Here we go again (Low low down payment)

[CA renter]

[quote=FlyerInHi]CAr, you often bitterly complain about double standards between how businesses operate and how individuals are expected to behave.

Yes, for businesses and their lawyers especially bankruptcy is foreseeable. That’s why business people form corporations so that their personal wealth is insulated.

Individuals, and municipalities should seek bankruptcy whenever best to protect standards of living. Why live on macaroni and cheese just to pay the creditors? That’s pretty stupid, IMO.

For municipalities, why cut services to the core where citizens have to pay taxes and have little services while creditors are paid in full?[/quote]

I’m not in favor of double standards here, either. I think that BK should be the very last possible option for both individuals and corporations/govt entites, and it should only be available once all of the relevant parties have given up everything they might have gained by their irresponsible and reckless behavior.

The only possible exception to this would be for individuals who are hit with huge medical costs, or some other unforeseen catastrophic event (death, disability, etc.)

I’m also greatly opposed to limited liability if there is no commensurate limit to the upside. Risks and rewards should always be balanced (real personal risks, gambling with other people’s money does not constitute risk, BTW) .

And costs can be dramatically reduced if we eliminate the corruption that exists between private entities and the govt. We do not necessarily need to reduce services dramatically. While some govt entities are run very well, others are drowning in corruption.

[Anonymous]

[quote=FormerSanDiegan][quote=CA renter]

This fully planned economic event (the Great Recession, and even the stock market bubble, IMO) …

[/quote]

This is the sentence where I stopped reading. Anyone else read beyond this ?[/quote]

It’s good that she qualifies things with “IMO” – otherwise we would all accept it as fact.

[Anonymous]

[quote=CA renter]I’m also greatly opposed to limited liability if there is no commensurate limit to the upside. [/quote]

You never cease to have strong opinions about things that you simply do not understand.

If companies were not limited liability, then shareholders (including CalPERS) would be on the hook for the debts of every company they invest in. If someone purchases a stock, they could lose more than what they paid for it. Please explain how that would be a good thing.

Anybody who lends money to a limited liability company knows the rules and risks. If they don’t like the risks, they don’t lend. It’s that simple. The system works, it has worked for centuries.

And why would you want to limit the upside of an investment? What would happen when a company reaches this artificial upside limit? It just stops?

Sorry folks, we’d like to make the iPhone you want but Apple can’t do any more hiring because it’s not fair that Apple is successful…

This Marxist planned economy fantasy of yours is just nonsense.

[quote]And costs can be dramatically reduced if we eliminate the corruption that exists between private entities and the govt.[/quote]

Excellent! You are in favor of eliminating collective bargaining for public-sector unions.

[CA renter]

[quote=harvey][quote=CA renter]I’m also greatly opposed to limited liability if there is no commensurate limit to the upside. [/quote]

You never cease to have strong opinions about things that you simply do not understand.[/quote]

This is particularly hilarious considering the fact that you constantly opine about things that you know little/nothing about, and you don’t even qualify it with an “IMO,” you make declarative statements as if your opinions were facts. You have yet to prove me wrong about something; no, your opinions and name-calling don’t count as proof of anything. It’s particularly humorous when the subject is something you *clearly* know nothing at all about. This is proven by the fact that you cannot find anything to back up most of your statements (you hate it when I “copy and post” data and links that back up what I’m saying, too! In your wacky world, opinions are more important than facts.), and your statements are so incredibly false and ridiculous that it appears you’re more troll than actual poster who wants to engage in genuine debate.

[quote=harvey]If companies were not limited liability, then shareholders (including CalPERS) would be on the hook for the debts of every company they invest in. If someone purchases a stock, they could lose more than what they paid for it. Please explain how that would be a good thing.

Anybody who lends money to a limited liability company knows the rules and risks. If they don’t like the risks, they don’t lend. It’s that simple. The system works, it has worked for centuries.

And why would you want to limit the upside of an investment? What would happen when a company reaches this artificial upside limit? It just stops?

Sorry folks, we’d like to make the iPhone you want but Apple can’t do any more hiring because it’s not fair that Apple is successful…

This Marxist planned economy fantasy of yours is just nonsense.[/quote]

There is no reason for risks to be divorced from rewards. None. The fact that you suggest that they should be is indicative of your ignorance. What would happen if we didn’t have limited liability? People would be more careful about where they invest their money, and speculation would be reduced dramatically — which is a good thing. It should be incumbent upon the shareholders (and executives and other responsible employees) to do their due diligence and make wise — and responsible — choices; why should creditors be the only ones responsible for knowing what they’re getting into?

