patrick.net

bgamall4 says

Reality says

Self interest, and calculations based on that, is the very basis of practically all schools of Economics and Game Theory.

The invisible hand of self interest is limited to libertarianism alone. That invisible hand is supposed to weave goodness into the greater society.

"Invisible hand" was a term invented by Adam Smith. Libertarianism came too late to claim that term. Invisible hand is what makes the society functional. Nobody told you how to put on your clothes this morning. Nobody was ordered to bring you breakfast . . . unless you are in a jail.

But deregulation of the banksters, is like pulling the referees from a basketball game. The libertarians are too stupid and blinded to figure that simple lesson out.

The referees were cheer-leading the adjustable rate mortgages (Greenspan the top referee encouraging Americans to take on ARMs during Congressional Hearing in 2005-06) and not seeing any problem as late as in 2008 (Bernanke the top referee testifying at Congressional Hearing).

The whole "referee model" is wrong:

1. Nobody alive can be disinterested in the society; would you let one of the team's coaches to be the referee for the game that the team is playing?

2. Would you let a blind man be the referee in a baseball game?

bgamall4 says

Reality says

All men are driven by self-interest in the long run. Power corrupts.

How come the libertarians can't learn that simple lesson?

Libertarians learned that lesson quite well. That's why they advocate less power concentration.

“Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process.” -Alan Greenspan

Hypocrite! Loose monetary policy enables the confiscation of wealth UPWARDS! Money trickled up under Greenspan not down. Austrians are all about making Richie Rich even richer, with the hand-waving religious belief that somehow this will inevitably result in "all boats rising". And of course the ends justifies the means, so if you have to become Fed chairman to enable Utopia and mumble a lot so be it. The fact that it never works escapes them.

They called it the Greenspan Put, because they knew no matter what, Uncle Al was on the side of Finance & Bankers and would make sure they were taken care of. Why? It's about Al's religious belief that FIRE can do no wrong, and the best thing Big Gubmint can do is sit on it's hands and never take away the punchbowl no matter how rowdy the party is.

Did he ever admit culpability in any of this? NOOOOPE!

"Bernanke handed out billions to the banksters but was tightening money supply during 2008-2009."

I'm no expert here -- quite the opposite -- but what I think happened after Lehman is the Fed and Treasury intervened to put $800B in the banks, literally 'tiding them over' the coming crash of 2009.

http://research.stlouisfed.org/fred2/series/EXCSRESNS

is excess deposits the banks had at the Fed, a cash cushion they had to liquidate loans from, instead of telling their depositors they didn't have their money any more, Casey Serin took it, talk to him.

There were a few consumer banks that failed in 2008 -- IndyMac and Wamu were the mains one I guess. Citibank, Wells Fargo, and Bank of America were next.

Yes it is bullshit that they were saved and everyone else swept out to sea. But that's what TBTF gives you, and TBTF was created by free-market lunatics like Greenspan who have had their heads up their asses for a very long time.

Reality says

Libertarians learned that lesson quite well. That's why they advocate less power concentration.

Even though their principles would have the consequence of private mafias:

http:/s.randi.org/showthread.php?t=136113

spydah_hh says

Greenspan created the stock market bubble and the housing bubble with loose monetary policies

loose monetary policies certainly contributed to the housing BOOM of 2002-2003.

The BUBBLE of 2004-2007 was created by suicide lending empowering real estate professionals at all levels -- real estate agents and brokers picking up strings of properties with no cash up front, and cash-out refinancing to recapitalize their growing empire, millions (?) of other specuvestor types buying properties with liar loans, mortgage fraud at all levels, etc etc.

It was the unregulated 1920s all over again, and conservatives who set up the system and watched it go off the rails contrary to their religion were left to watch it all fall down in 2008-2009.

Reduced Regulatory Burden

Determined to cut red tape and reduce regulatory burden are (l to r), OTS Director James Gilleran, Jim McLaughlin of the American Bankers Association, Harry Doherty of America�s Community Bankers, FDIC Vice Chairman John Reich and Ken Guenther of the Independent Community Bankers of America. On June 3, 2003 under the leadership of FDIC�s Vice Chairman John Reich, the federal thrift and bank regulatory agencies launched a cooperative, three-year effort to review all of their regulations (129 in all) that impose some burden on the industry. The purpose of the review, which is mandated by the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), is to identify and eliminate any regulatory requirements that are outdated, unnecessary or unduly burdensome.

http://www.fdic.gov/about/strategic/report/2003annualreport/intro_insurance.html

"That's why they advocate less power concentration."

wealth is power, and this is the central contradiction in (right-) libertarianism -- right-libertarianism is the worship of wealth concentration.

