Joe Doakes from Como Park writes:
The various “occupy” groups want to operate outside the rules of ordinary civilized society . . . as long as everyone plays nice.
Reports of unsanitary conditions and even rape remind us that life without order brought by consensus is solitary, poor, nasty, brutish and short.
Too much government is bad, but too little is bad, too. What Conservatives offer is Just Right.
Wonder how long it’ll take the OWS crowd to figure out what the Founding Fathers knew 200 years ago?
Joe Doakes
Como Park
What’s the old saying? “A conservative is a liberal that’s been mugged; a libertarian is a conservative that’s been audited?” Maybe we’ll need to add “A new conservative is someone who’s seen “democracy” in action?”
You don’t read enough liberal blogs. They have defined conservatives as nazis who hate the state and don’t believe in collective goals.
They have defined conservatives as nazis who hate the state and don’t believe in collective goals.
That sounds like my alumni magazine.
What’s the conservative position on the unregulated market in credit default swaps?
Well, that depends on what the liberals position is on the people that run Fannie and Freddie getting $13 M in bonuses despite the fact that both programs are in the shitter and owe the taxpayers about $141 M!
There aren’t “conservative” or “liberal” positions on CDS. They are important devices to hedge risks in lending. Get rid of hedging and far less money will be lent. Do they work perfectly? No. But what is your alternative suggestion to having them. Spreading risk is a good thing. Predictions, like Yogi Berra said, are tough, especially about the future.
What’s the conservative position on the unregulated market in credit default swaps?
I don’t know — guess I need an updated handbook on such things. I would ask this — how would regulations have changed the endgame? Many of the investments (read: bad loans) that were part of the financial instruments in question were predicated on two factors: the requirements/regulations involved in the CRA and, more importantly, the implied backing of the federal government for the loans that were filtered through Fannie Mae and Freddie Mac. The whole edifice was based on moral hazard.
Think it through, Peter — if the regulators came down against credit default swaps, wouldn’t they have had to address the structural soundness of the components of the financial instruments they were regulating in the first place? Do you suppose that would have gone anywhere?
The Bush and the Obama administration’s position on CDS seems to be:
1) Hire wall street types to write the regs.
2) Send wall street types back to the financial houses to administer compliance with the rules they have just written.
3)Little guy gets f*cked again.
A more intelligent question would be : “Since the increase in US GDP growth since 2000 has mostly been in financial services, and if deregulation (like ending glass-steagall) drove much of that growth, if we reinstate regulations like glass-steagall how can we grow the US economy?”
Boss, I think that anyone running a company (or quasi company, as in Freddie and Fannie) that’s losing money — or losing value — shouldn’t walk away with a golden parachute. Corzine is just the latest. Dubow’s $37 million retirement package from Gannett, which saw it’s stock drop from $72 to $10 per share, is also egregious.
Corzine may actually be worse. It’s probably a gross oversimplification, but it seems to me that his firm placed bad bets while gambling with other people’s money. The clients lost, but the system is set up so that Corzine walked away from the table with a pile of cash. This doesn’t seem right.
And of course both parties are complicit with the abuses of the financial sector.
While Joe asserts that too little and too much regulation are bad, the conservative approach to the financial markets has been to argue for less and less regulation. I’m sure there’s a midpoint — I just don’t know where it is.
I know the economy is improved when investors can buy and sell shares. I’m not sure the economy is enhanced with the rapid buying and selling of shares directed by computer algorithms. At least there are brakes that kick in if these machines start leading a massive sell-off.
I also get the idea of hedging one’s bets. I purchase insurance. But when I read something like this, it seems to me that the CDS function as something other than a mechanism to hedge one’s bets. And with the housing crash, it seems that there were some investment banks that were packaging bad assets, misrepresenting them to the people who were buying them, and then using CDS or some other mechanism to bet against the assets they just sold.
“The various “occupy” groups want to operate outside the rules of ordinary civilized society . . . as long as everyone plays nice.”
Seems the anarchists don’t understand anarchy.
Hmmm . . .
Did you know, PeterH, that in market economics it’s considered impossible to make an economic profit in the long term? Goes back to Adam Smith and has been since ratified by generations of economists. This doesn’t mean you can’t make money — it just means that, all things being equal, you can’t get more value from something than you put it into it. In the long term. In calculus it’s shown as a curve with its limit at 0 economic profit.
In the short term, you can make a profit by exploiting inefficiencies in the system and erecting barriers to entry from competitors. HFT takes advantage of inefficiencies int the financial system — if you can buy and sell faster than the next guy you can make more money than the next guy.
I am a conservative. I love the inefficiencies. Without market inefficiencies I wouldn’t be paid more than a guy in India who is in my line of work.
There are free-market economists who hate inefficiencies introduced by, say, tariff’s and restrictions on immigration. They say these inefficiencies reduce long term economic growth, and they are probably right, but people spend their entire lives in the short term, and none of their lives in the long term.
I’m always annoyed by people who complain that I am not enthusiastic to give them money when I learn their problems. You can’t just start the story by telling me you’re a homeless single mother addicted to crack. You need to explain why after a lifetime of bad choices, your present situation is my problem to solve, not yours.
Similarly, starting with problems in the credit default swap market is too far down the chain of bad choices to interest me. Start with racial pandering overruling common sense in the Community Reinvestment Act and Barak Obama suing Citimortgage to make more bad loans to people who can’t repay them. Continue to establishing a quasi-private corporation that doesn’t have enough assets to cover its promises, but was given exclusive power to write loan guarantees. Move on to a Congress that repeatedly insisted everything was fine right up until the administration threatened martial law to ram through a bailout funded by taxpayers who still have no idea where all the money went and can’t get straight answers from the people who gave it nor from those who received it. None of that was libertarian excess; it’s all heavy-handed government regulation and mostly inspired not by fiscal prudence but by clumsy attempts at social engineering. Regulations caused problems long before credit default swaps were involved.
Back to the point: an orderly system of government needs some rules and regulations to function, which the OWS crowd is finding out the hard way. The question is how much. Study the Constitution again – you’ll be surprised at how much individual freedom the Founders thought we needed. And dismayed at how little we enjoy today.
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