libertarianism empirically disconfirmed?

[Acid King]

So where's the stern "calm down and shut up" aimed in their direction, from ANYone?

As is what usually happens, the reasonable people are being drowned out by panicky electorate, a sensationalistic doom and gloom press and loudmouthed hacks on both sides of the political spectrum.

Edit: BM, here's an article from Reason that you might find interesting.
http://www.reason.com/news/show/129041.html

[BulletMagnet]

As is what usually happens, the reasonable people are being drowned out by panicky electorate

As I said before, it really doesn't seem that the electorate at large is to blame here, as most "regular" people appear to want the government to take its time while working out what to do next - the corporate geniuses who would have been left to rot in the "unrestricted free market" that they constantly sing the praises of are the ones demanding ANY sort of boneheaded action ASAP.

Having taken a look at the article you linked, I agree on a handful of points that the group brings up, at least on some level - most of them at least seem to see the inherent absurdity (if not injustice) in these corporations being unwilling to accept some regulation as the price of having the government there to bail them out, so if nothing else they're not happy to see them have it both ways (most corporate types will abandon, and have abandoned, their sacred free-market sensibilities at the drop of a hat if it means more money for them). I have no idea whether stepping aside and letting the companies crash and burn is viable, or if they really are "too big to fail," though I can't say the notion lacks appeal, for a certainty. I'm not sure I see eye to eye on the notion that regulators "don't know enough" (as opposed to "aren't allowed to do enough in the first place"), alongside the assertion that we need to worry about an increased risk of terrorist attacks along with everything else, among other things, but at least these guys seem willing to admit that blaming minorities and throwing all oversight to the wind isn't the answer.

One thing I will add, however, is that when the one fellow says that "the welfare state seems more generous for bankers than for the poor" - frankly, there's no "seems" about it. Of course, those in his camp tend to oppose much such help for anyone, rich or poor, but at least there's some recognition of how absurd the situation has gotten in this area, when those most critical of said "welfare state" are the ones most desperate (and most able) to suck at its teat.

[Ed Oscuro]

So where's the stern "calm down and shut up" aimed in their direction, from ANYone?

The smart investors, like Warren Buffet, are putting their money where other people would just put their mouths.

Of course, the multitudes will bitch later, oblivious to having missed another opportunity.

I think it's frankly embarrassing that after members of both parties have made clear that restricting payment for failed CEOs must be a part of any bailout plan and that the U.S. taxpayer must be able to get a tangible return for their money - not just a return to normalcy of the markets (although that alone is reason enough to tact), the number of people calling into NPR (I'm hearing this secondhand) against the bailout versus the number for it is 100 to 1.

Going forward, I think politicians with Senate or House aspirations might be able to play this into an anti- position when running against any incumbent, Republican or Democrat, who will vote for a necessary bailout.

[Acid King]

As I said before, it really doesn't seem that the electorate at large is to blame here, as most "regular" people appear to want the government to take its time while working out what to do next - the corporate geniuses who would have been left to rot in the "unrestricted free market" that they constantly sing the praises of are the ones demanding ANY sort of boneheaded action ASAP.

There are reams of polling data showing public support for government action. I don't know why you keep repeating this. Even if the public disagrees with a specified plan (Though probably a small fraction of those expressing opinions on any of the governemnts potential plans really know anything about it), the majority of the public wants the government to act. A recent CNN poll put 79% of respondents as saying they were worried that the economy could get worse if the government takes no action. That's not a call to act?

(most corporate types will abandon, and have abandoned, their sacred free-market sensibilities at the drop of a hat if it means more money for them).

You keep repeating this as if it's true, as if some how corporations by nature are inherently free market and it's total bullshit.

Of course, those in his camp tend to oppose much such help for anyone, rich or poor...

The guy is a free market economist. That has absofuckinglutely nothing to do with what he thinks of welfare.

[BulletMagnet]

Even if the public disagrees with a specified plan...the majority of the public wants the government to act.

Well yeah, that's the thing - they do want action (when have I said they didn't?), but they're willing to wait for a fundamentally solid decision (or at least a more solid one than was proposed) to be made, rather than panicking and demanding any fool thing as long as it happens right now, unlike the recipients of the bailout. The point I was attempting to make was not that the public didn't want anything to happen at all, but that they're not being the utterly irrational mob that some are characterizing them to be - that description belongs to the corporations, yet somehow.the prevailing rhetoric is still "you can't trust the public."

