We Do Not Need a State

January 19, 2011

Lew Rockwell interviews Professor Roderick T. Long about the nature and necessity of the State.

Professor Long stresses that the state is just a bunch of people, not supermen. Its power is an illusion, coercing us only because we consent to be ruled. But education about the State, and alternative networks, empower an ever-greater number to withdraw their consent from the power-hungry, tax-eating, violent apparatus whose abuses result in many evils, including piles of dead bodies.

Anarchy, the absence of a ruler, is impossible, say its opponents. In fact, it is becoming ever more possible, and ever more necessary.

Follow the link to either listen through the browser or download a podcast of the interview.

I fully agree with Long and Rockwell’s position – I have no need to be ruled by a bunch of thieving tyrants.

The State produces nothing and has no goods of its own. Before it can spend, first it must take from the producers of the country. It must use violence against the innocent to fund its evil programs.

The State can not wage war against another nation without first waging war against its own people.

The State must use violence against its citizens in order to force them into building bombs and bullets.

The State must use violence against its citizens in order to fund the mercenaries it sends to fight in foreign wars of aggression.

The State constantly uses violence against its own citizens to prevent them from controlling their own property and even their own bodies.

The State has sent more people to an early death than all other unnatural causes in human history.

Professor Long and Lew Rockwell aren’t the only ones who see the evil of the State.

Philosopher Stefan Molyneux interviews Doug Casey:

Doug Casey is a highly respected author, publisher and professional investor who graduated from Georgetown University in 1968.

Doug literally wrote the book on profiting from periods of economic turmoil: his book Crisis Investing spent multiple weeks as #1 on the New York Times bestseller list and became the best-selling financial book of 1980 with 438,640 copies sold; surpassing big-caliber names, like Free to Choose by Milton Friedman, The Real War by Richard Nixon, and Cosmos by Carl Sagan.

This entry was posted on January 19, 2011 at 9:23 am and is filed under Anti-Fascist Agitprop. You can follow any responses to this entry through the RSS 2.0 feed.

http://twitter.com/auditnerd JG

No public check against private power?

Right, I’m completely down with despising the present state. It can be organized in a manner more fitting of a libertarian/populist (because, the anarchist is a populist, right?) society. This will involve more public power, not less. Publicly financed electoins and public credit, for example.

http://fascistsoup.com/ Michael Suede

Without a state, there is no need for elections.

And public credit is what has destroyed our economy.

I’m not sure why you would want more of that.

I do not need some douche bag politician directing my life.

I do not need a “leader” elected by morons who were educated in public schools.

Private “power” is only obtained by the use of the State. The State is the corporate gun. Microsoft is not going to hire mercenaries to destroy Google if there were no State.

http://twitter.com/auditnerd JG

Public credit destroyed our economy? Ok, I was working on Wall Street at the time of the blowup. You need to explain to me how “public credit” blew up the economy.

Private power is obtained by buying the biggest gun. Some the largest fortunes were accumulated via slavery. That did not need or in many cases have state support. Do you even consider that private power is a problem too?

http://fascistsoup.com/ Michael Suede

Ok:

Step one, have the Fed artificially suppress interest rates leading to an inflationary credit expansion.

Step two, dish out levered ARM loans to degenerates (which are now made possible by the artificially low interest rates) and then pass the junk mortgages off to government agencies. Thus creating artificial demand for housing and driving up home prices while inflating the worlds biggest bubble.

Step three, securitize the junk mortgages as AAA and sell them to chumps.

Step four, when your securitized mortgages packages each shit, have the Fed bail you out.

Without the government credit backing of Fannie and Freddie, this would not have occurred.

Without the Fed artificially suppressing interest rates, this would not have occurred.

Private corporations HAVE NO GUNS – they need the State to impose fiat currency laws, legal tender laws, centrally planned interest rates, and all other manner of cronyism.

The STATE is the ultimate cause of this disaster. Private corporations could not have looted the public to the tune of trillions without it.

Private corporations have NO POWER to do anything because the market prohibits them from getting away with fraud without getting caught. The market would have bankrupted ALL the major banks decades ago without government guns protecting them.

http://twitter.com/auditnerd JG

The financial crisis was aggravated by very low interest rates and sub-prime borrowing, both of which are obviously caused by government. The ultimate cause was speculation in the derivatives markets. Remember that the sub-prime debts added to less than 50billion (the most egregious were less than 1b). What brought down the system was the web of derivative transactions, which were entirely unregulated. In our hypothetical libertarian community, would derivative transactions be policed?

W/R/T your assertion that private firms have no power because the market prohibits fraud.. I am an auditor. It is frankly absurd to make such a claim. Firms spend millions of dollars hiding their actual financial situation from investors and the auditors (paid by the firm) are more often than not in a position of helping them hide the fraud so-as to maintain the contract to audit. This is why no audit firm issued going-concern warnings about AIG et al.
http://fascistsoup.com/ Michael Suede

The market tried to punish the wrong doers.

The market polices itself.

The massive banks:

1. could not exist without the Fed, FDIC, and fiat currency laws.

2. would all be bankrupt right now if the Fed had not bailed them out.

So the market tried to stop the corruption and the State prevented the market from enacting its punishment.
http://twitter.com/auditnerd JG

Right, this is a major problem with your line of thinking. You apparently see two options for a firm: 1) failure or 2) not failure. This is not accurate. Firms are able to squander hoards of money without shareholders knowing it. Firms can be less profitable due to internal fraud/theft. This is why the state has set up the system of mandatory public audits. The system is deeply flawed w/r/t agency issues but can be repaired. Without the state forcing open these firms there is no mechanism with which to examine statements and claims.

If you invest in a firm you need to know what is happening inside the firm. To do this you examine audit reports. How do you know if they are accurate? How do you know how cash is being spent? The “market” is utterly indifferent to a small decrease in earnings per share – on balance. The investor isn’t.

The financial crisis was by in large a crisis of derivatives. The state did not regulate them, and to the extent shareholders knew about them, they were more than happy to take the short-term returns for long-term risk. The market is not long-sighted.
http://fascistsoup.com/ Michael Suede

Well isn’t that the job of shareholders?

To take risks and monitor the operations of the organization they are investing in?

You think the government can do a better job of this than the shareholders?

If the firm is engaging in fraud, then they can be sued by shareholders in a private civil court. The State is not required for this to occur.

The very government you want to police the corporations has done everything possible to prevent those corporations from having to suffer the consequences of their actions!

Why in the hell would you want the same organization that just bailed out all the fraud to be responsible for policing the fraud?
http://twitter.com/auditnerd JG

“Well isn’t that the job of shareholders?”

In a fairy-tale world of efficient markets and rational investors, that would suffice. I’m sure a society composed entirely of androids like Lieutenant Commander Data would hold firms to account.

Sadly, that is not the world in which we live. Shareholders are emotional and easily manipulated.

From The Intelligent Investor (the most celebrated investing manual of all time):

…the shareholders are a complete washout. As a class they show neither intelligence nor alertness. They vote in sheeplike fashion for whatever the management recommends and no matter how poor the management’s record of accomplishment may be… The only way to inspire the Average American shareholder to take any independently intelligent action would be by exploding a firecracker under him… (pp 498 in my copy).

So, yes. The state has a role. A system of “audit insurance” rather than the present model would be a dramatic improvement. Every single audit of a financial institution that I have been a part of has uncovered nefarious – though often legal – behavior by management that has deleterious consequences for the shareholder. This behavior is not documented in the financial statements and only a highly educated/experience professional is able to unwind the smoke/mirrors to figure out what is going on. The average investor is defenseless.

If you’re building your philosophy on top of a species (us) that does not conform to the always-rational species that you assume the result will be mass looting, corruption and fraud. Not all that different from what we have now.

I am in total agreement with the assertion that the present American regime is corrupt beyond repair. They have been bought by private interests. There is zero public check on private power in the US.
http://twitter.com/auditnerd JG

“I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields.”

This is not true. The slave ships were private and the slave owners (mostly) private. The first batch of slaves that were imported to the Caribbean were done so on sugar plantations, and the area they were imported to had no government. Some of the largest, most wealthy organizations on earth today owe their fortunes to slavery (Lehman was first a cotton trading firm, and Goldman’s was founded with seed money from slavery). Many of the large rum manufacturers are similar. The fortunes were made not only in the USA but also in isolated sugar-producing islands.
http://fascistsoup.com/ Michael Suede

This is entirely true.

The south actually dropped out of the union because the north kept nullifying the slave laws.

It took the state to impose slavery in the south – period.

http://twitter.com/auditnerd JG

No public check against private power?

Right, I’m completely down with despising the present state. It can be organized in a manner more fitting of a libertarian/populist (because, the anarchist is a populist, right?) society. This will involve more public power, not less. Publicly financed electoins and public credit, for example.

http://fascistsoup.com/ Michael Suede

Without a state, there is no need for elections.

And public credit is what has destroyed our economy.

I’m not sure why you would want more of that.

I do not need some douche bag politician directing my life.

I do not need a “leader” elected by morons who were educated in public schools.

Private “power” is only obtained by the use of the State. The State is the corporate gun. Microsoft is not going to hire mercenaries to destroy Google if there were no State.

http://twitter.com/auditnerd JG

Public credit destroyed our economy? Ok, I was working on Wall Street at the time of the blowup. You need to explain to me how “public credit” blew up the economy.

Private power is obtained by buying the biggest gun. Some the largest fortunes were accumulated via slavery. That did not need or in many cases have state support. Do you even consider that private power is a problem too?

http://fascistsoup.com/ Michael Suede

Ok:

Step one, have the Fed artificially suppress interest rates leading to an inflationary credit expansion.

Step two, dish out levered ARM loans to degenerates (which are now made possible by the artificially low interest rates) and then pass the junk mortgages off to government agencies. Thus creating artificial demand for housing and driving up home prices while inflating the worlds biggest bubble.

