[Rich Toscano]

This is happening this coming Sunday, in case anyone missed it…

Rich

[Rich Toscano]

This is happening this coming Sunday, in case anyone missed it…

Rich

[Rich Toscano]

This is happening this coming Sunday, in case anyone missed it…

Rich

[Rich Toscano]

This is happening this coming Sunday, in case anyone missed it…

Rich

[Rich Toscano]

Mmmm… garlic.

I see where you are coming from. But, it’s not that the treasury is getting all the upside from risk-taking and none of the downside. They are getting both: tax revenues when the risk pays off, and none when it fails.

I understand that they can go back and say, basically, we’re going to widen the timeframe from 1 year to 5 years. But that is pretty arbitrary, since the timeframe has always been 1 year, and it’s 1 year for individuals and for cautious businesses in good times. The net effect is that it’s only going to be done in a time and manner that disproportionately helps the “high flyers.”

I should add that they aren’t commensurately cutting back spending. They are spending the same (actually far more) while reducing tax revenues, meaning that they will have to make up for it in the future via higher taxes (on producers) or via inflation (punishing savers). So again, it’s disproportionately taking from the prudent and competent and giving to the reckless and less competent. It’s the old capitalist argument; resources should be marshalled by those who are most competent to use them effectively in the long term, and this has the opposite effect.

All that said I acknowledge that this is small time compared to some of the shenanigans that they have undertaken. It’s just particularly comical and backwards in how it manifests itself with the builders.

Rich

[Rich Toscano]

Mmmm… garlic.

I see where you are coming from. But, it’s not that the treasury is getting all the upside from risk-taking and none of the downside. They are getting both: tax revenues when the risk pays off, and none when it fails.

I understand that they can go back and say, basically, we’re going to widen the timeframe from 1 year to 5 years. But that is pretty arbitrary, since the timeframe has always been 1 year, and it’s 1 year for individuals and for cautious businesses in good times. The net effect is that it’s only going to be done in a time and manner that disproportionately helps the “high flyers.”

I should add that they aren’t commensurately cutting back spending. They are spending the same (actually far more) while reducing tax revenues, meaning that they will have to make up for it in the future via higher taxes (on producers) or via inflation (punishing savers). So again, it’s disproportionately taking from the prudent and competent and giving to the reckless and less competent. It’s the old capitalist argument; resources should be marshalled by those who are most competent to use them effectively in the long term, and this has the opposite effect.

All that said I acknowledge that this is small time compared to some of the shenanigans that they have undertaken. It’s just particularly comical and backwards in how it manifests itself with the builders.

Rich

[Rich Toscano]

Mmmm… garlic.

I see where you are coming from. But, it’s not that the treasury is getting all the upside from risk-taking and none of the downside. They are getting both: tax revenues when the risk pays off, and none when it fails.

I understand that they can go back and say, basically, we’re going to widen the timeframe from 1 year to 5 years. But that is pretty arbitrary, since the timeframe has always been 1 year, and it’s 1 year for individuals and for cautious businesses in good times. The net effect is that it’s only going to be done in a time and manner that disproportionately helps the “high flyers.”

I should add that they aren’t commensurately cutting back spending. They are spending the same (actually far more) while reducing tax revenues, meaning that they will have to make up for it in the future via higher taxes (on producers) or via inflation (punishing savers). So again, it’s disproportionately taking from the prudent and competent and giving to the reckless and less competent. It’s the old capitalist argument; resources should be marshalled by those who are most competent to use them effectively in the long term, and this has the opposite effect.

All that said I acknowledge that this is small time compared to some of the shenanigans that they have undertaken. It’s just particularly comical and backwards in how it manifests itself with the builders.

Rich

[Rich Toscano]

Mmmm… garlic.

I see where you are coming from. But, it’s not that the treasury is getting all the upside from risk-taking and none of the downside. They are getting both: tax revenues when the risk pays off, and none when it fails.

I understand that they can go back and say, basically, we’re going to widen the timeframe from 1 year to 5 years. But that is pretty arbitrary, since the timeframe has always been 1 year, and it’s 1 year for individuals and for cautious businesses in good times. The net effect is that it’s only going to be done in a time and manner that disproportionately helps the “high flyers.”

