Socialism has failed. Now capitalism is bankrupt. So what... - Page 2 - Politics Forum.org | PoFo

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Any other minor ideologies.
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By Todd D.
#13090062
I am not suggesting regulation contributed to this crisis. I am suggesting (and pretty much every sane person on Earth, including most economists, agree with me) that the market was responsible. You lose.

...the crisis happened after the removal of said regulations, not during a period of stronger regulation and more protection from failure. I don't know why I have to keep pointing this out. Correlation does not imply causation, but lack of correlation sure as hell implies lack of causation. - Spidermonkey.

I am merely asking you what regulations were removed, which presumably you are suggesting would have prevented this crisis?

Arguing "the market" was resonsible makes about as much sense as suggesting gravity is responsible for all plane crashes. Market forces operate on human behavior, but human behavior is ultimately the cause of the crisis itself. The question then becomes WHAT human behavior was responsible, and I would suggest that the removal of risk by government authorities was, at the very least, a significant contributor.

Yes, seriously. You are cherry picking. What you are trying to pass off as facts are mere opinions, and crazy opinions at that.

That interests rates were lowered, and lowered significantly, from 2000 to 2004 is not an opinion, it is a fact.

I was talking about how class mobility is changing (i.e. how it is collapsing). And yes, heritage is full of shit. That isn't even contentious.

Are you suggesting that the Treasury Department, Urban Institute, Federal Reserve Bank of Dallas, and the Census Bureau are full of shit? None of the research cited was done by Heritage.

Yes, because the economy has been standing still all that time

http://www.ukpublicspending.co.uk/downc ... 20Spending

Ignoring the projections at the right of the graph (those are a response to the current crisis, as are the 2009 and to a lesser extent 2008 numbers) the general trend is clearly downwards.

Are you getting tired of being owned yet?

Your figures are as a percentage of GDP, not real figures. The links are cited proved, unequivocably, that public spending INCREASED at a rate of about 3% annually since the late 1970's. Your defense to this is "GDP grew faster than government spending", which is hardly a defense at all.

Again, this is a fact (not an opinion): In 1970, total government expenditure in the UK was 21.6 Billion Pounds (200 Billion pounds adjusted for inflation), it was 557 Billion pounds in 2007. Are you trying to suggest that 200 Billion > 557 Billion?

You have not produced any facts

Except for the fact that interest rates decreased steadily from 2000 to 2004. Are you disputing that? Or that government spending, adjusted for inflation, increased from 1970 to 2007? That fact was referenced. Oh, and the references to the Treasury Department and the Census Beureau on income mobility. Those were facts as well. Try again.

Todd D. wrote: have not necessarily claimed a public outcome. You're blatantly making shit up again. Most people actually just call that "lying", but I'm willing to give you the benefit of the doubt and suggest that you're merely delusional, rather than intentionally deceptive.

SM wrote:Whatever.

Outstanding rebuttal. You should join the debate team. What's next, "I know you are but what am I"?

WOAH! Wikipedia! What a reliable source!

Sigh. Try Dictionary.com then, which includes (amongst other things) in their definition of market:
5. trade or traffic, esp. as regards a particular commodity: the market in cotton.
6. a body of persons carrying on extensive transactions in a specified commodity: the cotton market.
7. the field of trade or business: the best shoes in the market.
10. a region in which goods and services are bought, sold, or used: the foreign market; the New England market.

Source

You can't define a market the same way you can define a planet or a force. It isn't a thing, it is just something you (and people like you) made up.

You really have reached a new level of delusion when you begin to deny concepts like a market for goods and services.

LOL appeal to authority! Seeing as your silly rants fly in the face of mainstream economics anyway, you are hardly in a position to get pissy about qualifications. My qualifications are in science, and the ability to think and reason clearly. They are sufficient.

Obviously they are not, since you are apparently suggesting 1) That the study of allocation of resources and human behavior can not properly be classified as a "science", 2) That there is not such thing as a global "market" for goods and services, 3) That my views fly in the face of mainstream econ (without describing what theories those are, and what "mainstream" economist or economic theory contradicts it), note that this would also contradict point 1.
By ninurta
#13090520
The reason we are in this really bad economic mess, which thats all it is, is because so many people went buying things they couldn't afford with money they don't have with loans they couldnt pay off. Was it partly fault of the banks? I suppose you can argue that, but adjustable rates adjust, so why buy big houses with adjustable rates? thats the longer it takes to pay it. its both a bad investment for your money since you'll pay nearly double, or more, and so them taking houses they can't afford lead to foreclosures.

