NationStates Jolt Archive

In another thread, Collectivity posted an article by Naomi Klein (http://forums.jolt.co.uk/showpost.php?p=14033968&postcount=173), ranting about the usual evils she dislikes so much. You'd expect it from her, or Paul Krugman or a few others.

But even normally levelheaded people have been asking questions.

http://blogs.ft.com/maverecon/2008/09/the-end-of-american-capitalism-as-we-knew-it/
http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article4735446.ece
http://www.businessspectator.com.au/bs.nsf/Article/Brawling-over-Wall-Street-JQSSG?OpenDocument

On Jim Lehrer's newshour, shown here in Oz yesterday, one commentator took this thinking to its logical conclusion.
http://www.pbs.org/newshour/bb/politics/july-dec08/campaign_09-22.html
JACKIE CALMES: Well, I think we are truly at a watershed moment, perhaps, in our politics right now that's going to amount to a turn from the time going back to the, you know, when Ronald Reagan came to Washington 30 years ago, nearly, that deregulation was in vogue.

And if you talked about regulating business, you had to defend it -- the only way you could really pass new regulations is if it had some public good, like clean air, clean water.

But now you see John McCain is on the defensive about regulations or deregulation, after a career spent promoting that idea. And it's the Democrats who have been on the defensive for over a quarter century when they talk about regulations are now boasting about it.

The all-American investment banks are dead, finance in the US will take some time to recover and will look very different. I don't actually believe in the story about salaries paid in the industry falling for the long term, because the sums handled and created will recover and the skills and talent required won't be reduced, but that's a side issue.

So what do you think will come out the other end? Is American capitalism dead for the time being, to be returned to the pre-Reagan days of regulating the shit out of everyone? Is the political discourse going to change in tone, favouring the Dems' view of things over that of Republicans? Or will things simply return to the way they were before, once the clean-up has come to an end?

In short: what are the implications of the collapse of Wall Street for the political economy of the United States, or indeed other western countries?

So what do you think will come out the other end? Is American capitalism dead for the time being, to be returned to the pre-Reagan days of regulating the shit out of everyone?

You make it sound like a bad thing :p.

It would never return to pre-Reagan because the U.S.A economy is intertwined with others to a much greater degree. AFAIK international exports back then were either raw resource imports or high tech imports, not the massive amount of light industry imports it performs now.

Congress wants to pass laws limiting compensation. They will pass.

You can forget new investment vehicles too. The past twenty years have been an aberration driven by trade deficits and currency manipulation. As global trade dries up traditional banking will reintermediate.

They are even talking about regulating hedgefunds, which is just plain dumb in my opinion.

in this country people are saying our government will be taking a swing to the left, partly as a result of the world economic problems, and that people are fed up with deregulation and privatisation. but that's just what i hear from people and i can't find anything concrete to back that up.

perhaps much of the world will turn away from market forces for a while, with trust in the market to produce stable and dependable results diminished

So the financial and L&S segments of American capitalism will be un-de-regulated for the forseeable future. Until the economy begins to boom again, that is. Or until the economy tanks.

Could someone remind me of where, exactly, capitalism dies again?

in this country people are saying our government will be taking a swing to the left, partly as a result of the world economic problems, and that people are fed up with deregulation and privatisation. but that's just what i hear from people and i can't find anything concrete to back that up.

perhaps much of the world will turn away from market forces for a while, with trust in the market to produce stable and dependable results diminished

I don't doubt it. There are very few solvent financial institutions left (yah, people can say that I am wrong about this, but if this is not the case, why are they running to Washington asking for what is basically a multi-trillion dollar recapitalization).

Unwinding all this is going to cause all kinds of havoc. Consider this, already we are seeing the most conservative type of investment, money market funds showing signs of extreme stress. Large companies use these funds both to park cash and to roll short term debt. If that situation doesn't resolve soon then payrolls won't be met, and receivables won't be paid. This will cause all sorts of problems keeping the lights on at the local tescos until things shake out.

So naturally, the general public will become extremely skeptical of free markets, and will inevitably look towards more tightly regulated and planned economies.

I think a key point to remember about the 1930s is not that people thought that planned economies were actually more productive, (certainly everyone knew that they weren't nearly as profitable), but they were prepared to trade that for what they thought would lead to greater stability: which was key in everyone's mind after the 1930-1932 period. It's just human nature. Like blaming short sellers.

Edit: Also, there is going to be a lot of anger over the epic fraud part, and lost pensions.

