In what I can only type with a combination of disgust and astonishment, SEC Chairman Christopher Cox blames the current crisis on the “boom-and-bust cycles” of markets.

“Financial markets, of course, are not perfect. In particular, they are susceptible to boom-and-bust cycles. Cycles of this sort have been a hardy perennial over the past 400 years of experience with organized markets. Addressing the results of these cycles is why we have protective mechanisms such as the Federal Reserve System and federal deposit insurance.

But clearly these mechanisms proved inadequate to prevent the current crisis. As the Congress and the new administration consider what improvements are necessary, they should take exceptional care to preserve the premise of well-ordered markets that underlies our enforcement and regulatory regime. Maintaining the arm’s length relationship between government, as the regulator, and business, as the regulated, is essential. Otherwise, when the government becomes both referee and player, the game changes dramatically for every other participant.

Rules that might be rigorously applied to private-sector competitors will not necessarily be applied in the same way to the sovereign who makes the rules. On several occasions during the past year the Treasury and the Fed took on the unusual role of negotiators and principals in merger and acquisition transactions that normally would have been arranged by private parties. Even in these extraordinary cases, however, it remained the role of the SEC to regulate these transactions for the protection of investors. We took pains to stay at arms length in these cases, but our close collaboration with these same government agencies has made this truly terra incognita.”

Talk about an imperfect messenger: You will note that nowhere in his entire Op-Ed is there any mention of the role of the SEC in the entire credit or financial mess — most notably, the SEC’s nonfeasance. They utterly failed to discharge their legal responsibility to regulate the Rating Agencies (Moody’s, S&P, Fitch). Note that these same agencies are the ones that slapped triple AAA rating ont he mortgage backed paper at the root of the current crisis.

Nor does he address the role of the SEC in allowing the 5 biggest investment banks — now wards of the state — to waive net cap rules and lever up to 40-to-1.

Cox takes zero personal responsibility for the current crisis for the acts of his own agency, or even himself.

You may dismiss the entire Op-Ed written by the Chairman as a steaming pile of cluelessness and evasive subject changers.

Whether you read it or not is up to you, but my advice: Don’t step in it.

>

Source:
We Need a Bailout Exit Strategy
Let’s not forget that free markets made America strong.
CHRISTOPHER COX
WSJ, DECEMBER 10, 2008, 11:24 P.M. ET

http://online.wsj.com/article/SB122895345612296365.html

Category: Bailouts, Legal, Markets, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

123 Responses to “SEC’s Chair’s Bailout Bull$%&t”

  1. dig1 says:

    “Cox takes zero personal responsibility for the current crisis for the acts of his own agency, or even himself.”

    Seriously, isn’t this what we are facing square here in the United States at these perilous times? Listen, it may not be my place here to talk (for i don’t own any stocks or T-bills or anything or i don’t even consider to be a middle-class person), but my question is- WE HAVE NO LEADERS because leadership requires courage and responsibility. If you think any of the CEOs that we have in most companies are leaders, then how come no one yet, as far as i know, has come out and said, “I regret that we have had to put the whole country in such a condition?” You all might think i am some right-wing christian with the next statement, but i am far from that. Capitalism never works unless there’s some moral responsibility for the actions that those that are in power to be have towards those that are at their mercy. If anything, this crisis should teach us, it’s that we have gone down the tube when it comes to what it means to be a citizen of a country.

  2. Rightline says:

    Cox and Bush….perfect together….More revisionist history. Either they have sick minds or they think (know) the average sheep will eat their crap.

  3. wally says:

    The biggest disappointment in everything that has surfaced over the last few years is the recognition of the total idiocy of so many people who got into powerful positions in this country. I’m not sure what mechanisms propel them there, but we deserve what we have gotten for letting it happen.

  4. whitespiral says:

    The biggest irony is how the actual creator of the business cycle, the Fed, is portrayed as the saviour who just couldn’t get around the problem this one time.

    How comfy…Two years ago they were talking about the Bush Boom, Goldilocks 2.0 and how their enlightened and magical policy measures showered prosperity on every single American. Now that Greenspan’s chicken are coming home to roost, it’s the market’s fault for spoiling everyone’s party.

    What I’m still trying to figure out is whether we’re talking about economic illiteracy on a massive scale, or plain old special interests exploiting big government’s tentacles to grab their share of the pie.

    Either way the now ubiquitous dinner table quote of the evening, “Its obvious capitalism has failed”, is starting to get on my nerves. Reminds me of that classic scene in “The Aviator” where Howard Hughes meets Hepburn’s family and gets pissed off by their lofty pro-socialist rhetoric, when neither of them has worked a day in their lives.

  5. DownSouth says:

    dig1 said: “Capitalism never works unless there’s some moral responsibility for the actions that those that are in power to be have towards those that are at their mercy.”

    Libertarian dogma (of which Cox is undoubtedly the most zealoous of acolytes) is closely associated with two current popular economic schools–Chicago and Austrian. Both schools suffer from the same fatal flaw that Communism does, and that is that at their core is a concept of human nature that is a fiction.

    In the case of Communism, the best critique I’ve encountered was rendered by Cornel West in “Race Matters.” West discusses the philosophies of W.E.B. Dubois, who touted the mantra of the “talented tenth”–10 percent of the black populaton that is better educated and well informed, that “knew best” and supposedly would act benevolently and lead the other 90% to the promised land. The flaw in this is that the “talented tenth,” when empowered as they were in Communist regimes, didn’t act at all benevolently, but according to human nature.

    The Chicago and Austrian schools have at their core a construct of man that is equally fictitious. Homo economicus, or Economic man, is the concept in these theories that holds humans to be rational, perfectly informed and self-interested actors who desire wealth, avoid unnecessary labor, and have the ability to make judgments towards those ends. But as the theologian Reinhold Niebuhr points out, this is a simplistic, sentimental view of human nature:

    “The false abstraction of ‘economic man’ remains a permanent defect in all bourgeois-liberal ideology. It seems to know nothing of what Thomas Hobbes termed ‘the continual competition for honor and dignity’ in human affairs. It understands neither the traditional ethnic and cultural loyalties which qualify a consistentent economic rationalism; nor the deep and complex motives in the human psyche which express themselves in the desire for ‘power and glory.’ All the conflicts in human society involving passions and ambitions, hatreds and loves, envies and ideals not recorded in the market place, are beyond the comprehension of the typical bourgeois ethos.”

  6. Tom K says:

    “personal responsibility”?

    So we elected a new regime who’s entire economic ideology runs counter to the concept of personal responsibility.

    I almost agree with dig1, but responsibility doesn’t need to be driven by “morals” in order for capitalism to work. “Risk-takers” need to have real skin; unescapable, devastating consequences for making poor decisions. Capitalism fails without those consequences, and the current actions by our government demonstate they’re not capitalists.

  7. Katie says:

    Boom and bust cycles? The reason we are in this mess is because Greespan (who neither takes zip responsibility) thought he is God and can do away with it. And everybody else played along.

  8. ottovbvs says:

    Cox is really one of the prime culprits here not very far behind Easy Al. Basically he was a personally lazy, but fervent believer in extreme free market capitalism and deregulation. He reminds me of one of those Czarist war ministers before 1914 who was completely blinkered and oblivious to reality while the troops went off to war without rifles. This guy makes Brownie look like dedicated public servant. Ultimately of course the book stops with Bush or more likely Cheney who chose this bozo but then ultimately you have to blame the American people who were dumb enough to elect Bush and Cheney twice. People get the governments they deserve.

