Sunday, July 11, 2010
History repeats – will our bankers & MP’s ever learn?
Panics and Booms, a lesson from 1897
A very good but old article. Funny how it seems so bang up to date
Posted by who stole my pension? @ 04:27 AM (1847 views)
8 thoughts on “History repeats – will our bankers & MP’s ever learn?”
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easybetman says:
Nice one. Thanks. Many things haven’t change but the article is no longer valid today because the reckless get BAILED out nowdays while in the past, they were left to fend for themself…
enuii says:
Easybetman@1; The article is still valid because a bailout is effectively an extension of credit the following paragraph covers it if you can think laterally about 1/4 way into the article.
‘When prices of property and goods during a period of business depression are falling, the loss does not come on the entire property, but only on that portion of it represented by the cash capital the man has invested in it. The debt never shrinks until the real investment is all gone.’
A bailout transfers the debt onto whoever funds it, in our case the taxpayers via the state.
cyril says:
@2 – it’s more a case of savers bailing out the borrowers. There are plenty of taxpayers who are having their savings wiped out in order to keep mortage rates down and keep the reckless borrowers afloat.
enuii says:
Prudence has been nailed on two (if not more) fronts then
mark wadsworth says:
If you read down the article, there’s a bit that points out that there were banking crises every 18 to 20 years, and the article mentions that this had a lot to do with land price speculation. Which is what Fred Harrison has been saying for thirty years – Land Value Tax – that will sort them out 🙂
easybetman says:
@enuii – yes, prudent got hit on many fronts and also we get japan slow death where everybody suffers rather than the creative/constructive destruction given in the article. Japan haven’t got a new land bubble for a while and unlikely to have one for the foreseable future.
@MarkW – I am afraid LVT just isn’t going to sort out human nature of greed and fear. If there is no land to speculate, they will just speculate on something else (biotech / genetic engineering is probably the next one).
mark wadsworth says:
EBM, of course LVT won’t solve all our economic problems – some are simply insoluble and we have to live with them.
AFAIAC, people can speculate in shares or gold as much as they like, these are not essentials of day to day life and do not really affect non-participants. Even if gold were to hit $2,000 or $3,000, so what? But if most people are obsessed with driving up house prices this adversely affects those people who are just looking for somewhere to live. Of course, they can protect themselves by renting in the interim, but they will still have to stump up the income tax to bail out the reckless borrowers and reckless lenders.
Crunchy says:
5. mark wadsworth
That’s exactly why it will not happen.
Everything to keep the financials in check is slowly being eroded, whilst the international monopoly strangle hold tightens.
Who’s really in control here. The hand that gives the money is above the hand that takes. We are feeding the problem.
With due respect, poor old Fred and Mark are missing a vital clause, the vital seemingly unstoppable agenda hidden in plain view now.
Aaron Russo, rest in peace some day.