4 ms·

> it's 10s, 100s times healthier You mean, except in 2008?!

by tomp 11y ago

golergka 11y ago
No, exactly _including_ 2008. Of course, you think that 2008 was BAD. But this is not usable data. Compare how BAD was it compared to 1998 in Russia, for example.
- _yosefk 11y ago
  Not that I believe the Russian economy to be better-run than the American, but right now the US does have the big advantage over just about everyone else of being able to print the world's reserve currency, which makes it easier to make the rest of the world pay to solve its problems, and I think the US did use that trick a lot after 2008 (QE being debt monetization, and the Fed's balance sheet having grown with no clear date when it'll shrink back.) So it's a bit hard to compare the US to others. As to how well markets functioned wrt the 2008 crisis - one question concerns credit rating agencies. If you believe that they didn't do their jobs well, then it should be troubling that they didn't go out of business, quite the contrary, it's the same small number of firms which still operate in this business. If you believe that they did do their jobs well, because the government bail-out resulted in most junk debt being repaid to creditors, then you essentially don't believe that markets function very well, as they seem to have made a correct calculation that they can extract money out of taxpayers through this junk paper, and that is not what any economist would praise as markets functioning for the benefit of society. (Two counterarguments to the above that I heard are, the government caused the housing bubble in the first place, or alternatively the government helped smooth/stabilize asset prices, including housing prices, which is a proper use of monetary policy, and the paper was never "really" junk since housing prices rebounded later. Dean Baker argues against the latter based essentially on buying homes getting costlier relatively to renting them in bubble years. The former counterargument is voiced more rarely which is perhaps why I haven't heard a counter-counterargument. Anyway, I think this whole thing is a bit muddy...)
  - golergka 11y ago
    My original comment: > a lot of criticism against US financial system is completely valid
  - arielb1 11y ago
    > as they seem to have made a correct calculation that they can extract money out of taxpayers through this junk paper, and that is not what any economist would praise as markets functioning for the benefit of society. Well, it's not like the credit agencies bailed out the banks themselves. The version of the criticism I have heard was that the banks (and credit agencies) knew that the taxpayers will bail them out if they fail, and therefore they took unnecessary risk - making investments just as useless as the nails made by Soviet nail factories.
- 1stop 11y ago
  Compare a US problem that caused global recession, to a single countries recession!? Or even better compare to china that might have to down grade its growth to "normal"... I forgot what your point was...
  - golergka 11y ago
    > Compare a US problem that caused global recession, to a single countries recession!? It wasn't a single country's recession, it was connected to the Asia's earlier crisis and oil price plummeting. > I forgot what your point was... You can read it above.
    - 1stop 11y ago
      2008 was connected to 97? How? Last I checked it had nothing to do with oil, so please explain.
      - golergka 11y ago
        1998
        AnimalMuppet 11y ago
        1stop asked for an explanation. You corrected the year, but that doesn't actually explain how you think the two are connected.
  - kasey_junk 11y ago
