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Part of the problem is too much centralization of the control of $. This arrangement could be fine if people (and companies) where held accountable for their mi
by zarro 7y ago
Part of the problem is too much centralization of the control of $. This arrangement could be fine if people (and companies) where held accountable for their mistakes (No bailouts).
What I mean: Normally, you wouldn't trust all your money to one bank or financial adviser, because if they make bad bets you could lose your money. But because of the bailouts, it puts an hedge on your downside risk, so you feel more comfortable with outsourcing the responsibility to a small number of parties to manage your money, because if they fail, you in part (mostly them), will be bailed out.
This ignores the fact that there were individuals that were more responsible with their money that ended up being the losers in this arrangement and were extorted of their money.
I'm not saying that we shouldn't have bailouts, but what I am saying is that if we are forced to do it, we should do it to such an extent that it addresses the root cause and provides economic incentive to be more accountable for ones actions.
- xapata 7y ago> too much centralization The purpose of a capitalist, laissez faire economy is to decentralize control. Turns out the result is central planning by a cartel of magacorps.
- zarro 7y agoI think you calling our current system "capitalist" is giving it more credit than its due.
- danielovichdk 7y agoYup. It's called corporatism and had nothing to due with capitalism, which in fact is a positive thing. On a theo' level
- chris11 7y ago>> we should do it to such an extent that it addresses the root cause and provides economic incentive to be more accountable for ones actions. I agree with that. Bailouts should usually be coupled with regulation to limit the need for a bailout the next time a failure occurs.
- tonyedgecombe 7y agoIt’s hard to predict what regulations you need, I recently read a book about the banking crisis that stated the Basel regulations were partly responsible. The next crisis won’t look like the last one.
- me_me_me 7y agoAFAIK Poland didn't bend the knee and didn't do bailouts, Iceland partly nationalized banks in exchange for bails. The cold harsh truth is that majority of countries were conned or coerced into bail-outs or else 'your economy will collapse'. What kind of industry can afford to take a risk and never be punished for it? ...well its no longer a risk if you can never loose, therefore you can afford to gamble more and with increased risk. After all all profits are yours and all loses are paid by someone else. And we are probably on the way to next bailout round as there were only a band-aid solution to appease tax payers.