On Not Learning The Lessons Of Long-Term Capital's Failure

[Al68]

The only real reason "the poor" exist as they do is because of lazy people who won't work.

Most of them would if they weren't being paid not to with stolen money. That's the fault of government, though, not the poor.

Of course there are those that cannot make a decent living, even in a country like the U.S. where it is easy, because they are born severely handicapped, but these are not the people in dispute. There is more than enough charity to care for those that are so mentally or physically handicapped they cannot make a living in the U.S.

That's what charity is for, to help those that cannot help themselves. Thievery is only necessary for wholesale wealth redistribution, to gain power for politicians, and to oppress people.

 

[WheelsRCool]

I do not have a problem with society taking care of people who born with a severe handicap, if charities are not a foolproof solution. However, society forcing such people onto businesses, and then also giving them (the disabled folk) subsidies, I do not agree with.

 

[Al68]

I do not have a problem with society taking care of people who born with a severe handicap, if charities are not a foolproof solution. However, society forcing such people onto businesses, and then also giving them (the disabled folk) subsidies, I do not agree with.

That's the advantage of charity, it doesn't force anything on anyone. I'm referring to real charity, not the enabling of bad habits with thievery and oppression that some on the left call charity to mislead those that don't know any better.

 

[misgfool]

There's no line to draw. Nobody is opposed to it. I'm not religious, but I'll use Jesus as an example. He clearly advocated helping the poor. He never advocated any socialist policy. He never advocated theft of another's property to help the poor. Does that mean he didn't really care about poor people?

Did he say that socialist policies were evil? I know that he bankrupted money lenders, so you couldn't describe him as a free market supporter either. And by doing that he damaged other peoples property i.e. violated their freedom. Another thing is that Jesus was able to do miracles. We wouldn't need socialism if people were able to create bread from thin air and cure disease at will. But you are not answering the question. Which needs would you fulfill?

Ps. With Jesus the saying "There is no free lunch" is not relevant.

 

[mheslep]

It was tried in Chile. Pinochet was put in power in '73, as a dictator he was able to push forward reforms without resistance, privatising huge state own industries. It was a complete disaster for the initial 10 years: hyperinflation, 30% unemployment (x10 higher than before Pinochet).

Surprisingly, Chile's free market reforms are held up an economic miracle after a period of steady growth in the mid 80's.

But Chile was never a completely liberated market, it was a failed experiment, in the end, after the economy crashed again in the mid 80's, Pinochet was forced to nationalise many of the industries he privatised.

Even though it is not an oil rich state like Mexico and Venezuela, Chile is the most economically successful country in Latin America since the reforms put in in the 70's. Highest per cap. GDP, lowest infant mortality rate, etc. See e.g. http://graphs.gapminder.org/world/index.php#$majorMode=chart$is;shi=t;ly=2003;lb=f;il=t;fs=11;al=0;stl=t;st=t;nsl=t;se=t$wst;tts=C$ts;sp=6;ti=2006$zpv;v=0$inc_x;mmid=XCOORDS;iid=phAwcNAVuyj1jiMAkmq1iMg;by=ind$inc_y;mmid=YCOORDS;iid=phAwcNAVuyj0NpF2PTov2Cw;by=ind$inc_s;uniValue=8.21;iid=phAwcNAVuyj0XOoBL_n5tAQ;by=ind$inc_c;uniValue=255;gid=CATID0;by=grp$map_x;scale=log;dataMin=194;dataMax=96846$map_y;scale=log;dataMin=2;dataMax=420$map_s;sma=49;smi=2.65$cd;bd=0$inds=i10_d001911cGaj;i161_t001960,,,,;i26_t001960,,,,;i52_h001960aGbb;i62_p001960akak;i66_p001960akak;i97_p001960akak;i90_p001960akak;i174_p001960akak;i245_p001930akak;i43_d001901bpa7;i143_p001960akak;i29_t001960,,,,;i47_t001924,,,,#$majorMode=chart$is;shi=t;ly=2003;lb=f;il=t;fs=11;al=0;stl=t;st=t;nsl=t;se=t$wst;tts=C$ts;sp=6;ti=2006$zpv;v=0$inc_x;mmid=XCOORDS;iid=phAwcNAVuyj1jiMAkmq1iMg;by=ind$inc_y;mmid=YCOORDS;iid=phAwcNAVuyj0NpF2PTov2Cw;by=ind$inc_s;uniValue=8.21;iid=phAwcNAVuyj0XOoBL%5Fn5tAQ;by=ind$inc_c;uniValue=255;gid=CATID0;by=grp$map_x;scale=log;dataMin=194;dataMax=96846$map_y;scale=log;dataMin=2;dataMax=420$map_s;sma=49;smi=2.65$cd;bd=0$inds=i47_t001924,,,,;i29_t001960,,,,;i143_p001960akak;i43_d001901bpa7;i245_p001930akak;i174_p001960akak;i90_p001960akak;i97_p001960akak;i66_p001960akak;i62_p001960akak;i52_h001960aGbb;i26_t001960,,,,;i161_t001960,,,,;i10_d001911cGa"