The housing crisis then began to take down the whole system, and one by one, everything in the economy started to go down hill. Was it the lack of regulation? No, the lack of resposibility. It's like people who eat mcdonalds till they are fat, and are mad, so they sue mcdonalds and win. HELLO, your choice not to stop when you were gaining weight, when saw you needed to cut back, and you didnt, then don't go sueing as if its mcdonalds fault. No one made you be too lazy to cook but you, and no one forced you to go to mcdonalds everyday. It's stupid people like that that made it so hot coffee has to say, "caution! Hot", when evidently, its coffee, its going to be.
User avatar
By Dr House
#13090533
Kasu wrote:Because a small, backwards socialist country cannot survive in the face of a globally integrated capitalist economy. Socialism cannot exist in one country, the revolution isn't complete until the entire world is socialist. Then we'll get to see the super productive forces of a true socialist economy.

What super productive forces? Socialism doesn't have a coherent theory of production and central planning proved itself a failure when COMECON, which was food-sufficient and had every natural resource it needed for an industrial economy (mostly from Russia), failed to achieve the standard of living enjoyed by the workers of the similarly autarkic US.
User avatar
By Rojik of the Arctic
#13090553
The premise is false. Capitalism isn't bankrupt. Some buisnesses will fail because of the current problems but they will be the minority. Most will just have to get by on reduced capital until things pick up. Socialism failed? I don't know because I can't get an answer on what it actually is. Depending on the person I talk to I get that Socialism is anywhere from state owned everything distributing as required to the Government setting up a heath system and welfare payments. So as far as I can see unless the socialists can tell us what the system is that they advocate then we cannot tell if it has failed. Therefore, as far as I can see, Capitalism is alive and well, but with a bit of a cold, and Socialism is an yet to be defined quantity.
User avatar
By RonPaulalways
#13090621
Why does the Guardian have Marxists write articles for it?

Image

Image


Fannie Mae:

http://www.nytimes.com/1999/09/30/busin ... nding.html

Fannie Mae Eases Credit To Aid Mortgage Lending

By STEVEN A. HOLMES
Published: September 30, 1999

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.


The CRA:

http://www.city-journal.org/html/10_1_t ... ollar.html

The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities
Howard Husock

Winter 2000

The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.
User avatar
By Todd D.
#13090972
I'd also like to point out that this is hilarious:
Spidermonkey wrote:I am suggesting (and pretty much every sane person on Earth, including most economists, agree with me) that the market was responsible.

Then later in that very same post
Spidermonkey wrote:You can't define a market the same way you can define a planet or a force. It isn't a thing, it is just something you (and people like you) made up.

After previously suggesting:
Spidermonkey wrote:Please give me the longitude, latitude, and altitude where I can find this market. What is its mass? How about its kinetic energy? People exchange things, sure, but this doesn't conjure into existence something which isn't there.


So....he's blaming railing against me because he thinks "the market" doesn't exist...but then turns around and blames that very same "marker" for creating the current crisis. Fantastic.
By SpiderMonkey
#13091398
The belief in a concept (the market) made up by a bunch of fuckwits led to the current crisis. It isn't a complicated concept, I am sorry if my argument is semantically difficult for you to follow. :knife:
By ninurta
#13091450
What caused the recession is the same thing that causes any recession, it's the buisness cycle, there is nothing wrong with it.

It was bad practices of banks, people and buisnesses that made them nearly bankrupt, that made the recession worse. On top of that, they tried bailing them out, which made a worse situation worser.
User avatar
By Fitzy
#13118204
The reason we are in this really bad economic mess, which thats all it is, is because so many people went buying things they couldn't afford with money they don't have with loans they couldnt pay off. Was it partly fault of the banks? I suppose you can argue that, but adjustable rates adjust, so why buy big houses with adjustable rates? thats the longer it takes to pay it. its both a bad investment for your money since you'll pay nearly double, or more, and so them taking houses they can't afford lead to foreclosures.

The housing crisis then began to take down the whole system, and one by one, everything in the economy started to go down hill. Was it the lack of regulation? No, the lack of resposibility. It's like people who eat mcdonalds till they are fat, and are mad, so they sue mcdonalds and win. HELLO, your choice not to stop when you were gaining weight, when saw you needed to cut back, and you didnt, then don't go sueing as if its mcdonalds fault. No one made you be too lazy to cook but you, and no one forced you to go to mcdonalds everyday. It's stupid people like that that made it so hot coffee has to say, "caution! Hot", when evidently, its coffee, its going to be.


