NationStates Jolt Archive

Sorry, I'm going to commit a serious faux-pas here and post a thread then leave for the night. I'll contribute to it in the morning.

Governments the world over have shown no hesitation in bailing out struggling financial institutions. This has been referred to as "privatising profit, socialising loss" with good reason - the public is being expected to cover these guys' arses every time they mess up.

We have two ways to deal with this fairly. Either we privitise loss or we socialise profit. Since privitising loss means the whole economic system collapses, is it now reasonable to suggest that banks should remain nationalised to assist the Taxpayer long past their recovery?

And since we're nationalising banks, why not supermarkets, manufacturing, engineering, pharmaceuticals, estate agency, travel, plumbing, energy and legal representation while we're at it? After all, it seems only fair that socialising profit should extend beyond a small and highly specialised area of trade.

(Obviously some of this is reasonable, some of it not. It's more of a devil's advocate position to start discussion about socialism and its possible future application in a post-free-market world.)

I am very much for privatizing losses instead of socializing profits. Private corporations can't fsck things up as reliably as the state. I doubt that you want to live in a nation like the GDR.

I've posted this elsewhere, and I'll post it here.

http://money.cnn.com/2008/09/26/news/economy/easton_backlash.fortune/index.htm

I don't think we're going to see full-on socialism here in the United States, but I do believe that the article raises some very good points about the oncoming class warfare of sorts in this country. I think we'll see a public backlash against the idea of the completely unregulated free market (even if our market isn't unregulated by any stretch of the imagination) and a move towards socialization of a lot of services, especially if they collapse and require government bailouts.

My first nomination? General Motors.

http://i6.photobucket.com/albums/y241/nastrond667/walter.jpg

GTFO commie.

Yes nationalize my company Greed and Death CO. we need a Bailout. never mind there is no record of us before now we are worth 1 billion in retirement assets that will be lost with out bail out.

O_o

I've had similar thoughts, at least with respect to essential industries that we feel compelled to bail out.

But then, I actually am a pinko commie.

Sorry, I'm going to commit a serious faux-pas here and post a thread then leave for the night. I'll contribute to it in the morning.

Governments the world over have shown no hesitation in bailing out struggling financial institutions. This has been referred to as "privatising profit, socialising loss" with good reason - the public is being expected to cover these guys' arses every time they mess up.

We have two ways to deal with this fairly. Either we privitise loss or we socialise profit. Since privitising loss means the whole economic system collapses, is it now reasonable to suggest that banks should remain nationalised to assist the Taxpayer long past their recovery?

And since we're nationalising banks, why not supermarkets, manufacturing, engineering, pharmaceuticals, estate agency, travel, plumbing, energy and legal representation while we're at it? After all, it seems only fair that socialising profit should extend beyond a small and highly specialised area of trade.

(Obviously some of this is reasonable, some of it not. It's more of a devil's advocate position to start discussion about socialism and its possible future application in a post-free-market world.)

Been their, done that. Communism failed.

The problems with that are that, in a heavily interconnected economy (as all the western economes are), you A) wind up nationalizing Everything, because it's ALL "essential", B) you rapidly discover that some aspects of the "essentials" CAN'T be nationalised, due to being in another country, and C) you wind up giving the government far too much control over the economy - when it has repeatedly shown itself to be incompetent with the amount of control it already has.

I am very much for privatizing losses instead of socializing profits. Private corporations can't fsck things up as reliably as the state. I doubt that you want to live in a nation like the GDR.

The problem here is that the reckless and sometimes corrupt corporations end up holding Dead Men's Switches. They go under, so does the world's economy.

Well I'm an anarchist who is suspicious of the state. The variants of Communism that have "failed" are actually variants of state socialism that have often morphed into Capitalist oligarchies - like Russia and China. Actually, many theorists might regard China as having had considerable "success" in going from a sprawling dysunctional feudal empire under the manchus to a modern Capitalist state under the Communist Party. And yes, Mao was unquestionably a giant of the 20th Century. However, I look forward to China's next revolution where the workers and middle class who are looking enviously at Western freedoms, rise up and challenge the buch of robber barons who are running the Communist Party.

