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On April 20 2009 07:48 Diomedes wrote:
Caller, Im talking about the loans that caused the crisis. The source you site contains only empirical data that it wasn't loans forced by CRA that caused the crisis.
You are talking about CRA. Im talking about the crisis. You are the one that tries to connect them.
You started the Manson analogy. Not me. Don't blame me for your bad analogies. You can hold the government accountable for bad governance. But not for going broke. Especially not because of CRA. At least not according to what those wiki pages say.
It wasn't a source that I cited: it was basic, unbiased information about the CRA. I already noted the caveat in my previous post that the main counterclaim regarding the CRA is that there is no empirical evidence that demonstrates it was responsible: however, a similar lack of evidence points in the opposite direction.
Your posts of what caused the crisis are basically what the average news anchor reads off a teleprompter. I'm simply saying what I believe caused the crisis, and I feel that I have demonstrated sufficient reason to at least get my point out there (although clearly ideological differences are present).
First of all, your Manson analogy completely differed from what I said: Charles Manson himself technically did not kill anybody. However, he had essentially ordered (key word: using threats of force otherwise) members of his cult to kill random people. You proceed to take the metaphor the completely wrong way and assume he is just a generic murderer. If you had actually taken the time to understand the background of the metaphor, then you would have seen that the way you twisted my comparison was flawed.
And what do you mean by going broke? I'm blaming the government for making the stupid policies that resulted in the crisis. The market doesn't play by different rules whenever it wants: fundamentally as a whole the market (an overwhelming majority of whom are rational) responds to incentives the same way that any rational person would respond to incentives. However, when you change the incentives for different things, as CRA and similar legislation did, you get disaster, as was further demonstrated in my first post in this thread.
Aside from using information that I not only willingly provided but acknowledged and rebutted, you have failed to adequately address any of my points. If you could take the time to read up and proceed to counter my arguments with something besides banal, didactic-based commentary spewed from cable news shows, then I would be happy to respond and so forth. Instead, you proceed to not only ignore all the evidence I have brought up (not even questioning the validity of said evidence), but to repeat what you have said over and over again.
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You are just drawing on straws. Everyone knows now what caused the crisis. It's the mortgage deals by certain banks and the trading in them by others. So called securitization and all the speculation.
CRA is something that happened all the way in 1977 according to wikipedia. And it doesn't even matter. Even if governments forced the banks to make a few money-losing deals, which you yourself admit is totally disputed, unclear and not backed up by data, they were still making a lot of profit. It's not why these banks failed. They were gambling with other people's money. And then the government bailed them out. Yeah, if they wanted to subsidize the middle class and lower class they should have done so with tax money. And if they wanted lower income people to be able to afford houses then it helps if they are cheaper, not more expensive. Allowing people to buy expensive houses more cheaply by subsidizing their mortgages only make them more expensive.
If you want to blame the government for one thing besides not regulating is for bailing them out or letting them get 'too big to fail'.
You can't blame the government allowing bubbles to be created. The market did it. They themselves did because they thought they would be crazy not to because people were making money off inflating the money. Now that all of this wouldn't be possible with higher interests is something different. What good are companies if they destroy themselves under certain circumstances?
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This book is too long.. I'd rather play Starcraft for a whole week.
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A quarter into reading this book, I thought this was gonna be a work of genius or something.
After I finished it, I thought it was really overrated, and I wiki'd some shit, found some really insightful criticisms of rand that got me turned over. Asked my teacher about it, and he literally chuckled and asked me why I was into it, and I said cause of a video game, and he laughed some more.
I think I'll try something postmodernist later...(I barely know what that term even means..)
Everyone says Nietzsche and Hegel are far better, but that road down to existentialism seems just downright depressing for me.
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On April 20 2009 06:55 Jaksiel wrote:Show nested quote +On April 20 2009 06:35 fanatacist wrote:
Atlas Shrugged is one of the best books of all time. Hopefully a joke.
