Everybody hates Libertarians
They fear they’ll take over and leave everyone alone.
Remember, I do this to entertain me, not you.
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May 25th, 2010 at 9:52 am
Totally.
Wait, wat?
May 25th, 2010 at 10:04 am
The number of idiocies in the Salon piece is high, but when I came to this one, I had to stop, lest my brain be sucked from my pan:
Yeah, that government-sponsored free market you’ve heard so much about.
Progressives and conservatives alike try to marginalize libertarians because they’re right.
May 25th, 2010 at 11:12 am
Trust me, nobody, but nobody is afraid the libertarians will take over anything. The Greens have a better chance at electoral victory. 🙂
But hey, if you think football would be a better game without all those pesky rules and referees, by all means, vote libertarian.
May 25th, 2010 at 11:14 am
your statement doesn’t match what happens. if they’re not a threat, why the hate?
May 25th, 2010 at 11:15 am
Libertarian != Anarchist, but thanks for trying.
May 25th, 2010 at 11:27 am
Uncle, the hate is because while Libertarians do not have much of a shot at taking control they espouse Liberty which is an anathema to Progressives and Conservatives alike.
With freedom, you might not give enough to the homeless drug addict, which pisses of the progressives, and with liberty you can “sail your dinghy in whatever port you desire” which infuriates the Conservatives.
I’m not a big L libertarian myself, but the Libertarian party has done more to influence my political views than the Republicans or the Democrats. And I think that’s what the leftists and conservatives fear will happen writ large.
May 25th, 2010 at 11:52 am
See, that’s the thing, Republicans, Democrats, Liberals, Conservatives and Progressives don’t want everyone to be left alone, they could think wrongly, or make choices that are not in line with their thinking and we CAN NOT have that shit going down. Control is a powerful drug.
May 25th, 2010 at 12:32 pm
Actually, I think it has more to do with that libertarian philosphy sounds good, but in reality doesn’t really work all that well.
A case in point:
Simple logistics for things like public roads. But you say, “What are these *public* roads of which you speak?” And you would be quite right.
But could you imagine the nightmare travel would be if you turned off of one street where the owner wants you to drive on the right side onto another where that owner wanted you to drive on the left? Where one owner would only allow passing with a dotted yellow line, but another would only allow passing on a solid green line. Where stop signs were red octogons on one and blue circles on another?
How exactly would you ever know what the owners “terms of service” were?
Require signed contracts for any and every road you wanted to travel on in order to be enforcable in civil court? How would you obtain these contracts? Road side boxes? By mail (which causes a recursion problem as each [access to mail and access to roads] is a prerequisite of the other)? Massive signs posted at every intersection with usage as implied consent?
May 25th, 2010 at 1:33 pm
Yu-Ain, again there’s confusion between Libertarianism (with to me is not much more than Minarchism) and Anarchy. That, and there are still patchworks of laws that will ensnare the unsuspecting as it is, which indicates the government isn’t a solution to those problems either (for example, gun / liquor / obscenity laws that differ from county to county or state to state).
Imagine if you will an electronic network where you could communicate with other computers. To do so requires a device for encoding your data into some sort of transmission protocol. One vendor might ask you to use Token Ring, one asks you use TCP/IP while another might have a proprietary protocol.
How in the hell could we build a global network that everyone agrees upon the rules without the government stepping in and defining them for us?
Oh, wait….
VHS / Betamax. DVD. BlueRay / HD-DVD. Somehow, standards were decided on without requiring the force of government and you can now watch movies in the comfort of your own home.
May 25th, 2010 at 1:36 pm
OH, and another point. Can’t remember the economic term where competition tends to meet in the middle anyway, but the guy who decides to force people to drive on the left side is going to find his business model trumped by the majority of those who want driving on the right side.
Mishmashes of practices don’t make for good business. Best to adopt your competitors’ stances and modify them to suit your benefits as needed.
May 25th, 2010 at 2:34 pm
Even though libertarians have no shot at gaining a majority, every now and again their ill-thought-out ideas wind up gaining traction and put into practice. Stuff like “you know what, let’s relax regulation of the banks,” or “we should just let the oil companies police themselves.” I guess I can’t see why anybody would react viscerally and strongly against ideas like that.
May 25th, 2010 at 2:37 pm
Robb Allen:
You’re right that libertarianism != anarchy, but the devil, as they say, is in the details. Put three libertarians in a room and try to get them to agree beyond the most superficial level what the government actually ought to do, and you’re in for a long haul.
