Bankers/Rich/Poor/Bailouts

[Staunton]

So if the credit crunch wasn't a fault in the operation of the free market, who's fault was it????

 

That is a very good question Mister M. It may not have been the free market system that failed (indeed not, since there is actually no such thing as the 'free market'), but it was the proponents of free market doctrine at the US Federal Reserve and in the major finance companies such as Goldman Sachs who were behind the corporate fraud that became known as the credit crunch.

 

For a withering exposé of the issue, I would strongly urge anyone to take a look at Charles Ferguson's brilliant documentary, Inside Job, out now on DVD.

[Supertramp]

So if the credit crunch wasn't a fault in the operation of the free market, who's fault was it????

And when the Credit crunch did occur in 2008 why did the head of the Federal Reserve, Alan Greenspan admit that it was a flaw in the operation of the free market that had caused the problem? http://www.guardian.co.uk/business/2008/oct/24/economics-creditcrunch-federal-reserve-greenspan

 

The free market would correct itself, with the government intervention in bailing out the banks (and making the banks lend to sub prime borrowers (Bill Clinton)), the problem isn't the free market, it is poor intervention by governments.

[Mister M]

That is a very good question Mister M. It may not have been the free market system that failed (indeed not, since there is actually no such thing as the 'free market'), but it was the proponents of free market doctrine at the US Federal Reserve and in the major finance companies such as Goldman Sachs who were behind the corporate fraud that became known as the credit crunch.

 

For a withering expose of the issue, I would strongly urge anyone to take a look at Charles Ferguson's brilliant documentary, Inside Job, out now on DVD.

 

Indeed it is very good & infuriating that none of the protagonists in this drama have been prosecuted; they may have been heavily censured but given the scale of the destruction a mere telling off is hardly appropriate.

 

One can only speculate that if it was trade unions and not banks that had caused tens of millions of people to lose their homes, jobs, savings, and even lives would governments or their people tiptoe around and not call for at the very least tougher laws.

 

But it goes beyond personalities, politicians and banks. I wonder whether there will be a backlash against the ideas which sowed this whirlwind, and a economic paradigm - like there was after 1979 or even after WW2.

 

---------- Post added 27-03-2013 at 16:50 ----------

 

The free market would correct itself, with the government intervention in bailing out the banks (and making the banks lend to sub prime borrowers (Bill Clinton)), the problem isn't the free market, it is poor intervention by governments.

 

So in other words when the emissaries of the market produces profits, all hunky dory - but when it goes belly up, it's the fault of government. It reminds me of the situation were in now where profits are privatised, and losses are socialised. A win-win outcome for the bankers.

 

And who ameliorates the effects of decisions made by financial institutions? What philosophy calls for little government intervention?

It's like you're saying the same as Ronald Regan "Government isn't the solution, it's the problem" whilst relaxing the post depression restrictions on capital.

 

I will say that in another thread someone floated the theory that we only get the politicians and society that we deserve - I think, in this scenario there is more than an element of truth to that.

[Staunton]

Directors of a business concerned can indeed do hard time where a conviction occurs. In the UK. The MD of the business at which a relative of mine was killed was getting ready for it, until SYP/CPR decided not to bring criminal charges. Though that may yet change at the Coroner's inquest.

 

L00b has related a shocking circumstance here. I am sure that all of us here on sheffieldforum would join in expressing our hope that justice is done for your relative, and to send our best wishes to your grieving family.

[syne]

Once again, concise, to the point and powerful. Many thanks epiphany.

 

But please do forgive me. Let me just focus on just one fascinating clause which is hiding in your words - this idea of 'corporate personhood'. Surely you are not suggesting that a corporation like Chevron or McDonalds is regarded in law as an individual? Hmm - I wonder if such 'individuals' can be put in prison if they kill people (like Dow Chemicals), or fix interbank lending rates (like Barclays).

 

they can and are. I can't remember exactly how it works but there are differing degrees of corporation.

 

http://en.wikipedia.org/wiki/Corporation

http://en.wikipedia.org/wiki/Legal_person

http://en.wikipedia.org/wiki/Personhood

 

none of which are human (natural person) but can claim certain human rights.

http://en.wikipedia.org/wiki/Natural_person

 

you already have a legal person, look on your bank card = MR JOHN SMITH

whereas your human name would be John Smith

(or more accurately, John of the family Smith)

it's just that not many ever really try to dis-entangle these two identities,

alas I digress..

[Staunton]

The free market would correct itself, with the government intervention in bailing out the banks (and making the banks lend to sub prime borrowers), the problem isn't the free market, it is poor intervention by governments.

 

Sadly, I fear that such optimism is misplaced. It is certainly seductive to hold on to the hope that there is a positive aspect within the corporate structure, and I can certainly sympathise with Supertramp's wishes. However, neoliberalism, which is the theory that underpins the myth of the free market, has just a few fundamental principles, and all of them are scrupulously crafted to enhance the wealth of corporate executives and shareholders at the expense of ordinary people, be they staff, subcontractors, customers, competitors, or the wider community here in the UK and across the globe.

