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Financial crisis ! whats your opinion and why :)

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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?
    I am not going to deny that all these things are problems. However they are not so great that they merit no regulation that is simply giving up because you cba to deal with a problem.

    We make sure regulators do not succumb to regulatory capture by having stringent laws on transparency and punishments for those who are clearly seen to be colluding.

    We also try our best to outline the regulators as independent organisations with expertise. (I am going to outline critiques of this as well)

    To make an independent, politically neutral and expert organisation is very difficult nigh on impossible.

    However you can get as close as possible to this for example courts tend to try and do this.

    Most regulators face regulatory capture due to those who regulate them being from the same industry as this requirement is necessary for them to get the job as a regulator for expertise.

    However one thing you can do is have these people from industry work along very clearly and transparently with government and have government train people who are not from the industry to learn more so that they can actually judge for themselves a situation and not be fooled by "experts from the field".

    I have know lost the will to write any more lol I will continue later.
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    (Original post by Classical Liberal)
    ...

    (Original post by py0alb)
    ...
    I'm not an expert in the subject at all but the banking system seems quite interesting to me, and I'm captivated by both your arguments. What I was thinking to myself though, is what would happen if the FSCS was removed completely? So people were more aware of what they are really investing in rather than blindly following high interest rates. I'm quite right wing, in the economical sense, and I think removing this legislation might actually make fractional reserve more reliable.
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    (Original post by Classical Liberal)
    Brilliant so we have loads of kids unemployed, on benefits, getting depressed, losing skills, because of the NMW. At least you admit that
    wut?

    For a start, I assume you are giving up on abolishing child labor...

    Ok, Lets see if I can get this straigt - I say there is unemployment and if you abolish NMW employers will lower wages for those currently on NMW this because of the huge competition for jobs.

    You then reply with "see, you admit that NWM causes unempolyment".



    This is almost as bad as saying because I say parents shouldn't be legally allowed to abuse children then I want all children taken away from their parents... Are you able to follow any logical process in that mind of yours?
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    (Original post by Classical Liberal)
    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.
    Lol I hoped you learned something from our 3 page debate but clearly not.

    All systems rely on regulators getting it right that is the founding basis of capitalism. You regulate just enough so that innovation is possible without firms harming the people.

    However this system is not perfect but I implore you to come up with a better system Marx tried but Communism didn't go so well :rolleyes:
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    (Original post by Classical Liberal)
    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.
    What a load of *******s. Society is regulations. Civilisation is regulations. Without laws and regulations, you simply have might is right. We grew out of that phase in our evolution centuries ago and we don't want to go back there thank you very much.

    There is no economic system that would function without regulations and enforcement of contract.

    Its really time you grew out of these naive hippy ideas that if you just leave people alone everyone will be nice to each other and no-one will try to take advantage. You're no better than some utopian Marxist.
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    (Original post by Classical Liberal)
    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.
    We have a human system.


    Take a look at crime. Crime is not nice for most people. It exists, we combat it by making things laws that govern what people can and can't do.

    You say this is a bad system, we shoudln't relly on laws - removing laws would make everything o.k.

    Do you think the world runs on fluffy pink cotton candy?
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    (Original post by py0alb)
    What a load of *******s. Society is regulations. Civilisation is regulations. Without laws and regulations, you simply have might is right. We grew out of that phase in our evolution centuries ago and we don't want to go back there thank you very much.

    There is no economic system that would function without regulations and enforcement of contract.

    Its really time you grew out of these naive hippy ideas that if you just leave people alone everyone will be nice to each other and no-one will try to take advantage. You're no better than some utopian Marxist.
    The purpose of the law is to protect people from coercion. Coercion being threats of force, actual force or lying. If there is law that exists that does not stop or prohibit coercion, then my default position is to repeal that law.

