And Now We're Headed For The GREATEST Depression

[Phokus]

Also, we used to do just fine with top marginal tax rates of 70-90%, so republicans can just stfu.

 

[Darwin333]

Actually, I find a story like that outrageous and frustrating, and we need to keep looking for ways to do government better to reduce that sort of thing.

If I had the info, I'd contact the legislative representative relevant and perhaps the newspaper to expose the story and look for improvement.

Whether the cause is corruption or in this case just apparently poor officials (I haven't heard their side of the story), it's an actual example, apparently, of waste.

I don't see anything here where you're the bad guy, unless you did something unethical in not reducing the price when you got it done cheaper.

As far as I've seen that's not the case, so enjoy the beer.

You didn't really address the bigger parts of my post, but that's your choice, your story is still useful on its own.

For example, with all the waste, was it better to get this done the bad way it was with the waste, or to not have done it at all (speculation about it blowing away aside)?

Well, I suppose it is nice to have the building but its hard to put the "speculation about it blowing away aside" when that was the entire point of the building. It is a very simple concept, if the thing you attach your roof to will not withstand 130mph winds then the building envelope will fail, even though the roof did not. It will actually fail in a worse way because now the building is entirely open to the elements. Think about your house, would you rather the shingles blew off or the wood decking underneath the shingles blew off? Both are bad but one is much much worse if you happen to be inside that building at the time.

As far as me giving money back if I could get it done cheaper, there really isn't a mechanism to do that. The best you can do generally do is spend that money giving them "extra" but they still have to approve it and that usually means changing the design in someway. The COE nor the consultant would have any of that which is usually the case when dealing with the Feds (at least in my limited experience with them). State and local are usually much better because their budgets are rather limited (except when they have too much money left at the end of the year, gotta spend it to get it next year so they will spend it on ANYTHING).

I know the story itself is ancedotal but every contractor I talk to has similar stories of absurdity. Hell, there is a school that just got built around here with zinc roof and wall panels. Pretty much the most expensive roof you could possibly design with almost no benefit over a regular metal standing seam panel that costs (material only) 1/8th that of zinc.

Again, the contractors make out well because their profit is based off of total cost to do the job. Costs + overhead x 15% (depending on when it bid, maybe down to 10-12). Which do you think we would rather markup, something that costs $100 or something that costs $1000 considering the labor stays the same? Sometimes you feel like you have fallen through the rabbit hole or something because the contractors are the only ones saying that it can be done much cheaper with equal or better results.

I could go on for days about stuff like this. Local school needs new teachers but got nice big ass plasmas in all the classrooms that are used for a few minutes a day. They do make outstanding clocks for the rest of the day though. I remember sharing one or two projectors for the entire school in my day, which would serve the current function equally well but they had to spend the money or they won't get it next year and teachers are a "recurring" expense that are difficult to remove from the budget if it becomes necessary.

 

[Darwin333]

Also, we used to do just fine with top marginal tax rates of 70-90%, so republicans can just stfu.

We never collected anywhere close to that though.

History has proven that there is a limit on the percentage of GDP the .gov can extract via taxation. We are close to that limit right now.

NO ONE and I mean absolutely NONE of the business owners I know will take the risk of operating their business if they are taxed at 70%. We aren't talking Bill Gates or Buffets but the normal business owners who make 1/2 a mil a year or less. You would have to be insane to risk your wealth for that kind of return. Hell, I know guys who are talking about closing up shop if it goes over 50%. They will make out just fine, their workers (or former workers), not so much.

 

[Phokus]

We never collected anywhere close to that though.

History has proven that there is a limit on the percentage of GDP the .gov can extract via taxation. We are close to that limit right now.

NO ONE and I mean absolutely NONE of the business owners I know will take the risk of operating their business if they are taxed at 70%. We aren't talking Bill Gates or Buffets but the normal business owners who make 1/2 a mil a year or less. You would have to be insane to risk your wealth for that kind of return. Hell, I know guys who are talking about closing up shop if it goes over 50%. They will make out just fine, their workers (or former workers), not so much.

nobody said tax 500K at 70% (and remember, this is MARGINAL tax rates, not effective tax rates), but should millionaires/billionaires be taxed that much? Absolutely. When you're getting to wealth so great it becomes abstract to the person earning that much, it doesn't make a difference. We did fine before taxing that much, we can fix many of our problems taxing that much again.

