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  1. #11
    Vaguely Precise Seymour's Avatar
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    Quote Originally Posted by pure_mercury View Post
    Wow, that is completely and totally incoherent. Doesn't this guy know that libertarians and Tea Partiers were AGAINST the bailouts? And that the financial markets that collapsed were anything but "deregulated?" Like the toilets he loves, this guy is full of shit.
    Well, I found the article fairly incoherent, myself; the author seems to be reading far to much into two statistics. I agree with Lasting_Pain about needing to factor in the differences in needed infrastructure.

    I am interested in how you think the shadow banking industry was over regulated, and how that contributed to the financial crisis. I think it's pretty clear that the credit rating agencies' (CRA's) ratings failed to accurately represent the systemic risk represented by mortgage backed securities. In fact, the whole tranches structure for mortgage backed securities created a illusion of safety and created an insatiable demand for mortgages (however risky). That demand for subprime mortgages that was already being filled by private mortgage companies before Fannie and Freddie entered the market. If the shadow banking industry had not been eager to buy subprime mortgages, it's difficult to see how that housing bubble could have been created. (I made a longer post on the topic here.) Certainly the government is far from blameless for the fiasco, but blaming it all on "too much regulation" seems simplistic at best.

  2. #12
    Order Now! pure_mercury's Avatar
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    Quote Originally Posted by Seymour View Post
    Well, I found the article fairly incoherent, myself; the author seems to be reading far to much into two statistics. I agree with Lasting_Pain about needing to factor in the differences in needed infrastructure.

    I am interested in how you think the shadow banking industry was over regulated, and how that contributed to the financial crisis. I think it's pretty clear that the credit rating agencies' (CRA's) ratings failed to accurately represent the systemic risk represented by mortgage backed securities. In fact, the whole tranches structure for mortgage backed securities created a illusion of safety and created an insatiable demand for mortgages (however risky). That demand for subprime mortgages that was already being filled by private mortgage companies before Fannie and Freddie entered the market. If the shadow banking industry had not been eager to buy subprime mortgages, it's difficult to see how that housing bubble could have been created. (I made a longer post on the topic here.) Certainly the government is far from blameless for the fiasco, but blaming it all on "too much regulation" seems simplistic at best.
    I didn't blame too much regulation for the meltdown, although I think a TRULY deregulated industry would not allow people to be so cavalier with money and get away with it. There was a perfect storm of errors all over the place. I take issue with his implication (echoed by many on the left I know who know NOTHING about economics) that there was some type of "libertarian" deregulation under Bush that allowed a near-collapse. That meme is tiresome. This guy clearly has no grasp on econ or financial regulatory schemes.
    Who wants to try a bottle of merc's "Extroversion Olive Oil?"

  3. #13
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by pure_mercury View Post
    Wow, that is completely and totally incoherent. Doesn't this guy know that libertarians and Tea Partiers were AGAINST the bailouts? And that the financial markets that collapsed were anything but "deregulated?" Like the toilets he loves, this guy is full of shit.
    Every time someone defames tea partiers, you take it personally. It's getting old. We all know they're not a single cohesive group. His claims may not describe you, but they do describe some tea partiers.

    Turning to the government does not always equal bailout. It could be law enforcement, the military, or any number of services the government provides.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  4. #14
    Oberon
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    Karl Denninger has pointed out numerous times that many transactions and bank policies that led up to the meltdown were actually in violation of existing "black-letter law," as he puts it, while authorities looked the other way.

    There's a difference between deregulation and collusion. This was a case of the latter, I believe... unethical under any economic system.

  5. #15
    Oberon
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    Quote Originally Posted by Lateralus View Post
    Every time someone defames tea partiers, you take it personally.
    So do I... particularly when the criticism is nonsensical, or transparently political.

  6. #16
    Order Now! pure_mercury's Avatar
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    Quote Originally Posted by Lateralus View Post
    Every time someone defames tea partiers, you take it personally. It's getting old. We all know they're not a single cohesive group. His claims may not describe you, but they do describe some tea partiers.
    Snooze. . . Someone wants to criticize, they better come correct. Otherwise, they get blasted. That's how it works.


