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It also seems to be an essential part of the US political lingo and culture that we Europeans (and to some extent even Canadians) often have hard time to understand.

In the everyone-for-himself style paranoid American atmosphere government and even things like welfare system are often seen as the cause of problems rather than a solution, as odd as it may sound to a happy person living in a happy European welfare state. I suppose its been like that since many refugees, Utopian groups or people just looking for easy riches left the European shores to build a better life of their own in America, free from their former oppressive European governments. They might have had many things right then, but things have changed and we are just not living in the 1700's anymore.

Americans, on the other hand, seem to have difficulties understanding (central, Nordic & western) European democratic politics where many parties, instead of only fighting, and at least ideally, try to find a solution that is as good for everyone as possible, by means of constant negotiation and compromises. Americans do not often seem to trust negotiation, not to mention compromises, as a political solution but want money and direct power for themselves instead.

Edited 2008-09-25 14:38 UTC

Maybe I should have used the term Anglo-American as many English speaking countries seem to share similar political culture to some extent?

Anyway, there are many types of governments and rule. I would rather hand the power to a democratically elected multi-party government and parliament that is forced to negotiate with all the parties of the society, than to, say, a single party or some behind-the-scenes elites and/or corporations. (Besides of 1984 you could read some new cyperpunk dystopias too where, for example, big corporations have the power and government role is restricted to a minimum; not exactly a nice place either).

Somebody is going to hold the political power anyway, whether we wanted it or not, even in total anarchy. Better to make the system as transparent and democratic as possible in order to avoid corruption and decisions that are wrong from the start. Democratic government sure has its problems, as people are not perfect and as they may sometimes act like fools, but I haven't seen a better form of government yet.

Exactly my point. I don't get it!

On this side of the pond - well, in NL at least - we look with amazement towards what's happening in the US. People receiving mortgage and loans even though they aren't credit-worthy? Shady practices in the financial world? The country's largest banks in financial troubles? Isn't there anyone regulating and overseeing the financial industry over there?

In NL, all banks and financial institutions are under strict regulation by the state, and they are strictly monitored, because we realise that without a solid, trustworthy financial structure, your economy is in serious danger. If people lose confidence in their banks - simply put - and withdraw their money, the whole economy will collapse.

This is what is happening now in the US. The financial system is collapsing, and had the government controlled it much more tightly, this would have never happened.

Why do you think that so far, this large financial crisis left NL more or less untouched, even though we have one of the most outward-facing (and thusly supposedly the most affected) economies in the world? Exactly - because our system of monitoring and controlling the financial institutions in order to foster confidence is working.

People who advocate no governmental meddling at all (Libertarians) should take a long hard look at the world, and realise the countries which have the lowest crime rates, the best monetary distribution, the most equality, the least amount of people living below the poverty line, and the happiest people are welfare states.

Like I said on my weblog today, show me one example of a libertarian governmental model working out better for citizens than a welfare model as seen in most European countries. Just one.

It's not so weird. The assumption that there was too little government assumes this was a market created problem. It's not; the government played a huge role in creating it.

In this instance, the politicians used the government to enable the banks to give out risky loans, which they mandated the banks do, rather then letting the market handle it. Simplification: the problem was caused by the government meddling in financial affairs.

The majority of people don't want the government bailing out companies. They would rather let them sink, so the perception of government meddling is very high. Also, the political atmosphere is very charged here. If the government started handed out free kittens, people would complain it was being irresponsible and moan about how much the kittens are costing us. Not to mention it isn't considering the cat problem down the road when the free kittens start breeding.

http://iusbvision.wordpress.com/2008/09/21/in-plain-english-how-did...

http://hotair.com/archives/2008/09/23/video-whos-responsible-for-th...

That's a weird assessment. The situation is as bad as it is in the US exactly because there was TOO LITTLE government. Had the US gov stepped up earlier to properly protect its citizens, the mess would be far less bad than it is now.

