If you subtract 1929 from 2008, the difference is 80. This means that capitalism has completely crashed twice in 80 years! Is this system really any good? Can't we find something a little more dependable to place our trust in?
shareLet's start with your math. 2008 - 1929 = 79. You need to at least get that part right before people will take anything else you say seriously...
shareCount it out, it is 80 years. Just like year 1 to year 10 is 10 years (1, 2, 3... 9, 10) whereas if you subtract it, it yields 9...
shareI can't believe I'm having this discussion...
The 1929 crash began on October 24, 1929. The largest single day point drop was September 29, 2008. There was a 500+ point drop day as early as September 15, 2008. If someone was born on October 24, 1929, they would not have even reached their 79th birthday by September 15, 2008. They would still have been in their 79th year. You can use your parlor tricks to work the phrase "9 decades" into conversation, but there is no accurate way to use the phrase "80 years" when referring to the interval between the 2 crashes.
Also, there were crashes in the intermediate. There were too many to count, but off the top of my head, there were huge crashes in 1972, 1974, 1987, 2000, and 2001 (prior to 9/11). Let me know if you need any more assistance in deterrmining the definition of a year.
There is state capitalism and private capitalism. The 2008 crisis involved houses that were almost all completely guaranteed or partially guaranteed by the government. This is what caused the houses to be overvalued. This is an example of state capitalism/socialism, whatever you wanna call it.
If the secondary market had not been partially or fully guaranteed by the government, then the banks would have done due diligence on the money they lent out. This "free market" system would have prevented people from getting mortgages to pay for houses that were overvalued. And if banks in this hypothetical "free market" system had given out loans to pay for overvalued houses, they would have been able to collapse without being "too big to fail".
What I'm saying is that your premise that the housing market represents capitalism is wrong. Having said that, if you have an alternative to capitalism, I would like to hear it. We can always use a better system. After all, capitalism has an inherent weakness in that it can lead to ponzi schemes. The credit/debit dichotomy that allows capitalism and wealth to flourish is also the same thing that leads to ponzi schemes.
And when the government gets involved in ponzi schemes, there are potential problems.
And for every $1 of financial 'guarantee' by the state capitalism element, there were, courtesy of private capitalism, $50 worth of bets on the books over whether the schmuck no-doc homeowner hustled into a mortgage by the GSE's actually would pay that mortgage or not.
AIG, Lehman, Bear,.... they were merely the 'bookies' in the private capitalism betting scheme.
Elimc184's premise that the crisis was largely 'state capitalism' driven is equally flawed. This microcosm of "state capitalism" existed for 30 years without a major crisis. Only when the GSE's actually started reporting directly to the private betting parlor owners, who were demanding fresh gambling fodder be delivered daily to the private capitalism element, did things really go sour and get costly.
The problem lies in "we the people" demanding deregulation at every turn. We asked for it, and our dear politicians on both sides of the aisle delivered it. After all, who wants to own a business and actually work for a living when we can live off gambling-based investment shortcuts instead? Can a brother get an Amen!
"The 2008 crisis involved houses that were almost all completely guaranteed or partially guaranteed by the government."
by the way, the "mortgage problem" involved the houses. The "financial crisis", which is a separate and distinct event from the mortgage problem, was the disaster that took us to the edge of the abyss. And that was all about the (unregulated) insurance-based side betting in the privately run betting parlors. Losses there, and the taxpayer bailout that followed, had absolutely nothing to do with the actual real-estate, and had everything to do with the elite's pure gambling over the no-doc shmuck's payment abilities.
Lets all get up to speed, shall we?
And for every $1 of financial 'guarantee' by the state capitalism element, there were, courtesy of private capitalism, $50 worth of bets on the books over whether the schmuck no-doc homeowner hustled into a mortgage by the GSE's actually would pay that mortgage or not.