  9. Stuart says:

    But Cox’s attitude is perfectly reflective of the managerial oligarchy. It’s a cultural “best practice” equivalent of socialize losses and privatize gains, socialize blame and privatize credit that is deep seeded and embedded in the upper echelons of those within managerial oligarchy. Cox’s comments illustrate why a cultural re-boot is required among this class.

  10. DownSouth Says:

    December 11th, 2008 at 8:52 am

    DS,

    no offence meant, but your post is utter BUL**HIT

    why walk it over to http://www.mises.org , and the them what they think of ‘homo economicus’ ?

  11. try this:
    Psychic Impairment
    October 26, 2008 8:19 PM by Jim Fedako

    Last week I suffered a psychic loss in the form of a goodwill impairment charge. What?!? Only the business firms take goodwill charges. Not so fast. While it is true that firms take such charges, it is also true that everyone experiences psychic profits and losses throughout the day.

    Acting man seeks to increase the asset side of his psychic value in every exchange; he seeks psychic profit. However, just as in a free market, losses are everywhere. And it’s our value judgments of potential psychic profits and losses, and our value judgments alone, that have the ability to guide an economy toward an efficient utilization of scarce resources.

    Unlike other schools of economic thought, the Austrians do not construct homo economicus as the originator of action. In its place, the Austrians assume a myriad of acting individuals, all basing their actions on purely subjective valuations. The key here is that acting man can change his valuations at any point, based purely on subjective reasoning. ..
    http://blog.mises.org/archives/008851.asp
    for starters,

    and, further: http://www.google.com/search?oe=utf8&ie=utf8&source=uds&start=0&hl=en&q=homo+economicus+site%3Amises.org

    and to clarify this: “DS, no offence meant, but your post is utter BUL**HIT

    why Not walk it over to http://www.mises.org , and Ask them what they think of ‘homo economicus’?

    Sorry, but you False Equivalancy of Chicago=Austrian, is Something that Cox, himself, might try to pull-off..

  12. km4 says:

    > You may dismiss the entire Op-Ed written by the Chairman as a steaming pile of cluelessness and horseshit

    Yes I do !

    Stiglitz has an excellent article in Vanity Fair on how we got to the worst economic times since the 1930s. He points to five key mistakes—under Reagan, Clinton, and Bush II—and one national delusion.

    The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal.

    Joseph Stiglitz on Capitalist Fools: How We Crashed the Economy
    http://www.dailykos.com/story/2008/12/10/82418/061/679/670543

  13. awilensky says:

    Occasionally, an actual physical beating has to be administered – not out of anger, but for the good of industry and the public interest. Without beating Cox hard in front of a Web Cam, we are saying to the next generation of regulators, “do or don’t, we care not, let us rot, here’s your check, get ready to lobby in a few years”.

  14. whitespiral says:

    Downsouth,

    If you’ve read enough Austrian work you’d know full well that neither Mises, nor Menger, nor Bohm-Bawerk who put the pillars of Austrian theory consider man to be purely rational. They abstracted and said that economics should be value-free (vertfrei) for precisely this reason.

    If I like a Porsche for its superb build quality and engineering, and thus, relative to other goods and services in the economy, place a higher value for it than the $100,000 the dealer asks for it, that’s “homo economicus” at work. But so is liking a contemporary painting with cats and dogs getting it on because it satisfies some inner sexual perversion, and again, placing a higher value for it than the $100,000 the dealer asks for it.

    In Austrian theory, human action demonstrates choice, and since it is HUMAN, and subject to individual whims and desires, this choice CAN’T be predicted. That’s why you don’t see any Austrians making forecasts, but rather, issue warning about the sustainability of credit bubbles, and the economic booms that follow them.

    The Chicago or Neoclassical School on the other hand aggregates to enormous levels, and makes technical predictions about what an ENTIRE ECONOMY is going to do if the supply of money falls X percent, or inflation goes beyond a certain benchmark. They, of course DO assume perfectly rational players, and that is partly due to their positivist leanings – a scientific methodology that works wonders when applied to the physical sciences, but fails horribly when transfered over to social ones (like economics was, is and always will be).

    Neoclassicals will even apply game-theory to make predictions, something that again, fails horribly when taken out of the context of GAMES.

    It’s one thing reaching sub-game perfect equilibrium in a chess game, and quite another to do the same in the famous bank robbery scenario where the robber asks you for the password to the bank vault at gunpoint, but you know that is an empty threat because only you know the password.

    Herein lies the difference. The Neoclassical, in order for his nifty model to work, will assume that you make the perfectly rational choice of withholding the password from the robber. The Austrian, who doesn’t even need to make that prediction to make some model work, will accept that in all likelihood, you’d be scared shitless or fear the other guy is a nutcase and give him the password in your best practiced smile.

    It is precisely these Chicagoite pipedream models and ideas that have given the free-market a bad name.

  15. Mark E. Hoffer:
    DownSouth’s premise, while not 100% correct, is towards the target. Hell, Greenspan was bosom buddies with Ayn Rand. It’s a combination of Rand-ism gone amuck and Republicans not being interested in governing(see Grover Norquist and his want to drown government in a bathtub).

  16. Tom K says:

    @DownSouth

    Your analysis of the Austrian school’s view of human nature is grotesquely cartoonish. Most humans are indeed “self-interested actors” – which doesn’t necessarily mean they make decisions that ultimately result in their own best interest. Nor do Austrian’s believe humans are “perfectly informed” or even desire substantial wealth – I could argue manyAmericans are satisfied by fulfilling the basic requirements of the lower rungs of Maslow’s pyramid.

    The idea that government is better suited to “make judgments” for individuals is where socialists (and social democrats) go wrong. Humans are flawed, and even the most “perfectly informed” will make poor decisions from time to time. That isn’t a “simplistic, sentimental view of human nature”. Socialism uses the flawed-human concept to ultimately strip everyone of personal liberties…and sense of personal responsibility.

  17. DownSouth says:

    dig1,

    To finish my thoughts, libertarian (free market) true believers like Cox live in a world completely disconnected from reality. As Eric Hoffer pointed out about these doctrinaire types:

    “A doctrine insulates the devout not only against the realities around them but also against their own selves. The fanatical believer is not conscious of his envy, malice, pettiness and dishonesty. There is a wall of words between his consciousness and his real self. ”

    Cox’s fanatical embrace of his ideology thus allows him to make nonsensical claims such as “government is an auxiliary to the market, not a substitute for it or a participant in it.” This of course flies in the face of any impirical analysis, such as the one conducted by Kevin Phillips for his recent book “Bad Money.” Phillips meticulously documents the massive government largesse and special legislative protection lavished on the banking and finance industry during the past 30 years. In “Wealth and Democracy” Phillips takes a longer view, showing that government has always been the principle engine of economic development in the United States, not “free markets” as the fiction embraced (and evangelized) by Cox would have us believe.

    The libertarian, free-market zealots now have their hands firmly on the levers of power. Their power must be broken. I had high hopes that Obama might be the first step in this correction, but thus far he is shaping up to be a major disappointment.

  18. ottovbvs says:

    km4 Says:

    December 11th, 2008 at 9:20 am

    The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal.

    Interestingly this is the conclusion at the end of Krugman’s recently re-issued Depression Economics. Probably because they both have a roughly similar view of the world. It’s the age old dilemma isn’t it. Capitalism is the one economic system that works, even the Chinese communists now believe it, but in any well ordered society it has to be harnessed for the greatest public good and this is sometimes a messy process. You see a classic playing out of this conflict in the pharmaceutical industry which is a tremendous engine for producing medications that benefit us all but is constantly being caught in unethical or downright illegal activities in pursuit of ever higher profits. Capitalism needs gatekeepers and they need to be awake. Cox didn’t believe in gatekeepers but took a well paid assignment as a gatekeeper and then went to sleep.

