First Greece, Portugal and Spain, next is Italy, Ireland and Belgium?

[El_Gato]

Interesting points.

I'm back from the protests and am glad to say we're growing in number and impact on the media.

Now we're talking about the US, have you seen the documentary film Inside Job? What are the opinions in the US about this revealing work? It had very positives reviews in EU (regardless of Matt Damon, lol). I think it's pretty clear that we can't keep playing the same game forever, this has to change.

The problem is that they privatize profits and socialize losses, that lead them keeping doing wrong.

 

[Trevoire520]

I'm not going to pretend that I understand even half of what you guys are on about, totally over my head. But I do have a couple of (probably very stupid) thoughts:

I keep hearing about how basically every country has masses of debt. Who the hell is it owed to? And who decided to make them queen of the world and give them trillions of billions of millions of £/$/whatever to loan out to every fucking country? Is this just some massive worldwide fund loaning out money they don't actually have so that they can get rich off the interest payments or something?

Why the hell is every country in Europe getting bailed out left right and centre? Surely if everyone keeps getting bailed out it just costs all the other less fucked countries more and they'll end up becoming fucked aswell?

If everyone's got fuck loads of debt, and everyone's currency is based on it's demand compared to other countries, can we not take the country with the least amount of debt and call that the new zero point. I suppose it wouldn't actually make any difference other than making some of the numbers look smaller?

How the fuck can we afford to bomb Libya and bail out EU countries at a cost of billions, yet public sector workers pay is far too expensive to afford!? Here's an idea, keep police on the streets, nurses in the hospitals, teachers in schools etc and DONT go bombing the fuck out of other countries!
I suppose it all comes down to the fact that the government will somehow make it profitable for themselves in the end. Assholes.

Apologies for my absolute ignorance in this subject,

 

[JeffTD]

1. I keep hearing about how basically every country has masses of debt. Who the hell is it owed to? And who decided to make them queen of the world and give them trillions of billions of millions of £/$/whatever to loan out to every fucking country? Is this just some massive worldwide fund loaning out money they don't actually have so that they can get rich off the interest payments or something?

2. Why the hell is every country in Europe getting bailed out left right and centre? Surely if everyone keeps getting bailed out it just costs all the other less fucked countries more and they'll end up becoming fucked aswell?

3. If everyone's got fuck loads of debt, and everyone's currency is based on it's demand compared to other countries, can we not take the country with the least amount of debt and call that the new zero point. I suppose it wouldn't actually make any difference other than making some of the numbers look smaller?

Apologies for my absolute ignorance in this subject,

1. Generally owed to it's own citizens/institutions and foreign investors. In the US, for instance:

2. In theory, it's better for everyone when their peers are doing well - they'd rather see a member state brought back into good standing than thrown out completely, as the more countries in the Euro-Zone are stable, the stronger the Euro is against other currencies.

What they're trying to do is walk the fine line between saving other member states and completely fucking themselves over, kind of like deciding how far to swim out into a river with a swift current to save one of your hunting buddies.

3. You answered this one yourself in the last sentence. The problem is that sheer amount of debts owed isn't a great indicator of how well a country is doing, especially when you compare to GDP. Take a look at this list of countries in order of most to least debt as a % of GDP - pretty surprising, to be honest, especially when you see who the US is beating despite our massive, massive debt amount.

*edit* Here's another really interesting map; same info as above but presented in geographic form:

 

[egan.]

Take a look at this list of countries in order of most to least debt as a % of GDP - pretty surprising, to be honest, especially when you see who the US is beating despite our massive, massive debt amount.

Whoa. Not what I was expecting.

 

[Cheesebone]

If everyone's got fuck loads of debt, and everyone's currency is based on it's demand compared to other countries, can we not take the country with the least amount of debt and call that the new zero point. I suppose it wouldn't actually make any difference other than making some of the numbers look smaller?

I think there's a lot of misconception on the concept of what what actually gives a currency value. In it's basic form though, a currency is valuable because of the production behind it. The best way I can explain it is like this..