    >Compare a US problem that caused global recession Its an extreme oversimplification to say that 2008 was a US problem. It was a problem of international finance, the bulk of which (maybe unwisely) is done via US financial institutions and with US financial products. That a problem with international finance was linked to recessions globally is not surprising. Similarly, if some systematic problem in international manufacturing appeared, the bulk of which (perhaps unwisely) is done in China, we would expect it to also have global ramifications. It turns out that a financial problem in China is currently contained because it is not a major player in international finance (yet).
- tomp 11y ago
  Well, even if that's true, we can't pretend that 2008 wasn't caused by unlevel playing field, intransparent markets, faulty regulation, corruption and great concentration of power (in the hands of banks and rating agencies).
  - rayiner 11y ago
    Was it caused by those things? Or was it just a speculative bubble popping, which has happened countless times in the history of the republic, long before the modern regulatory state and modern banks ever existed?
    - addicted 11y ago
      The Market cannot fail. It can only be failed.
      - EGreg 11y ago
        Poe's law applies here
      - TeMPOraL 11y ago
        Started Googling about markets being treated as religion, found this 1999 article from the Atlantic: http://www.theatlantic.com/past/issues/99mar/marketgod.htm http://www.theatlantic.com/past/issues/99mar/marketgod.htm "The East Asians' troubles, votaries argue, derive from their heretical deviation from free-market orthodoxy -- they were practitioners of "crony capitalism," of "ethnocapitalism," of "statist capitalism," not of the one true faith." Interesting reading.
    - ra1n85 11y ago
      Very much speculative bubbles being popped. One of the most interesting things was what Dr. Michael Burry (one of the main characters in Michael Lewis' The Big Short) noted in a recent interview: "The biggest hope I had was that we would enter a new era of personal responsibility. Instead, we doubled down on blaming others, and this is long-term tragic." http://nymag.com/daily/intelligencer/2015/12/big-short-genius-says-another-crisis-is-coming.html# http://nymag.com/daily/intelligencer/2015/12/big-short-geniu... And having seen that things like interest only loans are still a thing, and very much still offered and applied for, I would tend to agree.
brc 11y ago
It's my hypothesis that the authoritarian actions leading to 2008 and the authoritarian responses to 2008 made it worse than it should have been. A better structured economy would have more competition and more bankruptcies. And fewer bailouts and government-arranged mergers. The capitalist system must be able to purge bad decisions and investments naturally or it will eventually calcify like a centrally planned economy.
- cconcepts 11y ago
  Totally agree. The idea that the laws of gravity shouldn't apply if you're "big enough" seems like it could throw the planets out of alignment.
  - AnimalMuppet 11y ago
    It's not quite that simple. The law of gravity will not be permitted to apply to you if doing so will cause too much damage to too many people. But several times the "bailout" kept the institution alive, but wiped out the shareholders. I thought that was at least somewhat reasonable. Wipe out the senior management too (which I don't recall whether that was done), and that might be about as good as can be achieved.
tonyedgecombe 11y ago
Just read https://en.wikipedia.org/wiki/Great_Chinese_Famine https://en.wikipedia.org/wiki/Great_Chinese_Famine and consider that the US didn't have anything like this even in the depths of the depression.

