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Originally Posted by dippin
...The bail out last year prevented a much larger sum of assets from disappearing in thin air,...
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Real assets don't disappear. Leverage against real assets can cause financial ruin. Given a decline in the value of underlying assets those highly leveraged became insolvent. De-leveraging the highly leveraged by government means rewarding the biggest risk takers and is still like a shell game because no matter how you look at it or what you do the market has to adjust to the new lower prices of the underlying assets and someone has to incur the costs. This is a painful process.
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as imperfect and flawed as it was. And there are several sectors where the government is significantly better at doing than the market, and often "government" and market are so intertwined as to be hard to separate.
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A very few areas, in my view, like providing for national defense is something government is better suited to provide .
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It is really hard to have any investment in basic science, for example, without government intervention. Can't think of a single major innovation of the past 40 years that did not include heavy government investment.
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When we look at innovation in the private sector compared to government there is no comparison. For example Cisco Systems invested $1.4 billion in R&D in the fourth quarter of 2008, if we added all the R&D investment by US corporations and compared it to Government spending on R&D we would find government R&D spending small in comparison. Then if we looked at the return on the dollars invested the difference would be even bigger. In most cases government is not even interested in their R&D investment translating to something useful to society.