What are the REAL reasons why Americans have been losing their jobs?

[HBK-79]

Hey everyone. I have a few friends who were recently laid off from a pharmaceutical company due to an acquisition. They join the millions of Americans who are out of work during these tough times. So I felt compelled to initiate this kind of discussion.

 

Unfortunately, I'm not educated a whole lot regarding the US economic system. All the economy-related threads on this forum just leave me with a question mark. I do know that Wall Street had a big meltdown last year with the financial collapse of a bunch of banks. And these banks fell because people couldn't pay their mortgages. As a result of these banks failing, companies can't get the funds to support their businesses. And this was followed by a massive rash of layoffs. And unemployed people can't afford to spend, so retail outlets like Circuit City met their demise.

 

I also understand that companies tend to participate in such activities as merging, downsizing, and "offshoring."

 

However, that's all I know.

 

But everything can be traced to a beginning. A trend in job losses doesn't just happen. One thing leads to another. There are cause-and-effect relationships obviously at work.

 

Can someone piece all of this together? How do banks, government, and business practices figure into the equation? What are the origins of this rolling snowball of job losses in the first place? Where did it all start to go wrong? Is there a timeline?

 

Thanks for your help, guys. I apologize if I seem so ignorant.:\

[noonsun]

My theory/some facts:

 

Every now and again, uncontrolled growth in the stock markets (caused mainly by speculation) reach a point where people realize that a lot of the high prices aren't based on actual substance - for example, maybe Wal*Mart is getting higher and higher with no sign of stopping despite the fact that Wal*Mart has done nothing to "cause this." Then prices go downnnn. (called a "correction")

 

Also, relatedly, real estate markets have been on the bubble that everyone was talking about (that is, they go through a similar situation as the one above) which also crashed recently, related no doubt to the economic "correction."

 

Around this time, Alan Greenspan left as head of the Federal Reserve Board. Alan Greenspan was/is considered one of the best chairmen of the Fed, and if the economy was ever in trouble, he could release any old statment about almost anything, and things would magically get better. It was a very, very rich happy time while he was chairman. However, he ended up using all of his allowed time as chairman, so he had to step down. Historically, the changing of a Federal Reserve Chairman has caused economic slowdowns/ickiness in general, so this also piled on top of the correction/housing bubble.

 

People started getting more and more afraid, because we hadn't really had a correction in a long time, and there were lots of other scary things going on (ex Alan Greenspan being replaced by Ben Bernanke.) The fear and negativity started snowballing upon itself until the stock markets started going down, banks went out of business (again related to the bursting housing bubble), which obviously didn't help. People started officially saying we were in a recession, and now, a full-fledged depression. The fear is making things so bad that it's becoming real; job losses are skyrocketing and banks/retail chains, as you mentioned, are failing.

 

This all relates to job loss in particular -- to explain the "merging" "downsizing," and "offshoring" that you are presumably confused about:

 

Merging is the act of merging two or more companies together, theoretically with economic gain for both parties. For example, when Bear Stearns (almost!) went bankrupt in early 2008, J. P. Morgan bought it out for very, ridiculously low prices -- which is a kind of merging.

 

Downsizing is where companies try to "cut down" the size of themselves -- through any means including cutting employment. This is done to save money.

 

Offshoring is probably the worst part for Americans. Offshoring is where, for example, Hollister will move one of its clothes-making plants, by closing down the one in America and building one in, say, Taiwan, where the people (and sometimes children) have about the same skill level (that is, almost none, since almost none is needed) and work for far, far lower wages. This is a very good advantage to the company because they are now making the same amount or more product at a far cheaper price. This is similar to "outsourcing," though you shouldn't confuse the two, because outsourcing is where you get a third-party company to do the job instead -- however this is also usually done overseas.

 

Anyway, the stock market is complicated and a lot of it is based off raw emotions (mostly fear and confidence.) If you want to know when/if we're getting out of this recession/depression, sorry, I can't tell you; no one can. Anyone who says they can either has no fucking idea what they're talking about or is trying to con you.