Elimc184's premise that the crisis was largely 'state capitalism' driven is equally flawed. This microcosm of "state capitalism" existed for 30 years without a major crisis. Only when the GSE's actually started reporting directly to the private betting parlor owners, who were demanding fresh gambling fodder be delivered daily to the private capitalism element, did things really go sour and get costly.
by the way, the "mortgage problem" involved the houses. The "financial crisis", which is a separate and distinct event from the mortgage problem, was the disaster that took us to the edge of the abyss. And that was all about the (unregulated) insurance-based side betting in the privately run betting parlors. Losses there, and the taxpayer bailout that followed, had absolutely nothing to do with the actual real-estate, and had everything to do with the elite's pure gambling over the no-doc shmuck's payment abilities.
"What bank would give out loans to people if they were concerned they wouldn't get the money back? "
What bank would do that, you ask? How about ANY bank that didn't hold the risk but sold off the mortgages to Wall Street for securitization AFTER Wall Street invented its risk-laundering devices. Once the risk-abating innovations were in place, Wall Street's appetites for the loans was an essential part of enabling sales of their ponzi insurance along with the CDOs.
I agree with you that Government backing is what got the ball rolling pre-Wall Street "innovation", but AFTER Wall Street came up with its risk-laundering schemes, every bank on every street corner became a defacto irresponsible lender, you no longer needed the government backing component to make the scheme viable. Banks hired their own brokers to go out and put no-docs into subprime loans. Whether or not the loans were backed by the government became irrelevant to the overall scheme.
"The insurance issues stemmed from the real estate market, did they not? They were just a method of abstracting risk, AFAIK. They allowed the pyramid to keep going for a few more years before the crash."
The part of the insurance ponzi scheme that collapsed, sure. The unexploded part of the same insurance ponzi scheme that remains? Hell no. The unregulated insurance problem is a $700 trillion problem. The mortgages only represented about $60 trillion of that total. LESS THAN 10%.
Mortgages were only one element of betting fodder within that $700 trillion problem. Gambling on interest rates is approximately $420 trillion. Then there is the gambling on currency differentials, oil price changes, the viability of private corporations (GM, etc), the solvency of state governments, you name it.
We have a national, elite-driven, insurance-based gambling problem. That gambling problem is what drove the separate and distinct "financial crisis". You are trying to lay the blame off for the entire gambling problem only on the ponies (the mortgages), while here in the real world we simply do not limit our gambling only to horse races.
If you say the mortgages are ground zero of the insurance problem, you are wrong. I say they are ground zero to the small part of the insurance ponzi that did blow up, but they are completely unconnected to the part of the ponzi that remains, The mortgages did us a favor, awakening a nation to the danger of the part that has not exploded.
Whether or not the loans were backed by the government became irrelevant to the overall scheme.
"How do you know?"
You are so damn obsessed with attempting to place the smoking gun under the GSE's pillow, you end up so blind.
ANY BANK that makes MONEY by putting people into a profitable-but-shoddy mortgage but then does not hold that loan risk themselves but passes the risk on to some investment bank who passes it on again to some blinded investor does NOT need a government guarantee to make their profit.
Wake the f#c% up.
ANY BANK that makes MONEY by putting people into a profitable-but-shoddy mortgage but then does not hold that loan risk themselves but passes the risk on to some investment bank who passes it on again to some blinded investor does NOT need a government guarantee to make their profit.
by the way, the "mortgage problem" involved the houses. The "financial crisis", which is a separate and distinct event from the mortgage problem, was the disaster that took us to the edge of the abyss. And that was all about the (unregulated) insurance-based side betting in the privately run betting parlors. Losses there, and the taxpayer bailout that followed, had absolutely nothing to do with the actual real-estate, and had everything to do with the elite's pure gambling over the no-doc shmuck's payment abilities.
And who made the government give those guarantees? That's right
Wall Street!!!!!!!
