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"Recovery!" WHAT Recovery??

Most of current Western poverty is still darn comfy when compared to anything except current Western middle-class and above. In terms of the history of this planet, that's almost everybody that ever lived.
I think thats plain daft thing to say. Our poverty is better (or not so bad) than theirs??
 
Meanwhile, today, over a billion humans are starving - "pretty darn comfy".

Of course, 99% of those billion people (all but about 15 million of them) are the ones who aren't living in the current high-tech developed world that you abhor.

BadBoy expressed it as:

One of the issues with western lifestyles is that the part of population that is living in poverty is not sufficiently acknowledged by the rest of us. Most of the time they are ignored.

Sometimes I think living in a longhouse in the Amazon would be better than Western lifestyle. Nothing to worry about apart from hunting with your mates every week. (and catching some infection that requires antibiotics)

The only problem with this line of reasoning is that the people in the Amazonian longhouse are exactly the ones who are starving. The ones living the Western lifestyle are generally the ones facing the problems of too much food....
 
Of course, 99% of those billion people (all but about 15 million of them) are the ones who aren't living in the current high-tech developed world that you abhor.

BadBoy expressed it as:



The only problem with this line of reasoning is that the people in the Amazonian longhouse are exactly the ones who are starving. The ones living the Western lifestyle are generally the ones facing the problems of too much food....
actually, I dont think thats correct. Not everyone in the third world is starving. The main issues the amazonians have they have is disease brought in by westeners, and their forest being cut down around them.
 
Of course, 99% of those billion people (all but about 15 million of them) are the ones who aren't living in the current high-tech developed world that you abhor.

And most of those 15 million suffer from some sort of addiction or mental illness. While this is no less of a problem, it’s not an economic problem per say.
 
And most of those 15 million suffer from some sort of addiction or mental illness. While this is no less of a problem, it’s not an economic problem per say.



Approximately 40 million Americans are now receiving food stamps.
 
Approximately 40 million Americans are now receiving food stamps.

IOW they have food to eat, right?

Go outside the western industrialized countries and the definition hardship changes from “having government help you with food stamps” to “starving to death”
 
IOW they have food to eat, right?

But are they all addicts and/or mentally ill?

Go outside the western industrialized countries and the definition hardship changes from “having government help you with food stamps” to “starving to death”

The relative wealth and over-consumption of industrialized countries is not unrelated to the relative poverty of others.

As the Western capitalist project grinds to a halt and collapses so government help disappears with it.

E.g.: An Update on State Budget Cuts
At Least 45 States Have Imposed Cuts That Hurt Vulnerable Residents and the Economy
 
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The relative wealth and over-consumption of industrialized countries is not unrelated to the relative poverty of others.

Perhaps, but not in the way you seem to think. The biggest negative impact wealthy western countries have on poor countries is that they export cheep food to those countries undercutting their local agricultural economies.

Of course what this once again speaks to is the ability of these countries to not only feed but over-feed it’s own people, even the poor ones.
 
Perhaps, but not in the way you seem to think. The biggest negative impact wealthy western countries have on poor countries is that they export cheep food to those countries undercutting their local agricultural economies.

Of course what this once again speaks to is the ability of these countries to not only feed but over-feed it’s own people, even the poor ones.

Are the approximately 40 million Americans are now receiving food stamps all addicts and/or mentally ill?

How long do you expect Western, industrialized countries to be able to sustain their entitlement and welfare programs?
 
Are the approximately 40 million Americans are now receiving food stamps all addicts and/or mentally ill?

Nope, but the relevant question is whether they are starving as the worlds truly poor are.

How long do you expect Western, industrialized countries to be able to sustain their entitlement and welfare programs?

I don’t see why not, since most industrialized countries produce more food then they consume.
 
Here's part of the loony programme advanced by your heroes at "CASSE":

--------------
Fair Distribution

Since continuous growth and sustainable scale are incompatible, growth cannot be relied upon to alleviate poverty, as has been done (ineffectively) in the past. If the pie isn’t getting any bigger, we need to cut and distribute the pieces in a fair way. In addition, poor people who have trouble meeting basic needs tend not to care about sustainability, and excessively rich people tend to consume unsustainable quantities of resources. Fair distribution of wealth, therefore, is a critical part of sustainability and the steady state economy.