It would also dramatically reduce the careless risks taken by those who put profit above all else — risks that, under our current system, are born by those who often have no say in the decisions that cause so many of these economic and environmental and legal problems (like cars that catch on fire, or accelerate for no reason; or when mortgages and their derivatives blow up the economic system; or when pollutants are pumped into potable water sources…). If people knew they could be held personally responsible for these things, I can assure you that they would make far better decisions. More than anything, this should pertain to the major decision makers (who are often the largest individual shareholders) more than it does to the average individual stock investor, IMO. The decision makers should have the greatest liability.

And your reading comprehension problem rears its ugly head, yet again. I’ve never said that limited liability shouldn’t exist at all, just that the rewards and risks should be balanced. If the risks are limited, then the rewards should be limited as well. And I’m referring to the broader concept of limited liability, too, not just where debt and creditors are concerned. Liability for tort actions — and who is responsible for insurance and legal defense costs of an individual officer/executive/shareholder — also fall under this umbrella. Limit the liability, limit the rewards.

[quote=harvey][quote]And costs can be dramatically reduced if we eliminate the corruption that exists between private entities and the govt.[/quote]

Excellent! You are in favor of eliminating collective bargaining for public-sector unions.[/quote]

Absolutely! I want labor’s money out of politics, too; though fraud, waste, and abuse are more likely to happen between private contractors (among a host of other private interests) and public entities because the private stakeholders are less scrutinized and better protected than public employees. We can eliminate labor’s money just as soon as capital’s money is out (and every other special interest group’s money, too) — ALL OF IT. Until then, labor absolutely needs to have a seat at the table.

[livinincali]

[quote=CA renter]
Absolutely! I want labor’s money out of politics, too; though fraud, waste, and abuse are more likely to happen between private contractors (among a host of other private interests) and public entities because the private stakeholders are less scrutinized and better protected than public employees. We can eliminate labor’s money just as soon as capital’s money is out (and every other special interest group’s money, too) — ALL OF IT. Until then, labor absolutely needs to have a seat at the table.[/quote]

It’s too bad the the one paying the bills (the common taxpayer) doesn’t have a seat at the table. Whether the politician is beholden to special interests or public labor unions the result for the tax payer is the same. Take more from us to give to some special group. Whether your corporate special interest or public sector union, in my eyes you’re both greedy leeches.

[Anonymous]

[quote=CA renter]If the risks are limited, then the rewards should be limited as well.[/quote]

It’s pretty clear that your worldview is driven by a contempt for successful people.

But since, by your own declaration, you have all the answers, please explain to us how your solution to this non-problem would work.

Let’s start with a simple and familiar example:

Explain to us how Bill Gates’ reward should be limited.

This is a softball. Someone as smart as you should knock it out of the park.

[spdrun]

Explain to us how Bill Gates’ reward should be limited.

He should be required to pay a decent level of tax as existed through the 1970s. And people still innovated and made money in the 50s and 60s.

[Anonymous]

[quote=spdrun]

Explain to us how Bill Gates’ reward should be limited.

He should be required to pay a decent level of tax as existed through the 1970s. And people still innovated and made money in the 50s and 60s.[/quote]

In the 50’s and 60’s capital gains rates were about 25%. That seems to be a reasonable number, but a 25% tax would not have “limited” Gates’ rewards.

http://krugman.blogs.nytimes.com/2012/01/18/the-history-of-capital-gains-taxes/

There were no limits on ROI, which is what CAR is advocating.

So we have a swing and a miss.

Anybody else care to step up to the plate?

[poorgradstudent]

Capital Gains should be taxed as regular income.

[FlyerInHi]

If you look back at history, the reason bankruptcy is constitutionally enshrined is because our Founders wanted to avoid “debt servitude” that was common in Europe and encourage a commercial republic. Debtors could have their debts discharged at the Federal level and start anew, without dealing with contradictory state laws.

[CA renter]

[quote=FlyerInHi]If you look back at history, the reason bankruptcy is constitutionally enshrined is because our Founders wanted to avoid “debt servitude” that was common in Europe and encourage a commercial republic. Debtors could have their debts discharged at the Federal level and start anew, without dealing with contradictory state laws.[/quote]

I understand the reasons behind bankruptcy laws, but think that they have become so warped that they are now abused on a regular basis. It’s one thing to enable a farmer to declare BK if a horrible drought wipes out everything he owns, or if someone becomes so ill that they cannot work and have tremendous medical bills to boot; but it’s totally unacceptable (IMO) to allow people who have simply overspent on all manner of vacations, real estate, jewelry, cars, fancy restaurants, etc. to still all of their creditors.

