Financial institutions that are "too big" to fail
Excuse me, but wasn't there something called Neoliberalism in the 70's? Remember that? Von Hayek, road to serfdom - where he outlined how socialism and state control would lead to poverty and fascism? Thatcher and all that? The gradual erosion of the welfare state and council housing programmes? Now, surely if the financial sector is going to be granted more freedom from state intervention to pursue the ideal of a free market that's all very well and good. But where the fuck do they get off accepting state bailouts from the goverment? It seems that socialism and state intervention are bad for the economy, and indicative of a creeping inneficiant beuocracy/communist menace and a downturn in competition. However when private enterprises look like they are going to fail (as happens in capitalism and a free market economy) suddenly state intervention seems to be the only way forward.
(Fredz A graveyard of hopes, a dump of ambition, Mon 23 Feb 2009, 17:37, 15 replies)

Meh
The suits are just interested in making as much cash as they can. Which is fine (within certain moral limits) until government starts throwing buckets of cash at them.

Let it burn.

Rich
(Richy_T hundreds if not thousands of dollars, Mon 23 Feb 2009, 17:46, closed)

Agreed
if there's a market for what they're making or the service they're providing someone will make money off that product or service.

So why not let it all collapse and rebuild in a more suitable form?
( uberdeity Wondered why Owen Lars knew of the term "hell" on, Tue 24 Feb 2009, 10:29, closed)

state intervention isn't the only way forward.
But it's an option to try and inject cash and re-stimulate the economy, whilst slightly protecting some jobs.

there are possibly better ways. Direct and large-scale investment in infrastructure springs to mind. but that didn't work in the US at the height of the great depression.

It's pointless arguing it though. No-one - not the IMF, not the government, not all the best economists in the word - can have even a half-decent idea what will happen, because this exact situation hasn't occured before. The IMF predicting negative growth figures to one or two dp for various countries is at best pointless and at worst dangerous scaremongering. As if the press wasn't good enough at that in this country.
( the mighty badger Aphrodite, on a bar stool, by your side, Mon 23 Feb 2009, 17:47, closed)

Oh, I agree
State intervention is, let's face it about the only tool most goverments have at the moment. It's just a bit annoying that the institutions that in times of economic growth bleat on and on about state intervention and such are not only reliant on it themselves, but also don't seem to have a lot to say regarding this sudden political turnaround. And yes, it is rather unprecidented. Economists in this case might as well start reading the entrails of sacraficial virgins to predict what's actualy going to happen
(Fredz A graveyard of hopes, a dump of ambition, Mon 23 Feb 2009, 17:53, closed)

The great depression
is actually the closest parallel to the current situation*. Which is insane, because predicting ecomonic growth based on what happened nearly a hundred years ago is about as much use as mudflaps on a tortoise. But that's what they are doing.

*with the caveat that America's refusal to abandon the gold standard at the time was a major contributor to the situation, if not going tits up, then staying tits up
( the mighty badger Aphrodite, on a bar stool, by your side, Mon 23 Feb 2009, 18:39, closed)

I'd disagree
To an extent - in that state funded infrastructure investment in the US DID work when it was properly and efficiently controlled.

Huey P Long is vilified now - possibly with justification as he was undoubtedly a corrupt and nepotistic demagogue - but he was able to use Federal funding to drag Louisiana from a pre - 1930 basket case to parity with the more developed Northern States.

The other Southern States followed his lead to varying degrees, Alabama in particular.

The difference was that the Northern States regarded Federal funding as a means by which to maintain the fairly feudalistic status quo.

To translate this into 2009 terms, if the multifaceted handouts gleefully (recklessly?) issued by HM Government were directed at those who wish to progress, rather than those who wish to buy bandages to contain the wounds inflicted upon them, we may build a solid base upon which to build an economic future.

As it is, all I see is the brave little boy sticking his finger in the hole in the dyke.
( The Disappointed Caravanner of the year, Mon 23 Feb 2009, 18:16, closed)

I'd not completely disagree with you
in that it's impossible to say what did and didn't work back then. Who knows what might have happened if the investment didn't happen?

