I would like to disabuse some of you of the idea that the decimation of the economy is the fault of free market Capitalism.

What you have been witnessing is not the result of free market capitalism but rather the purchase by those whose best interest is served to influence those that can choose not to enforce laws that are already in place.

Now maybe what's popping into your head about now is "Well there you go, less regulation has resulted in more corruption." In a manner, yes that's true. The government has been propping up some of these companies through corporate welfare and tax loopholes, left unplugged, for years. Their excuse? The massive unemployment that would result from the failure of these companies justifies the survival of these companies.

This is true. But what happens when an ant hill either gets kicked over or collapses for whatever reason? They build it stronger next time.

We have had shitty products sold to us for years and when we finally had enough, we stop buying. We are not the stupid sheep we've been counted on being.

Also, when someone who calls themselves a professional real estate agent tells a person that they can own a home for a low interest rate and monthly payment that easily fits within their budget, then mentions the variability of the interest rate but down plays the reality of what this could mean for them, then triples or quadruples their monthly payment because all of the mortgage companies agreed to jack up the interest rates for mortgages, that's dirty pool for which you can't solely blame the consumer if they are unable to pay. Especially when this mortgage rate hike comes in tandem with $4.50/gal gas prices.

The companies that were dishonest with their clients and pulled the old bait and sell the mortgage 40 or 50 times so that the mortgage holder wouldn't even know who to talk to to try to renegotiate the terms of the mortgage deserve to fail.

I also firmly believe they counted on people not being able to pay their mortgages, repossessing the property and reselling it, then the debt would still be hanging over the heads of the former home buyer and they would also be able to sell it to someone else for equal or lesser value, who cares, they get their money either way. But the housing bubble burst and now they ask for money from the government for their stupid and irresponsible business practices.

The banks and lending institutions have employed actuaries for years to estimate the risk of lending to people who apply. They knew better. They know who to lend to and who to avoid, they've been doing it for years.

Oh and the American car company fiasco...they should also fail. They aren't making a product that people are buying. So either adapt, or die. Ford is attempting to adapt and is doing better, hopefully we find an attractive, reliable product from them soon.

There were so many reasons that the economy failed that I find it laughable when people point to free market capitalism as the sole perpetrator here. We haven't had a free market capitalist country since the New Deal. Our country is a mix of capitalism and socialism.

Have you noticed that no churches are failing? Which makes me wonder what if we also made a separation of business and state?

The business would have to worry about the retention of their customer base, care about the bad effects of their products, and sink or swim on their own.

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Comment by Parallax on July 13, 2009 at 12:55pm
While I do agree with what you are saying, it is still my assertion that the mortgage holder is not fully to blame for the collapse of the housing bubble and mass foreclosure problem that has fed the recession/soon-to-be-depression that is happening now.

In the past the banks did act in their own best interest and lent to people that were less risky-as computed by actuaries..et.al-this time they did not and I ask why.

I'm not asking for regulation or more control, frankly if the Fed went the way of PanAm I would be very happy. But to put the blame for the bursting of the housing bubble solely on the person that signed the mortgage paperwork (and if you've ever bought a house you know it is lengthy and confusing) you're missing the other side of the story, if you will.

But yes, the Fed needs to go away, I like Ron Paul's bill, which is gaining support, to audit the Fed. It is necessary and maybe enlightening.
Comment by Count Beavertron on July 10, 2009 at 7:54pm
While I agree with your conclusion, I think it's unrealistic to paint mortgage companies (and real estate agents especially) as predatory when people sign a contract and then can't follow through on it. You are responsible for knowing what you're getting into when you put your name on the dotted line. Sure, most people thought that the housing market would always go up and interest rates would always remain low... the financial talking heads (with the notable exception of Peter Schiff and others) were selling us that story even as the housing market was collapsing around them.

I also don't think you can overestimate the role of monetary policy in the recession/soon-likely-to-be-depression. The Fed is a huge component of that corporatist regime you are railing against, and it should not be overlooked.

The Community Reinvestment Act and other feel-good legislation also had a big part in feeding that bubble. Whenever the government intervenes in the credit markets, there will be distortions and misallocations and we are just asking for trouble down the line.

All of these factors together created this situation. A free market is the only economic model that is capable of rationally dealing with a large-scale economy, because each actor in the economy has their own self-interest at heart and can see the implications of their own economic actions. Central planning of any degree in a modern economy is ridiculous; nobody, not even the best economic experts in the world, can oversee something so incredibly complex. It has failed everywhere it has been tried, over and over.

Why do people keep insisting on government regulation of the market? For moral reasons. It is the remnants of a Christian moral code or a utilitarian one which tells people it is imperative for some people to be sacrificed on behalf of other people. If you want to change the political world, you have to strike the root, which is ethics.
Comment by Clarence Dember on May 4, 2009 at 12:20pm
Thanks for this.



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