JONATHAN TURLEY'S BLOG Res ipsa loquitur ("The thing itself speaks")

Dealing With Fannie and Freddie

Published 1, June 5, 2011 Politics 123 Comments

-Submitted by David Drumm (Nal), Guest Blogger

With the recent appearance of Gretchen Morgenson and Joshua Rosner’s Reckless Endangerment, the focus on the financial meltdown turns to Government Sponsored Enterprise (GSEs) such as Fannie Mae and Freddie Mac (F&F). The claim is that the role of F&F in the meltdown is being marginalized or ignored. Some claim that this book fills an important void.

However, the role of F&F has been well researched and documented.

The GSEs, by charter, are intended to facilitate mortgage finance to lower-income homeowners. These lower-income borrowers, with no political support structure, are the perfect patsies for those looking to shift the blame for the financial crisis. Republicans have used the “affordability” aspect of the GSEs mission to blame F&F for the financial crisis. The facts just don’t bear them out.

In Raj Date’s presentation, he notes that GSEs $100 billion of private-label subprime Mortgage Backed Securities (MBS) in their portfolio is only 2% of their $5 trillion credit exposure. He writes:

Moreover, the very worst performing GSE loans (that is, the loans where losses are the greatest multiple of original forecasts) were made to prime borrowers, not subprime.

As shown in the graph below, it is the prime mortgages that make up the vast majority of serious delinquencies.

As Raj Date points out, the serious delinquencies came from “Alt-A” and “Interest Only”, which had average borrower FICO scores of 722 and 720, respectively, solidly within the “prime” category.

Between 2004 and 2006 the volume of subprime and the riskier (than conventional) Alt-A mortgages ballooned. In 2005 and 2006, conventional, conforming mortgages accounted for one-third of all mortgages originated.

From early 2004 to late 2007, it was the private-label insurers that played a large role in securitizing (pooling contractual debt into bonds) the higher-risk mortgages.

As Barry Ritholtz points out in his review of the Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States:

They focus blame largely on the so-called “private label” mortgage market. These are bank and non-bank,  brokers, lenders, and securitizers.

If F&F had accepted their lower market share and not tried to stay competitive with the private-label insurers during the bubble, their losses would have been substantially less. The F&F blame game is a desperate attempt, not borne out by facts, to shift the focus of the financial crisis away from  the private-label insurers.

H/T: Mike Konczal, Karl Smith, Conservator’s Report.
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1. Elaine M.1, June 5, 2011 at 9:27 am

   Fannie, Freddie, and the New Red and Blue
   by Matt Taibbi
   January 4, 2010
   http://trueslant.com/matttaibbi/2010/01/04/fannie-freddie-and-the-new-red-and-blue/

   Excerpt:
   Everyone was involved in the mortgage scam. At the lender level the deceptions were myriad; liar’s loans, fraudulent income documentation, negative amortization loans, HELOCs, etc. The rush to get as many loans written as possible and then get those hot potatoes moved to the next sucker in the line was furious and extended from coast to coast, sinking one lender after another in Ponzoid debt and indictments.

   Then there were the countless deceptions that emerged from the securitization process, the bad math that allowed banks like Goldman to do $474 million mortgage deals where the average equity in the home was just 0.71 percent, and sell 93% of that deal as investment grade paper.

   Are we really to believe that the people who did those deals didn’t know what total crap they were selling? That the people who used CDO-squareds to magically turn BBB investments into AAA investments didn’t know how nuts that was?

   There were the ratings agencies, who accepted all that bad math and slapped AAA ratings on crap mortgage-backed securities in exchange for the continued largess of the banks upon whom they were financially dependent — the same ratings agencies that later sputtered and coughed up bullshit my-dog-ate-my-homework excuses for mismarking mortgages, with the Moody’s revelation that a computer error caused them to misapply AAA ratings to billions’ worth of MBS being the comic low point.

   Then further along in the chain you had crooks like the folks at AIG, who took advantage of the basic nonexistence of derivatives regulation to issue billions in guarantees for these mortgage investments that they had never had any intention of paying off, to say nothing of actually having the ability to do so. And of course underwriting the entire enterprise was the implicit guarantee of Alan Greenspan’s Fed, which made it known time and time again that its modus operandi was to refuse to recognize the existence of bubbles until after they blew up, at which point it would rush in and clean up the mess, bailing out all the chief actors out with easy money.

   Everyone had a hand in the bubble, from the congressmen who killed regulatory initiatives to the regulators who snoozed at the wheel to the GSEs to the Fed to the banks to the ratings agencies to the lenders. I don’t think it’s really controversial to say that, but it does seem like there’s an argument brewing about what that across-the-board complicity means.

   My own personal feeling is that our recent bubbles weren’t much different than pyramid scams and lotteries; they’re the handiwork of an essentially regressive and deeply cynical political organization that systematically hoovers up taxes and investment money mainly from middle-class suckers, where it eventually gets eaten in short-term cashouts and mostly blown on sports cars and tropical vacations and eye jobs for the trophy wives of Wall Street executives. Crackonomics: take literally all the spare money from four square city blocks and turn it into one tricked-out Escalade.

   For me the basic dynamic of the mortgage bubble is some Ivy League dickwad hawking a billion dollars of securitized subprime mortgages to a pension fund, and then Hobie-sailing off into the sunset with a bonus after they all blow up. Of course my seeing it that way might have a lot to do with my own personal psychological prejudices, and I get that some other person with different hangups might choose to focus on Barney Frank deciding to “roll the dice on home ownership” with the GSEs.

   But what I don’t see is how anybody can say that all of this happened because Fannie and Freddie rigged the game to get Mexicans in homes, and then the banks and the ratings agencies just reacted organically to the corrupted market and helped the bubble along through no fault of their own. That’s just another (albeit more convincing) version of the early attempt to pin the disaster on the Community Reinvestment Act, which in turn is just another way of playing the red-blue blame game, which in turn is missing the point.

   This GSE story is a big one, but if it gets used as a path back to a “The Market Reacted Rationally” version of history, we’re screwed. It has to be looked at as an important part of a diabolical whole, a symbiotic scheme in which the banks and the state were irreversibly intertwined in an enterprise that on both sides was never about market economics, but crime. Because otherwise… the diversionary notion that one side or the other is wholly to blame is part of what makes the whole scam possible.

   p.s. Just to get this out of the way, I love Zero Hedge, and Marla Singer has been really nice to me personally. I just don’t completely agree with this particular thing. I don’t see any reason why focusing blame on the banks and the ratings agencies and AIG was “fundamentally flawed,” because, well, shit, they were to blame. The fact that Fannie and Freddie now get to jump in the pigpen with them doesn’t change that for me.

   I think in the end what we’re going to find is that all the relevant actors had their own motivations for getting involved in the bubble. Two and now three presidential administrations let the Fed overheat the economy for political reasons that should be obvious. Alan Greenspan, hell, he did it because he loves seeing himself on magazine covers and wanted to keep getting invited to the right Manhattan parties. There were congressmen that converted the expansion of cheap credit into low-income votes. The bankers and lenders went along because the system of compensation on Wall Street is fucked and rewards short-term thinking while ignoring long-term consequences.

   To me all of these people were equally guilty of making bad decisions to benefit themselves in the here and now at the expense of the whole in the future. When it comes to bubbles, It Takes a Village, and blaming the whole mess on the “socialist” aims of a pair of government agencies seems off base — particularly since the Randian protocapitalists running the banks benefited every bit as much from this socialism as actual homeowners, and perhaps even more, when one considers that homeowners get foreclosed upon, while bonuses are forever.
2. Elaine M.1, June 5, 2011 at 9:40 am

   Nal,

   More from Matt Taibbi:

   Mortgage Bubble Blamed, Ludicrously, on the Government
   11/17/2010
   http://www.rollingstone.com/politics/blogs/taibblog/mortgage-bubble-blamed-ludicrously-on-the-government-20101117

   Excerpt:
   The reason there was a sudden rush to lend out homes to subprime borrowers was not because of Fannie and Freddie, but because the banks had discovered fancy new derivative tools like CDOs and CMOs that allowed them to chop up bundles of home loans and turn them into AAA-rated securities. Countrywide was not trolling the streets looking for jobless indigents to lend mansions to (this literally happened, by the way) because the government was forcing them to. It was because big banks like Goldman and JP Morgan Chase and Bank of America were letting them know that they had a virtually limitless market for mortgage-backed securities, thanks to the new derivative tools that allowed them to sell billions of subprime MBS as AAA-rated investments to suckers like German land-banks and Icelandic trade unions and the like.

   Every time the AEI or some other stooge comes out with one of these “But the government made us lend this shit!” arguments, we need to stand up and repeat: no, sirs, it did not. This was not a government program to put people in homes. This was an international fraud scheme to disguise crappy American home loans as AAA-rated safe investments so that they could then be hawked to foreigners and insurance companies and pension funds. The fact that a whole bunch of people who probably didn’t deserve credit ended up owning mortgages and buying homes was actually an incidental side-effect, a kind of collateral damage, to the underlying fraud scheme. Not about greed, Richard Hahn? This crisis was about banks bundling subprime mortgages and selling it off as AAA-rated gold to pension funds.

