AIG to be bailed out to the tune of $85 billion

Aris

Whatda? I'm a little confused and fuzzy on how this relates to AIG. It's very difficult to read your posts sometimes.

Try the sequence –

http://www.hipforums.com/newforums/showpost.php?p=4718495&postcount=34
http://www.hipforums.com/newforums/showpost.php?p=4718537&postcount=36
http://www.hipforums.com/newforums/showpost.php?p=4718583&postcount=37
http://www.hipforums.com/newforums/showpost.php?p=4718725&postcount=38
http://www.hipforums.com/newforums/showpost.php?p=4721680&postcount=39
http://www.hipforums.com/newforums/showpost.php?p=4722126&postcount=42

I’m sorry if it isn’t that clear, I’ll try and put it in a more basic way for you –

The neo-liberalists claimed that under there deregulated ‘free market’ model if a business failed it should be allowed to fail.

But they sold the con (through think tanks and lobbyists) that neo-liberalism would work and always work, because of the superiority of their ‘free market’ model and for the very reason that the people in control of corporations’ would also ‘fail’ if their businesses failed.

The thing was that those that had most to gain from deregulated neoliberal economic ideas were those that could use it to cushion themselves if things did fail.

I mean a CEO that is making 500 times the amount of his average worker is 500 times more likely to weather any economic downturn than the average worker and that’s a large margin that makes one hell of a cushion.

Are you with me so far?

*

How can I put it more simply –

Imagine the captain, senior officers and owners of a ship.

The ship can take two routes one is very risky but will reap huge profits that will mainly go into the hands of the captain, senior officers and owners of a ship. The other route is much less risky but would bring in a, still substantial, but smaller profit.

And during the time since the ship was launched the rules and regulations have been relaxed so maintenance hasn’t been kept up and some safety features have been bypassed. So it’s not as steady or sturdy as it once was.

The ship survives the risky route a few times then hits the rocks.

Now if the ship sinks, aren’t all the people involved at risk of drowning?

Well what if the captain has earned enough from previous trips to have his own yacht along and is therefore able to sail off on it and the officers all have places on the last few life boats still on board and can also escape and of course the owners are safely back on shore.

In other words the ones least at risk are the ones that gain more from sailing a risky course.

Oh yes if the ship sinks it’s still lost, so the owners have lost the cargo and ship but they have earned enough over the years that they still will be alright and the captain might get a bad reputation which he can think about while on his yacht in Barbados. They might even regret their risky decisions over a meal at an exclusive restaurant, but…

So even if the good ship SS Lehman goes down they still come out alright.

**

But what if the ships cargo can’t be allowed to go down, what if the cargos lose would bring about a chain reaction that would pollute the seas and the air for 20 years. Well in that case the navy is sent in at great public expense to keep the ship afloat.

That is the other part of the neo-liberal con trick.

Sometimes the risk of a company or institution failing is too great. This was also known but once again the neoliberal con was that no such failure would happen so there was nothing to worry about.

**

 

Hipstatic

I notice you are not addressing the points I’ve raised.

 

Rat

Problem is you answer still seem to be to make a bad situation worst by pursuing ideas that would just increase the power of wealth.

I get the impression that anything to the left of your extreme right wing, libertarian leaning, viewpoint is in your opinion socialist and under the control of ‘the conspiracy’ of Lucifer worshipping Zionists. It’s not exactly the most rational or balanced way to approach a subject and is very likely to cloud a person’s judgement.

 

Sorry was I supposed to address points like this?

Lehman was not supported. It failed. Shareholders lost everything, at a cost of zero to the taxpayer. The fact that the CEO has personal wealth even after his shareholdings in Lehman are wiped out is not "socialism for the rich". The government had nothing to do with protecting his residual wealth.

Is this not the point you wanted me to address?

 

Hipstatic

But this is it, do you believe in bringing about a better society or do you think people should just grab what they can and to hell with anyone else?

It seemed to me as with many other observers that the neoliberal philosophy was closer to the latter than the former.

I’ve not talked about ‘socialism for the rich’ I have tried to explain the neoliberal con trick that has led to not just Lehman’s going under but also why government’s have had to step in to prop up the system.

You on the other hand don’t seem to be saying much, your attitude seems to be a shrug – ‘Lehman’s went under and other institutions have had to be propped up, so what, who cares’ – that I find as irrational a stance as Rat’s conspiracy theory doom saying.

Don’t we need to try and work out what went wrong?

**

 

Of course I want a better society.

What con trick? Lehman failed, the government stood by and did nothing, and shareholders lost all their money. Businesses are supposed to fail under capitalism. Neo liberals never promised that no businesses would ever fail.

The two institutions that were bailed out so far - really bailed out - were Freddie and Fannie. These were quasi governemental institutions that owned or guaranteed over half the $12 trillion mortgage market. Now you are trying to tell me that we live in an extreme neoliberal dystopia yet HALF the mortgage market - and this crisis is all about the mortgage market - is a product of government interference. This is $6 trillion dollars we're talking about. Couldn't this be part of what went wrong?