We in the west, whose ancestors fought frevolutions and civil wars for the freedoms that we take for granted, should look no futher than my nom de plume - Collectivity.
Collectives and co-operatives can challenge corporations because they can be non-heirarchical, voluntary, free of government bureaucracy and can adapt to different markets. Collectives have beengoing on a small scale sincew Adam was a boy. They were a notable feature of the Spanish economy during the Spanish Civil War. The Kibbutz system in Israel is another variant. We can participate in co-operative enterprises that will, eventually, overthrow the sort of capitalism that has keds to the current Wall Street crisis - and help the state to shrink back.
This is the age of the dinosaurs still - but climate change is just around the corner.

The problem here is that the reckless and sometimes corrupt corporations end up holding Dead Men's Switches. They go under, so does the world's economy.
The financial industry is the central hub for economic activity, in that it channels funds from one sector into another. It's sort of like a heart. Market principles make sure that these funds go to where they produce the best returns. Usually. As such anything bad happening to it has bad effects on the rest of the economy, since blood doesn't reach the limbs anymore. That makes them different to other sorts of companies - though GM failing would cost a lot of jobs and ripple through supplying industries, it's not a failure at the core, the results would be contained.

This didn't happen by design, and has been recognised to be the case for a long time. The failure in the system in this particular case was a matter of leverage being extended too far on the basis of weak assumptions in valuation models and risk management strategies, brought about by a series of good years, cheap credit and so on.

I don't think that you can seriously argue that Bear Stearns, for example, got into the business it did on the prospect of a government bail-out. The moral hazard issue wasn't really that pronounced, I think, and on the whole the government has made a reasonably good job of making sure the parts that needed to be saved were, and the shareholders and employees suffered in accordance with the risks taken by the firms.

Anyways, we can try and regulate this heart of the economy, but it's difficult. It's the most creative, most fast-paced and flexible industry in the world, employing just about the best people you can get anywhere. Writing regulations for them is not something run-of-the-mill politicians are capable of - and even the professionals from the BIS (http://en.wikipedia.org/wiki/Bank_for_International_Settlements) got it wrong on vital counts. As I pointed out in another thread, there really weren't any legal issues involved in this - the laws that might have stopped this never existed and weren't being suggested before the event happened. Still, regulations roughly in line with trying to protect the taxpayer from the fall-out of interventions are a reasonable thing to call for as long as everyone is aware of just how difficult a task that is.

Nationalising the whole thing, on the other hand, is not a good idea at all. In effect you'd have a government department deciding who gets credit and for what. Cooperative arrangements between private banks and the government to that effect have generally turned out to oversupply cheap credit to political allies, with occasionally disastrous effects (http://en.wikipedia.org/wiki/Asian_financial_crisis). You'd also substantially reduce flexibility and the ability to react to changing economic circumstances quickly. Government bureaucracies are slow, because they're inclusive things. A lot of rules and a lot of opinions are needed for the government to do anything, and because a centralised entity hates to waste money, it will tend to pick champions. A nationalised banking industry wouldn't give loans to lots of different forms of sustainable energy production and consider simply whether they'd be paid back, it would choose solar (for example) and then give extra cheap credit that make the success of the actual technology irrelevant to the profitability of the business.

Christ, if you think this is bad...the entire economy of the Soviet Union in its later years was based on principles of magic and graft that make these guys look like amateurs. I don't think we need to go from bad to worse.

Been their, done that. Communism failed.

Been there, done that. Capitalism failed, too.

But what are you gonna do, give up? No - you just keep getting back on the horse, expecting that THIS time, it won't throw you...

It is entirely possible in THIS day-and-age, to make a fully rational communism that need not fall prey to the same problems as the Soviet Bloc, and we have the technology to make it a damn sight better for a lot of people.

The main reason why there's no (real) communism in the US at the moment has nothing to do with whether it's practical, realistic, would work... any of those kinds of questions... it's all about generations of Americans that have been raised to hate communism without question.

Been there, done that. Capitalism failed, too.

But what are you gonna do, give up? No - you just keep getting back on the horse, expecting that THIS time, it won't throw you...

It is entirely possible in THIS day-and-age, to make a fully rational communism that need not fall prey to the same problems as the Soviet Bloc, and we have the technology to make it a damn sight better for a lot of people.

The main reason why there's no (real) communism in the US at the moment has nothing to do with whether it's practical, realistic, would work... any of those kinds of questions... it's all about generations of Americans that have been raised to hate communism without question.


I like how you assume that because I oppose communism, I must theirfore believe in simply trying the same capitalist system over again.

You're the second guy to try strawmanning me tonight. Or maybe you actually believe that the world is that black and white.

