# $$$How $ is $ the $ mighty $ fallen!$$$$$



## Guest (Oct 12, 2008)

*$$$ How $ is $ the $ mighty $ fallen! $$$*

With the economic debacle in the US now spreading to the rest of the world I am curious as to what your views are, has it effected you yet? IMO it all spreads from greed and Banks giving credit far too easily, it seems so unfair that the poor old tax payer should have to bear the burden. :angry: Any comments


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## kiwipolish (May 2, 2008)

It's good for me since I am an exporter from New Zealand to USA.

Not affected otherwise, but we've been rather wise over the past few years and haven't mortgaged too heavily.


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## marval (Oct 29, 2007)

Well so far it hasn't effected us. (in the UK) We are in the fortunate position of having paid our mortgage off, so no money owed to a bank or building society. It is just a case of being a little careful with money, as my husband can't work due to ill heath and I have been made redundant. But I know we are luckier than a lot of people.


Margaret


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## purple99 (Apr 8, 2008)

Andante said:


> With the economic debacle in the US now spreading to the rest of the world I am curious as to what your views are, has it effected you yet? IMO it all spreads from greed and Banks giving credit far too easily, it seems so unfair that the poor old tax payer should have to bear the burden. :angry: Any comments


It will have a profound effect for a generation on politics in Britain, the US and around the world. Ever since Ronald Reagan and Margaret Thatcher deregulated the money markets in the 1980s we've endured a million lectures from political right that small government = good, big government = bad, that the state should get out of people's hair, that wealth creation can be entrusted to the private sector, that when bankers make money it trickles down and enriches everyone, that state ownership and control is a nasty old fashioned communist idea which should be consigned to history with the Berlin Wall.

All that's been shown to be utter rubbish. As soon as there's a major economic crisis the bankers rush to hide behind the government's skirts and massive state intervention -- we've seen the biggest acts of socialist nationalisation in the history of the human race -- is required to stop total economic meltdown.

It means Republicans in the US and Conservatives in the UK are now virtually unelectable, except by the terminally stupid. It's their de-regulated free market ideology which caused the current crisis and most them, who spent the last twenty years attacking the state, screamed like goosed schoolgirls for it to engage in humongous socialist intervention as soon as things got tough.

If it weren't for the fact that real pain is being caused by the crisis -- people losing their houses, jobs and pensions -- the ironies would be delicious. For example, I hear Bush is referred to in Washington circles now as 'Comrade Bush' and his cabinet as the 'Politburo.'

How Chávez and Castro must be laughing.










* Shall we send them food parcels Comrade? *


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## Lang (Sep 30, 2008)

Yes, when I last checked the exchange rate of the pound against the dollar had fallen from a high of over 2 dollars down to 1.69. I really don't know why this should be, because I thought our economy was relatively sound when compared with the American one. Anyway, it is making life difficult for me.


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## purple99 (Apr 8, 2008)

Lang said:


> Yes, when I last checked the exchange rate of the pound against the dollar had fallen from a high of over 2 dollars down to 1.69. I really don't know why this should be, because I thought our economy was relatively sound when compared with the American one. Anyway, it is making life difficult for me.


The British housing crash is the key. The great unmentionable is now being mentioned and the markets don't like it.


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## Guest (Oct 14, 2008)

Capitalist V Socialist

Capitalise the profits Socialise the risks

Present situation = So much for imaginary money!


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## Lang (Sep 30, 2008)

Yes, Andante, the irony of that hasn't escaped me. Neither the American nor the British governments are keen on socialism, but as soon as things go wrong they start nationalising!


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## soundandfury (Jul 12, 2008)

Imho the only way the system will ever work is if we accept that banks can go bankrupt. If governments were to guarantee the savings, but not the executives' jobs or the survival of the companies, then evolution could take its course without any great need for regulation. Just look at how Canada is carrying on unperturbed.
Re purple99 about the Bush Politburo: Over here, the Daily Telegraph has been running a few pictures recently that make Brown look very much like Stalin. We can still laugh at the irony no matter how great the pain - at least that's the tradition here in England.


