Interview Transcript
Well it’s a lot better than a lot of people thought it was gonna be. Let’s start with that. It is rather surprising to me in some ways that it’s done this well this long, because I was taught at the University of Chicago and Northwestern that it was terribly important for countries to have savings, and to invest a lot in the future. And that had a lot to do with how well they’re doing. Well America today has the lowest savings rate it has had in many, many years. At the national level, it’s fallen dramatically from 10, 11% of the GDP as we call it down to one or two. Personal savings rates stunningly have gone from nine percent of our disposable income to a minus one percent. And we’ve become very gifted, ardent, robust consumers and borrowers, and not savers. Now the big question is . . . We’ve become huge borrowers as a country with our very large deficit. We’ve become borrowers at the consumer level with very hard debt levels and a really lousy savings level. And the big question I have about the American economy is not today . . . but it’s how long we think we can continue, because we’ve got some huge challenges that are coming. There are 78 million baby boomers, plus the size of the current generation due to begin retiring next year. We have Social Security and Medicare that are programs that are . . . where we’ve made a lot of promises but we haven’t funded them. And we’ve grossly misled the American people with such euphemisms as the Social Security Trust Fund. I argue that it’s an oxymoron, and it shouldn’t be trusted and it’s not funded because the money has already been spent. We haven’t provided for those programs. We are getting to be fancy language; but if something called a “current account deficit”, which measures our deficits abroad, which is largely a trade deficit . . . It’s now twice as high a percentage of the economy than it’s ever been in American history. And we’re borrowing, borrowing, and borrowing and becoming _______ and I think destructively dependent on the long run on Chinese money, and Japanese money, and Asian money and so forth. And which they lend us this money.
But you know it’s a funny thing about borrowing. You have to pay it back some time. And as a country, we can’t continue to borrow seven percent of the economy, which is what we’re borrowing now, for very many years without looking like a very different America than we have now. So I think the economy today is in pretty good shape; but it’s getting pretty turbulent now with housing. And housing is a wonderful example. I did quite a study about 18 months ago, and I was simply astonished at the number of people who bought homes no money down. It’s called “interest only”. And then I was astonished that even though mortgage rates at the lowest level in 30 years have averaged around 9.7% or something like that, and now they’re like six, people are not taking long term fixed mortgages. About half of them are taking what are called “adjustable rate mortgages”. Well one might say, “Gee, that’s fine if we have a lot of savings that we’ve stacked away, and if we aren’t borrowing very much for other purposes.” That isn’t true. We’re borrowing more _______ income than we have in many, many years. So now we’ve had this big blowout of the so-called “subprime mortgage” market. And today I hear in the press that housing prices are falling and so forth. What did we think was going to happen? How are these loans gonna get paid back? We don’t have any savings, and we’re already heavily borrowed. So my concerns about the economy of this country are much more in the future, and much more of our culture. We have become one of the biggest savers in the world. And saving, remember, is a metaphor for the future. We’ve become the biggest consumers and borrowers in the world, which is kind of another way of saying, “I want it all. I want it now, and I don’t want to give up anything.” And a kind of “to hell with the future.” Well I’m far more concerned with America’s economic future 10, 15, 20 years from now than I am with what happens over the next six months.
Well it’s interesting you should ask that question. You’ll be sorry you asked it. I am planning to take my bounty from Blackstone going public, a lot of it – and it’s quite a windfall – and set up what would turn out to be a very large foundation. And because I’ve been boring people relentlessly for the last 20, 30 years about some of these problems, I’m going to take a number of these problems that are what I call undeniable and unsustainable, and yet politically untouchable because of the political culture we now live in where it’s considered almost politically terminal to ever ask anybody to give up anything, or to pay for anything. And you know, “I want more, and more, and more, and I want it now.” And to take these issues which I think are a serious threat to America’s future, and take those issues where there’s a huge gap between what we should be doing, and what we could be doing, and what are or are not doing, and figure out how at the margin, a major foundation might be able to make a difference. For example, looking at you you’re a very young person, certainly by my standards. When I think of young people today, I think of what we’re leaving them 10, 15, 20 years from now. You remind me of that old joke from a philosophy class where the professor asks the students which is worse – ignorance or apathy. And some poor kid from back of the class says, “I don’t know and I don’t care.” Well I think it’s an interesting question. Is there an exciting way that we could get the young people of this country aware, and their parents? Because I refuse to believe that parents have suddenly become cold and indifferent to their own kids and grandkids. I think they’ve been deceived, and misinformed, and disinformed and so forth. So we have a political system today, for example, where the elderly are unbelievably well represented. The American Association for Retired Persons has 38 million dues paying members. They write more. They lobby more. They call more. And by and large, it’s not too unfair to say a lot of their programs are “We want more”, even though by any reasonable standard – as I say some of these challenges are unsustainable – we’re not going to be able to meet the promises that we’ve made. For example, in about 20 years or so . . . 25 years, I’m looking at you, your payroll taxes are scheduled to go from 15 to 30% or more, which would be a huge, huge burden on you, on the economy, on your future and so forth. So on one hand we have this culture of our ethic of “shared sacrifice” being a kind of a dirty word – not wanting to give up anything – we have political organizations who are dominant in representing one age group. And the young people who are all about the future are somehow being slipped this huge check – hidden check, I might add – for our free lunch, and nobody seems to be doing anything about it. So I would like to gather together the student and the young leaders of this country, and take a day or two and say . . . try to give you the biggest, best rundown I can in half a dozen areas of the economy and fiscally, and what the world looks like. And I want you to contemplate that – because it’s not my future. It’s yours. I’m 81years old. Lord knows I don’t need anything more – and ask you, “What are the best ways to do something about it?” And should we have an American Association of Young People and Their Parents, for example? Because until this democracy gets educated and gets informed – which is the first requirement – and then get active and motivated, not much is gonna happen on these problems unless there’s a huge crisis. Then it will be a very costly crisis when it hits. So that’s a long-winded answer how I feel about the economy. I’m much more concerned about the long-term picture than I am about the next year, or two, or threeMy parents’ generation, the greatest generation, for example, fought the most costly war in history – costly in every sense of that word. They built international institutions – Marshall Plan and so forth, which was central to the world getting restored. They had G.I. Bill of Rights for all the returning veterans . . . went to college. They rebuilt the infrastructure of this country. But they didn’t ask me to pay for it. They paid for it because they were willing to invest in the future. And that meant saving, and that meant consuming less because you can’t have it all. You can’t have it all now and have something for the future. I tell these university audiences I think a careful study of your sociologist, of your social psychologist, of your political science, of your economists, of your historians . . . and say, “What was it during those early times where more Americans than I’m afraid today had a clear sense of the future and a responsibility for it?” And what led us to this notion “I’m gonna grab what I can”? And “The government owes me this and the government owes me that.” And kind of, “To hell with other people. To hell with the future. And to tell with who and how we’re gonna pay for all of this.” Now why did that come about? What led to this boomer mentality, you know, about, “I want it all. I gotta enjoy it.” I have a dear friend who is in the ________ medical profession. He’s kind of complaining that he’s not a millionaire or a multi-millionaire, whatever. And I said, “Well you know, one way people become millionaires is they save and they invest.” But he’s got to have his small airplane that he flies on the weekends. He points out to me it’s not a jet. And I said, “Well I understand. I don’t have a jet either.” And “Oh, I need to have fun because I work so hard all week. And I need a Porsche car,” and so forth. And that is the boomer mentality that we’re kind of dealing with here. And I don’t really know what led from saving and investing into the future to consuming and borrowing now. Did America get disenchanted by the Vietnam War that tore this country apart? You’re much too young to remember it, but it truly tore us apart. Did we get torn apart by the assassinations of presidents, and presidents’ brothers, and Martin Luther King, and riots in the streets? As I said, I was working on this problem in Chicago. It was a terrifying sight to see, and that somehow the bonds that unite us and heal us lead to the current situation. I’m not sure. But I’ve never seen a time when there was so much bitterness and partisanship, and paralysis as we have today in our government. I mean nothing. We went through important areas where the Republican leadership and the Democratic leadership are united for a much larger cause, namely the nation’s interest. We’ve had very little of that recently. So I’m _______. I don’t know what all the reasons are. I just know there’s been a really major shift. I think if I may, just to insult your medium, it’s entirely possible that television has had its impact. For example, I used to watch my children. ________ wasn’t television. And they’d turn on the TV and pound it into their heads. Here’s this toy they had to have. This is the dress they gotta have. And we’ve developed a kind of indulgent, instant gratification, consumption largess that has become part of our culture. And I don’t know all the reasons for it, but certainly the presence of such an effective medium . . . and television is probably one of the reasons for it.
