Economic double standard

[Dari]

In 1998, during the Asian financial crisis, economists from the West were telling the Asian "tigers" to "let the market decide" the fate of their banks and companies. Fast forward ten year later we have Western governments spending well over $10 trillion dollars to shore up their economies. Let it be known that the root of the problem, properties, is the root of both problems. The arrogance of it all makes me ashamed of being an economist.

Developing nations were also pressured to let in Western banks and their financial "expertise" would modernize their banking systems. It's all been one big joke.

 

[Farang]

not sure if you get to call yourself an economist without postgraduate qualifications

 

[Dari]

Originally posted by: Farang
not sure if you get to call yourself an economist without postgraduate qualifications

I'm not sure what you mean but I recently got my doctorate degree.

 

[Farang]

ha.. that teaches me to read the entire thread (http://forums.anandtech.com/me...d=38&threadid=2204859))

 

[jackace]

Our entire system feels like a big scheme. Someone somewhere is paying for our excesses and greed. With the current situation we are going to be paying a much bigger price for past, current, and future excesses and greed.

 

[Cattlegod]

Similar to engineering theories - economic theories rely on a ideal situations and rational people. Because ideal situations do not exist, and people are not rational, anomalies will be created.

 

[JS80]

Originally posted by: Dari

Originally posted by: Farang
not sure if you get to call yourself an economist without postgraduate qualifications

I'm not sure what you mean but I recently got my doctorate degree.

Bullshit shens that a socialist fool like you could have a phd in economics. What school? The Soviet School of Communist Economics?

 

[Throckmorton]

Originally posted by: JS80

Originally posted by: Dari

Originally posted by: Farang
not sure if you get to call yourself an economist without postgraduate qualifications

I'm not sure what you mean but I recently got my doctorate degree.

Bullshit shens that a socialist fool like you could have a phd in economics. What school? The Soviet School of Communist Economics?

Karl Marx was an economist. I think his books are required reading for economics students.

 

[Capt Caveman]

Originally posted by: Throckmorton

Originally posted by: JS80

Originally posted by: Dari

Originally posted by: Farang
not sure if you get to call yourself an economist without postgraduate qualifications

I'm not sure what you mean but I recently got my doctorate degree.

Bullshit shens that a socialist fool like you could have a phd in economics. What school? The Soviet School of Communist Economics?

Karl Marx was an economist. I think his books are required reading for economics students.

I had to read about some of his theories but didn't have to read any of his books.

 

[Genx87]

Originally posted by: Throckmorton

Originally posted by: JS80

Originally posted by: Dari

Originally posted by: Farang
not sure if you get to call yourself an economist without postgraduate qualifications

I'm not sure what you mean but I recently got my doctorate degree.

Bullshit shens that a socialist fool like you could have a phd in economics. What school? The Soviet School of Communist Economics?

Karl Marx was an economist. I think his books are required reading for economics students.

I thikn it should be required reading. Give people shock treatment on how not to run an economy.

 

[wwswimming]

Originally posted by: Dari
In 1998, during the Asian financial crisis, economists from the West were telling the Asian "tigers" to "let the market decide" the fate of their banks and companies. Fast forward ten year later we have Western governments spending well over $10 trillion dollars to shore up their economies. Let it be known that the root of the problem, properties, is the root of both problems. The arrogance of it all makes me ashamed of being an economist.

Developing nations were also pressured to let in Western banks and their financial "expertise" would modernize their banking systems. It's all been one big joke.

well, what you're talking about relates to 2 double standards. one is sometimes referred to as "American exceptionalism".

the double standard that is being exercised with the TARP bail-out and all the other $trillions being spent to prop up the banks is that risky investing behavior is being bailed out.

specifically, the money the government is pumping into the economy is partially to offset losses related to credit derivatives, which have 3 categories - mortgage backed securities (MBS), credit default insurance, and "other".