  19. Calvin,

    to continue BR’s meme, your post, as well, is ########.

    Rand has Nothing to do Austrian Economics, and the same goes for the current crop of ‘our leaders’: the Neo-Cons y Neo-Liberals..

    Time to Realize: There’s hardly a different between the (R)’s and the (D)’s , “Hope”-ing for “Change” not withstanding..

  20. Mannwich says:

    I’m not reading it. These people are criminals and need to go to prison. Plain and simple. I’m waiting…….

  21. ottovbvs says:

    DownSouth Says:

    December 11th, 2008 at 9:40 am
    dig1,

    To finish my thoughts, libertarian (free market) true believers like Cox live in a world completely disconnected from reality. As Eric Hoffer pointed out about these doctrinaire types:

    “A doctrine insulates the devout not only against the realities around them but also against their own selves. The fanatical believer is not conscious of his envy, malice, pettiness and dishonesty. There is a wall of words between his consciousness and his real self. ”

    The Hoffer quote could of course be applied with equal force to communists. Hence the belief that when it comes down to it there isn’t much difference in approach between the far right and far left although their economic theories may be very different. We’re clearly entering a period when the pendulum is going to swing back against far right economic theories and much of the orthodoxy of the past thirty years is jettisoned. The far right’s worst nightmare is probably going to happen. We’re going to look rather like Old Europe. Don RIP.

  22. ottovbvs says:

    hoffer says:
    “Time to Realize: There’s hardly a different between the (R)’s and the (D)’s , “Hope”-ing for “Change” not withstanding..”

    That’s because this is a border war. The basic economic geography was settled long ago. There’s no real disagreement about the basic shape of the economic system but merely about how it’s operated and how the spoils are divided up.

  23. this: “The Hoffer quote could of course be applied with equal force to communists. Hence the belief that when it comes down to it there isn’t much difference in approach between the far right and far left although their economic theories may be very different. ” from ottovbvs

    Was Eric Hoffer’s whole point, the observation was a Universal one..

    To try apply it against one Group, to the Exclusion of another, is a perfect example of what E. Hoffer was describing. IOW, to hoist one’s self upon their own pretard..

    nice point otto..

  24. “That’s because this is a border war.”

    yes, where We take orders, dig the Trenches, and serve as Cannon Fodder, a la WWI.

    “The basic economic geography was settled long ago.”, sadly, from the same era, 1913..

    “There’s no real disagreement about the basic shape of the economic system but merely about how it’s operated and how the spoils are divided up.”

    …”"The powers of financial capitalism had (a) far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank…sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.” –Carroll Quigley
    http://quotes.liberty-tree.ca/quote/carroll_quigley_quote_e775

  25. Moss says:

    People like Cox can not take any responsibility either personally or philosophically since it would be a tacit admission of fault or failure. This is the conundrum we all face as evidenced by the continued denial and strict adherence to demonstrated failed policies. Other than Greenspan’s admission who prey tell in this camp has said anything was wrong? Bush still believes he did the right thing in Iraq for God’s sake. Kudlow and the other wingnuts still cling to the supply side philosophy. The problem is that these beliefs define these people and in some cases their very existence. If Kudlow ever changed his philosophy he would not continue in his role as a supply side advocate and have no place as the chief cheerleader. I use Kudlow as an example since he is the vocal and viable.

  26. whitespiral says:

    Of course markets can “regulate themselves”, or more accurately, appoint referees, standards and rules by which all market participants must abide.

    What do you think would happen if the aviation industry began and no FAA was ever established? Do you think the airlines would do as they please and operate flying coffins, killing a few thousand passengers in the process, and continue business as usual? No, what would happen is that no aircraft manufacturer, or airline would get any form of insurance without demonstrating their operational and safety standards. Alliances, safety standards, and endorsements would all play a part in what airline people chose to fly.

    Now substitute that for an FAA that sets the rules, but the minute one major airline lawndarts a 747 full of people, and the public’s confidence in flying with this company has all but evaporated, it deems the stricken airline as systemically important, and instead of letting it go down the drain for its shady safety standards, grants it with a couple of new Boeings to get “bums on seats” again.

    And then you blame Rand and the free-market….

  27. Of course markets can “regulate themselves”, or more accurately, appoint referees, standards and rules by which all market participants must abide.

    Really.

    Can you name one?

  28. whitespiral says:

    Folks, the spectrum that’s important isn’t Left vs. Right. The spectrum is Command vs. Market systems, and the whole global system has sat squarely on the side of command economies for the past century. You can’t have central banks, fiat money, mammoth welfare/warfare states and still claim we lived in a market-driven society.

    Now, AFTER all mainstream politicians and ideologies have IN PRACTICE agreed on the level of government involvement they’d like to have, their quarrel is about how to divide the spoils.

    Remember, we’re talking about politicians whose life ambition is to attain power and govern. And we expect THEM to start limiting themselves and letting free people make their choices? Are we so naive as to assume they won’t just use these positions to award themselves more powers? Everyone thinks that THEY can govern even as big and complex an organization as the US. So why not give THEMSELVES more power to let their magic work?

    Sadly, we’ve seen the outcome every single time the state gobbles up more power. Theft, Oppression, and War.

    Everybody’s calling for the new FDR to arrive. Beware what you wish for.

  29. The Curmudgeon says:

    How does anyone that does something so ludicrously stupid as banning short selling of anything get branded a “free-market” idealogue?

    Free-market v. socialism; Chicago/Austrian school v Keynesian; these are all very nice dichotomies that have no particular relevance to gathering an understanding of what in fact has happened and what might happen in these unsettled days–they mainly serve to operate as an ink-blot test for political-lizard brains.

    “Free” markets are an illusion, but then so is the notion that government-directed markets will do what the government directs. Bigger forces are at work than can be controlled by governments, and markets are never free, but require specified rules and the ability to enforce them, implying some sort of governmental influence and participation.

    Blaming the present problems on any particular ideology only reveals one’s own ideology and biases, tainting the analysis. Good economic analysis (which one rarely sees) has no ax to grind, but rather tries to understand what actually happened, and using scientifically-valid correlative/causative analysis, tease out possible reasons why.

    Christopher Cox is an idiot because he made no attempt to figure out what was really happening in the markets. Exhibit A to his idiocy was his feckless attempt to prevent a particular type of market transaction (short selling), which was both inept (there are other ways to bet against a company) and anyway had nothing to do with market realities.

  30. whitespiral says:

    Prostitution. (Fed aside).

  31. Mannwich says:

    @whitespiral: You ARE kidding (“prostitution”), right?

  32. Mannwich says:

    And I don’t think “everyone’s calling for a new FDR to arrive”. Who exactly is “everyone”? I DO think that many of us want our government to be COMPETENT, NON-IDEOLOGICAL, PRAGMATIC, EVEN-HANDED, and WISE. Is that too much to ask?

  33. rknox says:

    Of course markets can regulate themselves
    Chinese farmers put poison into watered down milk to make more profit
    US Governors sell senate appointments

    Let the market regulate itself – but you must harden your heart for all the innocents that are harmed; unless you are prepared to do some regulating of the otherwise free market.

  34. Mannwich says:

    I forget to mention HONEST. Thought that was a given but in this day and age, I guess not. No laughing now.

