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Sunday, Nov 8, 2009
Sorry for writing twice: just read Anonymous' contribution which reminds me of Fukuyama's "end of history".
"Capitalism has become nature - it is neither good or bad. It is the Hegelian totality, and therefore knows no outside and - as a corollary - cannot be the object of moral judgement."
No it hasn't, and yes it can. Nature obeys inherent rules which we cannot change. Capitalism obeys man-made rules which we can rewrite as we please. The subprime crash once again shows that the rules we wrote - and can unwrite - unload risk upon the weakest shoulders and grant reward to the strongest. It doesn't have to be that way.
The very essence of moral judgement is to regulate society, and capitalism is part of society - and not even a necessary part.
Greed and strecthing beyond ones means to get what they should saving for is one of the roots of this problem. Too many people are trying to live the life style of the rich and famous and they do not have the funds to live in that style.
It used to be people saved 20% for a down payment and did not buy house that would strecth them over one person's monthly income. Too many people are allowed to have too much have credit, too ealry in life. The U.S. has a very large personal debt and few personal savings. In addtion we ahve a large our national debt due to too much spnding and cutting taxes. Teh U.S. is now very dependent on foreigbn trse and incme to keep us afloat. It is time to stop consuming. It will be better for us all individually and as a nation. Besides it will help the environment. Unfortunately where I live you have to pay millions to get a tear down.
the market had a few bad sessions and is now back to where it started at the beginning of the year. hardly a meltdown.
Cost of Alberta Health Care Premiums in the last 10 years for my extended family:
$20,000.
Total bill for serious family injuries/illnesses in the last 10 years:
$1.5 million.
How much more my extended family has paid in taxes compared US to extended friends/family/acquaintances in the same tax bracket:
$400,000.00
In contrast to those who are just appalled by the "false analogy" that Mr. Leonard here uses, can I say that I think it is a brilliant analogy?
I'm not talking about investment=gambling which is an old analogy accurate in some ways but maybe not in others.
I'm talking about his further analogy of gamblers becoming the active force in sports contests, influencing outcomes in the way that "mere wagering" does not. Whether you accept the moral term "corruption" for this, or not, you can't deny that these practices have a real influence on the actual economy.
We are now in a position where those who for years lived within their means may very likely be asked to subsidize either the fatcats who encouraged subprime mortgages or those who took them on despite the risks. It will be impossible to bail out only the "worthy" even if we could all agree who they are.
That it should have come to this is tragic.
I suspect that most of those slamming Mr. Leonard work in the financial industry. Tell the people who used to produce real goods and services until the financial wizards told them they were too expensive that there's no difference between the "real economy" and the "speculative economy."
Capitalism is simply unreal. Capitalism is what free markets morphed into once pools of money reached a critical mass. Then the money took on a life of its own. Medical science says something similar happens when an obese person's fat layers begin producing their own enzymes and hormones--all toxic. When did this economic obesity happen? With the Venetians, the Fuggers, with Max Weber's Protestants saving instead of spending like Enlightenment spendthrifts Voltaire and Th. Jefferson?
In "It's a Wonderful Life" we get the basics of home loans: the cleaning ladies, bricklayers, bakers, etc. pool their money, then you borrow it promising them to pay it back, then some. Nice and neat. But somewhere the pyramid scheme takes off. You can't pay X% interest unless you're able to get an X+Y% return yourself...and so on up the pyramid. Just as life is one big Stockholm Syndrome, capitalism is just one bing Ponsi Scheme. And whenever the growth hiccups, the pyramid shakes.
Now there's pressure to spit out the bullet by sinking interest rates. Ha! Then the unreal money games Mr. Leonard describes just continue, right? Since I'm big into Schadenfreude, I just can't wait for the oil prices to slam us with big inflation pressures. Bwaaahhaahahahhhaaaa!
My advice: avoid debt like hemlock, get involved in real supply and demand of real things...and you'll never go wrong.
The difference between investing in derivatives and outright betting is the same as the difference between taking medicine and doing recreational drugs. A derivative is no more a "bet" than any investment in any company.Kathleen L.
Since I first raised it, it took 18 hours for someone to stop talking about technicalities and definitions to mention fraud again.Retired Military Patriot
The problem was that the discussion turned around the use of the term "betting" to describe "investment". It has been an interesting discussion to watch, though. It is taking place for two reasons: 1) people object to use of gambling language, because they seem to feel that since gambling is somehow naughty behavior, it isn't appropriate. 2) People with involvement object to the term betting apparently because they believe the term "bet" refers only to taking financial risks that have all-or-nothing payoffs.
Or quite possibly because they do not want to think of their professions that way. It would be interesting to have a similar discussion with real estate brokers as the commenters, and find out whether they accepted the description of their "efforts to make a home affordable" as "fraud".
Investment is betting whether or not the outcome is all or nothing. That doesn't make it seedy, but it is unrealistic to think there is no possibility of losing the bet. As for whether adroit use of technical language is sometimes fraud, I leave that to those who use it to decide.
Kathleen L. in her attempt to separate betting and investment above, says that a derivative is no more a bet than investment in any company, and is correct. It is no less a bet, either. I found it interesting that she uses the analogy that investing is taking medicine and betting is doing recreational drugs. I find this statement very true as well -- most of the drug dependency and abuse in this country is of prescription drugs -- and therefore could be described as "taking medicine".
Yes there was fraud on loan applications. But there was also fraud in pretending the applications had been vetted. And there was fraud in taking and bundling the subsequent mortgages and underestimating the risk.
And there is a whole lot of fraud in failing to speak plainly and explain things, and yes, call a bet a bet, to avoid scrutiny by those outside the club. And that fraud didn't happen in small towns with poor people trying to get loans they didn't deserve. It happened in investment banks, and hedge funds, and on Wall Street.
And it has just entered its next round as the defrauders attempt to convince the government that although they were paid handsomely for taking risks and making tough choices, the government should use the money collected from people whose productivity can actually be measured as product created per hour worked, to shield them from the consequences of the risks they took with other people's money.
Much of the initial coverage about Fort Hood turned out to be wrong. Is there anything wrong with that?
The accountability imposed by another country for the CIA's kidnapping and torture reveals much about our own.
Fox News' morning show plays to type, talking about whether Muslims in the Army should face "special debriefings"
The survivor and author is upset about comparisons some on the right are making to genocide
Once seen as a lunatic fringe, reactionary anti-women groups are courting respectability
Salon headlines in your mailbox
