Nice post.
[quote]Ryan P. McCarter wrote:
Quite right–the banks. They were more eager than anyone to relax lending standards, because they stood to make more money off riskier loans. Follow the money, then you won’t make as many mistakes.[/quote]
Genius, banks can’t lower their lending requirements below the regulated levels - those changes have to be made by regulators or lawmakers. Banks were only happy to lower the lending standards if they didn’t have to keep risky loans on their balance sheets - and the regulators permitted exactly that. Here is a dialogue to help you out:
Banker: “I won’t loan to low-income or high-risk borrowers. I will lose money more times than not.”
“Social Justice” regulator (SJR): “But we need you to extend credit to these people in the name of fairness so everyone can own a home, even if they are, on paper, high-risk borrowers.”
Banker: “Well, I can’t lend money to these people under current rules, even if I wanted to.”
SJR: “Ok, we will relax the standards so that you can extend credit to them.”
Banker: “Fine, but even with relaxed regulations, these loans are bad business - I don’t want these high-risk loans on my book. They are likely to default, so no thanks.”
SJR: “It’s ok - we have a government-sponsored enterprise that will buy these loans from you and get them off your books. Just go ahead and lend the money. Fannie Mae will give you the money for them.”
Banker: “Hmmm. So I can make all these loans and Fannie Mae will buy them from me, even if they are garbage loans. How can I lose? Well, I am concerned about the other loans that ultimately are part of this bigger package of new loans. There is a chance they could default as well.”
SJR: “No problem - every loan you make, the federal government will guarantee.”
Banker: “So, if I want to own the mortgage-backed securities as part of my asset book, I get a better-than-market average return with a government guarantee that any defaults will be covered with government money?”
SJR: “Yes, we have to make sure market participants buy the securitized mortgages full of these garbage loans that we have made in the interest of ‘social justice’, so we have to back them all with a government guarantee. See, everybody wins.”
Banker: “So I can lend to borrowers I otherwise would not for business reasons, sell the loans at a profit to a government agency, I get to buy the mortgage-backed securities if I want to, all with a government guarantee against the credit risk. Where do I sign?”
Yes, they will, if they know they can sell the loan to a government agency who will always buy it, dipshit.
I don’t think this about “poor banks” - they had a hand in believing what goes up can never go down. But the genesis of the problem was the kind of “social justice” programs you undoubtedly endorse.
You think without the Fannie Mae-securitization-government guarantee regime that was set up, banks would be lending to unqualified borrowers? Banks try to make money, not lose it on bad bets in the credit markets. Banks were sold a “can’t lose” strategy, and they naturally took it.
CRA was a huge part of the problem, as was the Fed’s insistence on keeping interest rates low to mitigate the hangover from the tech-wreck. Instead of tough medicine, government policies continued to try create a world with low-risk, high-return.
Moreover, as for the “institutions not subject to CRA”, that is dishonest - the CRA mandates that regulated banks cannot “redline” against low-income borrowers. Unregulated mortgage companies were free to make loans to whomever they wanted, which served the “social justice” agenda all the better. The only “CRA requirements” were that more loans go to low-income borrowers, not less, genius.
You don’t even know what a credit-default swap is - you merely use that term in a “boogeyman” parlance that idiotic leftists think means something it doesn’t. A credit-default swap is a form of insurance against credit defaults, and just like any insurance regime, when there is systemic failure, the insurance fails with it. Don’t take my word for it - the insurance industry’s scramble after 9-11.
Absolutely correct, a flawed system set in motion by flawed policies - flawed policies who at their root were the creations of your “social justice” crowd. Let banks be banks, and let them do their job and allocate resources, and this meltdown doesn’t occur.
I’m kind-hearted that way, always looking to help out young students who have wasted their parents’ money on their education and who have exactly zero sense as to the real world.
Oh they can’t, eh? Anyway, what does this have to do with 50% of subprime loans that had nothing to do with the CRA? What did this have to do with the subprime loans that weren’t actually subprime (in the sense that they went to “risky” individuals)? What does this have to do with the loans that tanked that weren’t subprime?
Which is what I’ve been saying. But you continue to pretend that they all went to Fannie and Freddie, which is patently untrue. Furthermore, your cute dialogue implies that lending to “high-risk” individuals was unprofitable more often than not, which it wasn’t.
