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Guest Post: “The Sequel”: How 2011 Is A Repeat of 2008—Only Bigger, Longer, and Uncut by Bailouts
Submitted by Gonzalo Lira
Guest Post: “The Sequel”: How 2011 Is A Repeat of 2008—Only Bigger, Longer, and Uncut by Bailouts
I might have missed it, but I don’t think anyone has noticed this simple truism:
The structural causes that led to the Global Financial Crisis of 2008 are identical to the structural causes that are leading us to another systemic financial crisis in 2011.
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| You saw this one already? |
The only difference is the kind of debt at the core of the looming crisis: Mortgage-backed securities in 2008, as opposed to European sovereign debt in 2011.
And of course, the debt hole in 2011 is bigger than in 2008—a lot bigger.
That’s why I am confident in predicting we are about to have another Global Financial Crisis—I’m calling it The Sequel: Same movie, same players, same story. Only this time around—like all good sequels—the financial crisis we are about to experience is going to be bigger, longer, and uncut by bailouts.
By the way, that is the key difference between 2008 and 2011: We’re not going to have a Hollywood Ending this time around. The governments of Europe and the United States, as well as their respective central banks, do not have any weapons to fight off this 2011 financial crisis, as they did in 2008, for the simple reason that they used them all up—they’re out of bullets, both monetarily and politically.
So when The Sequel hits the big screen, there won’t be a Big Daddy Government deus ex machina to come save the day in the third act twist. When The Sequel hits, we’re on our own.
Let’s discuss the structural similarities between the original and The Sequel:
In both 2008 and now 2011, you had unpayable debts at the center of a fragile financial system. In 2008, it was mortgage backed securities and collateralized debt obligations—the so-called “toxic assets”. I think we all know that story pretty well.
In 2011, we have European sovereign debt. And just like the toxic assets of 2008, the Euro-bonds might have been rated AAA, but they certainly aren’t blue-chip—they are more like brown-chip: That deep brown color peculiar to fast-sinking dog-turds.
In both 2008 and 2011, these unpayable debts—emitted over many years, accumulating silently and asymptomatically like plaque in the arteries—gave a false sense of prosperity in the years leading up to the respective crises.
In the lead up to 2008, the MBS’s and CDO’s gave the American homeowner a sense that their house was their personal private ATM sitting on their quarter-acre suburban lot. They also were a profit spigot for the financial sector, which bouyed the U.S. GDP growth, leading to a false sense of national prosperity, even as there were signs that the non-financial sector of the economy was diving.
In the lead up to 2011, on the other hand, the sovereign debt of the eurozone countries gave the European citizens a sense that they could afford to buy all the imported goods they could ever want, as well as the sense that their government could afford to pay for all the social welfare programs they were all promised—without having to pay for any of this by way of higher taxes. Hell, that was the entire Labour governments’ platform between 1997 and 2010: Blair and Brown gave the UK a welfare state and low taxes—all paid for with sovereign debt.
In both 2008 and 2011, you have banks exposed to these bad debts both directly and indirectly—and this exposure in 2011 threatens to topple the entire financial structure, just as it almost did in 2008.
In 2008, the financial institutions with direct exposure to the toxic assets—that is, the institutions that actually owned these crap bonds that would never be paid in full—were mostly American banks. Their capitalization depended on how pristine these toxic assets were. As it became increasingly clear that the toxic assets were exactly that—toxic—the banks holding this crap found themselves not only without the capitalization to pass regulatory muster, but in fact found themselves functionally insolvent—hence the suspension of FASB 157, coupled with the injection of $150 billion worth of capital by way of TARP.
In 2011, the financial institutions with direct exposure to toxic assets—in this case, the European sovereign bonds, especially from the PIIGS—are once again banks, this time around mostly European banks: UniCredit, Société Générale, Dexia.
Like 2008, these assets might be rated triple-A, but they’re dog-turds—and they threaten these banks with insolvency, if any of them default. A bankruptcy of any of the aforementioned European banks would have massive consequences for the rest of the global financial construct—it would not be a Europe-only problem, just as the bankruptcy of Lehman was most definitely not an America-only catastrophe.
And that’s just the direct exposure to the 2011 version of toxic assets.
The real danger in 2011 is the indirect exposure—that is, the liabilities that are triggered in the case of a debt default: Just like 2008.
In 2008, it was AIG and other assorted credit default swap sellers that got hit bad, when the toxic assets began to default—we all remember how the very ground we trod rocked as AIG stumbled and everybody had a collective nuclear-meltdown freak-out.
In 2011—you guessed it—it’s worse: We have Bank of America for sure has massive exposure to derivatives on European sovereign and debt, as well as . . . God Knows who else.
Why do I say “God Knows who else”? Because just like in 2008, the derivatives market is so opaque—not to say hermetic—that we are not going to know who’s going to go bust until it actually happens. In 2008, Hank Paulson and the Treasury Department didn’t find out about the AIG hole until the weekend before the company would go bust. Today, in 2011—even with the experience of how potentially deadly ignorance of the derivatives markets can be—there are no mechanisms in place to swiftly and accurately tally who has derivatives exposure to any particular bond or asset.
In other words, Tiny Timmy and Bailout Benny never implemented the one lesson learned from 2008: Make the markets transparent, so that you can see where the crisis is coming from before it falls on top of your head.
Thus they—and we collectively—are flying blind insofar as derivatives written on the European sovereign debt. We only know about BofA’s massive CDS exposure indirectly, through Timothy Geithner’s demand in December 2010 that Ireland not default, because of the massive losses an Irish sovereign default on BofA.
Bernanke and Geithner had the chance to regulate this vital piece of the financial markets—but they didn’t! Instead, they acquiesced to this ridiculous pseudo-“ideology” that we should not regulate the financial markets.
(Parenthetically, and speaking as a hard-core, anti-choice, anti-vegan, pro-gun, pro-red meat Conservative: I am sick and tired of the ignorant assholes who say, “All government regulation is bad! Let the free markets reign!” We have the government regulate various industries and products because it is necessary for our individual and collective safety—or would you rather the government never regulated, say, the water supply, car safety standards, housing standards? Would you prefer it if the FDIC ceased to exist, and your local S&L could go to Vegas and play the roulette wheel with your life savings? Certainly not. Not only do we need government regulation for safety standards, we need regulations to prevent unscrupulous exploiters from gaming the system—think Enron, which should have put paid to any ridiculous notion that “the market knows best”, but obviously hasn’t (or else I wouldn’t be ranting here): The Enronites of the “energy trading desks” exploited the free markets and the lack of government regulation in the so-called “energy markets”, and deliberately created rolling blackouts in California so as to gouge the people of that state for the electricity they already owned and which they should have been getting, but which the Enron bastards were manipulating in order to squeeze them for money. Insofar as the financial markets are concerned, anyone spouting that particular bullshit spiel about the markets knowing best is either a shill for the banks, or a complete and utter imbecile. And a bank shill at least has the excuse of needing to pay the mortgage in exchange for spouting this nonsensical bullshit—the imbecile does not.)
