RoR: Forum

Good summary, Ed.

There was one refreshing voice in today's Senate hearing with Bernanke. Sen. Jim DeMint, a South Carolina Republican, said Congress should resist the Bush administration’s pleas for the legislation. He said, “The government broke it. I don’t trust them to fix it.”

Post 1

Wednesday, September 24, 2008 - 1:10pm

Thanks, Merlin.

Regarding that great Senator's remarks, it's great that there's still some good in that cesspool we call the Washington Insiders.

Ed
["Somehow liberals have been unable to acquire from birth what conservatives seem to be endowed with at birth namely, a healthy skepticism of the powers of government to do good."--Danny P. Moynihan]

Post 2

Wednesday, September 24, 2008 - 3:28pm

Yes - it's a 'vita-man' deficiency... ;-)

Post 3

Wednesday, September 24, 2008 - 6:36pm

Fannie and Freddie were created by politicians. The politicians were elected by....us? The only regulation voters need to be concerned with is self-regulation.

Post 4

Wednesday, September 24, 2008 - 8:12pm

It was an unpopular view, but what I had suggested in some earlier posts is that if you cannot prevent regulations, the next best thing is to at least try ensuring that only "good" (which I put in quotes again) regulations are (can be) written.

The essence of this is that the industries being regulated should be the ones writing the regulations - which should amount to a simple statement of "good practices or standards of practice". This concept is already employed in many industries and trades.

The kicker, for which I'd expect to draw heat, is that once such "good standards of practice" are established, there may be a few cases where it is practical to have government act as enforcer (and there are cases today where industry writes the standards, and government enforces them). In all other cases, the inability of a company to advertise their conformance to industry standards (not permitted to use recognized logo) is usually sufficient to warn public of the potential risks.

jt
(Edited by Jay Abbott on 9/24, 8:13pm)

Post 5

Wednesday, September 24, 2008 - 8:52pm

Jay,

Arguments have already been provided that show bad regulations cause problems, and that there are NO good regulations if they violate individual rights.

Second, if we are powerless (or just give up) in getting rid of regulations, then we also do not have the power to make "good" regulations - which, as mentioned above, aren't real and won't work!

Don't you see that it was "good" regulations by congress attempting to help everyone own a home that caused this? The people who were regulated, did write the regulations, they just paid members of congress to make them official. And those politicians would have passed them anyway. Except for the regulations that were enacted by officials themselves, as in the Fed. It is the approach you advocate that led to these problems.

Post 6

Thursday, September 25, 2008 - 6:50am

My point was that poor regulation (or lack of regulation) of industry did not cause this. That such regulation is not the problem or the solution.

The only type of regulation needed or wanted is the internal self-regulation of government bureaucrats. Market regulation was never a key issue and isn't the key issue now. Power lusting bureaucrats are just trying to get Americans to think that it was and is (so that they can exand their arbitrary power).

We've had 4000 years of this (those in power tricking the rest into giving them more power).

Ed

Post 7

Thursday, September 25, 2008 - 7:49am

Apropos to nothing, there is an article by George Will on Capitalism in this month's latest edition of Newsweek that I would recommend reading - not necessarily something anyone here wouldn't already know, but at least in a somewhat mainstream publication. I'd post the url here, but would have to buy another subscription just to view it online.

One thing that particularly caught my attention in this article was the reference to "the political class". That phrase strikes me as being a sadly accurate appraisal of the situation people face when dealing with (most) modern governments.

Steve,

Although I don't agree those were "good" regulations, I do understand your point.

Again, I do not advocate "giving up" on getting rid of regulations. We should always state clearly that is the ideal and most ethical goal. What I advocate is more akin to what Ed suggested recently (can't remember the specific thread right now) about a new constitution/bill of rights that would say (essentially) that "no new laws may be enacted that are in conflict with certain principles already laid out". In essence, regulate the regulators to prevent (at least) the worst abuses, if not all. The alternative is, really, to let them continue doing whatever they want... and you see where that has gotten us.

Personally, I'm afraid that we only have the choices of being (at least) an influence government will listen to, or of being the nuthouse fringe (in their opinion, not mine) which they feel they can freely ignore.

How productive is being ignored?

jt
(Edited by Jay Abbott on 9/25, 7:50am)

Post 8

Thursday, September 25, 2008 - 8:34am

Jay, I've included the hyper-link and I commend you on summing up the wisdom well:

==============
What I advocate is more akin to what Ed suggested recently (can't remember the specific thread right now) about a new constitution/bill of rights that would say (essentially) that "no new laws may be enacted that are in conflict with certain principles already laid out".
==============

Ed

(Edited by Ed Thompson on 9/25, 8:35am)

Post 9

Thursday, September 25, 2008 - 10:54am

More of the Same (excerpted from the Couric interview of Palin):

===================
COURIC: You've said, quote, "John McCain will reform the way Wall Street does business." Other than supporting stricter regulations of Fannie Mae and Freddie Mac two years ago, can you give us any more example of his leading the charge for more oversight?

PALIN: I think that the example that you just cited, with his warnings two years ago about Fannie and Freddie--that, that's paramount. That's more than a heck of a lot of other senators and representatives did for us.

COURIC: But he's been in Congress for 26 years. He's been chairman of the powerful Commerce Committee. And he has almost always sided with less regulation, not more.