 

Hipstatic

Quote:
But this is it, do you believe in bringing about a better society or do you think people should just grab what they can and to hell with anyone else?It seemed to me as with many other observers that the neoliberal philosophy was closer to the latter than the former.

Of course I want a better society.

Do you? You haven’t exactly shown much evidence of it here.

**

Quote:
I’ve not talked about ‘socialism for the rich’ I have tried to explain the neoliberal con trick that has led to not just Lehman’s going under but also why government’s have had to step in to prop up the system.


What con trick? Lehman failed, the government stood by and did nothing, and shareholders lost all their money. Businesses are supposed to fail under capitalism. Neo liberals never promised that no businesses would ever fail.

Selective reading, a useful art in a dissembler but it doesn’t make the words disappear.

The trick was to gain as much from neoliberal policies in an effort to cushion against the prospect of a fall while claiming that no fall was possible.

**

Quote:
Don’t we need to try and work out what went wrong?

The two institutions that were bailed out so far - really bailed out - were Freddie and Fannie. These were quasi governemental institutions that owned or guaranteed over half the $12 trillion mortgage market. Now you are trying to tell me that we live in an extreme neoliberal dystopia yet HALF the mortgage market - and this crisis is all about the mortgage market - is a product of government interference. This is $6 trillion dollars we're talking about. Couldn't this be part of what went wrong?

So neo-liberalism has been working fine this whole crisis was the fault of ‘government interference’?

 

Well its quite simple - i believe free markets and free people make a better society.

I don't know what this means.

I am not familiar with the neoliberal claim that nothing can ever go wrong.

This was a housing bubble. Not a mezzanine tranche CPDO bubble which benefited high net worth investors in Cayman Islands based hedge funds. A housing bubble, everything flowed from that. 70% of the US was part of this bubble, and in fact you were part of this bubble in the UK - you took your gains and sold out, which will help cushion your fall when the UK goes into recession. Were you in on the trick?

I'm not sure if you are acknowledging my point or not - can you see how $6 trillion worth of government intervention to provide cheaper, easier credit for mortgages would have a role in the housing bubble?

Also, out of curiosity, what is wrong with your quote function?

 

Hipstatic

Well its quite simple - i believe free markets and free people make a better society.

LOL – yes and Rat has at times said the very same thing – and like his similar statements its basically meaningless rhetoric if you don’t actually explain what you mean.

Also as the Chicago boys discovered in Chile sometimes the only way to bring in ‘free market’ reforms is under a dictatorship.

**

The trick was to gain as much from neoliberal policies in an effort to cushion against the prospect of a fall while claiming that no fall was possible.

I am not familiar with the neoliberal claim that nothing can ever go wrong.

Here are some comments by the economist Paul Krugman on Milton Friedman who many see as the father of neoliberal thought – “he slipped all too easily into claiming both that markets always work and that only markets work. It's extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong, or that government intervention could serve a useful purpose” and points out that “Friedman's laissez-faire absolutism contributed to an intellectual climate in which faith in markets and disdain for government often trumps the evidence.”
http://www.nybooks.com/articles/19857

**

This was a housing bubble. Not a mezzanine tranche CPDO bubble which benefited high net worth investors in Cayman Islands based hedge funds. A housing bubble, everything flowed from that. 70% of the US was part of this bubble, and in fact you were part of this bubble in the UK - you took your gains and sold out, which will help cushion your fall when the UK goes into recession. Were you in on the trick?

Once again a clever move, when the other person is arguing macro, counter by talking micro. It can work like a charm if it not tried so crudely that it is easily spotted.

I’m not talking of this bubble or the last but the move toward neoliberal economic ideas that has been going on for over 30 years.

I mean you said “Lehman failed, the government stood by and did nothing, and shareholders lost all their money”

Well, here is a list of the supposed biggest shareholders in lehman Brothers.
http://lcmarket.blogspot.com/2008/09/biggest-shareholders-of-lehman.html

Well the CEO of French company AXA, Henri de Castries says “the current crisis offers AXA opportunities to strengthen its market positions” so he doesn’t seem that upset, probably softened by a total compensation for 2007 of €3,545,987 (I believe that is $5,185,517).

FMR LLC (Fidelity Investments) is run by the Johnson family and the CEO is Edward Crosby "Ned" Johnson III who was ranked by Forbes as the 33 richest person in America in 2005 with an estimated worth of $6.5 billion.

Legg Mason’s (which controls ClearBridge among others) CEO is Mark Raymond Fetting, whose total compensation was 4,703,699. The owner is Raymond A. "Chip" Mason, who when he was CEO led “the Baltimore Business Journal's List of the area's 100 highest-paid executives with a combined salary and bonus of $7.64 million” http://baltimore.bizjournals.com/baltimore/stories/2003/06/23/story2.html

Do you think they’ve been ‘wiped out’ by the death of Lehman’s?

**

Quote:
So neo-liberalism has been working fine this whole crisis was the fault of ‘government interference’?


I'm not sure if you are acknowledging my point or not - can you see how $6 trillion worth of government intervention to provide cheaper, easier credit for mortgages would have a role in the housing bubble?


But I’m not talking about this one bubble but the economic philosophy that led to it.