I have yet to hear a right-libertarian say globalism, walmart, or

http://research.stlouisfed.org/fred2/series/CP/

is bad for our society. Their programming doesn't allow them to.

"privilege" from the latin is 'private' 'law', and that's what libertarians want.

and the only way you get privilege (in libertopia) is by purchasing it, just like all kleptocracies.

'privilege' in the corrupted soviet economy was awarded through Party connections, but now in Russia they've basically evolved into oligarchic libertarianism, a plutocracy that owns the natural wealth and physical plant of the country with the populace left with nothing.

I'd like to think libertarianism would work in the real word when combined with Georgism -- they call that geolibertarianism. But libertarianism without Georgism is certainly a short trip to plutocracy, he who has the gold makes the rules.

This is why rich mofos like Scaife and the Kochs fund libertarian message centers like Cato,

http://www.sourcewatch.org/index.php/Cato_Institute

big money has a happy time in libertopia.

Bellingham Bill says

Yes it is bullshit that they were saved and everyone else swept out to sea. But that's what TBTF gives you, and TBTF was created by free-market lunatics like Greenspan who have had their heads up their asses for a very long time.

The concept of TBTF is a joke on the believers of big government. There is no such thing as TBTF. Bear Sterns failed, Lehman failedd, and the final cost clearing their derivative portfolio was quite minimal as most positions were mutually off-setting despite the huge nominal values.

TBTF was an artificial concept concocted by the big government interventionists. 90-99% of American callers to their representatives and senators were "free market fanatics" who refused to recognize the TBTF concept and wanted the lousy bankster institutions swept out to see by the free market.

bgamall4 says

Reality says

"Invisible hand" was a term invented by Adam Smith. Libertarianism came too late to claim that term. Invisible hand is what makes the society functional. Nobody told you how to put on your clothes this morning. Nobody was ordered to bring you breakfast . . . unless you are in a jail.

Wrong. The libertarians claim Adam Smith. Invisible hand is one of the foundations of libertarian thought. Invisible hand did not make society function in the housing bubble and crash. It almost destroyed society.

1. The society is not destroyed. You are still living in it

2. Does market make mistakes sometimes? of course it does, just like you the human being make mistakes. Just like every single government official as human beings make mistakes. Do you want to those mistakes enshrined by the strong arms of gun barrels? If you do, then love your big government. If on the other hand, you believe each individual has the right to point out that the Emperor has no clothes on, then you are a free market advocate.

3. Unless you woke up in a jail, and a jail house slave laborer brought you breakfast, the invisible hand of the market place was what fed you this morning.

bgamall4 says

He was never a referee. He was a libertarian who believed in deregulation. We never had referees when Greenspan was holding interest rates low and blowing bubbles. The regulators were not permitted to do their jobs when Greenspan was in charge.

Of course he was the referee: he decided how much money was worth; i.e. the interest rate.

For you to use the argument that regulators didn't do their jobs and therefore we should not regulate, because a libertarian was over them, is just plain evil, Reality.

The regulator regulated how much interest rate was. The regulator agreed with most politicians that ARM was a good deal for Americans. Do you suppose they should have been given more power to force Americans into taking ARMs? Your implicit assumption that regulators have all the correct information and know future consequences of their actions is simply wrong.

sbh says

Imagine what we could look forward to in the austrian bizarro world. Toyota could produce untold numbers of death dealing cars, but if the price was low enough we would just have to wait for the marketplace to sort out the pricing power of death due to sudden acceleration. And, the private courts, owned by whomever, would put their stamp on it as well. Joe Camel would be up there with Ronald McDonald in the school-age kids' pantheon of social heroes. Lung cancer in middle school is merely the price of freedom. Hell, why shouldn't Budweiser be part of school lunches? Let the free market speak!

The free market speak would be no robbing of parents to run school lunch program at all, so taxpayers do not subsidize Pink Slime fed to precocious school aged children like they have been doing.