 

[Al68]

Did he say that socialist policies were evil? I know that he bankrupted money lenders, so you couldn't describe him as a free market supporter either. And by doing that he damaged other peoples property i.e. violated their freedom. Another thing is that Jesus was able to do miracles. We wouldn't need socialism if people were able to create bread from thin air and cure disease at will. But you are not answering the question. Which needs would you fulfill?

Ps. With Jesus the saying "There is no free lunch" is not relevant.

Well, I have to agree that Jesus is a bad example for this, but as far as what he thought of socialist policies, it depends on your definition. One thing that he obviously considered evil was stealing. So stealing from someone who has it to give it to someone who needs it is wrong.

The way the word socialist is normally used, if thievery is not involved, then it just isn't socialist. By that definition, socialism is evil according to Jesus, obviously.

If you're using the word socialist to mean something else, not involving theft, then I'm not necessarily opposed to it.

As far as which needs would I fulfill, if you mean fulfilled by government, we have government as a necessary evil to protect our freedom, not fulfill our needs.

 

[rcgldr]

In free-market economics ... never allowed to have 32-times leverage

Who made that regulation for free-market economics? In a truly free-market system, there is no leverage limit.

wealth ...

Wealth is distributed by convincing others to give a person or company money, regardless of any actual value that person contributes to society. Bernie Madoff is a good example of wealth redistribution without actual production of anything with real value. Then there are those that figure out more productive ways of doing things by endagering their employees or the public, such as Film Recovery Systems (most notable because it was the first time corporate executives were carged with 2nd degree murder - eventually they pleaded guilty to manslaughter).

 

[Al68]

Who made that regulation for free-market economics? In a truly free-market system, there is no leverage limit.

Just because there is no artificial limit does not mean there's no limit. The market itself naturally limits it, but not to some arbitrary level.

Wealth is created by convincing others to give a person or company money, regardless of any actual value that person contributes to society. Bernie Madoff is a good example of wealth creation without actual production of anything with real value.

No wealth was created by Madoff's scheme, it only changed hands. Wealth changing hands is not wealth creation. Unless you are using the word wealth to describe something with no value, which is self-contradictory.

 

[rcgldr]

In free-market economics, there is no such thing as outstanding leverage.

Who made that regulation for free-market economics? In a truly free-market system, there is no leverage limit.

Just because there is no artificial limit does not mean there's no limit. The market itself naturally limits it.

How? Short of failure, why would there be any limit? Even in the case of failure, the individuals involved have profitted from it and only their customers assume the risk of loss.

Wealth is created by convincing others to give a person or company money

Wealth changing hands is not wealth creation.

I corrected my earlier post to read wealth distribution. Wealth creation is tricky, because a significant part of it is perceived, such as the total value of the stock market, or the value of currency. Even the value of goods and services is influenced by perceived value.

regulation

Most of the time regulation is created in hindsight after a failure of some sort. It should be obvious that an economic system based on personal gain without regulation would lead to problems.

 

[mheslep]

How? Short of failure, why would there be any limit? Even in the case of failure, the individuals involved have profitted from it and only their customers assume the risk of loss...