You keep repeating this as if it's true, as if some how corporations by nature are inherently free market and it's total bullshit.

On that point I frankly agree, though that never stops corporations from arguing for less regulation in the name of "free markets," even if their claims aren't backed up by their actions in other areas, i.e. demanding bailouts - again, though, where is the chorus of "true" free-marketers crying foul, outside of Reason magazine, at any rate? Most of the ire I've seen appears to be aimed at the existing regulators and the people who bought loans they couldn't pay back - obviously some of the blame lies there, but again, the guys who orchestrated the whole thing appear to be getting off with far less criticism (and resulting action) than they deserve.

The guy is a free market economist. That has absofuckinglutely nothing to do with what he thinks of welfare.

I suppose I've missed some nuance or other again - I've always been under the impression that most free-market types were also "Social Darwinist" in terms of how they viewed "obligatory" help being given to anyone in bad shape. Perhaps that's just a stereotype on my part, then.

[Ed Oscuro]

Update: Congress ain't buyin' the bailout.

My initial reaction was a feeling of mild outrage (but definitely outrage). After a few seconds, though, I thought about the implications:

One, many pols likely carefully thought over the scenario I outlined earlier, where voting for this bill would destroy their reelection chances. You can say "blame the polls," but the polls gave politicians a heads-up that John and Jane thought this was an evil thing.

Politics is the art of the possible; and in this case, it was simply not possible to push through a bill laying 7/10ths of a billion dollars to likely expenditure.

Let's be pragmatic here: Either this is going to push legislators to adopt a more careful series of smaller bills focusing on the problem, or we get to live through a GREAT Depression! Sounds like fun to me.

The major downsides to the bill failing:

- banks are still failing, the market is in the dump
- putting through a series of smaller bills might weaken the Fed's bargaining position (aside from the missed opportunities)

On the whole, another bad day for America that could have been avoided, but $700BN expenditures are themselves really bad day. If it would suit Congress to finagle every last cent out of the bill to make themselves look like heroes, that's what they'll be doing, right or wrong.

[BazookaBen]

I think the final amount they would end up spending would be more than 1 trillion dollars with future appropriations. That's why we have to stop this now, another great depression is better than the collapse of our currency, which is sadly the two choices we have right now.

Frankly, I'm not ready for what's about to happen, but I hope most investors keep their heads on straight and come back into the market soon after the storm hits. We still have a country with lots of infrastructure and healthy people, we should be able to rebuild our economy quickly.

[Ganelon]

Nobody honestly knows what will happen (although the credit freeze is pretty much already in place); that's why nobody predicted that the collapsed bubble would be this damaging and widespread. Kudos to the republican representatives for keeping government from unjustly placing a hand in things where it doesn't belong.

[Acid King]

Kudos to the republican representatives for keeping government from unjustly placing a hand in things where it doesn't belong.

What filthy leftist commie pedophile scumfuck told you that?! Everyone KNOOOOWS it's the democrats. Fucking Obama....

[TLDragoon]

At least you can say that there was bi-partisanship going on . Oddly, out of the 4 reps in my state, the 3 democratic reps voted against it while the lone republican (who just happens not to be running for re-election) voted for it. I've actually garnered a little respect for them (the dems, not the republican).

The parties can spin it however they want, but at least now they may be able to calm the frick down, quit playing Chicken Little, at actually develop a more sensible plan that doesn't pour tax-payer money into bad loans.

[MOSQUITO FIGHTER]

The bailout just doesn't seem like the right thing to do. It's like creating Frankenstein or something. And from what I've heard it's just an effort to get banks to continue to give out loans to people who can't pay them. Isn't that the problem to begin with?

Don't think I want to see my IRA today though.

[JoshF]

Kudos to the republican representatives for keeping government from unjustly placing a hand in things where it doesn't belong.

Ya it might accidentally bump into the invisible one.

[Ed Oscuro]

The bailout just doesn't seem like the right thing to do. It's like creating Frankenstein or something.

I can totally understand that gut reaction, as people would be more comfortable getting slammed by a number of bailouts in succession because the faith would be there that more time was spent approving each item.

The problem with approving money as it's needed in each case is that by the time you've approved that money, it's too late. Even so, I think they could have made the spending bill a fraction (like 1/3, possibly) with the promise that more would be coming only when anticipated to be needed. That smaller bill would have been more likely to pass, although I don't really have a read for how many representatives were working off the "BAILOUT = BAD" notion.

