Just out of curiosity: what barrier was that? I thought it was capitalism that went bankrupt
To anyone who understands anything about economics, this statement, honestly, looks like a troll. It's like reading someone saying "I thought Windows was better? Isn't that what 95% of businesses use?" or something like that. Yes, there are many, many people who thought (and perhaps still think, although OS X and even linux have made tremendous inroads into the public consciousness now), for example, that it was "obvious" which operating system was best. For one thing, there were many, many people in the media who would pontificate about the superiority of Windows over any alternative, and then you could back that up by finding hordes of Windows weenies who would enthusiastically repeat the tired, old, canards in a way that made them sound all sarcastic and superior.
The people talking about the current crisis as a failure of capitalism understand economics in the same way that the people referenced above understand technology. They hear people talk about it, some of them sound like they know what they're talking about, they look around at other people in the crowd and go with what they think of as the consensus of the smart/informed people.
In fact, they know very little, and the people that do know are sharply divided over what is "obvious".
But if you think that you have seen capitalism fail, you just aren't looking hard enough to see past the Democrat's distortion blitz.
I agree wholeheartedly that the novelty of credit default swaps were an artifact of capitalism. A stupid investment which Buffet called a time bomb--but capitalism produces stupid investments, as it reflects the desires of individuals to get something for nothing. That's not all it produces, but because it embraces freedom, it embraces people's freedom to dumb as well as to be smart. And sometimes what one person says is dumb turns out to have been really smart.
But let's get back to the current useful-idiot-producing crisis. Where did the "money" come from that went into the bubble that just burst? It came from "money" (fiat money, meaning you aren't allowed to compete with it like you would in capitalism; political money, meaning it's produced by a quasi-government entity (the Federal Reserve) ) that was "created" when banks sold mortgages. There was a huge influx of "money" into the system. All the dizzying loads of information you can find about what happened after that--the "exotic derivatives" and so forth--is just the result of people trying to cash in on a flood of "money". Basically, yes, if you pour money into a capatilist system, it will figure out all kinds of ways to attempt to drive that money into the pockets of various players. No surprise there, and you can call it capitalism.
Over time, after a source of money shows up, once people figure out what the real nature of that source is and how to value it, the activity around it calms down. There may or may not be a bubble, depending on how risky or cautious people are, whether quality information is available, and a host of other factors. Capitalism does not instantaneously find the value of something new, it tries hundreds of different ways to measure and extract that value.
What, in the case of the current crisis, is the source of the "new money"? Well, we've already talked about the mortgages, buy why did they show up? Was there some kind of twitch in the invisible hand? Some evil capitalist corporation put subliminal messages into advertising convincing people that they should really be buying a house, it's what all the cool people are doing?
No, no, and no. Although things something like that happened once it was shown that there was money there, what started this artificial glut of money was the government. Some politicians, concerned that people that couldn't afford to buy homes by evil capitalist banking standards, well, couldn't afford to buy homes by the evil capitalist banking standards, decided to legislate a change in the standards. The Community Reinvestment Act, first started under Carter then given a dose of steriods under Clinton, forced banks to change their standards if they wanted to do what normal capitalist banks wanted to do--acquire or merge with other banks in order to realize economies of scale.
Not content with this meddling, Fannie Mae and Freddie Mac were spawned to do something that the silly capitalist banking world had foolishly never thought of--to buy, on a very large scale mortgages that had been initiated by someone else, and were being paid by someone that the institutions had never met, were for homes in neighborhoods thousands of miles away, etc, etc. Suddenly, because of government intervention, there was a huge market for mortgages--and the government was making it practically risk free. It wasn't far from that to "lend to anyone, on any house, for any amount, and you will be able to sell the mortgage to a greater fool".
Having thus circumvented decades, or possibly centuries, of capitalism pricing housing (to whatever extent that was possible given all the other ways that government meddled in housing in the name of fairness or handicapped accessibility or whatever they had decided), a free-for-all started and things went nuts.
And then the Democrats that started it all declared that it was a problem with lack of regulatiion, which the media was happy to trumpet, right on the verge of an election, and the sheeple did what sheeple do.
Do you want to keep going? Shall we talk about how money was drying up for IPOs after Sarbanes-Oxley destroyed the American IPO market, and speculate whether that money was looking for somewhere to land and got sucked into the government sponsored Ponzi scheme? Shall we talk about what real estate might look like if there hadn't been decades of interference by the well meaning government? Cuz we can go on. And on, and on.
I'm sorry, but the people that you think are there to save you from the Evil Republican Liberty Crushers are the Evil Democrat Liberty Crushers. And we haven't had capitalism in America for a long, long, time. We've had crippled capitalism which, when it stumbles, is blamed on the failure of unregulated capitalism, and regulated further by the kind lawyers who have never had to strain to make a payroll, don't know the sweat and tears of building a business from nothing, and, frankly, appear to look with incredible arrogance and condescension on those that have.