In Defense of Capitalism & Free Markets

[clarkatticus]

We were bought by a large corp years ago. They were suprised to find we did a 100% inventory every day and rectified it by the evening. We counted a multimillion $$ inventory with 325 SKU's in about 1 hour without stopping production using regular employees. All companies can be constantly audited for regulation, we just need to train the regulators. Madoff was able to confound the regulators by bluster and intimidation, after all, he started NASDAQ. Enron sent so many clues that my only guess is that Wall St just was too greedy to stop it. Other nations like Germany do not allow this kind of speculation within their borders and came out of 2008 better than the rest of us. And Dr Who, you are right-no company is too big to fail-if you don't mind throwing the entire world into a depression that makes 1929 look like party time. BofA, CitiBank, Wells Fargo, Goldman Sachs, WaMu, RBS, GMC, Chrysler, all their suppliers, possibly Ford, and the iceing on the cake-AIG (who insured much of the debt of many of the worlds bigest financial inst.) all would have failed. We would be having armed conflict with our neighbors over the water in their swimming pool. Unemployment would be at 50%+ and food riots would be on the TV for everyone who could afford electricity. In my mind, that is too big to fail. We were that close, TARP saved the nation whether anyone wants to admit it or not.

 

[clarkatticus]

Truth is, you cannot separate gov from economics, you have to make a conscious decision to do what's right for the nation, not just a corporation. The Supreme Court recently allowed corp. to make as many political contributions as they like, so corp greed will have a comfy seat next to political graft. I would be OK with ending corp contributions AND union contributions. 1 person, 1 vote would work for me. Regulations are laws, the SEC is an enforcement agency, although little used as you say. I would not expect a traffic cop of an FBI hostage negociator to regulate corporate accounting. When you use the term presumed guilty, what you really mean is being out of compliance. Companies are forced to comply with a number of regulatory restrictions and document them on a set timetable, they also have industry standards that list fuduciary regulations (what you did with the customers or consumers money) Any attempt to diviate from the regulations or the timetable is being out of compliance, a pre-notice to the affected agency can usually get you a variance or extension, failure to do so-you are screwed.

 

[Dr.Who]

We were bought by a large corp years ago. They were suprised to find we did a 100% inventory every day and rectified it by the evening. We counted a multimillion $$ inventory with 325 SKU's in about 1 hour without stopping production using regular employees. All companies can be constantly audited for regulation, we just need to train the regulators. Madoff was able to confound the regulators by bluster and intimidation, after all, he started NASDAQ. Enron sent so many clues that my only guess is that Wall St just was too greedy to stop it. Other nations like Germany do not allow this kind of speculation within their borders and came out of 2008 better than the rest of us. And Dr Who, you are right-no company is too big to fail-if you don't mind throwing the entire world into a depression that makes 1929 look like party time. BofA, CitiBank, Wells Fargo, Goldman Sachs, WaMu, RBS, GMC, Chrysler, all their suppliers, possibly Ford, and the iceing on the cake-AIG (who insured much of the debt of many of the worlds bigest financial inst.) all would have failed. We would be having armed conflict with our neighbors over the water in their swimming pool. Unemployment would be at 50%+ and food riots would be on the TV for everyone who could afford electricity. In my mind, that is too big to fail. We were that close, TARP saved the nation whether anyone wants to admit it or not.

I don't buy that all those companies would have failed. I don't buy that if one or a few of them did fail that the impact would have been that great (consider the size of the companies compared to the size of the total GDP). And I don't buy that if one or a few of them failed that the effect would have all been negative. Each time one of those companies would have failed it would have been a boon to their competition.

Edit: wait you said world depression. So we need to compare the size of the company to the size of the world GDP. I just dont buy that if AIG failed that even if all of their assets just dried up and disappeared it would even make a dent in the world economy. I don;t even think that the total value of all those companies adds up to a large enough number to make too large a dent in the world economy. The people who believed that were the owners of those companies and the politicians who they were in bed with.

