DebateGate

General Category => 3DHS => Topic started by: _JS on October 24, 2008, 04:48:04 PM

Title: The Berlin Wall of Laissez-Faire has Fallen
Post by: _JS on October 24, 2008, 04:48:04 PM
Hard times: The myth of public v private has now been exposed

Private companies have often vilified the state for causing dependency. Now the boot is on the other foot, it's time to focus on public service values, says Peter Beresford


The Guardian (http://www.guardian.co.uk/society/joepublic/2008/oct/17/public-sector-credit-crunch/print)

(http://static.guim.co.uk/sys-images/Society/Pix/pictures/2008/10/16/enron-460x276.jpg)
Enron's collapse in 2001 proved that private companies were equally as prone to inefficiency as the state. Photograph: Martin Godwin


For a generation now, the received wisdom has been: "Market good, state bad." But how do we square this equation with the collapse of the market economy and the idea that only the state can bail it out?

For those of us concerned with the public sector, these issues are raised with particular intensity. Where does this leave the market-driven values we've been taught to internalise? What will it mean for public policy and the public service ethic?

From Thatcher onwards, we have been told how hopeless public welfare is and how damaging state intervention has been. Welfare claimants have been held up as figures to despise and suspect. The state has been cast as wasteful, bureaucratic, inefficient and dependency-creating. Welfare claimants have been stereotyped as draining the wealth which the market has generated, their dependency presented as a burden on the rest of us through their cost in high taxation.

Where once we heard that the welfare state would put an end to social evils, more recently we have been encouraged to believe that it's the cause of social breakdown, and "benefit scroungers." The market and the private sector, we are told, alone have the competence, expertise and experience to provide efficient goods and services. They can convert us from clients and claimants patronised by the state to public consumers with choice and control.

Yet now, without apparent embarrassment or hesitation, state intervention is advanced as all that stands between us and economic meltdown.

The banks, we are told, so distrust each other that only unprecedented injections of state money may make it possible for them to do business together again. For years the Daily Mail and the Sun have run poisonous campaigns against asylum seekers and people on income support to reclaim an imagined few millions. Governments promote campaigns to snoop on welfare claimants. These campaigns rarely generate enough money even to pay for themselves. Yet now we are encouraged to spend hundreds of billions of public money to bail out the banks and private sector that preached the mantra of independence and individual responsibility.

Are we really going to pretend that all this hasn't happened, carrying on as before as if the market hasn't now faced its equivalent of the fall of the Berlin Wall? Will we still be looking to bright young management consultants at £1,000 plus a day, few of whom have even run a corner shop, to teach central government, local authorities and primary care trusts to be 'business-like'?

What about the big voluntary organisations who tell us they must pay their chief executives the salary packages of the private sector if they are to get the brightest and the best? Many such charities have increasingly divested themselves of services as their metropolitan offices and fundraising departments have got larger and glitzier.

What will go into the large organisational hole now filled with the "visioning", team-bonding babble lapped up from the commercial sector? This is the same private sector that has now for years been featherbedded by profit-taking from public utilities, government sell-offs, wasteful PFI schemes and government tax credit subsidies for low wages, operating within a globalised economy that exploits the majority world and its people and damages the environment.

From Enron onwards, we have all known that the private sector bore no relation to the lean and efficient paragon we were told it was. No one's saying the private sector is all bad, just that it has been grossly oversold. Meanwhile the merits of public service values have been treated as, at best, worthy but dull. The current economic crisis should remind us of what we can gain from enduring values of collectivity and mutuality. Our energies must now be spent on updating them to match the challenges of the future.

• Peter Beresford is professor of social policy at Brunel University
Peter Beresford Posted by Peter Beresford Friday October 17 2008 00.03 BST

* guardian.co.uk © Guardian News and Media Limited 2008

Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Plane on October 24, 2008, 04:52:25 PM




For a generation now, the received wisdom has been: "Market good, state bad." But how do we square this equation with the collapse of the market economy and the idea that only the state can bail it out?



It is a bit early to know that President Bush's plan is going to work , but I am glad fianally that his genius is being recognised.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 24, 2008, 05:07:48 PM
It is a bit early to know that President Bush's plan is going to work , but I am glad fianally that his genius is being recognised.
==================================================
Exactly how is anything being done now Juniorbush's plan? How is his 'genius' a part of it?
Junirbush's role in this mess is as a  bystander.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Plane on October 24, 2008, 05:43:38 PM
It is a bit early to know that President Bush's plan is going to work , but I am glad fianally that his genius is being recognised.
==================================================
Exactly how is anything being done now Juniorbush's plan? How is his 'genius' a part of it?
Junirbush's role in this mess is as a  bystander.


Oh?

I note that the President , Barack Obama and John McCain are agreed that the $700 billion bailout should be passed.

I don't think that Bush even had much troubble convinceing Obama the conformist , but McCain the Maverick came around too after application of Bush's considerable charm and formidable logic.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 24, 2008, 05:48:20 PM
IT WASN"T BUSH'S PLAN!