Recorded On: 7/26/07
Does Pete Peterson Look Worried?
Co-Founder, The Blackstone Group; Chairman Emeritus of the Council on Foreign Relations
Peterson talks about the American economy.
December 14, 2007 | In Business & Economics
Discuss
J Roy on January 6, 2008, 9:20 PM
Peterson is clearly a numbers wonk. I can read this information without him rambling on about it. Bad question: "What do you think about the economy?" Bad question: "What will you do with your money?"
Hire interviewers who are more "smart." I would prefer to hear about how Blackstone assesses risk or about a deal that soured. What would the TLS think of that music? What a joke.
J Roy on January 7, 2008, 2:20 AM
Peterson is clearly a numbers wonk. I can read this information without him rambling on about it. Bad question: “What do you think about the economy?” Bad question: “What will you do with your money?”
Hire interviewers who are more “smart.” I would prefer to hear about how Blackstone assesses risk or about a deal that soured. What would the TLS think of that music? What a joke.
Louise Middleton on January 7, 2008, 3:39 AM
Pete
I could never tire of hearing your concise, on the money comments on this subject as well as many others. You inspire "boomers" like me to become better citizens. You lead by example.
Louise Middleton on January 7, 2008, 8:39 AM
Pete
I could never tire of hearing your concise, on the money comments on this subject as well as many others. You inspire “boomers” like me to become better citizens. You lead by example.
Craig Taylor on January 7, 2008, 4:28 PM
A considerable part of what Pete is concerned of in our society today is the direct result of an increasingly liberal and secular society; members who view themselves as victims – feeling empowered to grab before somebody else grabs what they want. The institutions of the press, media (of all kinds), higher education and government, etc have placed self-interest/preservation and personal wealth ahead of the greater good.
Ben Fisher on January 8, 2008, 12:02 PM
mr peterson i am glad someone in your position has come forth and thus validated these ideas.
Holly P Pressman on January 8, 2008, 12:40 PM
I appreciate the comments Mr. Peterson makes. The "grab-it-now" mentality is pervasive. The first step to refocus the American mentality will start with political reform to address the greater good rather than the slice of owners of American assets at the very very top. We have made significant inroads with our (higher) educational system. It is a model for economic policy.
Ben Fisher on January 8, 2008, 5:02 PM
mr peterson i am glad someone in your position has come forth and thus validated these ideas.
Holly P Pressman on January 8, 2008, 5:40 PM
I appreciate the comments Mr. Peterson makes. The “grab-it-now” mentality is pervasive. The first step to refocus the American mentality will start with political reform to address the greater good rather than the slice of owners of American assets at the very very top. We have made significant inroads with our (higher) educational system. It is a model for economic policy.
Maaarten Doude van Troostwijk on January 10, 2008, 11:44 AM
This is less of a comment on the economy than an analysis of American/Western consumer culture. Very interesting and thoughtful. Perhaps part of the answer he is looking for may be found in the collapse of traditional protestantism.
Maaarten Doude van Troostwijk on January 10, 2008, 4:44 PM
This is less of a comment on the economy than an analysis of American/Western consumer culture. Very interesting and thoughtful. Perhaps part of the answer he is looking for may be found in the collapse of traditional protestantism.
Lex Wenberg on January 16, 2008, 5:08 PM
Someone commented that this idea is less about the economy and more about consumerism and western culture. I would argue that this speech is more about the roots of economy and the end results of those roots being where they are and of what nature they are. The economy is directly related to the way that we live our lives. It's not even an indirect relation, it's a direct relation.
I think we can even look to a more micro example than the 'family' model presented here. Mr. Peterson says we're 'passing the buck' to our children,' but I'm proposing that we can even look at our own lives. For instance, I can look at my bank account and say, 'well, I have enough to enjoy myself today, but I won't have any money next week.' When I do spend the money on myself that day instead of spreading it out over the next week is that I don't care about my future self. That poor bastard's going to be broke, but my present self will enjoy today. It is a philosophical issue. We can never be 100% sure about the future, but we can be 100% sure about the present. Should that lead us to ignore the future in favor of the present? Absolutely not! Also granted, should we forsake the present in hopes of some glorious future? Also no! There has to be a balance, and we have to find that balance individually before there can be any widespread change. I believe this is Mr. Peterson's point.
Thank you Mr. Peterson. Your talk was a very necessary reminder to watch out for our future selves, our future generations, and our future in general.
-Lex
mark levine on January 16, 2008, 6:40 PM
First of all, geesh! The guy looks Awesome for his age!… My prespective on Mr. Peterson's questions about different factors in this national shift to "consume" and "get it now" is that media has been a very big factor,(I live near LA and can't stand the industry!) but also the overall change in society's structure.
It's obvious there are less couples and more working adults. I'm a 36yr old, single architect. It's much easier to "spend" as a single person, for one thing, but of all the things our parents teach us,even from a very young age,"look both ways", "stay in school", "don't do drugs", "marry for love", …..how many say, "learn to save"?
It makes me think of the first architect I ever worked for during college as an intern. (He was a drunk, but a good guy) He said, Architecture is not a job or career or profession. It's a discipline. I think our collective 'discipline' needs a little attention.
Lex Wenberg on January 16, 2008, 10:08 PM
Someone commented that this idea is less about the economy and more about consumerism and western culture. I would argue that this speech is more about the roots of economy and the end results of those roots being where they are and of what nature they are. The economy is directly related to the way that we live our lives. It’s not even an indirect relation, it’s a direct relation.
I think we can even look to a more micro example than the ‘family’ model presented here. Mr. Peterson says we’re ‘passing the buck’ to our children,’ but I’m proposing that we can even look at our own lives. For instance, I can look at my bank account and say, ‘well, I have enough to enjoy myself today, but I won’t have any money next week.’ When I do spend the money on myself that day instead of spreading it out over the next week is that I don’t care about my future self. That poor bastard’s going to be broke, but my present self will enjoy today. It is a philosophical issue. We can never be 100% sure about the future, but we can be 100% sure about the present. Should that lead us to ignore the future in favor of the present? Absolutely not! Also granted, should we forsake the present in hopes of some glorious future? Also no! There has to be a balance, and we have to find that balance individually before there can be any widespread change. I believe this is Mr. Peterson’s point.
Thank you Mr. Peterson. Your talk was a very necessary reminder to watch out for our future selves, our future generations, and our future in general.
-Lex
mark levine on January 16, 2008, 11:40 PM
First of all, geesh! The guy looks Awesome for his age!… My prespective on Mr. Peterson’s questions about different factors in this national shift to “consume” and “get it now” is that media has been a very big factor,(I live near LA and can’t stand the industry!) but also the overall change in society’s structure.
