Letter to the editor:

Top-down approach to rescue misguided

Kat Tatz, Las Vegas

Thu, Oct 9, 2008 (2:03 a.m.)

I watched and laughed Wednesday as the Fed cut the interest rate by half a point. The poor fools ... still trying to implement the trickle-down theory. Don’t they understand that human emotion is everything?

The economy doesn’t live in a vacuum. If people are too scared to spend, big business doesn’t make money. The government and banks are trying to scare the middle class with the threat that the banks aren’t going to be lending those customers any more money. Instead, the banks should be begging us to start spending money again so someone will borrow from them.

No one is going to take out loans because the middle class has stopped spending and businesses are going bankrupt. What does a business (that doesn’t have any business) need with a loan?

The problem is there is no money trickling up! The government had better stop this foolishness and do what makes sense, which is put a price cap on all products sold to the public.

Huge corporations need to step up to the plate. Instead of windfall profits, they are going to have to be happy with reasonable profits for the time being.

Discussion: 23 comments so far…

By mwh710

10/9/08 at 4:59 a.m.

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That won't happen as long as Re-Puke-licans are in charge....
By neiman1

10/9/08 at 8:29 a.m.

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If top down is wrong. Why was McCain attacked for saying if he becomes President he will direct his new Treasury Secretary to emphasize the section of the recent bill to buy up mortgages and make the securities good because the mortgage is then good instead of just buying the securities and letting the mortgage go bad. The bottom up approach was what he wants.
By artistsolution

10/9/08 at 9:03 a.m.

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Hi Neiman,

Don't you get it? Mccain is admitting he has been wrong about trickle down economics. He is flip flopping now because he is unpopular! Wake up...who are you going to believe? Democrats who were against top down policies 95% of the time or republicans who voted in favor of top down policies 95% of the time? Take a look around you. It's time to admit Bush and the republicans have ruined this country! McCain has shown poor judgment in the past and he continues to show poor judgment by choosing that half wit for vice president!
By KDR81

10/9/08 at 9:11 a.m.

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It was never intended to save the economy, is was intended to bailout creditors.

The press took the government and Wall Street officials at their word and didn't bother digging deep. Maybe that is a problem with the modern journalism school...we don't have journalists who are finance, business, or economics majors writing about finance, business, or economic issues.

Or it may be due to the fact that the government really doesn't give a hoot about the people, what they care about are all the special interests who tossed millions their way to help keep them elected.

"Save our skins and we'll save yours"

The bailout was a political decision not an economic one.
By KDR81

10/9/08 at 9:12 a.m.

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Neiman,

The Republicans are clearly going for a top down approach. National socialization of banking and Wall Street and Democrats are cheering and totally in support.
By jfnance32

10/9/08 at 10:19 a.m.

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Obama plan is to give $1.95 a day in middle class tax breaks over McCain's plan.

Oh Boy!!!! We will all be able to go to McDonalds and buy a cheesburger.

Obama will also increase taxes on job creation capital investments. That will sure help us in Las Vegas.....LOL

McCain wants to decrease taxes on job creation capital investments.

With Obama, I guess we will get our happy meals.
By artistsolution

10/9/08 at 10:49 a.m.

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Happy meal is better than no meal!
By artistsolution

10/9/08 at 11:22 a.m.

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Ask yourself this JFnance, how does the money get up there in the first place in order for it to trickle down?

If people are afraid (like they are now) they stop spending money. If people stop spending money, businesses don't make money. If businesses don't make money, they cut jobs (why would a business hire more people if they have no customers?)

I hope you can see the logic in this.
By redferret

10/9/08 at 11:34 a.m.

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Also it assumes that the rich will always plow their money back into investments that will help working stiffs like us. Instead the rich might just buy a mansion, foreign cars, luxury items that don't employ a lot of workers, or go on vacation outside the US. Really in this market business already won't be doing a lot of investment. Why build a new store right now, when demand is low?
Hence the name for supply side economics: Voodoo economics.
By jfnance32

10/9/08 at 11:53 a.m.