 

I really hope that was helpful. That's almost all I know on this subject. If you want to learn more, I would suggest watching CNBC or Bloomberg (I prefer Bloomberg for various reasons, but it's not on all cable/satellite plans) -- while you shouldn't necessarily trust everything some people say on these networks, you'll pick stuff up. That's basically how I got pretty knowledgeable on this subject. Also, Google is your friend.

[Saffire]

No this is fantastic, I love explaining economics.

 

To understand this recession, you've got to understand the boom that preceded it. Why do we have booms and busts in an economy? The answer that's usually taught to students is that people (investors) become mad with greed and borrow a lot of money to buy stocks or build a billion new Starbucks. This isn't true. Greed is always present in an economy (it's why people bother starting businesses or buying stocks in the first place). So to blame greed for the economy's downfall is like blaming gravity for a plane crashing.

 

If you want to really get to the root of all this, you can trace it back to the actions of the Federal Reserve. What does the Fed do? They manipulate interest rates. What's an interest rate?

 

Interest rates are the "cost of money". It's how much you pay to borrow money... to buy a house, buy stocks, hire new people, etc. In a healthy economy, interest rates reflect the "savings pool" - how much money people have saved in their bank. The more money people save, the bigger the "savings pool" is, and as a result the more money is available for banks to lend. That lowers interest rates naturally.

 

Obviously the converse is true - when the savings pool is small (people aren't saving, they're just living paycheck to paycheck), the interest rate naturally goes higher (because there's less money available to borrow). A higher interest rate at your bank gives you (and all people who have bank accounts) an incentive to save more money! Think of money as being a scarce resource and it all makes sense.

 

The Federal Reserve's existence destroys this idea of money as a scarce resource. With the ability to print money, the Fed can literally create credit out of thin air... and that forces interest rates down to levels lower than they SHOULD be.

 

The result is that it's easier to borrow money. In fact, even idiots who don't pay their bills can borrow lots of money. They can use it to start stupid unprofitable businesses (think of the Dot Com boom of the late 1990's) or to build massive mansions that they can't actually afford (like in our most recent boom). Banks can even borrow money at lower rates from the Fed than they could if they were force to borrow it from each other! All this easy money sends the economy the wrong signal - it punishes people who save money, and rewards people who SPEND money.

 

Eventually the bubble bursts, because money isn't real value. It's only a measurement of value... a way to keep score. When the scoreboard is broken, you can't play the game.

[Darlene_Ihnfsa]

edit: i was waiting for your answer Jay.

 

so noonsun we are on a depression?

 

according to our government we are in a recession (and he took months to recognize that which cause the actions to try to to stop that came too late).

 

well is a chain, in economy everything is connected...

 

i think high cost of houses is the main cause, because that's why people had to ask for mortgages to their banks (mortgages they can't afford now, so it cause that the suppoused return of this money won't happen so another person can't ask for money help at their bank).

 

in my view point, i think most enterprises/business are a bit guilty, as i see they hadn't followed some accounting rules as count with the money you really have and not future amounts you could have, so they've played with that, they worked with that and now we see it doesn't exist.

 

another thing they should have done is save some money each year, it would had helped them to can afford that economical problem, as they could keep their workers now.

 

but as i've said is all a chain, is not very useful keep a factory running if people stops buying our product :\

 

sorry for my english, and i've just left an opinion.

[Saffire]

BTW, I can explain in more detail precisely why the bubble pops, and why your friends end up losing their jobs (downsizing) when I return later tonight. But reading the above post can give you the jist of how an economy works.

 

When there is a Federal Reserve, money isn't real. It's imaginary, because it can be printed.

 

When there is a gold standard (or any commodity based money-supply that can't be manipulated by governments), money is real. Interest rates are accurate and the economy is healthy.