The best way I can describe my philosophical objection to libertarianism is that to me, libertarianism always seems to prefer a pound of cure over an ounce of prevention. Against everything we know about human nature and typical behavior, libertarianism insists that if people know they’ll be held personally responsible for the harm they cause, they won’t cause harm. It just doesn’t work that way in practice. So why should we pretend that it does, as libertarians would have us do?
May 25th, 2010 at 2:39 pm
Trouble is for us small libertarian sorts, the ounce of prevention has turned into 2 tons of prevention.
Uh uh. Because neither of those are regulated extensively. And, of course, it’s not libertarians who got those things passed. It was big money from banks and other companies.
May 25th, 2010 at 2:52 pm
Sounds like a good thing to me. Much better than 3 progressives in a room who will all come to the conclusion that I’m too dumb to run my own life and should be controlled.
And if you think banks and oil companies are ‘unregulated’, then you exist in a dimension that I cannot reach you.
May 25th, 2010 at 3:17 pm
Imagine if you will an electronic network where you could communicate with other computers.
The problem is that the laws governing electrons are immutable. How they move cannot be changed, it is what it is. The gov’t couldn’t change them if it wanted to. The anology to TCP/IP wouldn’t be to the roadways. For example, it doesn’t really matter to the phone line whether you are speaking English or French. Only to the person on the other side of the line. That’s a completely different subject.
As for things naturally standardizing themselves the patchwork of liquor/obscenity/gun laws seems to take my side that these things do not always work themselves out. They might, but they also might not. When dealing with a luxury item like a HD-DVD/Blu-Ray the lost opportunity costs in the format war are trivial. The entire transportation network, not so much.
The other problem is that of looking at the roadway as a business model. How exactly are the businesses going to charge for the roads in downtown urban areas where you may only be on a particular road for a couple hundred feet before turning onto a competitors road? If you think downtown New York traffic is bad now, stick up a toll booth between every intersection. 🙂 Maybe just toll boothes at the company’s borders, it’s still be a pain.
Or quite possibly, because of all the headache, they just wouldn’t get built at all.
The biggest problem is that this is all chicken-egg type stuff. There’s little profit in building a commercial road that doesn’t have stuff at it’s destination. But there won’t be any stuff at the destination until there’s a commercial road that can get people to it.
The only reason we have the internet today is because the military (i.e. the gov’t) sunk a ton of money into it. Today, sure, if you were to destroy the infrastructure to the internet there would be plenty of companies jumping all over themselves to rebuild it. But they weren’t doing jack squat back then because no one saw the profit in it.
And while I agree the .gov should be kept as small as possible the Libertarian philosophy that the .gov should only be concerned with protecting the rights of its citizens and everything else is not its concern is just not realistic.
May 25th, 2010 at 3:21 pm
Uncle:
the ounce of prevention has turned into 2 tons of prevention.
It’s hard to imagine a realistic level of government regulation that would end up with a worse result than 1-2 million gallons of oil spilling unchecked for 36+ plus days.
Because neither of those are regulated extensively
Not any more, but they used to be. Which is precisely my point.
And, of course, it’s not libertarians who got those things passed.
So libertarians opposed eliminating Depression-era banking regulations, and relaxing environmental regulations? News to me.
Robb Allen:
And if you think banks and oil companies are ‘unregulated’, then you exist in a dimension that I cannot reach you.
I never said “unregulated,” did I? But nice try on the Ray Bolger treatment.
The truth, whether you’re willing to acknowledge it or not, is that the banks are far less regulated than they were 30 years ago, and that for the better part of the last decade, the people whose job it was to enforce what regulations remained weren’t particularly interested in doing their job.
But speaking of unregulated, derivatives were very lightly regulated, if at all, and they were at the heart of the meltdown.
P.S. By your own admission, libertarianism is not anarchism, which would seem to imply that you’re down with at least some level of government control. It’s a simple question of where you draw the line. For me, it’s simple: to the extent that your behavior only impacts you, do whatever the hell you want. To the extent that it impacts others, your freedoms are limited and constrained.
May 25th, 2010 at 3:28 pm
Your logic fails.
There’s a ton of unreasonable regulation, all of which was signed off on and government approved. Yet, there’s still a spill. Shocking, I know. We should just make it illegal to have oil spills.
Bullshit. Go open a bank today. I’ll wait.
I’m certain if they opposed it, it would have never passed, right? And, of course, depression-era banking regs? Hyperbole much?
Like I said, go open up a lawful bank right now. Or an oil rig. Let me know how it goes. I await with baited breath.
May 25th, 2010 at 3:31 pm
The issue with the “deregulating banks” canard is that no one seems to be able to quote what regulations were abolished.
