Bankrupting America

[Spiffor]

Originally posted by VetLegion
Spiffor this crisis doesn't demonstrate that capitalism is not a viable system and that we have to replace it.

Oh, I do think capitalism is viable in the middle run, and the current crisis won't destroy it.

What I'm saying is that capitalism is evil. Capitalist banks are rationally supposed not to lend to the poor ; when they do, as they did with suprime mortgages, it leads to crisis.

We just have to fine-tune the banking regulations a little. Banks have served us well historically.

And banks will continue to serve in any economic system where currency has a meaning. However, the current crisis isn't about "fine-tuning bank regulations a bit". Yeah, some problems we saw this year will be corrected, some new problems will appear (after all, the subprime crisis itself is mostly due to the belief some financial innovations)

But capitalism will continue as per the logic it has shown for the past 20+ years (ever since the capitalists don't fear the red menace anymore): more an more to the owners of the means of production, wages that get increasingly exploitative, and occasional attempts to associate the workers to ownership, which ends up in the proles being shafted.

It's not because a technical idea of viability that I want to switch systems. It's a political posture, which considers our system to be fundamentally flawed when it comes to wealth-distribution, and even to wealth-production.

[Kidlicious]

Even if they weren't "evil," as you say, this would all still happen. Don't worry, you don't have to argue with me, but I'm just stating my POV.

[Spiffor]

Originally posted by Oerdin
Spiffor doesn't like me.

You're the one who brought me back to this den after all

[snoopy369]

Spiffor, I would say that "evil" is perhaps a poor word (particularly because it is polarizing). "Amoral" is probably more accurate and also less divisive. Banks inherently do not care about 'morality' (at least the common definition thereof), generally (though this is not always true, and in most cases is not 100% true). Banks exist to make a profit independently of morality; therefore they do not take into account 'moral' issues (such as lending to the poor). The only inherent difference between you and a capitalist, is that the capitalist doesn't feel that the bank should behave morally, and you feel it should.

[Kidlicious]

Originally posted by snoopy369
The only inherent difference between you and a capitalist, is that the capitalist doesn't feel that the bank should behave morally, and you feel it should.

Really? My God, what is this, 1820? I've never seen so much hatred for bankers.

[Spiffor]

Originally posted by Kidicious
Even if they weren't "evil," as you say, this would all still happen. Don't worry, you don't have to argue with me, but I'm just stating my POV.

I fully agree. Banks are fplaying their part, in a system that is fundamentally evil. Banks per se are not evil, they're a part of the system. And as a part of the system, they do what they're expected to do: maximalized instant profit tomorrow be damned, agressive commercial policies, transferring as much wealth as possible toward the capitalists.

And it's not even a small conspiracy of criminals who expect such from banks, but any ordinary person who has invested some money, and expects the highest possible return from it. While the big capitalists make out like bandits, the middle class is the flesh and bone of the system's political support, as they tend to believe the system actually benefits them...

[Spiffor]

Originally posted by Kidicious
Really? My God, what is this, 1820? I've never seen so much hatred for bankers.

You don't understand me if you think I hate bankers.

I hate the capitalist system, and I treat the bankers' functioning as a mere manifestation of the system. To me, bankers are no more inherently evil than that poster who conned old people into buying ****ty health insurance (it was booger I think - he wrote a thread about how ****ty he felt about his job), no more inherently evil that the owner of a lottery company which makes money on the hopes of the players.

All those people do what they're supposed to do: profit. In a world where financial profit is seen as the penultimate goal to achieve, where "it's money that makes the man".

Yeah, banks are amoral. I don't want them to be moral, excpet for niche markets: if they became moral, the capitalist system would be dysfunctional, because its very foundation is the amorality of profit-making.

This is why I want to switch systems. Because this one sucks in its very fundamentals, and wanting to introduce "morals" in capitalism will have about the same effect as wanting to introduce morals in drug-trafficking...

[Aeson]

Originally posted by Kidicious
So you are saying the same thing that Spiffor is, that they didn't calculate the risks correctly. Why do you say that?

No. I don't know if they calculated the risks correctly or not. I'd be surprised if there weren't at least some who knew exactly what they were doing. (Let's face it, some people got extremely wealthy creating this problem, and the individuals involved will keep most of it since they aren't liable for the problems they created.)

What I do know is they created these methods to get the risk off their books, and acted like the risk was gone even though it was still there. Fraud or stupidity. Probably some of both.

[VetLegion]

Originally posted by Aeson
What I do know is they created these methods to get the risk off their books, and acted like the risk was gone even though it was still there. Fraud or stupidity. Probably some of both.

