Did high gas prices trigger a global recession?

Oleg Bach · November 22, 2008

To move product and people you need energy - when you charge to much - it stops moving..simple - Oil merchant in Saudi Arabia and our own are pricks.

eyeball · November 22, 2008

shell

That was a nice bit of fluff.

Can you provide a source that shows the energy companies don't participate in innovation.

Wait for it...

They do have something, the Alberta oilsands were until now been heavily invested into, shareholders got richer which means better for retirement earnings.

Yes until now that is, now everyone suddenly needs a bailout even the mighty oil companies after their biggest profit windfall in history it seems.

10$ says the oil companies will soon be elbowing their way to the front of the bailout trough everyone else is queing up for, they're old experts at finagling tax cuts, government incentives and...liquidity for lack of a better term.

The gnomes can't pump liquidity because the Americans took your stupid socialist advice and forced banks to loan money to people who can't pay their bills instead of big companies and people that can pay their bills. The banks ran out of money and voila the crisis.

Yeah right. I thought it was a matter of US government encouragment, "c'mon America, spend." Remember when Bush Sr said that in the wake of the 1st Gulf War? Judging by Juniors performance the apple didn't fall too far from the tree.

What msj said in any case.

blueblood · November 22, 2008

Ah, yes, this myth of the big bad government forcing the private sector to loan money to people who can't pay it back through the CRA and GSE's (for those who don't know what these abbreviations stand for - well, read the links below).
Stop spreading this nonsense:

It Wasn't Fannie and Freddie

CRA and Fannie and Freddie as betes noire

Private sector loans, not Fannie or Freddie, triggered crisis

Oh, and those hypocrites who like to only blame Clinton for this:

President Bush and Home Ownership

-------------------------------------------------

Fannie, Freddie, Clinton, Bush - none of them forced people to lie about their income to get a loan.

None of them forced banks to accept no doc loans.

None of them forced banks to turn a blind eye to appraisal fraud.

None of them forced banks to have ridiculous incentives for mortgage brokers to get more deals.

None of them forced rating agencies to give AAA ratings to bundled loans that were not even close to AAA.

None of them forced investors to stupidly believe that these AAA rated "investments" were sound.

The list is endless.

The government did not force banks or people to do this.

Yes, they did/do allow it to happen with lax regulation which allowed the market to practice such shoddy practices in the first place and through easy money to make it all seem like it would last forever.

Sure, the government/Fed provided the long piece of rope; but, it was the free market that chose to hang themselves with it.

Banks are in business to make money, why in all that is holy would they make lend out money to people they know can't afford to pay. Only a fool would do that, or someone forced by government. Tin foil is becoming a rare commodity these days, I should be looking to buy shares.

The free market has been around longer than any stupid socialist experiment and will continue to be around longer. This will only last for a little while than everything will be hunky dory again. The only thing different is that it will be a lot harder to punish rich people for doing well by forcing them to lend to people that can't afford it, which in the end will be better for everyone. Gov't intervention brought this mess, they can clean it up with regulations that keep the rob from the rich mentality out in the fringe where it belongs.

This economic crisis just proves that socialism is a pathetic scourge and is pure evil.

I'm with Geoffery and August 1991 on this issue.

Wild Bill · November 22, 2008

Gaia? That certainly wouldn't be very scientific would it?
Peak oil, peak beachfront property peak bush meat...it all comes down to depletion and the curve looks the same in each and every case. Put it this way, if natural capital grew at the rates that people expect finacial capital to grow, aquifers would fill faster than we can pump them, more fish would return to rivers than were caught and trees would grow faster than you could cut them down. The fact is they just don't which explains why we've been reduced to believing we can fabricate wealth out of thin air, or paper as the case may be. Now that illusion has been burst and a crisis has set in.

So how scientific is it to believe that a human economy can grow any faster than the natural ecosystems that support it?

