Opinion on socialism?

[Xomic]

Lending standards don't just drop for no reason. Fannie, Freddie, the FHA, the CRA, the Federal Reserve are all to blame.

From what I read, the blame almost certainly is on Alan Greenspan, a noted Libertarian and economist who was in charge of the Federal Reserve, and his rate lowering almost certainly caused the housing bubble to develop. Further, he and others like him opposed regulations on derivatives.

What failed is regulations, that may have had good intentions, but the unintended consequences make them pale by comparison.

What failed was trusting capitalists to do things in the interests of the public as a whole. Those rates should have never dropped and those derivatives should have never been allowed to exist unregulated. The regulation system certainly needs to be refined and rebuilt, but more regulations, and tougher regulators need to exist. To pretend that socialism is somehow the cause of this failure is the height of intellectual dishonesty.

We see this every time the market goes south- it's always, claim the capitalists, somehow the fault of regulations for these failures, yet never do they explain how or why this would be, other than their invisible hand somehow saving the day.

[Sibirsky]

Lending standards don't just drop for no reason. Fannie, Freddie, the FHA, the CRA, the Federal Reserve are all to blame.

From what I read, the blame almost certainly is on Alan Greenspan, a noted Libertarian and economist who was in charge of the Federal Reserve, and his rate lowering almost certainly caused the housing bubble to develop. Further, he and others like him opposed regulations on derivatives.

Greenspan is no libertarian. He pretended to be one in the 60s. Doesn't make him one in the 21st century. Many people and many entities are to blame. If you're going to blame individuals, then yes, Greenspan is the one with the most blame.

What failed is regulations, that may have had good intentions, but the unintended consequences make them pale by comparison.

What failed was trusting capitalists to do things in the interests of the public as a whole. Those rates should have never dropped and those derivatives should have never been allowed to exist unregulated. The regulation system certainly needs to be refined and rebuilt, but more regulations, and tougher regulators need to exist. To pretend that socialism is somehow the cause of this failure is the height of intellectual dishonesty.

We see this every time the market goes south- it's always, claim the capitalists, somehow the fault of regulations for these failures, yet never do they explain how or why this would be, other than their invisible hand somehow saving the day.

No one trusted them. Stronger regulations will do nothing but slow things down and increase costs. Since socialism isn't to blame, it's a good thing I didn't blame it, in this particular case. The height of dishonesty, is your buddy Jakaragua blaming this shit on capitalism. You yourself admit that most of the blame lies with Greenspan, a government appointed banker.

[Forster Keys]

What do you guys think about socialism? Does it work? Does it not? Is it better than capitalism? communism? Any opinion or view about this economical structure.

Another word for socialism is 'Envy'

Another word for envy is jealousy.

[Jakaragua]

The history of the United States for the past 30 years has been a history of deregulation. The systems that have been set up to protect us from capitalism have been weakened severely in this last generation. This shows stateless capitalists are indoctrinated in the belief that the opposite has happened in the same period.

Instead of telling the truth: “capitalism is fail”, instead you create a counter wave that says, “it didn’t fail, something caused it to fail.”

You can't handle the truth. And the truth is, deregulation is a myth. Banking is one of the most regulated sectors in the US. Lending standards don't just drop for no reason. Fannie, Freddie, the FHA, the CRA, the Federal Reserve are all to blame. None of them have anything to do with capitalism. It did not fail. What failed is regulations, that may have had good intentions, but the unintended consequences make them pale by comparison.

The truth is, your ideology has failed, will continue to fail, and is made of fail.

Right-Lolbertarians are very quick to throw criticisms at the Federal Reserve, but lack seemingly even a basic understanding of how much power (rather how little) it actually has.

While it is true that the Federal Reserve does in fact print the money that the banks and society uses, you as a stateless capitalist also knows that the privately owned banks also create their own money through book keeping entry, out of thin air as you say. This is true; I’m not denying this at all. The job of the Federal Reserve is to safe guard the value of the money by having some form of power over the money. That power over money mainly takes two forms: the money supply and interest rates.

As just about everyone knows, if you have more money in circulation than you have demand for goods and services, you have inflation. You as a stateless capitalist are already familiar with inflation and its effects on society. One of the jobs of the Federal Reserve is to control this inflation by determining how much money is in the money system. We’re all familiar with Zeitgeist how it showed that there has been a 94% devaluation of currency in 96 years.

