Here's a short interview with the Wall Street Journal's Steve Moore on Milton Friedman's ideas and how they apply to today's economy.
On Milton Friedman
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Posters in Washington D.C. calling Friedman the father of the global crisis?? Interesting! Stupid, but interesting. I haven't seen one of those yet – I'm going to keep my eye out.
I find Steve Moore's use of Friedman to criticize current policy a little odd – particularly his interpretation of Friedman's monetary policy and how Friedman would be disappointed by policy today. People have taken to calling Ben Bernanke "helicopter Ben" for a speech he made about dropping money from helicopters to fight a deflationary recession, and for his recent aggressively expansive monetary policy – but have we all completely forgotten that it was Friedman who first said that you could fight deflation by "dropping money out of a helicopter"?
Anna Schwartz has famously denied that Bernanke is taking the right approach, insisting that deflation and illiquidity is not the threat here – but a lot of people have taken her to task for those comments, and I don't think we can necessarily assume that Schwartz is accurately channeling what Friedman would have thought. Indeed – the numbers themselves, which show mild deflation in the last year despite a huge increase in the money supply – seem to refute Schwartz quite decisively. If that's what prices looked like after over a year of aggressive rate cuts, does anybody seriously doubt we would be experiencing depression-scale deflation now without aggressive monetary policy?
I have more minor problems with other ways that Moore is using Friedman to butress his position. Very few people disagree with Friedman on the ill-advisability of government ownership of corporations… but I don't think that means we can cut and paste Friedman's view on that and apply it to what is essentially an abnormal bankruptcy proceedure. Objectively speaking, it's just not the same issue. I'm not suggesting Friedman would have liked the GM takeover – I'm sure he wouldn't have… but the rarely challenged wisdom of Friedman on government ownership of firms doesn't translate quite as well to this situation as I think Moore supposes it does.
Very interesting, though. I'm baffled at how Moore seems to have turned Friedman completely on his head when it comes to monetary policy, but interesting nonetheless – and a very nice (and true) assurance from Rose.
I could be wrong, but I believe Friedman was very complimentary of Greenspan's work, all the way through his death in Nov 2006. Greenspan left office in Jan 2006.
Would Friedman today concede he underestimated the lagged effects of poor monetary policy, or would he continue to defend Greenspan and instead cite other factors (poor government regulation, the madness of crowds, etc.) as the cause of the housing boom and bust?
CD -
What's interesting is that the two primary culprits people cite are both Friedman's babies – monetary response to recession and deregulation of finance. (Now, nobody should jump on me for mentioning deregulation – I know it's disputed if that even happened, much less caused the recession… my point is these are the two culprits most people cite).
So no matter who proves correct, Friedman is going to have to take a hit here. However, I don't think it would threaten Friedman's underlying thoughts on monetary policy to admit that humans are fallible and they err, and that strong monetary policy should only be used in very serious and obvious circumstances. I'd also note that Greenspan shot from the hip – and used his gut on many occassions. The new blood in the Fed is more inclined towards explicit inflation targeting – which I think is inherently more in line with Friedman than the ad hoc Greenspan approach.
I think deregulation and Greenspans aggressive policy in 2001 probably both contributed to the current crisis – but I think people aren't talking as much as they should be about the Asian savings glut and it's effect. I know this gets into trade deficit issues, so it might make Don a little squeemish – but if we think about where a flood of money might have come from in the last decade, what is the more obvious culprit – Greenspan's Fed or China?
I'm not meaning to exonerate Greenspan – but I think when we step back and view the wreckage and reevaluate, Asia is going to loom bigger in the discussion than it is right now.
I think deregulation and Greenspans aggressive policy in 2001 probably both contributed to the current crisis
Hoping you aren't restricting blame to these two things, I think regulation should be included here as well, not to mention various government policies.
Disingenious Kuehn,
"Friedman's view on that and apply it to what is essentially an abnormal bankruptcy proceedure.
Posted by: Daniel Kuehn | Jun 5, 2009 9:12:11 AM"
Why was it essentially an abnormal bankruptcy? What necessary ingredient was in the recipe that made it an abnormal bankruptcy?
The answer is one word. Can you come up with it?
RE: "Hoping you aren't restricting blame to these two things, I think regulation should be included here as well, not to mention various government policies."