The government costume apparently did not save the cop from driving the loaner Lexus to triple digits speed with a stuck throttle, eventually to the death of his entire family. Now tell us, how exactly how he had known the Toyota/Lexus problem apriori just because he was a government official? Why was he suicidal after magically knowing such facts? Apparently the man, despite being a traffic cop for many years, did not even know to shift the car into neutral; nor did the 911 operators on the other end of the phone call. So much for bureaucratic omniscience. They literally didn't know enough to save their own lives!

sbh says

Reality says

The free market speak would be no robbing of parents to run school lunch program at all

Right, the grubby little urchins could hold fist fights each day in the dirt lot to see who had the strongest pricing power. That's the only pure way to determine who deserves to eat an austrian lunch. Better to eat with your knuckles than to pay a moment of taxation. Everybody knows that.

Utter nonsense. You are looking at a government run monopoly that takes money from parents, and spend most of the money on the bureaucracy itself instead of on the actual food, so now the kids have to eat Pink Slime for lunch . . . yet all you can think of is the government monopoly being the only possible supplier of food. Do you live in a jail or something? Do you think jail food (where Pink Slime also have a larger than usual share) is better than food that normal people buy from competitive vendors outside the jail?

Reality says

The regulator agreed with most politicians that ARM was a good deal for Americans. Do you suppose they should have been given more power to force Americans into taking ARMs?

Let me understand this. Regulators are bad and should be abolished because they allowed banks to make arm's instead of regulating arm's or not allowing arm's. So you are saying that there should have been more regulation and regulators failed because they didn't regulate enough. That's "logic" worthy of the captain.

Reality says

so now the kids have to eat Pink Slime for lunch

The option still exists to pack a lunch. Obviously a lot of parents are perfectly ok with pink slime. They voted with their wallets on the issue, so why are you the mighty oz saying they are wrong.

bob2356 says

Reality says

The regulator agreed with most politicians that ARM was a good deal for Americans. Do you suppose they should have been given more power to force Americans into taking ARMs?

Let me understand this. Regulators are bad and should be abolished because they allowed banks to make arm's instead of regulating arm's or not allowing arm's. So you are saying that there should have been more regulation and regulators failed because they didn't regulate enough. That's "logic" worthy of the captain.

You are making the mistaken assumption that regulators would see ARMs as a bad thing in a bubble therefore curtail it. The reality was that the regulators encouraged ARMs during the peak of the bubble! They thought it was great and more cost-effective than fixed rate mortgages!

If they had more regulatory powers, they would have used that regulatory power to encourage more ARMs at the expense of other forms of capital allocation.

bob2356 says

Reality says

so now the kids have to eat Pink Slime for lunch

The option still exists to pack a lunch. Obviously a lot of parents are perfectly ok with pink slime. They voted with their wallets on the issue, so why are you the mighty oz saying they are wrong.

They were forced to make that choice because much of the content of their wallet has already been stolen by the bureaucracy that runs school lunch (which spends more money on the bureaucrats than on food), the public schools themselves, and myriads of even worse forms of big government expenditures.

Reality says

They were forced to make that choice because much of the content of their wallet has already been stolen by the bureaucracy that runs school lunch (which spends more money on the bureaucrats than on food), the public schools themselves, and myriads of even worse forms of big government expenditures.

Horseshit.

bob2356 says

Reality says

They were forced to make that choice because much of the content of their wallet has already been stolen by the bureaucracy that runs school lunch (which spends more money on the bureaucrats than on food), the public schools themselves, and myriads of even worse forms of big government expenditures.

Horseshit.

I see, another big government type running out of arguments. Thank you for the honest admission.

Reality says

You are making the mistaken assumption that regulators would see ARMs as a bad thing in a bubble therefore curtail it. The reality was that the regulators encouraged ARMs during the peak of the bubble

They encouraged it? Pray tell how/ So those evil regulators "encouraged" arm's and the banks were forced to hand them out to people totally unqualified to pay them back? Those poor helpless banks making billions of dollars against their will. My heart goes to them.

Please feel free to continue on this line of "logic". I haven't had this good a laugh in months.

Reality says

bob2356 says

Reality says

They were forced to make that choice because much of the content of their wallet has already been stolen by the bureaucracy that runs school lunch (which spends more money on the bureaucrats than on food), the public schools themselves, and myriads of even worse forms of big government expenditures.

Horseshit.

I see, another big government type running out of arguments. Thank you for the honest admission.