Highlighted portion would need to be better explained.

I think thats plain daft thing to say. Our poverty is better (or not so bad) than theirs??

How is it daft? Compare the poor in LA to the poor in Calcutta and tell me if you still think the situations are comparable.

actually, I dont think thats correct. Not everyone in the third world is starving. The main issues the amazonians have they have is disease brought in by westeners, and their forest being cut down around them.

Actually the main issues they face is their continuing inter-tribal wars. Some of those tribes have the highest murder rates on the planet. They also have issues with, you know, surviving. Any drought or overly rainy season can spell disaster for people who live on very thin margins.
 
How is it daft? Compare the poor in LA to the poor in Calcutta and tell me if you still think the situations are comparable.

Let us not forget that one of the biggest threats to the health of Americans is obesity. Not only that, but the less money one has, the more likely they are to be obese. I would suggest that this is unique in human history.

That being said, we have a serious problem:

Nearly one in four children live in households that struggle to put food on the table. That's 16.7 million children.
http://www.bread.org/hunger/us/

That's disgraceful and embarassing...but it isn't Calcutta, it's not Somalia, it's not Honduras.

We can easily do much better, but we aren't doing that bad by world standards.
 
What results has capitalism produced?
A world on the brink of ecological catastrophe and economic collapse.
Shall we keep trying capitalism?

How about a world wealthy enough that many millions have free access to information, clean water, decent food in sufficient quantity and sufficient personal freedom to consider themselves self-realized. Compare that with any previous era any it's a huge huge win. Yes we should not only keep trying capitalism, but continue promoting it avidly.

{{As an aside free-markets work well in situations of limited resources - for example in time of war/oppression/blockade/prison))..

If there is a problem of "ecological disaster", then I expect you have examined the problem of polluting the waters and air in terms of the economic concept of "tragedy of the commons". The problem is a LACK of capitalistic values and not of capitalism and free markets per-se If we all are allowed to dump our waste CO2 into the atmosphere FOR FREE then, yes the biggest piggies gets the most. The solution is to have the commons "owned" (note capitalistic intent) by a private entity if possible, Current the US Gov't has proposed charging a "carbon tax" for CO2 emissions - but that is a load of baloney unless and until the amount charged exactly matches the "cost" to the general welfare (as determined by the market). The Gov't has ZERO intention of using those funds to scrub CO2 from the atmosphere or to pay consolidated polluters (like power companies) to avoid CO2 release. It's a bit like charging a road-use tax with no intention of maintaining the road - a dead-end concept.

No ! The use/abuse of the ecosystem is NOT a problem of capitalism; It's a problem of the ANTI-capitalists who refuse to recognize any notion of ownership over "commons". Capitalism and free-markets solve that problem nicely.
.

Yes, and Europe performed an experiment that showed capitalism constrained by well-funded socialist programs is better for a nation's people.

Really ??? How exactly is EU better than the US ? I know US ppl who drive trucks for a living and also operate small cattle operations, have 10-20 acre horse-farms for their kids to grow up on .... "working class" ( I am disgusted by the fallacious-academic tri-chotomy) ppl who have riches fundamentally unavailable within the EU. Even many European nations have been backing away from socialism since the late 1980s. Go to Germany (I worked thre for a while) and try to start a new company on a shoe-string. Sorry - impenetrable barriers exist - EU is absolutely/positively inferior to the US in terms of the potential for self-realization. The US of the 2010s is decidedly worse than the US of the 1960s in this regard.

Understanding what capitalism does well (motivate and reward innovation) and what it does poorly (provide necessities for all people) allows one to rationally establish a system that balances profit motive with ensuring the basic needs of a country's population.

That "balance/basic_needs" concept doesn't really have any meaning wrt free markets and capitalism - it's sort of a soft-hearted goo-goo concept that will quite correctly be thrown in the mud by the first sincere free-marketer to come along.