It’s obvious there are less couples and more working adults. I’m a 36yr old, single architect. It’s much easier to “spend” as a single person, for one thing, but of all the things our parents teach us,even from a very young age,“look both ways”, “stay in school”, “don’t do drugs”, “marry for love”, …..how many say, “learn to save”?
It makes me think of the first architect I ever worked for during college as an intern. (He was a drunk, but a good guy) He said, Architecture is not a job or career or profession. It’s a discipline. I think our collective ‘discipline’ needs a little attention.
Douglas Rose on January 18, 2008, 7:04 AM
could we ever come up with a tax rate that fair to all income levels?
We then would not have to hear every election about how much a republican can cut a tax, or here how much a democrat would raise a tax.
I am middle classes at $150,000(wife & my income) why is this level not mentioned as the real middle class as compared to $65,000 which would not get you far living in Mass. I would love a tax cut but this group never gets mentioned and when is does were consider upper middle class. Is inflation never consider when telling us what class were in?
Douglas Rose on January 18, 2008, 12:04 PM
could we ever come up with a tax rate that fair to all income levels?
We then would not have to hear every election about how much a republican can cut a tax, or here how much a democrat would raise a tax.
I am middle classes at $150,000(wife & my income) why is this level not mentioned as the real middle class as compared to $65,000 which would not get you far living in Mass. I would love a tax cut but this group never gets mentioned and when is does were consider upper middle class. Is inflation never consider when telling us what class were in?
Kimberly Hughes on January 18, 2008, 4:03 PM
I am utterley sick, middle class 150,000 well guess what "mr middle class" I am living off of all I can at this time which is government assistance, which means all of america's money and guess what I get? $440 dollars a month for me and my 5 yr old son. so how much is that a year? well about 5000 dollars. Anyways I know many people may look down upon someone for admitting that but, i myself have no other options at this time. I do not have family, or savings, no inheritance, or assets of any kind. I am poor begotten by poor, that died poor and left nothing but debt. So I have actually nothing. No fault of my own I graduated highschool at the age of 17 with a 3.75 gpa, not a very good school either mind you. All this time allmost six years now i have been trying and trying to get into college, but unfortunately there is no housing for me so the only way i can even attend is through federal aid and that wont cover living expenses. I can go work part time while i am attending but it still won't be enough I've done the math unless I borrow from a lending source that actually most likely won't except me, because of the previously mentioned debt left to me. So I could work full time and go to school, leaving me with only enough time for homework and sleep. It could work but oops I forgot I have a kid, so when do I get to be a parent? Inbetween naps? I don't think so. I am not actually willing to let my child grow up without guidance. Fortunatley after 6 1/2 years on the hud housing waiting list I will be accepted within about another 1 1/2 years. Hurray!. Maybe I do want instant gratification, but maybe also i deserve it. I am not stupid I am not poor because of intelligence. I do not think that is right, there is nothing right about it. I cannot go to school even though my IQ has been tested at about 133 so thats not genius or anything but maybe I could do something for this world but i must wait until money gets to point b from a. If I myself could pay for all these things I certainly would but when i m done with achieving my goals i will be contributing alot more than i am recieving a mere $440 monthly. Besides the fact that the state has it set up that if a mother and child is on welfare the father must return that money. They are borrowing me money but just from him, this in my mind is not as bad. The only other way is if the father is dead, and do you wan't to take that away from the children of a dead man. In this generation children of dead parents are most commonly war "heroes" The real problem has to do with the fact that people are becoming richer and richer for sport but you have to think of america's money as if it were a pie chart: The more one source gains the less from all other sources. When this pattern continues on the big get bigger and the little pieces of pie get smaller. Is that simple enough? I believe even you mr roscoerose are rich, atleast in my eyes. I allways imagined myself winning the lottery and you know what I imagined? Buying some property and getting all the run down used and free motor homes and trailers i could and make affordable housing for everyone. If I had just 1 million dollars i would do this for everyone. But there are those who have millions, billions of dollars and they don't care, it seems as though they are just trying to achieve the high score at an arcade game of monopoly. It's not a game I've seen children die. I've seen abuse, neglect, poverty and many much worse things sir something needs to be done NOW! Why can't I just win the lottery? why don't good things fall into place? Things don't just "work out" themselves in the end like some tv sitcom. People in america are starving to death right now. People in america are freezing to death at this very moment. Some of them are small children and they are going to die. Maybe you should consider buying a smaller house sir maybe you should think about riding the metro to work. Yeah right as if you ever would. Just think about it while your picking up your latte' in the morning and getting warmed up by your heater, that someone was just found dead because they didn't have a heater, and they didn't have a house to go into. Do not believe that this is some kind of choice. The homeless are dying. people are suffering. I hope you're nice and comfortable. If I ever saw even 60,000 dollars in a year you better bet that I am going to live in a shack but anyone in need around me will be cared for. I promise this.
Thank you
Derek Thomas on January 18, 2008, 5:19 PM
VoiceofAmericanpoverty; you are asking for a free lunch. Unfortunately for many of us there is no such thing as a free lunch. You cannot and should not rely on other people to help you out of a hole.
Besides you are far better off with your $5000 a year than many other poor people in other countries.
Roscorose there is indeed a tax fair to all income levels its called the FairTax. It removes the IRS, all federal income, payroll , corporate, capital gains, gift, and estate taxes, and replaces them with a single flat rate national retail sales tax. Which effectively taxes wealth. (It is supported by Mike Huckabee and Mike Gravel fyi)
Gary Dodge on January 18, 2008, 6:11 PM
Mr. Peterson presents some excellent insights to our current society. The "got to have it now" mentality of our society is at the center of our future economic success/failure. I can't help but wonder what it will take to change societies views.
F R on January 18, 2008, 7:53 PM
I have to say that I respect and admire Mr. Peterson. However, I think that we are all missing the point: the American economy is 66% consumer driven—no ifs ands or buts about it. For our economic to be in full gear there HAS TO BE spending. However, over the past 25 years, educational costs, health care costs, gas prices, etc all have skyrocketed while wages, adjusted for inflation, have remained stagnant. Therefore, so that our economy to remain at full level, with its 66% consumer driven component, EASY credit and NO saving HAD to occur. Until we figure that equation out, borrowing is going to continue to go up, while savings are going to remain in the negative. We can also reconfigure our GDP equation to reduce the spending component, but that would take a heck of a lot of courage from our political establishment and sacrifice from our population.
