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TranceAddict Investors Club @ Marketocracy (pg. 124)
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| Krypton |
| quote: | Originally posted by Capitalizt
This isn't about radical libertarianism...It's about common sense. |
Common sense? What's so sensible about allowing a complete financial collapse of our economy?
| quote: | | If Citi fails, we won't face another great depression and it won't be catastrophic krypt...It will be very painful recession, yes..but it desperately needs to happen. Prices NEED to fall..unemployment in the financial sector NEEDS to rise...and the bubble that popped NEEDS to DEFLATE completely so all the malinvestment can be cleansed from the system. It will be very ugly but it will also be TEMPORARY. |
If Citigroup, AIG, Bear Sterns, Fannie Mae, Freddie Mac, and Lehman Brothers all failed without any government intervention whatsoever, you bet your heinie we'd be in a catastrophic economy collapse. A liquidity disaster. People's deposits completely lost. Life savings gone. Tell me, should we also get rid of the FDIC? How about the SEC? No regulation right? Let the market police itself? LOL...
Price are falling. Have you checked the gas prices lately? Tens of thousands of financial jobs have already been lost. Where have you been? They are all laying people off and have been for several fiscal quarters. The deflation is already occurring. Prices for commodities, stocks, real estate, etc. have PLUMMETED. Yes, plummetted. That's deflation if you ask me. Talking about 'cleansing malinvestment from the system', don't you know about the HUNDREDS OF BILLIONS OF DOLLARS in write-downs? Wouldn't you call that 'cleansing the system'?
Not only would it be ugly, it would be 1931 all over again.
| quote: | | The economy is diseased and a painful recession is the only cure for it. All of these bailouts and interventions are like giving aspirin to a suffering cancer patient. Sure it might make him feel better for a while but it really isn't addressing the underlying problem, and the longer we refuse the much needed (and unpleasant) treatment, the worse the patient will be. |
Why not treat the cancer patient with pain meds AND chemotherapy? That's essentially what's been going on with the economy. The objective of the Federal Reserve and government is to maintain a stable financial system. Well, given the current circumstances, I think they'v done a damn good job. Thank god we don't have Herbert Hoover as president, or your laissez-faire capitalism would have completely destroyed our country. |
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| Capitalizt |
Unemployment is 6.8%
great depression 30%
Don't fall for the media hype krypt. At the very worst if those companies were allowed to fail, we would have twice the unemployment and a temporary price deflation.. Very painful but not the end of the world. Lower prices would eventually spur buying and a slow recovery would begin. The sooner your Jenga tower falls the sooner you can rebuild it. Propping it up with toothpicks isn't going to help for long ;)
By the way, Hoover was an interventionist...doing much the same thing our government is doing now, trying to prop up wages and prices. His stupid policies are what tipped us into depression..and they were anything but laissez faire. |
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| Krypton |
| quote: | Originally posted by Capitalizt
Unemployment is 6.8%
great depression 30%
Don't fall for the media hype krypt. At the very worst if those companies were allowed to fail, we would have twice the unemployment and a temporary price deflation.. Very painful but not the end of the world. Lower prices would eventually spur buying and a slow recovery would begin. The sooner your Jenga tower falls the sooner you can rebuild it. Propping it up with toothpicks isn't going to help for long ;) |
If we are to talk about the Great Depression, they did exactly what you're advocating here. Hoover let the market collapse with no government intervention, because, the market can handle it...that turned out to be a disaster. Additionally, they were on the gold standard, so they couldn't inflate the currency to stabilize the system. The result? A total financial meltdown. Deposits gone. Life saving zip. Massive bankruptcy epidemic. Cap, we'v tried laissez-faire capitalism, and it is as gigantic a failure as communist socialism is. |
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| Joss Weatherby |
| quote: | Originally posted by Krypton
WAMU wasn't bailed out. It was forced to sell everything at fire sale prices. It's a worthless company.
If billions in sub-prime losses, an FDIC seizure, and bankruptcy is sound to you, then I must not know about this new investment scheme to buy bankrupted companies and expect anything in return. WAMU has HUGE problems before they had the bank run. But, it's your money. But frankly, if you invest in WAMU pink sheet, you might as well go to the local dump and ask to buy their garbage. |
I didnt say it was bailed out, it didn't even need to be bailed out...
