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Marxist Hacker 42's Journal: A better, more direct stimulus? 15

Journal by Marxist Hacker 42

This article from Economy In Crisis combined with my own talks with conservatives and liberals on the subject, have convinced me that the current $700 billion stimulus bill, while I believe won't hurt, won't help that much either.
 
Here's a totally new suggestion: EVERY firm is too big to fail if it has been listed public. But none deserve bailouts. INSTEAD, let's pass another $700 billion stimulus bill. The first $350 billion, give out to homeowners who are about to lose their primary residence to foreclosure (foreclosure papers should already have been filed, and it MUST be the family's primary residence). The second $350 billion, set a "floor price" of $.10/share on stock- the government will buy *any* company's shares at that price to keep the company from being delisted and pushed into bankruptcy. The government can then create a competing stock exchange (WDCSE?) to compete with the NYSE and other stock exchanges, offering bargain basement companies for sale on the condition that you can only reduce hours or let employees retire- not fire or lay off employees. This will keep people "working", maybe at only an hour a week, but working. And as the old saying goes, the depression doesn't feel half as bad if you have a job.

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A better, more direct stimulus?

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  • Easy: Slash the capital gains tax by 50%. Watch the economy roar.
    • How do you slash 0 by 50%?

      • That's only 0% for the bottom 10% of workers, and they also don't pay income taxes... and those types aren't going to hire people, creating jobs.

        Stop being stupid. I know you're smarter than this.
        • That's only 0% for the bottom 10% of workers, and they also don't pay income taxes... and those types aren't going to hire people, creating jobs.
           
          It's also been 0% on stocks and bonds capital gains for the last 5 years, since the Bush tax cuts. I know- I've been a direct beneficiary of that tax cut (seeing as how I used getting out of the stock market to survive the 2001-2003 downturn).
           
          So I ask again. Exactly how will a 50% cut of 0% be worthwhile?

          • by iminplaya (723125)

            He still hasn't figured out that St. Ronnie's "trickle down" is really a golden shower. I doubt he ever will. Whatever misfortunes he suffers he will blame on someone else. Loyal as a puppy dog to his masters he is.

    • by iminplaya (723125)

      Man! you are nuts. A perfect example of how little has been learned over the last 45 years, much less the more distant past. And a perfect study of Pavlovian and/or Skinner conditioning. Along with any of the other animal psychology theories out there. Some people use the word "indoctrination". Whatever works. You really should take to heart what you can do with your "dribble down" economy.

      • by ces (119879)

        The right is like a fucking broken record. Their answer to everything is "cut taxes".

        It reminds me of the joke that if all you have is a hammer everything looks like a nail.

  • The second $350 billion, set a "floor price" of $.10/share on stock- the government will buy *any* company's shares at that price to keep the company from being delisted and pushed into bankruptcy.

    You have cause and effect switched around. A company doesn't file bankruptcy because their share price goes to zero; the share price goes to zero because the company goes bankrupt. When a company is liquidated, the equity holders are at the bottom of the totem pole when dividing up the remaining assets.

    • True- what we need is some way to prevent liquidation.

      • True- what we need is some way to prevent liquidation.

        Well, that's the tricky part. We don't want to prop up all businesses. Companies which have no hope of profitability in the current climate should be liquidated; and those resources used in more productive enterprises. Basically, the companies whose business model was nothing but a house of cards in the first place, should be allowed to fail. Indeed, they will fail eventually, unless the government commits to propping them up forever.

        But, because of the current crisis, there is a real danger that solid busi

        • Companies which have no hope of profitability in the current climate should be liquidated

          Well, actually, if the current climate is a relatively short artificial period like a deflationary recession, then it makes a LOT of sense to subsidize businesses that don't have any other hope of profitability in this climate.

          Indeed, they will fail eventually, unless the government commits to propping them up forever.

          Of course, I've previously blogged about autarky- the need of a natio

          • Well, actually, if the current climate is a relatively short artificial period like a deflationary recession, then it makes a LOT of sense to subsidize businesses that don't have any other hope of profitability in this climate.

            I wasn't clear. When I was talking about the current climate, I didn't mean the relatively short-lived recession. I was referring to businesses which won't be profitable for at least a generation: house flippers, many residential construction businesses, many real-estate agents, mortgage brokers, and businesses which relied on 40:1 leverage to make money. Since the bubble popped, there won't be much demand for those businesses until the next real-estate bubble. We need to let those types of businesses fail.

            • by Qzukk (229616)

              We need to let those types of businesses fail.

              There's a pretty easy way of doing that: make the support almost as painful as the bankruptcy process. Forcing companies to give up preferred shares is one way, they can have them back when they get back on their feet and pay back the government.

              Whatever way its done, we'll eventually reach the point where all of the companies that are ever going to be able to make it will be off the dole. The hard part is pulling the rug out from under the rest of them.

  • These two suggestions are a good idea. One helps middle class households and the other helps create government owned companies. Many companies were first created by government, then later they were sold to private sectors in marvellously low prices. In recession things will be reverse. I suggest 700 billion dollars be used for every household. This is going to be much more direct way to stimulate economy, which is in a word to make the flow of money in society. Recession or depression means money stays in

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