Kimberly Hughes on January 18, 2008, 9:03 PM
I am utterley sick, middle class 150,000 well guess what “mr middle class” I am living off of all I can at this time which is government assistance, which means all of america’s money and guess what I get? $440 dollars a month for me and my 5 yr old son. so how much is that a year? well about 5000 dollars. Anyways I know many people may look down upon someone for admitting that but, i myself have no other options at this time. I do not have family, or savings, no inheritance, or assets of any kind. I am poor begotten by poor, that died poor and left nothing but debt. So I have actually nothing. No fault of my own I graduated highschool at the age of 17 with a 3.75 gpa, not a very good school either mind you. All this time allmost six years now i have been trying and trying to get into college, but unfortunately there is no housing for me so the only way i can even attend is through federal aid and that wont cover living expenses. I can go work part time while i am attending but it still won’t be enough I’ve done the math unless I borrow from a lending source that actually most likely won’t except me, because of the previously mentioned debt left to me. So I could work full time and go to school, leaving me with only enough time for homework and sleep. It could work but oops I forgot I have a kid, so when do I get to be a parent? Inbetween naps? I don’t think so. I am not actually willing to let my child grow up without guidance. Fortunatley after 6 1/2 years on the hud housing waiting list I will be accepted within about another 1 1/2 years. Hurray!. Maybe I do want instant gratification, but maybe also i deserve it. I am not stupid I am not poor because of intelligence. I do not think that is right, there is nothing right about it. I cannot go to school even though my IQ has been tested at about 133 so thats not genius or anything but maybe I could do something for this world but i must wait until money gets to point b from a. If I myself could pay for all these things I certainly would but when i m done with achieving my goals i will be contributing alot more than i am recieving a mere $440 monthly. Besides the fact that the state has it set up that if a mother and child is on welfare the father must return that money. They are borrowing me money but just from him, this in my mind is not as bad. The only other way is if the father is dead, and do you wan’t to take that away from the children of a dead man. In this generation children of dead parents are most commonly war “heroes” The real problem has to do with the fact that people are becoming richer and richer for sport but you have to think of america’s money as if it were a pie chart: The more one source gains the less from all other sources. When this pattern continues on the big get bigger and the little pieces of pie get smaller. Is that simple enough? I believe even you mr roscoerose are rich, atleast in my eyes. I allways imagined myself winning the lottery and you know what I imagined? Buying some property and getting all the run down used and free motor homes and trailers i could and make affordable housing for everyone. If I had just 1 million dollars i would do this for everyone. But there are those who have millions, billions of dollars and they don’t care, it seems as though they are just trying to achieve the high score at an arcade game of monopoly. It’s not a game I’ve seen children die. I’ve seen abuse, neglect, poverty and many much worse things sir something needs to be done NOW! Why can’t I just win the lottery? why don’t good things fall into place? Things don’t just “work out” themselves in the end like some tv sitcom. People in america are starving to death right now. People in america are freezing to death at this very moment. Some of them are small children and they are going to die. Maybe you should consider buying a smaller house sir maybe you should think about riding the metro to work. Yeah right as if you ever would. Just think about it while your picking up your latte’ in the morning and getting warmed up by your heater, that someone was just found dead because they didn’t have a heater, and they didn’t have a house to go into. Do not believe that this is some kind of choice. The homeless are dying. people are suffering. I hope you’re nice and comfortable. If I ever saw even 60,000 dollars in a year you better bet that I am going to live in a shack but anyone in need around me will be cared for. I promise this.
Thank you
Derek Thomas on January 18, 2008, 10:19 PM
VoiceofAmericanpoverty; you are asking for a free lunch. Unfortunately for many of us there is no such thing as a free lunch. You cannot and should not rely on other people to help you out of a hole.
Besides you are far better off with your $5000 a year than many other poor people in other countries.
Roscorose there is indeed a tax fair to all income levels its called the FairTax. It removes the IRS, all federal income, payroll , corporate, capital gains, gift, and estate taxes, and replaces them with a single flat rate national retail sales tax. Which effectively taxes wealth. (It is supported by Mike Huckabee and Mike Gravel fyi)
Gary Dodge on January 18, 2008, 11:11 PM
Mr. Peterson presents some excellent insights to our current society. The “got to have it now” mentality of our society is at the center of our future economic success/failure. I can’t help but wonder what it will take to change societies views.
F R on January 19, 2008, 12:53 AM
I have to say that I respect and admire Mr. Peterson. However, I think that we are all missing the point: the American economy is 66% consumer driven—no ifs ands or buts about it. For our economic to be in full gear there HAS TO BE spending. However, over the past 25 years, educational costs, health care costs, gas prices, etc all have skyrocketed while wages, adjusted for inflation, have remained stagnant. Therefore, so that our economy to remain at full level, with its 66% consumer driven component, EASY credit and NO saving HAD to occur. Until we figure that equation out, borrowing is going to continue to go up, while savings are going to remain in the negative. We can also reconfigure our GDP equation to reduce the spending component, but that would take a heck of a lot of courage from our political establishment and sacrifice from our population.
Tony Purdom on January 19, 2008, 2:40 PM
I am very concerned about the economy. My biggest concern is that the government is devistating our economy on purpose so that the most powerful people can buy up the bussiness, and property as happened during the great depression.
During the great depression many loans were handed out margin loans that could be called in at every time. These loans enabled people to borrow money to invest in the stock market, they only had to have ten percent of the money that they were borrowing. J.P. Morgan, Rockefeller and other bankers then committed the greatest robbery of all time. They called in all these margin loans at the same time. It devistated the stock market and these bankers were able to buy up stocks at pennies on the dollar.
If you want to find out more about this occurance there are many movies out there. Zeitgiest was my favorite.
A tax cut at a time of war would inevitablly lead to inflation. Lowering interest rates in such in inflationary environment will also lead to inflation. Deficite economy, again inflation.
The United States refused to learn lessons from Japan, and Europe who ran deficit economies that were blamed for 20 year recessions in both countries.
I only hope that our current recession only lasts 20 years.
The federal reserve is a privately owned bank that prints the money for our coutnry. The owners of the federal reserve is kept a secret. They are a group of the most powerful people in the world. They are also a group that bennifits significantly from war and inflation.
Woodrow Wilson knew that when he signed the federal reserve act he was selling our country to the wolves. I fear that our present situation is the culmination of all of his greatest fears.
Tony Purdom on January 19, 2008, 7:40 PM
I am very concerned about the economy. My biggest concern is that the government is devistating our economy on purpose so that the most powerful people can buy up the bussiness, and property as happened during the great depression.
During the great depression many loans were handed out margin loans that could be called in at every time. These loans enabled people to borrow money to invest in the stock market, they only had to have ten percent of the money that they were borrowing. J.P. Morgan, Rockefeller and other bankers then committed the greatest robbery of all time. They called in all these margin loans at the same time. It devistated the stock market and these bankers were able to buy up stocks at pennies on the dollar.
If you want to find out more about this occurance there are many movies out there. Zeitgiest was my favorite.
A tax cut at a time of war would inevitablly lead to inflation. Lowering interest rates in such in inflationary environment will also lead to inflation. Deficite economy, again inflation.
The United States refused to learn lessons from Japan, and Europe who ran deficit economies that were blamed for 20 year recessions in both countries.
I only hope that our current recession only lasts 20 years.
The federal reserve is a privately owned bank that prints the money for our coutnry. The owners of the federal reserve is kept a secret. They are a group of the most powerful people in the world. They are also a group that bennifits significantly from war and inflation.
Woodrow Wilson knew that when he signed the federal reserve act he was selling our country to the wolves. I fear that our present situation is the culmination of all of his greatest fears.
Jen Something on January 21, 2008, 2:42 PM
This is creative destruction and it is planned. Just like Enron only now it is a country. SHAME ON YOU.
We know that.
www.thesanitycheck.com
www.investigatethesec.com
Jen Something on January 21, 2008, 7:42 PM
This is creative destruction and it is planned. Just like Enron only now it is a country. SHAME ON YOU.
We know that.
www.thesanitycheck.com
www.investigatethesec.com
Nirmal Patel on January 25, 2008, 2:35 AM
Yes, America's economy certainly worries me but in a very diff manner. I am worried about the quality of management personnel and expertise that the entire American establishment is turning to now a days. I mean, I am astonished how the Indian academic and market structure which, till the late 80s, was considered to turn out 'below par' technical expertise in each field, is suddenly elevated to this 'super status' without any significant changes in its operations and policy struc. And pl forget this humbug about liberalisation and focus on knowledge industries. A quick on the ground trip to India will immediately prove my point.
Also take note of certain comments from the 'super manager' Indra Nooyi that her co, Pepsico, has nothing to disturb it as a consequence of the subprime crisis, because it is in a diff industry !!! I ask you.
