Capitalism works.

[D-bol]

A repost of my reply in a different thread.

Free markets do work.

However, people tend to forget is that recessions and general equilibrium contraction is also a part of the normal free market forces.

Western society seems to bond well with market economy when the market is at a full employment equilibrium and the aggregates are high, but totally fall out with it when the market goes below full employment, which is just a part of it's natural dynamics.

If you advocate free market economy, then have the balls to live with all the aspects of it's natural dynamics.

Discuss.

[headhuntersix]

Its been proven time and again, but when government regulations require private companies (banks) to make bad loans, that they know are and will be bad...we end up where we are. People bitch about regulation and de regulation....de-regulation wasn't the problem...it was lack of oversight,

[OzmO]

Its been proven time and again, but when government regulations require private companies (banks) to make bad loans, that they know are and will be bad...we end up where we are. People bitch about regulation and de regulation....de-regulation wasn't the problem...it was lack of oversight,

I still don't get how the Government forced banks to take bad loans.

[headhuntersix]

Trace it.......I would expect u to do ur own indepth research but as I understand it.

Jimmy Carter signed the CRA Community Reinvestment Act that required banks to lend in low income areas.

In early 1993 President Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities. The new rules went into effect on January 31, 1995 and featured: requiring numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks.

According to a United States Department of the Treasury study of lending trends in 305 U.S. cities between 1993 and 1998 467 billion dollars in mortgage credit flowed from CRA-covered lenders to CRA-eligible borrowers. The number of CRA mortgage loans increased by 39 percent. Other loans increased by only 17 percent.” close quote

Clinton passed a law “encouraging community groups to complain.” IN 1995!!!! ACORN staff began to picket and blockade bank headquarters to blackmail the banks into writing mortgages to people who would never repay the loans.


 And what caused the housing bubble? “Sub-prime,” i.e., risky, mortgages; that is, mortgages made to people who, in the normal course of things would have to pay a premium in order to obtain a mortgage (if they could obtain one at all) because

a) they had bad or non-existent credit

b) their income was insufficient or

c) both.

[headhuntersix]

The banks knew this was a bad idea...they had to be forced to do it. ACORN was heavily invloved. This can be laid squarely at the feet of liberal dems. The banks are to blame later as they begain to sell loans they knew were, bad or had no hope of being repaid. There is alot of blame to go around but unlike liberal fantasy land....u can trace the root causes. Did Carter set out to sink the US economy..no not at all. He thought he was helping people.. Turns out Banks understand better then Carter or Reagan or Clinton or whoever...who can repay and who represents a risky loan.

[The True Adonis]

Capitalism is just Socialism for the rich, and capitalism for everyone else.

[headhuntersix]

Seems to be working out well for the US despite the current problems.

[240 is Back]

Seems to be working out well for the US despite the current problems.

Without that corporate socialism move, our economy would likely be collapsed today.

Socialism saved capitalism.  Weird.

[D-bol]

Trace it.......I would expect u to do ur own indepth research but as I understand it.

Jimmy Carter signed the CRA Community Reinvestment Act that required banks to lend in low income areas.

In early 1993 President Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities. The new rules went into effect on January 31, 1995 and featured: requiring numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks.

According to a United States Department of the Treasury study of lending trends in 305 U.S. cities between 1993 and 1998 467 billion dollars in mortgage credit flowed from CRA-covered lenders to CRA-eligible borrowers. The number of CRA mortgage loans increased by 39 percent. Other loans increased by only 17 percent.” close quote

Clinton passed a law “encouraging community groups to complain.” IN 1995!!!! ACORN staff began to picket and blockade bank headquarters to blackmail the banks into writing mortgages to people who would never repay the loans.


 And what caused the housing bubble? “Sub-prime,” i.e., risky, mortgages; that is, mortgages made to people who, in the normal course of things would have to pay a premium in order to obtain a mortgage (if they could obtain one at all) because

a) they had bad or non-existent credit

b) their income was insufficient or

c) both.

Interesting.... basically putting everyone "on to the hook" of the banks...

[Bindare_Dundat]

Without that corporate socialism move, our economy would likely be collapsed today.

Socialism saved capitalism.  Weird.

Your right, the worst is behind us.