Bush was simply the chair warmer in the White House when this plan was devised. Paulson was the man who did nearly all of the convincing.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Plane on October 24, 2008, 05:51:51 PM
IT WASN"T BUSH'S PLAN!

Bush was simply the chair warmer in the White House when this plan was devised. Paulson was the man who did nearly all of the convincing.


It is who's plan?

Just because you like the plan doesn't mean that it isn't possibly Bush's plan.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: _JS on October 24, 2008, 05:53:23 PM
Quote
Bush's considerable charm and formidable logic

 ;D

Plane, I haven't seen baiting like that since shark week.


I liked this part of the article:

Quote
Are we really going to pretend that all this hasn't happened, carrying on as before as if the market hasn't now faced its equivalent of the fall of the Berlin Wall? Will we still be looking to bright young management consultants at £1,000 plus a day, few of whom have even run a corner shop, to teach central government, local authorities and primary care trusts to be 'business-like'?

The answer to both questions is an emphatic "hell no!"
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Universe Prince on October 24, 2008, 05:58:51 PM
With all due respect to JS, Peter Beresford is either a fool or a liar. Perhaps he was misled by other fools or liars. I don't know. "From Enron onwards, we have all known that the private sector bore no relation to the lean and efficient paragon we were told it was." Who told him? Saying the private market is better is not claiming it to be a paragon or flawless or perfect. "Yet now, without apparent embarrassment or hesitation, state intervention is advanced as all that stands between us and economic meltdown." Says who? Maybe there are no people who believe in free markets in Britain, but here in the U.S. there are many people trying to explain that state intervention is the beyond the last thing we need. We even have a handful of politicians who are bold enough to suggest the massive bailout isn't the best plan. "Are we really going to pretend that all this hasn't happened, carrying on as before as if the market hasn't now faced its equivalent of the fall of the Berlin Wall?" No one has to pretend, because that hasn't even remotely happened. The interference of government carries as much or more blame than that of individuals in the private sector. There was no "Berlin Wall" to fall. As a post by Brassmask (http://debategate.com/new3dhs/index.php?topic=8107.msg84188#msg84188) correctly pointed out, "the Wall Street hotshots didn't have and don't want a free market [...] have no interest in a free market." If there is anything we have to pretend, it would be to pretend that this somehow a failure of a laissez-faire free market.

Peter Beresford seems to be a victim of extremely wishful thinking. Not unlike Jacob Weisberg and his proclamation of the end of libertarianism, Beresford seems to have constructed an entirely false view of the nature of the situation for the purposes of propagandizing. So at this point, I am of the opinion Beresford is a liar. He has, perhaps, lied to himself most of all, but that doesn't make him any less of a liar.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Plane on October 24, 2008, 06:07:17 PM
Quote
Bush's considerable charm and formidable logic

 ;D

Plane, I haven't seen baiting like that since shark week.


I liked this part of the article:

Quote
Are we really going to pretend that all this hasn't happened, carrying on as before as if the market hasn't now faced its equivalent of the fall of the Berlin Wall? Will we still be looking to bright young management consultants at £1,000 plus a day, few of whom have even run a corner shop, to teach central government, local authorities and primary care trusts to be 'business-like'?

The answer to both questions is an emphatic "hell no!"

So you like the Bush plan too?












If you catch and release ,do they get wise to the bait ?
http://www.kevinwakeman.com/44kinkaidmarchmuskie.wmv (http://www.kevinwakeman.com/44kinkaidmarchmuskie.wmv)
http://www.kevinwakeman.com/bgfpics/big_fish_clips.htm (http://www.kevinwakeman.com/bgfpics/big_fish_clips.htm)
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: _JS on October 24, 2008, 06:10:58 PM
In fairness UP, he is likely writing in hyperbole but you cannot deny that neoliberalism sold the free-market as snake oil. I can go hunt down quotes from Maggie Thatcher or Ronnie Reagan if you like. And on the flipside, yes there are folks who have attacked the bailout plan (me included, but for different reasons), but the mainstream political parties have endorsed it.

And whether you are willing to admit it or not, this is a failure of deregulation to an extent. Is that the only variable? Of course not. But it most certainly played a role and you'd be hard-pressed to find many investors who disagreed.

So while Beresford is playing up his argument (and certainly using hyperbole), there was certainly an inherent push to burn the idea into people's mind that "government=bad, market=good." Now, did that idea of the private sector coincide with your idea of a free market? No. Neo-liberals never wanted the government completely removed. Notice that in Chile under Pinochet the Government had to exist, mostly to keep Pinochet in power, but also to use public funds to invest in private markets (and for bailouts as well).

In many ways neoliberalism is a refining of Fascism. Fascism was a triangular relationship between Government - Private Sector - Unions. All the neo-liberals did was remove the unions and make it a two-way relationship. So I agree that it wasn't truly laissez-faire anarchism, but it is the market that has been preached by the likes of Thatcher, Reagan, Friedman, Pinochet, and others.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: _JS on October 24, 2008, 06:11:56 PM
Quote
Bush's considerable charm and formidable logic

 ;D

Plane, I haven't seen baiting like that since shark week.


