US Politics: OBAMAGATE - An American Story

[Ran]

@Fez

The end of that Politco article was something else. Makes sense, sadly, for Klett to be on her guard about Reade, given their past interactions.

[ants]

Sorry about the triple post, but I think this is hilarious:

 

[felice]

2 hours ago, ants said:

But saying the loan should be against the company is (sorry) ridiculous.  The person making the loan wants some guarantees (or they'll charge exorbitant interest).  The company has no physical assets.

Investment probably makes more sense than loan; it doesn't matter how exorbitant interest is if the company fails and can't pay it. Presumably the loan/investment will be used to acquire assets, physical or otherwise, which would immediately become collateral. Nominally, it's a risk for the source of the capital, but averaged out over a large number of investments, the net risk is effectively nonexistent.

2 hours ago, ants said:

You seem to want to ignore that there is huge risk for starting a business.  In Australia 1 in 3 small business fail within 2 years.  That is personal hours and capital put into a failed project 1 in 3 times.  But you think they should only get 2x the lowest person's salary?  It also ignores that people may bring other skills to the table. 

Risk of what, exactly? Not having a successful business? That just puts you in the same situation as all the people who never had any capital to start with. Having the opportunity to start a business means you're already in a privileged position. Do you think your employees should be happy with less than half what you earn? Everybody brings something to the table, or they wouldn't be hired.

2 hours ago, ants said:

Should someone who sacrifices years of low pay while studying get paid the same as someone who chooses to move into the workforce immediately? 

People who're studying shouldn't have low pay! And the main advantage of studying should be to qualify for more interesting/fulfilling jobs.

[Ser Scot A Ellison]

7 hours ago, felice said:

That's the current situation, yes, but it doesn't have to be the case. We're talking about a proposal that would radically transform the whole system.

How would you change it?  If the proposal is to ban the requirement for personal guarantees what is to stop lenders from simply refusing to lend when they see more risk, that cannot now be ameliorated via a personal guarantee, than they are willing to take?

[Ser Scot A Ellison]

6 hours ago, Simon Steele said:

The article absolutely quotes people who don't remember. My argument is that, even as people interviewed said, this article doesn't do a thing. Some don't remember. Some say their view of Biden shouldn't discount Reade's accusation. The quotes about people not remembering are evidence I used, but they are not the premise of my argument. The premise of my argument is that 70 some people were interviewed, and we get statements like "several of those interviewed said...[blank]." Give me some numbers. What percentage of those interviewed said what exactly? How many people have worked for Biden in all that time between now and then? What about the women who have come forward in the last year saying he put his hands on them without consent? What about their coworkers?

For them to say they remember no accounts of allegations against Biden means they haven't been paying attention. Women have been coming forward. Images are all over the internet showing him touching uncomfortable women. 

By the way, many of history's greatest creeps had lots of people vouching for their character. That's why people get away with that shit for so long. They hide it well. He isn't molesting every single person he comes across. 

 

Are you willing to accept, a minimum of (God only knows what he’ll try if he wins), 4 more years of Trump as the price to keep Biden out of the Oval Office?

That’s real question you have to answer with you advocacy against Biden.

[Ser Scot A Ellison]

6 hours ago, teej6 said:

Reade claims it happened in a semi private alcove between Biden’s office and the Capitol. This is so vague. She should be able to go to that very spot and point out where it happened. It’s only a 10 min walk according to the PBS article between Biden’s office and the Capitol. The layout of the location hasn’t changed. The fact that the PBS reporters couldn’t find the “semi private alcove” is telling. Such a place doesn’t seem to exist. Besides, the report also states the 10 minute route was an open space (no secret semi-private spot) with a lot of traffic. And no, people don’t forget the location and environment where an assault, especially a traumatic experience like the one Reade describes happened. They may forget the time, date, year, but images are clear and vivid. And besides, this was not a place that was unfamiliar to Reade. She worked in the building. She may have walked through that space many times during her time there.

Aren't you trotting out many of the well worn tropes that are used against women who make allegations of sexual assault?

[OldGimletEye]

4 hours ago, ants said:

snip

Here is why this is such a difficult problem. Typically when a business goes out and finances a new investment it has to decide how much to finance with debt and/or equity. Normally, the total borrowings should be equal to the present value of the proposed project. So in normal times a business that borrows at least has an asset that "backs" the loan.