[2ND COMING]

Its been proven time and again, but when government regulations require private companies (banks) to make bad loans, that they know are and will be bad...we end up where we are. People bitch about regulation and de regulation....de-regulation wasn't the problem...it was lack of oversight,

whole. lee. shit.

[The BEAST]

Without that corporate socialism move, our economy would likely be collapsed today.

Socialism saved capitalism.  Weird.

You really think that...do you also think that the stimulas package and 800+billion economic stimulus plan will bail us out?  Yikes.  IMO this will make things much worse for the next few years.  The worst is yet to come.

[Bindare_Dundat]

You really think that...do you also think that the stimulas package and 800+billion economic stimulus plan will bail us out?  Yikes.  IMO this will make things much worse for the next few years.  The worst is yet to come.

Obama was able to handle changing the dress code, I'm sure he can fix the economy.

[marcus]

The Chosen One was able to handle changing the dress code, I'm sure he can fix the economy.

Fixed.

[Tesla]

Here is a good example of why bank bailouts fail:

http://resurrectcapitalism.com/?p=181

I keep hearing about "credit collapse" but I'm still getting preapproved credit cards in the mail.  I'm still getting mortgage offers.  What's happening is credit is renormalizing back to a long-term sustainable level.  For these past 5 or so years credit was priced too cheaply due mainly to Alan Greenspan slashing rates to 1% and China buying massive amount of treasury and mortgage debt, suppressing the cost of borrowing.  Cut to the current situation and there is massive amounts of bad debt on the balance sheets of SOME lending institutions. 

Some people, like CEOs of big corporations that took on too much bad debt, have a vested interest in making the public think the economy is on the verge of collapse.  They don't want to have a bankruptcy on their resumes.  Most CEOs are not capitalists- they want the gains of capitalism while socializing their losses (that's for you and I to endure). 

In order to bailout a failed financial institution you either have to tax people and companies that didn't make bad financial decisions or you have to inflate the money supply (effectively a tax on the same people).  Our government can't just sign a piece of paper and have these bad loans just go away- someone has to bear these losses.  Our government can only transfer who pays for the loan losses. 

Stimulus programs were tried and failed in the Great Depression, the Japanese banking crisis of the 1990's, the Korean economic crisis of the late 90's, and other places.  I don't why this time would be any different. 

Things will be ugly for a while but the system will repair itself.  What are we all going to do, crawl into a hole and die?  We'll emerge bruised but wiser. 

[disco_stu]

A repost of my reply in a different thread.

Free markets do work.

....

Discuss.

lol.

no they dont.

as usual, a blend of multiple "economic models" works best- which is why it isnt simple, and which is why it needs special people to manage and control it.

and yes, it needs control.

its like a playground full of kids... let them go long enough and you'll see the pecking order..eventually some of the kids will start to cry and want their moms..others will bully the rest, and some become the big dogs... a bunch of them will spend their entire time competing for recognition and approval for whatever scraps they can get.

why cant we all get along and not have such disparity?

rather than have some living very rich and others starving..why not have some living very comfortably and others at least not struggling?

that means less desperation, less pain, less infighting etc..etc..

i for one would love to smack that donald trump upside his face when he puts on that smarmy look from under his whispy comb over. what's he need all that money for?

why do athletes get so much?...

its a fucking joke. and that's why the US is fucked up.

[Fury]

Yeah, because the USA is the only country that pays their athletes too much. Nevermind the rumored $180+ million Ronaldo is supposedly going to get this summer if he signs with Real Madrid. 

[Tesla]

lol.

no they dont.

as usual, a blend of multiple "economic models" works best- which is why it isnt simple, and which is why it needs special people to manage and control it.

and yes, it needs control.

its like a playground full of kids... let them go long enough and you'll see the pecking order..eventually some of the kids will start to cry and want their moms..others will bully the rest, and some become the big dogs... a bunch of them will spend their entire time competing for recognition and approval for whatever scraps they can get.

why cant we all get along and not have such disparity?

rather than have some living very rich and others starving..why not have some living very comfortably and others at least not struggling?

that means less desperation, less pain, less infighting etc..etc..

i for one would love to smack that donald trump upside his face when he puts on that smarmy look from under his whispy comb over. what's he need all that money for?

why do athletes get so much?...

its a fucking joke. and that's why the US is fucked up.

