@ Telmo

> Free markets assume rational agents performing symmetrical
> transactions for their one self-interest. What we have in reality is a
> centralised secret bureaucracy with unchecked economical and
> regulatory powers.

The 70s through to the 00s was typified by the dismantling of Glass-Steagall 
such that financial markets were increasingly unregulated rather than 
regulated. Free rather than governed.
The market in CDOs and Credit Default Swaps and all the other derivatives at 
the center of the GFC was not regulated. The Big Banks like Lehman Brothers and 
Bear Stearns leveraged themselves to the hilt ... unchecked.
The event that sent liquidity in the economy into cardiac arrest was the 
refusal of Hank Paulson to intervene in the failure of Lehman Bros. The refusal 
of government to interfere. 

What de-fribullated the economy? As bitter a pill as it must be for market 
fundamentalists to swallow recovery was instigated by bail outs and 
intervention.

That's the irony isn't it? That faith in Adam Smith's invisible hand in fact 
nurtured the growth of financial institutions that became 'too big to fail'. It 
ended up cementing the requirement of government to intervene in finance.

Interest rates though, they can go up and down and be fiddled with by 
government for decades without triggering the kind of crisis witnessed in 2008.

> From: marc...@ulb.ac.be
> To: everything-list@googlegroups.com
> Subject: Re: Capitalism : the way of creating wealth OUT OF THIN AIR
> Date: Tue, 16 Jul 2013 17:22:49 +0200
> 
> 
> On 16 Jul 2013, at 16:08, Telmo Menezes wrote:
> 
> > On Tue, Jul 16, 2013 at 2:09 AM, chris peck  
> > <chris_peck...@hotmail.com> wrote:
> >> Hi Roger
> >>
> >> hmmm. sort of. Lowering interest rates, creating cheap money, in part
> >> encouraged banks to lend to people they ordinarily would not have.  
> >> This put
> >> more buyers on the market and that increase in demand led to a rise  
> >> in house
> >> prices. Of course, when the interest rates went up, those loans  
> >> became much
> >> more expensive and people found they couldn't afford the mortgages  
> >> they had
> >> taken. People began to default, demand decreased and then so did  
> >> the house
> >> prices.
> >>
> >> But, there was a whole lot more to it than that. Deregulation, (ie.  
> >> free
> >> market sensibility),
> >> allowed banks to collect together and carve up loans
> >> into complex derivatives and sell them on as 'high quality' assets.  
> >> In other
> >> words, free market sensibility led to a situation in which banks no  
> >> longer
> >> bore responsibility for the loans they made.
> >
> > We haven't had a free market in the western world for a long time now.
> >
> > Banks loan money that, in turn, they borrowed from the fed (or the
> > ECB, or...). Central banks have the power to create money out of thin
> > air. They control the supply of money. This is not capitalism, it's
> > something else. Something insane.
> >
> > Free markets assume rational agents performing symmetrical
> > transactions for their one self-interest. What we have in reality is a
> > centralised secret bureaucracy with unchecked economical and
> > regulatory powers.
> 
> I agree. We assist to a criminal perversion of capitalism. It seems to  
> me that there are evidences that this has been prepared between the  
> assassination of Kennedy and the election of Nixon.
> 
> 
> 
> >
> > In a real free market, I would be able to loan you money and act like
> > a bank myself. The big banks would have to make do with the money
> > reserves they had.
> 
> And the worst is yet to come when you see how Obama is handling the  
> TPP (the Trans-Pacific Partnership trade agreement).
> I hear also often in that context the idea that "corporation are  
> person", which is a non sense, and a real threat on the people.
> 
> But Obama's NDAA 2012 is quite clear, and is literally a confession of  
> terrorism. For now I am waiting for a serious inquest for 9/11, as the  
> official conspirary theory makes less and less sense to me. In fact  
> they have not yet provided one evidence for their case, except a  
> passport which has survived a fire so hot that steal melted and made a  
> skyscraper collapsing.
> 