  35. whitespiral says:

    Mannwich, no I am not kidding. (Although I’ll admit to choosing for its association to the Fed).

    Regarding what you (and I, for that matter) would like our government to be, tell me, when was the last time we’ve had all these wonderful things in a government?

    Government should be left with the very basic notions that hold us as societies together. Protect our bodies, our laws, and make sure they’re enforced. Trouble is, it takes government to limit itself to that-and it don’t like it one bit.

  36. molten_tofu says:

    whitespiral, let me guess: those same insurance corporations would NEVER agree to insure a class of investments unless banks could “demonstrate” the REAL value of those investments.

  37. Mannwich says:

    When we elect leaders who don’t believe in government doing anything but doling out our treasury monies to their friends, then it’s no surprise we are where we are.

    But “prostitution” as an example that runs quite nicely without government interference? You must be kidding? You think most of those prostitutes live great lives? See that’s the thing with too many so-called “libertarians”, as long as it’s not they, their family or friends who are being exploited, “free market” capitalism is great. I wonder how you’d feel about prostitution if your daughter was one? Just sayin’.

    I still think my theory holds true – most so-called “libertarians” love the “free markets” when they’re on top of the heap (and justify their actions as being virtuous because, well, “it’s the free market, and everyone knows it works so well when allowed to flourish freely”), but go squealing to Mommy government when the excrement hits the fan. Notice I said “most”. There are actually some honest libertarians out there but I’ve yet to actually meet one in person.

  38. DownSouth says:

    ottovbvs Said: “The Hoffer quote could of course be applied with equal force to communists.”

    Absolutely.

    This is not the first time that libertarian (free market) fundamentalism has been inflicted on humankind. If we look at the grand sweep of history, communism was actually a reaction to previous excesses of the “bourgeois ethos.” As Niebuhr points out:

    “Marxism is so formidable as a political creed precisely because it expresses the convictions of those who have discovered the errors in the liberal-bourgeois creed in bitter experience. Marxism is so dangerous because in its consistent form it usually substitutes a more grievous error for the error which it challenges. In this debate between errors, or between half-truth and half-truth, America is usually completely on the side of the bourgeois credo in theory; but in practice it has achieved balances of power in the organization of social forces and a consequent justice which has robbed the Marxist challenge of its sting.”

    Niebuhr goes on to illucidate that it has been America’s great propensity for pragmatism and common sense that has saved us from the excesses of both libertarianism and communism.

    Phillips shows that the U.S. has once before–during the Gilded Age and up until the 1920s–decended into the hell hole it now finds itself in. This era was also a time characterized by the unholy alliance between state power and corporations, banking and finance. We managed to break the death grip of corporations, banking and finance during the 1930s and we had almost 50 years of reasonably good governance in the United States. Will we be able to do so again? I for one intend to do my best to see that we do.

  39. molten_,

    you’re cherry-picking, the “Insurance” companies you are referring to Are creatures of the State, not the Market..

    towit, they are some of the most Regulated businesses, de jure, if not de facto, the history of business has ever witnessed..

  40. whitespiral says:

    rknox,

    An economy’s or society’s products and accomplishments is analogous to the quality of its constituents. Markets aren’t perfect because humans aren’t. Rather, they’re the best and most efficient way to allocate resources and organize societies.

    How a free-market’s participants interact with each-other has a lot to do with the level of sophistication that society has already reached. Germans did fine under a decentralized system of principalities – I doubt Russians would have done as well.

    I think market-based societies is the closest one can get to true democracy, where you don’t vote on one person every four years, but rather, on a gazillion different things, every second of the day. I think they’re well-suited to more educated, sophisticated, and mature societies, just like an older kid requires less and less restrictions as it grows up.

    They’re not perfect. They’re better.

  41. molten_tofu says:

    Now, AFTER all mainstream bankers and CEOs have IN PRACTICE agreed on the level of market share they’d like to have, their quarrel is about how to divide the spoils.

    Remember, we’re talking about business men (and women) whose life ambition is to attain power and wealth. And we expect THEM to start limiting themselves and letting free people buy what they want? Are we so naive as to assume they won’t just use these positions to take for themselves more wealth? Everyone thinks that THEY can run even as big and complex an organization as a multinational corporation. So why not give THEMSELVES more wealth to let their magic work?

  42. molten_tofu says:

    Oh yeah, I forgot: the Feds MADE AIG insure all those MBS. Just like they made Moody’s and S&P slap “AAA” on those same securities. I’m not saying AIG was doing it intentionally (someone might have known; hard to prove either way). I’m saying: information asymmetry is something I don’t believe free markets can solve. Belief being the operative word; I’m open to suggestion.

  43. bcasey says:

    I’m thinking beyond jail for these folks, after all we’ve seen happen ( as if we didn’t see it coming,) after 350 billion down payment and another 350B coming from the pockets of taxpayers, you’d think they could start to think about lending money to improve liquidity. but no they’re still thinking about the bonuses they still hope to get. On tuesday I read in the NYTimes, proposed ideas to allow bonuses to be paid with a three year takeback option. The stated logic was that sort of thing would help the financiers focus on longer term goals. are you *&%^$ kidding me? These people are incapable of focusing on anything other then themselves. With the nations economy in a shambles the world economy ripping apart at the seams, and these folks are spending time trying to think of a way that they can still get their bonuses!
    I think we need a place like Siberia in this country. Some place where we can send folks like Cox here and delusional bank executives to eke out an existance way below the bottom of the food chain. Hard work would result in a modest bonus, for intance after a 12 hour day of labor, if you are in the top ten post hole diggers in your group, you might request cockroaches added to your oatmeal. Perhaps if you show a capacity to work together to lighten the burden when hauling your sledge load of fresh cut lumber, you might be allowed to take a 3 minute shower in snow and sawdust. If you are too weak to keep up and just can’t take anymore, perhaps you would be allowed to wander off into a blizzard.
    People can argue about rationality of human beings and markets until they are blue in the face, but if we keep investing our gnp into a bunch of selfish hoarders the markets will be adjusted, but in ways that most people can not imagine currently. Still history is bound to repeat itself and if we’re going to socialize our banking system we are likely to go all the way. You can not have support for failing institutions, borne by all without having corrections being allowed to happen.

  44. Also curious is how the uptick rule was abolished precisely at a time when investment banks and hedge funds were becoming starved for capital. Which raises the question whether a theft of historic proportions was perpetrated on the backs of the average Joe and Jane saving for retirement, creating a rigged game wherein stocks could easily be manipulated lower, all so capital could be raised to plug massive holes in financial firm balance sheets. This is what I think of when President Bust vaunts the free market and claims protectionism should be avoided at all costs…

  45. molten_

    you make a distinction w/o a difference..the “Business” people, you are describing, are, merely, the other side of the duopolistic Coin–Big Biz on the Obverse, Big Gov’t on the Reverse..

    DownSouth,

    way to be self-contradictory, with this: “This is not the first time that libertarian (free market) fundamentalism has been inflicted on humankind.”
    v.
    “Phillips shows that the U.S. has once before–during the Gilded Age and up until the 1920s–decended into the hell hole it now finds itself in. This era was also a time characterized by the unholy alliance between state power and corporations, banking and finance.”

    and, self-delusional, with this: “We managed to break the death grip of corporations, banking and finance during the 1930s and we had almost 50 years of reasonably good governance in the United States.”

    all in one post. Nice job. Aptly, though, it was in a thread pertaining to C. Cox

  46. Mannwich says:

    @bcasey: “These people are incapable of focusing on anything other then themselves.”

