Whats the point in being a fiscally conservative politician?

[trefoil]

Quote from ChkitOut:

oh i gotcha, so you agree with me that LBO's are complete crap sometimes.

There is the moral end of it, yes.. the 'company' which includes the employees and the service that company provides towards the good of society is being put in jeopardy because of and LBO

or..

you could say, well, i start a company, it makes money, i am the biggest stake holder, private equity offers to buy it out and I say, heck yeah! I cash out and who cares what happens to the firm because if it fails then it makes room for someone else to take its place. Maybe do it better.



and yeah.. this is what is happening right now to my old firm. they keep refinancing the debt. its silly.

- for speculative finance, a firm must roll over debt because income flows are expected to only cover interest costs. None of the principal is paid off.

LBOs are always crap: they use the assets of the firm to make the firm pay off the owners who encumbered those assets with debt so they could buy it.
So no matter what some portion of the money the firm used to be able to use to make investments in its future is now used for the completely sterile purpose of paying back the debt the new owners used to buy the company from the old owners. Sometimes the company can be resold as a smaller, allegedly "leaner" entity to someone else; frequently, the company simply goes bankrupt either from the debt itself or from the effect of that debt: unable to remain competitive, it slowly dies as it falls behind the other players in its industry.
LBO companies are parasitic, and flourish when speculation is at its peak, because only in those times will people buy the debt LBO firms issue. Every ecosystem has parasites; in capitalism, LBO firms, or private equity, as they now like to be known, are one species.
The conclusion is: it's about as improper a use of debt as you can think of. It's legal, but that's about as much as can be said in its favor.

 

[Eight]

Republicans passed a balanced budget amendment in the Reagan era. Democrats took it to the Supreme Court and got it tossed out. Since then it's been more like a spending contest between the two parties and who can blame the conservatives for giving up on being responsible?

The US is the richest economy ever dreamed of in the history of mankind and it has to borrow money? It has to borrow money to the point of not being able to pay the minimum payments without borrowing? When Rome fell the attorneys and politicians were killed off as a class. They were KILLED. Does anybody think that will happen again? I think it will happen again. Look at the insane level of violence from the Zeta Cartel in Mexico or gangbangers in our inner cities and try to wish it away.. it doesn't wish itself away, it just looks for richer targets...

 

[Ricter]

Quote from tomdavis:

Leverage, a specific application of debt, is an important part of capitalism; but it is not the "essence." Competition is the essence of capitalism.

Sure, competition for debt.

Simply borrowing and spending is not leverage. Very few people, democrats or republicans, understand this concept.

We're not really talking about interest free, non collateralized loans a buddy might make to a buddy, are we?

Cuba is heavily in debt. Are they capitalists?

I don't know what loans Cuba holds if any, but even so whoever holds their debt may be expecting a return.

Having a credit card does not make anyone a capitalist.

No, the CC issuer is the capitalist, and they do it precisely for the debt.

 

[AAAintheBeltway]

Quote from ChkitOut:

You're always swimming up stream.

If its next to impossible to repeal entitlement programs and every 10-20 years or so the spending party takes over government and signs new massive never ending spending into law then you're gauranteed to lose the fiscal fight.

So wouldn't a better strategy be to let the "progressives" bankrupt the country and let US fall into massive despair and say "told you so"

Accurate observation and also an explanation of why we're in the mess we're in.

We have one Ron Paul, and he is despised by both the dems and his own party.

 

[tomdavis]

Quote from Ricter:

Sure, competition for debt.

We're not really talking about interest free, non collateralized loans a buddy might make to a buddy, are we?

I don't know what loans Cuba holds if any, but even so whoever holds their debt may be expecting a return.

No, the CC issuer is the capitalist, and they do it precisely for the debt.

If your original statement that debt is the "essence" of capitalism were true, then only leveraged businesses would be successful.

There are many successful (capitalistic) businesses that have little or no debt. Businesses require capital, but they do not require debt.

Capital is essential. Debt is not.

 

[PiggyBank]

Quote from tomdavis:

If your original statement that debt is the "essence" of capitalism were true, then only leveraged businesses would be successful.

There are many successful (capitalistic) businesses that have little or no debt. Businesses require capital, but they do not require debt.

Capital is essential. Debt is not.

+1

 

[Ricter]

Quote from tomdavis:

If your original statement that debt is the "essence" of capitalism were true, then only leveraged businesses would be successful.

Does not follow, some leveraged businesses are unsuccessful.

There are many successful (capitalistic) businesses that have little or no debt. Businesses require capital, but they do not require debt.

Capital is essential. Debt is not.

If your definition of capitalism requires no more than "tools required", then chucking a spear for one's dinner is capitalism.

 

[tomdavis]

Quote from Ricter:

Does not follow, some leveraged businesses are unsuccessful.


If your definition of capitalism requires no more than "tools required", then chucking a spear for one's dinner is capitalism.

I don't know what spear chucking has to with capitalism. Maybe somebody else can answer that question.

Your original statement was: "Debt is the essence of capitalism."

There are many successful large companies (e.g., Disney, Apple, etc.) that have very little debt relative to their assets, and there are also successful small companies (e.g., Jacobs Engineering, Ingram Micro, etc.) that have little or no debt.

This isn't about spear chucking unless you consider low-leverage companies like Apple and Disney to be primative.

Capital is essential. Debt is not.