Discussions on the new bailout bill

[audtatious]

Thoughts, concerns or what you have heard....

I will start with:

"Washington, Jan 25 - Speaker Nancy Pelosi (D-CA), appearing this morning on ABC’s This Week with George Stephanopoulos, said she has “no apologies” for including billions of dollars in spending unrelated to job creation – including taxpayer funding for contraceptives and the abortion industry – in congressional Democrats’ economic bill, which will reportedly be voted on by the House this week."

Oh joy.

[audtatious]

Looks like ACORN and others may be getting some of the chump change....

“For a further additional amount for ‘Community Development Fund,’ $4,190,000,000, to be used for neighborhood stabilization activities related to emergency assistance for the redevelopment of abandoned and foreclosed homes as authorized under division B, title III of the Housing and Economic Recovery Act of 2008 (Public Law 110–289), of which—

“(1) not less than $3,440,000,000 shall be allocated by a competition for which eligible entities shall be States, units of general local government, and nonprofit entities or consortia of nonprofit entities[.]”

“(2) up to $750,000,000 shall be awarded by competition to nonprofit entities or consortia of nonprofit entities to provide community stabilization assistance […]”

and

The House Democrats’ trillion dollar spending bill also includes $1 billion for the Community Development Block Grant (CDBG) Program. CDBG funds are given by the federal government to state and local governments which often contract with nonprofits for services related to the purpose of the grant.

ACORN knows how to secure CDBG funds. Audit reports filed by ACORN’s headquarters with the Office of Management and Budget show that ACORN spent $1,588,599 in Community Development Block Grant (CDBG) Program funds from FY 2003 through FY 2007. It is not clear from these records when or from what source the funds were awarded to ACORN.

On top of:

Washington, Dec 8, 2008 - House Republican Leader John Boehner (R-OH) today sent a letter to Secretary of Housing and Urban Development Steven Preston, urging him to protect taxpayers and withhold funding from the Association of Community Organizations for Reform Now (ACORN) until credible congressional oversight hearings are completed in a manner that clears the organization of wrongdoing. Boehner’s request follows last week’s announcement that NeighborWorks America, a government-created entity which directs tens of millions of taxpayer dollars to state housing agencies and nonprofit groups, has awarded two taxpayer-funded grants totaling $17.2 million to the group. In October, Boehner sent a letter to President Bush requesting that all federal funds be withheld from ACORN after the Associated Press reported that the scandal-tarnished organization was under investigation by the FBI for a “coordinated national scam” of voter registration fraud.

[Jesda]

Its about as bad as the previous bailout packages.

What happened to letting poorly run firms fail, so that we can become more efficient when the economy recovers?

[MinisterofDOOM]

when the economy recovers?

You nailed it right there. That would require thinking about tomorrow instead of whining about today. No one, not citizens nor politicians, are going to do that in this reality.

[OriginalWheelman]

Its about as bad as the previous bailout packages.

What happened to letting poorly run firms fail, so that we can become more efficient when the economy recovers?

For that matter, what happened to letting people fail.

[smockers83]

According to recent reports, if I heard correctly, there are provisions in the bill that require projects to purchase only American steel, iron, and what not. If not, then the project won't get government money.

To everyone that reads this: IMMEDIATELY TELL YOUR REPRESENTATIVES TO VOTE AGAINST THIS BILL!!!!

This is protectionism. Politicians will claim that it'll save American jobs and help the economy. This is completely false and recent history only tells us this is completely unfounded and completely untrue. Protectionism is what extended the Great Depression and it only made the Depression worse than what it could have been! Do not believe the politicians! It is appalling that they are resorting to this type of legislation when history already tells us it's bad for the economy.

This is not me talking about a political position on the bill. This is real and if it is enacted, protectionism in this bill will hurt the US and its economy with a probability of 100%.

[Cold_Zero]

Listening to Congressman Pence, there is $50 Million in the Economic Stimulus Plan II for the National Endowment for the Arts and $200 Million for beautifying the National Mall in DC.

Not to mention money for Family Planning.. How does any of this Stimulate the economy effectively?

[audtatious]

Where are all the Obama supporters? It seems to me the bill being proposed by Obama and the Dem controlled Congress would be full of WIN for them?

Yeah, kinda a low blow as a majority of his supporters here will call BS on it just like the rest of us. I'd still like to see your comments tho....

[smockers83]

What I don't understand is the big hoopla about the contraceptives. They are to be provided to low-income people. Most of the problem with low-income people is that they have too many kids. If they had less kids, they could maybe bring themselves out of poverty or raise their income either by delaying having kids or just having less. This would provide more money for themselves to better themselves and allow them to focus on that. It would also allow them to focus on quality of kids, not quantity. Parents living in dire situations tend to have more kids because the rate of survival is smaller, which kind of puts them into a poverty trap.

[Cold_Zero]

What I don't understand is the big hoopla about the contraceptives. They are to be provided to low-income people. Most of the problem with low-income people is that they have too many kids. If they had less kids, they could maybe bring themselves out of poverty or raise their income either by delaying having kids or just having less. This would provide more money for themselves to better themselves and allow them to focus on that. It would also allow them to focus on quality of kids, not quantity. Parents living in dire situations tend to have more kids because the rate of survival is smaller, which kind of puts them into a poverty trap.

Well, if this was a Family Planning Bill or an Anti Poverty Bill then this kind of pork would be appropriate. But when we are contemplating the fastest and most effective way to ‘Stimulate’ the Economy, I don’t think that passing out free condoms, birth control pills and abortions is the best way to stimulate our economy. Nor is it appropriate to come up with government programs (other pork) that will take 5-11 years to ‘kick in’ before this country will see any benefit, especially when the program is created to advance a certain social or political agenda.