It certainly didn't work quickly though, and it cost Hoover ultimately, which was a terrible shame.

The last part - we can't build a solid base without a banking system. We might not like it, but those wounds HAVE to be bandaged. How we progress after that is another matter.
( the mighty badger Aphrodite, on a bar stool, by your side, Mon 23 Feb 2009, 18:35, closed)

Might
I make a recommendation? Look up Joseph Stiglitz - he wrote some very interesting books both against and for globalization and free markets as well as the banks that support them. He used to work for Clinton but has some very interesting arguments on both sides. :)
( Jimbuktu See? Right here, Mon 23 Feb 2009, 19:04, closed)

So let's step back
And use our mighty powers of hindsight.

Tony Blair and George Bush were the Warren G. Hardings of our generation - placed in positions of power by those who trusted them to convey an appropriate message and, above all, protect their interests.

Granted the translation does'nt quite work because Coolidge was a relatively honest man and we don't have a contemporary Coolidge but by the time of his presidency the damage was done - despite the show trials of the Teapot Dome the senate was in the hands of the industrialists.

I half suspect that Calvin Coolidge understood that he was fighting a loosing battle and was happy to give way to Hoover - certainly the latter half of Coolidge's presidency was particularly lacklustre and saw the beginnings of what we now call McCarthyism - the assumption that leftist forces were insinuating their way into the US economy.

If you want early 20th century US politics I could go on all night - it's one of my passions - but the parallels are there to see.

I'm not a conspiracy theorist or similar but I have been regarding the Blair years in direct comparison to Harding for some time.
( The Disappointed Caravanner of the year, Mon 23 Feb 2009, 19:08, closed)

What
I don't understand is that groups of companies spread themselves far and wide, such as a firm I used to work for. One part of the company would sell holidays, another car and home insurance, another white and brown goods, another credit cards, gas, electric etc...

If one part fails, the other(s) prop up the failing part until it recovers.

How come the same is not true of a country?

Why not make cars, mine coal, produce steel, insurance, banking, tourism etc...?
(dchurch bah, Mon 23 Feb 2009, 19:17, closed)

Ssh!
The ghosts of reagan and thatcher will find you, and god help those who let facts stand in the way of religion.
(tootired Is searching for a funny sig, nothing good so far, Mon 23 Feb 2009, 19:46, closed)

This
In a corporate organisation - is called cross-subsidation and is, providing the corporate structure entitles it - perfectly acceptable.

In a national economy it's called Nationalisation. Once upon a time it was perfectly acceptable. The nationalised steel industry made steel to support the nationalised railways (steel rails and steel bodied carriages), the nationalised motor industry (steel chassis and steel derived frames and bodies), the nationalised defence industries...need I go on?

Then the wicked witch of Grantham wandered onto the scene and proclaimed all of this self-sufficiency wasteful. And with one flick of her wand (which she called Keith Joseph) this utopia had gone.

Here I must declare that I was brought up in a shipbuilding town (Barrow-in-Furness) and saw first hand that ill-managed nationalisation had the potential to be exceptionally wasteful.

But with a deft and careful touch, eliminating the excesses and championing the most efficient this system may well have brought about an economy capable of weathering the current tempest.

Just a thought.
( The Disappointed Caravanner of the year, Mon 23 Feb 2009, 19:49, closed)

I do recall
wondering out loud at the time why everyone was queueing up to buy shares in British Gas etc when they were privatised - as National industries surely we already owned them?

I was shushed.
( The Light in Chains don't touch the Pope's boner, Tue 24 Feb 2009, 8:11, closed)

None of these replies
really address a point raised by the original post, which is that the people currently being bailed out, and those doing the bailing, had an almost moral objection to government intervention in the economy. Or, rather, it seems they pretended they did.
(apeloverage committed the vile act of onanism on, Tue 24 Feb 2009, 1:59, closed)

to be fair
although the institutions have been saved the owners, the shareholders, have been pretty much wiped out. So they have had their cumupence
(Batemonkey, Tue 24 Feb 2009, 15:34, closed)