Ah yes, the government agencies! You people are so predictable. We need a Mad-Libs, T-Nation style. As above, you continue this fantasy of pretending that all the bad loans went to Fannie and Freddie. There’s nothing wrong with pretending, but when you start to lose to ability to distinguish between reality and your reveries, that’s a problem.
OK honey, whatever you say (no I don’t endorse social justice programs).
Could, would, did.
Oh, I forgot we were reading from the Gospel here. OK, whatever you say,
OK, so the CRA had nothing to do with it, but still, “social justice” programs are to blame. Just believe it. OK.
Yeah, I know what it is. Your point?
Hey, whatever you gotta believe to get through the day.
Except that they were banks, and it DID occur, but other than that I see no problem with your logic.
Luckily, it’s not YOUR real world that they’re expected to know about.
I’ve got to be on Punk’d or something.
[quote]phaethon wrote:If a bank doesn’t want to lend money then it is difficult to make them. They leant the money because they could turn around and sell the mortgages straight away and thus avoid the risk. Pretty damn obvious.
Now thunderbolt23 then said the “social justice” crowd didn’t try to fix this problem because it helped their ideology. And as someone ‘sort of’ in the industry the risks were clear. However everyone was making bucketloads and the common understanding was the government would step in if things went pear shaped. The government certainly didn’t dissuade this view.[/quote]
Yet you are still ignoring the elephant in the room: most of the bad loans weren’t due to the CRA or government pressure.
Your arguments are kind of like icebergs: what you say is (largely) true, yet what you don’t say is vastly more important. To continue with the iceberg analogy, it’s like blaming the loss of the Titanic on weak rivets or something.
[quote]Ryan P. McCarter wrote:
valiant knight wrote:Lol. The data is in. What is there to contest? Liberals are more ignorant. The data can only reflect reality.
Haha. The data is on on global warming too (and much more, I might add) but that carries no weight in your mind. I might be excused for brushing off one poll. But OK! One Internet poll is authoritative, right? Well, if you want to believe one little pissant poll, go right ahead. I can’t bear to interfere with a child who is having fun.
Conservatives are older and wiser and know what’s actually going on, thereby turning the ignorant dreamer into the knowledgeable conservative.
Except that they had no idea what was going on in the housing market, the mortgage-backed securities market, Iraq, Afghanistan…
Conservatives are usually older, that’s true. But you can’t teach an old dog new tricks.
When you grow up you’ll understand. That is, if you have any balls.
Ha! As he regurgitates the Official Opinions he was fed from Fox News. Once you figure out what balls are, let me know.
I was no longer young and ignorant, a fool much like yourself. (Except I wasn’t ever dumb enough to be a Communist)
You’re dumb enough to have been wrong about everything you’ve talked about so far.
As for journalists and academics, everyone knows they tend to be naive, sheltered and effeminate. They only fool themselves when they tell themselves they are smarter. No one but each other cares to hear the hot air of their hand wringing and moaning. Such men are weak and afraid of what it takes to be a man. They are not fit to lead.
Oh good, lot of self-aggrandizing and pathetic insults to avoid having to make any real points. That’s right, “everyone knows” these things, and by “everyone,” you mean you and your conservatives pals, eh? Let me tell you something son: it doesn’t take a man to insult someone. Children do it all the time. It does take a man to look at what is going on around him and honestly think for himself. It’s rarely done by anyone and is something conservatives steadfastly refuse to do, especially now, when they’re engaged in the most powerful groupthink I’ve ever witnessed.
You can learn here a valuable lesson: just because all the losers agree on something doesn’t mean they are right. Of course as a socialist you would be afraid to think for yourself and stand out from the pack.
A classic! He says this to the ONLY SOCIALIST ON THE BOARD, to a chorus of cheers from THE REST OF THE REPUBLICANS. Good day sir!
[/quote]
LMAO Damn! Relax nerd. You fool nobody. After all, as you admit, you’re the only socialist 
Lmao, crying about “it’s rarely done by anybody” “it doesn’t take a man” hand wringing and moaning. Hilarious!
Watch as he goes flying off the handle frothing at the mouth about global warming. What was that someone said again, I think it was something, something about “group think”? What was that phrase, hmm, off the top of my head, something about “refuting arguments no one is making?”