[CA renter]

[quote=poorgradstudent]Capital Gains should be taxed as regular income.[/quote]

Exactly.

[CA renter]

[quote=harvey][quote=CA renter]If the risks are limited, then the rewards should be limited as well.[/quote]

It’s pretty clear that your worldview is driven by a contempt for successful people.

But since, by your own declaration, you have all the answers, please explain to us how your solution to this non-problem would work.

Let’s start with a simple and familiar example:

Explain to us how Bill Gates’ reward should be limited.

This is a softball. Someone as smart as you should knock it out of the park.[/quote]

If a person wants to be protected by limited liability laws, and if they want to put other people’s money at risk, then their compensation should reflect that. IMO, the top pay of an owner/executive in a limited liability corporation should be tied to the compensation of the lowest-paid person at the company. One could also include the compensation and security of shareholders and creditors. There are many possible ways to go about balancing risks and rewards.

[FlyerInHi]

[quote=CA renter]
I understand the reasons behind bankruptcy laws, but think that they have become so warped that they are now abused on a regular basis. It’s one thing to enable a farmer to declare BK if a horrible drought wipes out everything he owns, or if someone becomes so ill that they cannot work and have tremendous medical bills to boot; but it’s totally unacceptable (IMO) to allow people who have simply overspent on all manner of vacations, real estate, jewelry, cars, fancy restaurants, etc. to still all of their creditors.[/quote]

You’re injecting morality into something that has no basis in law.

What about if the medical bills are due to substance abuse and unwillingness to keep a job?

Basically lenders can lend secured or unsecured. They can also ask for guarantees or even pay for purchases directly. But they can’t force good financial management or low risk taking.

High risk taking with bankruptcy protection is actually proven to generate higher economic output.

[Anonymous]

[quote=CA renter]If a person wants to be protected by limited liability laws, and if they want to put other people’s money at risk, then their compensation should reflect that. IMO, the top pay of an owner/executive in a limited liability corporation should be tied to the compensation of the lowest-paid person at the company. One could also include the compensation and security of shareholders and creditors. There are many possible ways to go about balancing risks and rewards.[/quote]

Wow.

Corporate limited liability protects shareholders. It means that shareholders can lose up to 100% of their investment, but not more.

You are a shareholder. Your pension fund is a shareholder. Millions of ordinary Americans are shareholders. Limited liability applies to all shareholders.

You are protected by limited liability because you cannot lose more than what you invested. If one of your investments fails, no one can sue you and ask for more money. If a CalPERS manager chooses a losing stock, nobody will come after you for compensation. That’s a good thing.

This sentence:

[quote]If a person wants to be protected by limited liability laws, and if they want to put other people’s money at risk […][/quote]

…is complete gibberish.

The person protected by limited liability IS the “other” person providing money.

[quote]IMO, the top pay of an owner/executive in a limited liability corporation should be tied to the compensation of the lowest-paid person at the company.[/quote]

Oh, so now I’m seeing where the gibberish originates. Of course, it’s your disdain for CEOs. Except that limited liability laws have nothing to do with executives or employees. They don’t protect executives from anything.

Yes, there are laws that protect managers from liability, but those aren’t what is called limited liability. These laws protect managers from shareholder lawsuits. They protect managers from being sued when businesses don’t do as well as expected. They free managers from the fear of making mistakes.

You once said that you are a manager. That means the shareholders have agreed to compensate you for services and have entrusted you to make decisions. As you know, sometimes things don’t work out because of things outside your control. Would you be a manager if you could get sued when your employees don’t perform or some external factor caused your project to fail? Few people would.

Legally, you are in the same category as the CEO, CFO, or any other manager. Yes, you are one of them! You cannot be sued by shareholders if they lose their investment. They can fire you but they can’t make you compensate them if they decide that you did a poor job as a manager. That’s a good thing.

Limited liability actually does much to protect employees. It is quite common for corporations to continue operating under bankruptcy protection – some of the major airlines have been operating for years during bankruptcy restructuring. Without limited liability, these companies would simply shut down and there would be no jobs.

You really need to learn about how this stuff works before you rant about dismantling the entire economy and replacing it with something you can’t even describe.

[Author]

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