[audtatious]

This is interesting: http://mack.house.gov/_files/S...9.pdf

Summary of spending by Appropriations Subcommittee:

Agriculture: $26.863 billiono $19.99 billion in mandatory spending for the Food Stamp program.o $5.13 billion for rural grant and loan programs, including programs to support broadband deployment, the Rural Business Cooperative Service, housing insurance, water and waste programs, and community facilities.o $726 million for the after-school snack program.o $253 million for the Department's building and facility repairs.o $345 million for information technology improvements.o $400 million for watershed flood prevention and rehabilitation.o $23 million for the Department of Agriculture's Inspector General to conductaudits and investigations of these programs.

Commerce, Justice, Science: $14.191 billiono $6.575 billion for the Department of Commerce, including $3.175 billion forbroadband mapping and for the deployment of wireless and broadbandtechnology to unserved areas, $ 1 billion for unspecified activities related to the 2010 Decennial Census, $650 million for additional Digital TV transitioncoupons, $1 billion for NOAA climate satellite and habitat restoration programs, $500 million for NIST research, construction and manufacturing support pÍograms, and $250 million for economic development assistance grants.o $4.00 billion for the Department of Justice for grant assistance to State and locallaw enforcement, including $3 billion for the Byrne/JAG formula grant programand $l billion for COPS Hiring grants.o $600 million for NASA, including $400 million for Science to accelerate thehighest priority Earth Science missions, $150 million for aeronautics research and $50 million for hurricane-related construction projects at NASA centers.o $3 billion for the National Science Foundation, including $2 billion for research grants, $300 million for research instrumentation grants, $200 million for academic research facilities renovation grants, $400 million for major research equipment and facilities projects, $100 million for science education programs.o $ 16 million for the Inspectors General of the Department of Commerce, Justice, NASA, and the National Science Foundation to conduct audits and investigations of these programs.

Defense: $4.865 billiono $4.5 billion for sustainment, maintenance, and repair of Department of Defense facilities.o $350 million for research, development, test and evaluation, including pilotprojects, for improvements in energy generation, transmission, regulation, storage, and use on military installations.o $15 million for the Department of Defense's Inspector General to conduct audits and investigations of these programs.

Energy and Water: $48.915 billiono $5 billion for water projects, including $4.5 billion for the Army Corps ofEngineers for repairs and upgrades to levees and dams and $500 million for the Bureau of Reclamation for drinking water supply, water reuse, and waterrecycling projects.o 537.4 billion for energy projects, including the following:1. $2 billion for research related to renewable energy and energy effrciency,2. $500 million for an industrial waste energy recovery incentive program,3. $ 1.5 billion for grants to institutions to identify, design, and implementsustainable energy projects,4. $6.2 billion through the'WeatherizationAssistance Program to assist lowincome families in reducing energy costs,5. $3.5 billion for Energy Effrciency and Conservation Block Grants tostates, local governments, and Indian tribes to reduce fossil fuel emissions,6. $3.4 billion for the State Energy Program to provide grants to state energyoffrces,7. $200 million for Transportation Electrification Program to move thetransportation sector toward clean energy sources,8. $300 million to provide rebates to residential customers for the purchaseof energy efficient appliances,9. $400 million for a pilot programthat will allow state and localgovernments to acquire alternative fueled vehicles,10. $2 billion for facilities to support the manufacturing of advanced vehiclebatteries,1 1. $4.5 billion to support research and development, pilot projects, andfederal matching funds for the Smart Grid Investment Program tomodernize the country's electric grid,12. $8 billion for a new loan guarantee program for renewable energy andelectric power transmission systems,13.52.4 billion for carbon capture and sequestration demonstration projects,14. 52 billion for capital improvements at Department of Energy labs andfacilities, and for advanced research projects, and15. $500 million for to accelerate ongoing nuclear waste cleanup.o $6.5 billion in additional borrowing authority for the Western Area PowerAdministration and the Bonneville Power Administration.o $15 million for the Department of Energy's Inspector General to conduct audits and investigations of these programs, but no new funds are provided to conduct audits and investigations of the Corps of Engineers' projects.

Financial Services: $8.755 billiono $430 million for subsidy and administrative costs of small business loans.o $600 million to replace a portion of the Federal vehicle fleet with alternative fuel vehicles.o $7.7 billion for construction and repairs of Federal buildings, with $6 billiondedicated to projects focused on energy-efficiency and conservation and $1billion for ports of entry.o $25 million for the Inspectors General of the Small Business Administration and the General Services Administration to conduct audits and investigations of these programs.

Homeland Security: $1.102 billiono $100 million for non-intrusive Customs and Border Protection inspectionequipment,o $150 million for construction at land ports of entry.o $500 million for Explosive Detection System installation and procurement and Airport Checkpoint Technolo gies.o $150 million for the Coast Guard for alteration of bridges.o $200 million for Emergency Food and Shelter. (FY08 - $153 million)o $2 million for the Department of Homeland Security's Office of InspectorGeneral to conduct audits and oversight of these programs.

