4 responses to “Progressive Tax Rates Reality Alert”

1. 

   Wade

   16 November 2008

   I doubt very much the “new” Wall Street will fail to find a way to pay itself handsomely. It is doing so now with taxpayer “bailout” funds.
   Hopefully we will find a way to curtail completely unregulated markets such as the one in credit default swaps in which, due to the absolute lack of regulation or oversight or rules of any kind, CDSs, or insurance policies on loans, could be sold without actually putting up assets to cover the loan. Or even owning them in the first place. Or could be bought by those having nothing whatsoever to do with the loan (pure gambling). There were 10 CDSs for every loan and their easy availability (they brought in fees) enabled loan issuers to disregard lending standards of any kind as it simply didn’t matter if the loans went bad. There were CDSs for the 10 CDSs. The implosion of this 70 trillion dollar (more than the combined GDP of the entire world, and yes, that does qualify as “greedy,” if not, what does?) unregulated casino (even casinos are regulated) is currently dragging the world’s economies around the bowl with it due to lack of oversight.
   Once again, the “market” has proved utterly incapable of policing itself (I, like Alan Greenspan, am SHOCKED!). Who could’ve known that $120 billion in bonuses doesn’t somehow magically align the actions of the broker-dealers with the interests of their shareholders, not to menton those of the larger economies in which they operate? Perhaps this time*\ Wall Street will finally get up and move to some “business-friendly,” low tax, free market bastion such as Alabama. That will show those socialist New Yorkers.

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2. 

   George Rebane

   16 November 2008

   Wade, I think that you may have inadvertently joined Henry Waxman’s Beltway Choir with so many others to sing ‘The CDS Dirge’. A lot of things went wrong, and you correctly point out that the interests of “the CEOs” were not always aligned with that of the investors. But Credit Default Swaps may have been the only part of the now much maligned unregulated markets that actually worked and can clear without government intervention. Here is a 15nov08 WSJ piece ‘The Meltdown That Wasn’t’ which summarizes this aspect of the current crisis.
   Our respective views seem to be beyond reconciliation. I believe in starting from ‘There is very little that the/any government does right’, and view history corroborating this as a good beginning when making social policy. You probably start from the opposite end of this field, and have the easier sell with an electorate now rapidly realizing that their welfare can only be assured through the power of the bayonet.
   So that we don’t rehash the already hashed, I do believe that some regulation is necessary to align the interests of capitalists and labor. And as labor becomes less capable of assessing their own best interests and of competing to sell their diminishing skill set, a case can undoubtedly be made for more regulation. But that’s another story.

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3. 

   Wade

   16 November 2008

   George –
   The entire premise of that opinion piece (tellingly not a news item) in the WSJ was that there can’t be anything wrong with the unregulated CDS market because not every single financial institution on the face of the earth is yet bankrupt, only a lot of them. Seriously, that’s the only actual argument put forth. Oh, then he compares the CDS market with the bond mrket in a wholly disingenuous attempt to contrast “deregulation” with “regulation.” Apples and oranges = FAIL.
   Find me $70 trillion in defaulted minority mortgages and I will begin to entertain the prevailing right wing theory that the Community Reinvestment Act of ’77 is to blame for the crisis of ’08. Speaking of which, it’s a good time to point out that the CRA did not force lenders to lower their standards, it merely stipulated that if a loan was given to a white person with any arbitrary credit rating and income, it also had to be given to a minority with the same credit rating and income. Seemingly, a lot of people are confused about that point.
   “Identifying major systemic risks in the CDS market has proven much harder than the pols expected.” Haha. Much harder than the I-bankers expected too, hence the meltdown.
   More later…

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4. 

   Mike

   16 November 2008

   The market did not fail. The US Gov. would not allow the markets to play out. Those who put their eggs in the CDO baskets are suffering the consequences; which the market is dishing out.

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