The only regulation removed was Glass-Stegall which allowed commercial banks and investment banks to diversify their portfolios with the other type of portfolio (I.e. investment banks could now buy commercial paper and commercial banks could now buy investemnt paper). This was repealed by Bill Clinton who still defends it, not Bush.
The only other changes were to strengthen the Community Reinvestment Act and to allow Fannie and Freddy to buy and sell securitizations. Neither of which “deregulated” banks.
May 25th, 2010 at 3:33 pm
But i read it on the internet. Banks are deregulated and it’s like the 1930s. It must be true.
May 25th, 2010 at 3:36 pm
the people whose job it was to enforce what regulations remained weren’t particularly interested in doing their job.
You obviously aren’t in the industry, because the regulators *I* deal with were all up in our a$$ everyday even though our sub-prime exposure was miniscule.
May 25th, 2010 at 3:46 pm
Sorry, but those of you using retarded analogies against libertarianism (also known as “liberty” and “freedom”)sound like idiots.
We’ve tried everything else, why not FREEDOM?
May 25th, 2010 at 4:15 pm
WROOOOONG.
The Internet would have sprung up eventually, regardless of the military’s involvement. It’s speed of growth was more attributed to porn than anything.
Can you show me the executive order that declared the 192.168.0.0 subnet unroutable? Or was that a 378 page document set up by the military? How did these things happen without massive government intervention? Surely all the competing protocols (and we’re talking protocols here which are NOT immutable, not electrons) would have caused everyone to just give up and not work on the web…
And yet here you are, reading this very post and comments using the fruits of a mutually agreed upon standard that didn’t require the force of government to implement.
In such absurdly small quantities as to be statistically insignificant, yes. Call it minarchist if you want (although that’s not entirely accurate for me either).
And I’m ‘down’ with it like I’m ‘ok’ with fire. I don’t trust fire, I contain it so that it doesn’t spread, and when it stops becoming beneficial to me, I extinguish it. What I don’t do is go Full Retard and say “Well, the fire was good at cooking my steak so I should just let the fire consume every last thing I do”.
Unfortunately, I agree with you 100% when you say
The problem is that everything statists (conservative or progressive) do impacts my freedom considerably.
May 25th, 2010 at 4:21 pm
uh Uncle, you’re not supposed to eat the bait. Did you mean “bated breath”.
May 25th, 2010 at 4:22 pm
i had sushi.
May 25th, 2010 at 4:47 pm
Uncle:
Your logic fails. … There’s a ton of unreasonable regulation, all of which was signed off on and government approved. Yet, there’s still a spill. Shocking, I know.
I’m afraid it’s your logic that fails. The fact that regulation sometimes fails is not in and of itself evidence that we’d be better off without it, any more than the fact that referees sometimes make bad calls demonstrates that football would be better off without referees.
I don’t see how anyone looks at the BP spill and decides “the problem is too much regulation.” For example, regulators wanted to require remote control shut-offs for offshore drill pipes, and the oil industry fought against the requirement and won. Now there’s no guarantee that such backup devices would have worked, but at this point it’s pretty hard to argue that we’ve been better off without them.
And yes, certain aspects of the banking industry are still heavily regulated. Those aspects aren’t the ones that failed us and caused widespread harm to the financial system. Funny, that. Must be a coincidence.
Yu-Ain:
By all means, show me where I ever absolved the Clinton Administration or the Democrats of blame in the GSA repeal. As Uncle likes to say, go ahead and look for it, I’ll wait.
But the larger problem here is the broadening of the definition of the word “banks.” Commercial banks are still pretty strongly regulated; I’ll grant that. But for all the right-wing bleating about Fannie and Freddie and the CRA, loans guaranteed by those entities and subject to those regulations were substantially less likely to default than those written by their less-regulated counterparts. Loans made by the bank where you have your checking account weren’t the bulk of the problem; it was private non-bank entities and bank subsidiaries (created to avoid exactly those regulations) like Quick Loan Funding and Countrywide Financial that were doing all of the nasty stuff. And guess where they got their backing? From Wall Street investment banks. How were those banks obscuring the risk and passing it off to others? By packaging the crap up as derivatives which — surprise! — were effectively unregulated.
Robb Allen:
The Internet would have sprung up eventually, regardless of the military’s involvement.
Probably true, but beside the point. It would be nowhere near as advanced and pervasive as it is today without the .gov’s heavy initial investment. That’s pretty much always the case with infrastructure.
May 25th, 2010 at 4:51 pm
You did it again. Your logic fails because your analogies fail.