But, even in normal times too much debt finance can expose a business to risk, particularly if the economy goes bad because it has to make fixed payments to service the debt whether or not it generates a large amount of revenue.

Currently, many businesses need access to credit to cover their fixed cost as opposed to their variable cost. But notice here that none of the credit is being used to finance new investment projects. It's all going to service fixed cost so the business can stay open and presumably can go back to doing what it was doing before the COV-19 crises. So the problem is that businesses now have taken on all this financial leverage, but don't have the investments to "back them".

You could of course have the government subsidize the loans, but then that becomes kind of windfall for a firm's equity owners and creditors, who usually are going to be well off.

I'm not sure what the solution to this problem is. But, I'll venture to say, that it seems that the government has kind of played the role of an insurer to businesses by extending them loans. If my analogy is correct then the insured need to pay a premium when this all over. Or in other words higher capital taxes.

[Ser Scot A Ellison]

16 minutes ago, OldGimletEye said:

Here is why this is such a difficult problem. Typically when a business goes out and finances a new investment it has to decide how much to finance with debt and/or equity. Normally, the total borrowings should be equal to the present value of the proposed project. So in normal times a business that borrows at least has an asset that "backs" the loan.

But, even in normal times too much debt finance can expose a business to risk, particularly if the economy goes bad because it has to make fixed payments to service the debt whether or not it generates a large amount of revenue.

Currently, many businesses need access to credit to cover their fixed cost as opposed to their variable cost. But notice here that none of the credit is being used to finance new investment projects. It's all going to service fixed cost so the business can stay open and presumably can go back to doing what it was doing before the COV-19 crises. So the problem is that businesses now have taken on all this financial leverage, but don't have the investments to "back them".

You could of course have the government subsidize the loans, but then that becomes kind of windfall for a firm's equity owners and creditors, who usually are going to be well off.

I'm not sure what the solution to this problem is. But, I'll venture to say, that it seems that the government has kind of played the role of an insurer to businesses by extending them loans. If my analogy is correct then the insured need to pay a premium when this all over. Or in other words higher capital taxes.

In reading felice's response to Ants suggesting "investment" over "loans" is actually kind of interesting.  I've always liked "employee owned businesses" where everyone is given a stake in the the success of the enterprise.  Perhaps that's where she is going.  

I think she is a tad pie in the sky with "maximum wage being 2x the lowest paid worker" but creating a business where everyone brought into the business has an equity stake and real benefit from the success of the business is another way to promote a more equitable society and having people, literally, invested in the work that they do.

Doing away with loans and personal guarantees seems too far in my view.  But requiring a broad equity in those who work to get the business up and running, and a continuing equity stake as new people are brought in, may have a dual effect.  It means that if the business fails the cost of failure is spread across all the equity stakeholders.  It also means that if the business is successful that the success is spread across those same equity stakeholders.

:)

[OldGimletEye]

1 minute ago, Ser Scot A Ellison said:

In reading felice's response to Ants suggesting "investment" over "loans" is actually kind of interesting.  I've always like "employee owned businesses" where everyone is given a stake in the the success of the enterprise.  Perhaps that's where she is going.  

Yeah essentially, investments have be financed from some source whether from debt or equity. Just think about a basic accounting course where assets equal liabilities and equity.

3 minutes ago, Ser Scot A Ellison said:

I think she is a tad pie in the sky with "maximum wage being 2x the lowest paid worker" but creating a business where everyone brought into the business has an equity stake and real benefit from the success of the business is another way to promote a more equitable society and having people, literally, invested in the work that they do.

I agree that thinking about ways to increase financial asset ownership among all classes might be a way to decrease inequality.

[Rippounet]

3 hours ago, ants said:

The person making the loan wants some guarantees (or they'll charge exorbitant interest).  The company has no physical assets.  That is why it is against the owner(s) personal assets.  

You seem to want to ignore that there is huge risk for starting a business.

Sorry to intrude, but I see a lot of things wrong in very few sentences.

The idea that business owners are "risk-takers" is an interesting one. I assume, for starters that we are here talking about new businesses, since obviously businesses that are already successful imply no risk.