Well, simplify things a bit. Let's say there was no currency at all, just your country, and my country. You were relatively efficient at producing the things you needed, and therefore really didn't need my help at all. However, my country has taken a liking to oranges. Unfortunately, oranges aren't really indigenous to the area that my borders cover, and don't grow well there. Your country has GREAT capability for growing oranges, though. So I ask you "hey, can we have some of your oranges?" Obviously, unless you were currently producing so many oranges that they were simply going to waste, you'd want something in return for your production, right?

But if my country doesn't have anything to offer you, then there likely won't be any oranges coming over my borders. We need to produce something that you want, that you currently don't have, or can't produce that well on your own, and trade that for your oranges.

The downfall of the barter system, like this, is that if you grow oranges, and say - you want bananas, you have to find someone who has bananas and wants oranges. That's why currency is almost "necessary", because it really simplifies trade by creating an accepted medium of exchange for virtually any good or service available. The guy with the oranges no longer needs to find someone with bananas who WANTS oranges, he can just give the guy with bananas (who maybe wants apples) some currency, and get bananas in exchange. Likewise, the guy with bananas can now go buy apples with the money exchanged for his bananas.

The fact is that, this currency would have NO VALUE to another country if there wasn't any production behind it in the first place. Currency is essentially a claim on a given amount of production within a particular country, then. Likewise, if my country came up to yours and said "here, I printed up these dollars, so now let me buy some of your oranges" - you'd have to ask "well, what can I buy from you with these dollars that I don't already have on my own?" Again, if I can't give you anything in exchange for these dollars that you don't already have - the trade simply doesn't make sense. The currency is essentially worthless to you, and is only really any good as a medium of exchange for the people in my own country.

Take this and apply it to the US, now. You probably understand that our general manufacturing base has virtually evaporated. So much of our consumer goods, clothes, toys, pens, furniture, electronics, car parts, oil, packaging, appliances, you name it.. SO MUCH of it is now produced overseas. Eventually, these people are going to have to ask "what can I buy with these dollars in the US market, that I can't already make for myself?"

And as our monetary policy continues to increase the global supply of US dollars, these dollars lose value and purchasing power, making the hard work of other countries less and less rewarding if they are paid the same nominal amount for their production.

This process WILL NOT last much longer, it's on it's last breath right now and it won't be long before other countries get tired of giving us the goods they make, that they they could be consuming, in exchange for little green pieces of paper that are worth less and less every time they look at them.

 

[Aaron Smith]

Now we're talking about the US, have you seen the documentary film Inside Job? What are the opinions in the US about this revealing work? It had very positives reviews in EU (regardless of Matt Damon, lol). I think it's pretty clear that we can't keep playing the same game forever, this has to change.

The problem is that they privatize profits and socialize losses, that lead them keeping doing wrong.

I saw it; I actually enjoyed it to a degree, as it did a good job of portraying the cozy relationship between Wall Street and the US government. However, I was very disappointed that it never once pointed the finger at the Federal Reserve as being in any way at fault for anything; the Federal Reserve is the entity responsible for setting interest rates, and without the excessively low rates throughout the early 2000s, there would have been absolutely NO incentive for unfit borrowers to take out giant loans for houses they couldn't afford! Furthermore, since bankers know that the funds of their depositors are all "insured" by the government, there is no longer any real incentive for bankers to maintain prudent lending standards, especially when the price of an asset like homes climbs year after year... What banker is going to opt out of making a quick and easy profit on subprime lending in a housing boom, when the government is there to guarantee all of their deposits?

I kind of got the feeling from the film that the filmmakers were probably Democrats who had a preconceived idea as to the grand point and worldview they wanted to promote ("Bankers are evil and corrupt, and the problem is too little government regulation"), rather than going into the whole project hoping to learn things that they didn't already "know" about the crisis or really uncovering the entire truth of the situation. Why didn't they blame the Federal Reserve setting interest rates too low and for not even realizing that the low rates were fueling a housing boom? Why didn't they question the ability of modern banks to lend out far more money than they even have on deposit? Why didn't they think about the original concept of money (a simple tool with stable value, meant for making commerce as efficient as possible), and contrast it with modern fiat money (an undefinable, unstable medium of exchange, which in quantity and value can be manipulated at will by a central bank who basically pretends to see the future)?