But it does raise the question of whether those regulations accomplished anything. And, once again, you’re making an argument up for me. You asserted some sort of correlation to the oil spill. And I can imagine plenty of regulation that would make the oil spills worse, for instance having inflated prices and an oil spill.
Like I said, go get some posterboard and write ‘bank’ on it. And open up a bank. Or go drill for oil. Tell me how unregulated it is. I’ll wait. Hell, open a nail salon.
May 25th, 2010 at 4:53 pm
Robb Allen:
And yet here you are, reading this very post and comments using the fruits of a mutually agreed upon standard that didn’t require the force of government to implement.
I think you’d be surprised just how heavily the .gov is still involved in keeping the internet open.
Call it minarchist if you want (although that’s not entirely accurate for me either).
Voluntaryist, maybe? That’s all the rage these days, I hear.
The problem is that everything statists (conservative or progressive) do impacts my freedom considerably.
Seems like a bit of an overstatement to me. In practice, the question becomes to what extent do you have a freedom to engage in behaviors that put others at risk, even if you (as yet) haven’t actually harmed anyone? From where I sit, at some point society has a right to say “behavior X is likely to cause harm to more than just the people engaging in it, so we should restrict it or ban it outright [depending on the level of risk].” This seems to bug the shit out of many libertarians I know. They seem to believe [to use a contrived example] that they have a right to drive 120 MPH down city streets as long as they don’t actually hit anything or anybody, no matter how many studies show they simply can’t control their vehicle or stop in time at that speed.
May 25th, 2010 at 6:01 pm
By all means, show me where I ever absolved the Clinton Administration or the Democrats of blame in the GSA repeal. As Uncle likes to say, go ahead and look for it, I’ll wait.
Didn’t say you did. Only that it couldn’t be the cause. It increased diversity which spreads risk not increases it. And backed up my contention with someone you would not dismiss simply out of hand.
it was private non-bank entities and bank subsidiaries (created to avoid exactly those regulations) like Quick Loan Funding and Countrywide Financial that were doing all of the nasty stuff.
Sorry, didn’t happen. Lending is lending. Not having checking accounts only absolves them of regulations involving checking accounts. Regulations on Countrywide’s lending are the same as regulations on BoA’s lending.
How were those banks obscuring the risk and passing it off to others? By packaging the crap up as derivatives which — surprise! — were effectively unregulated.
“Effectively unregulated”. You mean not regulated to your satisfaction (Can something bad happen and it *not* be due to insufficient regulation?). Which isn’t the same thing at all. And even if they weren’t, it’s still not “deregulated”. To be deregulated means to remove regulations that at one time existed. It is not the lack of regulations that have never existed.
Accidents went up after cars were added to roads due to a lack of speed limits/seat belts/etc but those injuries were not the result of “deregulating” the roads.
But for all the right-wing bleating about Fannie and Freddie and the CRA, loans guaranteed by those entities and subject to those regulations were substantially less likely to default than those written by their less-regulated counterparts.
Depends on how you define a CRA loan. If I have to create a new loan product to satisfy the CRA (because not enough people in poor black neighborhoods qualify for a traditional mortgage), do only those loans booked in those protected neighborhoods count as a CRA loans? If so, you are probably correct. If you count the dude in a rich white neighborhood who took that loan product which the bank, by law, cannot deny to him (even though he’d qualify for a traditional mortgage) because it enabled him to buy a McMansion, then your numbers will change considerably.
And that is where all hell broke loose. A well meaning change meant to protect people from discrimination was abused by other customers who though they were smart enough to game the system. Not bank “deregulation”. The loan products were essentially secured solely on expected appreciation. As long as the home appreciated they were safe. The customer could refi or sell and satisfy the loan. When home values dropped the security for the loan disappeared.
The fact that regulation sometimes fails is not in and of itself evidence that we’d be better off without it,
It is also not, in and of itself, evidence that we’d be better off with more of it.
The Internet would have sprung up eventually, regardless of the military’s involvement. It’s speed of growth was more attributed to porn than anything. – Robb
Maybe, maybe not. You don’t know that. But what I know is that bussiness were devoting exactly $0 to it at the time. So even it it did spring up, it would have done so *much later* and given the exponential growth rate, *much slower*. So regardless, we’d be much worse off today had the .gov not been involved.
Can you show me the executive order that declared the 192.168.0.0 subnet unroutable?
Don’t have to. Whether you denote your street address as “123 Main Street” or “#FE48A1” or “15.265.48.124” is completely independent of the traffic laws. So you are addressing a problem (one with which I also happen to agree with you) it’s just not the problem I posed.
