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Sunday, October 19, 2008 - 6:27amSanction this postReply
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According to Wikipedia, this guy is for real. He hates economic freedom.

Ed




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Sunday, October 19, 2008 - 8:20amSanction this postReply
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I would not have been surprised if his last paragraph approved destroying the Liberty Bell and the Statue of Liberty.



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Post 2

Sunday, October 19, 2008 - 11:11amSanction this postReply
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So long as the scrap was not sold for a profit.



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Post 3

Sunday, October 19, 2008 - 11:44amSanction this postReply
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"...it became abundantly clear to anyone paying attention ... that supervision and limits of some kind were advisable." I highlighted the weasle-words. They usually signal two things when you see them - that the heart of the person's argument is to follow, and the part they feel is the weakest. People don't try to beat you over the head with things like "it became" (which means that this argument was already resolved somewhere out there) and "abundantly clear" and "to anyone paying attention" unless it is important to twist your arm into accepting what follows - and that they think it isn't strong enough to stand on it's own.

"They [Cox and Gramm] share with Greenspan, the only member of the trio who openly calls himself a libertarian, a deep aversion to any infringement of the right to buy and sell. That belief, which George Soros calls market fundamentalism, is the best explanation of how the natural tendency of lending standards to turn permissive during a boom became a global calamity that spread so far and so quickly." He should have used past tense when calling Greenspan a libertarian - I'm not sure that it's appropriate to call the person who held the head position in a monopolistic, government control on the money supply, credit regulation, and central banking system a proponent of Libertariansim. The author of the article also is telling about himself when he chooses to quote George Soros as an intellectual source!

"Their heroic view of capitalism makes it difficult for them to accept that markets can be irrational, misunderstand risk, and misallocate resources or that financial systems without vigorous government oversight and the capacity for pragmatic intervention constitute a recipe for disaster. They are bankrupt, and this time, there will be no bailout." This is a very telling sentence for several reasons. The first thing that leapt out at me was that his view must be of heroic bueaurocrats understanding risk and allocating resources tirelessly and correctly... Wow! The next thing I notice is the real purpose of the article. He has decided that we aren't going to recover from this crash, and that it is massively serious and the purpose of his article is to ensure the blame is on Capitalism and it's defenders. When the worst happens, he doesn't want anyone to turn to Libertarians or free-market advocates for answers.

He names three causes cited for the current crisis: 1) Credit Reinvestment Act, and the pressures on lenders to make subprime loans, 2) subsidizing and securitizing the bad debt by Fannie and Freddie who pushed them into the financial system as complex bundles with the implicit government guarantee, and 3) the history of governement bailouts that encouraged investors and speculators to behave in a more reckless fashion. But he left out the most important ingredient: Very cheap credit and inflation. If there hadn't been a long period of cheap money and good times, the housing market could not have become a bubble. Bubbles always collapse. But here, the bubble was sustained over a long period and grown, by sucking those mortgages into Fannie and Freddie for conversion to derivatives. And the derivatives wouldn't have been nearly as toxic without the subprime mortgages.

To make it real and concrete just picuture Barney Frank and Chris Dodd getting laws passed requiring a percentage of the lenders portfolios be subprime, "Affordable housing is a right, and we won't have lenders redlining mortgages because of the neighborhoods." Then picuture a meeting at a major lender where they are trying to figure how to minimize the damage of holding too many bad loans, when some of ACORNS's rowdy protesters bursting into the board room, the lenders decide to just sell as many as they can, particularly the very worst turkeys, to Fannie, and they start getting rich on this wonderful business of making loans where you no longer half to vet someone's credit. Fannie being able to sell derivitives all day long at great prices because of their special low credit rates they are allowed to use to buy the mortgages and the implied government guarantee. And Greenspan keeps dropping the credit rates at any hint of a recession as if that were his lifes mission. So, there's the Fed, expanding the credit with each home loan via the fractional reserve banking system, holding rates low to stop any attempt of the economy to self-correct, and opening a special discount window for the folks at Fannie and Freddie - that makes the fed the fire hose of injected money at both ends. The inflationary nature of the created credit allowed the expansion without having other economic areas dry up, the subprime laws and congressional committees, were the valves that opened the flood gates from lender to Fannie, and the sales into the financial markets completed the flow to free up Fannie to buy more.




