“The real question is…how to fix this mess? Should investors lose their money because of bad government policy? And if the gov has to be held accountable, they pay for with it our taxes. I don’t know if there is any good way to deal with this at this point.”

Armed revolution IMO.

As I said, the profits were private, but the risks of failure were socialized.

Rotarian Socialism: A free market, and keep those subsidies coming!

“So, if we give money to the Big Three, do we all get the new electric car for $10?”

Feh. After what GM did with the EV1, I wouldn’t drive a Volt if it was free and came with a teenage granddaughter of the CEO as my personal sex slave. Badwill lasts a damn long time, and charging people for body damage when you’re sending the cars to the crusher constitutes a gigantic ‘fuck you’ to the consumer.

Free market doesn’t mean being nice to big stupid corporations. Free market means letting big stupid corporations out on their own and let the forces of free market make short work of them if they continue being stupid. I hope the Volt becomes GM’s Electric Edsel, and I say that as someone who *likes* the idea of alternative fuel vehicles. I’m going to try really hard to be in a position to buy an Aptera Type-1h when they become available.

They did have a charter from the government (e.g. do no evil) or some such, but that was it.

I believe Fannie WAS a government entity until LBJ sold it to fund the Viet Nam war (or some such).

Not only should they die, but once our police departments start buying American-made Toyotas and Hondas, we’ll save money by having more reliable cars that don’t need to be replaced every three years.

All that valuable capital (human and otherwise) could be put to better use.

I’m not an economist and haven’t really taken more than the basic economy classes in college, but I’ve read that most of these failings are due to regulations concerning how companies were allowed to increase their debt-to-assets ratios and they were allowed to keep less cash to secure those debts with, therefore creating the situation where they’d fail if something went wrong (like the mortgage crisis). Also, it’s not just the removing of regulations, but the lack of oversight (which, in a way, is a regulation). There was nobody watching the egg basket.

My point is that there would be no need for oversight if it weren’t for the government intervention in the first place. Unless there is some sort of government meddling in the markets, either by the federal reserve, or by some other “well intentioned” government program, the market will govern itself.

To put it in terms of your example, it’s like the government taking all of the eggs from the farmers, and setting them in a basket out front with a sign saying “free eggs” then complaining because people are taking too many eggs. Then, when there are no eggs, the people are pissed and demand that the government hire people to protect the eggs.

Yes, Yes, and hell no.

You enter the market, you take your chances. You put up a shitty product, that’s your own damn fault. Businesses fail all the time. Did we subsidize Pets.com when it went under? I don’t think so. There is no god given right to have a successful business. The car companies mistakes have been tremendous.

I had a 1997 Ford Escort; it ran great, got 37 miles a gallon with careful driving, handled fine, and was major repair free for almost 300k miles. When it died, I would have liked to have bought another one….oh wait. Ford discontinued that model to focus on the Explorers and Excursions and other cars that I wouldn’t touch, because I’m on a budget. I’m a Michigander, but I’ll apologetically buy Japanese, because, get this, in a free market, I’ll buy the best product. You don’t make the best product? Tough shit. Learn to compete.

Oh, but the poor investors? Yeah, fuck them. Nobody held a gun to their heads and told them to invest in the Big 3. My understanding is that investment is what you do when you see a company that’s putting out a good product, and you feel that by putting money into the company, you’ll get a return back. You couldn’t have forced me 8 years ago to invest in these companies; it was shitty then, and any idiot could see that a product line of gas guzzlers was a short term proposition at best. Now, they’re crying for bailouts because their gamble didn’t pay off? Too bad, so sad, now go away.

#25 | Robert | September 18th, 2008 at 12:09 pm

I hate to break it to you, but deregulation didn’t cause this mess. The Federal Reserve along with the government created it. In an effort to stimulate the economy, the Fed kept interest rates artificially low, which fostered mal investment. The federal government in an effor to make homes, education, etc. “affordable” enacted programs to guarantee loans.

Between the two of them, they’ve caused prices to skyrocket. Homes are way overvalued, and people have borrowed money against those inflated prices. Now they can’t pay it back, and rather than let the companies that made the mistake of lending that money out go broke, we’re going to nationalize the debt.

We’re acting like someone who offered someone else a plate of cookies, now acting outraged and indignant because they ate them.

Of course we can’t tax or borrow enough to cover these massive losses, so we’ll just fire up the printing press and destroy our currency. In 10 years, when it takes a wheelbarrow full of cash to buy a loaf of bread, people will be looking around all stunned saying “we never saw it coming”, but the writing is clearly on the wall now.

Robert,

I’m not an economist and haven’t really taken more than the basic economy classes in college, but I’ve read that most of these failings are due to regulations concerning how companies were allowed to increase their debt-to-assets ratios and they were allowed to keep less cash to secure those debts with, therefore creating the situation where they’d fail if something went wrong (like the mortgage crisis). Also, it’s not just the removing of regulations, but the lack of oversight (which, in a way, is a regulation). There was nobody watching the egg basket.

I can’t recall what office in the government was supposed to be watching all this Wall Street stuff, but I remember reading that the staff went from about 1500 people when Clinton left office to just over 200 this year. And, the big reason was financial lobbyists convincing Congress and Bush that their oversight and regulation wasn’t needed. However, had they been able to keep up and not been so understaffed, the problems could’ve been avoided.

The separation of banking and the stock exchange was ordered in response to revelations of the gross corruption and manipulation of the market by giant banking houses, above all the House of Morgan, which organized huge corporate mergers for its own profit and awarded preferential access to share issues to favored politicians and businessmen. Such insider trading played a major role in the speculative boom which preceded the 1929 crash.

It’s all Clinton’s fault

http://www.wsws.org/articles/1999/nov1999/bank-n01.shtml