to these problems - namely homeowners & domestic savers. Not the banks themselves.

    Bernanke seemed to confirm 2 days ago that the plan is to offer to buy "toxic" debt from the bank at Hold to Maturity Value - pretty much what it was worth before we all realised that these debts were based on false assumptions and were not likely to pay out over the term. Effectively this is a get out of jail card for the banks restoring much of their lost profits on this debt and lumbering the taxpayer with one hell of a problem.

    Not very fair, and no real motive for the banks to not try and repeat this mess in 15-20 years. There has to be some punitive aspect to the plan if they do indeed give it assent.

  5. #20
    Malum in se abachler's Avatar
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    Given that what we are getting is the toxic waste, and the Tier A part of the dirivitives will apparently continue to be held by other institutions, this is really just a way to milk the taxpayer. If the bailout is to succeed it must require full reintegration of all portions of the dirivatives. I dont think bailing otu the individual homeowners will work either, since they are the root cause of the problem by purchasing assetts for more than they are worth.

    Quote Originally Posted by FillYourBrain View Post
    abachler, you significantly misunderstood the point of my post. I am not defending the bailout. I disagree with it actually. Just trying to slap down the typical hatred-driven kill the rich rhetoric that's going on.
    Defending it with false assumptions just contributes to the problem. As stated, one of the problems these investments present is that they specifically enable investments that do not increase production.

    I'm not sayign 'kill the rich', I'm saying don't reward bad behavior. These instruments have caused problems before (ENRON) but wall street refuses to accept that they are inherently a flawed device. Investors buy into these expanding bubbles that have no govrment oversight despite the historical failure of these markets. So its the housing market today, 80 years ago it was the stock market. The bubble always bursts, and then someone gets left holding the bag. The only real decision is who is that going to be, the people who made the mistakes, or the people who suffered from outrageous housing prices as a result of those mistakes.

    The market will correct itself. A bailout will make it worse.
    Last edited by abachler; 09-25-2008 at 12:56 PM.
    Until you can build a working general purpose reprogrammable computer out of basic components from radio shack, you are not fit to call yourself a programmer in my presence. This is cwhizard, signing off.

  6. #21
    pronounced 'fib' FillYourBrain's Avatar
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    determined to argue that I was defending the bailout eh? not inclined to argue myself.
    "You are stupid! You are stupid! Oh, and don't forget, you are STUPID!" - Dexter

  7. #22
    Malum in se abachler's Avatar
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    Quote Originally Posted by FillYourBrain View Post
    determined to argue that I was defending the bailout eh? not inclined to argue myself.
    Defending it with false assumptions just contributes to the problem. As stated, one of the problems these investments present is that they specifically enable investments that do not increase production.

    I specifically adressed your false conjecture that giving the rich more money will make more jobs for the poor.
    Until you can build a working general purpose reprogrammable computer out of basic components from radio shack, you are not fit to call yourself a programmer in my presence. This is cwhizard, signing off.

  8. #23
    pronounced 'fib' FillYourBrain's Avatar
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    even so, you argue against things that I didn't say. I didn't present an "all cases" argument.

    When I said "the rich invest their excess $$ in companies" it meant a portion of their money. When I said "companies use investment to expand" it meant a portion of that money

    If I were speaking in absolutes as you suggest, I would have been suggesting that the rich never spend any money on themselves, never go to the movies, never enjoy their money. You can't seriously believe that is what I was saying. Again you're just being argumentative.

    The specific case that the bailout represents does not represent all uses of rich people's money.
    Quote Originally Posted by abachler View Post
    [B]I specifically adressed your false conjecture that giving the rich more money will make more jobs for the poor.
    Not a false conjecture. When not speaking in "all cases" absolutes, it is absolutely the truth
    Last edited by FillYourBrain; 09-25-2008 at 01:15 PM.
    "You are stupid! You are stupid! Oh, and don't forget, you are STUPID!" - Dexter

  9. #24
    Unregistered User Yarin's Avatar
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    Code:
    // main.h
    
    BOOL bailnow()
    {
       BOOL suc = FALSE;
       LAW *eco = GetLawSystem(LS_ECONOMY, NULL);
       LAW *bo = GetLawSystem(LS_BAILOUT, eco);
       if(bo)
       {
          AUTH *auth = GetLawAuthority(LA_AUTO, eco, LA_ALL_ACCESS);
          if(auth)
          {
             if(SetLawState(bo, auth, LS_PASS))
                suc = TRUE;
             ReleaseLaw(auth);
          }
          ReleaseLaw(bo);
       }
       ReleaseLaw(eco);
       return suc;
    }
    
