News On Not Learning The Lessons Of Long-Term Capital's Failure

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The discussion centers on the implications of deregulating derivatives markets and the lessons learned from past financial crises, particularly the collapse of Long Term Capital Management. It critiques the push for deregulation by Congress, arguing that it overlooks the need for transparency and the dangers of high leverage in financial transactions. Participants debate the definition and reality of a "free market," with some asserting that current economic conditions are not truly free due to government intervention and regulation. The conversation also touches on the perceived failures of both major political parties, labeling them as socialist for their economic policies. There is a strong emphasis on the belief that a completely free market would prevent the emergence of "too big to fail" institutions, arguing that government involvement has led to the current economic vulnerabilities. The dialogue further explores the moral implications of wealth distribution and access to healthcare, with contrasting views on whether individuals "deserve" access to services based on their economic contributions. Overall, the thread reflects deep ideological divides regarding economic systems, regulation, and social responsibility.
  • #31
misgfool said:
Al68 said:
No they don't. No one has the right to do anything they please to other people.
You believe that and I believe that, but once you default your contract with the society, you can have any philosophy you like.
What contract with society? I made no such contract.
Al68 said:
Isn't what a socialist policy?
Giving food to the poor.
Uh, no. Have you ever heard anyone oppose that? Nobody is against that except in the minds of delusional people. That would make everyone socialist, since everyone would like to help the poor. Of course, socialists like to pretend that the difference between them and their opposition is whether or not someone wants the poor to eat, but that's just obvious fraud intended to stir up hatred.
 
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  • #32
Al68 said:
What contract with society? I made no such contract.

It's a rather common figure of speech. Contract with the society means abiding with the border conditions and laws of the society.

Al68 said:
Uh, no. Have you ever heard anyone oppose that? Nobody is against that except in the minds of delusional people. That would make everyone socialist, since everyone would like to help the poor. Of course, socialists like to pretend that the difference between them and their opposition is whether or not someone wants the poor to eat, but that's just obvious fraud intended to stir up hatred.

Here we go again. Where do we draw the line in helping the poor? Maslow's hierarchy is one description of the basic needs for humans. How many levels should be fulfilled?

http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs
 
  • #33
Office_Shredder said:
It's not so easy to draw a clear line between 'violence' and 'not violence' or any other such distinction to delineate what's right and wrong.
It's easy to distinguish between initiating the use of force and not initiating the use of force.
Example: I'm the richest man in the country say. I decide to expand my wealth by cornering the food market, and then adding a zero to the price of food (maybe I work with some other wealthly people to do this). Now, the poorest people in society are going to get slammed by the price increase, possibly to the point of starving. Would they be justified in killing me to break up the food oligarchy?
Well, in a free market, that would not be possible. You give an example that is impossible without economic oppression in order to justify economic oppression?

And if you had the resources to take out such a powerful man, why not just use those resources to compete with him instead of commit murder?

Bottom line is that you can't complain about the price of something in a free market if you can't offer a lower price yourself, and this especially applies to government.

Socialists want power over society, they have no interest in competing with private companies to offer a better deal to consumers. Why should they, when they can just use force to take control of those private companies instead?
 
  • #34
misgfool said:
It's a rather common figure of speech.
I know it is. But no such contract actually was entered into by the people it is attempted to be imposed upon. The expression fraudulently uses the word "contract" to describe one group of people forcing their will on another, when that's not what the word contract means.
Here we go again. Where do we draw the line in helping the poor?
There's no line to draw. Nobody is opposed to it.
I'm not religious, but I'll use Jesus as an example. He clearly advocated helping the poor. He never advocated any socialist policy. He never advocated theft of another's property to help the poor. Does that mean he didn't really care about poor people?
 
  • #35
neu said:
So poor people don't deserve access to good health care?

No one "deserves" food, healthcare, housing, etc...those things aren't rights, although the Left like to claim they are. Anything that requires the skills of someone else to provide it, cannot be a right. To make "good healthcare" available for all means you would have to take all of the good doctors who busted their butts to get their education and force them to provide services to everyone.

That would mean infringing on their rights.

Good healthcare has a price. There is a misconception that we have a free-market healthcare system right now, but that isn't the case, most amply illustrated recently by that doctor who wanted to provide services for a lower price to his customers, only to have the government come in and tell him he can't do that, he has to keep the price higher.

While I agree with most of your post, the examples you give here all had/have underground economies and so are not under complete government control.

