democracy vs. capitalism

[BigBallinStalin]

the banks

As we said earlier, the banks only own a fraction of government debt.

If I lend money to a guy who I know never pays off his debts that's my bad, buddy while still an idiot didn't force me to lend him money.

This wasn't the case. Let's take Greece as a proxy for any struggling government:

Pre-recession Greece had a strong economy, with notably strong tourism and shipping industries. These were shattered by the recession, dealing a blow to Greece. Greece held assets in US banks, which the recession dealt great damage to. Greece has had to bail out its banks, which was an unprecedented and high cost. Pre-recession, Greece was just as sound an investment as anyone else - of course 'the banks' would lend to them. It is only since the economic slowdown that Greece has experienced any major problems.

Greece was highly susceptible to any aftershocks from the global economy. That's not having a strong economy if its government is on the verge of collapsing from a recession in the US. Their government is the source of its problems because after getting on the Euro, the Greek government could borrow money at lower interest rates because on paper Greece had the good, economic requirements which the EU demands.

The truth was that Greece actually didn't meet the requirements because Greece was great at cooking its books. Additionally, the EU rules aren't really enforced (see debt-to-GDP ratios in Italy, Spain, Ireland, Portugal, and others, and see economic growth rates for these countries). Many failed to meet these requirements, but not much was really done about it, so it made sense to continue borrowing.

Besides, if your in power in the Greek government, and you have access to funds that will increase your political party's power in the short-run, then you'd be a fool not to borrow money, create bureaucracies, load in your supporters, and spend spend spend on other social welfare programs to indirectly purchase votes.

The party continued until a small storm blew away Greece's dress, and when people sobered up, they realized she was a huge, gross, butt-ugly, fat chick with a bad personality. As the country's economic growth rate decreased, commercial banks--mainly in Germany and France--dumped plenty in Greek bonds with the expectation that the Greek economy would rebound, so they'd make a handsome profit. The economy didn't, and fearing an economic downturn within Germany and France (from shitty bank decisions on extremely risky investments), they essentially bailed out Greece (but in actuality, they bailed out their own commercial banks).

This then creates the bad incentives for commercial banks to continue making risky investments, because hey, the government will have their backs. These countries have federally insured bank deposit accounts, so the vast majority of people don't lose money--assuming the banks fail, which might not happen (and with the underlying, imagined assumption that the domestic economy would be terrible terrible terrible if banks weren't bailed out, but no one really knows. It's a slippery slope argument).

[BigBallinStalin]

Long post is long but it sums up Greece, the EU, why that shit happened, and who's to blame.


Regarding the OP, you need to define "democracy" and "capitalism" first.

[Lootifer]

This then creates the bad incentives for commercial banks to continue making risky investments, because hey, the government will have their backs. These countries have federally insured bank deposit accounts, so the vast majority of people don't lose money--assuming the banks fail, which might not happen (and with the underlying, imagined assumption that the domestic economy would be terrible terrible terrible if banks weren't bailed out, but no one really knows. It's a slippery slope argument).

Exactly, and this is what annoys me most about the whole thing.

[BigBallinStalin]

What's wild is that deflation should have occurred if the government didn't bailout the banks/inject trillions into the economy. But it didn't. The Fed countered that at the cost of devaluing everyone's US dollars (by essentially printing money and having the government spend it). What's amazing about this method of inflation is that it's an implicit form of taxation. The government creates money to spend at the cost of devaluing your money. Isn't that wonderful?

It's a powerful political tool which is used to tax people without their being aware of it. Isn't the state grand? I'm glad they're looking out for our long-term well-being!

[barackattack]

So you would let a government or bank collapse just to prove a point? Why not, say, provide support to the government on the condition that they shape up? Exactly what is happening in Greece, which is being forced into tough austerity and technocracy in order to receive bailout money. Letting everything fall to shit is a bit extreme for the sake of teaching people a lesson.

Greece was highly susceptible to any aftershocks from the global economy

So Greece's inability to remain immune to external factors shows it is weak? Would the US economy be shown to be 'weak' if a Eurozone collapse led to another US recession?

When we look at what happened to Greece we're not talking about 'a US recession' - we're talking about a global housing bubble crash that triggered crises in a number of international banks. Of course that's going to affect an economy. In a global economy no one can expect to just sail on unharmed when their neighbours experience crisis.

[BigBallinStalin]

So you would let a government or bank collapse just to prove a point? Why not, say, provide support to the government on the condition that they shape up? Exactly what is happening in Greece, which is being forced into tough austerity and technocracy in order to receive bailout money. Letting everything fall to shit is a bit extreme for the sake of teaching people a lesson.