3 hours ago, ants said:

The person making the loan wants some guarantees

Person? This is an odd choice of words, and I wonder how deliberate it is.
We all know that in 2020 corporations make loans. Generally private banks (at least in my country ^^), sometimes not (but I'll leave other cases aside, since we quicly get into "capitalism" itself).
So, sticking with banks... The reason it's important is that banks create money. They don't lend the money from deposits, nor do they lend the money from their own profits*. They are corporations that have the right to create credit and profit from it. They want guarantees, yes, but mostly because they want to protect their profits. The other things limiting money creation are linked to notions of value and trust.
To make it simple you can only create money as long as there is trust in its value, so there must be ways to protect trust and value. From a collective perspective, that's what private banks are supposed to be for. We trust the value of money because we trust the banks not to create too much money.
And of course, we are wrong on both counts.

*see for instance: https://www.investopedia.com/articles/investing/022416/why-banks-dont-need-your-money-make-loans.asp
Not the best reference obviously, but I'm a bit lazy today.

3 hours ago, ants said:

The person making the loan wants some guarantees (or they'll charge exorbitant interest).

Yes, the banker conducts interviews.

It is wrong however to think that personal assets as collateral or exorbitant interest are necessary. In fact, in many cases there is neither. The fact that there are interviews to assess the quality of the project and the character of the borrower should be sufficient to protect trust.
But if you think about it both are also problematic because both are meant to protect the lender, i.e. the bank, and place the risk on the borrower. While this is meant to protect trust, it only works by assuming the banks are more responsible than borrowers (ha ha!).

Anyway... to come back to the "risk-taking" part. The mechanisms are well understood by people in high places, which is why regulations and practices vary from country to country. I'm not clear on the specifics but from what I know what you presented as fact is not true everywhere. The entrepreneurs that I now neither had to offer collateral nor take on exorbitant interest (this would be a "ridiculous" system, to use your term). Instead the state has a role in protecting the entrepreneur ; it offers both complementary loans and very generous fiscal terms to stimulate innovation. In the one area that I know of relatively well, electronics-IT, the state ensures that an engineer become entrepreneur gets not just a low-interest loan (we're talking under 1%, and quite often 0) to buy material necessities but two full years of -modest but decent- salary.
There is no risk-taking, none whatsoever.

All this is a long-winded way of saying that behind your assertions is actually an ideological choice. If what you say is true in Australia (and it no doubt is), it is because some people want this to be the case, so that "entrepreneurs" are seen as risk-takers and everyone thinks that they are owed something.
Something like exorbitant wealth for instance.

[Ser Scot A Ellison]

2 minutes ago, Rippounet said:

Sorry to intrude, but I see a lot of things wrong in very few sentences.

The idea that business owners are "risk-takers" is an interesting one. I assume, for starters that we are here talking about new businesses, since obviously businesses that are already successful imply no risk.

Person? This is an odd choice of words, and I wonder how deliberate it is.
We all know that in 2020 corporations make loans. Generally private banks (at least in my country ^^), sometimes not (but I'll leave other cases aside, since we quicly get into "capitalism" itself).
So, sticking with banks... The reason it's important is that banks create money. They don't lend the money from deposits, nor do they lend the money from their own profits*. They are corporations that have the right to create credit and profit from it. They want guarantees, yes, but mostly because they want to protect their profits. The other things limiting money creation are linked to notions of value and trust.
To make it simple you can only create money as long as there is trust in its value, so there must be ways to protect trust and value. From a collective perspective, that's what private banks are supposed to be for. We trust the value of money because we trust the banks not to create too much money.
And of course, we are wrong on both counts.

*see for instance: https://www.investopedia.com/articles/investing/022416/why-banks-dont-need-your-money-make-loans.asp
Not the best reference obviously, but I'm a bit lazy today.

Yes, the banker conducts interviews.

It is wrong however to think that personal assets as collateral or exorbitant interest are necessary. In fact, in many cases there is neither. The fact that there are interviews to assess the quality of the project and the character of the borrower should be sufficient to protect trust.
But if you think about it both are also problematic because both are meant to protect the lender, i.e. the bank, and place the risk on the borrower. While this is meant to protect trust, it only works by assuming the banks are more responsible than borrowers (ha ha!).