Wamu was not junk, was on a sound footing, had assests to cover all their liabilities and was seeking a buyer for its consumer banking with out any sort of deadline set by the FDIC.
Who knows why the FDIC grabbed them when the did? A lot of peoples theories are that they were scared because of the number of bank failures in the previous weeks and that if WaMu did go down for some reason that the FDIC would not be able to cover it. FDIC decided instead to make WaMu the sacrificial lam and sold it at bargin basement prices to JP Morgan Chase for basically a steal, leaving WaMu a husk of what it was.
A senator from Washington State is even threatening to call for an investigation into the reason that it was taken. |
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| Joss Weatherby |
| quote: | Originally posted by Krypton
If we are to talk about the Great Depression, they did exactly what you're advocating here. Hoover let the market collapse with no government intervention, because, the market can handle it...that turned out to be a disaster. Additionally, they were on the gold standard, so they couldn't inflate the currency to stabilize the system. The result? A total financial meltdown. Deposits gone. Life saving zip. Massive bankruptcy epidemic. Cap, we'v tried laissez-faire capitalism, and it is as gigantic a failure as communist socialism is. |
So what, regulated capitalism with a dying hint of communism/socialism (or growing in the US case), a la China then? |
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| Krypton |
| quote: | Originally posted by Joss Weatherby
I didnt say it was bailed out, it didn't even need to be bailed out...
Wamu was not junk, was on a sound footing, had assests to cover all their liabilities and was seeking a buyer for its consumer banking with out any sort of deadline set by the FDIC.
Who knows why the FDIC grabbed them when the did? A lot of peoples theories are that they were scared because of the number of bank failures in the previous weeks and that if WaMu did go down for some reason that the FDIC would not be able to cover it. FDIC decided instead to make WaMu the sacrificial lam and sold it at bargin basement prices to JP Morgan Chase for basically a steal, leaving WaMu a husk of what it was.
A senator from Washington State is even threatening to call for an investigation into the reason that it was taken. |
My official opinion. WAMU is garbage. If you think otherwise then I'll be excited to see how you do when you buy WAMUQ.
| quote: | | So what, regulated capitalism with a dying hint of communism/socialism (or growing in the US case), a la China then? |
Ok well, let's deregulate traffic laws. I'm sure you trust all those good motorists out there not to drive 120mph to the grocery store. Do you honestly trust the market to police itself? LOL. The current crisis only proves my point. Given the chance, there are plenty who would prey on the unsuspecting in order to make a quick buck. Does Bernard Madoff ring a bell? |
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| Capitalizt |
omg krypt you've got alot of reading to do on the depression. It sounds like you are merely spouting out rubbish you've heard from other sources...soundbites that somehow became "common knowledge" among amateur academics without much truth behind them. Hoover was NOT a lassiez faire president...He was an interventionist just like Roosevelt. As the economy weakened, Hoover started raising taxes and tarriffs..two *HUGE* no-no's to any free market economist. He also had lots of "mini-New Deal" programs in place before leaving office...programs that intervened in different areas of the economy to keep things artificially pumped up.. When FDR took over, he merely continued down the interventionist path Hoover laid out for him but went a step further and expanded the welfare state as well. There are better sources out there but this is the first one I found on google. Give it a read when you find time.
http://www.lewrockwell.com/rothbard/rothbard184.html |
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| Joss Weatherby |
| quote: | Originally posted by Krypton
My official opinion. WAMU is garbage. If you think otherwise then I'll be excited to see how you do when you buy WAMUQ.
Ok well, let's deregulate traffic laws. I'm sure you trust all those good motorists out there not to drive 120mph to the grocery store. Do you honestly trust the market to police itself? LOL. The current crisis only proves my point. Given the chance, there are plenty who would prey on the unsuspecting in order to make a quick buck. Does Bernard Madoff ring a bell? |
No I do not trust the markets to police themselves. I was asking your opinion, not stating my own. Where does the regulation start/stop. Over-regulated markets usually smolder and never catch fire, under regulated and well... it burns down the house... where is the middle ground? |
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| Krypton |
| quote: | Originally posted by Capitalizt
omg krypt you've got alot of reading to do on the depression. It sounds like you are merely spouting out rubbish you've heard from other sources...soundbites that somehow became "common knowledge" among amateur academics without much truth behind them. Hoover was NOT a lassiez faire president...He was an interventionist just like Roosevelt. As the economy weakened, Hoover started raising taxes and tarriffs..two *HUGE* no-no's to any free market economist. He also had lots of "mini-New Deal" programs in place before leaving office...programs that intervened in different areas of the economy to keep things artificially pumped up.. When FDR took over, he merely continued down the interventionist path Hoover laid out for him but went a step further and expanded the welfare state as well. There are better sources out there but this is the first one I found on google. Give it a read when you find time.
http://www.lewrockwell.com/rothbard/rothbard184.html |
My mistake, after reading some stuff on Hoover, he did do stuff, but his policies completely failed at stifling the Depression.
