5 ms·

The financial crisis was grand political theater-- namely banks, their creditors, and derivative counterparties created a panic in order to stick taxpayers with

by ckinnan 17y ago

The financial crisis was grand political theater-- namely banks, their creditors, and derivative counterparties created a panic in order to stick taxpayers with trillions of dollars in losses. The media and policymakers were either in the bag or cowed by unsubstantiated fearmongering about economic collapse. If we had instead created an orderly way for these banks to fail (while protecting retail savers and insurance policyholders), we'd be on the path to recovery by now-- a recovery led by responsible banks. Instead we face massive new levels of government debt, an expansion of corrupt crony capitalism, and likely years of stagnation. Meanwhile, the perpetrators of the crisis-- Fannie, Freddie, AIG, Citi, Goldman-- are largely intact and now are taking on even greater risk under the umbrella of expanded government backstops and even direct taxpayer funding.

old-gregg 17y ago
I don't know much about economics but it seems that capitalism as I (used to) understand it, with classic supply/demand curves and rational enterprises competing for consumer cash, was just a fantasy. Turns out that competing (and, generally, working) is a pain in the ass - so the smartest people have long realized that nearly everybody can't go without: * Healthcare * Financial system * Legal system They have learned, that by merging with the state it becomes much easier to extract arbitrary sums of money for these three basic functions [that normal governments should provide for free]. Tools for wealth extraction vary: plain-vanilla taxes, insane medical insurance costs, insane legal expenses, or just printing money at will (i.e. devaluing what we already have). Hasn't an average good parent been wishing for his/hers kid to become a (lawyer|doctor|banker) within last 20 years? WTF? These "markets" don't create any value - we don't choose to use their services, we must pay them. No wonder these costs have been skyrocketing. Imagine a struggling entrepreneur with a monthly $1,400/mo medical insurance bill (because that's what they feel like charging), renting a crappy apartment for $2,000/mo (because banking system has inflated property values to insane limits) facing $10,000 fee to obtain a patent which will cost much more to defend in court anyway. Now: if you're 18, who do you want to become after college - an entrepreneur or one of these people who extract these sums of money from him? No wonder the private sector has been shrinking, while government and banking system have been growing. Listening to the news is depressing: they keep interviewing people, keep asking "how to pay for healthcare? how to save our banking system?" instead of just asking simple why? Why doctors need to make millions? Why do medical equipment salesmen need to have private jets? Why 5% down-payments for 30 year mortgages are the norm? And why our banks need to be so freakishly huge that we're afraid they could fail?
- amalcon 17y ago
  That last one's bugged me for a while. If small, local banks weren't permitted to merge until such time as they were "too big to fail", there would likely be no need to bail them out today. There are economies of scale in banking, but they're not on the same level as manufacturing industries and that sort of thing.
- jibiki 17y ago
  > Why doctors need to make millions? Here's an interesting link: http://bmj.bmjjournals.com/cgi/reprint/334/7587/236.pdf http://bmj.bmjjournals.com/cgi/reprint/334/7587/236.pdf Doctors do indeed make more in the US, although the US has higher average income than the countries it is compared to (which have socialized medicine.) Once you compensate for that, the effect is probably tiny. I would be very interested in looking at the amount medical supply companies make in each country, but good luck finding that data.

by ckinnan 17y ago

old-gregg 17y ago

I don't know much about economics but it seems that capitalism as I (used to) understand it, with classic supply/demand curves and rational enterprises competing for consumer cash, was just a fantasy. Turns out that competing (and, generally, working) is a pain in the ass - so the smartest people have long realized that nearly everybody can't go without: * Healthcare * Financial system * Legal system They have learned, that by merging with the state it becomes much easier to extract arbitrary sums of money for these three basic functions [that normal governments should provide for free]. Tools for wealth extraction vary: plain-vanilla taxes, insane medical insurance costs, insane legal expenses, or just printing money at will (i.e. devaluing what we already have). Hasn't an average good parent been wishing for his/hers kid to become a (lawyer|doctor|banker) within last 20 years? WTF? These "markets" don't create any value - we don't choose to use their services, we must pay them. No wonder these costs have been skyrocketing. Imagine a struggling entrepreneur with a monthly $1,400/mo medical insurance bill (because that's what they feel like charging), renting a crappy apartment for $2,000/mo (because banking system has inflated property values to insane limits) facing $10,000 fee to obtain a patent which will cost much more to defend in court anyway. Now: if you're 18, who do you want to become after college - an entrepreneur or one of these people who extract these sums of money from him? No wonder the private sector has been shrinking, while government and banking system have been growing. Listening to the news is depressing: they keep interviewing people, keep asking "how to pay for healthcare? how to save our banking system?" instead of just asking simple why? Why doctors need to make millions? Why do medical equipment salesmen need to have private jets? Why 5% down-payments for 30 year mortgages are the norm? And why our banks need to be so freakishly huge that we're afraid they could fail?

amalcon 17y ago
That last one's bugged me for a while. If small, local banks weren't permitted to merge until such time as they were "too big to fail", there would likely be no need to bail them out today. There are economies of scale in banking, but they're not on the same level as manufacturing industries and that sort of thing.
jibiki 17y ago
> Why doctors need to make millions? Here's an interesting link: http://bmj.bmjjournals.com/cgi/reprint/334/7587/236.pdf http://bmj.bmjjournals.com/cgi/reprint/334/7587/236.pdf Doctors do indeed make more in the US, although the US has higher average income than the countries it is compared to (which have socialized medicine.) Once you compensate for that, the effect is probably tiny. I would be very interested in looking at the amount medical supply companies make in each country, but good luck finding that data.