Step three, securitize the junk mortgages as AAA and sell them to chumps.

Step four, when your securitized mortgages packages each shit, have the Fed bail you out.

Without the government credit backing of Fannie and Freddie, this would not have occurred.

Without the Fed artificially suppressing interest rates, this would not have occurred.

Private corporations HAVE NO GUNS – they need the State to impose fiat currency laws, legal tender laws, centrally planned interest rates, and all other manner of cronyism.

The STATE is the ultimate cause of this disaster. Private corporations could not have looted the public to the tune of trillions without it.

Private corporations have NO POWER to do anything because the market prohibits them from getting away with fraud without getting caught. The market would have bankrupted ALL the major banks decades ago without government guns protecting them.

As for slavery, what do you consider taxation? If 40% of my property is taken from me by force, I have to consider that slavery.

I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields. In fact, a major reason the South seceded was because of Northern states nullifying federal slave laws, which lead to their slaves fleeing.

http://twitter.com/auditnerd JG

The financial crisis was aggravated by very low interest rates and sub-prime borrowing, both of which are obviously caused by government. The ultimate cause was speculation in the derivatives markets. Remember that the sub-prime debts added to less than 50billion (the most egregious were less than 1b). What brought down the system was the web of derivative transactions, which were entirely unregulated. In our hypothetical libertarian community, would derivative transactions be policed?

W/R/T your assertion that private firms have no power because the market prohibits fraud.. I am an auditor. It is frankly absurd to make such a claim. Firms spend millions of dollars hiding their actual financial situation from investors and the auditors (paid by the firm) are more often than not in a position of helping them hide the fraud so-as to maintain the contract to audit. This is why no audit firm issued going-concern warnings about AIG et al.
http://fascistsoup.com/ Michael Suede

The market tried to punish the wrong doers.

The market polices itself.

The massive banks:

1. could not exist without the Fed, FDIC, and fiat currency laws.

2. would all be bankrupt right now if the Fed had not bailed them out.

So the market tried to stop the corruption and the State prevented the market from enacting its punishment.

Yet you are trying to tell me that we need a State to prevent corruption?
http://twitter.com/auditnerd JG

Right, this is a major problem with your line of thinking. You apparently see two options for a firm: 1) failure or 2) not failure. This is not accurate. Firms are able to squander hoards of money without shareholders knowing it. Firms can be less profitable due to internal fraud/theft. This is why the state has set up the system of mandatory public audits. The system is deeply flawed w/r/t agency issues but can be repaired. Without the state forcing open these firms there is no mechanism with which to examine statements and claims.

If you invest in a firm you need to know what is happening inside the firm. To do this you examine audit reports. How do you know if they are accurate? How do you know how cash is being spent? The “market” is utterly indifferent to a small decrease in earnings per share – on balance. The investor isn’t.

The financial crisis was by in large a crisis of derivatives. The state did not regulate them, and to the extent shareholders knew about them, they were more than happy to take the short-term returns for long-term risk. The market is not long-sighted.
http://fascistsoup.com/ Michael Suede

Well isn’t that the job of shareholders?

To take risks and monitor the operations of the organization they are investing in?

You think the government can do a better job of this than the shareholders?

If the firm is engaging in fraud, then they can be sued by shareholders in a private civil court. The State is not required for this to occur.

If a firm refuses to open its books to investors, how many investors do you freaking think they will get?

The very government you want to police the corporations has done everything possible to prevent those corporations from having to suffer the consequences of their actions!

Why in the hell would you want the same organization that just bailed out all the fraud to be responsible for policing the fraud?

This creates MASSIVE MORAL HAZARD – just as the existence of the Fed, the FDIC, and other bailout mechanisms create.

I do not want government bailing out criminal organizations!

That report that was just issued BY GOVERNMENT AGENTS is a FRAUD IN AND OF ITSELF.

YOU ARE LISTENING TO THE VERY PEOPLE THAT HELPED BAIL OUT THE FREAKING FRAUDSTERS! WHY DO YOU KEEP LISTENING TO THEM?

Listen to this clear and simple explanation instead:
http://twitter.com/auditnerd JG

“Well isn’t that the job of shareholders?”

In a fairy-tale world of efficient markets and rational investors, that would suffice. I’m sure a society composed entirely of androids like Lieutenant Commander Data would hold firms to account.

Sadly, that is not the world in which we live. Shareholders are emotional and easily manipulated.

From The Intelligent Investor (the most celebrated investing manual of all time):

…the shareholders are a complete washout. As a class they show neither intelligence nor alertness. They vote in sheeplike fashion for whatever the management recommends and no matter how poor the management’s record of accomplishment may be… The only way to inspire the Average American shareholder to take any independently intelligent action would be by exploding a firecracker under him… (pp 498 in my copy).

So, yes. The state has a role. A system of “audit insurance” rather than the present model would be a dramatic improvement. Every single audit of a financial institution that I have been a part of has uncovered nefarious – though often legal – behavior by management that has deleterious consequences for the shareholder. This behavior is not documented in the financial statements and only a highly educated/experience professional is able to unwind the smoke/mirrors to figure out what is going on. The average investor is defenseless.

If you’re building your philosophy on top of a species (us) that does not conform to the always-rational species that you assume the result will be mass looting, corruption and fraud. Not all that different from what we have now.

I am in total agreement with the assertion that the present American regime is corrupt beyond repair. They have been bought by private interests. There is zero public check on private power in the US.
http://twitter.com/auditnerd JG

“I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields.”

This is not true. The slave ships were private and the slave owners (mostly) private. The first batch of slaves that were imported to the Caribbean were done so on sugar plantations, and the area they were imported to had no government. Some of the largest, most wealthy organizations on earth today owe their fortunes to slavery (Lehman was first a cotton trading firm, and Goldman’s was founded with seed money from slavery). Many of the large rum manufacturers are similar. The fortunes were made not only in the USA but also in isolated sugar-producing islands.
http://fascistsoup.com/ Michael Suede

The south actually dropped out of the union because the north kept nullifying the slave laws.

It took the state to impose slavery in the south – period.

In a day and age before electrified chain link fences and razor wire, there was no way for plantation owners to keep tabs on their slaves around the clock.

The apparatus of the State was required to make slavery profitable.

If it wasn’t profitable, people wouldn’t have engaged in it.

http://twitter.com/auditnerd JG

No public check against private power?

Right, I’m completely down with despising the present state. It can be organized in a manner more fitting of a libertarian/populist (because, the anarchist is a populist, right?) society. This will involve more public power, not less. Publicly financed electoins and public credit, for example.

http://fascistsoup.com/ Michael Suede

Without a state, there is no need for elections.

And public credit is what has destroyed our economy.

I’m not sure why you would want more of that.

I do not need some douche bag politician directing my life.

I do not need a “leader” elected by morons who were educated in public schools.

Private “power” is only obtained by the use of the State. The State is the corporate gun. Microsoft is not going to hire mercenaries to destroy Google if there were no State.

http://twitter.com/auditnerd JG

Public credit destroyed our economy? Ok, I was working on Wall Street at the time of the blowup. You need to explain to me how “public credit” blew up the economy.

Private power is obtained by buying the biggest gun. Some the largest fortunes were accumulated via slavery. That did not need or in many cases have state support. Do you even consider that private power is a problem too?

http://fascistsoup.com/ Michael Suede

Ok:

Step one, have the Fed artificially suppress interest rates leading to an inflationary credit expansion.

Step two, dish out levered ARM loans to degenerates (which are now made possible by the artificially low interest rates) and then pass the junk mortgages off to government agencies. Thus creating artificial demand for housing and driving up home prices while inflating the worlds biggest bubble.

Step three, securitize the junk mortgages as AAA and sell them to chumps.

Step four, when your securitized mortgages packages each shit, have the Fed bail you out.

Without the government credit backing of Fannie and Freddie, this would not have occurred.

Without the Fed artificially suppressing interest rates, this would not have occurred.

Private corporations HAVE NO GUNS – they need the State to impose fiat currency laws, legal tender laws, centrally planned interest rates, and all other manner of cronyism.

The STATE is the ultimate cause of this disaster. Private corporations could not have looted the public to the tune of trillions without it.

Private corporations have NO POWER to do anything because the market prohibits them from getting away with fraud without getting caught. The market would have bankrupted ALL the major banks decades ago without government guns protecting them.

http://twitter.com/auditnerd JG

The financial crisis was aggravated by very low interest rates and sub-prime borrowing, both of which are obviously caused by government. The ultimate cause was speculation in the derivatives markets. Remember that the sub-prime debts added to less than 50billion (the most egregious were less than 1b). What brought down the system was the web of derivative transactions, which were entirely unregulated. In our hypothetical libertarian community, would derivative transactions be policed?

W/R/T your assertion that private firms have no power because the market prohibits fraud.. I am an auditor. It is frankly absurd to make such a claim. Firms spend millions of dollars hiding their actual financial situation from investors and the auditors (paid by the firm) are more often than not in a position of helping them hide the fraud so-as to maintain the contract to audit. This is why no audit firm issued going-concern warnings about AIG et al.
http://fascistsoup.com/ Michael Suede

The market tried to punish the wrong doers.

The market polices itself.

The massive banks:

1. could not exist without the Fed, FDIC, and fiat currency laws.

2. would all be bankrupt right now if the Fed had not bailed them out.

So the market tried to stop the corruption and the State prevented the market from enacting its punishment.
http://twitter.com/auditnerd JG

Right, this is a major problem with your line of thinking. You apparently see two options for a firm: 1) failure or 2) not failure. This is not accurate. Firms are able to squander hoards of money without shareholders knowing it. Firms can be less profitable due to internal fraud/theft. This is why the state has set up the system of mandatory public audits. The system is deeply flawed w/r/t agency issues but can be repaired. Without the state forcing open these firms there is no mechanism with which to examine statements and claims.

