You're not in a position to understand those blind spots. I suspected you'd try to blag! Essentially referring to mercantilism does warrant it
For a list of explanations go and consult wikipedia! I'm more interested in how capitalism has become less stable (with unfortunate knock-on effects for SMEs). I've made it clear, multiple times, that I believe the inherent problem has been neo-liberalism (and the consequences for the hegemonic power of the financisal classes). This has led to an increased importance of home ownership (both in terns of perceived housing services and in terms of the macroeconomic effects) and therefore greater economic instability
In other words you have no idea. Increasing the importance of homeownership had nothing to do with deregulation or free market principles. It was an effort pushed forth by government based on the idea that intervention would create an opportunity for people who would otherwise not be able to purchase a home. It started with the Community Reinvestment Act (which was the catalyst for poor decision making by lending institutions) and continued with Freddie Mac & Fannie Mae (two government sponsored enterprises) securitizing loans, which did nothing but increase moral hazard. All of this while interest rates were kept low by the Fed. In the absence of such absurd regulation, lending institutions would not engage in the level of risky behavior that was observed from 2001-2007. To see this, all one has to do is to look at the rigorous standards applied to creditworthiness assessment in areas other than home loans. A bank will not extend credit to an individual with a high probability of default (based on whatever model they are using) unless they charge an appropriate interest rate. What the CRA did was remove "discrimination" based on factors such as where one currently resides (the whole purpose of this legislation was to increase lending to people in low income neighborhoods) out of the process of determining creditworthiness. But determining creditworthiness, and doing it effectively, is a process of discrimination, whether it be based on where you live, how much money you make, your spending habits, your current level of debt, etc. People from low income neighborhoods are statistically more likely to default, and so creating legislation to force institutions to disregard that was absurd. Although the institutions regulated by CRA were few, their profitability during that time (due to the conditions at the time: low interest rates, appreciating house prices, etc) stimulated such reckless behavior from the institutions not regulated by CRA, because they have a fiduciary responsibility to maximize shareholder profits, and their competitors were tapping into a previously untapped market and outperforming them. Not to mention that FHA insured most of these mortgages, creating even more moral hazard. So I agree with you, "capitalism" has indeed become more unstable - thanks to the massive amount of government intervention into the market.
Didn't understand my post? Shame! Where did you go wrong? Perhaps is the nature of neo-liberalism that confused you? A good starting point is Duménil and Lévy (2001, Costs and benefits of neoliberalism. A class analysis, Review of International Political Economy, Vol. 8, pp 578-607). Here's the abstract: Neoliberalism is the ideological expression of the return to hegemony of the financial fraction of ruling classes. The meaning of this movement can only be understood from a historical perspective. Modern finance, linked to the real economy, appeared in the wake of the structural crisis of the late nineteenth century. It lost its unrivalled domination, when the Keynesian compromise was ushered in by the succession of the great depression and World War II. Its return to power followed the crisis which began in the 1970s. The class character of neoliberalism is evident from an examination of the available figures. It prolonged the deficient profit rates of non-financial corporations and, thus, slow growth and unemployment. It was responsible for the deficits and the growing indebtedness of the states, as well as for the crisis of the debt of Third World countries, etc. But not enough attention has been paid to the benefits that finance gleaned from its return to hegemony during the crisis: the stunning rise of the profits and growth of the financial sector, only delayed in the US by the banking and thrift crises of the 1980s. It is not that finance organized to minimize its own costs during the crisis. It actually benefited from the crisis in amazing proportions, already during the crisis as in France, or after as in the US financial sector. One should not underestimate the sufferings of the unemployed and homeless, or of Third-world countries. But perhaps the biggest cost stemming from the rise of finance is the increase in the domestic and international instability. Please note that I won't be interested in your opinion on this subject. However, if you can refer to good scholarly sources that's a different kettle of fish!
This doesn't address anything. Now, it has been established that you dislike empirical evidence and that your views are not based on reality, but you'll have to do better than to post an excerpt without backing up its claims. For example - how has the "rise of finance" been responsible for an increase in instability?
It provides the starting point in understanding the importance of neo-liberalism (and the negative effect it has had on capitalism's stability) I note that you didn't manage to respond with a scholarly paper in support of your 'opinion'
I haven't stated any opinions in this thread. I asked you a question (actually, I asked you several, which you didn't address.) How has the rise of finance been responsible for an increase in instability?
That's jolly. Care to refer to one scholarly source though? You've only ever googled textbooks 'badly' so far. Your chance to shine!
Scholarly source for what, simpleton? I asked you a question. Your lack of response is an indication that you cannot provide an adequate answer. Economics textbooks (used by graduate students studying economics) were relevant to the discussion to demonstrate what is taught to future practitioners in the field. In addition, I also posted links to numerous scholarly sources in that thread (which you did not read because you are an anti-intellectual.) Answer the question.
Anything relevant to my reference to neo-liberalism. I'm not interested in repeating everything I've said on this subject (go and search it out if you want). I'm interested in using this as an opportunity to get you to refer to scholarly research on the economic crisis. Go on, don't be shy!
*rolls eyes* Cato Journal, Vol. 29, No. 1 (Winter 2009): http://www.cato.org/pubs/journal/cj29n1/cj29n1-12.pdf Or http://www.cato.org/pubs/journal/cj29n1/cj29n1-2.pdf We can easily go back and forth like this. Now will you answer the question?
Someone in the finance sector would have done better than that. You've given the game away somewhat. There's a value in that though, so well done! And question? There isn't one to answer. I've already informed you that this is about neo-liberalism. I've also given you a paper to peruse to understand the point. Read it and then get back to me with something educated (if you want to just ask the basics, search for my previous comments on the subject).
I'm not searching through your 50,000+ posts, or however many there are. I asked you a question. How has finance been responsible for instability? If you don't want to retype a previously written response, then you search through your posts and copy/paste it. I would love to refute it. Do it.
You don't have to. Use the search button. I'm not interested in going through it again. But again, thanks for the info! I can understand where your bile comes from now
My bible? I am perfectly capable & willing to discuss the financial crisis without the use of any Cato publications, and rely solely on my experience & knowledge of what transpired. You on the other hand, are clearly incapable of forming a clear thought on the matter. Has there ever been a thread in which you haven't been destroyed & humiliated?
You weren't able to refer to any of the key scholarly research which has impacted on financial sector understanding. That will be the only useful exchange here! However, happy for you to try and discount the importance of neo-liberalism with regards capitalism's instabilities. Get going!
It was my mistake to assume that you had the intellectual capacity to comprehend what the conversation was about. I gave you the benefit of the doubt by assuming that your weak reading comprehension & analytical skills were confined to a single thread.
You haven't said anything yet. I'd be amused where you go with a reply: how would you discount the relevance of neo-liberalism with regards analysis into economic stability? I hope you wouldn't go with the most tedious "yeah but, neo-liberalism is globalisation aint it". Don't let me down now!
I've said plenty of things. I explained to you how government intervention created the conditions which eventually led to the 2007 crisis. You replied with "finance leads to instability" without supporting this baseless claim (this is because you cannot.) Have I mentioned that you are unintelligent?
Your innocence is endearing and can sometimes dim the sullen teen routine, but let's get you back on track: How would you discount the relevance of neo-liberalism with regards analysis into economic stability?
There is nothing to respond to until you make some sort of concrete claim. I mean seriously, you cannot be this unintelligent.