   That means a bunch of jackasses on Wall Street with $1000 suits and slicked-back hair were passing the word to Countrywide lenders that they needed masses of crap loans that they could then turn into investment-grade paper and sell it all off to, say, the state pension fund of Indiana.

   That way, thousands of Indianan toll booth operators and teachers and prison guards and janitors who’d been working their whole lives and saving up nest eggs were made into customers of this toxic crap these bankers knew would blow up eventually. Indiana’s pension fund lost $5 billion during the crisis. Virtually every state in the union suffered similar fates. Why? Because a bunch of used-car salesmen on Wall Street sold them fleets of lemons with no engines under the hoods.

   I don’t know what Richard Rahn would call making your yearly bonus goal by robbing some janitor in Indiana out of his pension. As a flack for the Cato Institute, I’m sure he would call it good business. But in my mind, if that’s not greed, I don’t know what the hell is.

   This has to be repeated: Fannie and Freddie did not invent this scheme to turn subprime crap into AAA-rated gold. They were not the ones who were mismarking dicey home loans; that was the fault of the ratings agencies, who did so because they wanted to retain relationships with the big banks. Here’s what Fannie and Freddie did do; they followed the market and bought lots of these loans after the banks had already collected them and chopped them up and mismarked them. As Barry Ritholz points out, they were essentially just another in a long line of dumb banks that jumped ass-first into the MBS market once it started to bubble up.

   There’s certainly a legitimate debate about government housing policy and whether or not it makes sense to have the Government-Sponsored Entities like Fannie and Freddie putting so much of our capital at risk to help low-income borrowers get houses. It may very well be that the Clintonian dictums went too far and were ultimately unsustainable. But that is an entirely separate issue, very different from the question of what caused the mortgage bubble and, by extension, the crash.

   Plain and simple, the mortgage bubble was caused by the unregulated mass-marketing of mismarked, or fraudulently marked, subprime mortgages to customers who had no idea or only a very dim idea of what they were buying. This was high-tech fraud and stealing, and not just greed but unconscionable, criminal greed on a grand scale.

   As for Richard Rahn talking about observers in the “political class” who blamed the crash on greed “without waiting for the evidence,” let me just ask this: on the literary totem pole, what could possibly be lower than a flack for an industry-fattened think tank taking a paycheck to defend greed? I guess there are all sorts of creatures in God’s kingdom, but man, are some of them ugly.
3. Nal1, June 5, 2011 at 10:21 am

   Elaine,

   Excellent links.
4. Bud1, June 5, 2011 at 10:47 am

   Thanks Nal and Elaine…

   But, this incredible crap just
   burns me…

   All these home owners did was pay for their
   house, and B.of A. thinks it is theirs!!!

   http://www.rawstory.com/rs/2011/06/04/florida-homeowners-confront-bank-threaten-to-seize-property-after-foreclosure-mistake/
5. Elaine M.1, June 5, 2011 at 10:51 am

   Nal,

   Here’s an interesting discussion about mortgage fraud, foreclosures, rocket docket courts, and robo-signers with Matt Taibbi and Christopher Hayes.
   
6. Dredd1, June 5, 2011 at 12:04 pm

   “Fannie & Freddie” should have kept their day jobs as porn stars.
7. Blouise1, June 5, 2011 at 12:07 pm

   “Crackonomics: take literally all the spare money from four square city blocks and turn it into one tricked-out Escalade.”

   Matt Taibbi has a gift for throwing exactly the right light on these people and revealing them for exactly what they are.
8. Blouise1, June 5, 2011 at 12:14 pm

   Slightly off topic but … maybe not:

   http://www.digtriad.com/news/watercooler/article/178031/176/Florida-Homeowner-Forecloses-On-Bank-Of-America
9. frank1, June 5, 2011 at 12:24 pm

   Thanks for the link to the pdf on selling points. It looks to honest to be something they would actually hand out. I will be very surprised if this is legit because it makes it obvious what they are trying to do. Most of these things talk about how to meet questions by reinforcing the spin not by explaining why the questioner is correct and the spin pure bullshit.
10. MAGGIE SIMI1, June 5, 2011 at 1:49 pm

    BULLSHIT ISNT PURE! IT RANKS! ILL BE HONEST,,I CANT WAIT TILL THE LOCK UP ALL THE SOBS!!!
11. ekeyra1, June 5, 2011 at 6:02 pm

    The greatest irony of fannie and freddie in particular, is their mission to make homes more “affordable” was completely turned on its head. If the banks and gse who had made the bad loans had been allowed to fail, if the recipiants of those loans would have been allowed to suffer the losses instead of foisting them on taxpayers, the artificially inflated housing prices would have fallen dramatically. Homes would actually be affordable, instead of the “affordable” of government backed mortgage loans. All the bailouts did was prop up housing prices to stem the devestating tide of devalued assets that fannie, freddie, the federal reserve, and the chosen few financial firms (goldman sachs, aig, etc.) were left holding the bag on. Propping up fannie freddie and the rest of the too big to fail crowd is exactly what is making home prices out of reach for so many americans. Not to mention the federal reserves role, interest rate manipulation and credit expansion, in the entire mess.

    But you dont want to hear that. It was greedy people. There you go. Dont think too hard, just wring your hands over those “corporations” and the evil “free market” that exists in a nation where the interest rate is set by a government protected banking cartel. The same government that can tell you what toilet and what kind of light bulbs you are allowed to buy. I might be more inclined to buy your “free market did it” stories if one actually existed. As it is you might as well blame it on unicorns.

    matt taibi can keep his one liners since he doesnt have a clue
12. ekeyra1, June 5, 2011 at 6:03 pm

    “This is my optimistic scenario. Think of the housing market that would follow. As housing prices adjust downward, the role of housing as a middle-class inflation hedge would end. Millions of mortgage holders would foreclose, and many millions more would find themselves upside down. This would be a disaster for many, sure, especially for undiversified households with equity primarily in their houses. But consider the upside as well. Housing would become affordable, which would be a true godsend compared to both today’s market and what will follow if Fannie and Freddie are bailed out. What’s more, the quality of mortgages after the bubble bursts would be much better than what exists today. Imagine: a mortgage market dominated by debtors of financial means! There would be short-term pain in the economy, but in the long run the housing market would be sustainable again, and general prices would fall, thus raising real incomes.”

    http://mises.org/daily/3053
13. Elaine M.1, June 5, 2011 at 6:46 pm

    ekeyra,

    “matt taibi can keep his one liners since he doesnt have a clue”

    That’s your opinion. One thing I like about Taibbi–he’s not partisan in his accounts of what the causes of the financial crisis were. He criticizes both Democrats and Republicans.
14. Anonymously Yours1, June 5, 2011 at 7:47 pm

    You think this is something….just wait and see what they do to Social Security….
15. puzzling1, June 5, 2011 at 8:23 pm

    Ekeyra,

    Schiff is exactly right.

    And the same thing will happen with student loans in the coming decade. Government sets artificially-low lending rates, creates wide availability for student loans, and the cost of tuition can rise far beyond what a free market would otherwise bear, particularly to fields with low employment viability.

    In the future many to most of these loans will be defaulted, to be picked up by the taxpayer through new debt and inflation. Government will also want to introduce student debt “forgiveness” in exchange for government employment, creating further dependency in coming generations upon the government for a job. If the empire continues to seek out new wars, some of that service might require military enlistment.
16. puzzling1, June 5, 2011 at 8:41 pm

    AY,

    For the social security ponzi scheme:

    1. Payroll taxes will continue to increase
    2. Retirement age will rise much faster than actual longevity
    3. The ability to draw social security with part-time employment will be highly constrained
    4. Survivorship benefits will be cut
    5. The future value of benefits will continue to decrease relative to real inflation (as opposed to official inflation)
    6. Ultimately, benefits will be means-tested against Roth, IRA, 401K, 403B, and pension holdings.
17. Roco1, June 5, 2011 at 9:30 pm

    ekeyra/puzzling:

    good posts and exactly right. Peter Schiff is one of the good guys. He could clean the floor with Krugman in a real debate.

    ekeyra is right about Taibbi, he truly is ignorant about things economic.
18. MAGGIE SIMI1, June 5, 2011 at 9:41 pm

    TY ALL!
19. Otteray Scribe1, June 5, 2011 at 9:56 pm

    Peter Schiff is an investment broker and talk show host whose highest academic achievement is a Bachelor’s degree. Paul Krugman, Ph.D. is a Nobel Prize winning economist and Princeton professor.

    I could say some more about Schiff, but I try to keep it civil, so will stop now.
20. puzzling1, June 5, 2011 at 10:01 pm

    OS,

    Sort of like our Nobel Peace Prize-winning President?
21. Otteray Scribe1, June 5, 2011 at 10:05 pm

    The Nobel Peace prize is traditionally a political statement. The other Nobel Prize awards are for achievement in an area of scientific endeavor. Those awards are for a scientific breakthrough or new and innovative insight into a problem.
22. puzzling1, June 5, 2011 at 10:22 pm

    Schiff continues to have a lot more insight than Krugman ever will, whether people want to accept reality or not:
23. Otteray Scribe1, June 5, 2011 at 10:25 pm

    Opinions are like that nether part of one’s anatomy. Everyone has one. You are entitled to your opinion. You are also entitled to be wrong. G’day.
24. rafflaw1, June 5, 2011 at 10:28 pm

    OS,
    I am with you. Krugman is heads above Schiff and any other right wing talking point so-called economist.
25. Otteray Scribe1, June 5, 2011 at 10:34 pm

    Reff, Schiff is not even an economist. He is an investment guy who pushes gold and silver. You know, kind of like that Beck guy.

