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(The Fiscal Times)   Economists now predicting a "lost decade" in the U.S., characterized by high unemployment, sluggish growth and rising inequality. Welcome to the Obama Economy   (thefiscaltimes.com) divider line 399
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2021 clicks; posted to Politics » on 07 May 2012 at 4:42 AM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-05-07 02:58:35 PM

WombatControl: Again, the problem with that theory is that it isn't true - the large banks didn't commingle depositor's money and investment money - for one, that would have been (IIRC) illegal. And second, Glass-Steagall had nothing to do with people's retirement accounts, other than letting them be housed in a combined bank. Nothing you've pointed to was banned by Glass-Steagall.

In fact, if Glass-Steagall had never been "repealed" the only difference was that those retirement accounts would have been held at a pure investment bank that would have gone under just like the others - if your retirement plan was through Merrill Lynch, you were hosed. If it were through Wells Fargo, you were still in trouble, but you weren't watching your account go down in flames.

That's why the crash unfolded as it did - with the pure investment banks getting killed while the larger banks rode out the storm. If GLB was the real problem behind the crash, the exact opposite would have happened.


Of course they didn't co-mingle the funds... but the funds they had on deposit allowed the banks to leverage that balance sheet to borrow and create more "wealth" than would have otherwise been allowed under Glass-Steagall. When the bank went down, so did the retirement accounts. That's why the repeal of Glass-Steagall was so devastating.

If your retirement plan was hosted by Wells Fargo/BoFA you watched it go down because of the market crash, and the fact that those mutual funds/banks were generally heavily invested in the toxic mortgage assets. That was the real problem with your example. The whole system was tainted by Glass-Steagall being repealed.

The larger banks only barely rode out the storm because they had to crawl on their hands and knees to Washington saying "If you don't bail us out, the whole system crashes." BoFA was sitting at six bucks a share at one point in 2008 if I recall correctly. People were predicting a 4,000 Dow by the end of October. The only reason we didn't see that was because of the massive liquidity injection into the system by the Fed. If you notice, the FDIC also had to change their rules to insure deposits up to $250,000 because there was a real fear that most of the big banks might not have made it to the end of the week. That's where too big to fail really came into play. Before, without the separation of investor and depositor funds, if BoFA's investment arm went down, no one cared cause hey, that's the free market. Now, when the shiat hit the fan, real deposits were at risk. See the difference?

Here's where Glass-Steagall repeal helped the system. Because of the massive bailout, investment banks were able to clear their balance sheet, essentially resetting what they had done to their depositor's funds. The toxic assets still exist in the CDS world, but now, banks have (albeit a somewhat shiatty job) of deleveraging those toxic assets by pawning them off on the Federal Government.

That's why Glass-Steagall was so important and why the repeal farked us over so badly. Does that make sense?
 
2012-05-07 03:00:50 PM

hurdboy: Smackledorfer: So you are claiming they put forth the bill for shiats and giggles with no intention of trying to pass it?

Something about Catholics still being welcome in the Democratic caucus, and not wanting the bill to cover abortion, if memory serves, along with the specifics of it being incredibly unpopular, nationally, led to it dying in committee, if memory serves. There wasn't a Bart Stupak to massage into assent in 1993/94.

Smackledorfer: I really get tired of the whole "xxx could ram through anything they want" stuff. If democrats have a control on paper but just enough democrats are unwilling to do it, you can't say "therefore democrats as a whole don't care about XXX" which is pretty much what you are doing. Its a spectrum. You've got far right folks, far left, and of course a number line isn't sufficient. You agree that the right wing is dead set against any progress. That same wing is heavily supported in this nation, whether we like it or not. Then the left wing repeatedly TRIES to enact change, but 70-80% of them aren't enough to get it done and the other 20-30% are moderate/right leaning on the issue, and therefore you conclude "the party isn't interested in doing anything".

You're angry. Isn't that cute? Still doesn't change the fact that I support single-payer insurance, which the Democrats wouldn't even consider debating.

Still, it doesn't change the fact that the PP&ACA is doomed to fail. The Republican mouthpieces will say that was the intention from the beginning, just to get single-payer, single-provider health care (see: Canada, UK). The Democrats won't admit it's because they're just farking incompetent, and beholden to donors (the PI bar, organized labor). Oh well. Be content in your self-righteous smugness. You've earned it.


To be fair, in re Single Payer, that douchebag from Connecticut (Lieberman) publicly stated, multiple times, that he would never allow any single payer or government option to ever come to a full Senate vote. He made this clear as early as June 2009, 5 1/2 months into the Obama administration.
 
2012-05-07 03:03:22 PM

imontheinternet: I wouldn't call myself a goldbug, but I'm not sure I'd bet on such a sharp decline in the near future. The market has become dependent on injections of liquidity from the Fed, meaning another round of QE can't be too far off, which could send gold prices up again.

Plus, Asian demand for PMs is an x factor right now. China is clearly backing away from USD, and if it decides to invest more heavily in PMs, that could also drive the price up, or at least offset the dumps from daytraders and Glenn Beck listeners you see coming.


I'll admit there are a lot of variables to my prediction, but I still see Treasury bills being a safer investment for China rather than gold, especially with the clusterfark going on in Europe and England now entering a double-dip recession.

You might be right that they (China and other various foreign entities) buying up gold contracts would be enough to pick up the slack from daytraders and Glenn Beck listeners, but, I think we'll know more about where gold is headed after November. I still think that $900 an ounce is right where it should be though even with China/et. al buying up PMs.
 
2012-05-07 03:06:34 PM
ok... that's enough from me for now. I'll check back later on and see if Wombat has a response.
 
2012-05-07 03:37:32 PM

Knight of the Woeful Countenance: WombatControl: Again, the problem with that theory is that it isn't true - the large banks didn't commingle depositor's money and investment money - for one, that would have been (IIRC) illegal. And second, Glass-Steagall had nothing to do with people's retirement accounts, other than letting them be housed in a combined bank. Nothing you've pointed to was banned by Glass-Steagall.

In fact, if Glass-Steagall had never been "repealed" the only difference was that those retirement accounts would have been held at a pure investment bank that would have gone under just like the others - if your retirement plan was through Merrill Lynch, you were hosed. If it were through Wells Fargo, you were still in trouble, but you weren't watching your account go down in flames.

That's why the crash unfolded as it did - with the pure investment banks getting killed while the larger banks rode out the storm. If GLB was the real problem behind the crash, the exact opposite would have happened.

Of course they didn't co-mingle the funds... but the funds they had on deposit allowed the banks to leverage that balance sheet to borrow and create more "wealth" than would have otherwise been allowed under Glass-Steagall. When the bank went down, so did the retirement accounts. That's why the repeal of Glass-Steagall was so devastating.

If your retirement plan was hosted by Wells Fargo/BoFA you watched it go down because of the market crash, and the fact that those mutual funds/banks were generally heavily invested in the toxic mortgage assets. That was the real problem with your example. The whole system was tainted by Glass-Steagall being repealed.

The larger banks only barely rode out the storm because they had to crawl on their hands and knees to Washington saying "If you don't bail us out, the whole system crashes." BoFA was sitting at six bucks a share at one point in 2008 if I recall correctly. People were predicting a 4,000 Dow by the end of October. The only reason we didn't see that was because of the massive liquidity injection into the system by the Fed. If you notice, the FDIC also had to change their rules to insure deposits up to $250,000 because there was a real fear that most of the big banks might not have made it to the end of the week. That's where too big to fail really came into play. Before, without the separation of investor and depositor funds, if BoFA's investment arm went down, no one cared cause hey, that's the free market. Now, when the shiat hit the fan, real deposits were at risk. See the difference?

