The incentive of failure is the only regulation that needs to be enacted, and the market has that already except where the state mucks it up. If they didn't have the reassurance that the Fed will bail out bad loans or purchase them (in some circumstances), there would be a lot less reason to accept subprime lenders. And yes, some people would still take on that high-risk venture, and eventually be rewarded with bankruptcy.

As far as loans to people who can't afford them goes, that would be an extraordinarily difficult to construct, and ultimately ineffective piece of legislation. For one thing, loans, by their very definition, go to people who can't afford the principle right now (Sorry, it's fun to be a smartass sometimes:D )
In addition, there are a lot of low-income families and individuals who need loans. Blanket legeislation about loan eligibility would hurt them a lot. What if a young person needs a loan for a car so they can go to work? A bank could look at that person, their credit history and any factors that may warrant explanation, and talk with them face to face to determine eligibility. A law can't do that.

Another important factor is the Federal Reserve's tampering with interest rates. Gnerally speaking, at least from the Austrian and Chicagoan schools of economics' points of view, when interest rates rise, the economy slows down before recovering and pushing ahead to the next bull market. Since the Fed sets interest rates under the guise of controlling inflation or spurring economic growth, they tamper with this cycle. When it is set too low, it encourages lending and therefore expansion of the money supply, often outpacing the value of alll national commerce and resulting in inflation. (Different economists prefer different methods for measuring this, GDP and GNP being two of the most popular. Others prefer time-based economic growth indexes and the like)

Of course, the Fed can't keep rates low forever, and the more they artificially inflate the economy, the farther down it has to go to before it settles into its' natural cycle. If the Fed continues lowering rates beyond this point, runaway inflation results from borrowers scrambling to accquire loans to pay off creditors, a natural consequence of trying to cram too much commerce into a national pool of resources that can only support so much at one time. (Their ventures fail because of increasing prices of goods, labor, too much competition, lack of demand, etc.) This period usually precedes an economic crash or severe recession as the means of capital generation equalize with the money supply.

Also, let's not forget Federal legislation to encourage subprime lending like the CRA and Fair Lending. Estimates typically put as much as 40% or as little as 20% of bad loans into this category. Certainly not the majority of them, but a significant chunk nonetheless.

So basically, there is a lot of regulation going on that is not helpful at all, and not a lot of interest in restoring the powerful self-regulatory forces of the market.

Finally, there's the all-important consideration that we know what happens when the government gets its' hands in things. I suspect that finding an American who believes that their government is efficient and effective would be something of a rarity. As such, why on earth would you ever let them have any kind of direct role in the management of something so central to the economy as lending? Unless, of course, you want an inefficient and ineffective economy.
It might also be worth noting the correaltion between the nations listed highest one the index of economic freedom and the nations with the highest PPP (Purchasing Power per Capita) GDP per capita, and average annual income. (Norway being one notable exception, and remmber that we are talking about economic freedom, not necessarily the left or right wing affiliation of the government. Believe it or not, welfare states can coexsist with economic freedom, to a degree. Of course, they never do as well as lassiez-faire states, but that's another matter)

On the bright side of things, the inevitable onslaught of banking regulations, controls, and economy-punishing legislation that is sure to assail us before long will be of great benefit to business lawyers, God bless their dear souls, and that's something we can all be happy about:down:

The argument "but the US doesn't have a really free market" sounds like the old "but the USSR didn't really have communism" argument to me
:rotfl:
Apart from parts of "new" europe and the UK, the US has the least regulated economy on the globe.
Aside of course from Somalia...

I think the US has regulations because at a certain level, a society needs them.
Totally free capitalism might work in Hayek's (or was it Friedman) famous Island, or in the society the founding fathers of the US lived in.
A bit like anarchism, which works just fine in a siberian village.

US intel: US set to lose dominant position within the next 20 years
 

summary:
http://www.guardian.co.uk/world/2008...ligence-agency

original document:
http://image.guardian.co.uk/sys-file...2025_FINAL.pdf

Double trouble for America, since demograpohs show that around 2040 white Americans will no longer form the majority of the american population, since more and more non-white immigration into the US takes place. As the Southern Poverty Law Centre in Alabama and the Center for the Study of Hate & Extremism at California State University, San Bernardino, show in their releases, publications and interviews with their leading heads, the (often seen before in history) counter-reaction of growing racism, and ideologies basing on Nazism, KKK-propagated supremacy of white race and growing racist hositlity against president elect Obama, already have switched into higher gear in reaction to the election result, with some Nazi groups ironically applauding Obama, for he will make things so bad for white man that the white population will see its mistake sooner or later and then strike back at non-whites even stronger, these sickos say.