    My brain just made a connection when thinking about Schiff which might or might not be on point. I recall that Charlie Daniels had a song about thirty years ago where the lyric was about televangelists: “They tell you to send your money to the Lord, but they give you their address.”
26. Buddha Is Laughing1, June 5, 2011 at 10:35 pm

    Schiff is an economist like Beck is a journalist.

    ‘Nuff said.
27. MAGGIE SIMI1, June 5, 2011 at 10:56 pm

    Lol Im laffin too hahahaha!!!
28. puzzling1, June 5, 2011 at 11:15 pm

    Perhaps government should license who has the standing to call themselves an “Economist” so that those who would challenge government’s Keynesian canons can be properly marginalized as the unscientific, wayward propagandists they are?

    No doubt the sixty million minds successfully indoctrinated by public schools each decade would agree.
29. Otteray Scribe1, June 5, 2011 at 11:18 pm

    Professor of Economics at Princeton and Nobel Prize in economics is a definitive credential under any conceivable standard. Talk show host and salesman does not.
30. rafflaw1, June 5, 2011 at 11:21 pm

    What OS and Buddha said!
31. Swarthmore mom1, June 5, 2011 at 11:23 pm

    Schiff has an undergraduate degree in finance and accounting.
32. puzzling1, June 5, 2011 at 11:39 pm

    Yet I must confess that if I had been consulted whether to establish a Nobel Prize in economics, I should have decidedly advised against it…

    The Nobel Prize confers on an individual an authority which in economics no man ought to possess.

    - F. A. Hayek. Nobel Banquet Speech 1974.
33. Otteray Scribe1, June 5, 2011 at 11:41 pm

    Good to see Hayek has a sense of humor. And they call Economics “The Dismal Science.” A little levity is good.
34. Otteray Scribe1, June 5, 2011 at 11:43 pm

    And I notice Professor Hayek did not turn down the check and medal.
35. puzzling1, June 5, 2011 at 11:51 pm

    SM and others may – or may not – enjoy this:

    The lesson I’ve learned is how little we know. The world is complex, not some circular flow.

    The economy’s not some class you can master in college. To think otherwise is the pretense of knowledge.
36. Otteray Scribe1, June 6, 2011 at 12:03 am

    Begging the question fallacy. This started out as promoting Schiff as somehow being the intellectual superior of Paul Krugman. Lets stop going off on tangents and look at the two men. Schiff is basically a salesman who has a bachelor’s degree in accounting and finance. In other words, business administration. Paul Krugman has a lifetime of work studying the flow of international trade and the mathematical and practical models that influence the ebb and flow of trade.

    The long-dead Hayek and Keynes have about as much to do with Krugman’s work as the Wright brother’s wing-warping technique has to do with modern airliner design.
37. MAGGIE SIMI1, June 6, 2011 at 12:11 am

    Very true puzzling,,,,,,also you made me think of someone who said he couldnt stop sm1 from killing me! strange huh?
38. puzzling1, June 6, 2011 at 12:39 am

    Like in 2004 when http://www.abc.net.au/lateline/content/2004/s1064193.htm"Krugmancalls on Bush to reign in the red

    Well, basically we have a world-class budget deficit not just as in absolute terms of course – it’s the biggest budget deficit in the history of the world – but it’s a budget deficit that as a share of GDP is right up there.

    It’s comparable to the worst we’ve ever seen in this country.

    It’s biggest than Argentina in 2001…

    The economy is weak for the time being. Job creation is essentially non-existent.

    And in 2009 Krugman claims Till Debt Does Its Part

    … deficits are actually helping the economy.

    As I said, deficits saved the world.

    In fact, we would be better off if governments were willing to run even larger deficits over the next year or two.

    So in 2004 a roaring debt under Bush was somehow flying upside-down, and five years later doubling down on that debt makes the policy right under Obama? Is this an example of the sophistication of Krugman’s “mathematical modeling”?
39. puzzling1, June 6, 2011 at 12:42 am

    Let me try that again, since editing comments is reserved for the elites.

    OS, you mean like in 2004 when Krugman calls on Bush to reign in the red

    Well, basically we have a world-class budget deficit not just as in absolute terms of course – it’s the biggest budget deficit in the history of the world – but it’s a budget deficit that as a share of GDP is right up there.

    It’s comparable to the worst we’ve ever seen in this country.

    It’s biggest than Argentina in 2001…

    The economy is weak for the time being. Job creation is essentially non-existent.

    And in 2009 Krugman claims Till Debt Does Its Part

    … deficits are actually helping the economy.

    As I said, deficits saved the world.

    In fact, we would be better off if governments were willing to run even larger deficits over the next year or two.

    So in 2004 a roaring debt under Bush was somehow flying upside-down, and five years later doubling down on that debt makes the policy right under Obama? Is this an example of the sophistication of Krugman’s “mathematical modeling”?
40. ekeyra1, June 6, 2011 at 1:24 am

    Krugman from THIS MORNING: ““If we had the threat of war, had a military buildup, you’d be amazed at how fast this economy would recover.”

    So lets see, besides actually promoting the idea that war is good for the economy, (which you may find debatable, but do you really want to take krugman’s position that we should drop bombs on another country simply because we ran our own economy into the ground?), our revered nobel prize winner somehow forgot that we are currently in hostilities with at least 3 countries at the moment, have over 700 military bases around the globe and spend more on our military than the rest of the planet combined. With all that in mind, how much more could we possible funnel into defense spending? How much would krugman find to be enough to say, you know what, thats enough tanks, bombs, and depleted uranium ammunition?

    If krugman is going to be your intellectual standard bearer you might as well pack it up and go home.
41. ekeyra1, June 6, 2011 at 1:47 am

    Back on topic:

    “There is more to this ugly situation. New research by Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A.

    In general, a subprime mortgage refers to the credit of the borrower. A FICO score of less than 660 is the dividing line between prime and subprime, but Fannie and Freddie were reporting these mortgages as prime, according to Mr. Pinto. Fannie has admitted this in a third-quarter 10-Q report in 2008.

    An Alt-A mortgage is one in which the quality of the mortgage or the underwriting was deficient; it might lack adequate documentation, have a low or no down payment, or in some other way be more likely than a prime mortgage to default. Fannie and Freddie were also reporting these mortgages as prime, according to Mr. Pinto.

    It is easy to see how this misrepresentation was a principal cause of the financial crisis. ”

    “As it turned out, however, none of Lehman’s largest counterparties failed—so much for the idea that the financial market is “interconnected”—but all market participants now realized they had to know the true financial condition of their counterparties. The result was a freeze-up in interbank lending.

    For most people, that freeze-up is the beginning of the financial crisis. But its roots go back to 1993, when Fannie and Freddie began stocking up on subprime and other risky loans while reporting them as prime. ”

    http://online.wsj.com/article/SB10001424052748703278604574624681873427574.html
42. ekeyra1, June 6, 2011 at 1:55 am

    Origins of an American Kleptocracy

    “It takes only a cursory examination to suspect that misdirection plays a key part in the latest act of the ongoing crisis theater of the absurd. Misdirection to distract attention from the key complicity of GSEs in the crisis. Misdirection to deflect scrutiny away from the political personalities from both sides of the aisle responsible. Misdirection to conceal what could only be described as the most damaging acts of accounting and securities fraud in the history of accounting, securities or fraud.

    Precious few assumptions are required to come to conclusions laying responsibility for the largest economic disaster in recent memory at the feet of the GSEs.

    First, that the GSEs had substantial influence over the mortgage market.

    This is a no-brainer with the GSEs either holding or guaranteeing 51% of outstanding home mortgage debt in 2003. To put this in perspective, that figure was around 33% of the GDP of the entire United States in 2003. Read that last line again. Anyone wishing to play in the market had to compete with the rates set by Fannie and Freddie.

    Second, that the GSEs artificially depressed rates (read: underpriced risk).

