4 ms·

This terrifying moment is our one chance for a new world

14 points by andyking 18y ago

scudco 18y ago
In America these problems are systemic because government has gotten in bed with powerful banks to create a monopoly via the Federal Reserve. We have given all economic power over the issuance of credit to very few with zero oversight. We have centralized (economic) power. "The fundamentals of Keynesian economics are sound" Just keep saying it to yourself, Mr. Hutton. In Britain they have their own central bank monopolizing their credit issuance, as well, through their confiscatory Bank of England. We yammer on endlessly about the evils of capitalistic greed and never once consider that governments(i.e., the people with the guns) are the ones controlling this entire system. Mr. Hutton seems to be suggesting what Mr. Frank Shostak sarcastically suggests: "If central bankers and government bureaucrats can fix things in difficult times, why not in good times too? Why not have a fully controlled economy and all the problems will be fixed forever?" http://mises.org/story/3131 http://mises.org/story/3131
SwellJoe 18y ago
As always, blame the market for a failure of government. Government caused the crisis, and it was aided and abetted by the wealthiest people on Wall Street. And, with the bailout, we've insured none of the people responsible will face negative consequences for bad business practices. And, to boot, it's being used as an example of a failure of markets. The whole sub-prime fiasco has nothing to do with markets. In a free market, government does not guarantee that a risky investment will be repaid (as has largely been the case in the home lending market since 1999). We're simply not talking about a free market. We're talking about government programs gone horribly (but predictably) awry.
- nazgulnarsil 18y ago
  I would go so far as to call this a false flag event. The american people are being called to rally around a stupid idea with the threat of catastrophe if we don't.
- jmtame 18y ago
  The future generations will look in the history books at "societies that were greedy" and instead of advancing technology and efficiency, they stifled and discouraged it because it went against established corporate profit motives. This is about greed, and you're right in saying that government programs have caused this. The greed takes over your logic and diligent decision-making, and we end up trying to make a lot of money on things that are nothing more than speculative. And so now look at what we're doing from 40,000 feet: we're trying to instill confidence by TAXING firefighters and school teachers all over the country? Are we actually creating value? Are corporate profits going up because value has been created in the market? Is there anything really coming out of this? Is this a reason to be more confident? Is there an economical justification for "bailing out" these firms that have made poor investment decisions? Are the toxic mortgages going to magically "pay for themselves" after all of this money gets circulated? What really have we solved from any of this?
- mhartl 18y ago
  This is a familiar tune. Take a heavily regulated market with massive government intervention, watch it get tied in knots, and then declare that the "free market" has failed. The most dramatic historical example is perhaps the U.S. economy leading up to the Great Depression, but we've seen plenty others in recent years: the "deregulated" energy markets in California, "free market" healthcare, and now the subprime meltdown. I'm beginning to suspect people will never learn.
  - jmtame 18y ago
    The US is going to need to go through a complete meltdown. A Great Depression probably wouldn't make people angry and organized enough to cause the change that we need. My prediction is that the United States won't stick around for too long (if you take a history textbook perspective on this, which you can see other failed societies have made the same mistakes that we are now repeating). I think we have a fighting chance to create the desirable society that eliminates corporatocracy. Did you know the planet contains 13,000 zettajoules of geothermal energy? The entire world uses 0.5 zettajoules of energy per year. And we can harvest this, but there are patent wars to suppress this from easily happening. Let's look at the other resources available, which cost us nothing at all. Wind? 3 states of wind energy can power the entire United States. Water? The UK alone could be powered by water/tide energy alone. Solar? One hour of thermal energy in the day could power the United States for an entire year if we harvested it properly. Travel by plane? Who does that when you could travel by AT3's mag-lev trains, which can reach speeds up to 4,000 MPH with zero moving parts and zero emissions. Oh, and it uses about 10% of the energy of an airplane. Yes, they work in land and water. What happens when technology replaces humans? You no longer need to work. In our capitalistic society, it's called unemployment. If you look into the Venus Project, it's called you get bored and start thinking about space exploration. Once people figure out that we don't really need these corporations, we'll never have this type of problem come up again. The corporations are holding us back and creating scarcity (real or perceived) at every opportunity. Like I said, I don't think the United States is going to get it right, we're in far too deep over our heads. And the attitudes and apathy of the American people never ceases to amaze me (in a bad way) as an undergraduate.
    - 18y ago
- ardit33 18y ago