TARP is/was for MBS'; the AIG money ($150 billion+) is related to AIG's derivative losses in the category of CD insurance.

of the bail-out money, more $$ have gone to bank exec salaries than to the Automakers. >$17 billion for a few thousand bankers, then the Senate gets "principles" and withholds $17 billion from the auto-makers - to which hundreds of thousands of jobs are directly related.

in other words, the socialism which we have always been told is so terribly bad when applied to Joe Worker, is being ladled out in heavy helpings to a small group of rich people.

part of the situation is that the financial derivatives industry has managed to twist itself around the Main Street banks, like a giant tic sucking on a patient's aorta. remove the parasite, and the patient dies.

i think there is definitely a way to manage our way out of the crisis. it involves following the money. e.g. the top 30-earning hedge fund managers earned and average of $500 million in 2007. as investigations proceed & fraud is un-covered, it would not be that difficult to confiscate the assets of every person & organization that was involved in the fraud.

 

[Gonad the Barbarian]

Originally posted by: Cattlegod
Similar to engineering theories - economic theories rely on a ideal situations and rational people. Because ideal situations do not exist, and people are not rational, anomalies will be created.

You're right, and there are far too many people who are credited with knowing what they are doing while completely overlooking these assumptions (I'm leering at you Mr. Greenspan). The only safe assumption that should be made is that individuals will always follow their incentives, rationality and ideals be damned. Of course now this is being ignored as our government moves to fix our economy by throwing more money at the crooks and bastards who brought this crisis on.

 

[mxyzptlk]

Originally posted by: JS80
Bullshit shens that a socialist fool like you could have a phd in economics. What school? The Soviet School of Communist Economics?

Does this form have a report function or something because this has to be against some rule somewhere....

 

[Zebo]

We wanted to dumb them down to our system of non-cooperation and dog eat dog over the barrel capitalism.

I was touched when Asians in Korea sold their personal gold, wedding rings and even athletes gold metals to save their banks back in the 90's.

 

[tfcmasta97]

Welcome to America, where they rape the world for cash and retards throw around words like 'free market' while only monopoly power and corruption get all the gains and the peons takes on the losses.

 

[zephyrprime]

Originally posted by: Cattlegod
Similar to engineering theories - economic theories rely on a ideal situations and rational people. Because ideal situations do not exist, and people are not rational, anomalies will be created.

I think there's even more to it. I think their economic theories are wrong even in an ideal situation.

Look at this article: http://www.theatlantic.com/doc...12/blodget-wall-street
Part of it talks about what happened in the real estate market. You'll see that at each point in the real estate buying chain, people were acting rationally. True, they weren't necessarily acting with perfect information (that's another problem. Economists seem to think that people and markets have perfect information. How exactly can information violate the laws of entropy and thermodynamics when nothing else can?) but then again perfect information is never available. If only economists would consider people to be heavily flawed and imperfect, their theories wouldn't be so nonsensical.

Let's look at what happened in the realm of the banks. Greenspan says he is shocked that self interested banks made such irrational decisions that eventually led to their demise. But was it really irrational? A bank is not a singular entity. It is really a composite of people, rules, laws, capital, and plant. What's logical for each of these individuals working at the bank to do is not necessarily what is logical for the bank to do. It's logical for each individual working at the bank to look out for their own interests and screw everyone else. If only one person in the bank thinks this way and everyone else is a saint, the selfish individual will attain epic win in the game. The problem is, in these investment banks, everyone acts selfishly including the CEO and the board. The results produced when everyone acts selfishly are worse than if no one selfish. Philosophy students will recognize that I'm just talking about the classic "tragedy of the commons".

What's more, there's an overwhelming tendency to only think about things in the short term. Any student of computer science knows that although short term thinking (greedy algorithms) sometimes produce optimal results, there are cases where they do not. In the real world, it's pretty clear that short term thinking produces good results in the short term and bad results in the long term. However, many individuals are forced to think only in the short term. There are many situations in nature where organisms act rationally in the short term but irrationally in the long term. They often need to do so because in nature, you can't get to the long term if you can't SURVIVE the short term. The same sort of thing happens in competitive environments sometimes. Brokers may go for that extra commission selling toxic securities even though in the long term they will upset and eventually lose the client those toxic securities were sold to because if the broker DIDN'T sell imprudently, he would lose the short term contest of generating good enough sales numbers in comparison to his peers and would never be able to keep his job long enough so that he could enjoy the benefits of looking out for your clients long-term. If you don't survive the short term, you won't ever be able to reach the long term.