Certainly not – and I would include both of those things as well. People tend to have an odd perspective on regulation. Regulations are just institutional rules of the game. A lot of people act as if "more regulation" is always good or always bad. It's a stupid way to look at the question. There are good regulations and there are bad regulations. Certainly there are regulations out there that probably contributed… I'm not sure exactly what they would be – they don't seem to have featured prominently in this crisis, but I'm sure they're there.
"Various government policies" I'd say is more relevant – community reinvestment act/ownership society, et al. I have a hard time believing that inappropriately getting poor people into homes fueled a McMansion bubble in Fairfax – a VERY hard time believing that… but I'm sure it contributed some.
This was not a misallocation – it was a massive bubble. It wasn't just that funds were diverted from productive to unproductive uses – it was that there were far more funds in the system than there should have been, and the system was designed to use those funds in a way that misconstrued or miscommunicated the risks. Where did those funds come from? Not the community reinvestment act – probably some from the Fed – but I think most of the answer probably lies elsewhere.
I don't see how Steve Moore could speak for three minutes on our current "problems" and not mention once the first and largest domino to fall, the housing market, and what the basic cause of that was.
Without 4 decades of government arm twisting lenders to give loans to any one who applied, would all the rest have been certain? I think not.
That was unsound monetary policy in and of itself, and it was forced on the lending industry. It was not a lending industry gone suddenly mad after 13,000 years of recorded history of sound monetary policy of not lending to deadbeats.
It was socialist idiots (is there any other kind) in government that used government power to vote buy and resisted fixing the problems they had caused. The whole sad sordid affair can be laid solidly on the shoulders of such as the three stooges highlighted in a recent previous post and all their collegues.
vidyohs -
RE: "Without 4 decades of government arm twisting lenders to give loans to any one who applied, would all the rest have been certain? I think not."
I'm NOT exonerating the government on the housing bubble, but I would be curious to know how four decades of arm twisting took thirty five years to build up a roughly five year bubble. It seems to me that we should be looking in the last ten years or so for an explanation.
Disingenious Kuehn,
I bake all the bread we eat in this household.
After combining all the ingredients, mixing, and kneading for 7 minutes on my industrial mixer/dough hook, I put the dough in a buttered pan and then into the closed warm oven to rise.
I set the timer on 30 minutes and I can tell you from experience that the dough does not sit there for 25 minutes in a lump and suddenly rise in the last five minutes.
What it does is right from the get-go is to slowly increase in size as it swells from the gas bubbles inside. If I do not keep that close check on it or do not hear my timer warning and let it go, the dough will swell up and droop over the sides of the bowl it is in and drop down in the oven making a mess. Now that last will happen in the last five minutes of its unsupervised and uncontroled growth unless I intentionally regulate it to two bread pans.
Government mixed the mess, kneaded the mess, and left it to rise in a warm climate. They then deliberately ignored the rising mess, intentionally, and stupidly refused to step in before a mess occured because that would have cost them votes. The "bubble" has been rising since the 1970s, it is only you that have come along in the last five years that think it is a sudden thing.
Note well that Moore has Friedman all wrong on Fed policy in the pre-2008 period: as late as July 2006 Friedman was praising the Fed as having produced a new "golden age" of economic stability.
It matters that Friedman never included production or capital goods in his economics and that he never understood Hayek on money and the boom & bust cycle,
vidyohs -
And you're a baker to boot! Is there anything you can't do?
What did Friedman consider the money supply to be? The ratio of M0 to M3 is about 1:12.
Friedman's theory on inflation is being severely tested right now. There are two things which may salvage it: the first is that the velocity of the new money is low, and the second is that it might be argued that we would have seen massive deflation had they not printed money.
That's why I asked about M3. In that context, the creation of new M0 is just offsetting the destruction of M3, but M0 has yet to undergo the magic multiplying effect brought on by velocity.
The thing is, to say that inflation/deflation is always a function of money supply says that debt doesn't really matter, and that it's only credit and cash that counts. Debt takes people out of the game, and that is deflationary.
The smartest thing that Moore said was his comment about common sense. Common sense have suffered from severe deflation for years now.
vidyohs, Moore did mention the housing crisis. He spoke of bubbles. We didn't have a housing crisis, we had a credit bubble.
To say it was the fault of socialist policies is putting the cart before the horse. If you want to blame the low interest rates as part of a socialist policy, that's one thing; but to claim it provided the financing doesn't scan.
