Fed Dropped The Rate To Basically Zero... - DFWstangs Forums
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post #1 of 56 (permalink) Old 12-16-2008, 02:26 PM Thread Starter
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Fed Dropped The Rate To Basically Zero...

...and there's no talk? i read that they plan on buying up 600 billion worth of securities from troubled banks as well. what's their next move?
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post #2 of 56 (permalink) Old 12-16-2008, 02:31 PM
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Bankrupt the US

"A government big enough to give you everything you want, is strong enough to take everything you have."
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post #3 of 56 (permalink) Old 12-16-2008, 02:34 PM
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Bankrupt the US
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post #4 of 56 (permalink) Old 12-16-2008, 02:36 PM
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what's their next move?
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post #5 of 56 (permalink) Old 12-16-2008, 02:40 PM
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Maybe if the hand were taking the money out of the wallet. They take.

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post #6 of 56 (permalink) Old 12-16-2008, 02:47 PM
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Maybe if the hand were taking the money out of the wallet. They take.
You just can't see the .45 in Sam's right hand...
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post #7 of 56 (permalink) Old 12-16-2008, 02:47 PM
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You just can't see the .45 in Sam's right hand...
the pic IS his right hand.....

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post #8 of 56 (permalink) Old 12-16-2008, 02:49 PM Thread Starter
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the pic IS his right hand.....
uncle sam has two right hands. it's a little known fact.
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post #9 of 56 (permalink) Old 12-16-2008, 03:01 PM
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Fed Dropped The Rate To Basically Zero...
Well, I know for sure they will not lower interest rate any lower ever.

Seriously, this is the liquidity trap that I wrote about earlier this year that was going to happen. Just like Japan 18 years ago, Americans have tried to borrow their way to prosperity and now we are having to pay it back.

Banks don't trust customers, borrowers are afraid of borrowing more, business are having lower sales, people getting laid off. This is the deflationary spirl. People will go just the opposite now, paying off their debts, saving money and not over consuming.

I heard on CNBC that they think that mortgages might go to 3.5%. That should be good for us that did not over borrow and have equity or cash. Well, I just might have to refiance again. Borrowing will still be hard for people with bad credit or no down. This will just help out the well off people like us rich people. LOL!
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post #10 of 56 (permalink) Old 12-16-2008, 03:08 PM
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I forgot to mention that the US$ got sold off pretty good today. The FED and the Treasury have their job cut out for them. They have to balance stimulating the economy and trying to attract foreign money in to the USA. After Japan cut to zero interest their banks were loaning more money but all the money left the country to find more profitable uses. We could start seeing currency out flows out of the USA.

The falling dollar will cause oil to go up. But will it go up more than the weaking demand is causing it to come down.
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post #11 of 56 (permalink) Old 12-16-2008, 03:41 PM
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Originally Posted by TexasDevilDog
I heard on CNBC that they think that mortgages might go to 3.5%.
Don't believe everything you hear. While mortgage rates are moving down (currently still around 5% on a 30 year fixed), we're still a LONG way from 3.5%. It will take more than the Fed dropping the rate to get mortgage rates to go down that low.

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post #12 of 56 (permalink) Old 12-16-2008, 03:57 PM
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The fed is out of ammunition and it's only round 2. The only step left is massive give aways of cash (more debt) or complete what they have started, nationalizing many US industries. Both have ramifications that will reverberate throughout the country for 50 years or more.

This recession is going to last for 5 years, and standards of living will drop for the forseeable future. (I pray I'm wrong)
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post #13 of 56 (permalink) Old 12-16-2008, 04:25 PM
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It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. -Henry Ford


None are more hopelessly enslaved than those who falsely believe they are free --Johann Wolfgang von Goethe
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post #14 of 56 (permalink) Old 12-16-2008, 04:48 PM
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Originally Posted by SVT Lurch
Don't believe everything you hear. While mortgage rates are moving down (currently still around 5% on a 30 year fixed), we're still a LONG way from 3.5%. It will take more than the Fed dropping the rate to get mortgage rates to go down that low.
The FED has a plan! They are going to start buying mortgages to reduce rates. Yea!
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post #15 of 56 (permalink) Old 12-16-2008, 04:50 PM
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I hope you all watch that youtube link posted by 93cpoupelx.

