Comment by pas | Hacker News Reader

Comment by pas | Hacker News Reader

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This is pretty fine high level grade bullshit. (Or Poe's law strikes again!)

The not-too-representationally selected/elected leaders of China want to keep the power of pegging their currency, which is very essential in a centrally planned economy, at the cost of personal freedoms. (And the yearly 50 000 USD limit is more than enough for poor people to send all of their savings away to a fraudster though, so it's not absolutely the right thing.)

A powerful private banking system is very different from a shadow bank that uses identity theft/fraud to store and gambling to exchange currencies. A healthy banking system helps allocate credit (which is risk), but since the barriers to entry to the finance sector is high (cost of regulatory compliance, IT security risks), margins are low (products are fungible, a mortgage is a mortgage, a savings/checking account is a savings/checking account, it doesn't matter which bank you chose, so you'll use the cheapest) and network effects are also high, we don't really see a healthy banking sector. (Thus risks are largely concentrated in too big to fail banks, and that's why the new big bank requirements include systemic exposure stress test regulations: https://en.wikipedia.org/wiki/Basel_III - of course, it's easy to argue that this just moves bubbles somewhere else.)

As to the other claims ("Now we see the US and the EU largely controlled by banking interests" - no, we don't, we see populism/nationalism/chauvinism, we see good old regulatory capture [the FCC Chairman is an ex-Verizon lawyer currently playing dumb for a lot of money, or just out of spite, the EPA lead is a proud climate change denier, the current UK leaders are typical isolationists, and so on], "very little if any taxes applied to financial gains" - cca average of 15% is not very little https://en.wikipedia.org/wiki/Capital_gains_tax and "the entire industrial complex has moved to China" - no, only the labor and raw materials intensive things [which is of course an enormous slice of the pie], but nowadays the problem is with lack of effective retraining in the advanced economies.)

This is just a bunch of BS to try to explain away the fact that the US economy is geared towards advancing the interests of banks and other financial institutions. It is amazing that you think that a 15% tax rate is a lot when even under the proposed tax breaks all other comercial activities will pay more than that in taxes. As a result, the US in fact subsidizes an activity which is not the primary producer of ANYTHING other than interests and fees, that is, a drag in the economy.

Later you claim that is just fine to support big banks because said banks exist to "spread risks". But of course the biggest risk for a country is in the existence of banks that are too big to fail, since they need to be saved by the government. Therefore, banks in fact perform ZERO risk reduction. They CLAIM to take risks away from the system, but when a crisis occur the whole tab of bad betts will be paid by the citizens of a particular country, not by bankers.

As for control of the US and EU, just look at who is responsible for economic policy in these places and tell me if they're not from the same half dozen banks that are already deemed to be too big to fail! What a coincidence...

What do you think is the best way for society to provide capital to people who need it? I'm genuinely curious. Peer-to-peer lending is interesting, but I'm not sure it's competitive with banks. State owned banking-enterprise would probably be more expensive for consumers, and if not, a tax for everyone who isn't loaning money.

too-big-to fail banks were bailed out also by people who are not loaning money, so it’s kinda same. just profits are private, damages are paid by public. in this regard private banks are worse. the main issue with government bank I see is that it will be very tempting for politicians to use public bank as a tool to buy votes for people by promising low interest rates or something not viable in long term, and doing damage to economy for short term political gain.

I don't get the revulsion towards bailouts. It isn't as if the money is handed freely without it being expected back. How are taxpayers hurt in the process? In fact, "the government and taxpayers made a $23 billion profit from the AIG bailout." [1]

[1]: https://www.thebalance.com/aig-bailout-cost-timeline-bonuses...

>> In fact, "the government and taxpayers made a $23 billion profit from the AIG bailout."

The results do not justify the process. Would small business owners be offered the same loans that were unjustifiable based on assets:liabilities? I can answer that for you right now as someone who has cash in the bank to cover a six figure loan but can't get one due to a 690ish credit score: No, they won't.

That we made a profit on (some of the) bailouts doesn't matter. The same process would never be offered to 99.999% of the other citizens of this country.

You could argue about exposure and banks that failed would have had larger impact on ordinary people than the 99.999%. But I generally agree with your comment.

You don't remember the 99.999% being offered unjustifiable mortgages? That was a big part of the financial crisis.

Er, the banks were bailed out of those terrible decisions. Individual homeowners were left to hold the bag.

If you wanted to bail out the home speculators individually, the analogous approach would be to buy their houses at below the prices the speculators had paid, essentially a short sale.

Remember TARP bought the assets for close to their realized value, so the loss was already priced in.

I'm a supporter of the bailouts.

But I think that those responsible for the financial crisis should have been charged and done prison time.

Well in the UK at least the taxpayers were hurt by nearly a decade of austerity measures, selling off of national assets and a gutting of the welfare state.

All as a result of yet another financial crisis caused by irresponsible and greedy financial institutions.

The government of China bails out industries all the time. However, they do it with money they print up on an as needed basis that doesn't incur debt to the government or require future payments for this debt by the taxpayer. This means that bailouts have no effects on the taxpayer in China while they burden the American taxpayer for years to come.

This isn’t completely true. The government makes the banks lend money to the SOEs with the implicit backing of the people. Much of china’s private sector debt is actually public sector debt in that way. When the loans go bad, they have to recapitalize the banks, which is when the printing presses are used.

> How are taxpayers hurt in the process?

Tax rates went up. (At least, where I am. Don't know about the US)

> the government and taxpayers made a $23 billion profit

How much of this did taxpayers actually get (in terms of, for example, decreased tax rates, or anything else that directly benefits the taxpayer)?

This is pretty fine high level grade bullshit. (Or Poe's law strikes again!)

You can disagree without being so rude.

Calling bullshit bullshit is not rude. Not all opinions are equal.

You can call bullshit without being rude, true, but you can also be rude. For example, "This is not at all true." is less rude than "This is pretty fine high level grade bullshit."

sure, but the rudeness could be much stronger, too, so this doesn't appear malicious.

It could have been stronger but it wasn't necessary either. Civil discussion is better.

I'm offended by your complaints. See how quickly this gets out of hand.

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