Neo-Capitalism

TruckerT

There is still a school of thought that the bank failures were caused, not by the banks' own stupidity, but by the absence of a nanny-government telling them that they were 'going too far'

But Capitalism and State Control are diametrically opposed - State Control is another word for Communism

Whatever happens in the near future, pure Capitalism is already dead - killed by it's own excesses

Bring on 'Neo-Capitalism' - shut down the existing system, and impose a new one... such things happened at regular intervals during the 20th Century, with varying degrees of success, and now it's our turn

TruckerT

CLAPTON

'pure capitalism'

when was that then?

TruckerT

CLAPTON wrote: »

'pure capitalism'

when was that then?

pre-2008/2009

TruckerT

OptionARMAGEDDON

I agree with capitalism, but I am also a realist. The global economy is like any other living breating system in nature defined by an equilibrium point. If you dont have "Rules" or boundary conditions, its pretty obvious a system will blow up in your face after not too long.

In this case, removing the tie between salary and maximum loan amount. The removal of Glass stegal was another boundary conditioin removal that was a fatal decision imho and certainly allowing liabilities to grow to a point where nation states were put at risk was equally dumb.

Doesnt change my view that there should be rich and poor and those that work hard for their money and have grey matter between the ears should do better than the proletariat.

TruckerT

OptionARMAGEDDON wrote: »

If you dont have "Rules" or boundary conditions, its pretty obvious a system will blow up in your face after not too long

If only the banks could have had your insight

You misunderstand the meaning of the word 'proletariat' (I hope)

TruckerT

IronWolf

Pure capitalism doesn't work when an industry or individual becomes 'too big to fail'. This is what the banking industry is like, and they know it. One of the reasons the Fed let Lehman Brothers go bust was to send a message that not all the banks could count on being bailed out.

We can't have capitalism in the real world because there will always be something too big to fail. But we don't have pure capitalism, we have regulation and government intervention which makes the system work.

There is a simple way to stop businesses making bad decisions, the reason they do so is because most CEOs have no stake in the companies they run. Just tie in executive pay to a companies long term performance (in a meaningful way, not in the short term fashion currently pay schemes are). If the company goes under, the CEO loses his entire wealth to the shareholders. Then see how many risk taking CEOs we have left.

CLAPTON

TruckerT wrote: »

pre-2008/2009

TruckerT

ah, now I know you are a joker.

FTBFun

TruckerT wrote: »

pre-2008/2009

TruckerT

I'd say it was more during the "laissez-faire" times of the 19th century, although even then there was still some control over capitalism.

Can't really see this happening again though.

michaels

Interesting take. This is mine.

Pure capitalism would have been the case where there was no expectations that banks would have been bailed out by governments just because of the impact the failure would have on the economy 'too big to fail'. In this case investors in banks, even down to ordinary depositors, would have been much more careful about where they put their money (for example Icelandic banks paying above market rates, would people have invested without a depositor guarantee?). Thus 'pure capitalism' would have reigned in the excessive risk taking by banks, it was the implicit state guarantee that caused the problem.


(As an aside I don't think 'pure capitalism' would have been the right answer but rather the state should have charged for the guarantee and put in place proper oversight to ensure that it was writing the insurance at the right price)

TruckerT wrote: »

There is still a school of thought that the bank failures were caused, not by the banks' own stupidity, but by the absence of a nanny-government telling them that they were 'going too far'

But Capitalism and State Control are diametrically opposed - State Control is another word for Communism

Whatever happens in the near future, pure Capitalism is already dead - killed by it's own excesses

Bring on 'Neo-Capitalism' - shut down the existing system, and impose a new one... such things happened at regular intervals during the 20th Century, with varying degrees of success, and now it's our turn

TruckerT

paddyrg

We have never had 'pure capitalism', nor 'pure communism'.

A._Badger

TruckerT wrote: »

There is still a school of thought that the bank failures were caused, not by the banks' own stupidity, but by the absence of a nanny-government telling them that they were 'going too far'

Your analysis stumbles at the first hurdle - history. The genesis of the debt problem was that the US government encouraged institutions to lend money to people who couldn't afford to pay for their loans.

Left-wingers blame government deregulation for the US mortgage crisis, Right-wingers say deregulation was a ploy to create an artificial feel-good factor.

So take your pick. It's either inept government or corrupt government.

Now where have we heard that before?