vtec9

Well, the closest anyone has come to pure capitalism is 19th century America in my opinion.. but it wasn't pure.


And I guess I'll agree to slightly disagree about the situation at hand. #2 is a problem, but I see it as an inevitability of cause and effect. It was bound to happen. It isn't the cause of the issues, it's an effect of underlying bad policy. If not for the manipulation of monetary policy -- extremely loose at first, and tightening later -- the asset bubbles wouldn't have ballooned, and wouldn't have crashed. There wouldn't have been such a large misallocation of resources. There wouldn't have been anything to come crashing down. Everything else, from loosening the lending laws and altering the tax structure to the creation of complex securities and over-leveraged financial institutions, just took the root problem and multiplied it into something uncontrollable.

So, I don't see #2 defaulting as the problem. The problem is the assets from #2 were compelled into getting so unnaturally large, that widespread defaults were unavoidable. The inevitable result of a certain action cannot be held responsible for future problems.

But I agree with everything else you've said.

Elistan

Interesting comments from Mark Cuban:

http://www.foxnews.com/story/0,2933,427644,00.html
GRETA VAN SUSTEREN, FOX NEWS HOST: This economic crisis is threatening Wall Street and Main Street and sending shockwaves throughout the political world by the minute. It is also threatening the ability of Americans to become self- made entrepreneurs.

Joining us live is a self-made man who is now a billionaire, Mark Cuban, the owner of the Dallas Mavericks and chairman and president of HD News. It's nice to see you, Mark.

CUBAN: Same--glad to be here, Greta.

VAN SUSTEREN: All right, Mark, I want to start at the end and work backwards. What happens after the bail out?

MARK CUBAN, DALLAS MAVERICKS OWNER: Boy, that's a good question.

Let's just say we put $700 billion into the economy, we increase liquidity, and it all goes according to plan--except there's one problem. The people who will do the lending after the money is injected were the ones that were doing the lending before. These were guys who don't know how to bank the right way.

So my guess is that they are going to be afraid to lend money. You're not going to see the effect of anybody being able to walk in, even with good credit, to borrow money for a house, to borrow money for a car.

The folks that actually do the lending on the ground in the neighborhoods, in the communities, are terrified about losing their jobs, won't know how to lend or won't know what the standards are.

So we could say there is a real second round of problems where someone has to step in and say "Ok, guys, you have to start lending money." And who knows what happens then?

VAN SUSTEREN: Does this financial crisis, for lack of a better word, that we're in--I know how it affects people who are lower income and middle income, but how about the rich guys? Does this have really any impact on you?

CUBAN: Oh, of course it has an impact, but we can rebound a lot more quickly. I had money in Lehman, and it's just gone.

Fortunately, I was smart enough about a month ago as I started recognizing that things were worse than I really appreciated they were I started pulling things back.

I think the big difference is I had resources where I could say "Ok, let's take a further look. Let's make sure I'm protected." And I got most of the way to a point where I'm actually level, but I still lost money in Lehman.

VAN SUSTEREN: One of the things that sort of bothers people is it seems like the people that have a lot of responsibility in this are getting the bailout. Is there any other alternative that see instead of a bailout?

CUBAN: No. You're going to have to bailout, you're going to have to inject liquidity, you're going to have to take the bad loans and all the bad instruments off people's balance sheets.

But I think what really upsets people is that they see this as just-- from Wall Street's end they see this as getting back to business as usual, and from Main Street's end, they see this as a problem that it is just going to turn back to business as usual.

And that's because there is no transparency. And, really--I'm a tech guy and Internet guy, and this is where the Internet could really come in and play a role.

All the social networking we talk about--we need to make sure that every transaction that takes place, wherever there is money injected, wherever there is a purchase made, all that is made available for all the citizens of the country to see.

Because it's not going to be an oversight board that catches problems. It's going to be the citizens of this country that go online and on a second by second basis that catch problems.

Because, I have to tell you, Wall Street is too smart. They can stay ahead of any board that any political entity appoints, but you are not going to be able to stay ahead of pure transparency, because the people of this country will get involved, pay attention, will realize $700 billion is at stake. And they'll also want to see if they're making money, because I think the second part of the fear is, yes, we may make money, but just like we don't know exactly where our tax money goes today, this money will go right in to the Treasury and somebody will earmark it, and it will be gone.

VAN SUSTEREN: Should the government, whether it's the Federal Reserve or the Secretary of the Treasury, should they have seen this coming a little sooner? And had they seen it coming sooner, would it have been less costly to us?

CUBAN: They should have seen coming sooner. They did see it coming sooner, they just didn't realize how slippery the slope was.

So, could you have stopped it sooner? No, because of the way Wall Street is, where everybody tries to get an edge and everybody takes a little chance. And once there is some level of confidence, that's how you get bubbles. And this was just one more bubble, and you're not going to be able to stop bubbles.

Warren Buffett said it best--first comes the innovator, then comes the imitators, then come the idiots. And that's what's going to happen in every bubble forevermore.

VAN SUSTEREN: So let's say the deal goes through the next day or two. Come Monday morning, are people going to feel confident and we're going to feel the effects rather soon? Or is this going to take a little while?

CUBAN: There will be a short infusion of confidence, and then people are going to realize nothing really changed. Some big companies will be able to borrow money, and you'll see the different spreads, the TED spreads and things come back to normal.

And then everybody will start asking what's really changed outside of the big players. And they'll start to realize, like I said earlier, that nothing's really changed.

And then we'll start to see a stagnation for entrepreneurs, we're start to see a stagnation available in credit available to buy everything from furniture to cars to homes.

And we'll wonder what happened, and then that's where we're going to have a problem again, because people won't know who to trust.

And so unless we have complete transparency, and unless maybe we also set standards on how loans should be done, and maybe step in and say OK, guys, once you have liquidity, this is where you need to take responsibility to offer loans to citizens, not just corporations.

Unless that happens we may have a second level or second phase of fear, if you will.

VAN SUSTEREN: I only have 30 seconds left. Let me ask this quick business question--is this a good time to buy a baseball team?

CUBAN: Actually, you know, I'm hoping all this confusion pushes the price down. But it's always a good time to buy a good baseball team.

VAN SUSTEREN: Mark, always fun to have you. Thank you.

CUBAN: Thank you, Greta. Appreciate it. It was fun.

cthree

late 18th century - early 19th century Georgian England was pretty pure, for a while at least until Parliament decided that if they kept working people to death in the factories they would soon run out of people to keep the machines turning so they decided to slow down the body count and save a little for tomorrow. This is a time when workers and their families were the rightful property of their lords, much like cattle or teacups.

GPMike

This period produced some of the finest literature of all time. Charles Dickens' classics.