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Title: Laissez-Faire Capitalism Has Failed: The financial crisis lays bare the weakness of the Anglo-Saxon model
Source:
forbes.com
URL Source: http://www.forbes.com/2009/02/18/de ... mnists_recession_stimulus.html
Published: Feb 19, 2009
Author: Nouriel Roubini
Post Date: 2011-01-20 16:13:23 by Godwinson
Keywords: None
Views: 10287
Comments: 14
Doctor Doom Laissez-Faire Capitalism Has Failed Nouriel Roubini, 02.19.09, 12:01 AM EST The financial crisis lays bare the weakness of the Anglo-Saxon model. It is now clear that this is the worst financial crisis since the Great Depression and the worst economic crisis in the last 60 years. While we are already in a severe and protracted U-shaped recession (the deluded hope of a short and shallow V-shaped contraction has evaporated), there is now a rising risk that this crisis will turn into an uglier, multiyear, L-shaped, Japanese-style stag-deflation (a deadly combination of stagnation, recession and deflation). < snip > It is clear that the Anglo-Saxon model of supervision and regulation of the financial system has failed. It relied on several factors: self-regulation that, in effect, meant no regulation; market discipline that does not exist when there is euphoria and irrational exuberance; and internal risk-management models that fail because, as a former chief executive of Citigroup (nyse: C - news - people ) put it, when the music is playing, you've got to stand up and dance. Furthermore, the self-regulation approach created rating agencies that had massive conflicts of interest and a supervisory system dependent on principles rather than rules. In effect, this light-touch regulation became regulation of the softest touch. Thus, all the pillars of the 2004 Basel II banking accord have already failed even before being implemented. Since the pendulum had swung too much in the direction of self-regulation and the principles-based approach, we now need more binding rules on liquidity, capital, leverage, transparency, compensation and so on.
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#1. To: Godwinson (#0)
Back in 2008-09 Roubini argued that the best way out of the financial crisis was to nationalize, recapitalize, and re-privatize banks, which is what Iceland did. Iceland has recovered pretty quickly, our financial system remains in crisis.
Since January 3, 2011, Republicans have controlled the power of the purse.
Exactly!
What a bunch of horse manure. We don't have Laissez-Faire Capitalism in this country. We have crony capitalism where special interests manipulate the politicians to create rules which let them prosper while the rest of us suffer. It has nothing to do with Laissez-Faire. A Laissez-Faire economy wouldn't provide government subsidies to businesses, give tax loopholes for favored industries, and allow politically connected companies and unions to get wavers so they don't have to comply with the rules that the rest of us have to follow. What's failed are big government policies from both parities.
What are you talking about? Iceland has not recovered. Their three big banks are still insolvent. The foreign creditors of those banks (the U.K. and the Netherlands) are still expected to lose between 70% and 90% of their investments. Iceland's housing market has collapsed as well. The government is finally getting its act together. It chopped the government deficit by 5.5% of GDP this year. That would be the equivalent of us chopping the deficit by $700 billion. They are going to cut the deficit by another 3.5% next year and balance their budget. You need to stop reading your left-wing propaganda rags. Go read the Financial Times or the Economist if you want to understand what is going on with the European economy.
GDP is growing at 2-3% a year now, they are in far better shape then they were when the crisis began, and they have a far more solid foundation for growth then we have with our new mega-banks.
Since January 3, 2011, Republicans have controlled the power of the purse.
You left out the negative sign. According to the CIA World Factbook, Iceland's GDP fell by -6.8% in 2009 and - 3.4% in 2010. Iceland's GDP: 2010: $11.86 billion 2009: $12.28 billion 2008: $13.17 billion They are finally chopping spending and closing their government deficits, so we'll see what happens in the future. I have a friend who lives in Iceland. He's desperately trying to find a job in the U.S.
The IMF reported earlier this week that 2011 GDP growth is on a 2% pace. http://www.bloomberg.com/news/2011-01-14/iceland-2011-recovery-pace-to-lag-previous- estimate-imf-says.html
Since January 3, 2011, Republicans have controlled the power of the purse.
