Global Financial Crisis (1 Viewer)

[Nebuchanezzar]

Easy to say that from your throne!

 

[withoutaface]

So you've gone from saying laissez faire doesn't encourage corporatism to saying you endorse corporatism?

Corporatism is where laws are made specifically to advance the interests of particular corporations or sectors of the economy (e.g. tariffs and subsidies). A laissez faire system would, by definition, reject such ideas as they interfere with the free operation of markets.

In such a system, those corporations are still accountable and have no protections offered to them. If they decided to treat all their employees like shit, they'd have people leaving the company and being replaced with inferior labour. If they decided to charge too much for their products, they'd lose their only real source of income (i.e. the consumer). I believe that if somebody manages a company where they produce superior products at competitive prices and maintain a high degree of satisfaction among their employees, they deserve to be paid more because (a) this is as difficult thing to do; and (b) it leads to a higher degree of happiness in broader society. This is not corporatism, this is common sense.

EDIT: Just to clarify, I consider myself a pragmatic liberal. I do not support free markets absolutely, but I do believe that further liberalisation of our economy is desirable (and, if this whole mess has shown us anything, necessary).

waf is trying to defend a defeated ideology hahaha

I'm providing a reasoned commentary on the situation. You've still done nothing to refute my assertion that (well intentioned) government interference in the market caused this mess, and while you refuse to do so you're not making any meaningful contribution to the discussion.

 

[_dhj_]

In what way did government intervention materially cause the sub-prime crisis? The crisis is not indicative of government over-intervention but of the lack of prudential regulation. It was not caused by central planning but by behavioural tendencies or 'irregularities' of individual agents that make up individual corporations, through a combination of 'rational' individualism on the one hand and irrational miscalculation and pack mentality on the other.

This is not the death of capitalism, but perhaps it is the death of homo economicus, and the solution will be found by a new wave of economic thinking similar to the wave which brought human civilisation out of the great depression.

 

[Captain Hero]

^ You're kidding right? The New Deal 2.0?

 

[Trefoil]

Further deregulation of our economy is desirable? How do you reach that?

It is Australia that is one of the best suited countries in the world to weather this storm, and the Reserve Bank of Australia credits a lot of that to our regulatory oversight - just enough, not too much. And it is not Australia's banking system that is collapsing. Australia is ranked as the freest market economy in the world alongside America and (IIRC) Singapore, so it's not as though our market isn't free enough already.

But unlike Singapore and America, we've also got a really good status quo between regulation, the welfare state, and the free market. Why would you want to impose on that for purely ideological satisfaction?

 

[Trefoil]

^ You're kidding right? The New Deal 2.0?

America never could get Third Way politics right. It's a symptom of their culture, I think.

 

[withoutaface]

In what way did government intervention materially cause the sub-prime crisis? The crisis is not indicative of government over-intervention but of the lack of prudential regulation. It was not caused by central planning but by behavioural tendencies or 'irregularities' of individual agents that make up individual corporations, through a combination of 'rational' individualism on the one hand and irrational miscalculation and pack mentality on the other.

This is not the death of capitalism, but perhaps it is the death of homo economicus, and the solution will be found by a new wave of economic thinking similar to the wave which brought human civilisation out of the great depression.

The situation was born out of the government believing that it knew better than the market in terms of lending money. It saw people who could not find loans on their own (or who would have been lent to at huge interest rates), and sought to intervene to guarantee these loans so as to facilitate those people owning their own homes. It did not account for the reasons why the private sector would not lend to these people, which have become eminently apparent in the last 12 months.

Lending to these people at low interest rates was disasterous because it was done at below the cost of credit (which is [what you're borrowing at + expected rate of default]) and so every suprime loan that was made was done at an eventual loss. If any regulation had been 'prudent' it would've ensured that loans weren't made below that cost, but it would've also killed off the original goal of providing cheap and affordable credit to those who couldn't find it elsewhere.

 

[Trefoil]

Actually, the situation was borne out of government stupidity combined with free market stupidity.

Everyone's blaming the other party when the fact is this was a mess up by both sides. And it didn't happen at any one point. It's been building up for a while.

 

[Captain Hero]

Yes but if they didn't give loans out to your less than average nobodies, people of your fiduciary capacity and limited means would not be able to get anything done it life.

Hey delete your post again you useless fucking troll

 

[Trefoil]

Forcing a bank to give a mortgage to somebody who is high risk is stupid, though.

There are plenty of better ways to deal with social welfare problems such as that and they still use government intervention. But instead of using a more logical and appropriate form of government intervention to solve the problem, Reaganomics dictated that they had to intervene as little as possible and it had to be solved within the free market. Which, again, is a stupid decision.

It's a failure on both fronts.

 

[Garygaz]

Credit rating agencies - Standard and Poor's, etc. They are the ones the blame. They gave AAA credit rating to people who were gearing against their own homes on which they still didn't own.

Also whichever bank let people borrow using shares as asset backing are completely fucking corrupt.

America: Deregulate when times are good, re-regulate when times are bad.... Great market philosophy, ai.

 

[Nebuchanezzar]

I'm providing a reasoned commentary on the situation. You've still done nothing to refute my assertion that (well intentioned) government interference in the market caused this mess, and while you refuse to do so you're not making any meaningful contribution to the discussion.

I already said I don't know anything about this stuff.

 

[withoutaface]

I already said I don't know anything about this stuff.

Then do some research...

 

[JaredR]

Kevin 07 Recesion 08

It was true!!!

lol.

 

[chicky_pie]

America never could get Third Way politics right. It's a symptom of their culture, I think.

Labor Prime Minister Kevin Rudd's first speech to parliament in 1998 stated:

Competitive markets are massive and generally efficient generators of economic wealth. They must therefore have a central place in the management of the economy. But markets sometimes fail, requiring direct government intervention through instruments such as industry policy. There are also areas where the public good dictates that there should be no market at all....

wot?

 

[bigboyjames]

http://img.photobucket.com/albums/v633/OxyBhai/ManUshirt.jpg

 

[jb_nc]

NYSX going to open in about 2 mins, prob won't be as many lolz today as yesterday

 

[jb_nc]

p much gained 2 per cent as of 9.31

 

[sunjet]

Despite FM and FM, the corporations took the high risk on board by issuing the higher rates (than what they were purchasing off) then overvalued the value of their subprime loans in their books. Surely, despite the expected Government bailout, they would of set provisions for such losses?

Were these investments actually guaranteed by the Government and classified as such low risk to the lenders?

 

[Silver Persian]

The Seagull Is Stealing The Chips @_@