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Yes, the $1.95 a day per tax person will bust open wide the economy.

It reminds me of when Ceaser would throw out bread to keep the common people happy.
By redferret

10/9/08 at 12:10 p.m.

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Well 1.95 x 365=711.75x 200 million adults= about $142,350,000,000 into consumers hands as a whole. Sounds like that might just help the struggling working and middle classes. More money in their hands means more stable mortgages (ie fewer defaults), less debt, and more money to in general spend on other things. Also if that tax cut remains constant versus inflation, an Obama 4 year presidency would give tax payers (who actually need it) $569,400,000,000, and an 8 year term would give $1,138,800,000,000. This kind of does sound significant.
A drop in a bucket might not seem like much, but 200,000,000 drops can make a difference.
By jfnance32

10/9/08 at 1:43 p.m.

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If you think that $1.95 per tax payer per day will start a boom economy then I guess you will drink whatever koolaid that they will feed you.

Of course, the $142 billion is being paid for by increasing taxes on job creation capital investment.

So Obama is not adding $142 a billion to the economy. He is just moving it from a capital job creation pool of money to a consumption pool of money.

He is just trying to bribe voters into voting for him. It is like Ceaser throwing bread to citizens to win them over.

I guess Obama is shooting for that McDonalds type economy where we spend money on cheesburgers instead of plant and equipment that create real productivity. I guess he might create jobs at McDonals instead at Boeing.

Most likely, Obama will be the trillion dollar man. He will be the first President to breach the trillion dollar annual budget deficits because he has all kinds of new spending programs that are not paid for.

I wonder what kool-aid you Obama supports will try to pour when that day arrives.
By artistsolution

10/9/08 at 2:02 p.m.

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So let me get this straight, you are in favor of pumping money into big business on wall street? You do understand that wall street is dependent on a global economy now, don't you? You understand that taking tax dollars from middle class Americans and giving those dollars to rich corporations does not mean Americans are going to benefit. Big business is taking their jobs where labor is cheap. Big business doesn't care about you or America. It cares about money. Think about it.
By jfnance32

10/9/08 at 2:11 p.m.

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It was the government monkeying around and pushing for sub-prime loans so that minorities (including a whole of illegals) that got us into this mess.

Read this:

http://online.wsj.com/article/SB12221294...

It is small business and big businesses that will get slam with Obama's higher taxes.

I am not sure if you have a job. It is a government job then you should vote for Obama.

I guess if you work for McDonalds then vote for Obama too. That $1.95 per taxpayer per day in tax cuts over McCain will increase your business.

Yes, Obama wants to attack small and big business and take money away from them so that you can buy your cheeseburger each day.
By artistsolution

10/9/08 at 2:26 p.m.

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The article you mention was in the opinion section of the wall street journal. You are confusing opinion with facts.

Obama has said time and time again that he will not raise the taxes of people making under 250k a year. 90% of small businesses fall under this category and therefore would not see a tax increase.
By tokaloshe

10/9/08 at 2:31 p.m.

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Great example of intelligence here,
"poor fools, still trying to implement the trickle down theory"
Kat, the fed rate is what banks pay thereby effecting what you pay, but it won't effect mortgage rates so quickly because those are longer term---etc. thats why they always say its like "pushing on a string" the fed rate never has an impact on long term interest rates immediately it will only effect short term and not always right always so quick either depending on banks positions, etc. prime lending rate was also lowered to match the fed, this will effect your credit card rates and home equity line so it is good for you kat.
On the downside you will probably see cd's drop,
no, not music cd's, certificates of deposit, so your money will earn less in a short term cd.

artistsolution,
If they don't keep liquidity in the market lots of people will lose their job, remember if a bank closes and does not re-open it shrinks the availaability of money, this is why the government must inject more cash into the system.
This was one of the problems of the great depression it would not have been so long and painful with unemployment at 20 percent plus but people like you refused to bail out wall street, so it was like i am not going to help myself or anyone else we can just pay for it, well they did, from late 1930 until 1941 unemployment never went below 15 percent.
By tokaloshe

10/9/08 at 2:35 p.m.