And who made the government give those guarantees? That's right
US citizens, who were and are lied to by Big Corp. Because they're 'Evil'? No, it's more mundane: BECAUSE THEY GET MILLIONS OF OUR TAXDOLLARS THAT WAY.
PM me if you really HATE the new not improved LISTSshare
US citizens, who were and are lied to by Big Corp. Because they're 'Evil'? No, it's more mundane: BECAUSE THEY GET MILLIONS OF OUR TAXDOLLARS THAT WAY.
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The system is viable.
It's just applied to the wrong country where citizens like to buy unaffordable things imprudently and unaccountably in mortage and could walk away without guilty conscience. In China, it's not until the opening reform in economy in late 80s do most of people know about mortage. However nowadays, to payoff debts is such a compulsory and guaranteed behavior of every Chinese individuals. Because it's the same serious as "To payoff your life in case of murder"(originated from a Chinese regulation) - the origin of the most controversible law in China - death penalty.
If home buyers do payoff debts, things wouldn't have become so bad.
"Student" - my advice for you is to go back to school.
In China, you also have the elites of the nation running away with all the wealth, while the peasants are forced to pay their bills at gunpoint. That's called modern day slavery, and not capitalism, so suggesting that we need to bring that concept here is dumb beyond belief.
The problem with both countries is the handful of elites looting the place. To say the root of all trouble is that the peasants here are not being forced at gunpoint is absurd.
Under capitalism, a business owner moves into a town and builds a factory to manufacture a product. When the factory becomes unprofitable, the business owner shuts the factory down and walks away from the property. The business owner has no obligation to the town, the neighborhoods, or to his ex-employees who now must pay their mortgage some other way.
This housing crisis was unique in that it had homeowners BEHAVING JUST LIKE A BUSINESS OWNER. When prices fell and mortgages went underwater, the act of paying the mortgage became 'unprofitable', and homeowners abandoned the property and walked away from the neighborhood - just like any other capitalist business owner would.
Why do some of you think homeowners should be held to a different standard than a business owner, even going so far as to claim that we could really benefit from a 'chinese gunpoint' enforcement solution?
You are blaming capitalist homeowners for not honoring contract obligations of their mortgage, while not holding the capitalist business owner to the same standard. And to suggest that homeowners are unique in this apparent need to be forced to honor obligations is absurd. Giving a few business owners a free pass on their contract obligations while holding the homeowner's feet to the fire is exactly how the elites end up looting the place.
Under capitalism, a business owner moves into a town and builds a factory to manufacture a product. When the factory becomes unprofitable, the business owner shuts the factory down and walks away from the property. The business owner has no obligation to the town, the neighborhoods, or to his ex-employees who now must pay their mortgage some other way.
This housing crisis was unique in that it had homeowners BEHAVING JUST LIKE A BUSINESS OWNER. When prices fell and mortgages went underwater, the act of paying the mortgage became 'unprofitable', and homeowners abandoned the property and walked away from the neighborhood - just like any other capitalist business owner would.
Why do some of you think homeowners should be held to a different standard than a business owner, even going so far as to claim that we could really benefit from a 'chinese gunpoint' enforcement solution?
You are blaming capitalist homeowners for not honoring contract obligations of their mortgage, while not holding the capitalist business owner to the same standard. And to suggest that homeowners are unique in this apparent need to be forced to honor obligations is absurd. Giving a few business owners a free pass on their contract obligations while holding the homeowner's feet to the fire is exactly how the elites end up looting the place.
So the '87 crash never happened and the dot com collapse of the late '90s never happened?
sharebanks crashed capitalism if you want to look at it in a more factual analogy. but, capitalism is not purely a stock market. it's not purely banks. it's a system of trade and commerce. it's factually wrong to lump all of our problems into "capitalism". believing capitalism is the problem is the quickest way we would end up becoming communists, which i will die defending against.
the system does work. there are just too many wealthy people trying to control it to make it work in their favor.