John McCain vs Barack Obama Mega-Politic-Thread of super fun awesomeness.

[Fluffz]

Hey fluffz, I will go ahead, when you are "liberal with your money" it means you spend a lot of money, now add an ism to it, and that is your government. Wow.

i am not laughing.

[Kolar]

bureaucratic red tape to juggle books a la enron

red tape?

Didn't Andy Fastow just dump Enron's debt into Jedi Inc. ect... to off set collapse? No one did their due-diligence, not the accountants, not the regulators and not the general employees. They were basically allowed to write down on the balance sheet what they thought they gained in a particular quarter and what they expected to in the next as actual assets today and no one questioned it. Enron is an example of lack of regulation, regular accounting and marketing practices and a lack of corporate responsibility.

[kthx]

I never said it was a joke, you seem to have trouble understand the base word in liberalism so I explained it to you. Being liberal with something means you use it a lot, to conserve means to use something sparingly.

[Epinephrine]

I never said it was a joke, you seem to have trouble understand the base word in liberalism so I explained it to you. Being liberal with something means you use it a lot, to conserve means to use something sparingly.

Including the brain...

[Jerome Scuggs]

red tape?

Didn't Andy Fastow just dump Enron's debt into Jedi Inc. ect... to off set collapse? No one did their due-diligence, not the accountants, not the regulators and not the general employees. They were basically allowed to write down on the balance sheet what they thought they gained in a particular quarter and what they expected to in the next as actual assets today and no one questioned it. Enron is an example of lack of regulation, regular accounting and marketing practices and a lack of corporate responsibility.

Look back before the immediate crisis at the creation of the Export-Import Bank subsidies, a subsidy program for foreign/domestic companies. Enron was one of the biggest receivers of massive federal subsidies and had alot of pull in extracting funds from the government for failed deals like the massive indian power plant plan. What caused the Enron scandal was not as much lack of regulation but its close relationship with the political class which enabled Enron to last very long in a situation where it would have otherwise gone out of business. Forget free market, the Enron scandal showed that government-corporate relationships tend to lead to corruption, and that Fed-created bubbles lead to economic disparity and collapse. Pre-enron, the regulations that called for mandatory audits of public companies led to the accounting industry to form a cartel that held serious and corrosive market power in that it created the false sense of security that allowed Enron's altered books to go without serious scrutiny which obviously would have been found if the regulation had actually solved problems instead of create a perception of solved problems. What unique implication exists that will make any sort of new regulation more successful than that failed piece?

[Kolar]

There's nothing on Enron receiving Government subsidies besides from Cato and lewd so I will consider that an over-exaggeration or an out right lie to prove an ideological point.

Internal and external regulations were not effective because they were given the ability to use mark to market accounting (and the work culture at Enron was to out do your coworkers or be fired, so people did their best even to and beyond breaking the law).

So if they signed a deal to manage and operate a power plant the value of that deal over the extent of the contact, regardless of the real value that changes or even if the contract falls through, it's a asset today to the company. Anyone who figured out the little game Fastow was playing were either bought or publicly destroyed. The power plant and Internet movie service were both losing massive amounts of money or were not producing anything so when that happened because they had the ability to declare their own earnings, without actually showing a money flow and Fastow doing his little handy work, they cooked the books. No one cared as long as the stock price went up and it did like clock work.

Look up Enron: The Smartest Guys in the Room

[Jerome Scuggs]

There's nothing on Enron receiving Government subsidies besides from Cato and lewd so I will consider that an over-exaggeration or an out right lie to prove an ideological point.

http://www.nationalreview.com/commen...rney053102.asp

http://uspolitics.about.com/od/polit.../a/enron_3.htm

http://www.commondreams.org/views02/0515-09.htm

http://query.nytimes.com/gst/fullpag...rssnyt&emc=rss

but, you know, i could be lying for ideological purposes.

[Kolar]

How is $600 million going to cause a bubble that nearly destroyed the state of California and killed one of the largest corporations in history? I'm not saying Enron didn't have connections in Washington but the idea that they were the root cause of Enron's collapse is just stupid and unfounded.

[Epinephrine]

Don't you get it already Kolar? If regulations didn't exist, eventually, bad companies, and bad executives which run these companies will eventually cease to exist in the future. Anyone who had ill intentions, like trying to cheat people on money or like try to make money using any means necessary even if it meant doing harmful things... would not exist. These people probably woudln't even be allowed to participate in the business world because everyone would be a perfect consumer able to make perfectly sound decisions on absolutely everything they purchased. No matter how hard 'bad' companies and 'bad' executives tried to hide things, people would always find out fast enough so that these bad people would never be able to take advantage of anyone and no one would get harmed or screwed by conceited and unethical individuals. In short, the world would be a much better place without regulation. It's the fault of regulation that ills occur in the world of business or in human psyche, or in anything for that matter.

