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| quote: | Originally posted by DOOMBOT
No, not why capitalism is anarchic; I was asking why and how, in detail, capitalism produces negative results and why government regulation (force and violence) is necessary to control particular parts of an economy or an economy as a whole and why these means produce better outcomes as a whole, in your opinion. |
but i don't think capitalism produces negative results per se, i am very happy with capitalism. but individual businesses certainly do create such results on occasion. ENRON for instance. the recent baby formula scandal in china. Madoff. edit: and then there's examples of illegal fishing (like abalone) that i am personally involved in enforcing penalties for. private companies are no less capable of breaking laws than indiviudal citizens; and as such there needs to be controls to prevent, guide and/or punish.
| quote: | Originally posted by DOOMBOT
Can you prove any of this? I know that you believe this but can you please explain in detail why you believe this? If a college professor, for example, said "Government deregulation is bad and if you want to know why, look at the derivatives market; here ends the lesson", I'm pretty sure most people would feel cheated and want their money back. You're going to have to do a lot better then that in order to make a good argument for your position. |
how would i go about proving this do you think? the general consensus that derivatives were "financial weapons of mass destruction" is reasonably well established and i simply accept the opinions of people far more able to understand complex financial instruments than i am. but i would argue that the risk management in the GFC was quite obviously responsible for increased levels of systemic risk
| quote: |
As people became successful quickly, they used derivatives not to reduce their risk, but to take on more risk to make more money. Greed started to kick in. Businesses started to go into areas that was not necessarily part of their underlying business...
The trade in these swaps created a whole web of interlinked dependencies; a chain only as strong as the weakest link. Any problem, such as risk or actual significant loss could spread quickly...
Derivatives didn’t cause this financial meltdown but they did accelerate it once the subprime mortgage collapsed, because of the interlinked investments. Derivatives revolutionized the financial markets and will likely be here to stay because there is such a demand for insurance and mitigating risk. The challenge now, Davis summarized, is to reign in the wilder excesses of derivatives to avoid those incredibly expensive disasters and prevent more AIGs happening. |
http://www.globalissues.org/article...inancial-crisis
i also never stated "government de-regulation is bad".
additional info on greenspan et al preventing the regulation of financial instruments:
http://www.pbs.org/wgbh/pages/frontline/warning/view/
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Last edited by pkcRAISTLIN on Oct-22-2011 at 01:46
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