Now, I used to write for the movies—I can tell you the secret to writing a good sequel: Use the exact same elements, the exact same story structure—hell, even use the exact same lines!—but make sure the sequel is bigger: Bigger sets, bigger explosions, bigger stars, bigger everything—a bigger bang for the buck.
2011’s The Sequel is certainly going to deliver that bigger bang—because it’s a lot bigger than 2008: The total sovereign debt of the PIIGS is about €3.1 trillion. That’s 20% of the eurozone’s GDP—just the PIIGS, just those five, forget about France, Belgium and the UK, which if added up easily doubles that €3.1 trillion figure.
Compare that to 2008, when the total toxic assets the Federal Reserve wound up having to buy amounted to about $1.5 trillion—about 11.5% of the U.S.’s 2008 GDP.
In other words, the current situation is over twice what 2008 was—and might wind up being four times the 2008 price tag. And that’s just the nominal value of the toxic debt at the core of the current situation. We have no idea what the total value of the indirect exposure via derivatives is going to add up to.
So! We’ve seen that we’re structurally at the same place we were in 2008: Unpayable debts held by a fragile financial sector, with massive indirect exposure by way of derivatives that no one has bothered to tally up and regulate.
We have furthermore seen that—like all good sequels—2011 is going to have a bigger bang: We currently have more debts on deck than in 2008, at least twice as much, as a matter of fact.
Question: Why does teasing out these similarities matter?
Answer: Because it will allow us to see what will happen over the months of September and October, when the crisis breaks.
What we’ve seen over the last couple of weeks is not the crisis—or not the crisis, at any rate. We’ve seen Italian and Spanish debt drop, their yields spiking—we’ve seen gold run up to $1,820—we’ve seen the biggest drops in the US equities markets since 2008—
—but these gyrations are not The Sequel. Rather, these last couple of weeks of market gyrations have been the forewarnings—the pre-tremors. Anyone who’s lived in earthquake country knows about them: The little tremors and hiccoughs that precede The Big One.
The Sequel will actually get going once we have our Lehman-like event.
In 2008, the bankruptcy of Lehman Brothers triggered the crash—but it was not the cause of the Global Financial Crisis of 2008: The structural weaknesses were already baked into the situation—the Lehman bankruptcy was just the shove the global financial system needed to fall off the proverbial cliff.
Today, we are waiting for the Lehman-like event. My personal guess is Dexia will be the first to go under, the Lehman-like event that will trigger The Sequel—but that’s just a guess. More likely than not, the Lehman-like event of 2011 will catch us all by surprise—but just like the Lehman bankruptcy, it won’t matter intrinsically: It’ll only matter insofar as it triggers the cascade of panic-default-bankruptcies, etc.
Be that as it may, at my paid site, The Strategic Planning Group, we’ve been discussing what to do, when The Sequel hits. I won’t bother recapitulating what I’ve written there—frankly, it’s too long, and besides, the details are why the SPG Members pay their dues.
The one issue I will discuss here is the notion of a safe haven:
In 2008, when all the stock markets were going south, and all the name-brand banks were teetering, where did everyone park their money? What was the safe haven?
Treasury bonds. In fact, the flight to safety was so massive that Treasuries reached negative yields, when you factored for inflation.
Treasuries are the traditional American safe haven. But what with the recent spate of, er, questionable events (Debt celing conniption fit, anyone?), Treasuries aren’t looking as safe as they used to, nevermind the (cosmetic) S&P downgrade of their Treasuries rating.
But this isn’t an American crisis—this is a European crisis that will have catastrophic consequences in America—but the epicenter will be Europe.
What’s the safe haven in Europe? Gold.
In fact, in Europe, sovereign bonds have never been considered a “safe haven”, for the simple reason that sovereign debt in Europe has countless times suffered haircuts, defaults, outright national bankruptcies.
Since this will be a European sovereign debt crisis that will spread around the globe—but the epicenter of which will of course be in Europe—bankers and asset managers will pull their cash—euros—out of whatever they think is risky, and park it in some safe haven.
These European money men obviously cannot sell their assets and buy US Treasury bonds with those euros that they get. And they certainly won’t plug those euros into European sovereign debt, which is exactly the source of the panic. They won’t even park those euros in German bunds, for fear of contagion.
Therefore, it is reasonable to infer that, if and when there is a Lehman-like event in Europe that triggers The Sequel, the flight to safety will be to gold, which Europeans traditionally see as a financial refuge as surely as Americans consider Treasuries their financial refuge.
Hence in my estimation, gold will rocket on. I would not be surprised if gold crosses $2,000 an ounce when the Lehman-like event happens, and goes on quickly to $2,500 before the end of the year. On my scale of augury, this is head-and-shoulders above a Strong Hunch, just shy of a Fearless Prediction: $2,500 by the New Year’s. After that?
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Enter the tinfoil hats. Or is it the ponzi money?
It hasn't been a price discovery market either. Maybe the Dow has had a little help the last 2 yrs.
Well it hasn't been exactly a price discovery market. Maybe the Dow has had a little help the last 2 yrs.
Plunge protection team to the rescue.
Why wouldn't "European Money Men" buy U.S. Treasuries. Maybe I'm missing something. Seems to me that the USD and U.S. Treasuries would be the winners if Lehman-like moment were to occur.
People would need to raise cash, and the USD is still the world's reserve currency. When govts begin bailing out everyone under the sun, then gold and silver would do well.
It's actually only about 60% of the world's reserve currencies. Been a while since i checked though.
what is your avatar from?
Somewhere on the Southeast quadrant of Hell.
All the talk of transparacy and it was the first causualty. I wager that everyone who really knows what is going on has looked into the abyss and realized that transparacy would only cause panic. Therefore it cannot be allowed. At the same time, it is not concealed. Rather, the truth is buried in a sea of information that is so deep, few will be able to really seperate fact from fiction from lies.
I agree completely that when the SHTF, it will be lightning fast. The real players all have thier eyes on the exits. Of course, all the "experts" will be talking about how they never saw it coming.
Agree 100%. The truth is x100 worse than the most cynical persons imagination could ever conceive. The game is over. The buses to the feudal plots will be leaving in 15 minutes
New Zealand has no deposit insurance. I am just going to wait for Dr. Acula to tear this apart
The U.S. Dollar is hanging by a thread.