Those countries had government controlled economies in the same way that the U.S. was alcohol-free during prohibition. That was the goal, but not the reality.

Yes I get what you're saying, that's because if the government owns all of the industries and tries to control the price system, the economy literally won't function, unless a black market pops up. In the case of the Soviet Union, the entire economy converts into one giant black market.

You have a very simplistic view of the world; you seem to think you live in a perfect meritocracy.

i.e there is a linear relationship between "hard work" and salary, and that poor people just don't work hard enough.

This is quite clearly not the case is it.

In a free-market economy, you aren't paid according to how hard you work, you are paid according to what you produce and how much of it you produce. How you produce it doesn't matter. If you build a robot that can do a job that used to take 50 men, and thus up your productivity to 50X as you are one person, well you will make lots more $$$, even if you are sitting on your butt from then on.

If you work very hard at a job that doesn't command a very high pay because it is easily replaceable, say a janitor, well then no you won't be paid much.

Another example, if you sit on your butt and code a great software program and start a company and make millions, well you probably haven't worked harder per se (at least not physically) than the janitor, but you have PRODUCED something far more valuable.

Wealth is created by creating better and more productive ways of doing things.

"The poor" is a misnomer. The only real reason "the poor" exist as they do is because of lazy people who won't work. Yes, there will always be a people who earn the lowest amount in society, but with all of the consumer products and services and the standard of living, even an idiot can make a semi-decent living these days.

You can work as a janitor and live in a one-room apartment, yet you still enjoy a standard of living beyond what billions in the world enjoy. You still have access to Starbucks coffee, high-speed Internet, computer, refrigerator, air conditioning, heat, shower, etc...yes there will always be some truly poor who weren't welfare folks, they just happened to get knocked on their rearend, and people can debate whether or not social safety nets should exist to help such people when they're down and out, but most of the "poor" exist only because society pays them to (welfare programs).
 
  • #36
WheelsRCool said:
The only real reason "the poor" exist as they do is because of lazy people who won't work.
Most of them would if they weren't being paid not to with stolen money. That's the fault of government, though, not the poor.

Of course there are those that cannot make a decent living, even in a country like the U.S. where it is easy, because they are born severely handicapped, but these are not the people in dispute. There is more than enough charity to care for those that are so mentally or physically handicapped they cannot make a living in the U.S.

That's what charity is for, to help those that cannot help themselves. Thievery is only necessary for wholesale wealth redistribution, to gain power for politicians, and to oppress people.
 
  • #37
I do not have a problem with society taking care of people who born with a severe handicap, if charities are not a foolproof solution. However, society forcing such people onto businesses, and then also giving them (the disabled folk) subsidies, I do not agree with.
 
  • #38
WheelsRCool said:
I do not have a problem with society taking care of people who born with a severe handicap, if charities are not a foolproof solution. However, society forcing such people onto businesses, and then also giving them (the disabled folk) subsidies, I do not agree with.
That's the advantage of charity, it doesn't force anything on anyone. I'm referring to real charity, not the enabling of bad habits with thievery and oppression that some on the left call charity to mislead those that don't know any better.
 
  • #39
Al68 said:
There's no line to draw. Nobody is opposed to it. I'm not religious, but I'll use Jesus as an example. He clearly advocated helping the poor. He never advocated any socialist policy. He never advocated theft of another's property to help the poor. Does that mean he didn't really care about poor people?

Did he say that socialist policies were evil? I know that he bankrupted money lenders, so you couldn't describe him as a free market supporter either. And by doing that he damaged other peoples property i.e. violated their freedom. Another thing is that Jesus was able to do miracles. We wouldn't need socialism if people were able to create bread from thin air and cure disease at will. But you are not answering the question. Which needs would you fulfill?

Ps. With Jesus the saying "There is no free lunch" is not relevant.
 
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  • #40
neu said:
It was tried in Chile. Pinochet was put in power in '73, as a dictator he was able to push forward reforms without resistance, privatising huge state own industries. It was a complete disaster for the initial 10 years: hyperinflation, 30% unemployment (x10 higher than before Pinochet).

Surprisingly, Chile's free market reforms are held up an economic miracle after a period of steady growth in the mid 80's.