In the long-run that's more intelligent and provides better consequences for everyone in the long-run. Merely prolonging a recession as the EU has done for Greece creates bad incentives (which will lead to more problems just like this), and it hurts all Euro-using citizens immediately and in the long-run.


Your making a slippery slope argument because you have no idea what the intensity of the outcome would have been had they let Greece default. What would have happened was that a lot of banks would've lost money on a bad investment, and interest rates for Greek bonds would be extremely high, since they're credit rating sucks. What would be the short-term consequences? Not really sure. The banks that incurred much risk would have to liquidate their assets to balance their books, or go bankrupt. Anyone with money in those banks is federally insured up to $250,000 (IIRC in the US, and it's probably similar to other places), so most citizens are off the hook. Would a recession occur? Perhaps, maybe not. Would it be bad? Not sure. Would it last longer than this? Most likely not.


Instead, the decision-makers who made risky investments were bailed out. Sure, Greece has tough conditions on its loans, but there's no effective enforcement mechanism to make Greece comply. Usually, countries in Greece's situation would have already exhausted their foreign reserves in order to pay their debt, but Greece hasn't exhausted these funds, because it doesn't have to--other countries have bailed it out. You see the bad incentives occurring?

You're just assuming that the conditions attached to loans made to Greece would be enforced effectively, but they aren't, so your appeal to their plan doesn't make sense. What you're seeing is a magic show. The movement of money is deftly hidden by sleight of hand. Essentially, the commercial bankers got bailed out, the politicians appear to be doing something "good" thus bolstering their "performance," while their citizens eat the costs from the political action, and Greece is still going to fail anyway.

What a stupid deal. If you don't have any money and your credit worthiness is crap, why should anyone lend to you? I wouldn't because that's retarded, yet in the political realm, it "makes sense" to lend money to countries which have no real means of repaying the debt. In the political arena, this happens because politicians scratch the backs of big banks, who'll definitely return the favor, while the people eat the consequences. How is this great for you and me and nearly every audience member of the magic show?

Greece was highly susceptible to any aftershocks from the global economy

So Greece's inability to remain immune to external factors shows it is weak? Would the US economy be shown to be 'weak' if a Eurozone collapse led to another US recession?

No, because the intensity of those two scenarios aren't the same. Basically, it took a small push to send Greece flying off its feet. That's not a stable economy--which you stated it was.

[barackattack]

it took a small push to send Greece flying off its feet. That's not a stable economy--which you stated it was.

Whereas the US required the gargantuan shunt of a drop in house prices to utterly fly off its feet. Lolz.

The Greek economy was stable. It was then destabilised by the financial crisis.

It's a bit fatuous to state that Greece isn't really doing much; they've made massive slashes to their public budget. What do you want from them? You don't have to completely rape a country to prove your point. If Greece was forced to exhaust its reserves before it was helped then you've just completely removed any investor confidence in Greece and, as a result, the Eurozone. You've also crippled Greece in terms of its ability to react to any future crisis, making it totally dependent on those around it. Hardly useful in the long run.

I know America loves its 'let the weak die' mentality but, like, how's that going for you guys? Say what you like, America's position is no stronger than Europe:
- worse unemployment than the UK, Germany or France
- more debt (as % of GDP) than UK, Germany or France
- politicians so incapable of dealing with your defecit ceiling that you've had your credit rating cut

[PLAYER57832]

What's wild is that deflation should have occurred if the government didn't bailout the banks/inject trillions into the economy. But it didn't. The Fed countered that at the cost of devaluing everyone's US dollars (by essentially printing money and having the government spend it). What's amazing about this method of inflation is that it's an implicit form of taxation. The government creates money to spend at the cost of devaluing your money. Isn't that wonderful?

It's a powerful political tool which is used to tax people without their being aware of it. Isn't the state grand? I'm glad they're looking out for our long-term well-being!

Whatever made you think politicians are looking out for our long term well being?

That IS the job of government, but it has been denuded and destroyed.. and everything the Tea Partiers push for is doing even more harm than good. What we need to rebuild this economy is to put more money into education, not just to keep it up, but actually IMPROVE it, so we can have some kind of future. Then we need to get more people working. If it takes a new CCC or whatever, so be it. Roads can be rebuilt, teachers can be moved into schools with need.

