patrick.net

snmr,

You are entitled to your opinion, but I have seen no evidence that multi-party democracies are slow.

Counterexample: Did not just France, Germany, Ireland, even England, and several others put together their financial rescue plans at record speed, and much faster than Washington.

Washington often described as "a gridlock". So which is it, a bipartisan gridlock or a lean mean decision machine?

I propose strong regulation of governments.

In this regard, I guess we at least have a good constitutional framework.

Argentina is going to nationalize pension funds. Is this what you want? Democracy can be as dangerous as exotic derivatives if the tyranny of the majority is not well regulated.

snmr,

our posts crossed again. I see no data. You have probably observed plenty, but as you say yourself, it is indeed very useful to have a wider knowledge about how many other western democracies function internally.

At some point, Rome was an incredibly powerful democratic republic. And I will bet that any number of romans would agree that they had the best and most efficient democratic republic possible How could it not be -- they were the rulers of the world!! They simply had to be the best, right?

But history shows what happened soon thereafter,

But history shows what happened soon thereafter,

Exactly. Any system eventually fail. This has absolutely nothing to do with the merits of the system. It has everything to do with time and events.

Peter P,

We actually agree on something today:

Strong constitutions and GOOD constitutions are of the essence. The US has a flawed constitution and election system. Many countries have better systems, We should learn.

>>Argentina is going to nationalize pension funds. Is this what you want?

Oops. Maybe I spoke too soon. There you go again baiting with some irrelevant prattle. What is your point here, exactly? That multi-party systems are more likely to nationalize than 2-party systems? Whatever the reason, it was just a red herring.

PS: Our 2-party system just "nationalized" the big banks, at least according to some people.
They also did not privatize social security, so no need to re-nationalize that, for what it's worth (sarcasm off).

Peter P says:

>>I propose strong regulation of governments.

Then he says:

>>Any system eventually fail. This has absolutely nothing to do with the merits of the system.

Uh, logic contradiction alert, anyone?

Strong constitutions and GOOD constitutions are of the essence. The US has a flawed constitution and election system. Many countries have better systems, We should learn.

Which country has a better constitution than the US? I agree we need to more adherence to the constitution.

The "progressive" era is a dark age though.

Does the inherent structure cause the elected members in multi party systems to be more pandering to thier constituents than focusing on something big for the country ?
India and other former british colonies have this problem so i am just curious ?
may be justme can enlighten me here.
What motivation does a mini-party have in driving and creating something useful for the nation beyond just getting re-elected ?
India has failed so many times in pushing for major "national" reforms when small parties with no national brand (so nothing to lose) have time and again put obstacles.
The more parties in key decision making, the less recognition they will eventually have and hence less motivation for the stuff thats beyond pandering to thier local masses
No wonder, europe is leaning towards socialism.
May be two or more Ceo's for a company might be good idea too ;-)

Better constitutions and election systems: Japan, Germany, France, Denmark. Norway, Sweden, Finland, Austria, Italy, Switzerland, there is a long list.

I'll prefetch the next question:

Next up: "How come they are not as big and great and powerful as us?"

Answer: Duh, just because we are the biggest and strongest doesn't mean we are perfect, nor that we need not improve. This is a false argument.

Hi Bap, yeah, I figured I could count on you for a thougtful argument :-).

Henry Waxman: You were perhaps the leading proponent of deregulation of our financial markets, certainly you were the most influential voice for dergulation. You have been a staunch advocate for letting markets regulate themselves. Let me give you a few of your past statements:

In 1994, you testified at a Congressional hearing on regulation of financial derivatives. You said there was nothing involved with federal regulations that make it superior to market regulations.

In 1997, you said there was no need for government regulation of "off-exchange" transactions.

In 2002, when the collapse of Enron led to the renewd Congressional efforts to regulate derivatives, you wrote the Senate, "We do not believe a public policy case exists to justify government intervention"
And earlier this year, you wrote in the Financial Times, bank loan officers, in my experience, know far more about the risks and working of their counterparties than do bank regulators.

And my question for you is simple: Were you wrong?

Alan Greenspan: Partially. Let's separate these problems into their component parts. I took a very strong position on the issue of derivatives and the efficacy of what they were doing for the economy as a whole...