If it craters, then all risk assets are going to start skying.
Even bank stocks.
Alright Tepper.
Bring it.
Looking rather bearish. Scary.
While America holds its breath waiting for the other european shoe to fall, there is the USD hanging by a thread in the opaque derivative world that the EURO wipe-out will undoubtedly push beyond into the abyss. So the only question now is what will trigger the slide, be the Lehman effect this time...nobody knows what the hidden detonator is going to be. But it will be a fall in the Fall and what a fall it will be; then you and I and all our fellow romans will also fall by side of great Caesar, ummm great USD/Euro ponzi.
I say old chap, as we say on this side of the pond, what a zany scenario you have there, 'the great gatsby's fall' by Alfred bloody Hitchcok...a nail biting, chair riveting, shell shocking, spell binding, mystery spiralling thriller. A true popper. Spanking stuff.
If only Terry Thomas were still with us...
He especially liked spanking.
Did August 15th really pass with a whimper? Will I have to leave prophecying to other, better seers?
Fascinating. The tip balanced cone teeters on. And Falak, the euro-side/US side im-balance is a fractal one eh?
Like having humpty dumpty on one side and a giant glass egg on the other of a giant, atlantic spanning see-saw.
It's not a matter of who is worse off, only who can engneer the softer landing and so not crack apart, never to be put together again.
ORI
http://aadivaahan.wordpress.com/2011/08/12/crop-circle-craziness-and-thoughts/
The amazing thing is to read Soros now pontificating about how to repair the fractal damage to Euro zone in a three step move. Amazing, how head poacher now plays head game keeper. What gall the Oligarchs have...Now that I'm liquidating my HF I can become head seer to coach you guys how to put your financial house in order... Priceless!
His ideas are good but politically unworkable. The EU has no political cohesion or will to fight the ponzi. If they had they would have pulled the plug on ther own banks, done a full audit and put into place regulatory mechanisms as of Janary 2009.
But they were total political, short term shills, like their American counterparts. Now the unwind...Brown and Sarkozy and Merkel at London...
33rd parallel now calling and the MIC sharpens its tools in case the natives get restless on all six continents. There will be blood...sad and sadder as the story gets; as each page turner sequel churns its inexorable thrilla day in day out, on this mad roller coaster ride.
Without qe or a lsap how, it gonna go down.
This is the definition of Bernanke's rock and a hard place. Dollar cratering sends Bernanke inflation through the roof with commodities priced in dollars.
GL: hyperinflation starts next week, right? lol
One thing that I do know is that the powers that be will do everything in their power to maintain the status quo. While the proles are beginning to realize that shit wont be the same anymore, this downgrading of expectations has not been accepted by the ruling class.
In the end reality will win as it always does.
Until now, I did not realize dog-turds was hyphenated. You learn something new every day.
Dogtards.
I guess we'll have to wait for the shit house to burn down before free markets reign. Sure would be a lot easier on everybody if the "smart people" would stop hoping that Ben Bernanke or any successor will regulate us in a kinder and gentler fashion.
The movement that I'm in favor of is a movement of libertarians who do not substitute whim for reason. Now some of them do, obviously, and I'm against that. I'm in favor of reason over whim. As far as I'm concerned, and I think the rest of the movement, too, we are anarcho-capitalists. In other words, we believe that capitalism is the fullest expression of anarchism, and anarchism is the fullest expression of capitalism. Not only are they compatible, but you can't really have one without the other. True anarchism will be capitalism, and true capitalism will be anarchism. -- Murray Rothbard
There is no legitimate service that monopoly government provides that can't be provided at greater quality and at lower prices by competing entrepeneurs subject to market disciplines.
"would you rather the government never regulated, say, the water supply, car safety standards, housing standards?"
The author here fails for the fallacy pointed out by Bastiat: he takes into account that which is seen - the government regulators - but fails to account for that which is unseen - all the competing entrepeneurs that would spring up in the absence of government meddling and would provide auditing and rating services. It's like this guy never heard of Consumer Reports or Angies' list.
If you want an unregulated free market in the water supply, you are truly insane
If you want to give up your freedoms to those who will simply use your weakened position to rob you and starve your family you are as dumb as a tree stump.
I am all for regulation - a necessary service that, like every other economic good, is best provided by competing entrepeneurs.
It is you who is insane to depend on a gang of corruptable gun-toting government goons to look out for your safety. Enjoy drinking the industrial waste and enjoy the resultant fluorosis.
Yeah, we had that kind of "regulation" 120 or so years ago... Do not be so naive, people will always take the money and run, especially at the small to mid-end... The corporate track record of the past 140 years is clear evidence of what the big boys do....
Regulators being hamstrung and not allowed to regulate is hardly regulation....
The power given to the people who run the government lets them rip off the populace on an enormous scale. In a free market no one could be as powerful as our legislators and regulators and so the ability for the strong to ravage the weak would be greatly lessened.
This is the statists most glaring flaw -- the belief that people are irrational and therefore they must be regulated by an elite class who are not only irrational but all powerful as well.
And you accuse the statists with idealism?? All we have is 6000 years of history to show us that people will take whatever the fuck they can get away with, or to put more precisely, enough people will do it to ruin it for the rest of us.
While we are at it, could you please explain "The Tragedy of the Commons" for our fellow readers?
Yes, it all sounds so nice, communism was a jolly good read until reality started setting in.
Edit: I'll add the following. such a system *may* work in a non-growth low technology agrarian society such that arable lands are divided "fairly". Furthermore, you would need an excess of land to deal with migratory issues brought on by climate changes (Lest you accuse me of fronting AGW, these kinds of migrations have been going on for millenia)....
Then why do you want to give some of those people supreme power over all the others? You advocate giving some people the unfettered ability to steal and kill all the others. That's a major flaw, don't ya think?
Who said anything about granting supreme power? I don't advocate anything of the like. I only note that there are enough people that will try to take "supreme power" in any system you come up with. Like I said, I have 6000 years of history on my side, all you got is a touchy feely idealism.
Yep, "Competing Entrepeneurs"
Meaning, a small cartel of loathesome scum who screw the public for their own reward.
Yeah, I'd trust my water to them.
People with excess capacity from their wells who are willing to trade with their neighbors are scum? How did you come to that conclusion?
Children eating garbage is what happens when you let the 'free market' dictate all positions. Money overrules what is in the best interest of people. Face it, you need regulations to keep everyone honest and the markets 'humane'. Privitization of everything is what has led us to bananna republic amerika.
http://www.krqe.com/dpp/news/local/central/worker-moldy-food-served-to-students
Or take the time to research what tremendous damage that private fire departments caused. The problem with the fundamentalist free marketistas is they actually believe their ideas are new. That they have never been tried before, all of which is a huge lie. They are FAILED beliefs from the past. Like all fundamentalists I will never be able to convince you otherwise and now I am mad that I even took the time to post.