I liked this part of the article:

Quote
Are we really going to pretend that all this hasn't happened, carrying on as before as if the market hasn't now faced its equivalent of the fall of the Berlin Wall? Will we still be looking to bright young management consultants at £1,000 plus a day, few of whom have even run a corner shop, to teach central government, local authorities and primary care trusts to be 'business-like'?

The answer to both questions is an emphatic "hell no!"

So you like the Bush plan too?

No. I did not support the bailout.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Plane on October 24, 2008, 06:13:36 PM
Fascism was a triangular relationship between Government - Private Sector - Unions.


Perhaps , but if so it was not this feature of Facism that made it objectionable or deserveing of the contempt it earned.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: _JS on October 24, 2008, 06:27:42 PM
Fascism was a triangular relationship between Government - Private Sector - Unions.


Perhaps , but if so it was not this feature of Facism that made it objectionable or deserveing of the contempt it earned.

No other form of government turned around a nation with such a dire economy in hyperinflation into one of the (if not the) leading economic power in the world as quickly as Fascism in Germany. The problem is that it took an extreme nationalism, fear, and dedication to a rigid hierarchy to perform the economic miracle that Fascism was capable of.

Neoliberalism takes some of those same problems as well, but more than that it takes an almost religious faith in the market-government relationship as well as an idea that wealth flows downhill. Chile proved that this wasn't the case. In almost every way the people of Chile were worse off under Pinochet's Friedman-esque economy. That is...everyone except the top 10% who were far better off. This seems the case with neoliberalism in general. It is wonderful for the wealthy and elite.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Plane on October 24, 2008, 06:30:29 PM
Fascism was a triangular relationship between Government - Private Sector - Unions.


Perhaps , but if so it was not this feature of Facism that made it objectionable or deserveing of the contempt it earned.

No other form of government turned around a nation with such a dire economy in hyperinflation into one of the (if not the) leading economic power in the world as quickly as Fascism in Germany. The problem is that it took an extreme nationalism, fear, and dedication to a rigid hierarchy to perform the economic miracle that Fascism was capable of.

Neoliberalism takes some of those same problems as well, but more than that it takes an almost religious faith in the market-government relationship as well as an idea that wealth flows downhill. Chile proved that this wasn't the case. In almost every way the people of Chile were worse off under Pinochet's Friedman-esque economy. That is...everyone except the top 10% who were far better off. This seems the case with neoliberalism in general. It is wonderful for the wealthy and elite.


I don't understand Chile well enough to critique your understanding of that situation.

Has th4e USA never proven your point?
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 24, 2008, 06:48:23 PM
No other form of government turned around a nation with such a dire economy in hyperinflation into one of the (if not the) leading economic power in the world as quickly as Fascism in Germany.

============================================
Germany got out of trouble by basically stealing all the money of a very prosperous minority of Jews. The state took nearly all their money, their possessions, their real estate, and even the gold from their teeth. They used this to pay for autobahns and weaponry, among other things.

It was not true that all Jews in Germany were rich, but there were many of them who were.

It is not a good model for economic stimulus.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Universe Prince on October 25, 2008, 12:30:19 AM

In fairness UP, he is likely writing in hyperbole but you cannot deny that neoliberalism sold the free-market as snake oil. I can go hunt down quotes from Maggie Thatcher or Ronnie Reagan if you like.


I'm sure you can. But the fact remains that we never got a free market.


And on the flipside, yes there are folks who have attacked the bailout plan (me included, but for different reasons), but the mainstream political parties have endorsed it.


I know they have, and it disgusts me. I did not like politicians much before this, but now, as I watch nearly all of them scramble to insist the government must do something, I find myself close to loathing.


And whether you are willing to admit it or not, this is a failure of deregulation to an extent. Is that the only variable? Of course not. But it most certainly played a role and you'd be hard-pressed to find many investors who disagreed.


It is nothing of the sort. I know you and I agree on a number of things, but on this we do not agree.


So while Beresford is playing up his argument (and certainly using hyperbole), there was certainly an inherent push to burn the idea into people's mind that "government=bad, market=good."


You say "inherent push". Inherent in what? This has been a debate that has been around since well before Reagan or Thatcher or Ayn Rand. And in the meantime, we've hardly seen anything close to an actual free market.


In many ways neoliberalism is a refining of Fascism. Fascism was a triangular relationship between Government - Private Sector - Unions. All the neo-liberals did was remove the unions and make it a two-way relationship. So I agree that it wasn't truly laissez-faire anarchism, but it is the market that has been preached by the likes of Thatcher, Reagan, Friedman, Pinochet, and others.


