T Nation

Big Banks Forced to Sell

Interesting summary of the extent to which large western banks have been forced to sell out some control and to whom.

Despite the fact that it is entirely the West own capitalist fault, it is still pretty disappointing. Eastern wealth funds are using US and European oil money to buy pieces of major corporations in US and Europe, it feels like self destruction of the West.

http://news.bbc.co.uk/2/hi/business/7525181.stm

My only criticism here is that this is not ‘capitalism’ per se. Using the power of government to inflate a currency, then profitting from the resultant chaos is a form of Statism.

A capitalist society would allow no mixed economy, a mixed economy being a road to despotism.

Excessive greed springing from capitalist values caused the credit crunch which this article is referring to.

[quote]Headhunter wrote:
My only criticism here is that this is not ‘capitalism’ per se. Using the power of government to inflate a currency, then profitting from the resultant chaos is a form of Statism.

A capitalist society would allow no mixed economy, a mixed economy being a road to despotism.[/quote]

If this is the case, then why are we in debt? If what you say is true, we should be running a huge profit.

[quote]JamFly wrote:
Excessive greed springing from capitalist values caused the credit crunch which this article is referring to. [/quote]

Define excessive greed. Define capitalist values.

I think someone has been recently enrolled in uni, and thinks he knows way more than he actually does.

[quote]Headhunter wrote:
Using the power of government to inflate a currency…[/quote]

In many cases (specifically China) the government is actually intercedeing and purposefully deflating the currency in order to keep their labor at a competitive advantage in the global marketplace.

Let’s keep in mind that this rescue capital is going to be tremendously profitable for these Sovereign Funds. For a frame of reference, look at the rescue capital that Warren Buffet gave Salomon Brothers years ago.

The biggest irony here is that this intensely capitalistic idea of “we must have free markets with no intervention” that actually keeps us from opening up our Sovereign Wealth Fund (Social Security) from taking advantage of these same once-in-a-century investment bargains.

If we took and applied the same investment banking and financial standards to our country’s balance sheet, cash flow and business opportunities as we do some of our largest corporations, the US could dramatically reduce it’s current issues.

[quote]rainjack wrote:
Headhunter wrote:
My only criticism here is that this is not ‘capitalism’ per se. Using the power of government to inflate a currency, then profitting from the resultant chaos is a form of Statism.

A capitalist society would allow no mixed economy, a mixed economy being a road to despotism.

If this is the case, then why are we in debt? If what you say is true, we should be running a huge profit. [/quote]

It depends if you mean the Fed or the country. Congress wants to spend money. They give an IOU to the Fed, which subsequently creates the necessary money as a ‘checkbook’ entry. The politicians get to spend and the Fed gets the Treasury bonds and bills. (This also prevents having to raise taxes on the voters.) Of course, sometimes the Fed sells the IOUs to someone else.

So, in a sense, we are running a huge profit if we regard the Fed as ‘us’. The Fed owns trillions in paper guaranteed by the people of the United States. As the chart illustrates though, there is trouble in ‘Debt-land’.

[quote]ajcook99 wrote:
Headhunter wrote:
Using the power of government to inflate a currency…

In many cases (specifically China) the government is actually intercedeing and purposefully deflating the currency in order to keep their labor at a competitive advantage in the global marketplace.

Let’s keep in mind that this rescue capital is going to be tremendously profitable for these Sovereign Funds. For a frame of reference, look at the rescue capital that Warren Buffet gave Salomon Brothers years ago.

The biggest irony here is that this intensely capitalistic idea of “we must have free markets with no intervention” that actually keeps us from opening up our Sovereign Wealth Fund (Social Security) from taking advantage of these same once-in-a-century investment bargains.

If we took and applied the same investment banking and financial standards to our country’s balance sheet, cash flow and business opportunities as we do some of our largest corporations, the US could dramatically reduce it’s current issues.
[/quote]

Once in a century? We need to wait until the bottom.

"In fact, the parallels between our present situation and the period preceding the Great Depression are striking. Just as massive debt was accumulating in the market from the purchase of stocks �??on margin�??, so too, mortgage debt between 2000 and 2006 soared from $4.8 trillion to $9.5 trillion. In both cases the �??wealth effect�?? spawned a spending spree which looked like growth but was really the steady, insidious expansion of debt which generated economic activity. In both periods wages were either flat or declining and the gap between rich and working class was growing more extreme by the year. As Paul Alexander Gusmorino said in his article, �??Main Causes of the Great Depression�??:

“Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920’s, and the extensive stock market speculation that took place during the latter part that same decade”.

The same factors are at work today except that the speculation is in real estate rather than stocks.

http://www.marketoracle.co.uk/Article383.html

JamFly wrote:
Excessive greed springing from capitalist values caused the credit crunch which this article is referring to.

Define excessive greed. Define capitalist values.

I think someone has been recently enrolled in uni, and thinks he knows way more than he actually does."

My point is that the financial sector have created the current bad debt situation by their choices and policies - we will all be effected by this. They have been allowed to do so by governments reluctant to step in and regulate certain bad practices in the industry, reluctant that is until it is too late.

Here in the UK the government have already bailed one bank out (Norther Rock) using public funds to the tune of several billion and counting…

As an example Norther Rock were the ‘go to’ bank if you required a mortgage loan in excess of 5-6 multiples of you income, it is not hard to see why they went bust when the piece started to unfold.

Having said the above I am not anti-capitalism I just believe that in general there needs to be robust guidelines and tough independent regulation from government, this is not happening at the moment.