Let's take a cold hard look at this. I love my Granny, and I'd be willing to sacrifice year's of income to ensure GrannyS has a more pleasant late-life. Why *SHOULD* you care about my Granny ? Why is her welfare a moral obligation on you ? Your morality makes no sense. If my Granny was a "moral" person then why didn't she try to take proper measures to take care of herself in old age and illness ? I do ! My parent's did. My grandparents did ! My great grandparents did ......I have records that show my G^7-parents did despite war and translocation. Why is it my obligation to care for myself and mine and also every profligate fool who doesn't understand that they must ultimately care for themselves ?

I have a great deal of empathy for ppl who have been reasonable and frugal and yet have had unexpected setbacks - still that is exactly what insurance and is for - but we must make allowances for human error/youth/stupidity. .I have even more empathy for ppl with disabilities who will never be able to provide for themselves fully and long term - I'm very willing to assume a moral obligation there. The problem is the idea that your able Grammy spent money like a drunken monkey and now at 68yo I OWE her a living by some moral mandate irs rubbish. That's a local issue - your Granny's situation involves a specific individual MORAL judgement by YOU !

When you try to nationalize these moral judgments - then the train is off the tracks. None of the "judges" is actually paying the cost None of them carry the burden of their decisions.

===
Here are two interesting experiments for you: The Great Depression and the current economic crisis. In both cases capitalism failed miserably.

WRONG ! Free market capitalism was completely and absolutely abrogated in the recent case.

Government GSEs were the majority source of the problem (FNMA,FreddieMAC) - so let's not ignore the man behind the curtain (Barney Fwank), who has no relationship to capitalism and markets but a center-stage role in the crash.

Capitalism/FM requires that losers lose so that winners can win. Everyone seems to think it's sweet and nice that GM was bailed out. How did this impact Ford ? Fiat ? Toyota ? and other competitors ? It's absolutely positively NOT capitalism. In any just, lawful world GM would have been eaten by these wolves - perhaps at a bargain price.

Holders of senior debt for GM were ripped-off by the Federal govern,ment - billions (~24B) were funneled to unions while the senior debt of GM was - by mandate - converted at 30 cents on the dollar. This completely violates the rule of law, the contractual relationship, and the rational expectation that GM was not part of government.

There is no place in a FM/C world for uneconomic bailouts. AIG, and the dozens of investment banks should have been in bancrupcy/re-org, broken into bits and sold to the highest bidder. This is EXACTLY the sort of market force that diminishes losers and enhances the position of winners. It is exactly the Darwinian force than create success (and it's obverse failure). Instead we have the Fed propping up LOSER institutions. Yes the Fed may have needed to have an orderly transition - but $780Bn in TARP is an order of magnitude too large and much of it will be lost forever. We also have the Fed jiggling/nudging housing prices and therefor preventing rational market forces from adjusting.

NOPE - there is no rational case that capitalism failed. It was just a bubble (see Didier Sornette for some interesting models) and like all bubbles it comes to a transition point. Instead of having a rude several year market re-adjustment, government interference is trying to institutionalize and extend the problems. All of this "great depression" talk cones from ppl who didn't live through the long-turgid post- Vietnam era recession. This IS NOT the worst, and if your diapers are feeling heavy - it's a measure of your inexperience.

Without significant government interference, the system simply couldn't survive.

Two words in response - HOG WASH ! "It would have been horrible if I didn't..XXX...." is the very motto of every demagogic politician.. Show proof of the alternative history you claim or admit you are blowing the blarney stone.

The current situation is similar in depth and length to the post-Vietnam recession. No one suggested re-designing/crushing capitalism then. The main difference is that the population was familiar with more significant problems - like WW2 and didn't wet their diapers every few minutes like the current crop.

Sorry to rain on your parade - but there is no horrible consequence to bancrupting/re-organizing GM, AIG, Investment banks, and backing the FDIC liabilities - except it would have cost ~12 percent as much and left the majority of the problem with those who made bad choices and made the business climate far more positive.. It would have left investors with a clear picture that the rules hadn't changes and therefore it was safe to invest again.

