Official — Economic Crash Not Computers' Fault 386
itwbennett writes "A 2-year government investigation has found what we pretty much all knew to be true: High speed trading systems were not the cause of the 2008 economic crash. 'The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire,' according to a leaked copy of the report's conclusions revealed in the New York Times."
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Economic Collapse due to Class War (Score:5, Insightful)
The rich are waging class war against the rest of us, and transferring wealth from the average person to themselves through fraud and coercion.
Re:Economic Collapse due to Class War (Score:4, Interesting)
Re:Economic Collapse due to Class War (Score:5, Informative)
Err, isn't that what OP was doing? Assuming simple greed?
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Arguably, if that greed is causing an economic collapse, it's stupidity, too.
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His other statement:
http://yro.slashdot.org/comments.pl?sid=1969586&cid=35023076
>>They do not care about net profitability. They care about power and control, which comes from wealt
Re:Economic Collapse due to Class War (Score:4, Insightful)
Greed is malice.
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Problem is, this is greed, but not stupidity.
Re:Economic Collapse due to Class War (Score:5, Insightful)
Re:Economic Collapse due to Class War (Score:5, Interesting)
What's more, our institutions are arranged in such a way that this is the natural outcome. The state has colluded with business since the beginning of the United States; this is how the colony projects were formed. George Washington was the richest man on the continent at the time of the revolution. It is only natural that he (and others like him) set up a system that makes sense from their perspective.
At one point or another, the common man needs to set up a state that works for his interests. Eventually working Americans will grow tired of working to enrich others while they suffer from illiteracy and treatable diseases. They will seize control of the state and industrial structures and finally determine their own future.
The biggest questions are when this will occur and will they have a plan for what to do after it happens, or will it succumb to demagoguery?
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To set up a state that protects the interests of the common man, he would need to rebel violently, because the current owning class will not give up their privilege easily. Violent rebellions almost always lead to tyranny, as the most ruthless are best able to take advantage of the chaos of violent rebellion. For example, see every single violent revolution except ours.
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If you are suggesting that the United States hasn't caused incredible brutality, you are quite wrong. If any African slaves were still around, they would tell you so. The Indians can certainly still testify to it, and might do so here, if they had running water and consistent electricity on the reservation. Pro-business dictators in Latin America and the Middle East (installed by the United States) have caused more suffering than the worst of Stalin's purges.
Even so, modern day communists still seek to avoi
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Ah, no. I am suggesting that, out of dozens of states which held a revolution to overthrow tyranny, most have ended up with more tyranny. We got lucky.
As for the rest, you are preaching to the choir. I'm a social anarchist, though most would just call me a socialist, and I am educated in the real history of our nation.
Re:Economic Collapse due to Class War (Score:5, Insightful)
yes they have go read about the Honduras 30 years long civil war started by Dole, Chiquita and the CIA
and read about the killing of syndicalist by coca-cola
and the toxic waste dumped by Shell
and the never-ending Colombian narcowar
and the oppression of millions by the Saudi regime in the middle east
Those things are all a direct result of the continuation of the Monroe doctrine
Re:Economic Collapse due to Class War (Score:5, Insightful)
At one point or another, the common man needs to set up a state that works for his interests. Eventually working Americans will grow tired of working to enrich others while they suffer from illiteracy and treatable diseases. They will seize control of the state and industrial structures and finally determine their own future.
What you're talking about is redistribution of the wealth by force. Historically the American economy has outperformed all others because it embraces laissez faire capitalism that allows people to accumulate wealth. Having failed in the old Soviet Union, been abandoned by the Chinese, and having caused stagnation throughout Central and South America, the idea of taking from the rich and giving to the poor still persists among those who choose to ignore history. Redistribution of the wealth has _never_ worked as an economic policy. It prohibits economic growth which means the poor just get poorer. This is the kind of thing Hugo Chavez does. You're all gonna end up like Venezuela if you're not careful.
Google for Geni Coefficient before you assume that wealth disparity is historically more disproportionate today than it's ever been or that the gap is any wider in the US than it is anywhere else.
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Well yes, and all of those rich people who are doing that, they are found in Washington DC.
The class warfare is one of the last attempts of a failed government, that has spent everything it could and couldn't, to divert attention from themselves. When an empire falls apart it starts class warfare, and its started by the government, who divert the attention from themselves.
Without government creating monopolies, there wouldn't be such huge disparities and differences between the 'rich' and the 'poor' (and b
Re:Economic Collapse due to Class War (Score:4, Interesting)
You put the cart before the horse. Government is just a tool, like a gun. It can be used for good or for evil. Tools do not have motivations of their own. They do what their owners make them do. We own our own government, but we have let it slip out of our control.
Monopolies exist outside of government creation and control. Natural monopoly is only one case where the free market fails. When it does, we need another mechanism. The free market will not stay free on its own. The rich will use their wealth to control and dominate the market, with r without government. In fact, it is easier for them to dominate the market without government regulations.
Our government is a democratic republic. It is hard for the wealthy to maintain control over it. They would rather it simply not exist, or failing that, that it do nothing to protect you, the cattle, from them, the owners. Government is not the problem, the rich controlling the government is the problem.
Re:Economic Collapse due to Class War (Score:4, Insightful)
Monopolies exist outside of government creation and control
- maybe you want to think about this before you type another one like that.