Hopefully a troll.
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On April 20 2009 09:59 Diomedes wrote:
You are just drawing on straws. Everyone knows now what caused the crisis. It's the mortgage deals by certain banks and the trading in them by others. So called securitization and all the speculation.
CRA is something that happened all the way in 1977 according to wikipedia. And it doesn't even matter. Even if governments forced the banks to make a few money-losing deals, which you yourself admit is totally disputed, unclear and not backed up by data, they were still making a lot of profit. It's not why these banks failed. They were gambling with other people's money. And then the government bailed them out. Yeah, if they wanted to subsidize the middle class and lower class they should have done so with tax money. And if they wanted lower income people to be able to afford houses then it helps if they are cheaper, not more expensive. Allowing people to buy expensive houses more cheaply by subsidizing their mortgages only make them more expensive.
If you want to blame the government for one thing besides not regulating is for bailing them out or letting them get 'too big to fail'.
You can't blame the government allowing bubbles to be created. The market did it. They themselves did because they thought they would be crazy not to because people were making money off inflating the money. Now that all of this wouldn't be possible with higher interests is something different. What good are companies if they destroy themselves under certain circumstances?
Yes, the bolded part is what I've been saying. If you read my earliest post that is what I said, and I explained the process by which this took place and why losses were so bad.
First of all, just because it happened in 1977 doesn't mean it has far reaching impact today. As a matter of fact, in the exact same wikipedia page, you see that it has been amended at least 8 times.
Second of all, I never said that the fact that government forced the banks is not backed up by data. As a matter of fact, I stated that on the Wikipedia page, it features the counterargument that the CRA is not known (empirically) to be directly responsible, according to FDIC and Federal Reserve Economists. Aside from the obvious conflict of interest, it does not state that there is empirical evidence that would support the idea that the CRA (and its associated programs) did not have any effect. Hence, my caveat.
Third of all, the only reason banks appeared to making lots of money is because they were using leverage, and there was some massive lying involved. This lying was based off of a way to dispose of the very securities that commercial banks were forced to take on. Without disposing of said securities, the banks would be in the red-thus, since they had no choice to take on risky loans that they would not have made otherwise, they attempted to offload as fast as they could. Fannie and Freddie bought these securities, which proceeded to give the impression that these subprime loans were safe, high profit securities. It was like hot potato, except that you told the person you were selling it to that you're selling them a hundred thousand cold potatoes, rather than 50/50 hot and cold.
I agree with your points regarding the subsidization of the lower and middle class makes prices higher. I also agree that the bailout was retarded, and still is retarded.
But then you say this:
You can't blame the government allowing bubbles to be created. The market did it. They themselves did because they thought they would be crazy not to because people were making money off inflating the money. Now that all of this wouldn't be possible with higher interests is something different. What good are companies if they destroy themselves under certain circumstances?
First of all, the market is not an entity. It's an idea. Second of all, yes, we can blame the government fo allowing bubbles to be created. You yourself blame the government for not regulating enough. I blame the government for regulating too much. So clearly, the government is responsible (at least somehow) for allowing bubbles to be created.
Secondly, your lack of understanding of economics here reveals itself. Inflating the money? WTF? Inflating money doesn't make you money, it just devalues everybody else's money and allows for a way to reward the debtor at the expense of the creditor. If anything, the government sponsored companies (Fannie and Freddie) were the ones buying up all these securities at ridiculous leverages. Market pressure dictates that other securities trading companies had to jump in, or else they would be crushed without having a competitive edge.
And all companies destroy themselves under certain circumstances. It's called the free-market and competition. There has to be failure in order to get businesses right, and to account for human error. If I made a company that sold Wii's for $20 when I bought them for $300, clearly this is a losing company. But by your argument, you say that my failure company, rather than be allowed to destroy itself, should be regulated to prevent it from destroying itself. Yeah, and if I had wheels I'll be a wagon.
