[davelj]

[quote=CA renter]
When you’re talking about debt used for consumption, all they’ve done is pulled demand forward, and made it more expensive to pay for things. They have done us NO favors by forcing people into debt in order to survive. Those of us who try to live without debt are forced to pay higher prices because we’re competing with idiots who don’t understand that buying a hamburger today for $1.00 means paying $1.25 in the future, while still needing to buy more burgers in the meantime.
[/quote]

I’m curious. What are you not able to purchase today for what you deem to be a reasonable price that you would like to be able to purchase?

To use the example at the root of this blog, if you’re willing to stay put for several years, buying a house right now, given current interest rates, is quite reasonable. In fact, historically, the monthly cost of owning a house is below the historical median. So, I will assume that housing is not the issue it was for you (and me and most others here at the Pigg) five years ago.

I agree that we have too much debt. But I’d also point out that not all debt is bad and, in fact, a decent portion of it is reasonable give the intended uses. (Although I’ll agree that a lot of consumer debt – particularly revolving credit card and HELOC debt – is not good.) But, when you state that, “They [The Powers that Be?] have done us NO favors by forcing people into debt in order to survive,” this seems more than a bit extreme. Who, exactly, can’t “survive” because they’re unwilling to take on debt?

[davelj]

[quote=CA renter]
When you’re talking about debt used for consumption, all they’ve done is pulled demand forward, and made it more expensive to pay for things. They have done us NO favors by forcing people into debt in order to survive. Those of us who try to live without debt are forced to pay higher prices because we’re competing with idiots who don’t understand that buying a hamburger today for $1.00 means paying $1.25 in the future, while still needing to buy more burgers in the meantime.
[/quote]

I’m curious. What are you not able to purchase today for what you deem to be a reasonable price that you would like to be able to purchase?

To use the example at the root of this blog, if you’re willing to stay put for several years, buying a house right now, given current interest rates, is quite reasonable. In fact, historically, the monthly cost of owning a house is below the historical median. So, I will assume that housing is not the issue it was for you (and me and most others here at the Pigg) five years ago.

I agree that we have too much debt. But I’d also point out that not all debt is bad and, in fact, a decent portion of it is reasonable give the intended uses. (Although I’ll agree that a lot of consumer debt – particularly revolving credit card and HELOC debt – is not good.) But, when you state that, “They [The Powers that Be?] have done us NO favors by forcing people into debt in order to survive,” this seems more than a bit extreme. Who, exactly, can’t “survive” because they’re unwilling to take on debt?

[davelj]

[quote=CA renter]
When you’re talking about debt used for consumption, all they’ve done is pulled demand forward, and made it more expensive to pay for things. They have done us NO favors by forcing people into debt in order to survive. Those of us who try to live without debt are forced to pay higher prices because we’re competing with idiots who don’t understand that buying a hamburger today for $1.00 means paying $1.25 in the future, while still needing to buy more burgers in the meantime.
[/quote]

I’m curious. What are you not able to purchase today for what you deem to be a reasonable price that you would like to be able to purchase?

To use the example at the root of this blog, if you’re willing to stay put for several years, buying a house right now, given current interest rates, is quite reasonable. In fact, historically, the monthly cost of owning a house is below the historical median. So, I will assume that housing is not the issue it was for you (and me and most others here at the Pigg) five years ago.

I agree that we have too much debt. But I’d also point out that not all debt is bad and, in fact, a decent portion of it is reasonable give the intended uses. (Although I’ll agree that a lot of consumer debt – particularly revolving credit card and HELOC debt – is not good.) But, when you state that, “They [The Powers that Be?] have done us NO favors by forcing people into debt in order to survive,” this seems more than a bit extreme. Who, exactly, can’t “survive” because they’re unwilling to take on debt?

[davelj]

[quote=CA renter]
When you’re talking about debt used for consumption, all they’ve done is pulled demand forward, and made it more expensive to pay for things. They have done us NO favors by forcing people into debt in order to survive. Those of us who try to live without debt are forced to pay higher prices because we’re competing with idiots who don’t understand that buying a hamburger today for $1.00 means paying $1.25 in the future, while still needing to buy more burgers in the meantime.
[/quote]

I’m curious. What are you not able to purchase today for what you deem to be a reasonable price that you would like to be able to purchase?