Who told you that? I believe in Natural Law which is certainly not new. It's as old as humanity and humanity was a glorious thing long before bureaucrats came on the scene. Free markets are just one aspect of voluntary, consensual interaction. Why do you believe that using force against people in order to change their economic habits is a good thing?
Without repeating the tirade about the railroads below, I will just ask; What do you think of monopolies? Are they not a natural outcome of a total free market system? At least they seemed to be in the past. (NO ONE stopped Morgan from gobbling up railroads and price gouging. In fact those that tried were outrightly bribed, thus de fanging any regulation.) You can agree they are not a good thing, especially in an industry like railroading that MUST exist in our modern society. Right? So if you don't believe in trusting the benevolence of a required monopoly who are you to 'regulate' them? Simple fact is, regulation at some level is REQUIRED.
As far as private fire departments, take the time to google research them. What happened was some people did not pay for a fire service, so their house would burn down. Well guess what? Fires spread. So it brought about a ton of unnecessary damage. What was originally just an individuals idea affected the whole through ruined property and declining property values due to abandoned, burned out homes. Would you institute that individuals must buy fire protection? Again you are now implementing regulation. Which again shows that some level of regulation is REQUIRED.
Please add the link below to your bookmarks and read it when you get a chance. It will answer all your questions and more. As a recovering liberal I can tell you that the anarcho-capitalists have a very complete and compelling argument for a strictly voluntary society.
This article will clear up a lot of the misconceptions folks have about monopolies which you have repeated in your post. Enjoy!
The Truth About the "Robber Barons"http://mises.org/daily/2317
Hamsterfist, it's wonderful that you can repeatedly use google to dredge up anecdotes of private companies run by actual human beings who handle things badly.
I applaud your mastery of google. But your efforts are for naught. For even if you did an honest study looking into both private failures and statist tragedies (e.g. causing millions of deaths) you still risk succumbing to the cum hoc ergo propter hoc fallacy.
And yet who provides cleaner water? Private bottled water or the shit from the tap?
Also, Texas and other states have been caught lying about the amount of toxins and RADIATION in the public water supply. So there goes your theory about the benevolent government watchdog.
Texas, same place as the worst mercury emitting power plants in the country??
Those in power in the great state of Texas are anti-government everything morons. Has it ever dawned on you the the radiation is high because they are a toothless watchdog?
Government is not a watchdog it is the fox in the hen house.
.
Very true, spinone. Isn't it funny how the Free Market nuts always overlook what has happened to places where water has been privatized? Higher prices for less quality, at best. At worst, you need to buy Pepsi or Coke, because you can't get clean water.
Truely an insane rejection of reality.
Oh the irony of this post, the three whistle blowers, S&P, Moodys, Fitch, all didn't see the great ponzi when it spiralled in 2005-2007. Out of the blue it hit these super efficient scions right between the eyes. Wow, Dr Beanblower, where were you then. Behind the transparent curtain of 'the invisible arm of the market'? Pontificating about private auditors and rating services, who only having one criteria when doing their job : who pays their bills. The rest is irrelevant.
Let me tell you a story that dates back to 1231. In those days Frederick II of Sicily and Germany and Italy and Holy Roman Emperor of Hohenstaufen lineage created the Liber Augustalis constitution. In those days he declared that state monopolies were VERBOTEN, for obvious reasons. He also declared that doctors and physicians could NOT be Pharmacists selling what they prescribed for obvious reasons of conflict of interest. Now, keeping this in mind, it is clear that what is a good compromise is to have state regulatory agencies, as they are neutral, but also to have private competitors who introduce price discovery and excellence. Never do one without the other. Period. It is do-able. In this day and age. Whistleblowers can be supervised all the time by state regulatory bodies with HANDS ON powers.
>Oh the irony of this post, the three whistle blowers, S&P, Moodys, Fitch, all didn't see the great ponzi when it spiralled in 2005-2007.
These guys are paid by the issuers of securities, not by investors. Would you also trust an infomercial where the male enhancement pills being offered are lauded by a paid reviewer?
Don't hide behind quibbling details. The biggest current problem is the result of lack of public regulation of the working of capital markets. Period. It destroys your thesis to shreds.
I don't argue on its theoretical validity, i just say it has major obvious flaws and propose a solution that even in 1231 seemed reasonable to the man who wrote the first written constitution of the modern nation state. Capische??
Enuff of pontificated, dogmatic, slanted generalisation with an ulterior political motive that is contradicted by facts, both going back 800 years, as of today.
Governments were responsible for the deaths of about a quarter of a billion people during the 20th century. What good could they possibly do that would offset that?
They help regulate how large a dump you are allowed to take: http://mises.org/daily/3997
Too funny.
Also funny: an AFL-CIO representative holding a petition just knocked on my door. I told him I don't support unions, that I'm a free market guy (the Gadsden flag and Ron Paul sign might have tipped him off). He said that unions are the free market and I disagreed. We wished each other a pleasant afternoon.
Unions are permissible in a free market. It's not an act of aggression or violation of property rights for groups of people to cooperate or to bargain collectively. Likewise, cartels, monopolies, and "collusion" (i.e. when companies cooperate) are all permissible. However, economic forces work against these groups:
-Unionized employees may achieve higher wages, but at the cost of jobs. Likely, they will be forced out of the market by non-unionized employees. This is what should have happened to Government Motors. The punishment for being unionized is swifter when employers are allowed to fire union employees and hire scabs without fear of artificial legal bludgeons.
-There is a tremendous profit incentive for cartel members to "cheat" and offer lower prices than other members.
-Monopolies that charge too high a price encourage new upstarts to form. The higher the price charged, the greater the opportunity for new entrepeneurs to profit off of the monopoly's greed.
-Companies that grow too large lose the ability to perform economic calculation when goods are services are internally exchanged between divisions of the company with no price discovery mechanism. The result is a total loss of the ability to allocate resources rationally.
The point is it's important to allow peaceful cooperation in organizations including companies and homeowners associations - and even the charging of "unfair" prices, like with unions, cartels, and monopolies - so that market participants are free to discover the best kinds of organizations.
Organizing is fine. But government gives special protection to unions which allows them to create barriers to entry for other workers and for start up businesses.
If one is willing to go on strike then certainly bring the power of your brotherhood along with you. But if the folks writing your checks don't like your offer prepare to be replaced.
One may wish to support the unions because we like to help the little guy but nobody is littler than the "scab" being beaten over the head by a bunch of union thugs just because he wants to feed his kid.