Here's where Glass-Steagall repeal helped the system. Because of the massive bailout, investment banks were able to clear their balance sheet, essentially resetting what they had done to their depositor's funds. The toxic assets still exist in the CDS world, but now, banks have (albeit a somewhat shiatty job) of deleveraging those toxic assets by pawning them off on the Federal Government.

That's why Glass-Steagall was so important and why the repeal farked us over so badly. Does that make sense?


Again, Glass-Steagall had nothing to do with leverage requirements. You're taking a bunch of very different things and claiming that they're related to Glass-Steagall when they're not. The only thing that was repealed from Glass-Steagall was the barrier that prevented investment and commercial banks from affiliating.

And again, if Glass-Steagall were the problem, then we would not have seen the crisis go the way it did. The failures were in the commercial banks with no investment arm (like WaMu or Countrywide) or the pure investment banks (like Bear or Lehman).

That whole theory that the mega banks caused the crash doesn't match what actually happened. In fact, the opposite happened - the larger banks stopped the crisis from spreading like a wildfire. Without GLB, JP Morgan couldn't have bought out Bear Stearns or BofA could not have bought out Merrill Lynch - both of which helped contain the crisis.

Repealing Glass-Steagall probably saved us from an even worse collapse than the one we suffered - but people keep (wrongly) associating it with causing the crash.
 
2012-05-07 03:55:25 PM

WombatControl: Repealing Glass-Steagall probably saved us from an even worse collapse than the one we suffered - but people keep (wrongly) associating it with causing the crash.


www.emperorswithoutclothes.com
 
2012-05-07 04:02:09 PM
Phinn


El Pachuco: As someone running his fourth startup business, 2012 sales est 7 million, your posts are setting off all my bullshiat detectors.

No business owner does jack in any way in response to who's in the White House. Everything is based on demand. Going up? I'm hiring and expanding. Down? Scale back.

You have not had any such discussions. You are a liar.

That's impressive. What kind of business are you in?

What's even more impressive than your entrepreneurial skill, however, is your access to some kind of crystal ball or other mystical scrying device. It's incredible that you just know what I have seen and heard.

Tell me, Merlin, what am I doing right now? (Hint: it involves your mom.)



Hey - if my mom is over there too would you please send her home.....someone needs to put supper on the table.
 
2012-05-07 04:08:07 PM
And Obama wouldn't have it any other way.

After all, if you don't need government, then you don't vote for Democrats to give you more of it.
 
2012-05-07 04:38:34 PM

Phinn: CheapEngineer: Anyone else agree?

Not man enough to stand on your own opinions?


Standing right here. Posted 'em right in that message. You see me hiding?
 
2012-05-07 05:17:58 PM

Phinn: BeesNuts: Weird, cause the very large businesses with which I work couldn't give two flying farks about Obama.

Maybe they're more insulated against the vicissitudes of the federal government, owing to their size, which tends to be roughly commensurate with the level of influence they exert over that very same government.


That's an interesting theory considering that I'm mostly referring to companies in and about the defense industry.

Notwithstanding the "game of Chicken being played by our legislative branch" that "absolutely froze up their accounts during the budget ceiling debate." that is.

Their size and their intimate connection with our federal government does precisely the opposite from insulating them from its 'vicissitudes'*. But their problems are the shifty 'surprises' that erupt in the legislature, and not with any policy of the executive branch and the sudden and simultaneous contraction of their entire supply chain from '07 to '09, which can hardly be blamed on the current executive anyway.

*8/10. made me smile to read it in a random forum post.
 
2012-05-07 05:23:41 PM

CheapEngineer: Phinn: CheapEngineer: Anyone else agree?

Not man enough to stand on your own opinions?

Standing right here. Posted 'em right in that message. You see me hiding?


Phinn's out....He had to be to the gym in 26 minutes.
 
2012-05-07 05:43:39 PM

Phinn: El Pachuco: As someone running his fourth startup business, 2012 sales est 7 million, your posts are setting off all my bullshiat detectors.

No business owner does jack in any way in response to who's in the White House. Everything is based on demand. Going up? I'm hiring and expanding. Down? Scale back.

You have not had any such discussions. You are a liar.

That's impressive. What kind of business are you in?

What's even more impressive than your entrepreneurial skill, however, is your access to some kind of crystal ball or other mystical scrying device. It's incredible that you just know what I have seen and heard.

Tell me, Merlin, what am I doing right now? (Hint: it involves your mom.)


I retract that: It's quite possible that you are being told the "ain't doin' nothin' 'til Obama's gone" story by your prospective clients. They may in fact have said that to you, but as said earlier, to excuse why they won't do any business with you.

However, anyone who's ever run a small to medium business would recognize that as a lie, because it doesn't make business sense. You're being lied to, in that case, and you're lapping it up because it fits your right-wing worldview.

Evidently you don't have any business experience yourself to recognize the lie. "Hurr durr not buying another paperclip until he's gone." That's the dumbest thing a real business manager could ever say about running an actual business.

As for the general tenor of your comments - insulting, abusive and vulgar - you deserve the pegging you're getting in this thread. You sound new to this internet thing - most people get spanked for being such an ass and tone it down, usually before they're out of their teens. What's your excuse?
 
2012-05-07 06:13:35 PM

rtaylor92: Born in 1978, graduated college in 2001 so I basically joined the workforce just in time for all this. So, not really getting a kick....


you got it up the ole' red, white, and blue poop shoot. sorry abt that. all this crap started with ronnie raygun and his fetish of sticking his tonque up corporate ass without thinking of the consequences.
 
2012-05-07 06:17:16 PM

JRoo: wademh: In the US it is popular to whine about the growing inequity between the rich and the poor but it's rather myopic.
Worldwide, there's been a redistribution of wealth from "middle-class" Americans to the rest of the world, China, India, Brazil and elsewhere. Yes, there's an imbalance in the ultrarich in the US but the pull comes from multiple directions and was inevitable.
Joe Average is simply no longer going to achieve the relatively luxurious lifestyle that US citizens enjoyed in the past.


Screw luxurious lifestyles.
How about being able to afford a place to live, decent food, and seeing a doctor once in awhile?



ole' jr there had better hope joe average and 50 million of his friends don't decide to take their country back.
 
2012-05-07 06:18:59 PM

DeaH: The lack of demand brought up in the article certainly has nothing to do with the shrinking middle class. Nope. Not a thing.



see, now you're getting with the program. wink wink. all hail our Corporate Masters!
 
2012-05-07 08:01:44 PM

WombatControl:

Again, Glass-Steagall had nothing to do with leverage requirements. You're taking a bunch of very different things and claiming that they're related to Glass-Steagall when they're not. The only thing that was repealed from Glass-Steagall was the barrier that prevented investment and commercial banks from affiliating.

And again, if Glass-Steagall were the problem, then we would not have seen the crisis go the way it did. The failures were in the commercial banks with no investment arm (like WaMu or Countrywide) or the pure investment banks (like Bear or Lehman).

That whole theory that the mega banks caused the crash doesn't match what actually happened. In fact, the opposite happened - the larger banks stopped the crisis from spreading like a wildfire. Without GLB, JP Morgan couldn't have bought out Bear Stearns or BofA could not have bought out Merrill Lynch - both of which helped contain the crisis.