Monopolies are government creations. The natural monopolies, such as if you own the original of Mona Lisa, that's not a government creation, that's real. But natural monopolies are far and between, while government has created and subsidized and protected and stimulated and bailed out and protected and created tax loopholes for and regulated for all of the really important monopolies of today, anything from AT&T, to the military industrial complex monopolies, to food production monopolies - the agricultural, the processing, the communications and the financial monopolies.
Think about FDIC, think about what that means - removing risk from lending to certain banks.
Think about Freddie/Fannie and what that means - removing risk from lending mortgages and then selling the 'securitized' debt around in SIVs.
Think about 0-1% interest - taking huge loans from government at almost 0% interest and buying gov't debt and "making" the spread, thus in one shot - propping up more gov't spending and displaying 'record' profits.
The utilities - energy department. When Carter established it, it had this agenda to get USA off foreign oil. Ok, how did that work out? But what happened to all the 'energy producing' companies that are dealing with the gov't?
The monopolies, they are what government loves, they are what government wants, they are what pays the government officials to be reelected. It's a symbiotic relationship between politicians and monopolies, and they are parasites on the back of the society and economy that does not need them, suffers and suffocates because of them.
You are saying: government is not the problem, the rich controlling it are the problem.
But how did that happen? Who are these 'rich'? They are rich, because they are at the helm of the government, taking in the free money and KILLING competition with government power.
They are the rich, and they are the government, because the people do not care, right? People do not care to stop the government from destroying the free market.
Because the people, average people, they NEED the competition and free market. Because average people need prices to go DOWN, but monopolies do not allow that.
Prices must go down. You are hearing that the gov't right now is telling you that the economy is improving. Do not believe a single word, it's a gigantic lie.
An improving economy would mean more economic activity, and that only means more production and the result of that would be savings and reduction of trade deficit. The trade deficit is not reducing, the jobs are not appearing, the prices are not falling. Falling prices are brought to you by a working economy, by an economy that is becoming more efficient due to more efficient allocation of resources, and it's never planned, it just happens by the market forces, that choose for the falling prices.
The government destroys the economy, takes away your purchasing power by printing money and causing prices to go up, at the same time it regulates the free market away to keep its monopolies running without any threat of competition, and this again causes prices to go up. The gov't also provides money.
Gov't gives money, gives out loans to students, securitizes all these risky assets and loans and all this money is printed, given out with no interest, no backing, no reserves of any kind, no production to back it up.
The US Fed is counterfeiting US Federal Reserve Notes (which are not dollars, dollars are coins, that are minted by US Treasury, that's the extent to which the gov't is allowed to 'create' money).
The Federal Reserve is supposed to be this 'independent' entity, so that if the gov't starts spending too much, it can SHUT DOWN the printing press. Of-course the Congress will NEVER prevent the Fed from printing more money, because it will never stop from pr
Re:Economic Collapse due to Class War (Score:5, Interesting)
From http://en.wikipedia.org/wiki/Natural_monopoly [wikipedia.org] :
A natural monopoly arises where the largest supplier in an industry, often the first supplier in a market, has an overwhelming cost advantage over other actual and potential competitors. This tends to be the case in industries where capital costs predominate, creating economies of scale that are large in relation to the size of the market, and hence high barriers to entry; examples include public utilities such as water services and electricity. It is very expensive to build transmission networks (water/gas pipelines, electricity and telephone lines); therefore, it is unlikely that a potential competitor would be willing to make the capital investment needed to even enter the monopolist's market.
The reason we do not have more economic activity is that the rich will not invest in American business. Why would they, there is no demand for more products because people are too poor. The rich will gain a greater profit by investing in countries with poor labor, workplace safety, and environmental laws. They can exploit poor countries much more easily than rich countries.
The Fed is controlled by rich banking families, not by the government. It is a "quasi-governmental agency," meaning it is entirely a tool of the rich. Again, government is not the problem, the rich are.
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Don't patronize me, don't need to. Obviously there are some natural monopolies, but that's not what we are talking about, is it?
Well, I am not talking about the natural monopolies, I am talking about all the monopolies that are not natural, and their nature is found in the halls of the government offices, where they are pumped up with money and privilege and where they are protected from the market forces, protected from any competition, where they get their preferable tax treatments, where they get the gov
Re:Economic Collapse due to Class War (Score:5, Interesting)
Indeed. Consider this. The economic losses to banks alone from the Financial crisis are estimated at 4 trillion [nytimes.com]. Total property crime in 2009 adds up to 15 billion [fbi.gov]
That's less than half a percent! When you look at it this way, it's not disproportionate to suggest that the entire law enforcement budget of the United States be spent on bringing these criminals to justice. Yet, in most cases the people responsible for crashing the entire economy get million dollar bonuses for it.
Honestly, the only way I can interpret this is that it's intentional. Our system is not intended to provide justice at all. It exists only to protect the wealthy. We have no justice system in the US, we have an exploitation system.
Re:Economic Collapse due to Class War (Score:4, Insightful)
Please. Stop.
You're obviously talking about something you don't understand. My guess is you model these people in your mind as evil villains, hatching plans, stroking kittens in their laps, and doing all sorts of dastardly deeds.
They're not.