I mean you seem to be making the same mistake as Friedman your free market model can’t be wrong so it must be the government’s fault.

What next a Rat like conspiracy theory?

 

So Hipstatic have you run away because you don't have any answers?

Maybe you are a lot more like Rat than you think.

 

I don't think its all that complicated. I support free market and free people because I think it leads to a better society. You support democratic socialism because you think it leads to a better society. I don't think either its "right" really, I wouldn't expect all societies to elect the same kind of government. But my feeling is that, free to chose, more would migrate towards my model than yours. As it happens that seems to be the case.

LOL, bringing up Pinochet so soon? Shall I proceed to compare your views to Stalinism and Maoism now?

I'dhave preferred a quote of Friedman saying that himself - not a quote of a critic of Friedman saying that Friedman says something.

This is really just a truism - proponents of socialism don't tell to dwell on the failings and shortcomings of socialism either. I don't think you've done much to prove your theory that neoliberals promised nothing could ever go wrong.

You seem to forbid any discussion of the state role in all this - claiming its "micro". But what you really are doing is preventing your assumptions from being challenged.

OK then what's your question?

You are confused - these companies are fund managers. Their CEO's are not personal investors in Lehman. Even their companies may not be investors in Lehman - funds they manage on behalf of their clients were invested in Lehman.

Butas I said before - the government didn't protect the personal wealth of these people. So what exactly is your issue? They paid a very large price - their invesment in Lehman was wiped out. This in many cases represented a huge proportion of their net worth. It was a disaster for them. They were not bailed out.

Short of a crime, I do not believe their personal assets should be at risk. This is the principle of limited liability under which all modern economies function.

Well no, I'm not saying that. Neoliberalism does not say nothing can ever go wrong. Recessions happen in free market economies. Bubbles happen. And nobody really believes that you can have a banking sector that is free of state interference - whether through a central bank, as the lender of last resort, or through deposit insurance, ultimately underwritten by the state. So here we are.

You on the other hand seem quite sure that the government should use this opportunity to grab as much regulatory power as possible and to make the pips squeak (and launching a attack on the free speech of your ideological opponents while you're at it), all while refusing to debate any state role in this mess.

Poor Rat, his name is now used as an insult!

 

Fannie Mae Eases Credit To Aid Mortgage Lending
Published: September 30, 1999

Anyone besides me find that interesting?

 

i do, but i'm the choir you're preaching to so....

 

hipstatic


Quote:
Also as the Chicago boys discovered in Chile sometimes the only way to bring in ‘free market’ reforms is under a dictatorship.


LOL, bringing up Pinochet so soon? Shall I proceed to compare your views to Stalinism and Maoism now?

I’m sure I’m not the only one that noticed you didn’t address the question.

And I’m not a follower of communism and I wouldn’t defend the economic policies of Stalin or Mao are you saying categorically here that you think that what the Chicago Boys got Pinochet to do economically was wrong?

**

Quote:
Here are some comments by the economist Paul Krugman on Milton Friedman who many see as the father of neoliberal thought – “he slipped all too easily into claiming both that markets always work and that only markets work.


I'd have preferred a quote of Friedman saying that himself - not a quote of a critic of Friedman saying that Friedman says something.

I’m sure I’m not the only one that noticed you didn’t address what was said are you saying that Krugman is a liar?

**


Quote:
It's extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong, or that government intervention could serve a useful purpose” and points out that “Friedman's laissez-faire absolutism contributed to an intellectual climate in which faith in markets and disdain for government often trumps the evidence.”


This is really just a truism - proponents of socialism don't tell to dwell on the failings and shortcomings of socialism either. I don't think you've done much to prove your theory that neoliberals promised nothing could ever go wrong.

LOL hell I know a number of socialists and we are always arguing over the failings and shortcomings of each others interpretation of socialism, that’s how progress in thought takes place.

Are you saying that you wouldn’t discuss the failings and shortcomings of the free market even if you knew they existed?

Is it possible that the reason you so often seem to shy away from addressing criticism of your ideas is because you also see those failings and shortcomings but are unable to bring yourself to ‘dwell’ on them?

**


Quote:
Once again a clever move, when the other person is arguing macro, counter by talking micro. It can work like a charm if it not tried so crudely that it is easily spotted.


You seem to forbid any discussion of the state role in all this - claiming its "micro". But what you really are doing is preventing your assumptions from being challenged.

In what way am I ‘forbidding’ discussion?

You said “A housing bubble, everything flowed from that”

But as I pointed out – “I’m not talking of this bubble or the last but the move toward neoliberal economic ideas that has been going on for over 30 years”

You are the one that seems not to be addressing what’s being raised.


**

Quote:
I’m not talking of this bubble or the last but the move toward neoliberal economic ideas that has been going on for over 30 years.


OK then what's your question?

Question?

Have you actually been reading the posts or just thinking up ways to not to address what’s said?

I’m pointing that in my opinion the problems that are being felt now are the end of neoliberal process that began some 30 years ago.

It seems to me that the trick was to gain as much from those neoliberal policies in that time as to cushion against the prospect of a fall while trying to claim that no such fall was possible.

