Thread: 2012 or Never

Originally Posted by Catawba

Ron Paul completely missed the cause of the recession, financial deregulation of the banking system. But you go ahead and vote for him if it makes you feel happy.

Ok, go here Visualize Economic Freedom Scores of World Countries

Click on financial freedom, type in the US, Australia, Sweden and Portugal. Australia didn't get hit at all. Sweden got hit but managed fine, while Portugal had to get bailouts. Maybe financial deregulation is not the cause of the crisis. I don't think you can regulate away crisis, because many crisis are caused by bad kind of regulation that forces or inventivenesses banks to prop up the economy.

Remember, the people who are going to create these regulations, were not even able to predict it in the first place. They have no idea what is causing crisis.

Originally Posted by Camlon

Ok, go here Visualize Economic Freedom Scores of World Countries

Click on financial freedom, type in the US, Australia, Sweden and Portugal. Australia didn't get hit at all. Sweden got hit but managed fine, while Portugal had to get bailouts. Maybe financial deregulation is not the cause of the crisis. I don't think you can regulate away crisis, because many crisis are caused by bad kind of regulation that forces or inventivenesses banks to prop up the economy.

Remember, the people who are going to create these regulations, were not even able to predict it in the first place. They have no idea what is causing crisis.

"The United States Senate issued the Levin–Coburn Report, which found "that the crisis was not a natural disaster, but the result of high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street."

Late-2000s financial crisis - Wikipedia, the free encyclopedia

Glass-Steagall Act: The Senators And Economists Who Got It Right

"The late Sen. Paul Wellstone also opposed the bill, warning at the time that Congress was "about to repeal the economic stabilizer without putting any comparable safeguard in its place."

Outside government, doomsday-ing over the repeal of Glass-Steagall seemed far more palatable a position to take. Edward Kane, a finance professor at Boston College, warned that "nobody will be able to discipline a Citigroup" once the legislation passed, because the banks would be too big and the issues too complex.

"It made it possible for the very big firms to take risks in away that would require a great deal of investment risk and time for regulatory agencies," Kane recalled ten years later. "You had people who could basically outplay the regulators."

Jeffrey Garten, who at the time had left his post as Undersecretary of Commerce for International Trade at the Clinton White House, wrote in the New York Times that if these new "megabanks" were to falter, "they could take down the entire global financial system with them."

Glass-Steagall Act: The Senators And Economists Who Got It Right

Originally Posted by Catawba

"The United States Senate issued the Levin–Coburn Report, which found "that the crisis was not a natural disaster, but the result of high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street."

Late-2000s financial crisis - Wikipedia, the free encyclopedia

Glass-Steagall Act: The Senators And Economists Who Got It Right

"The late Sen. Paul Wellstone also opposed the bill, warning at the time that Congress was "about to repeal the economic stabilizer without putting any comparable safeguard in its place."

Outside government, doomsday-ing over the repeal of Glass-Steagall seemed far more palatable a position to take. Edward Kane, a finance professor at Boston College, warned that "nobody will be able to discipline a Citigroup" once the legislation passed, because the banks would be too big and the issues too complex.

"It made it possible for the very big firms to take risks in away that would require a great deal of investment risk and time for regulatory agencies," Kane recalled ten years later. "You had people who could basically outplay the regulators."

Jeffrey Garten, who at the time had left his post as Undersecretary of Commerce for International Trade at the Clinton White House, wrote in the New York Times that if these new "megabanks" were to falter, "they could take down the entire global financial system with them."

Glass-Steagall Act: The Senators And Economists Who Got It Right

These guys didn't predict a crisis. They just said what they always would say after financial deregulation. However, I looked through predictions of some of the names, and couldn't find anything in the years 2003 to 2006.

Jeffrey Garten was even worse. He was promoting the policies that crashed the economy. He proposed in 2003 to have a global stimulus plan to prevent a slowdown. How do you think the house prices would have reacted to that? He was warning about deflationary pressures that never came. He is a perfect example of an economist who did not predict the crisis and promoted all the wrong policies. Also, read what he wrote in 2007 Jeffrey Garten on Forestalling a Dollar Rout « naked capitalism In comparison Stefan Karlson said in 2007, this However, barring such an unexpected positive shock, it seems increasingly clear that we will see a US recession this year. The main reason for this is that the housing bubble that fueled the recovery of the last few years has essentially burst. http://mises.org/daily/2544/Recession-2007 In the meantime your dude was talking like nothing was happening, and US biggest worry is a decline in the dollar and a switch from the dollar to the euro. These people didn't predict the crisis, they just don't like financial regulation.

Take a look at what Stefan Karlson wrote Monday, November 08, 2004. He did predict a crisis, and he did point at the correct causes that we all agree on now. Please read it.