I never said repealing Glass-Steagall had anything to do with the leverage requirements. You're deliberately twisting my words to fit your narrative. I said repealing it allowed previously separated institutions use their depositor's funds as collateral to borrow/loan more than they were allowed. When those loans went bad, their depositors were at risk.

Scenario 1 with Glass Steagall in place.

Investment bank has ten thousand dollars in their investment fund deposited by investors who know if their risk goes south, that's all part of the fun of investing in a bank. Said investment goes bad. Bank goes belly up. No harm no foul to anyone who had their money involved with that transaction, cause that's the rules of the road when investing in a risky asset.

Scenario 2 with Glass Steagall repealed:

Investment bank has ten thousand dollars given to them by investors and another ten thousand on deposit. Said investment bank uses that ten thousand on their balance sheet to take out a loan (generally 40-1) using their institutional faith and crony capitalism to invest in toxic assets. Said investment goes bad. Loans get called in. The $10,000 given to the bank by investors is automatically gone, AND the FDIC is on the hook for the $10,000 that bank had from its depositors because that's what the Government does. That's what happened. Were you awake during 2008? That's why the banks had to go to the Fed to take their massive bailouts just so they wouldn't break the whole system. There was too much shadow money floating around.

The Mega banks didn't cause the crash, they made the crash worse by how they handled their investment accounts. You can try and pretend Glass-Steagall had nothing to do with that, but then I suppose I'd get just as far talking to a wall.

It's been point out in the thread numerous times how you're wrong. I'm afraid I'm going to have to leave it at that and let you go back and study your history.

Repealing Glass-Steagall probably saved us from an even worse collapse than the one we suffered - but people keep (wrongly) associating it with causing the crash.

Now I know you're living in a fantasy land. Good luck with that.
 
2012-05-07 08:13:37 PM

chiett: It's ALL Bush's fault ..... La La La La La La La La La La La La La La La La La La ....
(fingers in ears)


LALALALALALApolitics and economics aren't longtermLALALALALALALALALAthere's some kind of statute of limitationsLALALALALALALAwe'd sound better if we weren't making this argument WEEKS after the electionLALALALALA!!!!
 
2012-05-07 08:29:03 PM

El Pachuco: I retract that: It's quite possible that you are being told the "ain't doin' nothin' 'til Obama's gone" story by your prospective clients. They may in fact have said that to you, but as said earlier, to excuse why they won't do any business with you.


Your crystal ball is on the fritz again. I don't talk to people I'm not already doing business with. The fact that I'm talking to them means they're paying me. [Strike one]

El Pachuco: You're being lied to, in that case, and you're lapping it up because it fits your right-wing worldview.


They don't know my worldview, because I don't talk politics with clients. It's bad business. These are spontaneous comments. [Strike two]

El Pachuco: As for the general tenor of your comments - insulting, abusive and vulgar - you deserve the pegging you're getting in this thread.


Welcome to Fark, Nancy. I didn't realize that Obama supporters were so sensitive.
 
2012-05-07 08:53:25 PM
As long as you feed the Troll Mods, they will continue to Troll.
 
2012-05-07 09:16:56 PM

Snarfangel: Monkeyhouse Zendo: Snarfangel: Rather than an unfunded mandate, state and federal government could provide an hourly wage subsidy. It would make the costs more explicit, while at the same time increasing employment. Plus, it's more economically efficient than a wage floor.

Exactly, there's literally no way a business like Wal*Mart would reduce wages such that their payroll costs were subsidized by the federal or state government.

You could always fund the subsidy via a tax on corporate profits. Or even an additional 25% flat tax on all income (since Republicans like flat taxes).

/Though a land value tax would be better, since it's a lot harder to hide land than profit or income, and commercial property tends to be a *lot* more valuable than residential property or farm land. Of course, Wal-Mart would lower wages in response to the subsidy -- though entry-level and low-paid workers would still end up with a bigger paycheck -- but Wal-Mart would help pay for the subsidy with every square foot of store and parking lot.



Snarfangel,

Are we the only 2 Farkers who understand Ricardo's Law of Rent and its implications?
 
2012-05-07 10:07:00 PM

MBA Whore: Snarfangel: Monkeyhouse Zendo: Snarfangel: Rather than an unfunded mandate, state and federal government could provide an hourly wage subsidy. It would make the costs more explicit, while at the same time increasing employment. Plus, it's more economically efficient than a wage floor.

Exactly, there's literally no way a business like Wal*Mart would reduce wages such that their payroll costs were subsidized by the federal or state government.

You could always fund the subsidy via a tax on corporate profits. Or even an additional 25% flat tax on all income (since Republicans like flat taxes).

/Though a land value tax would be better, since it's a lot harder to hide land than profit or income, and commercial property tends to be a *lot* more valuable than residential property or farm land. Of course, Wal-Mart would lower wages in response to the subsidy -- though entry-level and low-paid workers would still end up with a bigger paycheck -- but Wal-Mart would help pay for the subsidy with every square foot of store and parking lot.


Snarfangel,

Are we the only 2 Farkers who understand Ricardo's Law of Rent and its implications?


There are a lot of very bright people on Fark, so I am always optimistic when I mention it. :)

And to be honest, ten years ago I would have looked at you blankly if you had mentioned David Ricardo or Henry George (or Arthur Cecil Pigou, to mention another economist I like). But the internet provides a fun way of learning such things, and I know that if someone mentions something I'm unfamiliar with, I head to Google and Wikipedia. I figure that someone in these threads will go "Hmm, I wonder what that's all about," and go hunting.
 
2012-05-07 11:36:28 PM

Knight of the Woeful Countenance: I never said repealing Glass-Steagall had anything to do with the leverage requirements. You're deliberately twisting my words to fit your narrative. I said repealing it allowed previously separated institutions use their depositor's funds as collateral to borrow/loan more than they were allowed. When those loans went bad, their depositors were at risk.

Scenario 1 with Glass Steagall in place.

Investment bank has ten thousand dollars in their investment fund deposited by investors who know if their risk goes south, that's all part of the fun of investing in a bank. Said investment goes bad. Bank goes belly up. No harm no foul to anyone who had their money involved with that transaction, cause that's the rules of the road when investing in a risky asset.

Scenario 2 with Glass Steagall repealed:

Investment bank has ten thousand dollars given to them by investors and another ten thousand on deposit. Said investment bank uses that ten thousand on their balance sheet to take out a loan (generally 40-1) using their institutional faith and crony capitalism to invest in toxic assets. Said investment goes bad. Loans get called in. The $10,000 given to the bank by investors is automatically gone, AND the FDIC is on the hook for the $10,000 that bank had from its depositors because that's what the Government does. That's what happened. Were you awake during 2008? That's why the banks had to go to the Fed to take their massive bailouts just so they wouldn't break the whole system. There was too much shadow money floating around.

The Mega banks didn't cause the crash, they made the crash worse by how they handled their investment accounts. You can try and pretend Glass-Steagall had nothing to do with that, but then I suppose I'd get just as far talking to a wall.

It's been point out in the thread numerous times how you're wrong. I'm afraid I'm going to have to leave it at that and let you go back and study your history.


Your two scenarios are the exact opposite of what really happened.

It was the pure investment banks that had the systemic risks. Who failed first? Bear Stearns and Lehman Brothers. Were they hybrid banks? No, they were not. They were investment banks.

Who else failed? The commercial banks with no investment branches but high exposure to toxic mortgage assets. WaMu and Countrywide and IndyMac.