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Sunday, October 19, 2008 - 11:59amSanction this postReply
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Gee, I wonder who he's voting for?

"The best thing you can say about libertarians is that because their views derive from abstract theory, they tend to be highly principled and rigorous in their logic. Those outside of government at places like the Cato Institute and Reason magazine are just as consistent in their opposition to government bailouts as to the kind of regulation that might have prevented one from being necessary. "Let failed banks fail" is the purist line. This approach would deliver a wonderful lesson in personal responsibility, creating thousands of new jobs in the soup-kitchen and food-pantry industries."

LOL!  I think he's reacting bitterly to Stossel's latest 20/20 episode.  He really seems to think that government is a magical tool of the people, and the people are merely aimless sheep (or predatory wolves) without it, doncha-know.




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Sunday, October 19, 2008 - 12:46pmSanction this postReply
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[Libertarians] tend to be highly principled and rigorous in their logic.

At least he admits that to truly be free and prosperous we must abandon logic and reason. What a dope. This, of course, only shows his lack of intellectual rigor. That he assumes a free market is a filled with wanton disregard for others, or that it would include ever escalating corruption, displays a total break from reality and historic context.

At least the link for Rand is to a decent entry.



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Post 6

Sunday, October 19, 2008 - 1:29pmSanction this postReply
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"Their heroic view of capitalism makes it difficult for them to accept that markets can be irrational, misunderstand risk, and misallocate resources or that financial systems without vigorous government oversight and the capacity for pragmatic intervention constitute a recipe for disaster."
 
This shows a poor understanding of free market theory. This heroic view is a straw man. It is well recognized among advocates of capitalism that entrepreneurs do make errors and fail. Some lose to the competition. But the loss is private, not dumped on taxpayers. Also, the heroic view of capitalism does not reject government oversight, when the oversight is protection of property rights and against fraud and reneging. Lastly, government is the greatest mis-allocator and mis-manager of risk -- to wit, Fannie Mae and Congress' intervention in the mortgage market.




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Post 7

Sunday, October 19, 2008 - 2:34pmSanction this postReply
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The argument as a whole is reminiscent of wearying dorm-room debates that took place circa 1989 about whether the fall of the Soviet bloc demonstrated the failure of communism. Academic Marxists were never going to be convinced that anything that happened in the real world could invalidate their belief system. Utopians of the right, libertarians are just as convinced that their ideas have yet to be tried, and that they would work beautifully if we could only just have a do-over of human history.  -- The End of Libertarianism, SLATE, by Jacob Weisberg, Posted Saturday, Oct. 18, 2008, at 6:17 AM ET

 

The annoying symmetry is abundantly clear to anyone paying attention.  The USSR did not have true communism. The USA never had real capitalism. Ideologues are never dissuaded by facts because their theories explain facts away.

My thesis is that when businesses are managed by people who learned business management from television, public schools and state-funded universities, you cannot be surprised when those managers line their own pockets at everyone else's expense.  Where I sit, I see would-be crack dealers understanding full well that selling drugs is a ticket to prison, but going into business is a ticket to live large.  Ben Franklin would be appaled, of course, but he practiced a more self-disciplined business ethic.  Our push-button consumerist society is 180 degrees out of alignment with the Protestant Ethic.

Right now, computer game millionaire Richard Garriott is aboard the International Space Station.  His father is astronaut Owen Garriott. Richard Garriott rode into space on a Russian Soyuz/Proton and he will be returning with Sergei Volkov, whose father, cosmonaut Alexander Volkov, was one of the last two citizens of the USSR.  See, this all has to do with what is inside you. Yes, some societies reward the best and others reward the worst.  But above and beyond all that, it comes down to the individual.  There, in space, right now, are two individuals from two different cultures, who themselves are nominally exemplars of those cultures, yet who share a commonality unperceived and unappreciated by most people in those places.  Individuals who lack integrity will never make the right choices, no matter what their social milieu.  Those who possess integrity will do the best they can, regardless of the social conditions. 