And also, since economists have never been able to predict recession accurately, macroeconomics can't be considered a science.

 

[Dari]

Originally posted by: zephyrprime

Originally posted by: Cattlegod
Similar to engineering theories - economic theories rely on a ideal situations and rational people. Because ideal situations do not exist, and people are not rational, anomalies will be created.

I think there's even more to it. I think their economic theories are wrong even in an ideal situation.

Look at this article: http://www.theatlantic.com/doc...12/blodget-wall-street
Part of it talks about what happened in the real estate market. You'll see that at each point in the real estate buying chain, people were acting rationally. True, they weren't necessarily acting with perfect information (that's another problem. Economists seem to think that people and markets have perfect information. How exactly can information violate the laws of entropy and thermodynamics when nothing else can?) but then again perfect information is never available. If only economists would consider people to be heavily flawed and imperfect, their theories wouldn't be so nonsensical.

Let's look at what happened in the realm of the banks. Greenspan says he is shocked that self interested banks made such irrational decisions that eventually led to their demise. But was it really irrational? A bank is not a singular entity. It is really a composite of people, rules, laws, capital, and plant. What's logical for each of these individuals working at the bank to do is not necessarily what is logical for the bank to do. It's logical for each individual working at the bank to look out for their own interests and screw everyone else. If only one person in the bank thinks this way and everyone else is a saint, the selfish individual will attain epic win in the game. The problem is, in these investment banks, everyone acts selfishly including the CEO and the board. The results produced when everyone acts selfishly are worse than if no one selfish. Philosophy students will recognize that I'm just talking about the classic "tragedy of the commons".

What's more, there's an overwhelming tendency to only think about things in the short term. Any student of computer science knows that although short term thinking (greedy algorithms) sometimes produce optimal results, there are cases where they do not. In the real world, it's pretty clear that short term thinking produces good results in the short term and bad results in the long term. However, many individuals are forced to think only in the short term. There are many situations in nature where organisms act rationally in the short term but irrationally in the long term. They often need to do so because in nature, you can't get to the long term if you can't SURVIVE the short term. The same sort of thing happens in competitive environments sometimes. Brokers may go for that extra commission selling toxic securities even though in the long term they will upset and eventually lose the client those toxic securities were sold to because if the broker DIDN'T sell imprudently, he would lose the short term contest of generating good enough sales numbers in comparison to his peers and would never be able to keep his job long enough so that he could enjoy the benefits of looking out for your clients long-term. If you don't survive the short term, you won't ever be able to reach the long term.

And also, since economists have never been able to predict recession accurately, macroeconomics can't be considered a science.

Correct. The irony of it all is that financiers thought they could have the best of both worlds: short-term (high) profits and diversification. But when profits became exhausted, the diversification caused the pain to be much much sharper.

A simple example would be banks lending money to hedge funds while selling products to hedge funds. It doesn't take a genius to see that this could lead to disaster. But they thought that by selling their products to different different clients around the world would help when, in actuality, everybody was holding the same crap.

 

[Atreus21]

Originally posted by: Dari
In 1998, during the Asian financial crisis, economists from the West were telling the Asian "tigers" to "let the market decide" the fate of their banks and companies. Fast forward ten year later we have Western governments spending well over $10 trillion dollars to shore up their economies. Let it be known that the root of the problem, properties, is the root of both problems. The arrogance of it all makes me ashamed of being an economist.

Developing nations were also pressured to let in Western banks and their financial "expertise" would modernize their banking systems. It's all been one big joke.

I disagree. Certainly America's economic dominance up to and including the present can account for something American banks are doing right.

 

[Gonad the Barbarian]

Originally posted by: zephyrprime
True, they weren't necessarily acting with perfect information (that's another problem. Economists seem to think that people and markets have perfect information. How exactly can information violate the laws of entropy and thermodynamics when nothing else can?) but then again perfect information is never available. If only economists would consider people to be heavily flawed and imperfect, their theories wouldn't be so nonsensical.