Seuritization provided the financing, and that was explicitly forbidden from regulation. Even the word regulation sort of implies the ability to regulate. They couldn't stop writing bonds because they were making too much money. Do you really think they were writing bonds because some socialist tod them to?
Do you know what causes people to puke when they drink too much alcohol? Regulations.
Sorry, but Friedman was a humongous hypocrite:
1.) Big advocate of school "choice" and public vouchers to promote competition in education
2.) Supported a money that held its value and was "as good as gold."
Sorry bub… nothing promotes competition in education like a TRUE free-market, not a government subsidized synthetic pseudo-free-market. And if you want a money that is "as good as gold," why not try… gold?
These positions of Friedman and the Chicago school people in general just don't add up. I hear this stuff and all I can think of is the Department of Justice's Anti-Trust Division screwing around with anti-trust law and saying, "Voila! Competition!"
DK,
Read the list of ingredients of commercial bread(s), most will make you become a baker as well.
But, the point DK, to the point if you please?
Sorry, meant to add to my gold/money remarks that pursuing a policy of constant, mild inflation of 2% per annum, as most Chicago school economists and I believe Friedman himself was a fan of, is a policy of deliberate, intended currency debasement. It is the OPPOSITE of a stable money that holds its value over time, as gold does.
So how someone could rationalize, "I want to debase the currency at 2% a year" and "I want a money that holds its value as gold does" to be complimentary ideas… seems quite absurd.
Poor, poor academic theoreticians, stuck in their beautiful ivory towers where never a reasonable, realistic thought might perchance wander in.
K Ackermann -
Excellent, excellent points. In Friedman's monetary history he always presented a variety of measures of the money supply – I'm not sure if he talked about it more narrowly elsewhere.
I think it's tough to arbitrate between low velocity and a counterfactual deflation, because velocity is calculated as the residual of PQ=MV. You have to assume what P would have been to identify V, so untangling the two is fairly hopeless. I think history has proven quite conclusively that whatever the fluctuations in velocity, increasing the money supply will still cause inflation to some extent. We may not be able to say how much greater deflation would have been, but certainly we can agree it would have been somewhat greater, right? In light of this, I think the policy responses we've seen have been imperfect, but entirely justified.
Taylor -
"the gold standard is already a barbarous relic" – JMK
Thanks, though. It's always fun to hear people seriously advocate the gold standard in the f#*^%ing 21st century. "Good as gold" referred to it's stability, and I agree with Friedman that we should shoot for that. The unfortunate problem with gold is that we're not finding as much of it as we used to – which will inevitably put a stranglehold on a growing economy.
vidyohs -
RE: "But, the point DK, to the point if you please?"
To be completely honest, your points didn't seem that worthy of comment. I agreed that regs and other factors that have been in place for decades could play a role in this… but it's a very convenient argument to be able to point to the 70s as an explanation for everything that goes awry decades later. You're in good company – there are people out there who think that the events that transpired in 1913 explains every economic problem we've had for the last 96 years (I may exaggerate but you get the point). I'm not sure exactly what else you expect me to comment on, vidyohs.
Call it what it is, KA.
"vidyohs, Moore did mention the housing crisis. He spoke of bubbles. We didn't have a housing crisis, we had a credit bubble."
KA, I must have missed the part where he said housing. Yes we had a credit bubble and that was mainly caused by the results of the insane leding policies forced on lenders, specifically in the housing markets. It is disingenious to say we had a credit bubble and not mention that that bubble had a specific base.
"To say it was the fault of socialist policies is putting the cart before the horse. If you want to blame the low interest rates as part of a socialist policy, that's one thing; but to claim it provided the financing doesn't scan."
Sorry KA, it scans perfectly well down at the street level. The policies, not just low interest rates, forced on the lenders in effect were, and have proved themself to be, government give-aways, redistribution of the wealth. On the street where I live that is socialism. Even zero percent interest would not have been low enough to keep those deadbeats from defaulting.
"Seuritization provided the financing, and that was explicitly forbidden from regulation. Even the word regulation sort of implies the ability to regulate. They couldn't stop writing bonds because they were making too much money. Do you really think they were writing bonds because some socialist tod them to?"
All the rest could not have come about, had not that initial door, forced lending, been opened.
No matter what you say, a loan never made can not be manipulated.
A mortgage never sought can never be foreclosed. A mortgage never written can not be defaulted.