But exactly how is the Federal Reserve supposed to regulate the money supply if banks are creating their own money through loans? How is the Federal Reserve supposed to control the money supply when it comes from cheap foreign credit? It can’t and that’s the point. The Federal Reserve doesn’t really have that much power over the money system at all. It really only has power over about maybe a third of all money in the system. This money created through domestic and foreign loans are not regulated. So in a stateless society, exactly how is no regulation whatsoever supposed to make this work? Banks will just keep creating more loans because it’s the only way they make money. Why would they regulate the loans they make? They would just be working against their own profit motive. And this working against the profit motive would defeat the purpose of capitalism.

The other form of power held by the Federal Reserve is the power to control interest rates. Unlike “regulating” the money supply, this is a very real power actually held by the central bank. It is required for the regulation of interest rates that you have a central bank.

Interest rates work like this; you have two kinds of capitalists; productive capitalists who produce commodities and financial capitalists who loan money. Capitalism requires both sets of capitalists to exist in order for it to function. When a productive capitalist wants to start a manufacturing firm or begin a new manufacturing cycle, he’ll borrow money from a financial capitalist. This loan will be made with interest which is how the financial institution makes money.

The bank wants the interest rate to be as high as possible so as to make the most money possible from the loan. However, the productive capitalist wants the interest rate to be as low as possible so as to give as little of his surplus-value (his profit) as possible in paying back the loan. This takes on the form of a struggle between two sets of capitalists. In the concrete, a bank’s interest rates must be high enough to generate a profit, but low enough so as not to choke off the profits of the productive capitalist.

This is why so often you hear someone in some magazine or on television saying that interest rates are too high, (discouraging people from investing in production), and then someone saying that it is too low (discouraging banks from lending money). It is absolutely necessary to have some form of regulation to keep these two groups from going to war.

The far-right libertarian position is that the banks will always lower their rates compared to other banks because they are competing for loans. However this is not true and proven so by the financial collapse of 2008. Banks and other financial institutions gave out tons of sub-prime loans both in manufacturing and mortgages. This created credit bubbles that collapsed and ruined credit. The fact is they keep creating (and are still creating) bubbles shows that it will take regulation to keep another credit collapse. Unfortunately as I stated, the Federal Reserve can’t control how many loans or how large they give out.

Often the argument given to stabilize a currency is that we should return to the gold standard. However this would be rejected by independent banks without a central bank watching over. A stateless capitalist economy would not defeat inflation this way. Any bank could then just collect as much gold as they wanted and just create as many loans as they wanted. And they would just keep putting them out because they’ll make more money that way. Each bank would do the same thing and there would be no regulation of the currency creating inflation again.

A far-right libertarian-style bank would also not thrive off this environment. The cost of collecting gold in the first place to be greater than the amount of money you would be able to loan out. A gold standard really doesn’t mean anything.

I would like to point out that this is not the case with a central bank in a socialist country. In the case of Cuba there is only one bank, the central bank of Cuba. Because there is only one bank and new money cannot be created in another bank, inflation is relatively in control. These credit bubbles that were created by the capitalist profit-motive do not exist in Cuba.

However if anyone has actually looked into this, they’ll notice Cuba’s inflation is high. This is due to a promise made by the Cuban government at the end of the Soviet Union, their biggest trading partner. Castro made a public statement saying that no matter how bad things got during the “special period” they would be no interruption in medical and education services. The inflation was caused by a lack of trade due to the blockage against them. This problem wouldn’t have existed if it was not for the vindictive, petty bulling tactic by the US government.

[Lembrasia]

great post

the problem is that you can't really discuss with Looneytarians

AustroLibertarians act exactly like State Socialist "the USSR failed because it was not (State) socialist enough"

no matter how much real world data,statistics you throw them.....the fault is always of the government (because Libertarianism is a political belief that government leaves dirty fingerprints on everything it touches) and never of the markets....

don't forget these people are the same who want to revert back to the Gold Standard(LOL)

[New Acardia]

It is the warlords who wear fancy uniforms and have fancy titles who run those countries( and were put in to power by socialist and/or the communist)who won't let those problems be solved.

Wat? Why don't you look at Cuba's poverty levels: 4.1%,compared to the US's 12%

Also, warlords? Which supposed "Socialist" warlords? So vague, you're not helping me here.

Sorry about not getting back to you sooner but I have been sick and I will give you a list soon

[Sibirsky]

You can't handle the truth. And the truth is, deregulation is a myth. Banking is one of the most regulated sectors in the US. Lending standards don't just drop for no reason. Fannie, Freddie, the FHA, the CRA, the Federal Reserve are all to blame. None of them have anything to do with capitalism. It did not fail. What failed is regulations, that may have had good intentions, but the unintended consequences make them pale by comparison.

The truth is, your ideology has failed, will continue to fail, and is made of fail.