See: A History of Labor Unions From Colonial Times to 2009http://www.lewrockwell.com/reynolds/reynolds21.1.html
There is No Such Thing as a Free Market.
There never has been in the history of this planet.
And there never will be.
Every single market is manipulated by those that have the power to do so.
To believe otherwise is to display your complete and utter ignorance.
.
Is that supposed to be an argument in favor of government regulation or against it?
It sounds like your saying that market manipulation is bad but you also seem to be using that to suggest that markets should be manipulated by the most powerful people in the world -- those in government.
Why would I want to submit to an all powerful manipulator in order to protect myself against much less powerful manipulators? What's in it for me?
Of course there never has been nor will there ever be a 100% free market (free meaning based on peaceful voluntary exchanges and unhampered by coercion). Humans are imperfect and so is everything they create and do. That doesn't mean it's futile to try to improve things or fix what's wrong.
It's also true that there will always be some percentage of the population that commits crimes like rape. That doesn't mean you need to give up and accept rape as normal or good.
The biggest current problem is the lack of free markets dictating interest rates. PERIOD
It is mathematically impossible to have this problem with free market interest rates.
Yes, that's a very big problem.
Loanable funds are like any other economic good. When the price of an economic good is fixed too low by the government (or its agents), a glut results. We have a glut of debt and malinvestment.
>Don't hide behind quibbling details. The biggest current problem is the result of lack of public regulation of the working of capital markets.
And yet here you are on a private site that provides fantastic information on capital markets.
If you love goverment regulators, why aren't you at their websites?
>I don't argue on its theoretical validity ... Capische??
Yes, I understand. You don't know economic science and are trying to post ill-advised opinions regarding it.
>i just say it has major obvious flaws and propose a solution that even in 1231 seemed reasonable to the man
Here you are falling for the argumentum ad temperantiam fallacy: when there are two positions that you deem extreme you pick something in the middle to be safe, assuming that one of the original positions or an entirely different third position can't possibly be correct.
economic science
You're talking about a fantasy. You don't happen to be a computer programmer, do you? Lots of those guys are so in love with logic and theory they tend to forget nature isn't a particularly logical or theoretical system.
There is no "science" to economics. There are a bunch of models which often generate some predictive power, but there's no guarantee they'll be useful on any given day of the week, because "economic change" is determined far more by crowd-psychology than any set of causal relations.
Humans ARE NOT fundamentally rational.
It's clear you don't understand basic praxeology. I strongly recommend reading von Mises.
>Humans ARE NOT fundamentally rational.
Human beings are rational in the following sense. Each conscious person acts ex ante to remove felt uneasiness. Any attempt to refute this statement - known as the "action axiom" - only provides more evidence for it.
Thus a serial killer doing what brings them pleasure is rational, no matter how repugnant you find their desires. And a man who gambles everything away in the hopes of becoming rich is also rational, despite perhaps having a limited cognitive ability, a lack of understanding of expectation value computations, or a lack of what you deem to be an effective plan.
Human beings are rational in the following sense. Each conscious person acts ex ante to remove felt uneasiness.
Most of the time, sure. But there are exceptions, and that's what makes your bullshit so useless.
Sorry, dude, but a twitching nerve in a bag doesn't *always* do ANYTHING.
So why not describe one exception?
I tried to read a book once, it gave me a headache and I acted like a pompous ass know-it-all for two weeks afterwards.
I did enjoy school though. I spent three of the happiest years of my life in the third grade.
Emotions don't make sense to androids.
Of course Humans are not "rational" in the sense you postulate.
Rationality assumes the exercise of Reason.
Humans are Not Reasonable.
They will use Reason when it suits their inclination to gain self-enrichment.
They will use Reason when they are frustrated in their attempt at self-enrichment.
But they will not use Reason when it comes to self-examination of their own selfish motives.
.
>But they will not use Reason when it comes to self-examination of their own selfish motives
How can goals be based on "Reason"? Humans act teleologically. E.g. if my goal in mind is to taste strawberry ice cream, walking to my car and driving to Baskin Robbins are all rational elements of my plan as I believe this sequence of steps will bring about the desired goal. But there need not be any fathomable logic behind my choice of goal, unless it is a stepping stone in service of a future goal, e.g. perhaps I want to compare each of the 31 flavors.
Instead of spewing drivel, why not try reading von Mises like I suggested?
Unfortunately rothbard is an econo-cretin of the first order.
Anarcho-capitalism is a contradiction in terms, advocated solely by lunatics. On the other hand, under such a system I would be able to shot and kill people like rothbard because there will be no law that he cannot pay for himself. Read more Bakunin and get a clue before advocating pure ideological shit like rothbard.
>econo-cretin of the first order.
>advocated solely by lunatics
What a devastating refutation!
>On the other hand, under such a system I would be able to shot and kill people like rothbard because there will be no law that he cannot pay for himself.
Actually if you shot and killed Rothbard, the inheritor(s) would have a claim that they could sell off (essentially champerty) to the highest bidder who could then reclaim damages from your estate. Also, as someone who does not mind the senseless destruction of a human being, you may be deemed estopped from complaining about someone killing you, i.e. you may end up as target practice. Good luck getting a credit card, job, or apartment too. There's no telling what mechanisms competing entrepeneurs could develop for obtaining justice more efficiently than our current ossified government monopolies.
Are you suggesting that government cops work for free? Well, they don't. You pay for them through taxes, fines and fees. If you can afford to pay your taxes then you should be able to acquire all the services government provides (and then some) through the free market once you are relieved of your tax burden. Free markets always produce better services at a better price than government can.
Poor people would get free protection. There's a very logical reason why they would. Can you take off your collectivist blinders long enough to reason it out?
Game, set, match. Nice work crockett and acula!!
scary profits ahead for all those on the short side
Friday's "Credit Bubble Bulletin" by Doug Noland covered this same ground:
Compare & Contrast: 2011 versus 2008
Per gold as a safe haven, I will defer to its perfomance back in 2008. It may have been a U.S. crisis then, but European banks were just as exposed to toxic crap. Likewise today, crisis might originate in Europe, but U.S. megabanks still are hopelessly entangled in the mess. Nothing has changed, as you say. Thus, an accelerating crush for capital should hit gold just as it did in 2008. Trouble is now, as you note, there's nothing more lenders of last resort can do. At first blush this might seem a feather in the gold cap supporting its value, yet if the coming, accelerating crush for capital finds no lender of last resort liquidity spigot forthcoming, then gold might fare even worse than was the case in 2008, as it likely will be relentlessly sold in the scramble for capital.
I'm not sure either. I'll be very interested to learn more about this. I'm heavy into gold but i'm "worried" that gold will plunge in the deleveraging process. I have little idea about how things are different or the same compared to '08.