What does that mean? Your Scenario 1 is completely wrong. The failure of the non-diversified investment banks was manifestly not "no harm no foul" - instead it caused a wider destabilization of more and more banks due to spreading systemic risk.

Who didn't fail? The diversified banks like Bank of America and Wells Fargo.

And that's because your Scenario 2 is also wrong. The combined banks could not leverage federally insured deposits because unlike the pure investment banks, they were heavily regulated. Your hypothetical scenario could not (and did not) occur because the combined banks could not have leveraged their deposits. Scenario 2 utterly confuses the line between what a pure investment bank could do and what a hybrid commercial bank could do.

And again, if your Scenario 2 were right, then the crash makes no sense: because what happened was not a failure of the big hybrid banks, but of the smaller investment banks. Wells Fargo should have failed, not Bear Stearns. Bank of America should have been bought out by Merrill Lynch, not the other way around. But again, your theory simply does not match the facts.

Now I know you're living in a fantasy land. Good luck with that.

Oh really? So is Treasury Secretary Geithner also "living in a fantasy land." Is the American Banking Association also "living in a fantasy land?"

Nice way to reject an argument out of hand - which does a great service in demonstrating the weakness of your argument. But for those who would rather understand the truth there's a reason why GLB helped prevent a wider chaos.

When the investment banking system was in the middle a near collapse, two major transactions helped to keep the catastrophe from spread. JP Morgan bought out Bear Stearns and Bank of America bought out Merrill Lynch. Both those transactions were a hell of a lot better than the alternative: both companies collapsing altogether.

Under Glass-Steagall, those transactions would not have been possible - so either Glass-Steagall would have had to be temporarily repealed or the system would have collapsed even further.

So, to summarize, there are several reasons why your whole line of argument is wrong, none of which you bother to address:

1. If GLB was the problem, the collapse would have been with the commercial banks, not the investment banks. But that's not what happened.
2. Glass-Steagall's rules would not have prevented the transactions that limited the effects of the collapse. Glass-Steagall had nothing to do with mortgage-backed securities, credit default swaps, or any of the real causes of the crash. None of the activities that actually caused the crash were banned under Glass-Steagall. For example, mortgage-backed securities were first traded back in the 1970s where Glass-Steagall was firmly in place.
3. None of your hypotheticals match the actual facts of what really happened - which makes them useless in understanding the real facts.
4. Actual economists on the left and the right have looked at the hard data and found there's no evidence that Glass-Steagall had anything to do with the collapse. So has the Treasury Secretary of the United States. If you want to argue that all of those analyses are wrong, fine, but you had better come up with some actual evidence for it.

So no, you're still wrong. Glass-Steagall was not the cause of the crash, nor was it a major contributing factor. If anything, it helped stop the collapse. If you want to make a persuasive argument to the contrary, you need to demonstrate how your theory fits the facts of what actually happened and why your theory fits those facts better than the others. A hypothetical argument based on a completely different and invented set of facts is a waste of time.

And if after that, you still think I'm living in a "fantasy world," then you should maybe explain why FactCheck.org concurs with my analysis:

Observers as diverse as former Clinton Treasury official and current Berkeley economist Brad DeLong and George Mason University's Tyler Cowen, a libertarian, have praised Gramm-Leach-Bliley has having softened the crisis. The deregulation allowed Bank of America and J.P. Morgan Chase to acquire Merrill Lynch and Bear Stearns. And Goldman Sachs and Morgan Stanley have now converted themselves into unified banks to better ride out the storm. That idea is also endorsed by former President Clinton himself...


The weight of the evidence is overwhelming, and trying to pretend it isn't so isn't going to change the facts of what actually happened.

We have to learn from the 2008 crisis, and we have to learn the right lessons based on what actually happened, not on theories that don't fit the facts. Otherwise we'll make the same mistakes again and repeat the same crash with potentially even more devastating results.
 
2012-05-08 01:45:12 AM
Nice! Which explains why Bush was so villified that 6 months in, 9/11 hapened and nutjob libs blamed him ever since with no regard for the fat that Clinton could have preemptively avoided the conflagration if he had a sac that wasn't in Lewinsky's purse.
 
2012-05-08 01:49:55 AM

Friction8r: Nice! Which explains why Bush was so villified that 6 months in, 9/11 hapened and nutjob libs blamed him ever since with no regard for the fat that Clinton could have preemptively avoided the conflagration if he had a sac that wasn't in Lewinsky's purse.


I, for one, don't blame george w. bush for 9/11. I blame george w. bush for using Osama bin Laughin' as an Emmanuel Goldstein to push the war in Iraq, the TSA and the "Patriot" Act, among other things.

Small government Publicans my ass.
 
2012-05-08 02:18:08 AM

Friction8r: Nice! Which explains why Bush was so villified that 6 months in, 9/11 hapened and nutjob libs blamed him ever since with no regard for the fat that Clinton could have preemptively avoided the conflagration if he had a sac that wasn't in Lewinsky's purse.


Which part do you think took up more of clinton's time? Getting a little action on the side, or having the retarded shiatstorm thrown at him by the republicans in response?
 
2012-05-08 02:38:28 AM

WombatControl: It was the pure investment banks that had the systemic risks. Who failed first? Bear Stearns and Lehman Brothers. Were they hybrid banks? No, they were not. They were investment banks.


Yes, they failed first, because they had the biggest exposure to the toxic assets they were bundling. Not because of Glass-Steagall's repeal. You think I'm confusing the two issues, I'm not. GS had nothing to do with that. My issue is the fact that smaller banks/Wells Fargo/BoFa were allowed to take out loans based on the value of their balance sheets/assets they bought. The depositor's funds were at risk, not because that money was put at risk, but because the financial institution itself was making risky moves that nearly lopped off the head of the financial sector. No money flowing around the banks, means no money for the people on main street. Then the FDIC has to come in and cover all those bad bets.


Who else failed? The commercial banks with no investment branches but high exposure to toxic mortgage assets. WaMu and Countrywide and IndyMac.

What does that mean? Your Scenario 1 is completely wrong. The failure of the non-diversified investment banks was manifestly not "no harm no foul" - instead it caused a wider destabilization of more and more banks due to spreading systemic risk.


Scenario 1 wasn't intended to be a factual representation of what happened, it was the example of what would have happened if Glass-Steagall wasn't repealed.


Who didn't fail? The diversified banks like Bank of America and Wells Fargo.

And that's because your Scenario 2 is also wrong. The combined banks could not leverage federally insured deposits because unlike the pure investment banks, they were heavily regulated. Your hypothetical scenario could not (and did not) occur because the combined banks could not have leveraged their deposits. Scenario 2 utterly confuses the line between what a pure investment bank could do and what a hybrid commercial bank could do.


first off, Wells Fargo and BoFa didn't fail because they were allowed to take large unregulated loans from the overnight window of the Fed to cover their balance sheets. I'll reiterate it again, BoFa was days away from insolvency and their stock price was at $6 and falling fast. The only reason they didn't go out of business was because the Fed was called in to intervene. Here's where Glass-Steagall's repeal came into action - because of the repeal, banks were allowed to bloom:

"Volcker has argued strongly that the repeal of Glass-Steagall, allowing financial firms to grow big in part by merging conventional banking with investment activities, set the stage for the crisis."


And again, if your Scenario 2 were right, then the crash makes no sense: because what happened was not a failure of the big hybrid banks, but of the smaller investment banks. Wells Fargo should have failed, not Bear Stearns. Bank of America should have been bought out by Merrill Lynch, not the other way around. But again, your theory simply does not match the facts.