The problems of the continuing crisis are deeply rooted structural problems with the entire modern monetary system of paper money and the excessive debt it allows into the world, not simply surface problems created randomly by greedy bankers.

 

[Uros]

^^I see you mention Federal Reserve. Have you watched Zeitgeist movies? They do mention (and even go into details) how the whole system always reinvents the need for more and more debt and address all those monetary mambo jumbo. It's definitely an interesting thing to watch. I am curious if it's all true though.

 

[JeffTD]

^^I see you mention Federal Reserve. Have you watched Zeitgeist movies? They do mention (and even go into details) how the whole system always reinvents the need for more and more debt and address all those monetary mambo jumbo. It's definitely an interesting thing to watch. I am curious if it's all true though.

Zeitgeist is 100% made-up or misinterpreted bullshit.

 

[Aaron Smith]

I haven't seen the Zeitegeist movies, but I highly recommend the book The Case Against The Fed to anyone who wants to understand what the Federal Reserve is all about. Murray Rothbard is immensely concise, detailed, and fascinating in the case he lays out in the book, and the book is even short enough that you can easily read it in one evening if you want to. He begins by explaining the concept of money in the most basic sense possible, all the way through to the establishment of the Federal Reserve Act in 1913, up through the leaving of the gold standard, and into the 1990s when the book was written, and makes clear every step of the entire process in between. What it basically boils down to, is this: bankers like to lend more money than they actually have, but the only way to do this without causing bank runs, is to create a lender of last resorts, i.e. a central bank who can be in absolute control of the issuance of the currency and can insure that none of the largest banks will ever need to close their doors. One thing that not many people know, was that the Federal Reserve Act was literally written by bankers (in fact the most powerful bankers in the country), at a millionaire's club on Jekyll Island in Georgia, which was co-owned by J.P. Morgan himself, and the whole outing was spun to the press as a duck hunting retreat. I know that sounds crazy, but it's 100% true. The Federal Reserve is just a big banking cartel, created for the benefit of the banking elites, which operates under the guise of being an absolute necessity and bastion of stability in the economy, when in fact it is nothing of the sort.

 

[Aaron Smith]

Also, El_Gato, check out this film, it addresses the financial crisis but comes to entirely different conclusions than "Inside Job", although they stop short of explicitly blaming fiat money and fractional-reserve banking:

[ame]http://www.youtube.com/watch?v=4ECi6WJpbzE&feature=player_embedded[/ame]

I can't figure out how to display a wider YouTube player here on the boards, so you might just want to click through to the actual YouTube page to see it in the right size player.

 

[El_Gato]

I'll watch it, thanks.

You're right about we're focusing too much on bankers because the real guilty are governments that allow this. But bankers have their part of guilt for being irresponsible. They know what they are doing but financial business is also business and supranational businesses are telling Greece to accept the rules they're giving (cuts, cuts and cuts in everything I mentioned before) while bankers are getting richer or they won't give any money.

Is that democracy? Someone enlighten me because I don't think anyone voted the Central European Bank.

So, in this case governments should blame those who created this and make them pay. With the money we already gave the banks, the whole world would be fed for 600 years. I think we need to know how money is created now, we also need to make sure that they don't make the same mistake again. We need to make sure everyone understands how the banking system really works, how money is created, and how we can fix the system.

 

[Cheesebone]

I just see that as pointing the finger at the wrong person though. The government intervened in a system that they never should have had (and technically still don't) the power to manipulate, and in doing so they created an open door to let banksters run amok. The greed that people blame for this disaster has ALWAYS existed, it was natural market forces that kept that greed in check.

When the government comes in and distorts those forces, it it only realistic to assume that economic damage will be done.

If you grill up a big juicy steak, and then put it on the counter right in the eyesight of your dog, and then leave the house for an hour only to come back and find out that the dog ate the steak - who should you blame? The dog for being "bad" or yourself for being so ignorant to assume that the dog would just behave itself?

Bankers are absolutely guilty of being dumbasses and should have been allowed to fail accordingly. They are no different than you or I - if we make poor investment decisions, we have to accept the losses. They should too. Yes, jobs would be lost and the economy would get hurt. But that's what needs to happen, at least we'd purge the economy of all the poor investments (instead of trying to prop them up) and labor & capital would be reallocated to areas of the economy that it's actually NEEDED in.