Because of central bank intervention the natural cycle was interrupted. After a credit bubble of that size, deflation is necessary. Deleveraging is necessary. It will re-assert itself, and it will come on in a crisis, suddenly and with a vengance. Gold, silver, short term treasuries, everything liquid will be liquidated.
Yes, central banks intervene. They will print. You know what happens next.
Gold, silver, short term treasuries, everything liquid will be liquidated.
To be turned into paper currency?
No, it won't.
You are thinking that now is the normal time. It isn't, the world has been on a commodity standard for 5000 years, for all of recorded history
Everything is going to be liquidated, for commodities - not for money that LITERALLY grows on trees. End of the experiment boys 'n girls.
Exactly.
Nobody with any brains whatsoever will trade worthless paper for real hard assets.
.
Any major pullback will likely take gold down to some extent, but not all that much and still holding more buying power than the dollar so you have to adjust for those losses.
When everything was hitting the bottom a couple years ago the dollar hit rock bottom too.
If things were that bad wouldn't the people concerned be inclined to bankrupt themselves on paper and secret the only viable asset they hold (gold) to a hole in the ground under their mother-in-laws dog kenel?
READY
SET
PRINNNNTTTTT !!!!
i am prepped....have a good seat in the house....let the sequel begin...
I'm not sure gold will surge. I'm heavy into Gold so i'd like to know. I think there is a possibility like last time in '08 that people sell their assets in the deleveraging process and gold will drop. Anybody?
No doubt in my mind though gold will be good for the long term.
Well, you can't eat it, so I suspect it's going to drop to around $100 an ounce. Quick, sell it to me at 80% of spot, and then you can buy some shares in AAPL.
What's different now from 2008 are the following:
Foreign / Asian central banks are now net buyers, not net sellers, and are looking to buy on dips. (The Beijing put.) These CBs are the 800-pound gorillas in the market, not only because of their direct influence on prices, but because no speculator wants to "fight" them. Similarly, speculators like to be on the side of the big battalions.
Asian citizens are now strong accumulators, having more convenient access to gold purchasing, greater income, and less faith in Western fiat.
Gold bounced back after 2008, proving that it had not been in a bubble. I.e., it was robust, not a fragile house of cards. This again will stiffen the spines of gold speculators (and discourage the bears).
Hedge funds are not so leveraged and extended on the long side as they were in 2008.
Gold is already failing to behave as it did in 2008, rising strongly over the past 6 weeks while stocks were sharply falling. (Sure, it can drop a bit, to below $1700 for a while, but that should be the extent of it.)
If you're worried that gold is overbought, buy (Canadian) miners. They're oversold.
Paulson's Hedge Fund Slashes Stake in Bank of America Hmmm ...
Sounds good to me. I hope the credit card bill collectors quit calling me at that point. They dont belive me when I tell them "If you werent bailed out I would of paid off my debt." Only wish I had some capital to short this garbage.... True anarchism will be capitalism, and true capitalism will be anarchism Wow that sums it up pretty good.
When the banks go bust holding defaulted credit cards, they will be sold for pennies on the dollar to another company who will then try to get back the whole amount owed, plus interest and penalties. Its a great scam.
I get a lot of "Wow" moments when reading Murray Rothbard. You may want to check out the Rothbard archive at LewRockwell.com
http://www.lewrockwell.com/rothbard/rothbard-lib.html
10-4 thanks
Gonzalo perhaps to reiterate that the crisis of 2008 is still essentially uncorrected and uncleared -- all of those toxic assets have been rolled into the Fed's very own derivatives and shady accounting. On the banking side the (hidden) bank books plus unforclosed mortgages would adjust holdings/assets/accounting to many magnitudes below current already non-viable levels.
So 2011 is essentially a compounded crash because the structural fundamentals are now magnified on both counts across both Americancan and the EU.
What will be interesting is how Germany positions itself. I suspect that Germany will, a la WW's, trigger the massive domino effect by sticking to her guns and not bailing anyone out.
The next volume surge coming off of strong Euro market losses should trigger the fast burn to market crash. I suspect it will occur just in time for Jackson Hole.
To put the entire situation more succinctly, 2008 was about Corporate debt. Now the whole thing has moved upward, and the next crash is about Sovereign bad debts. There's no backstop there; we're already at the lender of last resort.
A hat tip to GL for putting this out there. While I disagree with a number of points, the key point and theme need to be out there, and publicized.
More succinct input, while unsolicited, is also oversimplified. Because 2008 was NOT just about Corporate debt. It was in no small part about Corporate debt as function of upside-side borrowers and vice-versa.
Now that (global) wealth inequality is even more pronounced and D for various sectors is and will greatly suffer hence low consumer confidence, GDP revisions, etc etc etc we enter the Sovereign STAGE.
To put it succinctly, it is a ratcheting staggered interrelated effect. Thanks in no small part to QE and Euro bailout bond nonsense etc etc etc. The longer the offset is manipulated the greater the crash. That IS simple.
"To make a long story short; is a phrase that has a long and complicated origin."
- Abraham Simpson
I'll take oversimplification over overcomplication-without-any-illumination any day. "No small part", indeed. Show me where public debt played a roll at all back in the meltdown of 2008.
I think it will happen overnight and you will not be able to exit..or prepare for it....I don´t care how expert you are...markets will close...banks will shut...computers will not work...cell phone too...and guess who will be on the TV all day long trying to "calm" the masses....the big O.....but as we have seen before...this will be an opportunity for the O´s followers to Flash mob their neghborhoods first..then yours...and it all falls apart then..you are on your own
Too me, if you look at everythings value basis (assets, stocks, bonds, commodities, currencies, pm) everything is in a bubble except the dollar.
In 2008 everything went down except the dollar and treasuries.
Treasury's have already excelled what's left to fly to in this unwinding of the world wide derivatives when they vanish?
The Dollar.
The Euro will disappear and the Dollar is the only medium that is standing ready to be traded too.
I see a huge unwinding of all classes ( and treasuries also)
The Dollar Flies, PM's die in the unwind
Then you buy PM's
Then you buy treasuries when yiealds are 15+
Be sure to wake me up when this happens-I've been waiting 2.5 years!
Fantasyland.
Never going to happen the way you describe.
The instant that the Euro dives off the cliff . . . CHF and Gold will go to the moon.
UST's will be the bridesmaid left behind . . . still cute in that phony dress, but unwedded nonetheless.
.
I thought 2011 was 2010 with another round of QE. No?
QE II ... late August 2010 hint .... Nov 2010 announcement ... QE III 2011, plenty of time left
Anybody just hear Cramer? He just did a 360 on european banks and the shorts.
