Learning the wrong lessons

So, if you look at the stock market as a time machine, we just went back to January 2004.

But what else can the developing countries think when you all keep on insisting that what we had were free markets?

A regulatory system that uses minimum capital requirements for banks based on the risk perceptions of the regulator and empowers some few agencies to measure these risks, is far from a free system, in fact, at its core, never before has the financial world been so regulated. You even set up AAA signs that guided so much capital flow into the lands of good mortgages to the subprime sector so that you completely distorted them into lousy mortgages to the subprime sector.

Are you afraid of telling the regulators they had no idea what they were up to trying to live our their teenage bedroom fantasies of a world without risks and banks never defaulting in their little mutual admiration club headquartered in Basel with the clubhouse of IMF in Washington?

At this moment the most urgent discussion is not about free markets or government interventions. At this moment what most needs to be discussed is transparency, truth and accountability.

In the Financial Times, "Brussels stiffens bank capital requirements", October 2, it is reported that there is legislation coming that will "require credit rating agencies to register and meet standards if they wish to operate in Europe." Does this mean that now, at long last, we will be able to really fully trust the credit rating agencies and follow them anywhere? Come on, are the regulators incapable of learning?

Hammer – it's hammer time! U Cant touch this!

Here is Bill Bonner ( that hilarious, libertarian gloom and doomer, writing about the ghosts of the Great Depression

Word on the street is that the pols are about finished Christmas treeing the bailout bill. The House of Representatives prepares to cast its historic vote today.

Here at The Daily Reckoning…we stand back…aghast…agog…paralyzed by the whole spectacle… from the lunatic assumptions of the credit bubble…to the solemn farce now taking place in the U.S. Congress.

Yes, dear reader, we are suffering from senselessness overload…the absurdities are coming too fast for us now; we can't keep up. We fear we are going into an irony-induced coma.

Could any scriptwriter have come up with such a preposterous story? Could any director have found such a clownish cast of characters?

It was only a few months ago that all the leading men and women of this drama claimed to believe in free enterprise so fervently they were willing to spend hundreds of billions of dollars forcing it on others. It was free enterprise that separated us from the barbarians and made the country rich, they said. But now, they're turning many of these free enterprises over to the bureaucrats to run…and desperately trying to make sure that the others don't go broke. It's capitalism without the creative destruction. Capitalism with seatbelts, helmets, and airbags. Capitalism without bankruptcy. It's like taking the crucifixion out of Christianity. What's left is as empty and foolish as a Congressman's head.

And then, it was only a few months ago that they were telling us that there was nothing to worry about…the subprime problem was contained…property prices had hit bottom…everything was fine. Really.

Then, two weeks ago, Ben Bernanke and Hank Paulson appeared before Congress and warned that if Congress didn't put up $700 billion of taxpayers' money pronto, the whole world economy could meltdown. Ben Bernanke, former head of the economics department at Princeton, and now head of the world's biggest banking cartel – the Fed – told the politicians:

"If we don't do this, we may not have an economy on Monday."

Of course, this alarm turned out to be as silly as his previous assurances. Monday came. The economy still functioned. And Congress got to work – Christmas treeing the bailout bill.

As it is, airbags and safety features led to an increase in wreckless driving.

I doubt it, but I love the Gordon Tullock Airbag. Can I get one?

Martin,

Much like hockey helmets, I don't think anyone individually wants a Tullock airbag. But of course we should mandate EVERYONE has one. =)

The airbag mandate leading to actuarial data on increased damage was mentioned in one of the EconTalk podcasts. I believe they were agnostic about human damage- at the time I found a reference that it had increased, but I cannot remember it.

The airbag mandate leading to actuarial data on increased damage was mentioned in one of the EconTalk podcasts.

Correlation is not causation. What else happened at the same time? The population aged maybe? We started driving more top-heavy SUVs? More cell phones and similar distractions? All of these factors explain a rise in automobile accidents better than "I've got an air bag now, so what the hell. Let's drive into that tree and see what happens."

The theory is laughably implausible on its face. It suggests that nothing ever gets any safer, which clearly isn't true.

It is possible that accidental deployments and similar events could cause accidents, but that's not the same theory.