[REDEYE]

Have you noticed who's being blamed for the current economic Chernoble? Everyone. Everyone from the Fed, to Merrill Lynch to oil prices to ignorant, hapless mortgage-holders like us. But nobody seems to want to face up to the obvious villain: our beloved free market capitalism. It's a deeply flawed system that implodes regularly from its inherent imperfections. It is, to paraphrase Churchill, the worst system of all, except for all the others.

[mkwin]

Recessions happen from time to time it's not the end of the world. The FED set rates too low in the last downturn and the regulators failed to regulate this CDO development. As Churchill pointed out, capitalism isn't perfect but it's the best we have.

[seldom_seen]

$this->bbcode_second_pass_quote('REDEYE', 'B')ut nobody seems to want to face up to the obvious villain: our beloved free market capitalism.

[REDEYE]

Actually, I agree with all the above. My problem is with those who (like the many, strident voices of CNBC) will not tolerate ANY criticism of capitalism. And so when something like this happens, they search wildly for somebody (like poor, lost Ben Bernanke) to blame. Anyone or anything but the Divinely Inspired Free Market. It's willfull, stupid and trouble-making.

[seldom_seen]

$this->bbcode_second_pass_quote('REDEYE', 'A')ctually, I agree with all the above. My problem is with those who (like the many, strident voices of CNBC) will not tolerate ANY criticism of capitalism. And so when something like this happens, they search wildly for somebody (like poor, lost Ben Bernanke) to blame. Anyone or anything but the Divinely Inspired Free Market. It's willfull, stupid and trouble-making.

[aflurry]

Ya, I am so sick of the Capitalism-as-Religion-Larry-Kudlow fanatics. I mean, my claw hammer is a great tool. Good for a lot of useful things. You don't see me worshiping the damn thing.

Besides, the whole idea of what constitutes a "free" market is so obfuscated as to be generally useless in serious conversation. Rarely is it used in any context except that the speaker is trying to convince your to give him more money.

Any time someone tries to sum up a complicated argument in two words, you can bet they are either 1. retarded, or 2. trying to pull a fast one on you.

one problem that has occurred is that people loaning money found they could make more just by collecting a signing fee, than by collecting the loan payments and accepting the default risk. So, as soon as they found a way to package those loans into attractive securities for other investors, they began selling them off along with the default risk, and just collect the signing fees. So what happened? Naturally, lending standards fell, which led to people flocking in to buy houses, which led to price inflation, which led to refinancing, and higher loan amounts, and an artificial and temporary suspension of risk and a positive feedback loop.

as long as prices were inflating, risk was underestimated by investors, ratings agencies, insurers, and loan originators, builders, etc. Not to mention everyone in that list was making a mint because they all charge fees for their services. So it was in no one's interest to check the problem.

how could this have been avoided? by making sure that risk stays attached to investment. i read some blurb in the paper about in initiative in california to only allow loans for people who can afford them, through regulation. here is an example of a bad idea - like banging in a nail with the flat side of a wrench. you may get the nail in but you will most likely bend it over and mash up your hand. In this case, intelligent application of free market forces is a better solution.

but here's an idea: require that loan originators retain the default risk (or some portion of it) for the loans they sign. some would say that this is anti-free market. i disagree. trading risk for reward is a core market principle. obfuscating it in a bubble and churning out fees risk-free is just graft.

regulation that would require alignment of interest through sharing of risk with all loan originators and re-packagers would have avoided the dropping of loan standards. a side effect would be a drastic reduction in financial "innovation" and alot of people would call you a communist. but they are full of shit. the free market must sit on a foundation of trust, fortified with regulation and transparency.

The term "free" in the phrase "free market" can mean alot of things. it doesn't have to mean crippling regulatory agencies. and it can mean outlawing certain innovative structures that ultimately amount to or encourage securities fraud.

Reaganite deregulation proponents who claim that the market needs no policing also cry that policing the streets is necessary for the freedom to walk down them safely. should we just go right up and ask the drug dealers how many police we should have on the streets?

When new financial tools arrive and drastically change the investment landscape, it may take an initial period of instability for people to understand the new risks associated with the new landscape. so maybe this is a temporary crisis. but the depression was temporary too. and that was founded on a crisis of confidence that arose from the same type of bonanza of graft. it's not like people didn't understand what was going on.

[mattduke]

I'll never understand why the calamitous results of government manipulation of money are blamed on freedom.

[NeoLotus]

I think the real problem is greed and the taking over of one's soul (humanity) to pursue profit at all cost.

I think Charles Dickens said it best in "A Christmas Carol" when he wrote:

`Business!' cried the Ghost, wringing its hands again. `Mankind was my business. The common welfare was my business; charity, mercy, forbearance, and benevolence, were, all, my business. The dealings of my trade were but a drop of water in the comprehensive ocean of my business!'

Unless people start understanding that no "ism" can make up for a lack of empathy or the need for cooperation as social beings we are doomed to annihilate ourselves for want of simple kindness and mutual aid in this thing called life.

[Concerned]

$this->bbcode_second_pass_quote('mattduke', 'I')'ll never understand why the calamitous results of government manipulation of money are blamed on freedom.

[americandream]

Freedom to do what...follow one's natural instincts to maximise one's profits by all means possible! Be objective when considering a system. Ask yourself what YOU would do given the opportunity....and be HONEST.

[heroineworshipper]

It's not a free market. Your government has total control over the value of money and free will. It is the natural human tendency to give ever more power to a few leaders which is now killing everyone off but executives.

[mattduke]

$this->bbcode_second_pass_quote('Concerned', 'C')learly you are either an idiot or have no idea whatsoever what you are talking about.

[aflurry]

$this->bbcode_second_pass_quote('mattduke', 'I')'ll never understand why the calamitous results of government manipulation of money are blamed on freedom.

[yeahbut]

$this->bbcode_second_pass_quote('REDEYE', ' ')free market capitalism...is, to paraphrase Churchill, the worst system of all, except for all the others.

[mattduke]

$this->bbcode_second_pass_quote('aflurry', 'c')an you elaborate a little?

[mattduke]

$this->bbcode_second_pass_quote('', '"')I do not understand this sqeamishness about the use of gas. I am strongly in favour of using poison gas against uncivilised tribes."

[NeoLotus]

$this->bbcode_second_pass_quote('aflurry', 'Y')ou can teach whatever you want, but still read the fine print before you sign.

[aflurry]

$this->bbcode_second_pass_quote('mattduke', 'A')bout eight years ago I set out to understand *exactly* what the Fed does, so that I might be a better investor. --snip-- I'll leave you to discover why.

[mattduke]

$this->bbcode_second_pass_quote('NeoLotus', 'A')re you referring to typical people like yourself who think selfishness is a proper value in a family or typical people like myself who teach children impulse control, taking turns, and sharing as the first step in civilized behavior and social maturity?

[mkwin]

$this->bbcode_second_pass_quote('mattduke', 'A')bout eight years ago I set out to understand *exactly* what the Fed does, so that I might be a better investor. --snip-- I'll leave you to discover why.