Ron Paul predicted this whole mess 6 years ago, and also told how it would lead to the collapse of the US as China,India & Russia will buy up all our assets after the dollar bottoms out & we owe them trillions.

To think we could have stopped this....
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post #16 of 56 (permalink) Old 12-16-2008, 04:56 PM
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It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. -Henry Ford
“The rich rule over the poor, and the borrower is slave to the lender.” -Bible

The more you borrow the more you work just to give to the lender. Taken to an extreme point of borrowing, the borrow will work only to give to the lender. With $55 Trillion in obligations we owe to entitlement programs are about to become slaves.
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post #17 of 56 (permalink) Old 12-16-2008, 05:12 PM
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“The rich rule over the poor, and the borrower is slave to the lender.” -Bible

The more you borrow the more you work just to give to the lender. Taken to an extreme point of borrowing, the borrow will work only to give to the lender. With $55 Trillion in obligations we owe to entitlement programs are about to become slaves.
Yet Obama wants to implement a New Deal. We're screwed. Is anyone getting more mad by the day like I?

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post #18 of 56 (permalink) Old 12-16-2008, 09:47 PM
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The difficulty here is deciding when, exactly, the sky actually does start to fall. Personally, I've gotten out of the market and am in the process of making as much of my (small compared to many others) debt load go away. I pray that this doom and gloom shit some of you talk so incessantly of doesn't come to pass.

Last edited by Fox466; 12-16-2008 at 09:54 PM.
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post #19 of 56 (permalink) Old 12-16-2008, 09:51 PM
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My lender buddy called me earlier today, to tell me that with 10% down and a 700 credit score, you can get a 4.85% 30 year mortgage. It's likely that will be in the area of 4.5% in a week, and possibly lower after the new year starts. We'll see if he's right...

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post #20 of 56 (permalink) Old 12-16-2008, 10:02 PM
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Yet Obama wants to implement a New Deal. We're screwed. Is anyone getting more mad by the day like I?

<---------Frustrated
I would agree. I think more and more people are agreeing. You have a runaway government that doesn't give a second thought to the citizen base and is only concerned with control. This is on both sides of the aisle.

I wish I knew what the solution was, I don't. I do picture a downward spiral to the point of revolt. I see millions rushing the Capitol and removing the government by force. We need a government in place that will say enough is enough and make the decisions that need to be made, no matter how painful or unpopular they are. For far to long our great country has lent money, forgiven debts and our politicians continue to do this while hamstringing us.

I am doing everything I can right now to shed every bit of debt I have, because I think debt, period, will become a very snug noose around the necks of whoever have it.

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post #21 of 56 (permalink) Old 12-16-2008, 10:27 PM
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I'm ready to sign up for the revolution. This shit's out of control and not at all what our forefathers envisioned.


Barring that I'll be in a little bitty town in central Texas eating cows and vegetables from the family garden when the shit hits the fan.
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post #22 of 56 (permalink) Old 12-16-2008, 10:30 PM
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I'm ready to sign up for the revolution. This shit's out of control and not at all what our forefathers envisioned.


Barring that I'll be in a little bitty town in central Texas eating cows and vegetables from the family garden when the shit hits the fan.
I agree. I need to get my fences fixed and I'll be looking at some animals.

I also have a family cabin in CO on some land in the middle of BFE that would be suitable. How hard is it to make solar panels??

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post #23 of 56 (permalink) Old 12-16-2008, 10:53 PM
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Here you're too close to the throngs that'll be trying to poach.