Dominance fading, unilateralism passé, a black man president in the White house, whites loosing numeric dominance in US society, economy fumbling, finance model failing, skyrocketing debts and a de facto state-bankruptcy, making the nation depending on the good will of the rest of the globe paying for it's bills - white America is heading right into a massive identity crisis. After the Reagan years and Bush's new world order and the neocons' project for an American century, this is going to be a rude wakeup-call to harsh reality that has little in mind with this self-glorification.

And the longer America keeps on denying this trend, the stronger the rest of the world will be affected for the worse from this stubborn patient fighting against accepting unwelcomed realities and the simple fact that it's excessive way of life is suffering from threatening health problems. that's why the world should use sticks and carrots to make america to learn faster and adapt to reality instead of trying to make the world adapting to america. We cannot afford to always wait until the mess has been done, and then repairing the damage behind. Prevention is easier, and cheaper.

However, reading some comments here convinces me that we need more of what has brought us right into the current credit crisis. :88) Let's repeat the old mistakes again, comrades, but this time with greater élan and determination! We can reach the 100 trillion debt mark for sure, yes we can! :up:

An autobahn without traffic rules and speed limits and everybody racing at will with 220 km/h is a safe autobahn. :know:
Free ride for free citizens! :up: Be patriotic - drive fast!

Skybird never quits slamming my country with lies and propaganda does he?

This comes from the NIC, which is the coordinating body of the CIA and the other US intelligence services.
This is not a leftist whacko theory but the official analysis of the leaders of the US intelligence communtiy.
Don't shoot the messenger
;)

On the other hand, Europe won't be in too great a shape either.
They predict India and China, possibly Russia (if they can fix everything that needs fixing) as equal players, with Iran, Turkey and others as new regional powers.

Very cute, sky:rotfl:

I can only assume that you're talking to me, since everyone here either agrees with you to some extent or with me to some extent.

Still, I have a lot of respect for your perspectives, no matter how much they may vary from mine, since you're obviously an intelligent person. So, how's about a little more detailed summary of how you could expect anything other than minimally-regulated capitalism to work, and maybe a few less poor analogies?:D
Surely, you must realize that if I make the argument that we're doing the same thing we've been doing for years and it has led to our current (and many previous) crises, you would have to somehow assert that my conclusion is wrong and maybe provide some rational explanation.

If you're busy or tired right now, I can wait. One can always learn the most from a perspective that they are unfamiliar with, so it's worth it.

True, there can never be a generally desireable system of pure capitalism, and a system of pure communism simply cannot exsist, so the resemblance is there, I suppose. I imagine that both are like a system of forums where people have to actually read the entire post before they argue with it;

or a system in which people post things that aren't contradictory;
I misspoke myself there, perhaps too focussed on dramatic effect.

According to whom? I can easily produce a large list of sources contradicting this claim, but here is one of my favorites
http://www.heritage.org/research/fea...dex/topten.cfm

Bear in mind that the lower the number in the government size index, the more government there is. The number actually refers to freedom from government as a percentage.

In short, though, you are correct that capitalism cannot be totally free. It must have regulations to prevent fraud, theft, and exploitation, to some degree. However, these regulations should be as unobtrusive as possible, since they tend to hinder honest business more than they damage dishonest dealings.

One thing that I have come to expect from economic left-wingers over the years is a complete disregard for any kind of empirical evidence, so I doubt that the world's growing assortment of failing mixed economies, or the stark contrast of China's "Special Economic Zones" with the rest of the nation, or even the alarming correalations between the stregth of the U.S. economy/dollar value within the past few decades with an increase in socialistic policies, would dissuade them from believing that someone out there has the knowledge to understand the completely unfathomable nature of economics and can make some sort of policy to govern it efficiently and effectively.

Rarely in history are there such stark contrasts as those which economics can show us. Centralization inevitably always fails. Freedom (to a certain point, of course) inevitably generates prosperity.