If you invest in a firm you need to know what is happening inside the firm. To do this you examine audit reports. How do you know if they are accurate? How do you know how cash is being spent? The “market” is utterly indifferent to a small decrease in earnings per share – on balance. The investor isn’t.

The financial crisis was by in large a crisis of derivatives. The state did not regulate them, and to the extent shareholders knew about them, they were more than happy to take the short-term returns for long-term risk. The market is not long-sighted.
http://fascistsoup.com/ Michael Suede

Well isn’t that the job of shareholders?

To take risks and monitor the operations of the organization they are investing in?

You think the government can do a better job of this than the shareholders?

If the firm is engaging in fraud, then they can be sued by shareholders in a private civil court. The State is not required for this to occur.

The very government you want to police the corporations has done everything possible to prevent those corporations from having to suffer the consequences of their actions!

Why in the hell would you want the same organization that just bailed out all the fraud to be responsible for policing the fraud?
http://twitter.com/auditnerd JG

“Well isn’t that the job of shareholders?”

In a fairy-tale world of efficient markets and rational investors, that would suffice. I’m sure a society composed entirely of androids like Lieutenant Commander Data would hold firms to account.

Sadly, that is not the world in which we live. Shareholders are emotional and easily manipulated.

From The Intelligent Investor (the most celebrated investing manual of all time):

…the shareholders are a complete washout. As a class they show neither intelligence nor alertness. They vote in sheeplike fashion for whatever the management recommends and no matter how poor the management’s record of accomplishment may be… The only way to inspire the Average American shareholder to take any independently intelligent action would be by exploding a firecracker under him… (pp 498 in my copy).

So, yes. The state has a role. A system of “audit insurance” rather than the present model would be a dramatic improvement. Every single audit of a financial institution that I have been a part of has uncovered nefarious – though often legal – behavior by management that has deleterious consequences for the shareholder. This behavior is not documented in the financial statements and only a highly educated/experience professional is able to unwind the smoke/mirrors to figure out what is going on. The average investor is defenseless.

If you’re building your philosophy on top of a species (us) that does not conform to the always-rational species that you assume the result will be mass looting, corruption and fraud. Not all that different from what we have now.

I am in total agreement with the assertion that the present American regime is corrupt beyond repair. They have been bought by private interests. There is zero public check on private power in the US.
http://twitter.com/auditnerd JG

“I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields.”

This is not true. The slave ships were private and the slave owners (mostly) private. The first batch of slaves that were imported to the Caribbean were done so on sugar plantations, and the area they were imported to had no government. Some of the largest, most wealthy organizations on earth today owe their fortunes to slavery (Lehman was first a cotton trading firm, and Goldman’s was founded with seed money from slavery). Many of the large rum manufacturers are similar. The fortunes were made not only in the USA but also in isolated sugar-producing islands.
http://fascistsoup.com/ Michael Suede

This is entirely true.

The south actually dropped out of the union because the north kept nullifying the slave laws.

It took the state to impose slavery in the south – period.

http://twitter.com/auditnerd JG

No public check against private power?

Right, I’m completely down with despising the present state. It can be organized in a manner more fitting of a libertarian/populist (because, the anarchist is a populist, right?) society. This will involve more public power, not less. Publicly financed electoins and public credit, for example.

http://fascistsoup.com/ Michael Suede

Without a state, there is no need for elections.

And public credit is what has destroyed our economy.

I’m not sure why you would want more of that.

I do not need some douche bag politician directing my life.

I do not need a “leader” elected by morons who were educated in public schools.

Private “power” is only obtained by the use of the State. The State is the corporate gun. Microsoft is not going to hire mercenaries to destroy Google if there were no State.

http://twitter.com/auditnerd JG

Public credit destroyed our economy? Ok, I was working on Wall Street at the time of the blowup. You need to explain to me how “public credit” blew up the economy.

Private power is obtained by buying the biggest gun. Some the largest fortunes were accumulated via slavery. That did not need or in many cases have state support. Do you even consider that private power is a problem too?

http://fascistsoup.com/ Michael Suede

Ok:

Step one, have the Fed artificially suppress interest rates leading to an inflationary credit expansion.

Step two, dish out levered ARM loans to degenerates (which are now made possible by the artificially low interest rates) and then pass the junk mortgages off to government agencies. Thus creating artificial demand for housing and driving up home prices while inflating the worlds biggest bubble.

Step three, securitize the junk mortgages as AAA and sell them to chumps.

Step four, when your securitized mortgages packages each shit, have the Fed bail you out.

Without the government credit backing of Fannie and Freddie, this would not have occurred.

Without the Fed artificially suppressing interest rates, this would not have occurred.

Private corporations HAVE NO GUNS – they need the State to impose fiat currency laws, legal tender laws, centrally planned interest rates, and all other manner of cronyism.

The STATE is the ultimate cause of this disaster. Private corporations could not have looted the public to the tune of trillions without it.

Private corporations have NO POWER to do anything because the market prohibits them from getting away with fraud without getting caught. The market would have bankrupted ALL the major banks decades ago without government guns protecting them.

http://twitter.com/auditnerd JG

The financial crisis was aggravated by very low interest rates and sub-prime borrowing, both of which are obviously caused by government. The ultimate cause was speculation in the derivatives markets. Remember that the sub-prime debts added to less than 50billion (the most egregious were less than 1b). What brought down the system was the web of derivative transactions, which were entirely unregulated. In our hypothetical libertarian community, would derivative transactions be policed?

W/R/T your assertion that private firms have no power because the market prohibits fraud.. I am an auditor. It is frankly absurd to make such a claim. Firms spend millions of dollars hiding their actual financial situation from investors and the auditors (paid by the firm) are more often than not in a position of helping them hide the fraud so-as to maintain the contract to audit. This is why no audit firm issued going-concern warnings about AIG et al.
http://fascistsoup.com/ Michael Suede

The market tried to punish the wrong doers.

The market polices itself.

The massive banks:

1. could not exist without the Fed, FDIC, and fiat currency laws.

2. would all be bankrupt right now if the Fed had not bailed them out.

So the market tried to stop the corruption and the State prevented the market from enacting its punishment.
http://twitter.com/auditnerd JG

Right, this is a major problem with your line of thinking. You apparently see two options for a firm: 1) failure or 2) not failure. This is not accurate. Firms are able to squander hoards of money without shareholders knowing it. Firms can be less profitable due to internal fraud/theft. This is why the state has set up the system of mandatory public audits. The system is deeply flawed w/r/t agency issues but can be repaired. Without the state forcing open these firms there is no mechanism with which to examine statements and claims.

If you invest in a firm you need to know what is happening inside the firm. To do this you examine audit reports. How do you know if they are accurate? How do you know how cash is being spent? The “market” is utterly indifferent to a small decrease in earnings per share – on balance. The investor isn’t.

The financial crisis was by in large a crisis of derivatives. The state did not regulate them, and to the extent shareholders knew about them, they were more than happy to take the short-term returns for long-term risk. The market is not long-sighted.
http://fascistsoup.com/ Michael Suede

Well isn’t that the job of shareholders?

To take risks and monitor the operations of the organization they are investing in?

You think the government can do a better job of this than the shareholders?

If the firm is engaging in fraud, then they can be sued by shareholders in a private civil court. The State is not required for this to occur.

The very government you want to police the corporations has done everything possible to prevent those corporations from having to suffer the consequences of their actions!

Why in the hell would you want the same organization that just bailed out all the fraud to be responsible for policing the fraud?
http://twitter.com/auditnerd JG

“Well isn’t that the job of shareholders?”

In a fairy-tale world of efficient markets and rational investors, that would suffice. I’m sure a society composed entirely of androids like Lieutenant Commander Data would hold firms to account.

Sadly, that is not the world in which we live. Shareholders are emotional and easily manipulated.

From The Intelligent Investor (the most celebrated investing manual of all time):

…the shareholders are a complete washout. As a class they show neither intelligence nor alertness. They vote in sheeplike fashion for whatever the management recommends and no matter how poor the management’s record of accomplishment may be… The only way to inspire the Average American shareholder to take any independently intelligent action would be by exploding a firecracker under him… (pp 498 in my copy).

So, yes. The state has a role. A system of “audit insurance” rather than the present model would be a dramatic improvement. Every single audit of a financial institution that I have been a part of has uncovered nefarious – though often legal – behavior by management that has deleterious consequences for the shareholder. This behavior is not documented in the financial statements and only a highly educated/experience professional is able to unwind the smoke/mirrors to figure out what is going on. The average investor is defenseless.

If you’re building your philosophy on top of a species (us) that does not conform to the always-rational species that you assume the result will be mass looting, corruption and fraud. Not all that different from what we have now.

I am in total agreement with the assertion that the present American regime is corrupt beyond repair. They have been bought by private interests. There is zero public check on private power in the US.
http://twitter.com/auditnerd JG

“I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields.”

This is not true. The slave ships were private and the slave owners (mostly) private. The first batch of slaves that were imported to the Caribbean were done so on sugar plantations, and the area they were imported to had no government. Some of the largest, most wealthy organizations on earth today owe their fortunes to slavery (Lehman was first a cotton trading firm, and Goldman’s was founded with seed money from slavery). Many of the large rum manufacturers are similar. The fortunes were made not only in the USA but also in isolated sugar-producing islands.
http://fascistsoup.com/ Michael Suede

This is entirely true.

The south actually dropped out of the union because the north kept nullifying the slave laws.

It took the state to impose slavery in the south – period.

http://twitter.com/auditnerd JG

No public check against private power?

