Comments on: Dani Rodrik on Simon Johnson

By: Polaroid Sunglasses

Polaroid Sunglasses — Thu, 30 Jul 2009 00:00:07 +0000

Indeed, those same elites are paying far more for said welfare state – medicare, medicaid, social security – than they are getting out of it.

By: Live Lead Transfer

Live Lead Transfer — Tue, 09 Jun 2009 22:38:16 +0000

A business have always a problem.. Competition is always there.. And now..we are suffering from recession.. So its not surprising that their are many business that fails..

By: lxm

lxm — Sat, 04 Apr 2009 20:59:23 +0000

Well, the banks got the general relaxation of regulations by the Bush administration, the lifting of leverage limits to 30 to 1 or some such nonsense, the prohibition of regulation of derivatives, the bankruptcy requirement that derivatives were first in line to be paid, just to name a few. And probably more.

Where you been, brother?

By: Populism. And local newspapers. « Local Democracy

Populism. And local newspapers. « Local Democracy — Thu, 02 Apr 2009 08:24:01 +0000

[...] interesting posts – one via Chris Dillow, and one directly from his site. Firstly, Chris signposts this: “….perhaps it’s “populist” to think political elites always end up in bed with [...]

By: uknowbetter

uknowbetter — Wed, 01 Apr 2009 22:08:38 +0000

Are you really that blind? Don't you realize that often what forces a company out of business is competition? A competitor offers a better product, a cheaper price, better customer service, etc.

Somehow you think a big, inefficient government is good for liberty? No offense, but you and your ilk reaching into my pants to grab my wallet is an impingement on my liberty.

By: uknowbetter

uknowbetter — Wed, 01 Apr 2009 22:04:43 +0000

I don't want to bail out any of these idiots. Let the stupid banks fail (and the smarter ones take over) and let the stupid mortgages fail (they can move into my apartment and I can buy their house at a rate closer to market value). Why should I be bailing out retards who signed a mortgage they shouldn't have? The government would be better off giving money to responsible renters instead of retarded home buyers.

On Fannie and Freddie, you need to get your facts right:
http://archives.chicagotribune.com/2008/aug/03/…

Fannie and Freddie were some of the bigger instigators of the problem and other banks jumped on board once they saw what they were doing.

By: Craig

Craig — Wed, 01 Apr 2009 01:09:26 +0000

Two comments:
1) The current crisis was largely caused by the Fed, which kept interest rates too low for too long. And Congress, which subsidized house purchases.
Without these two factors you wouldn't have had the bad mortgages for the dumb bankers to slice and dice. So sure, what they did was incredibly stupid, but how was it the result of rent-seeking – that is, what favours did the investment banks get from the government prior to TARP?
2) Looking at the current surplus of SS and Medicaid/Medicare is not germane. What matters are the long-term liabilities. And my understanding (please correct me if I am wrong) is that these are huge.

By: Paul_G_Brown

Paul_G_Brown — Tue, 31 Mar 2009 19:57:52 +0000

As someone who is neither an elite nor stupid, but a responsible adult making rational financial decisions, I don' t feel very sorry for any of these people.

Spoken like a true master of the universe!

Really. These words reek of the very hubris that led to the trouble in the first place. What is more soulless and "rational" than a Black-Scholes valuation of a CDO on a AAA rated tranche of a bundle of MBSs? And ... (sing it with me sisters and brothers).. they was wrong, wrong wrong ...

Everything we've come to learn about the way the human mind works suggests that it's NOT 'rational', but instead the motor is powered by greed and fear, the wind screen is smeared with doubt and self-delusion, the steering suffers from "long and variable lags", and the brakes were installed by madmen and are maintained by drunks.

Do you really think it's that big a stretch from Medicare to telling Fannie Mae and Freddie Mac to make sure loans went to people making under the median income in an area?

The problem is no longer confined to people who took sub-prime loans, and hasn't been since mid 2008. Besides - the primary sources of these non-prime loans wasn't Freddie and Fannie. It was firms like Countrywide.

By: Paul_G_Brown

Paul_G_Brown — Tue, 31 Mar 2009 19:40:09 +0000

2. Businesses can go out of business.

At which point they are replaced by another business, which is equally rapacious. A new logo is not a new soul.

I care less about efficiency than I do about liberty.

By: uknowbetter

uknowbetter — Tue, 31 Mar 2009 19:32:20 +0000

With some additional provisions:
1. Businesses face competition.
2. Businesses can go out of business.

Neither of those happens with government and both of those have a large impact on efficiency.

By: uknowbetter

uknowbetter — Tue, 31 Mar 2009 19:29:01 +0000

When you are trying to compare absolute numbers it does. Much of that loss in US household wealth was bound to happen at some point. Housing values were very over-inflated.

The elites were stupid for giving money to the stupids (and that includes poor and middle-class alike while throwing in a few wealthy). As someone who is neither an elite nor stupid, but a responsible adult making rational financial decisions, I don' t feel very sorry for any of these people.

Giant welfare entitlements are a huge problem because they represent an attitude that people should have all sorts of things given to them (instead of earned). Do you really think it's that big a stretch from Medicare to telling Fannie Mae and Freddie Mac to make sure loans went to people making under the median income in an area? This is the exact thought process of people like Barney Frank. One entitlement program begets another program and on and on.

By: Paul_G_Brown

Paul_G_Brown — Tue, 31 Mar 2009 17:24:37 +0000

The bigger and more involved in our lives government is, the more incentive there is for business to get into bed with government.

To which I would sing "Amen!" and offer the following corollary.

The smaller and less involved in our lives government is, the more opportunity there is for business to get involved.

Ideally, I would pox both their houses. In practice, it's prudent to play one against the other.

By: Paul_G_Brown

Paul_G_Brown — Tue, 31 Mar 2009 17:21:39 +0000

For everyone buying a mortgage they could not afford, there was someone selling a mortgage that could not be afforded.

And then selling mortgages, bundling mortgages, persuading a ratings agency to mark tranches of these bundles as AAA, selling these tranches to other people who borrowed money to buy 'em, selling insurance to everyone in case the deal went bad, and everyone kidding themselves it wasn't a lie and pulling down big money as long as the grift went on.

The people who bought the mortgage/house have had their lives disrupted, and their credit rating ruined. Now they're losing their jobs. The people who sold the mortgages are leveraging their bonuses to buy up foreclosed homes at firesale prices.

None of which is in any way related to Craig's assertion that "the most economically damaging aspects of the modern welfare state are the universal entitlement programs", by the way.

By: uknowbetter

uknowbetter — Tue, 31 Mar 2009 17:07:06 +0000

The bigger and more involved in our lives government is, the more incentive there is for business to get into bed with government.

By: uknowbetter

uknowbetter — Tue, 31 Mar 2009 17:04:40 +0000

Much of that US household wealth was fictional. There was a giant housing bubble.

The real issue was bad assets. You know what those bad assets were? People who took out mortgages they couldn't afford. You can call those people 'elites' if you want to (and I somewhat do since I rent), but I don't think many people will agree.