An enormous amount of loans were made, due to coercion, to people that no sound lending practice would have ever approved. Government's fault, socialist government.
An enormous amount of mortgages were made, due to coercion, to people who it was almost 100% certain would have to default in the near to mid future. Socialist government's fault.
Socialist policy dictated the forced lending and made everything else inevitable, because having opened the door the socialist could not close it without losing the very votes they had purchased by opening it.
Economists should be very careful what they say, for politicians are likely to hear and misinterpret them.
I don't know enough about the liberty Dollar case to comment, but I will hold to the possibility that the DOJ may be "overstating" its case.
I know someone who worked in the DOJ; spent months with a coworker researching and writing a 23 page report on crime.
The report was submitted to higher ups, and of the original report, only half a dozen sentences were retained after editing.
vidyohs, there is no such thing as forced lending. If you are referring to the CRA, then maybe you should read up on some facts for a chance of pace.
Before you do that, I just want to point out a couple of observations about the housing market bust.
The highest rates of default have been in new communities, not poor neighborhoods.
The most comprehensive studies on the CRA all pretty much conclude that, at worst, CRA is ineffective. They had to come to that conclusion because anything else would call attention to the fact that enforcement was minimal. According to Wiki, an average of 22 mergers per 1100 reviewed were rejected for CRA non-compliance… a lower rate of rejection than non-CRA institutions wanting to merge.
Housing advocacy groups had been asking the Fed for several years to tighten up lending because of rising rents triggered by sub-prime rates, but the banks made so much money on sub-prime lending that nothing was going to stop them from lending to anyone they wanted. They could sell the mortgage and not even worry about default. You have to understand that this took place and was fueled by greed.
Some of the biggest players in the subprime market were not even subjected to CRA regulations. Explain that one.
You really should start being honest with yourself. You owe it to you.
And speaking of bubbles, the fact that they can exist in a free market says that the market is not always efficient.
RE: "And speaking of bubbles, the fact that they can exist in a free market says that the market is not always efficient."
That's because all bubbles started in 1913 when they introduced fiat money… or something like that…
I jest in that last comment… people seem really touchy today, so I just want to make it clear that I'm joking!
KA,
You've lost touch with reality with this statement.
"vidyohs, there is no such thing as forced lending. If you are referring to the CRA, then maybe you should read up on some facts for a chance of pace.
You really should start being honest with yourself. You owe it to you.
Posted by: K Ackermann | Jun 5, 2009 2:03:38 PM"
I lived through it as a politically aware person. It began in the late 60s with the clamor from the left leaners that banks did not open branches in black neighborhoods (they said minorities but everyone knew to read that as black), big chain stores did not open branches in black neighborhoods, and this lack caused great distress in the black communties.
Then the clamor began that banks would not loan to black (minority) fincally unsound applicants, and when they did the terms were more stingent than those on loans made to white fiscally sound applicants. This was not eeeequalityyyy!
The fact that government pressure on banks and other institutions to open in black neighborhoods and serve them was widely known, reported, and commented on.
To say that the government has never exerted pressure (coerced) lending institutions to make loans to black, and now other minority, applicants is to say that you are either young and ignorant of that fact, or else your just plain ignorant. It happened.
To make all this palitable to lending institutions, the government assured that if and when the loans went bad the government would cover the losses. Another residual benefit of the Great Society. Socialist government will find a way to buy votes by getting wealth redistribution to the poor.
But, even all that wasn't enough to open the flood gates to mortgages with no research, quality control, or supervision. So, that pressure evolved into the CRA.
Once the assurance from the government was made and understood, why wouldn't banks begin to compete to lend to losers and deadbeats, hell it wasn't going to cost them anything, and if they didn't others would simply step in and do it.
It happened.
Then we can address the sleazebags who knew that they would never be able to make any lasting fullfilling commitment on a loan; no problem, eh, government is going to cover their butts so why shouldn't they step up and get loans to live in houses they never dreamed of living in, all t the expense of people who actually work and take responsibility serious?
The sad part is that many, if not all those sleazy deadbeats that are now defaulting will probably be able, through government manipulation, be able to stay in those homes they can't afford and on which they defaulted, all at the expense of we who actually work and take responsibility for ourselves.