To use the example at the root of this blog, if you’re willing to stay put for several years, buying a house right now, given current interest rates, is quite reasonable. In fact, historically, the monthly cost of owning a house is below the historical median. So, I will assume that housing is not the issue it was for you (and me and most others here at the Pigg) five years ago.

I agree that we have too much debt. But I’d also point out that not all debt is bad and, in fact, a decent portion of it is reasonable give the intended uses. (Although I’ll agree that a lot of consumer debt – particularly revolving credit card and HELOC debt – is not good.) But, when you state that, “They [The Powers that Be?] have done us NO favors by forcing people into debt in order to survive,” this seems more than a bit extreme. Who, exactly, can’t “survive” because they’re unwilling to take on debt?

[davelj]

[quote=CA renter]
Why are these pensions guaranteed? Because that is what was agreed upon decades ago. Because that is what drew these employees to these jobs. Govt workers earned their benefits and negotiated for them in good faith. They’ve all given up other things (money, vacation, stipends, etc.) in exchange for their retirement benefits because they negotiate for their entire compensation package when they determine what to get and give up.
[/quote]

Here’s the problem with your argument: Government workers did NOT “negotiate” for these benefits in good faith. They “negotiated” for these benefits with politicians who were sitting on the SAME SIDE OF THE TABLE. Which is exactly why so many states don’t allow for collective bargaining among municipal employees – they understand this. They also understand that even in the absence of collective bargaining, the politicians making these decisions will STILL be unduly influenced by the public employees’ representatives because they represent a huge and vocal voting bloc.

It’s kind of like saying that corporate boards of directors negotiate in good faith with the CEOs of their companies. It’s a joke. The board determines the CEO’s pay, but the CEO has enormous influence over the board’s pay – they’re all in bed together. So, it’s just a matter of trying to minimize how bad the outcome is going to be. But, despite how flawed that arrangement is… at least it’s in the PRIVATE sector. Certainly we shouldn’t be imposing a similar flawed dynamic on the taxpayers, no?

But “good faith” negotiations? That’s hysterical!

[davelj]

[quote=CA renter]
Why are these pensions guaranteed? Because that is what was agreed upon decades ago. Because that is what drew these employees to these jobs. Govt workers earned their benefits and negotiated for them in good faith. They’ve all given up other things (money, vacation, stipends, etc.) in exchange for their retirement benefits because they negotiate for their entire compensation package when they determine what to get and give up.
[/quote]

Here’s the problem with your argument: Government workers did NOT “negotiate” for these benefits in good faith. They “negotiated” for these benefits with politicians who were sitting on the SAME SIDE OF THE TABLE. Which is exactly why so many states don’t allow for collective bargaining among municipal employees – they understand this. They also understand that even in the absence of collective bargaining, the politicians making these decisions will STILL be unduly influenced by the public employees’ representatives because they represent a huge and vocal voting bloc.

It’s kind of like saying that corporate boards of directors negotiate in good faith with the CEOs of their companies. It’s a joke. The board determines the CEO’s pay, but the CEO has enormous influence over the board’s pay – they’re all in bed together. So, it’s just a matter of trying to minimize how bad the outcome is going to be. But, despite how flawed that arrangement is… at least it’s in the PRIVATE sector. Certainly we shouldn’t be imposing a similar flawed dynamic on the taxpayers, no?

But “good faith” negotiations? That’s hysterical!

[davelj]

[quote=CA renter]
Why are these pensions guaranteed? Because that is what was agreed upon decades ago. Because that is what drew these employees to these jobs. Govt workers earned their benefits and negotiated for them in good faith. They’ve all given up other things (money, vacation, stipends, etc.) in exchange for their retirement benefits because they negotiate for their entire compensation package when they determine what to get and give up.
[/quote]

Here’s the problem with your argument: Government workers did NOT “negotiate” for these benefits in good faith. They “negotiated” for these benefits with politicians who were sitting on the SAME SIDE OF THE TABLE. Which is exactly why so many states don’t allow for collective bargaining among municipal employees – they understand this. They also understand that even in the absence of collective bargaining, the politicians making these decisions will STILL be unduly influenced by the public employees’ representatives because they represent a huge and vocal voting bloc.

