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Originally posted by WajomaYou still feel the same way Waj? Is $850 Billion enough for a celebration?
To make money, literally, to create wealth, is a noble pursuit and something to aspire to. Rather than putting stumbling blocks in front of those that are good at creating wealth we should celebrate them as we do those that have shown the skill and dedication to become top in their chosen field, we should celebrate them as we do athletes and sportsmen.
Originally posted by WajomaI still don't get how you are okay with the idea that as long as most are doing the right thing then even if a few bad apples cause a total meltdown of the financial system, then that's okay, and yet my apparently control freaking ways which would have had a very robust interaction with the market and would endeavour to take out the highs and lows, would not have allowed this to happen.
Most wealthy people don't want to build a money mountain though, they use their money to make more money and they're good at it. The key word here is 'make'. To make money, literally, to create wealth, is a noble pursuit and something to aspire to.
Is your freedom still free when the bail out cost forces you to be responsible for other people's lack of due diligence and oversight?
Originally posted by kmax87So suddenly you think people should be made responsible for decisions they make. It would have some gravity if you could be consistent.
I still don't get how you are okay with the idea that as long as most are doing the right thing then even if a few bad apples cause a total meltdown of the financial system, then that's okay, and yet my apparently control freaking ways which would have had a very robust interaction with the market and would endeavour to take out the highs and lows, would not ...[text shortened]... out cost forces you to be responsible for other people's lack of due diligence and oversight?
The highs and lows are caused by control freaking.
I'm consistent all the way, because I got with some P a long time a go. You should try it.
Principle that is.
Originally posted by kmax87Haha, your "control freaking ways" first you want to run my life for me, my health care, wages, who and how I help others now you want to run the international economy.
I still don't get how you are okay with the idea that as long as most are doing the right thing then even if a few bad apples cause a total meltdown of the financial system, then that's okay, and yet my apparently control freaking ways which would have had a very robust interaction with the market and would endeavour to take out the highs and lows, would not ...[text shortened]... out cost forces you to be responsible for other people's lack of due diligence and oversight?
BY WHAT QUALIFICATION
Originally posted by WajomaI'm not sure how you can set about to demonstrate that. You've argued this line before about free enterprise. You claim that it works and yet when shown where it doesn't you simply reply that's because that particular system was not free. This suggests that you have faith in a system that can never be proven, simply because we always seem to have one group or another taking advantage of, or using force, or coercion, over another group, and running the market to suit themselves.
The highs and lows are caused by control freaking.
Originally posted by WajomaBy the very same qualification that you insist an absolutely free system will be to the benefit of all. ie:- absolutely none, other than an intuitive hope that everything will work out okay.
Haha, your "control freaking ways" first you want to run my life for me, my health care, wages, who and how I help others now you want to run the international economy.
BY WHAT QUALIFICATION
Originally posted by kmax87The 'no true Christian/communist/capitalist' defence.
I'm not sure how you can set about to demonstrate that. You've argued this line before about free enterprise. You claim that it works and yet when shown where it doesn't you simply reply that's because that particular system was not free. This suggests that you have faith in a system that can never be proven, simply because we always seem to have one group or ...[text shortened]... or using force, or coercion, over another group, and running the market to suit themselves.
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Originally posted by Bosse de NageA couple of interesting quotes from the wiki article
History ribbits itself.
http://en.wikipedia.org/wiki/Panic_of_1837
The Panic of 1837 was a panic in the United States built on a speculative fever. The bubble burst on May 10, 1837 in New York City, when every bank stopped payment in specie (gold and silver coinage). The Panic was followed by a five-year depression, with the failure of banks and record high unemployment levels.
Political blame game, sound familiar?
Purported causes include the economic policies of President Andrew Jackson who created the Specie Circular by executive order and also refused to renew the charter of Second Bank of the United States, resulting in the withdrawal of government funds from that bank. Martin Van Buren, who became president in March 1837, five weeks before the Panic engulfed the young republic's economy, was blamed for the Panic. His refusal to involve the Government in the economy was said by some to have contributed to the damages and duration of the Panic. Of course, the initial Government intervention in the market had inadvertently been part of the cause of the problem, and further intervention might or might not have been useful.
