Runner “Socialist often get rich by capitalism and then preach to everyone else or even worse expect to live on welfare created by capitalism”

Well socialists have a tendency to balance the public self-righteousness with private bigotry, I remember how Graham Richardson got caught with his fingers in up the third knuckle, in his ill gotten gains in a hidden Swiss bank account, how Evans was similarly caught dipping his digits into Cheryl Kernow and I don't want to repeat where the late Bob Collins fingers were.

“shows if we build our life upon anything or anyone other than Christ Jesus then that life will eventually crumble.”

Yes well, tell that to the Egyptians, their pyramids seem to have been remarkably resilient.

As for “It is more blessed to give than to receive. We who are so rich in this land that we need to be generous to the poor.”

Yes and the meek shall inherit the earth, if that is ok with everyone else.

To be honest if you want to twitter on about your personal belief in economic theory then you are welcome but anyone who wants to subordinate business, government and commerce under the thumb of some theological clap-trap has as much relevance to this thread as some primitive Muslim academic criticizing the notion of interest because he read it on the outside of a box of Koran cookies.

All I know is the system which has been most successful at delivering opportunity and reward to individuals with which more of them can take responsibility for improving their own circumstances has been the libertarian-capitalist model which then accepts facilitates significant distribution into philanthropic endeavours and generates an increasing economic base for paying taxes to “render unto Ceasar”.

Yabby AAA rating, these things fluctuate over time, when creditability is damaged, then AAA is downgraded. The credibility of say, Enron was good once. It is no different to a horse, valued at a million dollars, until it falls and busts a leg.

Arjay “The real question is that how do we insure that this human potential is harnessed in the right direction so as to avert financial collapses such as our sub-prime debacles?”

It depends on what caused the sub prime collapse.

If the cause was some fraudulent endeavor,

then government, as regulator bears a responsibility to either enforce laws the curtail the fraud or as in most cases, enact new laws.

Typically Sarbane-Oxley is new regulation in USA partly in the wake of Enron to apply new regulation to the role of auditors. Just google it, there are heaps of links.

However, will all the will in the world, government is neither infallible nor predictive. All anti-fraud legislation is enacted reactive to given events and rarely in anticipation of a possible future new fraudulent risk and of course, the returns available to a fraudster are immense, relative to the effort and thus we are always going to have some fraud occurring.

If the cause was not fraud

Many causes can lead to any given event. Greed is one and stupidity another. Change of confidence or belief in something is another.

If we acknowledge that any endeavor has a “risk” some might even calculate a risk profile, which, based on historic observation expects the risk of going broke in a housing investment is less than going broke on a straight share investment and a lot less than anticipating commodity futures.

Many times the “risk” is rewarded with enhanced returns. Sometimes the risk comes in and someone loses their shirt.

And no one is ever going to fix that sort of event, whether a free market or otherwise.

No one can guarantee that all “human potential is harnessed in the right direction”.

If it could be, we could get rid of the fraudsters, the criminal courts who convict them and the prison system which houses them. And no one would pursue a legal commercial endeavour which comprises any “risk”.

Col, I agree, ratings can change and do. But in the case of the
subprime mortagages, they were never prime in the first place.

The problem is that financial engineering, ignoring risk, has grown
huge on Wall Street. Warren Buffett even concedes that derivatives
could be a financial tzunami. IMHO only a small portion of the
truth has come into the open so far.

A couple of interesting links from the Asian Times Online.
They have some great articles, with a different perspective,
as long as you can ignore the IMUVU ads, which seems to be
a popular pastime in Asia.

http://www.atimes.com/atimes/Global_Economy/JC19Dj01.html

and

http://www.atimes.com/atimes/Global_Economy/JC20Dj04.html

.

A very interesting discussion.Col Rouge and Yabby have made some very salient points in regards the reality of survival whether it be our present day economics or past experiences.
Like it or not money is a commodity which has the capacity to feed off itself and thus pervert the machinations of the real economy.

In my view,the poor need more incentive to save thus have more access to the wealth they have helped to create via the share market.

Arjay “In my view,the poor need more incentive to save thus have more access to the wealth they have helped to create via the share market.”

Saving is a result of having disposable income and a appropriate attitude. I might suggest most of the poor live virtually from day to day, week to week with no disposable income, all income being disposed of on necessaries. It is common for any potential “savings” to be diverted into cigarettes, alcohol etc.

Even if you fixed the economic level of disposable income to make savings a possibility, the “attitude” will still prevail to guarantee that many will not do so.

Whilst I do not like the idea that many are financially irresponsible, we do have a real problem and the only ways of fixing that I can think of are

A paternalistic, authorative state, which pretends it cares, can give out food stamps and rent vouchers to ensure the poor dispose of their income wisely.

An even more invasive state which manages the financial affairs of all, with the obvious curtailment of the not-so-poor and possibly wealthy as well as the poor.

Either option seems to me to present far more serious issues than what anyone may hope they resolve.

The attitude thing is the stumbling block. The state is not responsible for protecting people from their own foolishness and of it were, who would protect the able, as well as the foolish, from what the state deems to be “foolish”?

Sometimes it is better to acknowledge, the world is not a perfect place and the price required to attain perfection is simply not worth paying.

As you said, interesting discussion. We can all benefit from more of them :-)

Arjay, the poor do benefit from higher share prices through their
super funds, who effectively own most large Australian companies.

But I agree with you, the Australian system is flawed in that there
is little incentive to save cash, so people don't. That is why we
import so much finance from overseas, which is to our detriment as
a nation and one of the causes of higher interest rates.

If somebody saves their hard earned Dollars in a bank account,
inflation takes half the interest and marginal tax rates take the
other half. So people don't save cash for good reasons, hence our
problems.

If indexation was applied to interest from bank deposits, the system
would be much fairer and people would actually have an incentive to
bank some $. Hey presto, then our current account might also look
alot healthier then it does right now.