Right, I’m completely down with despising the present state. It can be organized in a manner more fitting of a libertarian/populist (because, the anarchist is a populist, right?) society. This will involve more public power, not less. Publicly financed electoins and public credit, for example.

http://fascistsoup.com/ Michael Suede

Without a state, there is no need for elections.

And public credit is what has destroyed our economy.

I’m not sure why you would want more of that.

I do not need some douche bag politician directing my life.

I do not need a “leader” elected by morons who were educated in public schools.

Private “power” is only obtained by the use of the State. The State is the corporate gun. Microsoft is not going to hire mercenaries to destroy Google if there were no State.

http://twitter.com/auditnerd JG

Public credit destroyed our economy? Ok, I was working on Wall Street at the time of the blowup. You need to explain to me how “public credit” blew up the economy.

Private power is obtained by buying the biggest gun. Some the largest fortunes were accumulated via slavery. That did not need or in many cases have state support. Do you even consider that private power is a problem too?

http://fascistsoup.com/ Michael Suede

Ok:

Step one, have the Fed artificially suppress interest rates leading to an inflationary credit expansion.

Step two, dish out levered ARM loans to degenerates (which are now made possible by the artificially low interest rates) and then pass the junk mortgages off to government agencies. Thus creating artificial demand for housing and driving up home prices while inflating the worlds biggest bubble.

Step three, securitize the junk mortgages as AAA and sell them to chumps.

Step four, when your securitized mortgages packages each shit, have the Fed bail you out.

Without the government credit backing of Fannie and Freddie, this would not have occurred.

Without the Fed artificially suppressing interest rates, this would not have occurred.

Private corporations HAVE NO GUNS – they need the State to impose fiat currency laws, legal tender laws, centrally planned interest rates, and all other manner of cronyism.

The STATE is the ultimate cause of this disaster. Private corporations could not have looted the public to the tune of trillions without it.

Private corporations have NO POWER to do anything because the market prohibits them from getting away with fraud without getting caught. The market would have bankrupted ALL the major banks decades ago without government guns protecting them.

As for slavery, what do you consider taxation? If 40% of my property is taken from me by force, I have to consider that slavery.

I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields. In fact, a major reason the South seceded was because of Northern states nullifying federal slave laws, which lead to their slaves fleeing.

http://twitter.com/auditnerd JG

The financial crisis was aggravated by very low interest rates and sub-prime borrowing, both of which are obviously caused by government. The ultimate cause was speculation in the derivatives markets. Remember that the sub-prime debts added to less than 50billion (the most egregious were less than 1b). What brought down the system was the web of derivative transactions, which were entirely unregulated. In our hypothetical libertarian community, would derivative transactions be policed?

W/R/T your assertion that private firms have no power because the market prohibits fraud.. I am an auditor. It is frankly absurd to make such a claim. Firms spend millions of dollars hiding their actual financial situation from investors and the auditors (paid by the firm) are more often than not in a position of helping them hide the fraud so-as to maintain the contract to audit. This is why no audit firm issued going-concern warnings about AIG et al.
http://fascistsoup.com/ Michael Suede

The market tried to punish the wrong doers.

The market polices itself.

The massive banks:

1. could not exist without the Fed, FDIC, and fiat currency laws.

2. would all be bankrupt right now if the Fed had not bailed them out.

So the market tried to stop the corruption and the State prevented the market from enacting its punishment.

Yet you are trying to tell me that we need a State to prevent corruption?
http://twitter.com/auditnerd JG

Right, this is a major problem with your line of thinking. You apparently see two options for a firm: 1) failure or 2) not failure. This is not accurate. Firms are able to squander hoards of money without shareholders knowing it. Firms can be less profitable due to internal fraud/theft. This is why the state has set up the system of mandatory public audits. The system is deeply flawed w/r/t agency issues but can be repaired. Without the state forcing open these firms there is no mechanism with which to examine statements and claims.

If you invest in a firm you need to know what is happening inside the firm. To do this you examine audit reports. How do you know if they are accurate? How do you know how cash is being spent? The “market” is utterly indifferent to a small decrease in earnings per share – on balance. The investor isn’t.

The financial crisis was by in large a crisis of derivatives. The state did not regulate them, and to the extent shareholders knew about them, they were more than happy to take the short-term returns for long-term risk. The market is not long-sighted.
http://fascistsoup.com/ Michael Suede

Well isn’t that the job of shareholders?

To take risks and monitor the operations of the organization they are investing in?

You think the government can do a better job of this than the shareholders?

If the firm is engaging in fraud, then they can be sued by shareholders in a private civil court. The State is not required for this to occur.

If a firm refuses to open its books to investors, how many investors do you freaking think they will get?

The very government you want to police the corporations has done everything possible to prevent those corporations from having to suffer the consequences of their actions!

Why in the hell would you want the same organization that just bailed out all the fraud to be responsible for policing the fraud?

This creates MASSIVE MORAL HAZARD – just as the existence of the Fed, the FDIC, and other bailout mechanisms create.

I do not want government bailing out criminal organizations!

That report that was just issued BY GOVERNMENT AGENTS is a FRAUD IN AND OF ITSELF.

YOU ARE LISTENING TO THE VERY PEOPLE THAT HELPED BAIL OUT THE FREAKING FRAUDSTERS! WHY DO YOU KEEP LISTENING TO THEM?

Listen to this clear and simple explanation instead:
http://twitter.com/auditnerd JG

“Well isn’t that the job of shareholders?”

In a fairy-tale world of efficient markets and rational investors, that would suffice. I’m sure a society composed entirely of androids like Lieutenant Commander Data would hold firms to account.

Sadly, that is not the world in which we live. Shareholders are emotional and easily manipulated.

From The Intelligent Investor (the most celebrated investing manual of all time):

…the shareholders are a complete washout. As a class they show neither intelligence nor alertness. They vote in sheeplike fashion for whatever the management recommends and no matter how poor the management’s record of accomplishment may be… The only way to inspire the Average American shareholder to take any independently intelligent action would be by exploding a firecracker under him… (pp 498 in my copy).

So, yes. The state has a role. A system of “audit insurance” rather than the present model would be a dramatic improvement. Every single audit of a financial institution that I have been a part of has uncovered nefarious – though often legal – behavior by management that has deleterious consequences for the shareholder. This behavior is not documented in the financial statements and only a highly educated/experience professional is able to unwind the smoke/mirrors to figure out what is going on. The average investor is defenseless.

If you’re building your philosophy on top of a species (us) that does not conform to the always-rational species that you assume the result will be mass looting, corruption and fraud. Not all that different from what we have now.

I am in total agreement with the assertion that the present American regime is corrupt beyond repair. They have been bought by private interests. There is zero public check on private power in the US.
http://twitter.com/auditnerd JG

“I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields.”

This is not true. The slave ships were private and the slave owners (mostly) private. The first batch of slaves that were imported to the Caribbean were done so on sugar plantations, and the area they were imported to had no government. Some of the largest, most wealthy organizations on earth today owe their fortunes to slavery (Lehman was first a cotton trading firm, and Goldman’s was founded with seed money from slavery). Many of the large rum manufacturers are similar. The fortunes were made not only in the USA but also in isolated sugar-producing islands.
http://fascistsoup.com/ Michael Suede

The south actually dropped out of the union because the north kept nullifying the slave laws.

It took the state to impose slavery in the south – period.

In a day and age before electrified chain link fences and razor wire, there was no way for plantation owners to keep tabs on their slaves around the clock.

The apparatus of the State was required to make slavery profitable.

If it wasn’t profitable, people wouldn’t have engaged in it.

http://twitter.com/auditnerd JG

No public check against private power?

Right, I’m completely down with despising the present state. It can be organized in a manner more fitting of a libertarian/populist (because, the anarchist is a populist, right?) society. This will involve more public power, not less. Publicly financed electoins and public credit, for example.

http://fascistsoup.com/ Michael Suede

Without a state, there is no need for elections.

And public credit is what has destroyed our economy.

I’m not sure why you would want more of that.

I do not need some douche bag politician directing my life.

I do not need a “leader” elected by morons who were educated in public schools.

Private “power” is only obtained by the use of the State. The State is the corporate gun. Microsoft is not going to hire mercenaries to destroy Google if there were no State.

http://twitter.com/auditnerd JG

Public credit destroyed our economy? Ok, I was working on Wall Street at the time of the blowup. You need to explain to me how “public credit” blew up the economy.

Private power is obtained by buying the biggest gun. Some the largest fortunes were accumulated via slavery. That did not need or in many cases have state support. Do you even consider that private power is a problem too?

http://fascistsoup.com/ Michael Suede

Ok:

Step one, have the Fed artificially suppress interest rates leading to an inflationary credit expansion.

Step two, dish out levered ARM loans to degenerates (which are now made possible by the artificially low interest rates) and then pass the junk mortgages off to government agencies. Thus creating artificial demand for housing and driving up home prices while inflating the worlds biggest bubble.

Step three, securitize the junk mortgages as AAA and sell them to chumps.

Step four, when your securitized mortgages packages each shit, have the Fed bail you out.

Without the government credit backing of Fannie and Freddie, this would not have occurred.

Without the Fed artificially suppressing interest rates, this would not have occurred.

Private corporations HAVE NO GUNS – they need the State to impose fiat currency laws, legal tender laws, centrally planned interest rates, and all other manner of cronyism.

The STATE is the ultimate cause of this disaster. Private corporations could not have looted the public to the tune of trillions without it.

Private corporations have NO POWER to do anything because the market prohibits them from getting away with fraud without getting caught. The market would have bankrupted ALL the major banks decades ago without government guns protecting them.

http://twitter.com/auditnerd JG

The financial crisis was aggravated by very low interest rates and sub-prime borrowing, both of which are obviously caused by government. The ultimate cause was speculation in the derivatives markets. Remember that the sub-prime debts added to less than 50billion (the most egregious were less than 1b). What brought down the system was the web of derivative transactions, which were entirely unregulated. In our hypothetical libertarian community, would derivative transactions be policed?