While some brilliant mind may exsist who can effectively control any centralization of economy, I have yet to see them, so I ask those who would disagree; "What preferable system do you have?" "How would you control an economy more effectively than it can control itself with the minimal regulations of the nature I presented above?"
The rest of us eagerly await your response, becuase all the other people who claimed to have such solutions haven't done such a great job.

P.S. I have to apologize for getting so worked up over such issues. IMO, a healthy economy is vital to a healthy nation. Quite simply, I am not willing to trust the economic welfare of the country to an person or person(s) other than the producers and consumers. The alternative has historically been shown to fail, quite catastrophically on a number of occassions. Nonetheless, I'm the first to admit that I don't know everything (understatement of the century), so I would jump at the chance to hear an economic policy that I couldn't easily circumvent for my own gain.

Feel free to be harshly critical in your responses, it doesn't bother me a bit.:D

The important question is however, will the NIC's assessment and future predictions prove accurate in the next +20 years? Hell if I know. :-?

America's strength comes from it's ability to constantly change and grow. The demographic breakdown is irellevant. It's the quality of our people that matters, not the dominant color.

In the recent presidential election, just under 70 percent of the voters were white. We elected an African American president to serve in the White House, a building that was built by slaves a little more than a hundred years ago.

America offers more freedom and opportunity than any other country in the world, and it will continue to do so. Maybe that's why some other countries are so jealous of it.

The people of my country have yet to elect a Dictator, something that can't be said of some European Countries represented here.

It's also worth noting that because you have to be a natural born citizen of the United States in order to become President, there's no chance of an Austrian born painter attempting world dominace from our shores.

No offense intended to you AntEater but:

a. Skybird searches the web for negative articles about my country and has been doing so since I started reading this board half a decade ago. I trust him about as far as i can throw a tiger tank.

b. This is not the NIC article. It is the Guardians interpretation of the NIC article. Even his "original document" link doesn't come from the source but rather the Guardian.

c. It is merely an estimate of what might happen almost twenty years into the future. I leave it to you to calculate how accurate such projections tend to be.

Yes, TDK, jealous we are, and so thankful that we need to pay for your way of life and your superior model. Paying for it on and on and on, it makes us happy.

Try to run your model we envy you for without cheating by using other people's money, use exclsuively your own - then you may have a claim to make about how great your model work. Until then, I would prefer to brag a bit lesser about how fantastic we are, if I were you. your nation is not an example for the rest of the globe anymore, as it has been until decades ago - it is the globe'S greatest problem today. And still you think you are the greatest?

Or in other words: give us (the non-american rest of the globe) back our money, TDK, two thirds of your yearly GDP. And compensate us for the loss of profits and the loss oif hundreds of thousands of jobs that is to be expected as a conseqeunce of the recession your nation's failed finance policy has kicked us into, and compensate us for the increased burden this puts onto our social budgets. In germany we have reduced spendings over the past years and expected to have the first balanced state budget without new debts next year - thanks to the crisis made in the US, we can forget that and will increase our new debts again now - years of fiscal policy of ours lost and ruined. We are so jeaulous for you, yes we are! Do all that, get rid of your debts and compensate us for the dmaages you have done to us, and then you have an argument indeed to claim your model has unused ressources and can be successful and revive itself like phoenix rises from the ashes, and that it can run by itself and without help from the outside. Right now it has proven to cause a mess, if being allowed running for just long enough, it is a patient on the intensive-care-station. And all we non-american nations and economies need to clean the mess that you have made by refusing to stop while there still was time, and we need to suffer massive losses - for your model failing. You are the greatest debtor in the world - that successful your model works.

And I do not even touch the issue of widening social gaps inside your country, and the accumulation of more and more wealth at a smaller and smaller top of the social hierarchy while more and more people become poorer and poorer.

AntEater is right, things won't be too great in the EU, too, for different reasons - what America has too little, the EU has too much: regulations. Both does damage, but there can be no doiuzbt that the current crisis that I more and more understand to be just unfolding in it'S starting sequence has been caused by and in America. and where foriegn bansk and economies suffer losses as well, it is becaseu they allowed to be infested with the virus that had taken over the american finance system. That is not a recommendation for that finance system - but the exact opposite.