Interior: $15.010 billiono $8 billion for state revolving funds for clean water and drinking water.o $1 billion for clean-up of Superfund sites and leaking underground storage tanks.o $4.375 billion for construction, capital improvements, and revitalization projects of the Smithsonian Institution, US Forest Service, Bureau of Land Management, Fish and Wildlife Service, National Park Service, Bureau of Indian Affairs, and Indian Health Service.o $850 million for wildhrehazard reduction, including on Federal lands.o $300 million for grants and loans to states and local governments to reduce diesel emissions (DERA).o $200 million for repair and restoration of science facilities and scientificequipment of the US Geological Survey.o $100 million for the Brownfields program to address site assessment and cleanup.o $100 million for facility repairs and modernization of programs through theNational Park Service Centennial Challenge grants.o $50 million for grants through the National Endowment for the Arts.o $35 million for the Inspectors General of the Department of the Interior and the Environmental Protection Agency.

Labor-HHS: $171.363 billiono $4 billion for worker training, including $1.2 billion for a new program for youth summer jobs, $50 million for Youthbuild, and $750 million for green jobs, healthcare, and emerging industry training grants.o $120 million to employ older Americans in community service.o $500 million for state employment service and reemployment grants.o $80 million to ensure infrastructure projects funded in the bill comply withworþlace safety re gulations.o $300 million to construct Job Corps facilities.o $1.5 billion for community health centers, including $1 billion for constructionand renovation of existing facilities.o $88 million to replace HRSA's headquarters facility.o $600 million to subsidizetraining for primary care workers, including doctors,nurses and dentists.o $462 million to continue replacing CDC facilities.o $1.5 billion for university research facility construction through NIH.o $500 million for construction of NlH-owned facilities.o $ 1.5 billion for NIH research.o $ I .l billion for comparative effectiveness research.o $1 billion for LIHEAP for fiscal year 2010.o $2 billion for the Child Care Development Block Grant.o $2.1 billion for Head Start and Early Head Start.o $1 billion for the Community Services Block Grant.o $100 million for the Compassion Capital Fund.o $200 million for senior citizen nutrition programs such as Meals on Wheels.o $3 billion for a new prevention and wellness fund.o $2 billion to modernize electronic health records.o $900 million for Project Bioshield.o $13 billion for formula grants to school districts.o $100 million for school construction in school districts heavily impacted byFederal or tribal lands on which they cannot collect property taxes.o $1 billion for education technology in elementary and secondary schools.o $66 million for education for homeless children and youth.o $200 million for the Teacher Incentive Fund.o $25 million for construction loans to charter schools.o $13 billion for special education state grants.o $600 million for special education programs for infants and families.o $500 million for vocational and rehabilitation state grants'o $200 million for centers for independent living.o $15.6 billion for Pell grants.o $490 million for college work-study grants.o $50 million for student aid administration.o $100 million for teacher quality grants to institutions of higher education.o $250 million for statewide education data systems.o $14 billion for construction of elementary and secondary schools.o $6 billion for construction of facilities at colleges and universities.o $200 million to pay Americorps volunteers.o $900 million to reduce the Social Security disability case backlog and construct a new computing center for the agency.o $39 billion for state and local education agencies'o $15 billion to reward schools that have made progress in meeting No Child Left Behind standards.o $25 billion for other state and local government functions (including education).o $42 million for the Inspectors General of the Departments of Labor, Health and Human Services, and Education, as well as the Social Security Administration and the Corporation for National and Community Service, to conduct audits and investigations of these programs.

Military Construction - Veterans: $7.001 billiono $6 billion for military construction projects, including base housing, childdevelopment centers, hospitals and ambulatory care centers, construction projects to support Guard and Reserve units across the country, and clean-up activities related to base closures.o $1 billion for maintenance of veterans' medical centers and national cemeteries.o $l million for the Department of Veterans Affairs Inspector General to conduct audits and investigations of these programs.

State-Foreign Operations: $0.500 billiono $224 million to rehabilitate the Rio Grande Flood Control System and meet water quality and capacity requirements of the Colorado River Boundary and Capacity Preservation project.o $276 million to improve information technology, including cyber-securityenhancements.o No funds provided for the Department of State's Inspector General to conduct audits and investigations of these programs.

Transportation-HUD: $59.485 billiono $30 billion for federal highway projects, including $300 million for roads onIndian reservations, $250 million for park roads, $20 million for on the jobtraining, $20 million for Disadvantaged Business Enterprise bonding, $60 million for administration, and $29.35 billion to the States.o $6 billion for transit capital assistance grants for vehicle acquisition and facility construction.o $300 million for intercity rail programs.o $800 million for Amtrak for capital infrastructure improvements.o $1 billion for capital investment grants for new transit projects.o $2 billion to rehabilitate existing transit systems.o $3 billion for airport improvement projects.o $5 billion for repair and construction projects in public housing units.o $2.5 billion to renovate and retrofit federally-assisted housing units to make them more energy efficient.o $l.5 billion for emergency shelter grants.o $500 million to renovate and retrofit Native American housing units.o $l billion for Community Development Block Grants.o $4.19 billion for the Neighborhood Stabilization Program for local communities to purchase and rehabilitate vacant housing.o $1.5 billion for the HOME program to rehabilitate and construct housing, as well as fill financing gaps.o $10 million for nonprofit housing organizations to develop or rehabilitate low income housing.o $100 million to address lead-based paint threats in public housing.o $50 million, which will allow loan limits to be raised in subareas, if warranted.o $35 million for the Inspectors General of the Department of Housing and Urban Development and Transportation to conduct audits and investigations of these programs.

[audtatious]

Here's something from the last bailout:

http://www.nypost.com/seven/01...3.htm

"Beleaguered Citigroup is upgrading its mile-high club with a brand-new $50 million corporate jet - only this time, it's the taxpayers who are getting screwed."