Maybe my presentation is not laced with high value words and theory al la Freidman, Smith, Hayek, and Mises, et.al., but don't tell me I haven't seen what has happened at the street level, and it hasn't been to damn difficult to see and understand.
Memories of conversations with my fellow crypies in the late 60s are vivid, and we all asked ourselves and speculated on the natural state of affairs that banks would not build branches in black neighborhoods, hells bells, we certainly knew of the high theft and fraud potential in doing that. The we became more dismayed to see that banks were giving in to the pressure.
Last, I will close with this, KA, you are incredibly naive if you think the government doesn't bring intensive pressure to bear on those who oppose it or go against its whims and whimsies. Ask Bill Gates about that….want to be accused of monopoly because you're not sending enough free money to D.C.? Want to go through a full audit by the IRS on a monthly basis, just defy the right people in government and you can experience the pleasure, want to be raided by the DEA because of some ambiguous untraceable tip, how about a visit from the BATF to search for reported illegal weapons during the height of your busiest part of the day.
Want to know why people puke when they read naiveity and ignorance? Saturation.
"vidyohs, there is no such thing as forced lending. If you are referring to the CRA, then maybe you should read up on some facts for a chance of pace.
You really should start being honest with yourself. You owe it to you.
Posted by: K Ackermann | Jun 5, 2009 2:03:38 PM"
Furthermore KA, it seems you bypass the most salient points in my post.
————
Why not address these:
No matter what you say, a loan never made can not be manipulated.
A mortgage never sought can never be foreclosed. A mortgage never written can not be defaulted.
———
In assigning blame for the mess, in my street world it all began with the sleaze bags who applied for the loans they couldn't afford.
Once we recognize the truth of that, then we can talk about why they applied, which is the next logical step in understanding the mess.
If we take it step by rational step we wind up exactly where I stated, socialist government is the underlying problem to all our mess.
disingenious Kuehn,
Damn me if I didn't think it was glaringly simple.
"I'm not sure exactly what else you expect me to comment on, vidyohs.
Posted by: Daniel Kuehn | Jun 5, 2009 11:45:14 AM"
"Disingenious Kuehn,
This is what you said:
"Friedman's view on that and apply it to what is essentially an abnormal bankruptcy proceedure.
Posted by: Daniel Kuehn | Jun 5, 2009 9:12:11 AM"
and this was my reply:
"Why was it essentially an abnormal bankruptcy? What necessary ingredient was in the recipe that made it an abnormal bankruptcy?
The answer is one word. Can you come up with it?
Posted by: vidyohs | Jun 5, 2009 9:58:09 AM
The point is the one word, DK, the one word.
Jesus, you cute f.ckers who dodge issue after issue are human cripples.
For the bankruptcy to be abnormal, something out of the ordinary had to be part of the deal, what is the one word that describes that "something" in the case of the GM bankruptcy?
Why didn't GM just move straight to bankruptcy when it could not meet its financial obligations?
Yeah it begged and pleaded for aid, but had its begging and pleading fallen on deaf ears, as it should have, then the GM bankruptcy could not be described as abnormal, now could it?
No. The one word, DK, you have the intellectual honesty to say it?
The government can't force a loan to be made. They can attempt to regulate some level of fairness, but they have never demanded that CRA should lead a bank to make an unsound loan.
Do you understand what happens when a class of people are denied access to money? If the government has a mountain of data showing that people from certain areas are being denied loans for no appearent reason other than where they live or the color of their skin, then in the spirit of civil rights, they try to give the same shot to everyone. I know it must kill you, and I'm sure in your head it means to poor banks are just shoveling money at people with bad credit… such as all the blacks, right.
If it's all the fault of the blacks and the government forcing loans to be made, then why is it just now blowing up?
Let me guess: it's only blowing up now because the market sensed a Black president was going to be elected, right? It finally capitulated.
And the banks guaranteed loans under CRA? Yeah, OK. And that's why the banks, with obviously nothing to lose, rushed out since 1977 making massive amounts of loans in the ghettos.
"Here, have some more money! It's guaranteed against loss! We'll just write off that loan we gave you last week and fix you up with another. Just tell us for how much. You want a Cadillac with that house?"
The friends you were speculating about the black neighborhoods with… these would be your rich, honest, White and righteous friends, right? I mean, is there any other kind? There is black people, and there is pink people, and there is normal people, right?
You are whacked, Jack, but I know you are just toying with me.
