Gov't Intervention Won't Last

You're not listening to what I've been saying at all.

Third world countries go to the IMF because they need money to re-structure their own economies and manage their markets. But the IMF has a policy of "democratization" and "free enterprise" that attach stipulations to their loans. So, even though a country has an excellent and functional public health care system, in order to get a loan from the IMF, the country has to sell it off (usually to someone the IMF happens to know is in the market for buying) at a bargain price.

The IMF staple governments. They give them a set limit on how much social spending they are to allocate. So, if a country has a budget of social spending on education for let's say $2 million a year - the IMF will say to them that they can only spend $1 million a year now since they are asking for a loan.

The IMF attempts to curtail any form of re-structuring that these governments are attempting to make. It's a fact of life that devalued currencies like Jamaica, whose $1,000 is equal to about $25 USD cannot restructure their own failing economies due to American dominance in their markets by themselves.

And the Private Sector banks won't lend them investment money. They've been trying to go to anyone but the IMF, WTO, and WB - and it's a fact of third world life that these are the only people who are willing to loan them money for development.

Why? Because the IMF, WTO, and WB can require certain conditions - and the private banks have few legal avenues to exercise corporate control. It's unethical for a private bank like Bank of America to loan a country money to build schools in exchange for high interests rates and free zones of unregulated labour laws and sweat shops. So these banks that invest and are members of the IMF, WTO, and WB have these organizations do it for them.

They are associations of monopolized loaning creditors in full support of exploiting third world countries by systemically forcing them to take the only available fund they have access to through them..

They're corporate sharks, thieves, devils.

 

shills also.

with the, forcing to sell to a friend thing.

 

Well here's what many capitalist think of the IMF:

Abolish The IMF by Richard Salsman, CFA -- Capitalism Magazine



IMF & World Bank alternatives:

 

And what do you think?

 

^
If more developing countries are to improve economiclly it'll require their governments to make reforms that are known to spur economic growth like tax reforms,enforcing property rights and fighting corruption. Other than the IMF's bad economic advice one other big reason many countries don't benefit from loans is because too many gov'ts are squandering the loans. If governments don't like the IMF and World Bank's policies then they should consider other alternatives like the capital markets. I've read that the World Bank has diminished in importance because more countries are using other ways to raise funds.

 

So we get neo-liberalism in the good times, and when that inevitably crashes, we get bastard Keynesianism that props up the failed neo-liberal system.

The best possible system for wealth - and the worst for everyone else.

 

If you know Keynesian ideas please skip - for those not sure here is a very basic and simple explanation.

(First up it should be remembered that many neo-liberal pundits implied that their system wouldn’t crash, the supposed end to boom and bust. So they don’t seem to have had a plan for downturns except for turning to Keynesian ideas.)

Anyway basically Keynesianism is about managing boom and bust so that it causes the least amount of harm (both in the up and down cycle) to most people. But for it to work it the policies have to be in place during boom and bust.

So that in the up period the government pays off its debts incurred in the low period and possibly its stakes in some industries and business it nationalised or bought in the low period.

In the low period the government is then in a good position to borrow money so that it can put money it into the system and nationalise or buy up viable businesses that have got into trouble.

In low periods the interest rate would be set low to simulate growth and in up periods set higher to curtail a run away market.

Same with taxes in low periods it would be set them low for most people and businesses to stimulate growth and in up periods set them higher to pay off state debt and get such things as businesses to pay for those infrastructural requirements they might need to conduct their business (e.g. roads, public transport, education etc).

In low periods infrastructural needs might be paid for directly by government to increase employment (and wages in the system) and to have the structures in place for recovery.

Also taxes in the up period on wealth can be used to curtail excessive risk, if people at the top are so well cushioned against any fall, they are likely to take risk if they know that if they go wrong they will not really suffer but if go right they get even greater wealth.

It also is a means of distributing the gains of an up period more equitably.

At the same time regulation is used to try and keep any crisis contained, such as putting up firewalls between various parts of the financial sector, so that a failure in one cannot bring down another.

 

Motion

The only problem is that I’ve been here before with you and you don’t seem able to defend your ideas.

You push the neo-liberal line then skip when the questions get too hard.

Universal Groceries?
http://www.hipforums.com/newforums/showthread.php?t=320985&f=36

Population Changes & Social Welfare?
http://www.hipforums.com/newforums/showthread.php?t=189526&f=36

Europe's Welfare Future
http://www.hipforums.com/newforums/showthread.php?t=225200&page=2

 

Much of what I said in those past threads can easily be backed up by several sources. The fact is demographic changes in America,Canada and western Europe are affecting the ability of government to deal with poverty,healthcare and pension issues. More countries will have to find more non government approaches to these issues in the comming future.

 

Stagflation, 1970s Style

Didn't the experiance of the 1970's U.S economy(and others) cause many economist to rethink many aspects of Keynesian economics because of the stagflation that occured which Keynesian economics couldn't explain?

 

Motion

As I’ve pointed out before you don’t seem to address the criticisms you just point to sources that push your way of thinking.

But there are plenty of sources that give alternative views that I could cite.

It doesn’t really get us anywhere.

I’m talking to you why are you seemingly incapable of defending what you’re pushing?

