Some on the left are promulgating the idea with no small sense of glee. The Washington Post editorial page of all places says no. The lede:
IS THIS the end of American capitalism? As financial panic spread across the globe and governments scrambled to contain the damage, reality seemed to announce the doom of U.S.-style free markets and President Bush's ideology. But this is wrong in two ways. The deregulation of U.S. financial markets did not reflect only the narrow ideology of a particular party or administration. And the problem with the U.S. economy, more than lack of regulation, has been government's failure to control systemic risks that government itself helped to create. We are not witnessing a crisis of the free market but a crisis of distorted markets.
Included in the text is a necessary critique of government's role via Fannie & Freddie in problematic market manipulation.
Read the whole thing.
Posted by Eric Earling at October 20, 2008 07:24 AM | Email ThisAlso it is clear that Fannie Mae and Freddie Mac played only a small role in the banking breakdown. And I'm afraid the mortgage deduction, which the editorial rightly faults, has overwhelming bipartisan support.
Posted by: Bruce on October 20, 2008 08:46 AMMore like a failure of financial companies to act in the best long term interests of their company and shareholders.
Most companies took the the short-term gain which made increased the value of their stock price. Sadly they did not look at the long-term consequences of their actions and this led to massive failures across the banking industry when the bills came due.
Free Markets work quite well when the people involved are thinking about the long term strategy and not play follow the leader into short-term high risk endeavors. Quality accounting and sunshine rules also help keep comapnies honest.
you're only half right. the only reason those companies weren't acting in their own long-term interests is because the government told them not to.
the government told and is telling these institutions that if you get into trouble, we'll just bail you and fix everything for you.
the article is right, this is a crisis of distorted markets. if the government hadn't extended treasury backing to freddy and fannie then they wouldn't have taken such large risks.
Posted by: blindman on October 20, 2008 10:57 AMObama (the "Outsider")
Goldman Sachs $739,521
UBS AG $419,550
Lehman Brothers $391,774
Citigroup Inc $492,548
Morgan Stanley $341,380
Latham & Watkins $328,879
Google Inc $487,355
JPMorgan Chase & Co $475,112
Sidley Austin LLP $370,916
Skadden, Arps et al $360,409
McCain (the "Maverick")
Merrill Lynch $349,170
Citigroup Inc $287,801
Morgan Stanley $249,377
Wachovia Corp $147,456
Goldman Sachs $220,045
Lehman Brothers $115,707
Bear Stearns $108,000
JPMorgan Chase & Co $206,392
Bank of America $133,975
Credit Suisse Group $175,503
DEMOCRATS. REPUBLICANS. STATUS QUO.
NOTHING CHANGES IN A TWO PARTY SYSTEM.
VOTE 3rd PARTY FOR REAL CHANGE.
Special thanks to the Center for Responsive Politics
Do the names of these contributing banks sound familiar to anyone?
When Paulson FORCED a governmental takeover of all the banks last week he put yet another nail in the coffin of American capitalism. He was quoted as saying this bank takeover was "objectionable yet necessary." Necessary for whom? The economy, or just the banksters?
The first step in the murder of capitalism is crushing the American Dream. We have Joe the Plumber to prove Obambi will do just that.
"I can" is now "Why bother".... especially if my neighbor, especially if YOU will provide for me.
The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance. -- Cicero , 55 BC
Posted by: Ragnar Danneskjold on October 20, 2008 11:36 AMSo, after eight years in control of the Oval Office, the debt has increased. Tell me again why the office should have a Republican occupant? McCain does a great job of spinning himself as a reformer (with no executive experience and an uneven temperament, I might add), but the last time the budget was balanced was when a Democrat was President.
Posted by: demo kid on October 20, 2008 12:06 PMAhhh... the typical Republican way. Someone gets thrown out of a job or needs assistance with medical bills or suffers some kind of major catastrophe, and it's they're own damn fault.