Please don't cheat! You posited 'peak oil'. It's up to you to prove it to render the rest of your argument valid. If you want to keep sliding off onto a different point then it rapidly becomes 'point-less'.

If that IS going to be your approach then I've got some things to do...

Oleg Bach · November 22, 2008

Having a very brief conversation with an old renegade banker - He said it was the internet that cause systems to collapse in unison globally. This makes sense to me. The net provides massive instant communication with absolutely everyone and all at once if you will - So as one institution entered into a panic induced economic frenzy, It spread like wild fire - no faster than that! The nervousnesss that is the web can transmit disease in the form of virus and can also transmit the disease called fear. When fear takes hold and wins over it's victim, the results is loss of faith - a paniced hopelessness and eventually a loss of personal confidence that results in a standstill - apprehension has apprehended all economic systems.

The only ones that are holding on are those who have leaders that are fearless -but even they will fall because even with a good captain - if the crew is paralized - the ship is lost. What was supposed to be a saving grace and a tool of investment is now a curse - The web is the beast - and it rules with a mindlessness all it's own. The mythical biblical beast is the human collective gone wild. The hopeful part about this webish revolt by the machine is that it has no brain. It's like a dragon with a pea size skull - it will wave it's tail about and breath fire ...but it can be stopped - because it does truely think....I say pull the plug on the damn thing and let the humans recover - privacy is focus and with the net no matter how well things are incrypted - there is no privacy...and when everyone knows the other guys buisness there is no buisness.

eyeball · November 22, 2008

Please don't cheat! You posited 'peak oil'. It's up to you to prove it to render the rest of your argument valid. If you want to keep sliding off onto a different point then it rapidly becomes 'point-less'.
If that IS going to be your approach then I've got some things to do...

Surely you do realize there will come a time when oil is so expensive to recover that its pointless to try. Like everything else it is after all finite. Please don't tell me you think the oil reservoirs are magically filling up from below.

The inevitability of peak oil is evident in examples of other resource peaks, our fisheries probably provide the most graphic, where you sometimes hear the term commercially extinct. As for other natural resources, most have been creamed and many are becoming more expensive to extract, mine, sow, grow and harvest and what have you with each passing year.

So what does this have to do with the global recession? Its just not as easy to base growth in our economy on natural resources as it used to be. The need for growth in the economy though is still just as acute if not desperate, and given the lower rates of return from natural capital the reach for yield has lead to a financial never-never land of quantum tranches and other metaphysical constructs that have little if any basis in reality. I think the proof of what I'm saying will be reflected in what could be a very slow recovery until such time as growth is based on something that's actually real. Like the finite world that's around us for example.

Anyway I've got to go deliver a couple of cords of firewood. People still have to stay warm it seems and if its dry the stuff sells like crack or credit default swaps or something.

eyeball · November 22, 2008

The inevitability of peak oil is evident in examples of other resource peaks, our fisheries probably provide the most graphic, where you sometimes hear the term commercially extinct. As for other natural resources, most have been creamed and many are becoming more expensive to extract, mine, sow, grow and harvest and what have you with each passing year.

Remember the phrase, "too many boats chasing too few fish"? There's a new one around the docks that goes "too much capital chasing too few fish". It refers to the way quotas have led to the need to purchase or lease quota to contiune fishing as stock continue to decline. As stocks decline, prices go up and so does the cost of quota. A handful of quota owners and brokers get extremely wealthy off this process but at the expense of thinner and thinner margins and pay for the people who are actually fishing.

Just another example of the way an overdrawn account of natural capital is reflected in the so-called 'real' economy.

ReeferMadness · November 22, 2008

Its just not as easy to base growth in our economy on natural resources as it used to be. The need for growth in the economy though is still just as acute if not desperate, and given the lower rates of return from natural capital the reach for yield has lead to a financial never-never land of quantum tranches and other metaphysical constructs that have little if any basis in reality. I think the proof of what I'm saying will be reflected in what could be a very slow recovery until such time as growth is based on something that's actually real. Like the finite world that's around us for example.