Stepping in - yes, as the company's debt leverage continues to grow, normally their cost of borrowing money would start to rise as would-be lenders assess an increased risk of default. That is, the company would have to offer a higher interest rate on the money they borrow which acts to restrict further borrowing. However, if we insert a large organization into that market that somehow has a guarantee that it can not fail, and it is 50-100x larger than anyone else, and it goes on to leverage itself up 40:1, far more than the other people have been doing, then that organization resets the idea of what is considered risky among everyone else, as long as the me-toos borrow and loan the same kind of security. In this case that 'large organization' was Fannie Mae/Freddie Mac, creations of a government that did not to deal with trillions in home loans on the budget.

 

[rcgldr]

leveraging

Short of failure, why would there be any limit?

Stepping in - yes, as the company's debt leverage continues to grow, normally their cost of borrowing money would start to rise as would-be lenders assess an increased risk of default.

In a free market system without regulation, why should the companies reveal their actual debt leveraging instead of lying about it? Until a failure occurs (such as Madoff's fund), who would know?

Fannie Mae/Freddie Mac

At least their operations involved real assets. A big part of the current problem is deravitives, which don't involve any real assets, just legalized gambling on the outcome of financial events.

 

[Al68]

In a free market system without regulation, why should the companies reveal their actual debt leveraging instead of lying about it? Until a failure occurs (such as Madoff's fund), who would know?

I don't think basic law and order, ie theft and fraud being illegal, falls into the category of regulation, at least not by the definition most people use for regulation.

 

[misgfool]

Well, I have to agree that Jesus is a bad example for this, but as far as what he thought of socialist policies, it depends on your definition. One thing that he obviously considered evil was stealing. So stealing from someone who has it to give it to someone who needs it is wrong.

The way the word socialist is normally used, if thievery is not involved, then it just isn't socialist. By that definition, socialism is evil according to Jesus, obviously.

If you're using the word socialist to mean something else, not involving theft, then I'm not necessarily opposed to it.

How exactly is the government stealing money? Freedom is not a right, it's a privilege. It takes money to protect freedom and you can hire the government to maintain it. There is no point in complaining about it.

As far as which needs would I fulfill, if you mean fulfilled by government, we have government as a necessary evil to protect our freedom, not fulfill our needs.

That's your view, but by no means is it universal.

 

[Al68]

How exactly is the government stealing money?

By using force to take it from someone with no service provided to them. Charging for services provided, ie protecting freedom, is not stealing. That accounts for a small fraction of taxes.

Freedom is not a right, it's a privilege.

That must be why we have a "Bill of Privileges" instead of a "Bill of Rights".

As far as which needs would I fulfill, if you mean fulfilled by government, we have government as a necessary evil to protect our freedom, not fulfill our needs.

That's your view, but by no means is it universal.

Well, obviously it's not universally agreed upon. I never claimed that everyone agreed with me. As a matter of fact, it's pretty obvious that I'm in the minority.

(Of course it's a matter of record that the U.S. government was created for the primary purpose of protecting freedom, not fulfilling everyone's needs.)

 

[misgfool]

By using force to take it from someone with no service provided to them. Charging for services provided, ie protecting freedom, is not stealing. That accounts for a small fraction of taxes.

All the taxes go to protecting freedom. You are just not seeing the big picture.

That must be why we have a "Bill of Privileges" instead of a "Bill of Rights".

Actually you are absolutely right, have you suggested to your lawmakers to make a change to the name? Freedoms have been limited from the first time when private ownership was established.

(Of course it's a matter of record that the U.S. government was created for the primary purpose of protecting freedom, not fulfilling everyone's needs.)

Most of North America was free to be exploited back then. Opportunities were more abundant.

 

[Al68]

All the taxes go to protecting freedom. You are just not seeing the big picture.

No, they don't. Assuming that the word freedom means liberty.

Actually you are absolutely right, have you suggested to your lawmakers to make a change to the name? Freedoms have been limited from the first time when private ownership was established.

Private ownership wasn't "established". The right to own property, like all other rights, is not created by government or any human institution. People naturally own the results of their own labor, and any property they receive in voluntary exchange.

Most of North America was free to be exploited back then. Opportunities were more abundant.

Most of the land area of the U.S. is still undeveloped. I don't see your point here.

 

[misgfool]

Private ownership wasn't "established". The right to own property, like all other rights, is not created by government or any human institution. People naturally own the results of their own labor, and any property they receive in voluntary exchange.

They own the results of their labor, because we agree that they can own it. If we wouldn't agree on that, nobody would own the results.