Not being students of theirs, I don't know exactly what they preached. (I have a fair idea of Friedman's ideas, but not of the rest) But as for not "truly laissez-faire anarchism", that is a severe understatement. It's not even in the same gorram ballpark. And while Peter Beresford might be using hyperbole, he is using it to mislead. Again, there was no "Berlin Wall" between business and government. So suggest there was is either completely ignorant or completely deceitful. "Are we really going to pretend that all this hasn't happened, carrying on as before as if the market hasn't now faced its equivalent of the fall of the Berlin Wall?" Are we really going to pretend that something which did not happen really did not happen? Are we going to pretend that Ross Perot didn't get elected President of the U.S.? Are we going to pretend that the New York Yankees didn't win last year's World Series? Since it did not actually occur, seems to me there is no reason to pretend. The only reasons to ask the question in the first place are either ignorance or to mislead others about what actually did happen. I doubt Beresford got to where he is by being ignorant, so I can only conclude he is being deceitful. It is, at the very least, propaganda. It is certainly not a reasonable representation of the facts.

Did people in the private sector do bad things? Yep, they did. The notion that they did so as a result of too much economic liberty and too few regulations is so much bunk.

Let me put this another way, in a free market, sans government regulations and interference, the Federal Reserve chairman would not have been keeping interest rates artificially low, there would have been no push from the federal government for subprime lending for the sake of pushing up home-ownership numbers, and no bailouts large or small from the federal government to give any company the notion that it was too important or too big to fail. In reality, we have had all three. And this isn't just neoliberals or conservatives that have responsibility for this; liberals in government have been helping all this along.

So quote Thatcher and Reagan all you like, but this isn't some neoliberal or neofascist policy failure. This is a failure of the idea that government will make everything better. The government was going to ensure "affordable housing". Thus we have Fannie Mae and Freddie Mac buying up and offering subprime loans. The government now is going to save us all from economic doom, so it will spend likely trillions of dollars in bailouts and other "fixes", perpetuating the notion that businesses can take as much risk as they please with other people's money because the government will bail them out, setting us all up for further problems down the road.

Like the FEMA fiasco in New Orleans after Hurricane Katrina, this is a failure of government. And like the FEMA fiasco, nearly everyone seems to be saying, "but we just need more government to fix this." It is almost literally saying if we just keep doing what got us into the problem, we'll fix it. One might as well argue the pedophile Catholic priests scandal could have been solved by having the pedophile priests hang out more with young boys. Or that drinking more beer and whiskey is the solution to alcoholism. Or that fatty foods, pasta by the bucketful and no exercise will solve obesity.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Religious Dick on October 25, 2008, 02:20:58 AM


And whether you are willing to admit it or not, this is a failure of deregulation to an extent. Is that the only variable? Of course not. But it most certainly played a role and you'd be hard-pressed to find many investors who disagreed.



I like these articles that blame the free-market, but never get into any specifics as to what actually happened. For a start, what was ever deregulated? The only deregulation I can think of was a relaxation of some of the provisions of the Glass-Steagall act in 1999. Other than that, regulation has come thick and fast. You can have Glass-Steagall back if we can get rid of Sarbanes-Oxley. As someone who's had to implement some it's provisions, I can assure you it's taking a hell of chunk out of the economy in it's own right.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Michael Tee on October 25, 2008, 08:36:19 AM
<<The interference of government carries as much or more blame than that of individuals in the private sector. There was no "Berlin Wall" to fall. As a post by Brassmask correctly pointed out, "the Wall Street hotshots didn't have and don't want a free market [...] have no interest in a free market." If there is anything we have to pretend, it would be to pretend that this somehow a failure of a laissez-faire free market.>>

Three questions for Prince
:
1.  What specific acts of government interference do you think caused or contributed to what specific aspects of the current crisis?
2.  Would you at least accept in principle that different acts of government interference could have had a more beneficial effect?
3.  what would you say to the argument that without whatever "government interference" was in fact applied to the markets, the crash would have been worse in one or more ways (i.e., deeper, broader, longer, less salvageable?)
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Michael Tee on October 25, 2008, 08:49:39 AM
plane sez:  <<Perhaps , [fascism was a triangular relationship between Government - Private Sector – Unions,] but if so it was not this feature of Facism that made it objectionable or deserveing of the contempt it earned?>>

What do you have against triangular relationships? 

I think the most repellent aspect of fascism is the brutality that seems to always accompany it, and the inequality that inevitably results.  Whatever harshness was found under communism was always done in the pursuit of abolishing forever the exploitation of man by man, and undeniable material progress often followed, to the great benefit of the masses.  But fascism even in its purest form always seemed to be involved heavily in the grinding down of the poor (once certain minimal social benefit levels were achieved) and the preservation of the old, pre-fascist world of inequality of the rich and the poor.  And of course in most cases, there was nothing pure about fascism - - it is a magnet that inevitably attracts the wealthy, anxious or fearful for their wealth and privilege and ready to stop at no means to protect it.

Brutality and inequality are the real deal-killers for fascism, at least IMHO.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Amianthus on October 25, 2008, 09:49:06 AM
So, to recap:

Brutality and harshness under fascism == bad.