May 25th, 2010 at 6:06 pm
Similarly, if you are on the phone speaking English to someone who only understands French, that’s not a problem with the phone. 🙂
May 25th, 2010 at 6:50 pm
Yu, the point I’m making is that a super complex system of networking was developed – roads if you will. The traffic laws – i.e. what stop sign shapes are, what color the lights should be, which side of the road should you drive, etc – were all agreed upon even though there were hundreds of competing technologies.
Your browser works very much the same way. In fact, what it takes to get this “quoted phrase” to you is much more complex than any traffic law you could ever think of and yet it happened spontaneously. Granted, dropping a packet doesn’t result in you doing a head over head roll at 70mph (all analogies break at some point ;).
Yeah, let’s see how that’s working out. Alcohol will destroy the fabric of society, let’s ban it. Blacks are dangerous to society, let’s segregate them (remember, there were LAWS set up by governments to do so, not just people refusing service – they were bound by law to do so). Homos are going to destroy the sanctity of marriage! STOP THEM FAGGOTS FROM MARRYING! Drugs will destroy our children, we need to not only ban them, we need to militarize our police to ensure they stay banned.
Last time I heard, alcoholism was rampant during Prohibition, Blacks never really did reach epidemic proportions, queers sashayed all over the place holding hands while Liz Taylor still continued to go through marriages like Kleenex, and drug usage has not abated, but there’s a lot more people in jail and dead dogs than I remember from the early years.
Nobody is smart enough to deal with all the problems by making one size fits all solutions which is what a Federal sized government does. Having solutions smaller and closer to the people they effect are a much better choice. I understand the desire for laws to change behaviors, but that’s a dangerous tool. You’re more than happy to give The Alleged Hawaiian control over health care because you believe he’ll make the right choices, but when Sarah Palin gets voted in next term and decides to use the same power… Well, you won’t like it as much will you?
Best to leave the Federal gov’t out of 99% of what they’re involved in and avoid those problems.
May 25th, 2010 at 7:10 pm
Yu-Ain:
It’s clear we’re going to have to agree to disagree about the causes of the credit crisis. I mean, Quick Loan Funding didn’t happen? Really? Suffice it to say that most of the really bad subprime loans were made by entities that weren’t even governed by the CRA at all, and made after Fannie and Freddie got out of the subprime loan business. From where I sit, they were at worst contributors to a larger problem, and by no means causal. The commercial real estate market, which has no Fannie & Freddie counterparts and is not governed by anything like the CRA, finds itself with very similar problems, which would tend to lead one to conclude that CRA, Fannie, & Freddie weren’t the problem, or at the very least not the main problem.
I also take great exception to this:
If you count the dude in a rich white neighborhood who took that loan product which the bank, by law, cannot deny to him (even though he’d qualify for a traditional mortgage) because it enabled him to buy a McMansion, then your numbers will change considerably. … A well meaning change meant to protect people from discrimination was abused by other customers who though they were smart enough to game the system.
This is the first time I’ve heard anyone assert that the banks had no choice but to make those lousy loans, but set that aside. Your framing makes it sound as though the Poor Wittle Banks, wholly against their will, were forced — forced, I tell you! — to make such loans to such customers. When what happened in reality is that those banks and other lenders aggressively marketed those products to that segment of the population. I don’t see how anyone could argue with a straight face that this was a case of the government forcing the banks to make loans that they didn’t want to make. They made the loans perfectly willingly, because as long as the bubble was growing, they were their most profitable segment. (Boring, traditional mortgages like mine make them modest profits at best. In fact, few lenders are willing to refinance my mortgage, not because my credit is bad, but because I’m paying too fast and have too much equity.)
It is also not, in and of itself, evidence that we’d be better off with more of it.
Absolutely true, which is why such things should be judged on a case-by-case basis. Pre-crisis, we might say to ourselves, “there’s no need for a regulation stating that loans can’t be given out without verification of income, because no sane bank would ever do such a thing anyway.” But now we know better, don’t we?
May 25th, 2010 at 7:12 pm
The traffic laws – i.e. what stop sign shapes are, what color the lights should be, which side of the road should you drive, etc – were all agreed upon even though there were hundreds of competing technologies.
And I’m saying that the analogy has already broken because an electron can only move one way. Sure you can say that the electron can only move on the right side of the wire. It will ignore you. You can say that it is only allowed to travel so fast. It won’t care. It will move the only way it can regardless of your wishes on the matter.
You do not tell the electron how to move, it tells you and you adapt to it. The only question is how you will use that fact.
The technologies (TCP/IP, etc.) are the addresses and the cargo being shipped on the road, not the road itself.