W/R/T your assertion that private firms have no power because the market prohibits fraud.. I am an auditor. It is frankly absurd to make such a claim. Firms spend millions of dollars hiding their actual financial situation from investors and the auditors (paid by the firm) are more often than not in a position of helping them hide the fraud so-as to maintain the contract to audit. This is why no audit firm issued going-concern warnings about AIG et al.
http://fascistsoup.com/ Michael Suede

The market tried to punish the wrong doers.

The market polices itself.

The massive banks:

1. could not exist without the Fed, FDIC, and fiat currency laws.

2. would all be bankrupt right now if the Fed had not bailed them out.

So the market tried to stop the corruption and the State prevented the market from enacting its punishment.
http://twitter.com/auditnerd JG

Right, this is a major problem with your line of thinking. You apparently see two options for a firm: 1) failure or 2) not failure. This is not accurate. Firms are able to squander hoards of money without shareholders knowing it. Firms can be less profitable due to internal fraud/theft. This is why the state has set up the system of mandatory public audits. The system is deeply flawed w/r/t agency issues but can be repaired. Without the state forcing open these firms there is no mechanism with which to examine statements and claims.

If you invest in a firm you need to know what is happening inside the firm. To do this you examine audit reports. How do you know if they are accurate? How do you know how cash is being spent? The “market” is utterly indifferent to a small decrease in earnings per share – on balance. The investor isn’t.

The financial crisis was by in large a crisis of derivatives. The state did not regulate them, and to the extent shareholders knew about them, they were more than happy to take the short-term returns for long-term risk. The market is not long-sighted.
http://fascistsoup.com/ Michael Suede

Well isn’t that the job of shareholders?

To take risks and monitor the operations of the organization they are investing in?

You think the government can do a better job of this than the shareholders?

If the firm is engaging in fraud, then they can be sued by shareholders in a private civil court. The State is not required for this to occur.

The very government you want to police the corporations has done everything possible to prevent those corporations from having to suffer the consequences of their actions!

Why in the hell would you want the same organization that just bailed out all the fraud to be responsible for policing the fraud?
http://twitter.com/auditnerd JG

“Well isn’t that the job of shareholders?”

In a fairy-tale world of efficient markets and rational investors, that would suffice. I’m sure a society composed entirely of androids like Lieutenant Commander Data would hold firms to account.

Sadly, that is not the world in which we live. Shareholders are emotional and easily manipulated.

From The Intelligent Investor (the most celebrated investing manual of all time):

…the shareholders are a complete washout. As a class they show neither intelligence nor alertness. They vote in sheeplike fashion for whatever the management recommends and no matter how poor the management’s record of accomplishment may be… The only way to inspire the Average American shareholder to take any independently intelligent action would be by exploding a firecracker under him… (pp 498 in my copy).

So, yes. The state has a role. A system of “audit insurance” rather than the present model would be a dramatic improvement. Every single audit of a financial institution that I have been a part of has uncovered nefarious – though often legal – behavior by management that has deleterious consequences for the shareholder. This behavior is not documented in the financial statements and only a highly educated/experience professional is able to unwind the smoke/mirrors to figure out what is going on. The average investor is defenseless.

If you’re building your philosophy on top of a species (us) that does not conform to the always-rational species that you assume the result will be mass looting, corruption and fraud. Not all that different from what we have now.

I am in total agreement with the assertion that the present American regime is corrupt beyond repair. They have been bought by private interests. There is zero public check on private power in the US.
http://twitter.com/auditnerd JG

“I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields.”

This is not true. The slave ships were private and the slave owners (mostly) private. The first batch of slaves that were imported to the Caribbean were done so on sugar plantations, and the area they were imported to had no government. Some of the largest, most wealthy organizations on earth today owe their fortunes to slavery (Lehman was first a cotton trading firm, and Goldman’s was founded with seed money from slavery). Many of the large rum manufacturers are similar. The fortunes were made not only in the USA but also in isolated sugar-producing islands.
http://fascistsoup.com/ Michael Suede

This is entirely true.

The south actually dropped out of the union because the north kept nullifying the slave laws.

It took the state to impose slavery in the south – period.

http://twitter.com/auditnerd JG

No public check against private power?

Right, I’m completely down with despising the present state. It can be organized in a manner more fitting of a libertarian/populist (because, the anarchist is a populist, right?) society. This will involve more public power, not less. Publicly financed electoins and public credit, for example.

http://fascistsoup.com/ Michael Suede

Without a state, there is no need for elections.

And public credit is what has destroyed our economy.

I’m not sure why you would want more of that.

I do not need some douche bag politician directing my life.

I do not need a “leader” elected by morons who were educated in public schools.

Private “power” is only obtained by the use of the State. The State is the corporate gun. Microsoft is not going to hire mercenaries to destroy Google if there were no State.

http://twitter.com/auditnerd JG

Public credit destroyed our economy? Ok, I was working on Wall Street at the time of the blowup. You need to explain to me how “public credit” blew up the economy.

Private power is obtained by buying the biggest gun. Some the largest fortunes were accumulated via slavery. That did not need or in many cases have state support. Do you even consider that private power is a problem too?

http://fascistsoup.com/ Michael Suede

Ok:

Step one, have the Fed artificially suppress interest rates leading to an inflationary credit expansion.

Step two, dish out levered ARM loans to degenerates (which are now made possible by the artificially low interest rates) and then pass the junk mortgages off to government agencies. Thus creating artificial demand for housing and driving up home prices while inflating the worlds biggest bubble.

Step three, securitize the junk mortgages as AAA and sell them to chumps.

Step four, when your securitized mortgages packages each shit, have the Fed bail you out.

Without the government credit backing of Fannie and Freddie, this would not have occurred.

Without the Fed artificially suppressing interest rates, this would not have occurred.

Private corporations HAVE NO GUNS – they need the State to impose fiat currency laws, legal tender laws, centrally planned interest rates, and all other manner of cronyism.

The STATE is the ultimate cause of this disaster. Private corporations could not have looted the public to the tune of trillions without it.

Private corporations have NO POWER to do anything because the market prohibits them from getting away with fraud without getting caught. The market would have bankrupted ALL the major banks decades ago without government guns protecting them.

http://twitter.com/auditnerd JG

The financial crisis was aggravated by very low interest rates and sub-prime borrowing, both of which are obviously caused by government. The ultimate cause was speculation in the derivatives markets. Remember that the sub-prime debts added to less than 50billion (the most egregious were less than 1b). What brought down the system was the web of derivative transactions, which were entirely unregulated. In our hypothetical libertarian community, would derivative transactions be policed?

W/R/T your assertion that private firms have no power because the market prohibits fraud.. I am an auditor. It is frankly absurd to make such a claim. Firms spend millions of dollars hiding their actual financial situation from investors and the auditors (paid by the firm) are more often than not in a position of helping them hide the fraud so-as to maintain the contract to audit. This is why no audit firm issued going-concern warnings about AIG et al.
http://fascistsoup.com/ Michael Suede

The market tried to punish the wrong doers.

The market polices itself.

The massive banks:

1. could not exist without the Fed, FDIC, and fiat currency laws.

2. would all be bankrupt right now if the Fed had not bailed them out.

So the market tried to stop the corruption and the State prevented the market from enacting its punishment.
http://twitter.com/auditnerd JG

Right, this is a major problem with your line of thinking. You apparently see two options for a firm: 1) failure or 2) not failure. This is not accurate. Firms are able to squander hoards of money without shareholders knowing it. Firms can be less profitable due to internal fraud/theft. This is why the state has set up the system of mandatory public audits. The system is deeply flawed w/r/t agency issues but can be repaired. Without the state forcing open these firms there is no mechanism with which to examine statements and claims.

If you invest in a firm you need to know what is happening inside the firm. To do this you examine audit reports. How do you know if they are accurate? How do you know how cash is being spent? The “market” is utterly indifferent to a small decrease in earnings per share – on balance. The investor isn’t.

The financial crisis was by in large a crisis of derivatives. The state did not regulate them, and to the extent shareholders knew about them, they were more than happy to take the short-term returns for long-term risk. The market is not long-sighted.
http://fascistsoup.com/ Michael Suede

Well isn’t that the job of shareholders?

To take risks and monitor the operations of the organization they are investing in?

You think the government can do a better job of this than the shareholders?

If the firm is engaging in fraud, then they can be sued by shareholders in a private civil court. The State is not required for this to occur.

The very government you want to police the corporations has done everything possible to prevent those corporations from having to suffer the consequences of their actions!

Why in the hell would you want the same organization that just bailed out all the fraud to be responsible for policing the fraud?
http://twitter.com/auditnerd JG

“Well isn’t that the job of shareholders?”

In a fairy-tale world of efficient markets and rational investors, that would suffice. I’m sure a society composed entirely of androids like Lieutenant Commander Data would hold firms to account.

Sadly, that is not the world in which we live. Shareholders are emotional and easily manipulated.

From The Intelligent Investor (the most celebrated investing manual of all time):

…the shareholders are a complete washout. As a class they show neither intelligence nor alertness. They vote in sheeplike fashion for whatever the management recommends and no matter how poor the management’s record of accomplishment may be… The only way to inspire the Average American shareholder to take any independently intelligent action would be by exploding a firecracker under him… (pp 498 in my copy).

So, yes. The state has a role. A system of “audit insurance” rather than the present model would be a dramatic improvement. Every single audit of a financial institution that I have been a part of has uncovered nefarious – though often legal – behavior by management that has deleterious consequences for the shareholder. This behavior is not documented in the financial statements and only a highly educated/experience professional is able to unwind the smoke/mirrors to figure out what is going on. The average investor is defenseless.