The ability to continue economic growth based on a dwindling base of natural resources will depend on technology's ability to get ever more functionality from ever less resources. For example, today's automobiles are lighter, more fuel efficient and require less metal than those of 3 decades ago. Yet, they are in most ways more functional. How far can technology take us before real world limitations overtake technological progress? I don't think anyone understands the answer to that question and this is a huge source of risk to our species.

The current economic crisis is an artifact of a system that can't control itself. The crisis is psychological and has more to do with wealth distribution than anything real. If we lose sight of the real issues, however (peak oil, global warming, environmental dgradation), we will find ourselves in a world of hurt that won't be solved just by world leaders getting together and spending their way out of the mess.

Please don't cheat! You posited 'peak oil'. It's up to you to prove it to render the rest of your argument valid.

Why don't you prove that the supply of oil in the ground is infinite? That would be the alternative theory to peak oil.

This economic crisis just proves that socialism is a pathetic scourge and is pure evil.

And I thought it proved markets don't work. They overreact on short-term stimuli. resulting in wild, bizarre price fluctuations. The fact is, though, that oil was too cheap for too long. Much if not most of it was wasted and it continues to be today. People communting 100 miles daily, mountains of cheap plastic goods, wasteful packaging, stuff being manufactured and then shipped thousands of miles, the list goes on and on. Ultimately, peak oil will hit and our children will look at us and say "What the hell were you thinking?".

The only correct answer will be "We weren't".

blueblood · November 22, 2008

The ability to continue economic growth based on a dwindling base of natural resources will depend on technology's ability to get ever more functionality from ever less resources. For example, today's automobiles are lighter, more fuel efficient and require less metal than those of 3 decades ago. Yet, they are in most ways more functional. How far can technology take us before real world limitations overtake technological progress? I don't think anyone understands the answer to that question and this is a huge source of risk to our species.
The current economic crisis is an artifact of a system that can't control itself. The crisis is psychological and has more to do with wealth distribution than anything real. If we lose sight of the real issues, however (peak oil, global warming, environmental dgradation), we will find ourselves in a world of hurt that won't be solved just by world leaders getting together and spending their way out of the mess.

Why don't you prove that the supply of oil in the ground is infinite? That would be the alternative theory to peak oil.

And I thought it proved markets don't work. They overreact on short-term stimuli. resulting in wild, bizarre price fluctuations. The fact is, though, that oil was too cheap for too long. Much if not most of it was wasted and it continues to be today. People communting 100 miles daily, mountains of cheap plastic goods, wasteful packaging, stuff being manufactured and then shipped thousands of miles, the list goes on and on. Ultimately, peak oil will hit and our children will look at us and say "What the hell were you thinking?".

The only correct answer will be "We weren't".

Dwindling natural resources? Cars are the most recycled products there is. And then there is that pesky law of the conservation of matter.

Technology has enabled us to change the world and will continue to do so. If we were running out of resources, they would be much to expensive for anyone to afford, the system works.

Wealth distribution was the cause of this mess. Loaning to poor people who can't afford to pay their bills. If the government did things like Kevin O'Leary does, we wouldn't be in this mess.

In theory the supply of oil in the ground is infinite, refer to the carbon cycle. However with high energy prices, that spurns more investment and development of alternative energy.

Markets do work, they have been around for over two hundred years, survived the depression and other downturns and have advanced human civilization. Socialism on the otherhand is a complete joke, refer to the soviet union.

The only thing environmentalists should invest in is duct tape.

eyeball · November 22, 2008

Wealth distribution was the cause of this mess.

Concentration of wealth ranks equally high on any list of causes.

Putting the brakes on the rate at which the income gap grows should be just as important as braking the rate of inflation.

The real bottom line on crisis triggers though is probably overpopulation.