May 25th, 2010 at 7:15 pm
Robb Allen:
Yeah, let’s see how that’s working out.
Setting aside the fact that targeting people is not the same thing as targeting elective behaviors, I could just as easily spew out a list of places where such regulation has worked extremely well. But what would be the point, really? It’s clear that our difference is a matter of philosophy, not of implementation.
(And while we rightly repealed prohibition, we still tightly regulate its manufacture and sale, and prohibit certain activities while under its influence — unless you’re arguing that we should throw those rules under the bus, too, it’s not the best example you could have come up with….)
May 25th, 2010 at 7:16 pm
P.S. Ending the war on drugs is probably one of the few areas where we can all agree.
May 25th, 2010 at 7:34 pm
This is the first time I’ve heard anyone assert that the banks had no choice but to make those lousy loans, but set that aside.
Exactly how then do you legally tell a customer who more than qualifies for an NegAm loan (a product only created to satisfy CRA requirements) that he’s been declined? “Sorry, you’re just too rich”? The .gov can do that. A bank can’t. It get’s them sued.
When what happened in reality is that those banks and other lenders aggressively marketed those products to that segment of the population.
Only after Fannie and Freddie were allowed to buy them off the bank. You see, the banks didn’t want this stuff on their balance sheets, because they knew it was trash. So if they were going to have to originate it they wanted some place to off load it. Fannie and Freddie to the rescue. Once that happened it was Fannie and Freddie’s risk and you’re damned right they originated (aggresively even) every single bit they’ll buy. Even those banks not doing a lot of CRA lending got into the market because if you give someone a profit for 0 risk you shouldn’t be surprised when you get a lot of it.
Since the house of cards lasted so long, it made the securities seem safer to all the other investors than they really were. And investors bought into the illusion because all the data suggested the illusion was real (and besides Fannie and Freddie were backing them so they couldn’t be that bad, right). Oops.
I mean, Quick Loan Funding didn’t happen? Really?
Didn’t say that. I’m saying that products such as Stated Income loans from Countrywide were just as regulated as Stated Income loans from BoA. No regulator took a look at Countrywide and said “Dammit, if only Countrywide was BoA, then we could stop this sh17!”
May 25th, 2010 at 8:03 pm
So much for Alternating Current…. 😉 The analogy is still sound though. Even though there were an infinite number of protocols (ways of driving on the road) we still came to consensus without the need of a governmental entity.
Because behaviors are entities in and of themselves and can be controlled without human intervention? What?
Thank God we do so. DUI’s and underage drinking have all but been eliminated! PRAISE THE IRON FIST OF THE GOVERNMENT!
May 25th, 2010 at 11:49 pm
Tgrich,
Yu is 100% spot on. I was working in the mrotgage department of a credit union in the late 1990’s and shortly before 9/11 (when I was promoted to a different department, but still watched what was happening).
Have you ever heard of the term “red-lining”?
It’s a “progressive” euphemism for “You don’t want to loan money to people who are far less likely to pay it back, and you either deny them the same loans others can get, ore you offer them high interest rates! Why, iot’s almost like you think a business should make money, you racist!”
Believe me when I tell you, you pretty much HAD to offer these subprime loans (now called racist and predatory by the same progressives who insisted on them) or be accused of racism and predatory lending!
“WAH! The banks don’t want to lend lots of money to people without stable employment, no down payment, and a history of not paying their debts in a timely fashion! Might as well call it the BanKKK! I notice teh rich white guys at the country club get fat loans with sweet rates.” Of course those “rich white guys” have a history of paying back the money, but make no nevermind that a fat slob named Bubba McCracker with no stable empoyment history, no down payment, and a history of not paying his debts in a timely fashion gets EXACTLY the same loan product as the guy from teh projects, presuming that they are buying identical homes. Never mind that the black guy who is a senior partnet in the top law firm around, and who has a perfectly clean credit report gets the same loan product as the white guy from Skull & Bones.
GOVENRMENT, specifically DEMOCRAT MANDATED loose loan requirements (ostensibly to fight the racism that no one could ever actually articulate proof of. . . that would be becuase heartless white businessmen only see one color of customer — the color of his money) that CREATED the mortgage crisis. The loose money the loose loan requirments drove encouraged unrealistic inflationary appreciation of home prices. When teh cost of money is cheap, and cheap money is easy to get, people will pay MORE for teh same product — you have just increased the pool of potential buyers DRAMATICALLY (which was, after all, the STATED purpose of the damned regulations, so it was only a secret to anyone who failed Intro to Economics 101).