    Good straw-manning me as an anarchist though.
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    (Original post by Electronica)
    I'm not an expert in the subject at all but the banking system seems quite interesting to me, and I'm captivated by both your arguments. What I was thinking to myself though, is what would happen if the FSCS was removed completely? So people were more aware of what they are really investing in rather than blindly following high interest rates. I'm quite right wing, in the economical sense, and I think removing this legislation might actually make fractional reserve more reliable.
    returns should be correlated to risk, and risk should be transparent. This was a major failing in the financial crisis because the high street banks were offering low risk low return saving accounts but due to their morally dubious activities, the risk was actually far higher than they were advertising. This is exactly the kind of thing I would legislate to prevent.

    If you want to make risky takeovers and investments, then you need to communicate this to your depositors and pay them accordingly.
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    (Original post by py0alb)
    returns should be correlated to risk, and risk should be transparent. This was a major failing in the financial crisis because the high street banks were offering low risk low return saving accounts but due to their morally dubious activities, the risk was actually far higher than they were advertising. This is exactly the kind of thing I would legislate to prevent.

    If you want to make risky takeovers and investments, then you need to communicate this to your depositors and pay them accordingly.
    So do you agree with me that there should be no money-back-guarantees for depositors?
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    (Original post by Electronica)
    I'm not an expert in the subject at all but the banking system seems quite interesting to me, and I'm captivated by both your arguments. What I was thinking to myself though, is what would happen if the FSCS was removed completely? So people were more aware of what they are really investing in rather than blindly following high interest rates. I'm quite right wing, in the economical sense, and I think removing this legislation might actually make fractional reserve more reliable.
    FSCS is a patch job government intervention. It claims to be there in the interests of savers. In reality it is there to be in the interests of banks. It means that conservative banks are out competed and banks can take crazy risks without savers doing anything about it. Savers do not even demand higher interest rates for the crazy risks banks take.

    Without things like the FSCS then fractional reserve would have surely failed and the banking industry would be no where near as lucrative as it is today.

    It is the classical case of do gooders on the one hand promoting government intervention to protect people, whilst a special interest group (the banks) on the other hand are the real beneficiaries. It is basically a whop off implied subsidy to the banks.
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    (Original post by py0alb)
    returns should be correlated to risk, and risk should be transparent. This was a major failing in the financial crisis because the high street banks were offering low risk low return saving accounts but due to their morally dubious activities, the risk was actually far higher than they were advertising. This is exactly the kind of thing I would legislate to prevent.

    If you want to make risky takeovers and investments, then you need to communicate this to your depositors and pay them accordingly.
    The whole problem is you do not need to, because of the FSCS. Savers don't give a ****, the government insures all the accounts.

    This is the very definition of moral hazard, the very thing you proclaim to deal with.
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    (Original post by py0alb)
    You're no better than some utopian Marxist.
    LOL I totally agree exactly this is what I was saying too.
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    (Original post by Classical Liberal)
    The purpose of the law is to protect people from coercion. Coercion being threats of force, actual force or lying. If there is law that exists that does not stop or prohibit coercion, then my default position is to repeal that law.

    Good straw-manning me as an anarchist though.
    :rolleyes: After this I am very much convinced you are very confused / a troll.

    You will end up repealing a hell of a lot of laws if your view was true.

    The purpose of the law is to protect rights and liberties in general but to also define the level to which they are repealed when you break the law.

    However if you REALLY think that the total purpose of the law is to protect people from coercion you are so damn confused lol.
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    (Original post by Classical Liberal)
    The whole problem is you do not need to, because of the FSCS. Savers don't give a ****, the government insures all the accounts.

    This is the very definition of moral hazard, the very thing you proclaim to deal with.
    Well yes, the FSCS should not use public money. If firms go under they go under and their assets should be liquidated and distributed to their creditors. We agree on that.

    If savers want insurance for their deposits they should buy it themselves from a different source.

    Having said that, there should be a market for a whole range of banks between those who pay interest at barely above the base rate but only invest in a mixed portfolio of extremely safe blue chip stocks all the way to high interest accounts who invest in high risk high reward enterprises.