Edited November 22, 2008 by eyeball

blueblood · November 22, 2008

Concentration of wealth ranks equally high on any list of causes.
Putting the brakes on the rate at which the income gap grows should be just as important as braking the rate of inflation.

The real bottom line on crisis triggers though is probably overpopulation.

What concentration of wealth. In case you haven't noticed, wealthy people have invested in areas all over the world making themselves and the citizens of poor areas much better off. Canadian mining companies have invested in Kenya when they didn't have to, providing Kenyans jobs and at the same time making the mining company bigger. What the hell is wrong with that? Would you rather have those Kenyans jobless and even poorer?

No the only bottom line on this crisis was some stupid leftist social experiment trying to force rich people to lend to poor people with no guarantee of loan repayment. The poor people buggered up the bank liquidity and screwed everyone including themselves over.

As for overpopulation do you suggest a cull? Where do you draw the line? I suggest adapting to it and making money off of it at the same time.

eyeball · November 23, 2008

The income gap has widened faster as we've gotten closer to this crisis and it will widen faster still as it unfolds. The evidence seems to indicate that the greater the income inequality the less overall justice there is. Amongst other things this is one of the reasons they rolled out the guillotines in France. There is nothing wrong with investing and creating jobs I've done it myself, but the fact a widening income gap - a concentration of more wealth in fewer hands - does exist.

The issue of overpopulation is just going to have to work itself out I think. Of course I don't want to see a cull. All and all I think as human being we just have to give ourselves a bit of a break here. Its not like running a global economy or figuring out how to deal with a global crisis in a civilized manner comes with an instruction manual. And its not like aliens are in orbit demanding payment in full with interest now or else.

I definitely think the last thing we should be doing is letting our baser instincts run riot and turn this crisis into a wedge issue between the right and the left or the rich and the unrich. I can't think of anything that will lead to civil disorder faster.

Wild Bill · November 23, 2008

Surely you do realize there will come a time when oil is so expensive to recover that its pointless to try. Like everything else it is after all finite. Please don't tell me you think the oil reservoirs are magically filling up from below.
The inevitability of peak oil is evident in examples of other resource peaks, our fisheries probably provide the most graphic, where you sometimes hear the term commercially extinct. As for other natural resources, most have been creamed and many are becoming more expensive to extract, mine, sow, grow and harvest and what have you with each passing year.

So what does this have to do with the global recession? Its just not as easy to base growth in our economy on natural resources as it used to be. The need for growth in the economy though is still just as acute if not desperate, and given the lower rates of return from natural capital the reach for yield has lead to a financial never-never land of quantum tranches and other metaphysical constructs that have little if any basis in reality. I think the proof of what I'm saying will be reflected in what could be a very slow recovery until such time as growth is based on something that's actually real. Like the finite world that's around us for example.

Anyway I've got to go deliver a couple of cords of firewood. People still have to stay warm it seems and if its dry the stuff sells like crack or credit default swaps or something.

It's always dangerous to make predictions without factoring the possibility of new technologies or discoveries. It's like someone in the horse and buggy age making predictions on the travel industry, 2 years before Henry Ford's new factory comes on line.

There are new oil and gas reserves being found every day. The methane hydrates found around the Bermuda/Florida/Texas basin apparently make the world's oil reserves look like a backyard propane tank!

Meanwhile, who says the demand for oil might not decline naturally? The last huge spike in prices seems to have finally woken folks up to the fact that they can never depend on constant reasonable energy prices. Even if supplies hold up prices still seem to rise, often due to political factors. It's like Charlie Brown, Lucy and the football. The market would appear to have finally lost confidence in the situation. Gas is cheaper than it's been in many years and yet buyers don't seem to care. They want hybrids, diesels, electrics or whatever will not only save them money but also protect them from another insane price hike.

