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Great Speech by Obama!
DaltheJigsaw
Mountain View Veteran
Comments
Also, is that true that there are no americans fighting in Iraq? I must be in my cave??
Madness!! Total smoke and mirrors!
The argument for a low capital gains tax is that it encourages investment. I wonder if that is really the case though. Personally I don't think anyone invests money because they have extra money sloshing around in their pockets, they invest money because they see an opportunity for return. If there is potential for return people regularly borrow money to make it so (starting a business, purchasing equipment). Even if it better at %15 there needs to be enough demand to meet that investment which starts with the average consumer, so the government should invest in the middle class to boost demand. The roots of the financial meltdown can be traced to a global glut of investment dollars looking for a home.
The speech seemed to be setting the field for his campaign. I liked the arguments he was putting forward. I heard it described as a kind of optimistic populism.
They don't invest money because they have extra sloshing around. Lee Iacocca wrote a rant about that, saying, "Thanks, but I don't need the money" about those tax cuts. He said nobody uses it for investment or to create jobs, he says the rich should be paying more tax to rescue the country from collapse.
A global glut of investment dollars looking for a home? The meltdown isn't due mainly to the financial shenanigans of banks and investment firms? Please, fill me in. This is new to me. Thx for your input.
My understanding is that there was excess investment money, also partly created by extremely low interest rates for borrowing. This created a desire to find a place to invest. Bundled mortgage products seemed like a good place. Since there was excess capital mortgage bundles were sold as soon as they were made. That created incentive to make more. All the regular mortgages and purchasers where at capacity so there was a strong incentive to give unqualified borrowers a mortgage. Since the bundles where unloaded immediatly the borrowers had no responsibility for the sustainability of the mortgages and the rating agencies messed the hell up when they based the new mortgages as if they were traditional ones. So excess money made selling bundled mortgages so easy that borrowers didn't care who they lent to. Investment firms and banks put pressure to get more loans and created the bundled products. Plenty of shenanigans ensued to keep pumping them out.
There is also the case that since money was so cheap to borrow investors could borrow money at cheaper rates than they would get on returns. So they were borrowing 30-40 times what money they had on hand. The repeal of Glass-Steagall in 1999 allowed traditional banks to get into investment banking, meaning when the bleep hit the fan normal banks that lend money were so leveraged that they would collapse thus drying up the lending that greases the economic wheels. Those in government felt the only way to prevent that was to bail them out.