 

[Aaron Smith]

Right on the money again, Cheesebone...except that the steak analogy is a bit simplistic and could easily be used as an argument for many other philosophies that you didn't intend it to be

The big idea is that the prospect of failure is a very powerful natural incentive for a man to be safe and reasonable when conducting business or making investments; things like government bailouts and deposit insurance are not good for the average citizen, but they are absolutely ideal for a banker who doesn't want to be bound by the discipline of the free market.

I can't help but inject some Ron Paul into this topic, just because the guy is so smart and articulate when he writes:

The free market is a naturally occurring phenomenon that can't be eliminated by governments, not even totalitarian ones like the former Soviet Union. It can be regulated, over-taxed and manipulated until it is driven underground. Lately it has been wrongly accused of doing so many things it just doesn't do, that are really the fault of crony corporatism and convoluted government policies that brought on the crisis. Too many people equate the free market with big business doing whatever it wants, but that is not the free market. Unconstitutional taxpayer funded bailouts are what allow giant corporations to run roughshod over the economy. The free market is what puts them out of business when they misbehave.

The free market is you and your neighbors working hard to produce what you produce, and exchanging goods and services voluntarily, in mutually agreeable arrangements. The free market is about respecting property rights and contracts. It is not about building up oligarchs and monopolies and confiscatory tax theft -- these are creatures of government.

We must watch out when government comes up with interventionist solutions to interventionist problems. The root of our problems lie in interventionism. Trusting the free market is the solution.

 

[Genius Gone Insane]

^Problem is if there is no government intervention, such as regulations, then the free market inevitably becomes a series of giant monopolies and is no longer free. Although you are saying that the monopolies would also inevitably crumble and the free market would still stand, which is also correct.

^So then, after the collapse, if you have no government intervention, then you've got the entire American car industry destroyed and basically half the state of Michigan out of jobs. And that is going to take a lot longer to fix than this debt will.

Granted I know nothing about economy/politics so I can go fuck myself. However, if you take the Democratic party out of the equation and let the free market run rampant, then it seems to me that the USA becomes Romania in 10 years.

 

[El_Gato]

I think free market would be ideal but these days, regulations are there for every business, for example we need to ensure there are no monopolies and speculation. So, some sort of regulation is necessary in these circumstances. The problem is that we need a Global economy solution everyone should adapt to its country because one country can't do it for itself nowadays.

Free market is something variable and there are grades depending on many factors but it works with ethics. We cannot confuse interventionism with the lack of norms that is happening right now. In the same note, we people try to act ethically but there are norms in society (you're not free to kill somebody)

Again, we may blame the banks, the governments, even the people who gave those banks and corporations all their money. Banks said we offer 17% interest rates for your money, so people went to that bank that gave them more (including presents like stereos). Those people never cared about where their money was going to (speculation, weapons...). They just went greedy.

Then people were told houses were a great investment because the price was rising quickly. As if it was a good thing. So people went greedy, started to buy houses, loans required no actual guarantees. The same with wall street games.

All this is what we're paying now. The absence of ethics in favour of quick cash. From banks to regular people.

So we all should use ethical banking that works transparently, eat organic food and ask if we really need an interest rate of 10% when we can do much better to society while we're still getting a 5% of profit. Sounds hippie, I know, it's not. It's about sustainability and conscience. I'm working on this myself everyday.

So yes, free market is good because, why putting regulations when we can act from our conscience and freedom of choice? The problem is we're letting responsibles go. And with their pockets full of our money. Yes that is some steak and dog style case. We're good people but not idiots they can fool. Well, at least Iceland people aren't.

 

[Cheesebone]

I suppose this brings up a different question - if there were a truly free market, and a monopoly existed in such an environment - explain then, how would a company reach monopoly status?

They obviously would only be able to do so by providing a good or service at a price that others simply can't compete with. How is this bad for the consumer then? There's always the argument that "well, then they can raise prices because they're greedy bastards and if there's no competition, then we're all screwed" but the simple fact is that if they raise prices to exorbitant levels, competition will come in again and drive prices downward again, because other "greedy bastards" will see an opportunity to profit from the monopoly's poor pricing structure.