There has been some media attention lately to guys in Silicon Valley taking an interest in developing electric cars. This is old news to someone like me who spent his career in the high tech electronics field. I was there at the dawn of the microcomputer chip. It wasn't Timex who brought the first digital watch to market. They had all the money and resources you could imagine necessary and yet they never saw it coming. It was an Light Emitting Diode company called Litronix that was looking for new market areas. It wasn't Underwood Typewriters who developed word processors either. Virtually NONE of the old companies, some of whom had held the lion's share of a market for over a hundred years, who rode the high tech revolution and delivered all those new products we take for granted today. Was it Royal Typewriter who brought out the first fax machine? Not a chance! For the most part, the incumbent companies simply dwindled down to either a shadow or a memory of what they had been before.

Among the next wave of shadows could easily be Exxon or Shell. It wouldn't be at all surprising if the Big 3 car companies died out while we all bought new electrics made by companies based in California, either.

That's just oil. You're assuming we will just eventually run out of materials mined here on earth. This strikes me as an incredibly provincial attitude! We've had the technology from the 80's to go out and capture asteriods. Most are made of a high grade nickel-iron ore. It would cost a few billion to lasso one such asteroid a mile or so in diameter and bring it back to a Low Earth Orbit. However, it would then supply the entire world's needs for steel for at least a year! It could be smelted cheaply with solar power in space, with ZERO pollution to our terrestrial environment and delivered as large boxcar sized ingots splashed down into shallow waters off our east or west coasts, for FREE! It's just simple ballistics.

Asteroids contain a virtually inexhaustible supply of raw materials for our needs. We can also mine the moon. Iron ore would likely be prohibitively expensive to ship home, considering the Moon has a gravity well of its own. Still, more expensive metals could be profitably launched homeward by a mass driver, or electric catapult.

The Universe is infinite and we live on a tiny grain of sand. Yet you talk about running out of 'stuff'?

It's NOT Buck Rogers ideas! Businesses have been polled about these ideas for nearly 30 years. Nobody wants to be first, taking the highest initial expense and risk. More interestingly, nobody wants to be THIRD either! As existing costs gradually escalate sooner or later business will consider these other sources. The Japanese have made a national project out of making cheaper ways to get payloads to orbit. In a few decades we could see payload costs drop from hundreds of thousands of dollars per kilo down to a few hundred dollars!

The first company to start asteroid mining will become rich as Midas!

This whole idea of limited resources is holding us back. Maybe if as a race humankind is that lacking in imagination it deserves to fall victim to "peak oil"! Myself, I don't believe it. That would deny the accomplishments of our entire history as a species.

Still, I've come to believe it won't be an American company mining those asteroids. More likely it will be China, India or maybe both. Humans will get there. It's not that important that it be American ones. The West seems to be more concerned with increased social spending and less inclined to lead us into new and better lands.

One thing for absolutely sure, when it happens Canada will still be forming a federal commission to decide if it's all a federal or a provincial matter.

August1991 · November 23, 2008

The income gap has widened faster as we've gotten closer to this crisis and it will widen faster still as it unfolds. The evidence seems to indicate that the greater the income inequality the less overall justice there is.

Eyeball, that is ultimately a Marxist argument. Marx, writing in the 1840s, believed that capitalism was prone to market panics and crises (Marx gave an explanation for these panics) and then Marx argued that each crises tended to exacerbate inequalities.

Well, some 150 years later, we are still waiting for the revolution.

----

I won't deny that some markets are prone to bubbles and panics. (Heck, most marriages have at least one honeymoon/voluntary separation.) But Marx's inequality argument has always bothered me because it was wrong in theory and wrong in practice.

Never in human history have so many ordinary people lived so well as they do in the US (and Canada).

Several years ago, I had the chance to walk around a city in western Siberia (Ufa, not unlike Edmonton) and I felt ill to see how central planning had utterly destroyed a city astride a wonderful, natural environment of a river valley.

----

Wow. Sorry for the thread drift/hijack.