Waxman: So, you don't think you were wrong in not wanting to regulate derivatives?

Greenspan: Well, it depends which derivatives we're talking about. Credit default swaps have serious problems associated with them...

Waxman: Let me interrupt you because we do have a limited amount of time.
...

Waxman: Dr. Greenspan, Paul Krugman the Princeton Professor or Economics who just won a Nobel Prize wrote a column in 2006 as the subprime mortgage crisis started to emerge. He said, "If anyone is to blame for the current situation, it is Mr. Greenspan who poo-pooed warnings about an emerging bubble and did nothing to crack down on irresponsible lending".

He obviously believes that you deserve some of the blame for our current conditions. Do you have any personal responsibility for these financial crises.

Greenspan: Let me give you a little history, chairman. There's been a considerable amount of discussion about my views on the subprime market in the year 2000. And indeed, one of our most distinguished governors at the time, Governor Gramlich, who regrettably is deceased but who was unquestionably one of the best governors I've had to deal with, came to my office and said he was having difficulty with the problem of what turned out to be a fairly major problem in predatory lending...

Waxman: He urged you to move with the powers that you had as chairman of the Fed as both the Treasury Department and HUD suggested that you put in place regulations that would curb these emerging abuses in subprime lending, but you didn't listen to the Treasury Department or Mr. Gramlich.

Do you think that was a mistake on your part?

Greenspan: Well, I question the facts of that. He and I had a conversation. I said to him I have my doubts whether that would be successful. But to understand the process by which decisions are made at the Fed it's important to understand...

Waxman: Dr. Greenspan, I'm going to interrupt you. The question I have for you is... You had an ideology ... You had the authority to prevent the lending practices that led to the subprime mortgage crisis, you were advised to do so by many others, and now our whole economy is paying the price. Do you feel that your ideology pushed you to make decisions that you wished you had not made.

Greenspan: Well, remember what an ideology is. It's a conceptual framwork for the way people deal with reality. Everyone has one. To exist, you need an ideology. The question is whether it is accurate or not. And what I'm saying to you is that I found a flaw - I don't know how significant or permanent it is - but I've been very distressed by that fact. But if I may, can I just answer the previous question?

Waxman: You found a flaw in the reality...

Greenspan: I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works.

Waxman: In other words you found that your view of the world, your ideology, was not right. It was not working.

Greenspan: That's precisely the reason I was shocked because I was going for forty years or more with very considerable evidence that it was working exceptionally well.

But, just let me finish if I may...

Waxman: Well, the problem is that time is already expired.

So Greenspan had a faulty idelology. Who could have guessed?

Its comforting to know that Alan Greenspan is apparently less intelligent re: financial matters than a bunch of random IT dorks running housing blogs.

I don't really feel that Greenspan was to blame. If you want to argue for not having a central bank at all, then you might have a good point. But if you DO have a central bank that controls interest rates, then Greenspans model actually wasn't that ridiculous.

Note that low interest rates DID NOT cause the problem we're in. The problem was caused by fraud on many levels of our financial system. The banks thought they found a way to game the system, and they did, until they sucked all the marrow out of America. Now that the bone is dry, we're experiencing the after affects.

His biggest mistake was underestimating the animal nature of man. Which, really, we're all guilty of. Except Peter P of course.

It will be interesting to see how this affects research and academia in general. There will be less endowment income to pay for the programs and less to reinvest.

The UC already froze wages for the year.

Beyond that Uni endowments are notoriously conservative. They are also absolutely enormous these days. Stanford and Princeton are basically free if you come from a needy family.

FuzzyMath Wrote : I don’t really feel that Greenspan was to blame.

Its unbelievable you still believe that !!

Greenspan's fault was that he could not figure out the biggest asset bubble in history that was taking place. He was in the field for 40 years. His brain has to be pea sized to miss that.The ideology that greenspan followed was that asset bubbles matter little when it comes to fiscal policy even though the bubble is big and is hitting you on the face.

Don't get me wrong snmr, his hands are not clean. He had a flaw in his model. But really, who doesn't?

I'm sure there are bigger flaws in our amateur models.

Greenspan made a mistake. The banks committed fraud. There is a very important difference there.

FuzzyMath wrote : Greenspan made a mistake. The banks committed fraud. There is a very important difference there.

