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Banking Crisis of 2008

Our economy is being hit hard by the failure of the banking system on many levels. What can we do about it?

Comments

Ralph Nader gives a great answer

 

We certainly CANNOT give the Bush administration a blank check of $700 billion. Fortunately, we did not.

http://www.youtube.com/watch?v=S7aC7CyOP0Q
1. regulation
2. shareholder power over corporations
3. corporate transparency
4. US Treasury gets an equity share if there is a bailout.
5. Speculators must spend their own money.
6. criminal prosecution of recklessly greedy executives
7. private watchdog group

a_thing wrote: Fortunately,

a_thing wrote:

Fortunately, we did not.

For now. They're not giving up. They'll revise it a little and then the congress, which apparently does not have the afinity to listen to the people will approve it anyway. From what I know, more than 90% of americans are against the bail out yet the vote was closer to 60% against it.

Also note that the Federal Reserve already injected 630 billion anyway. This means that if the bailout was to be approved the plan was apparently to inject 1.33 trillion dollars into the system. That's just nuts. They're, as Ron Paul says, destroying the dollar.

I don't quite agree with Nader's solutions though. This crisis was not caused by not enough regulation. It was caused by too much regulation. Government supported a completely foolish business strategy where loans are being given to people who couldn't afford to pay them so people who simply can't afford it, can buy a house anyway. Banks in turn went along with this stupid game because of implicit or explicit government promises of bailouts. If you were to remove the government from the whole picture and left the market to work you wouldn't have the kinds of incentives for this kind of foolish and ultimately self destructive business.

But typically, instead of government they're blaming the market. I'm sure chinese, which might actually have a freer market today than USA, might like the idea that this represents a "failure of capitalism", whereas it represents a failure of SOCIALISM and FASCISM (which what corporatism is).

As for blaming the greedy bankers.. If we go with the "follow the money" principle after some research it isn't hard to conclude that you can trace this fiasco back to central bankers - the federal reserve and others, but they ARE the government (in all its fascist glory) and not the market.

 
libervisco wrote:

I don't quite agree with Nader's solutions though. This crisis was not caused by not enough regulation. It was caused by too much regulation. Government supported a completely foolish business strategy where loans are being given to people who couldn't afford to pay them so people who simply can't afford it, can buy a house anyway. Banks in turn went along with this stupid game because of implicit or explicit government promises of bailouts. If you were to remove the government from the whole picture and left the market to work you wouldn't have the kinds of incentives for this kind of foolish and ultimately self destructive business.

...

As for blaming the greedy bankers.. If we go with the "follow the money" principle after some research it isn't hard to conclude that you can trace this fiasco back to central bankers - the federal reserve and others, but they ARE the government (in all its fascist glory) and not the market.

[citation needed]

It comes down to the way

It comes down to the way banking today works. Central banking and fractional reserve lending are systems instituted upon the use of fiat currency, money whose value is enforced by the state and in reality is nothing but a borrowers pledge of debt.

So economies of most countries today are totally based on debt rather than actual value. The reason why the government can be blamed for this is, aside from the obvious fact that it enforces this system by giving special powers to the central bank (Federal Reserve in US), is that by its coercive nature it attracts wealth seekers who would try to use this power of the state for their own ends - they succeeded and continue to succeed to this day, which is why the state essentially always ends up being just a free ride for the less moral among capitalists. It always resorts to fascism (corporatism or state controlled capitalism).

Anyway, some good sources on that are:

Of course, you could just classify all this as pro-libertarian drivel, but then I'd have to remind you that USA in which you live was founded on libertarian principles and that it's constitution is entirely libertarian (minarchist in fact), so if nothing that alone should probably make you curious about the kind of economic thinking that led the founding fathers of USA to found a country that would function in this way.

Needless to say USA today broke pretty much every principle they stood for and is, in my view, officially fascist. The fact you elect leaders is pretty much meaningless when your only real choice is between "socilaism" and "fascism" or two kinds of fascism. Democracy is good for only one thing; deceiving the public into believeing their government is truly ran by them when in fact it simply isn't. Unfortunately, most other "democratic" states have a degree of fascism involved (corporatism playing with the state), but most people just don't see it or don't even care.

While you can try I don't

While you can try I don't think begging politicians or even voting is going to help at all. They've created the problems that exist in the first place by harmful interventions in the market which kept sending the wrong signals, by devaluing your currency through the practice of central banking and fractional reserve banking which makes every single US dollar backed by nothing except someone's pledge of debt (so it's an economy entirely based on DEBT) and by promoting foolish loans to those who can't actually afford to pay them back.

Now it's bailing out banks, yet that makes the problem even worse as they are increasing the debt, increasing inflation - they're just making sure that when a bang comes it'll be a really big one.

So respectfully, I think you're wasting time trying to get politicians to do anything about it. They're the cause and can't be nothing but a cause because the market evidently operates best when regulated and "governed" least.

What you can do, however, is try to make yourself as immune to the potential collapse as possible by switching your wealth and posessions to things of real value which will continue to have value even if the new great depression comes. This means that if you can buy real estate to stick with now, which has some land to grow your own food at, do it now! Also buy silver (cheaper) and gold (more expensive) because those always retain their value. You could also for the short to mid-term protection buy some euros, swiss francs or other currencies which are more stable than the dollar, and stash them as part of your savings. (Of course if you see them collapsing too, quickly convert to another stable currency or silver).

If you don't have any land available, or even either way, and are convinced the big crisis is coming, I think stockpiling on some food wont hurt either. Some people also suggest guns and bullets or some means of defense should the crisis be so bad that people will want to rob you of your stockpiles in order to survive. The more you stockpile in a single place (presumably your home), the more at risk you are of robbery and the more defense you need. I THINK tasers or stun guns could work too if you don't like deadly weapons (man, I don't like them either Sad ).

And lastly, I personally think it may be a good idea to find a way to generate your own electricity, even if only small amounts. You could consider getting small solar powered generators (at least you could charge your mobile phone or even a laptop with it so you can use them if electricity goes off for communication). For more electricity an old generator might do.. Some have jokingly suggested you strap an old bike to a generator so you can generate electricity and exercise at the same time. You can use the electricity to cook food that gives you the energy to exercise - it's a perpetual circle. Smiling EDIT: Oh and if you can Get an AeroGarden! It's an easy to use device which with very little electricity allows you to grow food inside of the house or apartment. It's brilliant!

All this said, I don't know if there's a gread depression coming or not nor do I know for sure it'll be so bad you'll need to generate electricity yourself and depend on only the food you grew or stockpiled while defending it from desperate poor robbers who didn't know better to prepare before it was too late. I still hope that, if not government, the markets will find a way to save the day and make this crisis a bigger recession at the most, but not any worse. If you're really brave you could even do something about it by opening a business outside of the current financial system that offers stuff people will need if the actual system collapses. You can sell stuff accepting ONLY silver payments or something similar (the extreme case being barter).

Good luck.