Edited November 23, 2008 by August1991

August1991 · November 23, 2008

Ah, yes, this myth of the big bad government forcing the private sector to loan money to people who can't pay it back through the CRA and GSE's (for those who don't know what these abbreviations stand for - well, read the links below).

I tend to agree msj that it is wrong to blame liberal government regulations for this current financial crisis.

I read several of your links but to me, the best counter argument is the collapse of housing bubbles in Spain and the UK. Fannie Mae and Freddie Mac didn't guarantee mortgages there.

----

IMV, the US economy faces a severe crisis because a housing bubble just collapsed and this led to a collapse in credit/equity markets.

msj, you keep citing people who have predicted nine of the last four recessions so you and your links are less than helpful in understanding what will happen next. I disagree with your comparison to Japan in the early 1990s. Everything is now happening much faster.

Yes, there will be deflation but I think it will be shortlived unless we have an utter collpase in confidence and a serious liquidity trap.

eyeball · November 23, 2008

Eyeball, that is ultimately a Marxist argument. Marx, writing in the 1840s, believed that capitalism was prone to market panics and crises (Marx gave an explanation for these panics) and then Marx argued that each crises tended to exacerbate inequalities.
Well, some 150 years later, we are still waiting for the revolution.

----

I won't deny that some markets are prone to bubbles and panics. (Heck, most marriages have at least one honeymoon/voluntary separation.) But Marx's inequality argument has always bothered me because it was wrong in theory and wrong in practice.

I've never read anything Marx wrote so I wouldn't know. I guess my expectation of greater injustice in a world were economic inequality seems to actually be encouraged just comes naturally. Its probably not so much the wealth as the power that seems to be joined at its hip that leads to problems.

Never in human history have so many ordinary people lived so well as they do in the US (and Canada).

We've basically had a planet for the taking so its not hard to see why prosperity has been fairly widespread.

Several years ago, I had the chance to walk around a city in western Siberia (Ufa, not unlike Edmonton) and I felt ill to see how central planning had utterly destroyed a city astride a wonderful, natural environment of a river valley.

10$ says the locals were completely ignored when it came to planning their city. That's an injustice stemming from a concentration of power. Different bucket, same shit.

Wow. Sorry for the thread drift/hijack.

The way things are changing daily in this crisis its not surprising that discussions about it jump about too I guess.

msj · November 23, 2008

Banks are in business to make money, why in all that is holy would they make lend out money to people they know can't afford to pay. Only a fool would do that, or someone forced by government. Tin foil is becoming a rare commodity these days, I should be looking to buy shares.
The free market has been around longer than any stupid socialist experiment and will continue to be around longer. This will only last for a little while than everything will be hunky dory again. The only thing different is that it will be a lot harder to punish rich people for doing well by forcing them to lend to people that can't afford it, which in the end will be better for everyone. Gov't intervention brought this mess, they can clean it up with regulations that keep the rob from the rich mentality out in the fringe where it belongs.

This economic crisis just proves that socialism is a pathetic scourge and is pure evil.

I'm with Geoffery and August 1991 on this issue.

You do realize that length of time for this or that is not a meaningful argument: Zoroastrianism has been around longer than Christianity. Polytheistic religions have been around longer than Judaism/Christianity/Islam. None of this gives any credibility to any of these different religious beliefs.

The fact that such superstitions will continue to be around for a long time does not further their credibility (although, it is a pretty good indictment about humanity but that is for another topic).

--------------------------------------------------------------------

I'm not surprised that you are unable to provide any clear evidence for systemic government coercion to force banks to lend to people who they shouldn't have lent to.

I'm also not surprised that you show no evidence of reading any of the links that I have provided.

Even Greenspan now admits that his ideology was not sound on this issue:

Greenspan Admits Errors to Hostile House Panel

Greenspan: Securitization, Not Fannie/Freddie, to Blame

“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.”
-Alan Greenspan, former Federal Reserve Chair

Note - these links are provided for the benefit of people who will actually read them - like Eyeball and, well, that's probably it...