Wise up. Black and white idiocy like that is one of the few things more detrimental to the world than communism.

Collectives and co-operatives can challenge corporations because they can be non-heirarchical, voluntary, free of government bureaucracy and can adapt to different markets.
Where's the difference?

Now, I'm not a big believer in co-ops, because I consider them pipe dreams (http://forums.jolt.co.uk/showthread.php?t=538048) in the long run. But say I was wrong - they're not actually any different from privately-owned companies. They are subject to the same economic laws and constraints, they would have to be subject to the same regulations and they have the same need for capital.

And if we were to imagine a financial co-op, then if it was big enough its failure would have the same consequences as the failure of a large private bank.

Collectives have beengoing on a small scale sincew Adam was a boy. They were a notable feature of the Spanish economy during the Spanish Civil War. The Kibbutz system in Israel is another variant.
We didn't really see the ones in Spain operating for long enough though. The Kibbutzim afterall failed thoroughly after the war situation was over, with the kids fleeing them and the communities only being kept alive by government hand-outs.

There is no doubt that some co-ops have lasted for a long time and been reasonably successful - but those also tend to be the ones that feel and act most like private companies.

We can participate in co-operative enterprises that will, eventually, overthrow the sort of capitalism that has keds to the current Wall Street crisis - and help the state to shrink back.
On a macroeconomic level, co-ops are no different to normal companies. They'll overthrow nothing.

Co-ops were THE libertartian and social growth area until World War 1 when the State in all its ghastly manifestations derailed them. Many active socialists and unionists redirected there energies into state socialism (co-operativism is a little slow and after 1918, with the success of the Bolsheviks, they thought that they had found the sure-fire short cut with the dictatorship of the proletariat. It took them a long time to realise that it was a "dictatorship ON the proletariat"
The Kibbutz experiment may have started as a bundist legacy but I think that the attractiveness of city life, the mistrust between Jews and Arabs and the peculiar economy of Israel that is a capitalist economy on a more-or-less permanent wartime footing, stunted the growth of the kibbutzim. But it may rise again! Good ideas don't die - they recede and return when the time is right.
In Spain, Franco killed off as many collectives as he could because he realised that they ultimately threaten the state. What collectives and co-operatives do, is that they give the workers a voice in industry - workers can own part of their own businesses.
Yes they are small now but there could come a time when people see the economic advantages or participating in organisations where they have some control rather than working for "The Man" who inhabits a board room in Tokyo, Beijing or wall Street.
And one thing is sure....you can't always trust governments - they can be fickle employers at best.

There are some very successful co-ops in the US. Cabot dairies and creamery springs to mind. It has been in existence for like 80 years or something, and has basically kept the vermont dairy industry intact while neighboring states have seen theirs decimated.

Ocean Spray, teh juice and cranberry people are another. It's even international.

I guess it depends how you run them.

I somehow think Lacadaemon and Neu-L that if you guys ran them, they'd turn a profit! They need to do this - but not too much of a profit because that attracts the sharks who can take over. Co-ops that open themselves to the market can get taken over. Herein lies the rub. How does a co-op grow while ensuring that it doesn't grow too big too soon and forget its own base?

We didn't really see the ones in Spain operating for long enough though. The Kibbutzim afterall failed thoroughly after the war situation was over, with the kids fleeing them and the communities only being kept alive by government hand-outs.

.

I think you've stated what he wants.

(Obviously some of this is reasonable, some of it not. It's more of a devil's advocate position to start discussion about socialism and its possible future application in a post-free-market world.)

The point could be: does socialism need total nationalisation, or socialism could be a good idea to reform market? The economic boom of Italy, back in the '50s and '60s (centre-right and centre-left cabinets), was mainly fueled by statal intervention, coming both from the ERP (aka Marshall plan) and from the Italian State, in the form of subsidies to the private industries, affordable public housing, extension of the rights to healthcare and education to the lower classes, and infrastructures (motorways and railroads) built by the State.

Also, one of the more important reforms in CCCP was the institution of the kolkhozian market (I cannot recall exactly when, it was between the '50s and the '60s): the collective farms could sell directly their products in a sort of small-scale free market. This improved both the availability of dairy products and the economy of the kolkhoz.

While right now a "classical" socialism (quasi-total statalisation à la CCCP or quasi-total collectivisation à la Yugo) is almost unconceivable in the Western world, we might look on the socialdemocracy as example of a model both fairer and more effective than "free market fuck yeah!" ultraliberism.