 

**

LOL again you don’t actually address what I’ve said but instead go off at a tangent, I’m explaining a basic set of Keynesnesque principles and you want to discuss history.

Well, OK I’m game.

You mean when the US was beginning to feel the problems of being engaged in a long, expensive (and unwinnable) war in South East Asia (which it refused to fund through taxation) and was finding it hard to keep up with it’s commitments to the Bretton wood agreement?

In my view if the US had actually followed the Keynes plan at Bretton Wood rather that imposing their own half arsed version then things might have been very different.

And then there was the 1973 oil crisis.

(oh and by the way one of the best descriptions of what later became termed Stagflation is in Keynes’ The Economic Consequences of the Peace)

Thing is that economics doesn’t happen in a vacuum, Keynesian ideas can be good guidelines but they are not the be all and end all. It can help but if you don’t deal with underlying problems (deficits, dependence on oil) or make bad decisions (having wars) it might not be help enough.

But turning to neo-liberalisms wasn’t the answer it didn’t deal with any of the underlying problems it was a just another bad decisions that has made the situation worse.

**

My point (which you ignored) was that the neo-liberals don’t seem to have any idea how to deal with a crash (besides letting everything fall) and so in this crisis seem to have turned to a corrupted form of Keynesianism, that bails out wealth without the benefits normal Keynesianism brings to society as a whole.

A system of neo-liberalism in good times and bail out Keynesianism in bad times would only ever serve wealth and would eventually bleed a country dry leaving only wealth standing, it is untenable.

 

Interesting how government intervention is being sold as a necessary evil now that the corporate entities responsible for the sub prime meltdown are feeling the pain, yet there was no intervention or oversight to prevent the practices that caused it in the first place. Add banks and the auto industry to agriculture when it comes to the absurdity of subsidies.

Corporations that are "too big to fail" should be permitted to fail, since they're obviously not efficient enough to remain in business. All this intervention compounds the problem by artificially changing the economic climate, giving some corporations unfair advantages over others, which we the consumers (and tax payers) ultimately pay for.

We've just witnessed the final cash grab giveaway by the bush administration, good riddance...

 

Yes, strange how we were told that the mergers that created these giant financial corporations were so good for the economy. That regulation that could have made the US auto industry fit for purpose was wrong, and that government involvement in the markets is essential in down turns and totally unnecessary in the good times.

Weirder still is that people, like Motion, are still pushing the neo-liberal agenda but seem totally unable to defend it.

 

Balbus,

To address your original question. Few capitalist or free market proponents I know of has ever said that market economies were problem free. Most acknowledge that economic downturns like recessions are a part of capitalism. Even Milton Friedman pointed out that market oriented economies aren't perfect but they had the ability to largely correct and adjust themselves if they are allowed to and they are still the most effecient way to run an economy.

Anyway I still agree with the focus of the thread that when the economy gets back on track we won't have no more gov't involvement than what is neccessary. This will probably be especially true since Barack will more than likely be governing as a centrist. We will basically have better oversites in areas of the lending industry to prevent the shady practices that led to this mess.

 

Will anyone either neo-liberals or conseratives address derivatives and hedge funds are they off limits, part of a game only the rich can play and the workers can pay for?

What real benefit do they serve society or the economy? When we deal only with debt and risk we ignore real productivity and finance.

 

I hope you're right, yet I don't see how padding the accounts of exec's in the banking industry or the auto industry is necessary, other than providing traders on wall street with a false sense of security.

Agreed, but then isn't oversight, by definition, government involvement?

I'm all over the idea that government meddling in the economy is a problem in that it encourages fraud, waste, and abuse, and I'd love to see some sort of utopia in which corporations could do whatever they want, assuming they don't exploit their workers and defraud the consumers of their products, but they do, so they need to be monitored.

Maybe you're right, maybe after Obama gets the oversight committees in place, and corporations start playing by the rules, there will be less need for intervention, and things will run more smoothly again...

...until the next major scandal...

 

FactCheck.org: Who Caused the Economic Crisis?

I think whatever is done later on to prevent future problems like this it'll be based on what actually caused this financial mess. According to factcheck this financial crisis was caused by a combination of factors. I guess all of these factors will need to be taken into account by politicians when formulating an approach for preventing future financial collapses.

 

Interesting analysis on factcheck, I had been too eager to blame Gramm and deregulation, but they're right, it's more complicated than that, and deregulation itself isn't the culprit, nor are the poor people who didn't read the fine print on their mortgage contracts.

The main problem as I see it was the very predictable bursting of the housing bubble. I saw that one coming years ago. Predatory lenders overextended themselves, knowing that they would foreclose on many of their loans. What they didn't consider was that the value of real estate would plummet, so that the homes they foreclosed on wouldn't be worth what they had paid for them.

So what about those of us who didn't get sucked in by all the hype? Those of us who have lived within our means? The way I see it, they should give me a chunk of that bailout money for paying my bills on time, curtailing my consumption, and not hedging my bets on risky investments. Instead they're rewarding the assholes who made the bad decisions, and my hard earned retirement funds are now worth about two thirds what they were a year ago.

 

Aren't those the assholes/experts that are going to get us out of this? Or so we're told.