It’s kind of like saying that corporate boards of directors negotiate in good faith with the CEOs of their companies. It’s a joke. The board determines the CEO’s pay, but the CEO has enormous influence over the board’s pay – they’re all in bed together. So, it’s just a matter of trying to minimize how bad the outcome is going to be. But, despite how flawed that arrangement is… at least it’s in the PRIVATE sector. Certainly we shouldn’t be imposing a similar flawed dynamic on the taxpayers, no?

But “good faith” negotiations? That’s hysterical!

[davelj]

[quote=CA renter]
Why are these pensions guaranteed? Because that is what was agreed upon decades ago. Because that is what drew these employees to these jobs. Govt workers earned their benefits and negotiated for them in good faith. They’ve all given up other things (money, vacation, stipends, etc.) in exchange for their retirement benefits because they negotiate for their entire compensation package when they determine what to get and give up.
[/quote]

Here’s the problem with your argument: Government workers did NOT “negotiate” for these benefits in good faith. They “negotiated” for these benefits with politicians who were sitting on the SAME SIDE OF THE TABLE. Which is exactly why so many states don’t allow for collective bargaining among municipal employees – they understand this. They also understand that even in the absence of collective bargaining, the politicians making these decisions will STILL be unduly influenced by the public employees’ representatives because they represent a huge and vocal voting bloc.

It’s kind of like saying that corporate boards of directors negotiate in good faith with the CEOs of their companies. It’s a joke. The board determines the CEO’s pay, but the CEO has enormous influence over the board’s pay – they’re all in bed together. So, it’s just a matter of trying to minimize how bad the outcome is going to be. But, despite how flawed that arrangement is… at least it’s in the PRIVATE sector. Certainly we shouldn’t be imposing a similar flawed dynamic on the taxpayers, no?

But “good faith” negotiations? That’s hysterical!

[davelj]

[quote=CA renter]
Why are these pensions guaranteed? Because that is what was agreed upon decades ago. Because that is what drew these employees to these jobs. Govt workers earned their benefits and negotiated for them in good faith. They’ve all given up other things (money, vacation, stipends, etc.) in exchange for their retirement benefits because they negotiate for their entire compensation package when they determine what to get and give up.
[/quote]

Here’s the problem with your argument: Government workers did NOT “negotiate” for these benefits in good faith. They “negotiated” for these benefits with politicians who were sitting on the SAME SIDE OF THE TABLE. Which is exactly why so many states don’t allow for collective bargaining among municipal employees – they understand this. They also understand that even in the absence of collective bargaining, the politicians making these decisions will STILL be unduly influenced by the public employees’ representatives because they represent a huge and vocal voting bloc.

It’s kind of like saying that corporate boards of directors negotiate in good faith with the CEOs of their companies. It’s a joke. The board determines the CEO’s pay, but the CEO has enormous influence over the board’s pay – they’re all in bed together. So, it’s just a matter of trying to minimize how bad the outcome is going to be. But, despite how flawed that arrangement is… at least it’s in the PRIVATE sector. Certainly we shouldn’t be imposing a similar flawed dynamic on the taxpayers, no?

But “good faith” negotiations? That’s hysterical!

[davelj]

[quote=Allan from Fallbrook]
While we don’t have the space to get into all of the details, I think its safe to say that Wall Street’s mission and priorities became tied to short-term bonuses and compensation and thus we saw the explosion of investment products, like CDOs, MBS, etc, that produced the largest bonuses for groups like Lehman, Bear and Goldman Sachs. Combined with the insane amount of leverage that was present and the inherently poor quality of the products themselves, the meltdown became inevitable.

I think if you go back in time and look at groups like Goldman, Merrill and Bear Stearns when they were partnerships and not publicly floated corporations and back when leverage was reasonable and controllable, I think they did a much better job of allocating capital. [/quote]

Incentives matter.

When you combine huge financial companies with legions of employees for whom the present value of their cash compensation is greater than the present value of their ownership stake… you’re begging for trouble.

