It’s PIIGS, not GIIPS.
Capitalism had nothing to do with the current government created mess. Capitalism has nothing to do with a managed economy. Capitalism is not Keynesianism. Capitalism is not Monetarism. Capitalism is not Cronyism. Capitalism is not Mercantilism.
Capitalism wasn’t failing because what was failing wasn’t capitalism.
The bailouts didn’t save jobs.
Posted by Ayn R. Key on Jul 29, 2010 at 1:21 PM
Ayn R. Key is right!
“Capitalism wasn’t failing because what was failing wasn’t capitalism.”
The following statement is pure NONSENSE!
“This government intervention saved capitalism from itself. So one might expect some humility and gratitude for the public sector from the titans of finance. You would be wrong. Instead, those same financial elites, from Europe to the United States, now oppose deficit spending to stimulate the global economy—rejecting the thinking of British economist John Maynard Keynes, let alone Marx.”
Wake up! The same people are now in charge of fixing the problem who CAUSED it.
The government intervention saved the elite of the Corporate/Banking & Governmental Elite.
They used taxpayer dollars to keep those too big in the driver’s seat, the bureaucratic crooks available for more of the same. (FDIC, SEC, Fanny&Freddie;, rating agencies, and the Congressional Banking Committee)
Some key players were/are: Alan (There is no bubble—low rates are good) Greenspan, Henry (higher margins) Paulson, Robert (Bye-bye Glass-Stealgall Act) Rubin, and now (helicopter money dropper) Ben Bernanke.
They systematically did away with regulations, raised their own ability to buy on margin, lowered the requirements to get mortgages and raised the amount loaned to well over six-figured amounts. Packaged crap with caviar and pronounced it AAA.
You say, “The crisis demonstrated the need for stronger regulation of the economy, especially financial markets, as well as a larger role for the public sector. “
We’ve just had a large dose of “regulation reform” dumped on us which will further hamper any real capitalist (small business employers) from expanding or possibly from remaining in business.
This is to be added over approximately the next five years on top of the huge cost of health care increases.
It’s not how much is spent — it’s HOW it is spent and WHO gets the resulting benefit.
If a $trillion dollars had been spent on infrastructure like our falling bridges (remember Minneapolis?), a national public transport system (coast to coast fuel savings), restoring border security (preventing exploitation of cheap labor), reforming the health insurance industry — people could afford to pay for their own medical coverage without the bureaucratic drag of government.
All of the above followed a two decade dismantling of our manufacturing capacity (which was real capitalism at its best) while the CEOs cashed in their stock options and bailed out in their Golden Parachutes.
Posted by whattheheck on Jul 30, 2010 at 5:11 AM
The Greek government did in fact mismanage the economy, but not in the sense that free market critics claim. The policies of the Greek government were not Keynesian or “socialist” but free market oriented. As on analyst explains;
“Fiscal policy was pro-cyclical; revenue declined substantially from 2000-2004, despite annual GDP growth averaging 4.5 percent during these years. Taxes, already below the European average level (around 44% of GDP), were slashed. Public spending rose rapidly after 2007, mainly in response to the economic slowdown and then recession…It is against this background that the Greek government, newly arrived in office, decided in favor of reporting correct deficit and debt numbers. In October 2009, the deficit for 2008 was revised upwards from 5% to 12.5% of GDP while the projected deficit for 2010 also went up from 3.7% to 12.5% of GDP and later to 13.6% of GDP. Financial markets did not appreciate this effort at transparency by the newly elected Greek government. Nor did the public warning of the central bank governor of Greece for banks to be careful in buying Greek sovereign debt and using it as collateral in liquidity operations with the European Central Bank go down well. From November on, Greece was hit by several speculative waves, bidding up the interest rate on sovereign debt to exorbitant levels, at times exceeding 10%.”
