Another Lib who doesnt want to pay taxes!

[jtnesbitt 0]

What about investment, aquisition, mergers, opening new markets, product adaptation, target demo shift, diversification, etc

(edit to add diversification, dont know how i forgot that one)

"If this post needs to be moderated I would prefer it to be completly removed and not edited and butchered into a disney movie" - DorkZone Hero

[DanG 1]

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What about investment, aquisition, mergers, opening new markets, product adaptation, target demo shift, etc

Investment - in what? Infrastructure, tooling, training, research? I think most small business would rather save.

Aquisition & mergers - Sure, that's great and usually leads to job loss, not creation.

Opening new markets - I guess, but in this economy all that really means is opening overseas markets, which small business will not be able to do with a 2% tax rate cut.

Product adaptation - I'll give you that one.

Target demo shift - I have no idea what this means. I'm assuming you mean demography, as in marketing your product to a different segment of consumers. That sounds great, but all segments of consumers are hurting right now.

Supply and demand, not just one or the other.

- Dan G

[chuckakers 426]

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>When businesses have more money, the typical response of management is
>to use it to grow the business.

Uh, no. When businesses have a bigger market, their typical response is to grow the business. A business that has more money but no additional market gets no advantage by growing. They can make more widgets, but since there is no market for them, they lose money.

You reply is a bit simplistic and implies that businesses are at the mercy of the existing market. This is not the case. Markets exist because of demand, but demand is often the creation of business. In fact, some of the most profitable and successful businesses on the planet got that way by creating a market for their products, rather than filling an existing need.

Companies seek growth, whether by selling more widgets (increased sales of your basic widget. The kind of growth you mentioned is tough without increased demand), different widgets (growth through diversification by selling widgets that do other widgey things), and improved widgets (growth through selling widgets that are more efficient at whatever they widge).

And the one you won't want to hear - growth through increased market share. That's growth by taking business from the other widget makers. Unlike in public school system, there is no trophy in business for "participation".

Chuck Akers
D-10855
Houston, TX

[billvon 3,119]

>What about investment . . .

If you invest in something that does not increase production/sales, the economy does not improve. (Nor does your company.)

>aquisition . . .

That's taking two companies and merging them (and their markets) into one. In theory no net change. In reality, usually there are layoffs and changes in marketing strategy.

>mergers . . .

See above.

>opening new markets . . .

Now yer talking! Yes, finding new markets will increase the production/sales of a company and have an overall positive impact on the economy.

>product adaptation . . .

Means nothing if the market does not increase or their market share does not improve. You can make your corkscrews into corkscrew/radios, but if no one buys them, it did you no good.

>target demo shift . . .

If you mean "shifting your target demographic" that's opening a new market.

>diversification . . .

Again, opening new markets is the key there.

You may have noted that the key word above is "market." If you can sell your stuff you'll do well. If you can't, you won't. Being able to sell your stuff requires that people have enough money to buy it, and that in turn depends on having a decent enough economy that people have income they can use in that way. We have a consumer driven economy; not much you can do to get around that.

[jtnesbitt 0]

>Investment - in what? Infrastructure, tooling, training, research? I think most small business would rather save.

Yes, most small businesses do invest their money. It's very wise not to have all your eggs in one basket and is key in growth and in marking the transition from a small to a large company.

>Aquisition & mergers - Sure, that's great and usually leads to job loss, not creation.

You're thinking too short term. Which is better for the economy in the long term: Two struggling compnaies or 1 strong growing company?

>Target demo shift - I have no idea what this means. I'm assuming you mean demography, as in marketing your product to a different segment of consumers. That sounds great, but all segments of consumers are hurting right now.

Vast generalization and isn't true.

>Supply and demand, not just one or the other.

Incorect. There are many other factors involved than supply and demand. Even if we were just talking about supply and demand there are many other factors we have to consider "within" the realm of supply and demand that can cause a dramatic shift. These factors are:

-Power of Buyers
-Power of Suppliers
-Threat of new Entrants
-Rivalry among competitors
-Threat of substitutes

"If this post needs to be moderated I would prefer it to be completly removed and not edited and butchered into a disney movie" - DorkZone Hero

[jtnesbitt 0]

>If you invest in something that does not increase production/sales, the economy does not improve. (Nor does your company.)