[davelj]

[quote=Allan from Fallbrook]
While we don’t have the space to get into all of the details, I think its safe to say that Wall Street’s mission and priorities became tied to short-term bonuses and compensation and thus we saw the explosion of investment products, like CDOs, MBS, etc, that produced the largest bonuses for groups like Lehman, Bear and Goldman Sachs. Combined with the insane amount of leverage that was present and the inherently poor quality of the products themselves, the meltdown became inevitable.

I think if you go back in time and look at groups like Goldman, Merrill and Bear Stearns when they were partnerships and not publicly floated corporations and back when leverage was reasonable and controllable, I think they did a much better job of allocating capital. [/quote]

Incentives matter.

When you combine huge financial companies with legions of employees for whom the present value of their cash compensation is greater than the present value of their ownership stake… you’re begging for trouble.

[davelj]

[quote=Allan from Fallbrook]
While we don’t have the space to get into all of the details, I think its safe to say that Wall Street’s mission and priorities became tied to short-term bonuses and compensation and thus we saw the explosion of investment products, like CDOs, MBS, etc, that produced the largest bonuses for groups like Lehman, Bear and Goldman Sachs. Combined with the insane amount of leverage that was present and the inherently poor quality of the products themselves, the meltdown became inevitable.

I think if you go back in time and look at groups like Goldman, Merrill and Bear Stearns when they were partnerships and not publicly floated corporations and back when leverage was reasonable and controllable, I think they did a much better job of allocating capital. [/quote]

Incentives matter.

When you combine huge financial companies with legions of employees for whom the present value of their cash compensation is greater than the present value of their ownership stake… you’re begging for trouble.

[davelj]

[quote=Allan from Fallbrook]
While we don’t have the space to get into all of the details, I think its safe to say that Wall Street’s mission and priorities became tied to short-term bonuses and compensation and thus we saw the explosion of investment products, like CDOs, MBS, etc, that produced the largest bonuses for groups like Lehman, Bear and Goldman Sachs. Combined with the insane amount of leverage that was present and the inherently poor quality of the products themselves, the meltdown became inevitable.

I think if you go back in time and look at groups like Goldman, Merrill and Bear Stearns when they were partnerships and not publicly floated corporations and back when leverage was reasonable and controllable, I think they did a much better job of allocating capital. [/quote]

Incentives matter.

When you combine huge financial companies with legions of employees for whom the present value of their cash compensation is greater than the present value of their ownership stake… you’re begging for trouble.

[davelj]

[quote=Allan from Fallbrook]
While we don’t have the space to get into all of the details, I think its safe to say that Wall Street’s mission and priorities became tied to short-term bonuses and compensation and thus we saw the explosion of investment products, like CDOs, MBS, etc, that produced the largest bonuses for groups like Lehman, Bear and Goldman Sachs. Combined with the insane amount of leverage that was present and the inherently poor quality of the products themselves, the meltdown became inevitable.

I think if you go back in time and look at groups like Goldman, Merrill and Bear Stearns when they were partnerships and not publicly floated corporations and back when leverage was reasonable and controllable, I think they did a much better job of allocating capital. [/quote]

Incentives matter.

When you combine huge financial companies with legions of employees for whom the present value of their cash compensation is greater than the present value of their ownership stake… you’re begging for trouble.

[davelj]

[quote=Allan from Fallbrook]

Unlike private unions, public unions aren’t “bargaining” or “negotiating” with anyone. The politicians who vote for these sweet deals are sitting on the SAME SIDE of the table as the unions. This is vote buying, pure and simple. Wisconsin is not some bellwether state, blazing a new trail and seeking to bust unions. Only half the states have a collective-bargaining agreement in place, and there is plenty of data to support the fact that the states that don’t, like Virginia or Indiana, are in fact able to deliver effective services and at a lower cost.
[/quote]

And therein lies the problem. The adversarial relationship that exists between private unions and their employers does not exist between municipal unions and those they are negotiating with. They are sleeping in the same bed. And in most cases the negotiators for the taxpayers are in line for even larger pensions than the union members. That is why we end up with these ridiculous contracts with benefits and retirement packages virtually unheard of in private industry. It’s also why so many states don’t allow collective bargaining for their municipal unions. It’s a recipe for fiscal disaster.

[Author]

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