As was said during the DNC, the motto of the Republican Party should be that when it comes to your country, "you're on your own" to flounder and die if you ever run into trouble.
Posted by: demo kid on October 20, 2008 12:11 PMThe POINT, willfully ignorant, is regarding Joe the plumber:
WHY BOTHER starting a business,
WHY BOTHER working hard,
WHY BOTHER having goals, if the results, if my reward, for doing so will be exactly the same as you sitting on your ass reaping the same benefits.
Hells bell, move your ass over so I can have a seat on that Obambi gravy train!
So, after eight years in control of the Oval Office, the debt has increased.
How much of that debt comes from the wars?.. you know, thoe ones that have kept terrorism off our shores for 7 years... but according to Joe will be back within the 1st 6 months of 2009
"Tell me again" how socializin US healthcare will not increase the debt.
"Tell me again" how SanFranGranNan's $150 BILLION vote buying scheme..er, stimulus pacakge will not increase the debt.
"Tell me again" how Obambi's $874-billion in new spending will not increase the debt.
Posted by: Ragnar Danneskjold on October 20, 2008 12:39 PMYou mean like the ones that Dodd and Frank consistently blocked, over howls of Republican protests, on Fanny and Freddy?
Posted by: Cliff on October 20, 2008 12:47 PMYou are speaking of a 'hand up", which is opposed by almost no one, particularly if it is offered by a private charity.
There are millions in this country, however, who exist on long-term government "handouts". When those presently accepting such join forces with millions more expecting such, and together those exceed the number of working taxpayers, you elect a government of Obamas. Instant socialism and inevitable collapse.
Posted by: Saltherring on October 20, 2008 01:03 PMDoes the fact that Freddie Mac secretly hired a *Republican* consulting firm to lobby *Republican* senators to prevent a vote on regulation change your views at all? And if not, why not?
http://www.cbsnews.com/stories/2008/10/20/national/main4531578.shtml
(Note that the story says that both Republicans AND Democrats opposed Hagel's bill. There's blame on both sides of the aisle.)
For Republicans, justice demands that money should belong to those who earn it. (This has the benefit that work is encouraged and sloth discouraged.)
As Ronald Reagan said: "In the beginning of the empire, taxes were low and revenues were high. At the end of the empire, taxes were high and revenues were low."
Welfare states that spread the money around lead not to properity but generalized poverty due to lack of initiative and investment.
These are lessons Joe the Plumber understands. Why doesn't the Demo kid?
Posted by: KW64 on October 20, 2008 01:52 PMNo. Every Democrat opposed the bill, and that amount of uniform opposition to a bill ensures that it will never get to a full vote of the Senate, so what's the point of bringing it up? That's the reason Frist never brought it, not because 7 Republicans didn't sign a letter.
Posted by: Palouse on October 20, 2008 02:42 PMNot nearly as much as say the debt from those GOP budgets that Bush passed. Everyone knows it's irresponsible to increase spending and cut taxes at the same time, yet that's exactly what happened.
Ahh those were the days, when we actually thought we'd be able to pay off the Debt. Here we are 8 years later with the biggest US Govt. in history, the largest Debt in US History, not to mention the introduction of Socialism into the US economy by the sitting Republican President.
The first priority of the new President will have to be debt reduction while getting the bill for Iraq and Afghanistan. Obviously neither Presidential candidate will get to spend money on programs they want. President Bush's economic policy pretty much destroyed that idea.
These are lessons Joe the Plumber understands.
Wow, look at all deranged people on here are. You guys are now taking fiscal advice from people who don't even bother to pay their taxes. Clearly Obama Derangement Syndrome is in full effect.
It is not deranged to say that welfare states discourage work. When Obama says he is giving tax cuts to 95% of the people when 40% do not even pay income taxes, that means he is providing redistributionist welfare. In the 12 years Before the 1996 welfare reform that required work after 5 years rather than permanent welfare, unemployment averaged higher than in the 12 years afterward.