Lol damn. Down boy. I’ve said my piece. There is no point to addressing every one of your foolish rantings when the problem is the nonsensical attachment to socialism. You should probably work on that before daring to accuse others of getting things wrong. “Look around and think for yourself” indeed
Your effeminate manners reek of academia. We all know what happens to the majority of people with too much school and that is nerdiness. You seriously going to argue to the contrary? You have to have everything spelled out for you huh. Their poor social skills, lack of manliness, ivory tower insulation all lend fertile contribution to their nonsensical, embarrassing theories. You reflect your masters well
Journalists belong to the chattering do nothing class educated by frivolous makework for authoritarian English departments staffed by lame women reflecting the worst aspects of feminine culture. Notorious among the hard sciences. Talked so much that they’ve started to think what they say is important. Drinking their own kool-aid
[quote]Ryan P. McCarter wrote:
Oh they can’t, eh? Anyway, what does this have to do with 50% of subprime loans that had nothing to do with the CRA? What did this have to do with the subprime loans that weren’t actually subprime (in the sense that they went to “risky” individuals)? What does this have to do with the loans that tanked that weren’t subprime? [/quote]
Already addressed that - “subprime” loans were given even beyond CRA’s requirement not to “redline”, and done so because policymakers encouraged it. The regulations were relaxed so banks could keep the easy money flowing to low-income, higher-risk borrowers whether they fell under CRA’s “redlining” jurisdiction or not. Banks would not have done this if they had to keep these loans on the books.
Second, the “other” loans that defaulted - your precious “non-subprime” loans - were part of the easy money train pushed by the policies complained of now. These loans “tanked” because the housing market sustained by all this monkeying around with policy could never go indefinitely, and idiotic speculators that had easy money available - to which bankers had no incentive to say “no” to - overextended themselves as much as the “subprime” crowd.
They didn’t all go to Fannie Mae/Freddie Mac, just an overwhelming majority of them towards the end of the bubble. And, of course, there is nothing cute about lending to high-risk individuals - they were profitable at first, and then risk materialized, as it always does.
Use common sense, assuming you have any - if loans to these high-risk prospects was profitable in the first place, policymakers would have never had to lower the lending standards and guarantee the loans in the first place - banks would have just making these loans all along.
It’s almost as if you have sense of how the economics of banking work. Well, I just answered my own query.
Nope, not all - just most. Fanne Mae guaranteed billions - and a huge majority of the loans outstanding before the bubble popped. Everyone paying attention - i.e., not you - understood that the value of the securitized mortgages was underpinned by the government’s implicit promise that it would back the payments. The rest of your pabulum is just noise from a child - it’s clear you have nothing substantive to add on this issue, so you start the nonsense.
Of course you do - you are an admitted socialist. Instead of endorsing common sense, you endorse policies like these.
Then you’re a fool for believing so. The catalyst behind all this is this setup of lowered standards, agency purchasing loans, and government guarantees, even as there is plenty of blame to go around (consumers, Wall Street, etc.). That you refuse to accept this and that you would rather believe a fiction proves you are nothing but a waste of time.
Banks would not have engaged in the behavior that caused the meltdown - if they have to keep garbage loans on their books, they won’t make the garbage loans. That is precisely why there is legislation pending designed to make sure that risks stay with the lender in order to enforce discipline in the lending process.
Banks didn’t drive the problem.
[quote]Luckily, it’s not YOUR real world that they’re expected to know about.
I’ve got to be on Punk’d or something.[/quote]
Run along. The adults are discussing economics.
[quote]Ryan P. McCarter wrote:
valiant knight wrote:
Liberals are ignorant about the real world.
That’s why they have to have their own special news network that won’t break the seal on their parallel reality, eh? Ohhh, right…
Anyway, it’s the conervatives who deny evolution, deny global warming, insist Iraq had WMDs, blame the financial crisis on poor people, etc.
You want to rethink that statement? Oh, of course you don’t. You’re a conservative.