These are very large, very complicated "systems" of people, with various incentives, and different ideas on how things should work. The result of everyones ideas, biases, actions, result in the system we have.
If you investigated most of the people you find fault with, you'd find they did not act deceptively, they did not break any laws, they merely acted in a way which in hindsight was bad, but given the context was entirely rational.
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No, we are not.
/me returns to admiring the polished woodgrain on his custom-made PC
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But you aren't rich. You are middle class. I highly doubt that any real rich person posts on Slashdot. Remember, $250,000 a year is only upper middle class, it does not put you in the owning class. If you make less than a million a year, you are what a rich person would call a peasant.
Re:Economic Collapse due to Class War (Score:4, Insightful)
What? If anything, it was the opposite. The Rich were transferring money to the poor so that they could buy houses they could not afford. Once the bubble that caused burst, the poor lost their houses (which they couldn't afford in the first place) and the rich lost their money (foreclosing on underwater mortgages == losing money!).
Of course, the rich had bet everything (including the deposits in your bank accounts) on those mortgages. This is when the government decided to give your childrens' money to the rich to prevent the crash from becoming a collapse. But the government's action is the result of the crash, not the cause of it.
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Hahaha, good one. No, the poor are being scammed out of years worth of mortgage payments by the bank owning rich. Please look at current statistics. Look at the stock market, look at Wall Street Bonuses. The rich did not have to tighten their belts at all. The top one percent control more of the country's wealth today than they did when Bush took office. The crash, and the government response to it, were all decided upon ahead of time by the few wealthy banking families that control our monetary policy. It
Re:Economic Collapse due to Class War (Score:5, Insightful)
The rich did not eat the losses, the losses were farmed out to small investors while the big trading houses got a bailout. This recession was not even a speedbump to the ultra wealthy. Look at the bonuses, the Dow Jones, the income disparity: the rich were not hurt at all by this recession, they profited from it.
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Okay, whatever, but the question is, were the ultra rich hurt in any way by the recession? I do not believe they were, and if they make money primarily from investments, then not only were they not hurt, they made out like bandits. Where is the stock market today, and where was it when Obama took office?
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US Currency is more or less worth what it is because we can say "Look! We're a huge super power, this cash isn't gonna go all Hungarian [wikipedia.org] on you anytime soon!" The very fact that the US was/is so huge, and could produce so much, gave weight to its currency. This was even better then gold because frankly, there isn't enough gold for that. The only w
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Well, if the market rate for debt at the time was high, but the government loaned them money at a lower rate, that is, in fact, a give-away. In addition to giving the interest away, they were gambling with the principle. In all cases, your future earnings and those of your children were used to fund this give-out and gambling for the benefit of the international investor class.
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Sure place no blame on the average public. Even after a lot of media coverage about the housing market being in a bubble and could pop. A lot of the average person was putting their own money into this as a way to get rich quick. The banks and the other rich were trying to meet demand. As they were many other sources that would have put them out of business if they didn't try to meet the demand. The average person is just as greedy if not more then the rich. I have seen the rich warning the average per
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We do have a class of people telling us what is right and what is wrong. Working to make the rich richer is right, anything else is wrong. You do not get to decide on the course our country takes, on where we focus our efforts, on what projects we decide are important. You are not owning class, so you do not get to decide. You can work for the rich, or develop new markets for them by starting your own business which they will bankrupt after you develop demand for them. That is all.
Re:Economic Collapse due to Class War (Score:5, Informative)
http://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States [wikipedia.org]
http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States [wikipedia.org]
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But that isn't all you ask of your government - in that demand is implicit that not only it be somehow feasible that you go from poor to rich, but also that it be feasible on a reasonable scale. Otherwise your condition could be fulfilled by only one out of all Americans in a generation being able to make that leap, which is a position that strikes me as unreasonable.
Few people in America are actually asking for everyone to make the same, and for the government to redistribute wealth in that fashion. They'r
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You are missing the point. If you are poor and want to be rich. Do not work hard for someone else. Work harder for YOURSELF.
Yeah, because we all have the opportunity to be self-employed in this bold America of ours.
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Of course I believe that a poor person can become rich with hard work, determination, and a large amount of luck. Our society is not organized in such a way that there are high paying jobs for everyone who works hard. Plenty of people work very hard all their lives and can not rise out of poverty. The problem is institutional, not one of human laziness. It is intellectually lazy and dishonest to blame the poor for their plight. The poor are poor because the rich profit more when people have fewer options. A
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Inheriting it is NOT creating wealth, it's just a transfer of existing wealth. The guy who sold pet rocks? That's creating wealth.
And, yes, hard work doesn't guarantee you wealth either.
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Possible, yes, but rare. The unfortunate fact remains that children of the very rich basically have it made. Unless they really screw up, they can be guaranteed of a comfortably wealthy life. Everyone else can only work hard for a living - and no matter how hard they work, it still take
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"...no man ought to own more property than needed for his livelihood; the rest, by right, belong to the state." -Benjamin Franklin
"The descent of property of every kind therefore to all children, or to all the brothers and sisters, or other relations in equal degree, is a politic measure and a practicable one. Another means of silently lessening the inequality of property is to exempt all from
Re:Economic Collapse due to Class War (Score:5, Insightful)
It happens occasionally, but it is exceptionally rare. What actually happens, in practice, is that someone born into the middle class becomes upper middle class by moving to an area with a higher cost of living, then working for a while, and finally retiring somewhere with a lower cost of living. Work in California. Retire in Tennessee.