Most of you want to pretend that all the GI bills and benefits had nothing to do with the successes of the 50's and 60's..a nd that they had nothing at all to do with the benefits of the 80's. But note... when did things start to slide? When "trickle down" began to truly come into effect. Sure, it did not happen right away. After all, we could rest on the benefits raised by the 70's. In the late 70's and early 80's, hunger was all but eradicated, people could really count on going to school if they did well.. no matter what their parents made or who they knew. If you did not go to the best of schools, you probably had to start with a public school or trade school, but it was all there for anyone who tried and WITHOUT tens of thousands of dollars in debt.. unless you were becoming a surgeon or attorney (and even then, it usually was not that high).


THEN.. then we saw the tech boom, extremely high profits made quickly, huge increases in real estate, particularly out west. MOST people's jobs did not keep up, but with prices rising all the time, no one really cared. It was "all good".... except, in came shady lenders. Living off of credit became mainstream or even what "the people who knew" did. Only folks too dumb or too poor to know how to use it went without credit. AND... of course, when people think nothing of wracking up thousands in credit, why would they worry about passing on some debt in the government? Get worried about your credit? Just take out a second or third mortgage! Worried about US debt? Why... there is plenty of money out there to borrow. Of course, it will be paid back, economies never really tank..they just keep growing. And, with all that good stuff, why on earth would we ever think we should pay more in taxes. Building debt? That's the American way. We even had a president all but telling us to spend to support american... then another who really did say just that! Oh yeah.. that guy who touted fiscal responsibility? He went off to build houses. He was just so.. Plain.

Limits, future projections...people saw them as all just scare tactics. As long as we keep building our corporations, America would have JOBS. If companies were sending them overseas... the answer is just to cut taxes. Anything else was just "protecionism". Low taxes, better benefits, relaxing those nasty environmental regulations! That will keep them here! (except it doesn't). People being laid off.. just too bad. They were stupid, did not get the right education. Why would they ever imagine that manufacturing would continue? They demanded too much! Have to pay those CEOs.

And.. all this talk about limits of resources? Pure poppycock! People believe there was no limit.. that oil crisis? Never happened! We found oil in Alaska, so people thought "all good!" Limits are just more environmentalist lies! Worry about pollution? We RECYCLE! (of course, we buy water in plastic bottles now, instead of 100% recyclable aluminum, but hey "its all good!").

[BigBallinStalin]

it took a small push to send Greece flying off its feet. That's not a stable economy--which you stated it was.

Whereas the US required the gargantuan shunt of a drop in house prices to utterly fly off its feet. Lolz.

The Greek economy was stable. It was then destabilised by the financial crisis.

It's a bit fatuous to state that Greece isn't really doing much; they've made massive slashes to their public budget. What do you want from them? You don't have to completely rape a country to prove your point. If Greece was forced to exhaust its reserves before it was helped then you've just completely removed any investor confidence in Greece and, as a result, the Eurozone. You've also crippled Greece in terms of its ability to react to any future crisis, making it totally dependent on those around it. Hardly useful in the long run.

I know America loves its 'let the weak die' mentality but, like, how's that going for you guys? Say what you like, America's position is no stronger than Europe:
- worse unemployment than the UK, Germany or France
- more debt (as % of GDP) than UK, Germany or France
- politicians so incapable of dealing with your defecit ceiling that you've had your credit rating cut

We're not talking about the US and its reaction to its own depression. We're talking about the degree of stability of Greece's economy in relation to the financial crisis in the US.

Greece's economy was not robust enough to handle the economic crisis. Compare its "stable" economy to the economies of France, Germany, Belgium, Spain, Ireland, etc., before the financial crisis in the US (2007). Do these European countries' economies differ in stability? Yes, they do. Why did France and Germany's economy fare much better than Greece's?

[barackattack]

'financial crisis in the US' - as I said earlier, this was a global financial crisis. The fact it was triggered in the US doesn't make it a US-specific problem.

France and Germany's economies have remained more 'stable' because they were initially more 'robust'. Greece was 'stable' before the crisis but has now been 'destabilised' due to the fact it wasn't 'robust' enough.

Every European country you just named is in danger of being sucked down the shitter by the problems in Greece. Does that make them unstable? Ireland and Spain have already crashed hard.

[BigBallinStalin]

'financial crisis in the US' - as I said earlier, this was a global financial crisis. The fact it was triggered in the US doesn't make it a US-specific problem.

France and Germany's economies have remained more 'stable' because they were initially more 'robust'. Greece was 'stable' before the crisis but has now been 'destabilised' due to the fact it wasn't 'robust' enough.

Every European country you just named is in danger of being sucked down the shitter by the problems in Greece. Does that make them unstable? Ireland and Spain have already crashed hard.