[smockers83]

Well, if this was a Family Planning Bill or an Anti Poverty Bill then this kind of pork would be appropriate. But when we are contemplating the fastest and most effective way to ‘Stimulate’ the Economy, I don’t think that passing out free condoms, birth control pills and abortions is the best way to stimulate our economy. Nor is it appropriate to come up with government programs (other pork) that will take 5-11 years to ‘kick in’ before this country will see any benefit, especially when the program is created to advance a certain social or political agenda.

Point taken on the quickness part.

"Beleaguered Citigroup is upgrading its mile-high club with a brand-new $50 million corporate jet - only this time, it's the taxpayers who are getting screwed."

IIRC, firms who received TARP monies the first time around are being told by the government to divest their stakes in corporate jets.

[audtatious]

IIRC, firms who received TARP monies the first time around are being told by the government to divest their stakes in corporate jets.

They don't listen

[Armelius]

According to recent reports, if I heard correctly, there are provisions in the bill that require projects to purchase only American steel, iron, and what not. If not, then the project won't get government money.

To everyone that reads this: IMMEDIATELY TELL YOUR REPRESENTATIVES TO VOTE AGAINST THIS BILL!!!!

This is protectionism. Politicians will claim that it'll save American jobs and help the economy. This is completely false and recent history only tells us this is completely unfounded and completely untrue. Protectionism is what extended the Great Depression and it only made the Depression worse than what it could have been! Do not believe the politicians! It is appalling that they are resorting to this type of legislation when history already tells us it's bad for the economy.

This is not me talking about a political position on the bill. This is real and if it is enacted, protectionism in this bill will hurt the US and its economy with a probability of 100%.

How is protectionism bad? History hasn't told me anything on it.

From what I remember, most countries in the world went toward a protectionist stance. Some even wanted to get all of their gold out of New York. I could think of at least one country that got out of their depression using protectionism.

[smockers83]

How is protectionism bad? History hasn't told me anything on it.

From what I remember, most countries in the world went toward a protectionist stance. Some even wanted to get all of their gold out of New York. I could think of at least one country that got out of their depression using protectionism.

How is protectionism bad? It prevents trade for one thing. During the Depression, one country turned inward, the United States, and other countries turned inward as well whether they were following our lead or they did so in retaliation of the tariffs/quotas we put on their products. The economy can't grow without trade, not just domestic trade but international trade and the trade policies put in place during the Depression are classic examples. Prior to the Depression, barriers to trade were falling worldwide until the economy went south. These policies made the Depression worse and longer.

Also, protectionism destroys jobs due to the fact that there is less trade going on. World economic growth grows as barriers to trade are removed, promoting free trade. People who say things like NAFTA destroy jobs are wrong. They don't look at the data and/or they are only trying to appeal to a very tiny group of people.

I know that response is kind of all over the place, but just trust me, protectionism is bad. There are more examples of how it hurt the US other than just the Depression.

Name at least one country that got out of the Depression by implementing a protectionist policy.

[Armelius]

How is protectionism bad? It prevents trade for one thing. During the Depression, one country turned inward, the United States, and other countries turned inward as well whether they were following our lead or they did so in retaliation of the tariffs/quotas we put on their products. The economy can't grow without trade, not just domestic trade but international trade and the trade policies put in place during the Depression are classic examples. Prior to the Depression, barriers to trade were falling worldwide until the economy went south. These policies made the Depression worse and longer.

Also, protectionism destroys jobs due to the fact that there is less trade going on. World economic growth grows as barriers to trade are removed, promoting free trade. People who say things like NAFTA destroy jobs are wrong. They don't look at the data and/or they are only trying to appeal to a very tiny group of people.

I know that response is kind of all over the place, but just trust me, protectionism is bad. There are more examples of how it hurt the US other than just the Depression.

Name at least one country that got out of the Depression by implementing a protectionist policy.

I would say you entirely make sense. However my example is Nazi Germany. They were the first to go into a depression (farmers were hit due to bumper crops in Ukraine/USSR late 20's we gave USSR the most amount of agricultural exports ever).

They were off the gold standard yet they still had gold in New York and wanted it. So Germany paid WWI reparations in gold marks which meant there would still be a call on the gold reserves in New York. Which also forced US banks to call in their loans. Much of it was tied to speculation in Wall Street stocks. That is how the Great Depression started.

Under protectionist policies the gold in New York stayed put. However Germany funneled money through the Bank of International Settlements which helped it fund a war machine that put Germany back on the road to full employment and it was the first to emerge out of the Great Depression which affected the whole world.

http://www.thirdworldtraveler.....html

Also protectionist polices like nationalization of oil fields in Mexico (1938) help keep profits within a nation's border. Noting that US is the only country that hasn't nationalized it's oil.

There is no such thing as "free" trade. There are economic costs with doing business with low wage countries. Mainly jobs in the US were wages are considered higher because cost of living is higher.

Before NAFTA tarriffs worked to protect US jobs from low wage products flooding US markets. After NAFTA the US had good times because of the building of US factories in places like Mexico or Canada. It was only temporary and today we are seeing the results of that very quick boom going bust for the American worker.

Protectionism is not bad if you are trying to sell products in the US. It's when you try to sell US products to other countries that it might hurt US business. Right now our exports are not doing well and are only doing good if the dollar value is low.

[Jesda]

How is protectionism bad? History hasn't told me anything on it.

From what I remember, most countries in the world went toward a protectionist stance. Some even wanted to get all of their gold out of New York. I could think of at least one country that got out of their depression using protectionism.

No. No. No.

The US engaged in protectionist policies just prior to the Great Depression. As a result, we got ourselves a Great Depression. Protectionist policies were a major contributing factor in global economic decline.