And if that does not suggest a cause and effect, look at the welfare states of Europe where unemployment has run as much as double what it has run in the US. As the old bumper sticker said:
"WELFARE IS NOT WORKING"
Obama cannot change human nature. Many people paid not to work won't. Many people taxed for working more, won't bother.
Posted by: KW64 on October 20, 2008 03:06 PMAs I've said many times before, I often wonder if conservatives really understand what "socialism" means. Nothing has been proposed that even hints at more nationalization than the Republican administration has pushed through. In fact, McCain's proposal of buying up and renegotiating home loans smacks of it as well, and given that McCain hasn't proposed abandoning the progressive tax system, I can only guess that this would mean that he is a closet "socialist" as well.
I've said this before... I understand greater than most that government support does in fact cause certain people to feel entitled to services like you describe. I volunteer for a social service agency in my off time, and some of the people that look for help do so thinking that they deserve everything. And yes, it isn't completely fair that these folks get to slide in to get free temporary housing or healthcare while people that have a better work ethic grind themselves down to support their families and improve their lot in life.
But you're faced with a simple decision as a society. Do you cut off services for those folks that you feel don't "deserve" it, and in the process cut off those people that just need a "hand up" as you describe? Or do you extend those services, knowing that some people will abuse the system? My personal opinion is that I'd much rather try to manage the free-riders than cut off the people that really do need these services.
Our half-assed consensus approaches aren't working either. Take healthcare, for one. EMTALA, a measure taken to ensure that hospitals don't dump uninsured or underinsured folks on the street to die in a medical emergency, has effectively broken our medical system. We cannot bear to let people suffer and die on the street, but we cannot actually take the most efficient approach and ensure that everyone has some form of medical insurance under a consistent program. Either we need to accept the fact that there are severe human costs to a completely free market-based system, or we need to find a way to provide for effective and cost-efficient government programs that deal with these problems head-on and work to minimize costs to the taxpayer.
I know also from experience volunteering that charities at present don't have the infrastructure or the resources to deal even with the current holes in the social safety net, especially in down economic times. If you were to massively cut social services and reward taxpayers with a fat tax cut as a result, the amount of charitable contributions that would result would not nearly be able to make up the difference to deal with the social problems that we have as a country today. Likewise, the patchwork of charities would not be able to provide consistent levels of services for the people that would need them.
Posted by: demo kid on October 20, 2008 03:31 PMI agree, but a vast majority of American do work, pay taxes, a majority of them are middle-class American's like Joe the Plumber.
Every article I've read on Joe the Plumbers situation seems to indicate he'd pay less under Sen. Obama's plan than under Sen. McCain's plan. Is Joe going going to quit working now that he pays less in taxes?
Doubt it, even if he did take over said business he has the right to hire and fire the individuals who work for him as he pleases, nothing is stopping him. Nowhere under Obama's tax plan is there no rules like the French 35/hr max work week, so Joe is free to keep his future employees on a 40/hr+ work week if he so desires. The only thing the state asks for are licenses so that the state can verify that Joe and his employees are not just scam artists or unskilled workers aiming to undercut real plumbers and providing shoddy workmanship.
Joe and his employees can work hard by providing quality workmanship at a competitive price and pay lower taxes thereby allowing his employees to take home a larger chunk of their paychecks. Should Joe and his employees choose to invest that money or spend it is up to them.
Apples and oranges.
There is a huge difference between giving a hand UP (the conservatives way) and a hand OUT (the lberal way). A hand UP encourages you to get off your ass, a hand OUT encourages you to keep your hand out.
Meanwhile, the Catholic Church has ENDED its hand outs to ACORN:
US bishops' agency suspends ACORN funding October 20, 2008 The Catholic Campaign for Human Development (CCHD) has suspended funding of the Association of Community Organizations for Reform Now (ACORN) following reports of embezzlement, according to CCHD executive director Ralph McCloud. The CCHD has given over $7.3 million to ACORN projects in the past decade despite concerns raised over the years by the Wanderer Forum Foundation, the Capital Research Center, and others.
