Sunday, August 09, 2009

The Limits which should be set

I will probably catch Hell from Dean Baker over this, but I am going to utilize his Post on further discussion of yesterday’s theme. Dean takes on this Washington Post article with the contentions that the WP does not accurately reflect Populist opinion, ignores some of the actual Concerns of Populists, and that the Earnings on which the Bonuses are based are actually subtracted from the Incomes of Consumers and Businesses. It is actually a good article based upon sound research, and Dean’s critique is also well-written and brought up real elements of the Problem which should be evaluated. So what do We do with these two Pieces?

The first Statement to be entered upon the Record states that these companies borrowed a lot of money from the Government, which they must repay. The Contention of the companies is that the Government should allow the companies to earn the repayment in the method to which they are accustomed, and pay their Employees the Bonuses they were assured, even though such practice leads to malfeasant behavior to raise Cash by these Employees. Dean’s analysis states that these practices cost Consumers and Businesses much more in Expense, than would the Taxes sufficient to absorb the lost funds. His basic posit would probably state that is of higher benefit to deny the Bonuses, rather than to grant them. I tend to agree with that Sentiment.

I find that We are beseeched to pay the very people who brought Us the financial crisis huge reward, simply because they possess the capacity to repay the loans. I tend to the idea that it would be better to hire all new Help if Those promised such bonuses quit because they did not get them. Many people claim there are no replacement, and if so, then the American economy is indeed in sad shape. The basic contention of these companies is that the Employees enjoy a personal relationship with their Clients, which makes their retention so valuable. I find this to be somewhat fallacious; Investors being the general type who travel to Those who present the best advantages, with no long-term friends. I do know that these financial transactions do cost the American Consumers and Businesses about 12% of their Operating Costs, with their combination of designed Interest rates and artificial support of Prices. I also know Investors get almost a 22% advantage of Profits from their Investments because of the artificial Pricing and Charges, but which is only about 40% of the excess Income generated. The Question becomes whether We need to create a new class of Wealth, simply they know how to Shortchange the Consumer and Business in the economy. I think not! lgl

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