Pope condemns Capitalism

[benny]

I have to agree with the Pope, strange but true. Yet on the other hand I lay the responsibility at the feet of governments, not the bankers. Governments frame the regulations under which banks operate, they are "Chartered" by the governments to do business. Beyond taxes, and central banking, governments have determined that they should have the right to borrow money as they see fit and saddle the responsibility for paying these incurred debts to the public. There is mistake number one.

The Pope seems to claim that ethics are in question and responsibility is absent. I must agree, yet in so doing I must suggest the we, the citizens have allowed our governments to perpetuate a system of economic slavery. I believe the true cause of our problems lie in the area of legislation and regulation relevant to the banking industry. The bank used to be the King or Queen of a nation and their treasury was the nations bank. When nations displaced monarchies they did not allow the new governments to act as the bank and control every aspect of society through financial leverage. An entire financial industry grew up as a result. Not hamstrung by governments, more available capital was accessible to the public and economies grew. They grew unchecked and the industry providing the money was to a great extent unregulated. Ever so slowly the banks were legislated into corners and regulated to provide protection to citizens and investors. Those efforts did little to solve financial problems as economies grow and contract subject to political realities.

A final answer to the woes of finances was fractional reserve banking. Complete with central banking and international industry coordination and cooperation, the industry as it stands today is far more stable than it ever was. The price of doing this was very high to citizens and to a much larger extent governments. We now have an accumulated international debt that will in time see the net transfer of wealth from individuals and governments to corporations of banking interests. Allowing banks to "create" money in the form of credit has changed everything. Fiat currencies are the flavour of the day and they are no longer backed with assets, being brought into existence as interest bearing debt they are subject to numerous variables, not the least of which is consumer confidence.

The Pope was right.

This analysis is bogus because the problem fundamentally is that the cost of producing money (which is near zero) is much much lower than its value.

[Jerry J. Fortin]

This analysis is bogus because the problem fundamentally is that the cost of producing money (which is near zero) is much much lower than its value.

Benny, fiat currency has no value but trust. Hard currency is no longer backed with assets such as gold or silver. The vast majority of the money supply is interest bearing debt, not dollar bills or coins. What is the cost of producing this vast majority of the money supply? The only cost is the expense of administration. Meanwhile the value of that created money or credit is the same as dollar bills or coins which cost far more to create. To that end your argument is bogus.

[benny]

Benny, fiat currency has no value but trust.

Nothing is more valuable, in a society, than trust.

[Jerry J. Fortin]

Nothing is more valuable, in a society, than trust.

Fair enough, now do you trust governments and central banks? If you do then you have no problems, if not then just what is that fiat currency worth?

[Pliny]

Nothing is more valuable, in a society, than trust.

Very good post.

[Sir Bandelot]

Basically, as the Business Week article stated, the value of an Economics degree should be questioned in light of the fact that no one saw the crisis coming and then they turn to the same Economists and ask.."Well, what's going to happen next?"

That was the problem caused by laissez faire, without rules anything could happen. Laissez Faire is capitalism without theory. Every man for themself.

You may have found a few people who actually did see it because they have a propensity for being naysayers....the actual chicken littles; of which there is no shortage in any consideration of the future.

As I recall they were the ones who were marginalized through name calling, called tin-foil hatters and such.

Seems that the information media wants to deny or call in question that this crisis was seen coming, by many in fact. Shall we get the tin foil out some more?

Edited July 20, 2009 by Sir Bandelot

[Sir Bandelot]

The Bush Administration played a role in the banking disaster.

For USA, the chickens are now coming home to roost. Over the past 8 years, they have distanced themselves from their friends and trading partners around the world. They broke their trade agreements whenever it suited them. There is never a guarantee that they will honour their business contracts, and some doubt that they even can honour them now, if they want to.

And make no mistake- If it suits their national interest to make you go away, you're a goner.

But now looks like all those little chickens are coming home, baby.

Edited July 20, 2009 by Sir Bandelot

[benny]

Fair enough, now do you trust governments and central banks? If you do then you have no problems, if not then just what is that fiat currency worth?

I'm running of PM office so that the real value of money and its face value can be compared.

[kuzadd]

That was the problem caused by laissez faire, without rules anything could happen. Laissez Faire is capitalism without theory. Every man for themself.

As I recall they were the ones who were marginalized through name calling, called tin-foil hatters and such.

Seems that the information media wants to deny or call in question that this crisis was seen coming, by many in fact. Shall we get the tin foil out some more?

yah, actually I recall myself, starting a post here, way back, about how serious this economic crisis may just get, and let's see.

some comments I recall getting

you hate the USA

"tinfoil hat"

the US will take care of everything

I mentioned how the banks bundled the bad mortgages they intentionally went after committing fraud, and spreading their misery globally.

but ya know, whatever.... I just hate the US

but then, also paid the house off, and am debt free, moved investments to safer grounds.

Edited July 20, 2009 by kuzadd

[Pliny]

That was the problem caused by laissez faire, without rules anything could happen. Laissez Faire is capitalism without theory. Every man for themself.

Oh...was there laissez-faire somewhere?

It hasn't been seen for at least 150 years and it's still the cause of economic disaster today.

As I recall they were the ones who were marginalized through name calling, called tin-foil hatters and such.

Seems that the information media wants to deny or call in question that this crisis was seen coming, by many in fact. Shall we get the tin foil out some more?

Financial advisers around the world told investors that they lost money on their investments because no one saw it coming. What other reason could they give? That they are stupid?

