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Timetheos
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Posts: 469
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 Posted: Fri Apr 03, 2009 3:04 am Post subject: Re: How we got into this financial mess |
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| cornopean wrote: | The current economic crisis is govt engineered from start to finish.
I'd be happy to defend that. |
So do it. |
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cornopean
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| Posted: Fri Apr 03, 2009 9:53 pm Post subject: Re: How we got into this financial mess |
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Whenever the govt intrudes into the economy, it changes incentives. Back when FDR signed the FDIC into law, the banks were no longer on there own. The FDIC would insure that banks would not fail. Further legislation increased this. Fannie & Freddie gave loans to people who did not deserve them. Eventually, the market corrected and that is the mess we see today.
If the market were allowed to regulate mortgages, then banks would never make such risky loans b/c they would have to bear the results of their poor business decisions. As it was, when banks know the govt will bail them out, they make foolish business decisions knowing that the govt will pick them up when they fall. We MUST allow failing businesses to fail. That is the way we purge poorly managed businesses from the scene. The stupidest thing to do is to prop up such businesses and reward their stupidity. |
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Timetheos
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| Posted: Sat Apr 04, 2009 3:41 am Post subject: |
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Whenever the govt intrudes into the economy, it changes incentives.
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Sometimes that is a good thing.
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Back when FDR signed the FDIC into law, the banks were no longer on there own. The FDIC would insure that banks would not fail.
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And now people no longer stash money in their mattress-pads.
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Fannie & Freddie gave loans to people who did not deserve them.
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You are alluding to CRA loans, which have already been discussed on this thread and you have not refuted the data.
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If the market were allowed to regulate mortgages, then banks would never make such risky loans b/c they would have to bear the results of their poor business decisions.
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1) CDOs and CDSs were not a government invention.
2) CDOs and CDSs allowed people to transfer risk, so loan creators didn't have to "bear the results of their poor business decisions"
3) Executive compensation is such that short term gain is enough (if I make 20 million in one year, and things fall apart in the next, it's no sweat of my back; I can take my money and leave).
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As it was, when banks know the govt will bail them out, they make foolish business decisions knowing that the govt will pick them up when they fall.
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Which is why we had laws to keep banks from making risky investments and required them to maintain healthy margins. However, people eventually forgot about the GD, repealed Glass-Stegal, and history repeats.
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We MUST allow failing businesses to fail. That is the way we purge poorly managed businesses from the scene. The stupidest thing to do is to prop up such businesses and reward their stupidity.
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I agree, but failure and how we react to it may look different depending on the situation. Real, temporary nationalization of banks is letting them fail, but forcing an orderly extraction of assets from the investors while allowing depositors to still function. |
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cornopean
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| Posted: Sat Apr 04, 2009 1:01 pm Post subject: |
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| Timetheos wrote: |
And now people no longer stash money in their mattress-pads. |
why shouldn't people be free to stash money in their mattresses if they want?
| Quote: | | You are alluding to CRA loans, which have already been discussed on this thread and you have not refuted the data. |
I just came back onboard here. You're going to have to point me to it.
but some things are just very simple. When the govt encourages banks to make foolish loans and then offers to bail them out when things fail........isn't that a recipe for disaster?
If banks were forced to live with the results of their decisions (as in a true free market) they would not makes such reckless loans.
| Quote: | Which is why we had laws to keep banks from making risky investments and required them to maintain healthy margins. However, people eventually forgot about the GD, repealed Glass-Stegal, and history repeats.
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You don't need laws to force banks to make wise loans. If you deregulate things and refuse to bail out the banks that made bad loans, then banks wouldn't make foolish loans. they would have to live with the results of their decisions.
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I agree, but failure and how we react to it may look different depending on the situation. Real, temporary nationalization of banks is letting them fail, but forcing an orderly extraction of assets from the investors while allowing depositors to still function. |
Dear sir, nationalization is NEVER temporary. Herein lies the problem. as Thomas Jefferson said, The natural progress of things is for govt to gain and for liberty to yield. |
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Timetheos
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Posts: 469
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| Posted: Sat Apr 04, 2009 5:38 pm Post subject: |
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why shouldn't people be free to stash money in their mattresses if they want?
