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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: Dan B. who wrote (41467)	10/30/2008 10:10:05 PM
From: RetiredNow	Read Replies (3) \| Respond to of 149317

Any teansy bit of anything which looks like socialism at all, precludes actual free markets from operating. Dan, this statement exposes you for lack of knowledge in the area of economics. Any economist will tell you that sometimes free markets simply cannot even get off the ground without government intervention. Sometimes, the natural competition in free markets creates natural monopolies, which by their very existence squeeze out all competition, until the markets are anything by free. Why do you think Microsoft got sued everywhere? They used their natural monopoly to squeeze everyone out very successfully for a time, until the government intervened to put some checks on what they were allowed to do. That was to ensure competition and new ideas could thrive. That is why we have government intervention...in order to ensure markets operate as frictionlessly as possible, and in some cases to create free markets where none can exist if left to natural market dynamics. What is the logical conclusion of Darwinism? If you put a lion in a cage with several antelopes, then come back a week later, how many antelopes will there be? Economics is like that. Sometimes, the government has to ensure there are enough competing lions and safeguards to ensure there are enough of lesser lifeforms in the economy to ensure the whole pyramid doesn't collapse. Folks who hate government for get the very real importance of the benefits they bring. Free markets aren't as simple as you make them out to be.

To: Dan B. who wrote (41467)	10/30/2008 11:15:03 PM
From: LLCF	Read Replies (1) \| Respond to of 149317

<Any teansy bit of anything which looks like socialism at all, precludes actual free markets from operating.> ROFLMAO!!!!!!!!!! I read books on "teansy weansy bits" and their relationship to market efficiency when I got my econ degree. It was cool. You may want to write a paper defining "actual free markets" and how the term "operating" fits in given the context of the above. It would probably be quite a long work... and don't report back here... just fire it off via e-mail as such an important work should go straight to those who would appreciate it the most: eugene.fama@gsb.uchicago.edu ideas.repec.org Keep up the good work! DAK

To: Dan B. who wrote (41467)	10/31/2008 4:35:40 AM
From: nigel bates	Read Replies (1) \| Respond to of 149317