The number of children born below the poverty line (the definition of poor) who work hard and "become rich" is essentially zero, with the exception of lottery winners, and even those folks are rarely rich for very long.
The reason for this is twofold. First, the poor have to spend nearly all of their income just to get by. This leaves no realistic opportunity for the sorts of "I started a company and made it big" stories because there's not enough capital or access to capital to make that happen.
Second, because the poor live hand to mouth, they generally do not understand how to manage finances, so in the rare occasions when they come into a large sum of money (lottery, inheritance, etc.), they tend to blow through it very quickly instead of saving it and living on the interest. They also fail to keep enough money aside to pay their taxes, and end up losing their shirts. This same mindset leads to racking up colossal debt, which only exacerbates the problem.
Those two factors can be overcome, but only through proper education. Unfortunately, our education systems do not teach money management (except perhaps in an MBA program or something), and thus the only opportunity for kids to learn it is from their parents. When the parents don't know how to manage their money, the kids don't learn it. As a result, the vast majority of the working poor (along with the vast majority of their descendants) are basically doomed to a life of barely breaking even.
Even scholarships merely promote them from working poor to working middle class, but the tendency to burn through all their income usually follows them, and although they are in some sense better off, there's not much room for further advancement beyond that point except in subsequent generations through marrying someone with a better grip on money management.
It's like a treadmill. The poor keep walking on it because they started out going just fast enough to keep up. The middle class often start out going faster than the treadmill, walk off the front, and keep walking.
Short of outside interference (e.g. a better education system, marrying someone in a higher social class, etc.), there is no real opportunity to break this cycle. Thus, no matter how hard the poor work, they almost never get ahead, and even when they do, there are limits to how far ahead they are likely to get.
Ultimately, the only way to fix this is for schools to instill financial responsibility in children from a young age. However, this isn't in the best interests of the folks at the top, who require a steady flow of willing consumers in order to maintain their artificial inequality. As such, this isn't likely to every happen unless we get a truly progressive government (which we don't have now and haven't had in my lifetime).
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No, because it is similarly not the parents' fault that they were not taught money management as children; it was their parents' fault, which in turn was their parents' fault, and so on up the line. Ultimately, the real fault lies so far back in history that it really doesn't matter whose fault it is.
Also, a fair part of the blame rests on companies that extend insane amounts of credit. If you cannot possibly pay it back with a decade of wage garnishment and living hand to mouth, it is more credit than yo
Re:Economic Collapse due to Class War (Score:4)
40-50 years ago, people could support a family on one income. The average person still did not make enough to really save, though. They worked hard, but no harder than people today work. The average person got the same government benefits in the sixties as they do now. They sued just as much.
The average person today does not look for government handouts. being on the dole still carries a huge social stigma. People are born knowing that to prove your worth to others, you contribute. It is in our genes. Non-cooperators got shunned. Nearly everyone wants to contribute, but no one wants to be taken advantage of.
I know it is easier to blame the poor for their problems than to admit the system is unfair. When you admit the system is unfair, you have to look at how it was, just possibly, unfair in your favor. Then you have to question the myth you tell yourself: that you got ahead because you are superior. You can not go on believing that you were better than other people, rather than privileged or lucky.
Personal responsibility is certainly a good moral value, and should be taught, but you may also want to teach your children not to be doormats of the rich and powerful. Sometimes when something goes wrong, it is because a criminal is taking advantage of you, not because you screwed up. Sometimes the way to take responsibility for a situation is to stick up for yourself, and to fight those who would enslave you.
Sadly, there are times when nothing you could possibly do will make any difference. For example, the White Citizens Councils used the free market to destroy the lives of minorities who tried to stand up for their rights. They ensured that no one would do business with any "uppity" minorities. Those minorities could not have avoided that situation through any other choice but sitting down and shutting up. Is that what you tell your children to do when someone bullies them?
Re:Economic Collapse due to Class War (Score:5, Insightful)
In other 1st world countries, parents income has a 10% effect on their offspring's income.
In the U.S. it is 50%.
In the US it used to be 3 generations from bottom to top to bottom- now it's 5.
Instead of letting people earn money on merit, we have paris hilton's and george bush's leading the nation because their parents were rich. Think about how similar paris and george were.
The children of actors get first shot at all the acting jobs- not because they are good- but because their parents were actors. The CEO's share the same private schools as kinds and refer to playing with other ceo's when they were children.
In the long run- it's bad for the country as a whole to allow rich idiot children to take over the nation because they are friends with each other.
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The people who didn't save or think of the future kept the economy going for the last thirty years ... you couldn't have saved without them.
3 decades of prosperity build on NOTHING but increasing debt.
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I am sure that the fact that it is still possible for a person to grow up poor and with determination and hard work become rich is something that you either do not believe in or something that you do not believe happens.
Oh, it happens, it just doesn't happen very often. And a hell of a lot less often than it used to. The game is increasingly rigged, and if you don't see that, you're just one of the legions of useful suckers.