Horseshit is horseshit, there is no need whatsoever for argument. The problem is you actually believe it.

Reality says

The worth of money, i.e. opportunity cost of money, refers to interest rate.

Expected Future value of money\current value of money = opportunity cost of money = risk free interest rate = inflation rate.

sbh says

yet all you can think of is the government monopoly being the only possible supplier of food.

No, no. The little buggers can buy their own food from unlicensed street venders when they head to school after a shift in the mines. Or better yet, they could just eat the scraps off the floor of the meat packing plant that hires them at age 7.

Would you send your kids to jobs like that if you had better choice? Don't even get me started on the price of street vending license and how that cost gets extracted from consumers to feed a few bureaucratic fat cats

They should have enough scratch to bargain for immunization shots peddled on the streets by unlicensed snake oil salesmen. If it doesn't work out and they die, that's just the social market clearing.

So now instead the snake oil salesmen are given by the government the license to kill: as immunization shot manufacturers are immunized from law suits when the kids die or suffer from Autism due to undead virus or mercury poisoning. BTW, your kids can't even go to school without taking the shots from the snake oil salesmen! That's the reality of your social engineering.

All of this is better than paying one cent of tax. Everybody knows that.

You can see taxes as a new age "indulgence sales" to obviate your own personal responsibility, or you can see it as a scam just like the "indulgence sales."

bob2356 says

Reality says

You are making the mistaken assumption that regulators would see ARMs as a bad thing in a bubble therefore curtail it. The reality was that the regulators encouraged ARMs during the peak of the bubble

They encouraged it? Pray tell how/ So those evil regulators "encouraged" arm's and the banks were forced to hand them out to people totally unqualified to pay them back? Those poor helpless banks making billions of dollars against their will. My heart goes to them.

Please feel free to continue on this line of "logic". I haven't had this good a laugh in months.

You are changing the topic. I was talking about the regulators literally encouraged ARMs at the peak of the market when the rates were at multi-decade lows.

As for encouraging handing out loans to people who were unqualified, that came with double barrel of policies:

1. affirmative action in loan making

2. making "lender of last resort" safety net available to big financial institutions when their loan portfolio go bad.

control point says

Reality says

The worth of money, i.e. opportunity cost of money, refers to interest rate.

Expected Future value of money\current value of money = opportunity cost of money = risk free interest rate = inflation rate.

Mostly correct, with the addition of time value.

Reality says

Mostly correct, with the addition of time value.

Expected future value of money is dependent on time value.

control point says

Reality says

Mostly correct, with the addition of time value.

Expected future value of money is dependent on time value.

I was thinking of time value as in rewarding the patience of waiting. It's a small point.

I think the article was ok, but did not give a reason for Greenspan's change to the dark side.

I think the real reason was that since 1997 he has been thinking with the little head.

sbh says

which forced the mine to kill the children in an inefficient manner thereby raising costs to consumers

you joke, but this is literally what these asshats post here repeatedly

Obama Policy Seeks To Reduce Working Hours and Decrease Business Profitability

sbh says

Reality says

Would you send your kids to jobs like that if you had better choice?

If their only choice is to die in the mines it's the government's fault, surely. Either the government over taxed the mine owners or the government forced the mine owners to pay something at all or the government refused to let the mine owners kill the kids and sell them as fertilizer or the government refused to let the mine owners charge the kids for the privilege of working in the first place. It just doesn't matter: the government is to blame.

Are you talking about ancient Greece or pre-Civil War American South, both of which had de jure slavery enforced by the government? Otherwise, are you so dumb as to think the government outlawed child labor before it was already on its way out? Where do you think the votes came from if child labor were still common practice? The legislations banning child labor only became politically possible when free market improvement of the human condition had reached a level where child participation in labor force was already becoming unnecessary for the family and the vast majority of employers.

sbh says

One can literally only resort to humor to innoculate against such lunacy, otherwise we, the sane ones, ultimately have to join the lunatics. No one enjoys being taxed, even fascists, I presume, if in fact I knew any.

Really?? So you are saying those who advocate raising taxes are just sociopaths incapable of feeling other people's pain?

But the bizarro world of anarcho-capitalism is just too perverse in its victimhood theories: without OSHA kids wouldn't die in mines. It's remarkable, really.

