[ExI] Financial Crisis - What really happened

[BillK]

2010/2/19 Mirco Romanato wrote:
> The solution to this is to move from an economy where banks and governments
> can print paper money to a economy where the money is representative of
> something, like gold and silver (or whatever the market prefer).
> I would see Ben Bernanke or any other fed. bankers to try to conjure gold
> and silver from thin air to bail out Goldman&Sachs, AIG, Freddy Mac and
> Fanny Mae and the others.
>
> When they short-circuited the feedback of money lended and money saved,
> printing money and giving it to bankers to loan out and stimulate the
> economy, these geniuses never think of the consequences?
> Austrians economics and economists are repeating the same arguments because
> doing this is simply to kick the can down the road and make it bigger.
>
> Do you want a government that interfere with the economy?
> Then don't complain about when they always screw the economy.
> It is not that you was not warned before about what would happen.
>
> Now, the governments are all trapped in a debt traps.
> With low interest rates (now zero interest rate) they are forcing the
> economy to stagnate, as people have no reason to save and any reason to take
> debts.
> And with higher interest rates the government would be unable to pay the
> interests on the debts without raising the taxes and killing the economy.
> This can be solved only by defaulting, by inflating the debt away paying the
> debtors with the printed paper or taxing the people and cutting the welfare.
> Or all of them.
>
> But, hey, the motives of the politicians were good; they wanted people to
> own their homes, to stimulate the economic growth, to have their cake and
> eat it. If you don't change the politicians, there is no way you will change
> their policies. No surprise you will have more of the same.
>
>


I agree with most of your comments, though I doubt that a return to
the gold standard will solve all our problems. It would probably
create just as many different problems.

Although the government must accept a lot of the blame it doesn't let
Wall Street off the hook.

As Matt Taibbi says:
It isn't so much that we have inadequate rules or incompetent
regulators, although both of these things are certainly true. The real
problem is that it doesn't matter what regulations are in place if the
people running the economy are rip-off artists. The system assumes a
certain minimum level of ethical behavior and civic instinct over and
above what is spelled out by the regulations. If those ethics are
absent — well, this thing isn't going to work, no matter what we do.
Sure, mugging old ladies is against the law, but it's also easy. To
prevent it, we depend, for the most part, not on cops but on people
making the conscious decision not to do it.
-----------------


I think we are talking about the breakdown of society here.
If the cops have disappeared (because of 'too big to fail') and Wall
Street has no ethical values left, then regulations and laws don't
matter.

You will end up with lots more cases like that man who became so
desperate that he flew his plane into the IRS offices in Austin,
Texas.


BillK