Thats insane. You are telling em if i use capital from my company and invest it that the capital earnings i get from that investment can't be considered growth?

>That's taking two companies and merging them (and their markets) into one. In theory no net change. In reality, usually there are layoffs and changes in marketing strategy.

You are thinking too short term, see my post above. Same with mergers.

>diversification . . .
>Again, opening new markets is the key there.

No, it's not. Ever look at the Tata group? They are one of the most diverse corps out there and they are imensely successful. Diversification doesnt mean opening new markets, if means diversifying your intrests into different industries. The more unrelated they are the better.

"If this post needs to be moderated I would prefer it to be completly removed and not edited and butchered into a disney movie" - DorkZone Hero

[jtnesbitt 0]

>target demo shift . . .
>If you mean "shifting your target demographic" that's opening a new market.

Demographic shift, not geographic shift. It is not opening a new market. An example of this would be the Express/Structure switching their target consumer and increasing their sales dramatically while at the same time reducing their expenses.

"If this post needs to be moderated I would prefer it to be completly removed and not edited and butchered into a disney movie" - DorkZone Hero

[chuckakers 426]

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When businesses have more money, the typical response of management is to use it to grow the business.

But this environment is anything but typical. The banks were given large (fucking large) infusions of cash so that they would make the lending markets more liquid again, but aside from giving bonuses, they're all electing to hold onto all the cash for fear of failure. While that might be the intelligent choice for them, it doesn't seem like the intelligent choice for us if the purpose of the money is to move things along again. Quite the opposite, it suggests that bailout II should be geared toward increasing the demand side.

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Will some of that "new money" be used to treat execs to vaca's or remodel office suites? Sure it will, but why should anyone care? It's the free market doing what it does best.

The free market got us into this mess.

Government manipulation of the free market is what got us into this mess. In this case it was called the Community Reinvestment Act.

Chuck Akers
D-10855
Houston, TX

[kelpdiver 2]

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Government manipulation of the free market is what got us into this mess. In this case it was called the Community Reinvestment Act.

I guess that makes the situation easier for you, but it's horseshit.

[jtnesbitt 0]

There is no way to place blame for our current siutation because it is all around. It is consumers fault, lenders fault, banks fault, managements fault, executives fault, government's fault, etc. The blame goes all around.

"If this post needs to be moderated I would prefer it to be completly removed and not edited and butchered into a disney movie" - DorkZone Hero

[kelpdiver 2]

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>Aquisition & mergers - Sure, that's great and usually leads to job loss, not creation.

You're thinking too short term. Which is better for the economy in the long term: Two struggling companies or 1 strong growing company?

what's really hurt us in this past year is having companies that are "too big to let fail." AIG, the Big 3, the larger banks. Only Bear was allowed to collapsed alright.

so....maybe we're better off letting one of the two struggling companies fail, and then the other can recover.

[chuckakers 426]

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Government manipulation of the free market is what got us into this mess. In this case it was called the Community Reinvestment Act.

I guess that makes the situation easier for you, but it's horseshit.

The CRA forced banks to issue loans to people who would not have come even close to qualifying for one (and couldn't afford the one they got). The government mandated lending standards so lax, that in many cases buyers didn't even have to prove (hell, or even report) how much money they made - how idiotic is that? Adding insult to that, the government lowered the standards further and redued down payment requirements, in some cases to ZERO.

All this in turn created an artificial market for housing, which resulted in a massive housing expansion across the country that we now know was a bubble. Banks were glad to write these shit loans because Fannie Mea and Freddie Mac (which IS you and me) backed them - by law. And since many of these unqualified buyers paid little or no own payment, a bunch of them simply walked away when they couldn't make the payment. At the end of the day, Fannie and Freddie (you and me) got stuck with the resulting mess.

That's government manipulation of the market, and as usual, it backfired.

The foundation of the economic problem we're in today is the housing mess, compliments of Jimmy Carter, and later Chris Dodd and Barney Frank, among others.