[Matter-Eater Lad]

It started in the 1960's, when we spent a lot and had economic troubles in the 70's so Nixon took us off the gold standard. By taking us off the gold standard it allowed us to send dollars overseas instead of Gold or trade goods, thus that lead to less production, more consumption and a trade deficit. Production is where most wealth is created, not service sector jobs, so in the switch from the 70's to the 2000's we went to a consumer based society. So the overall wealth of the middle class has been disappearing since the 70's, but kept together with loans and credit and false data from inflation to make everything look ok and to give the illusion of wealth. In the 70's the women went to work, 1980's and 1990's savings were depleted and in the 2000's the middle class went into massive debt. Wages have not kept up with inflation, thus real wealth has declined since the 70's but consuming has increased.

 

Then you have the Fed(Central banks) that lowered interest rates that caused cheap assessable money to millions. With interest rates so low, many investors world wide wouldn't settle for such little returns, so they have to leverage* out to get better returns. Leveraging amplifies profits but also amplifies losses. Then the speculators got involved with the cheap easy money and inflation driving up prices to unsustainable levels.

 

 

*leveraging is borrowing money

 

In the end the solution is simple but not as much fun.

1)A Sound Currency backed by something tangible

2)No Central banks

3)Interest rates determined by the market

4)Balanced trade(a currency backed by something physical promotes balanced trade, countries are forced to send the tangible asset or a good in order to trade)

[Saffire]

Nick, great post.

 

If you want to understand economics, you should remember this basic fact: prices are signals.

 

Some people think prices are arbitrary. These people view the world in a way that emphasizes the "should". They say, "College should cost less." "Medical care should be free for everyone." "Young people shouldn't make a lot of money." "My retirement account should get bigger every year." "Interest rates should be lower." etc.

 

If you use the government to skew price signals, the economy doesn't work properly - prices of goods/services go up instead of down.

[noonsun]

so noonsun we are on a depression?

 

according to our government we are in a recession (and he took months to recognize that which cause the actions to try to to stop that came too late).

 

 

I don't know about Spain specifically, and I don't personally think we (the U.S.) are in a depression, but many terrified traders do, and that's what really matters becuase they're the "movers and shakers," so to speak.

 

Saffire and Nick both did better jobs than me. I would follow their posts more than mine, because mine sucked in comparison :D But each of the posts here has value, so read them all. Saffire's/Nick's points about the gold standard are especially important.

[Matter-Eater Lad]

Thank you noonsun!

 

I think were in a mild depression right now.

Btw watch this video about the bail out.

 

[ame=http://www.youtube.com/watch?v=Tda0-cDyD0U]YouTube - 20/20 - Bailouts and Bull**** Pt. 1 of 6[/ame]

[noonsun]

It looks interesting, (judging completely from the title) however YouTube has been acting all weird and broken toward me lately. :/ I haven't been able to watch basically anything for the last few days. It's really odd. :confused:

[Lalo5]

This really sucks, I'm your average teenager that really wants to make money but I can't find anywhere to work.

[Ambergris]

I believe there's a freaking over-production over the world. Not only in the U.S. It is just unsustainable. Take for example the automovile industry.

[Matter-Eater Lad]

Overproduction in some places but underproduction in others, balanced trade is one of the main solutions.

[berrywoman]

Thank you noonsun!

 

I think were in a mild depression right now.

Btw watch this video about the bail out.

 

 

I wouldn't call it a "depression" just yet.... recession is definitely the catagory we are in...

 

 

when we get into 'depression' there will be a lot more people unemployed and starving. But, at this rate.... who knows! :(

[Pseudonym]

This really sucks, I'm your average teenager that really wants to make money but I can't find anywhere to work.

same here.

[Matter-Eater Lad]

I wouldn't call it a "depression" just yet.... recession is definitely the catagory we are in...

 

 

when we get into 'depression' there will be a lot more people unemployed and starving. But, at this rate.... who knows! :(

 

Well if you calculate unemployment life it was during the great depression, we'd be at 19%, I'd call that an depression. Depression is a tricky thing because there is no exact definition, I wish they'd come out with one.

[Saffire]

Every second the Federal Reserve exists, we're in a depression.

