This page has been archived and commenting is disabled.
Please take the time to read my latest entry and post your comments here:
http://pensionpulse.blogspot.com/2010/04/beyond-greek-crisis-will-capitalism.html
Thank you,
Leo Kolivakis
>
- advertisements -
Contact Information:
Tips: tips [ at ] zerohedge.com
General: info [ at ] zerohedge.com
Legal: legal [ at ] zerohedge.com
Advertising: ads [ at ] zerohedge.com
Abuse/Complaints: abuse [ at ] zerohedge.com
Suggested Reading:
Make sure to read our "How To [Read/Tip Off] Zero Hedge Without Attracting The Interest Of [Human Resources/The Treasury/Black Helicopters]" Guide
It would be very wise of you to study our disclaimer, our privacy policy and our (non)policy on conflicts / full disclosure. Here's our Cookie Policy.
Barter will do quite well, and there is always the off chance that the underground economy will remian sound long after the pathetic excuse for a gubbermint has run itself too deeply into the latest dung heap to successfully escape.
Ilha de Tristão da Cunha CDS spreads are going ballistic as well. What is the world coming to ? I'm moving to the Kerguelen Islands to join the penguins.
I'm still waiting for your direction on what to do with the Greek bonds you recommend we all buy a few weeks back.
Don't worry, Germany and France will save Greek bonds, to save their banksters.
Germany is supposedly paying 25 billion euros to protect 18 billion euro in bank losses (German exposure - 45 billion euros; Greek bond haircut - 40%; German electoral reaction - Priceless).
There is a different game being played here.
The real question is Can This/That Government Survive? How many hours of Goldman Sachs testimony will we sit through before someone mentions that the government was the largest player by far in the U.S. mortgage market? What part of Greek insolvency isn't the direct result of government mismanagement? Whether we're talking about the U.S. housing bubble or the PIIGS crisis it is the government which tried to force the impossible into being and set the stage for disaster: universal, low risk credit and unsustainable entitlements. Also, when government sets up perverse incentives it is inevitable that human nature and market forces will exploit them. It is far easier to better design the former than to try and remake the later. Fraud and ineffective rule of law. I think that the term of "capitalism" is too often a label deployed to describe unpleasant outcomes. For the purposes of this post I would like to make the case that what is important in an economic system is in fact free enterprise which may or may not overlap with other definitions of capitalism.
There are a few, scattered, vaguely defined references to “capitalism” before Marx but he essentially defined the term as we know it today and I think it’s fair to say he was setting up a straw-man to be knocked down in favor of his views on how things should be run (personally I think he was baffled by "surplus value" and never adequately addressed risk but much of his analysis is brilliant.) That is the main reason the term “capitalism” carries so much baggage although I don’t think capitalism is the opposite of socialism or even communism.
“Free enterprise” isn’t any kind of –ism, school of thought or social construct. It’s an activity that all humans naturally engage in like food gathering, shelter building or sex. Applying one’s own hard work and ingenuity in an effort to add value to something for the purpose of attaining some benefit for yourself, your family or your tribe is simply innate to human nature and at a pretty basic level it is pure evil to try and thwart free enterprise in the same way that human bondage is pure evil.
Real “capitalism” I believe, can probably be defined as a system wherein the exchange of abstract representations of capital (securities, rights, obligations, insurance, contracts etc.) dominates everything else in an economy. This probably first happened during the Medici era and in fits and starts in other places and times. I don’t see how in the modern, developed world, even in a heavily socialized economy oriented toward the redistribution of wealth, “capitalism” isn’t the underlying mechanism that facilitates everything much like electricity does in all our lives.
Although it can be mishandled it has certainly been the case in the past that great things can happen when a state encourages free enterprise at home even (or especially) while thwarting free trade between itself and other nations. See the rise of modern Singapore and Daniel Defoe's 'A Plan of English Commerce.'