Most of the land area of the U.S. is still undeveloped. I don't see your point here.

All the land is owned. Back then it was regarded as wilderness, which anyone could claim for themselves.

 

[Al68]

They own the results of their labor, because we agree that they can own it. If we wouldn't agree on that, nobody would own the results.

Well, if you believe a person doesn't rightfully own his own labor, that explains our disagreement. Clearly, someone will own the results, assuming that by "own" we mean the right to make decisions about it.

All the land is owned.

Not in the U.S.

 

[misgfool]

Well, if you believe a person doesn't rightfully own his own labor, that explains our disagreement. Clearly, someone will own the results, assuming that by "own" we mean the right to make decisions about it.

Yes. So nobody owns the results.

Not in the U.S.

Example?

 

[Al68]

Yes. So nobody owns the results.

Well, if you're not claiming that anyone else owns the results, then you won't mind the person who's labor created them claiming ownership.

Example?

You want me to give directions to unclaimed land in the U.S.?

Of course, the land is virtually all worthless scrubland far from any utilities and easy access. It should be no surprise that valuable land in heavily populated areas has already been claimed.

If you're really interested, try a net search.

 

[misgfool]

Well, if you're not claiming that anyone else owns the results, then you won't mind the person who's labor created them claiming ownership.

One can dispute the persons ownership at any time.

You want me to give directions to unclaimed land in the U.S.?

Of course, the land is virtually all worthless scrubland far from any utilities and easy access. It should be no surprise that valuable land in heavily populated areas has already been claimed.

If you're really interested, try a net search.

So you can't give me an example?

 

[rcgldr]

unclaimed land

There isn't any in the USA. The homestead act was ended back in 1976, except for Alaska, where it was ended in 1986.

2000 - Congress is rushing to deregulate derivatives markets

Getting back on topic I agree. Deregulation of the derivatives market was a bad idea. Derivatives are just a form of legalized gambling (as noted by the clauses that prevented states from treating derivative activity as illegal gambling).

 

[Brilliant!]

This entire thread has been on topic.

 

[Al68]

One can dispute the persons ownership at any time.

Sure, but what's the point? If someone else claims ownership of my labor, on what basis would they own it while I don't?

So you can't give me an example?

Well, a quick lazy search gave me this: http://www.ers.usda.gov/Publications/EIB14/ .

The federal government does claim ownership of a lot of undeveloped land, and it's true that a lot of it is restricted by gov't. But the fact remains that the land is physically there and undeveloped.

 

[misgfool]

Sure, but what's the point? If someone else claims ownership of my labor, on what basis would they own it while I don't?

I have already answered this question. Read my previous posts and try to comprehend.

 

[Al68]

I have already answered this question. Read my previous posts and try to comprehend.

Well, it's hard to comprehend someone not believing that a person owns his own body, and the wealth created by his own labor. Your previous posts indicate that you disagree, but you provide no basis for anyone else to claim the right to make such decisions (own) the product of a person's labor.

 

[mheslep]

In a free market system without regulation, why should the companies reveal their actual debt leveraging instead of lying about it?

The idea is that lenders would not lend the company money unless it demonstrated the ability to pay it back.

Until a failure occurs (such as Madoff's fund), who would know?

Regulation and laws governing fraud, theft, etc are two different things. Every free market libertarian recognizes the need for a government to enforce these basic laws. Libertarians are not anarchists.

At least their operations involved real assets. A big part of the current problem is derivatives, which don't involve any real assets, just legalized gambling on the outcome of financial events.

Real? In what sense was guaranteeing mortgages on houses that had tripled in price in a few years real? In any case that's still gambling - the place a bet that the home buyer won't default, and even in good times they know that some percentage will default.

 

[misgfool]

Well, it's hard to comprehend someone not believing that a person owns his own body, and the wealth created by his own labor. Your previous posts indicate that you disagree, but you provide no basis for anyone else to claim the right to make such decisions (own) the product of a person's labor.

I think a few millennium of slavery in human societies has proven that it is a very natural state to own other peoples body and their labor. You should try to look at it from natural point of view instead of your liberalism view. There is no fundamental proof (that I know of) to indicate that liberalism is the rightest view, but it is a nice thought so some have adopted it. The key point is that one can choose any view and after that one doesn't have to follow the rules of other views.