Down there or up there it's less work shooting the SOBs who can't fend for themselves...
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post #24 of 56 (permalink) Old 12-17-2008, 12:13 PM
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My lender buddy called me earlier today, to tell me that with 10% down and a 700 credit score, you can get a 4.85% 30 year mortgage. It's likely that will be in the area of 4.5% in a week, and possibly lower after the new year starts. We'll see if he's right...
4.375% with no points was out there for about an hour this morning. 4.875% is still doable but rates are changing almost hourly.
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post #25 of 56 (permalink) Old 12-17-2008, 12:18 PM Thread Starter
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4.375% with no points was out there for about an hour this morning. 4.875% is still doable but rates are changing almost hourly.
holy cow! 4.375? i've never heard of anything that low. it might be getting close to refinance time!
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post #26 of 56 (permalink) Old 12-17-2008, 12:43 PM
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I'm all over it if I can get anything under 4.5%
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post #27 of 56 (permalink) Old 12-17-2008, 12:50 PM
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You guys need to get in touch with lenders. When rates drop that low, it is for a VERY short time. As I said we're already back up a half point from 4.375. You need to be on the books and tell your lender to LOCK you in as soon as rates get below your sweet spot. Don't try to "play" the rates and get slightly better. If you want 4.5% and you can lock it DO IT. Don't try and wait to get 4.375% etc. I'm trying to keep the refi thread updated, but when rates drop that low we get busy and I can't get on here.
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post #28 of 56 (permalink) Old 12-17-2008, 12:52 PM
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4.375% with no points was out there for about an hour this morning. 4.875% is still doable but rates are changing almost hourly.
4.375 is 1950's money. Damn! It's the first time my 5.50 seems "high".

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post #29 of 56 (permalink) Old 12-17-2008, 01:54 PM
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You guys need to get in touch with lenders. When rates drop that low, it is for a VERY short time. As I said we're already back up a half point from 4.375. You need to be on the books and tell your lender to LOCK you in as soon as rates get below your sweet spot. Don't try to "play" the rates and get slightly better. If you want 4.5% and you can lock it DO IT. Don't try and wait to get 4.375% etc. I'm trying to keep the refi thread updated, but when rates drop that low we get busy and I can't get on here.

Where do you work?

I quited a woman 4.375% with minimal points today and she had to still think about it even though I've bene working with her for weeks. I told her after today I will not be watching anything for her nor keeping her updated. People get greedy.
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post #30 of 56 (permalink) Old 12-17-2008, 02:05 PM
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Where do you work?

I quited a woman 4.375% with minimal points today and she had to still think about it even though I've bene working with her for weeks. I told her after today I will not be watching anything for her nor keeping her updated. People get greedy.
The folks like her wind up with a higher rate, because they're trying too hard to get it as low as possible. How the hell can someone get greedy about a rate that low? I can assure you, she hasn't seen rates that low in her life-time unless she's 75 years old. Adjusted to inflation, that's probably a 1% loan in 1955.

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post #31 of 56 (permalink) Old 12-17-2008, 02:06 PM
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Where do you work?

I quited a woman 4.375% with minimal points today and she had to still think about it even though I've bene working with her for weeks. I told her after today I will not be watching anything for her nor keeping her updated. People get greedy.
Damn 4.375 and she wants to think about it haha. She probably voted for obama too

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post #32 of 56 (permalink) Old 12-17-2008, 02:08 PM
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Damn 4.375 and she wants to think about it haha. She probably voted for obama too
No shit. If she was really serious, she should have pounced on that.

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post #33 of 56 (permalink) Old 12-17-2008, 02:14 PM
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Adjusted to inflation, that's probably a 1% loan in 1955.
I don't think percentages are adjusted for inflation.
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post #34 of 56 (permalink) Old 12-17-2008, 02:16 PM
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I don't think percentages are adjusted for inflation.
I was trying to find a diplomatic way of saying that but I think he was joking to begin with.
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post #35 of 56 (permalink) Old 12-17-2008, 02:32 PM
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You'd be surprised. 1 point on scenario A would have netted you a 6.25% interest rate 3 weeks ago. 1 point on the scenario TODAY would net you 4.875%. I will call people back and tell them to lock in now etc and half of them want to hold off until they go lower.
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post #36 of 56 (permalink) Old 12-17-2008, 02:58 PM
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I hope you all watch that youtube link posted by 93cpoupelx.

Ron Paul predicted this whole mess 6 years ago, and also told how it would lead to the collapse of the US as China,India & Russia will buy up all our assets after the dollar bottoms out & we owe them trillions.

