[Copernicus]

[ QUOTE ]
I don't know enough about Enron. Some of the problems may go all the way back to our government conception of a corporation. I'll let others comment on this.

Sub-prime lending is a natural result of moral hazard created by government in the first place. <font color="red"> irrelvant interjection of your own morality</font>

First in the way the Fed runs out monetary policy to promote borrowing and spending over saving. This might take a lot of study and I guarantee your professor wouldn't understand it. <font color="red"> do you? monetary policy favors moderate inflation over risk of deflation, which can promote borrowing. So what? </font>

Second is our governments favoring of mortgage debt through interest tax deductions amongst a variety of other subsidies. The governement favors people who take out giant mortgages. <font color="red">the mortgage issue itself is no different than the first issue of favoring debt over savings. if individuals cant afford a home without a mortgage deduction, they rent, and the landlord takes a deduction for his mortgage. the real import of the mortgage deduction is that it does encourage individual ownership, which in turn helps drive the economy since people naturally spend more on their own home than they would on a rental property </font>

Third is our government has created an atmosphere were people expect to be bailed out, leading to moral hazard and a propensity to take risks. Ask about the S+L crises in the 80s, the LTCM bailout in '98, the "Greenspan put". <font color="red">I dont think there is a single company that bases a single decision based on expectation of a bailout </font> Recentely our new Fed chief slashed rates 50bp, devauling the savings of Americans to bailout the sub-prime crowd, no doubt ensuring people will engage in the same practices next decade expecting another bailout. <font color="red"> how is it a bailout of the subprime crowd? be specific. why do you think that a reduction in interest rates wasnt appropriate given other economic conditions? </font>

Social Security is a giant ponzi scheme. <font color="red"> no its not</font> The program uses the same accounting as Enron. <font color="red">no it doesnt, but its irrelevant if it did. Its not the accounting system that caused Enrons failure it was greed. </font> If the government was a private entity it would have been shut down for massive fraud related to these programs. <font color="red"> no it wouldnt, because government accounting is not the same as GAAP and shouldnt be for several reasons </font>

Your professor likely advoates reduced military spending to pay for SS and Medicare. In addition to not being enough a much better question to ask is why such funds should go to SS and Medicare when they can be given back to the people through lower taxes. People can then invest that money for thier own retirement, ensuring money is actually there for thier retirement rather then being squandered by the governemnt. <font color="red"> one has nothing to do with the other, conflating them is just political rhetoric </font>

Scandanavia does great because it is sitting on as much oil as Saudi Arabia. They are better run the the rest of Europe due to thier smaller size, but they suffer from many of the same demographic problems and if not for the oil they would have the same financial problems as France. France is a good example of how [censored] things would be with socialism in America.

[/ QUOTE ] <font color="red">you got one right, congrats </font>

Lehigh should be embarassed if this the quality of thinking they turn out.