Because of Glass-Steagall's repeal, BoFa was allowed to purchase Bear Stearns and place their toxic assets into receivership with the Fed picking up the tab. Before, that wouldn't have been allowed.

Not only that, there were a variety of... well, let's call them "Human factors" that let Wells Fargo/JP Morgan and BoFa survive the financial crisis. More precisely, it was the CEOs who had an in with Paulson, Geithner and all the other Goldman Alums in the Goverment who were busy chopping up the empire as Rome burned.


Oh really? So is Treasury Secretary Geithner also "living in a fantasy land." Is the American Banking Association also "living in a fantasy land?"


Argument from authority rarely works, especially when it comes from the guys who got us into the mess in the first place. Banks had been lobbying for the repeal of Glass-Steagall for years because they knew it would help them make bigger bets/larger profits. Quoting the American Banking Association saying that Glass-Steagall had no effect on the 2008 crisis is like listening to Tobacco execs argue against nicotine's smooth cancer flavor. And we all know how that turned out.

Geithner is no better. He was part and parcel of the group that truly believed that what they were doing would have no effect. Partianship aside, you can't blame a guy for buying into a belief system wholesale when he's making great money off of the ideas he's spouting... that is, until the ride comes to an end and we have to pick up the pieces.

Here's a few who disagree:

Krugmann

William Bernstein: From Four Pillars of Investing:

"The Glass-Steagall Act separated commercial and investment banking. This last statute has recently been repealed. Sooner or later, we will likely painfully relearn the reasons for its passage almost seven decades ago."

1987 Congressional Report on the possibility of repealing the portions of Glass-Steagall:

"Securities activities can be risky, leading to enormous losses. Such losses could threaten the integrity of deposits. In turn, the Government insures deposits and could be required to pay large sums if depository institutions were to collapse as the result of securities losses."

From the wiki quoting major economists on the repeal of Glass-Steagall:

The repeal enabled commercial lenders such as Citigroup, the largest U.S. bank by assets, to underwrite and trade instruments such as mortgage-backed securities and collateralized debt obligations and establish so-called structured investment vehicles, or SIVs, that bought those securities. Citigroup played a major part in the repeal. Then called Citicorp, the company merged with Travelers Insurance company the year before using loopholes in Glass-Steagall that allowed for temporary exemptions. With lobbying led by Roger Levy, the 'finance, insurance and real estate industries together are regularly the largest campaign contributors and biggest spenders on lobbying of all business sectors [in 1999]. They laid out more than $200 million for lobbying in 1998, ' according to the Center for Responsive Politics. ' These industries succeeded in their two decades long effort to repeal the act. ' "


Nice way to reject an argument out of hand - which does a great service in demonstrating the weakness of your argument. But for those who would rather understand the truth there's a reason why GLB helped prevent a wider chaos.


I rejected it because all you're doing is repeating tired talking points from the right about how Glass-Steagall had nothing to do with our problems and we should be instead blaming everything on the poor people who took out loans from Frannie and Freddie (A whole other clusterfark).


When the investment banking system was in the middle a near collapse, two major transactions helped to keep the catastrophe from spread. JP Morgan bought out Bear Stearns and Bank of America bought out Merrill Lynch. Both those transactions were a hell of a lot better than the alternative: both companies collapsing altogether.

Under Glass-Steagall, those transactions would not have been possible - so either Glass-Steagall would have had to be temporarily repealed or the system would have collapsed even further.

So, to summarize, there are several reasons why your whole line of argument is wrong, none of which you bother to address:

1. If GLB was the problem, the collapse would have been with the commercial banks, not the investment banks. But that's not what happened.


They became part of the problem when it was clear the whole financial system was melting down. That's why we had three days in a row of three digit dow losses.


2. Glass-Steagall's rules would not have prevented the transactions that limited the effects of the collapse. Glass-Steagall had nothing to do with mortgage-backed securities, credit default swaps, or any of the real causes of the crash. None of the activities that actually caused the crash were banned under Glass-Steagall. For example, mortgage-backed securities were first traded back in the 1970s where Glass-Steagall was firmly in place.


But the repeal of it gave banking institutions the motivation to expand and become larger under the whole "too big to fail" meme we all became familiar with in 2008. When that happened, we were unable to slow the contagion and treat it as effectively as we might have been able to with Glass-Steagall in place.


3. None of your hypotheticals match the actual facts of what really happened - which makes them useless in understanding the real facts.


They were intended as a lay argument to show why you were wrong. It's my fault for not expanding my thoughts. I thought by putting them in a more concise fashion might save people from the wall of text we've now inflicted on this thread.


4. Actual economists on the left and the right have looked at the hard data and found there's no evidence that Glass-Steagall had anything to do with the collapse. So has the Treasury Secretary of the United States. If you want to argue that all of those analyses are wrong, fine, but you had better come up with some actual evidence for it.


Except for:

Elizabeth Warren

Paul Krugmann,

Demos (a non-partisian public policy and research organization) who said:
"Commercial banks played a crucial role as buyers and sellers of mortgage-backed securities, credit-default swaps and other explosive financial derivatives," Demos, a nonpartisan public policy and research organization, wrote in a report discussing the problems it said were caused by the repeal of Glass-Steagall.

"Without the watering down and ultimate repeal of Glass-Steagall, the banks would have been barred from most of these activities," Demos said. "The market and appetite for derivatives would then have been far smaller, and Washington might not have felt a need to rescue the institutional victims."

Paul Volcher


So no, you're still wrong. Glass-Steagall was not the cause of the crash, nor was it a major contributing factor. If anything, it helped stop the collapse. If you want to make a persuasive argument to the contrary, you need to demonstrate how your theory fits the facts of what actually happened and why your theory fits those facts better than the others. A hypothetical argument based on a completely different and invented set of facts is a waste of time.


At best, we have reached an impasse where our different lines of economic thoughts, contributors diverge to the cause of the 2008 crisis. I don't believe I'm wrong and I have linked to the things that support my argument. You've done the same. I still think you're wrong. That's something wonderful about this country.


And if after that, you still think I'm living in a "fantasy world," then you should maybe explain why FactCheck.org concurs with my analysis:

Observers as diverse as former Clinton Treasury official and current Berkeley economist Brad DeLong and George Mason University's Tyler Cowen, a libertarian, have praised Gramm-Leach-Bliley has having softened the crisis. The deregulation allowed Bank of America and J.P. Morgan Chase to acquire Merrill Lynch and Bear Stearns. And Goldman Sachs and Morgan Stanley have now converted themselves into unified banks to better ride out the storm. That idea is also endorsed by former President Clinton himself...


The weight of the evidence is overwhelming, and trying to pretend it isn't so isn't going to change the facts of what actually happened.


Maybe. But, still there is a large percentage of economists who believe that reinstating Glass-Steagall is the right thing to do or at least, regulate our financial system in a way that prevents another meltdown like the one we saw in 2008. Inventing algorithms/AAA securities based on bullshiat ratings and crony capitalism isn't any way to do business. And yet, that's what we got.


We have to learn from the 2008 crisis, and we have to learn the right lessons based on what actually happened, not on theories that don't fit the facts. Otherwise we'll make the same mistakes again and repeat the same crash with potentially even more devastating results.


Couldn't agree with you more here. Agreement five. I personally think stronger regulation of derivatives and investment/depositor banks is the answer. You may disagree... that's fine. Just how it goes.
 