Anyway... to come back to the "risk-taking" part. The mechanisms are well understood by people in high places, which is why regulations and practices vary from country to country. I'm not clear on the specifics but from what I know what you presented as fact is not true everywhere. The entrepreneurs that I now neither had to offer collateral nor take on exorbitant interest (this would be a "ridiculous" system, to use your term). Instead the state has a role in protecting the entrepreneur ; it offers both complementary loans and very generous fiscal terms to stimulate innovation. In the one area that I know of relatively well, electronics-IT, the state ensures that an engineer become entrepreneur gets not just a low-interest loan (we're talking under 1%, and quite often 0) to buy material necessities but two full years of -modest but decent- salary.
There is no risk-taking, none whatsoever.

All this is a long-winded way of saying that behind your assertions is actually an ideological choice. If what you say is true in Australia (and it no doubt is), it is because some people want this to be the case, so that "entrepreneurs" are seen as risk-takers and everyone thinks that they are owed something.
Something like exorbitant wealth for instance.

Rather than getting side tracked into this nitpicking of the existing system please take a look at my response to felice's criticism of using debt financing to start businesses:

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Posted 23 minutes ago (edited)

  39 minutes ago, OldGimletEye said:

Here is why this is such a difficult problem. Typically when a business goes out and finances a new investment it has to decide how much to finance with debt and/or equity. Normally, the total borrowings should be equal to the present value of the proposed project. So in normal times a business that borrows at least has an asset that "backs" the loan.

But, even in normal times too much debt finance can expose a business to risk, particularly if the economy goes bad because it has to make fixed payments to service the debt whether or not it generates a large amount of revenue.

Currently, many businesses need access to credit to cover their fixed cost as opposed to their variable cost. But notice here that none of the credit is being used to finance new investment projects. It's all going to service fixed cost so the business can stay open and presumably can go back to doing what it was doing before the COV-19 crises. So the problem is that businesses now have taken on all this financial leverage, but don't have the investments to "back them".

You could of course have the government subsidize the loans, but then that becomes kind of windfall for a firm's equity owners and creditors, who usually are going to be well off.

I'm not sure what the solution to this problem is. But, I'll venture to say, that it seems that the government has kind of played the role of an insurer to businesses by extending them loans. If my analogy is correct then the insured need to pay a premium when this all over. Or in other words higher capital taxes.

In reading felice's response to Ants suggesting "investment" over "loans" is actually kind of interesting.  I've always liked "employee owned businesses" where everyone is given a stake in the the success of the enterprise.  Perhaps that's where she is going.  

I think she is a tad pie in the sky with "maximum wage being 2x the lowest paid worker" but creating a business where everyone brought into the business has an equity stake and real benefit from the success of the business is another way to promote a more equitable society and having people, literally, invested in the work that they do.

Doing away with loans and personal guarantees seems too far in my view.  But requiring a broad equity in those who work to get the business up and running, and a continuing equity stake as new people are brought in, may have a dual effect.  It means that if the business fails the cost of failure is spread across all the equity stakeholders.  It also means that if the business is successful that the success is spread across those same equity stakeholders.

:)

[Rippounet]

25 minutes ago, Ser Scot A Ellison said:

I think she is a tad pie in the sky with "maximum wage being 2x the lowest paid worker" but creating a business where everyone brought into the business has an equity stake and real benefit from the success of the business is another way to promote a more equitable society and having people, literally, invested in the work that they do.

SOCIALIST!

[Ser Scot A Ellison]

3 minutes ago, Rippounet said:

SOCIALIST!

Actually, not at all.  I simply want to encourage everyone working somewhere to have a stake in the success of the business they work for.  It isn't everyone everywhere owning the means of production, as such, it isn't "socialism" [super]TM[/super].  But it is a variation on the existing form of Capitalism that encourages spreading both the risk and the reward of entreprenurship.  

[Mr. Chatywin et al.]

Since the thread is locked and it was off-topic anyways,

@dbunting,

Gross negligence is a crime, and it's time we held white collar criminals accountable. Pretending the virus isn't real while leading to tens of thousands of needless deaths is absolutely a crime in my book.

He caused more people to die than OJ did, after all. Accountability matters. 