In assigning blame for the mess, in my street world it all began with the sleaze bags who applied for the loans they couldn't afford.
And how about the ones who actually got the loans? Those jackasses are even worse than that other useless class of people… the fixed income pinkos leaching off the gummint.
Did you ever Google "Citi Fined" like I suggested?
vidyohs -
RE: "Jesus, you cute f.ckers who dodge issue after issue are human cripples."
Why do you even bother commenting on this site???? What exactly are you doing here? I know I'm an aggressive dissenter and that puts some people off – but I don't think anyone comes on here to read this crap.
Disingenious Kuehn,
Your response simply proves the statement.
Still can't say the word, won't recongize the malingredient.
Your smoothness gets you no points because of your lack of honesty.
Tell us why it was an abnormal bankruptcy, DK, put the name to that malingredient that made it so.
I am a strong proponent of both free markets and lack of government interference, but I actually lived through the last 25 years inside the lending industry. I can tell you with 100% certainty that the CRA had little to do with the problem.
Lenders have never been standing around shivering in fear of violating the CRA. Yes, all the fair housing laws have been a consideration, but lenders did not interpret the CRA to mean that they had to loan money to unqualified applicants. It was always just another item to check off on the compliance checklist before you sent the files to storage.
Also, those who whine about "greed" being the cause of the problem sound silly to me. It is human nature to want more, whether you are talking about money, or food or anything. To deny that is naive and so is blaming that basic element of human nature for this problem. How could anyone really expect to regulate away human nature?
Lenders did help create and then actively participated in this enormous expansion of mortgage credit and the resulting increase in housing "values" in order to make money. Everyone, including government, also cheered them on in the interests of promoting home ownership. But government didn't have to force lenders to do it. Lenders were always looking for a new way to loan money to more new customers.
The element most people miss in this argument is that lenders did NOT expect all these loans with less stringent underwriting requirements to go bad. Everyone assumes when looking back with 20/20 hindsight that there were large numbers of critics warning that these loans would go wrong. That wasn't the case.
Yes, there were a few critics. Just as there are always critics of every business idea that's ever been tried. Sometimes they turn out to be correct. Sometimes they are wrong. But the guys in the trenches move ahead either way. In this case, there were many, many more voices proclaiming that a new method had been found to better predict the chances of mortgage default without having to ask for all that pesky extra information underwriters had gathered in the past before making a decision.
That new method was credit scoring. The founders of some of the subprime mortgage companies (which ended up going down the tubes) actually went around giving presentations on this great new and infallible way to predict whether someone would pay their mortgage on time. They were never making loans they knew would go bad after they sold them off. They expected the loans to be paid. They expected the investors in mortgage backed securities to profit mightily, to be happy with their investment and thus buy many more pools of loans in the future. (At least this was the case before massive numbers of mortgages started going bad, when there was the usual rush to cover themselves and not get blamed.)
This growing reliance on credit scores was tied in very tightly with an increasing reliance on automated underwriting systems. These automated systems can supposedly weigh all the factors much more thoroughly than a human looking at the loan file could ever do.
I think our experience has proven otherwise. If you want a culprit for all this mess, I think you'll find one if you go back and track the rise of the use of credit scoring and automated underwriting.
Yet these systems are still in use today as the primary method of underwriting every type of loan being made. And to this day they are still approving loans with ridiculously high debt ratios, and ridiculously sparse credit histories. (A very recent real life example: an approval with a high credit score, but only 3 small accounts and with 57% of GROSS income going to debt payments and no history of having been responsible for making any rental payments ever.)
Good presentation CP, and I agree that banks are always interested in making good loans, and if tempted to make a risky loan also always wanted interest and collateral to make the risk palitable.
So, why before the late 60s wouldn't banks even open branches in black neighborhoods, why were they castigated for not being more easy with their loans, and why were they scourged for making loans to blacks on extremely tight terms. In the case of loans to blacks they seemed to have their own credit scoring departments and went by their own dictates.
Now this:
"Also, those who whine about "greed" being the cause of the problem sound silly to me. It is human nature to want more, whether you are talking about money, or food or anything. To deny that is naive and so is blaming that basic element of human nature for this problem. How could anyone really expect to regulate away human nature?"
seems to come from the modern era of greed is normal (socialist theory – all people want and should have what they haven't earned) and says more about your education and upbringing than it does about humanity.
