Those crazy socialists

September 18, 2008

One European country actually seems to think that cuts in the corporate tax rate and the income tax rate might actually be good for their economy. (FYI, Sweden’s corporate tax rate is already lower than the United States)

And because this shit is totally boring to most people, here are some chickens playing the piano:

(h/t the Tax Foundation)

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13 Responses to “Those crazy socialists”

  1. superdave524 Says:

    It is odd. Sweden cuts corporate taxes while America is socializing the finance insurance industry. Weren’t we just talking about privatizing social security a couple of months ago? Shoot, if it didn’t work, we could always buy it back.

  2. John in IL Says:

    Strange days, these are. But then, the government reaps what it sows.

    As for private SS accounts, I’ll take government bonds anyday. If they are good enough for the SS trust fund, they are good enough for me. And they have the added benefit of actually being an asset of mine after I die (so teh kittehs will be taken care of).

  3. superdave524 Says:

    The Wikipedia article was interesting, but not particularly indepth. The suggestion that Democratic Reps were responsible for derailing reforms sought by President Bush was interesting; however, in 2003 Republicans still controlled the House, so probably Representative Frank didn’t scuttle the reform (whatever it was. Changing supervisory status might have done some good. Maybe. But if President Clinton’s regulatory actions got the ball rolling without the help of Congress, then presumably President Bush could have just as easily undone them without the hinderance of Congress).

    Anyway, it appears that the biggest problem is that a real estate bubble burst, like they always do, and too many people bet the farm that they could pass off the hot potato before the music stopped (boy that is a LOT of mixed metaphors in a little space, idnit?). Smarter (or more honest) home appraisers might’ve helped, but doubtless they got pressure from mortgage brokers who just needed to get the deal done to get paid to care how accurate the appraisals were. They were going to sell the mortgage, so it didn’t really need to be collectible; it only needed to look collectible. Like any Ponzi scheme, it works fine as long as everyone’s buying in, but falls apart when speculators stop ratcheting up the prices. Some of this I’m not guessing at, since I used to do a fair amount of real estate work when I was in private practice (I hated it, but I did it (divorces too. Ugh).

  4. John in IL Says:

    Anyway, it appears that the biggest problem is that a real estate bubble burst

    The government sets up the groundwork for a real estate bubble and then the bubble bursts. So, according to the geniuses in Washington, we need more government?

    That’s called job security.

    Like any Ponzi scheme, it works fine as long as everyone’s buying in

    like Social Security.

  5. superdave524 Says:

    Bubbles are cause by speculators, if allowed to by regulators. The real estate bubble was abetted by a bad economy. Over the last few years, there have been a lot of people “cashing out” of the rising value of their homes, in some cases not to make improvements in their homes or for even special events or special problems, but to catch up on rising expenses or pay off ordinary debts. Raiding capital to pay ordinary expenses can’t have been a good sign, because unless a person’s finances greatly improve or his expenses greatly drop, he’s still not going to be able to pay his bills. It still works out okay, as long as the value of the home is enough to pay the debt that it secures, but obviously you got problems if the value of the house is inflated. Hence the import of realistic appraisals.

    Regulations are only as good as the regulators. I know there are people who regulate appraisers, but I don’t know how many regulators there are for a given area, or what their rules are. Most evaluations of home values are based on sales of comparable properties.

    In a closing I’d done on a refinance in the little town of Ridgeland, the value of the home was listed as about 50% higher than original sales prices of only a few years earlier. It was difficult to imagine that anyone with any sense would pay what the appraiser said the house was worth. The comparables couldn’t have been truly comparable. If the refinancer couldn’t make his mortgage payments (which would’ve been tough because the rates on sub-prime mortgages are higher than what he’d refinanced from), the sale of the home probably wouldn’t’ve been sufficient to pay off the loan.

    Social security IS a Ponzi scheme, but since we know the demographics are going to change, we can plan for when the payees start to greatly exceed the payors. We know ahead of time when the music stops and can plan, so, though it might be a hardship on taxpayers, it won’t have to be a disaster.

  6. John in IL Says:

    So the government promoted low standards in lending (Fannie/Freddie have a finger in half of all US mortgages) which encouraged others to do the same thing with the thinking that if the government was wrong it would step in and sort it all out. See how that works?

    Social security IS a Ponzi scheme, but since we know the demographics are going to change, we can plan for when the payees start to greatly exceed the payors. We know ahead of time when the music stops and can plan, so, though it might be a hardship on taxpayers, it won’t have to be a disaster.

    When is this planning supposed to start? BO suggests taxing those making over $250,000/year with SS taxes. They’ll never get it back in SS payments. That destroys the last vestige of the insurance program FDR intially set up. Then it becomes another welfare program, like Medicare.

    What is so wrong with allowing me to invest my SS
    “contributions” in government bonds that I would actually own?

  7. superdave524 Says:

    Social security is sort of a hybrid creature. Some of it is about making us save our own money; some of it is giving it to other folks. My father died when I was in college. My brother and I got the social security benefits that he would never be able to collect because of his early passage. I was idealogically opposed to getting the money, because he didn’t need it and because of scholarhips and financial aid my family could afford to send me to college (but I didn’t send it back, either. I’m crazy, but not that crazy).

  8. John in IL Says:

    some of it is giving it to other folks

    No. Your social security payments are premiums in a federally mandated insurance program. SSI (Supplemental Security Income) is one part of that insurance program. When I pay my insurance premiums, I don’t consider it “giving” my money to other folks. Do you?

    Some of it is about making us save our own money

    And yet you call it a Ponzi scheme:

    A Ponzi scheme is a fraudulent investment operation that involves promising or paying abnormally high returns (“profits”) to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business.

    Let me save my own money. Force me, even. I’ll gladly take (my personally owned) government bonds over vague promises from Social Security (and its trust fund).

  9. superdave524 Says:

    Whatever the mandates are, there’s been lots of talk about raiding SS excess to pay other stuff (and atually, you called it a Ponzi scheme. I just agreed).

  10. superdave524 Says:

    …and I don’t have any problem with government mandated private savings. I’ve had several government jobs, and each one had a required retirement account (which I always- to my detriment- cashed out whenever I left the job).

  11. John in IL Says:

    there’s been lots of talk about raiding SS excess to pay other stuff

    How can it be raiding if that’s the way the SS trust fund is set up. It isn’t a bank account where extra (not paid to current SS recipients) SS contributions go. When the government spends those excess contributions, the trust fund’s assets actually increase.

  12. col Says:

    i resent paying SS. i have zero confidence that by the time i need to collect, there will be anything left. it’s like paying dues in corporate america …

    it used to get you some kind of long-term security.

    the new reality: all you can count on is what you control yourself right now.

  13. John in IL Says:

    That’s a very wise outlook, no matter what the circumstances are.


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