When the potential pool of buyers increases dramatically, and their ability to pay a price ABOVE current market value increases alongside that, what does that do to demand?
That’s right — you have increased demand. Since you’ve done it with paper, demand has just outpaced supply, AND people are willing to pay more to stay in the game.
I was already telling people in 1999 that real estate had entered a Tulip Craze spiral. I honestly expected the DotCom bubble to kick off what actually happened in 2008. (Most people didn’t seem to realize the DotCom Bubble was HEAVILY driven at the front end by media driven panic over Y2K. . . and the overreaction to that artificially warped the replacement cycle of almost EVERY business — practically everyone, and I mean, EVERYONE had mostly all-brand new hardware and software on January 2000; most businesses are one a 3 or 4 year replacement cycle — although 2 years is not unheard of. That means that in spring of 2000, the computer market essentially rolled to a halt, becuas ethe big customers were all Y2K’d up for th enext 36 months or so. Add in the simultaneous wide scale introduction of the Internet in the late 1990s, and people ALL thought they could start the next killer website. . . ignoring the fact that by time they got aboard, most of them were on the BACK side of the wave.)
And then the market corrected. As the market will ALWAYS do. (If you leave it pretty much alone in the first place, it tends to correct SOONER and LESS PAINFULLY.)
May 26th, 2010 at 12:57 am
Yu-Ain:
Exactly how then do you legally tell a customer who more than qualifies for an NegAm loan … that he’s been declined?
This dodges the point. Certainly you’re not going to argue that the CRA required banks to aggressively market these products to homebuyers and homeowners in upper-middle-class suburbs. If these were loans they’d rather not make, you’d think they’d sweep ’em under the carpet and hope nobody notices.
Only after Fannie and Freddie were allowed to buy them off the bank.
Once again, not true. The bulk of those loans were originated after Fannie & Freddie stopped guaranteeing them.
As for the securities “seeming safer than they really were,” conflicts of interest at the ratings agencies had more than a little to do with that.
I’m saying that products such as Stated Income loans from Countrywide were just as regulated as Stated Income loans from BoA.
That may well be so. Since I don’t have direct evidence to the contrary, I’ll concede the point. I don’t need it anyway, since my overarching point has been that there wasn’t nearly enough regulation of such products. Throughout the crisis, despite all the rhetoric to the contrary, the least-regulated products were the ones that got into the most trouble. I don’t think that’s a coincidence.
Robb Allen:
DUI’s and underage drinking have all but been eliminated
Murder hasn’t been eradicated, either. I suppose we should strike the laws against it off the books, eh?
Geodkyt:
Have you ever heard of the term “red-lining”?
It’s a “progressive” euphemism for “You don’t want to loan money to people who are far less likely to pay it back, and you either deny them the same loans others can get, ore you offer them high interest rates! Why, iot’s almost like you think a business should make money, you racist!”
Umm, that’s not even close to how I understand the term. Redlining is a practice by which person A on the “good” side of the line would be approved for a loan, whereas person B on the “bad” side of the line would be declined, even though Person B has identical or even better credit demographics.
And contrary to your rant, the overwhelming majority of the “loose lending standard” loans made — especially the ones that wound up in default — were made by lenders that were under absolutely no government compulsion to do so.
To contradict your rant even further, both parties were complicit in the mess, and anybody who tells you otherwise has an ax to grind. That’s not to say that they were equally complicit, but they both had a heavy hand in the affair. Even the Ayn Rand acolyte Alan Greenspan has dirty hands — he saw the crisis coming, and thought that surely the market would sort it all out without intervention. Whoops. Thus was the phrase “irrational exuberance” introduced to the public lexicon.
May 26th, 2010 at 12:58 am
Snark based on out-of-context excerpt:
“No regulator took a look at Countrywide”
Precisely the problem! 🙂
May 26th, 2010 at 1:20 am
Enron, Worldcom, Madoff Investment Securities: All companies that suffered from “too much regulation.” Imagine how profitable they would have been if there had been no regulation at all.
May 26th, 2010 at 8:35 am
I agree with most libertarian policies–ON PAPER. Even went so far as to register as a libertarian in ’96. Then I met some other “libertarians,” and I realized that I wasn’t unbalanced enough to be their friends. Seriously, I never met a bigger bunch of social outcasts and lunatics in my life. And for people dedicated to free markets and being allowed to make money, not one of them ever made anything out of himself.
It took a while, but I realized that people in the non-mainstream political camps on both ends of the spectrum are generally there because they have failed at life and are looking for excuses for their own shortcomings.