 

Stefan Molyneaux made a great argument that as long as the Fed exists, property rights don't exist. And it really makes sense when you think about it.

[noonsun]

^What? That doesn't make sense. Just because the Federal Reserve exists, doesn't mean we're in a depression. As Nick mentioned, there isn't even a definition of a depression. You're just making one up now. There are property rights now. Just because the U.S. isn't the best country (economically or otherwise) doesn't mean we're in a depression.

 

Please explain your reasoning a little more...

[Saffire]

Okay,

 

The Federal Reserve has the capacity to print money, and the Federal Government has the capacity to tax (steal) money. As long as there is a monopoly on the creation of credit and thievery, there can be no such thing as real property rights. After all, I could just print up some cash and buy you out. If you refuse my offer, I can invent a tax to make it more difficult for you to own your property (this is why you can't own land in the United States - you're simply renting it from the Federal Government).

 

The economic cycles we experience are caused by these government manipulations. Therefore, I think it's not inaccurate to say we're constantly in a depression. We're just waiting for the downcycle. It's like saying you're always in the ocean, regardless of whether your boat is at the top of a swell or underwater.

 

EDIT: You might think I'm exaggerating, but there's a great essay on this subject.

 

http://www.econlib.org/library/Bastiat/basEss1.html

 

Here the great French economist Bastiat talks about the assumptions many people make about economics. One major assumption is that during the good times (booms) people tend to think, "It couldn't get any better than this!" and "Thank goodness for taxes. They pay for our roads and education." Bastiat argues that prosperity is an illusion, because people aren't aware of what life would be like without government. He argues everyone would be far wealthier, and there would never be recessions.

[Saffire]

Noonsun, here's another thing to think about:

 

If you doubt that we're constantly in a depression, look at what leisure is like for workers today compared with what it was like 50 or 60 years ago.

 

Before inflation, people could save money in their bank and it would always be there to spend on retirement or a vacation. Usually only the man needed to work, while his wife could stay home and take care of the chores or garden. Getting time off from work wasn't very difficult.

 

Nowadays, in order to be considered middle class, both the man and the woman need to have six-figure-paying jobs. Raising children is more expensive. Doctors no longer make house calls, and healthcare is more expensive. College is far more expensive. Home ownership is far more expensive, so more people are forced to rent. Getting free time for a vacation is far more difficult. Retirement is nearly impossible because your 401K is worth only what it was in 1997 today (12 years of stock market gains and your dilligent savings have been eradicated). Even the money you put in a bank account is worth about half as much as it was ten years ago, because of the Federal Reserve.

 

That's the "rat race" everybody dreads. Where "job" stands for "Just Over Broke".

 

Sure, we have flat screen TV's and pretty cars and McMansions. But that sort of progress has only masked what we've lost in the process - freedom!

[noonsun]

After all, I could just print up some cash and buy you out. If you refuse my offer, I can invent a tax to make it more difficult for you to own your property (this is why you can't own land in the United States - you're simply renting it from the Federal Government).

 

Yeah, the Fed could do this. But the key thing is: they don't. It's like saying, "The military could all walk into our homes one day and kill us all." Yeah, sure, they probably could, but they also probably won't. And the reason why the Fed doesn't do this is because it wouldn't really work: they know if they did it would send the entire currency, the entire country, and dare I say it (though to perhaps a lesser extent) the entire world crashing into a big dysfunctional meltdown. Same if our military decided to kill us all.

 

And can you really OWN land in ANY country? Since every square foot of land is basically taken up by a government, you couldn't really own land anywhere. We have rights to what we do on the property we "own" and the government doesn't generally mess with peoples' "land" just for the sake of it, unless there is some sort of reason (well-grounded or not.) Forgive me for my ignorance if I'm missing something, but even for countries to do whatever they want with a peice of land is almost impossible, because thanks to international organizations/communications, other countries will prevent this. It's the same with individual citizens owning their own land.