 

[jackace]

We never collected anywhere close to that though.

History has proven that there is a limit on the percentage of GDP the .gov can extract via taxation. We are close to that limit right now.

NO ONE and I mean absolutely NONE of the business owners I know will take the risk of operating their business if they are taxed at 70%. We aren't talking Bill Gates or Buffets but the normal business owners who make 1/2 a mil a year or less. You would have to be insane to risk your wealth for that kind of return. Hell, I know guys who are talking about closing up shop if it goes over 50%. They will make out just fine, their workers (or former workers), not so much.

Well honestly that might be just what we need in this country. More people who have "made it" to step aside and leave room for someone else in those respective industries.

If the people you are talking about really wanted to take their businesses to the next level there are legal ways to limit their exposure to both taxation and litigation. It might cost them more money for lawyers and accountants, but there are ways. I'm not a legal expert by any means, but I read all the time about business owners setting up their income from their business as investment income and not personal income. This reduces their tax rate to below that of an average middle class family.

 

[CptObvious]

Just some thoughts from an American who's been living abroad for a couple years:

The American political system is too slow and inefficient. The government is so trapped in gridlock by special interest groups that it can't respond fast enough to rapid changes in the global economy.

I'm currently living in Seoul, South Korea now. The quality of life here is nowhere as good as back in the States. But compared to 10 years ago, the gap is closing pretty fast. The Korean economy has weathered the storm better than most countries. Unemployment is high here but less than in the U.S. Even though the government here has many problems with corruption and opacity here, I still have to admire that the country takes decisive action on economic policies, even if they're not always right.

In the U.S., any action that would be beneficial for society as a whole but detrimental to some economically undercontributing group would immediately be tangled up in gridlock. There are so many welfare recipients, corporate and individual, Republican and Democrat, that it's sucking the marrow out of the system.

It's a gross generalization, but I get the sense that people in emerging economies like China or Korea are movers and shakers while we Americans are too complacent and just waiting for the next bubble to dig them out of the recession. In 10 years it's projected that China will overtake the U.S. as the world's biggest economy. I don't know about anyone but I find it scary that China could one day be dictating the world's economic policy.

 

[piasabird]

What makes it hard for small businesses to get started is all the legislation and red tape that is created by the government that makes it more difficult. Then if you already have a large corporation they can take advantage of economies of scale. The big fish with the big wallet gets the lower price. This makes a hurdle for a small business to compete against a larger corporation. The laws that have been passed by congress often target different groups of people in a preferential ways, in an attempt to reward certain groups using the federal tax system. Corporations have teams of lawyers that are always trying to figure out how to legally hide assets and use accounting techniques to keep from paying taxes. This is all because of how congress has set up the business and tax laws. Then these same idiot politicians want to blame corporations for the mess they have created. Congress created the tax codes and the regulations responsible for this mess. So when a politician tries to blame large corporations, remember it is them that created the system that corporations are set up under. Just tell them to shut up.

 

[StageLeft]

Just some thoughts from an American who's been living abroad for a couple years:

The American political system is too slow and inefficient. The government is so trapped in gridlock by special interest groups that it can't respond fast enough to rapid changes in the global economy.

I'm currently living in Seoul, South Korea now. The quality of life here is nowhere as good as back in the States. But compared to 10 years ago, the gap is closing pretty fast. The Korean economy has weathered the storm better than most countries. Unemployment is high here but less than in the U.S. Even though the government here has many problems with corruption and opacity here, I still have to admire that the country takes decisive action on economic policies, even if they're not always right.

In the U.S., any action that would be beneficial for society as a whole but detrimental to some economically undercontributing group would immediately be tangled up in gridlock. There are so many welfare recipients, corporate and individual, Republican and Democrat, that it's sucking the marrow out of the system.

It's a gross generalization, but I get the sense that people in emerging economies like China or Korea are movers and shakers while we Americans are too complacent and just waiting for the next bubble to dig them out of the recession. In 10 years it's projected that China will overtake the U.S. as the world's biggest economy. I don't know about anyone but I find it scary that China could one day be dictating the world's economic policy.