If you look at past estimates, you will see a mixed bag
AFAIK the NIC failed to predict the collapse of the USSR.
On the other hand, while it did not predict 911 per se, it warned for years about major terrorist attacks on US soil.
It seems to me that while NIC is good on hard power politics, military, migration and industry, the US intelligence community knows little about the intricacies of the world financial markets.
This is not surprising as most intelligence services recruit themselves from the military or other security institutions.
Apart from that, as I posted in the "black swan theory" thread, the NIC apparently is quite good at recognizing trends.
And IMHO they're pretty much stating the obvious, and not giving a worst case scenario of that either, but rather an optimistic middle ground assessment.
With regards to america being more adaptable and such, intelligence agencies cannot count on metaphysics.
This sounds a bit like the WW2 japanese trusting that their japanese martial spirit might overcome any technological advantage of their enemies.

I mean if the US can integrate these non-traditional US citizens, it won't be because of some kind of special spirit, but because the economy can provide them with the same standard of living as the others.
With that I don't mean a welfare state, but well-paid jobs.
I'm not a US citizen, but to me it seems the great integrating factor in the past has not been some kind of economic kumbayah of a common spirit, but rather the fact that everybody who tried earned enough not only to keep living but to actually improve.

Are you saying SkyBird has an agenda? Im shocked :o

Im always amused at his 'sources' though.

At least it's not Der Spiegel this time:D

Ideology aside, I'm not so sure wether trust in the producers and consumers that much today.
If we had Henry Ford speaking to Congress, I'd agree, but we don't.
In many ways, today's CEOs are simply overpaid clerks.
They're basically interested in their salaries and their boni, if then corporate interest comes second, you have a good executive. If he thinks of the cooperation at all, you have an average one.
They're not corporal WW2 generals, but corporate 16th century condottiere (warlords).
On the other hand, leaving a multibillion dollar enterprise in the hands of one or serveral personal owners is not the solution either, a modern multinational corp. simply can't work this way.
With regards to the consumers, we can't trust them either.
First of all, a whole industry, the biggest industry in the US is PAID to cloud his judgement. Second, today's markets are so complicated that even without that much advertising, keeping abreast of the flood of information would be a full time job.

With regards to the auto industry, the logical thing would be "let 'em fail".
With state support, the state actually rewards the very same people who caused this mess and has zero guarantee that they won't screw up again.
A full scale nationalization would be an alternative, but I think not really feasible in the US.
Problem is, if you let the whole auto industry of america go down the drain, there's no one to step up in their place.
Without state support, not even foreign manufacturers would suddenly start to invest big scale in US production.
Auto industry in the US would just stop. From a libertarian standpoint, this is acceptable, the US big three screwed up and deserved it.
But from a national point of view, losing the most important part of your manufacturing industry is not acceptable.

His source is the NIC report from the USA
It just is linked via the guardian

But I'm sure you knew that, having checked what it is before you posted, and didn't just take the first opportunity to prove yourself a nob-end. I am reassured that you do in fact genuinely find the NIC report an amusing source.

I'm guessing steamwake thinks the only fair and balanced resource is little green footballs.

I have no agenda, I am simply angry, and with all right we non-Americans can have, since we pay the bills.

And what is wrong with my - as you put it - "sources"? I repeatedly have said, at least three time this year alone, that there is only one reason why I quote Der Spiegel often and almost never any other german news outlet: Der Spiegel is the only German paper with a dedicated and huge international internet edition that translates the german edition's content into English. Most other papers, and almost all of the major ones never had or have no more an English edition.

Learn German, and I give you material from two dozen different German "sources" regularly in this forum - just in case you suddenly discover your love and interest for german inner politics, and start to care for it!

Indeed. I could as well have used any other of the various German and British papers that I skimmed and where the news of this report is being covered on page 1. Most newspapers had a headline on it yesterday or today.

LOL he called me a nob-end... :p

The first link 'his source' is to an article in the Guardian itself which picked and choose excerpts from the 120 page report. Not that the Guardian has any agenda :yep: If they could have got away without crediting the source of the material they would have.

Im sure you took the time to read all 120 pages of the actual report. My favorite part was page two.

Nob end.... LOL :rotfl: that so cute.

Here is another perspectave on the same article http://www.reuters.com/article/usDol...41155720081120

By the way no I dont put a whole lot of faith in the NIC

kinda like you and some other people to with the democrats