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freeRadical
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Well, it is. That is free markets, free enterprise, and private ownership of the means of production.
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freeRadical
Guest
What does that have to do with free markets, free enterprise, and private ownership of the means of production.Well, there are the sub-prime mortgages. Do you watch the news?
The sub-prime mortgage crisis was the fault of banks, the government, and the Federal Reserve.
No one forced people to take those mortgages.
S
Seraphim73
Guest
It is as simple as that…Yes, that is a nice, legitimate, positive transaction. I wish capitalism would stay as simple as that!
T
ThomasJMullally
Guest
Look, you wanted an example of a voluntary, lose-lose transaction that was done under irrational pressures and both parties regretted later. This is only perhaps a trillion dollars worth… Capitalism did not produce morality, nor did it even produce efficiency, in those cases.What does that have to do with free markets, free enterprise, and private ownership of the means of production.
The sub-prime mortgage crisis was the fault of banks, the government, and the Federal Reserve.
No one forced people to take those mortgages.
The pressure was on the banks too, to be more “profitable” and “productive”. And yes, the pressure was on the people, to jump on the bandwagon of real estate riches before prices rose even more.
T
ThomasJMullally
Guest
Read sub-prime discussion, above… Perhaps a trillion dollars of lose-lose transactions that set the world economy back ten yearsIt is as simple as that…
T
ThomasJMullally
Guest
Thank you Seraphim & freeRad… I am nodding off on the East Coast, but will check on you tomorrow!
S
Seraphim73
Guest
But that had nothing to do with free trade and everything to do with government intervention. The sub-prime mortgages were a good deal for the banks because the government promoted it. It was in the self interest of the banks to make those loans because they knew Fannie Mae and Freddie Mac would purchase those loans. Then couple that with the fact that they know the federal government would bail them out if they got into trouble and you wind up with the crisis we had. General Motors and every single bank that got into trouble should have been allowed to fail. People look at capitalism as evil because it is supposedly a profit system. The reality is it’s a profit and loss system with the loss being more important than the profit because it punishes inefficiency.Read sub-prime discussion, above… Perhaps a trillion dollars of lose-lose transactions that set the world economy back ten years
A
Abu
Guest
The stupidity of not understanding the value of the free market so favored by St John Paul II and Pope Emeritus Benedict XVI is exposed further.
St John Paul II, Centesimus Annus #48:
“The State has the further right to intervene when particular monopolies create delays or obstacles to development. In addition to the tasks of harmonizing and guiding development, in exceptional circumstances the State can also exercise a substitute function, when social sectors or business systems are too weak or are just getting under way, and are not equal to the task at hand. Such supplementary interventions, which are justified by urgent reasons touching the common good, must be as brief as possible, so as to avoid removing permanently from society and business systems the functions which are properly theirs, and so as to avoid enlarging excessively the sphere of State intervention to the detriment of both economic and civil freedom.”
The condemnation of the Welfare State is clear. “Brief and supplementary interventions” do not constitute a Welfare State from which nearly all European countries are now trying to extricate themselves.
In Caritas in Veritate, 2009, Pope Emeritus Benedict XVI has explained that “Economy and finance, as instruments, can be used badly when those at the helm are motivated by purely selfish ends. Instruments that are good in themselves can thereby be transformed into harmful ones. But it is man’s darkened reason that produces these consequences, not the instrument per se.”
No Catholic papal social teaching refers to “laissez-faire”, which is a term coined by a school of economics – the “Physiocrats”.
Frank Morriss:
“True, free economics is open to abuse when it is allowed to be laissez-faire governmental indifference to the general economic welfare. But only free economics by its very own premise allows for the existence of subsidiarity, which demands not governmental indifference, but proper governmental restraint — the greatest amount of noninterference in economics in keeping with the common good. Welfare programs heedless of need, applied generally and replacing the desire and ability of the vast majority to govern their own lives and families, financed by taxation imposed on the basis of economic success, clearly give no weight to subsidiarity.”
tinyurl.com/75pvfmb
There is no “curse of capitalism”, but the curse of fallen human nature and the evils thereof when virtues and values are discarded. Wealth can be distributed only after it is produced. It is only with free enterprise that living standards for the great majority have been increased.
St John Paul II, Centesimus Annus #48:
“The State has the further right to intervene when particular monopolies create delays or obstacles to development. In addition to the tasks of harmonizing and guiding development, in exceptional circumstances the State can also exercise a substitute function, when social sectors or business systems are too weak or are just getting under way, and are not equal to the task at hand. Such supplementary interventions, which are justified by urgent reasons touching the common good, must be as brief as possible, so as to avoid removing permanently from society and business systems the functions which are properly theirs, and so as to avoid enlarging excessively the sphere of State intervention to the detriment of both economic and civil freedom.”
The condemnation of the Welfare State is clear. “Brief and supplementary interventions” do not constitute a Welfare State from which nearly all European countries are now trying to extricate themselves.
In Caritas in Veritate, 2009, Pope Emeritus Benedict XVI has explained that “Economy and finance, as instruments, can be used badly when those at the helm are motivated by purely selfish ends. Instruments that are good in themselves can thereby be transformed into harmful ones. But it is man’s darkened reason that produces these consequences, not the instrument per se.”