Ironic observation that John McCain gets angry about $19BN and yet wanted the $700BN to pass. "A billion here, a billion there, and pretty soon you're talking...about...real...money" - Kai Ryssdal (Marketplace)

And from what I've heard it's just an effort to get banks to continue to give out loans to people who can't pay them. Isn't that the problem to begin with?

No, that's one of the bad practices that nobody in Washington is going to tolerate after this mess. If you want to see who would've won and lost in the bailout, CNN put up a good article on the 28th.

Basically:

If you are going to get a new credit card
If you want to buy a house (and you don't have a suitcase stuffed with cash)
If you need any sort of credit for anything
If you just don't like having a few banks in the marketplace with de facto partial monopolies in the wake of this crisis

you lose because the banks now are afraid to lend you the money. They won't lend to each other right now.

Also, for all this talk of "anti-market" actions, the Dow had its largest point drop ever today. Watch the free market in action, folks! Of course you can argue that the drop came because people anticipated government action which didn't came (shocking to some), but if we don't shore up some banks the result will be the concentration of a lot of capital and lending power in the hands of a few banks. That's the thing the radial free-market guys don't like to mention; it's one of the dark secrets of playing with a totally unregulated market. But anyway, the big thing is the loss of lending opportunities for businesses and even average Americans.

Kudos to the republican representatives for keeping government from unjustly placing a hand in things where it doesn't belong.

What filthy leftist commie pedophile scumfuck told you that?! Everyone KNOOOOWS it's the democrats. Fucking Obama....

I will say that there were some complaints about comments by Speaker Pelosi on the Democratic side. Of course, this result was going to happen regardless of the politicking by leaders, because the Representatives were listening to their constituents and also not willing to pour all that money down the drain (to put it in friendly language).

Anyway:

How will our caped crusaders escape from the grinding teeth of the Credit Cruncher??

Tune in next (week?)

Same...Bat-Time!

Same...Bat-Channel!

[Twiddle]

The free market will save itself

for example, the new homeless can always revert to cannibalism

[BulletMagnet]

Everyone KNOOOOWS it's the democrats.

And of course the Liberal Media is right there to list the mountain of reasons why McCain's statements on this are utterly laughable, rather than simply repeating his talking points for him without the merest hint of objection or skepticism, like they've been doing the past decade or more...oh, wait.

[Ed Oscuro]

if it weren't for that darned grandma we'd have delicious bailout cookies

instead I have a handful of ashes. I HOPE YOU'RE HAPPY PELOSI :C

[jp]

Heh, wow McCain.

It was mostly democrats that had cobbled this pathetic bill together (though it was Bush's idea).


Thankfully, the House shot this down. I'd much rather have one year of turmoil as the market chews up and spits out a bunch of banks that did some outright idiotic stuff than a decade of Great Depression 2: Electric Boogaloo because the idiots in Washington thought throwing imaginary money at bad credit was a good idea.

Seriously, am I the only person here who has taken a course in economics? Do we really not realize that:
A. $700 billion is not needed for the "mortgage" crisis. $700 billion is needed because of some truly idiotic policies SOME (not all) banks decided to try out that came back and bit them in the ass.
B. A FRACTION of that $700 billion could be used to help out the people losing their homes. A FRACTION OF IT!
C. Suddenly throwing around $700 billion would make inflation flare the fuck up and the value of our dollar would be nonexistent pretty fast.


The only reason, the ONLY REASON, Bush proposed the bailout is because it would kinda make the economy look good for a couple of months or so. But after awhile, that shit would all come crashing down and if you think our economy is in shambles NOW then

[Ed Oscuro]

A. $700 billion is not needed for the "mortgage" crisis. $700 billion is needed because of some truly idiotic policies SOME (not all) banks decided to try out that came back and bit them in the ass.

"Scare quotes" go around "crisis," not "mortgage," unless you don't know what a "mortgage" is.

"These...what do you call them? Mortgages...they could be VERY tricky INDEED."

More relevant: Companies that didn't even have any direct exposure are having to change their mode of operations (Goldman Sachs comes to mind), to say nothing of companies that got duped.