To think we could have stopped this....
You know, forget Ron Paul, there was a guy named Karl Marx that had the foresight to dream up such a day when capitalism would inevitably topple under its own weight like it has. He wrote about, ironically, the government taking over control of the banking and credit industry as other critical sectors faltered and toppled as well. Workers are alienated from the product of their labor, and any surplus value is held and accumulated by the elite bourgeois upper class, while the working class merely earned enough wages to sustain an acceptable existence. So in this way, laborers, or the working class were separated not only from the product of their labor, but also from their ability to perform labor altogether, as that itself was bought and sold on the market just as the product they were employed to produce. He saw the surplus value source that was derived from manual labor, as the source of profits, but also saw capitalists investing in more efficient means of production through technological advances in the future. These are things like robots and automated assembly capital as well as other means of production that do not involve human labor. This would consequently lower the surplus value even as the economy grew, and in our case we filled it with credit. This makes the the social gap between these classes that was created in this divide inherently much wider by the day, between the rich and the poor, between the haves and the have nots. It's just to the point that it's gotten ridiculous, with the credit thing getting way out of hand. More and more it feels like somebody just took over the world, you know?

I saw something earlier in the thread about how somebody feels like Obama is the last stage in a terrorist plot against the United States and that sound to me to be about right. That begs the question then, what then was the first stage? Well there's a whole group of terrorists out there and they act freely under the color of authority. Money is power, and power is influence, and influence is government. It doesn't seem to me like it's ever too late to fight back for our true freedom.

The inevitable conclusion, to Marx, was exactly the same thing you guys are talking about, the overthrow of those that controlled the means of production, the bourgeois, by the working class, or the proletariat. Basically, the working class would overthrow the government, and seize control over the means of production--just like capitalism replaced feudalism What would follow, for Marx, would be the gradual descent into what he called communism, or the eradication of private property, social classes, states, and therefore in many ways, history as we know it. He supported this argument by saying that all history up until then had been a result of the struggle between these two classes, and the inevitable conclusion of capitalism is communism, after a transitional period called the dictatorship of the proletariat. He saw this final stage in human society unfolding into the ownership of land, as well as property in general after this revolution as being controlled by the people. I tend not to believe things so outlandish, but it' hard to deny that Marx was on the right track. I really don't know that we can go from the society we live in today to everybody cooperating enough to equally share property and the means of production. From there I just get lost in the possibilities and intricacies of the inevitable quarrels that would follow. On a panorama though, I think Capitalism works, just not exactly how we've been working it. I mean, will there be a capitalist society and economy in place in this country forever, and if not, what comes after Capitalism?? The inherent problem is that it digs its own grave, controlling people's labor, and thereby suppressing the enrichment of the people that will eventually get fed up and say enough is enough. This is why people are so against worker's unions, its because it gives the workers power in the form of rights and more control over the means of production. Large companies do not want this, especially knowing that they control the individual worker, but not a large number of them banded together in support of the same cause. As well, capitalism breeds corruption like none other, as we have seen.

The economy is in a sad state, but for reasons other than credit as well. Domestic production is at an all time low, most of the products we use every day come from overseas, mainly China, or Taiwan. Our nation's infrastructure is severely overloaded and suffering because of the constant influx of imported goods, while the number of exports continues to nosedive. I assure you guys, predatory lending and shitty mortgages are not the least of the causes of this credit meltdown'. Capitalism goes through its inevitable highs and lows, but the amplitude also keep getting bigger, the highs higher and the lows lower. It's still a relatively new economic system and we keep changing it so it seems pretty volatile from time to time, and we as a society do not help the problem but often only make it worse. Seems to me like wall street served as the scapegoat for somebody or a group of individuals to seize more power and influence in the world.

Could be wrong...

Just an opinion, I guess..sorry for the book.

gots some links
Karl Marx
Communism

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post #37 of 56 (permalink) Old 12-17-2008, 03:06 PM
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post #38 of 56 (permalink) Old 12-17-2008, 03:15 PM
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I'm ready for the wild west again. Whack out all the socialists liberals, tear everything down, and let's rebuild it!

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post #39 of 56 (permalink) Old 12-17-2008, 03:32 PM
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The falling dollar will cause oil to go up. But will it go up more than the weaking demand is causing it to come down.

It reached 39/barrel at sometime today and sits at 40.xx right now
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post #40 of 56 (permalink) Old 12-17-2008, 03:37 PM
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As someone pointed out, the problem is not what type of system you have, the problem is human greed. Even in the most hardcore communist governments you continued to have the haves and have nots. Capitalist Democracy isn't a great system but it is better than all the others because it is the only one where a man can start with absolutely nothing and be free to go as high as he can go.
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post #41 of 56 (permalink) Old 12-17-2008, 03:47 PM
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I'm not going to quote your post Zara, but I will comment.