The stupidity is remarkable. What do you think OSHA is? Some kind of omnipotent god-like figure that checks in each mine shaft every fraction of a second? Do you really think kids died in mines in droves after 1938 Fair Labor Act banning child labor but before 1971 establishment of OSHA? Really? Can you big government worshipers even read a calendar?

Reality says

Austrians were very critical of Greenspan even when the mainstream media was praising the "Maestro." In fact, Austrians were among the earliest critics of Greenspan policies.

and of Reagan too

indigenous says

I think the article was ok, but did not give a reason for Greenspan's change to the dark side.

I think the real reason was that since 1997 he has been thinking with the little head.

It was fame & power.

If you are given control of a nation's money supply it is too much perhaps for a mortal to avoid using all of the power granted to you.

Greenspan was an interventionists almost from day one:

During Greenspan’s tenure as Fed Chair he confounded us with an inimitable and often indecipherable verbal style. From softening the effects of the 1987 stock market crash (the Fed “stands ready to serve as a source of liquidity to support the economic and financial system”), to his attempt to jaw bone some of the “irrational exuberance” out of the nascent Nasdaq .com bubble in late 1996, to the arrangement of a bailout of Long Term Capital Management in 1998, to the pouring of liquidity into the market and lowering of interest rates in 2001 post 9/11, Greenspan’s Fed tenure had a decidedly interventionist streak that was antithetical to his pro free market/anti statist views of two decades earlier. Indeed, Mr. Greenspan’s Fed used an interventionist monetary policy so often to prop up the markets that such actions were called the “Greenspan put”.

http://smaulgld.com/negative-interest-rates-and-janet-yellen/

smaulgld says

It was fame & power.

Maybe, but I think my take is more accurate. His wife is quite doable, she hales from NBC which makes her mutually exclusive to Austrian economics, this would put poor Alan at her mercy...

spydah_hh says

The hype and herd mentality that is created by cheap money from the FED, yes

Not all bubbles however are created by the Fed.

The stock market bubbles are a direct result of Fed policy as was the housing bubble in the 2000's and the housing price bubble of the past two years.

The Fed admits that their policies are designed to raise asset values in stock and real estate markets to create a wealth effect-they just don't call rising stock and real estate prices, bubbles when the underlying fundamentals don't support the valuations, they call it a success.

bgamall4 says

Remember what that Republican guy from Alabama said? He said the regulators exist to serve the banks.

Bank regulation unfortunately exists to keep the big banks entrenched Look at the many fines that have been levied against citibank, jp morgan etal in the billions of dollars in the past few years. Only the big banks can pay those types of fines, smaller banks can't afford the compliance and legal fees and fines.

Holder even admitted they really can't regulate the banks because of the impact that bringing down one of those banks would have on the economy- a startling admission that the banks control the country

bgamall4 says

Our nation is not powerful enough to stop the Fed or decide. Look at when Tim Geithner was forced on the treasury as a Fed Mole. The guy actually gave money to banks everywhere to cover AIG's mistakes, and he did so at the behest of the Fed.

True and Geither actually did some document cover up for AIG-straight up criminal act and nothing happened.

http://www.businessinsider.com/the-25-billion-dollar-secret-the-ny-fed-goldman-and-the-aig-cover-up-2009-11

and then there was the issue of his personal taxes and failing to report portions of his income for two years and he still became treasury secretary http://blogs.wsj.com/washwire/2009/01/21/turbotax-responds-to-treasury-nominees-disclosure/

indigenous says

Maybe, but I think my take is more accurate. His wife is quite doable, she hales from NBC which makes her mutually exclusive to Austrian economics, this would put poor Alan at her mercy...

fame power and women- all human weaknesses

Its part bad monetary policy and part fraud working together

smaulgld says

spydah_hh says

The hype and herd mentality that is created by cheap money from the FED, yes

Not all bubbles however are created by the Fed.

The stock market bubbles are a direct result of Fed policy as was the housing bubble in the 2000's and the housing price bubble of the past two years.

The Fed admits that their policies are designed to raise asset values in stock and real estate markets to create a wealth effect-they just don't call rising stock and real estate prices, bubbles when the underlying fundamentals don't support the valuations, they call it a success.

No, all bubbles were created by the FED. Now if you're speaking of recessions then I'd agree not all recessions are created by the FED.

A recession can be caused by a bubble which effects the entire economy in all sectors now a recession that's not created by a bubble normally does not effect the entirety of the economy.