> I am optimist because the bandits made a fatal error: the prohibition  
> of marijuana and drugs. You need an infinite amount of money to  
> maintain craps like that. It might still last for some time, though,  
> and the number of direct and indirect victims will keep growing.
> 
> But you are right, capitalism is not the problem. It is just the total  
> perversion of the markets by special interests and corporations'  
> unscrupulous deregulating strategies. The middle class (and banks) is  
> taken into hostage, and is already shrinking.
> 
> Bruno
> 
> 
> 
> >
> > Telmo.
> >
> >> They just made the IOUs and
> >> then sold them on to pension schemes. Consequently, they loaned to  
> >> anybody
> >> because these derivatives enabled them to get an immediate return  
> >> on the
> >> loans, rather than have to wait 40 years. Crucially, they made  
> >> loans to
> >> people without demanding any kind of equity in the underlying  
> >> asset. This
> >> meant that defaulting became an extremely attractive proposition once
> >> interest rates went up. So people defaulted willy nilly because  
> >> they had no
> >> stake in the houses they had bought.
> >>
> >> So really it was deregulation that buggered things up and generated  
> >> false
> >> hopes and deregulation that led to massively inflated house prices  
> >> and then
> >> .... bust.
> >>
> >> ________________________________
> >> Date: Sat, 13 Jul 2013 20:11:45 -0400
> >> Subject: Re: Capitalism : the way of creating wealth OUT OF THIN AIR
> >> From: jami...@gmail.com
> >> To: everything-list@googlegroups.com
> >>
> >>
> >> How can an otherwise well educated and smart person write such  
> >> stupidity?
> >> Capitalism creates wealth out of the sweat of the expolited and  
> >> enslaved
> >> workforce they (the capitalists) keep on an economical/political  
> >> leash.
> >> MONEY does not grow on trees.
> >> Doctor, you should know better!
> >> Dr. phil - D.Sc. John M
> >>
> >> On Sat, Jul 13, 2013 at 11:05 AM, Roger Clough  
> >> <rclo...@verizon.net> wrote:
> >>
> >> Capitalism : the way of creating wealth OUT OF THIN AIR
> >>
> >> There are two ways of cheapening money: mechanically, by printing it,
> >> and emoltionally, by making it more easily available
> >> (less desirable) by lowering the interest rates.
> >>
> >> There is also a way of enriching money, and that is by NOT doing  
> >> either of
> >> the above,
> >> by not interfering with the market.
> >>
> >> Here is why.
> >>
> >> If somebody came along and told you that you can make gasoline out  
> >> of water,
> >> you'd call him a
> >> con man. Can't be done. But I am here to tell you that you can  
> >> create money
> >> out of thin air.
> >> The govt creates it by printing it, which is bad, for it cheapens  
> >> money and
> >> thus creates no real wealth.
> >> This is the mechanical creation of wealth. But wealth can also be  
> >> achieved
> >> by simply believing
> >> that it can be done (by naturally rising prices in hopes of future  
> >> gain).
> >>
> >> Profit, the magic ingredient of capitalism, is the creation of  
> >> wealth OUT OF
> >> THIN AIR, where nobody loses,
> >> if they both choose wisely enough. Both parties can profit-- the  
> >> seller by
> >> receiving a higher price and
> >> the buyer by paying a higher price in the hope that he can resell  
> >> it at an
> >> even higher price or make use of
> >> it in some other profitable way, such as buying in bulk. So the  
> >> hope of the
> >> seller-- for a brighter day tomorrow--
> >> is what creates wealth in the economy.
> >>
> >> Before the bubble burst, the housing market was an example of this,  
> >> except
> >> that there was a third party-- the govt--
> >> who made cheap money available by lowering the interest rate. That  
> >> screwed
> >> things up by luring the buyer
> >> into thinking that the housing price would rise, but it didn't.  
> >> That's not a
> >> free market, and that's why
> >> the bubble burst, because it was an unrealistic hope.
> >>
> >> Dr. Roger B Clough NIST (ret.) [1/1/2000]
> >> See my Leibniz site at
> >> http://independent.academia.edu/RogerClough
> >>
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> http://iridia.ulb.ac.be/~marchal/
> 
> 
> 
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