Financial News

[StrangeSox]

You still haven't actually answered the question: what caused the shift in the 80's? You keep saying "risk" without explaining what actually changed.

[Balta1701]

First off, has no one bought equipment, built new factories, hired new employees, issued new stock, or floated new bond issues in the last 30 years? That is all risk. Anything that comes with a cost, or potential cost, is risk.

No one built new factories in the 1940's-1970's?

[southsider2k5]

You still haven't actually answered the question: what caused the shift in the 80's? You keep saying "risk" without explaining what actually changed.

 

I'm saying it doesn't matter what caused the shift. It is immaterial to my point, which is why are you obligated to someone else's risk.

[southsider2k5]

No one built new factories in the 1940's-1970's?

 

I'm not the one trying claim no one has taken any risk since Jimmy Carter left office.

[Jenksismyhero]

This reminds me a lot of the NFL lockout.

[StrangeSox]

I'm saying it doesn't matter what caused the shift. It is immaterial to my point, which is why are you obligated to someone else's risk.

 

The discussion was about what caused the shift, not moral justification for it.

[StrangeSox]

I'm not the one trying claim no one has taken any risk since Jimmy Carter left office.

 

No one's said that. I've asked what's materially different about risk in 1950 and 1990 if you're going to use "risk" as your explanation for the stagnation of wages. You've just kept repeating "risk" and then gave a moral justification for business owners to do as they please with all profits, which still doesn't really address the question of why wages stagnated.

[southsider2k5]

The discussion was about what caused the shift, not moral justification for it.

 

Which is my whole problem with the discussion. The assumption is that people are owed something which isn't theirs. No one even questions that anymore.

[StrangeSox]

Which is my whole problem with the discussion.

Whether or not you think it's actually a problem is a separate issue from "what caused the change." Something obviously did.

 

 

The assumption is that people are owed something which isn't theirs. No one even questions that anymore.

 

That assumption cuts both ways.

[southsider2k5]

That assumption cuts both ways.

 

It seems to be that way with economic rights, but not others. Yes that bothers me. I don't constitutionally see where your rights to profit are somehow less than the others. People throw a fit if someone tries to abridge speech, religion, liberty etc. But they are perfectly willing to give away their economic rights.

[StrangeSox]

The assumption I am talking about is that the "risk takers" are entitled to all profits and that labor is only entitled to whatever wage they can negotiate, not the actual profits of their labor.

 

Liberty is tied in strongly with economic freedom and agency, as well.

[Rex Kickass]

It seems to be that way with economic rights, but not others. Yes that bothers me. I don't constitutionally see where your rights to profit are somehow less than the others. People throw a fit if someone tries to abridge speech, religion, liberty etc. But they are perfectly willing to give away their economic rights.

 

People have a right to make profits sure. But that doesn't mean the government should bend over backward to make it easier to profit, or to allow your profit to exist without consequence.

[southsider2k5]

People have a right to make profits sure. But that doesn't mean the government should bend over backward to make it easier to profit, or to allow your profit to exist without consequence.

 

That profit needs a "consequence" said a lot, as if it were murder or something.

[StrangeSox]

That profit needs a "consequence" said a lot, as if it were murder or something.

 

Negative externalities.

[southsider2k5]

Negative externalities.

 

I posted the story a week or so ago about the cost of compliance in this country being $1.75 trillion, how's that for a start?

[Rex Kickass]

That profit needs a "consequence" said a lot, as if it were murder or something.

 

I think outrageous profit can result in consequence. Just like outrageous speech can result in consequence.

 

 

[StrangeSox]

Profits aren't generated without consequences. Sometimes those consequences are literally death.

 

to be fair I don't really know what rex meant with that comment.

Edited September 9, 2011 by StrangeSox

[southsider2k5]

I think outrageous profit can result in consequence. Just like outrageous speech can result in consequence.

 

The consequences are pretty much your entire life from top to bottom. Everything to do, everything you are, everything you own, everything you eat came from someone seeking a profit. Without profit you'd still be in France as a subsistence farmer.

[StrangeSox]

instead we can be subsistence labor!

[Balta1701]

instead we can be subsistence labor!

Huh?

[StrangeSox]

Huh?

 

serf/lord vs. modern labor/employer relationship since he referenced being a subsistence farmer in France. Granted, standard of living is just a *bit* higher than a feudal peasant, but questions of actual economic liberty/agency for anyone not in the capitalist class (those with enough independent wealth who do not need to sell their labor) still lingers, especially if we're going to accept that business owners (lords) have rights to all of the profits of our labors and if we don't like it we can simply chose another business/lord to swear fealty to.

 

A better explanation of the comparison would be quite longer but I certainly didn't generate it on my own, so better explorations are out there.

[Balta1701]

I think in thy case, the connection is a bit strained.