The way the government is behaving now suggests a commitment to neither free-market capitalism nor regulation but instead kleptocratic cronyism, which was a hallmark of the Gilded Age that we seem to be reliving. So it won't really be a change from the last 8 years.

in this country people are saying our government will be taking a swing to the left, partly as a result of the world economic problems, and that people are fed up with deregulation and privatisation. but that's just what i hear from people and i can't find anything concrete to back that up.

perhaps much of the world will turn away from market forces for a while, with trust in the market to produce stable and dependable results diminished
It's odd to see the press suddenly turn from "Cut Red Tape Now" to "Enslave the Bastard who Lowered my House Price"!

I don't think it's going to end up with a turn to the left with any of the political parties, the current anit-City feeling among the electorate is generally limited to the City and won't really lead to a demand for greater public spending on social security, for example. All people are looking for, in my opinion, is a scapegoat as to why they've lost their home, their shares or paying more in mortgage payments. (But that's not to say that the City isn't at fault here).

And on the other hand, I think most people would have, even before the credit crisis, supported putting contracted out NHS work back in house, renationalising the railways and ending postal deregulation, for example.

The way the government is behaving now suggests a commitment to neither free-market capitalism nor regulation but instead kleptocratic cronyism, which was a hallmark of the Gilded Age that we seem to be reliving. So it won't really be a change from the last 8 years.

Ha. True that. But as I always tell people, now that you have this realization, use it to profit.

But you know, this bailout is not going to have the shape that skeletor wants because I know for a fact that the amount of angry voters ringing congresses phones off the hook is just enormous. Yes, americans may be divided by race, color, politics and religion, but there is one thing that can bring them together united: complete disgust at Wall Street pigmen with their hands blatantly in the taxpayers pocket.

Also, the bottom line is that Wall Street has threatened people if they don't comply. In my experience americans, whilst fat and lazy, do not generally respond well to people threatening them. America, fuck yeah!

Now, this is not to say that recapitalization of the banks is not a good idea. But they are doing it wrong. There are going to have to be a few sacrificial lambs to get this thing done. Most likely Goldman Sachs, which explains why they took buffets moneys at such outrageous terms.

article shouldn't really be buried here where too few people will read it.

Now really NL! Is this the behaviour of a Captain of Capitalism?
BTW, I'm now the 139th person to view this sight - but who is counting! Anyone would think you were being competitive.

Also, you may think that Naomi "rants" but she's cute and you're not!
Yours in maturity,
Collectivity

article shouldn't really be buried here where too few people will read it.
Hey, it was an excellent article (http://www.ft.com/cms/s/0/41960e1c-8972-11dd-8371-0000779fd18c.html?nclick_check=1), but it was buried in the middle of a thread. Some articles are good enough to deserve their own thread, just to ensure maximum exposure.

That's my philosophy anyways. And pointing out that Deutsche has leverage along the lines of a factor 50 and a balance sheet way too big for Germany to bail them out (the same being even more true for UBS and Switzerland) is more than important.

Also, you may think that Naomi "rants" but she's cute and you're not!
Guilty as charged.

On the other hand, I'm right and she's not. :p

More regulation? More socialism? A death to our idiotic notion of "free market capitalism", "deregulation", and "privitze everything"?


Yes please.

More regulation? More socialism? A death to our idiotic notion of "free market capitalism", "deregulation", and "privitze everything"?


Yes please.

I'll take it! I'll take twelve!!

More regulation? More socialism? A death to our idiotic notion of "free market capitalism", "deregulation", and "privitze everything"?
That's the question - do you think it will happen? I mean, it would be a big shift for US politics and the way the Mr Average thinks about these things.

More regulation? More socialism? A death to our idiotic notion of "free market capitalism", "deregulation", and "privitze everything"?


No thank you. The government intrudes into our lives enough as it is.

I missed you Nicea Sancta!
Where were you?

I missed you Nicea Sancta!
Where were you?

Forgive my brief absence, I've caught a cold from my wife, and have spent the past couple nights recovering.
Glad to be back. :)

All I had to pick on was Neu Leonstein - and he just lies there and takes it! (Heh! Heh!)

All I had to pick on was Neu Leonstein - and he just lies there and takes it! (Heh! Heh!)

No need for further worry of that then. :)

Even if American capitalism did return to the regulation of the pre-Reagan days, it could hardly be said that the future of capitalism itself is at stake.
Alas, people will continue to cling to the system they have because the system you know is better than the one you don't.

Marxism. The National Guard will side with the workers and storm Camp David.