Wednesday, July 16, 2008

A Little Under 4 Months to GO

We've got about 4 months to go until the November election, and I'm happy to say that things are looking good for the progressive/liberal/Democratic faction of this nation. I don't want to put too much hope into any politician (they are natural born liars), but maybe just maybe we can start to undo some of the damage that as been caused by the Regan Republicans over the last 25-30 years (and they were actually Nixonian Republicans initially- hence they are all REALLLY OLD). Oh, and I was listening to an On Point NPR radio program about how what we are seeing happen in the economy right now is actually a 30 year long 'Superbubble' (his term) in the process of bursting. This bubble is a financial bubble, which has been patched up over the years do to the attempted corrections in the savings and loan scandal of the late 80s and the recession in the early 90s. The bubble wasn't allowed to be properly fixed due to the last 30 years of a completely unregulated marketplace (I include the Clintons in this, they had it easy w/ the boom). What cracks me up is the fact that economist have shown mathematically that unregulated capitalistic markets (aka Laissez-faire market system) simply do not work, and break down due to corruption. I was happy to learn this as I've always thought of pure capitalism as a snake eating its own tail- competition = healthy market; but - competition = destroy competitors = no more competition = unhealthy market - see the loop?

Wow I got on a tangent there- ah well- I just wanted to show peoples that the future markets (a place where you can buy stock in certain predictions like the presidential election) shows Obama w/ a 66/33 lead over McCain. These future markets have been shown to be more accurate than any polling, like the Gallop polls because people are more honest w/ what they do with their monies!

Yay, go Obama!


brian harrington said...

who makes the regulation? sounds like people you don't have very much confidence in. the financial bubble is largely due to restructured and repackaged financing in new and evolving markets. Regulation can't really parallel in adaptation and must often be reactionary. The problem with our capitalism is that it has bred short sighted gross consumption of natural resources. transparency is the type of regulation needed, but the markets should stay free and hopefully more informed. There's not just a snake, but a lizard that once was a snake, and now he can grow a new tail. that lizard might just be more inclined to finance your solar panels.

Jesse said...

I don't know that I agree that they were new/emerging markets, it was just a new slicing and dicing of risk in a very old market - real estate. They sliced it too thin and got bit (well everyone did).

Transparency only comes with 'regulation', ie the government telling these investment banks to disclose information on how they are investing to customers. They won't do that w/o the gov't making them do it.

I like the lizard analogy, however, you have to admit that the goal of any business is to become a monopoly in that market, and if that is true, then the goal of capitalism is to destroy capitalism (meaning the competition). How can one rationalize this as a sustainable economic system w/o the gov't there to say- HEY leave them (the competitors) alone!

brian harrington said...

i meant the financial institutions sliced it and diced it with new instruments in new markets meaning credit default swaps and complicated derivatives. they got bit by borrowers defaulting on their loans and over exposure to this risk. to me that bite is the real market controller, with regulation required to create transparency so investors can see further ahead to know and hedge the risks involved. we agree on that definition of regulation as transparency.

i do have to admit that david needs help from goliath, but not at the expense of competition or market set prices, and my point being it's a fine line to walk and i'm skeptical of regulators (who are also politicians). i guess i could read some milton friedman.

brian harrington said...

were gonna be debating this shit all the time aren't we? cant wait!

Jesse said...

Yes, I do believe that there will be many "over the morning coffee" deep political discussions. We should record them...

And I agree that anti-competition regulation is dangerous at the best of times, however, I still insist that the goal of capitalism is in it's nature anti-competition- this paradox is something that has always puzzled me. So, I am in fact advocating PRO-competition regulation, ie. monopolies (or trusts of say 3 companies- see Microhoogle) are bad MMmm-kay.