 

and @ your other post:

 

All of the things you said are true: colleges have gotten more expensive, owning a house has gotten more difficult, and so on. However, the question is whether you want available modern "conveniences" (such as, as you said, having a fancy car or a plasma TV; but there are others, like not dying if you get cholera, or malaria, or similar diseases) or whether you want to live without these "conveniences", but with fewer economic restraints.

 

You look at one extreme, such as the more underdeveloped parts of Africa, where the barter system (probably the purest form of exchange and the purest form of capitalism, right?) is still used in areas, and you're definitely very, very free, because the law enforcement is basically crap. But if you live there, you're probably in poverty, you probably don't have enough to eat, if your uncle Samim gets an ulcer or something, he won't be able to work. You look at the other extreme (let's just say it's Sweden, because people in Sweden have universal health care and are very famous for all their comforts and so forth) and you pay 70% of your income in taxes, BUT you have:

 

-free health care

-ridiculously low crime rates

-and you are almost certainly literate.

 

But the reasons you have these are basically because Sweden is almost a socialist state.

 

We're sort of in the middle. We're definitely a capitalist nation, and that's what capitalism is, unfortunately: the smart (not necessarily intelligent) people get the advantage, everyone else doesn't. In the 1950's, each family might have their own little house, maybe their own little black-and-white TV and maybe their own little radio, their own little couch and little kitchen, with their own diligent little wife keeping it all running. Now, we have access to so many more things: the Internet, bigger houses, everything, and the reason why the cost of being middle-class has risen is because standards of living have risen. The only reason why it's still expensive to be average is because not everything has completely "caught up" yet... primary/secondary education hasn't expanded much, making college more necessary (and expensive) health care is still in the hands of corporate companies, and so on. And in honesty, the Fed has very little to do with this. :/

 

If someone from the Great Depression looked at the state of affairs now, they would probably jump to be in THIS "depression;" it's one with higher qualities for the average person, almost everyone can afford shoes and shoes for their children. My point is, what are you complaining about? You compare the so-called "rat race" here and the "rat race" in China or India or Pakistan or Botswana or anywhere of that nature, and you realize that not even most of our homeless bums-on-the-street are starving; we don't have people living in shacks on the landfills, we don't have mass genocide. America's fallen in standard a little, maybe, but it has in everything, and we're still one of the best countries to live in. And we're still almost completely a capitalist country, which has its draws.

 

The Fed does the best it can to maintain economic order. Alan Greenspan did a good job. We weren't really better off with the gold standard: we had it in the 1930's and that obviously did not help anything.

 

I'm really sorry, this entire post is way too long and also all over the place. I'm having trouble coalescing it into one main thought. :/

[Saffire]

I'm really sorry, this entire post is way too long and also all over the place. I'm having trouble coalescing it into one main thought. :/

 

No, that's okay, and I've seen all of these arguments before.

 

Basically what you're saying is that it's okay to steal, if the stolen money subsidizes certain businesses and middle-men.

 

I'll edit this post to refute each argument in full soon.

 

EDIT:

 

Because the Fed doesn't inflate the currency all at once, doesn't mean it isn't stealing from you. Over the period of the last 22 years alone (my age), the value of a dollar was halved. As Nick says in the post below me, over the period of your lifetime (assuming the same rate of inflation by the Fed, which is unlikely) the value of your money will be reduced to nearly zero relative what it was when you were born. A lifetime of earnings... evaporated.

 

And yes, the military could walk into your home and kill you. However this event is unlikely given the fact that government is parasitic. It needs the host (you) in order to survive and thrive. Because remember that a government doesn't generate value like a typical business does - it only steals.

 

If you think you own property, try not paying your property taxes. And you're right, you can't own land outright in most countries (I haven't researched to see if there are states that don't have property taxes... there might be). That doesn't make it okay to make citizens pay protection money on their land. This is the "America: love it or leave it" argument.

 

The idea that there is a spectrum from capitalism to socialism is false. There are only free markets and centrally planned economies. The free markets exist only illegally - when you get paid "under the table" for your services or you make a trade. In these cases, taxation doesn't affect the price of the good/service, so you aren't paying any more than the true value. This "underground economy" is far bigger than most people realize.