But Chile was never a completely liberated market, it was a failed experiment, in the end, after the economy crashed again in the mid 80's, Pinochet was forced to nationalise many of the industries he privatised.
Even though it is not an oil rich state like Mexico and Venezuela, Chile is the most economically successful country in Latin America since the reforms put in in the 70's. Highest per cap. GDP, lowest infant mortality rate, etc. See e.g. http://graphs.gapminder.org/world/index.php#$majorMode=chart$is;shi=t;ly=2003;lb=f;il=t;fs=11;al=0;stl=t;st=t;nsl=t;se=t$wst;tts=C$ts;sp=6;ti=2006$zpv;v=0$inc_x;mmid=XCOORDS;iid=phAwcNAVuyj1jiMAkmq1iMg;by=ind$inc_y;mmid=YCOORDS;iid=phAwcNAVuyj0NpF2PTov2Cw;by=ind$inc_s;uniValue=8.21;iid=phAwcNAVuyj0XOoBL_n5tAQ;by=ind$inc_c;uniValue=255;gid=CATID0;by=grp$map_x;scale=log;dataMin=194;dataMax=96846$map_y;scale=log;dataMin=2;dataMax=420$map_s;sma=49;smi=2.65$cd;bd=0$inds=i10_d001911cGaj;i161_t001960,,,,;i26_t001960,,,,;i52_h001960aGbb;i62_p001960akak;i66_p001960akak;i97_p001960akak;i90_p001960akak;i174_p001960akak;i245_p001930akak;i43_d001901bpa7;i143_p001960akak;i29_t001960,,,,;i47_t001924,,,,#$majorMode=chart$is;shi=t;ly=2003;lb=f;il=t;fs=11;al=0;stl=t;st=t;nsl=t;se=t$wst;tts=C$ts;sp=6;ti=2006$zpv;v=0$inc_x;mmid=XCOORDS;iid=phAwcNAVuyj1jiMAkmq1iMg;by=ind$inc_y;mmid=YCOORDS;iid=phAwcNAVuyj0NpF2PTov2Cw;by=ind$inc_s;uniValue=8.21;iid=phAwcNAVuyj0XOoBL%5Fn5tAQ;by=ind$inc_c;uniValue=255;gid=CATID0;by=grp$map_x;scale=log;dataMin=194;dataMax=96846$map_y;scale=log;dataMin=2;dataMax=420$map_s;sma=49;smi=2.65$cd;bd=0$inds=i47_t001924,,,,;i29_t001960,,,,;i143_p001960akak;i43_d001901bpa7;i245_p001930akak;i174_p001960akak;i90_p001960akak;i97_p001960akak;i66_p001960akak;i62_p001960akak;i52_h001960aGbb;i26_t001960,,,,;i161_t001960,,,,;i10_d001911cGa"
 
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  • #41
misgfool said:
Did he say that socialist policies were evil? I know that he bankrupted money lenders, so you couldn't describe him as a free market supporter either. And by doing that he damaged other peoples property i.e. violated their freedom. Another thing is that Jesus was able to do miracles. We wouldn't need socialism if people were able to create bread from thin air and cure disease at will. But you are not answering the question. Which needs would you fulfill?

Ps. With Jesus the saying "There is no free lunch" is not relevant.
Well, I have to agree that Jesus is a bad example for this, but as far as what he thought of socialist policies, it depends on your definition. One thing that he obviously considered evil was stealing. So stealing from someone who has it to give it to someone who needs it is wrong.

The way the word socialist is normally used, if thievery is not involved, then it just isn't socialist. By that definition, socialism is evil according to Jesus, obviously.

If you're using the word socialist to mean something else, not involving theft, then I'm not necessarily opposed to it.

As far as which needs would I fulfill, if you mean fulfilled by government, we have government as a necessary evil to protect our freedom, not fulfill our needs.
 
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  • #42
Brilliant! said:
In free-market economics ... never allowed to have 32-times leverage
Who made that regulation for free-market economics? In a truly free-market system, there is no leverage limit.

wealth ...
Wealth is distributed by convincing others to give a person or company money, regardless of any actual value that person contributes to society. Bernie Madoff is a good example of wealth redistribution without actual production of anything with real value. Then there are those that figure out more productive ways of doing things by endagering their employees or the public, such as Film Recovery Systems (most notable because it was the first time corporate executives were carged with 2nd degree murder - eventually they pleaded guilty to manslaughter).
 
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  • #43
Jeff Reid said:
Who made that regulation for free-market economics? In a truly free-market system, there is no leverage limit.
Just because there is no artificial limit does not mean there's no limit. The market itself naturally limits it, but not to some arbitrary level.
Wealth is created by convincing others to give a person or company money, regardless of any actual value that person contributes to society. Bernie Madoff is a good example of wealth creation without actual production of anything with real value.
No wealth was created by Madoff's scheme, it only changed hands. Wealth changing hands is not wealth creation. Unless you are using the word wealth to describe something with no value, which is self-contradictory.
 