Instead no investor knows what is likely to occur even w/in a few years and so few jobs will be created. The Gov't spending money rashly means that the same borrowed funds are unavailable for private sector growth. The resulting high taxes, particularly once the velocity o f money increases, dictate low growth of the private sector.

It's incredible that only two years removed from the latest example of the failure of laissez-faire policies, a failure generated by incredible greed, we get more arguments about the "morality" of profit.

Yeah - incredible greed - like YOU putting your IRA money into a mutual fund !. Nice strawmanning - but sadly derivative. Please show EXACTLY WHICH laissez-faire policy changes resulted in the current situation. You can't - there were none significantly relevant. Yes AIG incorrectly (perhaps honestly) underwrote mortgage backed debt based on historical trends. Yes many large entities invested and also insured based on this valuation. If the bubble bursts then AIG and those who relied on their opinions fail. Why should the US Gov't (you and I) bail them out - it's full-scale insanity !

I didn't say atheists have no morals.
I do not believe that science has anything to say about morals.
+1.

As far as we know, in order to achieve economic growth we must accept unemployment and poverty. Whether it is moral to do so, or rather how much unemployment and poverty we are willing to tolerate in exchange for how much economic growth, is a separate question.

These points require a serious amount of evidence to support. They are IMO primarily a result of the fallacy of the ignored economic alternative. Do you really believe that the machine mills that the Luddite/hand-weavers burned caused "unemployment and poverty" - or was it exactly the opposite ? All economic disruption causes local/temporal disruption. I can't agree with your broad-brush conclusions.

Let's say England refused to introduce machine-mills. Then their fabric would have been un-competitive with nations that did introduce machine mills. The hand-weavers would still have become unemployed but without alternatives since all the trade cash-flow would go elsewhere. Which nation would have a higher (fabric) GDP ? Which nation therefore has a higher(fabric) standard of living ?

We see the same arguments today wrt export of US manufacturing Now if you have a union-type viewpoint where you are a hand-weaver or a union electrician and only able/willing to perform that one function - then yes YOUR personal inflexibility will cause you to be unemployed and in poverty. That's the lack of fungible labor problem writ large. That doesn't mean the losing your job isn't better for the whole.

Read & critique Krugman's Nobel thesis if you can't see the point.
 
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No ! The use/abuse of the ecosystem is NOT a problem of capitalism; It's a problem of the ANTI-capitalists who refuse to recognize any notion of ownership over "commons". Capitalism and free-markets solve that problem nicely.

:D

'Jeremy Rifkin - Can we prevent the end of the world in 50 years?':

 
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I think thats plain daft thing to say. Our poverty is better (or not so bad) than theirs??

Yes. In fact, poverty in e.g. Finland is so different from poverty in, say, Mexico or Egypt that it seems somewhat disingenious to use the same term for both. To be poor in Finland means you're at the low end of the national income distribution, but to be poor in Mexico or Egypt means destitution. It even meant destitution here 100 years ago (and starvation and death during our latest famine a little over 140 years ago). The destitute homeless do unfortunately exist in Western nations as well, but they are not the face of Western poverty.

The poor over here live in apartments with electricity and running water. Their food may not be of the best possible quality, but the quantity is not a problem. The poor usually have a color TV and a cell phone. Many own automobiles. The ones that work get paid vacation time, during which they as a rule do not take on another job or go scavenging for resources, but instead rest and recuperate. Some may even take a vacation abroad.

I wouldn't trade my comfortable middle-class existence to the plight of the average Finnish poor person, but there are millions upon millions of people on this planet who would do the switch in a heartbeat. And you'd find millions upon millions more if you had a time machine. If that is a daft thing to say, where exactly did I go wrong?
 
Hmm, that seems like hyperbole.

Leave the distibution (which doesn't actually happen in N. Korea. Notice that the people suffering through famines aren't the ones dressed in the funny uniforms hanging out with lil' Kim), but eliminate the totalitarian dictatorship. That doesn't sound like such a bad place.

Now eliminate the "fair distribution" and keep the brutal dictatorship. Sounds kind of crappy.

Fair distribution sounds pretty rational.

