Market Ideology

[_Analytics]

Evidence? LOL
This is what Droopy is good at: He can rationalize and find "reason" to believe in the most bizzare stuff. Look, this is a guy who believes in Kolob and believes in crystal balls (seer stones) and a mammal diety. He believes that not only was the Garden of Eden real, but that it was located in Missouri. He believes that sex was not on the mind of a 20 something year old man who secretly married other mens wives and lied about it.

You ask him to look at the evidence! LOL! How could evidence (of all things) influence a mind like this? He is bent viewing facts through infinitely distorting ideological and supernaturalistic lenses. (What a combination!)

He lacks common sense and has a fantasmagorical and conspiracy theoretic world view. He makes Sen. McCarthy seem extremely reasonable and makes John Birchers look like rastafarians.

It's kinda refreshing to talk in a forum where you can tell it like it really is.

[_asbestosman]

It's kinda refreshing to talk in a forum where you can tell it like it really is.

I take it then, that you couldn't possibly have agreed with my comments about financial risk without representation. After all, I hold many of the same "delusions" that Droopy does: seer stones, etc. Poor, benighted Asbestosman. If only I'd become more enlightened and lose my testimony. Then my opinions might matter.

(No, I'm not feeling sorry for myself. I'm fishing for clarification and information, not reassurance--I could hardly care less if Tarski or others dismiss me out of hand through prejudice. I'm just curious).

[Guest]

It's not like we are dealing with anything even close to an unregulated, untouched market in which these problems occured, though. To pick two obvious examples that impacted how this situation played out: 1) the Fed was manipulating market interest rates as they have done for a century. In this case, it resulted in pressuring lower interest rates and therefore cheaper credit than natural market value. 2) There was a widespread belief based on implicit and explicit promises that the federal government would prevent certain institutions from failing (as it eventually did). This creates a moral hazard where businesses make riskier decisions than they otherwise would.

That's to say nothing of the complex regulatory scheme that was in place. Just because certain regulations are stripped or transformed and this is called "deregulation" that does not mean we're talking about anarcho-capitalism here or anything. I personally favor certain forms of regulation and argue that capitalism by its very nature incorporates certain forms of regulation (such as police enforcement of contracts), but I'm annoyed at how this financial crisis is painted as totally free markets run amok.

[_Tarski]

It's kinda refreshing to talk in a forum where you can tell it like it really is.

I take it then, that you couldn't possibly have agreed with my comments about financial risk without representation. After all, I hold many of the same "delusions" that Droopy does: seer stones, etc. Poor, benighted Asbestosman. If only I'd become more enlightened and lose my testimony. Then my opinions might matter.

(No, I'm not feeling sorry for myself. I'm fishing for clarification and information, not reassurance--I could hardly care less if Tarski or others dismiss me out of hand through prejudice. I'm just curious).

You show the ability to see the other side and you take time to ponder your opponents viewpoint. You can understand and listen to the arguments. Droopy only rants and so that's all he deserves in return (intellectual karma). I can imagine swaying you or being swayed by you.
I can not imagine Droopy being swayed by any person not already in his extreme ideological camp--ever.

[_Analytics]

It's kinda refreshing to talk in a forum where you can tell it like it really is.

I take it then, that you couldn't possibly have agreed with my comments about financial risk without representation.

I thought your point was well put, interesting, and valid.

[_asbestosman]

So it was a bit of a parody of Droopy's style. I thought it might be given recent comments to Dartagnan about an over-the-top style. One might hope that the problems of such a style would be obvious, but perhaps not--not even with parody.

I love a good satire, but sometimes it's hard for me to tell when there actually are people around here who really are that way. Satire's not quite as funny when't I'm not sure if it's satire anymore.

[_Analytics]

It's not like we are dealing with anything even close to an unregulated, untouched market in which these problems occured, though. To pick two obvious examples that impacted how this situation played out: 1) the Fed was manipulating market interest rates as they have done for a century. In this case, it resulted in pressuring lower interest rates and therefore cheaper credit than natural market value.

I did in fact list this as one of the causes in my analysis. An interesting point that Greenspan made though, was that the Fed manipulates short-term interest rates, and when they tried to put the brakes on the situation a few years ago and raised short-term interest rates, the long-term interest rates stayed low and the yield-curve inverted. The free-market demand for this debt caused the Fed to loose control of the interest rates.

2) There was a widespread belief based on implicit and explicit promises that the federal government would prevent certain institutions from failing (as it eventually did). This creates a moral hazard where businesses make riskier decisions than they otherwise would.

That was part of it, but a relatively small part. Fannie and Freddie had such a guarantee, but they were relatively conservative players. The rating agencies giving Aaa ratings to instruments based on junk was a bigger part of the problem.

That's to say nothing of the complex regulatory scheme that was in place. Just because certain regulations are stripped or transformed and this is called "deregulation" that does not mean we're talking about anarcho-capitalism here or anything. I personally favor certain forms of regulation and argue that capitalism by its very nature incorporates certain forms of regulation (such as police enforcement of contracts), but I'm annoyed at how this financial crisis is painted as totally free markets run amok.

A huge part of the problem wasn't de-regulation per se, but rather a decision not to regulate new markets and new instruments (specifically, the credit-default swaps).

The government was a big player and isn't blameless, but nobody saw this coming.

If, in the landscape that the government provided, private institutions and people would have made decisions based in their own best-interest, this wouldn't have happened.

[_Jason Bourne]

Greenspan is culpable. He flooded the marked with money supply and kept rates artificially low in order to blow hot air into a fake real estate bubble. People thought they had endless wealth and borrowed against that fake equity and consumed beyond their means and that consumptions was an hollow engine that fueled economic growth based on a house of cards consumption fueled by debt. Further the real estate bubble enticed people to by homes beyond their means because they would certainly see 50% gains in value in a year or so and could sell, pay debt and either move up or cash out. The false economic engine further enticed other governments to finance that US deficit and allowed our political leader, if you can call them that, to spend and spend and spend. Greenspan was really too smart to allow this but not only did he allow it, he helped create it. He will go down in history as one of the worst fed chairman ever.

Too bad he abandoned the restraint he had early in his career:

http://www.321gold.com/fed/greenspan/1966.html

[_bcspace]

Former Federal Reserve Chairman Alan Greenspan said a ``once-in-a-century credit tsunami'' has engulfed financial markets and conceded that his free-market ideology shunning regulation was flawed.

That is correct. A true free market has a minimum of regulation, not zero regulation. In a true free market, the purpose of regulation is to ensure the consumer has as much information as possible about products and services without infringing on proprietary secrets and that the consumer and producers pay all associated costs.