  • #44
Brilliant! said:
In free-market economics, there is no such thing as outstanding leverage.
Jeff Reid said:
Who made that regulation for free-market economics? In a truly free-market system, there is no leverage limit.
Al68 said:
Just because there is no artificial limit does not mean there's no limit. The market itself naturally limits it.
How? Short of failure, why would there be any limit? Even in the case of failure, the individuals involved have profitted from it and only their customers assume the risk of loss.

Jeff Reid said:
Wealth is created by convincing others to give a person or company money
Al68 said:
Wealth changing hands is not wealth creation.
I corrected my earlier post to read wealth distribution. Wealth creation is tricky, because a significant part of it is perceived, such as the total value of the stock market, or the value of currency. Even the value of goods and services is influenced by perceived value.

regulation
Most of the time regulation is created in hindsight after a failure of some sort. It should be obvious that an economic system based on personal gain without regulation would lead to problems.
 
  • #45
Jeff Reid said:
How? Short of failure, why would there be any limit? Even in the case of failure, the individuals involved have profitted from it and only their customers assume the risk of loss...
Stepping in - yes, as the company's debt leverage continues to grow, normally their cost of borrowing money would start to rise as would-be lenders assess an increased risk of default. That is, the company would have to offer a higher interest rate on the money they borrow which acts to restrict further borrowing. However, if we insert a large organization into that market that somehow has a guarantee that it can not fail, and it is 50-100x larger than anyone else, and it goes on to leverage itself up 40:1, far more than the other people have been doing, then that organization resets the idea of what is considered risky among everyone else, as long as the me-toos borrow and loan the same kind of security. In this case that 'large organization' was Fannie Mae/Freddie Mac, creations of a government that did not to deal with trillions in home loans on the budget.
 
  • #46
leveraging

Jeff Reid said:
Short of failure, why would there be any limit?

mheslep said:
Stepping in - yes, as the company's debt leverage continues to grow, normally their cost of borrowing money would start to rise as would-be lenders assess an increased risk of default.
In a free market system without regulation, why should the companies reveal their actual debt leveraging instead of lying about it? Until a failure occurs (such as Madoff's fund), who would know?

Fannie Mae/Freddie Mac
At least their operations involved real assets. A big part of the current problem is deravitives, which don't involve any real assets, just legalized gambling on the outcome of financial events.
 
  • #47
Jeff Reid said:
In a free market system without regulation, why should the companies reveal their actual debt leveraging instead of lying about it? Until a failure occurs (such as Madoff's fund), who would know?
I don't think basic law and order, ie theft and fraud being illegal, falls into the category of regulation, at least not by the definition most people use for regulation.
 
  • #48
Al68 said:
Well, I have to agree that Jesus is a bad example for this, but as far as what he thought of socialist policies, it depends on your definition. One thing that he obviously considered evil was stealing. So stealing from someone who has it to give it to someone who needs it is wrong.

The way the word socialist is normally used, if thievery is not involved, then it just isn't socialist. By that definition, socialism is evil according to Jesus, obviously.

If you're using the word socialist to mean something else, not involving theft, then I'm not necessarily opposed to it.

How exactly is the government stealing money? Freedom is not a right, it's a privilege. It takes money to protect freedom and you can hire the government to maintain it. There is no point in complaining about it.

Al68 said:
As far as which needs would I fulfill, if you mean fulfilled by government, we have government as a necessary evil to protect our freedom, not fulfill our needs.

That's your view, but by no means is it universal.
 
  • #49
misgfool said:
How exactly is the government stealing money?
By using force to take it from someone with no service provided to them. Charging for services provided, ie protecting freedom, is not stealing. That accounts for a small fraction of taxes.
Freedom is not a right, it's a privilege.
That must be why we have a "Bill of Privileges" instead of a "Bill of Rights".
Al68 said:
As far as which needs would I fulfill, if you mean fulfilled by government, we have government as a necessary evil to protect our freedom, not fulfill our needs.
That's your view, but by no means is it universal.
Well, obviously it's not universally agreed upon. I never claimed that everyone agreed with me. As a matter of fact, it's pretty obvious that I'm in the minority.

