[UnderseaLcpl]

Originally Posted by Skybird

@ Lance, 1 of 2

1st, the current thing we have is NOT a good thing, it is a disaster of first class quality. It is a threat to us all.

Yes, but that is because of the measures the state is taking. Just like they did in the 30's and in the 60's and then the 70's, the state steps in with a bunch of new legislation and massive spending. The money supply relative to the GDP increases tremendously, causing stagflation, and then we're in a much worse spot than we would have been if we'd left everything alone.
Everytime this happens, it gets a little worse, because the state does more and more.

2nd, for example most nuclear powerplants work flawlessly and do not require to switch to emergency protocols, nevertheless these protocols get developed and are being hold at the ready, for just one nuclear desaster on great scale can not only ruin your day, but the coming years and decades.

That analogy is invalid. The market cannot function without periodically "failing". Recession renews the market along more productive lines, assuming the state doesn't step in and inflate the currency and strangle innovation and competitive ability. That is where the problem lies. The state is always trying to develop expensive and invasive recession failsafes that then simply fail themselves.

Regulation is not the state deciding on every transaction. It is about obligatory set of rules to which all much submit, no matter whether they want it or not, to guarantee the transparency, the responsibility, the robustness of rating standards that are needed to reduce the likelihood of worst case accidents as we currently have it, and to hinder the criminal and selfish, greedy behavior of the few doing damage for the sake of their private banking account at the cost of the many.

We already have regulations like that, but you claim they are not enough so;
Easier said than done. For one thing, the prime culprit in the U.S. is the Central Bank, not the private ones. Their ability to fiat currency into exsistence is a big part of what makes these bubbles form. Unlike private banks, they are not required to maintain a set reserve of currency. However, they do lend to other banks, as well as everyone else.
When the market is hot and everyone wants in, the Central Bank creates a lot of capital out of thin air, and it works for a while, until the market adjusts. Then it all comes crashing down.
Private institutions without a fiat currency from a central bank couldn't do that. Borrowers would have to compete for loans, slowing the growth rate, which I agree is a good thing to an extent.

Secondly, how much would it cost to put all those regulations and the enforcement in place. It is not so easy as "show us your books". There is a major sector of the legal industry devoted solely to finding ways around business regulation, and the reason it exsists is because even expensive lawyers are cheaper and less strangulating than the labyrinthine state regulations. Ironically enough, their favorite loopholes come from previous or obscure regulations. You'd have to rewrite the legal code as well (which I think needs to be done)

The human factor has been ignored so far, or better: it got nice-talked, saying the egoism of the few means benefit for the community as well. That has been proven wrong. It paved the way into self-expanding anarchy, pushed by the dinosaur with the greatest claws and teeth.

It has not been proven wrong. This one recession does not disprove the comparitively positive record of lightly regulated capitalism, and it does not change the fact capitalism has fueled the most successful nations and the greatest advancements in the world, especially in the past 200 years.
There is also the heavy involvement of the state in this matter. It is not just the Central Bank, it is also sub-prime lending regulations, state-inflated energy prices, and soon, the effect of the government dumping 2 trillion dollars (in this year alone, more to come) into the money supply, to say nothing of the future interest on that and the unsustainable programs it will create.
The egoism of the few still creates jobs and realizes industrial opportunities, no matter what harms it is accused of. And the fact remains that the state is not capable of creating a net gain in wealth.
I think quite the opposite of your statement is true. The "beneficiaries" of the community are just as, if not more guilty than any corporate fat cat, and they can do much more harm.

I have said that several times in various postings to you now, Lance. It is not about the state taking decision command in making internal policies of private institutions........

My fear is that the state will ultimately reach that point, something that is happening here right now. Show me a state that has willingly surrendered more power than it has gained over any significant period of time, and I could see your point more clearly.

