vania-janet/multiturn-rag-retrieval-data huggingface dataset:
The answer to governments getting dragged into bailing out insolvent banks and then going under themselves, is to allow the banks to go under and to guarantee only small deposits. Let shareholders, bond holders and large (&gt;$500k) lenders to the banks to lose their money. Second, hold bank executives and shareholders liable for the bank's debts. Eg executive salaries and other remuneration need to be clawed back up to a 5 year window. Shareholders should be liable (as they used to be) for debts up to an additional 100% of the par value of the shares. I can assure you this would concentrate minds wonderfully - as it did in the old days when Wall St investment banks were partnerships with each partner liable for all the debts of the firm. Another alternative would be for governments to enforce limits on financial risk, but unfortunately they do not have the courage to do this, nor the morality to resist ""campaign contributions"" / bribes to look the other way. If these steps were taken the issue of the Euro currency would not be a problem. However printing money (which requires having your own currency) is a solution if it comes to that although it comes at the expense of people who have saved and invested prudently. Printing money (keeping interest rates excessively low for years on end) subsidizes borrowers - the ones who created the problem - at the expense of savers. Clearly this creates terribly perverse incentives the next time around. Anyone who thinks this problem is a result of unfettered free market capitalism is not paying attention."
"In 2001, Argentina defaulted on it's debt, and started negotiating a ""haircut"" with it's debtors. As a result, a lot of the debtors sold the bonds they had a fire-sale prices, thinking better get some back than nothing.  One of the guys that bought those cheap bonds was Paul Singer AKA ""Mr. Vulture Hedge-fund"". I'll speculate here saying that Mr. Singer saw that the bond conditions gave him a way to force Argentina to pay the full value of the bonds notwithstanding it's default or negotiated haircut. Argentina did negotiate a haircut with about 97% of it's bond-holders. This meant that although they would lose out on some of the money, they would still get some back, and Argentina could work its way back to its feet eventually.   Mr. Singer and friends were the 3% that did not accept the haircut, and took the country to court to get 100% of the bond value back.  Now, the plot thickens. I don't understand if Mr. Singer knew this or not, but the bonds also had a post-2001 condition that said that no bond-holder would be worst-off than the highest bond deal Argentina offered anyone. Which basically means, if they pay Mr. Singer 100%, they have to pay everybody else 100%. Now, it was well established that Argentina could not pay 100%, and is not able to pay 100% of the debt, hence the 2001 default.   Meanwhile, Argentina was paying out the hair-cut bonds, but holding out on Mr. Singer and friends as they still didn't agree to pay 100%. The courts ruled that they could not do this, and had to pay everybody. Since Argentina cannot pay everybody 100%, it is defaulting on the debt."
"You ask two questions - First - the market value can drop for two reasons (that I know), the company itself may have issues, and investors don't trust they'll be paid, or a general rise in interest rates. In the latter case, there's little to worry about, but for the former, well, that's your decision, you say ""the company is in trouble"" yet you believe they'll pay. Tough call. Second - yes, when a bond matures, the money appears in your account."
Savings accounts have limitations in case a bank goes belly up and you have a higher amount in the account (more than the insured amount). Mostly big corporations or pension funds cannot rely on a bank to secure their cash but a government bond is secured (with some fine print) and hence they are willing to take negative interest rates.
I guess I didn't fill in all the holes at first, but what I'm implying with this system is that the company bonds would be the currency of the territory, as monetary policy would be decentralized and be replaced by competing money supplies that firms and individuals would be free to choose from and switch between at any time, whether they prefer an easy or tight monetary policy at any given moment.  At this point, the bonds would be the most liquid thing around, as you could repay your bonds in the bonds of another, and any one of these bonds could be used to pay taxes.  It's a scenario I've been working out because I see the drawbacks of centralized money laid out by F.A. Hayek in Denationalization of Money, but I don't think a gold standard would be sufficient in today's world.    (Most of the scenarios I've planned this out in assume the scenario of a perfect competition market, where all firms breakeven with expenses, and the role of researcher and developer is taken up by the government, so life improvements can still occur over time.)
Because they receive compensation (generally interest + dividends) for loaning out the shares. I own an asset X.   Somebody else wants to borrow asset X for some time period.   I agree to loan them asset X in return for some form of compensation (generally a rate of interest plus, in this specific case, any dividend payments).  The reasons why I own asset X, and why they want to borrow asset X are irrelevant to the transaction. The only relevant points are the amount of compensation and the risk that they might default on the loan. This applies equally well to shares as to money or any other kind of loan-able asset.