Its the government that permitted those types of loans, and they did it for a reason. If consumption cannot keep up with production, an economic crisis is the inevitable result. Giving away consumer loans is just a temporary fix, without them, the crisis would have happened earlier. So I dont see why you blame it on the individual consumer, when the problem is systemic.
By ninurta
#13118287
Fitzy wrote:Its the government that permitted those types of loans, and they did it for a reason. If consumption cannot keep up with production, an economic crisis is the inevitable result. Giving away consumer loans is just a temporary fix, without them, the crisis would have happened earlier. So I dont see why you blame it on the individual consumer, when the problem is systemic.

I blame both the buisnesses and the consumer, and its both their faults, and the governments for jumping on a runaway train about to crash. :eh:

1) it's the government's fault for permitting, or doing anything in the economy in the first place that results in problems. It's not like the government cares for the economy, they do whatever is politically popular, keep them out of the economy and we'll all be happy. There are some exceptions, though we can get in on that a little later.

2) it's peoples faults for not thinking, "I can't afford an adjustible rate because I don't know that i will be able to pay it in an economic downturn", IF YOU CAN'T PLAN AHEAD, DON'T DO THINGS THAT REQUIRE LONG TERM PLANNING, LIKE HOW TO PAY FOR HIGHER RATES!! AND READ THE FINE PRINT WHILE YOU ARE AT IT!!!

IF it can't get simple enough.

3) It's the buisnesses fault for not thinking ahead and doing things the right way. And it's sad what happened to them, they survived, that's sad my tax dollars went to them. If I was even 500 dollars in debt for too long i'd be arrested. They on the other hand, their bills are paid for them.

The banks weren't too big too fall, just too big to stand.
By cathartic moment
#13182119
From the above comments, it does appear to me, as an outsider, that the US government played a part in creating the banking crisis. However, in the UK the government didn't push for mortgages to low income households to nearly the same extent.

But our banks still ended up in trouble. I find it hard to find anything else to blame apart from mismanagement at the banks themselves. Northern Rock had an appallingly bad business model, whilst the Royal Bank of Scotland takeover of ABN Amro looks to have been a serious mistake.

The UK government isn't completely blameless - they are responsible for regulating the banks, and should have been well aware of things like the decline in savings rates. I count Gordon Brown's claim that he had brought "an end to boom and bust economics" as a blatant and cynical lie to the British public.

However, the mismanagement at the banks clearly originated at a board level. Those board members weren't appointed by the government, but within a free market. I don't buy some of the arguments that the banking problems were impossible to predict, since the hedge funds saw the crisis coming. If these banks were competently run, then they should have seen the problem coming, and adopted a suitably cautious posture.

Why did we have such bad decision makers running some of our most important companies?

Why is the UK so heavily dependent on a single industry (finance). Is such a banana republic situation an inevitable result of pursuing free market economics?

Is government intervention necessary in order to ensure a medium sized country such as Britain has a suitably diverse economy?
User avatar
By RonPaulalways
#13185001
^ Because foreign banks trusted American mortgage backed securities. They bought hundreds of billions of dollars worth, and suffered massive losses when the subprime crisis hit.
User avatar
By redcarpet
#13186069
We have lived through two practical attempts to realise these in their pure form: the centrally state-planned economies of the Soviet type and the totally unrestricted and uncontrolled free-market capitalist economy.


Lol, what an Establishment tool. I wasn't aware a pure socialist society was established in the USSR or free market capitalism in Western states. What a dupe!
By cathartic moment
#13200358
^ Because foreign banks trusted American mortgage backed securities. They bought hundreds of billions of dollars worth, and suffered massive losses when the subprime crisis hit.


No - that's just an effect of stupidity at the board level.

What I'd like to know is the cause. And the remedy.
User avatar
By RonPaulalways
#13200391

No - that's just an effect of stupidity at the board level.

What I'd like to know is the cause. And the remedy.


Bailing out the banks that acted stupidly is not the way to take the stupid people out of the business world. Giving corporate welfare to large banks entrenches the inept in their position of power, thus preventing better directors and companies from taking their place.
By PBVBROOK
#13200420
Bailing out the banks that acted stupidly is not the way to take the stupid people out of the business world. Giving corporate welfare to large banks entrenches the inept in their position of power, thus preventing better directors and companies from taking their place.


Absolutely correct.