    So in summary, an free market is the answer. And as every economist knows, you can't have a free market without sensible regulation.
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    (Original post by Genius7)
    :rolleyes: After this I am very much convinced you are very confused / a troll.

    You will end up repealing a hell of a lot of laws if your view was true.

    The purpose of the law is to protect rights and liberties in general but to also define the level to which they are repealed when you break the law.

    However if you REALLY think that the total purpose of the law is to protect people from coercion you are so damn confused lol.
    I'm pretty sure he's not a troll, he's just one of these people that is so obsessed with one idea that even when the evidence is in front of his eyes he can't bring himself to accept it. Kinda like a religious fundamentalist in many ways.

    You get lots of politically ideological people like this unfortunately, several of them are disarmingly lucid. Of all the atrocities committed by mankind, the ones that weren't caused by religion were caused by the kind of dogmatic political ideology exhibited by CL. I bet Stalin couldn't be reasoned with either.
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    thought this was interesting and relevant http://www.thrivemovement.com/home
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    (Original post by Electronica)
    So do you agree with me that there should be no money-back-guarantees for depositors?
    Providing it is replaced with adequate dissemination of information and anti-moral hazard legislation, yes, absolutely.

    Some simple changes to enforcing the way banks are owned and run should be sufficient. At the moment, there is literally no-one within a bank or a whole range of other financial industries in whose best interest it is to ensure that the organisation is run responsibly that also has the information and power to see that this is done. We have this crazy system where both employees and senior management are incentivised to make decisions that are actually contrary to the best interests of the organisation as a whole. It would only take a couple of minor tweeks and the rest would fall into place. I'm instinctively weary of introducing pages of legislation, but sometimes there is just no way round it.

    We really need to apply the anti-corruption laws constistently. The amount of blatant bribery that goes on between banks and trusts and law firms and accountants and ratings agencies etc etc is just shocking. Its not allowed in any other industries, so why do we let the city get away with it?
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    (Original post by py0alb)
    Of all the atrocities committed by mankind, the ones that weren't caused by religion were caused by the kind of dogmatic political ideology exhibited by CL. I bet Stalin couldn't be reasoned with either.
    Classical Liberalism caused the atrocities committed by mankind?

    That is seriously funny. Lets just look through history. Where men have suffered at the hands of others? Where have these places been?

    All of the atrocities of man come from the left wing (or the pro government crowd). The only exception I can think of is Pinochet. Otherwise all of the dictators are on your side of, government knows best.

    Nazism - Gov knows best
    Soviets - Gov knows best
    Qaddafi - Gov knows best
    Iraq - Gov knows best
    Cuba - Gov knows best

    So on and so forth.


    Of all the sides of politics, classical liberalism has by far the cleanest hands.
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    (Original post by Classical Liberal)
    Classical Liberalism caused the atrocities committed by mankind?

    That is seriously funny. Lets just look through history. Where men have suffered at the hands of others? Where have these places been?

    All of the atrocities of man come from the left wing (or the pro government crowd). The only exception I can think of is Pinochet. Otherwise all of the dictators are on your side of, government knows best.

    Nazism - Gov knows best
    Soviets - Gov knows best
    Qaddafi - Gov knows best
    Iraq - Gov knows best
    Cuba - Gov knows best

    So on and so forth.


    Of all the sides of politics, classical liberalism has by far the cleanest hands.
    That wasn't what I said and you know it. Or at least I seriously hope you know it otherwise you're not as smart as I normally give you credit for.

    Besides, despite your name, the insane policies you advocate are a long way from being classically liberal.
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    (Original post by py0alb)
    That wasn't what I said and you know it. Or at least I seriously hope you know it otherwise you're not as smart as I normally give you credit for.

    Besides, despite your name, the insane policies you advocate are a long way from being classically liberal.
    What the crazy policy of saying the banks should not be able to create money?

    If think if the people at large understood the system, they would think you were the insane one.

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