The purpose is to be a racket. Assuming you're in the same tax bracket, you pay exactly as much tax later as you would now. If you're in a higher bracket, you pay more! And even if you pay less (assuming they don't change tax law before you retire) you give up direct control of your assets in exchange for a promise which may not be honored.
In finance, a lot say corporate tax is the original sin.  Corporate taxes make debt financing more attractive, so every company's debt ratio is much higher than it would be if there were no corporate tax, which makes them more vulnerable to shocks in cashflow and at higher risk of default in a downturn.  A slight downturn can snowball into a larger one because companies are so heavily debt financed they end up unable to service their debt, and end up in worse situations than if they were more equity financed. Subsequently, banks become much more important in the economy because everyone is more leveraged, and more company value is tied up in bank/debt balances.  Of course, the voting public doesn't generally want to lower the corporate tax rate; because the general population believes this is how they get their pound of flesh out of corporate america -- however that is rarely the case.
"Banks use the money for productive pursuits, earning returns in excess of what they will owe the fed in discount interest. If a bank could not yield a return greater than their interest due their lender (whether that lender is the fed or not) they probably wouldn't borrow in the first place. EDIT: I misunderstood the question. The federal reserve does not disseminate new money by making loans. They do so by issuing and trading in bonds. The US Treasury, for example, issues a bond. The Federal Reserve Bank buys this bond using money they ""printed"". So the same question applies.... where does the money come from to pay the interest on the bond? It comes from the perpetual issuance and trading in bonds at a growing rate. All the fed needs to do is to buy bonds at a rate faster than they collect interest."
Simply put, the government has no balls to fight corruption.  Ideally, the government would have enough people to oversee and make sure corruption like this doesn't happen. But the politicians cut a lot of money out for this type of enforcement (primarily because they had money donated to them by these same businesses). This looks great for the politician as it looks like they're cutting government fat, let's say something like a hundred million dollars. These opportunists fleece these companies and when they go under, they plead and beg the government to bail them out or else they'll have to fire all these people and it'll kill the economy. So the government steps in and bails out these companies for a few billion - now they look like they are being proactive and 'saving' the economy.  All at the expense of you of course. It's too bad politicians don't do what they believe is best but do what their donors believe is best for themselves.
"- So some time goes by and people start catching onto this system of credit-worthiness, and farmers and fishermen and so on start to realize that they can get better value for their IOUs by demonstrating credibility. People with shakier reputations or dubious prospects may not be able to ""issue money"", or might only be able to do so at very high ""interest"". E.g., a new farmer with no track-record might have to promise me twice as many potatoes in exchange for a deer haunch, due to the risk that I might never see any potatoes at all. - This obviously gets very messy fast, as different apple- and potato-certificates have different values depending on whether they were issued by Bob or Jane, and everyone has to keep track of and evaluate whose future apples are worth what. - Some enterprising person, maybe the merchant who runs the trading-post, comes up with the idea to just issue one note for all the farms in town. He calls a meeting with all the farmers, and proposes to have the town priest keep a book of certificates and so on, and the farmers will get notes just like everyone else in exchange for the crops they contribute to the pool, and the merchant will keep a cut of the crops with which to hire some accountants and farm-surveyors to estimate the total crop yields across town and so on. - Everyone agrees (or at least, enough farmers agree to kind of force the other ones to get on-board if they want to participate meaningfully in the town economy), and we now have something like a central bank issuing something like **fiat currency**: that is, currency whose value is ""decided"" by some central authority, as opposed to the kind of straight-up exchange certificates that can be traded for an actual apple from the issuer, for example. - Now we have something that looks a lot like a modern monetary system. The town can set up audit committees or whatever, but the idea is that there is some central authority basically tasked with issuing money, and regulating the supply of that money according to the estimated size of ongoing and future economic activity (future crop yields).
