Letters to the Editor
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Capitalism got bailed out. Cheap at the price, if you ask me.
Meh..
The invisible handout.
Capitalism is the most robust economic system ever invented.
Or so the proponents of capitalism would have us believe.
Privatize the profit and socialize the costs.
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Back to normal soon
The financial markets simply must return to "normal," i.e., "The firm made money, and the broker made money. Two outa three ain't bad." (props to Michael Lewis)
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Too Big For Me To Fail To Notice
He said, "20 years ago the Fed would have let Bear Stearns go bust; today, it is too interlinked to fail." Not too big to fail, too interlinked to fail. And that, again, is the world of derivatives, the world of hedge funds, the world that we all come together.
Hmmm. I remember when the Reagan Administration and Congress bailed out Continental Bank in the 80s, so I don't know if 20 years ago it was much different from today, except that there are more varied means for banks to make bad investments, and probably less oversight, making bad investments likelier, and, I guess, more bailouts likely, which just rewards the culture of corruption. Free markets for poor folks; rampant protection for the rich -- that's capitalism, American-style.
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The Reality of the One
Allow me to interject some Truth into this discussion: There is no them and us. We are all interlinked with each other, whether we "like it" or not. What is being demonstrated every day and being reported on is this reality. The failure of the sub-primes is directly linked with the outsourcing of industies, which is directly linked with the capitalist passion for eternal growth, regardless of who is negatively affected. As industry is sent to "3rd world" countries, those here is the States being displaced lose confidence in the economy and pull back on purchasing those commodities which they would have purchased had their jobs remained secure. This further depresses the manufacturing and distribution of goods and services, which in turn reduces "consumer spending and confidence". As more and more people fall into the cracks of unreported unemployment, the false figures reported cause the stock markets to rise unaccountability. Corporate media report these false figures with confidence and we buy it. As our consumer spending declines, the overseas production and importation of "cheap goods" declines and their cheap labor begins fall into unemployment.
Do I need to go on? What are these MBAs using for statistical analysis? It is Common Sense what is going on. One only needs to recognize the interconnection of ALL PEOPLES, ECONOMIES AND ENVIRONMENTS to see that unless we begin to work in cooperation, the whole system will collapse. Even those living in walled or gated communities on the top of the hill will feel the effects. There will be no where to escape to and no one to be trusted with their security.
I have only touched the surface. I leave it to those of you courageous enough to go deeply into this analysis, and apply the Philosophy of Oneness to it. Wake up. It is time.
I am committed to Oneness through Justice and Transformation
peace,
st john
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Risk Laundering
The proliferation of a vast array of complex financial instruments that are sliced and diced and recombined in a bewildering variety of forms and bought and sold and traded by thousands of parties across the globe...
My wife used the term "risk laundering" when we were discussing these instruments about a year ago. Like money laundering, risk laundering ought to be illegal. The whole idea of the marketplace is that an investor can assess risk versus value, reaping the rewards of making a good decision, and paying the price for making a bad one. But by obscuring the risks this fundamental working of the marketplace is disrupted, and what we are left with is what Noam Chomsky describes as socialized risk, privatized profits.
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Not Capitalism saved
More like Sociocapifacsim. That's the system we play in.
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Leonard is Doing a Legit Public Service by His Reporting on this Monumentally Important Issue
Leonard is tackling the most complex and important issue facing capitalist-oriented nations in the world today.
Having myself been the Head of a Wall Street firm's corporate bond trading department in my 20's, I have at least some sense of what these firms are like.
They are staffed by the smartest and most aggressive minds in business; they have no problem hiring mathematicians or physicists, for example, if they think those people can contribute to making money for the firm---in short, I have a very high regard for The Street, despite the fact the I (voluntarily) deserted it many years ago.
Leonard's gutsiness in reporting and writing on this--rather than concentrating on Barack's bowling score--is, IMHO, a real service to Salon readers, myself included.
I also have blogged on the topic, but Leonard's doing a better than I.
Keep pumping out the info, Andrew---I LOVE it.
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I've got news for you
Purely or highly socialist economies either don't take those risks and don't grow in the first place, or, they live with permanently high strutural unemployment as a result, which typically leads the same place.
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This is just a down payment
Bear Stearns didn't get bailed out. The entire system of globally interlinked financial markets got bailed out. Capitalism got bailed out. Cheap at the price, if you ask me.
1. Why is this written in past tense? The $1 trillion+ bailout has barely begun. There was nothing on the books at Bear Stearns that's all that different than Lehman, Merrill Lynch, Morgan Stanley, and many others. Many argue that the level of leverage being used by these firms is still comparable to Bear Stearns. All of this junk will be turned over to the Fed in exchange for crisp and clean US Treasuries, and eventually the vast majority of this waste will be written off by the Fed and monetized. All of us will pay for this through inflation and the declining purchasing power of the US dollar.
2. What does this have to do with capitalism? Yes - the President loves to talk about a free market capitalist system in America, but this system system is far from it. Like other statements from this administration it would be generous to even say that has much basis in truth. The government has a monopoly over money creation, the very DNA of the economy. Legalize competing currencies, abolish interest rate control by a central bank, and then we may have a hope of seeing how capitalism operates when it's our savings and wealth on the line, and not just cash run off a printing press. This is not capitalism. It's corporatism.
... both the Clinton and Bush administrations and Congress accepted Wall Street's plea to let them proceed with a light regulatory hand, and accepted the argument that new derivative instruments, such as credit default swaps, would increase the stability of the overall financial system by spreading risk more broadly.
1. Why should we believe that this isn't "spreading the risk more broadly"? Who just wrote off tens of billions this week? Swiss and German banks. They weren't writing off bad European debt or derivatives: they have "Made in USA" written all over them.
2. Instead of focusing on innovation, how about looking at the monopoly enjoyed by the ratings agencies who enables these derivatives to be sold? They are the cheap gasoline that incentivizes Wall Street to assemble ridiculous vehicles like these in the first place. The SEC designates as Nationally Recognized Statistical Ratings Organizations only three agencies: S&P, Moody's and Fitch. All three earn their fees not from the buyer of these instruments, but the creator. I wonder how they stay in business? To make matters worse, government regulation requires that our pension funds and banks can only buy debt rated "investment grade" by these same three NRSRO's. These ratings are just a modern snake oil. And our government regulations, not the free market, both created this distorted monopoly and now mandates that it continue.