BF2S Forums The Deficit

Varegg wrote:

I didn't limit it to the US economic problems alone, this is a phenomenon that is bigger than that, yours however is more tied with greed that many others ...

Take a peek back in time and look at how capitalism have caused crisis before ... the signs are pretty obvious ... several state leaders (in Europe I might add) have already acknowledged a more socially aproach to capitalism after this situation emerged and that is a good sign ...

The discussion between DonFck and I was about why Obama increased the deficit by 1+ trillion USD. That pretty much limits it to the US. And the root cause of the US's economic problems right now was the housing market and derivative securities associated with it.

I don't disagree that regulation is necessary. It certainly would've prevented the mess we're in right now...or at least have reduced the impact of the housing bubble dramatically.

Varegg wrote:

Blaming this on the housing market alone is a little blue eyed.

Take away the sub primes from the crisis and you would still have a crisis, maybe not right now but just around the corner ... your economy was heading for the edge of the cliff just fine without the housing market collapsing ... the housing market is what triggered the economic dominos, without the housing market the row would only get longer and the fall so much harder ...

Not only regulation through laws are necessary, a type of credit surveillance agency is highly recommended ...

I didn't blame it solely on the housing market. The cause (in the US) was two-fold: the housing bubble and the derivative securities that were "secured" by poorly-made mortgages. The securities issue is what dried up lending, which froze the markets, which is the problem that people are trying to resolve. No lending = no buying = business lay off workers = less money to buy = businesses shut down = downward spiral.

Had we not had the securities issue, the collapse of the housing market wouldn't have been such a problem. Conversely, had we not had policies that encouraged poor mortgage lending practices, there wouldn't have been nearly as large of a bubble to burst. The two fed on each other.

Outside the US the problem can be pinned on reckless behaviour by banks, buying up packages of these crappy mortgages to net the apparently high return without considering the underlying risk.

Thats what happens when you're CEO of a bank which is 'too big to fail' and you're going to get your multi-million dollar bonus even if you get fired.

FEOS wrote:

Varegg wrote:

The derivative securities is linked to the housing market or part of the housing bubble burst if you like ... there are more underlying issues about the crisis than those two ... the whole economy in general was "rotten" with a greed based attitude amongst the "pro's" inside the business ... not as obvious as the .com bubble but just as real ...

Then please point to the other factors that froze the lending markets. The lending markets were doing just fine until the wave of defaults on bad mortgages, which caused the inflated values of those mortgage-backed securities to drop to nothing.

No doubt that is what happened to trigger the situation we are right now FEOS, my point is if it hadn't been the housing market now it would have been something else later ... the capitalistic system as we know it was heading in this direction anyways and would have caused a crisis sooner or later ... it was bound to happen and just shows how useless die hard capitalism really is without proper regulation, without the housing market crashing it this time it would just have kept on building momentum until perhaps personal credit card debt would have tipped the scale.

FEOS wrote:

Varegg wrote:

FEOS wrote:

Then please point to the other factors that froze the lending markets. The lending markets were doing just fine until the wave of defaults on bad mortgages, which caused the inflated values of those mortgage-backed securities to drop to nothing.

No doubt that is what happened to trigger the situation we are right now FEOS, my point is if it hadn't been the housing market now it would have been something else later ... the capitalistic system as we know it was heading in this direction anyways and would have caused a crisis sooner or later ... it was bound to happen and just shows how useless die hard capitalism really is without proper regulation, without the housing market crashing it this time it would just have kept on building momentum until perhaps personal credit card debt would have tipped the scale.

While I agree with you on the notion of unregulated capitalism, I can't buy the purely emotion-based speculation that something else would've come along to do the same thing.

It's not an emotional opinion FEOS, it's a notion spreading within the political and financial markets and experts in Europe, capitalism as we know it is a thing of the past ... it's not speculation purely because what a few warned about a couple of years ago is where we are right now ... turning a blind eye to the fact that more than the housing market and mortgage-backed securities was heading for a big fall is pure ignorance ... there is no quick solution to this and some are claiming we will enter a recession by 2012 - 2014.

I have an idea.  Let's just clear the books.

We can forsake all that we owe to the world, and they can forget about what they owe to us.

A lot of countries would be pissed, but most of the poorer countries (like in Africa) would love us.

By completely starting over, we can actually make choices that wouldn't dig us so far into debt.

FEOS wrote:

Varegg wrote:

FEOS wrote:

While I agree with you on the notion of unregulated capitalism, I can't buy the purely emotion-based speculation that something else would've come along to do the same thing.

It's not an emotional opinion FEOS, it's a notion spreading within the political and financial markets and experts in Europe, capitalism as we know it is a thing of the past ... it's not speculation purely because what a few warned about a couple of years ago is where we are right now ... turning a blind eye to the fact that more than the housing market and mortgage-backed securities was heading for a big fall is pure ignorance ... there is no quick solution to this and some are claiming we will enter a recession by 2012 - 2014.

Capitalism as we know it is a thing of the past? Really? you should tell every country in the world (except Cuba) that.

If you've got some info to back up your assertion, please provide it.

Oh...and we're already in a recession, with indications that it's bottoming out. So the mysterious "some" are claiming we'll be in another one by 2012? Or is that your Mayan Calendar conspiracy talking?

Jerk

We're not really in a recession right now, this crisis have more kinda brought all markets to a halt or standstill ... a global recession is when all or most markets turn into a downward spiral that seems to have no end ... we are not there yet and hopefully we will not be there at all but that depends if we learn from our mistakes

Capitalism will survive FEOS but it will have to be reinvented with a social twist, look at how China is merging communism and capitalism to prolong a type of government they prefer ... after seeing how communism failed badly they opened their markets and adapted ... same transition is necesary for capitalism to be a secure base for our society ... Europe started converting along those lines in the 90's and the Scandinavian model is maybe the one that have done the most progress towards a more hybrid version of socialism and capitalism hence we have tackled this crisis much better than most ...

FEOS wrote:

Most of the major world markets are in a recession right now.

I think you're thinking of a depression.

I believe you are right, I had the impression a recession meant negative growth but it also seems to include a slowdown in the markets as we have now ...