    This is equally trivial to find given that this precise mandate has been the express purpose of the GSEs since at least 1993. The GSEs were not tasked with increasing the capacity for mortgage lending. They were tasked with making loans “affordable.” They used a number of tools to do so, but the key elements were acting as a proxy for quasi-government guarantees and bundling mortgages into risk tiers to act as a sort of clearing house for securitization pools. It is often said that providing a guarantee (particularly governmental) reduces risk. This is, of course, a fantasy. All that explicitly or implicitly tax dollar backed guarantees do is socialize risk. However, they manage to do so without requiring consolidation of the resulting liabilities on the government’s balance sheet. Convenient that, yes? A guarantee is a subsidy. Period. Failing to understand this is what permitted the political class to mislead the American public into thinking that cheap loans for everything from housing to small businesses to education (the next fiscal disaster on the horizon) come with no cost. (Or that cheap debt wouldn’t pump up the price of everything from education to housing). Today’s pundits seem to enjoy blaming “moral hazard” (by which they mean “corporate moral hazard”) for the crisis. Oddly, government guarantees, particularly those that everyone assumes will be costless, are not typically part of this definition.”

    http://www.zerohedge.com/article/origins-american-kleptocracy
43. Swarthmore mom1, June 6, 2011 at 8:36 am

    http://www.nytimes.com/2011/06/06/opinion/06diamond.html?_r=1 Nobel prize winner and fed nominee,Peter Diamond,who favors policies that are beneficial to the unemployed, pulls name out because republican voted in lockstep against him.
44. Elaine M.1, June 6, 2011 at 11:56 am

    Financial crisis was avoidable: FCIC
    CNN
    By Ben Rooney, staff reporterJanuary 27, 2011
    http://money.cnn.com/2011/01/27/news/economy/fcic_crisis_avoidable/index.htm

    Excerpts:
    NEW YORK (CNNMoney) — The financial crisis, which wreaked havoc on the economy and sparked a painful recession, could have been avoided, according to a federal commission.

    The Financial Crisis Inquiry Commission, in its final report on the causes of the crisis, said Thursday that federal authorities, who failed to curb reckless behavior on Wall Street, bear much of the blame for the turmoil that erupted in 2008 and 2009.

    *****

    The crisis was the result of “human action and inaction,” the chairman said, warning that it could happen again “if we do not learn from history.”

    *****

    The crisis was also the product of “dramatic failures of corporate governance and risk management at many systemically important financial institutions,” according to one of the report’s nine conclusions.

    The commission faults policies under both Presidents Bush and Obama, as well as actions taken by the Federal Reserve under Alan Greenspan and the current chairman, Ben Bernanke. Tim Geithner, the current Treasury Secretary who was president of the New York Fed during the crisis, and his predecessor, Henry Paulson, were also named in the report.

    “As our report shows, key policy makers — the Treasury Department, the Federal Reserve Board, and the Federal Reserve Bank of New York — who were best positioned to watch over our markets were ill prepared for the events of 2007 and 2008,” the commission states.

    The report also cites “a systemic breakdown in accountability and ethics” as a factor in the crisis. However, it states that “to pin the crisis on mortal flaws like greed and hubris would be simplistic.”

    “It was the failure to account for human weakness that is relevant to the crisis,” the report reads.

    *****

    The commission tells a familiar story of banks churning out trillions of dollars worth of poor quality home loans that were bundled into mortgage-backed securities, rubber-stamped by ratings agencies, and sold to unsuspecting investors around the world. As the housing market soured, those assets became worthless, leading to massive losses for banks and giving rise to a severe liquidity crisis.

    The crisis was driven by the proliferation of “synthetic” securities, such as collaterized debt obligations, and the excessive use of leverage at many financial firms, the report finds. These and other practices were carried out in a “shadow banking system” the report says, which was almost entirely unregulated.

    Some of the major operators in the shadow banking system included Lehman Brothers and Bear Stearns, which didn’t survive the crisis, as well as heavyweights Goldman Sachs (GS, Fortune 500), Merrill Lynch and Citibank (C, Fortune 500). The commission also faults the lending practices of commercial banks such as Countrywide, now owned by Bank of America (BAC, Fortune 500), Wachovia and JPMorgan Chase (JPM, Fortune 500).

    *****

    Fannie Mae and Freddie Mac, two government-sponsored enterprises, were “the kings of leverage,” the report says. By the end of 2007, according to the report, the companies had a combined leverage ratio of 75 to 1.

    The report faults government officials for encouraging Fannie and Freddie to increase their exposure to the mortgage market. The firms were placed under government control in 2008, and many analysts worry that their liabilities will be borne by taxpayers.

    AIG, the bailed out insurance giant, also features prominently in the report for its role in the crisis. AIG had to be rescued by the government in 2008 after it sold $79 billion worth of insurance contracts on mortgage-backed securities.

    The report also criticizes the three main credit rating agencies — Moody’s, S&P and Fitch — as “essential cogs in the wheel of financial destruction.”

    “Their ratings helped the market soar and their down-grades through 2007 and 2008 wreaked havoc across markets and firms,” the report reads.
45. Otteray Scribe1, June 6, 2011 at 12:21 pm

    Looks like there was enough blame to go around, Elaine. I have been watching this, and the deregulation mania after the election of Ronnie Raygun was what started the ball rolling downhill. Then the next four Presidents following St. Ronnie have either done nothing or made the problem worse (see Bush II).

    In aviation, there is something called the “graveyard spiral,” in which the airplane starts a diving turn. This typically happens when the horizon is not visible. If the pilot is not aware and takes immediate corrective action, a point will be reached where the dive cannot be recovered from without pulling the wings off the airplane. At which point it augers in at high speed with fatal results. That is, IMHO, a perfect analogy to what is happening to the economy. And when I was in grade school we made fun of Nero for fiddling while Rome burned.
46. ekeyra1, June 6, 2011 at 1:36 pm

    OS,

    “It’s high time we dispel once and for all the absurd myth that Ronald Reagan was somehow for deregulation.

    Statistically speaking, the size of bureaucracy, in terms of sheer civilian manpower, increased dramatically under Reagan, so that by the time he was finished, there were well over 200,000 more government workers than in 1980, when he took office.

    In fact, the size of government under Ronald Reagan grew astronomically in virtually every way.”

    http://rayharvey.org/index.php/2009/12/ronald-reagan-and-the-myth-of-deregulation/

    Are you sure you werent watching a movie where he pretended to deregulate?
47. Otteray Scribe1, June 6, 2011 at 2:04 pm

    Looking to a right wing blogger for credible data is hardly a definitive way to look at the history of any presidential administration.

    Google “deregulation under Reagan” and take a look at the million plus hits. Some are valid, some vacuous and some not on point, but the main thing is that deregulation under Reagan started the ball rolling downhill. I don’t know how old you are, but his concentrated efforts at deregulation all over the news during the Reagan administration, and some of it affected me personally.
48. Anonymously Yours1, June 6, 2011 at 2:34 pm

    OS,

    One area that he cut was actual number of federal employees….they just hired temps and paid the agency fees…so the number was initially decreased…but the monetary amount increased for payments….seems ludicrous to me…

    Then they did actually fire all of the FAA employee that went on strike….something about Union busting if I recall….
49. Otteray Scribe1, June 6, 2011 at 3:00 pm

    AY, yes, he fired all the PATCO air traffic controllers. They were on strike for better working conditions and requesting some serious equipment upgrades. ATC is probably one of the two or three most stressful jobs in the world of work. The outmoded equipment was accidents waiting for a place to happen and was increasing the stress on the controllers. I worked on one case where an air traffic controller hung himself in his garage, and the cause was stress, pure and simple.

    After Reagan fired the controllers and replaced them with supervisors and temps of his choosing, the safety factor went down dramatically. It made me very nervous flying, especially when, on two separate occasions, the new replacement controller vectored me into a collision course with another airplane. In the last incident, I had to roll inverted and dive away to avoid a head-on mid-air. He was willing to play games with the safety of the flying public to enforce his ideology.
50. Roco1, June 6, 2011 at 3:10 pm

    “he vectored me into a collision course with another airplane”. Was that controller fired?
51. Bud1, June 6, 2011 at 3:15 pm

    OS,

    As I recall also he replaced a lot of the controllers with military controllers at half the hourly wages.

    It was a sad sad day when PATCO struck and even sadder that
    they were all fired.

    It is absolutely amazing how Canada has privatized their entire air traffic system, and modernized it..

    Doesn’t/didn’t cost the taxpayers a penny.

    As I understand it, the Canadian system is a not-for-profit system, and every dollar that is collected from the airlines must be plowed back into wages and system improvements.
52. Otteray Scribe1, June 6, 2011 at 3:27 pm

    No, Roco, that controller was not fired. He was a “supervisor” and they had to keep every warm body they could. Every pilot I know had similar experiences. It was not a testament to the skill of the controllers that we did not have more “deals” but to the skill, situational awareness and quick reflexes of thousands of pilots.
53. Bdaman1, June 6, 2011 at 3:32 pm

    True Cost of Fannie, Freddie Bailouts: $317 Billion, CBO Says

    http://www.cnsnews.com/news/article/true-cost-fannie-freddie-bailouts-317-bi
54. Roco1, June 6, 2011 at 3:41 pm

    Bud:

    that sounds like a good idea.
55. Swarthmore mom1, June 6, 2011 at 4:23 pm

    http://www.theatlantic.com/politics/archive/2011/06/whats-wrong-with-america-chapter-817-sen-richard-shelby/239967/
56. puzzling1, June 6, 2011 at 11:00 pm

    OS,

    … the deregulation mania after the election of Ronnie Raygun was what started the ball rolling downhill.

    Carter was the deregulator, not Reagan. Of course, that’s not how it’s taught by public school catechists.

    Carter deregulated:

    1. Airlines 1978
    2. Oil prices 1979
    3. Trucking 1980
    4. Railroads 1980
    5. Interest Rates 1980

    And as for PATCO, preparation for the illegal strike and sourcing of replacement workers was done by Carter’s Management Strike Contingency Force.

