Is this experience called capitalism finally over?

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

  1. Baron Max Registered Senior Member

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    I think you have things a bit backwards here. Things weren't "out of control in Washington and Wall Street". The problem with the system of banking began when people borrowed more money than they could repay! And, yes, to an extent, the banks are somewhat responsible for loaning money to people who could not pay.

    But put the guilt for the problems where it belongs .....on the stupid people who couldn't be responsible enough to borrow ONLY for money they could repay. Greed in the form of borrowers wanting more than they could afford. For me, it's as simple as that. "The people,..." caused the problems that we're all now suffering for.

    Baron Max
     
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  3. joepistole Deacon Blues Valued Senior Member

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    Baron your post clearly demonstrates your lack of understanding and or reason. First, there is thing called variable mortgages....with stepped payments and interest rates.

    In a normal economy one could refiance if the payments became unbearable. As the economy played out that became an impossibility for many borrowers...result, defaults.

    Subprime mortgages are not a problem in and of themselves because they can be priced if you have a static default rate and the risk is known. The problem with the current crisis is that the risk was not known. These debt instruments were packaged and marketed as risk free investments...turns out they were anything but risk free.
     
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  5. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    I think "gulible" is the more correct adjective than "stupid." All the experts were advising them: "House prices are going up." You will easily be able to refinace or sell at a profit in a few years, months before the mortgage rate steps up. Every month you wait is costing you. Sign on the dotted line."
     
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  7. Syzygys As a mother, I am telling you Valued Senior Member

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    Seriously, it is clearly the banks' fault. People are generally stupid, thus it is the bank's duty to filter out the high risk candidate and not to lend money. And if they do, they should go down. Thus there was greed, but it was more on the banks' side.

    To use an analogy: You 5 years old wants to drive a car. If you let him and he crashes, who is the bigger idiot, you the adult who let him or the 5 years old kid?? Which 5 years old wouldn't want to drive a car anyway?

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

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    Because although the title doesn't say so, by capitalism we didn't mean a state controlled fascist capitalism, but truly freemarket capitalism. Also, just how long fascism can survive???
     
  9. Syzygys As a mother, I am telling you Valued Senior Member

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    Isn't that an oxymoron??

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  10. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    To Syzygys et. al.

    The banks (and others) who wrote the "no money down" "liar loans" etc. for people who could not even afford a nice trailer were not "idiots." They were greedy and quite clever. The also made (actually it was too tough for them to do the details, so some high energy physicists constructed the matematically complex tranches) the tranches that sliced and diced each loan into differ risk levels with in the trances (and among different tranches.)

    These mortgage writers had a well though out plan: get signature on mortgage today and put it into tranche product tommorrow and sell it away ASAP. (God knows, they said: we don't want to get stuck holding the bag of trash we are making.)

    These tranches were very attractive as with all the slicing and dicing, and mortgages from different parts of the US etc., they had both high interest* and great diversification.

    No one (except the physicists who built them) understood what they were. But S&P, Moodies etc. said that were low risk so they sold well and widely. Hard to find "idiots" here, I think. Just too many gulibles trusting the "experts."
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    *Much higher interest than Greenspan was giving of Treasury notes etc. The tranches sold well all over the world, carried high rating by Moodies, S&P, etc.
     
    Last edited by a moderator: Mar 10, 2009
  11. Syzygys As a mother, I am telling you Valued Senior Member

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    1. My point was that most of the blame falls on them, not on the guy who applied for mortgage.

    2. If by clever you mean that they counted on government help, you are right. Otherwise let's not call a bank "clever" when it is basicly bankrupt due to irresponsible lending...
     
  12. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    I agree with 1.

    Most of the local banks who wrote mortgage were not bankrupted by them (their problems are more related to fact the bigger banks no longer lend to them) There are (or AT LEAST WERE) two types of banks: banks the public used and "investment banks." The banks that you read about are mainly the latter but it has all gotten mixed in the last decade. E.g. Citi does both now, Lehman was only an investment bank, I think.

    I was not trying to give human characteristic to non-living bank (or mortgage writing firm) but to the people of it. I think they were clever as they quickly got large commissions and year end even larger bonuses, with no risk to themselves. I hope they are wrong about that - I think some could go to jail for fraudent miss-representations, if they can be shown to not have believed home prices would steadily go up faster than inflation. Many of them are now out of work. I would like to help them with a job in the prison laundry.

    The thief who stole a box of oranges from a grocer may be in jail as he damaged the grocer's profits. The guy who put the grocer out of business should not be in Miami with cold drinks and pretty girls at his side is my POV.
     
    Last edited by a moderator: Mar 10, 2009
  13. Not my puppy Registered Senior Member

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    Just passing bye but I have to give you a high score there "thinking". You have something inside you besides crap.
     
  14. EndLightEnd This too shall pass. Registered Senior Member

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    Expect currency integration coming across Canada, Mexico and United States. Much like Europe, this new currency will be called the Amero.

    Afterall Obama is all about change!

    As for what this means for capitalism, well have to see.
     
  15. Not my puppy Registered Senior Member

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    If it stopped at the Amero, that would be bad enough, but I imagine we could be talking about the UNero before it is over.

    Anyway, when capitalism gives way to socialism, capitalism becomes the black market

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  16. joepistole Deacon Blues Valued Senior Member

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    I think capitalism still has its finest days ahead...especially in The United States.
     
  17. stateofmind seeker of lies Valued Senior Member

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    Theory theory theory!!! You politicos and economos are all about praxis.

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    uke:

    Let's quit the postulating and do some REAL experiments! (ethical of course.)

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