Finally, the larger a state (the public sector) grows - in one business or the entire economy - the more it is incentivized to be in business for itself and those who work within it, crowding out free (private) enterprise. Both the Greek and American financial disasters have this situation in their roots. I understand the arguments surrounding "casino" and "crony" capitalism. But both can be kept in check by preventing government from becoming too deeply involved in private enterprise in the first place and by keeping it's primary focus on upholding the rule of law and policing fraud.
In general I'd like to see more developed world navel gazing that focuses on the cold mathematical reality that the government and the public sector cannot be bigger than that which supports it. A government that absorbs the failures of private businesses that are "too big to fail " will even more quickly become a government that is too big to succeed.
Dominates what exactly?
It is hard to see how registration of actions/events can not dominate actions/events themselves as soon as it is possible to register all of them.
Might be interesting to know.
A qualification of everything would be welcome for the quantification of the whole business to be shed light on.
Well, Mercury, your post negated my need to say anything here. Good job!
Audit all the banks and see where the chips fall. Everyone just might find that some have been better at the financial poker game than others. The chance/skill ratio of the game of poker means that over a period of time the smarter player will win more of the money. Sometimes people who lose their shirt maintain that the cards were stacked. A fair game frustrates the hell out of poor losers. Men can handle being rejected by a women. They can deal with ill-health. They will put up with jokes about their character. But they hate to admit that the other man is smarter than them. Most men would rather go to their deaths than face up to their intellectual and spiritual inadequacies.
Actually poker gives the real edge to the player who can stand to lose the most money. The rich player can consistently make bets that are small for him but expensive for the other players to match. Without a much larger amount of skill and/or luck, the poorer player will inevitably be wiped out. Similarly, in business, you don't want any one party, including the government from being too big to care if he's any good at playing cards or not.
P.S. Sorry everybody about the sloppy editing on the above post, I had a computer glitch and had to cut/paste some stuff that didn't come out right... that "Fraud and ineffective rule of law." segment shouldn't be there in the first paragraph. etc. By EN having responded, I now can't fix it.
Leo, what we have now isn't capitalism - we have a short term opportunity to bring it back and we need some politician or central banker somewhere to say "no more bailouts". That will bring capitalism back and a better future for my kids that the carp that's happening now.
Interesting post LK, but it argues against the spread of fear and fear is precisely what we need. People do not change their ways unless they are in a sufficient amount of pain. Everyone - be they banksters, unions, governments, states and municipalities are looking around the table asking someone else to keep them from having to suffer from the consequences of their actions. That's what debt is all about.
We in the U.S. (and the Greeks, and the Portuguese, and the Spaniards, etc.) will continue to issue debt so long as someone will buy it and then, when we can't issue any ome, then we hope that the IMF will come and bail us out.
That's not a failure of capitalism. The IMF's intervention in Greece (like the Fed's and the Treasury's intervention in the worldwide markets) is an interference with the mechamisms of capitalism. Let's see how brave the Greek union leraders quoted in your article are were the country actually to default and their members were outside their door with the pitchforks looking for them to get them their share of whatever was left of the pie.
Private Property is synonymous with the beginnings of personal freedom, so is personal responsibility. I do not know if such concepts are real in this day and age, but certainly in the US at the citizen level, private property is a myth and personal responsibility is discouraged very strongly.
The word "sovereignty" should be better understood by more people. The boundary violations around the world at the moment are legion. The concept of private property is a derivative of the true meaning of the word.
Leo, your post is too long. The short answer is that capitalism will succeed, though the Greeks and the EU will not. The Euro will not survive. Now for a negative outlook.
Case in point is the Swedish solution... good bank and bad bank.
In the not too distant future, the EU and the Euro will be the repository for the global bad bank. The Euro will be allowed to fail and the bad debt will be devalued away. That will purge alot of Eastern European and Global debt. This will be bad for any European country that stays with the Euro but... hey sometimes life sucks.
The Greeks are radioactive. They will be written about in case studies about how not to govern or deal with a fiscal crisis. Nobody will care. The world has moved on.