> it's 10s, 100s times healthier You mean, except in 2008?!

by tomp 11y ago

> it's 10s, 100s times healthier You mean, except in 2008?!

No, exactly _including_ 2008. Of course, you think that 2008 was BAD. But this is not usable data. Compare how BAD was it compared to 1998 in Russia, for example.

_yosefk 11y ago
Not that I believe the Russian economy to be better-run than the American, but right now the US does have the big advantage over just about everyone else of being able to print the world's reserve currency, which makes it easier to make the rest of the world pay to solve its problems, and I think the US did use that trick a lot after 2008 (QE being debt monetization, and the Fed's balance sheet having grown with no clear date when it'll shrink back.) So it's a bit hard to compare the US to others. As to how well markets functioned wrt the 2008 crisis - one question concerns credit rating agencies. If you believe that they didn't do their jobs well, then it should be troubling that they didn't go out of business, quite the contrary, it's the same small number of firms which still operate in this business. If you believe that they did do their jobs well, because the government bail-out resulted in most junk debt being repaid to creditors, then you essentially don't believe that markets function very well, as they seem to have made a correct calculation that they can extract money out of taxpayers through this junk paper, and that is not what any economist would praise as markets functioning for the benefit of society. (Two counterarguments to the above that I heard are, the government caused the housing bubble in the first place, or alternatively the government helped smooth/stabilize asset prices, including housing prices, which is a proper use of monetary policy, and the paper was never "really" junk since housing prices rebounded later. Dean Baker argues against the latter based essentially on buying homes getting costlier relatively to renting them in bubble years. The former counterargument is voiced more rarely which is perhaps why I haven't heard a counter-counterargument. Anyway, I think this whole thing is a bit muddy...)
- golergka 11y ago
  My original comment: > a lot of criticism against US financial system is completely valid
- arielb1 11y ago
  > as they seem to have made a correct calculation that they can extract money out of taxpayers through this junk paper, and that is not what any economist would praise as markets functioning for the benefit of society. Well, it's not like the credit agencies bailed out the banks themselves. The version of the criticism I have heard was that the banks (and credit agencies) knew that the taxpayers will bail them out if they fail, and therefore they took unnecessary risk - making investments just as useless as the nails made by Soviet nail factories.
1stop 11y ago
Compare a US problem that caused global recession, to a single countries recession!? Or even better compare to china that might have to down grade its growth to "normal"... I forgot what your point was...
- golergka 11y ago
  > Compare a US problem that caused global recession, to a single countries recession!? It wasn't a single country's recession, it was connected to the Asia's earlier crisis and oil price plummeting. > I forgot what your point was... You can read it above.
  - 1stop 11y ago
    2008 was connected to 97? How? Last I checked it had nothing to do with oil, so please explain.
    - golergka 11y ago
      1998
      - AnimalMuppet 11y ago
        1stop asked for an explanation. You corrected the year, but that doesn't actually explain how you think the two are connected.
- kasey_junk 11y ago
  >Compare a US problem that caused global recession Its an extreme oversimplification to say that 2008 was a US problem. It was a problem of international finance, the bulk of which (maybe unwisely) is done via US financial institutions and with US financial products. That a problem with international finance was linked to recessions globally is not surprising. Similarly, if some systematic problem in international manufacturing appeared, the bulk of which (perhaps unwisely) is done in China, we would expect it to also have global ramifications. It turns out that a financial problem in China is currently contained because it is not a major player in international finance (yet).
tomp 11y ago
Well, even if that's true, we can't pretend that 2008 wasn't caused by unlevel playing field, intransparent markets, faulty regulation, corruption and great concentration of power (in the hands of banks and rating agencies).
- rayiner 11y ago
  Was it caused by those things? Or was it just a speculative bubble popping, which has happened countless times in the history of the republic, long before the modern regulatory state and modern banks ever existed?
  - addicted 11y ago
    The Market cannot fail. It can only be failed.
    - EGreg 11y ago
      Poe's law applies here
    - TeMPOraL 11y ago
      Started Googling about markets being treated as religion, found this 1999 article from the Atlantic: http://www.theatlantic.com/past/issues/99mar/marketgod.htm http://www.theatlantic.com/past/issues/99mar/marketgod.htm "The East Asians' troubles, votaries argue, derive from their heretical deviation from free-market orthodoxy -- they were practitioners of "crony capitalism," of "ethnocapitalism," of "statist capitalism," not of the one true faith." Interesting reading.
  - ra1n85 11y ago
    Very much speculative bubbles being popped. One of the most interesting things was what Dr. Michael Burry (one of the main characters in Michael Lewis' The Big Short) noted in a recent interview: "The biggest hope I had was that we would enter a new era of personal responsibility. Instead, we doubled down on blaming others, and this is long-term tragic." http://nymag.com/daily/intelligencer/2015/12/big-short-genius-says-another-crisis-is-coming.html# http://nymag.com/daily/intelligencer/2015/12/big-short-geniu... And having seen that things like interest only loans are still a thing, and very much still offered and applied for, I would tend to agree.

brc 11y ago

It's my hypothesis that the authoritarian actions leading to 2008 and the authoritarian responses to 2008 made it worse than it should have been. A better structured economy would have more competition and more bankruptcies. And fewer bailouts and government-arranged mergers. The capitalist system must be able to purge bad decisions and investments naturally or it will eventually calcify like a centrally planned economy.

cconcepts 11y ago
Totally agree. The idea that the laws of gravity shouldn't apply if you're "big enough" seems like it could throw the planets out of alignment.
- AnimalMuppet 11y ago
  It's not quite that simple. The law of gravity will not be permitted to apply to you if doing so will cause too much damage to too many people. But several times the "bailout" kept the institution alive, but wiped out the shareholders. I thought that was at least somewhat reasonable. Wipe out the senior management too (which I don't recall whether that was done), and that might be about as good as can be achieved.

tonyedgecombe 11y ago

Just read https://en.wikipedia.org/wiki/Great_Chinese_Famine https://en.wikipedia.org/wiki/Great_Chinese_Famine and consider that the US didn't have anything like this even in the depths of the depression.