It must be serious - Channel Seven has flown David Koch all the way to New York to report live from Wall Street about the IMPENDING DOOM of our CRASHING GLOBAL ECONOMY!! 
Hopefully on a dodgy Qantas 747 with a seat that will fall out of just the right spot in business class.
Fuck.
I'm on a flight next week, hope he's not my neighbour!
But mum (who is incredibly switched on in all matters involving the economy and has been trying in vain to educate me for years and trying to get me to put my super into the self-run super fund that she created but I've ignored her, thinking it was some nasty parental way of controlling me etc) gave me a bit of a run down tonight.
SMSF are useful if you have in excess of $150K which is the rough tipping point where the costs outweigh the fees of most market funds.
She said that the US government has divvied up about 700billion bucks between 9 commercial organisations to help keep them afloat. The justification for this is that if they go bust, the US and subsequently global economies will basically cop a cactus enema (my words, not my mum's).
Correct, sort of.
The two options are to:
1. Take the action you have described (sort of). Bear in mind the funds are essentially mezzanine finance so they are a loan to allow an ordery sale of assets rather than a very short term fire sale collapsing everything. So whilst there's a trillion or so involved it's all at very high interest rates purchasing debt at a rate of 5c in the dollar or somesuch. So it's not just handing money over, it's actually extracting a high price and the recipients will suffer significantly for it.
2. Do nothing and let a significant part of the world banking system fall over.
From my understanding of news reports, good ol' Einstein himself, George Dubya, has let this thing spiral out of control because he was trying to "let the market work itself out" like any good flag-waving capitalist.
There have been more modest attempts at market manipulation to bring it to a halt. Problem is that everything is so cross collatoralised that the run in confidence dries up funds and things fall over. RAMS was an Australian classic - they were essentially a sound business who just couldn't get money to cover their refinancing needs. i.e. they had the money organised and paid for until day X, at day X+1 they couldn't get a rollover on their loan.
When confidence collapses this is what happens. Problem is if you let it run then everyone gets hurt, particularly the littel people who find out about all the nasty repayment triggers in their contracts and they lose everything.
.
Now from my understanding of capitalism, these happy little capitalists generally aren't a fan of government regulation of markets - is that right? Or is my understanding flawed?
Correct.
Equally note we are largely a mixed economy, where govt regulation (which has proven to be incredibly expensive and as we are currently seeing incredibly useless) controls the excesses of the market.
Certain elements believe in unfettered market forces, that ignores the basic fact that market forces are very different from their ideal world view of competition and idealistic behaviour.
If it's correct, then I'm scratching my head as to why they would then happily accept government handouts when they're about to go belly-up? Surely, if they are willing to live by the sword, they should be willing to die by the sword?
Indeed they should.
But pragmatism and self interest will always rule.
Thus a part way solution needs to be found (see before re what the govt gets in exchange for their money and more later).
Not only that, but mum mentioned something about some CEO who has been heading up a company for 3 months (Willumstad from AIG?) and is now planning to leave, taking with him a $7 million payout - despite the company receiving an $85billion bailout from the government.
On this we agree. For any company receiving funds (and the terms are not as simple as a clean bail out) all bonuses for the last 2 years should be clawed back and no bonuses payable until the loan is repaid.
Of course, that means high flyers will leave and go to other firms where they can get bonuses etc, if those firms are prepared to take a risk on these people then so be it, that is a totally acceptable market risk.
It really sucks that this "top end of town" gets bailed out for being gluttonous kunts while those on struggle street are going to really do it tough with having their houses and possessions repossessed.
Actually the ONLY reason the "bail out" is acceptable from a free market / capitalist viewpoint is that the alternative is a vastly increased rate of the latter as all these institutions demand immediate repayment of mortgages etc.
Note that the purist free marketeers believe that this latter view is an acceptable outcome and that Lehman's, Fannie Mae, Freedie Mac et al should be allowed to fail.
However overall, I hope we're entering some kind of huge "levelling out" period that will result in a western world that is far less gluttonous and self-absorbed - I think a depression would do us all good.
Muppet.
So anyway...over to the self-proclaimed economics gurus...
And so SG spoketh.
Is it all a storm in a teacup that's being made worse by media hype?
Yes and no.
Mac Bank absolutely yes. I dived in to get some options on the down and made plenty on the bounce.
Is it the end of the world?
No.
The capitalist system has provided the strength of democracy that can afford the short term impacts needed to overcome such issues. And that's the real strength of capitalism, it ultimately gives freedom through economic strength. If you look at Russia where there is incredible wealth the distribution is even more lopsided than in the USA or any other capitalist state you care to name.
The only reason people think the western world is so materialistic is that capitalism has largely ensured we can all afford a reasonable standard of living rather than having an elite clique holding all the money. Yes it's concentrated in a minority group in the west, that group gets smaller and smaller on a percentage basis the more you get control being exerted over the economy.
Are capitalist fuckers hypocrites who want the government to back out until their backs are against the wall?
Of course, self interest rules for all. I don't want to lose what I have so obviously made entirely through my own skill (teal insert for those who can't pick it) so the govt should bail me out.
That is, IMHO, the flaw in the rescue plan. The so called "masters of the universe" just gambled and kept doubling their bet until they went broke. They should be punished via direct personal loss of their winnings. Note that if the 9 get bailed out there are several hundred who don't need it, so do not confuse the high profile cases with the entirety.
Are you proud of how wonderfully the capitalist system is treating us right now?
Yes.
If the capitalist system had not built a strong core of economic wealth and stable democracy then we'd be in the middle of a major war right now as nations scrambled to overcome the collapse of the monetary system and sought a return to more basic forms of wealth which involve tangible assets such as resources etc.
Regardless of how much people blame religion it is trade, or rather the restriction of trade, that has resulted in more wars than anything else.
Should we all start considering the advantages of socialist or bartering societies? 
Yes.
This should be done regularly.
And you will always come to the conclusion that capitalism of the form we have is what works best of any system currently available to us.
IS THE END NEAR?!?!
No.
SG