It would be a fraud if he did it on purpose to remotely benefit him or his pals or his wife or his relatives.

It premature to assume that he just committed a mistake and not a fraud. I would hold him guilty until proven innocent (which i generally do with all high office positions :-) )

Its frustrating to see the gurus blaming the average Joe for causing the bubble by buying unaffordable houses.
You cannot blame joe because joe is personification of human nature. human nature didn't change during the bubble and will not change ever....period. Trying to change average joe is like trying to change all the millions of years of evolution. BTW, Average joe's memory fades every bubble year(TM) so good luck with financial awareness programs.

Bubble year - The time it takes for a bubble to form and pop.

Joe's hands are clean. He might have made a bad financial decision, but he's also going to lose his house and most of his money.

Like he was supposed to be aware that there were millions of other Joe's who were making the same financial mistake at the same time, thereby causing a financial crisis? Give me a break.

The banks gambled, they lost. Simple story. Should have been a simple ending.

>>Don’t get me wrong snmr, his hands are not clean. He had a flaw in his model

Green-san had a flaw in his model? I think the problem was that he thought he did not need any model, because the free market would automagically take care of everything.

Greenspan is a joke. He is a free marketeer that nevertheless believes in regulating the interest rate. The guy is a walking (oxy)moron.

justme:

OK. Where to begin...
I would be truly interested in seeing an example or two of your ever-changing-coalition multiparty system that lasted more than an election cycle. (or even a year.)

I would be very interested in knowing what your criteria are for judging one governmental system "better" than another.

Europeans were able to move quickly because a great deal more power is vested in their President's/Chancellor's/PM's hands than in the US President's. You want we should give GWB that much more power? Me neither. Nor BHO. Nor JSM. Quick movement doesn't correlate to wise movement. "Democratic" passions poisoned Socrates.

"Mini-party" is not meant to be perjorative: simply a way of talking about parties that fall below the, say, 25% threshold of stated support. Most times these days, neither Republican nor Democrat self-identification rises much beyond 35% in the US.

Anybody can start a party in the US. All you need do is convince about 150,000 of your neighbors in your congressional district, and you, too, can have a seat in the House. Not even a 5% demarcation line, more like .06%. Have at it, my friend. Oh, sorry, I see: You want to automatically get handed a seat or ten because you can scrape together 4 million (abt 5% of voters) or so other like-minded folks scattered all around the country? Proportional representation, eh? And that is better why? Because that is the only way your out-of-the-mainstream views could possibly get into Congress perhaps?

Is it time for a new thread?

Note that today stock futures hit the 500 point drop limit hours before the opening bell, AND gold dipped below 700.

One theory I heard is hat the hedge funds lined up this morning to drop stocks. If so, I wonder where they put the cash? Not gold, it seems.

Strong dollar, anyone?

Malcolm:
Yes please. This is comment number 338.

Headset:
love CNN's Commodities headlines:
The Old: Oil rises on expected OPEC cut
Just below this one...
The New: OPEC cuts production, oil sinks

you'd think they'd know about editors...

MST

LOL!

One theory I heard is hat the hedge funds lined up this morning to drop stocks. If so, I wonder where they put the cash? Not gold, it seems.

My theory is that there is some behind-the-scenes action going on to cripple the rest of the worlds markets in order to save ours. I'm imaging something like an orchestrated dumping of foreign equities alongside mass short-selling.

Once we squeeze liquidity out of the foreign markets, we dump it into domestic indexes. A huge stock market surge along with a strong dollar will pull whatever capital is left over into domestic equities.

Ain't capitalism grand?

Headset, BTW:

One theory I heard is hat the hedge funds lined up this morning to drop stocks.

Take it from me (inside a Hedge Fund, but just on the IT side) it's not a simple matter to "drop stocks" or particularly any of the more exotic instruments: You also have to find Buyers. With Cash. And cashing out can have two explanations: either the managers think it's a good idea to go cash strong right then, or the investors want out, and have asked for redemptions so they can strengthen their cash positions. Also look at volume figures. Low volume + low prices still equate to cash poor, which means deflationary which means strong relative dollar. And, as well, look at fundamentals: are we actually down to decent P/E ratios for Corps. That would be deflationary, too.