Re:Economic Collapse due to Class War (Score:5, Insightful)
I am sure that the fact that it is still possible for a person to grow up poor and with determination and hard work become rich is something that you either do not believe in or something that you do not believe happens.
It's not belief or disbelief. It's evidence. It happens very very rarely that a poor person becomes rich. And when it does happen, it is even more rarely due to determination and hard work. A poor person has no money to spend on education. To a poor person determination and hard work still mean a minimum wage job.
But of course, that's inherent in the capitalistic system. Capitalism is a system where you can become wealthy on the determination and hard work of others. Personal determination and hard work won't make you wealthy, they'll make your boss's boss wealthy.
And once wealth has been achieved, wealth breeds wealth. Once you're in the investor class, you pay other people to make money for you off of the labor of others.
If you a born into a poor family, the ways in which you can become rich are very limited.
1) You can have or develop a rare talent that is valuable. You can become a famous musician, singer, or athlete. But the problem with rare talents is that they are rare. I could never become a singer or professional wide receiver, regardless of the quality of the person who attempted to train me. I do have natural talents. But if I had been born into a poor family or even a lower middle class family, I would have never become a research physicist, because the resources I needed in order to become one would have been missing. And if I hadn't started on this path at about age nine, it would have been out of reach. You know what to the smart poor kids in an inner city Headstart program? They get ignored, because they don't need attention every second. That pretty much continues into elementary school and beyond. They learn pretty early that it doesn't pay to be smart.
2) You can marry into a wealthy family. This is a lot harder than you might think because the wealthy segregate themselves from the poor. So again, this option is reserved for the rich.
3) Be in the right place at the right time. Also hard if you're poor. But if you're already rich you can buy your way through business school and get an executive position at a start up and make millions for doing very little.
Along with the lack of upward mobility, there's little downward mobility. If you're Donald Trump, you can cancel a billion dollars in debt through bankruptcy, not have a penny to your name, and the next day walk into a bank to ask for a $10 million dollar loan, and they'll give it to you. Because you're a member or the rich club, even though you're poor. If you're poor, the same bank will charge you $50 a month in fees because you aren't maintaining a $15K combined balance. That is, if they let your shabby ass through the door in the first place.
But as I've said, I'm reasonably rich. I come from an upper middle class family. I married into an upper middle class family. I don't personally know any billionaires, but I do know people with 7 to 8 figure net worth, and I've met people with 9 figure net worth. What they all have in common is significant inherited wealth, with the exception of one person who was in the right place at the right time to earn millions on a job that should have paid $50k/yr. Now that he's earned millions and eluded the SEC, he can get jobs that pay in the millions. (Actually he had significant inherited wealth, too). All these people come from upper class or upper middle class backgrounds. I don't know any wealthy people who were once poor. Do you?
There's a reason Thomas Jefferson thought inherited wealth was dangerous to the Republic. There's a reason Adam Smith thought the idea of inherited wealth was absurd other than as a means to care for dependents who could not earn money on their own.
Re:Economic Collapse due to Class War (Score:4, Interesting)
50 years ago that would have allowed you to comfortably raise a family on a single income, with plenty of time to spend with your kids ...
Pushing everyone without the talent to rise to the top 10% into poverty will end up with most of the citizens into the US confined in ghetto's while the few remaining rich live it up in the majority of the country which they own outright ... a new feudalism, except this time they don't need any peasants any more because robots can do the farming.
Is that really the future you want to see?
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I know my fair share of doctors/pharmacists that have no business as one (i.e. they did it for the money not because they liked the work) that make in excess of 120,000 a year. Faculty in my department make somewhere around 80,000.00 and are leaps and bounds more brilliant than 80-90 percent of medical doctors. Then again, I guess they have tenure.
Yeah, I was basically told, when considering Grad School in my preferred field of academia, by professors who had tenure in the field, that if I could think of anything else I'd rather do with my life, to do that instead, but if I was so passionate about studying and contributing to the world's knowledge that it's all I could aspire to, to go ahead and shoot for a PhD. You pretty much have to love it, so hopefully that's what compensates those faculty, moreso than having tenure. I hear that a fair proport
Re:Economic Collapse due to Class War (Score:5, Informative)
The fact that the rich are still rich or richer and the poor are even poorer.
Poorer than what? Poorer than the poor a decade ago? Poorer than the richest king just two hundred years ago? A lot of the "poor" in the US today have cell phones, heat, food, television, access to computers, education, free libraries, some have their own transportation, and for those who don't, transportation costs are reasonably low for purchasing bus fare.
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They do not care about net profitability. They care about power and control, which comes from wealth inequality. They want the poor to be very, desperately poor and thus easier to control. Overall, their tactics might make our society poorer, but they only care about relative wealth, not absolute wealth. If there were a way to make everyone on the planet 1,000 times richer than the richest man alive today, say the invention of true nano-asemblers, the wealthy sociopaths would fight it tooth and nail. They d
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Good point, but the downfall of the rich has always been hubris. They do not see peasants as real people. They do not believe they are capable of uprising. History would seem to prove them wrong, but one privilege of being rich is that you simply do not have to pay attention to things that prove you wrong.
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Yes, and how exactly is that a strong argument against the theory?
I'm smart enough to design high-performance microprocessors, dumb enough to check in code that breaks the processor model.