I think he said shorts will annihilate them.
I better get more batteries for my hearing aid.
If true, everybody go long euro banks first thing tomorrow. Easy money.
59% of Germans do not want Euro bonds. 44% of them want Greece out of the EU and nearly as many want Germany out of the EMU. Things are still fairly civil, just wait until things get interesting. Taking Euros to the mint tomorrow to buy more gold bullion. I will have plenty of company, like always.
Belgium has since more than 400 days no national government, nevertheless we've more than enough regional (flemish, walloon, brussels, germand speaking region) governments.
The resaon why they can't form a government is easy, it's all about money.
Dexia for sure will bring the big splash because all the communities, all corporations, nearly all politicians are involved.
It will be the end of Belgium and the beginning of the finan-geddon in Europe and the rest.
But 'dikke' Dehaene, former prime-minister, inbev-drinker and president of the Dexia board will, as he used to say, solve the problems as soon as there are problems...
FADE IN
EXT. - AMERICA - NIGHT
We get a Bird's eye view of millions of people sticking their heads in the sand.
DISSOLVE TO:
INT. ILLUMINATI HEADQUARTERS - NIGHT
In the Gold Capstone room, with an ear to ear evil smile, Ben Bernanke rolls around in blood, feces and dollars.
CUT TO:
MONTAGE: ALL OVER THE WORLD - CITIES ON FIRE
DISSOLVE TO:
TITLE CARD "SUPERMAN WHERE ARE YOU NOW?"
When things start to crumble and tumble, the speed at which our leaders will flee the scene is directly proportional to their level of incompetence - it's entirely possible that at long last, the speed of light will be left in the dust...
But this isn’t an American crisis
yeah right
Informal poll request -
Do you think this "crisis" go around is the "big one" (ie dollar reset/fails/goes Weimar, major government spending/organization realignment, etc.) or do you think with have N(n=1 to ?) more rounds to go?
I'm on the fence between this being the big one, and having one more round (e.g. around end of 2012/sometime in 2013.) Leaning to one more round.
Votes/insights much appreciated.
It's all been "The Big One" but stuff like this easily takes a decade.
(I'm reminded of the corndog shot of Bachmann biting the big one.)
Decent review. You are right, Ts and $$ will not be the safe haven, it will be the Euro, behind gold of course. But what are the implications of that? Lower dollar, lower Ts, higher US equities.
Dear Gonzalo
Still here to tell you you are still wrong and we are long, not gold, but bucks and stocks from T Bond proceeds as interest rates climb
In particular, BAC/WS/B above 54 centavos
Regards
Rich
PS Do you have a list of your books and movies?
Probably would enjoy more of your speculative fiction
Watch 2012
very few sequels are ever as enjoyable as the original......this is going to be painful to watch
Will gold "surge" during the next collapse? Or will everyone sell gold in the "scramble" for capital? Easy answer. Many fools will sell gold while there is the faintest hope that a monetary unit based only on binary computer code might somehow retain its credibility. Tell you what. Whoever wants to "sell" his gold to me during the next crash, I will absolutely guarantee the highest price. I absolutely guarantee that the computers on the Enterprise will crush the Helicopter when it comes to creating vast amounts of binary code in order to "buy" your gold. I also have more military firepower.
Breaking Down the Spin: CNN’s Crowley Lies About Ron Paul
Breaking Down the Spin: CNN’s Crowley Lies About Ron Paul
http://www.infowars.com/breaking-down-the-spin-cnns-crowley-lies-about-ron-paul/
"I am sick and tired of the ignorant assholes who say, “All government regulation is bad! Let the free markets reign!” We have the government regulate various industries and products because it is necessary for our individual and collective safety—or would you rather the government never regulated, say, the water supply, car safety standards, housing standards? Would you prefer it if the FDIC ceased to exist."
Yes, the government has certainly done a great job of regulating our water supply with most major cities dumping toxic sodium flouride and over a hundred different toxic metals and chemicals therein. Yes, what is wrong with the country is that we are underregulated! Ha, ha, ha! Please do us all a favor and stick to making movies!
Tuco Benedicto Pacifico Juan Maria Ramirez
I"m sick and tired of the ignorant assholes that think people are too stupid to make their own choices.
Individual and collective safety?
YES YES AND YES.
The Gov't has no business telling anybody what to do unless their actions leave those affected no other choice. Clean water, grow up,
Was it the gov't that MADE Volvo produce the safest cars on the road ? or the market ?
So in the end, you will put your trust and future in the hands of the Gov't?
You need to apply some logic and an understanding of human nature to the twisted message's from "Pacifico".
Volvo "safe cars" is a marketing mythology.
Buy them at your own risk.
The people are pissed off and the lanterns of liberty are lit. The double edged sword of truth and justice is unsheathed. They will make the first move.
Are there false flag Events planned to stave off the rising tide of anger that is building against the babalonic media, banksters, wall street, and the horribly corrupted politicians?
When it is so obvious how this evil empire operates as we all saw in how they totally obscured the Ron Paul win in that debate in the media, and everyone knows it, they are ready to fall.
Here Ratigan tells it like it is.
The nation is waking up and the banksters and corrupted politicians are all being fitted for neck ties!
Hang em high, then lets see them all drug around town as a message to the rest!
http://www.liveleak.com/view?i=7f7_1313021133
SUPPORT ALL OUR TROOPS! BRING THEM ALL HOME NOW AND FOR CHRISTMAS WITH THEIR FAMILIES~~~!!! ALL OF THEM FROM EVERYWHERE AROUND THE WORLD!!!!!!!!! IF YOU SUPPORT THE TROOPS, DEMAND THEY BE BROUGHT HOME TO THEIR FAMILIES NOW!!!!!!!!!
Krugman Calls On Government To Manufacture War To Save Economy
http://www.infowars.com/krugman-calls-on-government-to-manufacture-war-to-save-economy
You just can't make that stuff up.
Got to go and get some whiskey. Too much info to gobble. Krugman making his mark again.
Droogies: A Clockwork Orange sequel of economic ultraviolence, set to the Ludwig Von's "Ode to Joy" is, indeed, being played out upon our heads, oh, my brothers...
Things are just as Nuriel Rubini said they would be back in 2008. The bank bailouts of 2008-2009 merely moved the debt shit-piles from the banks to the Sovereign (taxpayer) balance sheets to be economic time bombs to go off later. And later is now, and they're about to go off in our faces.
It's time for penis masks. Kill the banks, save the sovereigns. If not, 650 million middleclass lifestyles are going to be euthanized to save the lifestyles of 300,000 ultra-rich bankers. It's truly bizarre.
If the oil companies were doing this, instead of the banks, there would already be show trials and people in prison.