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## purple99 (Apr 8, 2008)

soundandfury said:


> Over here, the Daily Telegraph has been running a few pictures recently that make Brown look very much like Stalin. We can still laugh at the irony no matter how great the pain - at least that's the tradition here in England.


I'm English too.  It's intriguing to watch Brown. Before the crisis he was dead in the water. Now... well according to polls he's knocked ten points off Cameron's lead. When people's jobs, homes and savings are at risk they don't care if a political leader gasps like a gaffed cod or is no good on Richard and Judy's sofa. They want someone to keep food on the table (and their feet under it). Suddenly, politics is a game for grown-ups again.

Two key questions:

- is capitalism's failure systemic or a mere blip?

- what effect will a prolonged failure have upon Western liberties?

On the latter point, it used to be fear of the Soviet Union which kept Western democracies keen on human rights. They used multi-party elections, free speech, the relative absence of police torture cellars, etc as a stick to beat the Communists with. All that's gone now and China shows how unimportant democracy and human rights are to the operation of a vigorous capitalist economy. Western bankers and political leaders will have noticed that...


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## Guest (Oct 18, 2008)

GDay 99,
The main thing with Capitalism is the same as the “Market” it is there to make a profit, so instead of improvements coming out of the excess money it goes to the share holders, or most of it anyway, We have recently Nationalised the Railways in NZ due to the dilapidated state that the “Free Market owners” let the track fall into. it became unsafe to use as a passenger service and too unreliable as a heavy goods transport system, so we pick up the pieces. The same sort of thing has happened to Electricity generation and supply, we will eventually have to inject huge amounts of cash into that, capitalism may work in certain fields but the so called Utilities must be under state control.
S.O.E. can work for the benefit of all if managed correctly. Here endith the first lesson.  
99 you mention China, how about Russia? 
The western world exists on debt, we all have massive debts, who has all the money???


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## purple99 (Apr 8, 2008)

Andante said:


> GDay 99,
> The main thing with Capitalism is the same as the "Market" it is there to make a profit, so instead of improvements coming out of the excess money it goes to the share holders, or most of it anyway, We have recently Nationalised the Railways in NZ due to the dilapidated state that the "Free Market owners" let the track fall into. it became unsafe to use as a passenger service and too unreliable as a heavy goods transport system, so we pick up the pieces. The same sort of thing has happened to Electricity generation and supply, we will eventually have to inject huge amounts of cash into that, capitalism may work in certain fields but the so called Utilities must be under state control.
> S.O.E. can work for the benefit of all if managed correctly. Here endith the first lesson.
> 99 you mention China, how about Russia?
> The western world exists on debt, we all have massive debts, who has all the money???


It's funny watching the US Presidential campaign at the moment. Such is the fear of 'European socialism' -- and this from the country which has just engaged in the most expensive act of state intervention in the history of the human race -- that Obama's being accused of being a socialist for saying 'when you spread the wealth around it's good for everybody'.

Imagine if he proposed nationalising the US railways or national power? The NRA would be oiling their rifles.

I didn't know NZ had rescued their trains from the private sector. Good for you.


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## Andy Loochazee (Aug 2, 2007)

Andante said:


> GDay 99,
> The main thing with Capitalism is the same as the "Market" it is there to make a profit, so instead of improvements coming out of the excess money it goes to the share holders, or most of it anyway, We have recently Nationalised the Railways in NZ due to the dilapidated state that the "Free Market owners" let the track fall into. it became unsafe to use as a passenger service and too unreliable as a heavy goods transport system, so we pick up the pieces. The same sort of thing has happened to Electricity generation and supply, we will eventually have to inject huge amounts of cash into that, capitalism may work in certain fields but the so called Utilities must be under state control.
> S.O.E. can work for the benefit of all if managed correctly. Here endith the first lesson.


Of course, profits are ultimately remitted to shareholders under a Capitalist system. Profits are the residual after payment of all other factor inputs, and are used to reward risk-taking. If the risk takers see a prospective return (a return that at least matches opportunities elsewhere given the risks) in further physical investment by the company, then there's no reason why this investment should not place. If however physical investment is determined by the State and is not subject to market forces you'll tend to get either too much or too little investment, and a risk that whatever is carried out is done inefficiently.

