Stern,

The GFC occurred because stockbrokers and bankers found a new way to make lots of money out of other people's debt. They turned that debt into a product and traded it - making squillions. It was greed... it was greed... it was greed. And when the U.S. housing market went to the wall, this mansion of cards built on a house of cards came tumbling down.

And, during the early days of the meltdown when volatility in the market became evident, the only reason we didn't see a complete collapse of confidence was because the U.S. and various other governments around the world began to regularly pump billions into the market every time the DOW went into free fall.

Dear Stern,

I'm sorry if I gave you the impression that
I'm arguing pro Marxism as opposed to Capitalism.
I was merely trying to point out that Marx wrote
in England at a time when a large and impoverished
working class labored for a handful of wealthy
capitalists who owned the factories and other means
of production. Marx assumed that this situation
would inevitably lead to revolution.
The changes that have occurred
in industrial societies since Marx's writing have
thrown doubt on Marx's concept of class.

Many middle-class people, for example, work not for
capitalists, but rather for their fellow citizens,
perhaps as teachers, nurses, or civil servants.
Others don't work for anybody: they are self-employed.
Some blue-collar workers too, are paid more than some
white-collar professionals. A truck driver, for example,
may sometimes earn more than a high school principal -
so where is their relative class status?

Another important change since Marx's time is that most
industry is now run by large corporations, which are
owned by thousands or even hundreds of thousands of
stockholders but are controlled by salaried managers.
As a result, the "ownership" and the "control" of
the means of production are no longer identical.
True, corporate managers and directors typically own
stock in the companies that employ them, but -
especially in the case of large companies - they rarely
own a controlling interest. As I stated earlier, it
may be that a "new class" is appearing, consisting
of well-educated experts, whose high social status is
based on knowledge, not ownership. It isn't clear
where these salaried executives, bureaucrats,
scientists, and others fit in Marx's concept of class.

All I've been trying to rationalise is the fact that
Karl Marx spent most of his life writing about social
class. His pioneering work on the subject, (sometimes
contradictory) has had an immense influence that almost
all subsequent discussion of class systems has had to
confront his ideas.

Anyway, I'm done on this subject.
Thank You for responding to my posts.
And I'll see you on another thread.

Poirot "The GFC occurred because stockbrokers and bankers found a new way to make lots of money out of other people's debt..... And when the U.S. housing market went to the wall, this mansion of cards built on a house of cards came tumbling down."

PRetend all you want

You are suggesting the dirivatives values collapsed because the under-lying debt went bad.

the point with all that is this

being required, by law to lend to people who lacked the ability to support their debt levels is what caused the house market collapse in the firsr place.

Had sub-prime borrowers not been allowed to borrow (but were encouraged to by Democrats affirmative action strategy including threats of loss of licence to any bank who did not sign up enough "blacks, hispanics and single mothers") the house market would not have reached the dizzy heights from which it collapsed.

- and of course, without sub-prime debts, there would have been no incentive to off-load the debts as derivatives

It is all just another example of the "law of unintended consequences", where the immediate, short-term benefit is not considered against the ultimate long term cost.

Like I said previously, caveat emptor, one should never trade in a commodity which one does not understand.

You seem to misunderstand the function of a bank, Poirot

Banks have never been in the business of lending their own money, they have always been in the business of bringing lenders and borrowers together, for a modest margin on the transaction.

Banks are likewise, the masters at hedge transactions and provide a valuable service by doing so - but it is always other peoples debt and other peoples investment funds they use.

The derivative collapse was because bankers held alot of "sub-prime" debt, generateing rates of return above the rate of "prime" debt, making them a tradable commodity but when the mortgage borrowers exploited the jingle-mail option (another unintended consequence). Whilst derivatives were generating higher returns (as explained above) all was sweet - but the loss of the "capital worth" offset everything and thus, the whole process collapsed.

Dear George,

Thank You for understanding me so well,
and for your insight and words of wisdom.
I know what you're saying, and I agree with
you. Life is rarely just black or white.

As I've written many times in the past -
A historian can establish that an act took place
on a certain day, but this, by historical
standards, constitutes only chronology. The moment
the historian begins to look critically at
motivation, circumstances, context, or any other
such considerations, the product becomes unacceptable
for one or another camp of readers.

Survivors and victims' relatives are usually more
interested in condemnation and punishment than in
explanation. Explanations seem tantamount to
sympathizing and excusing. However all this often
leads to the questionable practice of stereotyping
people and nations, and unless people are willing to
modify their judgements, continued stereotyping can
lead to counter-stereotyping and the result is
usually a complete breakdown in communcation.

Again, Thank You for kind words.

Foxy “Many middle-class people, for example, work not for
capitalists, but rather for their fellow citizens,
perhaps as teachers, nurses, or civil servants.”

They are paid by the state and are servants of the state, not their fellow citizens

we do have some people who work for us... cleaning, gardening etc... but I dont think you meant that sort of "help"

“Others don't work for anybody: they are self-employed.”

Ah the individual capitalists… done a lot of that myself

Although never with a market barrow...

Many “capitalists” earn from a mix of sources, director fees, dividend income (aka profit distribution), salary, capital gains

re - “so where is their relative class status”

Capitalism has nothing to do with “Class”

So who knows or cares…

I have not mentioned “class”, it might be part of your mind set but I have never felt “class” was important in Australia…

Nor USA and even in UK it has experienced a most serious decline in recent generations and rightly so.

When I consider the first and to date only, female prime minister of UK (and a leading conservative thinker) was the daughter of a “middle class” grocer I would suggest the “Class war”, which Marx saw as the flash point for revolution is well and truly “Dead and Buried” –

possibly along side him in Highgate cemetery .

Indeed, when I think of it, places like India cling to a class system (Caste in their words) which has not existed in any western country for than a century.

“As a result, the "ownership" and the "control" of
the means of production are no longer identical.”

Stock exchanges –can be traced back to 12th century France

But the modern stock exchange was first formed in Amsterdam in 1602….

Which means the separation of ownership and control was a fact for centuries before young Karl was spat into the world.

So I repeat “Get an education”

“Anyway, I'm done on this subject.”

I think you were done with it along time ago but persisted in pretending to convey an understanding which was clearly unfounded and “unsustainable”

Dear Stern,

Kindly re-read my posts.
You seem to have misunderstood
completely,
what I was trying to say.

I'm merely puzzled by your lack of
comprehension skills.