B. A FRACTION of that $700 billion could be used to help out the people losing their homes. A FRACTION OF IT!

I won't blame people who signed onto bad loans without being told all the pertinent info (like many of the corporate recipients of this bad debt, come to think of it!), since they were scammed - but I will say that if the mortgage industry implodes that people who did nothing wrong will be paying (in the ways I outlined earlier, i.e. no loans).

C. Suddenly throwing around $700 billion would make inflation flare the fuck up and the value of our dollar would be nonexistent pretty fast.

Mainly this is an issue of balancing priorities. Ever since we left the gold standard, it's all been subjective.

The only reason, the ONLY REASON, Bush proposed the bailout is because it would kinda make the economy look good for a couple of months or so. But after awhile, that shit would all come crashing down and if you think our economy is in shambles NOW then :lol: :lol: :lol:

I fail to see how letting a few banks tighten their control of the financial markets while letting lots of assets go to seed is going to help the economy.

tl;dr - Biggest point drop ever on Wall Street (I guess that's not proportional, though; the GD must've been bigger). We'll see if it's permanent.

Also, complaints about the economy are incompatible with claims that the market doesn't matter. Startup capital, anybody?

[Twiddle]

The alternate solution Boehner wants to push: paying banks to evict people

http://www.poe-news.com/forums/sp.php?pi=1001826779

this is so free market i'm going to cum

[Ed Oscuro]

Nice.

I want to reiterate this: although numerous parties - particularly the Presidential campaigns - bloviated about the principles that they demanded be in the bill, the working copies of what was actually being negotiated included limits to compensation and 'golden parachutes', a bipartisan oversight board, equity in firms assisted by the plan and the possibility of lowering the scope of the bailout so that only a portion of the $700 billion would be advanced. The outraged statements about the bailout, the anger and panic they whipped up and the press-conference proposals were all directed at a version of the bill that had been immediately discarded.

People like certainty, which is why they hide their dollars and their Jesus Fetuses under their mattress and vote on abortion.

Possible Boehner-initiated treacheries aside, I think that's the issue here. I don't care if they have to throw together three bills in quick succession; people will see the effects of one bill - hopefully - and won't feel so bad about others.

There really needed to be more active selling of the plan by everybody involved. Bush didn't help manners by locking himself away in an Oval Office cupboard for the last eight years and slowly losing his limited ability for sustained speech; and in any case he hasn't been considered the most sympathetic (or, hell, trustworthy) public figure for some time, but even so it was his job to sell this thing.

Instead we have Pelosi (bless her misguided soul) and other people playing blame games instead of drawing closer together.

Given what's said about Boehner, though, it certainly does engender the suspicion that he set out to poison the thing from the start.

also an epic post, not really related though! Love the age estimation posts a bit above as well.

[Ganelon]

You realize every person in the US could be getting a free ~$2500 instead of unjustly helping out a few morons? Granted, the inflation would suck, but it's surely a much more enticing thing to have in a supposed "meltdown crisis next-Great Depression apocalypse Judgment Day" scenario.

Plus, the financial market would get double the money by being contracted to help save themselves. Great... That said, the planned bill was lukewarmly alright if we're really intent on giving money away; at least the government's shortsighted "analysts" can try to pick the cream of the crop and maybe get some money from its new share of the pie.

I won't blame people who signed onto bad loans without being told all the pertinent info (like many of the corporate recipients of this bad debt, come to think of it!), since they were scammed - but I will say that if the mortgage industry implodes that people who did nothing wrong will be paying (in the ways I outlined earlier, i.e. no loans).

I personally do blame them in large part (since not even scummy lenders can force you to take dirty loans). Plenty of info was out there warning people against lending scams (esp. variable interest rate crap) and how the housing bubble would collapse. These folks ignored all the signs and kept on pursuing their dreams with abandon. If you can't take some fiscal responsibility and do at least some research before offering to pay hundreds of grands, then I don't think you deserve a house.

What about all the other neighbors paying their mortgages bit by bit seeing the neighborhood fool having it easier with his payments? Plus, the transition will be smooth; you won't need a loan to rent an apartment.

Biggest point drop ever on Wall Street (I guess that's not proportional, though; the GD must've been bigger). We'll see if it's permanent.

No chance it'll be permanent; the only question is when it'll start climbing again.

[Ed Oscuro]

You realize every person in the US could be getting a free ~$2500 instead of unjustly helping out a few morons? Granted, the inflation would suck, but it's surely a much more enticing thing to have in a supposed "meltdown crisis next-Great Depression apocalypse Judgment Day" scenario.

