Capitalism is in one hell of a mess!

Daily Telegraph reports that the current crisis, one of the collapse of mortgage securities or the sub prime market lenders,i.e the banks, could make the 1929 meltdown look like a "walk in the park", says a York professor of economics.

Slashing interest rates, which should have been done in the UK 6 months ago, may now lead to over inflation,with oil prices at high levels,commodity and food prices spiralling etc..

BANKruptions are coming,so watch out for those private pension funds.
The Major Central banks are losing control inspite of the trillions of dollars being pumped in by them.

Predictions for 2008 look bleak

We've all been buying on the never never, manufacturing has fallen to its lowest level and economies are now dependent on the housing market and retaiil sales for their existence.

America could sneeze shortly over its real inflation rate and the rest of us will catch a cold.

The sub prime problem, like most major financial problems, is the unintended consequence of State intervention. The existance and growth of capital, including buildings that may be financed through a mortgage contract, were not the cause of the problem. That is, CAPITALISM (edited) is not the cause of the sub prime financial crisis, State intervention is the cause.

I would humbly suggest that greed, rather than the "State", is the problem.

Selling mortgages at low rates to people who could clearly not afford them, and then slicing and dicing those mortgages into various types of financial instruments for onsale, was a product of the financial institutions, not the "State".

Yes Jackspratt, greed is the problem, but that the system we live in, but can you blame the masses who are bombarded with offers,which are accepted. Its called "capital". They have it and want to make a huge profit from it. When the capitalist market goes pear shaped it expects people to go to the wall or the government to bail them out.For government read the tax payer. Nationalise the means of exchange is the only other alternative but can you see Brown nationalising Norther Rock? NO, the assets owned NOW by the people will be sold off cheaply to Richard Branson and the like. Watch out for the vultures. Have some sympathy for Northern Rock mortgage holders too.

it all Ken Lay fault he came back from the dead
if he was dead I personally do not believe he croaked
Bush fixed him up with the WPP program and faked his death

Unfortuneately, a discussion of economics with a dash of politics will lead nowhere until the participating individuals have a working comprehension of the concepts involved.

jackspratt wrote:I would humbly suggest that greed, rather than the "State", is the problem.

Selling mortgages at low rates to people who could clearly not afford them, and then slicing and dicing those mortgages into various types of financial instruments for onsale, was a product of the financial institutions, not the "State".

And all done at the behest of those who feel that it is a RIGHT to be a home owner and to make borrowing for home -- even though one cannot afford to -- easier.

Posters are abit short on threads today,Lee having killed off the last spat so here goes. As I started the topic let me upset TJ and give you 4 pennyworth.

After reading the opening thread I now say:-

Who is Going to Pay?

As the British economy teeters on the brink of recession the working people are going to pay the price for a society run for the rich.

Over recent decades, vast and mobile funds have been built up by transnational companies, oil rich and trade surplus countries and their state banks.

This money has been sloshing about the world looking for a market and unable to find profitable investments in consumable goods and services has put its money into shares,bonds and ever more complex markets.

Its what Karl Marx indentified 150 year ago as "fictious" capital, as opposed to "real" capital invested in the real, non paper economy.

Too much "fictious" capital being cashed in results in unstable banking followed by hyper inflation, followed immediately by devastating shortages.

The adjustment of "fictious" capital values downwards to meet productive capital values means holders of fictious capital realise very little of their wealth in any tangible form. In a "free" market it could be sudden but certainly not planned or managed gradually.

Instead there will be a run on the stock market,credit and currency along with the sub prime mortgage debacle and its resulting "credit crunch".

I do hope you will take this in the spirit it is intended or else I wll fold and not continue.

You see the Roast Lamb and Mint Sauce,Roast potatoes and two veg with gravy,followed by Homemade apple pie and cream is on the table.

OK! We agree so far?