So the salaries of top executives rose dramatically in that time and bonuses grew fantastical.

You don’t seem to be putting up much of a counter argument.

**


Quote:
Well, here is a list of the supposed biggest shareholders in lehman Brothers.

Do you think they’ve been ‘wiped out’ by the death of Lehman’s?


You are confused - these companies are fund managers. Their CEO's are not personal investors in Lehman. Even their companies may not be investors in Lehman - funds they manage on behalf of their clients were invested in Lehman.

I’m not confused, if you actually read what’s been said rather than putting all your effort into evasion you might just understand what’s being said.

The trick was to gain as much from those neoliberal policies in that time as to cushion against the prospect of a fall while trying to claim that no such fall was possible.

**

Quote:
I mean you seem to be making the same mistake as Friedman your free market model can’t be wrong so it must be the government’s fault.


Well no, I'm not saying that. Neoliberalism does not say nothing can ever go wrong. Recessions happen in free market economies. Bubbles happen.

That was the impression that many advocates of neoliberalism tried to give, which was that neoliberlist policies couldn’t lead to a ‘crash’ because it could deal with such fluctuations.
Many pointed out this wasn’t the case even some free market economists (who believe such ‘corrections’ were necessary) but in a black and white world, something is either all good or all bad, deregulators pushed the ‘good’ and dismissed those that talked of the risks as pessimistic scaremongers.

To quote the Cato institute on the Great Depression – “Many people think that we need a big government to prevent, or to reverse, recessions. But the 1930s illustrate that activist policies increase, not decrease, economic instability. Government interventions reduce the flexibility that markets need to adjust to shocks and return to growth.”

**

And nobody really believes that you can have a banking sector that is free of state interference - whether through a central bank, as the lender of last resort, or through deposit insurance, ultimately underwritten by the state. So here we are.

But the deregulators wanted the government to bug off and it did, and if the state underpins everyone’s deposits isn’t that a bit like telling a gambler that the pension money he has ‘borrowed’ from a granny will be paid back by the state even if he does loose it? But if he wins he doesn’t have to share any with the little old lady.

**
You on the other hand seem quite sure that the government should use this opportunity to grab as much regulatory power as possible and to make the pips squeak (and launching a attack on the free speech of your ideological opponents while you're at it), all while refusing to debate any state role in this mess.

In what way have I ‘launched an attack on the free speech of my ideological opponents?’

I do think governments around the world should use this opportunity to grab the regulatory powers they need to make the markets work more effectively to everyone’s advantage. Why do seem to oppose that point of view?

And I do believe that states have had a role in this mess, I mean haven’t you been reading what I’ve posted or what?

At one time or another I think I’ve laid into the economic policies of every US administration since Reagan.

**

Fannie Mae Eases Credit To Aid Mortgage Lending
Published: September 30, 1999
Quote:
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.


Anyone besides me find that interesting?


Yes this is all over the more right wing/free market type news and blogs sites and seems to be the stance taken by the same free market think tanks that advocated neoliberal policies (and I’m sure the lobbyists for the same cause will be whispering it in a lot of politician’s ears).


And I’m not the only one that’s noticed –


Don't blame Fannie and Freddie
http://www.guardian.co.uk/commentisfree/2008/jul/29/usa.mortgages

As it points out “economic conservatives will not roll over and surrender just because of a financial crisis. Instead, if history is a guide, they will blame regulation for the crisis. That was Milton Friedman's modus operandi when he launched the modern era of deregulation and animus to government with his false claim that the Fed caused the Great Depression.”

 

Shane, wonderful, you’re back.

You seemed to say you were going to discuss you views in the thread –

‘So sick of left vs right, why do Americans buy into the political/media class labels?’
http://www.hipforums.com/newforums/showthread.php?t=314753&page=4

Then you just disappeared, now that you’re back are you coming back to that discussion?

 

Sorry when did this thread become about Chile in the 1970s? Lets not have the debate spin off into a thousand tangents.

I'm sure I'm not the only one who notice that you claimed that free marketers claimed that nothing could ever go wrong and when it came time to provide proof all you had was "a critic of one economist says its extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong". Hard but not impossible? I still wish you could quote Freidman saying that yourself, arguing about second hand opinions is a bit of a waste.

Really! OK then provide us some examples where you have warned hipforums about the econmic dangers of high taxes, excessive regulation, state ownership of industry, powerful labor unions. If you are "always" arguing over the failings and shortcomings of socialism, you must have a lot of examples.

Face it, your argument is that proponents of free markets are biased in favor of free markets. Not really a bombshell you are dropping on us here.

Why would you ask that when in my very last post I said free markets have recessions and bubbles.

Shy away? I'm right here.

Because for example when I tallk about the state role in the housing crisis, you claim its "micro" and therefore outside the debate and then accuse me of avoiding important questions about Chile in the 1970s.

This is silly - why would these people knowingly let the companies they had built over decades blow up and wipe out the majority of their wealth? What kind of master plan is that?

That makes no sense at all to me, but if you find it convincing, great.

Many government interventions exacerbated the great depression. This is a valid point.