 

[GenSeneca]

BofA, CitiBank, Wells Fargo, Goldman Sachs, WaMu, RBS, GMC, Chrysler, all their suppliers, possibly Ford, and the iceing on the cake-AIG (who insured much of the debt of many of the worlds bigest financial inst.) all would have failed. We would be having armed conflict with our neighbors over the water in their swimming pool. Unemployment would be at 50%+ and food riots would be on the TV for everyone who could afford electricity. In my mind, that is too big to fail. We were that close, TARP saved the nation whether anyone wants to admit it or not.

TARP was a gigantic waste of money. All those corporations that you think were "too big to fail", used their TARP money to buy up all the smaller firms who weren't granted immunity at taxpayer expense. That only served to make the giants who were "too big to fail" even bigger.

As for claims of total anarchy in the streets had we not passed TARP, what a load of hyerbole. Would things have been bad? Very. Would we have bounced back in better shape than we are now? I believe so. And the Dr. was correct, the irrational belief that all those companies would have been liquidated is ludicrous. Most, if not all, would have gone through much the same process they went through with TARP; they would have filed for bankruptcy, restructured themselves, and emerged more competitive and fiscally sound on the other side.

Trying to prevent the market from purging itself of mal-investments by artificially reinflating market bubbles with taxpayer money, or government debt, or inflation, is akin to trying to avoid the pain of a hangover by shooting herion, it's madness.

What will you have the government do after the next bubble breaks? More bailouts? More debt? Eventually the other nations of the world will see that the US has become a fiscal basketcase and lower our AAA credit rating. You think the sky was going to come crashing to the ground as a result of the collapse in housing, just wait till our credit rating gets downgraded... No amount of government spending can prevent Americans from feeling the unimaginable pain of that scenario.

 

[GenSeneca]

Truth is, you cannot separate gov from economics,

Can we separate Church and State?

...you have to make a conscious decision to do what's right for the nation, not just a corporation.

The government should not be in the business of choosing what is right for a corporation. And keeping a wall of separation between government and business IS what's best for the nation.... Unless of course you think letting politicians get in bed with corporate interests and playing a game of taxpayer funded back scratching is "what's best for the nation", then our current system of corporatism is exactly what you want.

The Supreme Court recently allowed corp. to make as many political contributions as they like, so corp greed will have a comfy seat next to political graft. I would be OK with ending corp contributions AND union contributions. 1 person, 1 vote would work for me.

Take away the power of politicians to grant favors to business (tax breaks, subsidies, no-bid contracts) and those "greedy" corporations would have no reason to nestle up with politicians who would be unable to repay the favors.

Regulations are laws, the SEC is an enforcement agency, although little used as you say. I would not expect a traffic cop of an FBI hostage negociator to regulate corporate accounting. When you use the term presumed guilty, what you really mean is being out of compliance.

No, that's not what I mean. Companies are put under the microscope from day one, so if you're claiming that they are under a microscope for being "out of compliance", then companies must be born with some kind of "original sin" that I don't know about.

Companies are forced to comply with a number of regulatory restrictions and document them on a set timetable, they also have industry standards that list fuduciary regulations (what you did with the customers or consumers money) Any attempt to diviate from the regulations or the timetable is being out of compliance, a pre-notice to the affected agency can usually get you a variance or extension, failure to do so-you are screwed.

Would you support, or oppose, forcing every single American in the country to comply with the exact same laws, and undergo the exact same regulations, that corporations are subject to?

 

[clarkatticus]

AIG was the world's insurance company. They insured the loans most of the major banks passed out, more to the point, the money gambled on toxic mortgages and doubled down on with derivatives. GDP means nothing if money is worth nothing, revenues that we did lose is still crippling states, imagine losing 10X that much as the million or so jobs lost just from the automotive industry Then would come the downward spiral as all business' fell or domino'ed as a result of this increased loss. Was TARP mismanaged? Hell yeah, it was written pretty quick, but for a good reason. You believe what you want, I think this all started with Reagan, he was grossly wrong and time will prove it.

