Ah yes but look at who created these bubbles.Wow, i clearly looked away for too long!
Ok, have any of you ever head of "market failures"? These occur because MARKETS FAIL! i think it's a good example of what's happening right now. Poorly regulated markets created this mess (Sub-prime mortgage market in the US, or at least partly)
Govt's HAVE to step in. I'm not saying any one govt is better than another. Rudd is doing exactly what Howard would ahev done and throw money into the market to 'stimulate' it. Otherwise known as expansionary fiscal policy. The market is contracting, mainly through lack of consumer confidence. People are scared about the future, so instead of SPENDING they're SAVING and no money is going into the economy, so businesses are laying off people to keep their stock holders happy. Meanwhile stocks are going down due to businesses doing poorly and generally everyone's loosing money (even poor I have lost a few grand thanks to this *sigh* ).
Oh, my bad Gerald10, i missed the "arn't", thought you were saying it was all bad, the stimulas. Appologies.
Otheriwse, Yep, agree with you there Gerald10, let the market (peoples) decide which industry is efficent and which isn't.
Just make them spend it!
We are talking about Australia whose only real economic problem is our exports diminishing as a result of lower global demand - that lack of demand is being suplemented by government which is preventing mass human misery.Ah yes but look at who created these bubbles.
Fannie and Freddie was the result of government who created the moral hazard, It was the Federal Reserve that lowered Interest rates giving people easy access to money, It was the Federal Reserve that used delaying tactics to keep the recession of 2001 from happening thus insuring that a recession would turn into depression.
So a recession is not "failure" rather it's a correction to get rid of wealth that never existed due to these bubbles created by government.
If people were spending things they didn't need with money they didn't have the market has to punish us from all this easy money.
BTW regulation does not work. They could not stop Bernie Madoff from running his ponzi scheme and the regulators did not prevent this crisis from happening so regulation is not the problem.
Good 'old Neo-classical economics, maybe now they'll stop praising it!We are talking about Australia whose only real economic problem is our exports diminishing as a result of lower global demand - that lack of demand is being suplemented by government which is preventing mass human misery.
If we were to talk about America... Regulation is the solution to the problem - in Australia for example if one takes out a mortgage and the house price falls and the are forced to sell then that person still owes the bank money - in America they could walk away from the house with nothing more than a bad credit rating meaning the losses were all the banks - a possible solution is for government to buy up these debts that are bad and to renegotiate with the homeowners at a lower interest rate but stipulate that (like in Australia) that the debt must be repaid.
Your argument that regulators failed to stop this happening ergo regulation doesnt work is fallacious and frankly idiotic - if regulation existed to a) not allow people to get loans the cant afford and b) not brand those loans as AAA and sell off to other institutions then the problem wouldn't have occurred. Though you are correct to an extent in saying that the government was at fault for allowing the mortgage giants to act the way they did and the federal reserve in creating a an artificial housing bubble.
But just because government makes a mistake its ridiculous not to try and rectify it as best possible.
Yes it is better to encourage sustainable growth rather than booms which lead to inevitable bust - thats exactly what Keynes argued - but to stand back and watch the world burn just to teach the markets a lesson is something completely unjustifiable.
No it's not bizarre, it's just a different branch of economics than what you're used to, it is Austrian economics. Forget what they teach you in high school + most uni economics and give it a try sometime, check out Ludwig von Mises Institute - Homepage resources like daily articles or the free PDF books about the great depression, currency and so on.Btw Sdent the only part of what you said that is remotely correct is that some industries are inefficient and shouldn't be subsidised. Other than that its a collection of very bizarre comments.
Yer, not sure where they my econs teachings from my, University!No it's not bizarre, it's just a different branch of economics than what you're used to, it is Austrian economics. Forget what they teach you in high school economics and give it a try sometime, check out Ludwig von Mises Institute - Homepage resources like daily articles or the free PDF books about the great depression, currency and so on.
I will be sure to look at a great deal of different economic theories but as Hawkeye showed your argument is full of holes.No it's not bizarre, it's just a different branch of economics than what you're used to, it is Austrian economics. Forget what they teach you in high school + most uni economics and give it a try sometime, check out Ludwig von Mises Institute - Homepage resources like daily articles or the free PDF books about the great depression, currency and so on.
It's biggest mistake was to create malinvestment, which is the bubble that it created by having fractional reserve banking, and monopoly fiat currency.But just because government makes a mistake its ridiculous not to try and rectify it as best possible.
Ok, i'm going to come right out and say this. NO economic theory can truely explain why this crisis happened. This is because no economic theory can be proven in the real world. This theory is another attempt (not saying that it's a failed attemt) to explain economic happenings.It's biggest mistake was to create malinvestment, which is the bubble that it created by having fractional reserve banking, and monopoly fiat currency.
The best way to rectify that problem is to allow free banking and private currency.
H@wkeye, I will respond to your post later tonight, don't have the time right now
??It's biggest mistake was to create malinvestment, which is the bubble that it created by having fractional reserve banking, and monopoly fiat currency.
The best way to rectify that problem is to allow free banking and private currency.
H@wkeye, I will respond to your post later tonight, don't have the time right now
I was under the impression that the existence of such sub-prime markets was a result of policy of the Clinton Administration. I can assure you that not many in the financial sector would provide such high risk loans without some form of state protection.Ok, have any of you ever head of "market failures"? These occur because MARKETS FAIL! i think it's a good example of what's happening right now. Poorly regulated markets created this mess (Sub-prime mortgage market in the US, or at least partly)
I am, by no means, an expert on this issue, and am not crystal on the beginnings of it. What i thought happened, as a relaxing of the regulations regarding mortgage's (when, i'm not sure, as said, pre-bush - sadly we can't pin the initial blame on him...), which allowed people with super low, or even NO credit rating, to get a mortgage. As these were super high risk mortgages, banks had to get some reward for footing the risk, so they jumped from like 6% interest to something ridiculas, 20+% i imagion. That's what killed those with them.I was under the impression that the existence of such sub-prime markets was a result of policy of the Clinton Administration. I can assure you that not many in the financial sector would provide such high risk loans without some form of state protection.
Intervention not market decisions resulted in the sub-prime issue.
If I'm wrong I'll gladly accept it, but that's what I thought the deal was.