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On April 20 2009 10:25 fanatacist wrote:Show nested quote +On April 20 2009 06:55 Jaksiel wrote:On April 20 2009 06:35 fanatacist wrote:
Atlas Shrugged is one of the best books of all time. Hopefully a joke. Hopefully a troll.
Everyone is entitled to their favorites, but I would really encourage you to read more books if you really think this is among the best.
Don't take offense at this; maybe you've read a lot. But I found the book 'ok' compared to many of the better books I've read
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On April 20 2009 10:32 fusionsdf wrote:Show nested quote +On April 20 2009 10:25 fanatacist wrote:On April 20 2009 06:55 Jaksiel wrote:On April 20 2009 06:35 fanatacist wrote:
Atlas Shrugged is one of the best books of all time. Hopefully a joke. Hopefully a troll. Everyone is entitled to their favorites, but I would really encourage you to read more books if you really think this is among the best. Don't take offense at this; maybe you've read a lot. But I found the book 'ok' compared to many of the better books I've read
I've read a lot, but definitely not so much in the existentialism department besides basics like Thoreau, Emerson, and other American authors. Maybe that is why I thought it was such a good book.
I also enjoy Garcia Marquez's work, Bulgakov, Pushkin, Tolstoy, Sabatini, many other classical writers and more in science-fiction. If you have any books you would recommend me based on my tastes (including something you think is better than Rand), please let me know [:
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Amazing book. Highly recommended.
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On April 20 2009 11:16 fanatacist wrote:Show nested quote +On April 20 2009 10:32 fusionsdf wrote:On April 20 2009 10:25 fanatacist wrote:On April 20 2009 06:55 Jaksiel wrote:On April 20 2009 06:35 fanatacist wrote:
Atlas Shrugged is one of the best books of all time. Hopefully a joke. Hopefully a troll. Everyone is entitled to their favorites, but I would really encourage you to read more books if you really think this is among the best. Don't take offense at this; maybe you've read a lot. But I found the book 'ok' compared to many of the better books I've read I've read a lot, but definitely not so much in the existentialism department besides basics like Thoreau, Emerson, and other American authors. Maybe that is why I thought it was such a good book. I also enjoy Garcia Marquez's work, Bulgakov, Pushkin, Tolstoy, Sabatini, many other classical writers and more in science-fiction. If you have any books you would recommend me based on my tastes (including something you think is better than Rand), please let me know [:
i would recommend not having tastes unless you want to read a very narrow type of literature
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posted by jgad that is if you don't allow anyone to invade his land and kick him out - if you respect his property rights.
The problem I have Austrians as a moral philosophy as opposed to a economic system is that there are things people that value that can not be traded with a simple exchange. Property rights don't work for a lot of things. The problem of life is not solved if you optimize utility within the tradible domain. If one looks at the utopian desires of the average person, "hyper efficient exchange system" probably do not even register. The Austrians on this thread is certainly motivated by things that lies outside the monetary trade domain as no money is passing hands anywhere. The same is with everyone else, and people often don't mind reduced "efficiencies" to fulfill desires like "I belong to a nation that saves the poor!!"
I could even make the claim that the marginal utility of money is near zero beyond the point of filling basic biological needs. If one looks at the self reported happiness rating of people, money is of weak correlation (and what remain probably comes from the fact that successful people are often rich, not rich people are happier) beyond a certain point. It is said that gain in money result in increase in happiness but wealth level does not, and lottery winners move back to their baseline happiness in just one year. The implication of those things is that the economist's theory of the utility function doesn't apply to humans, and human beings are horrible at estimating their own utility and controlling to optimize with their short memories and bad imagination, resulting in mass consumption of things like drugs. In this case, free market hardly result in optimal utility, only "giving them what exchange relations result in."