>>Under Free Markets, there is no socialism. Any teansy bit of anything which looks like socialism at all, precludes actual free markets from operating. Governmental control, public funds, and the "peoples" interest are all involved here. That's about all of what defines socialism. Despite right-wing blather to the contrary, there IS such thing as a "little socialism" in this sense. Private Institutions cease to be private when they are backed by government.<< Has it never occurred to you that private institutions cease to exist if they are not in the final analysis backed by the state ? Or is the Congo an example of your ideal society ? Here's a decent article explaining why you are wrong. timesonline.co.uk There is more than one way to skin a cat. There might have been simpler and cheaper ways of preventing the collapse of Britain's financial system than that chosen yesterday by Gordon Brown and Alistair Darling. I have argued, for example, that the main requirements to stabilise the banking system would be to follow the Irish Republic and Denmark in offering unlimited deposit guarantees and to treat shareholders more generously when new capital has to be raised. But the announcements should achieve the same objectives - and could prove more effective, albeit at a higher cost. So well designed was Mr Darling's package that Italy, Spain, Sweden and Denmark are expected to announce similar measures. Whether the plan can avert a serious recession is doubtful, especially with the Bank of England offering only tepid support with a half-point interest-rate cut, but at least Mr Darling has put in place the preconditions for some kind of stabilisation. A broader question that my welcome for the plan is bound to raise is why anyone should take a British package seriously, given the failure of much bigger measures taken by the US Government? Aren't governments impotent against global markets? Shouldn't we just accept the inevitable hardships that follow the bursting of a credit and housing bubble, allowing market forces to clear up this mess in their own time? This fatalistic argument, echoing the attitudes of 1930s America and 1990s Japan, is profoundly wrong. Banking crises have never been resolved purely by market forces. Once a financial panic starts, government intervention is always required. Financial markets do not deal in physical commodities but in paper contracts that represent promises of future payments. Once faith in those promises is broken, only governments, with the right to print money and levy taxes, can offer truly credible financial guarantees. That is why, amid all the lurches in sentiment I have suffered along with everyone else in this crisis, my analysis has focused on one point: sooner or later governments would have to take serious action to stabilise financial markets and the key question was when, and whether the government-led “Plan B” would be forceful and clever enough. What has made this crisis so much worse than expected has not been the scale of the underlying problems but the inadequacy of the official response, led by the most incompetent US Administration since 1932. This brings us back to the Darling plan - and the possibility that it might catalyse some new thinking, not only in Britain but also around the world. Two key elements in the package should help to stabilise conditions in British banking, and could end the chaos around the world. The bigger and more surprising breakthrough was the £200 billion government lending facility that will ensure that British banks which agree to strengthen their capital positions to the level required by the Government will always be able to meet the repayment demands of depositors and creditors, no matter how suddenly they may wish to withdraw funds. This guarantee is four times bigger relative to the size of the economy than Henry Paulson's $700 billion US bailout - and the Treasury has agreed to increase it without limit if required. This enormous commitment of public money, which will not require any of the collateral normally demanded by the Bank of England for emergency loans, has attracted fewer headlines than the smaller £50 billion fund to buy bank shares. But it is the new credit line that deals with the genuine emergency in the banking system - the “silent bank run” in which nervous companies and financial institutions are withdrawing tens of billions of deposits from the wholesale money markets daily, thus jeopardising even the “soundest” banks. The Government is effectively taking on to itself the risk of a bank run. To all intents and purposes, this is the temporary unlimited guarantee of all bank deposits that many commentators have identified as a precondition for stability. So why did Mr Darling provide it in such a roundabout manner, instead of simply stating, like the Irish and Danish governments, that the Treasury would back all deposits for 12 months? The answer is probably a market-fundamentalist belief in the Treasury that guaranteeing bank deposits is wicked and encourages irresponsible lending - a curious phobia when additional lending is exactly what the Government is trying to achieve. But the key point is that deposits in the big British banks in Mr Darling's recapitalisation programme are now 100 per cent guaranteed. Once this is recognised, conditions in the British money markets should return to normal, banks should resume lending to one another and the £200 billion credit line will probably never be drawn. But how can we be sure that all British banks can strengthen their capital positions to be eligible for the guarantee? This brings us to the second innovative element in the package - the offer to buy up to £50 billion worth of bank shares. There is nothing new about buying bank shares or options with public money. That was what Mr Paulson did when he effectively expropriated Fannie Mae and AIG shareholders, with catastrophic results. The key breakthrough lies in the relatively generous treatment of shareholders under the Darling plan. While Mr Paulson seemed to take personal delight in wiping out the shareholders of any institution that dared to ask for his support, the British Treasury has realised that these scorched-earth tactics were disastrous. For shareholders in British banks, an offer of government help should not be the kiss of death that it has become in the US. British banks will offer their shareholders the right to participate in raising capital on the same terms as the Government. As a result, private investors may buy British bank shares and keep them as long-term holdings, instead of dumping them in terror, as they have since the Fannie Mae debacle, every time there is a rumour of government “support”. The upshot of these two key innovations - the effectively unlimited guarantee for bank deposits and the improved treatment of shareholders - is that the British banking system now has a decent chance of stabilising. Restoring more normal banking conditions will not save the economy from recession; but paralysis of the banking system would have turned an unavoidable recession into a once-in-a-lifetime depression. Now just a common-or-garden recession is much more likely. For that small mercy, we should thank Mr Darling and Mr Brown.

To: Dan B. who wrote (41467)	10/31/2008 11:49:22 AM
From: tejek	Respond to of 149317

Re: "Providing private institutions in an economic crisis with access to gov't funding is not socialism." Sure it is. Under Free Markets, there is no socialism. Any teansy bit of anything which looks like socialism at all, precludes actual free markets from operating. Governmental control, public funds, and the "peoples" interest are all involved here. That's about all of what defines socialism. Despite right-wing blather to the contrary, there IS such thing as a "little socialism" in this sense. By your definition then, the US has not been a free market in over a century if ever. "Once done, Creating institutions like FNM and FRE that are independent of the gov't but were created to accomplish certain goals desired by the gov't is not socialism either." Sure it is. Government has created these institutions, not free enterprise. Since it will always be impossible to accurately say FNE and FRE operated independently of the government when in fact they always operated at the behest of government backed by public funds, and in the "interest" of the people (per Barney Frank and others), they surely must be considered socialist enterprises. The mandate given by gov't to FRE and FNM is very broadly defined. On a day to day basis, they operate as independent, private companies. But even if you define them as socialistic entities, they are a very small percentage of the companies in the US. Private Institutions cease to be private when they are backed by government. Free markets ceased to operate once governmental decree created institutions backed by tax funds. Peter Lynch recommended investing in these two long ago, with great success. He noted that they had the upside of a private concern but without the risk since they were backed by government (taxpayers). To claim free markets ruled at Fannie and Freddie is obviously wrong. If not socialism, I suppose you'll call it some half-breed name. But, really, in this sense there is no such thing as a little socialism. Once any element of socialism is introduced, Free Markets cease to operate. Look, it's a duck, really. If you believe all of the above, then you are an anachronism.......out of touch with the complexities of modern economic functioning.