Except the moral hazard works in the reverse, because its the granny that can deposit the money with total indifference to the health of the bank. She's the one who has skewed incentives because of government intervention.

Don't you want to shut down the think tanks and prevent wall street from lobbying washington?

I see room for more regulation in some areas, but its more about adjusting and fine tuning regulation in a financial world that has constant change and innovation.Its about strengthening regulators' capabilities and effectiveness. I don't believe is a massive increase of regulation, because its not needed.

Well that's kind of the opposite though isn't it, because your criticism of the state role is that you wanted more of a state role. My point (obviously) was how the presence of state intervention, not the lack of it, played a role.

Very consistent then - like Friedman.

That's not really a response though, "oh that's what all the free marketers say". Yes, therefore you don't need to respond? Your article is quite a mix up - whereas mine pointed towards a shift to lower quality mortgages in 1999, your editorialist claims freddie and fannie don't even do low quality mortgages, and he only looks at asset growth from 2004-2006. I guess you think that sweeps $6 trillion under the rug?

But tell me, since you are so outraged by deregulation, and seem to think it is to blame for this crisis, name one regulation that was removed which contributed to this mess.

 

Hipstatic


And I’m not a follower of communism and I wouldn’t defend the economic policies of Stalin or Mao are you saying categorically here that you think that what the Chicago Boys got Pinochet to do economically was wrong?


Sorry when did this thread become about Chile in the 1970s? Lets not have the debate spin off into a thousand tangents.


So you don’t keep track of what’s being said? Or do you just ignore what you prefer not to address?


“Are you saying categorically here that you think that what the Chicago Boys got Pinochet to do economically was wrong?”


**


-I’m sure I’m not the only one that noticed you didn’t address what was said are you saying that Krugman is a liar?


I'm sure I'm not the only one who notice that you claimed that free marketers claimed that nothing could ever go wrong and when it came time to provide proof all you had was "a critic of one economist says its extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong". Hard but not impossible? I still wish you could quote Freidman saying that yourself, arguing about second hand opinions is a bit of a waste.


Oh dear another case of you not keeping track of what’s said or is this a ploy?


To clarify – you said earlier


Neoliberalism does not say nothing can ever go wrong. Recessions happen in free market economies. Bubbles happen.


(my reply) That was the impression that many advocates of neoliberalism tried to give, which was that neoliberlist policies couldn’t lead to a ‘crash’ because it could deal with such fluctuations.
Many pointed out this wasn’t the case even some free market economists (who believe such ‘corrections’ were necessary) but in a black and white world, something is either all good or all bad, deregulators pushed the ‘good’ and dismissed those that talked of the risks as pessimistic scaremongers.


To quote the Cato institute on the Great Depression – “Many people think that we need a big government to prevent, or to reverse, recessions. But the 1930s illustrate that activist policies increase, not decrease, economic instability. Government interventions reduce the flexibility that markets need to adjust to shocks and return to growth.”


**


LOL hell I know a number of socialists and we are always arguing over the failings and shortcomings of each others interpretation of socialism, that’s how progress in thought takes place.


Really! OK then provide us some examples where you have warned hipforums about the econmic dangers of high taxes, excessive regulation, state ownership of industry, powerful labor unions. If you are "always" arguing over the failings and shortcomings of socialism, you must have a lot of examples.


Really your inability to read the posts is just amazing


Try reading it again and work out why your reply doesn’t take any notice of what’s been said?


Here’s a clue it’s in the words.


As to your own words do you notice just how biased you are and how contradictory and hypocritical are your statements?


Probably not so I’ll try and explain
.

Hypocritical because just a few lines above you are seeming castigating me for supposedly going off a tangent only then to turn around and begin four of your own!


As to bias and contradiction lets look -


Its not tax to you its ‘high tax’ – but what is a high tax, one persons reasonable tax is another persons high tax, I mean some don’t want any tax so to them any tax is too high, are you claiming you are against all taxation? There are also many types of tax so it’s even more difficult to understand what you mean.


It’s the same with regulation, you claim that you want regulation, so how do you gauge that one regulation is excessive and another are you the arbiter of all things who decides what is or isn’t excessive?


Are you against any form of state ownership, of anything?


Are you against any type of union, be it of workers or business?


Hip you seem to be lashing out willy nilly trying to score point rather that arguing sensibly.

Please try and calm down read the posts more carefully and you make be able to make some coherent arguments that I can take more seriously than this rather pitiful offering, because so far you aren’t doing yourself any favours.


**


Face it, your argument is that proponents of free markets are biased in favor of free markets. Not really a bombshell you are dropping on us here.


Oh dear – please think before writing


As you should now (hell I hope you do) there are differing opinions as to how ‘free’ a free market should be among the proponents of free markets.


I’m not against there being a free market; I just want a regulated market that is made to work for everyone in a more equitable manner.

I’m just wondering why you seem to be against that.


**

Are you saying that you wouldn’t discuss the failings and shortcomings of the free market even if you knew they existed?


Why would you ask that when in my very last post I said free markets have recessions and bubbles.


But you seem to have implied that those are not failings or shortcomings they are just natural parts of the system you are defending.