I don't know how American banks work. I work for a European bank and this would be harder in Europe because of regulations. Banks are in the process of implementing Basel II (Basle II) standard. This is a very complex set of rules and it is costing them hundreds of millions to implement.

The very idea behind it to try and capture all risk banks are exposed to. There are requirements for banks to calculate Credit Risk, Market Risk and Operational Risk, as well as other risks with specific meanings.

They have to both quantify and disclose those risks. I'm not saying a subprime crisis is impossible in Europe but it would be harder for banks to pretend risk isn't there or hide it.

[VetLegion]

Originally posted by chegitz guevara


Yes it does. Capitalism could only keep going with this irresponsible deficit spending, but sooner or later, the bill has to be paid. That either means more borrowing or reducing spending, which reduces demand, which means recession.

Recession is not the end of the world.

[VetLegion]

Originally posted by Spiffor

Oh, I do think capitalism is viable in the middle run, and the current crisis won't destroy it.

What I'm saying is that capitalism is evil. Capitalist banks are rationally supposed not to lend to the poor ; when they do, as they did with suprime mortgages, it leads to crisis.

That's not evil. Would you have banks give someone else's savings to someone who won't pay them back? There are many problems with the banks, but them not lending to certain groups isn't one of them.

It's not because a technical idea of viability that I want to switch systems. It's a political posture, which considers our system to be fundamentally flawed when it comes to wealth-distribution, and even to wealth-production.

It is ultimately better to have a small part of a big pie, than a big part of a small pie. Capitalism makes the pie bigger instead of evenly distributing the small communist pie.

Now, you do have an argument there. People are very sensitive to distribution of wealth, this is hardwired into us from our tribal past.

But the very achievement of the rational age should be to look past our instincts, to learn from past and deduce what is best in the long run.

We have had many banking crisis in the past and we have managed to survive them. But the communist systems of the past? It will take decades for former communist countries to recover. It is easy to see what is better.

[Kidlicious]

Oh good you are still arguing with me. I like arguing with you Spiff. I didn't intend to appear to not understand what you were saying, so you caught me off gaurd with that.

Originally posted by Spiffor
I fully agree. Banks are fplaying their part, in a system that is fundamentally evil. Banks per se are not evil, they're a part of the system. And as a part of the system, they do what they're expected to do: maximalized instant profit tomorrow be damned, agressive commercial policies, transferring as much wealth as possible toward the capitalists.

I don't think bankers think of what they are doing as just transfering wealth to the capitalists, although that is certainly part of it, and it's no more clear than in the financial industries. But bankers provide a service to society, and usually a damn good one. Without bankers most of use wouldn't be able to go to college, buy houses and cars, or start up businesses.

So they are a lot like the rest of us. Don't we all collect money for the capitalists? But they also provide service to all of us, and I'm sure that's how most of them think of themselves.

And it's not even a small conspiracy of criminals who expect such from banks, but any ordinary person who has invested some money, and expects the highest possible return from it. While the big capitalists make out like bandits, the middle class is the flesh and bone of the system's political support, as they tend to believe the system actually benefits them...

The system does benefit them though. Are you saying we would be better off without a banking system?

Yeah, banks are amoral. I don't want them to be moral, excpet for niche markets: if they became moral, the capitalist system would be dysfunctional, because its very foundation is the amorality of profit-making.

The thing that I think is wrong is that some people are very rich, but I don't think that means there is something inherently wrong with the way the banking system works, or certainly not that bankers are any different from anyone else.

But we are getting away from the original topic. I don't think this crisis happened because of the morality of bankers or even the morality of the system. It happened because of capitalism and markets, and I think it's wrong to point fingers.

[Kidlicious]

Originally posted by Aeson
I don't know if they calculated the risks correctly or not.

Very good. Thank you.

What I do know is they created these methods to get the risk off their books, and acted like the risk was gone even though it was still there.

And how do you know that?

[Aeson]

Originally posted by Kidicious
And how do you know that?

Because that's what happened.

[Aeson]

Originally posted by Kidicious
Very good. Thank you.

You act like it's something you were after. It wasn't. I was refuting your entire implication:

"So you are saying the same thing that Spiffor is, that they didn't calculate the risks correctly. Why do you say that?"

I may or may not be saying what Spiffor is. I haven't read everything he's said, so how would I know? I agreed with one specific thing he had said, which was that there was a method banks were using to "cover" their risk by transferring it to other agencies (who themselves couldn't cover the risk).

I was never saying that they didn't calculate the risks correctly. You were incorrect to pretend that I did.