Right-Lolbertarians are very quick to throw criticisms at the Federal Reserve, but lack seemingly even a basic understanding of how much power (rather how little) it actually has.

It has power to regulate the money supply through open market operations.

While it is true that the Federal Reserve does in fact print the money that the banks and society uses, you as a stateless capitalist also knows that the privately owned banks also create their own money through book keeping entry, out of thin air as you say. This is true; I’m not denying this at all. The job of the Federal Reserve is to safe guard the value of the money by having some form of power over the money. That power over money mainly takes two forms: the money supply and interest rates.

They have reserve requirements. The Fed has ultimate power of the money supply.

As just about everyone knows, if you have more money in circulation than you have demand for goods and services, you have inflation. You as a stateless capitalist are already familiar with inflation and its effects on society. One of the jobs of the Federal Reserve is to control this inflation by determining how much money is in the money system. We’re all familiar with Zeitgeist how it showed that there has been a 94% devaluation of currency in 96 years.

But exactly how is the Federal Reserve supposed to regulate the money supply if banks are creating their own money through loans? How is the Federal Reserve supposed to control the money supply when it comes from cheap foreign credit? It can’t and that’s the point. The Federal Reserve doesn’t really have that much power over the money system at all. It really only has power over about maybe a third of all money in the system. This money created through domestic and foreign loans are not regulated. So in a stateless society, exactly how is no regulation whatsoever supposed to make this work? Banks will just keep creating more loans because it’s the only way they make money. Why would they regulate the loans they make? They would just be working against their own profit motive. And this working against the profit motive would defeat the purpose of capitalism.

Open market operations. That's how. It can and it does. Why even bring up banks in a stateless society? What does it have to do with the current situation? How will they regulate the money supply? Simple, supply and demand. By creating too much money you decrease demand for it, and in turn decrease your profits. The market will determine the money supply.

The other form of power held by the Federal Reserve is the power to control interest rates. Unlike “regulating” the money supply, this is a very real power actually held by the central bank. It is required for the regulation of interest rates that you have a central bank.

No it isn't. Banks can and do determine the interest rates.

Interest rates work like this; you have two kinds of capitalists; productive capitalists who produce commodities and financial capitalists who loan money. Capitalism requires both sets of capitalists to exist in order for it to function. When a productive capitalist wants to start a manufacturing firm or begin a new manufacturing cycle, he’ll borrow money from a financial capitalist. This loan will be made with interest which is how the financial institution makes money.

The bank wants the interest rate to be as high as possible so as to make the most money possible from the loan. However, the productive capitalist wants the interest rate to be as low as possible so as to give as little of his surplus-value (his profit) as possible in paying back the loan. This takes on the form of a struggle between two sets of capitalists. In the concrete, a bank’s interest rates must be high enough to generate a profit, but low enough so as not to choke off the profits of the productive capitalist.

Supply and demand determine interest rates. What is your point?

This is why so often you hear someone in some magazine or on television saying that interest rates are too high, (discouraging people from investing in production), and then someone saying that it is too low (discouraging banks from lending money). It is absolutely necessary to have some form of regulation to keep these two groups from going to war.

What war? The market can determine the interest rates.

The far-right libertarian position is that the banks will always lower their rates compared to other banks because they are competing for loans. However this is not true and proven so by the financial collapse of 2008. Banks and other financial institutions gave out tons of sub-prime loans both in manufacturing and mortgages. This created credit bubbles that collapsed and ruined credit. The fact is they keep creating (and are still creating) bubbles shows that it will take regulation to keep another credit collapse. Unfortunately as I stated, the Federal Reserve can’t control how many loans or how large they give out.

It can through open market operations. The right-libertarian position is that the supply and demand will determine interest rates. It's like the price of anything else. Interest rates are the price of money for a period of time.

Often the argument given to stabilize a currency is that we should return to the gold standard. However this would be rejected by independent banks without a central bank watching over. A stateless capitalist economy would not defeat inflation this way. Any bank could then just collect as much gold as they wanted and just create as many loans as they wanted. And they would just keep putting them out because they’ll make more money that way. Each bank would do the same thing and there would be no regulation of the currency creating inflation again.

Banks to do not just collect gold. Making more loans is not better when those loans are of inferior quality.

A far-right libertarian-style bank would also not thrive off this environment. The cost of collecting gold in the first place to be greater than the amount of money you would be able to loan out. A gold standard really doesn’t mean anything.

Which has what to do with the current situation exactly?

I would like to point out that this is not the case with a central bank in a socialist country. In the case of Cuba there is only one bank, the central bank of Cuba. Because there is only one bank and new money cannot be created in another bank, inflation is relatively in control. These credit bubbles that were created by the capitalist profit-motive do not exist in Cuba.

