Libertopianism to blame for the shitstorm the economy is in

[Human Snorenado]

HAW HAW HAW Libertopia am fail!

The worst thing you can say about libertarians is that they are intellectually immature, frozen in the worldview many of them absorbed from Ayn Rand. Like other ideologues, libertarians react to the world failing to conform to their model by asking where the world went wrong. Their heroic view of capitalism makes it difficult for them to accept that markets can be irrational, misunderstand risk and misallocate resources—or that financial systems without vigorous government oversight constitute a recipe for disaster. They are bankrupt, and this time, there will be no bailout.

[Kestastrophe]

Blame Greenspan for making the case that the exploding trade in derivatives was a benign way of hedging against risk.

Not only that, but he also fanned the flames when the housing market took off by championing sub-prime lending. His legacy is going to be permanently tainted by this fallout, and rightfully so imo.

Derivatives aren't inherently bad and they can be used to effectively hedge and other strategies (i.e. synthetics), but they are essentially just a betting device. It doesn't take a sage to predict that something that lets you place highly leveraged bets on prices has a potential to be abused.

[Beardo]

Perhaps this is partly true. But lets not completely blame free markets. We wouldn't have such a huge bust in the cycle if we just let the banks and the crappy home owners that bought above their means just take the fall. Unfortunately its not politically correct to let people fail (banks or home owners). So instead we are going to prop up home prices and banks so that we can fall even harder again and again.

Also, Clinton like greenspan too 


And I believe that even the socialist of social countries in europe are going into a recession also.



Edit: One thing great about libertarians is that we can always blame them for everything. And since they will never have any real power we will never have to hear from them. They are like the fat kid in class. If someone farts everyone always "knows" it's him.

[Van Cruncheon]

i do love the randroid quotes about how socialism is rooted in the envy of lessers. it's not; it's rooted in the fear of your superiors: that your intellectually juvenile economic faith will drag us all down with you.

[Mandark]

We wouldn't have such a huge bust in the cycle if we just let the banks and the crappy home owners that bought above their means just take the fall.

YES WE WOULD.

[Beardo]

Propping up homes to artificial prices will only make the fall hurt even more. I dont see how you can argue against this.

[Mandark]

Propping up homes to artificial prices will only make the fall hurt even more. I dont see how you can argue against this.

Who's talking about doing that?  The current plan (not just in the US, as everyone copies Gordon Brown) is to recapitalize the banks through government purchases of stock.

You said that the bust would be shorter if we "let the banks... just take the fall".  Which is completely goddam insane.

[Beardo]

So how do you punish banks that make bad investment decisions?


Just you guys know, The Bailout of these banks is costing taxpayer an estimated 5 Trillion.

[Beardo]

Regulate them?  You can't let banks fail without punishing the people who have their money there.

Banks were regulated. Are you suggesting that more regulation would prevent banks from failing?

[Beardo]

No, the regulation would have had to be years ago.  Now we're just playing to keep the whole thing from collaping.

So after we add regulation no more banks will ever fail again?

[Beardo]

I'm sorry I didnt mean to be coy. I was curious if in the 21st century we can build an economic system where finical institutions will never fail. And if we can is that what we want?

[Beardo]

No, but we certainly don't want one where healthy institutions can fail because of a panic.

I dont really think the whole mortgage crisis is panic. The whole mortgage crisis came about because people were paying more than the value of homes based on the speculation that the prices would always increase.  When people finally realized that people couldn't afford what was being offered the prices fail which caused mortgages to go upside own. In the wake we had big sell off of stocks that were also over-priced.

Nobody panicked even close to what happened during the great depression. Our economy is in a recession but as of now nothing too terrible is happening. It's just part of the cycle.

In fact there are a number of good things going on right now.

1. Home prices are dropping. Good for people wanting to enter the market.
2. Gas is dropping. Good for everyone.
3. The Dollar is strengthening.

In fact, for most of us in our 20s this is a great time to be entering the market. Stuff is cheap.

[Human Snorenado]

I'm sorry I didnt mean to be coy. I was curious if in the 21st century we can build an economic system where finical institutions will never fail. And if we can is that what we want?

John Maynard Keynes.  Go read up.

[Beardo]

I'm sorry I didnt mean to be coy. I was curious if in the 21st century we can build an economic system where finical institutions will never fail. And if we can is that what we want?

John Maynard Keynes.  Go read up.

I know who he is. My question remains unanswered.

[Kestastrophe]

Nobody panicked even close to what happened during the great depression.

Thanks in large part (if not wholly) to government intervention smh

[Van Cruncheon]

without government intervention -- especially international government intervention -- in using that money to pry credit markets open, there is a supreme chance that the markets would still be in a total rout, and that americans would have lost a LOT more than 5 trillion, including their fucking jobs, over the next three months

when credit markets close down, payrolls disappear overnight. goodbye america!

[Kestastrophe]

when credit markets close down, payrolls disappear overnight. goodbye america!

"We want a Main St. bailout, not a Wall St. bailout!!1!!1


*5 days later*
"Why didn't I get paid this week? And why is my 401k worthless?"

[Beardo]

Nobody panicked even close to what happened during the great depression.

Thanks in large part (if not wholly) to government intervention smh

what government intervention? the government hasnt done anything yet. they have only promised to do something.

[Beardo]

Ok so what is the right balance between no regulation and complete nationalization of the banking industry?