If their was to be a bailout the money should have gone back to the taxpayers to do with as they please. And to help people with the mortgages with which they were illegally saddled. And NONE of the mony should have gone to bail out foreign banks and entities.
User avatar
By RonPaulalways
#13201198
^ None of those things would have been right, but they would have been less destructive than bailing out the banks.
By KPres
#13201873
If their was to be a bailout the money should have gone back to the taxpayers to do with as they please. And to help people with the mortgages with which they were illegally saddled. And NONE of the mony should have gone to bail out foreign banks and entities.


Bailing out homeowners would have been worse than bailing out the banks. What do you think homeowners do with that money? They make house payments, which means the money still ends up in the bankers hands, it just takes longer to get there and therefore doesn't solve the immediate problem, which is a credit contraction. It's also worse from an ethical standpoint, because the homeowner bears the final responsibility for the loan, since no bank can force you to take money you know you can't afford to pay back. The mortgage payment is laid out clearly to everybody before they sign the contract. Homeowners were engaging in speculation, pure and simple, and they deserve their losses. The responsible borrowers are the victim in this whole mess.

If anything, what the government should have done is mimick what the market itself was going to do through creative destruction. They should have given the money to smaller, healthy banks that didn't get themselves over-leveraged. (My personal bank, BB&T, has done fine, taking very manageable losses). This would have pumped the same cash into the credit market without creating the moral hazard we have now. Furthermore, that money would actually have been lent out to the public (well, to members of the public who didn't overextend themselves with interest-only loans, that is. Those people would foreclose like they should. Don't worry, they won't be homeless, the responsible people would buy their houses at deflated prices and rent it to back to them at a nice little profit), because the healthy banks aren't holding a bunch of toxic loans that they don't know the value of. The big banks would have toppled and none would act irrationally in the future under the pretense that they were "too big to fail."

This is all common sense. The problem is small/medium sized banks don't have friends in high places like Henry Paulson and Tim Geithner.
Last edited by KPres on 17 Oct 2009 23:07, edited 1 time in total.
By KPres
#13201924
No - that's just an effect of stupidity at the board level. What I'd like to know is the cause. And the remedy.


Basically, banks lend money to each other, even on an international level. They do this so they can cover themselves when their fractional reserves are insufficient to cover their withdrawals. If one bank goes bankrupt, it can't pay back the loans it received from other banks. These other banks take a loss. If the bank that goes bankrupt is in the US, and the bank that takes a loss happens to be in the UK, well, there you go. International problem.

As far as the remedy, there is no remedy in the long run, except to suffer it. The wealth that was created was fake. It's like borrowing money on a credit card, someday you have to pay the piper, only in this case it's like the credit card company demanding you pay back the entire balance right now. If you don't have the money, you can put the balance on another credit card (which is essentially what all this bailout/stimulus is all about), which buys you some time, but also means more and more interest payments. Ultimately, people are just going to have to accept a lower quality of life for a while, meaning more work for less stuff. We have to pay back the principle.


From the above comments, it does appear to me, as an outsider, that the US government played a part in creating the banking crisis. However, in the UK the government didn't push for mortgages to low income households to nearly the same extent.


What RPA is talking about, with gov't push for low-income lending, isn't really the source of the problem, although it played a part. The gov't most certainly created this mess, but the details are more complicated, and involve the way the SEC governs transactions in the financial market. Problem is the left runs the media, so the right has to get their side of the story out in 30 second quips. The CRA and Fed rates are easy to understand, but together probably make up about 30-40% of the problem. The rest deals with the mortgage-backed securities.
User avatar
By Negotiator
#13315707
Neither socialism nor capitalism will ever work.

What can work is a compromise between the extremes.

A system where you are guaranteed a certain basic wealth and social security (socialism), but where you will also be rewarded for extraordinary good work and penetralized for extraordinary bad work (capitalism).

This means a sort of capitalism with high taxes, especially for rich people, and strong rules, especially liberal, social and democratic rights, but also strictly fighting any accumulation of market power (monopolies and de facto monopolies), and with a lot of welfare and public ownership of central elements that would imply a monopoly or should be in public hands for other reasons (such as schools and universities, hospitals and medical research, police and prisons, roads, trains and railtracks, post services, banks, power production, weapon production and military).

This system has existed in the past and has been proven to be very stable in the past. It gets attacked by rich people, though, every time, who want only to be rich and richer. This is the core problem - we know how to make a good system which works well, but theres too many people who dont want this kind of system out of egoistic motives.

The core problem of it all seems to be the media. Sadly, media is usually in control of rich people. Thats the core reason why rich people get too much influence. So what else could be done ? Media should be public ownership, too. However, being owned by just the state itself wont work either. It would result in the political parties, preferably those in command, controlling the media. So I guess we have to find some system like the reader owns the media he is reading.

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