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Old 17th Sep 2008, 05:44 PM   #1
geogob
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Are the United States of America moving towards communism?

It's a bit of a shocker really. But after what happened with AIG last night, I can't stop to ask myself if the US is really not silently/unconsciously turning to communism. Not the communism instigated by Lenin, but really the communism as described by Marx.

What surprises me is that it's happening pretty much exactly as Marx predicted it would, except not with England or France but with the US, over 100 years later. Marx didn't see communism as a system forced upon the people by leaders like Lenin did, but rather as a logical new equilibrium following the downfall of capitalism.

It probably never happened in Europe because European nations are play it rather safe. So, there, the critical point where things become to slide as described by Marx was never reached.

Is it what's happening now in the US? Wouldn't that be the greatest touch of Irony mankind has ever known?
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Old 17th Sep 2008, 06:14 PM   #2
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Marx didn't see communism as a system forced upon the people by leaders like Lenin did, but rather as a logical new equilibrium following the downfall of capitalism.

Interesting... It's possible, but I think it has more to do with corruption. Let's wait a couple of months and see what scandals come from this.
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Old 18th Sep 2008, 12:43 AM   #3
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Yes, very interesting. It would indeed be rather ironic, and i'd be rather interesting to watch, but i doubt neither the people nor the US government would let it get that far. If however it does, it could very well be for the better, maybe the arrogant US citizens will be humbled and realise their not so mighty (and thus better global stabiliy without the US pulling the strings and getting it's way). But then again, it could be for the worse, with the government seeing the only way of surviving being picking on weaker countries and taking what it needs. god i hope it doesn't get to that.

Thats my opionion anyway, i'm not following things too closely here in Aust. and i'm not privy to all the commotion going on inside the US and all the **** their undoubtably keeping internal.
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Old 18th Sep 2008, 02:46 PM   #4
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Isn't saving companies like AIG about crisis management and keeping the financial system ticking?
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Old 20th Sep 2008, 12:58 AM   #5
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Technically, yes, the US is socializing is financial backbone.

However, it's not really moving to communism, rather moving back towards more of a socialist framework. For example, Freddie Mac and Fannie Mae, the two largest morgage backers were actually founded by the Government in the 70s and during the depression respectively to help americans get homes as part of a strategy to bring back the economy. They were privatized later and became more focused on profits rather than helping Americans get mortgages to get homes. So basically they're now back in the hands of the government and, hopefully, will be run in the best interest of the people rather than the bottom line (yeah right)

AIG on the other hand is the US just covering it's ass.

One economist on a Vermont public radio/BBC debate summed it up very well and I'm paraphrasing

The United States goverment through deregulation in times of boom and nationlization in times of bust has privatized Growth and Socialized losses. Meaning we don't get a piece of the pie when it's cooked then we get stuck with doing the dishes.

So expect this trend to reverse once the economy rebounds. It's the trickle down effect people. IT WORKS! Just ask the factory worker who just lost his house.
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Old 23rd Sep 2008, 11:38 PM   #6
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This is the Fat Cats trying to save their asses after they blew all of their investors money. Too many $6 million dollars birthday parties thrown for their trophy wives. They want the tax payers to bail them out, so they won't have to give up their mansions and jets. Unfortuneately for them, they seem to forget that they laid off all the workers, so we don't have any money. I hope they burn in the deepest, hottest of hells. But not till after the mobs are through hacking them up and tearing their limbs off.
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Old 29th Sep 2008, 10:20 AM   #7
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While it might save some rich people, the consequences of doing nothing is worse. A lot of the people who will be turned out of their houses should never have been allowed to loan money for a house in the first place, that is where problem started. Sub-prime loans made in the hope that growth would last forever.

However, if congress does not get a package through, chances are that US economy will collapse, leaving a lot more people without any money. What is needed now is some following up and regulation to outlaw the most speculative investments.
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Old 1st Oct 2008, 02:49 PM   #8
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A lot of the people who will be turned out of their houses should never have been allowed to loan money for a house in the first place
I kind of agree with this statement because many of those people knew that their interest rates were going to be jacked in a year or two. However, doesn’t it seem a little predatory of the lending institutions to prey on these types of people, knowing they won’t be able to make the payment once the higher interest rates hit?