    Reagan was a master of small government, laissez-faire messaging while doing the opposite. Obama’s eloquent progressive positioning is equally perverse.
57. Otteray Scribe1, June 6, 2011 at 11:05 pm

    Think whatever you want to think. You are entitled to be wrong.
58. ekeyra1, June 7, 2011 at 1:35 am

    Swarthmore,

    Really? Thats what wrong with america? Some jackass senator using the senate’s own beaucratic rules to delay the appointment of yet more beauracrats in retaliation for a snubbed funding bid? Cause hiring ever more beauracrats is whats going to save america?
59. Elaine M.1, June 7, 2011 at 1:58 am

    Reagan Did It
    By PAUL KRUGMAN
    Published: May 31, 2009
    http://www.nytimes.com/2009/06/01/opinion/01krugman.html

    Excerpt:
    “This bill is the most important legislation for financial institutions in the last 50 years. It provides a long-term solution for troubled thrift institutions. … All in all, I think we hit the jackpot.” So declared Ronald Reagan in 1982, as he signed the Garn-St. Germain Depository Institutions Act.

    He was, as it happened, wrong about solving the problems of the thrifts. On the contrary, the bill turned the modest-sized troubles of savings-and-loan institutions into an utter catastrophe. But he was right about the legislation’s significance. And as for that jackpot — well, it finally came more than 25 years later, in the form of the worst economic crisis since the Great Depression.

    For the more one looks into the origins of the current disaster, the clearer it becomes that the key wrong turn — the turn that made crisis inevitable — took place in the early 1980s, during the Reagan years.

    Attacks on Reaganomics usually focus on rising inequality and fiscal irresponsibility. Indeed, Reagan ushered in an era in which a small minority grew vastly rich, while working families saw only meager gains. He also broke with longstanding rules of fiscal prudence.

    On the latter point: traditionally, the U.S. government ran significant budget deficits only in times of war or economic emergency. Federal debt as a percentage of G.D.P. fell steadily from the end of World War II until 1980. But indebtedness began rising under Reagan; it fell again in the Clinton years, but resumed its rise under the Bush administration, leaving us ill prepared for the emergency now upon us.

    The increase in public debt was, however, dwarfed by the rise in private debt, made possible by financial deregulation. The change in America’s financial rules was Reagan’s biggest legacy. And it’s the gift that keeps on taking.

    The immediate effect of Garn-St. Germain, as I said, was to turn the thrifts from a problem into a catastrophe. The S.& L. crisis has been written out of the Reagan hagiography, but the fact is that deregulation in effect gave the industry — whose deposits were federally insured — a license to gamble with taxpayers’ money, at best, or simply to loot it, at worst. By the time the government closed the books on the affair, taxpayers had lost $130 billion, back when that was a lot of money.

    But there was also a longer-term effect. Reagan-era legislative changes essentially ended New Deal restrictions on mortgage lending — restrictions that, in particular, limited the ability of families to buy homes without putting a significant amount of money down.
60. Elaine M.1, June 7, 2011 at 2:03 am

    Reagan’s Legacy: Homelessness in America
    By Peter Dreier
    NHI, May/June 2004
    http://www.nhi.org/online/issues/135/reagan.html

    Excerpt:
    Reagan also presided over the dramatic deregulation of the nation’s savings and loan industry allowing S&Ls to end their reliance on home mortgages and engage in an orgy of commercial real estate speculation. The result was widespread corruption, mismanagement and the collapse of hundreds of thrift institutions that ultimately led to a taxpayer bailout that cost hundreds of billions of dollars.
61. Roco1, June 7, 2011 at 7:33 am

    Puzzling:

    so what you are saying is that Carter’s actions led to the unprecedented growth we experienced in the 80′s? If that is true he truly did get the short end of that stick.

    Can you back that up? I thought Reagan let interest rates float. He and Volcker, which was why we had the down turn at the beginning of his term. Or are you saying he just extended Carter’s policies?

    Nixon’s wage and price controls did screw the economy up pretty badly. Are you saying Carter spent his presidency trying to correct those mistakes? And Reagan got credit for them?

    I would like to see that from a credible source.
62. Roco1, June 7, 2011 at 7:36 am

    Reagan’s supply side brought huge amounts of money into the treasury, as Carville and Begala like to say, he was responsible for the largest tax increase in history.

    But congress has control of the purse and spent like, drunken congressmen.
63. Elaine M.1, June 7, 2011 at 9:02 am

    Here’s is an excerpt from a NYT piece written by David Stockman who was director of the Office of Management and Budget under President Ronald Reagan:

    Four Deformations of the Apocalypse
    By DAVID STOCKMAN
    Published: July 31, 2010
    http://www.nytimes.com/2010/08/01/opinion/01stockman.html?ref=opinion

    Excerpt:
    The second unhappy change in the American economy has been the extraordinary growth of our public debt. In 1970 it was just 40 percent of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970. This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.

    In 1981, traditional Republicans supported tax cuts, matched by spending cuts, to offset the way inflation was pushing many taxpayers into higher brackets and to spur investment. The Reagan administration’s hastily prepared fiscal blueprint, however, was no match for the primordial forces — the welfare state and the warfare state — that drive the federal spending machine.

    Soon, the neocons were pushing the military budget skyward. And the Republicans on Capitol Hill who were supposed to cut spending exempted from the knife most of the domestic budget — entitlements, farm subsidies, education, water projects. But in the end it was a new cadre of ideological tax-cutters who killed the Republicans’ fiscal religion.

    Through the 1984 election, the old guard earnestly tried to control the deficit, rolling back about 40 percent of the original Reagan tax cuts. But when, in the following years, the Federal Reserve chairman, Paul Volcker, finally crushed inflation, enabling a solid economic rebound, the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts.

    By fiscal year 2009, the tax-cutters had reduced federal revenues to 15 percent of gross domestic product, lower than they had been since the 1940s. Then, after rarely vetoing a budget bill and engaging in two unfinanced foreign military adventures, George W. Bush surrendered on domestic spending cuts, too — signing into law $420 billion in non-defense appropriations, a 65 percent gain from the $260 billion he had inherited eight years earlier. Republicans thus joined the Democrats in a shameless embrace of a free-lunch fiscal policy.

    The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector. Here, Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation. As a result, the combined assets of conventional banks and the so-called shadow banking system (including investment banks and finance companies) grew from a mere $500 billion in 1970 to $30 trillion by September 2008.

    But the trillion-dollar conglomerates that inhabit this new financial world are not free enterprises. They are rather wards of the state, extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives. They could never have survived, much less thrived, if their deposits had not been government-guaranteed and if they hadn’t been able to obtain virtually free money from the Fed’s discount window to cover their bad bets.
64. Roco1, June 7, 2011 at 9:16 am

    Seems to me David Stockman is saying that spending needs to be restrained. That spending should be limited to revenue.

    He is also saying that freely printed money isn’t a good thing, as in stimulus and bail outs. Which is inflationary.

    And he is saying foreign wars are a bad idea. All policies neither democrats nor republicans seem to understand.
65. puzzling1, June 7, 2011 at 9:39 am

    Roco,

    Here is an article with a superior explanation to my own, Rethinking Carter

    I am just trying to refute the meme that Reagan was the grandfather of deregulation. That’s simply not true.
66. Buddha Is Laughing1, June 7, 2011 at 9:42 am

    Ooooo. An article from a von Mises organ. Yeah. That’s not fascist propaganda. Uh huh.
67. Elaine M.1, June 7, 2011 at 10:00 am

    Supply-Side Economics in Fact and Fancy
    by Robert E. Prasch
    Common Dreams
    May 7, 2011
    http://www.commondreams.org/view/2011/05/07-7
    Note: Robert E. Prasch is Professor of Economics at Middlebury College where he teaches courses on Monetary Theory and Policy, Macroeconomics, American Economic History, and the History of Economic Thought. His latest book is How Markets Work: Supply, Demand and the ‘Real World’ (Edward Elgar, 2008).

    Supply-side economics is a hearty perennial, one that closely follows the election cycle. Every four years ambitious Republican politicians (and not a few ‘centrist’ Democrats) rediscover that the wealthy would like to pay less in taxes. But the rhetoric of politics does inhibit the wealthy, their kept intellectuals, and paid spokesmen from arguing their case directly. In democracies, even those resembling plutocracies, the rich must present their own interests as coinciding with the general good.

    With this in mind, and yet still aspiring to a tax cut, the wealthy have lavishly supported ‘astroturf’ political organizations and ‘think tanks’ which, in turn, hire photogenic and eloquent spokespersons to present their case to the public. In its best form, the argument is that tax cuts for the rich will: (1) increase the national savings rate because the wealthy save a larger percentage of their incomes than others. This increased quantity of savings will (2) provide the funds required to spur business investment in plant and equipment. From this it follows that (3) supply-side tax cuts will have the effect of providing strong economic growth, which will “trickle down” to the “regular guy.” We are assured that not only are these propositions true, but that they were proven decisively during the Reagan Administration.