Your post requires you to be simultaneously smart enough to realize that the OP's theory requires simultaneous smartness and dumbness, but be dumb enough not to realize that this describes everyone, and even exceedingly smart people can make fundamental failures in judgment. Especially because everyone is also both ration
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Obtaining power over others is traditionally how the extremely wealthy have acquired their wealth but more importantly retained it over great periods of time. They only don't care about the throngs of people to the extent that they have no chance of usurping their position as the elite. Which means having power over them.
Feudal lords didn't acquire their land and wealth and then let the peasants go about their lives as they choose. They wouldn't have stayed feudal lords very long that way.
Makes sense. (Score:4, Insightful)
I mean, the problems largely stem from scuzzy bankers and brokers buying and selling what they knew was garbage, along with problems with the fed's lousy idea of what an interest rate is, etc.
It's like finding out that the Minnesota bridge collapse wasn't the fault of computers either. No big deal.
Re:Makes sense. (Score:5, Insightful)
Re:Makes sense. (Score:5, Insightful)
Actually, only complete morons were betting that the housing market never fell. The smart evil bastards that make up most of Wall Street knew the market would collapse, but were doing their best to ensure that when it did so they'd lose nothing.
For instance, Goldman Sachs would buy credit default swaps from AIG, which meant that they could never lose money on buying up a bad loan (because AIG was going to be left paying the piper if it did). Now, in order to get a good rate from AIG, Goldman also made those investments look much better than they were, so AIG was thinking "those suckers, we're never going to have to pay a claim on this". And of course Too Big To Fail meant that if the shit really hit the fan, they could be assured that Uncle Sam would be the one holding the bag.
And to compound the problem, the individuals at those companies knew that they were never going to be personally liable for any of it. So the manager at AIG was happy to sell credit default swaps and make big bonuses - the worst that could possibly happen is he would get fired after making big bucks.
Re:Makes sense. (Score:5, Insightful)
And to compound the problem, the individuals at those companies knew that they were never going to be personally liable for any of it.
Which is what distinguishes the United States from a free market. In a free market, individuals are liable for their actions. Government interference in the free market in the form of legislation that shields individuals from the consequences of their actions in the form of the various Companies Acts that have been passed in the past 150 years, allows such people to hide behind the skirts of the Nanny State.
Given the absence of a free market in the US, there are only two consistent alternatives: to regulate the existing market further so that we get the benefits of the corporate form of social organization without so much of the downside, or to unregulate the market by abolishing the Companies Act and its successors, and return corporate property to its individual owners (the shareholders) while giving each owner and officer personal liability. Since the latter leads to a mess--this is simply a matter of historical fact--I personally favour further regulating the non-free market in which corporations exist.
Anyone who attempts to oppose the regulation of corporations on the basis of claims about "the free market" is guilty of a fundamental logical inconsistency, as no corporations would exist in a genuinely free market.
Re:Makes sense. (Score:5, Insightful)
Actually, the major problem was precisely the opposite. The banks and insurance companies -- even Fannie and Freddie -- were all betting that the housing markets WOULD fail. Freddie was churning billions in overnight short sells of their own paper daily, trying to make a profit riding down that failure. It was a race to see who could skim the most off the trades themselves until the paper was worthless. Anyone with the slightest bit of understanding of economics in general and the housing market could see that crash coming back in 2000. They had just created the financial instruments to profit, massively, off the inevitable crash. Even as the last sucker holding that worthless paper, there was still one last bet to call in and come out even money with credit default swaps. It wasn't a cycle people forgot to plan for. It was a market deliberately re-engineered to transfer a LOT of wealth VERY quickly on the highly anticipated downside of that cycle.
It was not an accident, much less willful ignorance. It was simply bare avarice.
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They made those bad investments because there were insurance companies willing to *insure* those bad investments.
The failure was on multiple levels.
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Bankers are pretty scuzzy, yes, but they've always been so. There are good reasons why the financial markets turned to more and more risky products over the years, and computers have a lot to do with it. It comes down to the ever falling cost of IT, and the erosion of banks' monopoly over large IT systems capable of handling trillions of transactions a year. With the loss of this monopoly, they could not sustain profit margins of 6% or so on normal banking products. And without such margins they could not
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If you could make fees on selling something that you could then have a guaranteed buyer to who to resell, at cost or better, and them carry 100% of any future risk... who wouldn't take that deal? I'm not sure why you're being modded Troll, since that's largely what happened.
Re:Makes sense. (Score:5, Insightful)
We all get worked up over pictures of oil covered birds in the marshes of Louisiana, yet we just sit here and take it when the leaders of our country rob us at gun point.
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You're right in that there findings are not a big deal. But its also a good thing that they looked into it. Imagine if it had been the computers' fault and nobody checked into it. This kind of shit would just keep happening...
So instead, it's the people's fault, and this kind of shit will just keep happening...
I blame society. (Score:2)
I mean, why not?
Ban human trading (Score:4, Interesting)
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So, how wealthy do I need to be to get in on the effectively guaranteed returns of algorithmic high frequency trading? I mean, after all, if someone else learns how to make a profit from the activities of my algorithm, I can just demand the trades be reverted and them drug into court for daring to cost their betters money, right?