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nance32,
cesar did not always throw bread out to the people sometimes he would throw vegetables or even fruit.
By tokaloshe

10/9/08 at 2:40 p.m.

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neiman 1, purchasing homes is to stabilize prices or values, when they stabilize we can re-sell them for more.
I can tell you are not a homeowner, if you were you would understand how values have continued to fall because of too much supply.
poor people and illegals can not make payments anymore so we have to buy their home one way or another. If Barney Frank and Obama would not have pushed these loans we would not have to do this.
By NVMakz

10/9/08 at 2:40 p.m.

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"The article you mention was in the opinion section of the wall street journal. You are confusing opinion with facts."

Fact based OP-ED IS the mainline of news and commentary these days. Fact based OP-ED helps those in a busy world catch up on the latest arguments about issues. The lying liberal major media is a hard hurtle to overcome as they assist / in-the-tank for the liberal; and ALL they are are OP-ED. Your thesis is quite old-fashioned and impotently quaint, but really blown out by a modern society.
xxxx

"Obama has said time and time again that he will not raise the taxes of people making under 250k a year. 90% of small businesses fall under this category and therefore would not see a tax increase."

As a measly % is "cut" for the vast majority of whom pay little to no taxes anyway and a massive "taking" from those who succeed and produce in general; these same low/middle-income people will be subjected to BIG tax increases almost everywhere else in society. The "backside" tax increases throughout the economy - to feed the "Obamunist" worker's paradise - WILL SWAMP and TRUMP the measly % the struggling would save from their paychecks. Obama's lies are just an elaborate shell-game which Obama will give peanuts and take out truckloads of wealth.

Obama is a lying sack of crap.
By artistsolution

10/9/08 at 3:08 p.m.

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Tok,

Bush and the republicans have been implementing the trickle down theory for 8 years now. Why isn't it working?

I agree the bailout was needed and I am glad it had some provisions for the middle class to be paid back with interest. However, banks may not be so quick to lend as you think they will. They are just glad to recoup some of their losses. 700 billion in reverse socialism (taking from the middle class to give to the rich)means nothing if it is hoarded. Let's hope that is not allowed to happen.

Most American's finances are being stretched too thin because of the increase in cost of living (which happened while bush and the republican congress where at the helm.) What happens when the middle class runs out of money, who will be left to bail out big business then? Pretty dangerous scenerio if you ask me.
By thebs

10/9/08 at 4:40 p.m.

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Nance, August 18: "It gives $1.64 more a day to the middle class over McCain's plan."

In a day, Nance's projection for the Obama tax cut rose 3%.

Nance, August 19: "Obama plan for middle class folks earning between $35k to $70k will give $1.69 daily tax break over McCain."

Then, Nance's projection for the Obama tax cut rose a whopping 19% from his original estimate!

Nance, August 29: "She wants to give an extra $1.95 a day more in tax breaks than McCain to the middle class so that the middle class can buy cheesburgers....oops wrong again that is Obama"

Finally, it arrived at an increase of 21% from his original projection... just 15 days later.

Nance, September 2: "He wants to give us an extra $1.98 a day (Cheeseburger plan) in tax breaks over McCain while at the same time heavily increase taxes on job creation capitial investments."

At this rate, even with Nance's projections settling back around $1.95, things are looking better and better for Obama with Nance's projections.

Thanks Nance!

And Nance, please explain how taxing capital gains kills jobs. Obama wants to reset capital gains taxes to the same level as the Clinton administration, which CREATED millions of more jobs than the Bush administration, even with higher capital gains taxes.

Busted! You lose!

Oh it's good to be home!
By tokaloshe

10/9/08 at 8:49 p.m.

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reluctance of lending or limited lending will be driven by the availability of cash near term.
That is why GM shares fell and were the primary reason of market falling today. automakers are expecting dismal sales, because of credit tightening.
By tokaloshe

10/9/08 at 8:51 p.m.

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thebs;
Capital gains don't get reinvested into economy they go to the government.