Economic links

[erudito]

About monetary policy, financial regulation and arguments over asset bubbles.

The Indian company behind the cheap car is now doing cheap apartments.

Gold coin dispensing machines for German-speaking countries.

Help Africa, stop giving it aid: As Thompson puts it: "The British Treasury is empty. So you are going to be borrowing money in order to

Comments

[catsidhe]

OK, so I'm missing something here, obviously, but Obama stands up to a multi billion dollar industry, who are stating that they'd rather see the whole company burn than miss out on extra bailout money, enforces a Chapter 11 on a company which everyone and his dog knows needs it, and starts off a process where large parts of that company might be saved, if not all of it (after long needed radical restructure). As opposed to the equine corpse whipping leading to salted earth across swathes of middle America being advocated by the Hedge Funds.

Or, in other words - and to cross links - the entitlement princess amoral capitalists are whining like little girls because those “stupid lefties” aren't throwing around cash, but moving to save thousands of jobs instead.

Yeah. ‘Corrupt’.

[catsidhe]

I should point out that when they say “no-one gave us any bail-out wah!”, that's true but misleading. No-one was ever offering them bail-out money. But quite a lot went to try and save the auto industry. And the parasites Hedge Funds made out like bandits from it (pun most definitely intended). And given the choice between taking a little less profit and allowing the company to live, they stood up and said that it was their duty to get the gold from the teeth of the corpse for their investors, rather than allow an ambulance in.

Bankruptcy

[erudito]

Let's be careful to understand what bankruptcy means, particularly Chapter II. It does not mean that somehow the factories, etc suddenly vanish. What it means is that the ownership structure changes, because the previous owners have made a balls up of it (either directly or through their agents the managers).

"Too big to fail" is very dangerous thinking, since it encourages the notion that the powerful are to be privileged in avoiding the consequences of their errors. There is enough of that that goes on anyway, without adding to it.

So, that is the first problem with the "bailout". You are taxing people who did the right thing to pay people who did the wrong thing. A lovely mixture of justified resentment and bad incentives.

The second thing is, with the bailout money (plus an extremely compliant media) Obama can (and has) used the money to evade normal procedures and reward political allies. It is very "Chicago". It is not very rule of law.

Re: Bankruptcy

[catsidhe]

Strangely, we are on complete agreement that the Bailouts are a bad thing.

You seem to have miraculously forgotten that Bush was the one who started them. What “Chicago corruption” there? Unless you are doing the usual polemic of saying that things are only illegal/immoral/harmful when that guy does it. If you're going to get all high-and-mighty about how bad the bailouts are, you might want to share the blame amongst all those who deserve it.

(I have no doubt you will be able to point to posts which say ‘Bush's bailouts thought unwise’ or similar, but double-dare you to find one that impugns criminal or corrupt motives to him for it.)

[catsidhe]

And the US education system has been known to be a joke for decades. Every move made by government ostensibly to fix it has made things worse, to the point where most of the system is completely non-functional.

Attempts to measure the problem into submission have been anvils around the neck of the US education system; the biggest, most ill-advised of them being No Child Left Behind: Bush's baby.

The thing is that all that funding has been going to all the wrong places, based on the meaningless results of broken tests measuring the wrong things badly.

Maybe instead of looking at what is obviously fundamentally broken, more might be learned by looking at world's best practiceAlso, schools in the US are provided by the States, as, famously, are the syllabi. The Federal government and the States are not exactly known for joyful cooperation. So to that extent, funds come from the States and from the Feds, and in return for their money, the Feds impose rules and regulations which actively harm the students. The problem there is not that

[erudito]

Finland is not a good example, in that it is much easier to make public provision work in small, monocultural societies. The level of social agreement is higher, information flows are better, etc.

In the US, most school regulation is done at the State level, so the major regulator is the provider.

If you are telling me that the Feds should butt out of schooling, agree entirely.

But British schools have also been notoriously a joke for decades, and that is very much not a federal system.

[catsidhe]

Finland is not a monoculture. There are Swedish speaking Finns, Finnish speaking Finns, and the Lapps/Sámi.

In the US, it is not the State regulation which is doing the damage. Else the problems would be far more localised than they are.

British everything has notoriously been a joke for decades. Since before Thatcher, although it was worse after she went through the place.

[erudito]

Almost no country is perfectly a monoculture, and the Lapps I understand have some of the normal difficulty of hunter-gatherer cultures in modern society, it is still a society where one culture overwhelmingly dominates.

Actually, US State outcomes do vary significantly. Moreover, since they all have overwhelming public provision, so all have the regulator-is-the-main-provider, they have that in common.

As for the UK, its economic performance is notoriously much better since Thatcher went through, though I grant you the Blair-Brown government seems to have done it damnest to undermine that. And what would be the common feature of so much that misfunctions in the UK? That would be public provision then.

[enrobso]

If it would make you happier, I'm quite prepared to pretend that the government did not intervene in the functioning of the free market where the American auto industry is concerned.

The mismanaged, moribund companies went to the wall and unfortunately, the people who financed that mismanagement lost money.

That is the nature of business.

To say "We won't invest because the government wont cover our losses if things go wrong." suggests a fairly anemic approach to capitalism to say nothing of a perversion of "The Market".

Missing the point

[erudito]

To say "We won't invest because the government wont cover our losses if things go wrong." suggests a fairly anemic approach to capitalism to say nothing of a perversion of "The Market".

It is not about risk, it is about not knowing what the rules are. It is the difference between risk and uncertainty.

Using one's bailout money and political clout to evade normal bankruptcy procedures to reward friends (and thus penalise other creditors) is about changing the rules, not about risk as such

Re: Missing the point

[catsidhe]

... evade normal bankruptcy procedures to reward friends...

You keep saying that. I'm sure you have evidence beyond the sour grapes of the Hedge Funds.

Re: Missing the point

[erudito]

The bondholders did not get paid at the normal rate and the unions got paid at above the normal rate.

If had been a straight Chapter II the bondholders would have got more and the union less.

[tyggerjai]

I'm not sure whether the more I learn about Russian history, the more I understand why all our Russians are crazy, or vice versa.

Not mutually exclusive

[erudito]

Well, it could be an interactive process ...

Re: Not mutually exclusive

[tyggerjai]

Yup, these days I suspect it's a feedback loop. Learning their crazy language reinforces that belief.