Yeah, because the government cut their deficit by a whopping 5.5% of GDP (equivalent to a $700 billion annual cut in the U.S.) and they plan to chop the debt by another 3.5% this year and balance their budget. We need to do the same, but that's not what Keynesians with their head stuck in the 1930s are advocating. They are advocating more government spending and more government debt, which is exactly the wrong thing to do in a global economy where capital can flee across borders overnight.
The tea party is in charge of the purse strings now in case you missed it.
Since January 3, 2011, Republicans have controlled the power of the purse.
No they aren't, but they do have a big say in the process. That's a good thing. So we'll see some cuts, but not enough.
What's failed is ... affirmative african action socialism - science --- in politics - economics !
If you ... don't use exclamation points --- you should't be typeing ! Commas - semicolons are for girlie boys !
Really? So how are spending bills going to pass without approval of the GOP-controlled house?
Since January 3, 2011, Republicans have controlled the power of the purse.
If we don't have it who does? Somalia? I don't see any govt regulation there.... If this Laissez-Faire Capitalism does not exist anywhere on the planet then why adhere to this fantastical non-existing economic system that can never be and never was? This defense of the failure that is "Laissez-Faire Capitalism" is exactly like the one Marxist use to defend against charges that Marxism does not work per the example of the USSR and elsewhere. The Marxist defender will reply that true and pure Marxism per the text book has never been tried as written and thus can still work if we only go back to the fundamentals. Sound familiar?
If the public is too poor or too scared to purchase goods in this "consumer economy" and if businesses are not hiring who will be buying these goods for the economy to grow? It is sound principal to force start a motor when it stalls.
#2. To: go65 (#1)
Back in 2008-09 Roubini argued that the best way out of the financial crisis was to nationalize, recapitalize, and re-privatize banks, which is what Iceland did. Iceland has recovered pretty quickly, our financial system remains in crisis.
#3. To: Godwinson (#0)
"It's very important to remember the law is not simply what powerful people would want others to believe it is." -- Julian Assange
#4. To: go65 (#1)
Iceland has recovered pretty quickly
"It's very important to remember the law is not simply what powerful people would want others to believe it is." -- Julian Assange
#5. To: jwpegler (#4)
Iceland has not recovered. Their three big banks are still insolvent. The foreign creditors of those banks (the U.K. and the Netherlands) are still expected to lose between 70% and 90% of their investments.
#6. To: go65 (#5)
(Edited)
GDP is growing at 2-3% a year now
"It's very important to remember the law is not simply what powerful people would want others to believe it is." -- Julian Assange
#7. To: jwpegler (#6)
“Public debt dynamics are expected to improve considerably on account of the new Icesave deal,” the IMF said. Debt will fall to 72 percent of GDP by 2015, compared with 101 percent this year, the Fund estimates.
#8. To: go65 (#7)
(Edited)
The IMF reported earlier this week that 2011 GDP growth is on a 2% pace.
"It's very important to remember the law is not simply what powerful people would want others to believe it is." -- Julian Assange
#9. To: jwpegler (#8)
We need to do the same, but that's not what Keynesians with their head stuck in the 1930s are advocating. They are advocating more government spending and more government debt, which is exactly the wrong thing to do in a global economy where capital can flee across borders overnight.
#10. To: go65 (#9)
The tea party is in charge of the purse strings now in case you missed it.
"It's very important to remember the law is not simply what powerful people would want others to believe it is." -- Julian Assange
#11. To: Karl Marx (#2)
#12. To: jwpegler (#10)
No they aren't, but they do have a big say in the process. That's a good thing.
#13. To: jwpegler, go65, lucysmom, Happy Quanzaa, Capitalist Eric (#3)
We don't have Laissez-Faire Capitalism in this country.
#14. To: jwpegler, go65, lucysmom, Happy Quanzaa, Capitalist Eric (#8)
We need to do the same, but that's not what Keynesians with their head stuck in the 1930s are advocating. They are advocating more government spending and more government debt, which is exactly the wrong thing to do in a global economy where capital can flee across borders overnight.
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