Brits who remember the chaos of the British Economy in the 1970s will recoil at the suggestion that a return to large scale nationalisation is a panacea for our present troubles. It was a disaster period: huge inefficiency; bloated bureacracies in Nationalised Industries; very poor customer choice; rampant inflation, trade unions barons threatnening industrial action and virtually running the show, with the Government caving into excessive pay deals etc. All that was a road to nowhere. It is with thanks to Mrs Thatcher all that Labour Government socialist nonsense was ditched. That kind of Government sank without trace for the next 18 years, and it was after Tony Blair completely revolutionised the Labour Party in the early/mid 90s that it became an electable Party again in 2007. Most of the latter's good fortune in subsequent years owes far more to the sound economy they inherited than anything Gordon Brown (Chancellor) did.

The recent bank bail outs are not a return to widescale nationalisation. These measures, adopted by most of the G7, are necessary to restore order in a vitally important sector, which if not corrected could have disastrous consequences elsewhere in the real economies of the World. The bank failures etc stem primarily from inappropriate regulation in parts of the USA banking sector, not so much an overall lack of regulation. This created problems world-wide because of the dominance of the USA economy and the highly interconnected nature of bank lending etc. It could well be argued that the fundamental problem was not due to lack of regulation by gung-ho Republicans and their financial backers in Wall St, but by a Democrat President (Clinton) whose administration encouraged highly profligate bank lending to a whole load of very poor risk houseowners, which has now back-fired so disastrously.

The Capitalist System has generated far more more wealth than any other economic system, and has has survived for far longer. It has survived worst than this present set of problems (eg 1929 et seq), and these days Governments have far better knowledge/economic weapons to deal with crises of this nature. No G7 government has remotely talked about rejecting Capitalism. What is needed is a new set of rules and regulatory framework to control more effectively key parts of the financial sector to avoid further repetition in future.


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## Chi_townPhilly (Apr 21, 2007)

We don't award "posts-of-the-month" here at TalkClassical... but if I could... *Thanks, 'Andy!'* Sometimes, I'm almost (but not quite) frozen in place in (nearly) mute appreciation.


Andy Loochazee said:


> It could well be argued that the fundamental problem was not due to lack of regulation by gung-ho Republicans and their financial backers in Wall St, but by a Democrat President (Clinton) whose administration encouraged highly profligate bank lending to a whole load of very poor risk houseowners, which has now back-fired so disastrously.


The reflexive reaction of those somewhat less-informed on the American situation than you are, Andy, is to conclude that if deregulation has lead to troubles, then a Republican initiative must have been behind it. To the contrary, I recently read that it was Clinton's Housing and Urban Development secretary who urged lending institutions, under threat of lawsuit, to consider welfare pay-outs and unemployment benefits as resources, for the purpose of determining eligibility for mortgages.

Fannie Mae and Freddie Mac, occupying that 'undead space' between Capitalism and 'something else' [official designation: "Government-sponsored entities"] have been rightly fingered as the "patient-zeroes" of the current housing difficulties here in America. It seems that these institutions existed, in no small part, to provide home-loan access to persons who would have been considered (apparently justifiably) intolerable risks, if attempting to access credit through more sober and less 'creative' private-sector channels.

If home-values had gone up indefinitely, maybe all of this wouldn't be relevant. Then again, if the population of the world was infinity, a Ponzi scheme would be perpetually profitable, too.


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## Guest (Oct 20, 2008)

Andy Loochazee said:


> Of course, profits are ultimately remitted to shareholders under a Capitalist system. Profits are the residual after payment of all other factor inputs,


The trouble that you get with that is that some private companies known as 'asset strippers', take the profit first, while maintenance and workers etc get what is left.



> Brits who remember the chaos of the British Economy in the 1970s will recoil at the suggestion that a return to large scale nationalisation is a panacea for our present troubles. It was a disaster period: huge inefficiency; bloated bureacracies in Nationalised Industries; very poor customer choice; rampant inflation, trade unions barons threatnening industrial action and virtually running the show, with the Government caving into excessive pay deals etc.