But the truth always more complex
When analyzing the suggested causes of the bubble preceding the Panic of 1837, empirical evidence would actually imply the opposite. Suggesting that banks were carelessly lending and creating a credit boom would imply a large drop in reserve rates. During the early 1830s the average reserve rates of banks were not decreasing, but remained relatively stable. During this time, the money supply was increasing (approx. 200% ) despite the stable reserve rates of banks. This increase in the supply of money did not come from within the United States, but resulted from a positive specie inflow from foreign investors. British investors found it increasingly attractive to lend to the state governments in the United States in the 1830s. This increased level of available credit allowed the states to fund the building of canals through the use of state-issued bonds
The Empire Strikes Back?
The Specie Circular Act of 1836 required potential property buyers to use specie rather than bank notes. Although the use of bank notes was easier than carrying specie around, banks were required to exchange such notes for specie as promised. A potential property owner would simply go to the bank and exchange the note for specie in order to purchase the property. A larger catalyst came in the form of the Bank of England. The Bank of England was not comfortable with the increased flow of funds into U.S. by British investors. To combat this negative flow of funds, the bank increased its deposit rate. The increase in the deposit rate made it more attractive for British investors to invest within the UK, thus pulling funds from the U.S. As with any "credit" bubble, once the available credit shrinks, the "crash" quickly ensues.
Deneoument
Within two months the failures in New York alone aggregated nearly $100,000,000 in value. "Out of 850 banks in the United States, 343 closed entirely, 62 failed partially, and the system of State banks received a shock from which it never fully recovered." [1] The publishing industry was particularly hurt by the ensuing depression.[2]
A central banking cushion of any sort might have prevented some local failures, but most failures were caused by money. A few large local banks, like the Suffolk Bank of Boston, acted like central banks, lending reserves to other banks, and alleviated the effects of the Panic of 1837 in New England. Although Van Buren did not engender the Panic of 1837, he was harshly judged (and failed to be re-elected) because he was ideologically committed to keeping the government out of banking regulation, a resolve that many economic historians feel extended the effects of the Panic (emphasis added)(while others consider his approach to have minimized potentially destructive interference), which was not over until 1843. Van Buren even kept Jackson's Secretary of the Treasury, Levi Woodbury.
Conclusion
Economist Milton Friedman explains (1960 p 10):
The banking panic of 1837 was followed by exceedingly disturbed economic conditions and a long contraction to 1843 that was interrupted only by a brief recovery from 1838 to 1839. This Great Depression is particularly interesting for our purposes. It is the only depression on record comparable in severity and scope to the Great Depression of the 1930s, and its monetary concomitants largely duplicate those of its later mate. In both, a substantial fraction of the banks in the United States went out of existence through suspension or merger --around one quarter in the earlier and over one-third in the later contraction--and the stock of money fell by about one-third. There is no other contraction that even closely approaches this dismal record. In both cases, erratic or unwise governmental policy with respect to money played an important part.
Its interesting that 23 years after this crash the country was at each others throats in a house divided. Its also interesting that some people (no doubt rabid right wing conspiracists) claim that Lincoln was assassinated over his opposition to the idea of a central bank being formed.
From 1837 to 1929 = 92 years
From 1929 to 2008 = 79 years
The difference between these two time periods is 13 years. 😀
Anyone care to offer a theory for what all this might mean??
Originally posted by Bosse de NageSub-prime lending is channelling houses from the irrational to the rational. Houses are very cheap nowadays.
What's stopping them from investing it so as to enrich themselves immensely notwithstanding any potential damage to the economy as a whole?
How rational was sub-prime lending?
Originally posted by AThousandYoungLittle reported fact these days, the sub prime crises really started with an oversupply of new houses on the market. The market was totally saturated such that when people in sub prime stress tried to off- load their burden they couldn't.
Houses are very cheap nowadays.
The market became stagnant and that led incrementally to increases in the cost of credit which ultimately put pressure on increasing numbers of people with sub prime loans. So it seems the credit squeeze and drying up of capital affected the market from both directions. From above and below.
I forget the name of the US builder(one of the biggest) who was teetering on the edge of bankruptcy/ financial collapse around August of last year, but the oversupply of houses on the market was a very important aspect of the current crises timeline.
Originally posted by kmax87kmax: "By the very same qualification that you insist an absolutely free system will be to the benefit of all. ie:- absolutely none, other than an intuitive hope that everything will work out okay."
A couple of interesting quotes from the wiki article
[quote]
The Panic of 1837 was a panic in the United States built on a speculative fever. The bubble burst on May 10, 1837 in New York City, when every bank stopped payment in specie (gold and silver coinage). The Panic was followed by a five-year depression, with the failure of banks and record high une ...[text shortened]... periods is 13 years. 😀
Anyone care to offer a theory for what all this might mean??
