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USA panics, the EU simply fails and Japan humbled: welcome to meltdown-o-rama!
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<blockquote data-quote="Charles" data-source="post: 223254"><p><div class='quotetop'>QUOTE (shtove @ Oct 11 2008, 09:04 PM) <a href="http://index.php?act=findpost&pid=352869" target="_blank"><{POST_SNAPBACK}></a></div></p><p><span style="font-size: 10px">Charles, I disagree with you strongly. This isn't a problem of the free market - it's a problem of banks and state regulators colluding to distort the free market.</span></p><p><span style="font-size: 10px"></span></p><p>The banks have an asset division called "level three", which the Basle regulations allow to be booked at whatever valuation the banks deem appropriate. And it's in "level three" that the mortgage backed securities have been filed. They're STILL allowed to pretend that these assets are worth more than the market is willing to pay for them. That's why this crisis will deepen.</p><p></p><p>There was a real fear this week that European banks would fail, with a crash in the credit system and a run on deposit accounts. We wouldn't even have been able to get to work or buy food. </p><p></p><p>The various states have intervened in their own ways, which is fair enough. But nobody in government is calling for these bullshit valuations to be wiped out. Therefore the problem is still waiting to pounce, and its fangs are getting sharper.</p><p></p><p>I heard the Germans last week blaming it all on the US - a few days later they got smacked in the gob because they've allowed their own banks to indulge in the same abuses as the Americans and British. Same for France, although Sarkozy seems to have a grasp of the emergency we're in. I appreciate that Germany and France have been more measured and civilised in their internal regulation of the financial sector, but they still allowed the super banks to go crazy on a global basis.</p><p></p><p>In the long run, the only way through is to set up an open exchange for these "level three" assets and let the free market value them. That means several big banks will go down - RBS, Barclays, Lloyds, BNP Paribas, Deutsche Bank etc. </p><p></p><p>That's the kind of thing the state should now be doing: set up a means to bring assets out of the shadows and in to the light of the free market, and provide a process for bad businesses to go out of business without destroying the way in which we do business.</p><p></p><p>The state can make it an orderly process, but please don't pretend the state can use taxpayers' money to fix this when the state colluded to cause the problem in the first place.</p><p></p><p>I have no opinion on Friedman. Markets are made up of people, and anything that tends to interfere in those markets is surely against the interests of the people.</p><p>[/b]</p></blockquote><p></p><p></p><p>Same thing really...people are not honest and will always search for self-interest. Therefore you HAVE to regulate and punish, or else free market becomes the free wolf amongst the free sheeps. Communism is a nice idea but it failed miserably, and capitalism is the same. It is not sustainable in the long term anyway. Competition is not the only way, and cooperation might be the way to go.</p><p>[/QUOTE]</p>
[QUOTE="Charles, post: 223254"] <div class='quotetop'>QUOTE (shtove @ Oct 11 2008, 09:04 PM) [url='index.php?act=findpost&pid=352869']<{POST_SNAPBACK}>[/url]</div> [SIZE=2]Charles, I disagree with you strongly. This isn't a problem of the free market - it's a problem of banks and state regulators colluding to distort the free market. [/SIZE] The banks have an asset division called "level three", which the Basle regulations allow to be booked at whatever valuation the banks deem appropriate. And it's in "level three" that the mortgage backed securities have been filed. They're STILL allowed to pretend that these assets are worth more than the market is willing to pay for them. That's why this crisis will deepen. There was a real fear this week that European banks would fail, with a crash in the credit system and a run on deposit accounts. We wouldn't even have been able to get to work or buy food. The various states have intervened in their own ways, which is fair enough. But nobody in government is calling for these bullshit valuations to be wiped out. Therefore the problem is still waiting to pounce, and its fangs are getting sharper. I heard the Germans last week blaming it all on the US - a few days later they got smacked in the gob because they've allowed their own banks to indulge in the same abuses as the Americans and British. Same for France, although Sarkozy seems to have a grasp of the emergency we're in. I appreciate that Germany and France have been more measured and civilised in their internal regulation of the financial sector, but they still allowed the super banks to go crazy on a global basis. In the long run, the only way through is to set up an open exchange for these "level three" assets and let the free market value them. That means several big banks will go down - RBS, Barclays, Lloyds, BNP Paribas, Deutsche Bank etc. That's the kind of thing the state should now be doing: set up a means to bring assets out of the shadows and in to the light of the free market, and provide a process for bad businesses to go out of business without destroying the way in which we do business. The state can make it an orderly process, but please don't pretend the state can use taxpayers' money to fix this when the state colluded to cause the problem in the first place. I have no opinion on Friedman. Markets are made up of people, and anything that tends to interfere in those markets is surely against the interests of the people. [/b][/quote] Same thing really...people are not honest and will always search for self-interest. Therefore you HAVE to regulate and punish, or else free market becomes the free wolf amongst the free sheeps. Communism is a nice idea but it failed miserably, and capitalism is the same. It is not sustainable in the long term anyway. Competition is not the only way, and cooperation might be the way to go. [/QUOTE]
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USA panics, the EU simply fails and Japan humbled: welcome to meltdown-o-rama!
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