Inflation has historically been higher in socialist nations because of their weak economies.

However if anyone has actually looked into this, they’ll notice Cuba’s inflation is high. This is due to a promise made by the Cuban government at the end of the Soviet Union, their biggest trading partner. Castro made a public statement saying that no matter how bad things got during the “special period” they would be no interruption in medical and education services. The inflation was caused by a lack of trade due to the blockage against them. This problem wouldn’t have existed if it was not for the vindictive, petty bulling tactic by the US government.

What does Cuba have to do with the current crisis? Not a thing.

So what exactly is your point?

The key factors contributing to the crisis were the Fed keeping interest rates artificially low for an extended period of time. A decline of lending standards due to federal policy to increase homeownership rates. For example BAC announced in the fall of 08 that CRA loans accounted for only 7% of their book, but 24% of their defaults. The two government sponsored enterprises (Fannie Mae and Freddie Mac) played a central role in this, by buying those mortgages from the originators. Their bonds were backed by the Federal government and the credit default swaps on those traded at only 20 basis points above those on treasuries. Their leadership were some of the largest campaign donors around at the time. It was political. The top management of Fannie and Freddie provided key congressional leaders with large political contributions and often hired away congressional staffers into high paying jobs lobbying their former bosses. Between the 2000
and 2008 election cycles, high-level managers and other employees of Fannie Mae and Freddie Mac contributed more than $14.6 million to the campaign funds of dozens of senators and representatives, most of who were on congressional committees important for the protection of their privileged status. The lobbying activities of Fannie Mae and Freddie Mac were legendary. Between 1998 and 2008, Fannie spent $79.5 million and Freddie spent $94.9 million on congressional lobbying, placing them among the biggest spenders on these activities. The share of
all mortgages held by Fannie Mae and Freddie Mac rose from 25 percent in 1990 to 45 percent in 2001. Their share has fluctuated modestly around 45 percent since 2001. During recent years, Fannie Mae and Freddie Mac have purchased about 90 percent of the mortgages sold in the secondary market. The CRA also lowered lending standards. Historically, conventional loans, 30-year fixed interest rate mortgages with a 20 percent down payment dominated the home mortgage market. But this changed dramatically during the early years of this century. According to data published by the Joint Center for Housing Studies of Harvard University, conventional loans as a share of all mortgages originated fell from 57.1 percent in 2001 to 33.1 percent in the fourth quarter of 2006. The SEC applied regulations known as Basel I, to investment banking. These regulations, which have been adopted by most of the industrial countries, require banks to maintain at least 8 percent capital against assets like loans to commercial businesses. This implies a leverage ratio of approximately 12 to 1. However, The Basil regulations provide more favorable treatment of residential loans. The capital requirement for residential mortgage loans is only 4
percent, which implies a 25 to 1 leverage ratio. Even more important, the capital requirement for low-risk securities is still lower at 1.6 percent. This means that if low-risk mortgages could be bundled together and financed with securities, the capital requirement for these assets would be only 1.6 percent, implying a leverage ratio of more than 60 to 1. Using HUD and the Community Reinvestment Act, the regulators mandated and pressured Fannie Mae, Freddie Mac, and commercial banks to extend loans with little or no down payment, make large loans relative to income, extend loans to households who could not afford the monthly payments, accept poorly
documented loan applications, and make more “interest only” and variable rate mortgages. Essentially, the regulators undermined the traditional practices of the mortgage lending industry and replaced it with a system that encouraged lenders to make imprudent loans and borrowers to make only small down payments and borrow more funds than they could afford. Coupled with the Fed’s interest rate manipulation, the change in lending standards engineered the run up in housing
prices, its reversal, the rapid increase in mortgage defaults and foreclosures, the troubles of lending institutions, and the culmination of all of these factors with the Crisis of 2008.
Greedy lenders and real estate agents, incompetent rating agencies and imprudent borrowers are sometimes blamed for the current crisis. These players did play a role, but it hardly seems fair to blame them for responding to incentives and doing exactly what the government policies encouraged them to do. The housing crisis would not have occurred if government policy had not encouraged buyers to purchase housing with little or no down payment, forced banks to make
mortgage loans they otherwise would never have made, adopted lower capital requirements for housing loans than for other types of loans, and followed a tax policy that encouraged borrowing against housing equity.

[Sibirsky]

It is the warlords who wear fancy uniforms and have fancy titles who run those countries( and were put in to power by socialist and/or the communist)who won't let those problems be solved.

