Because the essence of capitalism involves a level playing field in addition to government intervention.  Not all regulations are purely for the purpose of a government flexing its muscles, companies/individuals in dominant positions in their respective fields or the same  parties not in dominant positions but with the right connections push the government to intervene on their behalf either by helping them or hobbling their competition.  At that point, capitalism ceases to exist and nepotism and even communism take hold.

 

Lobbyists, kill 'em all and let God sort 'em out.

I added this to T5C the other day but omitted to post it here. oops.

 

 

?Clubbed like baby seals? controversy ? the back story

 

I immediately think of the intelligentsia and the leftists favourite academic, Noam Chomsky after listening to this.

A lot of these problems now occuring with the global financial and economic system is in part due to too many (affluent) people placing greed and the never ending thirst for fatter profits over prudent investing and regulated and steady asset and profit building. The worst now is that us, as in the humbled taxpayers are now going to pay not just with money in order to bail out these scum but many may also indirectly lose their job/life savings and what happens, how do we fix it? Just pump more money into these areas...and what do you think will happen?

Not sure if anyone heard about how much money Richard Fuld (head of the firm) took home from the now failed Lehman Brothers investment firm over the last 8 years? $300m USD since 2000!!! Believe it or not he admitted that during the time he was pleading with congress and the federal treasury for a bail out he also requested another multi-million bonus!

Not sure about you guys but to be honest this stuff makes me incredibly angry and sick...these pr(cks take home more money in one bonus than the majority of the world's workers take home in a lifetime of hard work and yet the state generally on the whole leaves them alone, if not encourages them to speculate more investments, etc.

Capitalism hey, what a disgusting, disgraceful part of human history...oh how I would love for real socialism/communism to take a firm hold in Australia and around the world. You never know, we might actually then start addressing some real issues such as climate change, global poverty and hunger, gender inbalance in the workforce (and pay), universal healthcare and education.

One can dream during this fast turning financial nightmare.

FO

Incorrect, FO. The heart of this disaster was US Governement Sponsored Enterprises (Fannie Mae and Freddie Mac) making loans not based ion sound business practices.  The loans were made to achieve a social engineering objective-a private home for every American possible.

 

the problem was that when this social; program was rammed through as part of the GSE charters, our Congress, as it usually does, failed to insure against the No Income No Jobs No Assets [NINJA] moptgages issued to the tine of about 3 trillion dollars. Those "subprime" loans are where the defaults started. why that led to our current crisis is because those mortgages we5re bundlwe3d and used as "giovernment backed collateral" for loans against Hedge funds and commercial banks.

 

Well no value is no value. Once the real estate equity was revealed to be ":zero", the noin-government backed mortgage backed securities loan collateral was worthless. It wouldn't matter if the regulations and the greed was not in place. The US collapse would come. Market forces would see to that.  

 

Thus the root cause of this global panic is the US social engineering experiment.

 

Capitalism did not fail us, It was the refusal by our Congress [loans need collateral worth] to follow sound capitalist principles that did.

 

Herald

 

 

 

 

I wouldn't say I have a "theory" but have a fuzzy idea as to a bigger problem that might be behind the financial crisis. It isn't capitalism (in its purest, textbook form), it is beyond human greed or international politics or US partisanship.  What I do need to know is what are the specific names of the equations that are used for modern financial performance projections and especially derivatives trading.

And who controls that information?...........that is a good point. Thought of it and dismissed it as kook aide conspiracy stuff because I thought it was distributed knowledge among the trading community, but had not realized that chicanery was mechanically possible that way if the process wasn't transparent..

 

Herald

I'm not one to sully my reputation on this board with baseless, kool-aid induced conspiracy theories from far right field.  No, the angle I am coming from is a massive lack of control over something we thought we could control. 

I'm not an expert in financial forcasting but I know enough about economics that I can tell you any sort of economic projection is basically weather guessing. Forecasters deal with a massively complex system which can be impacted by a very large array of variables and nobody can reasonably predict which is going to impact when and how. In fact if we could predict that then there would be no need for derivatives, as they are risk management vehicles when they are used properly.

 

All that forecasters can reasonably hope to do is to identify trends with a range of risks around them based on the best information available. Sometimes that information isn't available or isn't considered properly (for whatever reason, workload, over-optimism ... whatever) and the projections are wrong. Combine that with other circumstances like the poor US policy settings wrtaffordable  mortgages for the poor and things can go kerplunk.  

 

Se La Vie