Not entirely true and depends who maintains the roads. At the state level,  it depends on the state - some fund a large chunk out of gas taxes, some out of vehicle registration fees, and some fund more out of other taxes.  Then you get down to the county level, and local level and it's even more varied. Things maintained by the municipal government are often funded more by property tax than by fuel tax.  On top of that, there's a large chunk administered at the state and local level, but funded by federal dollars that came from income taxes or sources other than fuel taxes.  [if you like sources](http://www.streetsblog.org/2009/11/24/new-report-road-funding-from-non-road-users-doubled-in-25-years/) or [this overview of the state level](http://www.uiowa.edu/~ipro/Papers%202006/roadfunding012307.pdf)
Granted this is an article on Argentina's debt but something that is not mentioned here is how Vulture Funds work. It is my understanding that Vulture Funds purchase debt which is considered weak or on the verge of default at discounted prices with the sole intention of holding out on the debt and blocking any settlements until they can get significantly higher payment on their bonds than their original investment (plus interest on the amount plus profits). Essentially, then Vulture Funds sole purpose is to profit off financially distressed debtors. So the court is ruling that all the shareholders who agree to the payout must wait until those shareholders that do not agree to the payout are accommodated (those shareholders who bought their debt cheap from debt holders that  wanted to sell and get out while the getting out was good). So much for the concept of risk or investing into the project, that speculators and financiers tote out whenever they want to describe the benefits their activities bring to the economy?
"This would inevitably lead to a few gatekeepers from which everyone trusts the bonds (ibm GE etc), and millions of small businesses which will have absolutely no access to capital. Once this happens, you will quickly end up with a shadow banking system, where companies like GE switch from making stuff to basically being banks, giving loans to other small businesses with no access to capital, etc. This is basically done in China in a slightly different way, but, the core state-owned enterprises have near unlimited access to capital, and they use this advantage to invest in, and buy up, any and all interesting companies, simply because they're the only organizations that can essentially ""print"" money. (Whether you agree with it being printing money or not, the fact is GE / IBM would be able to issue bonds almost whenever they want, similar to the Treasury's monthly bond auctions, and other firms simply unable to.) So... then you have a few key companies with nearly unlimited right to ""print"" (used loosely) cash. They use this advantage to push on other businesses, buy them up, or control them in many ways. And then they use this position to eventually take over anything that looks interesting. What you're imagining as being an open market where everyone's bonds have full information will quickly devolve into information overload, and people choosing the well known brands as their trusted source. Once that happens, the whole idea falls apart, and those few firms will find a way to control not only the money supply, but also who gets to use their money. You will also have situations where some mom-and-pop takes John-LLC bonds as payment for dinner, and when they try to give John-LLC bonds to their suppliers, their suppliers say 'no thanks, we only deal in IBM bonds."" Mom-and-pop will find themselves stuck with paper that nobody wants to accept. And mom-and-pop will quickly find themselves in a cash flow crisis, as they have tons of paper, but none of their suppliers will accept that paper. The only way to get out of this situation would be to convince IBM or GE to give Mom-and-pop some GE bonds in exchange for the John-LLC they have that nobody will accept.
His assumption is crazy. Governments treat financial institutions with kid gloves due to the reflexive nature of financial system liabilities. The government has proven it is willing to see unsecured bondholders at automakers take large haircuts.  I may not be understanding your point.
Property taxes, at least in Canada, are levied by the municipality or city in which the property is situated.  For many cities, it is a significant source of income. Part of the justification from the municipal point of view is that the land is serviced, in that it generally has city services like water, sewer, garbage collection and the like.  The taxes also commonly pay for city services like libraries, fire and ambulance. The tax rates vary widely across cities, so where your dream house is located may have a large impact on your overall tax bill. Property tax is more-or-less a government imposed lien on your house.  You can be foreclosed on if you are unable to pay.  This is a last resort of course, but can and does happen.
CDS spreads represent the premium for insuring some specific bonds against a default (as defined by the ISDA). I'm not sure how you can arrive at the claim that they have little to do with the already issued debt itself, except if you were to assume that this debt is not quoted on any market. There is a direct relationship between the level of the CDS spreads and the price of debt.
"Bernie sources: http://www.npr.org/2016/02/12/466465333/sanders-favors-a-speculation-tax-on-big-wall-street-firms-what-is-that http://www.marketwatch.com/story/what-would-bernie-sanders-wall-st-tax-look-like-2016-02-14 http://www.politifact.com/truth-o-meter/statements/2016/apr/04/bernie-s/bernie-sanders-says-wall-street-tax-would-pay-his-/ &gt; Heading out to open land to make your society in your image would definitely prove your point, as long as it works. And do that how? Buy my own island? Sea-stead and hope the US military doesn't just drop a seal team on my head? &gt;We just have plenty of evidence that no government is less so. No, we really have evidence that structure is better than nothing. I'm not advocating for no structure. Businesses/Charities/Organizations/Etc. obviously work better when they are well structured. To answer your Enron example, no corporation would have enough power to actually do something like that if they didn't have at least partial backing by the government. You know the drill, big business buy politicians (""contributions""), politicians write big business laws (Anti-competitive to push small guys out). Then when big business needs additional help, politicians come in to save the day (bailouts). The market would be extremely more competitive if for example the Dodd frank act which to my understanding the repeal just recently passed the house went away. It has been choking community banks, just like Glass-Stegal did. It essentially only allowed the big banks to compete, surprise they did some stupid things (Great Recession) But if you don't think they didn't already know that they those bailouts were coming if needed, you are fooling yourself. These messages are almost getting to the point of TLDR. I want to simplify our debate a bit.