2012-05-08 08:42:26 AM

Lee Jackson Beauregard: Friction8r: Nice! Which explains why Bush was so villified that 6 months in, 9/11 hapened and nutjob libs blamed him ever since with no regard for the fat that Clinton could have preemptively avoided the conflagration if he had a sac that wasn't in Lewinsky's purse.

I, for one, don't blame george w. bush for 9/11. I blame george w. bush for using Osama bin Laughin' as an Emmanuel Goldstein to push the war in Iraq, the TSA and the "Patriot" Act, among other things.

Small government Publicans my ass.


Don't forget George W. "Limited Government" Bush and his Medicare Part D.

Or George W. Bush, stalwart free market proponent, and his $700 billion TARP bailout and federal takeover of Fannie Mae and Freddie Mac.

The best thing for the United States is clearly to have an ineffective Democrat as President. A phony Republican who pretends to be economically sound ends up enacting disasters like these. An effective Democrat is just a well-packaged socialist.

Things have gotten so bad now, it makes me nostalgic for a president who was too pre-oocupied with getting his hand up the intern's skirt to add to his list of so-called "accomplishments."
 
2012-05-08 08:54:58 AM
This farking site needs to be renamed "Fark: The Plural of an Anecdote is Data".

The place where people couldn't find their ass with both hands even with a manual.
 
2012-05-08 10:51:30 AM

Phinn: Lee Jackson Beauregard: Friction8r: Nice! Which explains why Bush was so villified that 6 months in, 9/11 hapened and nutjob libs blamed him ever since with no regard for the fat that Clinton could have preemptively avoided the conflagration if he had a sac that wasn't in Lewinsky's purse.

I, for one, don't blame george w. bush for 9/11. I blame george w. bush for using Osama bin Laughin' as an Emmanuel Goldstein to push the war in Iraq, the TSA and the "Patriot" Act, among other things.

Small government Publicans my ass.

Don't forget George W. "Limited Government" Bush and his Medicare Part D.

Or George W. Bush, stalwart free market proponent, and his $700 billion TARP bailout and federal takeover of Fannie Mae and Freddie Mac.

The best thing for the United States is clearly to have an ineffective Democrat as President. A phony Republican who pretends to be economically sound ends up enacting disasters like these. An effective Democrat is just a well-packaged socialist.

Things have gotten so bad now, it makes me nostalgic for a president who was too pre-oocupied with getting his hand up the intern's skirt to add to his list of so-called "accomplishments."


Right. You're such a specialist.

We carried some debt from Clinton into Bush but at least we were running a small budget surplus and had begun paying the national debt down.
Bush's first great accomplishment was to cut taxes so deeply we were no longer running a surplus and had a budget deficit his 1st full budget year.
Bush then started a war off budget and congress appropriated 80+ billion dollars we didn't have.

Bush got another round of tax cuts through congress and the budget deficit exploded to new heights and opened a new war off budget and on the credit card, another 80 billion a year in debt piling on...

At the end of his term, Bush even borrowed 800 Billion to prop up the banks and another 200 billion to keep Detroit in business.

Fast forward to Nov 2009 and we have the deepest recession since 1929 and the GDP shrinking at a rate of 9% per year. Millions laid off, tax revenue in free fall and mandatory expenditures like Food Stamps, Medicaid/Medicare, Unemployment Compensation, TANF, sending the budget deficit to extremes.

In your fantasy world, none of that shiat ever happened. In your fantasy world, the dude the people hired in the midst of a world wide economic catastrophe who's primary task is to stem that tide of red ink, is a god damned socialist to the FOX news idiots. The Chamber of Commerce, the lobbying arm of your client base, Publicly decries every effort to prop up main street America as socialism. They inject millions into efforts to discredit the president. They fund complete idiots like World NUT Daily and his Russian trollop Orly Taitz' birther conspiracies, Kenyan usurper crap, DEATH PANELS for fux sake. And that unelected traitorous douchebag Grover Norquist.

Allowing the temporary Bush Tax cuts to expire is socialism in your world.
NOT kicking grandma and grandpa out into the streets is socialism to your clients.
Helping desperately poor NOT freeze to death is Socialism to you and yours.
Making sure our children have food to eat is socialism?!?!?!

All of these things were affordable before Bush worked his magic.
But the only actions your client's support is kicking the very victims of Bush's crash out into the street.

WHAAAAA! The Kenyan, Muslin, Commie, Fascist, Soshulist is destroying America!

America's social safety net was the weakest of all Advanced economies BEFORE the crash.
And the ONLY solution your client base supports to PAY OFF the trillions in debt racked by Bush and the subsequent economic catastrophe
is to weaken that already pathetic social safety net even more. To fire millions of teachers, firefighters and cops because...UNIONS!!!!

Your client base stands united against any increase in revenue. In spite of the FACT that the very tax cuts that benefited your client base resulted in immediate deficit spending. Your client base stands united against even modest regulation of Wall St. Your client base has done everything it possibly can to undermine this president during an international crisis.

YOUR CLIENT BASE has been treasonous.

There is nothing this president has done, proposed or even suggested that has not been done by previous presidents in the past. Successfully I might add. And your client base worked incessantly to block it all.

SOSHULLISM JISM!!!

That's all you got?

farking treasonous fraud. That's what you are.
 
2012-05-08 11:40:38 AM

X-boxershorts: In your fantasy world, none of that shiat ever happened.


Easy there, Sparky. I agree with you, to a certain extent. Everything you listed re: GWB was a disaster. It happened. It was bad. You'll get no counter-argument from me on that point.

X-boxershorts: And that unelected traitorous douchebag Grover Norquist.


The anti-tax guy? I don't know much about him, but if all he does is advocate for lower taxes, that's not "traitorous," I don't think. Not yet, anyway.

Maybe there's more to the guy's history that I don't know about, but if you are complaining about me demonizing the opposition, and you do so by calling anti-tax advocates "traitors," then you are being a self-contradictory hypocrite.

X-boxershorts: Making sure our children have food to eat is socialism?!?!?!


You know, if the only thing the government did was confine itself to feeding starving children and rescuing the elderly from a life on the street, I would not protest. (The way the government typically goes about "solving" these complex social problems is, almost always, retarded. But let's pretend for a moment that the government has the capacity to actually do these things.)

In your fantasy world, this is what the government does. In reality, it's about 0.01% of what the government does.

Mostly what it does is price-fixing, protectionism, wage controls, cartel-forming, barriers to market entry, and subsidies as fat as they can possibly make them without suffering political embarrassment.

As for the rest of your comment, you are clearly omniscient, righteous, and generous beyond compare.

Omniscient about what the economically-sound price for everything is.

Righteous in the distribution of the fruits of other people's skill and productivity.

Generous with other people's money.
 
2012-05-08 11:59:37 AM

Phinn: X-boxershorts: In your fantasy world, none of that shiat ever happened.

Easy there, Sparky. I agree with you, to a certain extent. Everything you listed re: GWB was a disaster. It happened. It was bad. You'll get no counter-argument from me on that point.

X-boxershorts: And that unelected traitorous douchebag Grover Norquist.

The anti-tax guy? I don't know much about him, but if all he does is advocate for lower taxes, that's not "traitorous," I don't think. Not yet, anyway.

Maybe there's more to the guy's history that I don't know about, but if you are complaining about me demonizing the opposition, and you do so by calling anti-tax advocates "traitors," then you are being a self-contradictory hypocrite.