Goodbye to the $2 pound in 2008
HSBC say the sell off has just begun and the pound will slump to $1.80 by the end of the year.
Barclays says the biggest risk to sterling comes from the City experiencing a severe shutdown. "Sentiment towards the UK and the pound couldn't be more darkand pessimistic than it is now"
Job security fears are at a 6 month high. Lloyds said the slump in confidence over job security,coupled with pressure on rising prices does not bode well for the New Year.
Shopping frenzy as store discounts hit 70%. (You know the rest)
"When they start opening their credit card bills and wonder how on earth they are going to pay them off,thats when they'll start cutting back" said a retail specialist

Take HSBC as an interesting lesson in 'capitalism' trivia.

The largest single shareholder in HSBC is Ma'an al Sanea of Saudi Arabia with a holdoing of about 4.5%.

How did he build up this staggering amount? He borrowed money and used it to buy HSBC shares.

Who lent him the money to do this? Why, HSBC of course!

Not bad if you can fix it!

well what else is new since capitolism is failing what other system works better
I think if goverments stop printing money for pet programs and get rid of corruption most any system would work also get rid of the multi national corp I think they play a big role in destroying countries economy. now for my personal question will the USD get stronger or weaker in the coming months ?

Subject: Fw: Economic Models Explained



Economic Models explained with Cows - 2007 update


SOCIALISM
You have 2 cows.
You give one to your neighbour.


COMMUNISM
You have 2 cows.
The State takes both and gives you some milk.


FASCISM
You have 2 cows.
The State takes both and sells you some milk.


NAZISM
You have 2 cows.
The State takes both and shoots you.


BUREAUCRATISM
You have 2 cows.
The State takes both, shoots one, milks the other, and then throws the milk away...


TRADITIONAL CAPITALISM
You have two cows.
You sell one and buy a bull.
Your herd multiplies, and the economy grows.
You sell them and retire on the income


AN AMERICAN CORPORATION
You have two cows.
You sell one, and force the other to produce the milk of four cows.
Later, you hire a consultant to analyse why the cow has dropped dead.


ENRON VENTURE CAPITALISM
You have two cows.

You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.

The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.

The annual report says the company owns eight cows, with an option on one more.

You sell one cow to buy a new president of the United States , leaving you with nine cows.

No balance sheet provided with the release.

The public then buys your bull.


A FRENCH CORPORATION
You have two cows.
You go on strike, organise a riot, and block the roads, because you want three cows.


A JAPANESE CORPORATION
You have two cows.
You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.
You then create a clever cow cartoon image called 'Cowkimon' and market it worldwide.


A GERMAN CORPORATION
You have two cows.
You re-engineer them so they live for 100 years, eat once a month, and milk themselves.


AN ITALIAN CORPORATION
You have two cows, but you don't know where they are.
You decide to have lunch.


A RUSSIAN CORPORATION
You have two cows.
You count them and learn you have five cows.
You count them again and learn you have 42 cows.
You count them again and learn you have 2 cows.
You stop counting cows and open another bottle of vodka.


A SWISS CORPORATION
You have 5000 cows. None of them belong to you.
You charge the owners for storing them.


A CHINESE CORPORATION
You have two cows.
You have 300 people milking them.
You claim that you have full employment, and high bovine productivity.
You arrest the newsman who reported the real situation.


AN INDIAN CORPORATION
You have two cows.
You worship them.


A BRITISH CORPORATION
You have two cows.
Both are mad.


AN IRAQI CORPORATION
Everyone thinks you have lots of cows.
You tell them that you have none.
No-one believes you, so they bomb the **** out of you and invade your country.
You still have no cows, but at least now you are part of a Democracy...


AN AUSTRALIAN CORPORATION
You have two cows.
Business seems pretty good.
You close the office and go for a few beers to celebrate.


A NEW ZEALAND CORPORATION
You have two cows.
The one on the left looks very attractive

Miruku - Enjoyed your post very much.

Miruku

There is major flaw for your model.
Your assumption is that they can look after cows.
Dairy and stockmen are a skilled and diminishing breed.

And the Economic model for the vegetarian is:-

Naam Jai

I don't understand your reasoning because contrary to your assertion, the international dairy industry is growing to meet the demands of expanding middle class consumers in developing countries like China, and especially as in India which has the world's biggest dairy industry, a substantial proportion ( 40% according to "The Hindu"newspaper 14/08/2006) of the population is vegetarian, and nearly all the milk is consumed domestically. For what it's worth, miruku means milk in Japanese.