[Jerome Scuggs]

How is $600 million going to cause a bubble that nearly destroyed the state of California and killed one of the largest corporations in history? I'm not saying Enron didn't have connections in Washington but the idea that they were the root cause of Enron's collapse is just stupid and unfounded.

saying anything is the root cause of it is stupid, which is why regulation never works. if you really, really want me to i can pop an adderall and sequence the multitude of relatively significant factors that caused the scandal. i don't feel like it because i have work in the a.m. but rest assured "under-regulation" is just an excuse for a solution to the many, many underlying issues that really need to be dealt with. the import-export bank subsidies are but one of many such subsidies which allowed enron to float long enough to cause the damage they did. i know it's hard to imagine on a government budget but in the marketplace, people can can quite alot with a few hundred million - or do alot in the time that that money keeps you afloat for. we seem to have this issue of lack of depth on an issue i feel i deal with almost every time. like in the thread where i tried to bring it all to a head about "energy policy" and the amazing breadth of what you consider a simple situation, after which received little to no real argumentation. if you feel the two issues are not as related as i am making them out to be i would love to try to build a picture of all the factors involved in the enron scandal and show the series of events that culminated in it, but finance markets and all the related technical mumbo-jumbo is incredibly intense and complicated and it would be a pain in the nuts but that in and of itself - the fact that there are thousands of pages of regulations yet it still happened - should at least begin to show you that maybe, just maybe, the cause isn't as plain and simple as "under-regulation".

[Kolar]

Lack of regulation was one factor, but a very important factor. There was no transparency in any of its practices and those at the top trumpeted it as some kind of success. The culture at Enron was to compete for your job or next month you're fired. Under intense pressure like that and given the tools and opportunity like mark to market accounting and hiding debt they were able to inflate the stock price. Enron fell because it was eventually discovered their cash flow was all about moving debt out of Enron and stating imaginary growth each quarter to keep the stock price up and the company afloat while they were losing money on almost every project they undertook, and energy prices were not skyrocketing either. With or without some small Government loan they were investing in projects that were not producing. And $600 million in loans over the course of several years isn't much when daily they were trading billions of dollars worth of energy. They also gamed California by creating fake black outs to inflate the price of energy making billions off of it. I consider this to be the end result, the only result possible, when people do whatever the fuck they want without any kind of responsibility or consequence. But If I am not going to convince you otherwise on any of this then believe whatever the hell you want.

I agree with you that these companies should look to the private sector for loans on deals that are extremely risky (there's a market for all kinds of risk.. with the right price) and the focus should be on small business if Government is going to foster any kind of export growth, but your average taxpayer shouldn't take on the burden of a loan that would otherwise not have happened especially given the ability for those in Washington to be influenced.

[Fluffz]

If regulations didn't exist, eventually, bad companies, and bad executives which run these companies will eventually cease to exist in the future. Anyone who had ill intentions, like trying to cheat people on money or like try to make money using any means necessary even if it meant doing harmful things... would not exist. These people probably woudln't even be allowed to participate in the business world because everyone would be a perfect consumer able to make perfectly sound decisions on absolutely everything they purchased. No matter how hard 'bad' companies and 'bad' executives tried to hide things, people would always find out fast enough so that these bad people would never be able to take advantage of anyone and no one would get harmed or screwed by conceited and unethical individuals.

And this is where the free market idea screws up every time. It is an idealized system that cant work, the cusomers "perfectly sound decisions" are defined by the ideology of free markets and not reality. It deliveres no mediation in the case of contradicting goals. It violates the concept of development. It results in Globalisation, a form of central planning it seeks to destroy. Its regulations that keep the system from destroying itself.

however giving a company that screwed up so and so much money isnt exactly a regulation. Its more of an economical decission to dampen the effects. You cant just assume mistakes wont be made without regulations.

[kthx]

If you are talking about the recent bailout of the mortgage industry, then you should know that neither of them was really on the free market, and that both were heavily funded by government already. Now government runs them officially, before government just ran them technically. In the end, the result will be the same.

[Fluffz]

but would you say they screwed up because they knew that the goverment would save them anyway or would you say they screwed up because the subprime and mortgage industry was underregulated?

[Nycle]

This morning, on my daily train commute to uni, a commuting newspaper had this on the frontpage:



It says something like "We are losing our jobs; not to China, not to India, but to America."

The article explains how some American states are competing with each other to draw in European industrial companies by offering them heavy subsidies in various forms if they decide to build factories there. The main reasons for settling there; the weak dollar and rising wages in Eastern Europe and China. Apparently some people view the US as the "newest low-wage country".

It makes me wonder how either McCain or Obama are effectively going to solve America's structural economic problems? I haven't heard many credible ideas from either of them. And by "structural problems" I don't mean the "business cycle as usual", but chronic debt and current account deficits.

You can think "oh there we go with the debt again", but it seriously is a problem. America arguably has the "most capitalistic" economy in the world. From a pure capitalistic perspective though, no debt can be left unpaid eventually. Countries like China have accepted this debt for a long time and continue to do so (and even strengthening this effect by purposely keeping its currency undervalued), only so its own industry has a chance to develop by exporting products back to America only to receive nothing in return (major current account deficit buildup). The question remains; can the US succesfully solve these problems before the world decides that enough is enough? Like it or not, these deficits simply can't go on forever. If it could, it wouldn't be called capitalism.

The way I personally see it right now; McCain will make things worse while Obama won't improve it.

[Sarcasm]There's light at the end of the tunnel though, with Freddie Mac and Fannie Mae being nationalised, increased government regulation (whoops, "creeping socialism") might at least put a brake on the uncontrollable situation.[/sarcasm]