PALIN: He's also known as the maverick though. Taking shots from his own party, and certainly taking shots from the other party. Trying to get people to understand what he's been talking about--the need to reform government.

COURIC: I'm just going to ask you one more time, not to belabor the point. Specific examples in his 26 years of pushing for more regulation?

PALIN: I'll try to find you some and I'll bring them to you.
====================

Notice how it's assumed that Wall Street business -- rather than government intervention and invasion into that business that is commonly conducted on Wall Street -- is the culprit.

It's a Red Herring. The "business" on Wall Street was merely the means by which the corruption in our government manifested itself. How unfortunate for Palin to say what she did, how equally unfortunate for Couric, like an ignoramous, to adopt Palin's statement uncritically and then to use it as a rhetorical weapon to paint Palin into a corner about McCain's history with regulation.

The real point is missed so that Couric can score points, while Palin tries to limit political damage. The bottom line is that it's incoherent for Couric to press Palin for examples of McCain pushing for more government regulation of the market -- because regulation of the market was never the problem here.

Sarah should have stood up, ripped off her microphone, slapped Katie in the face, and said: "It's Congress, not business, that's corrupt and in need of regulation or reform -- you dumb blonde bitch!" At least, that's how I picture the interview ending in my own mind.

:-)

Ed

Post 10

Thursday, September 25, 2008 - 11:14am

urQ"At least, that's how I picture the interview ending in my own mind."

Does anything else get ripped off, Ed...? Just wondering.

: )

jt
(Edited by Jay Abbott on 9/25, 11:15am)

Post 11

Thursday, September 25, 2008 - 2:17pm

Jay,

I'm glad you asked. My original picture of the event had involved a mud-pit, strategically placed nearby by some "grip" with hopeful expectation. If you build it, ...

:-)

Ed

Post 12

Thursday, September 25, 2008 - 2:24pm

Why would the Repugnantcans be complicit in the propagated misunderstanding of our housing crisis?

My conspiracy theory is that powerful, puppetmaster opportunists (e.g., some NeoCons, or some other leftist Utopian idealists) -- the ones responsible for Big Gov, Big War, Big Bailouts -- have merely seized the opportunity to expand their powers at the expense of U.S. public understanding.

"Keep them in the dark and play on their moods" might be the operating principle (of this elite group whom I have postulated to be running things in this country). The mitigated silence by McCain and Palin on this telling point seems to make my conspiracy case for me. At least it adds weight to my conjectures.

Ed

Post 13

Thursday, September 25, 2008 - 10:03pm

Two relevant videos:

Fox News Video

Alarmist Video (Don Harrold)

Ed

Post 14

Friday, September 26, 2008 - 6:43am

The fox video should be played in national tv ads 100 times a day from here to the election.

jt

Post 15

Friday, September 26, 2008 - 6:11pm

Hereis a link to an article about 50 economists who think the bailout isn't needed

Post 16

Saturday, September 27, 2008 - 6:49am

Hereis a link to an article about 50 economists who think the bailout isn't needed

I believe that is misleading. The economists reject the Paulson-Bernanke proposal, but not all reject any government effort to deal with the crisis.

One of the economists, Johnson, criticizes the plan for (1) lacking a mechanism to quickly modify distressed mortgages and prevent even more empty homes from being dumped into real-estate markets in free-fall and (2) not helping banks bring in new capital to boost lending. The first has been proposed by some Congressmen. The convertible preferred stock alternative I suggested here does the second.

Per the article Ed Yardeni said another measure that could have the same effect as the $700 billion rescue plan is simply to change accounting rules for bad assets — mostly bonds with mortgages as their collateral. I believe that could help, but lacking better knowledge about the mortgage assets held by banks, I'm not sure how much. The banks hold a variety of mortgage-related securities. To the extent they are like the securities I described here, it won't help. The "hold-to-maturity" value is still zero or miniscule. On the other hand, it would help in cases where the "hold-to-maturity" value exceeds the "mark-to-market" value.

Incidentally, once or twice on the news I have heard the term "workout" as an alternative to "rescue" or "bailout". This is a term often used in connection with commercial mortgages. If a mortgage is distressed, the lender may workout a deal to lower payments, maybe by lowering the interest rate or extending the term of the loan, e.g. 5 or 7 years to 10 years, as a more attractive alternative than foreclosure. A mechanism to quickly modify distressed mortgages on residential property would be a "workout". It would not be using the term in the same way, but I think the convertible preferred stock alternative I suggested is more a "workout" than a "bailout."

Edit: Here is a letter sent to Congressmen by John Allison, chairman of BB&T and an Objectivist.

(Edited by Merlin Jetton on 9/27, 7:57am)

Post 17

Saturday, September 27, 2008 - 8:52am

"Workout" has been used to mean giving a company a loan that they must repay - like was done years ago with Chrysler, as opposed to government buying the bad securities - the company has to 'work' it 'out' instead of being 'bailed out.'

(Edited by Steve Wolfer on 9/27, 8:53am)

Post 18

Sunday, September 28, 2008 - 8:58am

A sentence summing up the whole issue (for those with short attention spans) is this:

"A lack of (government) reform is what caused our crisis, not a lack of (market) regulation -- yet those in government have been trying to say it's the opposite, in order to get themselves off the hook for causing this mess."

Ed

Post 19

Sunday, September 28, 2008 - 10:48am