(you know, fair and unfair isn't exactly a black and white proposition, just as about anything in politics; and same goes for the freedom of market)

Co-ops aren't, in the US at least, publicly traded companies. So you can't buy shares in them unless you are allowed to by the co-op itself. This means that it is impossible to buy out a co-op, unless the majority of members want you to let you.

In the case of cabot, the number of shares you get is determined by how many cows your farm has - more or less. You also have to qualify - they have quite high standards about how the farm is run, and you can be kicked out if you don't maintain a certain level of standards. They also have to have space to accommodate you. You can, of course, buy out an existing co-op farm with the board's permission.

The downside is that they lack access to some of the capital markets, so that keeps growth slow. But they can get very big eventually. Ocean spray is massive for a co-op, with sales of 1.4 bln a year. Compare this to tropicana products, part of pepsico, that only has sales of .75 bln.

It's actually not a bad model for farmers. Certainly it makes the farms far more profitable as they get paid twice for their product, and it tends to insulate them from the open commodity markets to an extent.

The downside is that the farmers don't get to participate in sudden booms in commodity prices, as their product is pledged to the co-operative. Gives a lot of stability though.

On a macroeconomic level, co-ops are no different to normal companies. They'll overthrow nothing.

QFT. I have first-hand knowledge of co-ops, and I have to agree.

(Oh my, I have to agree with NL! Ayee!!! The NKVD is chucking me in Siberia this time! :()

I need to correct some of you. Now they appear to threaten nothing but you cannot say with any certainty that one day they won't eclipse the corporate behemoths we have at present, the same way that hairy mammals replaced the dinosaurs in The Ice Age.

I need to correct some of you. Now they appear to threaten nothing but you cannot say with any certainty that one day they won't eclipse the corporate behemoths we have at present, the same way that hairy mammals replaced the dinosaurs in The Ice Age.

that required a mass extinction.

And it is more people pointing out that collectives are really no different then corporations. Even more so once they get large. AkA Ocean spray.

I certainatly think that there is a case for important failing financial institutions to be restructured while under government trusteeship rather than allowing them to collapse or merge into overly large monopolies. I'd rather that HBOS be nationalised on a temporary basis rather than merged into Lloyds TSB, for example, because it would be too dominant a player - the government has already suspended competition law on their behalf.

Of course, this has to be done on the basis that the cost of nationlaisation is less than the cost of a failing economy in the long run.

Being the pinko leftie that I am, there are some services that I would nationalise on a permanant basis (even the chair of Sheffield Uni Conservative Future admits rail privatisation was a mistake) but that is for reasons of planning and operating on a non profit basis (most of these get subsidies anyway), rather than nationalising profit.

We may be seeing the beginning of the end of wild capitalism at last. A guided economy may be the solution after all. (As I've been saying for the last twenty years, actually.)

http://mises.org/misesreview_detail.aspx?control=264

I need to correct some of you. Now they appear to threaten nothing but you cannot say with any certainty that one day they won't eclipse the corporate behemoths we have at present, the same way that hairy mammals replaced the dinosaurs in The Ice Age.

Well, about co-ops, here in Italy the situation is quite different: most of them are grouped in huge organizations (like LegaCOOP, UniCOOP...) which have about the same level of influence of major corporations: these organisations also control co-op banks (like CrediCoop), co-op insurances (like UniPol), co-op supermarket chains (like Coop). The major workers' unions (ranging from centrist CISL to leftist CGIL) also are major players in the co-op organisations.

This has happened here as a byproduct of the presence, for about 50 years, of the major mass-parties (Democrazia Cristiana, Partito Comunista Italiano and Partito Socialista Italiano): the political affiliation of the co-ops led to their grouping. Italy, since the last years of XIX century, had already a large presence of co-ops, both in rural areas (agricultural co-ops) and in industrial areas (societies of mutual help between salary workers, mostly for healthcare and safety accidents). Most co-ops were of leftist inspiration, but in the following years, and expecially after the birth of the Republic, they divided between the more centrist, catholic side and the socialist-communist side.

In the UK Building Societies where most people borrowed their mortgages from were essentially co-operatives - jointly owned by all the the people who saved money with them. Unfortunately, for a quick profit, a lot of these institutions were converted into banks owned by shareholders. The few remaining traditional building societies are in a much better position to weather this financial storm than those that were floated on the stock market.

