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Sure, taxpayers hate bailouts, whether of banks or nations, but they need to stop and consider...
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Monday, May 10, 2010, 6:15 PM ETSure, taxpayers hate bailouts, whether of banks or nations, but they need to stop and consider the "costs of the panic and destruction" that would have ensued without them, James Pethokoukis argues. TARP bought U.S. banks time to raise private capital and restore confidence; the European plan "is in the same vein."
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capitalism as you imagine it does not and has not really ever existed. and if did - raw and unrestrained - I am quite sure that more than a few of would all find it a tad uncomfortable.
E
Mere priggish dismissal only increases your derision quotient, not your intelligence quotient. You don't really need to do that. Besides Rand's wildly self-centred individualism bears only an art-deco relationship to the Bauhaus of Capitalism.
Sorry, I liked the phrasing even though the metaphor is wholly wrong...reminds me of Gary Cooper.
Vengeance does not make good public policy.
Any Rand never wrestled with the dark side of unrestrained capitalism. Adam Smith believed that businessmen were morally dubious creatures only restrained by market forces. In fact, he believed that businessmen rarely met without the meeting ending in a conspiracy against the public good.
thats what most call chaos.
as there are no courts (that restricts free market)
and freedom only exist for those who can pay for it.
which is only the 1%.
Yes.
"thats what most call chaos."
Oh noes! Scareey.
"and freedom only exist for those who can pay for it.
which is only the 1%. "
I know. Against the nhinetee niners right?
heh
Open up your lemonade stand on any corner of any street in any neighborhood and charge whatever you like.
And one more I might add: personal responsibility. I know, not a big phrase in today's lexicon of Big Goobermint's paternalism and the infants who whine and clamor for more of it aka the OWS variety.
In the end, most people want to continue their lives as children needing protection from all the scary bad monsters, not realizing that government is the monster.
As far as...
"Lemonade, or heroin, or guns, or fake Rolexes, or copied software, or fake pharmaceuticals, or snake oil or whatever. It's all capitalism right?"
Sounds like Hong Kong. The entry costs to doing business are exactly zero. I dream of a day when anyone, I said anyone, can wake up and become their own boss without the constraint nor the weight of the state in every matter under the sun.
I don't need Big Bro. Especially when Big Bro is now the ultimate crime syndicate aka John Corzine.
As far as pharma. We, the taxpayer, subsidize it, pay the inflated costs(R&D) and then Mexico and Canada are left getting the benefit. Sounds pretty screwed up to me. I'd rather not have any FDA at all.
Fake Rolexes. Oh no! Frightening.
Heroin? Put them in a room. Let them run needles into the ditches of their arms until they bleed out.
Guns? What's wrong with guns? They're great.
I regulate my own purchases. I assert the right of all people to consensually trade without someone interfering in the transaction.
There's a huge difference between informing the public of potential dangers (a proper regulatory system), vs. preventing them from exercising their right to take their own risks (the tyrannical regulatory system we have today). Consumer Reports is a great template for free market regulatory agencies, where people can choose to take their advice, or ignore it at their own risk.
There will always be those who will clamor for more government. These are the people who need surrogate parents. But its more perverse than that. These same people want to force all of us to become their adopted kids by force of the same Federal Parent.
They can't just leave us alone. Its not enough that we want to assume our own way. They must insist themselves into our lives by way of the tribe. Its always the tribe with the left. Always the mob. Force. That's what today's Left is. Total coercion.
Suppose the moon is made of cheese and the wheels fall off your tricycle. Oh no! What then, hand wringer?
BTW the FDA kills thousands of people everyday with its backlog and delays. And even if that wasn't the case, most drugs already FDA rubberstamped are destructive in one way or another by virtue of the inherent side effects.
The real facts are without regs, it is a race to the bottom. The winner is the one who sticks the public with the long term costs.
I live close to a refinery and a major oil infrastructure is all through So Cal. I have seen refineries, pipelines blow up and worked on them. As an electrician I understand how dangerous the barely knowledgeable are. The costs to lives far after the original person, that saved a couple of dollars on a dangerous installation, are gone. What, you shoot the wife of the dummy that sold danger that kills your family if he is gone? Get a lawyer? Don't worry about the toxins that USED to leak into groundwater around refineries?Cancers have no costs?
You're rhetoric appeals to people that are stuck with rose colored glasses looking at the past. Do I like ALL the regs-of course not and would LOVE to see some SPECIFIC streamlining, unfortunately the Repubs with your rhetoric, just ask their biggest donor what they don't like and go after whatever makes them the most money, rather than the truly inefficient. We are no longer an agrarian culture with miles between neighbors and self sufficient. The "rights" we all have need to be balanced. I am not happy with the balance right now, but suggesting we just all fight it out, like the OK corral? That certainly fosters equal opportunity-for the biggest and richest or most willing to die.
I prefer freedom to the state every time. Even if that freedom means death. At least then I can say I was at one time, even for a moment, a free man.