[/quote]
I’m skeptical of all creationist and evolutionary beliefs, just like any rational person should be. Global warming is a money sink for liberal politicians to pay their cronies (bad republicans do this in other ways), Iraq could have had WMDs but didn’t. They did have the Uranium to do so, though. and poor people buying shit(houses?) they could not afford due to liberal social engineering providing them the means (for the time being) DID cause a financial crisis. But most importantly social, and economic liberty are under attack from both parties.
Did I win something?
[quote]Ryan P. McCarter wrote:
Yet you are still ignoring the elephant in the room: most of the bad loans weren’t due to the CRA or government pressure.
Your arguments are kind of like icebergs: what you say is (largely) true, yet what you don’t say is vastly more important. To continue with the iceberg analogy, it’s like blaming the loss of the Titanic on weak rivets or something.
[/quote]
I didn’t suggest they were. The bad loans were made because the banks knew they could just get rid of them.
I’m suggesting that the government helped create the market for asset based securities. The government put in place the framework for everything to fuck up.
On the CRA: it was a problem, but it wasn’t the whole issue. It catches a lot of blame, of course, because it’s a distinctly liberal policy, unlike, say, repealing Glass-Steagall or lowering the Fed funds rate. Now, there’s evidence that the CRA did actually lead the way in loosening lending standards:
“The Federal Reserve Bank of Minnesota attempted to absolve the CRA by claiming that only a small percentage of subprime loans were related to the act. But this is just academic hooey. In reality, once banks lowered lending standards to attract CRA borrowers, they found that they had to lower lending standards across the board. It simply wasn’t possible or legal (thanks to anti-discrimination laws) to offer the lax standard loans only to the targeted borrowers. In short, if a bank wanted to raise the number of CRA loans, it had to lower standards across the board. The broader subprime market was basically a creation of the CRA.”
On the other hand, neither the CRA nor Fannie and Freddie explain the broader financial crisis.
See Bradford DeLong on this:Liquidity, Default, Risk | Cato Unbound
This claim provokes two immediate reactions. First, as your mother says: â??If Freddie jumps off a cliff is that a good reason for you to follow him?â?? The answer to your motherâ??s question is: â??No.â?? Just because GSEs are leading the market in making stupid money-losing loans did not force private financial companies to follow them and so lose their money too.
Second, Freddie and Fannie and FHA were not the first to jump off the cliff. They lost huge amounts of market share in the mid 2000s. We donâ??t have a crisis which started when private mortgage lenders losing market share cut back on the quality of the loans they were willing to make. We have a crisis which started when private mortgage lenders cut back on the quality of the loans they were willing to make and so gained market share. The sequence is the opposite of what would have happened if White were correct.
[quote]valiant knight wrote:
Ryan P. McCarter wrote:
valiant knight wrote:Lol. The data is in. What is there to contest? Liberals are more ignorant. The data can only reflect reality.
Haha. The data is on on global warming too (and much more, I might add) but that carries no weight in your mind. I might be excused for brushing off one poll. But OK! One Internet poll is authoritative, right? Well, if you want to believe one little pissant poll, go right ahead. I can’t bear to interfere with a child who is having fun.
Conservatives are older and wiser and know what’s actually going on, thereby turning the ignorant dreamer into the knowledgeable conservative.
Except that they had no idea what was going on in the housing market, the mortgage-backed securities market, Iraq, Afghanistan…
Conservatives are usually older, that’s true. But you can’t teach an old dog new tricks.
When you grow up you’ll understand. That is, if you have any balls.
Ha! As he regurgitates the Official Opinions he was fed from Fox News. Once you figure out what balls are, let me know.
I was no longer young and ignorant, a fool much like yourself. (Except I wasn’t ever dumb enough to be a Communist)
You’re dumb enough to have been wrong about everything you’ve talked about so far.
As for journalists and academics, everyone knows they tend to be naive, sheltered and effeminate. They only fool themselves when they tell themselves they are smarter. No one but each other cares to hear the hot air of their hand wringing and moaning. Such men are weak and afraid of what it takes to be a man. They are not fit to lead.
Oh good, lot of self-aggrandizing and pathetic insults to avoid having to make any real points. That’s right, “everyone knows” these things, and by “everyone,” you mean you and your conservatives pals, eh? Let me tell you something son: it doesn’t take a man to insult someone. Children do it all the time. It does take a man to look at what is going on around him and honestly think for himself. It’s rarely done by anyone and is something conservatives steadfastly refuse to do, especially now, when they’re engaged in the most powerful groupthink I’ve ever witnessed.