Even if we limit ourself to the free market project, free markets don't work when "property rights" are so underdeveloped. There are still many things that are valuable but not owned by anyone as externalities are all over the place. The atmosphere isn't owned by anyone but it is critical for all too many things, and I still haven't seen a workable proposal that can divide up the atmosphere in to property. There are many other externalities for example housing prices are influenced by other houses in the area, so how do you prevent someone building a toxic waste dump beside your house? Ideas behind "Closed" property rights where land can be used to do anything regardless of its external effects are seriously suboptimal. This extends from everything in the environment to critical piece of information and other things whose effects are too large to easily be tied up in property rights. If there is a market, or even just a good proposal, where all those things can be owned and traded, than there is a good reason for government to step out. Before that happens, no cigar.
originally posted by Caller
This lying was based off of a way to dispose of the very securities that commercial banks were forced to take on. Without disposing of said securities, the banks would be in the red-thus, since they had no choice to take on risky loans that they would not have made otherwise, they attempted to offload as fast as they could.
Oh please. CRA is just functionally a tax. Taxes are a bad justification for lying and cons about AAA securities.
If your business model can't pay taxes, you change it or die. I don't think the CRA "tax" is anywhere enough to drive all of the banking sector that give out mortages to their doom. No, not at all. Only banks that are too weak to survive would seriously be troubled by it and they should have just died.
This is just another story of failures that try to survive by a con.
Sure, one can make a good argument against the tax rate and the annoyance of convoluted indirect taxation. That does not pass the responsibility of failure to another party.
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I would say that much of this mess happened because investors don't know exactly what those packaged securities mean as they were new and hyped. Next time comes around, they'll know better and over leveraging and things would be curbed by skeptical investors all over. (until young investor grow up and promptly forget all the lessons...ah well) Even the fed can't pump enough money to fuel a bubble (without massive inflation which should sound alarm clocks in voters everywhere) if the investors don't believe it.
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On April 20 2009 17:19 SWPIGWANG wrote:Show nested quote +posted by jgad that is if you don't allow anyone to invade his land and kick him out - if you respect his property rights. The problem I have Austrians as a moral philosophy as opposed to a economic system is that there are things people that value that can not be traded with a simple exchange. Property rights don't work for a lot of things. The problem of life is not solved if you optimize utility within the tradible domain. If one looks at the utopian desires of the average person, "hyper efficient exchange system" probably do not even register. The Austrians on this thread is certainly motivated by things that lies outside the monetary trade domain as no money is passing hands anywhere. The same is with everyone else, and people often don't mind reduced "efficiencies" to fulfill desires like "I belong to a nation that saves the poor!!" I could even make the claim that the marginal utility of money is near zero beyond the point of filling basic biological needs. If one looks at the self reported happiness rating of people, money is of weak correlation (and what remain probably comes from the fact that successful people are often rich, not rich people are happier) beyond a certain point. It is said that gain in money result in increase in happiness but wealth level does not, and lottery winners move back to their baseline happiness in just one year. The implication of those things is that the economist's theory of the utility function doesn't apply to humans, and human beings are horrible at estimating their own utility and controlling to optimize with their short memories and bad imagination, resulting in mass consumption of things like drugs. In this case, free market hardly result in optimal utility, only "giving them what exchange relations result in." Even if we limit ourself to the free market project, free markets don't work when "property rights" are so underdeveloped. There are still many things that are valuable but not owned by anyone as externalities are all over the place. The atmosphere isn't owned by anyone but it is critical for all too many things, and I still haven't seen a workable proposal that can divide up the atmosphere in to property. There are many other externalities for example housing prices are influenced by other houses in the area, so how do you prevent someone building a toxic waste dump beside your house? Ideas behind "Closed" property rights where land can be used to do anything regardless of its external effects are seriously suboptimal. This extends from everything in the environment to critical piece of information and other things whose effects are too large to easily be tied up in property rights. If there is a market, or even just a good proposal, where all those things can be owned and traded, than there is a good reason for government to step out. Before that happens, no cigar. Show nested quote +originally posted by Caller
This lying was based off of a way to dispose of the very securities that commercial banks were forced to take on. Without disposing of said securities, the banks would be in the red-thus, since they had no choice to take on risky loans that they would not have made otherwise, they attempted to offload as fast as they could. Oh please. CRA is just functionally a tax. Taxes are a bad justification for lying and cons about AAA securities. If your business model can't pay taxes, you change it or die. I don't think the CRA "tax" is anywhere enough to drive all of the banking sector that give out mortages to their doom. No, not at all. Only banks that are too weak to survive would seriously be troubled by it and they should have just died. This is just another story of failures that try to survive by a con. Sure, one can make a good argument against the tax rate and the annoyance of convoluted indirect taxation. That does not pass the responsibility of failure to another party. ------------ I would say that much of this mess happened because investors don't know exactly what those packaged securities mean as they were new and hyped. Next time comes around, they'll know better and over leveraging and things would be curbed by skeptical investors all over. (until young investor grow up and promptly forget all the lessons...ah well) Even the fed can't pump enough money to fuel a bubble (without massive inflation which should sound alarm clocks in voters everywhere) if the investors don't believe it.