    Turning to the government does not always equal bailout. It could be law enforcement, the military, or any number of services the government provides.
    Illegitimate argument. A BASIC understanding of the underlying philosophy would ensure that someone knew that law enforcement and the military and interstate transportation are some of the few things that libertarians and Tea Partiers actually want the federal government to handle. That isn't inconsistent.
    Who wants to try a bottle of merc's "Extroversion Olive Oil?"

  7. #17
    Vaguely Precise Seymour's Avatar
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    Quote Originally Posted by pure_mercury View Post
    I didn't blame too much regulation for the meltdown, although I think a TRULY deregulated industry would not allow people to be so cavalier with money and get away with it. There was a perfect storm of errors all over the place. I take issue with his implication (echoed by many on the left I know who know NOTHING about economics) that there was some type of "libertarian" deregulation under Bush that allowed a near-collapse. That meme is tiresome. This guy clearly has no grasp on econ or financial regulatory schemes.
    Well, I didn't get much out of the article, myself. I do think without regulation, creating enough transparency for investors (and consumers) to make informed decisions becomes impossible. I think governments failed adequately regulate the growing shadow banking system as it created new financial instruments. It's much harder to pin a failure to act on any single cause or person.

    I guess I'm not clear how sufficient financial transparency of private financial institutions would be maintained in a libertarian system. It seems that misleading one's investors eventually becomes unsustainable over time, so in one sense such issues are self correcting. However, it also seems like the overall level of trust in financial institutions in such an environment would be lower, resulting in less investment and less available credit. While private companies could step up and provide forms of "investment insurance" and "independent credit ratings," it seems like just such a arrangement helped lead to our meltdown.

    At any rate, I'm not an expert on economics or libertarian ideas, so just thinking out loud here.

  8. #18
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by pure_mercury View Post
    Illegitimate argument. A BASIC understanding of the underlying philosophy would ensure that someone knew that law enforcement and the military and interstate transportation are some of the few things that libertarians and Tea Partiers actually want the federal government to handle. That isn't inconsistent.
    It is inconsistent because not all people agree on what services the government should provide. There is no absolute truth as to what services the government should provide. In fact, the services government provides has changed over time, and it will continue to change as society evolves.

    Someone could hold all the same ideals as libertarians, except believe universal health care should be provided just as fire protection is provided. Would this person be a libertarian? Or would you call that person a communist?
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  9. #19
    Order Now! pure_mercury's Avatar
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    Quote Originally Posted by Seymour View Post
    Well, I didn't get much out of the article, myself. I do think without regulation, creating enough transparency for investors (and consumers) to make informed decisions becomes impossible. I think governments failed adequately regulate the growing shadow banking system as it created new financial instruments. It's much harder to pin a failure to act on any single cause or person.

    I guess I'm not clear how sufficient financial transparency of private financial institutions would be maintained in a libertarian system. It seems that misleading one's investors eventually becomes unsustainable over time, so in one sense such issues are self correcting. However, it also seems like the overall level of trust in financial institutions in such an environment would be lower, resulting in less investment and less available credit. While private companies could step up and provide forms of "investment insurance" and "independent credit ratings," it seems like just such a arrangement helped lead to our meltdown.

    At any rate, I'm not an expert on economics or libertarian ideas, so just thinking out loud here.
    There very well COULD be less available credit. Honestly, finance is not my background and I am not going to claim that I know exactly what would happen in all areas of society under a libertarian system. I DO know that trillion-dollar bailouts would not happen, though, because the government wouldn't be in the business of doling out any welfare to private organizations.
    Who wants to try a bottle of merc's "Extroversion Olive Oil?"

  10. #20
    Vaguely Precise Seymour's Avatar
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    Quote Originally Posted by pure_mercury View Post
    There very well COULD be less available credit. Honestly, finance is not my background and I am not going to claim that I know exactly what would happen in all areas of society under a libertarian system. I DO know that trillion-dollar bailouts would not happen, though, because the government wouldn't be in the business of doling out any welfare to private organizations.
    Fair enough. I guess my question would be if periodic collapses of corporations (and perhaps industries) would be a net overall win or not. I think it's possible individual corporations might on the whole be smaller in such an environment, so any single one failing would do less damage. But I don't see anything to prevent speculative bubbles or cascading failures in such a system (not that we entirely avoid such things currently).

    On the other hand, I certainly understand outrage at people who profited hugely from their own malfeasance being bailed out by tax dollars. I also agree that large corporations and the government have an unhealthily symbiotic relationship these days.

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