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Financial crisis ! whats your opinion and why :)

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    I agree with pretty much everything Classical Liberal has said. py0alb is just using ridiculous and patronising arguments that are invalid.
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    (Original post by py0alb)
    Riiiight... and using the same logic, what is the incentive for firms when considering how to invest in their businesses? Long-term or short-term?
    If you take money for longer, then you would be paying more interest.

    It is not about longterm vs. shortterm though, it is about coordinating the time preferences of savers with investors.

    If nobody saves in 10 year money, then that suggests people do not want resources devoted to production 10 years in the future, and therefore firms will not invest into 10 year projects as much because they would pay very high rates of interest to raise the money. Instead they would invest more into short term projects. Which is what savers wanted because they did not put their money into longterm savings accounts.
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    (Original post by Classical Liberal)
    Yes. It is usually two fold. On the one side there a do gooders who pass laws that are well intended to protect people. On the other side there are special interest groups who know they will benefit from certain laws and use the do gooders as front me.

    The perfect example being NMW. It is promoted by do gooder Fabians in the vain hope that it will raise wages for poor people. And it is backed the the monopolistic trade unions trying to protect themselves for competition.

    Regulation is always an unholy alliance of do gooders on the one hand and special interest groups on the other.


    I have never heard that claim before. Even Marx thought people would earn subsistence wages for godsake.



    The law underpins capitalism. Not arbitrary regulation.

    "Without the law there can be no freedom" - Greek Proverb



    What was the point?



    Who cares about the world stage. They are well fed. Probably have nice cars. And can spend more of their lives chilling with mates or going on holiday.



    Who is this 'China' who does not care about the workers?
    Lol you do realise that the law is regulation or are you just that ignorant.

    Child Labour laws - regulation

    Food standards laws- regulation

    Former banking laws - regulation

    You have basically come to see my point is correct and are now trying to say it in a different way to me to sound right well at least you have come to see the light lol.

    Though I will admit to some hyperbole on the labour market if we relate it to the current time. However back then it would literally have destroyed the economy if it were allowed to continue to go on as the productive potential of the economy was being destroyed.

    If you can't figure out what I mean when I say "China" then you are clearly not intelligent enough for me to be conversing with.
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    (Original post by Classical Liberal)
    If you take money for longer, then you would be paying more interest.

    It is not about longterm vs. shortterm though, it is about coordinating the time preferences of savers with investors.

    If nobody saves in 10 year money, then that suggests people do not want resources devoted to production 10 years in the future, and therefore firms will not invest into 10 year projects as much because they would pay very high rates of interest to raise the money. Instead they would invest more into short term projects. Which is what savers wanted because they did not put their money into longterm savings accounts.
    Don't obfuscate, answer the question.

    Why would you think that the personal preferences of savers be the best way to decide the best way for companies that they know nothing about to invest in their infrastructures? WTF are you smoking? You think that would make things better?
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    (Original post by py0alb)
    "Save" for long term "investment"... I think you need to google "savings" and "investment" because the two words don't fit together in this way within an economic context, which suggests to me that you might need to go away and read up a little more on introductory macro.
    All investment must be derived from savings, or forgoing consumption. When I refer to saving what I really mean is forgoing consumption.

    If we want to invest in capital we must forgo consumption of resources and instead use those resources to create capital. This is the nature of capital formation, it cannot be done any other way.

    Obviously when we refer to savings and investment in the real world it gets confusing. Because somebody might save some money. This money is given to somebody who then buys a house. This is not saving that has lead to investment. This is just one person forgoing consumption so another person can consume.
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    (Original post by Genius7)
    Lol you do realise that the law is regulation or are you just that ignorant.
    This gets in hazy philosophy. But the law, I think, derives from justice. What is categorically and morally right. Regulation on the other hand is just arbitrary do goodery or has nothing to do with categorical morality.

    For example this is a just law. You kill somebody. You go to prison.