I should add that they aren’t commensurately cutting back spending. They are spending the same (actually far more) while reducing tax revenues, meaning that they will have to make up for it in the future via higher taxes (on producers) or via inflation (punishing savers). So again, it’s disproportionately taking from the prudent and competent and giving to the reckless and less competent. It’s the old capitalist argument; resources should be marshalled by those who are most competent to use them effectively in the long term, and this has the opposite effect.

All that said I acknowledge that this is small time compared to some of the shenanigans that they have undertaken. It’s just particularly comical and backwards in how it manifests itself with the builders.

Rich

[Rich Toscano]

Mmmm… garlic.

I see where you are coming from. But, it’s not that the treasury is getting all the upside from risk-taking and none of the downside. They are getting both: tax revenues when the risk pays off, and none when it fails.

I understand that they can go back and say, basically, we’re going to widen the timeframe from 1 year to 5 years. But that is pretty arbitrary, since the timeframe has always been 1 year, and it’s 1 year for individuals and for cautious businesses in good times. The net effect is that it’s only going to be done in a time and manner that disproportionately helps the “high flyers.”

I should add that they aren’t commensurately cutting back spending. They are spending the same (actually far more) while reducing tax revenues, meaning that they will have to make up for it in the future via higher taxes (on producers) or via inflation (punishing savers). So again, it’s disproportionately taking from the prudent and competent and giving to the reckless and less competent. It’s the old capitalist argument; resources should be marshalled by those who are most competent to use them effectively in the long term, and this has the opposite effect.

All that said I acknowledge that this is small time compared to some of the shenanigans that they have undertaken. It’s just particularly comical and backwards in how it manifests itself with the builders.

Rich

[Rich Toscano]

davelj, I’m not suggesting that anyone would want to switch places with Robert Toll.

My point is that this is another example where when the times were good, the less cautious benefitted… and now that times are bad, their losses are subsidized.

Agreed, nowhere near as egregious as the TARP but this is clearly (to me anyway) another example of rewarding failure and encouraging risky behavior (whether it works or not).

rich

[Rich Toscano]

davelj, I’m not suggesting that anyone would want to switch places with Robert Toll.

My point is that this is another example where when the times were good, the less cautious benefitted… and now that times are bad, their losses are subsidized.

Agreed, nowhere near as egregious as the TARP but this is clearly (to me anyway) another example of rewarding failure and encouraging risky behavior (whether it works or not).

rich

[Rich Toscano]

davelj, I’m not suggesting that anyone would want to switch places with Robert Toll.

My point is that this is another example where when the times were good, the less cautious benefitted… and now that times are bad, their losses are subsidized.

Agreed, nowhere near as egregious as the TARP but this is clearly (to me anyway) another example of rewarding failure and encouraging risky behavior (whether it works or not).

rich

[Rich Toscano]

davelj, I’m not suggesting that anyone would want to switch places with Robert Toll.

My point is that this is another example where when the times were good, the less cautious benefitted… and now that times are bad, their losses are subsidized.

Agreed, nowhere near as egregious as the TARP but this is clearly (to me anyway) another example of rewarding failure and encouraging risky behavior (whether it works or not).

rich

[Rich Toscano]

davelj, I’m not suggesting that anyone would want to switch places with Robert Toll.

My point is that this is another example where when the times were good, the less cautious benefitted… and now that times are bad, their losses are subsidized.

Agreed, nowhere near as egregious as the TARP but this is clearly (to me anyway) another example of rewarding failure and encouraging risky behavior (whether it works or not).

rich

[Rich Toscano]

SK – I used the term reckless in the context of homebuilders, which are huge beneficiaries of this policy. You are correct of course that some losses were not due to “recklessness” as such, but that doesn’t change the argument.

Let’s look at those other non-bubbly industries that have suffered. Within each of them, some were more careful than others. Some did the analysis and saw the damage that could potentially be done by a housing bubble burst. Some didn’t. In any given industry, there is a spectrum of good forecasting -> bad forecasting and caution -> less caution. This policy, by its nature, disproportionately rewards those who were less cautious in the good times, and whose forecasts were less accurate, than their rivals.

So yeah, reckless certainly doesn’t apply to everyone here, but it does reward risk taking at a time when people shouldn’t have taken risk, as well as rewarding lack of forecasting of and preparation for the downturn. That said, the reckless are the ones who are helped the most by it.

Whether you use the word reckless or not, this is most definitely not a “level playing field” situation (which was my argument to begin with).

Rich

[Author]

Posts