http://www.cepr.net/documents/publications/greece-imf-2010-07.pdf
The massive budget cuts that the EU and the IMF is demanding of the Greek Government in exchange for the “bailout” is actually harming the growth potential of the Greek economy as all such austerity packages do. The bailout is simply a shift of debt from the private banks to which it is owed to the public because the bailout will guarantee the repayment of the big banks. The authors of the study explain further;
“The 110 billion euros now being lent to Greece by the IMF and European governments will be mainly used to pay back the banks and institutional investors who are now holding Greek debt. Banks, insurance companies and pension funds are the real beneficiaries. The possibility of Greece defaulting on the payment of interest and principal that is due should now be excluded for the next three years.”
The Greek people will pay the price. Much of the Greek debt wasn’t the result of discretionary spending but of automatic stabilizers that respond to the consequences of the recession itself caused in part by US financial excesses. The stagnation and deflation that may result will possibly spread to the rest of the EU. This will affect the US and the rest of the world.
Fiscal crisis is generally the result of the state’s attempt to cope with the social costs of corporate profit maximization. The chronic unemployment, tax cuts for the rich, budget cuts and low real wages and stagnant effective demand is the result of corporate strategies of profit maximization at the expense of society. Massive borrowing delays the crisis generated by lower standards of living and the potential stagnation caused by lower real wages and lower taxes but at the same time it expands the financial system and creates speculative bubbles. Instability is the result. The contradictory nature of late capitalism can no longer be coped with by financial manipulation. The chickens have come home to roost and addressing the inequalities and crises generated by the system itself must be addressed directly by those most adversely affected.
Posted by cabdriverinchicago on Jul 31, 2010 at 11:06 AM
Moberg is a Marxist/leftist/liberal/progressive/whatever-he-currently-calls-himself. Consequently, Moberg’s only priority is the ultimate victory of his totalitarian philosophy, which he hopes to ride to a place of honor in the new nomenclatura. As Marx taught, dishonesty is a tool to destroy honest values and install a dishonest totalitarianism.
Examples of Moberg’s dishonesty abound in this article, mainly about the nature and definition of capitalism. Moberg quotes “Newsweek” and John Monks, general secretary of the European Trade Union Confederation, on the nature of capitalism, which is like quoting a pair of whores on the nature of virtue.
The first observation on American capitalism is that it is the most productive, wealth-generating economic system ever devised. Marxists have long since given up on taking a feudal society such as Russia and turning it into a Marxist Utopia. Marxists now try to capture a commodity-rich country such as Chile a few years ago or Venezuela now and use their wealth to finance a Marxist revolution. Unfortunately, due to the nature of Marxism, Marxist Chile went broke in spite of its vast copper assets and Marxist Venezuela is now going broke in spite of its vast oil assets, We now have two different scenarios in which Marxism is an abject failure; neither feudalism nor commodity wealth can provide the basis for a functioning Marxist utopia.
Moberg’s article further details the abject failure of the Marxist experiment in industrialized Old Europe, and blames it on - capitalism! Moreover, Moberg blames current economic problems in the USA on capitalism, even though the Democrats’ Unaffordable Housing Project, the immediate cause of the recent economic crash, was both fraudulent and anti-capitalist.
If you want a detailed portrait of capitalist successes and statist failures over time in the USA, I refer you to the DOW monthly charts from 1900 to present. A brief study of the chart will present some amazing insights to our economy.
http://stockcharts.com/charts/historical/djia1900.html
From this chart, the economy has shown steady capitalist growth from 1900 to 1920, from 1945 to 1965, from 1983 to 1995, and from 2003 to 2008. In each case the markets have rebounded from a sharp downturn or from a period of stagnation. These periods were marked by minimal government interference in the markets, and maximal growth in the wealth created. Quality of life and quantity of wealth was greatly enhanced from 1900 to 2010, marked by improvements in food, clothing, housing, communication, transportation, and recreation for all citizens, but by far the most growth occurred during the periods of unfettered capitalist activity. .
