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Investors are betting that while the US government will continue to shrug off higher and higher unemployment numbers, any significant move downwards in the stoc
by bradleyjg 6y ago
Investors are betting that while the US government will continue to shrug off higher and higher unemployment numbers, any significant move downwards in the stock market will spur immediate action from both the administrative and legislative parts of the Federal government.
This is not a bad bet at all. The dominant ideology in Washington seems to be laissez faire when big businesses are doing well and bailouts when they aren’t. It must be nice to play with a stacked deck like that.
- bo1024 6y agoThe Big Short - "It's possible that we are in a completely fraudulent system."
- bradleyjg 6y agoI could live with the libertarian ideal of “regulation” via consequences imposed by market forces and I could live with the New Left ideal of regulation via, well, regulation. But no consequences and no regulations is insane. Our entire economy is like a mining company that steadily mines a gold seam, paying out healthy dividends and executive bonuses all the while and then as soon as the seam is mined out declares bankruptcy leaving toxic waste cleanup and employee pensions for the government to take care of. We don’t just allow ourselves to be exploited by sociopaths, we actively seek it out.
- Traster 6y agoI think what you're seeing is the implementation of the libertarian ideal. No regulation when companies are doing well, but no stomach to suffer losses when they aren't.
- snikeris 6y agoWhy would this be anyone’s ideal? You are not being charitable towards libertarians.
- Traster 6y agoI'm not saying what's happening is the libertarian ideal, I'm saying what's happening is what happens when the libertarian ideal is implemented. A libertarian may want to not bail out big businesses when times are bad - they may truly believe that ideally you just let the bad businesses fail and the market is stronger for it. The problem is that in reality, you're talking about letting voters take a huge amount of pain a few months before an election. So as a result you end up in a situation where you can have a laissez faire approach to regulations when the economy is booming, but you can't actually allow all the people who vote for you to lose their jobs.
- darepublic 6y agoThat's fair but also fair to consider what practically happens when big government philosophy is implemented.
- FactolSarin 6y agoPeople get good quality healthcare and spend less doing it?
- Jotra7 6y agoSeems to work fine in Europe.
- take_a_breath 6y agoWe could just study any other wealthy country, no?
- kwhitefoot 6y ago> You are not being charitable towards libertarians. Why would anyone, including other libertarians, be charitable toward them?
- whynotminot 6y agoThen they're being treated exactly as they prefer--no charity all bootstraps baby! :P
- 34679 6y agoThat's cronyism, and has no relation to Libertarianism whatsoever. Libertarians will never support government bailouts, as the only way they are possible is by taking money from someone more productive to give to someone less productive, backed by the threat of force. Nothing Libertarian about that.
- Ididntdothis 6y agoLibertarianism is the free market version of Communism. Maybe it will be good if it reaches a pure implementation but in reality it has never been achieved and probably never will be. If Libertarianism isn’t implemented fully then it will almost for sure devolve into cronyism. It can only work if there is no way to influence government or courts to do things your way. It also can’t really deal with things like pandemics or probably even war. In a pandemic you would have a lot of people die before the truly free market figures out which treatments work and which are scam.
- 34679 6y agoIn the US, it was the catastrophic failure of government that led to inadequate testing and fears of ventilator shortages. Businesses stepped up with tests that work and factories shifted production to ventilators and PPE to rapidly make up the shortfall.
- Ididntdothis 6y agoDo you think business would have planned for this? I agree that government has failed but I doubt business would have done any better. Who would pay for stockpiling supplies?
- 34679 6y agoThe ones that did plan for this would have made an obscene profit, so that would lead me to believe that some businesses would indeed plan for this. But I'll admit I have no way of knowing.
- bilbo0s 6y agoI would retort that real libertarians would be very much in favor of consequences, but of course that would be to fall victim to the No True Scotsman fallacy. I think the best we can say in the current environment is that libertarianism is a philosophy that a large number of elected officials promote for the purposes of getting votes, but also a philosophy that most don't really have the stomach for when the excrement hits the fan. Maybe there really are no libertarians in foxholes?
- qeternity 6y agoWhat you've described is the antithesis of libertarianism.