    This is an example of regulation (still a law in the technical sense). You pay somebody less than £6/hour. You go to prison.

    I say "China" then you are clearly not intelligent enough for me to be conversing with.[
    Good way of dodging the question.
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    (Original post by Classical Liberal)
    This gets in hazy philosophy. But the law, I think, derives from justice. What is categorically and morally right. Regulation on the other hand is just arbitrary do goodery or has nothing to do with categorical morality.
    /semantics
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    (Original post by Classical Liberal)
    This gets in hazy philosophy. But the law, I think, derives from justice. What is categorically and morally right. Regulation on the other hand is just arbitrary do goodery or has nothing to do with categorical morality.

    For example this is a just law. You kill somebody. You go to prison.

    This is an example of regulation (still a law in the technical sense). You pay somebody less than £6/hour. You go to prison.



    Good way of dodging the question.
    K well If you are honestly not intelligent enough I mean the Chinese government lol I expected you to have the intelligence to extrapolate simple information but I guess that is a luxury not everybody has.

    I underlined it you yourself said it that it is law. Don't really have much more to say law is a form of regulation that is pretty basic knowledge glad you could figure it out after this long ass convo.
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    (Original post by py0alb)
    /semantics
    Thank you very much. He has realised he is wrong and is now trying to go into very technical detail to admit it :rolleyes:. Guess there is not much one can do when arguing with people like this.
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    (Original post by Genius7)
    K well If you are honestly not intelligent enough I mean the Chinese government
    The government does not think. The government is not a person. It is an organisation. Only people can think.
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    (Original post by Genius7)
    Thank you very much. He has realised he is wrong and is now trying to go into very technical detail to admit it :rolleyes:. Guess there is not much one can do when arguing with people like this.
    Let me put it to you this way.

    Regulations basically means for the most part (as far as I am concerned), bad laws.
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    (Original post by Classical Liberal)
    It is an organisation. Only people can think.
    This is true of all organisations, and is a very good argument for strong legislation. Ultimately every decision in every organisation is made by an individual whose motives and incentives may or may not align with the needs of the organisation, the market, and society.

    The only cure for moral hazard is regulation unfortunately. You can't just shut your eyes and wish it away.
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    (Original post by Classical Liberal)
    Let me put it to you this way.

    Regulations basically means for the most part (as far as I am concerned), bad laws.
    AH finally we have gotten to the route of the problem. You have negative connotations about the words regulations this occurs for many people for a number of situations.

    The only way I can really answer this is to say simply that your idea is wrong.

    I am not trying to be rude genuinely happy to be getting somewhere in this convo now.

    It is just that regulation is not just bad law as many people think but most law. It is the view that regulation= bad law that gives people an unfair view of it.

    Regulation can be both bad and good law just depends on how well it helps fix the system.

    I am genuinely glad that we have come to this

    I now think we have had a
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    (Original post by py0alb)
    This is true of all organisations, and is a very good argument for strong legislation. Ultimately every decision in every organisation is made by an individual whose motives and incentives may or may not align with the needs of the organisation, the market, and society.

    The only cure for moral hazard is regulation unfortunately. You can't just shut your eyes and wish it away.
    Nope - For the most part the cure for moral hazard is for the government to not step in and bail firms out. The best cure for moral hazard is reduce the size of the government budget

    And of course I can turn your logic back on you, because after all legislation is passed by corruptible people, and there can definitely be misaligned incentives in government regulation. Regulatory capture happens time and time again.
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    (Original post by Classical Liberal)
    Well done on straw-manning the argument.

    Anyway, if we take your line of logic seriously all children should be taken away from their parents and put under the care of benevolent government, just in case the child's parents would do a bad job.
    Your argument already had the strength of a straw man, I didn't change it at all. Your argument was that "parents knew best" and that the governemnt shouldn't interfere by having regulations/laws such. Countless hundreds of thousands of cases of child abuse show that this is not the case...