But a close look at the graph reveals several interruptions to the capitalist progression and wealth creation. Two prominent interruptions were economic bubbles where the DOW shot up abnormally in the late 1920s and again in the late 1990s. If you are not aware of the nature and significance of economic bubbles, you might want to read up on them: Dutch Tulip, South Sea, Mississippi, and more recently Japan 1991 are good examples. Economic bubbles typically result in inflated prices and devastating crashes; Japan has not recovered from their 1991 bubble from that day to this. The Roaring Twenties Bubble resulted in the Great Depression that lasted twelve years, and was only ended by America’s entry into WWII..
Posted by scorp on Aug 2, 2010 at 8:04 PM
Continued.
The Dot.com Bubble lasted four years from 1996 to 1999, during which time the DOW rose from 6000 to 12000. Chairman Greenspan sounded the alarm when the DOW was at 6000 by calling it “irrational exuberance”, but neither Greenspan nor President Clinton, the only two people on earth who mattered, did anything to stop the Dot.com Bubble, which crashed in January 2000. The NASDAQ then lost $2.5 trillion before Clinton left office, and the markets and government revenues were in freefall by the time Clinton was out. Naturally, the Democrats still blame President Bush for the collapse of the Dot.com Bubble that occurred one solid year before President Bush was inaugurated.
The Dot.com Bubble was the third largest bubble in history after the Roaring Twenties Bubble and the Japanese Bubble of 1991. The most interesting thing about the collapse of the Dot.com Bubble as compared to the collapse of the Roaring Twenties Bubble and the Japanese Bubble was how little damage the Dot.com Bubble did. Both the Great Depression and the Japanese Crash featured government meddling, including restricted trade and higher taxes that we now realize destroy economic activity. The Dot.com Bubble produced minimal damage because President Bush stopped government interference in the markets and restored capitalism, and the recession was mild and short-lived.
Bubbles are the result of stupidity, but there are other market interruptions that are quite deliberate. Again referring to the DOW chart, the DOW peaked right at 1000 in 1967 and stayed at that level or lower for the next fifteen years. What happened? Well, LBJ’s Great Society happened. LBJ and the Democrats began taking massive amounts of capital out of the economy and pissing it away, primarily on the War on Poverty. The War on Poverty did absolutely nothing to alleviate poverty, but it had a devastating effect on the economy and on the national debt; after wasting $6.6 trillion on the War on Poverty, the national debt stood at $5.9 trillion. For thirty years, 1965 to 1995, the War on Poverty utterly wasted a total of $6.6 trillion, an average of $220 billion per year, depriving the economy of investment capital and assuring minimal growth. President Reagan restored capitalism by restoring capital to the starving markets, and the Reagan recovery took off like a rocket, only to be interrupted by the Dot.com Bubble twelve years later.
The fourth great interruption to the phenomenal march of capitalist prosperity was the Democrats’ Unaffordable Housing Project that forced the loan of trillions of dollars of taxpayer money to people who were in no position to repay the loans. This was a housing bubble but on a rather modest scale compared to the Japan Bubble 1991 or the Dot.com Bubble 2000. Regardless, the uncertainty triggered a worldwide markets crash that approached $50 trillion at one point, and is not finally resolved. We know that government interference in the market place creates and prolongs economic hard times, and Obama is interfering in the marketplace on a much greater scale than FDR or LBJ ever dreamed of. So expect more bad times until we get back to an honest capitalist system and prosperity is restored.
Every complaint that Moberg has about capitalism is foolish and irrelevant. Marxists have created and/or prolonged economic problems, whether the problem was created by stupidity, as the economic bubbles were, or deliberate, as the War on Poverty or the Unaffordable Housing Project were. The one good thing about Obama is that Americans now understand how deceitful and malevolent Marxists are.
Posted by scorp on Aug 2, 2010 at 8:06 PM
Reader Comments
It’s PIIGS, not GIIPS.
