Is this experience called capitalism finally over?

Discussion in 'Business & Economics' started by Syzygys, Mar 4, 2009.

  1. joepistole Deacon Blues Valued Senior Member

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    What I was trying to say in a rather jolting way, is that if appears to be an end of the era of special deals for special interests that allow them to circumvent free markets.

    That is an entirely seperate issue from the issue of government involvement in the markets. There is a legitimate roll for governent involvement in commercialism, capitalism. Government sets the infrastructure that allows capitalism to work. It provides the physical, legal and monetary framework to support capitalism. And I think you would agree. Now where that line is drawn, is where we are going to disagree.

    Unfortunately now is a time in which the government needs to support one of those vital structures...the financial system. You cannot have capitalism flourish without a sustainable financial infrastructure. Unfortunately, due to economic circumstances the government now needs to invest in infrastructure...a lot of it.

    But that is wholy different than using government to kill your competition (e.g. big pharma and prescription drugs no bid provisions).
     
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  3. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    And in US & EU exercise of the "no-buy right" is getting more beautiful every month!

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    Here is part of why:

    " Mass unemployment has begun to appear in advanced democratic economies with startling rapidity in the last three months. Predictions about U.K. unemployment reaching 3 million are already vindicated and unemployment has shot up in the United States, Germany, Ireland and France, as well as in Eastern European countries. In Spain, unemployment could reach 20% this year from its present 14.4%. ..."

    From the very respected Oxford Analytica: http://www.forbes.com/2009/03/04/un...business_oxford.html?partner=daily_newsletter

    Article goes on to note an increasing “Crescendo of Pulchritude", soon coming to US also (probably first in Michigan when GM closes or in Ohio):

    "--In France, street protests and strikes are routine.
    --In Ireland 120,000 protesters took to the streets in the first of a series of protests on Feb. 20.
    --Protests have occurred in Latvia, Greece and Iceland, in the latter case forcing the sitting government out of office.
    --In Greece, underlying hostility to the state especially among the young who suffer unemployment disproportionately bodes ill for social peace.

    This political atmosphere is ripe for nationalist xenophobia* and extremist political parties or movements. Recession damages cosmopolitanism, advantaging insularity and small-mindedness. Anti-foreign sentiment emerges or recurs immediately with economic depression. ..."
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    *Billy T comment: They did not mention the mass demonstrations of English steel workers against non-Brits from the EU "stealing their jobs"**, probably as those Brits do not know how to throw bricks, and take breaks for tea. etc.

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    **IMHO, it is a toss up as to which starts the break up of the EU. The huge debts of some members OR the re-issue of national pass ports to control internal migration of jobless seeking jobs in the more prosperous members.

    Anyway, I'm glad to see you still active here.
     
    Last edited by a moderator: Mar 5, 2009
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  5. ashura the Old Right Registered Senior Member

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    This is the basic problem, the financial system shouldn't be treated as some sort of untouchable holy grail. Banks shouldn't be treated as risk free businesses. And money shouldn't be treated as something with which the government can do whatever it wants! The reason the financial infrastructure is so screwed up to begin with is because of government influence in money, with Greenspan believing that financial instutions are just too big to fail and pumping them full of money created out of thin air via the Federal Reserve. The crisis now is a culmination of that kind of thought and that kind of piss poor handling of the dollar. Take a look at the monetary base in the past decades and you can begin to understand just how screwed up our monetary policy is:

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    http://blog.mises.org/archives/009542.asp

    That's exactly what the government has done with the financial system, favored existing big financial insitutions by redistributing a large amount of wealth to them to cover up their mistakes, and screwed over other institutions that were by and large responsible (or at least more responsible) with their assets. That's exactly what the government is doing with the auto industry, favoring the big 3 at the expense of other car companies and subsidizing their mistakes by putting their losses on every taxpayer. C'mon joe, why can't you see that this just more of the same...
     
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  7. joepistole Deacon Blues Valued Senior Member

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    Absoutely agree BillyT, people and our leadership need to take this seriously else we might not like what we ultimately get. Let us remember Hitler came to power in distressed economic times. Louise the XVI lost his head over bad economic times.
     
  8. ashura the Old Right Registered Senior Member

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    Joe, further evidence that this is more of the same and that government is still in the complete anti-capitalist business of killing competition and maintaining oligopolies:

    http://www.bloomberg.com/apps/news?pid=20601103&sid=alsJZqIFuN3k&refer=news

    Can you see, the smaller responsible banks are now going to be killed because of the bigger banks' mistakes, and because of the government's desire to maintain the illusion that big banks are risk free investments for a person's wealth.
     