If you’re building your philosophy on top of a species (us) that does not conform to the always-rational species that you assume the result will be mass looting, corruption and fraud. Not all that different from what we have now.

I am in total agreement with the assertion that the present American regime is corrupt beyond repair. They have been bought by private interests. There is zero public check on private power in the US.
http://twitter.com/auditnerd JG

“I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields.”

This is not true. The slave ships were private and the slave owners (mostly) private. The first batch of slaves that were imported to the Caribbean were done so on sugar plantations, and the area they were imported to had no government. Some of the largest, most wealthy organizations on earth today owe their fortunes to slavery (Lehman was first a cotton trading firm, and Goldman’s was founded with seed money from slavery). Many of the large rum manufacturers are similar. The fortunes were made not only in the USA but also in isolated sugar-producing islands.
http://fascistsoup.com/ Michael Suede

This is entirely true.

The south actually dropped out of the union because the north kept nullifying the slave laws.

It took the state to impose slavery in the south – period.

http://twitter.com/auditnerd JG

No public check against private power?

Right, I’m completely down with despising the present state. It can be organized in a manner more fitting of a libertarian/populist (because, the anarchist is a populist, right?) society. This will involve more public power, not less. Publicly financed electoins and public credit, for example.

http://fascistsoup.com/ Michael Suede

Without a state, there is no need for elections.

And public credit is what has destroyed our economy.

I’m not sure why you would want more of that.

I do not need some douche bag politician directing my life.

I do not need a “leader” elected by morons who were educated in public schools.

Private “power” is only obtained by the use of the State. The State is the corporate gun. Microsoft is not going to hire mercenaries to destroy Google if there were no State.

http://twitter.com/auditnerd JG

Public credit destroyed our economy? Ok, I was working on Wall Street at the time of the blowup. You need to explain to me how “public credit” blew up the economy.

Private power is obtained by buying the biggest gun. Some the largest fortunes were accumulated via slavery. That did not need or in many cases have state support. Do you even consider that private power is a problem too?

http://fascistsoup.com/ Michael Suede

Ok:

Step one, have the Fed artificially suppress interest rates leading to an inflationary credit expansion.

Step two, dish out levered ARM loans to degenerates (which are now made possible by the artificially low interest rates) and then pass the junk mortgages off to government agencies. Thus creating artificial demand for housing and driving up home prices while inflating the worlds biggest bubble.

Step three, securitize the junk mortgages as AAA and sell them to chumps.

Step four, when your securitized mortgages packages each shit, have the Fed bail you out.

Without the government credit backing of Fannie and Freddie, this would not have occurred.

Without the Fed artificially suppressing interest rates, this would not have occurred.

Private corporations HAVE NO GUNS – they need the State to impose fiat currency laws, legal tender laws, centrally planned interest rates, and all other manner of cronyism.

The STATE is the ultimate cause of this disaster. Private corporations could not have looted the public to the tune of trillions without it.

Private corporations have NO POWER to do anything because the market prohibits them from getting away with fraud without getting caught. The market would have bankrupted ALL the major banks decades ago without government guns protecting them.

http://twitter.com/auditnerd JG

The financial crisis was aggravated by very low interest rates and sub-prime borrowing, both of which are obviously caused by government. The ultimate cause was speculation in the derivatives markets. Remember that the sub-prime debts added to less than 50billion (the most egregious were less than 1b). What brought down the system was the web of derivative transactions, which were entirely unregulated. In our hypothetical libertarian community, would derivative transactions be policed?

W/R/T your assertion that private firms have no power because the market prohibits fraud.. I am an auditor. It is frankly absurd to make such a claim. Firms spend millions of dollars hiding their actual financial situation from investors and the auditors (paid by the firm) are more often than not in a position of helping them hide the fraud so-as to maintain the contract to audit. This is why no audit firm issued going-concern warnings about AIG et al.
http://fascistsoup.com/ Michael Suede

The market tried to punish the wrong doers.

The market polices itself.

The massive banks:

1. could not exist without the Fed, FDIC, and fiat currency laws.

2. would all be bankrupt right now if the Fed had not bailed them out.

So the market tried to stop the corruption and the State prevented the market from enacting its punishment.
http://twitter.com/auditnerd JG

Right, this is a major problem with your line of thinking. You apparently see two options for a firm: 1) failure or 2) not failure. This is not accurate. Firms are able to squander hoards of money without shareholders knowing it. Firms can be less profitable due to internal fraud/theft. This is why the state has set up the system of mandatory public audits. The system is deeply flawed w/r/t agency issues but can be repaired. Without the state forcing open these firms there is no mechanism with which to examine statements and claims.

If you invest in a firm you need to know what is happening inside the firm. To do this you examine audit reports. How do you know if they are accurate? How do you know how cash is being spent? The “market” is utterly indifferent to a small decrease in earnings per share – on balance. The investor isn’t.

The financial crisis was by in large a crisis of derivatives. The state did not regulate them, and to the extent shareholders knew about them, they were more than happy to take the short-term returns for long-term risk. The market is not long-sighted.
http://fascistsoup.com/ Michael Suede

Well isn’t that the job of shareholders?

To take risks and monitor the operations of the organization they are investing in?

You think the government can do a better job of this than the shareholders?

If the firm is engaging in fraud, then they can be sued by shareholders in a private civil court. The State is not required for this to occur.

The very government you want to police the corporations has done everything possible to prevent those corporations from having to suffer the consequences of their actions!

Why in the hell would you want the same organization that just bailed out all the fraud to be responsible for policing the fraud?
http://twitter.com/auditnerd JG

“Well isn’t that the job of shareholders?”

In a fairy-tale world of efficient markets and rational investors, that would suffice. I’m sure a society composed entirely of androids like Lieutenant Commander Data would hold firms to account.

Sadly, that is not the world in which we live. Shareholders are emotional and easily manipulated.

From The Intelligent Investor (the most celebrated investing manual of all time):

…the shareholders are a complete washout. As a class they show neither intelligence nor alertness. They vote in sheeplike fashion for whatever the management recommends and no matter how poor the management’s record of accomplishment may be… The only way to inspire the Average American shareholder to take any independently intelligent action would be by exploding a firecracker under him… (pp 498 in my copy).

So, yes. The state has a role. A system of “audit insurance” rather than the present model would be a dramatic improvement. Every single audit of a financial institution that I have been a part of has uncovered nefarious – though often legal – behavior by management that has deleterious consequences for the shareholder. This behavior is not documented in the financial statements and only a highly educated/experience professional is able to unwind the smoke/mirrors to figure out what is going on. The average investor is defenseless.

If you’re building your philosophy on top of a species (us) that does not conform to the always-rational species that you assume the result will be mass looting, corruption and fraud. Not all that different from what we have now.

I am in total agreement with the assertion that the present American regime is corrupt beyond repair. They have been bought by private interests. There is zero public check on private power in the US.
http://twitter.com/auditnerd JG

“I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields.”

This is not true. The slave ships were private and the slave owners (mostly) private. The first batch of slaves that were imported to the Caribbean were done so on sugar plantations, and the area they were imported to had no government. Some of the largest, most wealthy organizations on earth today owe their fortunes to slavery (Lehman was first a cotton trading firm, and Goldman’s was founded with seed money from slavery). Many of the large rum manufacturers are similar. The fortunes were made not only in the USA but also in isolated sugar-producing islands.
http://fascistsoup.com/ Michael Suede

This is entirely true.

The south actually dropped out of the union because the north kept nullifying the slave laws.

It took the state to impose slavery in the south – period.

http://twitter.com/auditnerd JG

No public check against private power?

Right, I’m completely down with despising the present state. It can be organized in a manner more fitting of a libertarian/populist (because, the anarchist is a populist, right?) society. This will involve more public power, not less. Publicly financed electoins and public credit, for example.

http://fascistsoup.com/ Michael Suede

Without a state, there is no need for elections.

And public credit is what has destroyed our economy.

I’m not sure why you would want more of that.

I do not need some douche bag politician directing my life.

I do not need a “leader” elected by morons who were educated in public schools.

Private “power” is only obtained by the use of the State. The State is the corporate gun. Microsoft is not going to hire mercenaries to destroy Google if there were no State.

http://twitter.com/auditnerd JG

Public credit destroyed our economy? Ok, I was working on Wall Street at the time of the blowup. You need to explain to me how “public credit” blew up the economy.

Private power is obtained by buying the biggest gun. Some the largest fortunes were accumulated via slavery. That did not need or in many cases have state support. Do you even consider that private power is a problem too?

http://fascistsoup.com/ Michael Suede

Ok:

Step one, have the Fed artificially suppress interest rates leading to an inflationary credit expansion.

Step two, dish out levered ARM loans to degenerates (which are now made possible by the artificially low interest rates) and then pass the junk mortgages off to government agencies. Thus creating artificial demand for housing and driving up home prices while inflating the worlds biggest bubble.

Step three, securitize the junk mortgages as AAA and sell them to chumps.

Step four, when your securitized mortgages packages each shit, have the Fed bail you out.

Without the government credit backing of Fannie and Freddie, this would not have occurred.

Without the Fed artificially suppressing interest rates, this would not have occurred.

Private corporations HAVE NO GUNS – they need the State to impose fiat currency laws, legal tender laws, centrally planned interest rates, and all other manner of cronyism.

The STATE is the ultimate cause of this disaster. Private corporations could not have looted the public to the tune of trillions without it.

Private corporations have NO POWER to do anything because the market prohibits them from getting away with fraud without getting caught. The market would have bankrupted ALL the major banks decades ago without government guns protecting them.

As for slavery, what do you consider taxation? If 40% of my property is taken from me by force, I have to consider that slavery.