Priests don’t call ‘acts of God’ like plagues or floods Gods failings or shortcomings do they?


**


Is it possible that the reason you so often seem to shy away from addressing criticism of your ideas is because you also see those failings and shortcomings but are unable to bring yourself to ‘dwell’ on them?


Shy away? I'm right here.


But you don’t seem to want to debate in anything like a coherent way, by not actually reading what’s been said (or pretending to) and by seeming to prefer point scoring over rationality.


**

In what way am I ‘forbidding’ discussion?


Because for example when I tallk about the state role in the housing crisis, you claim its "micro" and therefore outside the debate and then accuse me of avoiding important questions about Chile in the 1970s.


Once again I really wish you would actually keep track of the thread rather than ignoring it in favour of point scoring.


OK once again I’ll explain


I was pointing to the negative effect as I saw them of the neoliberal policies that have been going on for 30 years.


You tried to limit the discussion to just one aspect seemingly in an attempt to get out of discussing what I’d raised.


I highlighted your attempt at limiting the discussion and I can see you have got annoyed that I spotted it.


But while pointing out that – “I’m not talking of this bubble or the last but the move toward neoliberal economic ideas that has been going on for over 30 years”


I have not ‘forbidden’ any discussion of the most recent neoliberal crisis and are in fact discussing it with you (if you had read my posts you would have known that).


**


It seems to me that the trick was to gain as much from those neoliberal policies in that time as to cushion against the prospect of a fall while trying to claim that no such fall was possible.


This is silly - why would these people knowingly let the companies they had built over decades blow up and wipe out the majority of their wealth? What kind of master plan is that?


But have they been ‘wiped out’ as you claimed?


No, they are still wealthy (some of them just less so) and they became so wealthy by milking the neoliberal system as much as they could while they could, so that if any crisis came they would be cushioned from it.


**

I’m not confused, if you actually read what’s been said rather than putting all your effort into evasion you might just understand what’s being said.

The trick was to gain as much from those neoliberal policies in that time as to cushion against the prospect of a fall while trying to claim that no such fall was possible.


That makes no sense at all to me, but if you find it convincing, great.


LOL – in other words ‘I can’t think of any reasonable argument to put up against it so I’ll just shrug and hope no-one notices I didn’t address what’s been said’


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To quote the Cato institute on the Great Depression – “Many people think that we need a big government to prevent, or to reverse, recessions. But the 1930s illustrate that activist policies increase, not decrease, economic instability. Government interventions reduce the flexibility that markets need to adjust to shocks and return to growth.”


Many government interventions exacerbated the great depression. This is a valid point.


So you believe that no governmental body of any type or description should have done anything and or do anything to try and alleviate the problems caused by the busting of an economic bubble?


Are you claiming everything would have been alright without any government ‘interventions’ if so can you explain why?


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But the deregulators wanted the government to bug off and it did, and if the state underpins everyone’s deposits isn’t that a bit like telling a gambler that the pension money he has ‘borrowed’ from a granny will be paid back by the state even if he does loose it? But if he wins he doesn’t have to share any with the little old lady.


Except the moral hazard works in the reverse, because its the granny that can deposit the money with total indifference to the health of the bank. She's the one who has skewed incentives because of government intervention.


I’m sure I’m not the only one that’s noticed you haven’t addressed the question.


Instead you’ve given a rather incoherent reply – I mean can you please clarify?


You seem to be saying that the granny would be happy to give her money to a gambler and see him profit greatly from it (while incurring no risk) because although she’d get no or very little gain herself she wouldn’t loose anything?


Don’t you think she’d be right in thinking that was unfair?


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In what way have I ‘launched an attack on the free speech of my ideological opponents?’


Don't you want to shut down the think tanks and prevent wall street from lobbying washington?


My views on lobbying can be seen here –

http://www.hipforums.com/newforums/showthread.php?t=314393&f=36



I think all types of ‘lobbying’ should definitely be regulated.


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I do think governments around the world should use this opportunity to grab the regulatory powers they need to make the markets work more effectively to everyone’s advantage. Why do seem to oppose that point of view?


I see room for more regulation in some areas, but its more about adjusting and fine tuning regulation in a financial world that has constant change and innovation.Its about strengthening regulators' capabilities and effectiveness. I don't believe is a massive increase of regulation, because its not needed.


Contradiction and hypocrisy


So you believe in regulation but you seem to claim to be a proponent of the free markets, biased in favour of free markets so why don’t you want a ‘free’ market?


And you believe this isn’t ‘excessive regulation’ but anything beyond it is.

But why is anything more ‘excessive’? Well your only argument seems to be that you say it is, and that in your opinion “its not needed”. Come on Hip that’s not much of an argument is it?


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And I do believe that states have had a role in this mess, I mean haven’t you been reading what I’ve posted or what?


Well that's kind of the opposite though isn't it, because your criticism of the state role is that you wanted more of a state role. My point (obviously) was how the presence of state intervention, not the lack of it, played a role.


What!


Once again I need a bit of clarification here you’re blaming everything that’s happened over the last 30 years on something that happened 9 years ago that many don’t seem to think was the cause anyway?