Well stu no one is starving in America (except for anorexics).  In America the lower your income the fatter you tend to be. 
http://www.sciencedaily.com/releases/2008/02/080207163807.htm

There will always be people who have more than others.  I agree that athletes are grossly overpaid.  But what should we do about it?  As long as people buy tickets, watch the games, and buy merchandise the athletes are going to make money totally out of proportion to their importance.  As for Donald Trump, well, don't worry: he's on the verge of corporate bankruptcy once again. 

There will always be people who have less than others.  Did you know that most low-income households are low income because they don't work?  Check out this table from the 2004 census.  http://pubdb3.census.gov/macro/032005/hhinc/new05_000.htm

Look at the row labeled "Mean numbers of earners.......".  The bottom income quintile has a median of 0 earners.  Translation: the typical American household in the poorest 20% doesn't have anyone working.  Now if you look at the highest income quintile (top 20%) you'll notice a median of 2 income earners per household.  Poorer households are also much more likely to work part-time or work only part of the year. 

The poorest households in America on the whole aren't working very much and yet they have food, clothing, and shelter.  Sounds like they have a pretty good deal to me. 

[headhuntersix]

Stop using facts Tesla...libs only use their heart, what feels good....hope/change.....genearrly what normal people consider bullshit.

[D-bol]

lol.

no they dont.

as usual, a blend of multiple "economic models" works best- which is why it isnt simple, and which is why it needs special people to manage and control it.

and yes, it needs control.

its like a playground full of kids... let them go long enough and you'll see the pecking order..eventually some of the kids will start to cry and want their moms..others will bully the rest, and some become the big dogs... a bunch of them will spend their entire time competing for recognition and approval for whatever scraps they can get.

why cant we all get along and not have such disparity?

rather than have some living very rich and others starving..why not have some living very comfortably and others at least not struggling?

that means less desperation, less pain, less infighting etc..etc..

i for one would love to smack that donald trump upside his face when he puts on that smarmy look from under his whispy comb over. what's he need all that money for?

why do athletes get so much?...

its a fucking joke. and that's why the US is fucked up.

It's not a joke: athletes get much because people are willing to pay for them. I think it's crazy, but if people are willing to sacrifice up to 10% of their earnings on buying sport memorabilia, paying for sport channels, and going to see the match, then it is natural that athletes get so much.

What I meant was: free market models do not mean everything will be always good. As I said, contraction and below employment levels of aggregate output are also part of the dynamics of the market economy.

For example, the motor industry. According to the free market models: uncompetitive company eventually goes bust - people and capital gets layed off and relocates to other sectors of the economy. Nobody said its a painless process, but bailing out uncompetitive companies is distorting the natural dynamics of free markets and eventually causing more problems - much worse that if just let be.

I know real life is probably more complicated, but I think that mixing different models of economic management is a very dangerous game to play.

John Keynes advocated stimulation of aggregate demand, but not by destructive means like bailing out unsustainable industries and solving debt problems with yet more debt...

[Tesla]

Stop using facts Tesla...libs only use their heart, what feels good....hope/change.....genearrly what normal people consider bullshit.

Those income distribution numbers from the census were really eye-opening for me.  If you don't want to be poor in this country the most important thing is just to get off your ass and get to freaking work- full time.  Even if you don't have a good education you'll leave the bottom 1/5 of incomes as you build up knowledge and experience. 

Of course you don't get votes by telling people they should get to work and lift themselves out of poverty...

[Slapper]

Does capitalism work? 

I'll let the graphs do the talking:

The richest 1% make more and more money, while 99% of the population is not even NEAR that rate increase (which I presume is to cover for inflation  ), in some cases it even decreases:


Especialy when (about) 4 million people get to keep 90% of ALL the money/value made in the country:


Yes, I'd say it works... For 1% of the population. Capitalism does not work for the remaining 99% though.

You've got a point.

[Slapper]

Capitalism IS NOT equal to free market.

There IS NOT a SINGLE economy in the world right now with a truly free market economy. NOT ONE.

The free market is a MYTH.

[Saxon]

Everyones an cage fighter economist these days 

[Slapper]

Everyones an cage fighter economist these days 

Well, I've got 10 fingers and am able to count.

Now, this is not about me. Look at the question and answer it. If you can't, click away.

Simple.