[StrangeSox]

Almost on cue, Salon has an article that actually explains my hasty metaphor

 

http://www.salon.com/news/politics/war_roo...n_labor_history

 

As has always been true, the coexistence of idling workplaces and cast-off workers remains the single most severe indictment of capitalism as a system for the reproduction of human society. The arrival of a new social category -- "the 99ers" -- punctuates that grim observation today

Edited September 12, 2011 by StrangeSox

[southsider2k5]

http://online.wsj.com/article/SB1000142405...1261182836.html

 

What's the Matter With the French Banks?

Whether the market's worst fears are realized or not, the financial system maintains too close a relationship to the state.

 

By NICOLAS LECAUSSIN

 

"We can no longer borrow dollars. U.S. money-market funds are not lending to us anymore," a bank executive for BNP Paribas, who declines to be named, told me last week. "Since we don't have access to dollars anymore, we're creating a market in euros. This is a first. . . . we hope it will work, otherwise the downward spiral will be hell. We will no longer be trusted at all and no one will lend to us anymore."

 

He's not the only one worried. Société Générale has lost 22.5% of its value since the beginning of the summer. In early September, BNP released a statement—in English, which is highly unusual—explaining that it has abundant dollar liquidity and that BNP has nothing to worry about, unlike other banks. France's three biggest banks have been the subject of whisper campaigns about their solvency throughout the summer.

 

On the surface at least, the concerns are hardly groundless. BNP, Société Générale and Crédit Agricole together hold nearly $57 billion in Greek sovereign and private debt, versus $34 billion held by the largest German banks and $14 billion at British banks. And then there is Spain and Italy. French banks held more than €140 billion in total Spanish debt and almost €400 billion in Italian debt as of December, according to the latest figures from the Bank for International Settlements. If either of these governments were to default on their debts, their banking systems could collapse and take the French system along with them. BNP, Société Générale and Credit Agricole all say that their finances are in order and the market worries are unfounded.

 

But it's difficult for the BNP executive to hide his concern. "Look at the French banks' debt holdings versus those of U.S. banks," he continues. "The total debt of the three big U.S. banks (Bank of America, JP Morgan and Citigroup) is $5.86 trillion, or 39% of GDP, while the debts of BNP, Crédit Agricole and Société Générale come to €4.7 trillion, or 250% of French GDP."

 

Now that the situation is bordering on catastrophe, analysts are suggesting that the government is set to start nationalizing France's banks. The banks have remained silent on the matter, and the government denies this talk. That's just as well—the last time the French state intervened in the banking system in a big way, the results were disastrous. As recently as the 1980s, most French banks were owned by the state, and by the 1990s the sector was bordering on bankruptcy. The size of the French banking sector shrank by nearly 50% during the decade, while the banking sectors in other countries such as Britain and the U.S. grew by 39% and 50%, respectively.

 

The most famous case of that time was that of Crédit Lyonnais, which was plagued by mismanagement throughout the 1980s and 1990s until it shifted its debts and liabilities into a new state-owned company, the Consortium de Réalisation. In 2003 Crédit Lyonnais was taken over by Crédit Agricole, but in July 2008 its bills came due anyway. An arbitration court ordered the Consortium de Réalisation to pay €240 million to the liquidators of the Bernard Tapie group, along with €105 million in interest and €45 million in moral damages—so, a total of €395 million for just one erstwhile borrower. Meanwhile, the SdBO (Western Bank Corporation), a subsidiary of Crédit Lyonnais, lent sums to the Tapie family that added up to more than two-and-a-half times the bank's total capital. French taxpayers later had to cover these sums, following protracted legal proceedings. All told, Frenchmen paid out more than €15 billion for the mismanagement of Crédit Lyonnais over the years.

 

Then there was the case of French mortgage lender Crédit Foncier, whose taxpayer-backed losses came to €2 billion. The Hervet bank (now part of the HSBC group) announced the first losses in its history after its 1982 nationalization. The International Bank for West Africa (BIAO) was on the verge of default in 1988 when it was taken over by BNP.

 

These and other disasters were brought on by the bank nationalizations of the early 1980s. But the subsequent privatizations have not done much to radically change the composition of French banks' boards. They are still dominated by the alumni of France's famous ENA, the Ecole Nationale d'Administration, and by officials who have worked at the Ministry of Finance.

 

The revolving door between the government and the banks is a particularly French one. A study by the Management Institute at the Université de La Rochelle finds that between 1995 and 2004, banks that were administered by government-linked technocrats were in greater total debt than those that were not.

 

Whether the market's worst fears are realized or not, French banks certainly maintain an all too close relationship to the state. This opaque system doesn't offer outsiders much visibility, save for the knowledge that indebted banks and an indebted French state intend to continue to cover each other, no matter the cost and on taxpayers' backs if they must. If U.S. money-market managers no longer trust the French system, this is a glaring reason why. The fastest way to regain their trust would be to end this system.

 

Mr. Lecaussin is director of development at France's Institute for Economic and Fiscal Research (IREF).

[Balta1701]

I don't know what else to call this other than fascinating.