Chuck Akers
D-10855
Houston, TX

[jtnesbitt 0]

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>Aquisition & mergers - Sure, that's great and usually leads to job loss, not creation.

You're thinking too short term. Which is better for the economy in the long term: Two struggling companies or 1 strong growing company?

what's really hurt us in this past year is having companies that are "too big to let fail." AIG, the Big 3, the larger banks. Only Bear was allowed to collapsed alright.

so....maybe we're better off letting one of the two struggling companies fail, and then the other can recover.

No, we're better off not playing the "too big to let fail" game.

It it fails it's because it wasnt performing as it should to profit, thrive, and grow. Let it fail so other companies can move it to succeed where it did not or let it fail so it can restructure itself learn from its mistakes and be more successful.

"It's takes disaster to learn a lesson"

Yes, thats the lyrics from a Rancid song but it's true. It took Enron to get American to be more concerned of their investments and corporate fraud. In the short time it hurt, a lot of people lost a lot of money, then people lost faith and were scared to invest. If a large corp fails that some people think "is too big to fail" then yes it's going to hurt but it will be a learning experience and in time we will br stronger from it.

"If this post needs to be moderated I would prefer it to be completly removed and not edited and butchered into a disney movie" - DorkZone Hero

[DanG 1]

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Incorect. There are many other factors involved than supply and demand. Even if we were just talking about supply and demand there are many other factors we have to consider "within" the realm of supply and demand that can cause a dramatic shift. These factors are:

-Power of Buyers
-Power of Suppliers
-Threat of new Entrants
-Rivalry among competitors
-Threat of substitutes

You say that I'm thinking too short term, but I'd argue that you are thinking too micro. This is a macro problem. The things you mention relate to the success or failure of a single company. We're talking about the success or failure of an entire economy. One business failing while another succeeds is great for the successful business, but the health of the economy is improved if both businesses can survive and compete. In order for both businesses to be able to compete there must be enough customers to go around.

I agree that business needs to be stimulated. Maybe one way to do that is by lowering the corporate tax rate. That stimulus, however, needs to be combined with stimulus for the consumer as well. One can't work without the other.

- Dan G

[DanG 1]

Have you decided to ignore that fact that CRA loans performed as well or better (on average) as loans not made under that program? I do suppose that fact gets in the way of a good theory.

Interestingly, some of the best performing loans (on average) were made to recent immigrants, both legal and illegal. That fact, however, also gets in the way of the theory about illegals only coming here to suck on the government teat, so people like to ignore it as well.

- Dan G

[jtnesbitt 0]

>One business failing while another succeeds is great for the successful business, but the health of the economy is improved if both businesses can survive and compete. In order for both businesses to be able to compete there must be enough customers to go around.

Yes, however right now there isn't enough to go around. The whole precedent of the discussion is how can companies still grow when there isnt enough to go around. I agree, it would be better to have 2 thriving business. However, when thats not possible then the companies need to look at other options.

>I agree that business needs to be stimulated. Maybe one way to do that is by lowering the corporate tax rate. That stimulus, however, needs to be combined with stimulus for the consumer as well. One can't work without the other.

I agree with you here completely.

"If this post needs to be moderated I would prefer it to be completly removed and not edited and butchered into a disney movie" - DorkZone Hero

[chuckakers 426]

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Have you decided to ignore that fact that CRA loans performed as well or better (on average) as loans not made under that program? I do suppose that fact gets in the way of a good theory.

Data sources, please.

Interestingly, some of the best performing loans (on average) were made to recent immigrants, both legal and illegal. That fact, however, also gets in the way of the theory about illegals only coming here to suck on the government teat, so people like to ignore it as well.

Not that it's part of this thread, but since you mention it:

California just reported that in Los Angeles County alone, illegal immigrants are costing the county $1 billion dollars a year in welfare programs, medical care, etc. That number doesn't even include education costs.

Texas just reported that statewide, the cost of medical care given to illegal immigrants sucks 10% of the entire state budget annually. Imagine that - just medical care for illegals knocking $600 million right out the states already very squeezed budget.

And with a tightening economy and massive layoffs, how much you wanna bet there are Americans that will take the jobs Americans just won't take.