I live here and agree with your assessment although not the timeline of China's rise, I think it will be slower.

The political system in the US is increasingly incompetent, like a man who's digging himself deeper into quick sand with each step. Lobbying and special interests have turned it into an incapable mess. Legislation drags on for too long and when it's finally passed it's a piece of logorrheic sh*t.

 

[Trianon]

Same guys has another segment up now.

America Won the Cold War But Now Is Turning Into the USSR

Being exposed to both, I regretably agree with the commentator. To much "social safety netting" going on and for all the wrong causes. Same as with the USSR's goal for "world/permanent revolution", we are stuck with fool's errand "spreading democracy" on taxpayer dime.

 

[Darwin333]

nobody said tax 500K at 70% (and remember, this is MARGINAL tax rates, not effective tax rates), but should millionaires/billionaires be taxed that much? Absolutely. When you're getting to wealth so great it becomes abstract to the person earning that much, it doesn't make a difference. We did fine before taxing that much, we can fix many of our problems taxing that much again.

Their is a historical "magic number" which is the maximum percentage of GDP the government can extract via taxation regardless of the actual tax rates. We are close to that rate right now so, if history is any indication (and it usually is), we can change all the rates we want but we won't get that much more money. When the rates get to high for the rich they simply find ways around them or put their money in less rewarding/less risky investments.

As I said, I don't know a single person who would take any sort of risk on money when the "reward" will be taxed at well over 50%. I know a business owner who is already talking about closing up shop and putting his money into tax free bonds due to the upcoming tax hikes and those increases aren't that bad on paper. However, his magic number is 50% and the new tax increases will put him over that mark. It is simple risk/reward, all business people have an acceptable level.

 

[Darwin333]

Well honestly that might be just what we need in this country. More people who have "made it" to step aside and leave room for someone else in those respective industries.

If the people you are talking about really wanted to take their businesses to the next level there are legal ways to limit their exposure to both taxation and litigation. It might cost them more money for lawyers and accountants, but there are ways. I'm not a legal expert by any means, but I read all the time about business owners setting up their income from their business as investment income and not personal income. This reduces their tax rate to below that of an average middle class family.

Not sure if you have noticed but we are in a down economy. Competition is extremely stiff and a ton of out of town guys are now bidding on local work and our guys in town are bidding on out of town stuff as well. You would have to be insane to either start or seriously expand a construction business in this region right now. The foremans will get jobs of course but the other 90% will just be fucked.

As far as legally avoiding the taxes goes, that kinda goes toward my point. These tax increases generally only hurt the sorta rich but not rich enough to afford the really good lawyers/accountants. The really rich bastards don't give a shit what the tax rate is because they don't pay anywhere near it. Unfortunately, a ton of people are employed by the "sorta rich" folk.

 

[Darwin333]

What makes it hard for small businesses to get started is all the legislation and red tape that is created by the government that makes it more difficult. Then if you already have a large corporation they can take advantage of economies of scale. The big fish with the big wallet gets the lower price. This makes a hurdle for a small business to compete against a larger corporation. The laws that have been passed by congress often target different groups of people in a preferential ways, in an attempt to reward certain groups using the federal tax system. Corporations have teams of lawyers that are always trying to figure out how to legally hide assets and use accounting techniques to keep from paying taxes. This is all because of how congress has set up the business and tax laws. Then these same idiot politicians want to blame corporations for the mess they have created. Congress created the tax codes and the regulations responsible for this mess. So when a politician tries to blame large corporations, remember it is them that created the system that corporations are set up under. Just tell them to shut up.

I think you are wrong about the bolded part. Its kinda like a quid pro quo arrangement, Congress gives big corps advantages and loopholes and big corps let Congress use them as their whipping boys. Both win. Kinda hard to call them idiots for something that is working like a charm.

 

[jackace]

Not sure if you have noticed but we are in a down economy. Competition is extremely stiff and a ton of out of town guys are now bidding on local work and our guys in town are bidding on out of town stuff as well. You would have to be insane to either start or seriously expand a construction business in this region right now. The foremans will get jobs of course but the other 90% will just be fucked.