Rape a bank a day - keep debt flowing away!
Robotart
I hope your right on this 205th bank rally call. You are going to look like a stock guru. Go climb into your hole before the next wave of selling.
let them eat risk
I am so glad I am an illegal alien where I now am!
For a look into what may happen [cascading unintended consequences are impossible to predict or augur] check this out:
http://www.amazon.com/s/ref=nb_sb_ss_i_1_24?url=search-alias%3Dstripbook...
Let's face it, anything is possible...
All I know is that in Dec 2010 Gonzalo swore we'd be in hyperinflation by April 2011 and even charged $80 for a webinar expounding his views.
we have just inflation. Gonzalo should refund you $60 of the $80 you spent. ;)
the real question is how much is that 80 dollars worth now under the investing stewardship of GL?
hey, that's nothing. last year George Washington said there was another oil leak in the gulf near the BP spill but bigger than BP. We dont hear much about that anymore either, do we? I also think there was something about the contrails from jet airliners being used for radio waves or killing the surplus population. But, hey, its all content. Right?
Gold is in a bull market; I believe several people have noticed this. Aside from that, this is just a bunch of hysterical crap.
There's little to no upside potential without QE3. I can see things going sideways. But to rebound past summer levels and make new highs on this pile of shit we call an economy? Mainstreet is in contraction right now. I see it first hand here in Norman, OK.
Earth to any analyst out there. Do you read? Over.
[static...]
Earth to any economist out there. Do you read? Over.
[static...]
Earth to any algo out there. Do you read? Over.
[10101001100001110000111100011010101... <Warning: communication failure due to channel congestation>]
I believe that's the answer.
2011: A Farce Odyssey
bitchez
I'm beginning to understand that simply issuing an E-Bond is'nt so simple.. it could involve parliamentary votes, referendums, negotiations, court challenges, and for all who should agree, a disturbing loss of sovereignty. The problem with this is that such a venture requires time. In a crisis, the markets want an answer NOW. TODAY. The only time E-bonds come to the forefront is in the midst of a crisis.. forethought and planning to implement such a plan seem to be lacking up to this point.
IMHO, Europe's financial system is having a series of mini strokes: first the Greek crisis of last year, then Ireland, then Portugal, and this month comes Italy. Yet the E-Bond has not been introduced in any Parliament. At some point in the near future, Italy and Spain will become unable to hold up their end of the EFSF. Even France looked a little shaky last week. When the number of countries needing a bailout exceeds the number of countries doing the bailing, the markets will demand an answer TODAY. It's at this point that---
1. The French and Germans either can begin a bailout so big it would likely threaten France's solvency, or..
2. The ECB {with an assist from The Fed, the PBoC and with Germany's backing} vastly expands the SMP and begins purchasing failing sovereign bonds and bank stock, and waive the rule on "sterilization".. this is flat out monetization, and since The Fed and PBoC also participate, the Euro does'nt crash too badly in relation to most other fiat currencies... with the Swissy and Yen soaring. Germany, who has been resisting this, finally agrees when faced with financial Armageddon. As the Yen appreciates, Japan is strangled by deflation and a new phase begins.
3. Germany and it's Nordic cousins bolt the Euro.
My bet--- The Catastrophe behind Door #2
blah blah ... come to my subscription web site ... blah blah ... buy gold ... blah blah
When CNBC has nightly "market in turmoil" specials and my grandmother is talking about buying gold, you can pretty much can bet that the former signals a bottom and the latter a top.
better to be a little late than too early with that call. From past experience.
Yeah I am going to remember the 2500 call, Gonzo.
"The Enronites of the “energy trading desks” exploited the free markets and the lack of government regulation in the so-called “energy markets”, and deliberately created rolling blackouts in California so as to gouge the people of that state for the electricity they already owned and which they should have been getting, but which the Enron bastards were manipulating in order to squeeze them for money. Insofar as the financial markets are concerned, anyone spouting that particular bullshit spiel about the markets knowing best is either a shill for the banks, or a complete and utter imbecile."
Really ? Do you think we are fools ? Because you certainly are. Energy is an unregulated market ????? Hope I don't bust a gut laughing. Enron - well, at least some people went to prison in that scam. How about the government regulators and the banksters - has anyone yet gone to jail, as happened in 1987 ? ...yet that market is even more regulated.
Lira, you are a tool or a fool if you think government regulation will keep you safe ... in any situation.
The EPA is being honest about radiation from Fukushima ? The FDA is acting in your interest when it makes supplements illegal and refuses to allow labels identifying GMO products ? Any other .gov organization doesn't pander to the elites and the leeches ?
You are deliberately delusional.
You never 'proved' the point that Enron had your best interest at heart either. Government regulation should be like goldilocks. Not too much, not too little, just enough to protect the best interest of the public at large. You cannot strip it of all its powers then claim; "See, government doesn't work!" Just the same you cannot empower government to have complete control of individual liberties, otherwise you end up in a death camp. The free marketistas are espousing a highly lopsided argument and so you assume anyone advocating an effective government is advocating fascism. This simply is not true.
The regulators have the same character traits as those they regulate -- they look out for their own interests. It is in the interest of those in government to maintain and expand their own power. It is in their interest to promote their own values and ideas which quite naturally benefit themselves and their friends. No one regulates the regulators. How many governments can you name which have tried to exercise less power as time went on rather than more power?
Only the individual is sovereign and all acts must be consensual. That's the only practical and moral way to interact with your fellow man.
I can agree with you on a fundamental level, but we run into problems in a highly complex society. Libertarianism and it's sister anarchism might be great in theory, just the same as all other utopian ideas. Hell, communism, if not for the aformentioned desire for power, is a 'nice' idea. But I can, in a very simple illustration, destroy complete free market ideals in a complex society.
Railroads and monopolies
Upon the original foundation of the railroads they were controlled by varying and competing interests, just like the free market people advocate. However Morgan could not simply have this, and decided to buy up and bribe his way into controlling the market. Thus creating a monopoly. This was obviously bad for the customers of the railroad and their customers as prices were hiked. (Add in Morgan's US Steel monopoly.) This also was a 'natural' process of the free market. It is the ill and problem with no regulations. Now you might say, we would not allow monopolies. Well, isn't that regulation? You would be harshing my free market buzz man.
Of course my belief in some for of a government for the people, by the people and of the people has also turned out to be the true answer to freedom. However government SHOULD work for the best interest of the governed. I don't think that is such a bad ideal, even if we stop an individuals "freedom" to create a monopoly and hurt society as he wants. Sometimes the freedom to allow one person to become richer than God hurts the freedom of the remaining majority of the population.
You could also learn the lesson of private militaries from the past or as I stated above private fire departments.