I am very much for privatizing losses instead of socializing profits. Private corporations can't fsck things up as reliably as the state. I doubt that you want to live in a nation like the GDR.


I dunno, our corporations seem more than equal to the task.

Another of my analogies that don't quite work...

Say a parent has a kid, fat kid, the kid wants sweets so the parent gives the kid some sweets. Well, the kid wants more, whining and screaming and withholding its love until the parent relents. Who's at fault for the kid dying of a heart attack?

Further, the parent is only allowed to be a parent if all its other kids vote for it to be so. Yet fat kid controls the distribution of sweets, which are provided in return for tasks required by fat kid, and sweets are the main factor in keeping the other kids happy. If the kids aren't happy, they'll vote the parent out, so parent has even more incentive to give more sweets to the fat kid. Now who's responsible for the fat kid dying?

So the argument is made that kids are not responsible enough to distribute sweets and the parent allocates them evenly.

Sounds fair, nationalise everything.

Unfortunately, kids learn that by sucking up to parent, dobbing in other kids for false crimes, they gain favouritism, to the point where there's so much lying and false accusations that the parent essentially only trusts one kid with the sweets, who thus becomes fat as he allocates sweets to a few favourites who help him maintain his position.

So nationalism is, alas, way too prone to corruption and, eventually, is pretty much the same as the first scenario except a lot of kids are getting bugger all whereas in the first scenario, anyone willing to do a task could get some sweets.

The real point is that this neither reward system works but, in actual fact, kids don't really care for sweets, they just want to be happy and have simply equated sweets, 'I want, I get', with happiness.

We're wired to experience joy from achieving goals. The trick will be to realign goals so that happiness is gained from everyone sharing.

Previous attempts at communism fail because you can't force people to feel that, we're also wired to resist being told what to do at some level, there's no reward in that either.

It'll just take time but, ultimately, since it's probably only way to eventually survive, we'll likely get there at some point.

As long as we don't kill each other first.

Governments the world over have shown no hesitation in bailing out struggling financial institutions. This has been referred to as "privatising profit, socialising loss" with good reason - the public is being expected to cover these guys' arses every time they mess up.
See, the thing here is that public is covering their OWN asses too.

If banks collapse the PUBLIC is which suffers, not the bankers who might lose several millions but still have bigger fortune than the average consumer might dream of - Losing 70% of 10 or 20 million fortune is quite different from losing 70% of few hundred k and the small business you're working at collapsing.


Albeit, strong national banks are a good thing.

I like how you assume that because I oppose communism, I must theirfore believe in simply trying the same capitalist system over again.

You're the second guy to try strawmanning me tonight. Or maybe you actually believe that the world is that black and white.

Wise up. Black and white idiocy like that is one of the few things more detrimental to the world than communism.

Well I dunno, when the only response you offer is 'Been there, done, that communisom failed' how else are we to judge who tyou are and what you belifes are.

Don't want to be tarred with that brush, then leave the glib responses at the door man.

See, the thing here is that public is covering their OWN asses too.

If banks collapse the PUBLIC is which suffers, not the bankers who might lose several millions but still have bigger fortune than the average consumer might dream of - Losing 70% of 10 or 20 million fortune is quite different from losing 70% of few hundred k and the small business you're working at collapsing.


Albeit, strong national banks are a good thing.

Yeah I was thinking about this last night as I was watching the US congress say no, on the news!

Fuck me are they so scared of anything that has the slightest whiff of socialism about it that they don't realise what they done with their crazy voting?

It's interesting that the Europeans aren't just bailing out failing lending corporations; they are nationalising or partly nationalising them. The Europeans aren't as squeamish about this as the US is. There is this in "God and Private Enterprise we trust" thing burnt deep into the American psyche.

Mind you the corporate plutocrats or the nationalised bureaucrats - will either of them benefit Joe and Josephine Citizen in the long run? At least the nationalised industries ultimately have the voters as their bosses I suppose. However, the voters have to break through the firewall of politicians.

That's because Europe is full of commies :p

Yeah I was thinking about this last night as I was watching the US congress say no, on the news!
Probably the best course of action would be to save the system and fine the bankers that 70% because of their irresponsibility... :tongue:

I like how you assume that because I oppose communism, I must theirfore believe in simply trying the same capitalist system over again.


I didnt say you did.

The 'you' in my comments is the collective 'you'... "what are you gonna do" doesn't necessarily have any relation to what YOU are going to do, see?