That's just it though: the small banks thought they could get away with it. Clearly, this way they would be able to avoid the CRA penalty, et. al, and still be able to make a profit on what is clearly a bad loan. Now to be sure this wouldn't have been that big of an economic problem if it wasn't for the government sponsored Freddie and Fannie to be buying these at crazy leverages, setting a bad example for the rest of the market.
It wasn't just the CRA tax that's the problem. It was also the fact that in order to gain access to mergers and the like, they had to be verified by community organizations such as ACORN that they fell within CRA rules to make mergers and acquisitions (which later led to the development of PE as a new investment type). Mergers and acquisitions were (and are) quite profitable, but if they were to be blocked, there would be negative impact for the company, especially from its stockholders. It is no small coincidence that these firms not only were essentially pressured to make risky mortgage loans, but also to send hundreds of thousands to community firms around the same time they attempted to make mergers. Consider the impact this may make on small, local banks. Not only do they have to pay for getting the community on their side, they also have to make risky loans that they are likely going to take a loss on. Then realize that there is a very eager buyer for your crappy mortgages, and you package them into securities and sell them, washing your hands of the potential loss.
I do agree that a lot of people had no idea what the hell the securities were, and this led to the problem. But they were being hyped by Fannie and Freddie, whom are basically government sponsored and are very responsible for this overhype.
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On April 19 2009 22:24 oneofthem wrote:
lol rand
lol stereotypicalCondescendingPhilosophyUndergraduate.
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On April 20 2009 17:19 SWPIGWANG wrote:Show nested quote +posted by jgad that is if you don't allow anyone to invade his land and kick him out - if you respect his property rights. The problem I have Austrians as a moral philosophy as opposed to a economic system is that there are things people that value that can not be traded with a simple exchange. Property rights don't work for a lot of things. The problem of life is not solved if you optimize utility within the tradible domain. If one looks at the utopian desires of the average person, "hyper efficient exchange system" probably do not even register. The Austrians on this thread is certainly motivated by things that lies outside the monetary trade domain as no money is passing hands anywhere.
Again, I think I've failed in conveying the objective effectively. What sorts of non-tradeable goods can not be incorporated. How are they not accounted for? You're making an accusation but not explaining what it is. I may like cats. I may be good at fixing cars. In a free society I could choose to babysit cats intead of working as a car mechanic, for far less money, if I felt the psychic profit of spending my day with cats made it worthwhile. This isn't outside the scope of austrian theory. What are you talking about? Give me an example. I don't think there is anything in the human domain which cannot be accounted for.
The same is with everyone else, and people often don't mind reduced "efficiencies" to fulfill desires like "I belong to a nation that saves the poor!!"