Chuck Akers
D-10855
Houston, TX

[kelpdiver 2]

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California just reported that in Los Angeles County alone, illegal immigrants are costing the county $1 billion dollars a year in welfare programs, medical care, etc. That number doesn't even include education costs.

And how much are they contributing in the form of sales taxes and income taxes they don't file to get back?

That number by itself could be real or bullshit, but it sounds very good.

[billvon 3,119]

>You are telling em if i use capital from my company and invest it that
>the capital earnings i get from that investment can't be considered
>growth?

It represents financial growth. However, taking a million, giving it to a business and having them invest it is no different than taking a million, not giving it to a business and investing it. It does not represent economic growth.

In other words, if you want to make companies richer but not grow the economy, give them money and have them invest it.

>Diversification doesnt mean opening new markets, if means diversifying
>your intrests into different industries.

You might want to re-read what you just wrote. If you do not open new markets when you diversify, it is a pointless move.

The reason a company that makes tractors might diversify into making toys is not just to fill warehouses with toys. It is to sell toys to a new market, a market other than the one that buys tractors.

[chuckakers 426]

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California just reported that in Los Angeles County alone, illegal immigrants are costing the county $1 billion dollars a year in welfare programs, medical care, etc. That number doesn't even include education costs.

And how much are they contributing in the form of sales taxes and income taxes they don't file to get back?

That number by itself could be real or bullshit, but it sounds very good.

In both cases, the number comes from the state's own accounting office. And you're right, those numbers don't include sales taxes paid, or income/social security taxes paid while committing a felony offense by using someone elses social security number.

Oops.

Chuck Akers
D-10855
Houston, TX

[DanG 1]

Data sources please, yourself.

I'll look mine up and post it if you look yours up and post it..

- Dan G

[chuckakers 426]

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Data sources please, yourself.

I'll look mine up and post it if you look yours up and post it..

Tell me what part of my conversation needs substantiation and I'll gladly provide it.

Chuck Akers
D-10855
Houston, TX

[DanG 1]

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California just reported that in Los Angeles County alone, illegal immigrants are costing the county $1 billion dollars a year in welfare programs, medical care, etc. That number doesn't even include education costs.

Texas just reported that statewide, the cost of medical care given to illegal immigrants sucks 10% of the entire state budget annually. Imagine that - just medical care for illegals knocking $600 million right out the states already very squeezed budget.

How about both of the above?

And I agree that it's not part of this discussion, but you brought it up.

- Dan G

[nerdgirl 0]

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Government manipulation of the free market is what got us into this mess. In this case it was called the Community Reinvestment Act.

The problem with the “Blame CRA” hypothesis is that it’s not true. That is the facts do not support it … no matter how much people want to believe it.

“Risky mortgage products, not risky borrowers, are the root cause of the mortgage default crisis.” Default rates among recipients of CRA mortgages are lower than non-CRA mortgages.

“… CRA has always had critics, and they now suggest that the law went too far in encouraging banks to lend in struggling communities. Rhetoric aside, the argument turns on a simple question: In the current mortgage meltdown, did lenders approve bad loans to comply with CRA, or to make money?

“The evidence strongly suggests the latter. First, consider timing. CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. In the mid-1990s, new CRA regulations and a wave of mergers led to a flurry of CRA activity, but, as noted by the New America Foundation's Ellen Seidman (and by Harvard's Joint Center), that activity ‘largely came to an end by 2001.’ In late 2004, the Bush administration announced plans to sharply weaken CRA regulations, pulling small and mid-sized banks out from under the law's toughest standards. Yet sub-prime lending continued, and even intensified -- at the very time when activity under CRA had slowed and the law had weakened.

“Second, it is hard to blame CRA for the mortgage meltdown when CRA doesn't even apply to most of the loans that are behind it.

“Most important, the lenders subject to CRA have engaged in less, not more, of the most dangerous lending. Janet Yellen, president of the San Francisco Federal Reserve, offers the killer statistic: Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts. With this in mind, Yellen specifically rejects the ‘tendency to conflate the current problems in the sub-prime market with CRA-motivated lending.? CRA,’ Yellen says, ‘has increased the volume of responsible lending to low- and moderate-income households.’