Here's a brief layman's summary:http://uspolitics.about.com/od...n.htm

Tariffs are met with countertariffs, and the losers are producers (who have no markets to sell their goods) and consumers (who have no access to cheaper goods).

[smockers83]

I would say you entirely make sense. However my example is Nazi Germany. They were the first to go into a depression (farmers were hit due to bumper crops in Ukraine/USSR late 20's we gave USSR the most amount of agricultural exports ever).

They were off the gold standard yet they still had gold in New York and wanted it. So Germany paid WWI reparations in gold marks which meant there would still be a call on the gold reserves in New York. Which also forced US banks to call in their loans. Much of it was tied to speculation in Wall Street stocks. That is how the Great Depression started.

Under protectionist policies the gold in New York stayed put. However Germany funneled money through the Bank of International Settlements which helped it fund a war machine that put Germany back on the road to full employment and it was the first to emerge out of the Great Depression which affected the whole world.

http://www.thirdworldtraveler.....html

Also protectionist polices like nationalization of oil fields in Mexico (1938) help keep profits within a nation's border. Noting that US is the only country that hasn't nationalized it's oil.

There is no such thing as "free" trade. There are economic costs with doing business with low wage countries. Mainly jobs in the US were wages are considered higher because cost of living is higher.

Before NAFTA tarriffs worked to protect US jobs from low wage products flooding US markets. After NAFTA the US had good times because of the building of US factories in places like Mexico or Canada. It was only temporary and today we are seeing the results of that very quick boom going bust for the American worker.

Protectionism is not bad if you are trying to sell products in the US. It's when you try to sell US products to other countries that it might hurt US business. Right now our exports are not doing well and are only doing good if the dollar value is low.

Germany's economy was already severely limited in terms of trade and they emerged, as you stated, because of war spending through the rebuilding of its armed forces, not because it turned inward with protectionist policies.

Free trade is trade that occurs without imposed restrictions such as tariffs and quotas.

Things like NAFTA may cause job losses in the short run due to the fact that capital is now free to move around. Capital can move a lot quicker than labor. In the long run, free trade deals such as NAFTA create jobs across the board.

Protectionism is bad across the board. There are very small groups of people who can do well from protectionist policies, the ones who are protected. However, the rest of the people are hurt by this protectionism in the form of high prices. The most recent example that comes to mind of the consequences of protectionist policies are the ones imposed by Bush for the steel industry. This allowed the steel industry to restructure but it limited competition, therefore increasing prices which affected every single person. Protectionist policies put in place in the US does not hamper US companies' ability to sell abroad unless other countries retaliate with their own barriers to trade. However, if one country imposes protectionist policies, all countries affected by such policies will retaliate almost immediately. So the net effect is trade decreases everywhere resulting in job losses and GDP everywhere falling.

Exports are directly affected by the value of the dollar compared to other currencies no matter the economic situation. If the dollar falls against another currency, US products are now more attractive in areas that trade in the other currency, no matter what. As the dollar gets stronger against other currencies, naturally our products become more expensive to areas that trade those currencies. This affects international demand no matter what the economic situation is.

[smockers83]

More news on the bailout/stimulus package. Only 12 cents of every dollar go towards stimulative projects.

The Obama administration and Democrats are trying to defend this bill but they have no chance to be able to with those of us who understand what's going on here. Most of us say it's bad and not very stimulating at all. The problem is that most people don't understand and it may get passed just because of that.

[Armelius]

No. No. No.

The US engaged in protectionist policies just prior to the Great Depression. As a result, we got ourselves a Great Depression. Protectionist policies were a major contributing factor in global economic decline.

Here's a brief layman's summary:http://uspolitics.about.com/od...n.htm

Tariffs are met with countertariffs, and the losers are producers (who have no markets to sell their goods) and consumers (who have no access to cheaper goods).

That's not true Jesda. If you look at agricultural exports to the USSR from the US you will see that our exports were the highest ever for nearly any time period. As a result the Soviet Union had bumper crops of food. So much so that farmers there just destroyed it and faced punishment of death. The markets were flooded with food. And the bottom fell out of the prices everywhere. German farmers went bankrupt first. Remember there was plenty of bread only the German marks were nearly worthless at the time. Germany was also first to go in protection mode.

With floating fiat currency prices fluctuate as the market will bare. There has always been disparity in wages and costs within the US. A person in Chicago might make more for doing the same thing as someone in New Orleans. There is still "free" trade between the two states and that doesn't make wages any better for any place even if corporations move to New Orleans. Same goes for NAFTA. You won't get better wages in Mexico but you will get more employment. That won't mean much if the person in Chicago decides not to buy the product or go for something much cheaper made in China.

Our dollar doesn't necessarily get stronger with trade. It could get weaker as well with trade as long as the government runs a debt and prints even more fiat currency.

Look at the 50's to see this happen. High employment and a strong dollar with dominate products all over the world however, all that changed rather quickly when our currency was weakened. It's difficult for me to explain this whole exchange system with currencies. Even Hong Kong pegged it's currency to the dollar and then China in order to smooth over the transfer of the British lease of that island. That happened right after WWII.

But here is what matters and proves that without protectionist policies a currency can get out of flux. Instead of tariffs a government will go after higher tax policies on it's citizens property and production which will be hundreds of times worse than any protectionist policy.