(Of course it's a matter of record that the U.S. government was created for the primary purpose of protecting freedom, not fulfilling everyone's needs.)
 
  • #50
Al68 said:
By using force to take it from someone with no service provided to them. Charging for services provided, ie protecting freedom, is not stealing. That accounts for a small fraction of taxes.

All the taxes go to protecting freedom. You are just not seeing the big picture.

Al68 said:
That must be why we have a "Bill of Privileges" instead of a "Bill of Rights".

Actually you are absolutely right, have you suggested to your lawmakers to make a change to the name? Freedoms have been limited from the first time when private ownership was established.

Al68 said:
(Of course it's a matter of record that the U.S. government was created for the primary purpose of protecting freedom, not fulfilling everyone's needs.)

Most of North America was free to be exploited back then. Opportunities were more abundant.
 
  • #51
misgfool said:
All the taxes go to protecting freedom. You are just not seeing the big picture.
No, they don't. Assuming that the word freedom means liberty.
Actually you are absolutely right, have you suggested to your lawmakers to make a change to the name? Freedoms have been limited from the first time when private ownership was established.
Private ownership wasn't "established". The right to own property, like all other rights, is not created by government or any human institution. People naturally own the results of their own labor, and any property they receive in voluntary exchange.
Most of North America was free to be exploited back then. Opportunities were more abundant.
Most of the land area of the U.S. is still undeveloped. I don't see your point here.
 
  • #52
Al68 said:
Private ownership wasn't "established". The right to own property, like all other rights, is not created by government or any human institution. People naturally own the results of their own labor, and any property they receive in voluntary exchange.

They own the results of their labor, because we agree that they can own it. If we wouldn't agree on that, nobody would own the results.

Al68 said:
Most of the land area of the U.S. is still undeveloped. I don't see your point here.

All the land is owned. Back then it was regarded as wilderness, which anyone could claim for themselves.
 
  • #53
misgfool said:
They own the results of their labor, because we agree that they can own it. If we wouldn't agree on that, nobody would own the results.
Well, if you believe a person doesn't rightfully own his own labor, that explains our disagreement. Clearly, someone will own the results, assuming that by "own" we mean the right to make decisions about it.
All the land is owned.
Not in the U.S.
 
  • #54
Al68 said:
Well, if you believe a person doesn't rightfully own his own labor, that explains our disagreement. Clearly, someone will own the results, assuming that by "own" we mean the right to make decisions about it.

Yes. So nobody owns the results.

Al68 said:
Not in the U.S.

Example?
 
  • #55
misgfool said:
Yes. So nobody owns the results.
Well, if you're not claiming that anyone else owns the results, then you won't mind the person who's labor created them claiming ownership.
Example?
You want me to give directions to unclaimed land in the U.S.?

Of course, the land is virtually all worthless scrubland far from any utilities and easy access. It should be no surprise that valuable land in heavily populated areas has already been claimed.

If you're really interested, try a net search.
 
  • #56
Al68 said:
Well, if you're not claiming that anyone else owns the results, then you won't mind the person who's labor created them claiming ownership.

One can dispute the persons ownership at any time.

Al68 said:
You want me to give directions to unclaimed land in the U.S.?

Of course, the land is virtually all worthless scrubland far from any utilities and easy access. It should be no surprise that valuable land in heavily populated areas has already been claimed.

If you're really interested, try a net search.

So you can't give me an example?
 
  • #57
unclaimed land
There isn't any in the USA. The homestead act was ended back in 1976, except for Alaska, where it was ended in 1986.

Ivan Seeking said:
2000 - Congress is rushing to deregulate derivatives markets
Getting back on topic I agree. Deregulation of the derivatives market was a bad idea. Derivatives are just a form of legalized gambling (as noted by the clauses that prevented states from treating derivative activity as illegal gambling).
 
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  • #58
This entire thread has been on topic.
 
  • #59
misgfool said:
One can dispute the persons ownership at any time.
Sure, but what's the point? If someone else claims ownership of my labor, on what basis would they own it while I don't?
So you can't give me an example?
Well, a quick lazy search gave me this: http://www.ers.usda.gov/Publications/EIB14/ .

The federal government does claim ownership of a lot of undeveloped land, and it's true that a lot of it is restricted by gov't. But the fact remains that the land is physically there and undeveloped.
 
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  • #60
Al68 said:
Sure, but what's the point? If someone else claims ownership of my labor, on what basis would they own it while I don't?

I have already answered this question. Read my previous posts and try to comprehend.
 

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