Capitalism had nothing to do with the current government created mess. Capitalism has nothing to do with a managed economy. Capitalism is not Keynesianism. Capitalism is not Monetarism. Capitalism is not Cronyism. Capitalism is not Mercantilism.
Capitalism wasn’t failing because what was failing wasn’t capitalism.
The bailouts didn’t save jobs.
Posted by Ayn R. Key on Jul 29, 2010 at 1:21 PM
Ayn R. Key is right!
“Capitalism wasn’t failing because what was failing wasn’t capitalism.”
The following statement is pure NONSENSE!
“This government intervention saved capitalism from itself. So one might expect some humility and gratitude for the public sector from the titans of finance. You would be wrong. Instead, those same financial elites, from Europe to the United States, now oppose deficit spending to stimulate the global economy—rejecting the thinking of British economist John Maynard Keynes, let alone Marx.”
Wake up! The same people are now in charge of fixing the problem who CAUSED it.
The government intervention saved the elite of the Corporate/Banking & Governmental Elite.
They used taxpayer dollars to keep those too big in the driver’s seat, the bureaucratic crooks available for more of the same. (FDIC, SEC, Fanny&Freddie;, rating agencies, and the Congressional Banking Committee)
Some key players were/are: Alan (There is no bubble—low rates are good) Greenspan, Henry (higher margins) Paulson, Robert (Bye-bye Glass-Stealgall Act) Rubin, and now (helicopter money dropper) Ben Bernanke.
They systematically did away with regulations, raised their own ability to buy on margin, lowered the requirements to get mortgages and raised the amount loaned to well over six-figured amounts. Packaged crap with caviar and pronounced it AAA.
You say, “The crisis demonstrated the need for stronger regulation of the economy, especially financial markets, as well as a larger role for the public sector. “
We’ve just had a large dose of “regulation reform” dumped on us which will further hamper any real capitalist (small business employers) from expanding or possibly from remaining in business.
This is to be added over approximately the next five years on top of the huge cost of health care increases.
It’s not how much is spent — it’s HOW it is spent and WHO gets the resulting benefit.
If a $trillion dollars had been spent on infrastructure like our falling bridges (remember Minneapolis?), a national public transport system (coast to coast fuel savings), restoring border security (preventing exploitation of cheap labor), reforming the health insurance industry — people could afford to pay for their own medical coverage without the bureaucratic drag of government.
All of the above followed a two decade dismantling of our manufacturing capacity (which was real capitalism at its best) while the CEOs cashed in their stock options and bailed out in their Golden Parachutes.
Posted by whattheheck on Jul 30, 2010 at 5:11 AM
The Greek government did in fact mismanage the economy, but not in the sense that free market critics claim. The policies of the Greek government were not Keynesian or “socialist” but free market oriented. As on analyst explains;
“Fiscal policy was pro-cyclical; revenue declined substantially from 2000-2004, despite annual GDP growth averaging 4.5 percent during these years. Taxes, already below the European average level (around 44% of GDP), were slashed. Public spending rose rapidly after 2007, mainly in response to the economic slowdown and then recession…It is against this background that the Greek government, newly arrived in office, decided in favor of reporting correct deficit and debt numbers. In October 2009, the deficit for 2008 was revised upwards from 5% to 12.5% of GDP while the projected deficit for 2010 also went up from 3.7% to 12.5% of GDP and later to 13.6% of GDP. Financial markets did not appreciate this effort at transparency by the newly elected Greek government. Nor did the public warning of the central bank governor of Greece for banks to be careful in buying Greek sovereign debt and using it as collateral in liquidity operations with the European Central Bank go down well. From November on, Greece was hit by several speculative waves, bidding up the interest rate on sovereign debt to exorbitant levels, at times exceeding 10%.”
