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Blaming the big German banks is counterproductive when the real culprit is always the government that does the borrowing and the spending, along with the people

Blaming the big German banks is counterproductive when the real culprit is always the government that does the borrowing and the spending, along with the people that elected them. It’s how socialism works. Spend other people’s money on handouts then blame capitalism for the public debt.

claudiawerner 8y ago
>It’s how socialism works. Spend other people’s money on handouts then blame capitalism for the public debt. That's how an economically careless welfare state works in a capitalist economy. What you are describing is social democracy, which is not the same as socialism and never has been in the history of the movements or any terminology recognised by social scientists. Socialism is direct worker control over the state and social means of production (to the point where Karl Marx considered the term synonymous to "Communism"), while social democracy is a liberal capitalist economy in which the government (which owns very little social means of production itself) funds welfare programs through taxes.
keldaris 8y ago
It worked out rather the other way around, though, did it not? Namely, the consequences of the risks taken by the big banks in pursuing aggressive lending policies were effectively socialized, while profits remained private. Even in the case of the large sovereign bailouts (most prominently Greece) most of the money went directly towards debt servicing and associated expenses, further socializing risks taken by private banks. I'm not expressing any value judgment on these decisions in this post, but it seems to me the basic terminology is hard to dispute.
skh 8y ago
Lending is a two party interaction. Both sides have responsibilities and not holding German banks responsible for their profligate lending is bad. It is well known what happens when a country is flooded with credit at low interest rates. You shouldn’t just blame on party of the two party interaction.
- skybrian 8y ago
  While this is true, the borrower is going to know their financial situation better and have somewhat more control over it, so it would make sense to blame them more.
  - pjmlp 8y ago
    Lenders are free to deny loans.
  - tszyn 8y ago
    There's economic research that shows it's more efficient to regulate (in some sense, "blame") the lenders, because borrowers are often desperate. When you're desperate, you have reduced capacity to objectively judge the consequences of borrowing and are also less sensitive to "blaming", potential penalties for overborrowing, etc. From this perspective, putting all the blame on borrowers while exonerating the banks is exactly the opposite of what we should be doing as a society, if we want to avoid another debt bubble.
    - Faark 8y ago
      I'd fully agree with you if we were talking about small entities. Maybe we can not expect every citizen to fully learn the details and pitfalls of all those financial constructs available and thus want to protect them with regulation. But when we are talking about nation-states... whom else can we expect that kind of due diligence from to make properly informed decisions and understand the consequences if not governments of nations, representing millions of people? Lets imagine some democracy votes an incompetent fool into their highest office, who starts making "bad deals". Would you expect other countries to not agree to those deals for reasons other than their own interests?
- CryptoPunk 8y ago
  It's not the lender's responsibility to concern itself with the consequences of the lending for the borrower. I understand the impulse to hold people to act with more care for others, but I think it's ultimately counter-productive to absolve the party that is fundamentally the only one responsible of their responsibility for their predicament. This is a government when we're talking about, not a child.
andrepd 8y ago
>the real culprit is always the government that does the borrowing and the spending By that logic, I assume that in the case of the subprime crisis of 2008, you also think that the culprits are the indebted families, right? Not the banks that pushed loans on people who clearly couldn't afford them, who set up a system that richly rewarded them for that, that hoodwinked their clients and the public, that stacked regulators with friends to look the other way, that stacked universities with "economists" in conflict-of-interest to tout that their practices were a-ok, that paid themselves billions in bonuses with taxpayer money after the working class bailed out their losses... Not those people, right? >It’s how socialism works. Spend other people’s money It's always funny to me that the people who get trillion-dollar bailouts to recoup their losses and keep living an elite life of luxury have the gall to call others out on "handouts". Anyway, you forgot to set that quote over a photo of Margaret Thatcher /s.
- usepgp 8y ago
  In some aspect, yes. Many of those small families overextended through getting greedy, and borrowed money they could never pay back.
  - pjmlp 8y ago
    As if the banks were forced to always say yes to whomever came knocking on their door.
    - deleted 8y ago
      [deleted]
eecc 8y ago
Can we put this old troll from Thatcher to rest? It’s insulting

