welcome to the new socialist kingdom of Britain

[Aeson]

Originally posted by Kidicious
Banks don't really compete.

Also the difference between the government getting a stake in a company and just taxing them is that when they own a stake they get more than when they just tax them.

That would entirely depend on tax rates and amount of equity held. It could go either way based on how those were set.

It's actually more fair that way.

No. It favors the corporations which are held by government over competitors who are not held by government.

[Dauphin]

Originally posted by GePap


Come on, the difference is obvious.

Not to some, obviously.

[Aeson]

Originally posted by Dauphin
The fact that the answer is yes makes it a flawed rhetorical question?

fixed

(and the rhetorical premise switched)

[Dauphin]

I'm really not getting what your problem with the question is.

[Aeson]

Neither are you getting what the difference between a question and a rhetorical question is... which is rather apt to our discussion given that your rhetorical question was also missing the difference between two fundamentally different things...

[Dauphin]

I get the difference, you are just complaining about me being loose in my construct. I just don't get why it's bugging you.

[OneFootInTheGrave]

Just a quick one

well done Gordon, as from what I read this is THE plan, among more important details it features all three, ability for investors (private sector) to recapitalize if they think it's worth it, if not they are getting punished with taxpayer intervention, and lastly the banks are getting recapitalized so that economy stays protected from their failures... three in one and a big ... quite a bit different from the initial 700bn that was at the start of the game in US, but reading about the second 700bn US installment, that looks a lot better too...

so for what is worth the markets are jumping back up, and if all goes back to normal everyone should make money out of those rescues, and most importantly the financial services should start to function "as usual" a bit sooner rather than later...

all in all


-- quick comment on government intervention --

it was inevitable, so better now than later, however it really depends on what kind of shape this intervention takes, and the inital 700bn one in US looked like a big waste into a hole a lot bigger than it could plug + no "punishment" which was the worst aspect as far as I was aware...

this way it played out now, the market can still react with either saving the banks itself, if it think's it's worth it, or take the hit, as in the end they were investing in this "wrong risk" calculation and should get hammered for it, or better to say that taxpayers should get good value for their money when coming to the last ditch rescue...

and most importantly of all the sector has a crucial role in the economy so it is in everyones interest that it continues to function no matter what kind of errors were done previously... but those who did the errors and who "owned" them should get adequately punished, so that we do not encourage similar behaviour in the future... all in all this plan from Gordon & co seems to strike at all teh important details, overall I am impressed with this gov action ( a rare event indeed)... as for gov owned entities being favored by the government... I doubt it as the gov is in it for relatively short term (until stabilization and sell-off), and at least Sweden that I am aware of, did not make a mess of it... so out of all "bad" that could happen this is the least bad option, and it will surely be "limited" in the terms of time, and thus potential long-term damage as well.

[Aeson]

Originally posted by Dauphin
I get the difference, you are just complaining about me being loose in my construct. I just don't get why it's bugging you.

Whatever point you were intending initially needed clarification. It could have been a "yes" or a "no". I responded with the "yes" and why. Then you replied to me specifically, with another rhetorical along the same vein as the first. At that point you obviously were not trying to illuminate the issue for those who didn't see the differences, as you later claimed, because I had already clearly stated that there were differences.

I would have been willing to accept that you were promoting a "yes" before then, but not after. I had given the "yes" and you responded argumentatively rather that to confirm or clarify.

[Dinner]

It's like the 1970's again.

[Kidlicious]

Originally posted by Aeson
That would entirely depend on tax rates and amount of equity held. It could go either way based on how those were set.

In one case you get taxes and a share of the profit, and in the other case you only get taxes.

No. It favors the corporations which are held by government over competitors who are not held by government.

I don't think these corporations want the government to be shareholders. Certainly the US corporations don't want that.

[Aeson]

Originally posted by Kidicious
In one case you get taxes and a share of the profit, and in the other case you only get taxes.

You're assuming there can be no change in tax one way or the other.

I don't think these corporations want the government to be shareholders. Certainly the US corporations don't want that.

They want the gov to bail them out so they don't fail. Sure they'd like to own the whole thing if it was doing fine though, but they aren't doing fine and that's the whole point.

The others (let's assume there's a few out there who ran their business properly... who knows... there may actually be some) are punished for not having thrown caution to the wind. Not only don't they get the upside of the risky business, but they also don't get the benefits of being in a stable financial position when other firms are failing. (They don't get to buy up assets at low prices.)

All while the firms government owns equity in are virtually assured to continue to exist regardless of how ****ed up they are. (Which leads to an effect like F&F had, the implied guarantee drove a lot of the risky business. Not just for F&F, but for anyone who could sell paper to them as well.)

[Kidlicious]

Originally posted by Aeson
The others (let's assume there's a few out there who ran their business properly... who knows... there may actually be some) are punished for not having thrown caution to the wind.

This is where I disagree with you. You seem to be implying that these corporations that are partly owned by the government are going to have some advantage in the market place. They've had partially government owned corporations in France for a long time. These corporations aren't necessarily more competitive because they are partially owned by the government. You do have a point that they won't go under, but I don't think corporations set that as a goal for themselves.

[Kidlicious]

Originally posted by GePap
If the state has part ownership, then the state can influence internal bank decisionmaking in ways it simply can't if all it does is get a cut on profits.

Yes, and that's something that no corporation wants.

[Aeson]

Originally posted by Kidicious
This is where I disagree with you. You seem to be implying that these corporations that are partly owned by the government are going to have some advantage in the market place.

In that specific instance I was saying they have had a significant advantage in the marketplace for years. Because all those bad deals they did... all the "up front" value chosen over long term stability... they don't have to take the fall for it. In a case of risk:reward, if you eliminate the risk, you increase the value of the option.

Of course they will have a significant advantage in the future... since they can do it all over again and count on the bailout. Why worry about stability when you can always socialize losses?

[Zkribbler]

Originally posted by Aeson

Of course they will have a significant advantage in the future... since they can do it all over again and count on the bailout. Why worry about stability when you can always socialize losses?

That's why I want the banks, if they want capital from the government, to issue warrants or preferred stock in exchange for it. Yes Ugarte, you get our money, but at a price.