X-boxershorts: Making sure our children have food to eat is socialism?!?!?!

You know, if the only thing the government did was confine itself to feeding starving children and rescuing the elderly from a life on the street, I would not protest. (The way the government typically goes about "solving" these complex social problems is, almost always, retarded. But let's pretend for a moment that the government has the capacity to actually do these things.)

In your fantasy world, this is what the government does. In reality, it's about 0.01% of what the government does.

Mostly what it does is price-fixing, protectionism, wage controls, cartel-forming, barriers to market entry, and subsidies as fat as they can possibly make them without suffering political embarrassment.

As for the rest of your comment, you are clearly omniscient, righteous, and generous beyond compare.

Omniscient about what the economically-sound price for everything is.

Righteous in the distribution of the fruits of other people's skill and productivity.

Generous with other people's money.


You're willing to throw this nation's only future under the bus to preserve just a few dollars more.

fark you. Pay off the debt your assholes ran up. Teachers, firefights and cops did not run up that debt. Nor did the poor, our grandparents and children.

For the last 12 years, you cocksukkers were god awful generous with our future. So..fark you.
 
2012-05-08 12:58:57 PM

X-boxershorts: You're willing to throw this nation's only future under the bus to preserve just a few dollars more.


Dollars should go where their owners choose for them to go.

Those dollars aren't just dollars. They're human labor, skill, knowledge, and productivity.

I get it -- you want those dollars to be spent in other ways. That necessarily means that you want control over people's economic lives -- their labor, their skill, their knowledge and their productivity.

But neither you nor anyone else has any way of identifying an economically-superior way to spend that money. The only certainty is that whatever else you choose to do with other people's money, it is worse than what the owner of the money would have chosen.

When you divert the flow of money from what people would have voluntarily spent it on, and force it to be spent in some other way, you lose the wealth-creation that would have occurred if you left people alone. You destroy wealth.

Economic freedom is our nation's only future. You are helping destroy it.

X-boxershorts: Pay off the debt your assholes ran up.


They're not my assholes.

My suggestion is to repudiate the "national debt" in its entirety. It's illegal, immoral, and the creditors have no legitimate basis to demand repayment.

X-boxershorts: Teachers, firefights and cops did not run up that debt. Nor did the poor, our grandparents and children.


I'll grant you "children," of course, but everyone else on your list is part of the problem.

Being government parasites, teachers, firefighters and cops are all overpaid, not merely in terms of salaries, but through gold-plated pension and benefits packages. Their total compensation is grossly disproportionate to the true economic value of their services. It's a sinkhole of waste.
 
2012-05-08 01:33:15 PM

Phinn: X-boxershorts: You're willing to throw this nation's only future under the bus to preserve just a few dollars more.

Dollars should go where their owners choose for them to go.

Those dollars aren't just dollars. They're human labor, skill, knowledge, and productivity.

I get it -- you want those dollars to be spent in other ways. That necessarily means that you want control over people's economic lives -- their labor, their skill, their knowledge and their productivity.

But neither you nor anyone else has any way of identifying an economically-superior way to spend that money. The only certainty is that whatever else you choose to do with other people's money, it is worse than what the owner of the money would have chosen.

When you divert the flow of money from what people would have voluntarily spent it on, and force it to be spent in some other way, you lose the wealth-creation that would have occurred if you left people alone. You destroy wealth.

Economic freedom is our nation's only future. You are helping destroy it.

X-boxershorts: Pay off the debt your assholes ran up.

They're not my assholes.

My suggestion is to repudiate the "national debt" in its entirety. It's illegal, immoral, and the creditors have no legitimate basis to demand repayment.

X-boxershorts: Teachers, firefights and cops did not run up that debt. Nor did the poor, our grandparents and children.

I'll grant you "children," of course, but everyone else on your list is part of the problem.

Being government parasites, teachers, firefighters and cops are all overpaid, not merely in terms of salaries, but through gold-plated pension and benefits packages. Their total compensation is grossly disproportionate to the true economic value of their services. It's a sinkhole of waste.


Where the fark do you get this concept? You are one sick and selfish bastard. You really are clueless.
 
2012-05-08 02:15:25 PM

X-boxershorts: Where the fark do you get this concept? You are one sick and selfish bastard.


Markets and economic freedom?

I just made it all up myself, like a week ago.

X-boxershorts: You really are clueless.


Please do a little light reading before calling others clueless. Start anywhere..
 
2012-05-08 04:11:22 PM

Phinn: My suggestion is to repudiate the "national debt" in its entirety. It's illegal, immoral, and the creditors have no legitimate basis to demand repayment.


Wait, so I can borrow money from creditors to do whatever I want, and then just not pay it back?


WHY WAS I NEVER TOLD THAT THE ECONOMY FUNCTIONS ON FREE MONEY?!
 
2012-05-08 04:47:50 PM

NeedlesslyCanadian: Wait, so I can borrow money from creditors to do whatever I want, and then just not pay it back?


It depends -- are you an entity that earns no money of its own, and is only borrowing against your plans to extract money from others by force?

Lending money to the government is like lending money to fund a home invasion operation.
 
2012-05-08 07:09:10 PM
HA HA HA HA HA HA HA....you link to Hayek

Who has NO MODEL for dealing with market failures!

HA HA HA HA HA HA HA....you really are clueless.

Friedman was an advocate of lender of last resort in extreme market failures.

You suck at this.
 
2012-05-08 07:35:21 PM
There are no market failures.

That's a euphemism for "refraining from violence is inconvenient and frustrating, so I'll force people to follow my preferences."

You're the one who never heard of markets. Enjoy your self-referential bubble of ignorance, sunshine.
 
2012-05-08 09:29:18 PM

Phinn: There are no market failures.

That's a euphemism for "refraining from violence is inconvenient and frustrating, so I'll force people to follow my preferences."

You're the one who never heard of markets. Enjoy your self-referential bubble of ignorance, sunshine.


Right, asshole. Sure.

You should enjoy the revolution that is coming. How gated is your community? Are you armed? I hope so for your sake

GOP plan boosts Pentagon, cuts social programs

Keep voting teabagger you selfish narcissistic psychopath. Pitchforks are sharpening. And it's your grandma gonna lead that charge you ignorant prick.
 
2012-05-08 09:46:49 PM
How'd he put it in Hunt for Red October?

You killed us you arrogant ass
 
2012-05-08 09:48:09 PM

Phinn: There are no market failures.

That's a euphemism for "refraining from violence is inconvenient and frustrating, so I'll force people to follow my preferences."

You're the one who never heard of markets. Enjoy your self-referential bubble of ignorance, sunshine.


The classical definition of Depression/Recession IS Market failure you ignorant idiot. Ignore history at your own peril.
 
2012-05-08 09:52:20 PM

Phinn: There are no market failures.


Er...yes there are. For a market to function at pareto optimum level several assumptions must be met:

Perfect competition
Perfect information
No externalities
No principal-agent problems

Pretty much no market exists that conforms to those assumptions. Therefore, nearly all markets are inefficient; it's only a matter of degrees.
 
2012-05-08 11:15:24 PM

Phinn: There are no market failures.

That's a euphemism for "refraining from violence is inconvenient and frustrating, so I'll force people to follow my preferences."

You're the one who never heard of markets. Enjoy your self-referential bubble of ignorance, sunshine.


YOU...are a market failure.
 
2012-05-09 09:10:18 AM

KhanAidan: Phinn: There are no market failures.