It sounds rational, until you account for human nature. We don't want systems of "fair distribution", because that presumes some central planner that must first accumulate everything, in order to redistribute it. History proves this degenerates into tyranny, every time. What we need are systems for equitable accumulation instead, which require substantial monetary and political reform.
 
Howdy Tippet

What we need are systems for equitable accumulation instead, which require substantial monetary and political reform.

Can you give us an idea of what you mean here?

The average world GDP-PPP (ways and means of calculating this vary) between 5,500 and 6,500 US, lets say 6,000 as an average vs a place like Luxembourg at 55,000, the US at 37,500 or the UK at 27,500 versus a place like the sub-saharan Africa or south Asia were the average is around 500.
 
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Yes. In fact, poverty in e.g. Finland is so different from poverty in, say, Mexico or Egypt that it seems somewhat disingenious to use the same term for both. To be poor in Finland means you're at the low end of the national income distribution, but to be poor in Mexico or Egypt means destitution. It even meant destitution here 100 years ago (and starvation and death during our latest famine a little over 140 years ago). The destitute homeless do unfortunately exist in Western nations as well, but they are not the face of Western poverty.

The poor over here live in apartments with electricity and running water. Their food may not be of the best possible quality, but the quantity is not a problem. The poor usually have a color TV and a cell phone. Many own automobiles. The ones that work get paid vacation time, during which they as a rule do not take on another job or go scavenging for resources, but instead rest and recuperate. Some may even take a vacation abroad.

I wouldn't trade my comfortable middle-class existence to the plight of the average Finnish poor person, but there are millions upon millions of people on this planet who would do the switch in a heartbeat. And you'd find millions upon millions more if you had a time machine. If that is a daft thing to say, where exactly did I go wrong?
I can concede that there's a difference in the level of poverty, in general, between developed countries and developing countries. However I don’t believe it’s relevant to the argument because:

1. Many western countries have undergone social welfare reforms, not driven by capitalism, but payed for by their wealth which in a pure capitalist economy wouldn’t have happened
2. Western economies have emerged large and strong and able to pay for welfare reforms largely because of third world exploitation (of resources and manpower) in the first place.

So, to suggest that first world poverty is not as bad as the third world because of their economies maybe true, but only because of western exploitation in the first instance. I don’t know that I really believe in this argument completely, but I suspect it has some truth to it. We are where we are from the european subjugation, slavery and exploitation of the third world. It takes money to make money. It funded the industrial revolution in Great Britain and the empire.


http://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm - Globalisation theory maintains that all must benefit from recent changes. The Economist, house magazine of the global free marketeers, maintains that the world system now delivers 'more for all' and that vigorous growth in the Third World means 'it is the world's poor who will benefit most'.3 Every index of economic and social advance, however, suggests otherwise. Among most of the 4.4 billion people living in Africa, Asia and Latin America life has become a more desperate struggle for survival. The United Nations Development Programme (UNDP) estimates that 840 million people are malnourished, the great mass of them living in countries of the Third World.4 More than half the countries for which statistics are available do not have enough food to provide all their population with the minimum daily requirement of calories.5 In some regions hunger has become far more general: across Africa the average household now consumes 25 percent less than in the early 1970s.6 Between 1995 and 1997 only 21 out of 147 Third World countries recorded per capita growth of over 3 percent a year--the rate specified by the UN for reduction of poverty.7 There are staggering inequalities. California alone has a gross domestic product (GDP) of equal value to that of China and India combined;8 the wealth of the world's 15 richest people now exceeds the combined GDP of sub-Saharan Africa; the wealth of the richest 84 individuals exceeds the GDP of China, with its 1.2 billion inhabitants.9 There is no evidence to suggest that the 'global era' has brought prosperity, or even an alleviation of human suffering.
 
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Really ??? How exactly is EU better than the US ? I know US ppl who drive trucks for a living and also operate small cattle operations, have 10-20 acre horse-farms for their kids to grow up on .... "working class" ( I am disgusted by the fallacious-academic tri-chotomy) ppl who have riches fundamentally unavailable within the EU. Even many European nations have been backing away from socialism since the late 1980s. Go to Germany (I worked thre for a while) and try to start a new company on a shoe-string. Sorry - impenetrable barriers exist - EU is absolutely/positively inferior to the US in terms of the potential for self-realization. The US of the 2010s is decidedly worse than the US of the 1960s in this regard.