But read this until next time:

http://en.wikipedia.org/wiki/Bretton_Woods_System

Quote »The U.S. balance of payments crisis (1958–68)

After the end of World War II, the U.S. held $26 billion in gold reserves, of an estimated total of $40 billion (approx 60%). As world trade increased rapidly through the 1950s, the size of the gold base increased by only a few percent. In 1950, the U.S. balance of payments swung negative. The first U.S. response to the crisis was in the late 1950s when the Eisenhower administration placed import quotas on oil and other restrictions on trade outflows. More drastic measures were proposed, but not acted upon. However, with a mounting recession that began in 1958, this response alone was not sustainable. In 1960, with Kennedy's election, a decade-long effort to maintain the Bretton Woods System at the $35/ounce price was begun.

The design of the Bretton Woods System was that nations could only enforce gold convertibility on the anchor currency—the United States’ dollar. Gold convertibility enforcement was not required, but instead, allowed. Nations could forgo converting dollars to gold, and instead hold dollars. Rather than full convertibility, it provided a fixed price for sales between central banks. However, there was still an open gold market, 80% of which was traded through London, which issued a morning "gold fix", which was the price of gold on the open market. For the Bretton Woods system to remain workable, it would either have to alter the peg of the dollar to gold, or it would have to maintain the free market price for gold near the $35 per ounce official price. The greater the gap between free market gold prices and central bank gold prices, the greater the temptation to deal with internal economic issues by buying gold at the Bretton Woods price and selling it on the open market.

However, keeping the dollar was still more desirable than holding gold because of the dollar's ability to earn interest. In 1960 Robert Triffin noticed that holding dollars was more valuable than gold was because constant U.S. balance of payments deficits helped to keep the system liquid and fuel economic growth. What would later come to be known as Triffin's Dilemma was predicted when Triffin noted that if the U.S. failed to keep running deficits the system would lose its liquidity, not be able to keep up with the world's economic growth, and, thus, bring the system to a halt. But incurring such payment deficits also meant that, over time, the deficits would erode confidence in the dollar as the reserve currency created instability. [10][/quote]

[smockers83]

Where in the world did you learn those loads of crap?

That's not true Jesda. If you look at agricultural exports to the USSR from the US you will see that our exports were the highest ever for nearly any time period. As a result the Soviet Union had bumper crops of food. So much so that farmers there just destroyed it and faced punishment of death. The markets were flooded with food. And the bottom fell out of the prices everywhere. German farmers went bankrupt first. Remember there was plenty of bread only the German marks were nearly worthless at the time. Germany was also first to go in protection mode.

Agriculture, when protectionist policies were put in place (Jesda, I'll get to you in a little bit on this one) during the Depression, agriculture was one of the largest-affected industries. After Smoot-Hawley, the physical amount of goods exported decreased by half from 1929 to 1930. If exports were truly higher to the USSR during this period, then you are only looking at one country in which the US created a preferred trading partner. The agricultural industry was one of the hardest hit, caused farmers to default and created the run on the banks of the Midwest, which led to bank failures. Also, the markets were not flooded with food, in fact that's very much the opposite of what was going on. Food was in fact being taken off the market to support price floors imposed by governments.

As for Jesda, the US did not engage in protectionist policies that it was not already previously engaged in prior to the Depression. The Smoot-Hawley Act was enacted in 1930.

With floating fiat currency prices fluctuate as the market will bare. There has always been disparity in wages and costs within the US. A person in Chicago might make more for doing the same thing as someone in New Orleans. There is still "free" trade between the two states and that doesn't make wages any better for any place even if corporations move to New Orleans. Same goes for NAFTA. You won't get better wages in Mexico but you will get more employment. That won't mean much if the person in Chicago decides not to buy the product or go for something much cheaper made in China.

Why is it that people who pretend to understand economics only look at the most minuscule of things? I said the net effect in the long run would be job creation and a rise in global GDP due to free trade. Free trade does not mean wages in A are the same as they are in B. Free trade means trade that occurs with no imposed restrictions such as tariffs and quotas, I've already said that. Wages are affected by free trade. If wages are lower in B than they are in A, when trade occurs, wages in B will rise and wages in A will fall until they become equal under the most simplest of terms.

One person in Chicago is the least of a firm's worries when it considers the benefit of free trade agreements. I have yet to see one economist try and defend barriers to trade and their benefits. Go ahead and try and prove the benefit of protectionism and barriers to trade. You will fall flat on your face 100% of the time. Free trade and comparative advantage is one of the things Adam Smith is most famous for when he wrote The Wealth of Nations in 1776. Good luck.

Over 1000 economists petitioned the US government to not pass the Smoot-Hawley act, saying it would have major consequences. Guess what, they were right.

Our dollar doesn't necessarily get stronger with trade. It could get weaker as well with trade as long as the government runs a debt and prints even more fiat currency.

See, you have what I said in exactly the opposite way. I said exports, in which I meant the total amount of exports, is directly affected by exchange rates. Our trade, or exports, doesn't affect our exchange rates.

Look at the 50's to see this happen. High employment and a strong dollar with dominate products all over the world however, all that changed rather quickly when our currency was weakened.

Provide some numbers. This could have happened for a number of reasons.

It's difficult for me to explain this whole exchange system with currencies. Even Hong Kong pegged it's currency to the dollar and then China in order to smooth over the transfer of the British lease of that island. That happened right after WWII.

I'm pretty good with exchange rate policies. But what does Hong Kong and China have to do with anything?

But here is what matters and proves that without protectionist policies a currency can get out of flux. Instead of tariffs a government will go after higher tax policies on it's citizens property and production which will be hundreds of times worse than any protectionist policy.