Large ammounts of cash in the balance sheet with no debt means that you lack leverage and have an inefficient operating structure. The argument being that I. The current market debt in Germany Is relatively cheap whole it is expensive in Spain. So my guess would be that they are trying to move the debt from the Spanish unit (where is it is becoming costly and dangerous to carry debt on the balance sheet) to the German unit (where there is still plenty of cash and thus debt to go around). Mind you this is a simplistic and limited interpretation of the article as I do not have the time to research this company and all it's subsidiriaries in depth.
"As trane_0 suggested above, I am not questioning the validity of the study by Kenichi Ueda and Beatrice Weder Di Mauro. I don't doubt that there is some discount to the risk premium demanded in the market for the debt of systemically important banks.   What I am doubting is that this is a ""subsidy"" by the US government. This is a ""subsidy"" by bond investors, not the US government. Additionally, it is based on the assessment of risk by those investors as there is no explicit guarantee by the US government (see Lehman Brothers and Bear Stearns). There is no transfer of wealth by the US government and therefore there is no active subsidy."
"Because the value of distressed assets is close to what they are selling for.   When you lend money, you know there is a risk of default.  You gamble on that risk, and you take the responsibility if you lose because the person taking the money can't pay.  People who buy distressed debt on the idea that they can make more money off of it are only able to do that in two ways:  not giving a shit what the impacts of wringing more money out create, figuring out a legal way to make someone else pay for it through ripple blackmail effects (other people also are impacted when a country can't function.)  If you back Klarman, you may say the point is you are ""teaching"" Puerto Rico and everyone else that they shouldn't take on debt they can't afford.   But when has that ever worked?  The pensioners who are bankrupt are the ones actually getting the pain of the lesson.  Another lesson could be to investors not to lend to people who can't pay them back.  The people lending the money are the ones who now don't have it because they made a bad choice.    Seth Klarman could also learn a lesson about taking on distressed debt being a non-lucrative pastime.  Or we can all learn a lesson that taking on distressed debt is very lucrative.  A big change America implemented was getting rid of debtor's prisons.  This looks a lot like getting excited about debtor's prison to me.  EDIT:  I should note I am thinking of the Algerian version of making a ton of money off of distressed national debt.  As opposed to making a bit more money off of distressed debt because you were willing to let the collapse figure itself out.  Though I'm not so sure about that either."
The Government doesn't borrow money. It in fact simply prints it. The bond market is used for an advanced way of controlling the demand for this printed money. Think about it logically. Take 2011 for example. The Govt spent $1.7 trillion more than it took in. This is real money that get's credited in to people's bank accounts to purchase real goods and services. Now who purchases the majority of treasuries? The Primary Dealers. What are the Primary Dealers? They are banks. Where do banks get their money? From us.  So now put two and two together. When the Govt spends $1.7 trillion and credits our bank accounts, the banking system has $1.7 trillion more. Then that money flows in to pension funds, gets spent in to corporation who then send that money to China for cheap products... and eventually the money spent purchases up Govt securities for investments. We had to physically give China 1 trillion dollars for them to be able to purchase 1 trillion dollars in securities. So it makes sense if you think about how the math works in the real world.
There are real estate companies that take money, and invest it in real estate. Often the borrow money from Banks secured against their existing real estate and use it to build more real estate. (Notice the bit about it being secured against existing real estate; things go south, Bank gets stuff). The Bank's indirect investment in that apartment in the current system is covered by appraisals, the seller, the mortgage holder, and the system deciding that the mortgage holder is creditworthy. Banks sell risk. They lend you money, you go off and do something risky with it, and they get a the low-risk return on investment of your loan. Multiple such low-risk investments provides them with a relatively dependable stream of money, which they give out to their bondholders, deposit account customers, shareholders or what have you. When you take a mortgage out for that, you are buying risk from the bank. You are more exposed to the failure of the investment than they are. They get less return if things go really well."