The Free Market Paradigm Has Ended....What Is Next ?

Discussion in 'Economics' started by libertad, Jul 28, 2008.

  1. The idea of free markets has ended.

    The beginning of the nationalization of FNM and FRE....after the Bear Stearns rescue.... shows the cracks in the dam.

    Nothing is going to replace the value between real estate values at a normalized interest rate versus the values that were created with the Greenspan low rate policies.

    Some estimate that over 1 Trillion dollars in losses remains in residential housing alone....not including other categories such as credit cards, commercial real estate loans....the list gets longer.....

    Furthermore, why would any sovereign fund piss away more money than they already have on companies such as Citicorp, after just losing 30 to 50% in less than a year ?

    Also, why should foreign funds of any type buy the weak, when the stronger companies are on sale via the cheap dollar such as BUD....and much more to come ?

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    Thus government debt has to go to 7% tbill rates to be attractive, and maybe even higher . Thus this alone moves the real estate and other losses much higher.

    Part of the carry forward loss of $7 trillion bubbilized by Greenspan policies into real estate debt, is a more likely figure. Another 1 trillion being the stopping point would be small, especially when the printing press is taken into consideration.

    What does this mean ? At the very minimum a multi-trillion dollar bailout requirement or just finally an absolute loss, which should have not been carry forwarded from the 2000 stock market fall out. However, since much of this loss is visible in FNM, FRE debt held by foreign suitors, the fed has shown that they are more willing to work the printing press ponied on the US taxpayers, than simply taking the prolonged 2000 stock losses which have materialized in cheap real estate loans.
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    Just as the US citizen has lost its freedom in fighting terrorists by foregoing individual privacies, the idea of a genuine capitalism has evaporated and is tranforming into a new tax paid paradigm, called pseudo capitalist socialism.....

    The only way this changes is through structural changes which are nowhere in sight and have not even been mentioned by those who are seeking solutions.....
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    The world needs a currently successful capitalist model .....

    Where is it ?
     
  2. Nattdog

    Nattdog

    this is old news... about 100 years old. Do not take the headlines seriously, the free market has been dead for a very long time. More statism on top of more statism just alters the mix, it does not move our system from one category to another.
     
  3. Excellent Commentary, Nat
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    You are absolutely right in some aspects .....however the bills still have to be paid....

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    Obviously several trillion US dollars in losses still have to be absorbed....

    The question is ....who absorbs it ?

    And how is it absorbed ?

    And in the aftermath, how do the highly ranked economies stack versus one another?
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    Since the US is linked.....not unlinked to China, India, Euroland, and Latin America.....just who will be at the top of the economic heap in 10 years and why?
     
  4. I think most of the mess gets absorbed through print-money inflation and currency debasement.

    Foreign bond holders will bear part of the loss... through loss of buying power and/or actual losses when they reject buying and holding Treasury debt. (At some point, foreigners will have to cry, "No Mas"... dump their T-Bonds to avoid further losses, and send US interest rates soaring.)

    Who will be on top of the economic heap in 10 years? Historically, economic power has been with those who "make things and sell them to the world"... sounds like China and India to me.
     
  5. Sure seems that way. One way to look at such an issue is to know what the future position is going to be , provided everything you currently have stays the way it is.....

    You know this is basic math problem that only domestic productivity will take care of.....

    In other other words, you create businesses that have a positive outlook versus those that have a negative outlook.....

    Then you take those with the positive outlook and capitalize the values on a solid electronic worldwide stock exchange whereby anybody with a broadband internet account knows the story.

    Secondly, you get stock ownership into the hands of the majority that work at these companies.

    This is how to get it back , and then some....

    Nothing can beat the valuation that can be placed on a solid company with strong prospects.....

    In other words you can have a stack of assets that costs $1billion and is worth $1Billion.....or you can put the same $1Billion of assets in a solid future growth company, and make the $1Billion turn into $10 Billion or more.....

    If the gummint has 1$Billion the assets will be owned by the government....the people that work there will watch the clock....and the value will go down.....

    This is why the changing government policies have got to pull out all the stops to create the situation I described.....so the ship can turn around....

    An enhanced smokin hot worldwide electronic stock exchange whose stories go to everybody's house in the world.....

    The main changes being the elimination of the IRS with a sales tax only funded government....this will make every decent company in the world want to domicile in the US....

    You work at the company....you get stock....based on merit...

    What would also be plausible is to turn the White House and Congressional buildings into condos for Washington proper, along with the idiotic 2 party bullshit.....to be replaced with city by city, state to state , project by internet vote...government....

    Eliminate the shit...the shit being politicians, lawyers, IRS, subsidies, fucked up 2 party bullshit......Stack all the shit in large boats and send them SOMEWHERE ELSE.....

    When it gets done....all the other countries will want some of this ice cream.....
     
  6. Nattdog

    Nattdog

    The public is already taking the losses resulting from the crisis. how much has been lost in reduced savings/money market yields? Inflation? Taxes will be raised in effort to then take some of this liquidity back out of the system. For any of you who enjoy reading, VonMises has a very interesting essay on how intervention creates problems that lead to more calls for intervention... ever the cycle is reversed at some point or sufficiently slowed down, or the cycle leads to all out economic collapse and complete state control.. Lets hope the checks and balances provided by the market that we DO have will prevent this. bruce kovner had an interesting article in i believe cato magazine on this in the early 90's, for those near a library or who know how to find such things on the internet.
     
  7. VonMises.....

    Good articles.....


    Thank you
     
  8. libertad said""An enhanced smokin hot worldwide electronic stock exchange whose stories go to everybody's house in the world.....

    The main changes being the elimination of the IRS with a sales tax only funded government....this will make every decent company in the world want to domicile in the US....

    You work at the company....you get stock....based on merit...

    What would also be plausible is to turn the White House and Congressional buildings into condos for Washington proper, along with the idiotic 2 party bullshit.....to be replaced with city by city, state to state , project by internet vote...government....

    Eliminate the shit...the shit being politicians, lawyers, IRS, subsidies, fucked up 2 party bullshit......Stack all the shit in large boats and send them SOMEWHERE ELSE.....

    When it gets done....all the other countries will want some of this ice cream.....""

    Nothing could be better than these proposals, and, alas, nothing could be further from becoming reality.:(