- apatters 6y agoNothing in modern US politics comes even close to libertarianism. Libertarianism opposes all regulation of business unless it is in concert with the non-aggression principle (i.e. don't kill, steal, commit fraud, etc.). Libertarian thinking on antitrust is that it's unnecessary because there is no such thing as a natural monopoly; monopolies are the result of government regulation. Eliminate the regulations that privilege certain businesses over others, and competition will ensure an efficient market. In reality what we have in the US is a political class which constantly molds regulation to further benefit the shareholders of big businesses. Sometimes they remove regulations to this end, but much more frequently they create or alter them. There's no philosophical bent behind this at all, it's just the strong using government as a tool to oppress the weak (exactly what libertarianism warns us about). Nobody has ever pandered to libertarians when trying to justify their policies, so I have no idea why people like to blame them. To me a sign that the libertarians are on to something is that no government has ever dared to try it. Governments are comprised of powerful people and if they did they would lose all that power...
- xtian 6y ago> In reality what we have in the US is a political class which constantly molds regulation to further benefit the shareholders of big businesses. The political class you are talking about serves specific masters. They also mold ideological discourse which is where modern libertarianism comes from in the first place. Go check who's funding all of these libertarian speakers and institutes.
- dantheman 6y agoSo libertarian are in power? Libertarians are non-interventionists, so clearly not effecting foreign policy. Against gov spending and gov debt, clearly not winning there. We are making progress on civil rights, gay marriage, ending the drug war. The size and scope of government continues to increase every year, so I don't see how anyone could call that libertarian.
- xtian 6y ago
- paulryanrogers 6y agoPrivatize profits and socialize costs
- bo1024 6y agoThis quote was at the point in the film where banks were keeping prices artificially high until they sold their positions off. Similar is "Banks that bundled bad debt and bet against it" https://www.nytimes.com/2009/12/24/business/24trading.html https://www.nytimes.com/2009/12/24/business/24trading.html Basically my take-away was: don't bet against the house, even if it's crumbling. Because they won't agree you've won the bet until they resell it off to some other sucker; or they'll declare bankruptcy and you won't get paid; or they'll get bailed out and you'll be wrong even though you were right. [I'm not a finance person, so this is all a layperson's interpretation.]
- amiga_500 6y agoI like the bit where (and maybe it's in the same scene), he says: > You still believe in the system, don't you
- aantix 6y agoYou would probably get a better deck too if you provided flights for millions of people or helped disburse money or manufactured vehicles to keep people going to their jobs. Why do individuals think they should receive the same treatment as key infrastructure companies?
- 34679 6y agoMaybe OP would start a company that does one or more of those things if the companies dominating those industries were ever allowed to fail.
- aantix 6y agoWhy let them fail - so we can wait another decade until someone figures out the knowhow to start a reliable, national airline? So we can keep travellers idle for yet another year without business until a new company is figured out? "Save the ship if it sinks, let it float if it goes."
- bradleyjg 6y agoIf they are key infrastructure companies let’s regulate them like utilities.
- aantix 6y agoWhy? They need a bailout every 10 years, otherwise, they're autonomous. While far from perfect, they're better than the government could do if they had to develop their own systems for handling travelers. Pennies.
- skohan 6y agoIt makes me wonder if this is moment is going to become a lesson in future finance courses about when we inflated the dollar's value out of existence just to keep the S&P 500 chart moving in a positive direction
- nutjob2 6y agoPeople have been warning about inflation for more than a decade, but here we are in another deflationary environment, even with the Fed throwing endless fuel on the fire. Inflationary expectations and wage growth remain low and the Fed has plenty of tools to tame it (interest rates, a huge balance sheet), so the question really is now: where is the inflation going to come from?
- dd36 6y agoFed’s ever expanding balance sheet. It failed to reduce its size prior to the pandemic.
- dodobirdlord 6y agoSeems like in the long run the Fed will end up owning the whole market. It gets to invest with unlimited money in the most depressed assets every time there’s a downturn, and as an institution it’s horizon is forever. It seems like this ought to be a bizarre funding mechanism for the treasury. Perhaps the federal government should sell downturn insurance on assets. After all, it’s basically like the Fed is pretending it sold puts on much of the market when it in fact did not. Maybe the Fed should actually sell puts?
- skohan 6y agoI can't claim to be an expert in economics or finance, and I don't know if inflation per se is a threat at the moment, but I will say the current state of the economy doesn't make sense to me. If it really is the case that 30+ million Americans can be out of a job and the stock market reaction is to continue climbing on the assumption that the fed will continue to grow the balance sheet, doesn't that point to a fundamental decoupling between the value of the currency and real-world value? I mean are we really going to live in a society where the government pays companies so that their stock price can remain stable, even when demand for their products no longer exists because their customers are all out of work? It seems like a paper economy which essentially only serves to bail out investors. I'm not sure what the catalyst would be for that kind of a system to come crashing down, but I just don't understand how it could be sustainable.