Nirmal Patel on January 25, 2008, 7:35 AM
Yes, America’s economy certainly worries me but in a very diff manner. I am worried about the quality of management personnel and expertise that the entire American establishment is turning to now a days. I mean, I am astonished how the Indian academic and market structure which, till the late 80s, was considered to turn out ‘below par’ technical expertise in each field, is suddenly elevated to this ‘super status’ without any significant changes in its operations and policy struc. And pl forget this humbug about liberalisation and focus on knowledge industries. A quick on the ground trip to India will immediately prove my point.
Also take note of certain comments from the ‘super manager’ Indra Nooyi that her co, Pepsico, has nothing to disturb it as a consequence of the subprime crisis, because it is in a diff industry !!! I ask you.
baraca yo-bama on January 26, 2008, 4:27 AM
Talk about passing the buck. Nice "con" Pete. Try to blame the average Joe for the economic problems of the US Govt. HA HA.
Former secretary of commerce blames the consumer. Ha, what a joke. Didnt you head the fiat currency institution known as The Federal Reserve. I cant beleive a banker would complain about the carrot and stick approach to consumer lending. Blame the average guy for not saving? How bout 15% off the top to Social Security. Isnt that "forced govt. savings". In the 25-30 years that you have been in the revolving door of govt service/wall street, the US has gone from the largest lender to the largest debtor. This is your tenure Pete. Your Legacy. Thanks alot.
baraca yo-bama on January 26, 2008, 9:27 AM
Talk about passing the buck. Nice “con” Pete. Try to blame the average Joe for the economic problems of the US Govt. HA HA.
Former secretary of commerce blames the consumer. Ha, what a joke. Didnt you head the fiat currency institution known as The Federal Reserve. I cant beleive a banker would complain about the carrot and stick approach to consumer lending. Blame the average guy for not saving? How bout 15% off the top to Social Security. Isnt that “forced govt. savings”. In the 25-30 years that you have been in the revolving door of govt service/wall street, the US has gone from the largest lender to the largest debtor. This is your tenure Pete. Your Legacy. Thanks alot.
Marcus Cimino on January 27, 2008, 5:59 AM
Pete Peterson is a true pariot. Ive read his book "Running on Empty" and ive come to the conclusion he is one of the few insiders in both the businessworld as well as our eco-political collaborating government. He has been warning our citizens about this policy on borrowing since the Nixon administration and has been ignored by major figures like Dick Cheney and Nixon when hes advised them on whats best for the american people. If more people spoke like Peterson with his stature and intelligence our country would no longer be a berocracy.
Marcus Cimino on January 27, 2008, 10:59 AM
Pete Peterson is a true pariot. Ive read his book “Running on Empty” and ive come to the conclusion he is one of the few insiders in both the businessworld as well as our eco-political collaborating government. He has been warning our citizens about this policy on borrowing since the Nixon administration and has been ignored by major figures like Dick Cheney and Nixon when hes advised them on whats best for the american people. If more people spoke like Peterson with his stature and intelligence our country would no longer be a berocracy.
baraca yo-bama on February 1, 2008, 8:49 PM
I have to comment one more time. I've recently read both your books but I can't buy your rationale.
The American economy is consumer oriented and driven by cheap credit. Thats it. The availability of cheap credit has been the driving force of this economy for well over 20 years. Albeit, the money is just created out of thin air.
The other argument about savings is patently absurd. 401K/Mutual Funds have about $7 trillion invested in them. How much money would be in the "Social Security" trust fund had it not been raided. Had it never been raided, the compounded intrest would be enough to pay the so called entitlement. Its insulting to insinuate that the citezen is to blame for this mess.
The theft of the American taxpayers retirement savings is the biggest swindle in the world.
You wouldnt have to worry about the younger generation, had your generation done its job.
baraca yo-bama on February 1, 2008, 9:33 PM
A Crusader in Clover
Pete Peterson, Enemy of Social Security, Counts Journalists as Friends
By John L. Hess
Where does the man find the time to earn all that money? You can%u2019t turn on the tube but there%u2019s Peter G. Peterson, telling some awestruck talking head that Social Security and Medicare are gobbling up our kiddies%u2019 porridge. Or he%u2019s writing it on your favorite op-ed page, or in magazines, or relaying the message through a thousand media converts. Or he%u2019s presiding over the Council on Foreign Relations or the Concord Coalition, or gracing the society page in a dinner jacket, at all the really important social functions, sometimes as host. Or you can find him more informally at Sunday brunch in the Hamptons, with such useful tablemates as Diane Sawyer, Mort Zuckerman, Leslie Stahl, Peter Jennings, Barbara Walters and so on.
Vanity Fair (8/93) called on the great crusader at his spectacular beachside retreat in 1993 for an admiring profile. It said the interview was interrupted by telephone calls arranging the appointment of Leslie Gelb (ex-New York Times) as president of the Council on Foreign Relations, and of James Hoge (ex-New York Daily News) as editor of the organization%u2019s journal. Peterson made another call inviting former Sen. Warren Rudman (R.-N.H.) to join the board of the Robert Wood Johnson Foundation, a health-policy appendage of the great health supply company Johnson & Johnson (of which Peterson%u2019s third wife is a director).
Peterson told Vanity Fair he was writing about health policy at that very moment, for his second book, Facing Up: How to Rescue the American Economy From Crushing Debt and Restore the American Dream. That would be the chapter that said: %u201CThe issue isn%u2019t whether these new [universal health] benefits would be nice to have. They would. The issue is whether we can afford it. We can%u2019t.%u201D
That%u2019s our boy. His remark lends piquancy to his wife%u2019s explanation that her husband needed his $2.5 million, $1,500-an-hour helicopter to safeguard his health.
The question is not whether this kind of health care is nice. It is. The question is whether he can afford it. He can.
While he is reticent about his income, Vanity Fair put his take-home in 1992 at $7 million, not an excessive sum for an investment banker of his rank. His partner Stephen Schwartzman, who is regarded in the financial press as the sparkplug of their firm, the Blackstone Group, said that year that investors in its venture fund should expect returns of 25 to 30 percent during the 1990s%u2014again, not unreasonable, since the Dow Jones average rose more than 26 percent last year.
Such rates of return are, again, piquant, because Peterson has described the indexation of Social Security, which lately has raised benefits by roughly 3 percent a year, as %u201Cone of the greatest fiscal tragedies of American history.%u201D Piquant? Wait. Peterson was at President Nixon%u2019s side as his economic adviser and secretary of commerce when that %u201Ctragedy%u201D was enacted in 1972. (Conservatives thought making the cost-of-living adjustment automatic would deter Congress from voting more generous benefits.)
Peterson denounces the %u201Cmad, drunken bash%u201D of the Reagan years. That would be the time when the top income-tax rate was cut from 70 percent to 28 percent, military spending went sky-high, and trillions were made (and lost) on savings and loans and takeovers financed by junk bonds. He was himself, of course, making out like a bandit, hustling for his share of the action, and contributing his bit to Republican campaign funds. He also led a chorus of corporate executives who keened about the exploding federal deficit. His contribution was a key series of articles in the New York Review of Books in 1982 (12/2/82, 12/16/82) that prepared the intellectual climate for the 1983 Social Security %u201Crescue,%u201D which raised payroll taxes and lowered benefits.
The series purported to prove with mathematical certainty that the entitlements of the elderly were snatching food from babies and driving the nation toward bankruptcy. George Will called it %u201Cthe most important journalism of 1982.%u201D (Washington Post, 12/19/82). Its charts persuaded such liberals as Tom Wicker and Anthony Lewis. Leslie Stahl of ABC said Peterson %u201Creally began to educate me.%u201D (She has since repaid the favor with appearances by her mentor on 60 Minutes.)