The problem is that you always have to make that choice for some people by force. Why do that? If anything it's just begging for trouble - you create civil unrest any time you have to force people to do things they don't want, and every extraneous government programme is something like this. I donate to the Red Cross. Anyone with a desire for such psychic profit - helping others - has innumerable options at their disposal. I mean, what kind of world do you want to live in - one where people have to be forced to help other people, or one where people willingly choose to help each other out of the goodness of their heart and the recognition that it is a mutually beneficial act?
And if people do have to be forced, then are you really the benevolent nation you appear to be, or are you just whipping the peanut gallery into submission?
There are problem with compulsory things like this too. Out of sight, out of mind. It makes the world's probems "somebody else's responsibility". We don't help out the bum on the street because the government is giving him a welfare cheque, etc. This is my own rumination, but I think it's a point to consider. What normal developments of the human psyche are we short-circuiting with such interventions?
I could even make the claim that the marginal utility of money is near zero beyond the point of filling basic biological needs.
This is an entirely subjective statement. Obviously there are people who would make this statement, others would not. All value is subjective. That's an essential part of what makes the market work.
If one looks at the self reported happiness rating of people, money is of weak correlation
As is this hypothesis. I didn't know happiness was a thing one could rate. I know the study you mean and it's just that - a study. How can you claim to make correlations?
What I would conclude is that people are just people, and we generally find some comfort in our lives, no matter what we have or do - a mechanism to help us cope with things we must tolerate - and we also have unsatisfied desires. Man's greed is infinite - he will always find new desires to satisfy when previous ones are sated. Better products, more efficiency, tastier apples, a nicer sculpture, a tighter album, a more epic game, a more profound enlightenment, a smoother kata, more peaceful peace and quiet - whatever.
As for the environment, I agree that pollution is a problem and it needs laws. Scorched earth is obviously good for nobody. I don't think it's an intractable problem.
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I know so many people, and see a lot of posts on the internet, by people who think the big thing happening in the US is the "Democrats" controlling everything (media, banks, school systems) to create just a gigantic government that soaks up like 50% of everything in taxes. I think that this idea is absolutely rediculous. I would argue that the "big thing" happening in America is corporations buying and owning all the power, and the 2 parties just putting on a puppet show that gives people the idea there is some debate going on.
I havent read the book, but I did the article, and it seems like the author honestly believes that the "government" is the driving force in this country, driving and manipulating the private sector. I, obviously, see it as the other way around.
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Sanya12364 Posts
On April 20 2009 23:02 cUrsOr wrote:
I know so many people, and see a lot of posts on the internet, by people who think the big thing happening in the US is the "Democrats" controlling everything (media, banks, school systems) to create just a gigantic government that soaks up like 50% of everything in taxes. I think that this idea is absolutely rediculous. I would argue that the "big thing" happening in America is corporations buying and owning all the power, and the 2 parties just putting on a puppet show that gives people the idea there is some debate going on.
I havent read the book, but I did the article, and it seems like the author honestly believes that the "government" is the driving force in this country, driving and manipulating the private sector. I, obviously, see it as the other way around.
Corporations and Washington DC. The mass of parasites in Washington DC are the problem. It might also apply on a local level as well, but the "big thing" is the incestuous relationship between big lobby and big government. Big lobby not surprisingly is associated with big business.
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I totally agree. Its been a problem getting worse and worse in America. The worst part of it is that is Un-Democratic, insulating the public form the real decision making. I think the real problem is, convincing politicians to create and enact legislation that takes away from their #1 source of income and power- catering to and being implements of lobbyists. I guess the only solution would be enough people demanding for some such thing. Maybe I'll write them a strongly sentimented e-mail?
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Cayman Islands24199 Posts
On April 20 2009 19:46 HeadBangaa wrote:lol stereotypicalCondescendingPhilosophyUndergraduate.
im sorry you can't enjoy rand the way i do
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Atlas Shrugged was such a horrible book. She could've better sold her point in a pamphlet.
Of course, count on republicans and conservatives to completely misuse a source for their own backward cause. To say we're punishing the innovators and job creators by raising taxes only on the wealthiest Americans is complete and total logical fail.
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EPT