It seems on this board that the only ones who benefitted during this economic crisis are the ones who know little about economics. Like Kuzadd, who paid off his house and is now debt free. What recession? There's a recession? Do you think he should thank George Bush?

[kuzadd]

. Like Kuzadd, who paid off his house and is now debt free.

for reasons of not listening to main stream economists who it was pretty obvious were bullshitting massively.

because the facts on the ground were not matching the rhetoric.

because I was paying attention. really paying attention.

Nope I am not thanking George Bush or Obama.

Because it isn't over, and I am hoping the decisions taken will give me and my family some shelter, but, I am not so sure it will be entirely possible to be unscathed.

[benny]

Because it isn't over, and I am hoping the decisions taken will give me and my family some shelter, but, I am not so sure it will be entirely possible to be unscathed.

The Church is the safest house.

[kuzadd]

The Church is the safest house.

actually that should have been security, as opposed to shelter.

though you may claim that the church besides being the safest house, is also shelter.

whatever,

six of one, half a dozen of the other

Edited July 20, 2009 by kuzadd

[benny]

he church...

?

[kuzadd]

?

sorry,

fixed it

[kuzadd]

Pliny the comment about thanking GWB , I don't really know how you intended it.

But it was Bush that resided over the massive housing bubble, but not just resided over it, out and out encouraged it, and bragged about it.

He also encouraged Americans to go shopping.

Most noticeably and inappropriately right after 9/11.

That was an odd time to make such a statement

Don't worry, go shopping?

And the Americans did.

George Bush, continued to de-regulate housing and financial markets and bragged about the results at the 2004 Republican convention, saying:

"Another priority for a new term is to build an ownership society, because ownership brings security and dignity and independence.

"Thanks to our policies, homeownership in America is at an all-time high."

Bush again:White house conference on increasing minority homeownership

"The goal is, everybody who wants to own a home has got a shot at doing so. The problem is we have what we call a homeownership gap in America. Three-quarters of Anglos own their homes, and yet less than 50 percent of African Americans and Hispanics own homes. … So I've set this goal for the country. We want 5.5 million more homeowners by 2010—million more minority homeowners by 2010.

I don't know that George Bush should be thanked for anything except getting the country into a big mess, a calamity.

[benny]

But it was Bush that resided over the massive housing bubble, but not just resided over it, out and out encouraged it, and bragged about it.

George Bush, continued to de-regulate housing and financial markets and bragged about the results at the 2004 Republican convention

Bush again:White house conference on increasing minority homeownership

I don't know that George Bush should be thanked for anything except getting the country into a big mess, a calamity.

To live in a safe neighborhood, thou shalt love thy neighbour as thyself.

Edited July 20, 2009 by benny

[Moonbox]

Pliny the comment about thanking GWB , I don't really know how you intended it.

But it was Bush that resided over the massive housing bubble, but not just resided over it, out and out encouraged it, and bragged about it.

Look into who was really pulling the strings in the American economy after 2001.

Hint: It wasn't Bush.

[benny]

Look into who was really pulling the strings in the American economy after 2001.

Hint: It wasn't Bush.

It was hidden parasites.

[Pliny]

Pliny the comment about thanking GWB , I don't really know how you intended it.

But it was Bush that resided over the massive housing bubble, but not just resided over it, out and out encouraged it, and bragged about it.

He also encouraged Americans to go shopping.

Most noticeably and inappropriately right after 9/11.

That was an odd time to make such a statement

Don't worry, go shopping?

And the Americans did.

George Bush, continued to de-regulate housing and financial markets and bragged about the results at the 2004 Republican convention, saying:

Bush again:White house conference on increasing minority homeownership

I don't know that George Bush should be thanked for anything except getting the country into a big mess, a calamity.

Bush wasn't a brilliant President most certainly.

A common problem I notice among almost all administrations is controlling spending. Reagan, although he cut taxes which properly stimulated the economy, was still unable to get Congress to cut spending and do some downsizing. Cutting taxes increased the revenues during his administration and congress proceeded to spend it.

Moonbox suggests that Bush wasn't running the economy after 9/11. There was indeed a greater influence and I'll leave it to Moonbox to divulge who that may be but Bush must take the responsibility.

Bush's prime concern was the security of the nation and the confidence of the people in feeling secure. Yah, he told them to go shopping after 9/11. I think it was more of a statement to continue with life as normal because we have things under control. It was confidence building and the underlying economic reason was that it would keep the economy going.

The true enablers of the housing crisis were FDR, the creator of Fanny Mae, Jimmy Carter with the Community Reinvestment Act and Clinton who put the Community Reinvesment act on steroids

Big Government: Barack Obama and Democrats blame the historic financial turmoil on the market. But if it’s dysfunctional, Democrats during the Clinton years are a prime reason for it…

t was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions.

Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.

In Bush's second term the Democrats were feeling their oats. They pooh-poohed concerns about housing and lit a fire under it, mobilizing community activists to demand mortgages for the poor.

American political power is structured differently than Canadian power. The President isn't all powerful. True, he did little to attempt to curb what was becoming increasingly obvious, but on advices from you know who, market exuberances were exacerbated by government guarantees which created moral hazard; that is, occluded the risks of poor lending practices.

There is a neat political cartoon here that depicts it well.

Edited August 11, 2009 by Pliny

[benny]

Capitalism is all about private ownership of productive means and the USA was all about a "ownership society".

[ZenOps]

Ethical banking is just another word for no growth.

Really you could live that way... But would you really want to do without the supermodels, the fast cars.

Fortune favors the bold, in investment and banking. If you got burned on a risky venture - its your fault for not keeping the money under your mattress in the first place. You can only place so much blame on the banks.