 

[GenSeneca]

imagine losing 10X that much as the million or so jobs lost just from the automotive industry

On what, exactly, are you basing the belief that the auto companies would have been liquidated?

Then would come the downward spiral as all business' fell or domino'ed as a result of this increased loss.

It would have created massive opportunities for fiscally responsible companies to buy up billions worth of assets for pennies on the dollar. Under the direction of fiscally responsible companies, the nations economy would have been rebuilt and come back stronger than ever. Instead, we bailed out the fiscally irresponsible companies who bet it all and lost their shirts, preventing the fiscally sound companies from being able to massively expand their operations. As a result, the same fiscal basketcases are barely holding on, waiting for the next round of bailouts and stimulus to keep them going one more year.

I think this all started with Reagan, he was grossly wrong and time will prove it.

It all started with government. Fed policy artificially manipulating the interest rates and expanding credit to dangerous levels, politicians pushing for the "ownership society" and claiming that home ownership was the American dream, government threatening lending institutions and coercing them to lower lending standards, Fannie and Freddie (government sponsored entities) volunteering to become a dumping ground for volatile derivatives and mortgage backed securities that the banks were afraid to be stuck with, and then government guaranteed all that worthless paper as being backed with the full faith and credit of the American government.

Yes, there was no shortage of "greedy" businessmen who rode that train, but it was government who laid the tracks, built the train, and drove it off the cliff. Yet somehow, government is seen as the innocent bystander in all of this, rather than the conductor... Which is proof that propaganda works.

 

[clarkatticus]

As you know, the US gov owns a good part of GM as we speak, as well as Chrysler. You have a bad memory, there were no buyers. Only the US gov had the ability to bail out so many companies. This is a fundamental difference in opinion, how much suffering would a nation be allowed to go through in the abscence of gov intervention. You can say things would have been OK in the long run, but the very minds who brought you Reagan's idealism were scared and knew the consequences. It may very well have been the end of capitalism as you know it. Hard to prove a negative, but I believe the right is being disingenious in this, they would have done the same thing ( and did in many cases) You can try to revise history to "prove" your theory on economics, but time will show. In the meantime, sit back and watch Obama do it as right it can be done with a Tea Party house.

 

[GenSeneca]

You have a bad memory, there were no buyers.

The companies were bailed out (bought with taxpayer money) before they filed for chapter 11. Buyers do not approach a company about acquisition until after they have filed for chapter 11.

Only the US gov had the ability to bail out so many companies.

I wasn't suggesting that other companies would have come in and bailed them out prior to declaring bankruptcy but would have bought them out during the bankruptcy process.

This is a fundamental difference in opinion, how much suffering would a nation be allowed to go through in the abscence of gov intervention.

So is it a good idea to have government purchase a 51% share in all US companies? Surely that kind of intervention would make sure these companies are all on the up and up and working in the best interest of the nation rather than their own corporate greed.

You can say things would have been OK in the long run,

You're claiming America would have collapsed into a third world nation. At least I'm being realistic. Yes, there would have been pain but the nation would have rebounded without spending trillions in debt and without total anarchy in the streets.

but the very minds who brought you Reagan's idealism were scared and knew the consequences.

I have no idea what you're referring to or why you're bringing this up.

It may very well have been the end of capitalism as you know it.

Is that the system you think the United States currently operates under, Capitalism?

You can try to revise history to "prove" your theory on economics, but time will show.

Time has shown time and again that Government interference in the economy is a recipe for destruction.

In the meantime, sit back and watch Obama do it as right it can be done with a Tea Party house.

I wish Obama well in that task.

 

[clarkatticus]

Oh yeah? What companies would that be? The one's out of business because no one has money to buy thier goods because they are all unemployed? I didn't mean to imply that the US would be a third world nation, I meant to imply that the defination of third world would apply to the entire world, or nearly so. Government intervention in the economy has been consistant for the last century, you yourself admitted this while bashing the fed reserve. So for 100 years or so our standard of living has increased dramatically and you want to throw the baby out with the bathwater? And no, since Reagan this has not been capitalism but a constant class war with the middleclass losing and the wealthy getting richer. Reagan was wrong, time to own up.

