Global financial meltdown #2

[Ixodes]

Property is overvalued at this time. If we're going to even try to resemble good capitalists, we have to let the devaluation of property take place.

There was that line in Too Big to Fail where Bernanke said to buy up excess properties and burn them. In theory, could that have worked? In other words, could a big enough player (the feds) do something so radical that the real estate bubble wouldn't have popped so dramatically?

[Shryke]

A corporation is amoral; the people who run it can indeed be corrupt or immoral. That doesn't make the corporation bad; the people are bad.

A law is not a corporation. The parallel is inexact because a law has an effect, directly, on people. A corporation has no effect just by its existence; it acts through the people that make it act.

How can a group of people acting immorally not be immoral?

[Swordfish]

There was that line in Too Big to Fail where Bernanke said to buy up excess properties and burn them. In theory, could that have worked? In other words, could a big enough player (the feds) do something so radical that the real estate bubble wouldn't have popped so dramatically?

No. not at that point anyway.

The horses had already left the barn.

And i assume you weren't serious about actually burning down the houses....

[The Progressive]

It seems that the chickenlittles and fringenuts' prediction about the imminent demise of BoA isn't gonna happen after all. :laugh:

[Tormund Ukrainesbane]

There was that line in Too Big to Fail where Bernanke said to buy up excess properties and burn them. In theory, could that have worked? In other words, could a big enough player (the feds) do something so radical that the real estate bubble wouldn't have popped so dramatically?

No, that would have been stupid. This idea has been a boil on my ass for the last 10 years. The only reason to do that is to keep housing prices high. The only reason to do THAT is to keep big banks from losing money. It doesn't help out the consumer, it doesn't encourage people to actually buy houses. Like everything that has been suggested it directs money from the poor to the rich. Housing prices need to come down, with tight credit restrictions to the point that regular people can afford them. IMO, the average house in the US should cost about $150K - $175K. Because that's what normal people with normal salaries can afford. The economy doesn't require housing costs to go back up to recover. Exactly the opposite.

[Ixodes]

And i assume you weren't serious about actually burning down the houses....

Well, firefighters do have to train...

I guess burning them wouldn't have been necessary but you would need to destroy them. The problem of too many unwanted houses being solved with destruction of the over-supply. I have visions of depression-era dairy farmers dumping milk to try to raise milk prices, although in this situation it would BoA executives manning bulldozers.

If I understand history correctly, the milk dumping didn't really help the farmers and it certainly didn't alter the depression. Since housing over-supply was not the problem, rather it was a symptom of over-valuation of houses and loose lending, altering supply would accomplish nothing.

[Former Lord of Winterfell]

No, that would have been stupid. This idea has been a boil on my ass for the last 10 years. The only reason to do that is to keep housing prices high. The only reason to do THAT is to keep big banks from losing money. It doesn't help out the consumer, it doesn't encourage people to actually buy houses. Like everything that has been suggested it directs money from the poor to the rich. Housing prices need to come down, with tight credit restrictions to the point that regular people can afford them. IMO, the average house in the US should cost about $150K - $175K. Because that's what normal people with normal salaries can afford. The economy doesn't require housing costs to go back up to recover. Exactly the opposite.

This.

Anyone who believes that destroying livable housing is a good idea needs some electro-shock therapy. Good God, has common-sense become that warped by economic smarty-pants? The market needs to bottom out to the point where people can afford them. Then we need to get rid of things like Fannie and Freddie that artificially inflate both demand and prices. Quit trying to artificially fuck with the housing market, and you'll end up with a sustainable market that doesn't have these kind of systemic booms and busts that damage our entire financial system.

If prices were where they should be, you might not need all these expensive incentives so that people could afford them.

[Shryke]

They, the people are immoral. The legal entity that binds them together (say, Enron) can't, in and of itself, do anything.

I have an interest in a corporation, it's owned by two shareholders. It owns a piece of hardware that Tormund would drool over, which only the two shareholders can access. Now, if someone takes this piece of equipment and uses it to act immorally, by say, rampaging at a post office, did the corporation act immorally? No, the corporation is a piece of paper. The shareholder who removed the equipment and used it to wreak havoc wouold have acted immorally.

But a corporation isn't independent of the people that compose it and direct it.

It's like saying the Nazi Regime can't be evil, only the people in it.

[Swordfish]

Well, firefighters do have to train...