No Catholic papal social teaching refers to “laissez-faire”, which is a term coined by a school of economics – the “Physiocrats”.
Frank Morriss:
“True, free economics is open to abuse when it is allowed to be laissez-faire governmental indifference to the general economic welfare. But only free economics by its very own premise allows for the existence of subsidiarity, which demands not governmental indifference, but proper governmental restraint — the greatest amount of noninterference in economics in keeping with the common good. Welfare programs heedless of need, applied generally and replacing the desire and ability of the vast majority to govern their own lives and families, financed by taxation imposed on the basis of economic success, clearly give no weight to subsidiarity.”
tinyurl.com/75pvfmb
There is no “curse of capitalism”, but the curse of fallen human nature and the evils thereof when virtues and values are discarded. Wealth can be distributed only after it is produced. It is only with free enterprise that living standards for the great majority have been increased.
M
magnet
Guest
This kind of a bubble of “irrational exuberance” was exhibited in the late 1920s when there was a rush to invest in the stock market. Word was spread that riches await those who invest in stocks. So stock prices started climbing because of the demand. Then the brokers came along and made it easier to buy stocks by offering to loan money to buy stocks. This is dangerous leverage. Nevertheless down payments on loans went lower and lower, some requiring only 10% on the dollar. As soon as there was a lull in the uptick of stock prices, brokers started calling in their loans, and borrowers started defaulting because they were selling at a loss. Soon panic set in and the huge bubble burst. This is one of the main reasons why the Securities and Exchange Commission was established.Look, you wanted an example of a voluntary, lose-lose transaction that was done under irrational pressures and both parties regretted later. This is only perhaps a trillion dollars worth… Capitalism did not produce morality, nor did it even produce efficiency, in those cases.
The pressure was on the banks too, to be more “profitable” and “productive”. And yes, the pressure was on the people, to jump on the bandwagon of real estate riches before prices rose even more.
M
magnet
Guest
The sub-prime mortgage fiasco was built on subterfuge. When banks OK’d loans to people with bad credit rating, their strategy was to bundle those bad loans with good loans into instruments known as mortgage-backed securities with the hopes that the buyers would not read the fine print on the details of each mortgage-backed security that they bought. It was like a stew made up of prime beef mixed with animal hoofs. The stew was still supposed to be generally good. If the individual loans turned out to be bad, it was the buyer who lost out, not the bank. It’s very similar to diluting bad water with good water so that the resulting mixture is still acceptable as good water. Even though the resulting water is not as good as the original good water, it is still acceptable as potable water.Read sub-prime discussion, above… Perhaps a trillion dollars of lose-lose transactions that set the world economy back ten years
When the holders of these stews started experiencing defaults on payments of the bad loans, the reputation of them dropped like a rock. Suddenly they were not worth much.
T
ThomasJMullally
Guest
I agree with you there. The pivotal point where Bush could have been a leader, was not to save Bear Stearns. Everybody knew for two to three years that they were on the ropes. So it would have been hard, but we would have recovered three years sooner.But that had nothing to do with free trade and everything to do with government intervention. The sub-prime mortgages were a good deal for the banks because the government promoted it. It was in the self interest of the banks to make those loans because they knew Fannie Mae and Freddie Mac would purchase those loans. Then couple that with the fact that they know the federal government would bail them out if they got into trouble and you wind up with the crisis we had. General Motors and every single bank that got into trouble should have been allowed to fail. People look at capitalism as evil because it is supposedly a profit system. The reality is it’s a profit and loss system with the loss being more important than the profit because it punishes inefficiency.
What I am saying is, we have the dominant corporations representing capitalism in the driver’s seat instead of as a humble partner. It is considered so much priority to curry business that the corporations have carte blanche and all other priorities go by the wayside. This is all fine for the people at the “business roundtable” (you probably think I am a socialist but I loved Pat Buchanan). But the average guy has been steadily bilked and indentured. This is all happening under a less regulated economy since the 80’s-- government is subsumed by business interests. Politicians and government contracts are bought and sold like baseball cards. So you can’t tell me that the problem is, that deregulation didn’t go far enough!
T
ThomasJMullally
Guest
Yes, it was identical. We need bold thinking at this point. Dodd-Frank was just the next fiasco. The move should have been, disband the SEC and start over, like they did with Homeland Security. Instead they made things even worse. Still we have no small guys really protected, so small guys have just (rationally) withdrawn from investing.This kind of a bubble of “irrational exuberance” was exhibited in the late 1920s when there was a rush to invest in the stock market. Word was spread that riches await those who invest in stocks. So stock prices started climbing because of the demand. Then the brokers came along and made it easier to buy stocks by offering to loan money to buy stocks. This is dangerous leverage. Nevertheless down payments on loans went lower and lower, some requiring only 10% on the dollar. As soon as there was a lull in the uptick of stock prices, brokers started calling in their loans, and borrowers started defaulting because they were selling at a loss. Soon panic set in and the huge bubble burst. This is one of the main reasons why the Securities and Exchange Commission was established.