 

All of the things you said are true: colleges have gotten more expensive, owning a house has gotten more difficult, and so on. However, the question is whether you want available modern "conveniences" (such as, as you said, having a fancy car or a plasma TV; but there are others, like not dying if you get cholera, or malaria, or similar diseases) or whether you want to live without these "conveniences", but with fewer economic restraints.

 

I'm not sure where you get this idea about a tradeoff. So... I have to expect to pay more for some goods/services if I want to have other, cheaper goods/services? Just because the cost of one thing falls, doesn't mean the cost of another thing has to go up. In a capitalist economy (without government interference) the cost of all goods/services falls over time. This is because of the profit motive and economies of scale.

 

When the government subsidizes some things (like it does with college, housing, healthcare, etc) the cost of these things goes up.

 

Think about it this way: Let's say the government decided everyone should own a flat-screen TV. It offers people a $1000 tax credit if they buy a TV. What will happen? In a socialist utopia, everybody's taxes would be $1000 lower, and everyone would have a nice TV in their den. ("A chicken in every pot!" like FDR once said) In reality, the outcome is much different. Because the TV manufacturers know they don't have to compete for the money, they jack up their prices by -- you guessed it -- $1000. The tax credit is a wash, and the TV manufacturers are effectively using the government as their gun to collect more profits!

 

This is what happens in every field the government attempts to subsidize. Costs go up, and services become more difficult for the average Joe to obtain. The debate about healthcare has a particularly silly emotional aspect to it ("Grandma will die unless I tax you!") but you have to keep in mind that Grandma will also die if she can't get a steak dinner at Longhorn tonight. So perhaps the government should subsidize that as well? Foodcare for all! And miraculously steak dinners become more expensive. It's excruciatingly predictable.

 

Sweden - a myth. If Sweden were admitted to the US as a new state, it would rank the poorest (comparing the median household incomes). The Sweden theory seems to be that higher taxes = greater prosperity. How that could possibly be the case is anyone's guess.

 

Now, we have access to so many more things: the Internet, bigger houses, everything, and the reason why the cost of being middle-class has risen is because standards of living have risen. The only reason why it's still expensive to be average is because not everything has completely "caught up" yet... primary/secondary education hasn't expanded much, making college more necessary (and expensive) health care is still in the hands of corporate companies, and so on. And in honesty, the Fed has very little to do with this. :/

 

This is halfway true. The "keeping up with the Jones's" mentality has always existed as long as there has been a middle class. People in the middle class aspire to be richer than their parents. When you compare the standard of living of King Louis the Umpteen to a modern middle class working dad, the dad wins because of modern conveniences and technology. I would love to be a poor person living in the year 3000!

 

But this goes back to Bastiat's essay on what is seen versus what is unseen. We can see prosperity in the form of new inventions and technologies... but we can't see the businesses and inventions that don't exist today because of government interference in the market. Taxes are like friction that decrease economic efficiency. I'd guess we're a solid 40 or 50 years behind where we would be if we had a truly free market. We're basically living in 1962, sans government. You can't see the cost of the Iraq war or the war on terror, you can't see the cost of the bailout or inflation, etc. It's invisible.

 

The Fed does the best it can to maintain economic order. Alan Greenspan did a good job. We weren't really better off with the gold standard: we had it in the 1930's and that obviously did not help anything.

 

You know about a man named Bernie Madoff? He ran a ponzi scheme, where people would invest money in his "hedge fund" and he would spend it. If someone asked for his money back, he'd give it to them (plus the "returns", which was actually just a bit of extra cash he fudged from one of his other investors). Eventually it collapsed and he was discovered.

 

What Bernie Madoff was doing (and got put in jail for) is what Bank of America does. In fact, all major banks in the US do this - they lend money they don't have. It's called "fractional reserve banking".