[Van Cruncheon]

if the market completely self-destructs, it is supremely irrational to say "oh, it's SUPPOSED to behave that way!" it is the economic equivalent of saying "oh, we've sinned too much, free market jesus is smiting us!"

what would have happened if not for the liquidity injections would not have been a mere "bust". it would have meant the collapse of the american economic environment, and widespread unemployment across all sectors. now, if that's what you WANT, out of jealousy or frustration with the complexity of the modern world, please come out and simply state your views as an article of faith, not reason.

[Van Cruncheon]

Ok so what is the right balance between no regulation and complete nationalization of the banking industry?

guess we're gonna find out, eh?

[Van Cruncheon]

Nobody panicked even close to what happened during the great depression.

Thanks in large part (if not wholly) to government intervention smh

what government intervention? the government hasnt done anything yet. they have only promised to do something.

$250 billion has already been provided to back interbusiness credit. that alone has caused the libor to drop, and banks to open credit lines for payroll and inventory.

that said, most of the damage has been done: the consumer is spooked, and overall liquidity is -- well -- constipated. such are the wages of panic!

[Kestastrophe]

Nobody panicked even close to what happened during the great depression.

Thanks in large part (if not wholly) to government intervention smh

what government intervention? the government hasnt done anything yet. they have only promised to do something.

So what? Those promises have eased the panic in the market. They have set an immediate course of action, but it is a bureacracy and $250 billion action takes some time. But this doesn't discredit the fact that what the govment has promised to do has helped the markets while the government had a more hands off approach after the 1929 stock market crash.

[Kestastrophe]

I am in no way an apologist for the government. I think we would have been much better off with a comprehensive refinancing of the mortgage market as a whole administered by the FDIC, but such a task would be a tremendous undertaking and would take more time. Also, I think that the government should have taken equity shares in banks long before they did (last weekend). But they are obviously trying to alleviate the situation and their moves, while not perfect by any means, have helped the situation.

[Van Cruncheon]

i agree. the "bailout" wasn't the best possible solution, but time didn't allow for "best" -- the markets were spooked far worse than ever before, and sanity had to prevail. the only thing that would calm nerves was a promise of insurance for credit line extensions -- ones which might have been safe previously, but were now completely unreliable thanks to the toxic condition of the marketplace and gross consumer terror.  the real fix, as always, is impossible: that people DON'T panic; that they DON'T sit on their cash anticipating a financial apocalypse; that they accept their losses without abandoning the whole ship; that they don't do bank runs and dive into half-baked commodities markets; and that they don't force banks to do the exact same things on a larger scale out of an equal sense of self-preservation.

once libertarians UNDERSTAND the interdependencies of people and of the instiutions they create -- that no man is an island, ESPECIALLY in the economic arena -- we'll be much better off. if they want to continue to fuel their fantasies of independence and freedom, they need to go buy a cabin in the woods and not participate in society or the marketplace.

[laesperanzapaz]

*waiting for a libertarian to respond, if ever...

[Human Snorenado]

*waiting for a libertarian to respond, if ever...

Sadly, I think we've spooked FoC away for good.  White Man, ban Gaborn so we can start poking him with sticks over here.

[Mandark]

Beardo's firing wide sprays of ignorance here, but I'll just focus on this tidbit.

Just you guys know, The Bailout of these banks is costing taxpayer an estimated 5 Trillion.

By whose math?

[Mandark]

By whose math?

Wat?

[jiji]

Greenspan recants his laissez-faire mantra! 

http://www.huffingtonpost.com/2008/10/23/greenspan-calls-crisis-a_n_137193.html

Greenspan said he had made a "mistake" in believing that banks operating in their self-interest would be enough to protect their shareholders and the equity in their institutions.

Greenspan said that he had found "a flaw in the model that I perceived is the critical functioning structure that defines how the world works."

Greenspan called the global financial crisis is a "once in a century credit tsunami" that policymakers did not anticipate.

More at http://money.cnn.com/2008/10/23/news/economy/committee_regulatory/index.htm?postversion=2008102312

[Human Snorenado]

Newsflash!  Libertopian finally admits that greed trumps any idea of market self-regulation!  Man I wish I wasn't banned over at GAF so I could rub this poop in JayDubya and Gaborn's faces.

[Van Cruncheon]

ahhhh, it's so GOOD to be RIGHT i mean LEFT!~

[Kestastrophe]

Greenspan wasn't just a regular old Libertarian either. He was part of Rand's close social circle back in the 60's.

[Van Cruncheon]

update: i am still loving this.

[jiji]

So the CBC just had a representative of the Ayn Rand institute on to talk about Greenspan's change of heart. And as you might expect, the Randbot they had on claimed that Greenspan had fallen away from the true church of Rand long, long ago, and that we're in this mess because the market wasn't free enough. You'd think they were interviewing JayDubya.

[Van Cruncheon]

update: still laughing at randroids!

[Joe Molotov]

Libertarianism is deader than the PS3.

[Eric P]

in a completely unregulated market everyone would immediately be in business for themselves, so no one is unemployed, per se, they are just currently the heads of failing companies.

[Van Cruncheon]

and families would be corporations

brb, gonna beat the minority shareholder in my business until she agrees to a hostile merger

[Mandark]

I still want a Randroid to answer this question for me:  What if, in a completely unregulated market, the unemployment rate is set by the invisible hand at 25%?"

Then we would have conclusive evidence via social experiment that one quarter of the population objectively does not merit a job.

[Human Snorenado]

Bill Moyers has Galbraith on, talking about the idiocy of the past 20+ years.  Moyers took a shot at Greenspan/Rand in the opening bit of the Galbraith segment.  Hubba hubba.