[Rippounet]

Just now, Ser Scot A Ellison said:

Actually, not at all.  I simply want to encourage everyone working somewhere to have a stake in the success of the business they work for.  It isn't everyone everywhere owning the means of production, as such, it isn't "socialism [super]TM[/super].  But it is a variation on the existing form of Capitalism that encourages spreading both the risk and the reward of entrupenureship.  

Who's "nitpicking" now?

What you're describing is a form of socialism (and very much what I've been advocating for years btw).
But you can call it something else if you're not comfortable with the term (Americans often aren't for some reason ).
I know many people prefer to speak of co-determination, stakeholder pratices, cooperativism... etc, etc.
Like everything, there's a spectrum, and tons of different "strands." We could spend some time on this.
But at its core, this is socialist thought, what I've called "old-school" socialism here on this forum. Think of Fourier, Saint-Simon, Owen... etc.

[Ser Scot A Ellison]

17 minutes ago, Rippounet said:

Who's "nitpicking" now?

What you're describing is a form of socialism (and very much what I've been advocating for years btw).
But you can call it something else if you're not comfortable with the term (Americans often aren't for some reason ).
I know many people prefer to speak of co-determination, stakeholder pratices, cooperativism... etc, etc.
Like everything, there's a spectrum, and tons of different "strands." We could spend some time on this.
But at its core, this is socialist thought, what I've called "old-school" socialism here on this forum. Think of Fourier, Saint-Simon, Owen... etc.

It’s not “Socialism” as most Marxists would style it.  They like the “dictatorship of the Proletariat” and lots of power to the State.  

I see this as a hybrid of Socialism and Captialism keeping the monetary incentives of capitalism while, on a smaller scale, embracing the collectivist ideas of Socialism.  It gives groups of individuals the freedom to spread risk and benefit among those groups without requiring government to plan all aspects of the economy in advance destroying personal incentives created by individual benefits.

It also undermines the dichotomy between labor and management.  Many US unions dislike employee owned shops because it undermines that confrontation (weakening the need for Unions in the first place).

[OldGimletEye]

28 minutes ago, Rippounet said:

 I assume, for starters that we are here talking about new businesses, since obviously businesses that are already successful imply no risk.

Lets say you've just gotten a job as a Financial Analyst. The boss comes down and says to you, "we're thinking about investing in project X. Could you tell me whether we should do it". Well most likely you are going to calculate the Net Present Value of the project. NPV is basically:

NPV = Initial Cost - Present Value of The Project.

You calculate present value by discounting the potential stream of payments and then discount it at appropriate rate. To make the math simpler, I'll use the perpetuity form. So you get something like:

Present Value = Cash Flows / discount rate

And discount rate is basically:

discount rate = risk free rate + risk premium

To estimate equity risk you will use model like CAPM or the APT model. So risk calculations are part of businesses decision to make the next investment.

Now, I agree that right wingers often over play there hand on this, and suggest that capital owners need to be constantly coddled, have a glass of warm milk made for them while having their feet rubbed. And in the real world, it seems that the main determinant on whether a business makes an investment seems to be projected sales growth and not so much capital cost. And in the real world many businesses have a degree of monopoly power, meaning they are often earning returns above what would be required for them to make the next investment. But, even established businesses do consider potential risk when making investments.

40 minutes ago, Rippounet said:

It is wrong however to think that personal assets as collateral or exorbitant interest are necessary. In fact, in many cases there is neither. The fact that there are interviews to assess the quality of the project and the character of the borrower should be sufficient to protect trust.
But if you think about it both are also problematic because both are meant to protect the lender, i.e. the bank, and place the risk on the borrower. While this is meant to protect trust, it only works by assuming the banks are more responsible than borrowers (ha ha!).

I'll dissent somewhat over this. Bank lending can be thought of like healthcare markets, in the sense there are informational asymmetry problems. One party has more private information about their own state of affairs then another party. This can lead to adverse selection problems. During financial crises, these adverse selection problems can get amplified as fear and panic spread.

It's true of course that banks do ask for a lot of information in order to mitigate these informational asymmetry problems. However, they can't always overcome these informational problems and is the reason they do ask for collateral to back loans.