No all people do not want what they haven't earned, not enough to go out and take it from those who have earned. It is only in this modern time after decades of having propaganda like, "you deserve a loan", "you deserve the same as that rich guy", "you should live equally well" rammed down their throats that American people line up at any trough offered in shameless guiltfree fashion.
No sir, CP, I think you're dead wrong, it is greed on the part of someone to take what they haven't earned no matter what guise the redistribution comes in.
Vast numbers of those mortgagees had to know when they applied for loans to buy the home of their dreams that having a house payment that consumed half of their income made it inevitable that unless God opened up heaven and dropped gold on them that they were not going to be able to keep up the payments. They did it anyway. What describes that better than greed.
Now, if you want to tell me that the American people have been made too stupid to recognize that they don't deserve it, then I can buy that. If you tell me that Americans don't understand greed and envy being bad things unless it is done by a Republican or conservative, then I can buy that as well.
The fact remains that a loan never made can not be manipulated, and a mortgage never made can not be foreclosed.
To say that seeking an individual who seeks a loan he can't afford, and mortgage he will default on is excused because everyone else is doing it only illustrates, and reinforces, again my point on just how far socialism has degenerated the morals of the American people.
Egads, that last paragraph has too much seeking in it.
To say that an individual who seeks a loan he can't afford, and mortgage he will default on is excused because everyone else is doing it only illustrates, and reinforces, again my point on just how far socialism has degenerated the morals of the American people.
is how it should read.
vidyohs -
Re: "Still can't say the word, won't recongize the malingredient."
Can't say what word? "cute f.ckers" or "human cripples"?
RE: "For the bankruptcy to be abnormal, something out of the ordinary had to be part of the deal, what is the one word that describes that "something" in the case of the GM bankruptcy?"
Politics? Large employer? Ripple effect? I don't know what you're talking about, but any of those three apply. I think GM should have gone bankrupt in December – I'm not a fan of this. But I don't see it as socialism either – I just see it as a really botched bankruptcy. I can sympathize with Bush and Obama for being scared of just letting it go bankrupt without some government support. I don't agree with it particularly, but I sympathize with it. But at the end of the day, it's not socialism it's a botched ad hoc bankruptcy.
Disingenious Kuehn,
No, son, those are not the words.
Try the word, government.
Take government out of the picture and GM would have moved straight to a "normal" bankruptcy. Messy, painful to some, but normal, not "abnormal".
It is your beloved interfereing socialist government that made it abnormal.
Tis a pity your intellect can let you see the abnormality but your lack of honesty (redundant when said about a socialist) prevents you from seeing why it was abnormal.
vidyohs -
Well, ok. That's what I meant be "politics", but your hair splitting is to be expected. I have no love for interfering socialist government.
It's an odd set of things you attribute to me – I like to think my honesty is far more notable than my intellect, which is rather average. I have wide interests and an eagerness to learn, but I'm not sure I have an especially high intellect.
It's your devotion to denegrating anyone that takes issue with your predetermined view of the world as a socialist that prevents you from seeing that I recognized government (or politics or whatever) as the abnormality, and that I have always stated on Cafe Hayek that I don't like what the Obama administration has done with GM – and that my only difference with you is simply that I don't think the sky is falling because of what they're doing with GM.
The fact is, in this day and age of swaps, debt restructuring is pretty much not an option anymore. Why should someone want to agree on a restructuring when they stand to make money on a bankruptcy event?
Both CP and vidyohs wrote good comments, and they are great demonstrations of the subjectivity of rational expectations and rational choice.
Of course those mortgages were sold off with full expectations they were written in good faith. To think otherwise would be a crime, right?
I'm not saying that sarcastically; I'm saying that they sold off that mortgage in the same frame of mind as the over-extended bloke who purchased the home.
They saw 35% gains in house prices in the area, and they had the option to refi at better terms once that increase was realized. There was all that pressure of missing out if they didn't.
Disingenious Kuehn,
You stayed as far away from saying the word, government, as you could and resisted as long as you could, and I gave you plenty of shots at it.
This is the revelation of your honesty.
"that I recognized government (or politics or whatever) as the abnormality,"
Posted by: Daniel Kuehn | Jun 6, 2009 2:33:42 PM
I don't denigrate people who disagree with me, I denigrate socialist. It is the least I can do for the cause of truth, honesty, and freedom.
Thank you very much.