    BOOL herenow()
    {
       BOOL suc = FALSE;
       LAW *envprot = GetLawSystem(LS_ENVORMENTAL_PROTECTION, NULL);
       LAW *drill = GetLawSystem(LS_PROHIBIT_LOCAL_DRILLING, envprot);
       if(drill)
       {
          AUTH *auth = GetLawAuthority(LA_AUTO, envprot, LA_ALL_ACCESS);
          if(auth)
          {
             if(SetLawState(drill, auth, LS_REMOVE))
                suc = TRUE;
             ReleaseLaw(auth);
          }
          else
             ReleaseLaw(drill);
       }
       ReleaseLaw(envprot);
       return suc;
    }
    
    long getcon()
    {
       return (long)GetEconomyState(NULL, 0, NULL, NULL, ES_CONDITION, ES_AUTO, 0);
    }
    
    int main()
    {
       cout << "Working..." << endl;
       long cond = getcon();
       ECON *ec = SaveEconomyState(NULL, 0, NULL, ES_ALL);
       herenow();
       long cona = getcon();
       RestoreEconomyState(NULL, 0, NULL, ec, ES_ALL);
       bailnow();
       long conb = getcon();
       RestoreEconomyState(NULL, 0, NULL, ec, ES_ALL);
       if(conb >= cona)
          cout << "Govt, govt, better." << endl;
       else
          cout << "Here, now, better." << endl;
       return 0;
    }
    Quote Originally Posted by main.h run-time output
    Working...
    Here, now, better.
    Last edited by Yarin; 09-25-2008 at 01:20 PM.
    A class that doesn't overload all operators just isn't finished yet. -- SmugCeePlusPlusWeenie
    A year spent in artificial intelligence is enough to make one believe in God. -- Alan J. Perlis

  10. #25
    pronounced 'fib' FillYourBrain's Avatar
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    cute, I think. spend a lot of time on that did you?
    "You are stupid! You are stupid! Oh, and don't forget, you are STUPID!" - Dexter

  11. #26
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    Yarin, so your solution to the lending situation is to drill in Alaska?

    *sigh*... one mistake to cover up another...

  12. #27
    &TH of undefined behavior Fordy's Avatar
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    Sorry to go off on a tangent, but when I originally saw the subject of this post, I thought "the White House..."

  13. #28
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    yeah so did I.

  14. #29

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    Before I say anything, if I come across as argumentative I'm actually just playing a bit of the devil's advocate. Economy stuff can seem so incredibly complicated to me that I really don't know how I ultimately feel about the bail out.

    Frankly I don't buy it. In all my years I've never seen an address like that about the economy or what basically sums up to be scare tactics like if you don't do this then this will definitely happen
    I presume you are referring specifically to the scare tactics, but on the flip side people are reporting the economy may currently be, or will be, in the worst condition since the Great Depression (I'm still not sure if that's really accurate or, like you said, a scare tactic slogan).

    Maybe they should treat the illness, not the symptoms. Turn the economy around, reign in the oil companies and the price of oil, and these problems with people defaulting on loans will mostly go away on its own.
    You make it sound so incredibly easy/trivial.


    conversely, the best way to hurt the poor is to take from the rich for the same reason stated above.
    Does that statement change when discussing this in the context of outsourcing? e.g. in a scenario where the rich are plenty rich but still sending jobs overseas because it's ultimately cheaper (at the time).

    Defending it with false assumptions just contributes to the problem. As stated, one of the problems these investments present is that they specifically enable investments that do not increase production.
    Umm he wasn't defending it...


    I find it difficult myself to argue so strongly for the Capitalistic ideal because laissez-faire capitalism doesn't seem to exist anywhere in any country (and never really has). The American form seems to teeter-totter between the democrat and republican shades of regulation and control, of which the differences between the two approaches, when compared to the capitalistic ideal, appears to be moot.

    Also, do you guys think the economic turmoil tends to improve Obama's or McCain's odds?
    Last edited by BobMcGee123; 09-25-2008 at 05:52 PM.
    I'm not immature, I'm refined in the opposite direction.

  15. #30
    Super Moderator VirtualAce's Avatar
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    Also, do you guys think the economic turmoil tends to improve Obama's or McCain's odds?
    I think it tightens the race. No one I have talked to feels that either of these are our 'golden child' when it comes to being our next President. Most of us by now realize that regardless of who is in office the problems will remain and neither side has done much to help the USA in recent years.

    As always I say both parties need some serious house cleaning and I think it's high time for the American people to exercise the powers granted to us by the Constitution to remove these people from office be it through voting or through the court system.

    I'm not a person that just hates the rich or believes that type of economics is in any way sound but it does appear at this time that the only reason for the 'emergency' is because the rich are becoming a bit less richer. I do not think we need a $700 billion dollar bailout. Companies who make poor decisions have the right to go out of business. Their affect on the economy does not negate the fact that Capitalism will eventually prevail. Trying to avoid the consequences by having your tax payers bail you out is completely unacceptable.

    No one wants a recession but economies do go through them and sometimes that is what it takes to wake up. I, for one, don't believe the scare tactics and feel that they are concentrating on one sector of the economy instead of the economy as a whole. Bush's address was enough to make anyone want to run out and grab their money from the local bank which is why I think it should have never been made.

    All I got out of it was this: My administration screwed up royally and now we want you to bail us out or else.
    Bush can take his 'my way or the highway' politics along with his cabinet and cronies and get the heck out of dodge. Don't you ever notice that his administration always wants a blank check and then threatens people about the consequences if they don't get it? I'm not for blank check politics and I don't think the American system is about one man who can pretty much do what he wants - which is seemingly what the current President always asks for. Ours is a system of checks and balances and not about one man having absolute power. I'll be glad when this administration is gone.
    Last edited by VirtualAce; 09-25-2008 at 06:32 PM.

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