Time has been bought to have the sovereigns clean their balance sheets by selling alot of Euro denominated debt. Once the Euro has been used to the max, Germany can pull the pin, exit the Euro, and devaluation begins.
Europe will whine about the neo-dark ages. If a government falls in Europe, and nobody cares, did it matter?
I'd like to make sure I follow your theory: with proper hush-hush understanding, EU-denominated players take the bad debts off the hands of those around the world in other currencies; Step 2: EU implosion; Step 3: previously-FUBAR'd lenders worldwide write off losses in EU meltdown, have clean balance sheets; Step 4: the elite take care of their own; Step 5: no civil war and the pump goes on as always?
Basically it's a version of they can't help themselves.
The Greek bailout maintains the status quo. The world is everyone's oyster so many double down. Risk On... Greece, Spain, Portugal, Italy, Eastern Europe do not hit their deficit targets. Everyone looks to Germany to make things right and Germany says "not this time". A convergence of German public opinion leads to an exit of the euro.
As far as EU-"demon"imated players taking bad debts off the hands of those around the world (in other currencies); I guess the question is "can that risk can be off-loaded without the sale of the actual asset?" That is the $64 question. Time will tell.
Max what? Besides, surely Freedom fighters would be the PC term..? Kick the Banks out! Like North Dakota? Turkey would be up their Pyraeus in a second.
The revival of genuine capitalism and individual liberty (the two are inseperable) are the specific reasons I have become politically active.
The Aegean will not be the centre of world gravity no matter how hard the locals try. This will frustrate them no end.
OT
Forbes
Bulls Herd Into First Solar
http://www.forbes.com/2010/04/29/palm-first-solar-options-markets-amgen-...
After reading your post once, it is somehow clear to me that you did not address the vital point. Texts putting forth such claims should be read several times for full understanding. Yours doesnt deserve the effort.
Cause is simple: capitalism was not defined in your post.
Capitalism has no definition. Capitalism doesnt provide a proper framework for analysis.
Capitalism is anything that works. Capitalism cannot fail. Always an exterior cause to generate malfunctions.
Given this, the answer is obvious: capitalism cannot die. Whatever happens, any working combinaison will be labelled capitalism as it has always been.
Why do you call the system under which governments choose which companies fail and which ones will not, a "Capitalist" system?
You seem too sophisticated for this kind of misguided nomenclature!
A more intelligently designed financial architecture will prevail. A modern day "Solon of Athens" will be required to assist in the process. There is someone on the world stage that probably fits this bill. He will need lots of assistance. He will be under the sway of another leader. Just as many people are currently hoping a certain man who hits a small white ball around a golf course improves his game, so will people need to support and pray for the guidance of certain leaders. People should assist the righteous not try and destroy them. Redemption means to "counter-balance". A Rubik's Cube no matter how diabolical its configuration can always be solved in 27 moves. The trick is here that certain groups of people will have to pull their heads in and accept a certain command structure. A lot of people's mindsets are going through a major realignment. Certain frames of reference are being shattered. Some already know what moves should be made. Confusion always precedes understanding...
It is clear to me that pensions and the global economy have succumbed to Casino Capitalism - a form of capitalism which benefits the financial and corporate oligarchs, leaving the rest of the population behind. Greece is the birthplace of democracy, will it also be the birthplace of a new form of capitalism?
Thank you for taking time to answer but actually, you are doing the reverse of what is usually done.
You labelled a failing part of the machine and said capitalism is dead.
This is the other way round: any succeeding part is what is named capitalism.
Current world is not a gigantic failure. Some bits are working and very well working. They are capitalism.
This is how it's been working since the word capitalism was introduced.
You'll get no one to delineate capitalism in another way than this one.
+1000
There will be nothing new. Not really. Because all systems are run by human being and their nature won't change. Everything runs in cycles. Given enough time, they will do the same thing over and over again.