Some house that'll buy.

Plus, the financial market would get double the money by being contracted to help save themselves. Great... That said, the planned bill was lukewarmly alright if we're really intent on giving money away; at least the government's shortsighted "analysts" can try to pick the cream of the crop and maybe get some money from its new share of the pie.[/quote]
That's pretty much a completely different market and doesn't solve the original problem, which is: Credit and loans are in a shitload of trouble. Hell, any bank will take your money - but getting them to loan again requires the restoration of confidence.

I personally do blame them in large part (since not even scummy lenders can force you to take dirty loans). Plenty of info was out there warning people against lending scams (esp. variable interest rate crap) and how the housing bubble would collapse. These folks ignored all the signs and kept on pursuing their dreams with abandon. If you can't take some fiscal responsibility and do at least some research before offering to pay hundreds of grands, then I don't think you deserve a house.

Financial institutions have an obligation to keep their people vaguely appraised of the ins and outs - not everybody can easily go check (or knows how to) Wikihow for EXPERT FINANCIAL ADVICES. Even getting a good deal on a credit card is insanely, and needlessly, complicated. But in any case, see a certain thread in the Trading Section for more info! A lot of info on this stuff was available for some time, but not everybody listens to Warren Buffett religiously, and also that woman was asking for it. Finall, NPR did a story on this some while back (of course).

Bottom line, there needs to be some reform on how some of these more complex financial transactions are packaged and sold. Not everybody can be expected to be a financial wizard, and that assumption completely undermines the whole reason for having a credit market in the first place.

What about all the other neighbors paying their mortgages bit by bit seeing the neighborhood fool having it easier with his payments?

Nothing much because they've got their houses. Mainly, foreclosures happening, but of course that's the age-old solution for missing your payments. If only the housing market weren't in the shitter as well, maybe this "let 'em pay" approach wouldn't be pressing the economy from top and bottom.

Biggest point drop ever on Wall Street (I guess that's not proportional, though; the GD must've been bigger). We'll see if it's permanent.

No chance it'll be permanent; the only question is when it'll start climbing again.

Fuck me, why'd I say permanent?!

[Acid King]

tl;dr - Biggest point drop ever on Wall Street (I guess that's not proportional, though; the GD must've been bigger). We'll see if it's permanent.

Today's point drop was a little over 6%. The Great Depression's was 22%.

[jp]

See Ed, the reason I put "scare quotes" around mortgage is because this isn't really... mm... totally directly tied to bad lending practices.


No, the problem the banks that are dying had is this little deal where damn near any idiot off the street could walk in and buy a policy AGAINST someone's mortgage. So if you bought one of these policies, you basically got some large sum of money if the person you "betted against" defaulted. It was a really weird "Lets make a lot of money on the side by gambling on people's mortgages" type deal, and, apparently these banks thought that, "Surely, everyone will pay their mortgage and we'll be fine!"

Unfortunately, the economy hit a snag, oil prices rose, and the people living well beyond their means got smacked in the face pretty hard by reality. The result? Something $400 trillion in debt.

So, yes, the people defaulting on their loans and living beyond their means, that had something to do with it, but the real killer (that you certainly won't hear about, I mean, thats some shady shit. I only know about it because I called my best friend who happens to work in the higher echelons of government to discuss the bailout with an intelligent person today) was... some shady shady SHADY shit that they should not have been doing.

I mean the bailout is literally equivalent to someone losing all their money at a casino and crying foul.

[maxlords]

This whole situation is bizarre to me, and it's nice to come here and see some fairly intelligent commentary. I've just been wondering about a few things -

1. If we have a truly free market economy, why SHOULD the government bail out the banks? This whole changing laws and policies on the fly for spin control thing is kind of disturbing. Most of this shit is all their own faults....let em burn. With the housing market a mess, questionable mortgages everywhere, etc etc....why WOULD you go "Oh, here's a trillion bucks, go get a latte and relax!". Course...I guess the answer is that we don't have a truly free market economy...just the illusion of one.

2. Why are there not controls in place to prevent people from doing things like, say....selling mortgages to homeless people to get the signing bonus. That seems about has honest as stealing money from a till at gunpoint to me. Since we DON'T have a free market economy, only the semblance of one...should the gov't have controls in place to prevent just such a thing as this?