I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields. In fact, a major reason the South seceded was because of Northern states nullifying federal slave laws, which lead to their slaves fleeing.

http://twitter.com/auditnerd JG

The financial crisis was aggravated by very low interest rates and sub-prime borrowing, both of which are obviously caused by government. The ultimate cause was speculation in the derivatives markets. Remember that the sub-prime debts added to less than 50billion (the most egregious were less than 1b). What brought down the system was the web of derivative transactions, which were entirely unregulated. In our hypothetical libertarian community, would derivative transactions be policed?

W/R/T your assertion that private firms have no power because the market prohibits fraud.. I am an auditor. It is frankly absurd to make such a claim. Firms spend millions of dollars hiding their actual financial situation from investors and the auditors (paid by the firm) are more often than not in a position of helping them hide the fraud so-as to maintain the contract to audit. This is why no audit firm issued going-concern warnings about AIG et al.
http://fascistsoup.com/ Michael Suede

The market tried to punish the wrong doers.

The market polices itself.

The massive banks:

1. could not exist without the Fed, FDIC, and fiat currency laws.

2. would all be bankrupt right now if the Fed had not bailed them out.

So the market tried to stop the corruption and the State prevented the market from enacting its punishment.

Yet you are trying to tell me that we need a State to prevent corruption?
http://twitter.com/auditnerd JG

Right, this is a major problem with your line of thinking. You apparently see two options for a firm: 1) failure or 2) not failure. This is not accurate. Firms are able to squander hoards of money without shareholders knowing it. Firms can be less profitable due to internal fraud/theft. This is why the state has set up the system of mandatory public audits. The system is deeply flawed w/r/t agency issues but can be repaired. Without the state forcing open these firms there is no mechanism with which to examine statements and claims.

If you invest in a firm you need to know what is happening inside the firm. To do this you examine audit reports. How do you know if they are accurate? How do you know how cash is being spent? The “market” is utterly indifferent to a small decrease in earnings per share – on balance. The investor isn’t.

The financial crisis was by in large a crisis of derivatives. The state did not regulate them, and to the extent shareholders knew about them, they were more than happy to take the short-term returns for long-term risk. The market is not long-sighted.
http://fascistsoup.com/ Michael Suede

Well isn’t that the job of shareholders?

To take risks and monitor the operations of the organization they are investing in?

You think the government can do a better job of this than the shareholders?

If the firm is engaging in fraud, then they can be sued by shareholders in a private civil court. The State is not required for this to occur.

If a firm refuses to open its books to investors, how many investors do you freaking think they will get?

The very government you want to police the corporations has done everything possible to prevent those corporations from having to suffer the consequences of their actions!

Why in the hell would you want the same organization that just bailed out all the fraud to be responsible for policing the fraud?

This creates MASSIVE MORAL HAZARD – just as the existence of the Fed, the FDIC, and other bailout mechanisms create.

I do not want government bailing out criminal organizations!

That report that was just issued BY GOVERNMENT AGENTS is a FRAUD IN AND OF ITSELF.

YOU ARE LISTENING TO THE VERY PEOPLE THAT HELPED BAIL OUT THE FREAKING FRAUDSTERS! WHY DO YOU KEEP LISTENING TO THEM?

Listen to this clear and simple explanation instead:
http://twitter.com/auditnerd JG

“Well isn’t that the job of shareholders?”

In a fairy-tale world of efficient markets and rational investors, that would suffice. I’m sure a society composed entirely of androids like Lieutenant Commander Data would hold firms to account.

Sadly, that is not the world in which we live. Shareholders are emotional and easily manipulated.

From The Intelligent Investor (the most celebrated investing manual of all time):

…the shareholders are a complete washout. As a class they show neither intelligence nor alertness. They vote in sheeplike fashion for whatever the management recommends and no matter how poor the management’s record of accomplishment may be… The only way to inspire the Average American shareholder to take any independently intelligent action would be by exploding a firecracker under him… (pp 498 in my copy).

So, yes. The state has a role. A system of “audit insurance” rather than the present model would be a dramatic improvement. Every single audit of a financial institution that I have been a part of has uncovered nefarious – though often legal – behavior by management that has deleterious consequences for the shareholder. This behavior is not documented in the financial statements and only a highly educated/experience professional is able to unwind the smoke/mirrors to figure out what is going on. The average investor is defenseless.

If you’re building your philosophy on top of a species (us) that does not conform to the always-rational species that you assume the result will be mass looting, corruption and fraud. Not all that different from what we have now.

I am in total agreement with the assertion that the present American regime is corrupt beyond repair. They have been bought by private interests. There is zero public check on private power in the US.
http://twitter.com/auditnerd JG

“I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields.”

This is not true. The slave ships were private and the slave owners (mostly) private. The first batch of slaves that were imported to the Caribbean were done so on sugar plantations, and the area they were imported to had no government. Some of the largest, most wealthy organizations on earth today owe their fortunes to slavery (Lehman was first a cotton trading firm, and Goldman’s was founded with seed money from slavery). Many of the large rum manufacturers are similar. The fortunes were made not only in the USA but also in isolated sugar-producing islands.
http://fascistsoup.com/ Michael Suede

The south actually dropped out of the union because the north kept nullifying the slave laws.

It took the state to impose slavery in the south – period.

In a day and age before electrified chain link fences and razor wire, there was no way for plantation owners to keep tabs on their slaves around the clock.

The apparatus of the State was required to make slavery profitable.

If it wasn’t profitable, people wouldn’t have engaged in it.

http://twitter.com/auditnerd JG

No public check against private power?

Right, I’m completely down with despising the present state. It can be organized in a manner more fitting of a libertarian/populist (because, the anarchist is a populist, right?) society. This will involve more public power, not less. Publicly financed electoins and public credit, for example.

http://fascistsoup.com/ Michael Suede

Without a state, there is no need for elections.

And public credit is what has destroyed our economy.

I’m not sure why you would want more of that.

I do not need some douche bag politician directing my life.

I do not need a “leader” elected by morons who were educated in public schools.

Private “power” is only obtained by the use of the State. The State is the corporate gun. Microsoft is not going to hire mercenaries to destroy Google if there were no State.

http://twitter.com/auditnerd JG

Public credit destroyed our economy? Ok, I was working on Wall Street at the time of the blowup. You need to explain to me how “public credit” blew up the economy.

Private power is obtained by buying the biggest gun. Some the largest fortunes were accumulated via slavery. That did not need or in many cases have state support. Do you even consider that private power is a problem too?

http://fascistsoup.com/ Michael Suede

Ok:

Step one, have the Fed artificially suppress interest rates leading to an inflationary credit expansion.

Step two, dish out levered ARM loans to degenerates (which are now made possible by the artificially low interest rates) and then pass the junk mortgages off to government agencies. Thus creating artificial demand for housing and driving up home prices while inflating the worlds biggest bubble.

Step three, securitize the junk mortgages as AAA and sell them to chumps.

Step four, when your securitized mortgages packages each shit, have the Fed bail you out.

Without the government credit backing of Fannie and Freddie, this would not have occurred.

Without the Fed artificially suppressing interest rates, this would not have occurred.

Private corporations HAVE NO GUNS – they need the State to impose fiat currency laws, legal tender laws, centrally planned interest rates, and all other manner of cronyism.

The STATE is the ultimate cause of this disaster. Private corporations could not have looted the public to the tune of trillions without it.

Private corporations have NO POWER to do anything because the market prohibits them from getting away with fraud without getting caught. The market would have bankrupted ALL the major banks decades ago without government guns protecting them.

http://twitter.com/auditnerd JG

The financial crisis was aggravated by very low interest rates and sub-prime borrowing, both of which are obviously caused by government. The ultimate cause was speculation in the derivatives markets. Remember that the sub-prime debts added to less than 50billion (the most egregious were less than 1b). What brought down the system was the web of derivative transactions, which were entirely unregulated. In our hypothetical libertarian community, would derivative transactions be policed?

W/R/T your assertion that private firms have no power because the market prohibits fraud.. I am an auditor. It is frankly absurd to make such a claim. Firms spend millions of dollars hiding their actual financial situation from investors and the auditors (paid by the firm) are more often than not in a position of helping them hide the fraud so-as to maintain the contract to audit. This is why no audit firm issued going-concern warnings about AIG et al.
http://fascistsoup.com/ Michael Suede

The market tried to punish the wrong doers.

The market polices itself.

The massive banks:

1. could not exist without the Fed, FDIC, and fiat currency laws.

2. would all be bankrupt right now if the Fed had not bailed them out.

So the market tried to stop the corruption and the State prevented the market from enacting its punishment.
http://twitter.com/auditnerd JG

Right, this is a major problem with your line of thinking. You apparently see two options for a firm: 1) failure or 2) not failure. This is not accurate. Firms are able to squander hoards of money without shareholders knowing it. Firms can be less profitable due to internal fraud/theft. This is why the state has set up the system of mandatory public audits. The system is deeply flawed w/r/t agency issues but can be repaired. Without the state forcing open these firms there is no mechanism with which to examine statements and claims.

If you invest in a firm you need to know what is happening inside the firm. To do this you examine audit reports. How do you know if they are accurate? How do you know how cash is being spent? The “market” is utterly indifferent to a small decrease in earnings per share – on balance. The investor isn’t.

The financial crisis was by in large a crisis of derivatives. The state did not regulate them, and to the extent shareholders knew about them, they were more than happy to take the short-term returns for long-term risk. The market is not long-sighted.
http://fascistsoup.com/ Michael Suede

Well isn’t that the job of shareholders?

To take risks and monitor the operations of the organization they are investing in?

You think the government can do a better job of this than the shareholders?

If the firm is engaging in fraud, then they can be sued by shareholders in a private civil court. The State is not required for this to occur.

The very government you want to police the corporations has done everything possible to prevent those corporations from having to suffer the consequences of their actions!