 

http://www.scribd.com/doc/7507475/Americas-Great-Depression-by-Murray-Rothbard

 

Here's the definitive book on what caused the Great Depression.

 

We weren't on a gold standard during the Great Depression (it was in name only). The Federal Reserve needed money to spend on FDR's public works projects, and it couldn't get that money through taxation (that would have made the economy even worse) so it printed it. In fact, in 1933 the government banned owning gold, and it confiscated Americans' gold.

[Matter-Eater Lad]

"Let me issue and control a nation's money and I care not who writes the laws." Mayer Rothschild

 

The Fed is one of the worst things for the economy, causing most the major economic problems. The dollar has declined 95% since 1913 when it was created.

 

The dollar used to go up and down in value, through periods of deflation and inflation, in the 1800's it was likely the dollar was worth more the day you died then the day you were born...but the Fed put an end to that, the dollar has not gone up at all since its creation but like I mentioned down 95%

 

 

The Fed does the best it can to maintain economic order. Alan Greenspan did a good job. We weren't really better off with the gold standard: we had it in the 1930's and that obviously did not help anything.

 

Under the fed the wealth of the nations has vanished, along with the value of the dollar. Central banking leads to inflation, dead currencies and economic collapses.

 

We had the gold standard in the 1930's and the dollar was worth a lot more, but in the depression the fundamentals of the economy were sound, thanks in part to a gold standard. Periods of bad economic times always come, but are more often and worse without a gold standard.

 

Many nations throughout history have tried fiat money, always ending in hyperinflation and economic problems, it has never worked why will it work if America tries it?

 

Side note* the great depression was caused by the Fed, the false boom then bust. So the gold standard weaken the blow the Fed had on the economy, and look how bad things still got! Think how bad they will get without the gold standard. Economies without central banking and fiat money always have and will do better, history has proven this.

 

 

We're sort of in the middle. We're definitely a capitalist nation, and that's what capitalism is, unfortunately: the smart (not necessarily intelligent) people get the advantage, everyone else doesn't.

 

NO! Please don't believe the propaganda, we are NOT a capitalist country, China has embraced capitalism more then us! We have Corporate Socialism, that has given the rise to the uber rich, wall street.

 

Free Market Capitalism would not have allowed this mess to happen, nor let the CEO's get as wealthy as they are. The marriage of government and business has created the over rich CEO's who corporations aren't doing that well.

 

Basically government getting involved and ENCOURAGING bad behavior by banks and citizens and CEO's has lead to this. Long Term Capital Management was a investment group in the 90's that was leveraged out to like 70:1 I think, so they borrowed way more then they had or ever would have. When they failed government stepped in and saved them, encouraging bad behavior.

 

Because if you have no risks you will act irresponsibly like Citi group, Bear Stearns and all these groups have. Government took away the risk, thus we are in this mess. In Capitalism the risk of failure keeps greed in check, keeps CEO's from getting overpaid and investment banks from being reckless.

 

In a true capitalistic society, risk keeps things in check, in our corporate socialistic society government takes away the risk, thus people and banks cause these problems. If anyone was held accountable years ago, they would been a warning for those who created this mess and it would not have happened.

 

Max Keiser goes on a rant explaining this better, go to 4.37 and listen to it.

 

[ame=http://www.youtube.com/watch?v=wvrIya0E3dA]YouTube - Max Keiser The Oracle 06 March 2009 pt 2/3[/ame]

 

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[noonsun]

okay...

 

I don't really have time to write a full response to that because I have to go soon... but I would like to respond to what Nick said:

 

Government took away the risk, thus we are in this mess.

 

^^ That is really true. The bailouts and government support companies are getting is only encouraging them to not get off their lazy asses and try to fix it themselves. I agree completely (with that statement, at least :P)

gotta go. Be back later with more talking. :)

[Saffire]

[ame=http://www.youtube.com/watch?v=gTDFg9iQUDk]YouTube - True News 25: Lessons from the Great Depression...[/ame]

 

Here's a great video on the reason the great depression lasted longer than it should have.