As far as "self-realization goes" (that's a little Deepak Chopra-esque for my tastes), Europe had better social mobility than the United States:

International comparisons indicate that intergenerational mobility in Britain is of the same order of magnitude as in the US, but that these countries are substantially less mobile than Canada and the Nordic countries. Germany also looks to be more mobile than the UK and US, but a small sample size prevents us drawing a firm conclusion.
http://cep.lse.ac.uk/about/news/IntergenerationalMobility.pdf

So America is at the very low end of the spectrum in terms of people's ability to better their lives, to move up in society. Of course you've decided that "self-realization" is what we're measuring, and since that term has no actual meaning, you will just argue that you intended to show something else.

The United States was quick to develop a legal structure that made incorporating businesses very easy. Limited Liability Companies were the last step in this process as they became popular in the 80's. This made the US the best place in the world to start up a business.

That is changing. One of the main reasons this is changing is due to sky-rocketing health care costs. Countries like Australia, New Zealand, and Canada are mimicking US corporate law, but they also provide health care, meaning that it's cheaper to start up. The US is still the leader, but that may not be true in a decade.

But that's the basic point. "Free Markets" will often conflict with one another. Allowing health insurance companies to profit without restraint directly affects the ability of citizens to take entrepreneurial risk: they can't leave their current job and lose their health insurance, they can't afford to cover employees...etc.

That "balance/basic_needs" concept doesn't really have any meaning wrt free markets and capitalism - it's sort of a soft-hearted goo-goo concept that will quite correctly be thrown in the mud by the first sincere free-marketer to come along.

Please. It's a very simple notion--food, shelter, health care.

Speaking of goo-goo, what the hell is a "sincere free-marketer?" You have an amusing habit of launching silly terms that have no meaning.

Let's take a cold hard look at this. I love my Granny, and I'd be willing to sacrifice year's of income to ensure GrannyS has a more pleasant late-life. Why *SHOULD* you care about my Granny ? Why is her welfare a moral obligation on you ? Your morality makes no sense. If my Granny was a "moral" person then why didn't she try to take proper measures to take care of herself in old age and illness ? I do ! My parent's did. My grandparents did ! My great grandparents did ......I have records that show my G^7-parents did despite war and translocation. Why is it my obligation to care for myself and mine and also every profligate fool who doesn't understand that they must ultimately care for themselves ?

THis is vapid, Randian nonsense. You're just letting everyone know that you're an *******. By the time any elderly person has reached that stage of life, no matter how they got there, they cannot work to provide for themselves.

We have two options: care for them, let them suffer.

I, and thankfully most Americans, support programs that care for them. You describe that morality as making no sense. I think that makes you a sociopath.

I have a great deal of empathy for ppl who have been reasonable and frugal and yet have had unexpected setbacks - still that is exactly what insurance and is for - but we must make allowances for human error/youth/stupidity. .I have even more empathy for ppl with disabilities who will never be able to provide for themselves fully and long term - I'm very willing to assume a moral obligation there. The problem is the idea that your able Grammy spent money like a drunken monkey and now at 68yo I OWE her a living by some moral mandate irs rubbish. That's a local issue - your Granny's situation involves a specific individual MORAL judgement by YOU !

Huh? My Granny's situation involves aging.

But once again this is all based on some infantile notion that anyone without enough money to retire on must be some sort of reckless individual. I guess, then, that half of all Americans who reach the age of 65 are reckless:

Social Security reduces the proportion of elderly people living in poverty from nearly one in two to fewer than one in eight, according to a new study released today of Census data. The study found that in 1997, nearly half of all elderly people — 47.6 percent — had incomes below the poverty line before receipt of Social Security benefits. After receiving Social Security benefits, only 11.9 percent remained poor.
http://www.cbpp.org/cms/index.cfm?fa=view&id=1863

Social Security is meant to protect people who cannot work from capricious markets. If everyone's retirement had been placed in private accounts before the stock market tanked in 2008, there would be millions of elderly Americans back in poverty. What are they supposed to do then? Go get a job at a lumber yard at age 80?