Er...yes there are. For a market to function at pareto optimum level several assumptions must be met:

Perfect competition
Perfect information
No externalities
No principal-agent problems

Pretty much no market exists that conforms to those assumptions. Therefore, nearly all markets are inefficient; it's only a matter of degrees.


Your assumptions are false. Therefore, your conclusions are false.

1. A market is merely a means by which people may cooperate with others for the purpose of pursuing mutually-agreeable, individually-preferred results. Preferences are subjectively defined, and therefore vary from person to person. They also encompass a wide variety of non-quantitative factors, other than money, such as time, location, and other qualitative factors, which not only vary from person to person, but constantly change. These things can't be measured by reference to objective criteria. In other words, this definition of economic efficiency is not systemically meaningful.

2. It's a false premise that a market needs perfect competition or perfect knowledge. Knowledge, for example, is itself an economic good, which takes time and other resources to gather, assemble and distribute. It is therefore subject to the principles of economic production and distribution, just like anything else.

3. Any problem with externalities is easily solved by reliance on property rights principles, which are a basic component of any market.

4. Agent-principal problems are unavoidable in any system exhibiting division of labor, no matter the scale. Once again, like knowledge, agent management is itself an economic good, and the development of systems and skills in that area are just as much a part of the economic production and distribution process as anything else.

5. With regard to everything on your list of purported objections to property-based market exchanges, there is nothing other than markets that actually has the capacity to perform better. With regard to every objection, the question remains, "Compared to what?" There is no governmental action that has the remotest capacity to bring about a net improvement in competition, information, externalities or agency problems, or do any of these things BETTER than a free market will. To claim otherwise requires its proponents to ignore various unavoidable aspects of governmental (non-free-market) action, or define the problems away.
 
2012-05-09 09:21:13 AM

X-boxershorts: YOU...are a market failure.


You're just a failure.
 
2012-05-09 09:45:08 AM
Your assumptions are false. Therefore, your conclusions are false.

I am only presenting the facts as an economist would give. Those are the assumptions for efficient markets. It's there in nearly any economic textbook (one of the few things even intro classes get right). When discussing the efficiency of free market, we are all making those assumptions, that's a fact. I've got a small library here and a group of faculty that would agree.

Actually, yes, economic efficiency is systemically meaningful. It's called the Pareto optimum. An efficient market will reach Pareto optimality, failures will prevent the market from being as efficient. And yes, those objective criteria can be measured by consumer choice theory. We don't have specific measurements of utility that encompasses non qualitative characteristics, but we can form utility curves of customers by viewing their decision making. Microeconomics has been doing this for decades. There's a large amount of literature in the construction of empirical demand curves (which reflect customer non qualitative utility and qualitative utility).

Yes, knowledge is a good, thus why banks exist; to remove asymmetric information problems. However, for a market to achieve efficiency all actors must have the same and full knowledge of all goods and services in said market. Without such information, inefficient decisions will be made.

Coase's property rights theorem requires that:

Transactions are costless
The number of actors in the market are sufficiently small to enable agreements to be made
Complete information

Coase himself even critiqued his results on the first two assumptions in his paper, acknowledging their existence. Outside of Coase's property rights theorem, there is no economically demonstrable way to internalize externalities in a system without introducing inefficiency.

As for the rest of it, at no point was I commenting on the use of government or anything about comparing efficiencies. I was only noting that economically market failures do in fact exist. Ask any professional economist, they will all agree.

If you want to argue about markets on a philosophical scale, that's another matter. I'm just speaking from an economists point of view.
 
2012-05-09 10:39:42 AM

KhanAidan: We don't have specific measurements of utility that encompasses non qualitative characteristics, but we can form utility curves of customers by viewing their decision making.


Yes, I agree. Although "utility" is a flawed concept (or used in flawed ways, at least), these qualitative, subjectively-valued factors can only be observed as an effect of market activity, and thus not knowable in advance.

In other words, interfering with the market (i.e., making it less free) destroys the creation of market information. Market interference and manipulation inevitably and always causes an information loss, and that information is irreplaceable.

That informational blindness is the source of governmental (non-market) inefficiencies, and the reason that governmental enterprises never know how much to charge for their services, which services to provide, how to provide them in a way that meets consumer preferences, or how much to pay for its resources.

In the absence of this economic information (an informational vacuum), economic decisions end up being made on the basis of political preferences. (Which is why you get all kinds of sloganeering around governmental enterprises, like "Teachers should be paid more!", instead of a market basis for knowing what their services are actually worth.)

From this, we can understand why governmental enterprises become more inefficient, costly and decline in quality over time, until they reach a limit of political embarrassment. (E.g., road-building, police, fire, teachers, postal services, etc.)

KhanAidan: However, for a market to achieve efficiency all actors must have the same and full knowledge of all goods and services in said market. Without such information, inefficient decisions will be made.


That's simply not true. Like every other kind of good, every economic actor values information differently, values different types of information differently, and those types all have different costs to acquiring them. Plus, these values change constantly. Some uses of information, at some times, justify the cost of its acquisition, and some don't. Sometimes, acquiring and distributing perfect information is wasteful. Informational proxies, assumptions and other substitutes are sometimes good enough, and more economically sound.

The only way to know when the costs of acquiring and distributing information are lower than its economic benefit to consumers is, again, by reference to the market for information. There is no better source of information about the market value of information. (It's a convoluted way to say it, I know.)

KhanAidan: Coase's property rights theorem requires that:

Transactions are costless
The number of actors in the market are sufficiently small to enable agreements to be made
Complete information


Another way of saying this is that, to the extent these things do not exist, Coase's theorem is not true, or inapplicable, and the particular definition of property rights that one recognizes ends up mattering quite a bit.

I don't have a problem with a law-and-economics approach to jurisprudence, but the economics behind the analysis is usually pretty lousy. The law that results is inevitably lousy. Garbage in, garbage out.
 
2012-05-09 01:25:38 PM
That's simply not true. Like every other kind of good, every economic actor values information differently, values different types of information differently, and those types all have different costs to acquiring them. Plus, these values change constantly. Some uses of information, at some times, justify the cost of its acquisition, and some don't. Sometimes, acquiring and distributing perfect information is wasteful. Informational proxies, assumptions and other substitutes are sometimes good enough, and more economically sound.

The only way to know when the costs of acquiring and distributing information are lower than its economic benefit to consumers is, again, by reference to the market for information. There is no better source of information about the market value of information. (It's a convoluted way to say it, I know.)


Again, from an economic perspective, it is true. The definition of a market failure is the result from any market not achieving Pareto efficiency. The first fundamental theorem of welfare states that a free market (competitive economy) will achieve Pareto efficiency. This was mathematically proven by Arrow and Debreu. Since then, Greenwald and Stiglitz were able to prove that in the absence of perfect information and/or complete markets the Pareto efficient outcome does not occur.

Market failure exists, and they have been proven to occur, whether a government exists or not. I'm not going to get into the effects of government intervention since that's a whole other can of worms.
 
2012-05-09 08:01:32 PM

Phinn: X-boxershorts: YOU...are a market failure.

You're just a failure.


No, idiot. You're farking clueless with your Ludwig Von Mises maxims and petty arrogance.

The market for derivatives, which is wholly unsupervised, failed. Big time. It was a run on the shadow banking system
that sucked trillions of dollars worth of value out of the American and the world's economy.

And you have no clue. None.

On top of that, you apparently represent a bunch of assholes who would rather see America suffer in order to undermine the US Government.
You suck.
and
Your client base sucks.
 
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