I've never heard the "too much government" as a cause for the recent financial crisis. Any sources, perhaps? Genuinely interested. "

It's not all that weird. If you're really interested just google "Austrian Business Cycle Theory" or just head straight for the source and visit http://mises.org

Ludwig von Mises Institute is a strongly political institute promoting its own economic and political agenda and so having rather biased opinions about things. It seems that usually they first have their preferred goal and conclusion in mind and after that try to write a theory that could support it (nothing new in that though, as far as economic and social sciences are spoken of...).

Besides of the Austrian school "Anarcho-capitalist thinkers such as Murray Rothbard have also had a strong influence on the Institute's work". "The Institute's stated goal is to undermine statism in all its forms." "The Institute is generally critical of statism and democracy, with the latter being described in Institute publications as 'coercive', 'incompatible with wealth creation' and 'replete with inner contradictions'." "The Institute's economic theories depict any government intervention as destructive, whether through welfare, inflation, taxation, regulation, or war."
http://en.wikipedia.org/wiki/Ludwig_von_Mises_Institute

Edited 2008-09-25 16:08 UTC

That's a weird assessment. The situation is as bad as it is in the US exactly because there was TOO LITTLE government. Had the US gov stepped up earlier to properly protect its citizens, the mess would be far less bad than it is now.

I've never heard the "too much government" as a cause for the recent financial crisis. Any sources, perhaps? Genuinely interested. "

Incorrect. Look at the laws passed by congress to force banks to lend to people with low or no credit history under the guise of 'stopping discrimination'. To quote the Rand Institute:



There have been more indepth analysis of this; both the Republicans and Democrats have meddled in the economy and caused the crisis. The same thing happened back in the depression as well. Too bad we have born again marxists trying to turn this into a class of classes rather than what it really is - government screwing things up yet again.

Edited 2008-09-26 03:12 UTC

The USA has had one of the freest market economy there is in the world. US companies are given, by the government, quite free hands to arrange their business as they see best. For example, in many European countries governments control the economy much more than in the USA, yet we are talking about the economic crisis is the USA now, not in the EU.

As to loans given to ordinary people too easily, one should also ask why the same thing hasn't happened elsewhere in the world, and why so many American people have got or needed so many loans? Why is there such a loan system in the USA? Most sane people don't want to take expensive loans just for fun even if encouraged to do so. Could it have something to do with many other things in the US society and economy too than just some politicians forcing banks to give people loans?

"Born again marxists"...? I'm sure there may be a couple of hardcore Marxists left even in the USA still, but those few oddballs surely have nothing to do with the current US economic situation.

Biased and narrow-minded thinking whether right or left-wing is no lasting solution to serious nationwide problems.

Let's not oversimplify things or paint the situation in black and white, good guys against the bad guys, our perfect ideology against their evil ideology. Economy is complicated and the nationwide economic situation is always the sum of all things in the society.

The government harassed banks into giving out loans to non-creditworthy people based on a theory that homeownership created better citizens because they had a stake in the economy and a stable life. The practice of only giving loans to the people who could likely pay them back was called "racist" because many poor people are minorities and recent or illegal immigrants. Once the subprime market got opened up, banks got stupid greedy and that's why you see 500,000 dollar houses being sold under "subprime" loans to middle class people that could easily afford a reasonable house within their means, but were pushed a McMansion at a variable rate. Banks are greedy of course, and are culpable in many ways, but the government caused this by coercing banks into starting an entirely new field of risky loans. It's actually kind of funny how it ties into illegal immigration and the McMansion phenomenon, you've got more poor people who need a place to live, they can't afford houses, you open up the subprime lending field which causes a construction boom which cries for more cheap labor in the form of illegal immigrants who need houses. Construction is huge, they are now pushing bigger houses because they know that no matter how much money you make you can get a (risky) loan for a HUGE house. The contractor builds it and pockets the money from the bank, who cares if the people foreclose, you just sell it to someone else.

So the government messing with banking out of a mentally deficient idea of "equality" hastened a banking collapse, increased consumption of giant, low-quality and wasteful housing, and encouraged massive illegal immigration for construction jobs. Even when people lost their houses the jerks in construction and banking made their money and didn't care, this became a "crisis" when the banks foreclosed so many houses that they couldn't sell them again promptly, so they were sitting on mountains of rapidly depreciating houses that were costing them money instead of making money. Banks only make money from occupied houses they own.