Brutality and harshness under communism == good.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 25, 2008, 10:34:43 AM
Brutality and harshness under fascism == bad.

Brutality and harshness under communism == good.

===========================================
Brutality and harshness are always undesirable. It is not necessary to have either for people to live in harmony and prosperity.

It would be possible to remove the brutality and harshness that afflicts Americans as well, if we reformed the economic and criminal justise systems. It has been done elsewhere, but it would step on the toes of the oligarchy,  who rely on it to acquire a still bigger piece of the pie.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Michael Tee on October 25, 2008, 02:14:27 PM
So, to recap:

Brutality and harshness under fascism == bad.

Brutality and harshness under communism == good.

========================================================================

I'm sorry.

The brutality of fascism greatly exceeds that of communism.
That the goals of communism are much more laudable than the goals of fascism.
That the inequalities of society are levelled out much more under communism than they are under fascism.
That the victims of fascist brutality are mostly innocent people and that the victims of communism were mostly fascists, criminals, parasites, foreign agents, enemies of the people, racists and anti-Semites.
Most of the "brutality" of communism is Cold War mythology from Nazi and collaborationist apologists.

But otherwise, you are right.  Brutality is bad whoever practices it - - the U.S.A.  included.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Plane on October 25, 2008, 04:09:58 PM
So, to recap:

Brutality and harshness under fascism == bad.

Brutality and harshness under communism == good.

========================================================================

I'm sorry.

The brutality of fascism greatly exceeds that of communism..
Well that is the questionable part isn't it?
Quote
That the goals of communism are much more laudable than the goals of fascism..
Wait ,...that is certainly questionable too.
Quote


That the inequalities of society are levelled out much more under communism than they are under fascism..
I ,..Don't really know.
Quote


That the victims of fascist brutality are mostly innocent people and that the victims of communism were mostly fascists, criminals, parasites, foreign agents, enemies of the people, racists and anti-Semites..
That is so much like saying your which hunters catch the innocent and ours catch real whiches.
Quote


Most of the "brutality" of communism is Cold War mythology from Nazi and collaborationist apologists. .
I wish you were more of a sceptic.
Quote



But otherwise, you are right.  Brutality is bad whoever practices it - - the U.S.A.  included.

Unargueable.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 25, 2008, 04:18:39 PM
The entire purpose of Fascism is to impose the will of the majority on the minorities.

Communism as practiced in the USSR was not anything that anyone could or should envy. It's only good was that it held the nation together against Hitler. Stalin was a monster, Lenin was an ideologue who did occasionally monstrous things. I would not want to live a minute under either of them, or Hitler, Mussolini, Franco or Salazar, either.





Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Universe Prince on October 25, 2008, 05:00:59 PM

Three questions for Prince:
1.  What specific acts of government interference do you think caused or contributed to what specific aspects of the current crisis?


For starters, there is the use of Fannie Mae and Freddie Mac and various pieces of legislation to "encourage" supposedly "affordable housing". On the surface, this seems like a good idea. In practice it essentially established subprime lending. This doesn't excuse by any stretch the kind of predatory lending that sometimes went on with people being mislead into ARMs and whatnot. However it does set the groundwork for massive amounts of subprime lending and the state in which the FMs have found themselves. That Fannie Mae and Freddie Mac are involved alone discounts the notion of a "Berlin Wall" because they were both government sponsored enterprises.

And then there is the action of the Federal Reserve in keeping interest rates artificially low, which contributed in no small part to the housing bubble. It was a government interference that, along with proclamations from Greenspan and Bernanke, created the false impression that there was nothing wrong in the housing market and everything was fine.

And then we come to the fed meddling in failing businesses. Bear Stearns should have failed. Instead, the Federal Bank of New York helped JP Morgan take over Bear Stearns, and this is more evidence that there was no "Berlin Wall". AIG should have failed. Instead the government decided on a huge bailout. And these are just the recent events. There have been other bailouts, the airline bailouts come to mind, that established that just about any corporation large enough could simply depend on the federal government bailing the corporation out if it got into trouble. Remove the consequences of risk, and people end up taking risks they shouldn't.

These are broad strokes. Someone more versed in economics than myself could go into more detail. And again, none of this excuses bad behavior by those in the private sector. I'm not saying they did nothing wrong or do not deserve punishment. But they most certainly do not deserve a huge federal government bailout that takes money from middle class working people and gives it to corporations and their much wealthier owners and boards and such. There is simply no excuse for that.


2.  Would you at least accept in principle that different acts of government interference could have had a more beneficial effect?


Different acts of government. If you count letting businesses fail as an act, yes. I am not sure what government action would have been beneficial in this, except maybe making the FMs entirely privately run businesses.


3.  what would you say to the argument that without whatever "government interference" was in fact applied to the markets, the crash would have been worse in one or more ways (i.e., deeper, broader, longer, less salvageable?)