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Now don't be stupid. They are free to do it now. The problem is when they feel they have to.
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I just came back onboard here. You're going to have to point me to it.
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Start at the beginning of the thread and read the supporting materials referenced within.
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You don't need laws to force banks to make wise loans.
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No, you need to force them NOT to make stupid loans.
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If banks were forced to live with the results of their decisions (as in a true free market) they would not makes such reckless loans.
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Corporations are made up of individuals. If they make plenty of money, they don't care about the long term of "living with their results".
Furthermore, it appears that you don't understand that this is more than banks failing. The concern is the financial destruction of hedge funds, insurance companies, investment houses... Allowing all of these to fail, especially if there is little to help the populous, could be disaterous for said populous.
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Dear sir, nationalization is NEVER temporary.
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Dear idiot, nationalization is often if not always temporary.
Ever hear of the Resolution Trust Corporation? It nationalized S&Ls in the early 90s. It has been mostly been disolved. |
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cornopean
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| Posted: Sat Apr 04, 2009 7:20 pm Post subject: |
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| Timetheos wrote: | | No, you need to force them NOT to make stupid loans. |
No you don't. If banks make stupid loans, they will go under. If we let them go under, they will quickly learn to make smart loans. yes?
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Corporations are made up of individuals. If they make plenty of money, they don't care about the long term of "living with their results". |
But the only way a corp can make money is if they make a product that people want. A corp's profit margins is simply a measure of how well they've satisfied the people they serve.
| Quote: |
Furthermore, it appears that you don't understand that this is more than banks failing. The concern is the financial destruction of hedge funds, insurance companies, investment houses... Allowing all of these to fail, especially if there is little to help the populous, could be disastrous for said populous. |
It would only be disastrous in the short term. In the long term, it would be very profitable since it would purge all this rottenness from the system.
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Dear idiot, nationalization is often if not always temporary.
Ever hear of the Resolution Trust Corporation? It nationalized S&Ls in the early 90s. It has been mostly been disolved. |
This is one example. There are a million other examples of new govt programs and agencies. From the beginning of this nation's history, our gov't has done one thing......grow. There have been minor ups and downs but the general trend is always more govt and less liberty. |
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Timetheos
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| Posted: Sun Apr 05, 2009 2:40 am Post subject: |
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No you don't. If banks make stupid loans, they will go under.
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The individuals that make up the corporation don't give a damn if they can leave with a boat-load of cash when it goes under. And that does happen all the time.
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But the only way a corp can make money is if they make a product that people want.
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Not true at all. You do not address examples such as patent troll corporations.
Furthermore, making a product that people want does not imply ethics or fair treatment of others. Again, my example of coal.
Other examples of corporate misdeeds include the current Peanut and Pistachio incidents. As long as corporations could hide their malfeasance, they made a lot of cash, and people thought they were getting what they want.
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It would only be disastrous in the short term. In the long term, it would be very profitable since it would purge all this rottenness from the system.
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People die and starve from short term things. Short term things like losing your house can affect the rest of your life.
Gawd, I feel like I have to explain 2+2 to a 1st grader.
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This is one example. There are a million other examples of new govt programs and agencies.
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But we are not talking about those other things. You are using a strawman. |
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cornopean
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| Posted: Mon Apr 06, 2009 7:03 pm Post subject: |
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| Timetheos wrote: |
The individuals that make up the corporation don't give a damn if they can leave with a boat-load of cash when it goes under. And that does happen all the time. |
This does not happen all the time. I can only list Enron and that one accounting firm. Forget the name now. An these execs were subject to civil penalties. They did not get away with their tricks.
At any rate, every economy, from the most free to the most socialist will have corrupt businessmen, quacks, and cheats. The truth is that in a free market, their is far less of this than in a socialist system. The socialist govts of this world are RIFE with corruption.