 

[Brilliant!]

Al, remember:

Reason is not automatic. Those who deny it cannot be conquered by it. Do not count on them. Leave them alone.

 

[rcgldr]

Real? In what sense was guaranteeing mortgages on houses that had tripled in price in a few years real?

It's a tangible asset. There's some inherent value of the land and house, and it is more than zero. A derivative is simply a sidebet on the outcome of some other financial event; without any direct involvement with the financial event being wagered on.

 

[ThomasT]

This to is a rather large topic, with no short explanation. Thankfully, great minds have addressed this topic very well. The best article that I've ever read on the subject of monopolies, as it applies to the free market, is http://www.nathanielbranden.com/catalog/articles_essays/question_of_monopolies.html , written by Nathaniel Branden. It's a lengthy article, but will be incredibly interesting to anyone who is truly curious on the matter. It goes into great detail of the government interference I keep referring to (preferential treatment).

Thanks for the link. I read the article. Not sure if I understand everything Branden said. I'll ask several questions about it when I get more time. One thing that I'm curious about is that he says that "the market is ruled by a single moral principle: justice". I've always thought of free markets as being amoral or nonmoral. Sort of in the same sense that wild animals aren't constrained by moral considerations. The strong emerge as leaders and inevitable exploiters of the weak. So, in a certain sense, it seems that a totally free economic system would inevitably lead to the liberties of the weak being infinged by the strong. And so a government (ostensibly of, by, and for all the people), which has the monopoly on lawmaking and state sanctioned violence, sometimes steps into prevent abuses (such as inordinately low wages and salaries, dangerous working conditions, time requirements, etc., child labor, union busting, etc.}.

While I do believe that government intervention has screwed up a lot of things, it seems that in some ways it has acted as an instrument of big business. I mean, suppose that you start out with a more or less totally free market, captitalist system, then what's to prevent the owners and bosses of certain companies who emerge as powers from coercing the people in the government to pass laws and do other things that benefit their companies?

If you consider the government as just another player in the 'market', then a lot of what has happened makes sense -- ie., the government as a conglomarate corporation which has a monopoly on certain activities which make it the most powerful player, and a coercive force, in a free market which encompasses it and other so-called 'private' corporations.

The thing to do now is identify why purchasing power has weakened. Currency is just like any other product: it is effected by supply and demand. As more money is pumped into the system, demand for it goes up. All manner of service providers, producers, distributors, etc raise their prices because their is more money to be made. This isn't simply because they are greedy, however. Their costs are rising, because everyone involved in their supply chain wants more of the monetary pie.

It seems inevitable that prices will rise faster than the income of the mass of consumers. So, the standard of living for most people is, inevitably, being steadily eroded. It seems that this must inevitably have an adverse effect on the entire economy. So, how does it get corrected? I don't see it just correcting itself. Doesn't there have to be some sort of centalized manipulation?

 

[Al68]

I think a few millennium of slavery in human societies has proven that it is a very natural state to own other peoples body and their labor.

Even the act of enslaving a person is an acknowledgment by the master that the slave is the original owner of what the master wants. Why else use force to enslave them?

Libertarianism is just a belief that force should not be ever initiated against another person.

The obvious fact that a person is the original owner of his labor is just derived from the fact that a person's body responds to his mind, so he therefore has original control of it, and control is ownership by definition.

 

[Al68]

Al, remember:

Reason is not automatic. Those who deny it cannot be conquered by it. Do not count on them. Leave them alone.

That's the most timely quote I've seen in a long time.

 

[misgfool]

I'm sorry Al68, but despite my best efforts, apparently at the moment I don't have the skills to explain this fairly simple thing to you with any more clarity.

 

[misgfool]

It seems inevitable that prices will rise faster than the income of the mass of consumers. So, the standard of living for most people is, inevitably, being steadily eroded. It seems that this must inevitably have an adverse effect on the entire economy. So, how does it get corrected? I don't see it just correcting itself. Doesn't there have to be some sort of centalized manipulation?

Also in the past history wars leveled the differences. It had two effects: decimation of the population and changes in the aristocracy. Since we don't have wars anymore and the population is constantly increasing, there is less to give to more people.