Libertarian ideologues will excuse anything done in the name of business and blame any negative consequences on the government.  As Patrick Moynihan said, "You have a right to your own opinion.  You do not have a right to your own facts."

On the John Stossel show "Greed" they set up this game.  People sat around a bowl of money.  Take as much as you want, they were told, and I will match whatever is left.  Time and again they grabbed all the loot, leaving the bowl empty.  Game over.  Game over. Game over.  Then, you can see a clear  <edit/break> and they do it once more, this time, leaving money in the bowl to be doubled so that they could continue to play.  I think that after three failures, John Stossel or someone actually explained to those idiots  how to play the game to their advantage.  They were raised and educated to be capable of greed -- and incapable of self-interest -- and that explains the mortgage meltdown. 




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Post 8

Sunday, October 19, 2008 - 3:02pmSanction this postReply
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No, Michael, that does not explain the mortgage meltdown. You can't explain the credit contraction without reference to the derivatives. They can't be explained without reference to Fannie and Freddie, who couldn't have sold these at desirable prices without the special interest rates they were given by the fed. And Fannie and Freddie needed an enormous supply of mortgages that were bad, to be able to make the enormous number of bad derivatives. That supply would not have been forthcoming without the continuing activities of Congress, the CRA, and the pressure on major lenders to make sub-prime loans. The housing bubble wouldn't have gotten large enough to supply enough bad mortgages, or for the difference between the proper price of a house and the inflated prices we saw without the expansion of credit created by the fractional reserve banking system. And the bubble in housing also required artificially low interest rates from the fed and the tax credit for mortgage interest.

Greed is just a word for a strong desire, one that is sometimes followed in opposition to reason, or ethics - a word that carries a negative connotation that is sometimes appropriate for an individual's actions, but just as often is no more than a mindless code word for "Let's hate the rich" or "Let's hate big business."

Michael, you seem to be having an ideological meltdown. Here on an Objectivist forum, you have long been an anarchist, but recently you seem to have parted ways with the concept of individual rights (your rethinking of violence as perhaps not even appropriate in the case of self-defense) and now you seem to have abandoned free-market economics and adopted the fuzzy notion of "greed is bad." Are you in the midst of some major intellectual metamorphosis or am I misreading you?






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Post 9

Monday, October 20, 2008 - 5:35amSanction this postReply
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Steve, you and I have been misreading each other for some time.  Certainly, I feel that you have read into my words whatever you wanted to argue with.

One: On Greed

In the famous words, "hear me now and believe me later."  Greed is good.  Self-interest is better.  Rational self-interest is best. 

We all get these 0% Balance Transfer credit card offers in the mail.  I got one from one of my credit unions that included an 800-number I could call to stop all the other 0% Balance Transfer card offers.  I do not take up every offer I get, no matter how compelling the deal.  That is self-discipline.  If the publicly educated managers of publicly held firms had any privately held backbone, they would still be in business.  Many of them are.  As noted here in another post, many other banks are still solvent. 

Business is hard work and losses lurk around every decision.  Still, it is not unusual for market failures to begin as moral failures. 

Two: On Peace

Steve, I have no answers on violence.  I have a maxim that I follow -- Violence is the last resort of the incompetent.  I never said that you have no right to defend yourself.  I never said that I would not defend myself.  When such defense devolves to violence, it is because of a failure to find any other solution.  That happens.  I have said that when a bank robber is shot, that is a direct consequence of the choices made by the robber.  Sometimes bad things happen to bad people. 

The problem with violence -- as you have noted yourself, having listening to the stories of men who were in combat -- is not just what you do to others, but what you do to yourself.

Thus, my interest in alternatives to violence stems directly from a basic principle of Objectivism, self-interest.




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