claudiawerner 8y ago

>It’s how socialism works. Spend other people’s money on handouts then blame capitalism for the public debt. That's how an economically careless welfare state works in a capitalist economy. What you are describing is social democracy, which is not the same as socialism and never has been in the history of the movements or any terminology recognised by social scientists. Socialism is direct worker control over the state and social means of production (to the point where Karl Marx considered the term synonymous to "Communism"), while social democracy is a liberal capitalist economy in which the government (which owns very little social means of production itself) funds welfare programs through taxes.

keldaris 8y ago

It worked out rather the other way around, though, did it not? Namely, the consequences of the risks taken by the big banks in pursuing aggressive lending policies were effectively socialized, while profits remained private. Even in the case of the large sovereign bailouts (most prominently Greece) most of the money went directly towards debt servicing and associated expenses, further socializing risks taken by private banks. I'm not expressing any value judgment on these decisions in this post, but it seems to me the basic terminology is hard to dispute.

skh 8y ago

Lending is a two party interaction. Both sides have responsibilities and not holding German banks responsible for their profligate lending is bad. It is well known what happens when a country is flooded with credit at low interest rates. You shouldn’t just blame on party of the two party interaction.

skybrian 8y ago
While this is true, the borrower is going to know their financial situation better and have somewhat more control over it, so it would make sense to blame them more.
- pjmlp 8y ago
  Lenders are free to deny loans.
- tszyn 8y ago
  There's economic research that shows it's more efficient to regulate (in some sense, "blame") the lenders, because borrowers are often desperate. When you're desperate, you have reduced capacity to objectively judge the consequences of borrowing and are also less sensitive to "blaming", potential penalties for overborrowing, etc. From this perspective, putting all the blame on borrowers while exonerating the banks is exactly the opposite of what we should be doing as a society, if we want to avoid another debt bubble.
  - Faark 8y ago
    I'd fully agree with you if we were talking about small entities. Maybe we can not expect every citizen to fully learn the details and pitfalls of all those financial constructs available and thus want to protect them with regulation. But when we are talking about nation-states... whom else can we expect that kind of due diligence from to make properly informed decisions and understand the consequences if not governments of nations, representing millions of people? Lets imagine some democracy votes an incompetent fool into their highest office, who starts making "bad deals". Would you expect other countries to not agree to those deals for reasons other than their own interests?
CryptoPunk 8y ago
It's not the lender's responsibility to concern itself with the consequences of the lending for the borrower. I understand the impulse to hold people to act with more care for others, but I think it's ultimately counter-productive to absolve the party that is fundamentally the only one responsible of their responsibility for their predicament. This is a government when we're talking about, not a child.

andrepd 8y ago

>the real culprit is always the government that does the borrowing and the spending By that logic, I assume that in the case of the subprime crisis of 2008, you also think that the culprits are the indebted families, right? Not the banks that pushed loans on people who clearly couldn't afford them, who set up a system that richly rewarded them for that, that hoodwinked their clients and the public, that stacked regulators with friends to look the other way, that stacked universities with "economists" in conflict-of-interest to tout that their practices were a-ok, that paid themselves billions in bonuses with taxpayer money after the working class bailed out their losses... Not those people, right? >It’s how socialism works. Spend other people’s money It's always funny to me that the people who get trillion-dollar bailouts to recoup their losses and keep living an elite life of luxury have the gall to call others out on "handouts". Anyway, you forgot to set that quote over a photo of Margaret Thatcher /s.

usepgp 8y ago
In some aspect, yes. Many of those small families overextended through getting greedy, and borrowed money they could never pay back.
- pjmlp 8y ago
  As if the banks were forced to always say yes to whomever came knocking on their door.
  - deleted 8y ago
    [deleted]

eecc 8y ago

Can we put this old troll from Thatcher to rest? It’s insulting