“Yellen is hardly alone in concluding that the real problems came from the institutions beyond the reach of CRA. One of the only regulators who long ago saw the current crisis coming was the late Ned Gramlich, a former Fed governor. While Alan Greenspan was cheering the sub-prime boom, Gramlich warned of its risks and unsuccessfully pushed for greater supervision of bank affiliates. But Gramlich praised CRA, saying last year, ‘banks have made many low- and moderate-income mortgages to fulfill their CRA obligations, they have found default rates pleasantly low, and they generally charge low mortgages rates. Thirty years later, CRA has become very good business.’

“It's telling that, amid all the recent recriminations, even lenders have not fingered CRA. That's because CRA didn't bring about the reckless lending at the heart of the crisis. Just as sub-prime lending was exploding, CRA was losing force and relevance. And the worst offenders, the independent mortgage companies, were never subject to CRA -- or any federal regulator. Law didn't make them lend. The profit motive did.

“And that is not political correctness. It is correctness.”

Combine that with the reality of “Where are the highest foreclosure rates and what kind of loans are they? which recognizes the correlation between defaulting on home mortgages and inflated housing values.

Foreclosures rates in urban and rural areas of Mississippi (lowest per capita State income), *where the housing prices are reasonable,* has been on par with historical averages. Where housing prices have skyrocketed, e.g., California, which leads w/8 of the highest foreclosure communities, the foreclosures rates are the highest.

If a lower-income" mortgage is $150,000, it takes 3 of those loans defaulting to equal one $450,000 mortgage default or 6 of those loans defaulting to equal one $900,000 McMansion default (altho’ parts of California, $900k is a 1500ft^2 single-family home).

Historically, some very small percentage of home loans have defaulted and led to foreclosures (~1.5%, iirc), when the average default was some relatively smaller value, the impact could be adsorbed by the larger economic system; as mortgage defaults grew larger both in absolute number and average value, it’s a larger pressure on the system.

But we’ve already been through this once before.

The problem isn’t greed: greed is a relative ‘constant’ throughout history. The absence of oversight, the lack of tacit ability to implement, and apparent lack of consequences for those who engaged in behavior are the problem. Individual homeowners – whether a 2nd McMansion or rural poor – are experiencing consequences through loss of homes. How good greed (entrepreneurial capitalism is encouraged/fostered) versus how bad greed is minimized is the problem.

/Marg ... still invoking all those annoying facts

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[chuckakers 426]

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California just reported that in Los Angeles County alone, illegal immigrants are costing the county $1 billion dollars a year in welfare programs, medical care, etc. That number doesn't even include education costs.

Texas just reported that statewide, the cost of medical care given to illegal immigrants sucks 10% of the entire state budget annually. Imagine that - just medical care for illegals knocking $600 million right out the states already very squeezed budget.

How about both of the above?

And I agree that it's not part of this discussion, but you brought it up.

California stats from the state - http://antonovich.co.la.ca.us/issues/illegalimmigration/index.html

Texas stats from the state - http://www.window.state.tx.us/specialrpt/undocumented/4health.html

Looks like my figure of the state spending $600 million annually was wrong. It's $677 million.

I didn't see the totals in the Texas report, so here are some news headlines using the stats (presumably accurate since they quote the state of Texas)

http://www.statehousecall.org/illegal-immigrant-health-care

http://www.numbersusa.com/content/news/december-15-2008/illegal-immigrants-care-costs-texas-677-million.html

http://bordercontrol.blogspot.com/2008/12/texas-spends-677-million-per-year-for.html

http://www.alipac.us/modules.php?name=News&file=article&sid=3818

Sorry some of these links are to obviously anti-illegal immigrant websites, but I couldn't find the reference to the state of Texas report in the mainstream media using a google search. I guess they chose not to run the story. Hmmm.

Your turn. You posted:

>>>Have you decided to ignore that fact that CRA loans performed as well or better (on average) as loans not made under that program? I do suppose that fact gets in the way of a good theory.

Interestingly, some of the best performing loans (on average) were made to recent immigrants, both legal and illegal.<<<


Go for it.

Chuck Akers
D-10855
Houston, TX