Actually it's accepted that one can never have perfect information. Economists think that it doesn't matter because in a free market all relevant information is reflected in the price. I don't necessarily disagree with the sentiment of the rest of your post, and haven't read the article you linked, but I think the big problem is selective/poor understanding and application of economic theories by the folks that should know better than the theories themselves. And I'm not sure you can entirely dismiss something as a science because there is a certain aspect it can't predict.

 

[Atreus21]

Originally posted by: Genx87

Originally posted by: Throckmorton

Originally posted by: JS80

Originally posted by: Dari

Originally posted by: Farang
not sure if you get to call yourself an economist without postgraduate qualifications

I'm not sure what you mean but I recently got my doctorate degree.

Bullshit shens that a socialist fool like you could have a phd in economics. What school? The Soviet School of Communist Economics?

Karl Marx was an economist. I think his books are required reading for economics students.

I thikn it should be required reading. Give people shock treatment on how not to run an economy.

I don't know. Marx was mistaken, certainly, but part of me sympathizes with his idea. He was trying to make a country act like a family.

 

[Dari]

Originally posted by: Atreus21

Originally posted by: Dari
In 1998, during the Asian financial crisis, economists from the West were telling the Asian "tigers" to "let the market decide" the fate of their banks and companies. Fast forward ten year later we have Western governments spending well over $10 trillion dollars to shore up their economies. Let it be known that the root of the problem, properties, is the root of both problems. The arrogance of it all makes me ashamed of being an economist.

Developing nations were also pressured to let in Western banks and their financial "expertise" would modernize their banking systems. It's all been one big joke.

I disagree. Certainly America's economic dominance up to and including the present can account for something American banks are doing right.

I think you missed the point entirely.

 

[Dari]

Originally posted by: Gonad the Barbarian

Originally posted by: zephyrprime
True, they weren't necessarily acting with perfect information (that's another problem. Economists seem to think that people and markets have perfect information. How exactly can information violate the laws of entropy and thermodynamics when nothing else can?) but then again perfect information is never available. If only economists would consider people to be heavily flawed and imperfect, their theories wouldn't be so nonsensical.

Actually it's accepted that one can never have perfect information. Economists think that it doesn't matter because in a free market all relevant information is reflected in the price. I don't necessarily disagree with the sentiment of the rest of your post, and haven't read the article you linked, but I think the big problem is selective/poor understanding and application of economic theories by the folks that should know better than the theories themselves. And I'm not sure you can entirely dismiss something as a science because there is a certain aspect it can't predict.

It depends on what you mean by "science". Then again, economics has always had its foot in both the social sciences as well as the hard sciences.

 

[Deadtrees]

Exactly. All those Washington Consensus reforms forced Asian Tigers, not to mention other nations that had no choice to borrow money from you-know-who, to accept neoliberalism doctrine. The outcome is that those countries are suffering along with stupidity brought by U.S.A.

 

[miketheidiot]

Originally posted by: JS80

Originally posted by: Dari

Originally posted by: Farang
not sure if you get to call yourself an economist without postgraduate qualifications

I'm not sure what you mean but I recently got my doctorate degree.

Bullshit shens that a socialist fool like you could have a phd in economics. What school? The Soviet School of Communist Economics?

economists are generally center left, and certainly not free market hacks as a rule. Any economist worth his degree will have the brains to realize the true free market hypotheticals are based on a set of circumstances that do not exist in the real world, most notably that people are not rational all the time and that people do not have the information they need to make correct decisions.

The world is a complex place, and even the most advanced models can only provide basic insights into markets and society.

 

[miketheidiot]

Originally posted by: Genx87

Originally posted by: Throckmorton

Originally posted by: JS80

Originally posted by: Dari

Originally posted by: Farang
not sure if you get to call yourself an economist without postgraduate qualifications

I'm not sure what you mean but I recently got my doctorate degree.

Bullshit shens that a socialist fool like you could have a phd in economics. What school? The Soviet School of Communist Economics?

Karl Marx was an economist. I think his books are required reading for economics students.

I thikn it should be required reading. Give people shock treatment on how not to run an economy.

spoken like someone who has never read any of marxs economics works.

das kapital =/= the communist manifesto