T
ThomasJMullally
Guest
So the move should have been, completely disband Fannie Mae and Freddie Mac and charter a plain administrative agency to adjudicate and finance through Treasury the liquidation of those papers at discounts back to the banks. An agency with a finite timeline e.g four years. I am sure it was proposed… but too many big guys would have been given walking papers, and would no longer be getting their bread buttered.The sub-prime mortgage fiasco was built on subterfuge. When banks OK’d loans to people with bad credit rating, their strategy was to bundle those bad loans with good loans into instruments known as mortgage-backed securities with the hopes that the buyers would not read the fine print on the details of each mortgage-backed security that they bought. It was like a stew made up of prime beef mixed with animal hoofs. The stew was still supposed to be generally good. If the individual loans turned out to be bad, it was the buyer who lost out, not the bank. It’s very similar to diluting bad water with good water so that the resulting mixture is still acceptable as good water. Even though the resulting water is not as good as the original good water, it is still acceptable as potable water.
When the holders of these stews started experiencing defaults on payments of the bad loans, the reputation of them dropped like a rock. Suddenly they were not worth much.
T
ThomasJMullally
Guest
Fine, but the welfare state is not the only alternative to capitalism. His Eminence was always looking for some re-working of capitalism to better align with Church teaching. I am looking for the same thing.The stupidity of not understanding the value of the free market so favored by St John Paul II and Pope Emeritus Benedict XVI is exposed further.
St John Paul II, Centesimus Annus #48:
“The State has the further right to intervene when particular monopolies create delays or obstacles to development. In addition to the tasks of harmonizing and guiding development, in exceptional circumstances the State can also exercise a substitute function, when social sectors or business systems are too weak or are just getting under way, and are not equal to the task at hand. Such supplementary interventions, which are justified by urgent reasons touching the common good, must be as brief as possible, so as to avoid removing permanently from society and business systems the functions which are properly theirs, and so as to avoid enlarging excessively the sphere of State intervention to the detriment of both economic and civil freedom.”
The condemnation of the Welfare State is clear. “Brief and supplementary interventions” do not constitute a Welfare State from which nearly all European countries are now trying to extricate themselves.
M
magnet
Guest
How does the church explain entitlement? According to much of what I read, if you are poor, you deserve to be supported. You may have nothing to trade with — no labor, no skill, no expertise — and not be able to operate in a free trade environment upon which capitalism is based. What happens? Is the productive sector of society obligated to support the unproductive sector? Is the unproductive sector obligated in any way for its support?
F
freeRadical
Guest
Do you understand what the word voluntary means? If people are forced to trade or feel like they are forced to trade, then that isn’t voluntary trade is it? I was specifically talking about voluntary trade. When two people voluntarily trade, they are both better off and wealth is created.Look, you wanted an example of a voluntary, lose-lose transaction that was done under irrational pressures and both parties regretted later. This is only perhaps a trillion dollars worth… Capitalism did not produce morality, nor did it even produce efficiency, in those cases.
The pressure was on the banks too, to be more “profitable” and “productive”. And yes, the pressure was on the people, to jump on the bandwagon of real estate riches before prices rose even more.
F
freeRadical
Guest
Sounds to me like the problem lies with government then.What I am saying is, we have the dominant corporations representing capitalism in the driver’s seat instead of as a humble partner. It is considered so much priority to curry business that the corporations have carte blanche and all other priorities go by the wayside. This is all fine for the people at the “business roundtable” (you probably think I am a socialist but I loved Pat Buchanan). But the average guy has been steadily bilked and indentured. This is all happening under a less regulated economy since the 80’s-- government is subsumed by business interests. Politicians and government contracts are bought and sold like baseball cards. So you can’t tell me that the problem is, that deregulation didn’t go far enough!
F
freeRadical
Guest
Sounds to me like the problem is a broke financial system, an out of control Fed, and a corrupt government.Yes, it was identical. We need bold thinking at this point. Dodd-Frank was just the next fiasco. The move should have been, disband the SEC and start over, like they did with Homeland Security. Instead they made things even worse. Still we have no small guys really protected, so small guys have just (rationally) withdrawn from investing.
I don’t see how free markets, free enterprise, and private ownership of the means of production has anything to do with that.
F
freeRadical
Guest
There is nothing wrong with a social safety net and it is not mutually exclusive to Capitalism (I don’t like using that word because it was coined by Karl Mark and is meant to be pejorative).Fine, but the welfare state is not the only alternative to capitalism. His Eminence was always looking for some re-working of capitalism to better align with Church teaching. I am looking for the same thing.
Capitalism doesn’t need to be reworked. What needs to be reworked is the interaction between government and business and how much influence government has on markets, enterprise, the means of production, and businesses, and how much influence business has on government.
Once government becomes involved in business of course businesses are going to try to take over the government because it is in their interest to do so. Money talks and politicians only care about one thing, getting re-elected.
C
clem456
Guest
No
God does not “ordain” any economic or political system.
God does not “ordain” any economic or political system.
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