You can learn here a valuable lesson: just because all the losers agree on something doesn’t mean they are right. Of course as a socialist you would be afraid to think for yourself and stand out from the pack.
A classic! He says this to the ONLY SOCIALIST ON THE BOARD, to a chorus of cheers from THE REST OF THE REPUBLICANS. Good day sir!
LMAO Damn! Relax nerd. You fool nobody. After all, as you admit, you’re the only socialist
Lmao, crying about “it’s rarely done by anybody” “it doesn’t take a man” hand wringing and moaning. Hilarious!
Watch as he goes flying off the handle frothing at the mouth about global warming. What was that someone said again, I think it was something, something about “group think”? What was that phrase, hmm, off the top of my head, something about “refuting arguments no one is making?”
Lol damn. Down boy. I’ve said my piece. There is no point to addressing every one of your foolish rantings when the problem is the nonsensical attachment to socialism. You should probably work on that before daring to accuse others of getting things wrong. “Look around and think for yourself” indeed
Your effeminate manners reek of academia. We all know what happens to the majority of people with too much school and that is nerdiness. You seriously going to argue to the contrary? You have to have everything spelled out for you huh. Their poor social skills, lack of manliness, ivory tower insulation all lend fertile contribution to their nonsensical, embarrassing theories. You reflect your masters well
Journalists belong to the chattering do nothing class educated by frivolous makework for authoritarian English departments staffed by lame women reflecting the worst aspects of feminine culture. Notorious among the hard sciences. Talked so much that they’ve started to think what they say is important. Drinking their own kool-aid[/quote]
DAMN I LIKE THIS GUY
[quote]Ryan P. McCarter wrote:
DoubleDuce wrote:
Ryan P. McCarter wrote:
orion wrote:
jnd wrote:
orion wrote:
Ryan P. McCarter wrote:
Wow, great job guys. If you can score high on that, you MUST be smart…
No, but if you score low on that you are not entitled to a political opinion.
So YOUR freedom comes with an test? Wow!
jnd
How are they any less free for being a dolt?
Um, I’m pretty sure you said they are not entitled to a political opinion if they score poorly on that test. Which means that you think they should not have any influence if they do poorly. Which is to say they are less free.
Right to influence others = freedom? Maybe you should get a dictionary.
If some people are free to do something that other people are not, no matter what it is, the latter group is less free. Pretty easy, right?[/quote]
I cannot fly an f-22, therefore I am not free? I cannot compete in the UFC, therefore I am not free? By your inane definition, no-one is free.
[quote]Ryan P. McCarter wrote:
DoubleDuce wrote:
Ryan P. McCarter wrote:
orion wrote:
Ryan P. McCarter wrote:
Wow, great job guys. If you can score high on that, you MUST be smart…
No, but if you score low on that you are not entitled to a political opinion.
And it is kind of telling that those who have no idea about the basic shape of things tend to vote liberal.
It’s also telling that the most educated people tend to be liberal.
Conclusion? It’s hard to draw sweeping conclusions from things like this. Smart people don’t.
actually it said the highly educated were fairly evenly split. Smart people would have noticed that.
I don’t care what it says. Over 50% of college educated people (I’ll go ahead and say it–this doesn’t mean they’re intelligent) voted for Obama. Among post-grads it was nearly 60%.[/quote]
So you don’t care what some statistic says… then you rattle of an unsupported statistic? This is like talking to a kindergartener.
[quote]AlisaV wrote:
On the CRA: it was a problem, but it wasn’t the whole issue. It catches a lot of blame, of course, because it’s a distinctly liberal policy, unlike, say, repealing Glass-Steagall or lowering the Fed funds rate. Now, there’s evidence that the CRA did actually lead the way in loosening lending standards:
“The Federal Reserve Bank of Minnesota attempted to absolve the CRA by claiming that only a small percentage of subprime loans were related to the act. But this is just academic hooey. In reality, once banks lowered lending standards to attract CRA borrowers, they found that they had to lower lending standards across the board. It simply wasn’t possible or legal (thanks to anti-discrimination laws) to offer the lax standard loans only to the targeted borrowers. In short, if a bank wanted to raise the number of CRA loans, it had to lower standards across the board. The broader subprime market was basically a creation of the CRA.”
