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Bailouts Don’t Work - Peter Schiff Explains Why


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8 minutes ago, Warlord said:

Say NO to bailouts! 

 

Just posted this on another hpc thread. 

vg ( long) interview with Schiff

Economist Blasts The Fed, Stimulus, Bitcoin & Makes Bold Predictions

https://www.youtube.com/watch?v=mzDKHi-wEoc&list=RDCMUCIHdDJ0tjn_3j-FS7s_X1kQ

Edit: just realised your quoted vid is from same interview 

Edited by Saving For a Space Ship
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Posted (edited)

Transport for London secures emergency £1.6bn bailout

Quote

 

Transport for London (TfL) has secured £1.6bn in emergency funding to keep Tube and bus services running until September.

Under the bailout's terms, London mayor Sadiq Khan is expected to restore a full Underground service as soon as possible.

He has also agreed to increase bus and Tube fares by 1% above inflation.

Mr Khan had urged the government to provide support or risk TfL running out of money.

https://www.bbc.co.uk/news/uk-england-london-52670539

Bailouts don't work, they just delay the inevitable!

 

Edited by Warlord
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Everyone will want a bailout come October when the furlough scheme is pulled. 

Just another symptom of our current non capitalist system where no one can be allowed to fail and a companies money is theirs and so is taxpayers money too.

The banks started all this bailout rubbish in 2008 when we handed them £500 billion.

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6 minutes ago, Social Justice League said:

Everyone will want a bailout come October when the furlough scheme is pulled. 

Just another symptom of our current non capitalist system where no one can be allowed to fail and a companies money is theirs and so is taxpayers money too.

The banks started all this bailout rubbish in 2008 when we handed them £500 billion.

I suspect they will extend the furlough scheme or turn into a Universal Basic Income (UBI). These schemes never go away once started.

 

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2 minutes ago, Warlord said:

I suspect they will extend the furlough scheme or turn into a Universal Basic Income (UBI). These schemes never go away once started.

 

Yeah I agree with you.  I think a Universal Basic Income (UBI) is coming, as it's the only way, going forward, to avoid riots and systematic breakdown in society, imo.

Maybe this virus outbreak is the start of the automation age, where many/most current employees are no longer needed to fill non job roles.

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8 minutes ago, Social Justice League said:

Yeah I agree with you.  I think a Universal Basic Income (UBI) is coming, as it's the only way, going forward, to avoid riots and systematic breakdown in society, imo.

Maybe this virus outbreak is the start of the automation age, where many/most current employees are no longer needed to fill non job roles.

Interesting set of thoughts.  I have to agree on the issue of riots and societal breakdown; UBI would be a way forward.  However I could see it coming with strict location (phone based) restrictions on movement as a way of keeping the Proles in their place.  Stay where you are meant to be and you get UBI, move outside that perimeter and you lose your entitlement to UBI.

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Posted (edited)
15 minutes ago, Social Justice League said:

Yeah I agree with you.  I think a Universal Basic Income (UBI) is coming, as it's the only way, going forward, to avoid riots and systematic breakdown in society, imo.

Maybe this virus outbreak is the start of the automation age, where many/most current employees are no longer needed to fill non job roles.

+1

Already their is a huge demand for foodbanks and charity. I don't think we can cope with mass underemployment. It's going to get ugly.

 

Edited by Warlord
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Bailouts do work.

Bailouts  have an economic foundation, but they are primarily a political action. It keeps the national economy afloat and allows a state to function. Maintaining a functioning state is the governments primary purpose.....I state the bleeding obvious I know, but that's what a governments job is.

We all in our daily lives need to keep our heads above water and carry on. Businesses also do the same and take all sorts of measures to stay afloat........long term of course?

 

Since GFC1 the bailouts have kept things afloat, it defies logic sometimes how they do it, but achieving that aim by kicking the economy down the road again is what they are aiming to do. Don't forget, the UK economy had more debt coming out of WW2 than they have now and didn't disappear. Bailouts then we're called 'State Subsidies'
 

Are the bailouts more of the same, well yes, it's baked into the system of how they manage and only stops when it fails, It hasn't failed yet. The political aim is to make sure your state is still standing whilst others fail, it's a political/economic war on a global scale.