  9. thinking Banned Banned

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    ashura

    what I don't understand is why these billions of dollars are not used to reduce the mortgage payments of home-owners , so that they stay paying their monthly payments into the the credit system > hence a cash flow into the credit system
     
  10. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    I would prefer that also, but think the best approach is described here:

    http://www.sciforums.com/showpost.php?p=2025940&postcount=1

    That post was made before Congress had even voted the first time on Paulson's TARP plan and told why it would fail.

    There are four main reasons my approach is better:

    (1) Many will find some way to pay their mortgage, so only helping those who cannot is cheaper for the tax payers. Only those who can not pay are helped by my plan:

    If the "under water" owners just "walks away" they remain in debt and the bank puts their house on the for sale market. Like your plan often does, but not always does, my plan with FHA buying ALL foreclosed housed that do not sell for the unpaid mortgage balance avoids ANY foreclosed houses adding to the list of houses for sale. I.e. the FHA usually rents back to the occupant. You must realize that some who have bought houses that they cannot afford, cannot even afford to rent them. - They MUST go back to renting smaller house. I.e. if they need to "down size," then that too should be helped, not prevented as your plan does.

    Like Paulson, Geither and everyone else's plan, yours included, the fundamental problem is ignored by the plans. The problem foundation is that greedy, commission hungy writers and promoters of "creative" new mortgage types (plus lax government regulations) got far too many to buy house they can not afford. They MUST move, or only rent, not buy. Only my plan helps that happen.

    (2) As 100% of all mortgages in the "toxic trash" are now being fully paid, this is a perfect anti-dote to the toxin. Instead of "trash" the tranches are now even more valuable than the owners had hoped and can be sold for new funds to lend - financial system liquidity fully restored. ("More valuable" as the tranches were structured with an assume default rate, but that is now ZERO.)

    (3) It is much cheaper than helping all with their high rate mortgages. Also the FHA buying,by taking over the mortgage would be spread taxpayer costs over several years,probably about 20 in average, not all in 2009 and following years. For example, house bought in 2009 is producing rental income for the Tax payers in 2010 and later years, not continuing cost of mortgage aid.

    (4) The tax payer, via FHA, becomes the owner of valuable assets, which eventually can be sold back into private hands, probably with capital gain. The rent should cover the maintance expenses and loss of interest so this capital gain is profit (but I think it wise to return 50% to the occupant to encourage him to simply send deed and mortgage to FHA and avoid the cost of a foreclosure auction. That is at least $10,000 / house cost society need not bear.

    There are several "minor reasons" also, one is that occupant who cannot even afford to rent "his” house has up to 12 months to find house he can afford. This avoids "eviction rage" (broken toilets, burns on rugs, profanities painted on the walls, etc. - all by someone else while he was out, the occupant claims.) FHA grants 5 year "mortgage" (credit line really) for part of the rent that was due during the months (<13) while he is looking for affordable house in my plan. Obviously quickly moving makes that 5 year loan easier to pay as it might be half the rent for three months only as principle.
     
    Last edited by a moderator: Mar 7, 2009
  11. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    World Bank is beginning to agree:

    "... March 8 (Bloomberg) -- The global economy is likely to shrink for the first time since World War II, and trade will decline by the most in 80 years, the World Bank said today. ... World growth will be 5 percent below its potential, the bank said. Developing nations* will bear the brunt of the contraction. ... Action is needed by governments and multilateral lenders “to avoid social and political unrest.” ..."

    From: http://www.bloomberg.com/apps/news?pid=20601087&sid=aH3M7Ynp5jd8&refer=home

    Note the WB's concern is mainly for the "developing nations" (poorest countires). Definitely not China and Brazil - they should have growing economies, with Brazil growing at about half of China's rate, while US & EU transfrom ever faster the already longest* recession into depression.

    At what point does the US's "I want it now" generation turn to "social unrest" REMAINS TO BE SEEN.

    Get ready for ONLY internal identy cards, big brother check points, etc. IF we are lucky.

    As far as thread's question is concerned: I guess that depends upon wheather or not Facism is Capitalism.

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    *Recession officially began in December 2007.
     
    Last edited by a moderator: Mar 8, 2009
  12. Syzygys As a mother, I am telling you Valued Senior Member

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    So do we collectively agree that capitalism is finished?
     
