grimmeissen
Administrator
Join Date: 1/14/2004
Posts: 1217
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Posted: 2/13/2008 2:33:55 PM
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Socialism in economic policy has been a problem for years. The Soviet Union collapsed under socialist policies, capitalist governments have been driven deeply into debt by programs that interfere with the markets, and most federal programs in the United States have been a miserable failure. With these results available for comparison, I am baffled that leaders around the world still feel that government "stimulus" is needed to correct market problems, which were mostly caused by too much government involvement in the first place.
President Bush has officially signed the economic stimulus plan, providing $168 billion in newly printed cash to be spread amongst the population. Most tax payers below the $75,000 threshold will receive $600, with couples under the $150,000 threshold receiving $1,200. For each child, an additional $300 will be sent. Thanks to efforts by Democrats in Congress, the plan was extended to those that do not even pay taxes; providing $300-$600 checks for individuals and families that earn less than the IRS limits.
Combining this cash payment with the drastic interest rate cuts made by the Federal Reserve, we are being given an economic stimulus the likes of which has not been seen in years. On the outside it appears that our leaders are being proactive, giving the economy a boost before a recession really sets in and starts tearing things apart. In reality, we only need to examine what is going on in the markets today and what happened as a response to previous stimulus efforts, to determine that socialism will once again be a complete failure.
Recent statistics have shown that mortgage costs are actually increasing on the open market, even though the Federal Reserve has lowered short-term rates from 5.25% to 3.00% in only four months. The Fed hoped that mortgage rates would decline as banks had access to easier money, thus propping up the falling housing market. All this stimulus has done is allowed the banks to stay afloat and to rebalance their portfolios while they pass the burden on to homeowners who got in over their head. Borrowers with bad credit are still finding it difficult to refinance to lower or fixed rates because the banks have tightened their lending standards significantly.
There is one area where the lower interest rates has definitely had a visible impact--savings and fixed income. While the banks are using the lower rates to rebuild their reserves, and the mortgage holders are still struggling to make payments, those who actually had money saved have watched their yields dwindle away. High-yield savings vehicles have dropped almost in tune with the Fed Funds rate, going from over 5% last summer to near 3% today. The people being hurt by this are the ones who were smart enough to stay away from unnecessary debt and the people who rely on fixed income to pay the bills. Once again, retirees and smart savers are punished by the system of debt and the debasement of the dollar.
As for the economic stimulus bill signed by George W. Bush, it looks very similar to rebate packages that Congress executed in 2001 and 2003. In those years, it was shown that barely a third of those who received rebates spent them into the market. Recent polling data suggests that only 19% of the people plan to spend their rebates this time--choosing instead to use them on debt or outstanding bills. While this might feel good for some in the short run, all it will lead to is another failed attempt by the government to force the market in one direction.
A hidden piece of the stimulus legislation involves raising the limit on Federal Housing Administration loans to $729,750 from where it is now near $300,000. What this means is that the government-sponsored lenders, Fannie Mae and Freddie Mac, can now step in to buy troubled mortgages from anyone owing less than $729,750. I might be considered a little harsh for not wanting the government to step in and help those who took out loans that were larger than they could handle, but I doubt many will disagree with me that the government in no way should be stepping in to bail out homeowners who live in mansions. Your tax dollars are being taken from you to help pay for properties that we may never be able to afford during our entire lifetimes.
So once again, in the face of so much evidence in the defense of free market capitalism, the socialist argument has somehow won over our leaders. They will load the helicopters with money and spread it around to everyone, yet somehow only the economic elite will come out ahead. For those at the bottom, they can look forward to lower savings rates, mortgages they still struggle to pay, and the never-ending rise in prices due to runaway inflation.
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mccracken
VIP Member
Join Date: 1/16/2004
Posts: 262
Location: USA
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Posted: 2/15/2008 6:12:49 AM
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That's great news! People who were stupid enough to make less than the amount deemed taxable by the IRS and have children are getting more of this inflationary money than me!
Check it out.. check it out... and then pick it out....... Then show me my dinero!!!
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grimmeissen
Administrator
Join Date: 1/14/2004
Posts: 1217
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Posted: 2/15/2008 7:39:13 AM
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There have even been some analysts who are saying that a lot of illegal immigrants will get money from this operation. They don't pay taxes, but in some cases Social Security money is taken out for them, which qualifies them for the "below IRS limit" clause.
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