What does "degree of stability" mean to you?

Do you recognize that Greece's economic was systematically weaker (thus less stable) than Germany's and France's?

[Lootifer]

Huh?

How could anyone argue that (off-paper, on-paper lies were told) the Greek economy was ever on sure footing?

Massive bloat in public sector (regardless of political veiw, we all agree that money was mis-spent), GDP founded on tourism and other recession vulnerable sectors, huge public budget deficict and no long term thinking to dig itself out...

[barackattack]

on-paper lies were told

Pretty much exactly what I was talking about originally. To investors Greece wasn't a 'bad' investment because Greece appeared to be perfectly secure. Therefore it wasn't at all 'reckless' to lend to them.

[Lootifer]

on-paper lies were told

Pretty much exactly what I was talking about originally. To investors Greece wasn't a 'bad' investment because Greece appeared to be perfectly secure. Therefore it wasn't at all 'reckless' to lend to them.

Yeh but who knows what information the banks and other lenders were investing on.

They may have only had dodgy info
They may have had complete info but got bullied by EU authorties
They may have had complete info but still invested because of the bailout chance lowering risk
They may have potentially had complete info but didnt do the hard yards to get it and instead acted on dodgy info

Who know? Personally I think it's a little bit of all 4.

[BigBallinStalin]

Huh?

How could anyone argue that (off-paper, on-paper lies were told) the Greek economy was ever on sure footing?

Easy! He would have to presume that he knows what he's talking about. Then, upon encountering information that differs from his own, he'll have to shout louder while closing his eyes in order to hold that presumption.

Or he's trolling

Or... his original position was sincere, but later he realized it was stupid, so now he can pass it off as trolling.

Such is internet life.

[jay_a2j]

Genuine question: does anyone have the faintest idea why some of the protestors think that capitalism and democracy are opposing concepts?

You see how we have all been brainwashed to believe that the USA is a DEMOCRACY? We aren't, we are a REPUBLIC.



DON'T KNOW THE DIFFERENCE????? Click Here

[Symmetry]

Genuine question: does anyone have the faintest idea why some of the protestors think that capitalism and democracy are opposing concepts?

You see how we have all been brainwashed to believe that the USA is a DEMOCRACY? We aren't, we are a REPUBLIC.



DON'T KNOW THE DIFFERENCE????? Click Here

Please explain how the brainwashing works...

Or is this just another jay_a2j conspiricy theory?

[jay_a2j]

Genuine question: does anyone have the faintest idea why some of the protestors think that capitalism and democracy are opposing concepts?

You see how we have all been brainwashed to believe that the USA is a DEMOCRACY? We aren't, we are a REPUBLIC.



DON'T KNOW THE DIFFERENCE????? Click Here

Please explain how the brainwashing works...

Or is this just another jay_a2j conspiricy theory?

As a non-American you need not know. Just enjoy your crumpets and tea eh?

[Nobunaga]

Genuine question: does anyone have the faintest idea why some of the protestors think that capitalism and democracy are opposing concepts?

You see how we have all been brainwashed to believe that the USA is a DEMOCRACY? We aren't, we are a REPUBLIC.



DON'T KNOW THE DIFFERENCE????? Click Here

Please explain how the brainwashing works...

Or is this just another jay_a2j conspiricy theory?

... I'm not sure there is any actual brain-washing taking place. But we do live in a democratic republic. We have democracy, within the structure of a republic. Everybody gets a vote - that's democracy applied, and people cheer, "Yeah! Democracy!"

... Public school teachers fail to teach that the US is a republic, so folks assume we are a democracy. Or, kids are taught, but don't really care, what with all the hot girls, cool cell phones etc.. etc... going on around them.

... And when the media types say we are a democracy, I believe they are equally ill-informed, not intentionally misleading.

... My opinion.

[Johnny Rockets]

Why not borrow, and spend and then borrow some more?
There are no consequences, or if they are, it won't be in your time.

So you run your country into the ground at the expense of your children’s future because that’s how you get re-elected. There are no repercussions, so why not continue the destructive behavior to ensure your own well being and quality of life?

If countries had repercussions, then the pressure from the voters on the politicians to act fiscally responsibly would be an election issue in every country around the globe.

The only repercussions that all partys : politicians, bankers, and voters will respect and fear is the loss of their sovereignty of their physical territory. Until that happens, nothing will ever get better.

Those lazy, placard waving, self indigent, selfish fat asses in Greece would not be protesting austerity measures while standing there with both hands out for social benefits if they knew they were going to loose 30% of their fucking country if they didn't see reason.

JRockets