(no subject)

[desh]

Man, I'm so glad the Republicans love the free market so much.

How long will it take for the idea that Republicans are about free markets and small government to die?

(At this moment, DJIA is down 3.13% for the day, 6.19% for the week, and halfway (from the perspective of the week's opening) to being below 10,000. But at least we're going to start more offshore drilling.)

Comments

[atthe-algonquin.livejournal.com]

Oh, Adam Smith. Oh, Adam Smith jokes.

http://www.nytimes.com/2008/09/17/business/17leonhardt.html is a pretty good look at why bailouts don't work.

[dagoski.livejournal.com]

Yeah, this creates a real problem with Moral Hazard. If investment specialists in financial and insurance firms develop this kind of expectations it only encourages them to take absurd risks. On problem though is that so many people and institutions hold AIG backed bonds that a default might tip us all the way into a depression. I never liked AIG as a firm. I had a smartly managed financial services mutual fund throughout much of the 1990s. Not only did its principal grow consistently, but the dividends paid enough that, once I had a large principal built up in it, I never needed to add money. Then AIG bought it out. They immediately ditched all the old reliables and started purchasing really dubious common stock. Within a month they had transformed the fund into the antithesis of what I originally bought it for. Then it started to tank, during a bull market even. I cashed out in time, but the experience taught me that AIG was less risk averse and way more avaricious than I was.

[jdcohen.livejournal.com]

Isn't this kind of the reason why absolutely free markets kind of suck, but well-regulated markets are safer and still produce profits? I'm kind of hoping Americans see that this is the result of disastrous laissez faire policies combined with almost absurd levels of greed.

Oh, and fuck Ayn Rand.

--Jeff

[desh]

Yeah, I don't know if I disagree with the bailout or not. It's complicated. My criticism is just the meme that the Republicans are against "regulation" and other vague terms that this bailout definitely falls under. It's not an important point of separation between the parties.

[jdcohen.livejournal.com]

Oh, the bailout is (as the Daily Show put it) the very blatant nationalization of those companies, which the Republicans are DEFINITELY against (ideologically speaking). But when it comes down to the wire, do you stick with ideology and let shit collapse, or do you use the heavy hand of government to try to shore it up? The problem is that I don't trust a Republican (or Bush for that matter) administration to have a heavy hand in turning around these "nationalized" companies AFTER pumping shitloads of taxpayer money into them, unlike a Democratic administration, which would likely insist on larger punishments for upper management and would absolutely ABHOR any golden parachutes for incompetent CEOs.

--Jeff