 

These basic principles are easily identified, they are to cut welfare (dismantle the public sector), privatise (sell off anything of value within the state at a bargain price), deregulate (in order to avoid accountability), and to structure tax arrangements in such a way as to circumvent revenue obligations.

 

Knowledge of these few basic procedures will equip anybody to spot what the coalition government is really about here in the UK, and what the corporate sector is up to on the international stage.

[*_ash_*]

Only the fittest organisations would have survived, i.e. those with safer/more conservative lending/banking practices and reasonably well-capitalised at the time, with borderline cases being the target of aggressive takeovers.

i.e. what has always happened, and continues to happen, in any walk of business life aside from banking (in free market economies, that is).

 

The UK bailouts were a cop-out by Labour, (IMHO-) ideologically worse than whatever the LibCons have done to date (because of what Labour supposedly 'stands for'...and certainly according to their rethoric since the general elections).

 

I guess Brown simply did not want to exit his premiership as the PM who let millions of persons see their deposits wiped out (nothwithstanding applicability of Gvt garantees).

 

Do you think that this would have had a big impact on the average person?

 

They normally let most companies go bust. We no longer have Block Buster and Woolworths. Didnt Iceland let their banks go bust, so it was an option.

 

They did yes. I don't think it was very rosy for the general population though, and on a bigger scale what would happen here? (same question as above to L00b really)

 

Exactly what is going to happen anyway.

 

Are you familiar with the phrase "kicking the can down the road"?

 

Sooner or later you will run out of road.

 

The problem hasn't gone away.

 

It's certainly happening in Europe. And that is WITH bail-outs too. All just plugging some holes on a sinking ship then?

[Supertramp]

Indeed it is very good & infuriating that none of the protagonists in this drama have been prosecuted; they may have been heavily censured but given the scale of the destruction a mere telling off is hardly appropriate.

 

One can only speculate that if it was trade unions and not banks that had caused tens of millions of people to lose their homes, jobs, savings, and even lives would governments or their people tiptoe around and not call for at the very least tougher laws.

 

But it goes beyond personalities, politicians and banks. I wonder whether there will be a backlash against the ideas which sowed this whirlwind, and a economic paradigm - like there was after 1979 or even after WW2.

 

---------- Post added 27-03-2013 at 16:50 ----------

 

 

So in other words when the emissaries of the market produces profits, all hunky dory - but when it goes belly up, it's the fault of government. It reminds me of the situation were in now where profits are privatised, and losses are socialised. A win-win outcome for the bankers.

 

And who ameliorates the effects of decisions made by financial institutions? What philosophy calls for little government intervention?

It's like you're saying the same as Ronald Regan "Government isn't the solution, it's the problem" whilst relaxing the post depression restrictions on capital.

 

I will say that in another thread someone floated the theory that we only get the politicians and society that we deserve - I think, in this scenario there is more than an element of truth to that.

 

No the losses should not have been socialised, I don't think you have read what I am saying. If the losses were not mitigated by the government do you think the banks would have carried on doing the same thing?

[Staunton]

No the losses should not have been socialised, I don't think you have read what I am saying. If the losses were not mitigated by the government do you think the banks would have carried on doing the same thing?

 

Government? That is an interesting concept. If government and the corporate sector were discrete entities, then there might be some value to a focus on government action. However, a little scrutiny will reveal that the 'revolving door' between government and the political world spins with remarkable ease. For example, Bill Clinton's administration was severely hampered by the right-wing media, corporate players and political opponents, who fabricated a shocking array of unfounded and increasingly hysterical accusations, from the Whitewater real estate controversy, alleged drug-running and even murder, to serial sexual indiscretions. This left Robert Rubin, former executive at Goldman Sachs and Secretary to the Treasury under President Clinton, to exceed his mandate and make executive decisions beyond his jurisdiction. Oh, and following his tenure in office, Rubin moved on to another of those corporate monoliths, Citigroup. So, no corporate interests there then?

 

Add to this the power of the right wing media, and the corporate funded lobbying and think tank activity, and the idea of pure, democratic government begins to look rather shaky.

[Supertramp]

Government? That is an interesting concept. If government and the corporate sector were discrete entities, then there might be some value to a focus on government action. However, a little scrutiny will reveal that the 'revolving door' between government and the political world spins with remarkable ease. For example, Bill Clinton's administration was severely hampered by the right-wing media, corporate players and political opponents, who fabricated a shocking array of unfounded and increasingly hysterical accusations, from the Whitewater real estate controversy, alleged drug-running and even murder, to serial sexual indiscretions. This left Robert Rubin, former executive at Goldman Sachs and Secretary to the Treasury under President Clinton, to exceed his mandate and make executive decisions beyond his jurisdiction. Oh, and following his tenure in office, Rubin moved on to another of those corporate monoliths, Citigroup. So, no corporate interests there then?

 

Add to this the power of the right wing media, and the corporate funded lobbying and think tank activity, and the idea of pure, democratic government begins to look rather shaky.

 

 

Right wing conspiracy about Clinton's sexual indiscretions? Pull the other one. I agree about the lobbying though.

 

Also you are confusing actual reality with what I said should have happened. The same as your fantasist theories, mine are purely fantasy too.