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At one time or another I think I’ve laid into the economic policies of every US administration since Reagan.


Very consistent then - like Friedman.


Why like Friedman?


Have you got a rational argument or are you just trying to score some kind of point, if so you’re not very good at it.


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Yes this is all over the more right wing/free market type news and blogs sites and seems to be the stance taken by the same free market think tanks that advocated neoliberal policies (and I’m sure the lobbyists for the same cause will be whispering it in a lot of politician’s ears).


And I’m not the only one that’s noticed –


That's not really a response though, "oh that's what all the free marketers say". Yes, therefore you don't need to respond?


Oh Pleeeeeeeeeeeeeese I really think you should stop trying to score points you only seem to end up shooting yourself in the foot.


So I didn’t respond - so you didn’t read the article I posted - OH just a minute you did because you talk about it – SO that means I did respond - which means you were talking complete bollocks when you said I hadn’t.


Hip if you can’t put up coherent or rational argument why say anything?


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Your article is quite a mix up - whereas mine pointed towards a shift to lower quality mortgages in 1999, your editorialist claims freddie and fannie don't even do low quality mortgages, and he only looks at asset growth from 2004-2006. I guess you think that sweeps $6 trillion under the rug?


So let’s see your main critic of the article is that it’s “a mix up”? You then say what it says but don’t seem to put up any counter arguments and then you end on an unsubstantiated claim.


You’re not exactly bowling me over here are you?


How about “The GOP Blames the Victim” from the Wall Street Journal -

“I asked Bill Black, a professor of economics and law at the University of Missouri-Kansas City and an authority on the Savings and Loan debacle of the 1980s, what he thought of the latest blame offensive. He pointed out that, for all their failings, Fannie and Freddie didn't originate any of the bad loans -- that disastrous piece of work was done by purely private, largely unregulated companies, which did it for the usual bubble-logic reason: to make a quick buck.
Most of the mistakes for which we are paying now, Mr. Black told me, were actually made "by four entities that under conservative economic theory should have exercised effective market discipline -- the appraisers, the originators of the mortgages, the rating agencies, and the investment banking firms that packaged the subprime mortgage-backed securities." Instead of "disciplining" the markets, these private actors "served as the four horsemen of the financial apocalypse, aiding the accounting fraud and inflating the housing bubble." It is they, Mr. Black says, who "turned a crisis into a catastrophe."”
http://online.wsj.com/article/SB122282690823092989.html?mod=googlenews_wsj

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Lehman Brothers went out of business, colapsed, bankrupt. This is a normal thing in this world, pretty? No. but it is reality, Hard reality.

Was it a Neoliberal trick? busineses can and do go out without "tricks".
For the truly insulated, think tank types; a bankruptcy is a re-allocation and re-pricing of resources : The office space can be rented to a new enterprise at a lower cost. Workers will migrate to other industries who are anxious to hire them. Ect. These type state that one of the problems with Japan is where The Goverment insulates companies from consequences of the market or of bad decisions that those resources are not re-alocated making for slower growth. It is called creative destruction.

People grabbing what they can and the hell with everybody else goes back to paleolithic times. Its not pretty but it is the way of this world. No amount od legislation will change it.

We can contain it somewhat, Yes, everyone wants a better society, but please do not tell me that you will be bringing me utopia. Please do not tell me that you can prevent bankruptcies or tame the business cycle.

 

I guess I'm supposed to get worked up by these kinds of comments, but given that you say the same things to virtually everyone you get in a debate with, they have been rather blunted from over use.

Also, its a bit funny that the person with the longest, most disastrously formatted posts at Hipforums blames other people for not following the debate. I mean look at your last post - do I want to spend an hour wading through all that trying to keep up with a debate that is spinning off in three hundred directions? I mean I ask you one simple question - give me an example of when you had criticised left wing economics at all - and instead of answering it you turned it around and insisted that I explain my views on taxes, regulation, state ownership, and unions. Why should I be expected to run around like a dog fetching sticks? My question was narrow and focused. Yours are completely open ended and don't seem to relate to the debate at all.

Let me try to get this back on track.

You say the neoliberals said "nothing can go wrong" in free markets. You can't actually quote anyone saying that, but certainly can demonstrate that they lavished wild praise on it didn't spend much time talking about the downside.

Fine. My point is that proponents of things tend to be biased in favor of them, this is not a diabolical trait specific to neoliberals. You certainly can't provide any examples where you criticised left wing economics here. Ultimately, I really don't find this an interesting point at all, even if you could prove it.

I also pointed out that I myself acknowledge the downsides of free markets - they can lead to bubbles and recessions. You asked an interesting question: "But you seem to have implied that those are not failings or shortcomings they are just natural parts of the system you are defending". That's right, I do they they are natural parts of the system. I think free market capitalism - like democracy - is the worst system in the world, except for every other system that has ever been tried.

The next part of your argument is that capitalists didn't care if the system collapsed because they had already feathered their nests quite nicely. In your world, they "became so wealthy by milking the neoliberal system as much as they could while they could, so that if any crisis came they would be cushioned from it.".