3. Whose fault is this? I mean.....sure, it's the banking industry's fault for fucking people and then getting called on it. But the Republicans have been backing big business and giving them free reign for a good long time now. Could this be construed as strangulation with their own leash? It seems like we've kind of given them license to do this by who we've voted into office and the sorts of shady governmental and business practices people have been letting slide for the last decade or so.

4. What happens to average Joe American in this after the dust settles? Or is average Joe American already so screwed that he's working at Wal-Mart to pay for his two kids from two different moms cause he got loaded that one night and never graduated high school because he needed the money to care for them...

Seriously though...is that the average American these days? Is it because we have a huge labor pool of unskilled labor that will just sign whatever gets put in front of them and is generally completely uninformed that we're in this mess in the first place? Well, that and a lot of scummy business practices, but shouldn't we be smart enough to go...hey...wait...this isn't a good idea... "Sure, I'll take whatever ya give me. Sign here? No Problem."


I had a couple other thoughts but I'm too tired to be coherent. Hopefully the above made a semblance of sense...please don't overtly crucify me if it didn't I still think I agree with someone from earlier in their post where they said people literally are incapable of making decisions and taking care of themselves. Not just average people either...CEOs are people too And they're making just as bad decisions as the guy in the trailer park with a minimum wage job, a new pickup truck and a big screen TV. I don't know why that really surprises anyone...it just hurts more people.

EDIT: BTW...I find it interesting that the Dow spiked over 200 points up almost from the instant trading opened today. Does that indicate that this whole drop is a gut reaction fluke? Or is it just a general trading frenzy driving it up? I just don't understand how it all works enough...never really GOT the market. It seems like a spike like that wouldn't happen if there's this much uncertainty.

[Ex-Cyber]

Ever since we left the gold standard, it's all been subjective.

It was all subjective under the gold standard too. There was no divine decree stating how much people would work or sell for a given amount of gold.

1. If we have a truly free market economy, why SHOULD the government bail out the banks?

Mostly because the accompanying "market adjustment" would have nasty effects on a lot of people through no fault of their own. This is why the phrase "too big to fail" was coined. The question of why we let them get "too big to fail" without applying appropriate regulation to control the risks is the main one I'd like answered. Forget strings; for the financial sector any "bailout" or "rescue" needs to come with steel cables attached. They're supposed to know better than to get us into this kind of mess; the industry pretty much exists to manage aggregate financial risks. Yet here they are screwing the country over again by failing to do so effectively. How many times does this need to happen before we figure out that we can't simply let them do as they please?

[BazookaBen]

Hey maxlords, watch the movie "Money Masters" on google video. It's an old docu from the mid 90's, but it gives the most exhaustive overview of the worlds financial system for the past few hundred years I've seen. The central banks have manufactured this crisis to an extent, but they're losing control of it right now.

BTW, I read a stat that congressmen who voted yes on the bailout get 50% more donations from the financial sector.

[BulletMagnet]

BTW, I read a stat that congressmen who voted yes on the bailout get 50% more donations from the financial sector.

Got a link?

[maxlords]

1. If we have a truly free market economy, why SHOULD the government bail out the banks?

Mostly because the accompanying "market adjustment" would have nasty effects on a lot of people through no fault of their own. This is why the phrase "too big to fail" was coined. The question of why we let them get "too big to fail" without applying appropriate regulation to control the risks is the main one I'd like answered. Forget strings; for the financial sector any "bailout" or "rescue" needs to come with steel cables attached. They're supposed to know better than to get us into this kind of mess; the industry pretty much exists to manage aggregate financial risks. Yet here they are screwing the country over again by failing to do so effectively. How many times does this need to happen before we figure out that we can't simply let them do as they please?

So essentially, the only reason we're bailing them out is to save the working man that depends on em. Makes sense, but it's still bogus to have to do it. It seems like there should be stricter and stricter rules in place as a company gets larger an larger, partly to control what they do wtih that power, and partly to discourage companies from getting QUITE that big in the first place. Wouldn't that keep a problem like this from happening?

[Michaelm]

Of course, the fall of the Soviet Union strongly suggests that the other extreme is no better.

In my view this is quite incomparable.
The fall of the Soviet Union was largely due to capitalism.
The financial disaster is completely due to capitalism.

Also, the Soviet Union was more of a dictatorship then communism.
Communism and Socialism have not failed yet.