AND, Archbishop Chaput criticized Obabykiller as "most committed" abortion-rights candidate from a major party in 35 years
Our Moral Responsibility as Catholic Citizens
Can a Catholic Vote in Support of Abortion?
Posted by: Ragnar Danneskjold on October 20, 2008 04:06 PMI think it would do well if some bloggers were to research this philosophy and TEACH. Then, the commenters could stop responding to being called "socialist" as if they were being cussed at.
Internatational Socialism actually is an international political party. It has various forms in each country. Their website says that they operate in the United States of America under the Democratic Party. Look it up.
Socialist have what I call "denominations", just like the Christian Church has Catholics and Baptists and Pentecostals. Socialism has Communists, Social Democrats, and several others.
Personally, I don't like Socialism. Amoung other things, they treat the State as God, and tend to do things like kill an estimated hundred million Christians in the 20th century. I guess I'm a little offended.
Posted by: ljm on October 20, 2008 04:46 PMYawn, how many Muslims have we as a country killed in the 21st Century alone? Arguably millions. You can whine about the Chistian massacre all you want but Christians had full rights under Hitler and never once stood up for their fellow man. The Pope looked the other way as millions of people were massacred for their way of life. Then they have the nerve to elect a former member of the Nazi Youth to be Pope. So much for compassion and morality. The Catholic Church is one of the must corrupt and immoral organizations on the planet. They've lost their way, worshiping idols, living within their elaborate cathedrals, demanding money for forgiveness from sin, oppressing a woman's right to be treated as an equal, protecting child molesters, and generally failing to follow the teaching of Jesus. It's no wonder the Catholic Church and it's followers are becoming so irrelevant in society. They've lost their way, strayed from the flock, and are a far cry from the morality and teaching of Jesus.
The Church (Catholic or otherwise) should stay out of politics...religion is a personal experience and should not be dictated down from the theoretical ivory tower/pulpit...if the invidvidual follows the scriptirue God's plan will become clear and the proper choices will follow.
As Jesus once said:
"Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's"
Uhh, no, and because I'm not retarded.
ALL big companies hire lobbyists and they usually hire them from both sides. It would be unheard of for them not to. It would be even more grossly incompetent then their management of their financial dealings not to.
Republicans almost universally favored more oversight and stricter rules for Fanny and Freddy, and Democrats almost universally opposed them. That's a matter of record not up for serious dispute.
Posted by: Cliff on October 20, 2008 06:43 PMWhat market? You talk about deregulation, but for whom? For Chelsea Clinton to run Avenue A and soak the public? We didn't have deregulation, we had special decrees from Bill Clinton which allowed "investment banks" and few other entities to game the system and siphon the cream.
Do any of us (the bottom 97 percent) go to a Goldman Sachs ATM machine for our lousy 30 bucks to ride out the week? Do we hunt for "free checking" in the same place that Harvard MBAs mastermind hedge funds?
Nope! The problem was The People were regulated into a system which allowed the elites to milk us dry!
The McCain solution is to clamp down on the holes and make it safe to go back into the water again. McCain is a master shark fighter who will take out the cheaters and the gamers and say "hey, there's risk, but you will know about that risk in large print".
Posted by: John Bailo on October 20, 2008 06:54 PMThe Catholic Church has every right to demand obedience to its principles. YOU have a choice to join or not, to obey or not. Those choices have consequences.
The Catholic Church has every right and an absolute DUTY to remind its followers of those rules and how best to obey them.
If being a Catholic is too damned hard for YOU, or for the likes of the convenient when enpedient Catholics like Biden, Kerry, Kennedy, Murray, Dodd, Cantwell and Gregoire, then they are absolutely free to go join whatever other religion that allows them to set their own damned rules.