http://www.cepr.net/documents/publications/greece-imf-2010-07.pdf
The massive budget cuts that the EU and the IMF is demanding of the Greek Government in exchange for the “bailout” is actually harming the growth potential of the Greek economy as all such austerity packages do. The bailout is simply a shift of debt from the private banks to which it is owed to the public because the bailout will guarantee the repayment of the big banks. The authors of the study explain further;
“The 110 billion euros now being lent to Greece by the IMF and European governments will be mainly used to pay back the banks and institutional investors who are now holding Greek debt. Banks, insurance companies and pension funds are the real beneficiaries. The possibility of Greece defaulting on the payment of interest and principal that is due should now be excluded for the next three years.”
The Greek people will pay the price. Much of the Greek debt wasn’t the result of discretionary spending but of automatic stabilizers that respond to the consequences of the recession itself caused in part by US financial excesses. The stagnation and deflation that may result will possibly spread to the rest of the EU. This will affect the US and the rest of the world.
Fiscal crisis is generally the result of the state’s attempt to cope with the social costs of corporate profit maximization. The chronic unemployment, tax cuts for the rich, budget cuts and low real wages and stagnant effective demand is the result of corporate strategies of profit maximization at the expense of society. Massive borrowing delays the crisis generated by lower standards of living and the potential stagnation caused by lower real wages and lower taxes but at the same time it expands the financial system and creates speculative bubbles. Instability is the result. The contradictory nature of late capitalism can no longer be coped with by financial manipulation. The chickens have come home to roost and addressing the inequalities and crises generated by the system itself must be addressed directly by those most adversely affected.
Posted by cabdriverinchicago on Jul 31, 2010 at 11:06 AM
Moberg is a Marxist/leftist/liberal/progressive/whatever-he-currently-calls-himself. Consequently, Moberg’s only priority is the ultimate victory of his totalitarian philosophy, which he hopes to ride to a place of honor in the new nomenclatura. As Marx taught, dishonesty is a tool to destroy honest values and install a dishonest totalitarianism.
Examples of Moberg’s dishonesty abound in this article, mainly about the nature and definition of capitalism. Moberg quotes “Newsweek” and John Monks, general secretary of the European Trade Union Confederation, on the nature of capitalism, which is like quoting a pair of whores on the nature of virtue.
The first observation on American capitalism is that it is the most productive, wealth-generating economic system ever devised. Marxists have long since given up on taking a feudal society such as Russia and turning it into a Marxist Utopia. Marxists now try to capture a commodity-rich country such as Chile a few years ago or Venezuela now and use their wealth to finance a Marxist revolution. Unfortunately, due to the nature of Marxism, Marxist Chile went broke in spite of its vast copper assets and Marxist Venezuela is now going broke in spite of its vast oil assets, We now have two different scenarios in which Marxism is an abject failure; neither feudalism nor commodity wealth can provide the basis for a functioning Marxist utopia.
Moberg’s article further details the abject failure of the Marxist experiment in industrialized Old Europe, and blames it on - capitalism! Moreover, Moberg blames current economic problems in the USA on capitalism, even though the Democrats’ Unaffordable Housing Project, the immediate cause of the recent economic crash, was both fraudulent and anti-capitalist.
If you want a detailed portrait of capitalist successes and statist failures over time in the USA, I refer you to the DOW monthly charts from 1900 to present. A brief study of the chart will present some amazing insights to our economy.
http://stockcharts.com/charts/historical/djia1900.html
From this chart, the economy has shown steady capitalist growth from 1900 to 1920, from 1945 to 1965, from 1983 to 1995, and from 2003 to 2008. In each case the markets have rebounded from a sharp downturn or from a period of stagnation. These periods were marked by minimal government interference in the markets, and maximal growth in the wealth created. Quality of life and quantity of wealth was greatly enhanced from 1900 to 2010, marked by improvements in food, clothing, housing, communication, transportation, and recreation for all citizens, but by far the most growth occurred during the periods of unfettered capitalist activity. .
