The EU question (Response to Louis - II)

Xxxx Xxxxxx xxxxxxxxxx at xxxxxxxxxxxxx.xxx
Fri May 4 09:19:08 MDT 2001



>Now, profitability conditions are relative.
> Moreover, expected profitability, the one that truly counts, is
calculated
> by capitalists including some probabilistic measure of risk.  That's why
the
> measures of risk by rating Wall Street companies are so important,
because
> they alter the effective expected profitability of investments just like

Actually, 1996 Basle rules on transnational banking was modified in the
direction of "market based regulation" based on the calculation of risks by
private actors themselves.  J. P Morgan was among those offering the
proposal. This is no news, given the capitalists class can effectively buy
the state and international agencies.

What you are saying above is typical a "rational agency model". You are
assuming that private actors always know what is in their best interests,
so they calculate probabilistic measures of risk based on their own
estimates. This model does not work in reality because the reality is much
more complex. If  it did, we would not have financial crises. Capitalists
do not always act rationally just as markets do not always promise
predictability and certainty. Most of the time, they  fail.

---
Xxxx Xxxxx Xxxxxx
Ph.D Student
Department of Political Science
SUNY at Albany
Nelson A. Rockefeller College
135 Western Ave.; Milne 102
Albany, NY 12222


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