But you do not have to return to that system, a well run S.O.E. will produce enough profit to pay a divi to the government after making sure that every thing else within the particular enterprise has been looked after.


> It could well be argued that the fundamental problem was not due to lack of regulation by gung-ho Republicans and their financial backers in Wall St, but by a Democrat President (Clinton) whose administration encouraged highly profligate bank lending to a whole load of very poor risk houseowners, which has now back-fired so disastrously.


No argument there, unfortunately a lot of other countries have done the same thing, NZ for one.
Perhaps one day we will find better way. What was that saying:
Annual income $20, Expenditure $19.95 result happiness
Annual income $20, Expenditure $20.05 result misery


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## Isabelle (Oct 16, 2008)

Personally I´ve not noticed a whole lot from the economic problem. Its all over the news though, the cheaper house market is falling appart and there are a few banks who struggle to stay in existance, none of this really personaly affects me but if it gets worse in the future it might, so I really hope it is fixable!


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## Mr. Terrible (Oct 17, 2008)

For what it is worth I was living in the USA under Clinton and a bit of Reagan.
Whilst there is a degree of truth in what you say, unfortunately the USA does not exist in isolation from the rest of the world and whatever Clinton`s administation was doing was being done in every other similarly placed (financially) country in the world.
Adn we are all now reaping our just rewards.
Unfortunately the bankers that were the primary cause are not. They are walking away with their fat profits intact, laughing up their sleeves as the rest of us pay for their plundering.
But then what`s new about that?
Welcome to the downside of Democracy and free market economics folks.
P.S. Don`t blame me - I didnt vote for `em.

Dern! The smilies ran away again.


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## Guest (Oct 22, 2008)

2nd bail out in the USA looming We now have negative equity spreading in the housing market, mortgages higher than the property value, big job losses forecast.
Beam me up Scotty


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## Alnitak (Oct 21, 2008)

I remember that Jean Jacques Rousseau said that the first man who, having enclosed a piece of ground, bethought himself of saying "- This is mine", and found people simple enough to believe him, was the real founder of civil society.

I often ask to myself who was the first man who had the idea to sell goods of bad qualities to people who need not them, at prices they could not afford, and had the idea to lend money to people who would never be able to pay it back, who was the real founder of capitalism…

PS : excuse me for my awful grammar, but I don't understand anything to the sequence of tenses : If someone could help me, I should be really as happy as grateful!


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## Chi_townPhilly (Apr 21, 2007)

No worries, *Alnitak*. Your message is completely comprehensible to me.

Now... what's being said about "loans to people who can't pay them back" is best exemplified by the "goverment-sponsored-entities" Fannie Mae & Freddie Mac. To borrow my wife's salient metaphor on the topic, it was as though they has thrown a wrist-lock on Adam Smith's 'invisible hand.'

The following is not based on anyone's comments, but is instead my personal impressions on the matter. The housing market crisis metastasized when Fannie & Freddie turned their "mortgage-backed securities" into a proposition bet that private institutions were too-willing to take up. The subtext was that if real-state values continued to defy gravity, fat profits could be had by all. If they didn't, the assumption was that the government would cover their (backside)... and be that much more likely to do so, with the increased number of institutions on-the-hook. [It seems they were too-right about that one.]

I very much enjoyed your post... with the proviso that "poor goods to people that don't need them at prices they can't afford at credit they can't sustain" is better described by the word "consumerism" than "capitalism." They're *not* the same thing. "Consumerism," I think, is best warded off by the recognition that _things_ can't/won't/never will make a person truly happy.


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## Alnitak (Oct 21, 2008)

Chi_town/Philly said:


> "poor goods to people that don't need them at prices they can't afford at credit they can't sustain" is better described by the word "consumerism" than "capitalism."


Yes, I think you are absolutely right.


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## Guest (Nov 4, 2008)

Democracy is not to blame, it is as you say _Chi_town/Philly _
"consumerism" which is delivered through the mechanism of the "market" and as I said earlier entirely due to Greed. Once you have sold your product [one] to every one the next step seems to be to entice us to buy another one so we finish up with 2-3 Cars, 3-4 TV etc even 2-3 Houses, all is well until someone stumbles then the S#!T hit's the fan.


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