Edited to add: Looks like Calculated Risk was taking a walk down memories lane....

But, of course, I'm sure the government forced them to do advertisements like that. :rolleyes:

Edited November 23, 2008 by msj

August1991 · November 23, 2008

We've basically had a planet for the taking so its not hard to see why prosperity has been fairly widespread.

That's a zero-sum argument. According to you, North American wealth is based on theft/poverty elsewhere.

I fundamentally disagree.

When Isaac Newton discovered calculus, he made the world a richer and better place. We had more. Life is not a zero-sum game. Our wealth is not based on the poverty of others.

Edited November 23, 2008 by August1991

ReeferMadness · November 23, 2008

Dwindling natural resources? Cars are the most recycled products there is. And then there is that pesky law of the conservation of matter.

Automobiles are recycled but a lot of other things aren't. Over time, the richest sources of scarce materials will gradually be dispersed by human action.

Technology has enabled us to change the world and will continue to do so. If we were running out of resources, they would be much to expensive for anyone to afford, the system works.

If, by "the system", you mean capitalist markets, they're incredibly myopic. They don't anticipate shortages in time for conservation to occur. By time the prices go up, the materials are in short supply.

Wealth distribution was the
cause of this mess. Loaning to poor people who can't afford to pay their bills. If the government did things like Kevin O'Leary does, we wouldn't be in this mess.

Really. Who granted the loans? Who bundled the loans into securities so nobody could understand what they were buying? Who then bought those securities?

In theory the supply of oil in the ground is infinite, refer to the carbon cycle. However with high energy prices, that spurns more investment and development of alternative energy.

Brilliant. Let's just wait a few hundred million years for more oil to be produced.

Markets do work, they have been around for over two hundred years, survived the depression and other downturns and have advanced human civilization. Socialism on the otherhand is a complete joke, refer to the soviet union.

Anyone who thinks the former Soviet Union was a good example of Socialism should invest in some better quality education. And markets didn't survive the depression, they caused the depression.

blueblood · November 23, 2008

Automobiles are recycled but a lot of other things aren't. Over time, the richest sources of scarce materials will gradually be dispersed by human action.
If, by "the system", you mean capitalist markets, they're incredibly myopic. They don't anticipate shortages in time for conservation to occur. By time the prices go up, the materials are in short supply.

Really. Who granted the loans? Who bundled the loans into securities so nobody could understand what they were buying? Who then bought those securities?

Brilliant. Let's just wait a few hundred million years for more oil to be produced.

Anyone who thinks the former Soviet Union was a good example of Socialism should invest in some better quality education. And markets didn't survive the depression, they caused the depression.

And over time more technology and innovation will allow us to gather other sources of materials, see Wild Bill's post. This has happened throughout history. Oil has only been used widely for 150 years.

And a central planning socialist garbage system is any better? The USSR couldn't even bloody feed themselves and they were a world super power. Nope socialism sucks. And if you want any proof of that, look at the living conditions of a person in Alberta vs. Venezuela vs. Norway. The average Albertan has a much better lifestyle and you can take that to the bank.

When the banks are forced by law to grant loans or be in serious trouble, they sort of have to give them. How about the government stays out of the bank's business so they can loan money to people who can actually afford to pay them.

The USSR thought they were perfect examples of socialism, where are they today? You name one socialist country that has better living conditions than Alberta. Nope socialism is crap, utter crap. People have no incentive to innovate and grow, everybody is the same - poor, and rich countries have no desire to invest money there. Individual people know how to run their finances better than any government.

Markets have been around for well over 200 years. Nay sayers thought that the depression would be the end of markets, well they were wrong. Gov't intervention caused the depression instead of a short term market crash.

eyeball · November 23, 2008

That's a zero-sum argument. According to you, North American wealth is based on theft/poverty elsewhere.
I fundamentally disagree.