I would say to that argument that it is utter nonsense. Much of the events that factored into the crash would not have happened at all without government interference. To say that without these events the crash would have been worse is ridiculous. This is not to say that everything would always run smoothly in a market free of these interferences, but it is to say that without government pushing for subprime lending and keeping interest rates artificially low and implicitly promising to bailout businesses, this crisis does not occur. So the argument that the crash would have been worse without these actions is nonsense.

Please do not assume that I think businesses should be allowed to do any damn thing they please. I think as long as we have a government, businesses should be subject to laws that protect people's rights, the same as any other human entity. And I do not hold up the market as a god-like entity that can do no wrong. People are involved, so obviously sometimes bad things will happen, mistakes will get made, some people will try to cheat the system, et cetera. But frankly, I don't believe we can solve that with the government trying to keep people from the consequences of their actions. That is how we got into this mess in the first place.

Michael, I know you and I do not agree about this, and we could have another argument about socialism, capitalism and liberty, but we'll have to do that another time. I have other things to do right now. However, I wanted to thank you for asking the questions. Those were good questions, and I was glad to see them. So thank you for that.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 25, 2008, 05:50:57 PM
As a rule, houses rise to rather outrageous prices, then interest rates go up, and they become mostly unaffordable again. When interest rates fall, then there is another housing boom and prices shoot up yet again. This time, interest rates stayed low.

A problem you failed to mention is the use of credit default swaps as insurance, which they are not. There should have been a regulation against anything other than actual insurance being used as insurance. Banks should not be able to bundle and sell off mortgages immediately, either, and there is no reason that derivatives need to be sold.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Universe Prince on October 25, 2008, 11:32:39 PM

A problem you failed to mention is the use of credit default swaps as insurance, which they are not.


They are actually, however, they are also a rather risky means of insurance. And no, we don't need regulations against them. What we need is to let businesses who use them as such suffer the consequences of their actions.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 26, 2008, 12:14:16 AM
They are actually, however, they are also a rather risky means of insurance. And no, we don't need regulations against them. What we need is to let businesses who use them as such suffer the consequences of their actions.

================================================
No, that won't work, because they will trash the entire economy.  Banning using these things as insurance is a far better solution. You cannot trust these fools to be honest, as we have seen.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Universe Prince on October 26, 2008, 11:13:42 AM

No, that won't work, because they will trash the entire economy.  Banning using these things as insurance is a far better solution. You cannot trust these fools to be honest, as we have seen.


Sounds like a reason to let them fail, rather than ban them from doing something that is not an inherently bad practice.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 26, 2008, 11:25:10 AM
Sounds like a reason to let them fail, rather than ban them from doing something that is not an inherently bad practice.

But it IS inherently a bad practice. Insurance should ALWAYS insure. Credit swaps do not do this. They are bogus insurance, less useful than a bogus $10 Rolex.

If every mortgage is actually insured by insurance that will pay up in the event of default all the time, this would PREVENT failure.

Sounds like you are in favor of bogus insurance being sold as the real thing. Why? Do you sell these things, or what?
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Universe Prince on October 26, 2008, 11:56:52 AM

But it IS inherently a bad practice.


No, it's just risky.


Insurance should ALWAYS insure. Credit swaps do not do this. They are bogus insurance, less useful than a bogus $10 Rolex.


Says you.


If every mortgage is actually insured by insurance that will pay up in the event of default all the time, this would PREVENT failure.


Ideally speaking, yes. But we don't live in an ideal world.


Sounds like you are in favor of bogus insurance being sold as the real thing. Why? Do you sell these things, or what?


No. I'm in favor of letting people take risks and letting them live with the consequences.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 26, 2008, 12:02:13 PM
If every mortgage is actually insured by insurance that will pay up in the event of default all the time, this would PREVENT failure.


Ideally speaking, yes. But we don't live in an ideal world.

===============================================
Oh, please.

Life insurance pays up at least 99% of the time. The credit swaps failed miserably. Actual insurance is not some ideal, it is clearly possible.
Ban that which has failed us, allow only that which has proven that it has not.

It is not the fact that the banks failed themselves that counts, it is that their failure has ruined people who had no way of knowing what would happen and no way of preventing the collapse if they did.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Universe Prince on October 26, 2008, 12:11:29 PM

If every mortgage is actually insured by insurance that will pay up in the event of default all the time, this would PREVENT failure.

[...]

Actual insurance is not some ideal, it is clearly possible.


Infallible insurance that pays up all the time and therefore prevents failure is clearly an ideal and not possible.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Amianthus on October 26, 2008, 12:54:43 PM
Actual insurance is not some ideal, it is clearly possible.
Ban that which has failed us, allow only that which has proven that it has not.

So, it's your claim that no insurance company has ever failed because it could not meet it's insurance obligations?

Would you like a few examples to counter your claims?
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 26, 2008, 06:07:03 PM
So, it's your claim that no insurance company has ever failed because it could not meet it's insurance obligations?

Would you like a few examples to counter your claims?

===================
It is my claim that actual insurance from a well-regulated insurance company (and they all should be well-regulated) should be used instead of the bogus credit swaps, which were almost universally worthless.