  First of all Fannie Mae, Freddy Mac are not the main and only contributers to this mess. You also have a lot of private capital being lost, that never went through Fannie or Freddy. AIG is not goverment's mess. They decided to insure insane amount of CDO, which are not regulated, and being used not for hedging, more like bets in the market. Lehman Bros/Bear Stearn are not governments mess. They decided to leverage themselves at an absurd 1/30+ ratio. The goverment has been staying away from them, and look what happened. Also, if you noticed, that there are banks that are actually doing really good, mainly because were smart enough to stay away from this madness. And there have also been major crashes (1929, or 1873) where the gov. was almost non-existent, and the dollar was backed by gold. For some reason, just like in reddit, there is always post "Blame the goverment about everything for over-regulating". How about blaming the individuals for taking too much credit card debt, and too many loans(may they be greedy or stupid), and the people that led these companies to ruin for once.
  - SwellJoe 18y ago
    AIG is not goverment's mess. They decided to insure insane amount of CDO, which are not regulated, and being used not for hedging, more like bets in the market. Lehman Bros/Bear Stearn are not governments mess. They decided to leverage themselves at an absurd 1/30+ ratio. The goverment has been staying away from them, and look what happened. I don't disagree. At least not entirely. Where I disagree is in the distinction between what government should and shouldn't do, and how the "didn't do" played out in this particular disaster. If government is to take part in a free market economy, it's purpose is to enforce contracts, prevent fraud, and come down hard on those that lie, cheat or steal: trust is the most important currency in a market economy, and when it's lost, nothing works anymore. Pyramid or Ponzi schemes are illegal in the United States. Seems to me that a very strong case can be made that CDOs are merely the modern equivalent. At the very least there was significant deception happening at the point where junk debt was re-branded as quality debt, and that claims that this junk debt was "insured" against loss were simple fraud. We have laws for all of that, and in a just world, there would be consequences. But, we're talking about some of the wealthiest people on earth...consequences aren't really their style, and our government agrees with them. I'm not saying the finance industry, or a large percentage thereof, is free of blame. I'm saying it's like bike theft and the New York and San Francisco black market: it's a wholly unpunished crime, and so it is rampant. For the kind of people willing to do anything they can get away with to make money, the US government extended an open invitation to lie, cheat, and steal your way to a few million or billion bucks.
deleted 18y ago
[deleted]
tomjen 18y ago
>based on fairness instead of naked greed Would somebody please send that man a copy of "Atlas Shrugged"? And to every school child too.
- nazgulnarsil 18y ago
  atlas shrugged is too controversial to make a strong impact. too many people dismiss the salient points by pointing to some weird ones. send everyone a copy of Mind the Gap and How to Build Wealth by PG.
- mhartl 18y ago
  Coincidentally, I started (re)reading Atlas Shrugged a couple months ago. It's been a surreal counterpoint to events in the real world.
  - unalone 18y ago
    I reread it every 6 months or so. It's really fascinating not only because each time you read it you become aware of the nitpicky flaws in it, but because you become MUCH more aware of how there are really people who do talk like Rand villains, and it's scary.
    - dougp 18y ago
      Rand's number one rule of characterization: if someone says their ought to be a law. They are a bad character.
      - unalone 18y ago
        This is what I like least about Rand detractors: they never actually seem to have read the book. Rand gets very specific about what constitutes a useful law and what doesn't. Mainly, she says that government should protect the people with law enforcement, protect their rights with courtrooms, and protect the nation with a defensive military - all things that private enterprise can't be trusted to do. She believes in government in a limited capacity, but she believes it should exist. And one thing people don't seem to get while reading Atlas: she's aware that she's writing about a pipe dream. Her story is merely a hypothetical ideal, not an idea of what she actually wants to happen. Her writing worked, too: it made millions of people think about self-reliance and freedom. And that's not a bad thing at all.
benl 18y ago
So much for Disaster Capitalism (http://www.naomiklein.org/shock-doctrine http://www.naomiklein.org/shock-doctrine) then, huh?
- alecco 18y ago
  Didn't the same people just get 850bn dollars more to play with?
hugh 18y ago
I am deeply fearful that the current economic problems will lead to the resurgence of the kind of idiotic socialist ideas represented by this Guardian piece.
- danielharan 18y ago
  Right-wing governments are busy nationalizing banks at an unprecedented rate, and you're worried about some left-wing rag's putative influence? :O :O :O
- xutopia 18y ago
  I think the idiotic right wing politics and rethoric is what caused this thing in the first place. Perhaps it's time to look for alternatives. Unless you still believe what the right wing idiots are saying about the economy being strong.
- Xichekolas 18y ago
  While I'm also fearful of this, I feel like I missed something. After all the talk about creating a 'fairer' system, it seemed like he just suggested that Britain create its own version of Paulson's plan. What were his suggestions for making things more 'fair'? Did I miss something?
mynameishere 18y ago
I just love his proposal: It can require the banks to behave differently – to move from financing casino capitalism to productive enterprise. There can be a new emphasis on relationship building and offering cheap long-term loans to business The banks were not financing "casino capitalism". They were providing artificially cheap, long-term loans to unqualified homebuyers. Swap out "unqualified homebuyers" with "unqualified businessowners", and you can see the full extent of this guy's idiocy.