The world will  be one of massively changed national alliances in the coming years. Bailouts aren't the issue, who's left standing is..._

 

 

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2 minutes ago, Odakyu-sen said:

UBI is a bailout, too!

Bailout everyone. No limits! 

That's the thinking at the Treasury and the BoE I kid you not. They keep saying they will do "'whatever it takes"' which is code for all sorts of bailouts and interventions.

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3 minutes ago, Odakyu-sen said:

UBI is a bailout, too!

I can see that point of view. You might think that if there was a UBI, you would have the choice of 'switching off' the UBI and simply reduce taxes. But that would only leave cash in the pockets of well off people where as the thrust for UBI is to give some independence to all groups of people. Though it does largely seem to be proposed by people in niche non-jobs like artisan baker or beard oil distiller as opposed to people who need it like housewives, carers etc

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Looking at the video is bankruptcy different in the US (I know its called chapter 11?) because Schiff states that insolvency means a business can walk away from its debt, however that's not true in the UK. if you become insolvent, you can try and restructure your debt but there is no automatic write off that you can bounce back from free of debt after a 12 month insolvency period in the way I think Schiff is arguing 

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14 minutes ago, DiggerUK said:

Bailouts do work.

Bailouts  have an economic foundation, but they are primarily a political action. It keeps the national economy afloat and allows a state to function. Maintaining a functioning state is the governments primary purpose.....I state the bleeding obvious I know, but that's what a governments job is.

We all in our daily lives need to keep our heads above water and carry on. Businesses also do the same and take all sorts of measures to stay afloat........long term of course?

 

Since GFC1 the bailouts have kept things afloat, it defies logic sometimes how they do it, but achieving that aim by kicking the economy down the road again is what they are aiming to do. Don't forget, the UK economy had more debt coming out of WW2 than they have now and didn't disappear. Bailouts then we're called 'State Subsidies'
 

Are the bailouts more of the same, well yes, it's baked into the system of how they manage and only stops when it fails, It hasn't failed yet. The political aim is to make sure your state is still standing whilst others fail, it's a political/economic war on a global scale.

The world will  be one of massively changed national alliances in the coming years. Bailouts aren't the issue, who's left standing is..._

 

 

Bailouts don't work as Schiff points out in the video. They simply load the bailed out company with more debt and obligations which makes them uncompetitive.  The banks are still zombie banks for example and will likely fail again during the next 'crisis' despite being bailed out in 2008.

If bailouts were so necessary why did they let Lehmans go bust? And have we really missed them? Did letting them go down interrupt the function of the state?

 

 

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11 minutes ago, regprentice said:

Looking at the video is bankruptcy different in the US (I know its called chapter 11?) because Schiff states that insolvency means a business can walk away from its debt, however that's not true in the UK. if you become insolvent, you can try and restructure your debt but there is no automatic write off that you can bounce back from free of debt after a 12 month insolvency period in the way I think Schiff is arguing 

I'm not an insolvency practitioner... I think there are ways to negotiate and write off the debts through various orders but yeah it's probably not the same as the US.

There are also other benefits he mentions in the video like someone salvaging the company and a new management team with fresh ideas, entrepreneurs buying the assets etc.

 

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Schiff argues that bailouts don't work. All he is doing is following his free market, pro austerity, libertarian ideals. He shows and proves nothing, he is simply wrong.

Bailouts may or may not make businesses uncompetitive and lead to their closure, but it sure as hell keeps the pay coming in for the workforce. State subsidies are always old wine in new bottles.

That bill is always paid by the citizen anyway. Profits are always privatised and debts are always nationalised.......same as it ever was. 
Bailouts, State Subsidies,  Keynesian Policies,  Welfare State, Bread Wine 'n Olives.....put whatever label you like on the bottle, have been utilised for millennia because they provide a political solution to what is, at its base, a political, not an economic problem to resolve.

Its an appreciation that it is in the main a political problem for the government to resolve, not an economic issue that needs to be understood here..._

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27 minutes ago, DiggerUK said:

Schiff argues that bailouts don't work. All he is doing is following his free market, pro austerity, libertarian ideals. He shows and proves nothing, he is simply wrong.