    Let’s look up the figures. The key to this theory is in steps 1 & 2, describing a causal relationship between lower tax rates and increased private investment. Our starting point, or baseline, will be the average of what is called “net private domestic investment” over President Jimmy Carter’s four years (1977-1980), which we will compare to the average across the four years of President Ronald Reagan’s second term (1985-1988). The reason to select the former years is that they are widely recalled as having been dismal. Indeed, we have been repeatedly told that they were so bad that voters granted Reagan a mandate to pursue supply-side economic policies. Likewise, the latter years are selected as the effects of the enormous tax cuts enacted during Reagan’s first term should have had their strongest effect during his second term. Selecting data from Reagan’s second term allows us to set aside the economy’s abysmal performance during his first term with its devastating recession — the worst that occurred between the Great Depression and the Crash of 2008. In addition, by Reagan’s second term the wealthy should have had ample opportunity to adjust to their lower tax rates.

    When we look up the figures on the official National Income and Product Accounts, we find that “net private domestic investment” did not increase. On the contrary, it declined from an average of 7.0% of total Gross Domestic Product during Carter’s four years to an average of 5.7% during Reagan’s second term. More shockingly, if we factor out inflation, we find that the real dollar amount of investment fell slightly despite the fact that the American economy of the late 1980s was over 17% larger than the late 1970s. To put it mildly, this is a powerful refutation of the supply-side story.

    But, proponents might respond, surely overall savings rose as a consequence of the lower tax rates? Let us check. Comparing the averages over these same two four-year periods, consumption as a share of total National Income increased from 64.8% to 67.2%. Because the median American income for a full time year-round employee declined between 1980 and 1988 (from $34,483 to $34,253 in constant 1994 dollars according to the Bureau of the Census), this increase in the nation’s consumption was most likely undertaken by persons in the upper echelons of the income distribution.

    In light of facts presented in the previous two paragraphs, we are ready to sum up. President Ronald Reagan’s supply-side economic policies left us with more consumption on the part of the wealthy, a lower savings rate, less net private sector investment, and a lower median income for a full-time year-round worker. These who lived through those years will not be surprised by these numbers, as conspicuous consumption on the part of the wealthy was a dominant and widely-noted theme of that era.

    The ‘moral of the story’ is that proponents of more tax cuts for the rich will have to argue that its beneficial effects are very gradual, occurring only after an orgy of increased expenditure on the part of the policy’s immediate beneficiaries. Alternatively, they could argue that the National Income and Product Accounts put together by the Bureau of Economic Analysis at the Department of Commerce are profoundly flawed. Finally, they could drop the pretense that the Reagan years are an affirmation of their favored theory. The numbers presented above and the conclusions they point to simply cannot be sidestepped. If tax cuts for the wealthy are good for savings, investment, and the incomes of “regular guys” (that is to say the median earner), then some precedent other than the Reagan years will have to be invoked.
68. Gyges1, June 7, 2011 at 10:15 am

    Buddha,

    I actually get Mise’s daily e-mails. I read them when they look especially… odd.

    My two favorites are the one explaining how much better for profit libraries would be (although that one’s tied with the weird rant about how much better little leagues would be if they were ran for profit). Never mind the fact that in we’ve HAD people try and run for profit libraries in the recent past (it’s a major plot point in my favorite Orwell novel), and the one explaining that nobody makes home-made ice-cream because we buy the ice-cream maker, vanilla, cream, etc.
69. Buddha Is Laughing1, June 7, 2011 at 10:20 am

    Gyges,

    From loopy minds come loopy ideas.

    http://www.boston.com/news/globe/editorial_opinion/editorials/articles/2007/10/22/for_profit_libraries_a_sad_story/
70. Gyges1, June 7, 2011 at 10:39 am

    Buddha,

    Just to be clear, I get the impression that the people at The Mises Institute generally don’t go for outsourcing like that either. They seemed to think that there’s some evil force keeping someone from starting a for profit library business. The article was awhile ago though, so details are a little fuzzy.
71. Buddha Is Laughing1, June 7, 2011 at 10:49 am

    Yet clearly there isn’t. This only goes to prove that not all valuable services can be run on a for profit basis – nor should they be – and are indeed properly filled by government. Like the idea of privatized profit centered fire departments, the idea of privatized profit centered libraries is intrinsically faulty. Just like the idea of profit centered privatized health care insurance is fundamentally faulty.
72. Roco1, June 7, 2011 at 10:59 am

    “Ooooo. An article from a von Mises organ. Yeah. That’s not fascist propaganda. Uh huh.”

    So are you saying Carter was a fascist?
73. Buddha Is Laughing1, June 7, 2011 at 11:01 am

    No.

    I’m saying anything that comes from von Mises is fascist propaganda, sock puppet.
74. Bdaman1, June 7, 2011 at 11:05 am

    I’m saying anything that comes from von Mises is fascist propaganda, sock puppet.

    You meant Briepart didn’t you 
75. Roco1, June 7, 2011 at 11:05 am

    puzzling:

    sounds more like jimmy carter as forest gump.
76. Roco1, June 7, 2011 at 11:07 am

    so the Mises Institute is a fascist propaganda outlet? Is that what you are saying?
77. Buddha Is Laughing1, June 7, 2011 at 11:10 am

    Yep.
78. Roco1, June 7, 2011 at 11:15 am

    I will assume because they are pro free markets? Is that the only reason?
79. Buddha Is Laughing1, June 7, 2011 at 11:20 am

    No, but assume what you like.

    We’ve all seen how well that worked out for you in the past.
80. Bdaman1, June 7, 2011 at 11:34 am

    Barack Obama is floundering in a sea of bad news, as White House chief economist jumps ship

    http://blogs.telegraph.co.uk/news/nilegardiner/100090961/president-obama-is-floundering-in-a-sea-of-bad-news-as-white-house-chief-economist-jumps-ship/

    Daily economic briefings disappear from Obama’s White House schedule

    http://thehill.com/homenews/administration/164985-obamas-daily-economic-briefings-disappear
81. Roco1, June 7, 2011 at 11:41 am

    I would like to know what else you find distasteful they promote.
82. Gyges1, June 7, 2011 at 11:45 am

    Buddha,

    You’re not doing too hot these days, first the whole Big Brother\PKD thing (in retrospect, I’d put it closer to a few obscure cyberpunkish thrillers I’ve read, but since they’re not part of the common culture…), now this.

    There are lots of bad things about the Mises Institute you can say, but they’re not particularly fascist. The key difference is that where as with Fascism, The State is all important, in their philosophy, The Market is. While both apply the same omniscience and many other God like attributes to their entity of choice, there are enough key differences in the essence of the two to make the resultant philosophies divergent. I think the most important is that In Von Mises philosophy, The Market knows no national boundaries, Fascism is fiercely nationalist and REQUIRES other entities outside The State to be at war with.

    Let me be clear, The Mises Institute endorses a completely flawed ideology, and if it was actually implemented would be as tremendous a failure as Communism was. Rather than the Utopia they think it would lead to, the end result would just be a failed state. I think it’d have more in common with the Indian Subcontinent under English “rule” than it would with Mussolini’s Italy.
83. Buddha Is Laughing1, June 7, 2011 at 12:17 pm

    Gyges,

    What the von Mises institute suggests is default corporatism: the government having no function but to service the markets and the will of industry. In a world dominated by multi-national corporations, nationalism is an antiquated idea. Nationalism is a secondary trait in fascism compared to militarism. Militarism we see being played out in full force across the international stage in many cases for nothing more complex than a profit motive and often a profit motive by a company that because it has no national boundaries need no longer feel constrained by nationalism but rather only by maximum profitability. Unless prevented by the government, weapons manufactures – including those who manufacature WMDs – would simply sell to the highest bidder. That is the optimal solution in a laissez-faire free market is it not? Maximum profit.

    Quite simply, national boundaries no longer hold the meaning to industry that they did in the 30′s and 40′s. What is good for GM is good for the country is a maxim that no longer applies when GM does business on a global scale. Would it be more like India under English colonialism or Italy under Mussolini? The answer is neither. It would be much worse in terms of both damage and scale with the puppeteers being fluid legal fictions not bound by national laws as they are no longer bound by national borders. Without the constraints of nationalism, corporations are even more free to flaunt the law than ever. Without the constraints of accountability that the much expanded shield of liability presents corporate actors, the potential for abuses become unlimited. Corporate officers are not subject to public democratic election. As long as they maintain profitability and satisfy shareholder expectations, they have no checks on their power or abuse thereof. Corporatism is an interchangeable term with fascism according to the father of modern fascism, Mussolini, and the von Mises institute is nothing if not corporatist in bent seeking total freedom to pursue profit no matter the cost to the publics well being, civil rights and basic human rights. Their flawed ideology cannot be anything other than a form of post- or transnational fascism.

    Let us also not forget that there are other salient features to fascism such as being anti-egalitarian, anti-democratic, anti-individualist, anti-liberal, anti-parliamentary and pro-oligarchical. All in the name of unlimited ability to profit. These traits are still exemplified by the ideology von Mises espouses, either expressly or as an inevitable outcome of their propositions.

    I’ll stand by the assertion it is fascism. Fascism of a slightly different stripe than what Mussolini formulated, but fascism none the less. It is the evolved fascism of the multi-national age.
84. ekeyra1, June 7, 2011 at 2:30 pm

    B

    “the government having no function but to service the markets and the will of industry.”

    The government having no function. Full stop. There you go. Gyges may not agree with them but at least he understands their perspective.