WE won't miss them and actully prefer that they leave and stop misrepresenting what it is to BE a Catholic.
Posted by: Ragnar Danneskjold on October 20, 2008 08:11 PM
Don't Blame Capitalism
By Peter Schiff
Thursday, October 16, 2008; A19
Amid the chaos of recent days, as the federal government has taken gargantuan steps to stabilize the financial markets, realigning the U.S. economic system in the process, comes a nearly universal consensus: This crisis resulted from government reluctance to regulate the unbridled greed of Wall Street. Many economists and market participants who were formerly averse to government interference agree that a more robust regulatory framework must be constructed to cage the destructive forces of capitalism.
For the political left, which has long championed the need for such limits, this crisis is the opportunity of a lifetime.
Absent from such conclusions is the central role the government played in creating the crisis. Yes, many Wall Street leaders were irresponsible, and they should pay. But they were playing the distorted hand dealt them by government policies. Our leaders irrationally promoted home-buying, discouraged savings, and recklessly encouraged borrowing and lending, which together undermined our markets.
Just as prices in a free market are set by supply and demand, financial and real estate markets are governed by the opposing tension between greed and fear. Everyone wants to make money, but everyone is also afraid of losing what he has. Although few would ascribe their desire for prosperity to greed, it is simply a rose by another name. Greed is the elemental motivation for the economic risk-taking and hard work that are essential to a vibrant economy.
But over the past generation, government has removed the necessary counterbalance of fear from the equation. Policies enacted by the Federal Reserve, the Federal Housing Administration, Fannie Mae and Freddie Mac (which were always government entities in disguise), and others created advantages for home-buying and selling and removed disincentives for lending and borrowing. The result was a credit and real estate bubble that could only grow -- until it could grow no more..........
Interest rates contributed the most to creating the housing boom. After the dot-com crash and the slowdown following the attacks of Sept. 11, 2001, the Federal Reserve took extraordinary steps to prevent a shallow recession from deepening. By slashing interest rates to 1 percent and holding them below the rate of inflation for years, the government discouraged savings and practically distributed free money.
Artificially low interest rates invigorated the market for adjustable-rate mortgages and gave birth to the teaser rate, which made overpriced homes appear affordable. Alan Greenspan himself actively encouraged home buyers to avail themselves of these seeming benefits. As monetary policy caused houses to become more expensive, it also temporarily provided buyers with the means to overpay. Cheap money gave rise to subprime mortgages and the resulting securitization wave that made these loans appear safe for investors.
And even today, as market forces deflate the credit bubble, the government is stepping in to re-inflate it. First came the Treasury's $700 billion plan to purchase mortgage assets that no one in the private sector would buy. Now it has recapitalized banks to the tune of $250 billion, guaranteeing loans between banks and fully insuring non-interest-bearing accounts. Policymakers say that absent these steps, banks would not be able to extend loans. But given our already staggering debt burden, perhaps more loans are not the answer. That's what the free market is telling us. But the government cannot abide solutions that ask for consumer sacrifice.
Real credit can be supplied only by savings, so artificial steps to stimulate lending will only produce inflation. By refusing to allow market forces to rein in excess spending, liquidate bad investments, replenish depleted savings, fund capital investment and help workers transition from the service sector to the manufacturing sector, government is resisting the cure while exacerbating the disease.
The United States reached its economic preeminence on the strength of its free markets. So far, the economic disaster exacerbated by government policies is creating opportunities for further government interference, which will lead to bigger catastrophes. Binding the country to a tangle of socialist ideals will seal our fate as a second-rate economic power.
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/15/AR2008101503166_pf.html
This financial crash was not a failure of unbridled capitalism but of unbridled government power.
Posted by: Bill K. on October 20, 2008 09:35 PMMoney is not really the point of this election, is it? Just a facade for our hearts.
By Jove, I think you have it!
Posted by: 5.62 on October 21, 2008 06:35 AM