When Isaac Newton discovered calculus, he made the world a richer and better place. We had more. Life is not a zero-sum game. Our wealth is not based on the poverty of others.

Life is not a zero-sum game in the sense that blueblood described in the carbon cycle. The trouble as RM points out is that sometimes you have to wait hundreds of millions of years to get back to a point that's far enough above zero that you can sustainably subtract anything. Our wealth is based on liquidity and in the case of natural resources we're simply liquidating most of them.

After Newton discovered calculus we had more because we were able to speed up the process of liquidating natural capital faster than it could be replenished by the processes that created it. We are now clearly living beyond our planet's means and at the very least we're only borrowing from future generations although some would say we're actually stealing the heritage of future generations. As I said if natural processes were staying a step or two ahead of us there'd be more fish returning than are being caught, more trees growing faster than they're being cut and more oil filling up resovoirs than is being drained, and we know that just isn't the case.

Wild Bill suggests we can start tapping into the near infinite resources of outer space when things run out down here. I suggested as much in another post somewhere that we should print money, sorry, pump liquidity, based on being able to pay it back out of the wealth that's locked up in the moon and asteroids and such. Wealth should be wealth whether its sitting in a vault or drifiting about between Mars and Jupiter somehwere. Surely if we can imagine that the quantum tranching of risk leads to security then we should be capable of imagining there are asteroids made of gold and diamonds that are just waiting for us. The world as they say is your cherry, you just have to go pick it.

The risk here of course is that we might blow the wad down here before we leverage it to build a ladder to the riches above us. What would future generations do if they were in our shoes or had a say in this? At this point some would probably say go for it because we've got next to nothing left to lose.

Edited November 23, 2008 by eyeball

Smallc · November 23, 2008

The USSR thought they were perfect examples of socialism, where are they today? You name one socialist country that has better living conditions than Alberta. Nope socialism is crap, utter crap. People have no incentive to innovate and grow, everybody is the same - poor, and rich countries have no desire to invest money there. Individual people know how to run their finances better than any government.

The USSR wasn't the prefect example. Our world isn't wise or knowledgeable yet to know how to make the perfect system, socialist or otherwise. As for your belief that people have no reason to better themselves as a result of socialism, you are wrong. There will hopefully come a time when the betterment of humankind is more important than any other goal. Unfortunately, for the most part, that isn't the case right now, so I suppose profit will have to do.

eyeball · November 23, 2008

The USSR thought they were perfect examples of socialism, where are they today?

The US still thinks its the perfect example of capitalism and look where it is.

blueblood · November 23, 2008

The USSR wasn't the prefect example. Our world isn't wise or knowledgeable yet to know how to make the perfect system, socialist or otherwise. As for your belief that people have no reason to better themselves as a result of socialism, you are wrong. There will hopefully come a time when the betterment of humankind is more important than any other goal. Unfortunately, for the most part, that isn't the case right now, so I suppose profit will have to do.

Unfortunately profit does contribute to the betterment of humankind. I suggest reading the Wealth of Nations.

How am I wrong that people have no reason to better themselves as a result of socialism. Socialism is punishing people for succeeding by taking away anything extra and giving it to people who are unfortunate. That way of thinking has been proven ridiculous and is partly why the USSR collapsed. Now in smarter areas of the world, people aren't punished for succeeding and in turn because of their success have to hire and pay workers in order to keep their operation running smoother due to growth, those poor people have money when before they had none. Those poor people can now spend money buying things that improve their lives. You tell me which system is better?

blueblood · November 23, 2008

The US still thinks its the perfect example of capitalism and look where it is.

A country that will be doing very well come mid 2010 and will still be a superpower, far better than what the USSR could ever do.

Leftist lawmakers tried to force banks to lend to poor people and look where it got them. They won't be trying that experiment with socialism ever again.