What you are describing sounds like too many workers and not enough work. Sadly I don't see construction returning to anything it was in the past. Many of those people working construction are never going to find work again in that same industry. We can't base our decisions on what is happening in just a few industries, especially ones that grew out of control during the bubbles.

Also my point still stands. If these owners are not willing to take the risk and they would rather take their money and sit on the side-lines then let them because if there is truly a demand for what they do someone new will step up and fill that demand.

 

[Darwin333]

What you are describing sounds like too many workers and not enough work. Sadly I don't see construction returning to anything it was in the past. Many of those people working construction are never going to find work again in that same industry. We can't base our decisions on what is happening in just a few industries, especially ones that grew out of control during the bubbles.

Also my point still stands. If these owners are not willing to take the risk and they would rather take their money and sit on the side-lines then let them because if there is truly a demand for what they do someone new will step up and fill that demand.

Where does the demand come from when you get a bunch of (ex) employers sitting on their money, the unemployment already around 10%, massive "underemployment" and no more free monies from credit cards/using your house as a piggy bank?

 

[LegendKiller]

Their is a historical "magic number" which is the maximum percentage of GDP the government can extract via taxation regardless of the actual tax rates. We are close to that rate right now so, if history is any indication (and it usually is), we can change all the rates we want but we won't get that much more money. When the rates get to high for the rich they simply find ways around them or put their money in less rewarding/less risky investments.

As I said, I don't know a single person who would take any sort of risk on money when the "reward" will be taxed at well over 50%. I know a business owner who is already talking about closing up shop and putting his money into tax free bonds due to the upcoming tax hikes and those increases aren't that bad on paper. However, his magic number is 50% and the new tax increases will put him over that mark. It is simple risk/reward, all business people have an acceptable level.

I would love to see this "historical "magic number"".

as far as risk/reward, the risk/reward profile hasn't changed. You still only get taxed on profit, while the profit may be a little lower, it isn't massively so.

The whole idea behind not working for an extra dollar with a higher tax rate is ridiculous and unfounded. Tax rates were historically far higher and we did OK previously. It wasn't until the late 80s that the top marginal tax bracket increased, accompanied by an increase in marginal tax brackets. So, somehow, through about 30 years, through the beginning of the IT boom, through a huge manufacturing surge, we managed to do well with a 48-53% tax bracket at the top.

Then, suddenly, taxes were cut, massive bubbles ensued, huge amounts of debt piled on...etc....

 

[Acanthus]

Housing purchases crash and burned this month.

Numbers were just released today.

Maybe the fucking banks will renegotiate their unfair loans rather than take on depreciating assets by foreclosing.

 

[LunarRay]

The more dollars produced to enable World Control and Internal Economic pseudo-health will at some point result in a migration away from the dollar as the World's Reserve Currency... At that point the US will still be among the top demand nations in the World... We don't make enough here to sustain our needs... we will see, therefore, the cost of foreign goods sky rocket which will introduce the incentive to be creative at home and regain our Manufacturing base... Exports will climb and so will our Jobs picture.
Will there be a period of severe recession... I doubt it.. But, I'd not expect positive growth during the transition's early stages...

So ... keep your eye on the Euro... I think that is the key currency as well as alliances being formed to secure individual nation economics.

 

[LegendKiller]

Housing purchases crash and burned this month.

Numbers were just released today.

Maybe the fucking banks will renegotiate their unfair loans rather than take on depreciating assets by foreclosing.

"unfair" loans? How were the vast majority of them "unfair"?

1. Terms were disclosed in documentation. If you've ever closed on a mortgage you'd know how thorough they are.

2. People who took out the mortgages were largely "betting" housing would keep going up. They weren't educated and that wasn't a bank's fault. It is theirs for being stupid.

 

[Jhhnn]

"unfair" loans? How were the vast majority of them "unfair"?

1. Terms were disclosed in documentation. If you've ever closed on a mortgage you'd know how thorough they are.

2. People who took out the mortgages were largely "betting" housing would keep going up. They weren't educated and that wasn't a bank's fault. It is theirs for being stupid.