    I know the faux-libertarians well ream me for saying this, but this mentality is a direct by-product of faux-libertarianism and nearly 30 years of the uber-focus on the individual over the collective. If I’m doing something in the name of the free market God, then it MUST be virtuous, after all, everyone has “free will”. That’s the mentality we’ve become mired in.

  47. molten_tofu says:

    whitespiral, one of the things standing in between you and me on the “voting” aspect of spending money is the raw subliminal power of advertising. That being said, you know now how I feel about the current state of political campaign finance and in some ways, modern elections in general.

    Remind me again how everyone can become “educated” without a “public” education system?

  48. whitespiral says:

    Mannwhich,

    I feel your pain. But these are precisely the thugs that use the term “free-market” to do all that you mentioned and more. You are right in that true free-market advocates are indeed very few, not just because they like markets only on the way up, but also because most of them are economically illiterate.

    I mentioned prostitution not as a social ideal, but rather in the purely economic sense of how supply, demand and risk are handled by a system with (almost) no government intervention.

    Imagine government handing out prostitution licenses (forget the ghastly ethical implications for a minute) and regulating all aspects of that market. You’d have 50% of the male population with HIV, and a ten-fold increase in sex-change operations after the government decided to boost the now flailing industry with special tax-breaks and subsidies. ;-)

    But in classic Statist/Keynesian stupidity, you’d then have Kudlow on the air claiming that all this scheme is actually a good thing for the economy because after all, look at the stimulus effect it’s had on plastic surgeons, hospitals, and morticians. Quick, jump on those graveyard stocks before the party’s over will ya?!

  49. molten_,

    see: RiskAverseAlert Says:

    December 11th, 2008 at 11:13 am

    for some additional clues.

    LSS: We’re being Looted, Latin-American estilio, while we’re still stuck in the same, useless, Right-Left paradigm, meant to distract us, in the first place..

    The argument that the two parties should represent opposed ideals and policies, one, perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to the doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people can “throw the rascals out” at any election without leading to any profound or extreme shifts in policy.

    - Carrol Quigley, Tragedy and Hope

  50. DownSouth says:

    Mannwich Said: “I still think my theory holds true – most so-called ‘libertarians’ love the ‘free markets’ when they’re on top of the heap (and justify their actions as being virtuous because, well, ‘it’s the free market, and everyone knows it works so well when allowed to flourish freely’), but go squealing to Mommy government when the excrement hits the fan.”

    I’ll let Niebuhr respond:

    ” ‘Power,’ [John Adams] wrote, ‘always thinks it has a great soul and vast views beyond the comprehension of the weak; and that it is doing God’s service when it is violating all His laws. Our passions, ambitions, avarice, love and resentment, etc., possess so much metaphysical subtlety and so much overpowering eloquence that they insinuate themselves into the understanding and the conscience and convert both to their party.’ Adams’s understanding of the power of the self’s passions and ambitions to corrupt the self’s reason is a simple recognition of the facts of life which refuste all theories, whether liberal or Marxist, about the possibility of a completely disinterested self. Adams, as every Christian understanding of man has done, nicely anticipated the Marxist theory of an ‘ideological taint’ in reason when men reason about each other’s affairs and arrive at conclusions about each other’s virtues, interests and motives. The crowning irony of the Marxist theory of ideology is that it foolishly and self-righteously confined the source of this taint to economic interest and to a particular class. It was, therefore, incapable of recognizing all the corruptions of ambition and power which would creep ineviatbly into its paradise of innocency.”

    Libertarianism, because it is also based on a fiction about human nature, suffers from the same flaw. It is “incapable of recognizing all the corruptions of ambition and power which would creep ineviatbly into its paradise of innocency.”

  51. Mannwich says:

    @whitespiral: I hear you and understand your point. Believe me, I have a “libertarian” streak in me as well and respect people who truly espouse those views (accountability has to be an integral part of true libertarianism), but I just don’t think true, pure “libertarianism” works in the real world. Human nature is just too messy.

    What irritates me to no end are the faux-libertarians who use that ideology to justify their exploits but never take responsibility for their actions. That’s the most galling aspect of it. It’s utterly disingenuous and they need to be called out.

  52. molten_tofu says:

    Hoffer, I’m not quite sure what you are trying to say, but if I understand you: you say the events I was describing were merely a reaction of the insurance companies to various government insanities? Like – lowering rates, or something?

  53. Mannwich says:

    @DownSouth: Nicely put.

  54. molten_tofu says:

    Right got it, the people running the system are rotten, so the system must be broken (or useless). I mean, I’d never hold up the people currently in government (Republicans more than Democrats, but Democrats too) as “regulators” so much as “part of the problem”. I can definitely hate ALL politicans and LOVE market regulation in the same breath.

  55. molten_tofu says:

    Also, I’d just like to weigh in but I think legalizing regulating prostitution is a good idea. Why not legalize, regulate, and tax pot while were at it?

  56. molten_tofu says:

    .001% of the population in the Netherlands has AIDS; just looked it up to provide a data point in that particular conversation.

  57. molten_tofu says:

    err sorry .1%, can’t do math… hate self…

  58. whitespiral says:

    Molten_tofu:

    You are assuming that a free-market can’t supply quality education to everyone. Well, if we were talking in a world where food was handed down to every citizen by its government, you’d be saying food too should be provided by the government else we’ll starve.

    Mannwich,

    The people of which you speak are just looking for an excuse and snippets of an ideology to cover their loot. Beware of placing the collective above the individual though. Hitler required Germans to do the same and look where they ended up.

    I have no problem with the notion of families or communities, or the traits of selflessness and altruism. In fact, I consider them some of the most noble virtues a man can have.

    But let ME choose whom that collective includes and whom it does not. For me, that may be men and women of the Zoroastrian faith, or dodgeball enthusiasts. For you it may be some other group, and sure enough, that might well not include me.

    That’s how prosperous, harmonious societies are formed, and any institution that makes you include OR exclude someone from this group by force is setting you, and them, up for disaster.

  59. Mannwich says:

    @whitespiral: I’m not “placing the collective above the individual” but I AM advocating some level of balance and accountability to one’s community. That’s it. It’s all about balance and we’ve gotten so out of whack in recent years in the frenetic pursuit of wealth by the individual at all costs……..

  60. molten_tofu says:

    by 2007 that was up to .2%, U.S.: .3% ok I’m done with the AIDS stuff

  61. molten_

    you went with: “Oh yeah, I forgot: the Feds MADE AIG insure all those MBS. Just like they made Moody’s and S&P slap “AAA” on those same securities. I’m not saying AIG was doing it intentionally (someone might have known; hard to prove either way). I’m saying: information asymmetry is something I don’t believe free markets can solve. Belief being the operative word; I’m open to suggestion.”

    my point is that few people have any idea of how Regulated, de jure, our business sector, especially Anything Financial, really is..there are whole Industries predicated upon ‘Compliance’ alone..

    I’m, also, saying, that to think that this ‘crack-up’ happened ‘by accident’/'was just human nature’, is not to be thinking, at all.

