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   From: §pamßuster@not.ca   
      
   "Shedon Scott"  wrote in message news:Xns9FF3E3   
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   From: Shedon Scott    
   Newsgroups: talk.politics.misc,talk.politics.guns,can.politics   
   Subject: ----> Failed Bush Supply Side Tax Cuts Made Sub-Prime Fiasco Possible   
   - Republicans   
   Still Offer No Solutions Of Their Own <----   
   Followup-To: alt.religion.christian.last-days,alt.flame.rush-limbaugh   
   Date: Thu, 9 Feb 2012 03:24:36 +0000 (UTC)   
   Organization: Republican Women Are Whores   
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   can.politics:1380588   
      
      
   > By Sheldon Drobny   
   >   
   > The Bush tax cuts have created a scenario in which the lions's share of   
   > the benefit have gone to rich individuals furthering the gap between the   
   > rich and the other economic classes. The reduction and elimination of the   
   > estate tax puts even more wealth into the upper 1% of families. As a   
   > result, rich individuals have increased their wealth geometrically.   
   > However, Bush did not give any rate cuts to corporations. Let's analyze   
   > this.   
   >   
   > Supply-side economics is a school of macroeconomic thought that argues   
   > that economic growth can be most effectively created using incentives for   
   > people to produce (supply) goods and services, such as adjusting income   
   > tax and capital gains tax rates. This can be contrasted with the classic   
   > Keynesian economics (or "demand side economics"), which argues that growth   
   > can be most effectively managed by controlling total demand for goods and   
   > services, typically by adjusting the level of Government spending.   
   > Supply-side economics is often conflated with trickle-down economics, a   
   > derogatory term given to right leaning economist's views by political   
   > opponents (source: Wikipedia). The key phrase is: using incentives for   
   > people to produce (supply) goods and services. The people who produce   
   > goods and services are businesses most of which are corporations. Labor   
   > produces goods and services with the oversight of corporate executives.   
   >   
   > If Bush were to be true to supply side theory, the tax incentives would   
   > have been given to the corporations and unincorporated businesses. Tax   
   > cuts could have been easily targeted to businesses. The big lie in all of   
   > this is that there was only a giveaway to rich individuals and not   
   > businesses. One could argue that a reduction in business taxation coupled   
   > with a reduction in middle class taxation could stimulate the economy.   
   > That concept is neither supply side or Keynesian economics. I would label   
   > this as a hybrid so let's call this concurrent tax cut Drobnyian   
   > economics. In this economic climate, businesses and the consuming classes   
   > need help and this measure would be a reasonable approach coupled with an   
   > increase of taxes for the rich.   
   >   
   > There was no intent to provide economic substance to the giveaways to the   
   > rich authorized by Bush. As demonstrated above, there is no supply side   
   > benefit to these tax cuts. Bush falsely gives the argument that the   
   > wealthy families will somehow reinvest their tax savings into business   
   > ventures. The fact is that the increase in family wealth afforded by these   
   > tax cuts were put primarily into securitzed funds. In the 90's, excess   
   > wealth was put mostly into venture capital funds. These VC funds do   
   > provide some possible supply side benefit in that VC funds incubate new   
   > businesses. However, the NASDAQ collapse of 2000 put an end to all of   
   > that. The real problem of the 90's was that too much wealth was searching   
   > for too few deals. Accordingly, the false values attributed to the dot.com   
   > companies was the precursor to the 2000 collapse which did not have any   
   > major affect on the assets of the working class.   
   >   
   > The corporate scandals of 2001-2003 did impact the working class and their   
   > retirement plans. However, the Bush tax cuts put a lot more money into the   
   > coffers of wealthy families who did not reinvest these amounts into VC   
   > funds or businesses. These wealthy institutional investors needed to park   
   > their money into something that would earn more than the secure fixed   
   > income securities. But, they were not going to take any more risk in the   
   > tech heavy VC funds. This time, the investment banking community had an   
   > opportunity to come up with an idea that they perceived to be less risky.   
   > And that idea was to create funds that focused on the growing mortgage   
   > industry. Just as was the case in the 90's, these funds had too much money   
   > searching for too few deals.   
   >   
   > In order to increase demand for refinancing mortgages, these groups came   
   > up with the sub-prime concept. These below market loans induced people to   
   > refinance their homes with the false premise that this interest savings   
   > would be permanent. In fact, the savings on the front end of the new   
   > mortgages was transferred to the back end of the short term mortgage. When   
   > the renewals began to take affect, people were suddenly faced with monthly   
   > payments they could not afford. Furthermore, the people who refinanced   
   > their homes at these favorable rates generally spent their reduced   
   > payments without understanding the consequences. They did not have any   
   > savings to offset those increases.   
   >   
   > As was the case with the dot.com collapse, the inflated demand for low   
   > interest loans created a false valuation in the real estate market. Prices   
   > of homes were inflated because of the easy access to money. The fund   
   > managers did not truly understand that the collateralized value of the   
   > homes was very much overstated. Traditional mortgage collateral is usually   
   > greater than the loan amount. When the crunch came and prices went down,   
   > suddenly foreclosures would not be able to pay off the mortgages. As a   
   > consequence, almost every sub-prime loan resulted in a loss to these funds   
   > that is now being reported by all of the big investment banking firms.   
   >   
   > The dot.com collapse came after the investment firms had earned enormous   
   > amounts of money in the stock market boon. These firms ended up with a   
   > substantial net gain from the tech boon. That was not the case with the   
   > sub-prime funds. There was a catastrophic net loss to the investment   
   > bankers. These banks are now seeking billions of dollars from the overseas   
      
   [continued in next message]   
      
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