All the journalists he met seemed impressed by his expertise, and by his generosity in offering to surrender his own entitlements. It does not seem to have occurred to any of his interviewers that a rise of 1 percentage point in his income tax rate would cost him perhaps twice as much as his Social Security and Medicare benefits combined. Nor have any observed how policies he has supported have transferred the tax burden from the wealthy to the wage earner. Indeed, in Facing Up, Peterson remarks with pleased surprise that nobody had clamored for a cut in the Social Security payroll tax to match cuts in benefits.
If opinion-makers consider Peterson an expert on finance, experts on finance tend to consider him more of an opinion-maker. Ken Auletta%u2019s book Greed and Glory, about the near collapse of Lehman Brothers in the 1980%u2019s, describes Peterson as, in the eyes of his partners, an arrogant bungler dying to make killings in leveraged buyouts, an obsessed reactionary, a name-dropping snob, and, all told, so much a pill that his partners paid him $18 million to get rid of him.
Now to return to the question with which we began: How does Peterson find the time to make all that money? It would seem to be the new-fashioned way of tapping the gusher of wealth flowing from the economy. Peterson took his severance pay to Schwartzman and formed the Blackstone Group, which played the arbitrage game, bought up failing companies, shopped the savings-and-loan auctions, and made money.
A towboat operated by one of their subsidiaries and piloted by a man who had flunked his licensing exam seven out of eight times hit a railroad bridge and caused 47 deaths. Another Blackstone company drilled a hole in the Chicago River and caused that city%u2019s costliest disaster since the Great Fire. A major partner resigned last October under the cloud of an ugly scandal alleging fraud.
These things happen. Peterson is a busy man. Journalists may be forgiven for not connecting him with these misfortunes, or even knowing about them. What is not forgivable is their swallowing his ideological book, line and sinker.
baraca yo-bama on February 2, 2008, 1:49 AM
I have to comment one more time. I’ve recently read both your books but I can’t buy your rationale.
The American economy is consumer oriented and driven by cheap credit. Thats it. The availability of cheap credit has been the driving force of this economy for well over 20 years. Albeit, the money is just created out of thin air.
The other argument about savings is patently absurd. 401K/Mutual Funds have about $7 trillion invested in them. How much money would be in the “Social Security” trust fund had it not been raided. Had it never been raided, the compounded intrest would be enough to pay the so called entitlement. Its insulting to insinuate that the citezen is to blame for this mess.
The theft of the American taxpayers retirement savings is the biggest swindle in the world.
You wouldnt have to worry about the younger generation, had your generation done its job.
baraca yo-bama on February 2, 2008, 2:33 AM
A Crusader in Clover
Pete Peterson, Enemy of Social Security, Counts Journalists as Friends
By John L. Hess
Where does the man find the time to earn all that money? You can%u2019t turn on the tube but there%u2019s Peter G. Peterson, telling some awestruck talking head that Social Security and Medicare are gobbling up our kiddies%u2019 porridge. Or he%u2019s writing it on your favorite op-ed page, or in magazines, or relaying the message through a thousand media converts. Or he%u2019s presiding over the Council on Foreign Relations or the Concord Coalition, or gracing the society page in a dinner jacket, at all the really important social functions, sometimes as host. Or you can find him more informally at Sunday brunch in the Hamptons, with such useful tablemates as Diane Sawyer, Mort Zuckerman, Leslie Stahl, Peter Jennings, Barbara Walters and so on.
Vanity Fair (8/93) called on the great crusader at his spectacular beachside retreat in 1993 for an admiring profile. It said the interview was interrupted by telephone calls arranging the appointment of Leslie Gelb (ex-New York Times) as president of the Council on Foreign Relations, and of James Hoge (ex-New York Daily News) as editor of the organization%u2019s journal. Peterson made another call inviting former Sen. Warren Rudman (R.-N.H.) to join the board of the Robert Wood Johnson Foundation, a health-policy appendage of the great health supply company Johnson & Johnson (of which Peterson%u2019s third wife is a director).
Peterson told Vanity Fair he was writing about health policy at that very moment, for his second book, Facing Up: How to Rescue the American Economy From Crushing Debt and Restore the American Dream. That would be the chapter that said: %u201CThe issue isn%u2019t whether these new [universal health] benefits would be nice to have. They would. The issue is whether we can afford it. We can%u2019t.%u201D
That%u2019s our boy. His remark lends piquancy to his wife%u2019s explanation that her husband needed his $2.5 million, $1,500-an-hour helicopter to safeguard his health.
The question is not whether this kind of health care is nice. It is. The question is whether he can afford it. He can.
While he is reticent about his income, Vanity Fair put his take-home in 1992 at $7 million, not an excessive sum for an investment banker of his rank. His partner Stephen Schwartzman, who is regarded in the financial press as the sparkplug of their firm, the Blackstone Group, said that year that investors in its venture fund should expect returns of 25 to 30 percent during the 1990s%u2014again, not unreasonable, since the Dow Jones average rose more than 26 percent last year.
Such rates of return are, again, piquant, because Peterson has described the indexation of Social Security, which lately has raised benefits by roughly 3 percent a year, as %u201Cone of the greatest fiscal tragedies of American history.%u201D Piquant? Wait. Peterson was at President Nixon%u2019s side as his economic adviser and secretary of commerce when that %u201Ctragedy%u201D was enacted in 1972. (Conservatives thought making the cost-of-living adjustment automatic would deter Congress from voting more generous benefits.)
Peterson denounces the %u201Cmad, drunken bash%u201D of the Reagan years. That would be the time when the top income-tax rate was cut from 70 percent to 28 percent, military spending went sky-high, and trillions were made (and lost) on savings and loans and takeovers financed by junk bonds. He was himself, of course, making out like a bandit, hustling for his share of the action, and contributing his bit to Republican campaign funds. He also led a chorus of corporate executives who keened about the exploding federal deficit. His contribution was a key series of articles in the New York Review of Books in 1982 (12/2/82, 12/16/82) that prepared the intellectual climate for the 1983 Social Security %u201Crescue,%u201D which raised payroll taxes and lowered benefits.
The series purported to prove with mathematical certainty that the entitlements of the elderly were snatching food from babies and driving the nation toward bankruptcy. George Will called it %u201Cthe most important journalism of 1982.%u201D (Washington Post, 12/19/82). Its charts persuaded such liberals as Tom Wicker and Anthony Lewis. Leslie Stahl of ABC said Peterson %u201Creally began to educate me.%u201D (She has since repaid the favor with appearances by her mentor on 60 Minutes.)
All the journalists he met seemed impressed by his expertise, and by his generosity in offering to surrender his own entitlements. It does not seem to have occurred to any of his interviewers that a rise of 1 percentage point in his income tax rate would cost him perhaps twice as much as his Social Security and Medicare benefits combined. Nor have any observed how policies he has supported have transferred the tax burden from the wealthy to the wage earner. Indeed, in Facing Up, Peterson remarks with pleased surprise that nobody had clamored for a cut in the Social Security payroll tax to match cuts in benefits.
If opinion-makers consider Peterson an expert on finance, experts on finance tend to consider him more of an opinion-maker. Ken Auletta%u2019s book Greed and Glory, about the near collapse of Lehman Brothers in the 1980%u2019s, describes Peterson as, in the eyes of his partners, an arrogant bungler dying to make killings in leveraged buyouts, an obsessed reactionary, a name-dropping snob, and, all told, so much a pill that his partners paid him $18 million to get rid of him.