Wat? Why don't you look at Cuba's poverty levels: 4.1%,compared to the US's 12%

Also, warlords? Which supposed "Socialist" warlords? So vague, you're not helping me here.

The US poverty line is more than 2 times higher than the Cuban median household income. If the poverty line in Cuba was the same as in the US the poverty rate would be well above 50%.

[Sibirsky]

great post

the problem is that you can't really discuss with Looneytarians

AustroLibertarians act exactly like State Socialist "the USSR failed because it was not (State) socialist enough"

no matter how much real world data,statistics you throw them.....the fault is always of the government (because Libertarianism is a political belief that government leaves dirty fingerprints on everything it touches) and never of the markets....

don't forget these people are the same who want to revert back to the Gold Standard(LOL)

Statistics and data are not on your side.

[EvilDarkMagicians]

What do you guys think about socialism? Does it work? Does it not? Is it better than capitalism? communism? Any opinion or view about this economical structure.

Another word for socialism is 'Envy'

No it isn't.

[Sibirsky]

Another word for socialism is 'Envy'

No it isn't.

When discussing possessions with friends and neighbors, the Soviets where far more envious of "the haves" than the Americans.

[Georgism]

When discussing possessions with friends and neighbors, the Soviets where far more envious of "the haves" than the Americans.

Christian girls have a high rate of teenage pregnancy.

Therefore another word for christianity is sex.

[Sibirsky]

When discussing possessions with friends and neighbors, the Soviets where far more envious of "the haves" than the Americans.

Christian girls have a high rate of teenage pregnancy.

Therefore another word for christianity is sex.

Higher than atheist girls?

[EvilDarkMagicians]

No it isn't.

When discussing possessions with friends and neighbors, the Soviets where far more envious of "the haves" than the Americans.

That statement may be proof for socialism being a poor economic policy, but no proof for it being another word for envy.

[Georgism]

Higher than atheist girls?

So I have heard, although it's probably wrong.

The example doesn't really matter though, I was trying to highlight what I believe is bad logic; That since the people in one socialist country happened to covet the goods of others more than a capitalist country then socialism is equivalent to envy.

[Sibirsky]

When discussing possessions with friends and neighbors, the Soviets where far more envious of "the haves" than the Americans.

That statement may be proof for socialism being a poor economic policy, but no proof for it being another word for envy.

That's true. It came out as an implication of such, but that was not my intent. I think it has more to due with the psychology of the Soviets never being able to become the haves, while such is not the case in the west.

[Sibirsky]

Higher than atheist girls?

So I have heard, although it's probably wrong.

The example doesn't really matter though, I was trying to highlight what I believe is bad logic; That since the people in one socialist country happened to covet the goods of others more than a capitalist country then socialism is equivalent to envy.

Aighty Georgism.

[Jimanistan]

When discussing possessions with friends and neighbors, the Soviets where far more envious of "the haves" than the Americans.

I didn't realize the Soviet Union was a Socialist state. From what I understand, it was really more of a State Capitalist setup.

[Sibirsky]

When discussing possessions with friends and neighbors, the Soviets where far more envious of "the haves" than the Americans.

I didn't realize the Soviet Union was a Socialist state. From what I understand, it was really more of a State Capitalist setup.

I wouldn't call it state capitalist. I don't know what to call it. But it certainly was not capitalist.

[Jakaragua]

When discussing possessions with friends and neighbors, the Soviets where far more envious of "the haves" than the Americans.

I didn't realize the Soviet Union was a Socialist state. From what I understand, it was really more of a State Capitalist setup.

Whether it's Socialist or State Capitalists or degenerated is all subjective.

[Lembrasia]

I didn't realize the Soviet Union was a Socialist state. From what I understand, it was really more of a State Capitalist setup.

Whether it's Socialist or State Capitalists or degenerated is all subjective.[/quote]

semantic game

[Sibirsky]

I didn't realize the Soviet Union was a Socialist state. From what I understand, it was really more of a State Capitalist setup.

Whether it's Socialist or State Capitalists or degenerated is all subjective.

Great rebuttal of my points.

[Jimanistan]

semantic game

The differences between state capitalism, a system in which the government runs the economy, and socialism, a system in which the workers own and control the means of production, are far more than semantic. A very simple understanding of both concepts would reveal as much, and more.

[Panzerjaeger]

Socialism is nothing more then an Economic Ideology and can be used in a variety of manners. More and more of late I have begun leaning with the views of Otto & Gregor Strasser as well as Ernst Jünger in regards to Socialism. This quote sums it up quite nicely:
"We must take from the right nationalism without capitalism and from the left socialism without internationalism." -Gregor Strasser