But a close look at the graph reveals several interruptions to the capitalist progression and wealth creation. Two prominent interruptions were economic bubbles where the DOW shot up abnormally in the late 1920s and again in the late 1990s. If you are not aware of the nature and significance of economic bubbles, you might want to read up on them: Dutch Tulip, South Sea, Mississippi, and more recently Japan 1991 are good examples. Economic bubbles typically result in inflated prices and devastating crashes; Japan has not recovered from their 1991 bubble from that day to this. The Roaring Twenties Bubble resulted in the Great Depression that lasted twelve years, and was only ended by America’s entry into WWII..
Posted by scorp on Aug 2, 2010 at 8:04 PM
Continued.
The Dot.com Bubble lasted four years from 1996 to 1999, during which time the DOW rose from 6000 to 12000. Chairman Greenspan sounded the alarm when the DOW was at 6000 by calling it “irrational exuberance”, but neither Greenspan nor President Clinton, the only two people on earth who mattered, did anything to stop the Dot.com Bubble, which crashed in January 2000. The NASDAQ then lost $2.5 trillion before Clinton left office, and the markets and government revenues were in freefall by the time Clinton was out. Naturally, the Democrats still blame President Bush for the collapse of the Dot.com Bubble that occurred one solid year before President Bush was inaugurated.
The Dot.com Bubble was the third largest bubble in history after the Roaring Twenties Bubble and the Japanese Bubble of 1991. The most interesting thing about the collapse of the Dot.com Bubble as compared to the collapse of the Roaring Twenties Bubble and the Japanese Bubble was how little damage the Dot.com Bubble did. Both the Great Depression and the Japanese Crash featured government meddling, including restricted trade and higher taxes that we now realize destroy economic activity. The Dot.com Bubble produced minimal damage because President Bush stopped government interference in the markets and restored capitalism, and the recession was mild and short-lived.
Bubbles are the result of stupidity, but there are other market interruptions that are quite deliberate. Again referring to the DOW chart, the DOW peaked right at 1000 in 1967 and stayed at that level or lower for the next fifteen years. What happened? Well, LBJ’s Great Society happened. LBJ and the Democrats began taking massive amounts of capital out of the economy and pissing it away, primarily on the War on Poverty. The War on Poverty did absolutely nothing to alleviate poverty, but it had a devastating effect on the economy and on the national debt; after wasting $6.6 trillion on the War on Poverty, the national debt stood at $5.9 trillion. For thirty years, 1965 to 1995, the War on Poverty utterly wasted a total of $6.6 trillion, an average of $220 billion per year, depriving the economy of investment capital and assuring minimal growth. President Reagan restored capitalism by restoring capital to the starving markets, and the Reagan recovery took off like a rocket, only to be interrupted by the Dot.com Bubble twelve years later.
The fourth great interruption to the phenomenal march of capitalist prosperity was the Democrats’ Unaffordable Housing Project that forced the loan of trillions of dollars of taxpayer money to people who were in no position to repay the loans. This was a housing bubble but on a rather modest scale compared to the Japan Bubble 1991 or the Dot.com Bubble 2000. Regardless, the uncertainty triggered a worldwide markets crash that approached $50 trillion at one point, and is not finally resolved. We know that government interference in the market place creates and prolongs economic hard times, and Obama is interfering in the marketplace on a much greater scale than FDR or LBJ ever dreamed of. So expect more bad times until we get back to an honest capitalist system and prosperity is restored.
Every complaint that Moberg has about capitalism is foolish and irrelevant. Marxists have created and/or prolonged economic problems, whether the problem was created by stupidity, as the economic bubbles were, or deliberate, as the War on Poverty or the Unaffordable Housing Project were. The one good thing about Obama is that Americans now understand how deceitful and malevolent Marxists are.
Posted by scorp on Aug 2, 2010 at 8:06 PM