This talk is Peter Schiff at the Austrian Scholars Conference a week or two ago (Mar. 13-14). He's talking about what's happened with the economy and what's going to happen.
I know it's over an hour long, but it really is worth your time. The guy is very insightful and funny, especially if you're into capitalism and business and stuff.
Youtube Video
Peter Schiff: Why the Meltdown Should Have Surprised No One
Moderators: Tunnelcat, Jeff250
I think his analysis is dead on. I particularly like his point that the problem isn't greed, but greed decoupled from healthy aversion for risk. In trying to make the world safe, we've made it dangerous.
I do fear a government trying to save us from problems of its own creation. I don't think it's an intentional protection racket; I don't think they understand that they created the problem and I think they think they can really help. But motivations don't matter, just results--a decentralized pyramid scheme is still a pyramid scheme. A government that creates problems and uses them as excuses to seize power is still . . . that . . . even if it doesn't know what it's doing.
I see two root causes. One I think is moral and cultural, the other is governmental.
One, an unwillingness on the part of the people to endure pain. We have to be willing to let businesses fail. Trying to make the economy safe results in socialism, which results in everybody failing--but evenly. The lure of socialism is safe, guaranteed results for everyone. The sting is that you cannot improve your lot--at all. We'd rather have a deal where everyone's safe than a deal where anyone can work as hard as they like to make their own life as good as they'd like it to be. We're soft.
Actually, I don't think that's totally true. The American people are tough and would never make that deal. Civilization and peace might someday make us soft--it happened to Rome, I don't know why we'd be immune. But I don't think it's happened yet. Americans are tough. It's their politicians have no faith in them, and that's the problem.
Two, I think term limits result in politicians laser-focused on short term effects. I'm not saying term limits are bad. They're very very very good. But they do mean a deferral of responsibility. So you can make irresponsible decisions, and as long as the effects are good long enough to get you re-elected, you're golden.
It's not that people aren't smart enough to see long-term effects. They are. It's not that true patriots don't get elected sometimes. They do. But the thing is, they want to get re-elected, and the future results of their actions . . . well, those are subject to debate. Different people will tell the story different ways and people can believe what they want. Politicians can spin that. They can blow smoke about it. But current conditions are what they are--you can't deny them. Everyone can see them. And people naturally (and rationally!) hold politicans accountable for them. So even great patriots, even honest politicians (heh!) have every incentive to make things good now and heck with the future.
I'm not sure what to do about that. Educate the populace, maybe. Honestly, I think the internet's already doing that.
I do fear a government trying to save us from problems of its own creation. I don't think it's an intentional protection racket; I don't think they understand that they created the problem and I think they think they can really help. But motivations don't matter, just results--a decentralized pyramid scheme is still a pyramid scheme. A government that creates problems and uses them as excuses to seize power is still . . . that . . . even if it doesn't know what it's doing.
I see two root causes. One I think is moral and cultural, the other is governmental.
One, an unwillingness on the part of the people to endure pain. We have to be willing to let businesses fail. Trying to make the economy safe results in socialism, which results in everybody failing--but evenly. The lure of socialism is safe, guaranteed results for everyone. The sting is that you cannot improve your lot--at all. We'd rather have a deal where everyone's safe than a deal where anyone can work as hard as they like to make their own life as good as they'd like it to be. We're soft.
Actually, I don't think that's totally true. The American people are tough and would never make that deal. Civilization and peace might someday make us soft--it happened to Rome, I don't know why we'd be immune. But I don't think it's happened yet. Americans are tough. It's their politicians have no faith in them, and that's the problem.
Two, I think term limits result in politicians laser-focused on short term effects. I'm not saying term limits are bad. They're very very very good. But they do mean a deferral of responsibility. So you can make irresponsible decisions, and as long as the effects are good long enough to get you re-elected, you're golden.
It's not that people aren't smart enough to see long-term effects. They are. It's not that true patriots don't get elected sometimes. They do. But the thing is, they want to get re-elected, and the future results of their actions . . . well, those are subject to debate. Different people will tell the story different ways and people can believe what they want. Politicians can spin that. They can blow smoke about it. But current conditions are what they are--you can't deny them. Everyone can see them. And people naturally (and rationally!) hold politicans accountable for them. So even great patriots, even honest politicians (heh!) have every incentive to make things good now and heck with the future.
I'm not sure what to do about that. Educate the populace, maybe. Honestly, I think the internet's already doing that.