You live in this fantasy world where the beautiful free market gives everyone just what they put in. It's false, self-serving ********.

When you try to nationalize these moral judgments - then the train is off the tracks. None of the "judges" is actually paying the cost None of them carry the burden of their decisions.

I am dumber for reading that. I support social security and medicare. I vote for people who support those programs, I guess I'm a judge.

And guess what? I pay those taxes. The judges absolutely carry the burden. That was an awesomely incoherent rant.

WRONG ! Free market capitalism was completely and absolutely abrogated in the recent case.

I don't think that word means what you think it means. Free market capitalism was abolished, nullified, or treated as non-existent in the last case?

Government GSEs were the majority source of the problem (FNMA,FreddieMAC) - so let's not ignore the man behind the curtain (Barney Fwank), who has no relationship to capitalism and markets but a center-stage role in the crash.

Unbelievable. You've just gobbled up that nonsense and made it your own.

Fortunately some people look at the data:

1. The Community Reinvestment Act of 1977 was irrelevant to the subprime boom, which was overwhelmingly driven by loan originators not subject to the Act.

2. The housing bubble reached its point of maximum inflation in the middle years of the naughties

3. During those same years, Fannie and Freddie were sidelined by Congressional pressure, and saw a sharp drop in their share of securitization, while securitization by private players surged

Of course, I imagine that this post, like everything else, will fail to penetrate the cone of silence. It’s convenient to believe that somehow, this is all Barney Frank’s fault; and so that belief will continue.
http://krugman.blogs.nytimes.com/2010/06/03/things-everyone-in-chicago-knows/

Go to the link. It has pretty charts that are easier to understand than those big, nasty words.

Capitalism/FM requires that losers lose so that winners can win. Everyone seems to think it's sweet and nice that GM was bailed out. How did this impact Ford ? Fiat ? Toyota ? and other competitors ? It's absolutely positively NOT capitalism. In any just, lawful world GM would have been eaten by these wolves - perhaps at a bargain price.

Way to drift hysterically between causes of the crisis and responses to the crisis.

Of course the bailouts weren't capitalist. The most liberated market in recent history--the shadow banking derivative market--was responsible for destroying the economy. Things that work, not masturbation fantasies of lonely Randians, had to be used to fix it.

Holders of senior debt for GM were ripped-off by the Federal govern,ment - billions (~24B) were funneled to unions while the senior debt of GM was - by mandate - converted at 30 cents on the dollar. This completely violates the rule of law, the contractual relationship, and the rational expectation that GM was not part of government.

This will be fun: find me the law it violated.

There is no place in a FM/C world for uneconomic bailouts. AIG, and the dozens of investment banks should have been in bancrupcy/re-org, broken into bits and sold to the highest bidder. This is EXACTLY the sort of market force that diminishes losers and enhances the position of winners. It is exactly the Darwinian force than create success (and it's obverse failure). Instead we have the Fed propping up LOSER institutions. Yes the Fed may have needed to have an orderly transition - but $780Bn in TARP is an order of magnitude too large and much of it will be lost forever. We also have the Fed jiggling/nudging housing prices and therefor preventing rational market forces from adjusting.

TARP has been almost totally paid back.

Rational market forces caused the bubble in the first place.

NOPE - there is no rational case that capitalism failed.

Unless you actually look at the data and learn what happened.

It was just a bubble (see Didier Sornette for some interesting models) and like all bubbles it comes to a transition point. Instead of having a rude several year market re-adjustment, government interference is trying to institutionalize and extend the problems. All of this "great depression" talk cones from ppl who didn't live through the long-turgid post- Vietnam era recession. This IS NOT the worst, and if your diapers are feeling heavy - it's a measure of your inexperience.

Haha, this is such bizarre revisionism. The government intervention began occurring AFTER the crisis began. It managed to mitigate some percentage of the disaster, but because the general public understands economics, well, about as well as you do, politicians balked and we didn't provide large enough corrections.