You're the second guy to try strawmanning me tonight. Or maybe you actually believe that the world is that black and white.


Not at all - I'm actually saying exactly the opposite, if you look. I'm saying that the PROBLEM is that it's being viewed as black and white.


Wise up. Black and white idiocy like that is one of the few things more detrimental to the world than communism.

So, communism is like, just about the most detrimental thing you can think of, huh? That sounds remarkably like the 'black and white' thinking you were just complaining about.

Maybe CEO's should be like the salesmen they are - get a retainer that is close to the breadline and only get a bonus if they turn a profit.

communisim, capitalism, socialism the system doesnt matter they could all work but they have all failed not becase of inherant flaws an any of them but insted by the people who opperate them and the people who are opperated by them. And besides we have never really experenced any pure form of any of these systems becase they are ussally bent or mixed with some hybrid of both.

France did this years ago. Mitterand nationalized the banks, nationalized Renault and a whole slew of other things. But, eventually, the Rothschilds got their bank back, Renault returned to the private sector and Mitterand's policies fell back slowly. Even now, the lengthening of the workweek is a pet project of Mr. Sarkozy.

This is part of the long-cycle of regulation and deregulation. I'm not surprised by these nationalizations, and they will certainly not go as far as some people want them to, but, that's how it goes.

Right now, I'm just hoping that the airlines stay private, and that the big banks can stand up on their own.

Maybe CEO's should be like the salesmen they are - get a retainer that is close to the breadline and only get a bonus if they turn a profit.

Interestingly, in government process improvement, we've been talking about offering incentives and rewards for superior performance and increased efficiency. Maybe, for once, the private sector could take a cue from us, instead of us from them.

Another of my analogies that don't quite work...

I've no idea wtf you're going on about, but you've made me want to go out and buy a Mars Bar.

Well I dunno, when the only response you offer is 'Been there, done, that communisom failed' how else are we to judge who tyou are and what you belifes are.

Don't want to be tarred with that brush, then leave the glib responses at the door man.

I think that history shows that either communism or capitalism, unrestrained, leads to dictatorial and oppressive governments.

I think that history shows that either communism or capitalism, unrestrained, leads to dictatorial and oppressive governments.

No - history showed that 'people' lead to dictatorial or oppressive governments. The fact is - that's the only characteristic which links ALL the powerhungry assholes and accidental tyrants.

The Europeans aren't as squeamish about this as the US is. There is this in "God and Private Enterprise we trust" thing burnt deep into the American psyche.
I can tell you one thing, namely that the German government really has no interest in holding on to any stakes it acquired. Not least because state-owned banks like the IKB got wiped out by their bets in subprime securities themselves.

Which is something people might want to consider as well. Just because something is state-owned or even state-controlled doesn't preclude it from getting into the same deep shit that a private operator might.

Also interesting:
http://www.economist.com/world/europe/displaystory.cfm?story_id=12295463
Transatlantic model wars

What Wall Street’s woes reveal about European and American views of markets

Good post Neu-L! It was very clearly written and interesting. Did you agree with all of it?

Did you agree with all of it?
Everything it says is true. I obviously think the European social model is an abomination, but that's another story.

Well, I'm happy in Australia.....but I travelled in Europe and the US last year. I loved being in both but I'd prefer the relative security of Europe to that roller coater euphoria of the States. Mind you, the US doesn't have to be like that. Tougher regulation and a government and financial system that supported its home-buyers more could have prevented a lot of this. Low income home buyers need assistance and regulation if they are to realise "the American Dream".

http://www.theage.com.au/world/blood-on-the-streets-20080930-4r62.html?page=-1
http://en.wikipedia.org/wiki/Bradford_%26_Bingley
http://en.wikipedia.org/wiki/Fortis_(finance)

ITs spreading...

It sure is Miskonia! And it might help reverse the actions of governemnts privatising everthing from roads, to public transport to water. This is happening in Australia under so-called Labor governments and I regards it as theft by the state.

With governments nationalising failing banks, hoprefully there will be some accountability with them. (I note your earlier point Neu_L about Germany's experiences with unsuccessful nationalisation) - the caveat has to be theat the state manages them responsibly...... and that it may be better NOT to save some banks if the state has to pick up too big a tab when the banks have been haemorraging cash.

Everything it says is true. I obviously think the European social model is an abomination, but that's another story.

It is true. The only part it misses out on is the part where it actually comes out and explicitly says "...and the Western Europeans are right".