    Too many ‘watchdogs’ went to sleep, many, that did Bark, or were about to, were ‘put to sleep’..(Spitzer is a famous example)

    to this: “merely a reaction of the insurance companies to various government insanities?” more specifically, see: http://www.icerocket.com/search?tab=web&fr=h&q=Insurance+company+regulation

    for starters, and: http://books.google.com/books?id=zuX32UT4K3kC&pg=PT42&lpg=PT42&dq=bank+holding+company+regulators&source=web&ots=XSUEQi_TbF&sig=s0CAG3g2YpFKBpjnLLMRQjBouvI&hl=en&sa=X&oi=book_result&resnum=2&ct=result

    for further background. Good Luck!~ b/c that’s only the surface of, but, two facets of what’s at play.
    Forests have been felled, to produce the paper, to print the regs promulgated by our beneficent Gov’t..fat lot of good it did.
    People have been ‘Cained out of their Critical Thinking faculties, lulled by the soft-crooning of “That’s why we have Gov’t”–like it’s, somehow, from without us..and, sadly, it is.

  62. molten_tofu says:

    I don’t want to be trite, but whitespiral your assuming it can. All I know is a payed 40k a year for four years for my private education.

  63. molten_tofu says:

    And as an interesting comparison, isn’t the current median income of a US household more or less what I payed for said education?

  64. Mannwich,

    w/ this: @whitespiral: I’m not “placing the collective above the individual” but I AM advocating some level of balance and accountability to one’s community. That’s it. It’s all about balance and we’ve gotten so out of whack in recent years in the frenetic pursuit of wealth by the individual at all costs……..

    of course there needs to be ‘accountability to one’s community’–read the Federalist Papers, and, especially, the Anti-Federalists, as well. The driving Ethos of the system those boys devised was to keep it Local, in plain view of those that could, readily, correct the wayward actions, of the few, before they threatened the many..

    guess what? that pyramid has been inverted, now, the wayward actions, of the few, out of sight of most, are/do effect the many, before it can be, effectively, stopped-short..

  65. whitespiral says:

    molten-yes I am, because just like in the example of food, it works.

    To all that are running with this common theme… Accountability for government is good but it will always be inferior to the market’s way of rewarding/punishing good/bad behavior.

    Besides, is it any wonder that any point in a democracy’s history, all you’d hear a citizen complain about is one of the following:

    -”There just is no real leadership in our government any more”
    -”Isn’t there any honest politician out there?”
    -”How can this government have screwed this up so badly?”

    AND IT NEVER GETS ANY BETTER.

    Customers complain too. But the companies that serve them better do something about it or they go out of business (at least in the pre-bailout era).

  66. molten_tofu says:

    Right, so it’s our responsibilities as citizens to make sure the government works for us; I could go either way on the notion that quantity of regulation is inversely proportional to quality of regulation. Human beings are both very good at (accidently) making and (and very purposefully) finding loopholes, and less good at fixing them; perhaps the quantity is justified. I’ll check out those links when I’m not not working at work. Which is what I shouldn’t be doing.

    I’m definitely not saying it happened by accident…

  67. flipspiceland says:

    We’re never going to go anywhere but downhill unless the voters in this country wake up and throw out every career politician in office today, and restrict all Representative candidates to two terms just like the POTUS and one term for the Senators.

    We are in this mess today SOLELY because the people who have the power in their hand will not reconcile their 18% approval rating of Congress to their return of incumbents to office, time after time.

    There isn’t a reason in the world to give these very flawed men and women lifelong ‘jobs’ in which they work maybe two days a week on people’s business.

    Either vote them out and make them get real work or put up with these kinds of consequences the rest of your natural life.

    The people have no one to blame but themselves ultimately, for the actions of the corrupt people they keep putting back in office.

  68. VoiceFromTheWilderness says:

    Absloutely BR, and again, thanks for being a voice for truth, there are very few these days.

    I’d just ad that, effectivelly everyone operating in the financial and government worlds today has grown up in the regulatory environment created by the 1930′s. Everything we knew (up til now) was rooted in that experience. The efforts to over throw regulated, ‘limited’ capitalism that the Republican party has been spear heading for 30 years were thus an attempt to throw out the prosperity and public contentment brought about by regulation and by the commitment to fair, honest, and legal dealings created by the experience of the consequences of not doing that which was the 1930′s. These people didn’t know what the world they were advocating for, scheming for, manipulating for, looked like. They sold themselves a pile of home cooked crack (called ‘free markets’ — even Adam Smith didn’t believe in ‘free markets’), and it got them good and high, and off they went to destabilize the world, confident in thier haze that they knew best. And now the chickens have come home to roost. Free Markets are back and lo and behold — without regulation, with out effective policing, without honest dealing, without limitations on gambling…. the card game turns in to a bar fight, and the bar fight into a burning building. And the rest of the town? They get to lump it. They get to put out the fire, instead of tending to their business. But it’s only in the modern age of fools and suckers run rampant in every corner, that anyone could possibly believe that 1) it wasn’t the gamblers fault, and 2) they gamblers deserve to get paid for the fire they started.

    Christopher Cox has been an obvious stooge, handing out the matches, and the whiskey, for quite some time — many years in fact. That the WSJ will publish him just goes to show you… they are working for the same master.

  69. Mind says:

    There is human nature, the product of eons of natural selection, which has both selfish and altruistic components – usually the altruistic components only manifest in terms of an interest group with which one identifies, such as family, clan, village, nation, religious affiliation group, etc. The relative deficiencies being discussed above of both the “free market” and the “(government) regulated environment” result when the “selfish” component takes advantage of a situation to the detriment of the wider group. While we decry this, it’s actually only human beings acting according to their instinctual nature. This aspect shows both in a “free market” arena (e.g., Chinese mini-capitalists slipping melamine into the baby formula) and in a regulated environment (the USDA denying a meat processor the right to inspect every animal for mad cow disease). So how does this species, the human species, move itself out of selfish instinct born of ancient evolutionary forces towards “responsibilities as citizens to make sure the government works for us”. My guess would be widening what we see as our interest group to include more and more people – not just your own moneyed, political, or religious cohort – but the wider world. At this point of near global meltdown, it would seem that it would be clearer now that our rightful field of common interest is the entire planet. The vehicle for this is awareness fostered by education.

  70. whitespiral says:

    Mind,

    “Widening” and aggregating yet further is just about the worst direction to take. That’s what brought us here. Arbitrary groupings of people, ever-larger aggregation, and ever-increasing centralization and isolation of control.

    All this, in a world whose complexity is exploding.

    Recipe for disaster if you ask me.

  71. vic says:

    Ugh. We don’t have the Fed to mitigate the cycles. The Fed CAUSES the cycles. Or at least, it exacerbates cycles that are endemic to fractional reserve banking. The fed was created ostensibly to maintain price stability and eliminate the business cycle. It has done NEITHER. The dollar has lost 96% of its value since the Fed was created, and the cycles have become more vicious.

  72. whitespiral says:

    Well said vic. But in all earnest, the Fed was created to save a group of wealthy bankers and give them the most powerful tool in the world, the key to the printing presses.

  73. bcasey says:

    We want heads. Bloody heads on sticks. It is clear their source of motivation. It is clear that they knew what they were doing. It is clear the result of their activity. What is not clear is why we haven’t rounded them all up and shot them.

  74. DeDude says:

    “Capitalism never works unless there’s some moral responsibility for the actions that those that are in power to be have towards those that are at their mercy”

    I am with you on that statement dig1. But I am a little more cynical and would go as far as saying that since the above paradigm require a morality that is completely in contrast to the selfish greed that drives capitalism, we must have a strong government to ensure that capitalism works. Because it can only work when a strong hand constantly prevent that greed from becoming destructive, yet allow it to be productive. We have pleanty of government to prevent poor people from robbing rich people with a gun, why is it so hard to understand that we also need government to prevent rich people from robbing poor people with a pen?

  75. whitespiral says:

    DeDude,

    It is actually government that is doing the robbing of the poor, for the rich, with that pen. It’s called monetary inflation.