Communism also bred quite a bit of corruption. As did any other form of a society's means of life. It seems to be the general progression of things until it kills itself.

Will we, as a whole, be able to live harmoniously within the same plan? No, I really don't think so. I feel like the sooner we all realize that communism works in one place, socialism works in another, capitalism works over there, democracy works here, dictatorship works there, and quit trying to police others (not in the light of America being the world police), then life for the world will be better.

Then again, that's just my opinion.
Agreed. Good post.

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post #42 of 56 (permalink) Old 12-17-2008, 03:53 PM
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As someone pointed out, the problem is not what type of system you have, the problem is human greed. Even in the most hardcore communist governments you continued to have the haves and have nots. Capitalist Democracy isn't a great system but it is better than all the others because it is the only one where a man can start with absolutely nothing and be free to go as high as he can go.
Again, very true. It's just that. that same system opens the largest amount of opportunities to embrace corruption. Or, put another way, Capitalism breeds the most amount of corruption in many cases. But like Muffrazr said, there's really no other way we can do things, just stay as ethical and transparent as possible. I'm not for communism at all, it just seems too far out of reach. It's just sad that the power and influence rests in the hands of those at the top, and these people are above the law in many respects, lending more opportunity to carve out their own corrupt path.

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It is time we acknowledged a basic feature of human discourse: when considering the truth of a proposition, one is either engaged in an honest appraisal of the evidence and logical arguments, or one is not. Religion is the one area of our lives where people imagine that some other standard of intellectual integrity applies.
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post #43 of 56 (permalink) Old 12-17-2008, 04:16 PM
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Back on topic though, anybody know if this has ever happened before? Has the Fed ever dropped the federal funds rate this low in history? Admittedly, beyond simple stuff, my knowledge on contemporary economic matters is limited. However, I see that more than half a million people lost their jobs last month, and the unemployment rate is over 6.5%, and form all the talk, it looks like an increasing number of people will start to suffer at the hand of this economic recession. Seems like we got too big for our own pants, and not we can't even button 'em anymore! Anybody think anything about how much the crippled state of transportation infrastructure has anything to do with all this? After all efficient and technologically up-to-date infrastructure supports economic growth, making it possible to sustain these inherent ups and downs of economic cycles. Didn't I hear something about how Obama plans to spend a great deal of time and money on infrastructure issues when he gets into office? I don't know, but it seems like that would be a step in the right direction at least. I mean at the very least it would help by creating that many more jobs, right?

Thus Spoke Zarathustra
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It is time we acknowledged a basic feature of human discourse: when considering the truth of a proposition, one is either engaged in an honest appraisal of the evidence and logical arguments, or one is not. Religion is the one area of our lives where people imagine that some other standard of intellectual integrity applies.
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post #44 of 56 (permalink) Old 12-17-2008, 04:35 PM
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Quote:
Originally Posted by Muffrazr
I just don't think I can agree that Capitalism breeds the most amount of corruption. Possibly leaves many more avenues, but when you have a system that depends heavily on your own actions you tend to police yourself a little better. It's not really until you venture into big business/Gov't help that corruption really shines. In my view, I can see how a greedy individual would use Communist tactics in a Capitalist society to their own advantage, which would certainly be a problem.

In a small business, greed will sink you fast.
True, there are those that are honest and efficient enough to police themselves in a manner that sustains sound economic growth and enrichment. Enter credit on the scene and that just throws everything off course. Those last couple sentences are what I'm trying to shed a little more light on, though. Seems like that's exactly what's going on right now under our noses. But the big business thing totally hit the nail on the head, falls right into place in our contemporary situation. Big businesses, (banks) got too greedy and over extended themselves, ,which is only a macrocosm equivalent to the individual living beyond their means. The evaporation of the middle class also has a lot to do with this as well, as the size of the middle class more or less represents how happy a society is with a capitalist economy. They also represent the biggest threat toward the elite, and things like credit, and the recent nightmarish gas and food price conditions suppress and mitigate the power and enrichment of the middle class.