[Rippounet]

1 minute ago, Ser Scot A Ellison said:

I see this as a hybrid of Socialism and Captialism keeping the monetary incentives of capitalism while, on a smaller scale, embracing the collectivist ideas of Socialism.  It gives groups of individuals the freedom to spread risk and benefit among those groups without requiring government to plan all aspects of the economy in advance destroying personal incentives created by individual benefits.

Dude, whatever makes you feel good about it.

1 minute ago, Ser Scot A Ellison said:

It’s not “Socialism” as most Marxists would style it.  They like the “dictatorship of the Proletariat” and lots of power to the State.

Uhu. And you base this sweeping assertion on... ?

[ants]

3 hours ago, felice said:

Investment probably makes more sense than loan; it doesn't matter how exorbitant interest is if the company fails and can't pay it. Presumably the loan/investment will be used to acquire assets, physical or otherwise, which would immediately become collateral. Nominally, it's a risk for the source of the capital, but averaged out over a large number of investments, the net risk is effectively nonexistent.

Risk of what, exactly? Not having a successful business? That just puts you in the same situation as all the people who never had any capital to start with. Having the opportunity to start a business means you're already in a privileged position. Do you think your employees should be happy with less than half what you earn? Everybody brings something to the table, or they wouldn't be hired.

People who're studying shouldn't have low pay! And the main advantage of studying should be to qualify for more interesting/fulfilling jobs.

Incorrect.  Think of a someone starting a small business where someone rents a shop, outfits it, maybe has 1-2 service/waiting staff.  You have a chunk of money you started with, whether that is from a loan, investments or your own capital.  A chunk of that will go to rent, which doesn't create an asset.  Similarly when the business is going, whether profitable or not it will still be paying utility bills, which sucks up some of that cost.  The money on the employees isn't going into an asset.  The money spent to outfit the shop could potentially be recouped partly via equipment or stock sold, but the reality is this second hand stuff will now go at a significant discount, and the money spent on labour that was used to initially install it is all lost.  There is no collateral here, a chunk of that money has been spent and gone..  While it is unprofitable, it will be draining money.  If it turns a profit, all good.  If it doesn't, that's all lost and cannot be recouped by any party.  

Now you're saying that the person who is responsible for that capital should only get 2x the staff?  What if they're also the chef/designer/negotiator with 20 years experience and bringing in those skills, while the two staff are doing their first waitering/service jobs?  Should the pay still be only 2x the entry level staff?  Everyone brings something to the table, that is true.  It is also true that some people bring things to the table that can be sourced from the next 20 people, while someone else may not be easily replaceable. 

And of course, in your world where everyone is starting off almost the same, everyone is starting with similar levels of wealth.  Which means to build the capital, you're sacrificing spending it on something else.  This might be putting the personal home at risk as collateral, or spending less each day to save money for the home AND your future business.  Or working extra hours and sacrificing leisure time.  So when someone starts the business, they're risking all of that.  

Frankly, whether its an investment from others or a loan, the story is the same.  Someone is risking their capital, to say they shouldn't get a return on that seems awfully unfair.  

On the study one, is someone who studies with 12 contact hours and half-asses it through versus someone who studies and has 50 hours of contact and study a week going to be paid the same?  Should they then be paid the same in their subsequent jobs and throughout life if their levels of commitment stay the same?  

1 hour ago, OldGimletEye said:

Here is why this is such a difficult problem. Typically when a business goes out and finances a new investment it has to decide how much to finance with debt and/or equity. Normally, the total borrowings should be equal to the present value of the proposed project. So in normal times a business that borrows at least has an asset that "backs" the loan.

But, even in normal times too much debt finance can expose a business to risk, particularly if the economy goes bad because it has to make fixed payments to service the debt whether or not it generates a large amount of revenue.

........

I'm making the assumption we're talking normal world here, not current COVID-19 world.  I assumed Fez was talking more broadly than current circumstances.  

[Ser Scot A Ellison]

9 minutes ago, Rippounet said:

Dude, whatever makes you feel good about it.

Uhu. And you base this sweeping assertion on... ?

Marx’s comments on the necessity for the “dictatorship of the proletariat” and his definitions of its powers.

And does it matter?  Are you claiming there aren’t socialists who dislike this model because they want broad centralized powers for the State?