I guess burning them wouldn't have been necessary but you would need to destroy them. The problem of too many unwanted houses being solved with destruction of the over-supply. I have visions of depression-era dairy farmers dumping milk to try to raise milk prices, although in this situation it would BoA executives manning bulldozers.

If I understand history correctly, the milk dumping didn't really help the farmers and it certainly didn't alter the depression. Since housing over-supply was not the problem, rather it was a symptom of over-valuation of houses and loose lending, altering supply would accomplish nothing.

The problem is not that the houses are unwanted, the problem is they are over valued. So it's not an oversupply problem.

Burning a bunch of them down does nothing to solve that problem, and it also bankrupts a bunch of insurance companies.

not to mention the amount of money that would need to be spent on that kind of endeavor..... I would imagine the environmental issues alone would create costs that would be staggering, and lawsuits would spring up out of the ground like dandelions.

[Shryke]

Go take a business law class, please.

The legal state of a corporation does not change that a corporation does as it's members dictate. (or, certain members) I'm not even sure what you are thinking here since the distinction is irrelevant to the question at hand.

How is a group of people who do immoral things not an immoral entity?

Again, is the Nazi Regime not immoral? Are only individual nazis immoral?

Your earlier example is highly flawed. How it should be stated:

I have an interest in a corporation, it's owned by two shareholders. It owns a piece of hardware that Tormund would drool over, which only the two shareholders can access. Now, if the person running the corporation tells an employee to take it and act immorally, by say, rampaging at a post office, did the corporation act immorally?

And the answer is "Yes".

Your original example tries to jauntily skip over this issue by acting like these unethical acts just happen spontaneously.

It was Fakename Chemical employees that decided to dump chemicals in the river. This in no way reflects on the company who's management told them to do so apparently.

[TrueMetis]

A law is not a corporation. The parallel is inexact because a law has an effect, directly, on people. A corporation has no effect just by its existence; it acts through the people that make it act.

A law doesn't have an effect just by its existence either it only has an effect if it is enforced.

[Tormund Ukrainesbane]

I have an interest in a corporation, it's owned by two shareholders. It owns a piece of hardware that Tormund would drool over, which only the two shareholders can access. Now, if someone takes this piece of equipment and uses it to act immorally, by say, rampaging at a post office, did the corporation act immorally? No, the corporation is a piece of paper. The shareholder who removed the equipment and used it to wreak havoc wouold have acted immorally.

Where do I submit my application?

[Shryke]

That is correct. I am assuming an enforced law.

ETA - I'm never going to convince Shryke, so we'll just stop the unproductive line of conversation.

Well no. Because you are triyng to skip around the ethical question of "Does a group of people who do immoral things on the orders of group make that group immoral?" by falling back on a pedantic question of definition that isn't relevant.

[Tormund Ukrainesbane]

Tormund, would you like to come to the Knob Creek, Kentucky machine gun shoot?

Dear Penthouse, you would never believe...

[Zoë Sumra]

Apparently this place is up for demolition, on the grounds that no one will pay for it.

[Shryke]

Dear Penthouse, you would never believe...

Man, who wouldn't want to shoot a machine gun?

[ThinkerX]

I can't really buy into Chats argument either; it reads like an argument to commit major felonies and escape all blame.

Harry, Fred, and Jack are shareholders in a corporation. Acting in the corporations name, these three engage in a major fraud which ends with half a town bulldozed into rubble. Government Officials start investigating and right off, it is very clear that Harry, Fred, and Jack were all deeply involved in this mess. The officials think they have a slam dunk case and go to court. Harry, Fred, and Jack make the argument they CANNOT be held accountable because it was the *corporation* that was responsible for these acts, not themselves. And the corporation, as a fictional 'person', *cannot* be held accountable either. The argument holds up and they walk.

Somebody here (Zap???) posted an article describing this exact same situation somewhere on this site not all that long ago: corporate management/exec types had clearly done some major wrong, but the case got tossed because the corporation itself could not be held accountable.

Something I have wondered about now and again: criminal acts committed by corporations under the direction of corp management/execs would, technically constitute conspiracy. Therefor, whynot charge the *entire* corporation under RICO or something similiar? It would seem to me this would give the criminal element nowhere to hide: the corporation is a ficticious entity to be sure, but it is a ficticious entity that in legal terms all the top leadership works with/for.

:: waits for accusations of idiocy and accompaning temper tantrum on how this would cause a mass corporate exodus from the US and wreck the economy::