Here, in your accusation of my lack of qualification to comment on the international economy you admit to your own 'same' lack of qualification, which is fine, I admit it and it's good to see you fess up also. IMHO essentially it appears there is a lot of money with not enough of value to base it on, and the bail outs consist of doing more of the same, adding more fuel to the fire. Two points here.
1/ I have never claimed an absolutely free system will be to the benefit of all. That would be as ludicrous as you making the same claim about "robust intervention"(you don't do you?) Check the definition of "straw man". My claims are based on what is right. For every 'there's not enough control and regs' link you post I can post another stating the opposite.
http://blog.mises.org/archives/008567.asp
"The problem is with regulation itself. With regard to financial markets, government regulates everything. There is the Federal Reserve that regulates the money supply, interest rates and everything else. There is the Treasury with its array of regulatory powers.
There is the Comptroller of the Currency, the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, and the Federal Home Loan Bank Board. Government has multiple layers of regulators concerning mortgages, financial institutions, and stock markets.
I have taught money and banking and was formerly the Assistant Superintendent of Banking in the state of Alabama and I can not think of a single thing related to this financial crisis that is not regulated."
2/ The current debacle did not occur in a free market, it is not an example of capitalism. It is the mountain of regs and by extension, the bureaurats making the regs that have shaped the market and made it what it is. Chaos by stabilisation.
So if we're to go with your Reactor analogy. Should the guy that cleans the toilets at the power station (you) get his hands on the controls of the reactor cooling system?
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Originally posted by WajomaWelll if you are going to be that snobbish about the validity of the opinion arrived at by an enquiring mind, to make an observation about a subject not immediately inside of their sphere of expertise, should someone then (you) whose qualifications in technical matters only fits them for the job of fetching the lunch time refreshment orders for the board operators in the control room of the nuclear power plant, opine about the virutes of one method of regulation over another?
Here, in your accusation of my lack of qualification to comment on the international economy you admit to your own 'same' lack of qualification, which is fine, I admit it and it's good to see you fess up also. It is the mountain of regs and by extension, the bureaurats making the regs that have shaped the market and made it what it is. Chaos by stabilisation ...[text shortened]... ilets at the power station (you) get his hands on the controls of the reactor cooling system?
Choas by stabilization? What a crock. Has the market ever embraced transparency? Having offices/officers of regulation is only one aspect of the puzzle. Actually having meaningful regulations to regulate is another totally different story. Its like computers and computer programs. Its like laws and the legal system. The overall outcome and health of the system is only as good as the quality of and foresight of the regulations and controls put in place. Rules that need constant revision, testing and adaptation. A strategy put in place that may have worked ten weeks/months/years ago needs constant updating. As they say with computers, GIGO. Garbage in garbage out. Your program is only as good as the lines of code compilled to make it run.
Well what does that suggest? Its not that we can do without controls is it? Its that we need controls as appropriate. The problem with your bureacratic argument is that the regulations that finally get agreed upon between all the interest groups and lobbies that inform the establishment and implimentation of a given control framework/regime usually involves so many compromises and concessions as to become really inefficient and almost unworkable. When government finally has the cahunas to establish an authority above the reach of special interests that is also empowered to bring those who would rather operate outside of any control framework, regardless of how much or little it impacts at all on their obligation to comply, then the system may get somewhere. Until then I hope your libertarian idea of entitlement does not end up giving you a plot of land that will remain a negative imposte on your purse for the next 20 years.
Originally posted by kmax87It was you that SAID IT!!! (Is there any way to double the size of the font so kmax can see it?)
Welll if you are going to be that snobbish about the validity of the opinion arrived at by an enquiring mind, to make an observation about a subject not immediately inside of their sphere of expertise, should someone then (you) whose qualifications in technical matters only fits them for the job of fetching the lunch time refreshment orders for the board oper ...[text shortened]... ving you a plot of land that will remain a negative imposte on your purse for the next 20 years.
I asked by what qualification?
You replied "...absolutely none, other than an intuitive hope that everything will work out okay."
kmax: "By the very same qualification that you insist an absolutely free system will be to the benefit of all. ie:- absolutely none, other than an intuitive hope that everything will work out okay."
Me being snobbish? It was you that SAID IT!!!
...and I agreed with you, dang it.