Think about it, if the sub-prime borrowers had been left at a reasonable interest rate, many would never have defaulted. Why couldn’t “average Joes” be given lower interest rates? I mean, there is no reason or law that states a poor credit history makes a person a legitimate target for a bank to exploit. Yes, the US does operate on a “merit” system of sorts, but these are houses we’re talking about. It’s the minimum a hard working individual should be able to purchase. Builders want to build, sellers want to sell, banks want to loan and buyers want to buy. If the lenders had not gotten greedy, we probably wouldn’t be where we are at.
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Old 4th Oct 2008, 02:22 PM   #9
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Originally Posted by Pipe_Dream View Post
I kind of agree with this statement because many of those people knew that their interest rates were going to be jacked in a year or two. However, doesn’t it seem a little predatory of the lending institutions to prey on these types of people, knowing they won’t be able to make the payment once the higher interest rates hit?

Think about it, if the sub-prime borrowers had been left at a reasonable interest rate, many would never have defaulted. Why couldn’t “average Joes” be given lower interest rates? I mean, there is no reason or law that states a poor credit history makes a person a legitimate target for a bank to exploit. Yes, the US does operate on a “merit” system of sorts, but these are houses we’re talking about. It’s the minimum a hard working individual should be able to purchase. Builders want to build, sellers want to sell, banks want to loan and buyers want to buy. If the lenders had not gotten greedy, we probably wouldn’t be where we are at.
Pipe, I couldn't agree with you more. Well put!
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Old 4th Oct 2008, 03:28 PM   #10
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Greedy is the word indeed. To that one might add dishonest... Many of the home owners who have been or will be evicted from their homes have little or poor educational backgrounds. Although the maths behind mortgage, interest rates and other basic economic practice may seem simple to most of us, they are way over the head of a lot of people in the US.

Even here, in Canada, I see a lot of people - people who have university diplomas - who are barely able to understand and compute a simple cross-multiplication. These people have to rely on what their credit counselor tells them to make a decision on whether they can afford the loan or not. For people who can barely check if they can afford it in their current situation, you can't really expect them to predict if they would be able to afford it two, five or ten years in the future.

The so-called experts who told those people they could afford it, seeing the commission and profit in the end, are real criminals. Instead of bailing out multinational companies, leaking money directly into executive pockets or into the pockets of lenders all around the world, I think the US government should have concentrated their efforts on either paying the extra interests or the whole interests of homeowners that are in bad position, leaving them only with the capital to pay. A more radical solutions could have been to retake the mortgages in a global home nationalization effort. That would have relieved both the home owners and the credit institutions and insurance companies, while keeping the capital inside the US.
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Old 5th Oct 2008, 10:41 AM   #11
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The so-called experts who told those people they could afford it, seeing the commission and profit in the end, are real criminals. Instead of bailing out multinational companies, leaking money directly into executive pockets or into the pockets of lenders all around the world, I think the US government should have concentrated their efforts on either paying the extra interests or the whole interests of homeowners that are in bad position, leaving them only with the capital to pay. A more radical solutions could have been to retake the mortgages in a global home nationalization effort. That would have relieved both the home owners and the credit institutions and insurance companies, while keeping the capital inside the US.
That is where legislation comes in. Here in DK, banks are not allowed to sell their loans. So they are a lot more careful about not lending money to people who cannot pay. Still, due to US banks having problems, our Banks are also having problems. And a some people have been guided to take loans and invest in the same banks stocks, ending up with nothing but a huge debt when the bank falls. It is quite depressing what greed and the last several years of growth have driven people to.
BTW isn't nationalizing a lot of the loans exactly what US govt are doing, or am I completely wrong?
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Old 6th Oct 2008, 07:40 PM   #12
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That is where legislation comes in. Here in DK, banks are not allowed to sell their loans. So they are a lot more careful about not lending money to people who cannot pay. Still, due to US banks having problems, our Banks are also having problems. And a some people have been guided to take loans and invest in the same banks stocks, ending up with nothing but a huge debt when the bank falls. It is quite depressing what greed and the last several years of growth have driven people to.
BTW isn't nationalizing a lot of the loans exactly what US govt are doing, or am I completely wrong?
They are nationalizing the banks. Not the loans. Major difference. In the current case, banks laught their ass off. They ****ed up and still get the money... but the home owners still get evicted from their homes due to the sudden rise of interest rates. If you directly buy the loans interest (or capital to some extent) while allowing the homeowner to stay in his home while paying for the capital has he can, you solve the problem for the homeowner who got screwed in the first place. I would think that this is better than giving away money to the banks that knowingly abused the confidence of loan buyers.
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Old 10th Oct 2008, 12:48 AM   #13
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I think freshmeat is also right. That 700 billion was set up so that the federal reserve, through some host company or account would buy up the bad mortgage securities and renegotiate the loans in order to adjust them so that people can afford them.

It's so complicated and contrived I haven't fully been able to wrap my head around it.

