Sen on the future of capitalism

[garbon]

Who the fuck are you?

factory of diaries

[Habbaku]

Ugh.  It's so obvious, now.  I forgot he always drooled irrationally over Melville.  Thanks.

[Warspite]

Particularly since those dodgy mortages were mostly a creation of the gov't to begin with.

Did the government encourage the securitisation of these debts into exotic instruments?

[DontSayBanana]

 ??? @ Evil Spock.

You're looking at capitalism with extremely rose-tinted glasses. The problem with virtually all of the mentioned financial systems, including capitalism, is a failure to account for human greed. We've shown an amazing proclivity for "working the system" in the US. Employers have gotten by, paying their full-time employees less than the cost of living for the area they live in; similarly, many executives' salaries would raise a lot of eyebrows if they were converted to wage and analyzed task for task...

I guess my problem is I'm actually starting to become jaded with financial matters, as I've been observing them. There are people out there who could greatly benefit from free market capitalism, but I'm becoming more and more convinced that Americans simply are not responsible enough for it to work correctly. I'm not proposing Ayn Rand-ish "anti-dog-eat-dog" legislation, however; it just appears that we need to manage acceptable risk centrally, and try to take on that American tendency to set goals to more than we've actually earned.

[Sheilbh]

A shorter version of the Sen article was in today's FT - I can't believe sheilbh didn't post it already.   

I read the FT at work :p

[Hansmeister]

I don't advocate the abolition of charity, simply of redistribution of wealth by means of force. That is what socialism denies: volitional choice. It teaches that an individual 'owes' society without ever defining what that really means: everyone except you is entitled to your work.

This is not how they/I would see things(by Socialism I take it you mean everything Redder than Rapture).  No economic man is an island; even your most innovative member of society succeeds due to the thousands or millions 'below' him that make him possible. Even John Galt needed a baker. 

I'd also argue that your kind of Market Liberalism has yet to provide much beyond the occasional hasty, unegalitarian bubble  that collapses at the cost of global stability.  I don't think the world could afford another Great Depression, as it is I am concerned about this recessions' plausible impact upon the least stable parts of the world.

Spock=Habbaku, right?

Since the Great Depression was caused by the gov't interfering in the free market you are making my point for me.  Precisely because we can't afford that type of cock-up we need to keep gov't out of messing with the economy.  Having the gov't trying to solve this mess is what will lead us into a depression.

[Neil]

Particularly since those dodgy mortages were mostly a creation of the gov't to begin with.

Did the government encourage the securitisation of these debts into exotic instruments?

Of course not.  They didn't have to, because pretty much every debt gets turned into securities in one way or another.

[Grallon]

So that Evil Spock was Habbaku.  Cute but clueless unfortunately.

-----

Anyhow the article made eminent sense to me.  A balanced economy, with strong regulations to ground the market and prevent greedy bastards from abusing it, is far preferable to what we've been experiencing in the last 30 years.  Although I still think we should use this period of instability to re-think many concepts we take for granted.




G.

[Berkut]

I don't advocate the abolition of charity, simply of redistribution of wealth by means of force. That is what socialism denies: volitional choice. It teaches that an individual 'owes' society without ever defining what that really means: everyone except you is entitled to your work.

I'd also argue that your kind of Market Liberalism has yet to provide much beyond the occasional hasty, unegalitarian bubble  that collapses at the cost of global stability. 

I think it has provided decades of unprecedented economic growth, wealth, scientific progress, an increased lifespan, vastly increased standards of living for pretty much everyone in the world, stability, reduction in wars and violence, and really good coffee.

Other than that, you are right - market liberalism/capitalism has been a disaster.

[Berkut]

Particularly since those dodgy mortages were mostly a creation of the gov't to begin with.

Did the government encourage the securitisation of these debts into exotic instruments?

Yes.

In fact, when some people in the government started to worry about how the securitization of mortgages had removed risk form the lenders and increased shitty loan rates, the socialist lefts Wonder-boy Barney Frank personally made sure reform was impossible because it might mean that poor people could not continue to get loans for homes they could not afford.

[The Minsky Moment]

In fact, when some people in the government started to worry about how the securitization of mortgages had removed risk form the lenders and increased shitty loan rates, the socialist lefts Wonder-boy Barney Frank personally made sure reform was impossible because it might mean that poor people could not continue to get loans for homes they could not afford.

That is an interesting story, but not an accurate one.  The truth is that the Bush admin made some noises about addressing this issue and than quickly put it about #3,459 on the priority list once more important things came along like launching the Iraq War, announcing new faith based initiatives, and so on.

Neither faction in Congress had any real interest or appetite in reform b/c they all were taking money from the people making tons of $$ of securitization.  During most of this time period, the much villified Barney Frank was in the minority.

[Berkut]

In fact, when some people in the government started to worry about how the securitization of mortgages had removed risk form the lenders and increased shitty loan rates, the socialist lefts Wonder-boy Barney Frank personally made sure reform was impossible because it might mean that poor people could not continue to get loans for homes they could not afford.

That is an interesting story, but not an accurate one.  The truth is that the Bush admin made some noises about addressing this issue and than quickly put it about #3,459 on the priority list once more important things came along like launching the Iraq War, announcing new faith based initiatives, and so on.

Neither faction in Congress had any real interest or appetite in reform b/c they all were taking money from the people making tons of $$ of securitization.  During most of this time period, the much villified Barney Frank was in the minority.

Sadly, my story is rather simplified, but largely accurate.

Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
Representative Melvin L. Watt, Democrat of North Carolina, agreed. ''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

Nice job on regurgitating Franks press release where he tries to pretend he was on the other side of this issue. The fact of the matter is that Frank opposed any kind of reform, and fought it tooth and nail, and even once a bill was passed that was a piece of shit, watered down joke of "reform", he STILL voted against it.

[Tiamat]

I'm curious, how does a minority party in the House block or offer meaningful opposition to legislation?  ???

You'd do better to find some super villain in the Senate. Surely then we can blame this mess on Democrats.

[Berkut]

I'm curious, how does a minority party in the House block or offer meaningful opposition to legislation?  ???

By refusing to vote for it, expending political capital to oppose it, refusing to cooperate with it getting out of comitees, etc., etc.

Its not like the minority party is helpless or something.

Funny how people are so determined to apologize for obviosuly bullshit statemetns like "There is nothing wrong with FF! Quit trying to regulate it, because then poor people won't be able to but houses anymore!"

And more to the point - Frank may not ahve been in the majority party back in 2003, but he is now. And we are relying on him and his buddies, the supposedly smartest peoples in Congress, to fix the problem NOW. And this is the guy who insisted that everything was fine as the house was literally crumbling under his feet, all because he could not stand the idea of letting reality interfere with his social engineering project.

[Berkut]

You'd do better to find some super villain in the Senate. Surely then we can blame this mess on Democrats.

Who said anything about blaming the mess on Democrats?

My point is simply that the idea that someone like Frank is the solution to this problem is ludicrous.

And the idea that the blame CANNOT be on the Dems at all, because they were not in the majority at some cherry picked moments over the last ten years, is equally ludicrous.