Bailouts, State Subsidies,  Keynesian Policies,  Welfare State, Bread Wine 'n Olives.....put whatever label you like on the bottle, have been utilised for millennial

If it's so successful Digger how come the Soviet Union collapsed? How come Venezuela, Zimbabwe, Argentina etc. aren't economic powerhouses ? 

 

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States and Empires collapse when they get it wrong. If you compare the  Soviet Union to China you can see the truth in that statement.

 

Bailouts of any sort work, until they don't work, then you have to change. It's a States ability to make the wise changes at the right time that makes the difference between success and failure of that State. 
Having draconian trade embargoes against you doesn't help, corrupt state machines harm a States ability to provide good governance as well.

Schiff can't even see how foolish austerity has been, he believes that only the free markets can provide for all needs, which is just crazy. The main concern of Americans is not that they might contract Coronavirus, but that they won't have the money for hospital bills.

He talks right wing nonsense in a way that even the most right wing Tories have given up on. He's a practiced publicist, not a guru of quality..._

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54 minutes ago, Warlord said:

If it's so successful Digger how come the Soviet Union collapsed? How come Venezuela, Zimbabwe, Argentina etc. aren't economic powerhouses ? 

 

https://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/

We are now heading down that road.

"Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders. When a country like Indonesia or South Korea or Russia grows, so do the ambitions of its captains of industry. As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon—correctly, in most cases—that their political connections will allow them to push onto the government any substantial problems that arise."
 

If this is not the endgame then it must be pretty near with the shtf here and apparently 1 in 4 Americans loosing their jobs (insane) something has to give.

We have puffed up the housing market > puffed up the banks > puffed up housing again > put it on the government tab > now we have a real crisis.

The pressure is going to be too much and I think Boris is too much of a crowd pleaser to take a hard line.

Therefore will will keep going until we simply cannot do so maybe thats 100/150/200% of GDP then when we hit the limit it is going to get quite nasty.



 

Edited by Fromage Frais
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Posted (edited)
8 minutes ago, Fromage Frais said:

https://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/
 



We have puffed up the housing market > puffed up the banks > puffed up housing again > put it on the government tab > now we have a real crisis.

The pressure is going to be too much and I think Boris is too much of a crowd pleaser to take a hard line.

Therefore will will keep going until we simply cannot do so maybe that 100/150/200% of GDP then when we hit the limit it is going to get quite nasty.

 

One thing they have in common: Massive stimulus, gov't programs, using the printing press (inflation). We're adopting all those policies.. it's sheer madness but there you go.

We will all be poorer as a result of this  .One thing that bothers is that we've had 10 years of ''austerity' (i.e a declining deficit which Brown  left Cameron after the mess in 2008) and yet here they are blowing a massive hole in budget and squandering all those MODEST cuts made during 2010-2020.

If people thought that last 10 years of austerity was bad they haven't seen anything yet. We will be paying this debt off for the next 20 years.

What we need is a real leader who can cut the size of the bloated government (£12bn on foreign aid for example!!), cut taxes, cut regulations and balance the books as soon as possible.  Otherwise we're headed for a difficult few years and like you I doubt Boris will do anything. He's a socialist who loves to announce new government spending and initiatives.  It will end in tears for him.

 

Edited by Warlord
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Warlord,  you and Locke should just get a room. Which bits of bloated government do you want cutting?  Tax cuts for who and why? Cut which regulations, why, who and how will it benefit, me personally, I like the idea of emergency services,  but they have to be paid for.  Oh I know, them wot 'ave der money get the services, all others can just take their chances an' phuck off. No pressure,  take your time and don't come back without full answers with projected savings......otherwise you are just saying "something must be done" without the answers.....like some others round here.

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3 hours ago, Warlord said:

Bailouts don't work as Schiff points out in the video. They simply load the bailed out company with more debt and obligations which makes them uncompetitive.  The banks are still zombie banks for example and will likely fail again during the next 'crisis' despite being bailed out in 2008.

If bailouts were so necessary why did they let Lehmans go bust? And have we really missed them? Did letting them go down interrupt the function of the state?

 

 

That sounds like the essence of the private equity model - buy an asset, load up with debt and take your profits out immediately. Then try to offload onto another sucker.

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  • 417 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


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