  13. kmguru Staff Member

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    I came late to this thread. I am sure BillyT has answered most of the questions. My little comment is that:

    No, Capitalism is not finished. I think the Supply and Demand of products still there for a growing population of this planet. What is needed is people should stop playing with money which is more an imaginary but necessary value. If we can control that game, we should be OK.
     
  14. Syzygys As a mother, I am telling you Valued Senior Member

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    My question was more philosophical than practical and Billy T didn't address that.

    Again, the issue is: can we call this system capitalism where profits are privatized but whenever the system is crashing, the state steps in, and helps the "too big to fail" companies at the taxpayers' expense??

    Let's say you open a pizza shop that goes bust in 6 months, due to your missjudging the market opportunities. Will the government bail you out or are you stuck with a business or personal bankruptcy??? I am guessing the later...
     
  15. superstring01 Moderator

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    Actually, it's one of the purest capitalist nations on earth. It's no longer communist and only keeps that title for shit's sake. It's really a totalitarian regime dominated by an oligarchy that is wholly dedicated to capitalist pursuits.

    Again, Draq, get a clue or don't bother posting.

    ~String
     
  16. Captain Kremmen All aboard, me Hearties! Valued Senior Member

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    The pursuit of Self Interest means that you don't have to control from top down. I can't see any other system working as well if the aim is productivity.

    The flaws in the current system are being exposed, and a stronger version will be the outcome.
     
  17. kmguru Staff Member

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    The real Capitalism is going on in China as String siad. Ours is a Greedy-ism, Expolitism, Anti-humanism...or some other name....that says, we screw our own people to get rich-ism....

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  18. Syzygys As a mother, I am telling you Valued Senior Member

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    True, but that is exactly what's happening, the government is trying to control the market. Had they left everyone fail, that would have been true capitalism although the Dow would be at 3000....
     
  19. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    No. I too think capitalism is rapidly growing stronger in China, but they seem to have made a different trade-off between efficiency and individual liberty than US/ EU ideals. I.e. the "collect good" is more important so they can displace homes with great speed if they need an new highway or airport, etc. Thus the essential components / infrastructure of the society are not left to the market place to plan or fund. So it is not capitalism at all levels. I do not think any society ever has been or could be. Public schools and a public road in front of your house would all be private in pure capitalism.

    I do fear US will transform into fascism so if your question is about the US only (not entire earth), I repeat:

    "As far as thread's question is concerned: I guess that depends upon whether or not Fascism is Capitalism."
     
  20. Syzygys As a mother, I am telling you Valued Senior Member

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    1. What they have in China right now is some kind of weird, still state controlled getting there capitalism, not free markets. Their currency is kept low artifically for example.

    2. Even if we assume that in 10 years they will have a full blown capitalist system, that doesn't mean in 20 years that won't fail.

    Thus the China argument doesn't add anything to this discussion...

    So if capitalism can not run longer than a few decades before it turns into either socialism or fascism, (which is state capitalism) than it must be a failed system....
     
  21. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    No one has or ever has had "free markets" and I do not see how a nation trying to control is exchange rates relates to being or not being "capitalistic." Here you seem to disqualify China's claim to becoming more capitalistic for two reasons that do not apply to the question. In your post close you seem to accept that Fascism is a form of capitalism but reject that if the rulers speak Chinese. Why?

    I expect that in two or three generations, Chinese will not be saving 40% of their incomes but have credit cards and debts - eventually fail as a capitalistic nation. Perhaps Marx was correct: Capitalism has the seeds of its own destruction within it. – But that does not mean it will vanish from the Earth - It does seem to have the capacity to generate wealth more rapidly than any other system so nations will often climb out of poverty via it (and then later collapse, perhaps because of it.).

    China seems to have a new and better economic system in development - only time will tell. It is sort of a hybrid of capitalism for the non-structural items and fascism for the structural basics of the society. (power plants, roads, mines, ports, water supplies, etc.)
     
  22. kmguru Staff Member

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    If you have a well organized controlled market -then exactly what would you call that? Which seems to be the present Chinese system.....
     
  23. joepistole Deacon Blues Valued Senior Member

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    One thing history has been clear about, and that is the need for a stable banking system. Regardless of bank size, bank deposits must be guaranteed. People must have trust in the banking system for the economy to work.

    It is just so sad that things got so out of control in Washington and Wall Street.
     

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