An insurance policy that pays off 99% of the time might not be perfect, but it is certainly better than bogus credit swaps that failed almost universally.

The latter should be outlawed, and real insurance should be required.

Jeez!
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Amianthus on October 26, 2008, 06:31:44 PM
An insurance policy that pays off 99% of the time might not be perfect, but it is certainly better than bogus credit swaps that failed almost universally.

Actually, credit default swaps paid off consistently for years. Probably as great as 99%.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 26, 2008, 07:16:18 PM
Actually, credit default swaps paid off consistently for years. Probably as great as 99%.

I have no idea where anyone could confirm this. I suspect it isn't true. But no matter. NOW we know that they do not work all the time, and when they fail, they fail spectacularly. They were unregulated, and have been shown to be ineffectual. It is time to ban them or reform them so they won't fail
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Amianthus on October 26, 2008, 10:00:01 PM
I have no idea where anyone could confirm this. I suspect it isn't true. But no matter. NOW we know that they do not work all the time, and when they fail, they fail spectacularly. They were unregulated, and have been shown to be ineffectual. It is time to ban them or reform them so they won't fail

Regardless of your "suspect it isn't true" comment, it is a true statement. You can look up the records, they were a traded security, so their records are with the SEC.

Similarly, we know that insurance does not work all the time (or there would not be failed insurance companies), so do you want them banned as well?
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Plane on October 26, 2008, 10:09:42 PM
   Well , I suppose that any mortguage has a level of risk , that the promise won't be kept, or that the circumstances that allow the payments to be possible will not continue or that after thefailure of the payer the insureance will also fail.

    However it is done , can mortguages be rated accurately for the level of risk ?

  Investors have a right to take risks, but putting a misleading four stars on the risk seems unfair.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 26, 2008, 10:27:56 PM

Regardless of your "suspect it isn't true" comment, it is a true statement. You can look up the records, they were a traded security, so their records are with the SEC.

Similarly, we know that insurance does not work all the time (or there would not be failed insurance companies), so do you want them banned as well?

I have no idea what these damn fool things would be listed as, so no, I can't look up the records.

And no, I do not propose banning insurance. I propose banning credit swaps, as I have said four (4) cuatro, quatre quattro times now, and replacing it with well-supervised insurance. Please stop asking the same stupid questions again and again.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: _JS on October 27, 2008, 01:59:08 PM


And whether you are willing to admit it or not, this is a failure of deregulation to an extent. Is that the only variable? Of course not. But it most certainly played a role and you'd be hard-pressed to find many investors who disagreed.



I like these articles that blame the free-market, but never get into any specifics as to what actually happened. For a start, what was ever deregulated? The only deregulation I can think of was a relaxation of some of the provisions of the Glass-Steagall act in 1999. Other than that, regulation has come thick and fast. You can have Glass-Steagall back if we can get rid of Sarbanes-Oxley. As someone who's had to implement some it's provisions, I can assure you it's taking a hell of chunk out of the economy in it's own right.

Interesting...I've actually done SOX audits. What did you have to implement if you don't mind my asking?
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: _JS on October 27, 2008, 02:06:17 PM
The problem Prince is that you're assuming that had the market mechanisms been allowed to work (which is completely hypothetical) then the private sector would not have had bad actors or at the least it would have had less of an impact from bad actors. In other words, the "boom and bust" is caused from government interference. But this is merely a supposition.

I don't really have too much of a problem with it. I sincerely dislike the neo-liberal construct of government and business lying in bed with each other. The difference is that you want to place that power into the private sector whereas I want to bring back the piece that the neo-liberals selectively excluded and give the power to the Trade Unions.

Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 27, 2008, 02:33:44 PM
Boom and bust goes way back to the times of the Tulip mania in Holland and the South Sea Bubble in France and England. It is as much an integral part of capitalism as he waves on the sea is a part of the natural state of things on Planet Earth..

Capitalism is not something to be worshipped in the way that some Communists seen to worship Communism. IT is a natural phenomenon, like waves or the wind or gravity. Just as waves can be quelled with a drop of oil on the waters, the violent fluctuations of the market can also be controlled. Greenspan did a pretty good job for the long period he presided over the Fed, but specific regulations, like requiring actual insurance on bundled mortgages rather than bogus credit swaps, and orders to the FM's to NOT approve loans to people who had no demonstrated manner of repaying them were needed. Just as bad money always drives out good, bad mortgages drove out good ones, and the result is the current mess.

Maybe they had too many regulations, maybe not enough. But it is undisputable that they did not have the RIGHT regulations.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Christians4LessGvt on October 27, 2008, 04:55:40 PM
"The Berlin Wall of Laissez-Faire has Fallen"

actually just the opposite

when you get half-wit liberals (Barney Frank, Chris Dodd, Obama, ect..)
that basically tell by law lending insitutions "hey you must carry out our
social experiments & loan billions to our favored half-wits that cant afford
the loans but we order you to against all logic loan to these victimhood groups
anyway and dont really worry about the consequences because we'll cover it if it goes bad".....
thats just the opposite of "Laissez-Faire"...thats just more failed "LAZY ASS LIBERALISM AFFAIR"!
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Plane on October 27, 2008, 05:00:02 PM
"... I sincerely dislike the neo-liberal construct of government and business lying in bed with each other...."