    Excess greed, excess booms, and all the behaviors that these spawn are a direct result of the real, and ultimate cause of our present situation, fiat money.

  76. Mannwich says:

    @whitespiral: I’m no fan of the Fed either but I agree with Barry that you’re “tilting at windmills” in thinking they will ever be abolished, especially as longs other countries have Central Banks. You may be right about this in theory but it doesn’t mean all other forms of government regulations/oversight are necessarily “bad” for the greater good. I think the answer here is that “it depends”. Many “black/white” types who see no shades of gray won’t like it, but I think it’s true.

  77. whitespiral says:

    Which one of the above posters is Barry?

    Mannwich, being cynical about whether or not the Fed will ever be abolished is one thing, but withholding what one know to be true is quite another.

    Just because the ultimate cause of most of our problems isn’t likely to go away (for all the wrong reasons) doesn’t mean we should stop saying it, especially at a time when they’re asking for (and getting) extraordinary new powers with the same, inexistent oversight.

    Unfortunately, this crisis is causing all the wrong conclusions to be drawn by policy makers-but even worse, the public is losing faith in capitalism when it should be losing faith in what’s really at fault here. It’s making the public hate entrepreneurship and the men behind it, because in their eyes mostly everyone who made money in the past 30 years did so unfairly, unethically, and as is now obvious, to the detriment of all others.

    But its not moneymaking that’s so wrong, nor “greedy” and “selfish” instincts. It’s the guys with the slick smiles that are handing out free lumber for your fireplace, when in fact, they’ve been chopping it off your house’s foundation.

    That’s what paper money has always done in history, and it always ends in tragedy. This stuff the public should know.

    When Schiff was speaking years ago about the coming storm, he too was “tilting at windmills”. Even if he didn’t manage to change much by doing so, he still should have acted as he did because people listening to what warning he gave back then will want to hear what more he has to say.

  78. DeDude says:

    whitespiral; I agree that government as it has worked since 1980 has not served its true functions. However, I have seen no indication that the lack of government is going to do it any better. What we need is a better group of people running government and an informed electorate that will throw the rascals out if they fail to serve all of the people.

  79. Mannwich,

    thanks for bringing back this idea: @whitespiral: I’m no fan of the Fed either but I agree with Barry that you’re “tilting at windmills” in thinking they will ever be abolished, especially as long as other countries have Central Banks. ”

    what does “other countries having CBs” have to do w/ anything?

    you 2 make CBs sound like Jack’s Stalk–Magic, how, exactly does that work? what’s the unilateral benefit Country A would have, over Country B, merely by having a CB?

  80. whitespiral says:

    DeDude-

    Yes, that’s what we need, but we never got it, and we’re not going to get it now. So we can minimize the damage they do by shrinking their job description. That was the spirit of the Constitution until we started drifting toward federalism and statism. The US was founded on a premise of limited government, with checks and balances, and fully functioning state governments. The Civil War, WWI, WWII, the Cold War, and Bush II were enormous setbacks for liberalism in America.

    We first adopted the Imperial British mercantilist view of the world we fought against in the American Revolution, and are now quickly moving toward the kind of corporatism that Mussolini envisioned for Italy during his time in power.

    Governments with the power to print money are by definition locked in a Ponzi scheme they can’t get out of. And like the end of these pyramid schemes, the cleanup will be messy.

  81. DeDude says:

    Whitespiral; The privately owned mortgage company that got some high-school drop-out into a 400K house with a subprime loan is not going to let profit from that transaction disappear without the prompting from laws and government enforcing those laws. Pretty much all of the problems that developed related to the mortgage industry and the investment in mortgages can directly be traced to a needed government action that did not occur (because the action would have served the poor not the rich). A lack of government is not going to make the predators less predatory, it will just make their job easier. A change of job desription for government is what we need.

  82. whitespiral,

    I’d really love to see someone show how you’re wrong. Things would be a whole lot easier if you were.

    Sadly, wishing doesn’t make it so.

    DeDude,

    what happened, explicitly, in 1980, that was any different than ’76, ’72, ’68, ’64?

    funny, as in Sad, we ‘Caines think coup d’etats only happen in ‘other’ countries..

    btw, if you mentioned 3/1981, instead of 1980, you might have a better point..

  83. DeDude,

    sorry, but you’re either obtuse, or DeLusional. your whole ‘pvt. mtg.co./subprime loan’ fantasy would have never occured w/o our Gov’t-sanctioned FedRes fueled Fiat ‘money’ schema..

    that’s the point.

  84. DeDude says:

    Mark E. Hoffer; wake up to the real world and stop being so obtruse and delusional.

    The smarter rich guy sucking money out of the poor guy with less insight/information or understanding of the process will happen anywhere that you don’t have an even “bigger dog” protecting the little dog. Its possible that without fiat money and FedRes etc. that it would have been a 20K house (or clay hut) sold to a guy with a 25 cent/hour salary, but the pattern and result would have been the same. There is nothing in human nature that will prevent the greedy rich bastards from sucking on the poor except for the fear of fines and jail-time.

  85. DeDude says:

    The neo-con-mens Nirvana of no government intrusion into the free market forces exists already, and it doesn’t work that well – its called Somalia.

  86. whitespiral says:

    DeDude-

    You overestimate the rich guy’s ability to pounce on the poor guy without using the government’s tentacles. If we were in a market where there were no perverse government incentives, moral hazard, and unending credit expansion, and the poor guy took on a loan he later figured out he can’t pay….well gee whiz, tough luck!

    In this case though, the suckers weren’t just the borrowers (who can walk away anytime they like), but the lenders who never realized that this ponzi scheme is going to come to an end.

    This little guy/big guy argument is just moot. Without government help David can certainly survive Goliath, and in many cases even beat him. Whether that’s a home owner taking out a mortgage (voluntarily I might add) from a more competitive bank, or a Microsoft upstart beating an IBM only to be beaten by a Google….

    It doesn’t matter-point is-government screws things up for the small guy much more than anyone realizes (or cares to admit).

  87. DeDude,

    actually, if you had bothered to read any of the Papers left behind by our Founders, you would have found, at least, 2 things: 1.) sentiments similiar to yours, and 2.) their considered proscription to have the Nation’s currency to Gold & Silver–precisely to protect the ‘little dog’, as you say, from the predations of the schemers, and monetary architects they well knew of..

    this,though: “Its possible that without fiat money and FedRes etc. that it would have been a 20K house (or clay hut) sold to a guy with a 25 cent/hour salary, but the pattern and result would have been the same.”–is utter G*rbage..I’d love to see you substantiate that..

    That whole Pap, that you’ve suckled, all the fancy-sounding HS about “Informational Asymmetry” is nothing more than a canard–used as a Trojan Horse, to excuse Gov’t overstepping its Constitutional Bounds and proceeding, on, to enslave you..

    well done, hope u got an A in that class..

  88. AGG says:

    My, my, my,
    Friends, the issue is not the “isms” running the economy or human nature. Can we all agree that humans are in charge here? Okay, somebody cheated and didn’t get caught. That “somebody” may or may not have an economic philosophy that punishes honesty and rewards dishonesty but the issue is that the SEC was and is ground zero in the free wheeling, devil may care behavior of the hedge funds and investment banks. Now I hear that GS is recommending CDSs on state government debt. In some countries that would be considered treason. So, is it okay to buy a CDS on Florida or California debt?
    Fuck no! It’s unAmerican!
    I say put teeth in the laws and staff the SEC with honest people and everything changes for the better. And that is why who ever gets the SEC job with Obama will tell us if there is hope for a decent economy.
    The war by the greedy elite is centered on keeping gatekeepers in control of the regulators. If they win, we’re back to feudalism (another “ism”, I know).