What a scary day.
The scariest by far is that Russia is on the watch list for another bond default. You would think that their petro dollars would provide cover. sadly, the capital flight is, in fact, larger than their reservs.
As for what is happening. Why, it is the Great Deleveraging. And where is the money going? To the Bank balck-hole. If a Bank is levered at 40:1 (and many, many Euro banks were) it starts calling back its loans. Espcially if it calls into question the value of the collateral set against the loan. As the borrowers liquiidate, banks are losing as many borrowers are going under and pay less than their full amount. Banks now hve to shift more collateral to provisions for losses which shrins their reserves, and thus the cycle continues.
Where does this stop?
Typically it only stops once a governement that islarge enough to backstop the problem steps in. Since Western Europe seems to have cut Eastern Europe free and since the IMF, with a paultry $200b, is nowhere near large enough - your big backstoppers are The European Union, Japan, and the US.
Now, the EU has its own problem - really meaning more leverage than they ever let on. Japan is beging to be a player that is trying to help, but their position as a shrinking exporter is pretty tenuous.
This leaves the US. We did not enter this in a good position. Starting with $10t in debt is no way to start backstopping a global recession/depression.
Still, we are the worlds only $14t economy and we have a god chunk of wealth laying around to buy bargains. (I would love to inlcude places like Dubai, but they have not put their cash to good use, they just keep putting up 6 star hotels and creating new islands - which are pretty useless right about now).
So we are getting a flight to the US.
Also, have you seen the yen? Wow. That carry trade is as big as I thought. The world keeps blaming this problem on the US, but his credit bubble was being inflated for YEARS by the ZIRP at Japan.
Wow - this is amazing stuff.

(I would love to inlcude places like Dubai, but they have not put their cash to good use, they just keep putting up 6 star hotels and creating new islands - which are pretty useless right about now).

Artificial "natural" features (e.g. islands, beaches) tend to be a sign of bubble tops.

Artificial “natural” features (e.g. islands, beaches) tend to be a sign of bubble tops.

'specially when built on spec that somebody else wants to buy 'em. ;-)

One more explanation for Hedgies et al "Cashing out"

Margin calls. See Duke.

Exactly. ;)

Margin calls.

Yen shot up really high overnight.

BTW, Duke:

Don't know if I mentioned it here before, but we have a friend in Monaco who has been watching the Russians coming there for the last few years each with suitcases and steamer trunks full of cold hard cash -- billions. They buy a mega yacht apiece, and have a new twelve-year-old virgin delivered every night.

"Capital Flight" indeed

MST,

>>I would be truly interested in seeing an example or two of your
ever-changing-coalition multiparty system that lasted more than an
election cycle. (or even a year.)

Ok, You moved the goalpost again by changing what you asked to be proved,
but this time I will indulge you because the data is very easy to find:

http://rulers.org

Some excerpts that ought to satisfy you:

Federal Republic of Germany:

Presidents
7 Sep 1949 - 12 Sep 1949 Karl Arnold (acting) CDU (b. 1901 - d. 1958)
12 Sep 1949 - 12 Sep 1959 Theodor Heuss FDP (b. 1884 - d. 1963)
13 Sep 1959 - 30 Jun 1969 Heinrich Lübke CDU (b. 1894 - d. 1972)
1 Jul 1969 - 30 Jun 1974 Gustav Heinemann SPD (b. 1899 - d. 1976)
1 Jul 1974 - 30 Jun 1979 Walter Scheel FDP (b. 1919)
1 Jul 1979 - 30 Jun 1984 Karl Carstens CDU (b. 1914 - d. 1992)
1 Jul 1984 - 30 Jun 1994 Richard von Weizsäcker CDU (b. 1920)
1 Jul 1994 - 30 Jun 1999 Roman Herzog CDU (b. 1934)
1 Jul 1999 - 30 Jun 2004 Johannes Rau SPD (b. 1931 - d. 2006)
1 Jul 2004 - Horst Köhler CDU (b. 1943)
Chancellors
16 Sep 1949 - 16 Oct 1963 Konrad Adenauer CDU (b. 1876 - d. 1967)
16 Oct 1963 - 1 Dec 1966 Ludwig Erhard CDU (b. 1897 - d. 1977)
1 Dec 1966 - 21 Oct 1969 Kurt Georg Kiesinger CDU (b. 1904 - d. 1988)
21 Oct 1969 - 7 May 1974 Willy Brandt SPD (b. 1913 - d. 1992)
7 May 1974 - 16 May 1974 Walter Scheel (acting) FDP (s.a.)
16 May 1974 - 1 Oct 1982 Helmut Schmidt SPD (b. 1918)
1 Oct 1982 - 27 Oct 1998 Helmut Kohl CDU (b. 1930)
27 Oct 1998 - 22 Nov 2005 Gerhard Schröder SPD (b. 1944)
22 Nov 2005 - Angela Merkel (f) CDU (b. 1954)