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Exactly. Try to get a good price for buying an illiquid stock by aiming between bid and ask, and watch both bid and ask go up. Bid in between the new spread, and watch them both go up again. Finally settle for the new ask price, then watch the price drop back down again. They call it "providing liquidity".
Now try the same again, bidding higher and higher, then turn the tables around and sell at the higher price. Guess what? Your ass gets dragged into criminal court for manipulating stock prices.
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The point I was trying to make is that machines can only do what they're programmed to do. They're not smart enough yet to be dishonest of their own accord. You can program that act in such a manner, but they'll do so predictably. The idea is t
/. News Network (Score:2)
Years after $Trading_Houses intentionally create a bubble to trick gullible people into giving them money, people finally admit that maybe there were actual people involved in the stock market crash. As opposed to it being the fault of the inanimate objects designed and put into place at the behest of the trading houses
Kind of like with the dutch tulip bubble, but less pretty.
uh, credit crash, not "flash crash." (Score:5, Insightful)
the "flash crash" of fall 2010 was caused by robotraders.
the "credit crash" of fall 2008 was caused by greedy streetpunks passing crap paper around in the form of wispy visions of a bad translation of a murky photo of a dim shadow of the promise of someday showing a bad asset. and taking big bonuses every time the stinking pile came around for another rubber stamp.
the only possible report on cause could be "everybody failed as soon as this unregulated activity was allowed."
that's what published.
duh.
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It's like the traditional "let's blame the video games" or "let's blame the drugs", so people can excuse themselves for their stupid behavior.
WTF? (Score:5, Informative)
Was this EVER a proposed cause of the global economic crisis put forth by any reputable source? At first I thought the article was talking about the flash crash last May. I was unaware anyone could look past the many obvious causes of the 2008 collapse and try to blame high speed trading.
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Quoth Sponge Bath: ... ...
> At first I thought the article was talking about the flash crash last May."
Thank you, I had made the same assumption. Else... WTF is the point of running the gorram story?
Slashdot editors suck.
Thank you again.
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Was this EVER a proposed cause of the global economic crisis put forth by any reputable source? At first I thought the article was talking about the flash crash last May. I was unaware anyone could look past the many obvious causes of the 2008 collapse and try to blame high speed trading.
What was done back in 2008 wasn't explicitly illegal, just very dishonest and clever exploits of recent deregulation deregulation and loopholes. And as we see now with their taxpayer funded bonuses, the perpetrators of that bullshit are no less bold than they were back then.
What happened in 2010 also wasn't illegal, but obviously scared the crap out of everyone as well (granted on a much shorter-lasting timescale). Did we fix the root of that issue? No, there are some stops put in to bandage any future u
What a joke (Score:5, Insightful)
Yeah, "extensive" research and interviews. Only of the very people who didn't see it coming of course, because the legion of people who predicted it in advance wouldn't have any idea as to the causes.
You can guarantee the answer will be "there was enough regulation" by the gazillion regulations that did exist at the time and we need a gazillion more. Rather than "maybe the Fed settings rates at almost 0% for so long wasn't such a wise idea, oh and maybe when banks are making million dollar loans to people with no income and no assets the regulators and ratings agencies should take a look-see (you know doing their jobs)".
And yes some things that weren't regulated should have been (if it looks like insurance and quacks like insurance then maybe is is insurance even if they call it a credit default swap).
High speed trading is completely irrelevant since this wasn't triggered by a sudden drop in the prices of things involved in high speed trading in the first damn place.
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...maybe when banks are making million dollar loans to people with no income and no assets the regulators and ratings agencies should take a look-see (you know doing their jobs).
It's kind of hard to be objective when the banks and investment firms fund the regulators and ratings agencies... Definitely not a conflict of interest!
Stale regulations were part of the problem. (Score:2)
The markets had evolved much faster than new regulations could be applied, and of course the existing regulations weren't well enforced either. That's what you get tho...the party in power will put nay-sayers and do-nothings in charge of agencies and programs they don't like as a way to "show" that the agencies don't work. And of course, it's terribly difficult to get any new regulations put into law as no matter how good the economy they are always spun as job killers.
But that's our two-party system.
another gov't commission bs (Score:2, Insightful)
You know, results of a government commission that was established to figure out the causes for the financial crisis of 2008 came out, and that commission was a charade, just like this one.
That commission "found" that the crisis was caused by lack of regulations, that low interest rates and Freddie/Fannie had nothing to do with the housing bubble, they "found" that the only thing that government did "wrong" was let the Lehman brothers fail and that the future crisis can only be avoided if there is more gover
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You should be quite happy with the findings, then. If there was systemic failure; if it was the fault of institutions, then it follows that new rules can be devised to adjust the behavior of these systems or institutions. But if it turns out that individuals made, by pure happenstance, stupid and inane decisions, than no law can possibly prevent them from doing so again. Capitalism triumphs over the laws of man!
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You should despise corruption over a specific institution. The government & many private institutions are all culpable in the financial meltdown. What safeguards did the private firms have to protect themselves and the economy from meltdown? None. They took advantage of the situation, which is what most corporations do and with the US economy setup to value short-term growth gains over stability you will have a lot of shortsighted investments with most of the prosperity coming in the form of fraudulent
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I do despise corruption.
But the government is the only institution, among all other institutions, that has the ultimate power over people - it can jail and kill people.