Two words in response - HOG WASH ! "It would have been horrible if I didn't..XXX...." is the very motto of every demagogic politician.. Show proof of the alternative history you claim or admit you are blowing the blarney stone.

Sure. Since I'm not making **** up, I will happily provide sources that can explain this for you:

Nevertheless, policy over the past two and a half years has been good. A fundamental shock bigger than the one in 1929-1930 hit a financial system that was much more vulnerable to shocks than was the case back then. Despite this, unemployment will peak at around 10%, rather than at 24%, as it did in the US during the Great Depression, while nonfarm unemployment will peak at 10.5%, rather than at 30%. Nor will we have a lost decade of economic stagnation, as Japan did in the 1990’s. Admittedly, the bar is low when making this comparison. But our policymakers did clear it.
http://www.project-syndicate.org/commentary/delong95/English

Read the whole thing. After your done, hopefully you won't be quite as ignorant.

The current situation is similar in depth and length to the post-Vietnam recession. No one suggested re-designing/crushing capitalism then. The main difference is that the population was familiar with more significant problems - like WW2 and didn't wet their diapers every few minutes like the current crop.

No, it is a crisis that has only one comparable situation since the beginning of the 20th century: the Great Depression.

Such amusing psychology: A financial shock that was actually larger than the one that set of the Depression occurs. This time we know enough to take immediate action. The action spares us total destruction, then silly, frivolous people argue that because nothing truly horrible happened, there never was a crisis.

Just childish.

Sorry to rain on your parade - but there is no horrible consequence to bancrupting/re-organizing GM, AIG, Investment banks, and backing the FDIC liabilities - except it would have cost ~12 percent as much and left the majority of the problem with those who made bad choices and made the business climate far more positive.. It would have left investors with a clear picture that the rules hadn't changes and therefore it was safe to invest again.

I agree with Brad DeLong, who wrote the article linked above. Several of the specific steps taken in the bailout were not optimal. Some of the companies should have been allowed to fail, but the overall program worked very well.

Of course, you aren't really dealing with the more serious aspects of the crisis, just superficial details. This is not surprising since you think Fannie and Freddy were the cause.

Instead no investor knows what is likely to occur even w/in a few years and so few jobs will be created. The Gov't spending money rashly means that the same borrowed funds are unavailable for private sector growth. The resulting high taxes, particularly once the velocity o f money increases, dictate low growth of the private sector.

Taxes are at their lowest since the 60's. Growth is nonexistent. Investors view the US government as an incredibly good prospect.

You went 0-3 on that one.

Yeah - incredible greed - like YOU putting your IRA money into a mutual fund !. Nice strawmanning - but sadly derivative. Please show EXACTLY WHICH laissez-faire policy changes resulted in the current situation. You can't - there were none significantly relevant. Yes AIG incorrectly (perhaps honestly) underwrote mortgage backed debt based on historical trends. Yes many large entities invested and also insured based on this valuation. If the bubble bursts then AIG and those who relied on their opinions fail. Why should the US Gov't (you and I) bail them out - it's full-scale insanity !

I love how you get high and mighty, challenging me to provide detailed facts, when you've just rambled through a thousand words of discursive, incoherent fantasy talk. You haven't provided a single fact in all your bluster.

But fine. Since I live in reality, it's not difficult to provide substantiation for my claims. I'm not going to go through every step of the crisis, just provide one example of how laissez-faire capitalism contributed:

http://en.wikipedia.org/wiki/Shadow_banking_system

Financial institutions that don't take deposits aren't subject to the same level of government regulation. They don't have to keep money on hand in order to cover their risks to the same degree as typical banks. These are the institutions that began leveraging mortgage backed securities many times beyond what they could cover if the investment failed. When housing prices began dropping, they didn't have the funds to cover their risk. They had to try and rapidly sell off what assets they could in order to cover their failed gambling, which contributed to the stock market drop.

The entire shadow banking system was meant to circumvent rules that tempered the risk banks were allowed to make. In other words, they sought a more liberated, freer market. Bear Sterns, Lehman brothers, and others were the driving force behind the collapse. AIG went down because they underwrote all of that risk and didn't have the funds to cover it.
 

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