patrick.net

It is a difficult issue. As long as the living standards of people in other parts of the world are so far below ours, they will be willing to work for much cheaper real wages. Like water finding its level this is unstoppable.

Zephyr - Just like the South Park episode, the goobacks.

As OO pointed out, capital moves easily. Where the capital goes the income and wealth follows. We are chasing our capital away with our tax policy. Did you know that almost all of the hedge funds operating in the US are actually domiciled outside the US? They do this to avoid paying US income tax on their profits. About 70% of all hedge funds are based in the Cayman Islands, where there is no income tax on such companies. The Cayman Islands is a tax heaven - there are more banks in Cayman than there are people! All motivated by dodging US income taxes.

Yet these companies are allowed to benefit from our consumers and economy without payng tax to the US. Guess what - the rest of us pay the bill in higher taxes or deficits.

And now the bailout is going to buy the losses on MBS and other investments that these hedge funds hold with your tax dollars!

Even if they don't buy them directly from the hedge funds, the government buying will drive up the prices and benefit these tax dodging entities.

Companies based outside the US get to sell into our markets without paying as much tax as companies based here must pay. They play games with calculating "profit" for their US operations - keeping the profits offshore where the US cannot tax them because they are not US companies.

Even US companies play profit accounting games, and "profit" is often not what it appears to be. The solution is to tax the companies based on their net revenues.

TOB,
We were all ripped-off big time by the bailout giveaway. And it will not really do the most needed thing, which is to restore confidence in the banks.

What should be done (and we will eventually have to do anyway) is guarantee all deposits in US banks. Protect the depositors - not the investors or banks themselves. If all deposits are protected, banks will have no trouble getting money to lend, and will increase their lending again.

Yes but it is hard to do on a large and broad basis.

Mike,
To a large extent the losses are already spread. Pension funds and other pools of the peoples money were big buyers of those securities.

But it was not fake money. If it was fake the loss of it would be inconsequential. Real people put real money into these pools of money, and the managers bought the toxic stuff because it had a slightly higher yield. The added risk was far greater than they realized.

Where did the money go? It went to people who sold stuff to the borrowers. It went to the sellers of homes who sold at the market top. It was a giant wealth transfer.

Buy low, sell high. But for everyone who does this there is someone on the other side of the transaction, selling or buying at the worst time. Someone gains and someone loses.

Unfortunately, so many of the losing parties borrowed the money that they lost, and could not repay it - thus spreading their losses to others who did not realize that they were at such risk. This leads to panic and fear of lending. Therein lies the problem.

Yes. Whatever the borrowers spent it on, thats where it went.

Foolish investors, careless lenders and irresponsible and stupid borrowers all caused this mess. And now the government will attempt to solve the problem by bailing them out at our expense.

Most of the chindians buying now have not seen the pink slip tsunami of 2000/2001. They landed here in the Greenspan era of hot IPOs, hiring binges and endless credit. Now they'd realize the ass-whooping of capitalism.

Mike_orange,

physicians don't make $300K up, you are talking about a guy with years of practice and not a lot of Medicare deadbeats with that kind of income.

Physicians are not the problems of our medical system, insurance is. Where did the money go in the medical system? Just look at the CEO pay of all the insurance companies, not the physicians, because they have a rather high cost of operation - office, admin, and yeah, malpractice insurance.

Speaking of Pink Slips, eBay is starting the trend.

http://biz.yahoo.com/ap/081006/ebay_job_cuts.html?.v=8

Even though the layoffs will be "global" - which in post H1B/L1 era means job cuts in the US. If the company is hiring "globally", it means they're hiring in India.

HeadSet Says:

Monday will be interesting.

Looks like I was right! I can't wait to here the spin about why the bailout was needed. The excuse about saving 401ks from stock crash just won't fly anymore. Maybe more voters will see the bailout for what it was - a bailout for well connected wall street donors.

# The Original Bankster Says:
they seriously need to stop all foreign work visas.

Dumbest short-sighted idea I have heard so far from you (and that is saying something :-) ). What you suggest is the fastest way to:
1. offshore jobs - if you cannot bring workers to the job, send the job to the workers
2. ensure that the majority new projects are started offshore and no part of it (workers, management, overhead, cubicle-space, facilities) even touches US shores at all.

You need to have a policy that intelligently connects a company's US market revenues to its US workforce's strength. For instance, something that says that if your company sold [X] million dollars of product within US borders, then [X/12] million dollars needs to be re-invested here on a use-it-or-lose-it basis into a general fund that does something about employee training or improvement.

Now, that may not be a perfect plan, but it sure beats this "send the furriners home" nonsense.

coretexity Says:
India is screwed anyway. [...] The services based economy cannot survive when most of the jobs are created by bodyshops.

I think you may be making a mistaken assumption that what _you_ see of Indian companies here is all there is about their economy. I reviewed a case-study on emerging economies (BRIC) a few years ago - and while the analysis was not particularly original or insightful, it made the case that these countries have manufacturing depth and indigenous R&D in a very wide range of industries. Since then, I noticed several recent developments have supported this case. Russia and India in particular also have very broad educational infrastructure - both at elementary level as well as higher education. The internal environment in China and India is so intensely competitive that any survivors that come out of those markets (including job market) are guaranteed to give anyone anywhere in the world a serious run for their money.

So, while it may make you feel a little better to dismiss these places using some kind of ethnic stereotyping, it would probably be a good idea to shake yourself up and think about what you are going to do - beyond writing to your congressman to complain about outsourcing. I agree that the US needs to do a better job of dis-incentivizing businesses "leaders" to pillage the country - but it is up to individual Americans to step up their game too if you want any kind of sustainable solution.

@coretexity, the last paragraph of my previous post was not directed at you personally.

The Original Bankster Says:
yep and the ACM + IEEE don’t help either, they work against american engineers as well.

ACM = Association for Computing Machinery
IEEE = Institute of Electrical and Electronics Engineers

Both of these are international organizations that promote advancement of technology. They are not political organizations or workers unions. Why would you expect them to further the case for American engineers (or Iranian, for that matter)?

I am not disagreeing with your premise that US tech workers need better representation in their own government - just saying that looking to ACM or IEEE to do this is not the way.

Zephyr Says:
Buy low, sell high. But for everyone who does this there is someone on the other side of the transaction, selling or buying at the worst time.

Which reminds me, this is a housing blog. Is _anyone_ dumb enough to buy a house in the Bay area these days? I see for-sale signs with fantasy prices still pop up on lawns and go after a few weeks), but can't imaging what kind of mouth-breathing 'tard is wanting to buy now unless it is a deeply discounted REO.

The Original Bankster Says:
SP, Ill take that as a yes.

If that helps, you're welcome.