At the bare minimum, if I am to give any of your schtick an ounce of credence, it would be that two thirds of all federal regulations, whether they be EPA, employment law or civil/legal, are not only useless they are constricting to productivity and a healthy engaged society. The problem is not that we need more laws or regulations. The problem is that we aren't sunsetting them fast enough. For every new law, two old ones should be summarily killed. That should be the mandate to pass a law.
You either abide by the 10 commandments or you are cursed with the 10,001. ~ Mamonides.
And I would add: ... and their lawyers.
Each large bank's balance sheet is tied through the wholesale market to every other large bank.
That's your systemic risk. Every major national bank is lending from and borrowing to other major player. All the balance sheets are intertwined.
That creates the potential domino effect.
And moral hazard is a problem intrinsic to the type of capitalism we practice - incorporated, limited liability.
The benefits of excessive risk to
In fact, every dollar of NEW U.S. debt now causes U.S. GDP to shrink. This is the FIRST time in history the U.S. economy has been so debt-laden that it is IMPOSSIBLE to generate economic growth with new debt.
In fact, TARP and the rest of the Wall Street bail-outs has only moved the U.S. CLOSER to implosion - only the banksters benefited from all the hand-outs. And no amount of phony statistics PRETENDING that the U.S. economy is "growing" will change those facts.
"The U.S. Debt-Trap"
www.bullionbullscanada...
Honestly, you don't know your ass from a hole in the ground.
There is no debt trap. The Federal government's debt service is low and it currently borrows at the lowest interest rates over the last 60 years.
Do you ever look at data or you are simply trying to push people's buttons to advance your dubious economic populism?
Until there is fiscal reform in DC from the chin all the way down to the nuts, there will be very little real private sector growth. Especially since the tax question is never resolved and held out as the sword of Damocles over every future investment dollar. Capital will, very simply, move to other more favorable climates with harder currency and less central meddling.
But continue being a Krugman cheerleader and the punchline. Every party needs a clown.
You mean the pump and dump secondaries that were made possible by going from mark to market, to mark to myth.
All so the bankster's bonuses could continue while diluting shareholders that had already been recently raped?
A day of reckoning will come due, just a matter of when.
I'm going on a short trip to Vegas for a job interview tomorrow. Since tomorrow is Sunday and the liquor store is closed can I take that bottle of Dewar's and Absolut of yours? I promise I'll replace them and pay you back when I get this job.
Ummm...and...the transmission in my car is acting up and I'd be afraid to drive it all the way to Vegas...if it broke down you're the only one I could call for help...so...can I borrow your Beamer for the trip?"
Rationalizing his dysfunctional enabling and rescue instincts the Father says yes to the Son, then says to himself:
"Phew! If I had said 'No' to him just imagine the trouble he would have gotten himself into here in town because he was so upset that I wouldn't help him out"
In my opinion, the painful lessons of failure would have been better for society in the long run. Short term thinking will be our ultimate demise.
If we had taken our medicine then we could look forward to a bright tomorrow rather than postpone the inevitable.
It's an entitlement when one receives it.
It's a bailout when somebody else receives it.
Either way, it's the nanny state.
And Argentina basically defaulted again just a couple of years ago. But by nationalizing private retirement accounts, (stealing private property) it seems to be doing better. HaHa!
Throwing money at a broken system does not fix the system.
Who wins if everything goes down?
Better, first, who loses, that is easier. Most all of us in the West.
Who is likely to get up first? Probably the Germans, given the current US administration's apparent preference for reducing that country to penury.
But back to the winners. Are there any coming out of this? What country or group doesn't have their next paycheque tied to the massive Ponzi scheme that is developing a lot faster than I'm comfortable with? The Chinese? Nope, they are tied to the US. How about the Indians? Maybe. The Arabs... sort of, but they have a customer dependency that is heavier than a crack habit.
Who can identify the potential winners coming out of this potential collapse? I don't like being alone out here on this limb....
While history shows areas that have had massive problems - those have been areas. With the US, Canada, and the UK being sucked into the EU drain, should it happen, do we expect China to pick up the slack? As noted above, they are tied to the US. That is why I'm just a bit concerned about the breadth of this spread.
There has to be millions of people out there rethinking their citizenship. Oh wait, that's crazy talk.
Problem is - its not working this time. They can't induce credit expansion, because the system is choking on existing debt.
IMF bailouts, etc - can only work if the credit markets are growing and the money supply is expanding.
We've got a money supply falling like a hot knife through butter. That basically guarantees that financial obligations can't and won't be serviced.
There's nothing quite so useless as a central bank incapable of creating inflation.
If you subsidize risk, you get more risk.
If these governments and central banks keep bailing out risk taking in the financial sector, eventually that financial sector will create losses that are beyond the financial capability of governments to cover.
Unfortunately, enough moral hazard remains due to limited liability and lack of human wisdom to rule out the solution you propose.