It's silly to assume that the auto plants in Michigan would just vanish if the manufacturers were allowed to go bankrupt. Reality would tell you that if there was a completely functional factory, capable of producing vehicles at an efficient level, than an entrepreneur would buy up that preexisting capital and hire a new labor force to assemble and manufacture NEW cars. Yes, there would obviously be some downtime involved and an inherent hit for the economy, but the overall result would be new jobs produced through the private sector generating REAL profits and economic growth, instead of bailing out the UAW and slapping the companies on the wrist. That would fix itself MUCH quicker than 14 trillion dollars worth of National debt will, I think..

I also don't see any problem with speculation - it's basically just gambling at the end of the day. You make bets on the future price of something. If you win, you make money. If you lose - you lose money. It's no different than dropping money into a slot machine. There's no reason to regulate that practice, people need to be held accountable for their own decisions. If people making $40k a year thinks it's acceptable to take out a $300,000 mortgage because they are betting on the prospect of their new home value going up xx% annually and someone is stupid enough to write the loan, then they BOTH deserve to suffer the consequences of their absurd decisions.

 

[JeffTD]

^Problem is if there is no government intervention, such as regulations, then the free market inevitably becomes a series of giant monopolies and is no longer free. Although you are saying that the monopolies would also inevitably crumble and the free market would still stand, which is also correct.

^So then, after the collapse, if you have no government intervention, then you've got the entire American car industry destroyed and basically half the state of Michigan out of jobs. And that is going to take a lot longer to fix than this debt will.

Granted I know nothing about economy/politics so I can go fuck myself. However, if you take the Democratic party out of the equation and let the free market run rampant, then it seems to me that the USA becomes Romania in 10 years.

You need contracts to be enforced and certain regulations yes, but ultimately it's a hands-off approach that needs to be taken.

We should have let the American car industry destroy itself and left Michigan half unemployed - it's not our fault they built shitty cars year after year and expected to stay in business.

And no, it wouldn't become Romania without the Dems, but what we have right now is so far from a free market it's not even funny. Every single problem people attribute to capitalism and corporatism in America is not the result of the free market, it's the result of corruption and collaboration between the government and the corporations in an effort to quell free market activities.

 

[Cheesebone]

You need contracts to be enforced and certain regulations yes, but ultimately it's a hands-off approach that needs to be taken.

We should have let the American car industry destroy itself and left Michigan half unemployed - it's not our fault they built shitty cars year after year and expected to stay in business.

And no, it wouldn't become Romania without the Dems, but what we have right now is so far from a free market it's not even funny. Every single problem people attribute to capitalism and corporatism in America is not the result of the free market, it's the result of corruption and collaboration between the government and the corporations in an effort to quell free market activities.

*golf clap*

 

[El_Gato]

@Cheesebone That's an example of natural monopoly. It's not the norm but, anyway, with monopolies, prices tend to rise.

The problem with speculation is that i'ts not about the good itself for your enjoyment but the profit. We're putting money before necessities again. That's what happened with the house bubble. We should talk about conscious investment and not speculation. We saw how risky is and who end up paying the mess.

Example of speculation: when someone buys 20 houses to speculate (they expect double the money in 5 years), you need to see that that is creating poverty on the other side: prices will rise and you'll have to pay insane rates if you want to buy a place right now.

They expected it to cost twice the cost now, yes, but were they smart? Recession, bubble... what are they doing with 20 empty houses now? They better keep them locked and wait for the prices to rise again. That means less houses for the rest and the prices not being able to drop consequently.

Some agents use the monopoly (see oil) to influence on governements and wars, rising the price of the product by the way.

Free market can't be free of taxes like the ones everyone pays and the market is more efficient when you have to compete.

 

[El_Gato]

And no, it wouldn't become Romania without the Dems, but what we have right now is so far from a free market it's not even funny. Every single problem people attribute to capitalism and corporatism in America is not the result of the free market, it's the result of corruption and collaboration between the government and the corporations in an effort to quell free market activities.

In fact, compared to other countries, the Us is one of the most free markets nowadays.