America's Unsustainable Boom - Stefan Karlsson - Mises Daily

People in power, didn't even see this crisis in 2007. In 2007 the house prices has already begun dropping, people had started foreclosuring, but US government predicted it would be a mild slump. Europe completely ignored it. House construction in Spain kept going. Our economic profession is a shame, as they are not even able to make simple predictions correct. I think it is due to the mix of economics and politics.

So if the policymakers can not even predict the crisis in 2007, and completely fail to anticipate the consequences, then why do you believe regulations will solve the problem? Australia got a very free financial sector, and they didn't get in trouble. We also know that some of the regulations made the crisis worse and that some of the countries with heaps of regulation got in the most trouble.

Most crisis are caused by countries overextending themselves. Crisis are corrections, the inflated bobble is pooped. The solution for crisis is to try being responsible. Keep debt down, keep current account deficits down, get people to save, do not run large budget deficits, do penalize businesses that are too large to fail and need public money, do not overinflate wages and make sure that you are preparing for the future. If you do that, then the likelihood of a crisis will be much smaller, and if it happens, then you are prepared. It is not the regulated countries that avoid crisis, it is the responsible countries that avoid crisis.

Originally Posted by Mickey Shane

The more the GOP pushes the illegal immigrant stance, the smaller their voting bloc becomes.

its amazing how so many legal hispanic immigrants consider any attempt to crack down on illegals as being contrary to their wishes

Originally Posted by TurtleDude

its amazing how so many legal hispanic immigrants consider any attempt to crack down on illegals as being contrary to their wishes

that's because many of them believe that this crackdown is due to the ethnicity of most illegal aliens.

you never hear about folks attacking all the illegal Irish or Chinese immigrants in NYC.

You can tell the people who REALLY predicted the crisis by the size of their bank accounts. I'll have to look up the cite, but one young guy in particular springs to mind. He was just a regular dude -- ski instructor I think -- who dabbled a bit in the markets. He was reading up on credit default swaps and couldn't believe what he was seeing. He asked someone, "so ... wait a minute ... you're saying that if the real estate market falls en masse ... there's no way in hell they can cover all these swaps?!" Uh huh. So he went out straight away and shorted the biggest CDS issuers ... and made millions and millions of dollars.

Originally Posted by Thunder

that's because many of them believe that this crackdown is due to the ethnicity of most illegal aliens.

you never hear about folks attacking all the illegal Irish or Chinese immigrants in NYC.

probably true.

Originally Posted by AdamT

You can tell the people who REALLY predicted the crisis by the size of their bank accounts. I'll have to look up the cite, but one young guy in particular springs to mind. He was just a regular dude -- ski instructor I think -- who dabbled a bit in the markets. He was reading up on credit default swaps and couldn't believe what he was seeing. He asked someone, "so ... wait a minute ... you're saying that if the real estate market falls en masse ... there's no way in hell they can cover all these swaps?!" Uh huh. So he went out straight away and shorted the biggest CDS issuers ... and made millions and millions of dollars.

It wasn't like you needed coke bottle glasses in even 2006 already to see it coming. It was a very predictable and preventable issue yet at this time, but then again I have been told I have magical Nostradamus powers.

Originally Posted by Camlon

Ok, go here Visualize Economic Freedom Scores of World Countries

Click on financial freedom, type in the US, Australia, Sweden and Portugal. Australia didn't get hit at all. Sweden got hit but managed fine, while Portugal had to get bailouts. Maybe financial deregulation is not the cause of the crisis. I don't think you can regulate away crisis, because many crisis are caused by bad kind of regulation that forces or inventivenesses banks to prop up the economy.

Remember, the people who are going to create these regulations, were not even able to predict it in the first place. They have no idea what is causing crisis.

There are two basic ways to police Wall Street: financial risk and government regulation.

Risk means that the banks lose their money when they screw up, so they have an incentive not to make stupid mistakes. Or, the government could come in an tell them what is and is not smart, and the banks do what the government tells them to.

We removed risk from the markets with the Federal Reserve Act and the FDIC. These two things were explicit promises almost a full century ago that we would bail out Wall St if they got themselves into a big enough mess. This is an invitation for trouble, because it means that if the bankers are in a tough spot, they have every incentive to make sure that they make the situation worse so that they will definitely get bailed out.

Things went ok after that though, because we had some significant regulation in place to keep the banks out of trouble. But after we removed the regulations, there was then nothing stopping the banks from ****ing up, and it was only a matter of time before it happened.

Originally Posted by barbarian_style

It wasn't like you needed coke bottle glasses in even 2006 already to see it coming. It was a very predictable and preventable issue yet at this time, but then again I have been told I have magical Nostradamus powers.

Parts of it were predictable. A lot of people knew that the real estate market was incredibly overheated. But I think very few people grasped the scope of the that would have on financial markets.