The period of greatest US financial stability was 1935 to 1965 - the period of highest regulation.
Ironically, Milton Friedman, the Prophet of Capitalism, believed the banking industry should be tightly regulated and even forced to maintain 100% reserve requirements.
This round of bailouts is two orders of magnitude above that of LTCM.
Imagine financial losses that are two orders of magnitude above AIG+ FRE+ FNM.
Could governments cover losses of that magnitude? Would the bond market lend them that much money? What happens if they don't?
I'm negative on gold for the short and medium term, but when this cycle starts to turn over, i'm going to be buying.
Just because banks benefitted from TARP doesn't make it a moral or proper policy decision. We as a country don't have the money to pay for TARP, so while the benefit has been consumed, we've yet to pay the cost.
Each week, smaller banks are closed down, assets sold to competitors with good balance sheets. The law is enforced, and the life's work of some gets wiped out over the weekend. The system can be harsh, but the law is clear, and those who manage their business poorly suffer the consequences. So be it.
Our government, despite overwhelming opposition from its citizens, chose to reward some of the biggest offenders-- some would say the root cause-- of this crisis with bailouts. Common stock was not wiped out....bonuses remained intact....GS got a sneaky, back-alleyway $12 billion through AIG's bailout. Certain privleged citizens were protected. I suppose they now snicker about those saps who get taken out on "Bank Failure Friday."
Laws already on the books should have been enforced. The rule of law has to mean something. It is a bedrock principle, not a suggestion or guideline.
The argument that any bank or business is TBTF just does not cut it. But, for the sake of discussion, let's suppose that a bank exists that really is TBTF.....surely it cannot also be "Too Big To Break Up" and then sold off in pieces ? If it is too big to break up, what in the world is it ?
TARP and the stimulus have been turned into "slush funds". The money is doled out to "chosen" businesses by government. We don't even know all that the Fed is doing (Not our business, they tell us... might cause inflation if it were disclosed. Still trying to figure that one out.)
There is an assumption that when all of this is over, we will return to the vibrant, innovative nation that we recently were. But that is not a given. The severity of this financial crisis is beyond anything the world has ever witnessed. The entire international financial system lurches from crisis to crisis now, and there are many voices in this country demanding a "new type of capitalism", whatever that means.
As a nation, we had better hope we do not look back on TARP as the real defining event of this crisis. Because, if we do, we will will be looking back from a country we no longer recognize.
"Bailouts R Us" is the new normal, I'm afraid. Capitalism requires failure, but we won't allow it, at least not for the politically connected. We push pain off into the future, to be dealt with another day, by others than ourselves hopefully.
The new normal is morally reprehensible. It's heartbreaking. As a culture, we are lost.
The real problem is, as you say, will the populations follow the agreed austerity measures?
To me the correct analogy would be the people that converted high interest credit card debt to longer term lower rate housing debt. This in itself is of course not a cure, but if the overspending can be stopped and the credit card not run up again, is the best way to go.
Again only if the interest savings are used to pay down debt more quickly. Of course most Americans and I suspect Greeks are not willing to live within their means.
The real test is if the Greeks can stay on the austerity agreements and Americans can begin to make the cuts both parties have promised to their voting base.
For a little perspective Greek's debt that is due to foreign sources within 3 years is 2x their GDP-ours is one quarter of our current GDP. Not by any means good and I have been banging on the debt drum for many years, but nowadays it is mostly political fodder for newly awakened Republican's or Gold pumping "fiat" currency doomsayers.
We absolutely need to live within our budgets is agreed.
The hope of postponing the inevitable seems to be for the purpose of buying a vote. Most voters, I'm afraid, will fall for that. We are in desparate need of another Ronald Reagan. With Reagan, I felt empowered. Now I feel just the opposite, powerless. I really despise the feel of it all - the bailouts, the greed, the power-mongering, the waste, and the lies. Would somebody with some sense please come forward and save our country.
The bank bailout is old news.
Welcome to medicaid and social security default. The real detonator.
Pretty soon, old people will have to go to EZ Credit to cash their Uncle Scam paper and the only way they'll be able to cash it is by offering up their gold molars as collateral.
And now clearly benifits no one.
Hence their insistance on supporting such, with blatant disregard for that nuisance "Sustainability" thing.
Methinks Conehead should grow up and quit imagining a banking system collapse is in America's interest.
In a system riddled and complicated by international government obfuscation, cartels, croneyism, and corruption as this one is, there probably is no sort out before a complete destabilisation across one or both current camps: the USA and Europe on the one side vs. the rest of the world on the other (including China and India).
There are those who predict the "soon to come" unravelling. I'm not so sure, but the corruptly intricate and unstable system that exists either can wobbly serve the monetary interests of the very few for a while or it can be unwound and sensibly return to a rational market to serve the interests of the very many, the latter choice likely driving a great deal of global suffering in the process. But, if you'll pardon the gross nature of the simile, should it happen it will be like the relief at the end of weeks of bowel constipation.