Now to return to the question with which we began: How does Peterson find the time to make all that money? It would seem to be the new-fashioned way of tapping the gusher of wealth flowing from the economy. Peterson took his severance pay to Schwartzman and formed the Blackstone Group, which played the arbitrage game, bought up failing companies, shopped the savings-and-loan auctions, and made money.
A towboat operated by one of their subsidiaries and piloted by a man who had flunked his licensing exam seven out of eight times hit a railroad bridge and caused 47 deaths. Another Blackstone company drilled a hole in the Chicago River and caused that city%u2019s costliest disaster since the Great Fire. A major partner resigned last October under the cloud of an ugly scandal alleging fraud.
These things happen. Peterson is a busy man. Journalists may be forgiven for not connecting him with these misfortunes, or even knowing about them. What is not forgivable is their swallowing his ideological book, line and sinker.
James Nordhoff on February 13, 2008, 8:47 PM
Never trust a rich man, never, never, never.
The Bible had it right on that one. Bound for what a faithful Christian would call Hell, they must suck up riches at any and all costs, including their integrity and moral conscience. Of course, anyone who learned at the feet of such a master of attaining wealth on the backs of the poor working slobs, (I'm one), would praise his teachings. I guess learning to view hard working people as losers helps. They are, in their minds, better than us (slobs), right?
Yeah, right. Orchestrating a whole country to make the poor pay the rich and powerful's way thru life Tax Free, what a great man!!
The kicker of all this is, knowing all of these back door truths about any and all of these rich folk's ways isn't going to help us one iota, to become any better off, economically. The system is now so twisted into a Rich is only for the rich, all of us tax providers are permanently screwed. War is financed by us and the national debt to foreign countries. (Nice). Galling. Makes a revolution seem almost mandatory.
I say viva la revolution!!!!
We don't even know who we really should vote for anymore, everyone is such a liar and backstabber. No one person can fix all of this evil. Besides, all of the politicians are in on it!!!
James Nordhoff on February 14, 2008, 1:47 AM
Never trust a rich man, never, never, never.
The Bible had it right on that one. Bound for what a faithful Christian would call Hell, they must suck up riches at any and all costs, including their integrity and moral conscience. Of course, anyone who learned at the feet of such a master of attaining wealth on the backs of the poor working slobs, (I’m one), would praise his teachings. I guess learning to view hard working people as losers helps. They are, in their minds, better than us (slobs), right?
Yeah, right. Orchestrating a whole country to make the poor pay the rich and powerful’s way thru life Tax Free, what a great man!!
The kicker of all this is, knowing all of these back door truths about any and all of these rich folk’s ways isn’t going to help us one iota, to become any better off, economically. The system is now so twisted into a Rich is only for the rich, all of us tax providers are permanently screwed. War is financed by us and the national debt to foreign countries. (Nice). Galling. Makes a revolution seem almost mandatory.
I say viva la revolution!!!!
We don’t even know who we really should vote for anymore, everyone is such a liar and backstabber. No one person can fix all of this evil. Besides, all of the politicians are in on it!!!
Herbert Roque on February 26, 2008, 12:16 PM
Dude almost everone is really worried about the economy and its getting alot worse than it is now. the markets are dropping and they are not going to recover anytime sooner. the people that are mostly getting hurt are the real estate and the banks
Herbert Roque on February 26, 2008, 5:16 PM
Dude almost everone is really worried about the economy and its getting alot worse than it is now. the markets are dropping and they are not going to recover anytime sooner. the people that are mostly getting hurt are the real estate and the banks
Reuben Cohen on March 16, 2008, 7:12 PM
Perhaps the media has brought each citizen to a different philosophical position than this country has historically had. But because of the widespread availability of information that philosophical position can have a wealth of foundation regardless if it 'Me First' or 'For the Good of the Country'. But what I think the media has brought to the individual is information about how well the Corporation views its responsibility within the American economy. Recent examples include a couple of the major contractors to the Pentagon who take care of a lot of the daily tasks of everyday living in Iraq and here I am thinking about Halliburton and Kellog, Brown and Root. Now last week the newspapers state the Iraq war now runs $12B per month. Now what percentage of that cost goes to the contractors. Last year Halliburton re-headquartered out of Houston to Dubai and Kellog, Brown and Root reheadquartered to the Cayman Islands. And that old 'Coming to America' lawsuit taught me about the difference between gross and net profit and the situation that Hollywood is banking out of the Cayman Islands. So if individuals see that corporations whom derive a great deal of income out of doing business on these shores are 'headquartered' elsewhere in the world in order to take advantage of 'taxable situations' where does the individual in this country think he should position himself? I am old-fashioned, I do save and make my children do so. But have you considered what is left after you get your passbook savings statement and then have to add it to your 1040 declaration?
Reuben Cohen on March 16, 2008, 11:12 PM
Perhaps the media has brought each citizen to a different philosophical position than this country has historically had. But because of the widespread availability of information that philosophical position can have a wealth of foundation regardless if it ‘Me First’ or ‘For the Good of the Country’. But what I think the media has brought to the individual is information about how well the Corporation views its responsibility within the American economy. Recent examples include a couple of the major contractors to the Pentagon who take care of a lot of the daily tasks of everyday living in Iraq and here I am thinking about Halliburton and Kellog, Brown and Root. Now last week the newspapers state the Iraq war now runs $12B per month. Now what percentage of that cost goes to the contractors. Last year Halliburton re-headquartered out of Houston to Dubai and Kellog, Brown and Root reheadquartered to the Cayman Islands. And that old ‘Coming to America’ lawsuit taught me about the difference between gross and net profit and the situation that Hollywood is banking out of the Cayman Islands. So if individuals see that corporations whom derive a great deal of income out of doing business on these shores are ‘headquartered’ elsewhere in the world in order to take advantage of ‘taxable situations’ where does the individual in this country think he should position himself? I am old-fashioned, I do save and make my children do so. But have you considered what is left after you get your passbook savings statement and then have to add it to your 1040 declaration?
Michele B on March 27, 2008, 9:56 PM
And the question consumers should be asking is whose fault is it truly that the economy is like it is? I agree with Obama's comment today that the financial sector is not regulated. There should be some rules for lending money so as not to take advantage of the consumer. Is is right to be paying $750 in interest on a $800 mortgage payment each month? Paying $50 a month, can the house really get paid off in thirty years? NO. Yes, the consumer gets to stay in a nice house for thirty years, but the loan company pulls in usually 250% of the homes value. Is it right to be paying more in interest on a home than it is worth? This is what companies like Wells Fargo are able to charge and get away with it. The late charge on a mortgage loan from them is a percentage. That percentage has added up to $300 for one week. Is that fair? Second time late in 15 months. I understand sub-prime and I understand fees must be charged, but I do not understand the unethical amount of these fees and charges. If a risky borrower has trouble paying their regular mortgage payment, how do high-fees and charges give them incentive to pay on time? I personally think "cash-back" is always an incentive to pay ontime. Ten, fifty, or a hundred dollars for paying ontime and before. There should be a generalized pattern of loan programs applicable to all consumers from all lenders. Something should change in the credit rating program. I HAD bad credit, but I have been paying my bills ontime for over six years now. I cannot afford to pay past debt off, so shouldnt there be a rating system for how Im paying now? Checking the past five years, I feel, is sufficient. Everyone's situation is different.