Sorry, I'm going to commit a serious faux-pas here and post a thread then leave for the night. I'll contribute to it in the morning.

Governments the world over have shown no hesitation in bailing out struggling financial institutions. This has been referred to as "privatising profit, socialising loss" with good reason - the public is being expected to cover these guys' arses every time they mess up.

We have two ways to deal with this fairly. Either we privitise loss or we socialise profit. Since privitising loss means the whole economic system collapses, is it now reasonable to suggest that banks should remain nationalised to assist the Taxpayer long past their recovery?

And since we're nationalising banks, why not supermarkets, manufacturing, engineering, pharmaceuticals, estate agency, travel, plumbing, energy and legal representation while we're at it? After all, it seems only fair that socialising profit should extend beyond a small and highly specialised area of trade.

(Obviously some of this is reasonable, some of it not. It's more of a devil's advocate position to start discussion about socialism and its possible future application in a post-free-market world.)

Yeah, there was a little country in Eastern Europe called The Soviet Union that tried that too... If I recall correctly, it collapsed.

Yeah, there was a little country in Eastern Europe called The Soviet Union that tried that too... If I recall correctly, it collapsed.

For the same reason we're having problems now - corruption, lack of real regulation and predatory practise.

I don't think the Soviet Union was ever socialist - or communist (although it called itself both). Analysts on the Left called it state capitalist or a "deformed workers' state".
This doesn't mean that it wasn't better that the Tsarist feudal society that preceded it but it lacked true worker control. The Dictatorship of the proletariat" saw to that. First Leninism, then Stalinism gutted whatever democracy the soviets had thrown up.
One thing that we should have learnt from history is that without freedom, there is no workers' revolution.
And now under Putin, they are developing an oligarchical Capitalism. Hey, doesn't that sound like fascism to you?

It is true. The only part it misses out on is the part where it actually comes out and explicitly says "...and the Western Europeans are right".
Which must be why European banks are doing so much better right now than American ones.

...

Okay, maybe not that. Maybe their economies are doing a lot better than...no, scratch that.

Well, stuff it. I'm sure they're right on some level.

Which must be why European banks are doing so much better right now than American ones.

...

Okay, maybe not that. Maybe their economies are doing a lot better than...no, scratch that.

Well, stuff it. I'm sure they're right on some level.

If something is wrong in Europe it is obviously America's fault.

i'd love to see the banks nationalised and working for the public interest as opposed to profits... though it would probably be quite a disruption to the market if that happened :P

In the UK Building Societies where most people borrowed their mortgages from were essentially co-operatives - jointly owned by all the the people who saved money with them. Unfortunately, for a quick profit, a lot of these institutions were converted into banks owned by shareholders. The few remaining traditional building societies are in a much better position to weather this financial storm than those that were floated on the stock market.
The Halifax is a good example.

The Halifax is a good example.

Yup, as are Northern Rock and Bradford and Bingley; all building societies turned bank.

i'd love to see the banks nationalised and working for the public interest as opposed to profits... though it would probably be quite a disruption to the market if that happened :P
I don't think they all need to be nationalised, but I do think that we ought to be considering whether we ought to be allowing so many building societies to demutialise and having a state owned bank running as a business 'gold standard' operating within certain good business practices as an example for the rest of the market to follow. Obviously it would have to be legally independent, much like the BBC.

Yup, as are Northern Rock and Bradford and Bingley; all building societies turned bank.
Turned part of the Treasury...

While I'm dipping into banking nostalgia, I still have at home my pre-credit card 'Halifax Building Society' credit book.

http://www.economist.com/daily/news/displaystory.cfm?story_id=12331667&fsrc=nwl
How Europe responds

European Schadenfreude over the ills of American capitalism doesn't mean a shift from the free market

i'd love to see the banks nationalised and working for the public interest as opposed to profits... though it would probably be quite a disruption to the market if that happened :P
Not the market, the economy: http://forums.jolt.co.uk/showpost.php?p=14053545&postcount=12

Also...
http://www.dw-world.de/dw/article/0,2144,3659009,00.html
A German bank that handed over 350 million euros this week to bankrupt Lehman Brothers and got nothing in exchange may pursue criminal charges against its own executives, a report said Saturday, Sept. 20.

KfW, a government bank that administers federal shareholdings and passes out soft loans to home-owners, was dubbed "Germany's dumbest bank" by the mass-circulation newspaper Bild when the scandal broke.