I really need to buy some stock in soapbox manufacturers. This guy’s hindsight vision is 20/1, and that was kind of getting to me as I listened.
There was one running theme that I did agree with him on, and that is the shift in the American dream.
It’s true. The American dream use to be to work hard, and you could succeed. Now the American dream is to find a method of getting rich quickly. I liked the line (paraphrase):
“You use to get a job and work hard to buy a house, now you buy a house so that you can quit your job not have to work hard.”
The only get rich quick scheme that actually works, is to sell a product to someone else telling them how they can get rich quick. All that matters is that you sound confident.
Funny that near the end, that this guy starts selling his book.
There was one running theme that I did agree with him on, and that is the shift in the American dream.
It’s true. The American dream use to be to work hard, and you could succeed. Now the American dream is to find a method of getting rich quickly. I liked the line (paraphrase):
“You use to get a job and work hard to buy a house, now you buy a house so that you can quit your job not have to work hard.”
The only get rich quick scheme that actually works, is to sell a product to someone else telling them how they can get rich quick. All that matters is that you sound confident.
Funny that near the end, that this guy starts selling his book.
There's a fundamental tenant in business that you never outsource your core competency. It puts someone else in control of your destiny.
There was a time when the U.S. was the most productive nation on earth in terms of manufacturing goods. It's what we did and we were extremely good at it. We have outsourced much of that capacity and look where it's gotten us. I'm not say it's the sole reason why we are where we are, but reducing our manufacturing base has played a big part.
There was a time when the U.S. was the most productive nation on earth in terms of manufacturing goods. It's what we did and we were extremely good at it. We have outsourced much of that capacity and look where it's gotten us. I'm not say it's the sole reason why we are where we are, but reducing our manufacturing base has played a big part.
We aren't losing our manufacturing base - 2006 was an all-time high for US manufacturing output. You can't look at employment numbers. It's productivity that matters, working with more capital, thus producing more with fewer workers. That is exactly how we've gone from 98% or so of the population 100 years ago being employed in farming, to less than 2% of the population producing far more food than a century ago.
I agree with that statement alien, Supply vs demand is what a successful business is should be based upon and if we're truly to be efficient in days like this it seems too natural to me that we would be able to do more with less resources than ever before.
We ARE living in the 21st century, it's high time we started accepting the changes that comes with.
We ARE living in the 21st century, it's high time we started accepting the changes that comes with.
The melt down started when the \"Community Re-investment Act\" was enacted: http://en.wikipedia.org/wiki/Community_Reinvestment_Act
Once you start thinking everyone deserves a loan, the foundation is laid to create a abusive loan practice that saw it's fruition in the 90's with the repeal of the Glass Spiegel act, a law that was enacted after the Great Depression to prevent the very melt down that occurred now. So much for understanding history.
Once you start thinking everyone deserves a loan, the foundation is laid to create a abusive loan practice that saw it's fruition in the 90's with the repeal of the Glass Spiegel act, a law that was enacted after the Great Depression to prevent the very melt down that occurred now. So much for understanding history.
Really, the meltdown started in 1977?
As far as I know, all the problematic lending practices started in the last five years or so. So how can you blame that on a policy that predates it by more than 20 years?
Moreover, if you look at the actual data, you'll see that the institutions subject to the CRA sold way LESS rather than more bad loans that the other institutions. So again, how can it be the CRA's fault, if it - if anything - it appeared to have promoted responsible lending?
edit: here is a report with the data (.pdf).
To me this CRA meme is nothing but a collusion of guilty bankers who want to find a cheap scapegoat (\"they made us do it!\") and deregulators who need to show that it was not actually deregulation that caused the problem, but \"politically correct\" overregulation. And as much as I can sympathize with these all too human motives, the actual data does not support it.
As far as I know, all the problematic lending practices started in the last five years or so. So how can you blame that on a policy that predates it by more than 20 years?
Moreover, if you look at the actual data, you'll see that the institutions subject to the CRA sold way LESS rather than more bad loans that the other institutions. So again, how can it be the CRA's fault, if it - if anything - it appeared to have promoted responsible lending?
edit: here is a report with the data (.pdf).
To me this CRA meme is nothing but a collusion of guilty bankers who want to find a cheap scapegoat (\"they made us do it!\") and deregulators who need to show that it was not actually deregulation that caused the problem, but \"politically correct\" overregulation. And as much as I can sympathize with these all too human motives, the actual data does not support it.