    “In a world dominated by multi-national corporations, nationalism is an antiquated idea.”

    Given the pile of bodies nationalism has collected under its banner shouldnt this give you hope?

    “Militarism we see being played out in full force across the international stage in many cases for nothing more complex than a profit motive and often a profit motive by a company that because it has no national boundaries need no longer feel constrained by nationalism but rather only by maximum profitability.”

    How has nationalism ever constrained militarism? Every historical example proves that nationalism merely fuels an exceptionalism that justifies any military action because “were the good guys”. Hell the last 2 decades should be evidence enough of that. Also, Im not sure if you’ve noticed, yes war is profitable to the contractors and weapons manufacturers, chosen by government, but aside from them it is a staggering drain on the economy. Funneling productive capacity to things that will only end up charred wreckage on a battlefield does not make the world wealthier.

    “Unless prevented by the government, weapons manufactures – including those who manufacature WMDs – would simply sell to the highest bidder.”

    Without governments where would the demand or the funding have come from to produce weapons of mass destruction? Are you and your friends and family pooling your money to afford an abrams tank or a state of the art biological weapons manufacturing plant?

    “Corporate officers are not subject to public democratic election. As long as they maintain profitability and satisfy shareholder expectations, they have no checks on their power or abuse thereof. ”

    Which is a truly harder feat to accomplish? Satisfying a limited pool of shareholders, with extremely vested personal interests, of expectations of not only current revenue streams but future development of business opportunities, or convincing enough uneducated, immature, and economically ignorant people in a country of 300 million that you can make all their dreams come true if they pull lever a instead of lever b?

    B, seriously, do you ever stop and think who GRANTS corporations the legal fiction you always rant about?
85. Buddha Is Laughing1, June 7, 2011 at 2:49 pm

    1) “The government having no function. Full stop. There you go. Gyges may not agree with them but at least he understands their perspective.”

    Exactly what I’d expect an apologist say.

    2) Nationalism is a two-edged sword. It can and has both started wars and prevented them. Nationalism was a large part of what started WWII. Conversely, nationalism is a large part of what discouraged the Cuban Missile Crisis from becoming a nuclear WWIII.

    3) Your WMD statement is asinine. It’s not Mom and Pop becoming a nuclear power that is an issue. It’s organized religious fundamentalists and fringe political whack jobs of all stripes bent on destroying the world so they can meet Jesus in person or get their virgins or avenge a perceived ancient wrong against their tribe. Or some people simply live to see the world burn. None of which prevents any of the aforementioned groups from being a valid prospective client absent regulation.

    4) “Which is a truly harder feat to accomplish? Satisfying a limited pool of shareholders, with extremely vested personal interests, of expectations of not only current revenue streams but future development of business opportunities, or convincing enough uneducated, immature, and economically ignorant people in a country of 300 million that you can make all their dreams come true if they pull lever a instead of lever b? ”

    Spoken like a truly anti-democratic oligarch and someone with a vested interest in doing away with public education, McHomeSchooled. You have to dumb down the slave class lest they get the idea that the Ubermenchen are mere mortals too.

    5) “B, seriously, do you ever stop and think who GRANTS corporations the legal fiction you always rant about?”

    Seriously, do you ever stop and think where the perversion of the corporate form into personality equivalent and in someways superior to individual rights comes from? The answer is corporate lobbyists and a lack of regulation keeping corporate interests out of our political system. Corporations as a legal concept have a narrow and very specific application that has been distorted over time by corporate interests wanting unlimited power and unfettered ability to make a profit no matter the societal cost as long as they can escape personal liability for their actions. Like all tools, corporations are a tool that can, will and are being abused.

    That was way too easy.

    Try harder.
86. Gyges1, June 7, 2011 at 4:43 pm

    Buddha,

    The Mises Institute is actually pretty consistently anti-war. So if Militarism is a big point of Fascism, they’re missing it.

    You’re overlooking the huge body of Fascist rhetoric that these Plutocrats soundly reject. There’s much less emphasis on The Leader, and The Nation. Both of those need a clear line to differentiate US from THEM, that’s the rhetorical strength of Fascism, “I want to be a part of a group that’s better than that group,” which quickly becomes “I need to do what The Leader tells me is best for The Nation.”Since Mises pushes a market that’s global and without borders, you loose that tribal appeal. In fact, a large part of rhetoric is centered around encouraging people to consider themselves as separate and holy, and the good of the group as an obstacle to overcome. It’s missing the heart of Fascism.

    Now, if you want to say that they’re program will lead to A fascist or psuedo-fascist state, that’s one thing. The problem is that I consider motive part of the definition of a Fascist, they WANT that state, the people who write for Mises just sort of want to blunder into one. They’re just intellectually whoring themselves out to their moneyed betters, without any care for the consequences. I mean, say what you like about the tenets of National Socialism, Dude, at least it’s an ethos.
87. Buddha Is Laughing1, June 7, 2011 at 5:30 pm

    Gyges,

    “if you want to say that they’re program will lead to A fascist or psuedo-fascist state, that’s one thing.”

    That’s exactly what I’m saying when I say “an inevitable outcome of their propositions.” Don’t forget the lesson of Smedley Butler, “War is a racket.” Purposeful or not, the hanged care nothing for the motives of the hangman. The unregulated pursuit of profits eventually leads to conflict as bands of narrow interest pursue their profit goals irregardless of the effects on anyone or anything else. Idempotency of entailment (the proposition that one may derive the same consequences from many instances of a hypothesis as from just one, i.e. there can be more than one path to a unitary true solution) still applies.
88. Gyges1, June 7, 2011 at 5:39 pm

    Buddha,

    That last part was largely an excuse for the The Big Lebowski quote, but I guess I’m drawing a thousand monkeys vs. Shakespeare type distinction (the original analogy was man slaughter\homicide, but dealing with pre-preschoolers has given me a tendency to talk about monkeys whenever I can), sure the Monkeys could produce the play, but would you call them play-writes?
89. Gyges1, June 7, 2011 at 5:42 pm

    Buddha,

    Or Musicians for that matter?
90. Buddha Is Laughing1, June 7, 2011 at 6:03 pm

    When it comes to taking democracy out of the picture and installing an oligarchical two-tiered legal schema that will with absolute certainty lead to conflict, I care less about motive than I do about effect. Murder or manslaughter (to return to your original analogy so I don’t have to address the Davey Jones issue), the killer is still a killer. Intent only informs punishment, not responsibility. When one seeks to avoid all responsibility, one is concurrently seeking to avoid all punishment or consequences of failing in a responsibility. Willful depraved indifference is still a form of manslaughter even if your will was directed toward profits.
91. ekeyra1, June 7, 2011 at 6:04 pm

    “You have to dumb down the slave class lest they get the idea that the Ubermenchen are mere mortals too.”

    If everyone understood that everyone else is human, for all the good and ill that implies, the world would be better off.

    Its also very amusing that you assume my positions are advocated out of some flawed assumption that I am somehow superior to the dregs of society that are dragging me down.
92. ekeyra1, June 7, 2011 at 6:11 pm

    “When it comes to taking democracy out of the picture and installing an oligarchical two-tiered legal schema that will with absolute certainty lead to conflict”

    RIght because theres not a double standard in legal practices now… If i walk into a mcdonalds and shoot five people, im most likely going to jail. Do you have any doubt that dubya, obama, or any other president that has orchestrated war crimes will never see a jail cell? As long as you cloak your crime in the mysticism of politics you are immune from almost all forms of criticism, much less retaliation or prosecution.
93. Buddha Is Laughing1, June 7, 2011 at 6:15 pm

    ekeyra,

    If you want to take that personally, I really don’t care. You made your oligarchical bed. Sleep tight.
94. Gyges1, June 7, 2011 at 6:16 pm

    Buddha,

    A good chunk of my motivation is applying the same standard to you that I do whenever that stupid claim that Fascism is a branch of Socialism comes up. If I’m going to insist on accurate definitions, I need to do it consistently, and most definitions of Fascism I’ve seen use words that show intent: Advocate, exalt, that sort of thing.

    On the other hand I’m just considering the rhetorical implications of the boy who cried wolf. Crying Fascist at every right wing organization makes about as much sense as crying Communist at every left wing one, and gives those listening an excuse to ignore the shouter.

    Plus hey, two Monkeys jokes, a Big Lebowski reference and no Roco. I’d consider that a successful conversation.
95. Roco1, June 7, 2011 at 6:25 pm

    So I guess what you are both saying is that since markets are nothing but an aggregate of individuals, you are against individuals?

    The market is nothing but individuals pursuing their personal goals. Why do you consider the market to be some sort of corporate creation? Individuals create the market. Corporations are dependent on those individual transactions.

    So by limiting the market you limit the freedom of individuals which truly is fascism/communism and socialism to a lessor extent.
96. Roco1, June 7, 2011 at 6:27 pm

    sorry Gyges.
97. Buddha Is Laughing1, June 7, 2011 at 6:40 pm

    If you don’t think that the modern markets aren’t controlled by corporations, you simply haven’t been paying attention. That corporations are a tool that is often misused to avoid actual liability is another issue. If you don’t think that goes on as well, then you haven’t been paying attention.

    GoldmanSachs.