Please. Mortgage companies ignored their fiduciary duty to potential investors in writing loans they knew full well would crash and burn. Low/No doc 80/20 ARM's were sucked in at the front end and shat out the back onto investors- sliced, diced and artfully blended into MBS that were also destined to fail, stamped with AAA ratings and stuffed into the GSE's with govt guarantees, too.

What they offered weren't deals that nobody could refuse, but rather deals that nobody could really understand at either end of the rake-off pipeline.

You, of all the posters here, understand that better than anybody, yet choose to obfuscate the truth.

Just because people showed poor judgment doesn't mean they weren't being taken advantage of, manipulated and ultimately ripped off- quite knowingly by the perps.

 

[Acanthus]

"unfair" loans? How were the vast majority of them "unfair"?

1. Terms were disclosed in documentation. If you've ever closed on a mortgage you'd know how thorough they are.

2. People who took out the mortgages were largely "betting" housing would keep going up. They weren't educated and that wasn't a bank's fault. It is theirs for being stupid.

Because the average person can understand a polynomial with 6 variables scrawled into 30 pages of documents.

Many mom and pops were convinced they "could afford it" and given intitial payments that fit into their budget, then bent over when the interest went up and had no choice but to default.

The banks were betting on the appreciating asset of the house so when they repod it they could turn around and resell it for even more profit.

 

[Jhhnn]

The banks were betting on the appreciating asset of the house so when they repod it they could turn around and resell it for even more profit.

That's not really true- they were betting they could securitize loans faster than they could fall apart at the seams, push the Loser! loan liabilities off onto investors.

And they really didn't care about the welfare of their corporate steeds in the process, either- if the mortgage company, the investment bank, the whatever fails miserably- screw it- I got mine before it did, and that's all that really matters, right?

The rewards were so huge that greed had a field day.

 

[manimal]

Because the average person can understand a polynomial with 6 variables scrawled into 30 pages of documents.

Many mom and pops were convinced they "could afford it" and given intitial payments that fit into their budget, then bent over when the interest went up and had no choice but to default.

The banks were betting on the appreciating asset of the house so when they repod it they could turn around and resell it for even more profit.

Sadly predatory practices were the norm, many people were kept in the dark and failed to get a impartial analasis of what they bought. Now some people willfully took those loans thinking they would flip in a few years with the usual 10-20 percent appreciation.

I kept my house and finances in order and even made some real estate moves in the subsequent crash. Do I feel sorry for some of these shlubs...yes...do they need to start over? Probably..

Did financial regulation fix these practices?

 

[Trianon]

That's not really true- they were betting they could securitize loans faster than they could fall apart at the seams, push the Loser! loan liabilities off onto investors.

And they really didn't care about the welfare of their corporate steeds in the process, either- if the mortgage company, the investment bank, the whatever fails miserably- screw it- I got mine before it did, and that's all that really matters, right?

The rewards were so huge that greed had a field day.

Agreed, LK could've been more honest about whole setup, it's not a mystery for anyone anymore

 

[LegendKiller]

Please. Mortgage companies ignored their fiduciary duty to potential investors in writing loans they knew full well would crash and burn. Low/No doc 80/20 ARM's were sucked in at the front end and shat out the back onto investors- sliced, diced and artfully blended into MBS that were also destined to fail, stamped with AAA ratings and stuffed into the GSE's with govt guarantees, too.

What they offered weren't deals that nobody could refuse, but rather deals that nobody could really understand at either end of the rake-off pipeline.

You, of all the posters here, understand that better than anybody, yet choose to obfuscate the truth.

Just because people showed poor judgment doesn't mean they weren't being taken advantage of, manipulated and ultimately ripped off- quite knowingly by the perps.

I could debate this, but to what end? You've already baked in your assumptions.

 

[LegendKiller]

Because the average person can understand a polynomial with 6 variables scrawled into 30 pages of documents.

Many mom and pops were convinced they "could afford it" and given intitial payments that fit into their budget, then bent over when the interest went up and had no choice but to default.

The banks were betting on the appreciating asset of the house so when they repod it they could turn around and resell it for even more profit.

Meh, I'm not even going to go there.