I do not understand why Republicans do not feel responsible for helping consumers. They are the reason why this happened. Non-regulation of this sector has spun out of control and it has finally come to a head. Not every consumer can afford to have a lawyer on hand for every financial transaction that transpires. For any for that matter. Lawyers are expensive. Only those with alot of money dont worry about things like that and "monthly expenses." They spend freely. The little man has to work to survive and count nickels the whole way. Its a shame that those monthly expenses are so high. Why is Comcast able to charge for television service that should be free? People should be able to get major network and local channels for free if nothing else. Thats how it used to be. Why do the basics to sustain life cost so much now? With all the trillions that go in and out of the governement, it seems, some things and people are getting short changed. Who is the government really working for? Whose side is Bush on, that he'll allow Bear Stearns to get bailed out and has bailed out the airlines before and banks, but not homeowners when they clearly have been taken advantage of? And who is the stimulus package for? Its not for the poorest folk, the people that need it the most. It darn sure cant help homeowners that are losing their homes. It cant help at the pumps. Who's it for, to make Bush able to sleep at night? I hope the democrats make a change soon, because the country has already lost most of its factory jobs, Clinton will clear out the health care jobs if she gets elected. They'll be nothing else left for anyone to do but rob and steal.
Michele B on March 28, 2008, 1:56 AM
And the question consumers should be asking is whose fault is it truly that the economy is like it is? I agree with Obama’s comment today that the financial sector is not regulated. There should be some rules for lending money so as not to take advantage of the consumer. Is is right to be paying $750 in interest on a $800 mortgage payment each month? Paying $50 a month, can the house really get paid off in thirty years? NO. Yes, the consumer gets to stay in a nice house for thirty years, but the loan company pulls in usually 250% of the homes value. Is it right to be paying more in interest on a home than it is worth? This is what companies like Wells Fargo are able to charge and get away with it. The late charge on a mortgage loan from them is a percentage. That percentage has added up to $300 for one week. Is that fair? Second time late in 15 months. I understand sub-prime and I understand fees must be charged, but I do not understand the unethical amount of these fees and charges. If a risky borrower has trouble paying their regular mortgage payment, how do high-fees and charges give them incentive to pay on time? I personally think “cash-back” is always an incentive to pay ontime. Ten, fifty, or a hundred dollars for paying ontime and before. There should be a generalized pattern of loan programs applicable to all consumers from all lenders. Something should change in the credit rating program. I HAD bad credit, but I have been paying my bills ontime for over six years now. I cannot afford to pay past debt off, so shouldnt there be a rating system for how Im paying now? Checking the past five years, I feel, is sufficient. Everyone’s situation is different.
I do not understand why Republicans do not feel responsible for helping consumers. They are the reason why this happened. Non-regulation of this sector has spun out of control and it has finally come to a head. Not every consumer can afford to have a lawyer on hand for every financial transaction that transpires. For any for that matter. Lawyers are expensive. Only those with alot of money dont worry about things like that and “monthly expenses.” They spend freely. The little man has to work to survive and count nickels the whole way. Its a shame that those monthly expenses are so high. Why is Comcast able to charge for television service that should be free? People should be able to get major network and local channels for free if nothing else. Thats how it used to be. Why do the basics to sustain life cost so much now? With all the trillions that go in and out of the governement, it seems, some things and people are getting short changed. Who is the government really working for? Whose side is Bush on, that he’ll allow Bear Stearns to get bailed out and has bailed out the airlines before and banks, but not homeowners when they clearly have been taken advantage of? And who is the stimulus package for? Its not for the poorest folk, the people that need it the most. It darn sure cant help homeowners that are losing their homes. It cant help at the pumps. Who’s it for, to make Bush able to sleep at night? I hope the democrats make a change soon, because the country has already lost most of its factory jobs, Clinton will clear out the health care jobs if she gets elected. They’ll be nothing else left for anyone to do but rob and steal.
Rachele Antenucci on July 16, 2008, 1:07 PM
When Clinton was president the dollar and the Euro and the British Pound were close to equal. Then along came the hummer and Monica. All those that were not getting any were up in arms about Clinton's sex life which in my opinion has nothing to do with us. Then along came George W. Bush and his affair with a woman who mysteriously died by "apparent suicide" (I think she was murdered) who barely made it to the media owned by Bush's first cousin. Gee I wonder why?@!!! Then came 9/11, the lies, and the invasion of Afghanistan and Iraq that had nothing to do with it… all impeachable offenses that violate the Geneva Convention. Now not only is stolen oil $4.50 and climbing at the pumps, but the dollar is let's call it two dollars to one British Pound and it is a dollar and sixty cents to one Euro. Yes I am very concerned the US Dollar will soon be worthless like many third world countries, but not too many people here pay attention to that or make a stink about it. No, they would rather focus in on someone who is doing the nasty with someone they are not married to and who is not and "saved." They look the other way with the damage to the economy and the crimes against humanity all because their leader says he imagines he is "born again." That stupidity is what the powerful and greedy of this world are banking on.
Rachele Antenucci on July 16, 2008, 5:07 PM
When Clinton was president the dollar and the Euro and the British Pound were close to equal. Then along came the hummer and Monica. All those that were not getting any were up in arms about Clinton’s sex life which in my opinion has nothing to do with us. Then along came George W. Bush and his affair with a woman who mysteriously died by “apparent suicide” (I think she was murdered) who barely made it to the media owned by Bush’s first cousin. Gee I wonder why?@!!! Then came 9/11, the lies, and the invasion of Afghanistan and Iraq that had nothing to do with it… all impeachable offenses that violate the Geneva Convention. Now not only is stolen oil $4.50 and climbing at the pumps, but the dollar is let’s call it two dollars to one British Pound and it is a dollar and sixty cents to one Euro. Yes I am very concerned the US Dollar will soon be worthless like many third world countries, but not too many people here pay attention to that or make a stink about it. No, they would rather focus in on someone who is doing the nasty with someone they are not married to and who is not and “saved.” They look the other way with the damage to the economy and the crimes against humanity all because their leader says he imagines he is “born again.” That stupidity is what the powerful and greedy of this world are banking on.
Irvin Sha on September 18, 2008, 11:48 AM
@creciendO
The point that you’re making – that the risk of an ARM is equally borne by the lender and the borrower – is actually inaccurate. Thanks to a modern innovation called securitization, most banks will not actually hold onto the loans that they make. Instead, they take the loans that they’ve made, package them into loan pools, and then sell them to institutional investors as diversified debt instruments. Upon selling the loan, the bank will typically regain the principal that it paid, as well as fees for servicing and originating the loans. From an economic perspective, the bank’s incentive to “originate” higher volumes of loans is substantially increased, while its incentive to ensure that those loans are relatively low risk is substantially decreased.
The risk then, is held by the borrower and the investor. The lender (or loan originator) bears relatively little risk. Unfortunately, investors were all too willing to rely on the ratings agencies to determine whether or not the loans they were purchasing were risky. The amount of information that they got from banks was relatively trifling. However, most did not realize that they were being fed bad information until the default rates on their investments spiked well above expectations.
The banks have now run into problems with this model. First, they need to “warehouse” these loans until they have a sufficient number to package and resell them. However, when the mortgage crisis hit, investors became very reluctant to purchase the loans sitting in bank warehouses. As defaults began to increase, the banks began to take hits that they didn’t expect to have been their problem. The second problem is that banks occasionally drank some of their own Kool-Aid and held on to some of these loans. This also turned out to be a disaster.
I hope this makes sense.
William Hickey on December 6, 2008, 11:43 PM
Roakes:
You are half right about George W – fighting wars is not good for budgetary management. (Cutting taxes is; it brings in more revenue.)
But think your own position through: if poor budgetary management – spending more than you take in – is bad, how can the solution be spending more than you take in?
But that’s what the new plan is, isn’t it?
What is Barack thinking?
Jim Stiene on April 24, 2009, 7:55 PM
As long as we have to pay interest on every dollar to the Fed it is statistically impossible to pay off our debt, and our debt will be six times the GDP in 50 years. This is unsustainable. Something has to change.
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