On the other hand, neither the CRA nor Fannie and Freddie explain the broader financial crisis.
See Bradford DeLong on this:Liquidity, Default, Risk | Cato Unbound
This claim provokes two immediate reactions. First, as your mother says: â??If Freddie jumps off a cliff is that a good reason for you to follow him?â?? The answer to your motherâ??s question is: â??No.â?? Just because GSEs are leading the market in making stupid money-losing loans did not force private financial companies to follow them and so lose their money too.
Second, Freddie and Fannie and FHA were not the first to jump off the cliff. They lost huge amounts of market share in the mid 2000s. We donâ??t have a crisis which started when private mortgage lenders losing market share cut back on the quality of the loans they were willing to make. We have a crisis which started when private mortgage lenders cut back on the quality of the loans they were willing to make and so gained market share. The sequence is the opposite of what would have happened if White were correct.[/quote]
Good stuff, Alisa - and I am happy to spread blame elsewhere as well. Thought Wall Street was incentivized to go to extremes, Wall Streeters and bankers are supposed to be the proverbial “smartest guys in the room” and should have known that just because a government policy tries to strip fundamental rules of economics out of the market doesn’t mean it has actually accomplished that task. These high priests of finance should have known of the unsustainability of the entire enterprise, but in their glee for unrestrained excess, they were happy to ignore all of it.
These financial libertines were more than happy to rake in billions on the scheme and keep the government guarantee in their back pocket. They applied no braking mechanism on this scheme despite the fact that they are the ones supposedly endowed with the market wisdom to know the good times had to end, even if the social justice types insisted they did not.
For that, they deserve boatloads of blame in addition to the policy that enabled all this mess - made all the more damnable because these financial wizards then begged the government for bailouts to absolve their own greed and stupidity.
Pretty apparent how accurate the poll is if you follow most of the discussions on this forum.
[quote]Ryan P. McCarter wrote:
DoubleDuce wrote:as opposed to a dozen of them? Either way, it would seem Fox seems to do a better job supplying the facts than the liberal networks.
Ah yes, here comes the segment in which we cry about “liberal bias” in the media. There’s no such thing as a liberal bias. The democrats are simply a less ridiculous party than the republicans. They’re still ridiculous, but any objective reporting is going to appear “biased” if your standard is running equal numbers of good and bad stories about each party.
And I’m going to just pretend you didn’t say that Fox does a better job supplying facts than “liberal” networks.
[/quote]
HAH! YOU ARE THE ONE THAT STARTED MAKING BIAS CLAIMS! You start claiming bias and then spew some rhetoric about me claiming bias? You’re a joke. Really, where is Irish, I’d rather argue with an adult.
However, my claim about fox supplying better facts was not a conclusion I reached. I merely put your claim of fox being the conservative network together with conservatives doing statistically better on political quizzes. 2+2=4. You can pretend whatever you want, you seem to do that a lot anyway.
That’s the way, don’t argue the facts, try to equate people who disagree with you to holocaust deniers. But just for shits and giggles, what are you claiming is measurable data the holocaust didn’t happen? It would have been more intellectually honest for you to have just called me a poopie-head and plugged your ears.
Never mind the earth has been cooling since the 90s as predicted by solar cycles, keep believing in the political body known as the ipcc.
really, when we went into the war, pretty much every intelligence agency believed they had them. hell sadams own generals thought they had them. though he did have some chemical and biological weapons and a whole bunch of yellow cake uranium. You have to remember congress had access to the same intel the white house did.
Oh, you see, I would call those irresponsible people. Not poor people. The only way you can see those as the same thing is to think all poor people are irresponsible, and I don’t do that.
[quote]Ryan P. McCarter wrote:
DoubleDuce wrote:
Anyway, it’s the conervatives who deny evolution who? really?
In case you didn’t notice, many of last year’s republican presidential candidates don’t believe in evolution.
Neither does Ron Paul, apparently:
[/quote]
1: hah at john McCain = conservative
2: You cannot attribute the beliefs of one person to the entire ideology
or I you have to accept that “liberals” believe in eugenics, forced sterilization, Mao and Chavez are their heroes, ect. ect. ect. Hell rev right is a liberal, I guess you believe all the nonsense he spouts.