Why in the hell would you want the same organization that just bailed out all the fraud to be responsible for policing the fraud?
http://twitter.com/auditnerd JG

“Well isn’t that the job of shareholders?”

In a fairy-tale world of efficient markets and rational investors, that would suffice. I’m sure a society composed entirely of androids like Lieutenant Commander Data would hold firms to account.

Sadly, that is not the world in which we live. Shareholders are emotional and easily manipulated.

From The Intelligent Investor (the most celebrated investing manual of all time):

…the shareholders are a complete washout. As a class they show neither intelligence nor alertness. They vote in sheeplike fashion for whatever the management recommends and no matter how poor the management’s record of accomplishment may be… The only way to inspire the Average American shareholder to take any independently intelligent action would be by exploding a firecracker under him… (pp 498 in my copy).

So, yes. The state has a role. A system of “audit insurance” rather than the present model would be a dramatic improvement. Every single audit of a financial institution that I have been a part of has uncovered nefarious – though often legal – behavior by management that has deleterious consequences for the shareholder. This behavior is not documented in the financial statements and only a highly educated/experience professional is able to unwind the smoke/mirrors to figure out what is going on. The average investor is defenseless.

If you’re building your philosophy on top of a species (us) that does not conform to the always-rational species that you assume the result will be mass looting, corruption and fraud. Not all that different from what we have now.

I am in total agreement with the assertion that the present American regime is corrupt beyond repair. They have been bought by private interests. There is zero public check on private power in the US.
http://twitter.com/auditnerd JG

“I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields.”

This is not true. The slave ships were private and the slave owners (mostly) private. The first batch of slaves that were imported to the Caribbean were done so on sugar plantations, and the area they were imported to had no government. Some of the largest, most wealthy organizations on earth today owe their fortunes to slavery (Lehman was first a cotton trading firm, and Goldman’s was founded with seed money from slavery). Many of the large rum manufacturers are similar. The fortunes were made not only in the USA but also in isolated sugar-producing islands.
http://fascistsoup.com/ Michael Suede

This is entirely true.

The south actually dropped out of the union because the north kept nullifying the slave laws.

It took the state to impose slavery in the south – period.

http://twitter.com/auditnerd JG

No public check against private power?

Right, I’m completely down with despising the present state. It can be organized in a manner more fitting of a libertarian/populist (because, the anarchist is a populist, right?) society. This will involve more public power, not less. Publicly financed electoins and public credit, for example.

http://fascistsoup.com/ Michael Suede

Without a state, there is no need for elections.

And public credit is what has destroyed our economy.

I’m not sure why you would want more of that.

I do not need some douche bag politician directing my life.

I do not need a “leader” elected by morons who were educated in public schools.

Private “power” is only obtained by the use of the State. The State is the corporate gun. Microsoft is not going to hire mercenaries to destroy Google if there were no State.

http://twitter.com/auditnerd JG

Public credit destroyed our economy? Ok, I was working on Wall Street at the time of the blowup. You need to explain to me how “public credit” blew up the economy.

Private power is obtained by buying the biggest gun. Some the largest fortunes were accumulated via slavery. That did not need or in many cases have state support. Do you even consider that private power is a problem too?

http://fascistsoup.com/ Michael Suede

Ok:

Step one, have the Fed artificially suppress interest rates leading to an inflationary credit expansion.

Step two, dish out levered ARM loans to degenerates (which are now made possible by the artificially low interest rates) and then pass the junk mortgages off to government agencies. Thus creating artificial demand for housing and driving up home prices while inflating the worlds biggest bubble.

Step three, securitize the junk mortgages as AAA and sell them to chumps.

Step four, when your securitized mortgages packages each shit, have the Fed bail you out.

Without the government credit backing of Fannie and Freddie, this would not have occurred.

Without the Fed artificially suppressing interest rates, this would not have occurred.

Private corporations HAVE NO GUNS – they need the State to impose fiat currency laws, legal tender laws, centrally planned interest rates, and all other manner of cronyism.

The STATE is the ultimate cause of this disaster. Private corporations could not have looted the public to the tune of trillions without it.

Private corporations have NO POWER to do anything because the market prohibits them from getting away with fraud without getting caught. The market would have bankrupted ALL the major banks decades ago without government guns protecting them.

As for slavery, what do you consider taxation? If 40% of my property is taken from me by force, I have to consider that slavery.

I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields. In fact, a major reason the South seceded was because of Northern states nullifying federal slave laws, which lead to their slaves fleeing.

http://twitter.com/auditnerd JG

The financial crisis was aggravated by very low interest rates and sub-prime borrowing, both of which are obviously caused by government. The ultimate cause was speculation in the derivatives markets. Remember that the sub-prime debts added to less than 50billion (the most egregious were less than 1b). What brought down the system was the web of derivative transactions, which were entirely unregulated. In our hypothetical libertarian community, would derivative transactions be policed?

W/R/T your assertion that private firms have no power because the market prohibits fraud.. I am an auditor. It is frankly absurd to make such a claim. Firms spend millions of dollars hiding their actual financial situation from investors and the auditors (paid by the firm) are more often than not in a position of helping them hide the fraud so-as to maintain the contract to audit. This is why no audit firm issued going-concern warnings about AIG et al.
http://fascistsoup.com/ Michael Suede

The market tried to punish the wrong doers.

The market polices itself.

The massive banks:

1. could not exist without the Fed, FDIC, and fiat currency laws.

2. would all be bankrupt right now if the Fed had not bailed them out.

So the market tried to stop the corruption and the State prevented the market from enacting its punishment.

Yet you are trying to tell me that we need a State to prevent corruption?
http://twitter.com/auditnerd JG

Right, this is a major problem with your line of thinking. You apparently see two options for a firm: 1) failure or 2) not failure. This is not accurate. Firms are able to squander hoards of money without shareholders knowing it. Firms can be less profitable due to internal fraud/theft. This is why the state has set up the system of mandatory public audits. The system is deeply flawed w/r/t agency issues but can be repaired. Without the state forcing open these firms there is no mechanism with which to examine statements and claims.

If you invest in a firm you need to know what is happening inside the firm. To do this you examine audit reports. How do you know if they are accurate? How do you know how cash is being spent? The “market” is utterly indifferent to a small decrease in earnings per share – on balance. The investor isn’t.

The financial crisis was by in large a crisis of derivatives. The state did not regulate them, and to the extent shareholders knew about them, they were more than happy to take the short-term returns for long-term risk. The market is not long-sighted.
http://fascistsoup.com/ Michael Suede

Well isn’t that the job of shareholders?

To take risks and monitor the operations of the organization they are investing in?

You think the government can do a better job of this than the shareholders?

If the firm is engaging in fraud, then they can be sued by shareholders in a private civil court. The State is not required for this to occur.

If a firm refuses to open its books to investors, how many investors do you freaking think they will get?

The very government you want to police the corporations has done everything possible to prevent those corporations from having to suffer the consequences of their actions!

Why in the hell would you want the same organization that just bailed out all the fraud to be responsible for policing the fraud?

This creates MASSIVE MORAL HAZARD – just as the existence of the Fed, the FDIC, and other bailout mechanisms create.

I do not want government bailing out criminal organizations!

That report that was just issued BY GOVERNMENT AGENTS is a FRAUD IN AND OF ITSELF.

YOU ARE LISTENING TO THE VERY PEOPLE THAT HELPED BAIL OUT THE FREAKING FRAUDSTERS! WHY DO YOU KEEP LISTENING TO THEM?

Listen to this clear and simple explanation instead:
http://twitter.com/auditnerd JG

“Well isn’t that the job of shareholders?”

In a fairy-tale world of efficient markets and rational investors, that would suffice. I’m sure a society composed entirely of androids like Lieutenant Commander Data would hold firms to account.

Sadly, that is not the world in which we live. Shareholders are emotional and easily manipulated.

From The Intelligent Investor (the most celebrated investing manual of all time):

…the shareholders are a complete washout. As a class they show neither intelligence nor alertness. They vote in sheeplike fashion for whatever the management recommends and no matter how poor the management’s record of accomplishment may be… The only way to inspire the Average American shareholder to take any independently intelligent action would be by exploding a firecracker under him… (pp 498 in my copy).

So, yes. The state has a role. A system of “audit insurance” rather than the present model would be a dramatic improvement. Every single audit of a financial institution that I have been a part of has uncovered nefarious – though often legal – behavior by management that has deleterious consequences for the shareholder. This behavior is not documented in the financial statements and only a highly educated/experience professional is able to unwind the smoke/mirrors to figure out what is going on. The average investor is defenseless.

If you’re building your philosophy on top of a species (us) that does not conform to the always-rational species that you assume the result will be mass looting, corruption and fraud. Not all that different from what we have now.

I am in total agreement with the assertion that the present American regime is corrupt beyond repair. They have been bought by private interests. There is zero public check on private power in the US.
http://twitter.com/auditnerd JG

“I also might add that private slavery was a State imposed institution that could not have existed without the State imposing it. The slaves would have simply fled the fields.”

This is not true. The slave ships were private and the slave owners (mostly) private. The first batch of slaves that were imported to the Caribbean were done so on sugar plantations, and the area they were imported to had no government. Some of the largest, most wealthy organizations on earth today owe their fortunes to slavery (Lehman was first a cotton trading firm, and Goldman’s was founded with seed money from slavery). Many of the large rum manufacturers are similar. The fortunes were made not only in the USA but also in isolated sugar-producing islands.
http://fascistsoup.com/ Michael Suede

The south actually dropped out of the union because the north kept nullifying the slave laws.

It took the state to impose slavery in the south – period.

In a day and age before electrified chain link fences and razor wire, there was no way for plantation owners to keep tabs on their slaves around the clock.

The apparatus of the State was required to make slavery profitable.

If it wasn’t profitable, people wouldn’t have engaged in it.

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