 

[Rick]

Where do people get this odd notion that there's something wrong with the rich getting richer? It's as if they think wealth is a kind of fixed sum game, where one person's wealth can only come at the expense of another. If that were true, the wealth of society as a whole would never increase. In the same category is complaining that Exxon, or some other company, made big profits. It would be better if they made small profits? Even better if they took a loss??

 

[clarkatticus]

I would have no problems with big profits if the benefits were to the consumers in America, unfortunately companies today have no accountability for fraud (yet) and are free to move their profits from America to foreign nations leaving unemployment rampant here. How could it be the nation with the most productive workers on earth lose jobs to emerging nations, especially when we are the consumers that float these same companies? The answer is individual greed, not profit. I invest in the market and I do well, but I am not so blind as to see the vast majority of Americans have neither the ability or the skill to do the same, many never recovered from the butt dart Bush delivered in '08. So to you statement, 2% of the people control 90% of the wealth of this nation, and I don't trust that 2%

 

[clarkatticus]

I am sorry, got my #'s messsed up, 10% owns 83% of the wealth, and yes, I don't trust the 10%

 

[GenSeneca]

Oh yeah? What companies would that be? The one's out of business because no one has money to buy thier goods because they are all unemployed? I didn't mean to imply that the US would be a third world nation, I meant to imply that the defination of third world would apply to the entire world, or nearly so.

This is just getting silly... You keep making these absurd and unprovable chicken little claims about how the whole world would have returned to the dark ages and remained there forever without government bailouts and stimulus. It's boring and pointless.

The only thing that interests me is defending Capitalism and Free Markets, that's the purpose of this thread, and you cannot make any credible claims, or offer any valid proof, that the housing market crash was the result of Capitalism or Free Markets because neither have ever existed in the United States, or anywhere else.

Government intervention in the economy has been consistant for the last century, you yourself admitted this while bashing the fed reserve. So for 100 years or so our standard of living has increased dramatically and you want to throw the baby out with the bathwater?

You do realize that the United States is 235 years old, right? Our standard of living has been increasing since our nation was founded in 1776. So for 137 years prior to the creation of the Fed, our standard of living was already increasing. Now if you have some verifiable information that proves our standard of living only began increasing with the creation of the Fed, then I'd love to see it, otherwise, your comments are shown to be political rhetoric rather than a valid point about the subject.

And no, since Reagan this has not been capitalism but a constant class war with the middleclass losing and the wealthy getting richer.

We've never had Capitalism or Free Markets. It's true that, as a nation, we have come closer to realizing the ideal than any other nation on earth and it's for that reason alone that our nation has surpassed all other nations in history.

Reagan was wrong, time to own up.

Seriously, why do you keep bringing up Reagan? I have said nothing about the man or his policies, this isn't the, "In defense of Reagan and his policies" thread, so either explain why you feel he's relevant to the conversation or discuss the actual topic.

Now one question that I do hope you will answer,

How do you propose stopping politicians from getting in bed with corporate special interests? ...or do you not think that's a problem?

 

[Supposn]

Commitment to an ideology.

Originally Posted by Supposn
You may believe you’re more committed than I am to the concept of free enterprise.

..........There's no doubt.

GenSeneca, you’ve declared yourself to be more committed than I to the concepts of free enterprise and individual freedom.

I’m a strong proponent of free enterprise and individual freedom but I also believe that each proposed or existing regulation must be judged upon its own attributes and merits; (that certainly includes considering the consequences of establishing or ignoring precedents).

Often the choices are not between what is or isn’t valid but the more difficult choosing among concepts that are all valid. I do not believe my confidence of a concept's validity automatically grants it superior status over all other valid concepts in all conditions or situations.

This is not good reason to believe that you’re more or I’m less committed to the concepts of free enterprise and individual freedom.

Respectfully, Supposn