I'm just starting to barely understand Credit-Default swaps...It sounds utterly stupid and poses an even greater threat than this subprime mortgage nightmare.

We're not out of the woods yet people.
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Old 10th Oct 2008, 01:04 PM   #14
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Quote:
Originally Posted by Pipe_Dream View Post
I kind of agree with this statement because many of those people knew that their interest rates were going to be jacked in a year or two. However, doesn’t it seem a little predatory of the lending institutions to prey on these types of people, knowing they won’t be able to make the payment once the higher interest rates hit?

Think about it, if the sub-prime borrowers had been left at a reasonable interest rate, many would never have defaulted. Why couldn’t “average Joes” be given lower interest rates? I mean, there is no reason or law that states a poor credit history makes a person a legitimate target for a bank to exploit. Yes, the US does operate on a “merit” system of sorts, but these are houses we’re talking about. It’s the minimum a hard working individual should be able to purchase. Builders want to build, sellers want to sell, banks want to loan and buyers want to buy. If the lenders had not gotten greedy, we probably wouldn’t be where we are at.

the problem is that the predatory lending was set-up by the govt. to begin with. they came out and wanted every american in a home, they made the system flawed and the lenders knew it. they had no choice but to take part.

lenders knew that 75% of the loans that were being written were risky, the market was right though. lower income families were given the opportunity to dig their own grave and everyone jumped on board. that's why no one keeps their own loan.

I have dealt first hand with some predatory lending litigation, its not pretty. I've seen a 20 year old kid get 200+k worth of loans when he was 18 to prove a point. I'm not sure where the case will go but it is directly involved with the predatory lending and how banks sell notes and buy them back so when they foreclose insurance pays them back on top of the interest. basically the banks lost no money, at first. the problem is that too many loans are going in the tank.

it's partly about lenders being greedy but its also about the govt being nearsighted and wanting to create a false american dream that 70% of the population can't afford.
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Old 17th Oct 2008, 03:37 AM   #15
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Part of the problem is that the banks did not do anything illegal. They have been predatory as sharks, but given the competition in the economic market it was hard for them to be otherwise. If a bank did not give out the loans, competitors would. Same with high-risk, high-yield investments. If you did not partake, your board would be looking for someone able to make more money. So while everything was running, noone could afford to slow down.

Less than two years ago I bought the house in which I am currently sitting. I had a tag of ~$220 000, pretty cheap for a house in DK. Talking to the bank, they would allow us to buy a house up to some $400 000. When you looked at the payments, it was pretty sound. However, it was based on flexible interest loans, and we where very much sure that we wanted security instead of square metres.

So when I then hear about people crying their hearts out about loosing their homes, I wonder how many of those who actually sat down and looked at the world economy for the last ~30 years, with interests going 18% in DK in the 80'ies. A loan is for lifetime, but low interests come and go. If the government starts giving out money to all those cementheads, I want a cash payment for using my head when I bought a house.
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Old 17th Oct 2008, 10:16 AM   #16
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"Communism" IMHO doesn't match so much with what is happening with their economy. Yet, I find somewhat good to see their economy (based on nothing) going down pretty fast: maybe it's their good chance to realize that speculating on nothing isn't the best way.
Sure thing, I hope who made the mess will be punished in a bad way, otherwise it would be like saying: "Never mind (if Nation is going down); keep doing it".
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Old 29th Oct 2008, 12:08 AM   #17
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Everyone made the mess, be it the new home-owner not calculating anything, home-sellers horribly overpricing too small places, contractors building like crazy to gain their piece of the cake, the banks giving away loans like candy to kids, or the banks buying and selling insecure mortgages. If you want to punish someone responsible, put them all at the wall. The housing market in the US in the past years was a monstrous cow to be milked and a gigantic bubble full of hot air. Finally it exploded leaving holes to be filled with trillions of dollars worldwide. But communism?
One reason why the American economy is so extremely productive is the lack of regulation, pushing production of money over the top. Additionally, companies can rely on federal help once a recession hits. That is as far from communism or socialism. What happens now is basically bringing back the state as a player in capitalistic circulation resulting in re-regulation of the market. Other than the Internet-bubble at the beginning of this century, this recession in the globalized economy affects much more than stock-markets. With major banks on their knees, someone had to intervene. And of course we all pay for it, because we all participated in that game - more or less. 200 or so years ago Marx underestimated the abilities of capitalism to drag itself out of the siht. Think of Munchhausen.

Anyways, of course I am sorry for my neighbors losing their house. But this finally allows me to think of buying a house myself. Prices dropped from $600/sqft to $300. It's a buyers market! Wohooo!
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