    My line of logic is that we cannot allow parents to abuse children if they have been shown to do so. Thus we do exactly what you have said, but not "just in case" but when. Where you got this idea that if you follow my logic you assume all parents are bad from I don't know, however your system does just the opposite. Removing legislation on the treatment of children because you assume all parents are good. Which, as you just told me is a stupid thing to do, hence the presence of legislation.



    (Original post by Classical Liberal)
    Why do I get paid more than the NMW? If we take your logic seriously, that unless there is government interference wages will fall, how come everybody around me gets paid more than the NMW?

    It is because wages are a price. And prices are subject the competitive forces. And as long as there is competition amongst employers for labour, then labour will be protected from exploitation. It is not government that should or does protect the worker. It is that market and the ability to work elsewhere that protects the worker.

    "In competition, individual ambition serves the common good" - Adam Smith
    I get paid more than NMW. However, the idea that employers currently paying people on minimum wage are doing so out of the goodness of their hearts - or to draw in employers is stupid.

    Have you seen the unemployment figures lateley? 20% of young people unemployed, thousands of applicants for a job. Employers wouldn't need to give them a decent wage - the "competition" you are talking about is amungst labor for employers, not employers for labor with these kinds of jobs.

    It might not be for you - but you are not in a minimum wage job, as you said. For those in minimum wage jobs, their skills are not the kind that are dificult to find! I've been there, I got paid £3 an hour for my first job, I know that I was picked over someone older because the shop could get away with paying me less.
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    (Original post by Hanvyj)
    Have you seen the unemployment figures lateley? 20% of young people unemployed, thousands of applicants for a job. Employers wouldn't need to give them a decent wage - the "competition" you are talking about is amungst labor for employers, not employers for labor with these kinds of jobs.
    Brilliant so we have loads of kids unemployed, on benefits, getting depressed, losing skills, because of the NMW. At least you admit that
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    (Original post by Classical Liberal)
    Nope - For the most part the cure for moral hazard is for the government to not step in and bail firms out. The best cure for moral hazard is reduce the size of the government budget
    This view is based solely on ideology, not in rationality, logic, or the empirical evidence. According to your logic, the best way to reduce robbery would be to abolish the police force.

    And of course I can turn your logic back on you, because after all legislation is passed by corruptible people, and there can definitely be misaligned incentives in government regulation. Regulatory capture happens time and time again.
    ...which is why we have regulations about making regulations.
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    (Original post by py0alb)
    This view is based solely on ideology, not in rationality, logic, or the empirical evidence. According to your logic, the best way to reduce robbery would be to abolish the police force.
    If the police force paid out compensation when the crime failed, then yes, get rid of the police :cool:



    ...which is why we have regulations about making regulations.
    What about the regulation, of regulations, of regulations?

    And how do we make sure the regulators, of regulators, of regulators do not succumb to regulatory capture?

    And how do we make sure sure all of these regulators do not become a great big government bureaucracy just creating work for the unionised public sector workforce?
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    (Original post by Classical Liberal)
    If the police force paid out compensation when the crime failed, then yes, get rid of the police :cool:

    What about the regulation, of regulations, of regulations?

    And how do we make sure the regulators, of regulators, of regulators do not succumb to regulatory capture?

    And how do we make sure sure all of these regulators do not become a great big government bureaucracy just creating work for the unionised public sector workforce?
    Aside from being flippant, you're missing the point. If the regulations had been sufficient in the first place, they wouldn't have needed to bail out the banks, because such a mess would have been impossible. The wisdom of bailing out the banks which is another debate entirely.
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    (Original post by py0alb)
    Aside from being flippant, you're missing the point. If the regulations had been sufficient in the first place, they wouldn't have needed to bail out the banks, because such a mess would have been impossible. The wisdom of bailing out the banks which is another debate entirely.
    Coulda, shoulda, woulda.

    If the system relies on the regulators doing the right thing at the right time, then you have a bad system.

    If your solution is, 'get the right regulations in place' then you do not have a sustainable or practical solution.

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