Nothing you said here makes sense and/or has been proven wrong. Protectionist policies don't prevent a currency from getting out of flux. Actually, I take that back. It can and it would do so in a bad way. In fact, the source you quoted says exactly the opposite. It said that under a fixed exchange rate system such as the Bretton Woods System, the US had to maintain its negative balance of payments, meaning it had to import more than it exported. Early on in the system, the US was exporting to much and was essentially forced to reverse the natural economic transactions that occurred after WWII that created huge positive balance of payments for the US. As for the government raising domestic taxes due to the loss of duties, untrue. Income taxes here in the US have been lowered as well as duties. Plus, in order to maintain a fixed exchange rate you have to change monetary policy and not fiscal policy (government expenditures).
Modified by smockers83 at 11:49 PM 1/28/2009

[Armelius]

Where do you learn your load of crap?

Protectionism works when there is a disparity in wages, production or raw materials, and luxury goods.

You can say how great free trade is when we ship our garbage to China or Mexico and through no environmental policies and low wages that junk comes back as cheap cars, plastic goods, books, computers, televisions and appliances. That is what has been happening and their wages never improved, their employment grew at small rates, and the US suffered through trade deficits.

Protectionism would stop that and the IMF fears correctly that their economy will suffer more than our economy since as consumers the US along with Mexico and Canada are the largest in the world.

NAFTA is setting us up for that one world government and currency bullcrap that all those conspiracy people worry about. You don't think so, all you have to do is look at the EU and the Euro. Which I should say now we should get our military out of Europe all together as we are propping up their governments.

Furthermore, tariffs keep taxes lower for everyone in the US. You can still buy foreign goods only it's going to cost more. I don't mind paying more for crappy products from China or Europe, do you?

There is a fallacy going around that our export products will cost more in other countries. So far compared to the 50's our products are nothing but refuse garbage. We don't produce televisions, cars and even significant amounts of building materials.

Our jobs have been exported to low wage countries. That trend has been going on since the 50's even before free trade. Likewise, factories have historically moved south to southern states to avoid high wage costs, unionism, and high property taxes. Now they just move out of the country just across the border. "Free trade" has hurt us more than protectionism.

Do you take orders from the IMF or something? The whole reason there were "free trade" is to prop up countries in Europe after WWII. Now they are propped up and they still want more. Eventually you have to go with either wage balances reflecting cost of living, a one world currency and a world government to dictate trade policies. You can have all of that with the IMF. I don't want it because through people like you they will tell us to raise individual taxes or decrease our production or some other unsound economic policy.

The US gives up quite a bit with free trade. Just yesterday I had to go buy a used quality tool made in the US as opposed to a new tool made in China that is completely worthless and they are everywhere.

I can point out to a plasma television I have sitting broke because it needs a circuit board that won't be made anytime soon in China, Taiwan or South Korea. If it was made in the US I might have paid even more for it but those manufactures would be accountable.

We are getting so much stuff from China that the only way to prevent the crappy stuff from coming in is protectionism. We don't even export much goods to Canada and Mexico to make much of a difference.

And Hong Kong dollar throughout it's history and you will see that it was pegged to the US dollar. China adopted the same thing with it's yuan. You can look at the Hong Kong dollar in times when world markets needed some correction. Though most of the time it's a non-changing value to the US dollar.

http://en.wikipedia.org/wiki/Hong_Kong_dollar

Agricultural products were tractors, farm equipment and other things that farms need for production of grain or farm animals. We supported the Soviet Union with a large government purchase/loan to that country. As a result their production/efficiency skyrocketed and the European market was flooded with cheap grain and agricultural produce. This caused the German farmers to default on their land loans (yes, there were German farmers in other countries).

When there was a lack of food was during the dust bowl period. Which helped cause an economic crisis that was started with a call on bank loans (again originating in Germany/Europe) that ultimately crashed the US stock market in October 1929.
Modified by Armelius at 3:25 AM 1/29/2009

[Jesda]

Christ, I don't know where to begin but the beginning. You've managed to rewrite 100 years of economic history.

This is truly bizarre.

[480sx]

Iv been telling you guys. We have to ignore AR at all costs. Reading his posts only compels you to correct him, and results in a chain of posts that destroys otherwise good threads.

I refuse to even read his posts anymore, i just skim past them and see the inevitable 'WTF' under his quoted paragraphs.

[Armelius]

Christ, I don't know where to begin but the beginning. You've managed to rewrite 100 years of economic history.

This is truly bizarre.

Well I didn't start the whole federal reserve system of central banking and floating fiat currency. Want to blame the Warburgs for it then go ahead.

I am telling you what the federal reserve did to make a bigger crash/crisis to happen so they could pass through more legislation and taxes.

You don't have to believe me. Go read up on it.

[smockers83]

Where do you learn your load of crap?

I am a learned man in economics from one of the best universities in the country/world.

Protectionism works when there is a disparity in wages, production or raw materials, and luxury goods.

Why are you so hung up on wages. Explain your position because it doesn't make sense. When there is a difference in real wages and trade occurs, that difference narrows.

You can say how great free trade is when we ship our garbage to China or Mexico and through no environmental policies and low wages that junk comes back as cheap cars, plastic goods, books, computers, televisions and appliances. That is what has been happening and their wages never improved, their employment grew at small rates, and the US suffered through trade deficits.

Ah, the beauty of capitalism and how prices determine where stuff goes. Prices communicate to people on where stuff goes. If I have a landfill that is starting to fill up, the supply that I offer is decreasing but the demand is either the same or increasing even. This causes prices to rise for my landfill. But there's a landfill with lots of supply, therefore a cheaper price due to supply and demand. That means more garbage is going to go to that landfill than mine. In China, with all of the goods they're producing, the reason they export so much stuff is because they overproduce based upon the country's income and consumption levels for those products. This causes their prices to be low because their country is oversupplied, so they ship their products to where demand is greater, therefore higher prices.