Didn't I see this in certain descriptins of facism?

No wonder you don't like it , if certain businesses belong to the government , how can the government avoid helping these businesses with laws that favor the businness above the customer or compeditor?
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Universe Prince on October 27, 2008, 06:16:57 PM

The problem Prince is that you're assuming that had the market mechanisms been allowed to work (which is completely hypothetical) then the private sector would not have had bad actors or at the least it would have had less of an impact from bad actors. In other words, the "boom and bust" is caused from government interference. But this is merely a supposition.


I'm not assuming that at all. I do think government interference contributes to booms and busts in ways that get overlooked far too often. Ignoring the influence of government practices and actions on the boom bust cycle seems entirely foolish to me. It would be like trying to understand how plants grow without considering sunlight. Like or dislike government interference, it is there and it does contribute. I'm not saying it is the only cause, but some people seem to think government interference in the market has nothing ever to do with the cycle, and that simply is not true. Particularly in this crisis.


I don't really have too much of a problem with it. I sincerely dislike the neo-liberal construct of government and business lying in bed with each other. The difference is that you want to place that power into the private sector whereas I want to bring back the piece that the neo-liberals selectively excluded and give the power to the Trade Unions.


Yes, I want that power in the private sector. I'm not entirely opposed to unions, nor am I saying no laws should apply to businesses. I am saying I don't like the partnership of government and corporations to control the market. I am not saying the market is a panacea, or that there will not be bad actors in it who cause problems. I am saying relying on government to fix it is not going to solve the problem because government cannot fix it. Many people looking at this crisis are trying to think of how government can somehow prevent this from happening in the future. It can't. Depending on it to do so will only result in more power in the hands of the politicians and the wealthy and some future crisis. We cannot avert every crisis, but we can stop doing the things we know for certain will cause one. And we certainly don't need government bailout plans that give taxpayer dollars to the corporations.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Plane on October 27, 2008, 06:24:26 PM
  Perhaps a boom and bust cycle is normal to a market , I can see how the positive feedback might cause an overshoot of any goal.

    What does government do but aggrivate the cyclical by holding the frequency low?

    When the Rangers began putting out forest fires we learned thet the fires happening less frequently tended to be worse because there was more accumulation of fuel in the forest than would naturally occur.


     Imaginethat carefull regulation reduces risk so much that no one gets burned in investmet for a long time , wouldn't the reluctance to take risk be reduced ? After a while rediculous risks are taken by investors who have gone years without being burned , thus the burn all the brighter whenthey finally do.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 27, 2008, 06:31:24 PM
Forest fires have zero to do with financial cycles.

What Greenspan was doing, rather successfully, was maybe like pruning back the underbrush.

He was on the right track, but he simply failed to regulate a couple of things that should have been regulated better, or at least get Congress to make the proper moves with regard to requiring insurance that guaranteed the value of bundled mortgages, and restricting Fannie Mae and Freddie Mac from granting mortgages especially ARM's with teaser rates, to people who had no hope of paying them off.

Minor dips in the market will always occur, but major panics are what we need to avoid. It could have been done, but it wasn't. Politicians on both sides are to blame.
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Plane on October 27, 2008, 06:34:27 PM
Forest fires have zero to do with financial cycles.

What Greenspan was doing, rather successfully, was maybe like pruning back the underbrush.

He was on the right track, but he simply failed to regulate a couple of things that should have been regulated better, or at least get Congress to make the proper moves with regard to requiring insurance that guaranteed the value of bundled mortgages, and restricting Fannie Mae and Freddie Mac from granting mortgages especially ARM's with teaser rates, to people who had no hope of paying them off.

Minor dips in the market will always occur, but major panics are what we need to avoid. It could have been done, but it wasn't. Politicians on both sides are to blame.


If regulations prevent the minor dips , might this not pile the effect and make the eventuall major dip more drastic?
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Xavier_Onassis on October 27, 2008, 06:41:50 PM
If regulations prevent the minor dips , might this not pile the effect and make the eventuall major dip more drastic?

No.

Why should they?
Title: Re: The Berlin Wall of Laissez-Faire has Fallen
Post by: Universe Prince on October 27, 2008, 11:35:55 PM

When the Rangers began putting out forest fires we learned thet the fires happening less frequently tended to be worse because there was more accumulation of fuel in the forest than would naturally occur.



Forest fires have zero to do with financial cycles.



If regulations prevent the minor dips , might this not pile the effect and make the eventuall major dip more drastic?



No.

Why should they?


Ahem.


When the Rangers began putting out forest fires we learned thet the fires happening less frequently tended to be worse because there was more accumulation of fuel in the forest than would naturally occur.