Anyways, I speak from my mind, I don't regurgitate propaganda. I am not trancer x, so please don't insinuate that I am such.
Laissez-faire capitalism is just as bad as communist socialism because both are at the extreme end of the economic spectrum. Laissez-faire capitalism (LFC) lets 9 year olds work for 12 hours a day for almost nothing. LFC does not have workers rights, workers compensation, workers unions...LFC allows for monopolization, actually, monopolization is the ultimate result of LFC. Hell, there would be no anti-trust laws, so why not? Extremist capitalism is not that way to go. |
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| Krypton |
| quote: | Originally posted by Joss Weatherby
No I do not trust the markets to police themselves. I was asking your opinion, not stating my own. Where does the regulation start/stop. Over-regulated markets usually smolder and never catch fire, under regulated and well... it burns down the house... where is the middle ground? |
Oh..my bad...well, the middle ground is where the regulation has a valid justification. For example, insider trading is regulated so that insider stock holders don't have an unfair advantage over outsider stock holders. There is a valid justification for the regulation. |
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| Capitalizt |
Nobody is against basic regulation. Law and order isn't incompatible with free markets. Even the most hardcore libertarians support a government big enough to protect people from theft and fraud. People who commit those crimes should be punished severely under any economic system. Nobody is saying we need extreme "wild west" capitalism to prosper...We just need to take a few steps away from the rabid socialism/fascism we've been racing towards for the past 50 years. Unfortunately both parties are on board the massive government train and there is remarkably little dissent about it.
and anyway, even if there were a capitalist revolution overnight in Washington, I highly doubt it would be as bad as extreme socialism. Look at China today.. Economically they are far more capitalist than the USA now. Despite being a political dictatorship, the government finally decided to "let go" of the economy and allow things to run with minimal taxation and regulation, and the standard of living for the average citizen is soaring as a result.. Time will tell if the experiment pays off, but the people of China are certainly much better off than those living under an extreme form of socialism/communism like North Korea. The two extremes are not equally bad ;) |
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| Krypton |
| quote: | Originally posted by Capitalizt
Nobody is against basic regulation. Law and order isn't incompatible with free markets. Even the most hardcore libertarians support a government big enough to protect people from theft and fraud. People who commit those crimes should be punished severely under any economic system. Nobody is saying we need extreme "wild west" capitalism to prosper...We just need to take a few steps away from the rabid socialism/fascism we've been racing towards for the past 50 years. Unfortunately both parties are on board the massive government train and there is remarkably little dissent about it. |
The goal of the past year for the Fed's has been to stabilize the system. Yea, you can call it socialism, but what exactly is so bad about practical socialism? It's either that, or a complete financial collapse. Millions of people's savings, wiped out, if we followed laissez-faire capitalism, every man for himself. No FDIC to guarentee deposits, etc. etc.
| quote: | | and anyway, even if there were a capitalist revolution overnight in Washington, I highly doubt it would be as bad as extreme socialism. Look at China today.. Economically they are far more capitalist than the USA now. Despite being a political dictatorship, the government finally decided to "let go" of the economy and allow things to run with minimal taxation and regulation, and the standard of living for the average citizen is soaring as a result.. Time will tell if the experiment pays off, but the people of China are certainly much better off than those living under an extreme form of socialism/communism like North Korea. The two extremes are not equally bad ;) |
Which is why in China, millions are overworked for next to nothing in horrible conditions...I think the term is...sweat shop? Who is going to vouch for the workers' classes? It sure isn't going to be the executive class. Practical socialism is good. Practical capitalism is good. Moderation between the two is good. What you'r asking for is an extreme form of capitalism. Workers' rights? None. Environmental protection? None. A safety net from total economic collapse? None. You don't want a Federal Reserve and want to return to the gold standard. |
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