Protectionism would stop that and the IMF fears correctly that their economy will suffer more than our economy since as consumers the US along with Mexico and Canada are the largest in the world.

Actually, the EU is the largest economy in the world.

NAFTA is setting us up for that one world government and currency bullcrap that all those conspiracy people worry about. You don't think so, all you have to do is look at the EU and the Euro. Which I should say now we should get our military out of Europe all together as we are propping up their governments.

No sir, it is not. There is no conspiracy behind it. NAFTA is an agreement between countries saying that we'll keep our barriers to trade low for you as long as you do, too.

Furthermore, tariffs keep taxes lower for everyone in the US.

No, not really. Duties are quite small on the nations books. Go look up the nation's books, you can find the accounting stuff in Excel spreadsheats.

Our jobs have been exported to low wage countries. That trend has been going on since the 50's even before free trade. Likewise, factories have historically moved south to southern states to avoid high wage costs, unionism, and high property taxes. Now they just move out of the country just across the border. "Free trade" has hurt us more than protectionism.

Jobs are exported to low wage countries because wages, or the price of labor, is cheaper. Again, this is how prices dictate where things go. Free trade has hurt us more than protectionism since the 50s? How so? Our standard of living has risen since the 50s, our GDP has risen since the 50s.

Eventually you have to go with either wage balances reflecting cost of living, a one world currency and a world government to dictate trade policies. You can have all of that with the IMF. I don't want it because through people like you they will tell us to raise individual taxes or decrease our production or some other unsound economic policy.

Again, why are you so hung up on wages. Your wage argument isn't making sense, at all. The IMF doesn't tell any country it wants what to do. If a country takes out a loan from the IMF, then it begins to tell it what to do.

The US gives up quite a bit with free trade. Just yesterday I had to go buy a used quality tool made in the US as opposed to a new tool made in China that is completely worthless and they are everywhere.

Wait, what? How does that make sense? You chose to buy the US-made tool because you trusted it's quality. It probably had a higher price as well, as you said the Chinese-made tool was worthless. This is reflected in the price paid.

We are getting so much stuff from China that the only way to prevent the crappy stuff from coming in is protectionism. We don't even export much goods to Canada and Mexico to make much of a difference.

Not all stuff from China is crappy. My IBM laptop that I'm on right now, made in China. It's lasted longer than any Dell that I've come into contact with. Cheap stuff from China is crappy, but that's why it's cheap. You don't have to buy cheap stuff, but prices dictated that you bought something cheap. You yourself determined from prices that a Chinese-made product was more valuable to you than the money you paid for it while at the same time you yourself determined from prices that something Japanese-made was not worth more than the money you had to pay for it. Shift your focus to something that is Japanese-made or American-made that is higher quality with a higher price.

When there was a lack of food was during the dust bowl period. Which helped cause an economic crisis that was started with a call on bank loans (again originating in Germany/Europe) that ultimately crashed the US stock market in October 1929.

Again, you have no idea what you're talking about. The Dust Bowl was during the Depression in the 30s, not before. In 1919, there was a real estate bubble that caused farm prices (land) to rise, causing land to become over-mortgaged. Then as these prices fell, the real interest rate on the mortgages became too much to afford at the current crop prices. Crop prices fell because there was too much supply. This caused farmers to default and the run on the banks of the Midwest. Much of this happened prior to 1929. Then the government imposed a price floor, took food off of the market in order to support it while at the same time there were bread lines and malnutrition. There really was no more scarcity of crops, it's just that there was a shortage at the current price.

Could I interest you in a book? Basic economics by Thomas Sowell. There's no math or graphs, it's just reading. It describes the basics of economics with real world examples of the past and current times.

I am telling you what the federal reserve did to make a bigger crash/crisis to happen so they could pass through more legislation and taxes.

That's the first time you've mentioned anything about monetary policy and the resulting crash anywhere in this argument. So no, you haven't been telling us.

[HashiriyaS14]

Its about as bad as the previous bailout packages.

What happened to letting poorly run firms fail, so that we can become more efficient when the economy recovers?

That's not how it works. When poorly run firms, BIG ones, fail, they drag down everyone, including well-run firms. Bailouts are intended to prevent (hopefully) this domino effect.

Even if a firm is a good operator, if their stock price falls too far or if they are unable to secure credit at a reasonable price due to problems caused by others, then they will have capital issues and fail.

Being a good operator isn't enough to get oneself through a depression. We can't let good operators fail, and if that involves bailing out some of the bad operators to keep the whole situation from going to hell, then we should do that.

Obviously, you should only intervene if there is a credible threat to said good operators from the failure of said bad operators. If the economy is otherwise sunny and one big player craps out, then they shouldn't be bailed. This is a muddy, murky gray line, and it's hard to tell where to draw it. Anyone who professes to know precisely is lying or delusional. It isn't something that can be addressed ideologically.

[smockers83]

+1 for Hash.

The term bailout, I feel, is used slightly inappropriately when talking about the TARP funds. Yes, we are putting up large amounts of capital into the financial system. However, if we didn't do so, the entire US financial system would collapse, which would then spill into foreign markets causing other systems to collapse. The TARP funds are not necessarily bailing out these institutions, they are providing liquidity to the financial system so that it doesn't completely crash. The whole thing is try and get the credit markets liquid again and to turn up the velocity of money.

[audtatious]

I'm still trying to figure out how spending millions on condoms is going to stimulate the economy.......I would have much respect for Obama if he stepped in to try and remove all the pork.