I have argued against the state governing all decision-making in economy often enough,I think, I do not argue in favour of a state-run economy. but we need better, tighter rules by which business must run, and we need an office monitoring that these rules are being followed, and these offices must be strong enough in ressources and power that they can do the job. The monitoring systems we have had so far have failed miserably both in the Us and Germany - in one aspect they did so last but not least because they based too much on the too unsolid standards of rating agencies, and trusted the market too much - for no good. the greater the chance that lies will be discorvered, the smaller the probabuiliuty that somebody will lie, and the smaller the overall number of acvtual lies indeed. Trust is kind. Control is MUCH better. When it comes to money, my trust in the good of man comes to a sudden end. people kill each other for ten dollars. what do you think people are willing to do for an income of ten million dollars? Laws and control are for making sure everybody behaves.

Laws are more dangerous than money, my friend. They carry the threat of violence more surely than any street thug, and certainly more than any bank. You say yourself that the previous regulations failed, so who makes the new ones? Do you have access to an altruistic body of competent lawmakers?
The market provides the control you seek better than the state ever could. The voice of every consumer is directly represented by their money and how they choose to spend it. If you start with basic, but strong, anti-fraud legislation and have even a moderately educated populace, industry is kept in check. It must produce and satisfy or it fails.
The state, even in the limited (but not enough) capacity you describe obfuscates the truth of the market. It plays havoc with the ratio of capital to products, it interferes with legitimate business operations as readily as illegal ones, it stifles competition as entrepeneurs wait months or years to get approved for this or that license and pay hefty fees to obtain them.

Too pervasive? It has to do the job, if communal interest of sufficient critical quality and quantity are at risk. Let it be as pervasive as needed to acchieve that. Salus Publica Suprema Lex.

Imo, it doesn't need to be very pervasive to achieve that. It needs only to punish the frauds that the market, the media, and the populace expose on an almost daily basis. What I would like to see, is some longer prison terms for blatant offenders. Keeps them off the market, so to speak.

The current legal situation says that while they behave unethical, they are legally correct. I do not accept that status.

So what do you do then? People run their businesses into the ground every day, to the detriment of their employees and investors. Should they be accountable as well? What's the threshold?
In any case, as much as I disapprove of the shameless actions of these people, they didn't intend to collapse their companies. I'll admit that the question of how to handle them is not one I have the answer to.
However, incompetents like them get into those positions (and stay there) because there is not enough competition. The boards of many companies can afford to use company assets to play the "inflate the stock" game because their companies have security in their position thanks to a web of state legal protections that keeps up-and-comers down. That's why businesses lobby so hard for the regulation of their own industries.

that is the classical mistake - to assume the wanted effect gets acchieved by arguing for higher penalties......

....Without such controls, and the ressources needed to maintain and guarantee them, such standards could be ignored too easily. Controls need to be pervasive to a certain degree, else they do not work.

I have no doubt that strong anti-fraud legislation would not solve the problem itself, but it would help to stick it to the bastards who get caught and would have a deterrant effect, nonethelss.

I might agree with the need for the controls you described if I believed that the state would not expand its' power further and could maintain some semblance of fiscal responsibility. Unfortunately, it never does.
The more responsibility you shift to the government, the more crooked businessmen become politicians instead.

There is a difference. It has been repeatedly argued, and even is admitted by American economists, that Germany with it'S much better social security web than America in a crisis like this by this major structural difference produces a higher economic request that helps to boost the economy to a certain degree, than it is the case in america. That's why the sh!t hits us with a delay. Of course it compensates to a certain degree only, and not beyond. Point is: free market economy is not the same like free market economy. Your American ultra-liberal market economy is different than our social market economy. what you Americans often mock us for - so far has worked to our advanatge in this crisis. It is an additonal stimulus automatic.

I'd have to know exactly what Germany's protocols for a situation like this were to offer an educated opinion, and I've devoted most of my time lately to studying the American Government.
However, it could be noted that amongst U.S. states, the ones with the most liberal economies have suffered the least. Something of a similar effect but it doesn't cost a penny and there is no overbearing state to eventually mess it up.