RSS
Facebook
Twitter
E-PrinceWhat a year! Lehman Brothers collapsed on Sept. 15th, 2008. The Dow Jones Industrial Average dropped by 43 percent. And since March 2009, the market has rallied and made up a significant fraction of its losses. The basic storyline for ...(back to the article)
The opinions expressed here are those of the individual commenters and do not necessarily represent the views of The Daily Princetonian Publishing Company, Inc. We do not take responsibility for the opinions, facts, or claims presented by individual commenters, and reserve the right to moderate or delete inappropriate comments.
Ugh, more interventionism to solve a problem caused by interventionism.
How come no one ever mentions the root cause of the business cycle, central banking? The business cycle is NOT systemic in a free market. It is a result of credit manipulation and inflation by central planning. Blame belongs on the government and its quasi-government counterpart, the Federal Reserve.
In a free market, where banking is a free industry, where no central bank exists, where a commodity-backed currency is in use, and where fractional reserve banking is rightly considered fraud, the bubble-bust roller coaster would not exist.
relevance of this article? zero.
The thesis of the article seemed to be the last sentence:
"What is clear is that we need wise financial reforms quickly"
I was waiting to hear about the practical reforms Congress could send to Obama's desk in the next few weeks to sign but the article promptly ended.
Nobody lends any credibility to any of the Austrian school rubbish that you are promoting, except the loonies at the Mises Institute. You cannot even call it a "research program", since Austrians do not believe in empirical research, just pure ideology. Just stop.
Yes, the Austrians have no credibility even though they've correctly predicted and explained all the economic depressions and are the only ones who can explain in a coherent way the business cycle, prices, time preferences, and interest rates. Let's listen to the Krugman's of the world, the apologists for violence and theft, who promote the welfare/warfare state.
Austrians correctly show that economics follows a priori from the axiom of human action. Its (correct) conclusions follow deductively from it, in the same way that all geometric proofs follow from the original axioms of geometry. But geometry, in your small mind, must be some sort of ideology.
Also, i seem to remember a certain austrian economist winning the nobel prize in 1974 for his explanation of the business cycle caused by a central bank. And that was when the prize was actually worth something.
"And since March 2009, the market has rallied and made up a significant fraction of its losses."
And that's only because the dollar lost that much value. Gold is up to 1170 but was only 800 a year ago. And that's not because gold is more valuable. It's because the dollar is less valuable. So if you price the DOW in terms of gold, it's actually lost even more of its value.
"Where were the principals — the shareholders and boards of directors of these firms who should have watched the risks that their bankers took?"
Why should they care? As long as you're dumb enough to bail them out, they'll privatize their gains and socialize their losses. Don't you get it? The only way to solve it is to let them fail.
Austrians have non-sequitur policy prescriptions. Hayek, whom you have referenced, won the "Nobel" prize for his capital theory which was absolutely destroyed by Nicholas Kaldor which is why Hayek stopped working on capital theory after Kaldor's critique. Hayek also wanted the Great Depression to solve itself by growing savings and then investment. I would like to see who wants to invest when the consumer base is destroyed. I am calm, though, since I know that none of these liquidationist nutters will never have hands on policy.
"What is clear is that this crisis reveals deep flaws in the financial system."
That's right. There are deep flaws in legal tender laws. There are deep flaws in 0% interest rates for insiders. There are deep flaws in government-backed counterfeiting monopolies. There are deep flaws in fractional reserve banking (when it's bailed out by the counterfeiting monopoly). There are deep flaws in expanding claims on wealth beyond the total amount of wealth.
Anyone who studies specific "policy" in economics (health care policy, labor policy, etc.) is nothing but a socialist shill trying to get money from the public trough.
Only fools and foolish socialists think that you can have prosperity without savings. They are too worried about the phantom deflationary spiral. How menacing!
You don't realize that there would never have been a Great Depression had free market economics seen the light of day.