Netherlands, Prime Minister

24 Jun 1945 - 3 Jul 1946 Willem Schermerhorn VDB;
9 Feb 1946: PvdA (b. 1894 - d. 1977)
3 Jul 1946 - 7 Aug 1948 Louis Beel (1st time) KVP (b. 1902 - d. 1977)
7 Aug 1948 - 22 Dec 1958 Willem Drees PvdA (b. 1886 - d. 1988)
22 Dec 1958 - 19 May 1959 Louis Beel (2nd time) KVP (s.a.)
19 May 1959 - 24 Jul 1963 Jan Eduard de Quay KVP (b. 1901 - d. 1985)
24 Jul 1963 - 14 Apr 1965 Victor Marijnen KVP (b. 1917 - d. 1975)
14 Apr 1965 - 22 Nov 1966 Jo Cals KVP (b. 1914 - d. 1971)
22 Nov 1966 - 5 Apr 1967 Jelle Zijlstra ARP (b. 1918 - d. 2001)
5 Apr 1967 - 6 Jul 1971 Piet de Jong KVP (b. 1915)
6 Jul 1971 - 11 May 1973 Barend Biesheuvel ARP (b. 1920 - d. 2001)
11 May 1973 - 19 Dec 1977 Joop den Uyl PvdA (b. 1919 - d. 1987)
19 Dec 1977 - 4 Nov 1982 Andreas van Agt KVP;
11 Oct 1980: CDA (b. 1931)
4 Nov 1982 - 22 Aug 1994 Ruud Lubbers CDA (b. 1939)
22 Aug 1994 - 22 Jul 2002 Wim Kok PvdA (b. 1938)
22 Jul 2002 - Jan Peter Balkenende CDA (b. 1956)

I could post a whole slew more of these, but you get the idea. Go to the
site yourself and look the countries up. Start with Germany, France,
Denmark, Sweden, Norway, Finland, Italy, Netherlands etc etc.

So you agree with me now? Yes or no?

MST,

>>I would be very interested in knowing what your criteria are for judging one governmental system “better” than another.

Very simple: A structure of government is superior well IF

1. Each law enacted or rejected is the most likely to have a majority of voters supporting the decision made.

2. That the executive branch cannot easily perform unilateral actions that are against the will of the majority of the people.

Can we agree on the criteria?

MST,

>>Europeans were able to move quickly because a great deal more power is vested in their President’s/Chancellor’s/PM’s hands than in the US President’s.

This is also false. Most any European PM or equivalent has LESS intrinsic power than POTUS. However, when they have the support of the legislature, on a case-by-case baisis, they can indeed act swiftly and decisively.

MST,

>>“Mini-party” is not meant to be perjorative: simply a way of talking about parties that fall below the, say, 25% threshold of stated support. Most times these days, neither Republican nor Democrat self-identification rises much beyond 35% in the US.

I hardly think that a party with support from 25% of the voter is a mini-party. 25% is a very significant number. The fact us parties can only get 35%2=-70% of the electorate to vote is simply a further indication that the election system is deply flawed.

If so, I wonder where they put the cash? Not gold, it seems.
Oh, you just couldn't resist... Hedge fund selling... Margin calls I tell ya... Hey, look, its up for the day :-)
For the record, my PM disaster portfolio is still ahead of my mutual fund portfolio -- which really isn't saying much. When they cross, I will admit defeat and sell.
I think StuckInBA got it right... lost decade. I probably would have fared better with a coffee can full of cash buried in the back yard.