OK? So I can hate corporations, whatever, but none of them have the legitimate power to kill you or me or to jail you or me.
So when it's government corruption, I really really really despise it, because what is the ultimate conclusion of that? It's terrible, it's the worst.
Government corruption must be treated with the most contempt out of al
It's no one's fault (Score:3)
Andrew Leonard says it's pretty much a waste of time [salon.com].
I'm sure that committee members would have liked to assign blame; it's just that they didn't have the votes.
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Who needs votes? If we put every suit on Wall Street up against the wall and blew their fucking brains out, that would be a lesser injustice than letting them get away with this.
Nationalize the Banks (Score:5, Interesting)
If this were happening to any other country on earth the State Department would be leaning heavily on them to nationalize their failing banks. It's happened hundreds of times in the past and will happen again. Now that it's us, we're just too damned proud to suck it up and do what needs to be done.
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Of course! If the security issues in social networking sites cause a economic crisis, count me in!
The crisis was a result of ... (Score:4, Insightful)
"'The crisis was the result of [human action] criminal behavior and [inaction] failure of law enforcement to do anything about it."
Blame? (Score:3)
Maybe the authors think that we've actually built an Artificial Intelligence and put it in charge of our financial system. If so, maybe we should replace them with one of those computers.
Is the OP Missing the Point? (Score:3)
Perhaps the OPer is confusing this with the flash crash.
In terms of the mortgage meltdown, HS trading wasn't a major problem, but flawed risk models certainly were complicit because they added to the general overconfidence.
Of Course Not. (Score:4, Informative)
The "Crash of 2008" was the result of several simultaneous actions.
First, the overspending by the still relatively new Democratic Congress were not vetoed nearly enough by Mr. Bush.
Second, the real estate boom busted. Mr. Bush had warned of the coming collapse 4 years earlier, but Congress, both Republicans and Democrats were much too interested in claiming credit for the easy home loans to worry about something that was more than 3 months off.
Third, the relaxed accounting rules put in place during the Clinton Years had their final clash with reality. Reality won. Profits were nowhere near as high as investors were being told.
Fourth, the savings rate by Americans continued to decline, a trend that dated back to the Carter years, and is a result of tax policy. This resulted in under funded banks that relied mainly on loans to each other for collateral, as there were not enough depositors to provide the funds. Like paying one credit card with another, a point comes where you have to pay the piper. The long toll had gone on for years. Finally reaching a breaking point. Much of the banking system worldwide went down together. Full recovery still hasn't happened. Europe has several countries that are in deep financial trouble because of it. Several US States are hurting from this as well.
The US press of course blamed the President. That is after all a long time US tradition. Mr. Bush even got blamed for a hurricane or two. Stupid people believed it. New Orleans Mayor Levin for instance.
A coastal city that is 30 feet below sea level, with only a dirt levee between it and the ocean should expect storm flooding of epic proportions, say 30 feet or so. That is what happened. The Army Corps of Engineers had been warning of this since 1910. It happened. There was an interesting article in Scientific America about that in the late 1970's. It was not a question of if, only of when. The problem still isn't fixed, so it will happen again.
Now of course, Mr. Bush is no longer President, and Mr. Obama is getting blamed for the actions of others, including the weather. Well, he asked for the job. The blame comes with the territory.
So, it's all officially Obama's fault now. Really, it is lots of people's fault. Who benefited? Mr. Soros, and a few select others. Mr Buffet didn't do too badly either. Mrs. Pelosi and Mr. Reid got a lot from it too. Mrs Pelosi has lost her throne as an aftereffect, but Mr. Reid managed to hang on, thanks to a hundred Million from Mr. Soros. The list goes on, but it is so much easier to just blame someone. It doesn't fix anything, but you might feel better for a while. That is really the take home lesson. We didn't fix anything, but we have blamed someone. They may or may not have had something to do with it.
Don't worry about Mr. Soros, he got 7 Billion of the Stimulus funds to develop an oil field in Brazil where the oil is contracted to go to China. Mr. Buffet made out well on the recent stock climb, so he's doing well too.
There are lots of interesting happenings on the other side of this political aisle too. Pick any famous Washington or Wall Street insider, and they are probably in it up to their necks. Some don;t even know they were partially at fault. After all, some very intelligent people are deliberately stupid. It's pride.
No matter what side you are on, you were probably betrayed. It is after all about money.
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And vandalism is also still a problem, along with shoplifting.
Doesn't mean they have any relevance to the issue at hand.
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Indeed. HFT takes money from investors who do their homework. We (citizens, corporations, gov't) need to accept that the world won't end tomorrow, so we must ensure our short-term solutions are not going to f*ck us over in the future. The debt bubble is a good example: It was just so darned comfortable to enjoy the easy growth that came from accepting ever more debt and relaxing risk management practices. There were plenty of risks, but who listens to naysayers when we're in a party mood? And HFT is another
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I'm with you. The "Federal Reserve" is a privately owned banking cartel, engineered by banks, for banks. The system is a collossal Ponzi scheme designed to siphon wealth off to bank owners, and (unfortunately) eventually collapse under it's own weight.
Strong claims require strong evidence, right?
1) Go to Google Images and search "federal debt". You will see charts indicating an exponential function, where we currently are in a nearly vertical rise.
2) Next google "federal deficit". This is basically the