May 26th, 2010 at 12:35 pm
Who do you want to have beers with? Progressives? That would be a lot of fun if you like being bitched at for every little thing. They are boring and want to control everything.
I like Libertarians. I can’t go much beyond small L myself, but I can understand Libertarians. They care about liberty. And that makes sense to me.
I don’t understand Progressives. The party of change wants to control every single aspect of your life. They are the “do as I say, not as I do” crowd.
May 26th, 2010 at 3:24 pm
Number 9:
You need to broaden your horizons, man. I enjoyed having drinks with conservatives, liberals, progressives, libertarians, Republicans, Democrats, even Greens. But never Cowboys fans. A guy has to draw the line somewhere!
May 27th, 2010 at 1:46 pm
Robb-
So much for Alternating Current…
Heh. OK, that was funny.
Even though there were an infinite number of protocols (ways of driving on the road) we still came to consensus without the need of a governmental entity.
The problem is that I don’t see those protocols as analogous to traffic laws anymore than I see Mapquest Directions as analogous to traffic laws. Mapquest Directions and IPv4 are pathfinding schemes (and I already agree with you about those).
Tgirsh-
This dodges the point.
No, it’s exactly the point.
Certainly you’re not going to argue that the CRA required banks to aggressively market these products to homebuyers and homeowners in upper-middle-class suburbs.
The CRA didn’t require them to be aggresive, but it did require them to make them available.
If these were loans they’d rather not make, you’d think they’d sweep ‘em under the carpet and hope nobody notices.
And get the pants sued off of them if someone did notice. No thanks. The legal risk is too great. Since the banks didn’t want them, they sought an out. When they got it, the equation changed and since they could offload with little to no risk, *then* the marketing kicked in.
The bulk of those loans were originated after Fannie & Freddie stopped guaranteeing them.
Stricktly speaking Fannie & Freddie never guaranteed them. They were stricktly in the (and I’m using the term non-technically here) “conforming” loan business. When Fannie and Freddie bought *a* loan they only bought prime. What changed is that they could now buy (and sell) securitizations (read: investments secured by pools of loans) that could contain sub-prime paper. So at no point did they ever really “guarantee” sub-prime loans. Doesn’t mean they weren’t in the business of peddling them.
As for the securities “seeming safer than they really were,” conflicts of interest at the ratings agencies had more than a little to do with that.
Possibly, but the people I work with that have dealt with them didn’t seem to get that impression. The impression they left me with was that given all the historical data (which was confounded by astronomical appreciation rates) that had the default risk at X% that because of those appreciation rates the risk was understated and that the true risk might be, say, 2X%, but no one was really sure and it might be as high as, say, 5x.
When the crash came and it turned out it was really 15X. That doesn’t sound like conflict of interest or maliciousness, just being absolutely, horribly wrong. Everyone I’ve talked to in the industry knew things were going to be bad and were trying to prepare as best they could (did you know you get in trouble with the regulators if you reserve too much?) it’s just that nobody imagined it was going to be this bad.
I don’t need it anyway, since my overarching point has been that there wasn’t nearly enough regulation of such products.
Maybe, maybe not. That’s a matter of opinion. What isn’t is that these products were no less regulated across the industry or across time. Countrywide was not “deregulated” to allow them to make those loans, and the industry was not “deregulated” to allow them either.
To use your sports analogy, the rules weren’t changed, the umpires were not dismissed. Two things changed. Strategy and expansion teams. You can claim that the rules were not changed to adapt to the new strategy (like rules against roughing the QB as football moved from a running to a passing game) or that expanding the number of teams was a bad idea. But neither of those are “deregulation”.
This, however, is exactly correct.
Redlining is a practice by which person A on the “good” side of the line would be approved for a loan, whereas person B on the “bad” side of the line would be declined, even though Person B has identical or even better credit demographics.
That is the letter of the law. The problem, however, is in enforcement.
If the banks approval rates in predominantly white areas are 70% and the approval rates in predominantly black areas are 30%, the enforcement says that it doesn’t matter that my guidelines and my actual lending practices are neutral with respect to race and/or neighborhood.
That is, if my guidelines say you have to 1) have a 680 FICO and 2) total debt payments can be no more than 40% of your monthly income and 70% of those in white areas pass those requirement and only 30% of those in black area pass I have not redlined. I have acted completely neutral to race and neighborhood. My lending standards are the exact same for everyone.
Enforcement, however, will say that the bank has redlined and are acting in a racially discriminatory manner solely because the approval rates are different. That the underlying credit quality of the applicants are different do.not.matter. They should, by the letter of the law, but in practice, they don’t.