14 points by andyking 18y ago

In America these problems are systemic because government has gotten in bed with powerful banks to create a monopoly via the Federal Reserve. We have given all economic power over the issuance of credit to very few with zero oversight. We have centralized (economic) power. "The fundamentals of Keynesian economics are sound" Just keep saying it to yourself, Mr. Hutton. In Britain they have their own central bank monopolizing their credit issuance, as well, through their confiscatory Bank of England. We yammer on endlessly about the evils of capitalistic greed and never once consider that governments(i.e., the people with the guns) are the ones controlling this entire system. Mr. Hutton seems to be suggesting what Mr. Frank Shostak sarcastically suggests: "If central bankers and government bureaucrats can fix things in difficult times, why not in good times too? Why not have a fully controlled economy and all the problems will be fixed forever?" http://mises.org/story/3131 http://mises.org/story/3131

SwellJoe 18y ago

As always, blame the market for a failure of government. Government caused the crisis, and it was aided and abetted by the wealthiest people on Wall Street. And, with the bailout, we've insured none of the people responsible will face negative consequences for bad business practices. And, to boot, it's being used as an example of a failure of markets. The whole sub-prime fiasco has nothing to do with markets. In a free market, government does not guarantee that a risky investment will be repaid (as has largely been the case in the home lending market since 1999). We're simply not talking about a free market. We're talking about government programs gone horribly (but predictably) awry.

nazgulnarsil 18y ago
I would go so far as to call this a false flag event. The american people are being called to rally around a stupid idea with the threat of catastrophe if we don't.
jmtame 18y ago
The future generations will look in the history books at "societies that were greedy" and instead of advancing technology and efficiency, they stifled and discouraged it because it went against established corporate profit motives. This is about greed, and you're right in saying that government programs have caused this. The greed takes over your logic and diligent decision-making, and we end up trying to make a lot of money on things that are nothing more than speculative. And so now look at what we're doing from 40,000 feet: we're trying to instill confidence by TAXING firefighters and school teachers all over the country? Are we actually creating value? Are corporate profits going up because value has been created in the market? Is there anything really coming out of this? Is this a reason to be more confident? Is there an economical justification for "bailing out" these firms that have made poor investment decisions? Are the toxic mortgages going to magically "pay for themselves" after all of this money gets circulated? What really have we solved from any of this?
mhartl 18y ago
This is a familiar tune. Take a heavily regulated market with massive government intervention, watch it get tied in knots, and then declare that the "free market" has failed. The most dramatic historical example is perhaps the U.S. economy leading up to the Great Depression, but we've seen plenty others in recent years: the "deregulated" energy markets in California, "free market" healthcare, and now the subprime meltdown. I'm beginning to suspect people will never learn.
- jmtame 18y ago
  The US is going to need to go through a complete meltdown. A Great Depression probably wouldn't make people angry and organized enough to cause the change that we need. My prediction is that the United States won't stick around for too long (if you take a history textbook perspective on this, which you can see other failed societies have made the same mistakes that we are now repeating). I think we have a fighting chance to create the desirable society that eliminates corporatocracy. Did you know the planet contains 13,000 zettajoules of geothermal energy? The entire world uses 0.5 zettajoules of energy per year. And we can harvest this, but there are patent wars to suppress this from easily happening. Let's look at the other resources available, which cost us nothing at all. Wind? 3 states of wind energy can power the entire United States. Water? The UK alone could be powered by water/tide energy alone. Solar? One hour of thermal energy in the day could power the United States for an entire year if we harvested it properly. Travel by plane? Who does that when you could travel by AT3's mag-lev trains, which can reach speeds up to 4,000 MPH with zero moving parts and zero emissions. Oh, and it uses about 10% of the energy of an airplane. Yes, they work in land and water. What happens when technology replaces humans? You no longer need to work. In our capitalistic society, it's called unemployment. If you look into the Venus Project, it's called you get bored and start thinking about space exploration. Once people figure out that we don't really need these corporations, we'll never have this type of problem come up again. The corporations are holding us back and creating scarcity (real or perceived) at every opportunity. Like I said, I don't think the United States is going to get it right, we're in far too deep over our heads. And the attitudes and apathy of the American people never ceases to amaze me (in a bad way) as an undergraduate.
  - 18y ago
ardit33 18y ago
First of all Fannie Mae, Freddy Mac are not the main and only contributers to this mess. You also have a lot of private capital being lost, that never went through Fannie or Freddy. AIG is not goverment's mess. They decided to insure insane amount of CDO, which are not regulated, and being used not for hedging, more like bets in the market. Lehman Bros/Bear Stearn are not governments mess. They decided to leverage themselves at an absurd 1/30+ ratio. The goverment has been staying away from them, and look what happened. Also, if you noticed, that there are banks that are actually doing really good, mainly because were smart enough to stay away from this madness. And there have also been major crashes (1929, or 1873) where the gov. was almost non-existent, and the dollar was backed by gold. For some reason, just like in reddit, there is always post "Blame the goverment about everything for over-regulating". How about blaming the individuals for taking too much credit card debt, and too many loans(may they be greedy or stupid), and the people that led these companies to ruin for once.
- SwellJoe 18y ago
  AIG is not goverment's mess. They decided to insure insane amount of CDO, which are not regulated, and being used not for hedging, more like bets in the market. Lehman Bros/Bear Stearn are not governments mess. They decided to leverage themselves at an absurd 1/30+ ratio. The goverment has been staying away from them, and look what happened. I don't disagree. At least not entirely. Where I disagree is in the distinction between what government should and shouldn't do, and how the "didn't do" played out in this particular disaster. If government is to take part in a free market economy, it's purpose is to enforce contracts, prevent fraud, and come down hard on those that lie, cheat or steal: trust is the most important currency in a market economy, and when it's lost, nothing works anymore. Pyramid or Ponzi schemes are illegal in the United States. Seems to me that a very strong case can be made that CDOs are merely the modern equivalent. At the very least there was significant deception happening at the point where junk debt was re-branded as quality debt, and that claims that this junk debt was "insured" against loss were simple fraud. We have laws for all of that, and in a just world, there would be consequences. But, we're talking about some of the wealthiest people on earth...consequences aren't really their style, and our government agrees with them. I'm not saying the finance industry, or a large percentage thereof, is free of blame. I'm saying it's like bike theft and the New York and San Francisco black market: it's a wholly unpunished crime, and so it is rampant. For the kind of people willing to do anything they can get away with to make money, the US government extended an open invitation to lie, cheat, and steal your way to a few million or billion bucks.