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Other examples of corporate misdeeds include the current Peanut and Pistachio incidents. As long as corporations could hide their malfeasance, they made a lot of cash, and people thought they were getting what they want. |
the laws are set up to deal with malfeasance. These people rarely get away with it. I am not for the elimination of all laws. people who fail to honor contracts or who wantonly exploit others will be dealt with by the law.
but at the end of the day, we need to do everything we can to attract corporations and to ensure a business environment where they can grow and thrive. this anti-corporation attitude of the dems is marxist and foolish.
How about eliminating the corporate income tax? that doesn't have anything to do with the kind of malfeasance you referenced earlier. ??
| Quote: | | People die and starve from short term things. Short term things like losing your house can affect the rest of your life. |
I agree but the blame for this suffering is on the govt that created this crisis in the first place. People die from chemotherapy too, but thousands are saved by it.
These kind of hard measures wouldn't be necessary if the govt got out of the economy and let people make their own decisions and live with the consequences. |
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Timetheos
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Posts: 469
Location: Seattle
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| Posted: Mon Apr 06, 2009 7:14 pm Post subject: |
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| Quote: | | I agree but the blame for this suffering is on the govt that created this crisis in the first place |
Prove it.
| Quote: | | This does not happen all the time. I can only list Enron... |
And the S&L fiasco and Maddof and .... Happens all the time.
Corporations, and the individuals within them are just as guilty as anyone else when it comes to corruption.
| Quote: | | The truth is that in a free market, their is far less of this than in a socialist system. |
1) No one is arguing for a strictly socialist system you moron.
2) Once we are talking about blended systems, you have some proving to do. Prove to me that Norway is more corrupt than us!
| Quote: | | but at the end of the day, we need to do everything we can to attract corporations and to ensure a business environment where they can grow and thrive. this anti-corporation attitude of the dems is marxist and foolish. |
NO. We need to attract business and industry. Corporations are just one way of doing business. For example, giving universal healthcare can encourage small business because the person can now afford the insurance.
Your ideology blinds you. |
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cornopean
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Joined: 20 Dec 2006
Posts: 3576
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| Posted: Mon Apr 06, 2009 8:33 pm Post subject: |
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| Timetheos wrote: | | Quote: | | I agree but the blame for this suffering is on the govt that created this crisis in the first place |
Prove it. |
I already made my argument. The govt set up agencies that would give people loans who didn't deserve these loans. The govt also had a policy of bailing out banks that made foolish loans. Hence, the banks had no incentive to make smart loans. The whole system collapsed. the govt is to blame.
| Quote: | | Quote: | | This does not happen all the time. I can only list Enron... |
And the S&L fiasco and Maddof and .... Happens all the time. |
the S&L fiasco was another govt engineered crisis. and Madoff.....isn't he under arrest? He didn't get away with it.
| Quote: | | Corporations, and the individuals within them are just as guilty as anyone else when it comes to corruption. |
there is far less corruption in the halls of corporations than in the halls of govt.
| Quote: | | 1) No one is arguing for a strictly socialist system you moron. |
there is no such thing as strictly socialist. govts are more or less socialist. socialism is a continuum not a line.
| Quote: | | 2) Once we are talking about blended systems, you have some proving to do. Prove to me that Norway is more corrupt than us! |
Norway is not more corrupt than us but neither is Norway very socialist. the Index lists it at #28.
| Quote: | | NO. We need to attract business and industry. Corporations are just one way of doing business. For example, giving universal healthcare can encourage small business because the person can now afford the insurance. |
but universal healthcare has been shown to reduce the access people have to health care. Open your eyes and read the reports. Do Canadians have the same access to health care that Americans do? Do UKers have the same access to health care Americans do?
reports are that Pittsburgh has more MRI machines than Canada.
http://healthcare-economist.co.....an-canada/
this report says, “In spite of large increases in health spending, wait times in Canada are 86 percent longer now than they were in 1993 and are having a considerable impact on the well being of Canadians.”
http://www.fraseramerica.org/n...../6598.aspx
| Quote: | | Your ideology blinds you. |
another one of your profundities. do you have an ideology?  |
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