I have many problems with this. For one, they certainly didn't milk it for as much as they could while they could, because otherwise they wouldn't have taken such massive losses. They would have sold at the top. Hell they would have shorted at the top and ended up with twice as much money. I guess you can't see why someone who has $100 million wouldn't want to recklessly lose $95 million of it, but I sure can.

Secondly, this is kind of a socialist comic book version of capitalism with the evil fat cats and so on. Capitalism is not a monolith. The CEOs who you refer to (at least when you get it right, since you sometimes get confused e.g. your confusion about who was invested in AIG) are not the top of the food chain, the shareholders are. And shareholders can change constantly - the young gun hedge fund trader who just got his first fund and is looking to make big money long or short is different from the old money park avenue family office who has had the shares since 1978, who is different from the CEO and his options, who is different from the senior management and business line rising stars who may have just been poached from another firm and may be getting options that don't vest for years. All these people have different, even opposite interests.

But you throw all that away and pretend its just a couple of evil old guard CEOs that have been at the same company for years, running the company in total isolation from the outside world, happy to take wild, reckless risks from their corner suite because at least they've got a few million in the bank. As I said, I just don't find this convincing.

The third theme, a more interesting one in my view, is whether this bubble is purely the creation of foolish capitalists and whether the neoliberals did away with a regulatory environment which could have prevented it.

My view of course is that we don't live in a pure neoliberal world, of course we are in a mixed economy and shouldn't be surprised to find the blame is mixed too. $6 trillion is a lot of state intervention. And the majority opinion is that the Federal Reserve - by keeping rates too low - contributed as well.

But a large part of the blame has to lie with the private sector that kept lending and lending and lending. As I said above, I think this sort of bubble - and the recessions that come with or without it - are part of free market capitalism. Importantly, I don't think it call all be regulated away. And I asked you to name an example of deregulation which contributed to this mess but you have not, as yet, responded.

So that's how I see it. Will you find this a "pitiful" argument that you "can't take seriously"? Oh I just can't wait to find out.

 

Hipstatic

I guess I'm supposed to get worked up by these kinds of comments, but given that you say the same things to virtually everyone you get in a debate with, they have been rather blunted from over use.

LOL – only when it seems appropriate, I mean you’re not disputing what I’ve said you’re not even claiming that you haven’t been more interested in point scoring than real dialogue all you are doing is pointing out that many people just like you like to evade questions they don’t like. You are no different than Rat in that regard.

I mean go and have a look at the number of questions that were raised in my posts that you don’t answer look at the number of things you are seemingly refusing to address.

And what is the main thrust of your reply – to knock aside the criticism and try and limit the debate.


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Also, its a bit funny that the person with the longest, most disastrously formatted posts at Hipforums blames other people for not following the debate. I mean look at your last post - do I want to spend an hour wading through all that trying to keep up with a debate that is spinning off in three hundred directions?

I see, very clever, you are very good at this evasion thing – put this in now and then you can use it as an excuse to run away later. As in – ‘oh no I’m not running away because my ideas don’t seem to be standing up to scrutiny oh no I’m going because of Balbus’ bad formatting’

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I mean I ask you one simple question - give me an example of when you had criticised left wing economics at all

No you actually said – “proponents of socialism don't tell to dwell on the failings and shortcomings of socialism either”

To which I replied - I know a number of socialists and we are always arguing over the failings and shortcomings of each others interpretation of socialism, that’s how progress in thought takes place.

To which you replied - OK then provide us some examples where you have warned hipforums about the econmic dangers of high taxes, excessive regulation, state ownership of industry, powerful labor unions

Which as I explained only seemed to be more about point scoring, you own bias and hypocrisy as well as being rather contradictory. And I’m sure I’m not the only one that’s notice you haven’t actually disputed what I said.

So I know a number of politically minded people, here in London were I live and when I meet one or more down the pub or over a meal the conversation can turn to politics and we do arguing over each others viewpoints.

As I’ve said many times I’d describe myself as a pragmatic socialist with strong green leanings, and some on the left find my pragmatism and greenish leanings not to their liking.

As to the forums I’m unsure but if any socialist what’s a debate I’m here and would be most happy to discuss some issues.

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and instead of answering it you turned it around and insisted that I explain my views on taxes, regulation, state ownership, and unions.

Other than regulation I didn’t bring up any of those things – you did - and I quote - “the econmic dangers of high taxes, excessive regulation, state ownership of industry, powerful labor unions”

It was me that pointed out the hypocrisy of complaining about tangents when you do it more than me as to the failings and shortcomings inherent in your comments you seem to be using excuses to try and weddle your way out addressing them.

I can see you are annoyed that your double standards have been shown up so starkly but you have only yourself to blame.

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Why should I be expected to run around like a dog fetching sticks? My question was narrow and focused. Yours are completely open ended and don't seem to relate to the debate at all.

That’s probably because you don’t seem able to follow the debate or have that much insight into the issues, up to this point (as pointed out) you seemed more interested in point scoring than debate.


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Let me try to get this back on track.

I don’t think I’ve got off it; the best thing to do in a debate is answer the questions raised and address the points rather than evading them.

Then the debate might actually move on.

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