deleted 18y ago

[deleted]

tomjen 18y ago

>based on fairness instead of naked greed Would somebody please send that man a copy of "Atlas Shrugged"? And to every school child too.

nazgulnarsil 18y ago
atlas shrugged is too controversial to make a strong impact. too many people dismiss the salient points by pointing to some weird ones. send everyone a copy of Mind the Gap and How to Build Wealth by PG.
mhartl 18y ago
Coincidentally, I started (re)reading Atlas Shrugged a couple months ago. It's been a surreal counterpoint to events in the real world.
- unalone 18y ago
  I reread it every 6 months or so. It's really fascinating not only because each time you read it you become aware of the nitpicky flaws in it, but because you become MUCH more aware of how there are really people who do talk like Rand villains, and it's scary.
  - dougp 18y ago
    Rand's number one rule of characterization: if someone says their ought to be a law. They are a bad character.
    - unalone 18y ago
      This is what I like least about Rand detractors: they never actually seem to have read the book. Rand gets very specific about what constitutes a useful law and what doesn't. Mainly, she says that government should protect the people with law enforcement, protect their rights with courtrooms, and protect the nation with a defensive military - all things that private enterprise can't be trusted to do. She believes in government in a limited capacity, but she believes it should exist. And one thing people don't seem to get while reading Atlas: she's aware that she's writing about a pipe dream. Her story is merely a hypothetical ideal, not an idea of what she actually wants to happen. Her writing worked, too: it made millions of people think about self-reliance and freedom. And that's not a bad thing at all.

benl 18y ago

So much for Disaster Capitalism (http://www.naomiklein.org/shock-doctrine http://www.naomiklein.org/shock-doctrine) then, huh?

alecco 18y ago
Didn't the same people just get 850bn dollars more to play with?

hugh 18y ago

I am deeply fearful that the current economic problems will lead to the resurgence of the kind of idiotic socialist ideas represented by this Guardian piece.

danielharan 18y ago
Right-wing governments are busy nationalizing banks at an unprecedented rate, and you're worried about some left-wing rag's putative influence? :O :O :O
xutopia 18y ago
I think the idiotic right wing politics and rethoric is what caused this thing in the first place. Perhaps it's time to look for alternatives. Unless you still believe what the right wing idiots are saying about the economy being strong.
Xichekolas 18y ago
While I'm also fearful of this, I feel like I missed something. After all the talk about creating a 'fairer' system, it seemed like he just suggested that Britain create its own version of Paulson's plan. What were his suggestions for making things more 'fair'? Did I miss something?

mynameishere 18y ago

I just love his proposal: It can require the banks to behave differently – to move from financing casino capitalism to productive enterprise. There can be a new emphasis on relationship building and offering cheap long-term loans to business The banks were not financing "casino capitalism". They were providing artificially cheap, long-term loans to unqualified homebuyers. Swap out "unqualified homebuyers" with "unqualified businessowners", and you can see the full extent of this guy's idiocy.