Think about it, most people do not own their homes, cars, and in some cases home appliances outright. Banks do, or did, until the government bought (will buy) up all their faulty mortgages and assets along with most credit in general. Who owns your house and car now? Hmm.. Is it by design?

Thus Spoke Zarathustra
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This will help everyone out, check it.
It is time we acknowledged a basic feature of human discourse: when considering the truth of a proposition, one is either engaged in an honest appraisal of the evidence and logical arguments, or one is not. Religion is the one area of our lives where people imagine that some other standard of intellectual integrity applies.
-Sam Harris
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post #45 of 56 (permalink) Old 12-17-2008, 05:11 PM
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Good points.

I meant to focus more on infrastructure, roads, bridges, highways, drinking water facilities, dams, and critical structures that indirectly make it possible for people to earn and spend their money to drive this economy. Equally important as well, truck, rail, and maritime freight infrastructure inadequacies that in many ways lie at the base of the problems we are faced with continue to get worse and worse. At its very base, infrastructure supports and makes possible the economic growth that we have grown accustomed to. And it seems like the recent growth and enrichment of our economic system has outgrown our capacity to support it. Unfortunately, this sentiment is echoed across all sectors of the economy and society.

Thus Spoke Zarathustra
---
This will help everyone out, check it.
It is time we acknowledged a basic feature of human discourse: when considering the truth of a proposition, one is either engaged in an honest appraisal of the evidence and logical arguments, or one is not. Religion is the one area of our lives where people imagine that some other standard of intellectual integrity applies.
-Sam Harris

Last edited by Zarathustra; 12-17-2008 at 05:16 PM.
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post #46 of 56 (permalink) Old 12-17-2008, 05:45 PM
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Quote:
There are several reasons why I believe we are going the route of Japan rather than the Great Depression II. Back in the Great Depression banks were allowed to fail and all of the excess of the prior decade were wiped away in just a few short years, while Japan supported insolvent banks creating what came to be known as “Zombie Banks.” The Great Depression allowed all of the dead underbrush to be burned away by the deleveraging fire, while Japan quickly dumped massive amounts of water (Yen) on the fire and the dead underbrush was not removed. As a forest fire clears the way for healthy growth in future years by giving room for new trees and the strong trees that survived (solvent banks that were responsible) room to grow, trying to prevent forest fires keeps the unhealthy trees and dead underbrush able to compete for resources with the strong and healthy trees, weakening future growth. This can be seen below where after recovering from the Great Depression the economy saw growth rates ranging from 9-12%, with the subsequent expansion showing growth rates nearing 20%! With Japan, however, their economy has fluctuated between -3% and 4% for the past 12-15 years.
http://www.financialsense.com/Market.../wednesday.htm
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post #47 of 56 (permalink) Old 12-17-2008, 07:10 PM
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The world is coming to an end; everybody grab your guns and run for the hills.
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post #48 of 56 (permalink) Old 12-19-2008, 06:10 AM
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The world is coming to an end; everybody grab your guns and run for the hills.
You wanna ride shotgun?
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post #49 of 56 (permalink) Old 12-19-2008, 06:47 AM
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Quote:
Originally Posted by Muffrazr
Oh, you meant all the little details that kept the cogs rolling. Yeah, people became complacent because it worked so well for so long. Don't forget about our third world communication and utility grids. We could begin to rebuild what is falling apart and keep a fairly large group of people working.

In that light, it would almost be a beneficial time to allow the auto makers to declare bankruptcy in order to drop the unions. The people that would no longer have work could go to work rebuilding America while the auto makers regrouped. Yes, there would be a large bump in the road, but it would correct itself. Then we would have a new infrastructure to ride on for another 100 years while we made advances with production. All of that is provided we could maintain focus better than an ADD ridden adolescent.
I think that this is the crux of obamas new deal. Repair infrastructure. Just like the WPA did in the 20's.
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post #50 of 56 (permalink) Old 12-19-2008, 08:58 AM
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Quote:
Originally Posted by mikeb
I think that this is the crux of obamas new deal. Repair infrastructure. Just like the WPA did in the 20's.
Your off by a few years, FDR took office in 1933, and the WPA was created on April 8, 1935. The WPA was shutdown in 1943.
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