I’m not sure why, but I’ve never had any enthusiasm for the language of blame and excess that you see on both the right and the left regarding this crisis. A banker who didn’t try to maximize profits wouldn’t be doing his job. I’m not saying that “greed is good,” as a personal quality. But let’s not try to make a virtue out of parsimony for its own sake.
If investors suddenly became less interested in making money, or more cautious than they needed to be, then resources would be horribly misallocated and most of us would be poorer; in fact that’s what’s happening in this recession right now. If Brad DeLong’s calculations are right, then most of the contraction in capital can be explained by a huge spike in the world’s risk-aversion. Suddenly, for reasons not completely understood, a fairly ordinary real-estate bubble burst and the whole world got spooked and stopped lending. And that has human costs. So I’m skeptical of assigning moral value to loose or tight lending terms, or talking about “financial libertines.” Calling for financial puritanism doesn’t really help us figure out how to prevent economic devastation.
Where does it actually make sense to place blame?
I think, on those banks and car companies that accepted bailouts, and continued to make poor financial choices and got more bailouts. That’s free-riding, and they had a choice to do otherwise.
Also, on the Treasury for making deals with companies that involved bailing them out in exchange for their cooperation on questions of management. That’s close to fraud.
Possibly, on individuals who bought more than they could afford. You could argue that people have a responsibility to plan for bad times. I’m not sure, though. Consumer credit has brought the world a lot of prosperity, and I don’t believe that saving is innately better than spending.
And, because my background is in math, I do place some blame on the financial math experts. They used models that, roughly, assumed risks were uncorrelated when they could be correlated, and, disastrously, turned out to be correlated. This led to them reassuring insurers and investors that financial instruments were foolproof when they weren’t. Where I come from, it’s an intellectual sin – and I do mean that in a moral sense – to make a critical assumption without evidence that it’s true. It’s acting in bad faith as a scientist. You hear a lot of journalists saying that the problem with Wall Street was “too many smart guys” or “too much math,” and there are thinly veiled anti-intellectual digs at anybody who works with numbers. But the problem wasn’t “too much math.” The problem was bad math. People who ought to know better – people who were educated to believe they had a responsibility to be rigorous about truth – realized they could be paid a lot to make sloppy assumptions.
[quote]Ryan P. McCarter wrote:
orion wrote:I know, but that raises some questions for him:
A) If there is no “real democracy” and his utopia depends upon it, what then?
The sense of self-importance that a libertarian gets from completely misunderstanding an argument will never cease to amuse me. The fact that he simultaneously contradicts himself makes it almost too funny for words. But maybe you’re not talking to me, since I neither speak of nor believe in a utopia, but it is telling that a world in which needless poverty is eliminated and nations are not involved in constant warfare constitutes a “utopia” to a capitalist.
B) If too much of a free market can be a bad thing according to him why does he automatically assume that there is no such thing as “too much democracy”?
You imply A.) that I have said there is no such thing as too much democracy, and B.) that we live in one. Both of which are utterly false. But, libertarians have taken more dubious statements as axioms, so perhaps I shouldn’t complain.[/quote]
Well then, do tell, how we shall bring about your utopia?
It seems to me it had to do with democratic control of the means of production?
I am very interested in hearing how that would work.
Also, why not democracy in bridge building and brain surgery instead of the tyranny of surgeons and engineers?
[quote]Beowolf wrote:
Ryan P. McCarter wrote:
Um, I’m pretty sure you said they are not entitled to a political opinion if they score poorly on that test. Which means that you think they should not have any influence if they do poorly. Which is to say they are less free.
STREEEEEEETCH!
He was saying that if you can’t identify basic political figures and facts, you should shut the fuck up about politics.
Just because you extrapolate everything into law and government doesn’t mean the rest of us do. Just because I say someone shouldn’t do something doesn’t mean I want that something to be ILLEGAL.[/quote]
Maybe.
But Orion’s choice of words tells another story. He said that low-scorers shouldn’t be “entitled” to a political opinion. Seeing how voting is a right (A.K.A entitlement), it’s easy to deduce what it is Orion really meant.