Part 1 - Re: $700 Billion for the Banks!!!

Part 1 of a set of three responses to Randy on the $700 billion dollar 'bailout'

Category:

News & Politics

Tags:

• 700
• billion
• dollar
• bailout
• randyheltzerman

[WalterMerlin]

And I will leave things here, even though as you already mention things are extremely complicated. Thus, in this sense it maybe unfair to think of this complex situation leaving out the moral and psychological dimensions of it. It happens in the world here and now and includes every possible dimension of human characteristics. Sorry for taking up all this space ...

[dawnofreason]

WalterMerlin: Thanks for your thoughts. I don't fundamentally disagree with what you have said.

The banking industry will pay. There are already investigations underway into banking practice. These will inevitably uncover some malfeasance and 'heads will roll'. The masses will feel vindicated (even though the uncovered problems will have nothing to do with the sub-prime problem). The banks will be subjected to more regulation, which may or may not be effective - I suspect not though.

[dfthompson]

You say that "as soon as you regulate a market, it's no longer a free market." But what would make anyone think a completely unregulated market would work at all? An absence of any regulation that would affect the "market" would be a Hobbesian state of nature - in which case you wouldn't have a market at all, the stronger would simply take from the weaker. The more I hear, the more talk about the wonderful functioning of a "free market" is sounding like a fairy tale.

[dawnofreason]

I think it is fair to say that a free market in this strict sense is a theoretical construct. Like many ideas in economic theory (excluding the newer empirical economics) they are descriptively useful rather than analytically useful.

Perhaps the economists out there woudl like to pick that one up :)

[WalterMerlin]

If the patient is the economy and the banking system, and the heart and circulatory system (people) try to operate in a more sophisticated manner whilst the patient does not try to be more careful in what he does (eating, exercising etc), then everything will simply depend on the capacity of the heart and the circulatory system.

[WalterMerlin]

How will bankers pay for economic greediness? And when I say pay I dont refer to some kind of revenge. It is just the question of how this electric shock will make the patient be more careful.

[WalterMerlin]

It is the duty of every educational system to enlighten people on healthy economic behavior. But since the objective seems to be fast money for the few, nobody cares if people operate in a considered manner. Even when this behavior leads to what we face today, there is always The Dr. to give the electric shock and keep things going. But where does this leave the bankers responsibility? People, regardless of whether they were the supermarket type or not, will pay for economic ignorance

[WalterMerlin]

And most importantly I wonder how many people have real knowledge of how economy works. We only know we need (or think we need) money and go get the loan, like we go buy in a supermarket. And banks also operate like supermarkets. I dont think it is healthy for any society to start blaming each other for the situation they are facing. Yes, there are those who buy money in the supermarket and those who operate in a more well thought out manner.

[WalterMerlin]

This is an interesting series of arguments, but I would like to comment on your analogy of irresponsible MacDonalds consumers and irresponsible loan consumers. Thinking that MacDonalds food is OK to eat does not bring the same amount of blame as deciding to take a loan from the bank.Nowadays there is far more awareness regarding food matters than economic. You mention that everybody who knows a bit about history knows that nobody gives out money for free. How many people know about history?

[MrNotebook]

that our 700 they're tossing around!

[dawnofreason]

Are we really willing to suffer the consequences? We would, quite literally have people starving in the streets. The last time a government allowed the market to crash that dramatically you got the great depression. Not pretty.

Bear in mind how the recovery from the depression was kick-started too.