Capitalism is Not All to Blame for the Depression

To first criticize capitalism we must first understand what capitalism is, according to Merriam-Webster Dictionary; capitalism is " an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market".

Now we must look at the 2008-2009 global economic crisis highlights (in the United States):
1. Housing Bubble peak in 2005-2006
2. " unscrupulous lenders" of mortgages and loans
3. Debt crisis
4. Commodity Bubble
5. Banking crisis
6. March 2008-Bear Stearns Collapses
7. September 14, 2008 Merrill Lynch is sold to BofA
8. September 7, 2008 Fannie Mae and Freddie Mac were taken over by the government
9. September 16, 2008 AIG reported the biggest loss in US history
10. September 15, 2008 Lehman Brothers filed for Chapter 11 bankruptcy protection
11. December 11, 2008 Bernie Madoff is convicted of the largest Ponzi Scheme is US history with an estimated $20 Billion loss to his clients

and the list continues....

What this list shows is the spiral into a depression. Many people are blaming capitalism for these events that have occurred. As you may have heard, Michael Moore is coming out with a new movie entitled "Capitalism: A Love Story". In this movie, he will show us how capitalism caused this depression and no doubt will show some of the events listed above.

I agree with Mr. Moore that capitalism played a role in this depression but not all of it. The US government under President Bush and was notorious for laze-faire economics and general no regulations. It hasn't been only Bush, we have never really been as strict as we should with stock market regulations. It is because of the no regulations that has caused this depression. People could do whatever they wanted, thats why Madoff has gotten away with his Ponzi Scheme for over 12 years!

The SEC hasn't been doing their job. If they were, then all these schemes and criminals would have been caught. If we actually had good regulations and enforced them harshly then this depression could have been at least not as bad as it was.

In 2007, the SEC voted to remove "short" rule, which has been in effect since 1934. Economists have said that short selling played a major role in the collapse of Lehman Brothers. Chairman Christopher Cox gave a speech in March 2008 and told us how the SEC is going to start combating "naked shorting" but then Lehman fails a few months later from "naked shorting".

The depression can't be blamed on one person because there is plenty of blame to go around. From all the greedy corporate executives, to unregulated market, to failed government promises and ponzi schemes. Many people are at fault here. However, the lack of government watch over these greedy fat cats is a huge factor in the depression.

Capitalism is the way and should continue to be our way of economics. However, a regulated capitalism is the only way to do it. Capitalism is competitive and thats why these schemes and lies happen. Thats why regulation is needed.

So, before you blame capitalism and how it is terrible, look back at what happened in 2007-2009 and determine whether or not that all of this was caused by an ideology and not by non-regulation and greed...

Comments, questions: mwr2011@gmail.com

Sources:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/17/MN0V19OTKP.DTL
http://www.dipity.com/TerrranceDC/Meltdown_2008
wikipedia.org
m-w.com