  89. DeDude says:

    Mark; I have no doubt that the founding fathers had the best of intensions – but that doesn’t mean that the Gold standard would have prevented any and all imaginable monetary and financial problems 300 years later. It doesn’t seem to me that the depressions our economy experienced before removal of the Gold standard were any less severe than the depressions we have experienced after its removal. Nor does it seem to me that the “suck-the-poor-dry” schemes have been any more venomous and successful after the removal of gold standard than they were before (try read a little of the more recent history from around the time Marx and Lenin were around). The pattern and results of human nature (greed and selfishness) is the same regardless of fiat or gold standard money – take a trip to Somalia; they don’t even have anything that could be called a currency and the pattern of someone trying to exploit someone else is at least as strong as here in the US. And that “canard” of informational asymmetry is not anything invented by government – it is observable every single second of every single day in the US when a deal is struck. However, to observe it you have to live in the reality based world and not be blinded by your ideology in such a way that all your observations must lead to condemnation of fiat money and/or big (libural/socialist) gubinment.

  90. AGG says:

    DeDude,
    I agree that the foxes are in full control of the hen house. And also that they have a plethora of apologists for their pecadillos. Remember the Dukes of Hazard TV show? Nobody ever mentioned dethroning Boss Hog. Why is that? That’s just the way it is, says Mises. We have to work around that. The Commies say we hang Boss Hog, put the “proletariat” in charge and everything will be fine. Of course, there is the 100 year “transition” period for the “temporary” dictatorship. In other words, it’s all the SAME OLD SHIT; someone wants to tell you how to live and what to do and not do.
    Ideological leaders all want you to “die for the cause” while they run for cover at the first sign of problems. Ignore all the pedantic assholes and you’ll be all right. Just don’t be too “in your face” about it; pedantic assholes get offended easily.

  91. Mannwich says:

    @Mark E Hoffer, whitespiral: A big part of me would LOVE to see your ideal libertarian fantasy world come to fruition just so you can be proven utterly wrong.

    I really think that many of you LOVE tilting at windmills for the simple fact that you know your ideal world will never happen on this earth, so you get to stand back and theorize just how wonderful our lives would be only if the miracle of the free markets were allowed to run amok without any government interference whatsoever. If anything, we’ve devolved as a human race because rewards are far bigger, therefore, the temptation to cheat is far bigger. It would be disastrous but part of me would love to see it then quietly remind you I was right about the results.

    Hard care libertarians are no better than hard core Marxists. You’re all living in a dream world that will never happen here on earth.

  92. DeDude says:

    AGG; don’t think for a second that I have ANY sympathy for “Communists” of USSR or Mao China, or any of the other dictatorships that claimed to fight for the proletariat. The weakness of their particular “-ism” was the idea that you could come to something good via a “temporary” dictatorship. I understand why the ruthlessness and brutality of the forces they were up against could lead them to the dangerous idea that it was needed – but it was immensely arrogant (or naïve) of them to think that they could set such a thing loose and then control it. They were indeed not willing to risk “dying for the cause” trying to do it the right way, and ended up living a long disgracefully life of doing the wrong things.

  93. scepticus says:

    Libertarians and more specifically the austrian school have to date put forward some of the most valuable insights into where the system has gone badly wrong. It’s hard to ague that we’d be alot better off without the Fed, moral hazard and FRB.

    However being able to put ones finger on the problem does not mean that one is necessarily the best qualified to pronounce the solution. Reading the comments here and elsewhere on similar forums it seem that the libertarian constituency is in danger of disappearing up its own arse.

    What we’re seeing is a continuing entrenchment of Libertarian dogma coupled with little self-awareness from the movement itself. Libertarians should ask themselves what their constituency is. Here’s my guess: almost certainly white male, overeducated and more likely than average to be single or childless. I can’t recall having come accross a single female libertarian as far as I know, which I think is very telling.

    We hear alot about how individuals should be free, with state involvement restricted to essentially police functions to prevent fraud and improper use of force and other coercions, yet absolutely nothing about how this ‘perfect police state’ is to be enacted in terms of institutions, checks and balances and so forth. Likewise nothing on how to price externals like environmental depletion.

    Libertariansim is currently just another form of economic reductionism, and until that changes it deserves no higher esteem than any other school of economic thought, and will remain largely irrelevant in the real world. This is especially true if one accepts that the future lies increasingly with groups who tend to favour collectivism (women, asia) as well as non-monetary issues of environmental and social collateral damage.

    I had originally hoped that libertarianism would offer more solutions than conservatism/republicanism, but so far, I’m just not seeing it. Where’s the real vision?

  94. Mannwich says:

    @scepticus: Brilliantly put. Bravo.

  95. AGG says:

    Mannwich,
    Perhaps what we need is what the shrinks call “acting out” behavior modification. We all treat people we despise, as well as our friends, with respect for a limited time and hope it catches on. If it doesn’t, we jail their ass. However, we need an honest sheriff. The first people he must put in jail are the ones that claim sheriffs are a bureaucratic encumbrance to the “free” market.

  96. Mannwich says:

    @AGG: Ideological dogma of ALL stripes needs to be put down for good. If there’s any time for that to happen, it’s now. It’s literally killing this country.

  97. scepticus says:

    Agree with Mannwich. The only long term viable ideology is that of sustainability – social, polticial, environmental and monetary. Everything else is secondary (including personal freedom), and you don’t have to believe in global warming or have kids to see the sense of that.

    As to whether free market or collectivist solutions are the best answer I don’t have a view currently. However libertarianism needs to frame itself in this context which it has so far failed to do. Can libertarianism forget about gold and the Fed for a moment and think about long term sustainability?

  98. Mannwich,

    what’s up? can’t you answer my Q:? “I’m no fan of the Fed either but I agree with Barry that you’re “tilting at windmills” in thinking they will ever be abolished, especially as long as other countries have Central Banks. ”

    what does “other countries having CBs” have to do w/ anything?

    you 2 make CBs sound like Jack’s Stalk–Magic, how, exactly does that work? what’s the unilateral benefit Country A would have, over Country B, merely by having a CB?”

    yet, you sally-forth, trying to rope positions, that I’ve never proclaimed, onto me?

    bud, you’re better than that, no?

    please do, answer away..

  99. scepticus:

    please, refrain from self-refutation, it’s a painful thing to witness.

    this: “The only long term viable ideology is that of sustainability – social, polticial, environmental and monetary. Everything else is secondary (including personal freedom), and you don’t have to believe in global warming or have kids to see the sense of that.

    As to whether free market or collectivist solutions are the best answer I don’t have a view currently. However libertarianism needs to frame itself in this context which it has so far failed to do. Can libertarianism forget about gold and the Fed for a moment and think about long term sustainability?”

    to: “long term viable ideology is that of sustainability – social, politicial, environmental and monetary.”
    v.
    “Can libertarianism forget about gold and the Fed for a moment and think about long term sustainability?”

    hello, do you ever do Mathematics?

  100. DeDude says:

    Scepticus; to me it always seemed that the Libertarian ideology, vision and goal were all the same: “leave me alone to do whatever the heck I want”. With that it was enevitalbe that it ended up with a very small target class of priviledged asocial white males. Whenever I get to dig a little deeper into them with questions of what kind of protections this limited government should provide, it is always turns out to be a tiny little circle of protection around that particular person himself.