Laundering $800 Mil in Drug $, How Did HSBC Execs Avoid Jail?

[an8150]

Quote:
We assert that a free market tends to find equilibrium or, when unbalanced, that it seeks out equilibrium more efficiently than any other model.
Where is your proof? Von Neuman and Morganstern refute this claim.

[Bully for them; criticism has, in my view rightly, been levelled already in this thread at appeals to authority. Proof is in the eye of the beholder. I made an assertion, I supported it by reference to the law of supply and demand. It's up to you whether you consider that law amounts to proof, although given your apparent incomprehension of the law of supply and demand, I don't expect miracles any time soon].

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In other words, the freedom maximises equilbrium,
This is of course the converse of what you claimed in prior posts [you'll have to throw a quote of mine back at me for me to know what you're talking about]. But never mind that, tell us instead what a "maximized equilibrium" is. [Oh, all right, Miss Nitpicky, equilibrium, then (although I was basically adopting your language), not 'maximised equilibrium'. I assume you're an engineer of some sort, but much as I admire the hard sciences I find your application of physical laws to government and human behaviour verges, bizarrely, on the metaphysical]

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It is the absence of coercion
This is a ridiculous notion of freedom. What happens to a person who infringes upon your legally assured freedom if he is not coerced to recompense you in some way? [oh, dear God.]

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the law of supply and demand.
This law has nothing whatsoever to do with any sort of equilibrium [Sorry, you're just wrong]. It merely asserts that demand diminishes with price.

[trish]

Not surprised by your response. Religious fanatics do eventually resort to shouting.

Look, demand (at price p) is defined as the number of sells you can make if the price of an item is set equal to p. It's practically a built into the definition that demand diminishes with price. If you fix the price at p of course you don't want to produce more than the demand at price p because it'll cost you to produce items you can't sell. And of course you don't want to produce less than the demand at price p because you can make more profit by producing and selling more. But this is not the market seeking an equilibrium point. There is no predetermined demand for a product that the market miraculously meets. It's merely of matter of determining the profit function given an estimate of the demand function, setting the price to maximize the profit and supply what would be the demand at that price.

[trish]

There's no equilibrium seeking involved. Just maximizing profit.

[broncofan]

In engines, motors, any system designed to perform repeatable cycles, including market systems, regulators are required to make systematic corrections on each cycle ad infinitum in order to maintain a proper balance of feedback and control.

Absolute freedom is absolute anarchy. Real and useful freedoms can only exist within a context of social restraints.

I like this post. You are regulating markets by having any system of enforcement. When you have strict liability for product defects instead of negligence you are regulating products, but just using the private litigation system. If you had a no liability regime you would simply have a different set of incentives; in that case the incentive to use no care whatsoever in production practices.

In the context of banks, the entire system of bankruptcy creates a regulatory regime that encourages excessive risk. The fact that we have limited liability of any sort encourages people to take risk knowing their downside is limited. When libertarians talk about de-regulation they are not talking about getting rid of the corporate structure or of making bankers personally responsible for their financial losses. They are talking about eliminating consumer protections and availing themselves of our liberal bankruptcy laws. But you cannot claim you are against regulation when you support the use of the corporate structure (a legal artifact) and allow companies to be run by CEO's who are not really accountable to the owners. It is the structure of the corporation that has created (or made more prominent) the principal-agent problem and necessitates heightened scrutiny.

[buttslinger]

In a fair fight the guy with the money will always win.

[fivekatz]

I like this post. You are regulating markets by having any system of enforcement. When you have strict liability for product defects instead of negligence you are regulating products, but just using the private litigation system. If you had a no liability regime you would simply have a different set of incentives; in that case the incentive to use no care whatsoever in production practices.

In the context of banks, the entire system of bankruptcy creates a regulatory regime that encourages excessive risk. The fact that we have limited liability of any sort encourages people to take risk knowing their downside is limited. When libertarians talk about de-regulation they are not talking about getting rid of the corporate structure or of making bankers personally responsible for their financial losses. They are talking about eliminating consumer protections and availing themselves of our liberal bankruptcy laws. But you cannot claim you are against regulation when you support the use of the corporate structure (a legal artifact) and allow companies to be run by CEO's who are not really accountable to the owners. It is the structure of the corporation that has created (or made more prominent) the principal-agent problem and necessitates heightened scrutiny.

Simply put if a guy can make money selling rancid meat or throw it out at a loss, the meat will be sold unless some higher authority tells him not to. And once it is a corporation selling that meat, it is their charter and sole mission to enhance shareholder investment so by charter they should never throw away the rancid meat unless some regulating body says they have to.

Regulation and oversight happened not because of some conspiracy it happened because in its absence greed will make people do really bad stuff.

[hippifried]

Libertarians assert the market seeks an equilibrium that maximizes freedom. Yet they never define what it means to maximize freedom nor do they provide a proof that free market systems seek any sort of equilibrium. Anecdotes that suggest the obvious, that regulatory systems require constant adjustment, do not constitute proof that a system without regulation will do just fine; the persistent assumption that it will is tantamount to religious faith.

Hence my reference to the egoist "cult". I don't say that about libertarians though. The distinction needs to be made between libertarian philosophical thought (since thought is involved) & the faith based ramblings of the various Ayn Rand institutions.

[an8150]

Not surprised by your response. Religious fanatics do eventually resort to shouting.

Look, demand (at price p) is defined as the number of sells you can make if the price of an item is set equal to p. It's practically a built into the definition that demand diminishes with price. If you fix the price at p of course you don't want to produce more than the demand at price p because it'll cost you to produce items you can't sell. And of course you don't want to produce less than the demand at price p because you can make more profit by producing and selling more. But this is not the market seeking an equilibrium point. There is no predetermined demand for a product that the market miraculously meets. It's merely of matter of determining the profit function given an estimate of the demand function, setting the price to maximize the profit and supply what would be the demand at that price.

What shouting?

If you try to sell your house for U$D200k, and it's on the market for six months with no buyers, then you've got the price wrong. Most likely the price is too high. Lower it, and you will find your buyer. Your ability to do so, and the result of finding that buyer, is the point of equilibrium.

[an8150]

There's no equilibrium seeking involved. Just maximizing profit.

They're not mutually exclusive.

[an8150]

Hence my reference to the egoist "cult". I don't say that about libertarians though. The distinction needs to be made between libertarian philosophical thought (since thought is involved) & the faith based ramblings of the various Ayn Rand institutions.

Talking about thought being involved, have you given any to my question?