    As to this “The market is nothing but individuals pursuing their personal goals.” When your personal goals trample the rights and liberties of others, your personal goals should be subject to the rule of law. Your rights end where the rights of others begin. As in your right to profits end where the rights of others begin, including the right to be free from tyranny (economic or political). Unregulated markets historically lead to abuses of both labor and consumer by business interests and that’s a fact. Business interests more interested in profit than the good of both employee and purchaser alike. Establishing justice is a requisite function of government. Allowing abusive business practices because it’s simply more profitable to the owners is the very picture of injustice.
98. puzzling1, June 7, 2011 at 6:41 pm

    … The unregulated pursuit of profits eventually leads to conflict as bands of narrow interest pursue their profit goals

    Like when the State architects civil forfeiture laws, allowing government to seize assets when no crimes are proven or even charged? Regulation for the common good, no doubt.

    Nashville NewsChannel5 – Police Profiting Off Drug Trade

    Police turf wars over cash. Illegal searches and shakedowns. A not-for-profit police state profiting from the very prohibition it created.

    The answer must be more government.
99. Buddha Is Laughing1, June 7, 2011 at 6:44 pm

    Gyges,

    I don’t have an issue with your goal, however, in this instance I think I have adequately explained why I think the Austrian school is effectively fascist, to whit nationalism is no longer an required component in a post- transnational age and militarism is militarism whether express or tacit as violence is still the net result.
100. Buddha Is Laughing1, June 7, 2011 at 6:50 pm

     puzzling,

     “The answer must be more government.”

     No.

     The answer must be better laws and government more accountable to the people and not just their campaign contributors.

     A system only works as well as it is designed and if it is broken on purpose for the interests of the few, it is by definition not working well for the most people possible – which is the utilitarian definition of good governance. Size of government is and always shall be a red-herring argument. Effectiveness in serving the public’s interests is the only metric. You need a government large enough to do the jobs required as dictated by the Constitution, no more, no less. Our government isn’t plagued by being too large. It’s plagued by being mistasked to the desires of special interests over the needs of the many and that includes the need of the many for equal justice.
101. Buddha Is Laughing1, June 7, 2011 at 6:55 pm

     Gyges,

     Which is more dangerous and insidious?

     The devil you can see or the devil you can’t see? Overt or covert? Explicit or implicit?
102. puzzling1, June 7, 2011 at 7:03 pm

     The only “special interest” being served by drug forfeiture hauls is the ever-expanding police state. You can’t even blame private prisons for that one.
103. Buddha Is Laughing1, June 7, 2011 at 7:33 pm

     Actually I can and do blame private prisons for that as well as the ever-expanding police state. Their beds are filled with nonviolent drug offenders and other nonviolent offenders. According to the US Bureau of of Justice Statistics, for state jurisdictions 50% of the inmates in private prisons are nonviolent offenders and 20% are drug offenders. The numbers are even higher in Federal prisons. They rarely focus on rehabilitation and regularly cut inmate care to boost profits. Dick Cheney is a huge stakeholder in the GEO Groups, which merged with the company formerly Wackenhut, one of the largest private prison companies in the world. The GEO Group along with others of their ilk like Corrections Corporation of America all belong to a lobbying group known as American Correctional Association, which advocates legislation favorable to the industry and thus complete the circle of corruption and ever increasing criminalization of daily life for Americans that is the prison-industrial complex. Private prisons are an abomination.
104. Roco1, June 7, 2011 at 7:49 pm

     the problem is not private prison but draconian drug laws. Laws passed by federal and state legislatures. Make drugs legal and let honest farmers make a profit instead of South American drug lords.

     Government creates the atmosphere in which the lobbyists work. Government has the greater favors to provide; limits on competition, favoring one industry over another, favorable regulations, etc.
105. Buddha Is Laughing1, June 7, 2011 at 7:58 pm

     Government created the atmosphere in which the lobbyists work at the behest of lobbyists. When FECA (the Federal Election Campaign Act) was in full force, large contribution and “soft money” contributions were severely limited. But over time lobbyist sponsored legislation and soft headed and ill reasoned court opinions like Buckley v. Valeo slowly neutered FECA until its repeal in 1979. In fact, Buckley has been used as the primary weapon in keeping States from enacting campaign finance reform until the abomination that is Citizens United v. FEC came out of our current corporate friendly and purchased right-wing SCOTUS. The rules have been broken on purpose and they have been broken at the monied requests of those who wish to make this a corporatist country. Greater favor to provide does not obviate the crimes of those who offer money for favors. Graft and bribery are by definitions crimes that require two participants. So save that corporatist apologist bullshit for people who don’t know any better.
106. puzzling1, June 7, 2011 at 8:15 pm

     Roco is correct.

     The drug laws allow the state to grow and actually profit from prohibition. Basic rights are destroyed, students leave school for the lucrative drug economy, police become paramilitarized, law enforcement and the judiciary is corrupted, drugs become more concentrated and dangerous, while drug prices rise and crime skyrockets to pay those prices.

     A free market would do none of this. Only the State and gangs benefit from drug prohibition.
107. Buddha Is Laughing1, June 7, 2011 at 8:21 pm

     You won’t find an argument against legalization for some drugs from me, but if you only look at the seizure part of the money picture, you’re either ignoring, blind or willfully ignorant to the whole cycle that generates the problem of drug prohibition laws in the first place. Private prisons are a large a part of that cycle as those striving for Federal drug enforcement budgets are and probably more culpable on the corruption end as they employ lobbyists whereas Federal employees and interested state agencies (which are becoming fewer by the day) only have to appeal to budget committees as part of their normal operating process.
108. Roco1, June 7, 2011 at 9:04 pm

     government workers are not saints, a good many of them have no fealty to the US or the Constitution. They just want to grow their fiefdom so they can perpetuate their own agendas and insure their GS15 designation and the pay and percs which accompany that level of government service.

     Those are the types of people in positions to line their pockets with corporate money. To assume only corporate lobbyists have agendas is to ignore the fact that government is the source of power and those who wish to operate must pay tribute to the sovereign.

     If there were few regulations there would be no need to circumvent those regulations and no tribute would need to be paid to the sovereign for the right to make a profit. Which in a free country is one of our natural rights.
109. pete1, June 7, 2011 at 9:19 pm

     Roco
     1, June 7, 2011 at 6:25 pm
     So I guess what you are both saying is that since markets are nothing but an aggregate of individuals, you are against individuals?

     The market is nothing but individuals pursuing their personal goals. Why do you consider the market to be some sort of corporate creation? Individuals create the market. Corporations are dependent on those individual transactions

     Roco
     1, June 7, 2011 at 9:04 pm
     government workers are not saints, a good many of them have no fealty to the US or the Constitution. They just want to grow their fiefdom so they can perpetuate their own agendas and insure their GS15 designation and the pay and percs which accompany that level of government service.

     ========================================================

     government worker=evil

     corporate owner=good
110. Roco1, June 7, 2011 at 9:32 pm

     pete:

     not at all, I am merely saying that not all government workers are ethical actors and not all corporate actors are evil.
111. pete1, June 7, 2011 at 10:05 pm

     then i apologize for misreading what you wrote.
     but
     the average federal worker is not a GS15 nor do they have a “fiefdom”.

     and this paragraph

     Those are the types of people in positions to line their pockets with corporate money. To assume only corporate lobbyists have agendas is to ignore the fact that government is the source of power and those who wish to operate must pay tribute to the sovereign

     seems to describe retired military working for weapons manufacturers, or elected officials working as lobbyists for banks or investment firms than the average federal worker.
112. Buddha Is Laughing1, June 7, 2011 at 10:09 pm

     And the funny guy squashes the pro-corporatist troll . . .
113. Roco1, June 8, 2011 at 6:40 pm

     Pete:

     But then they are involved in the same thing I am talking about and government is still granting the favors. Those people exist because government has favors to grant. If government didn’t grant favors there would be no need for lobbyists would there.

     But then Bank of America didn’t pull that guy out of his house with armed thugs for not paying his student loan did they. It was the DOE.

     You guys make me laugh. The obvious is glaring you in the face, government, unless restrained, is inherently antithetical to human liberty. Bank of America and Exxon Mobil not so much.
114. Buddha Is Laughing1, June 8, 2011 at 7:05 pm

     How many times do you have to be hit in the head with the legal and logistical fact that bribery and graft are crimes that require two or more people before it sinks through that granite hard skull of yours?

     Apparently an infinite amount of times.

     And this is patently nonsense . . .

     “The obvious is glaring you in the face, government, unless restrained, is inherently antithetical to human liberty. Bank of America and Exxon Mobil not so much.”

     Really. Antithetical to human liberty? And corporations are what then? The friends of liberty? This history of industry from the dawn of the industrial revolution is replete with examples that show how staggeringly full of shit you are – from child labor to contaminated products to oppressive and dangerous working conditions to dumping toxic wastes into potable water supplies. All so some sociopath such as yourself can make a profit. The only thing that stops abusive corporate/business practices is government intervention. The only thing that prevents tyranny of the strong over the weak is government for the people, by the people.

     You are a simple, venal, myopic creature.
115. Roco1, June 8, 2011 at 7:23 pm

     No, the only way to prevent tyranny of the strong over the weak is to have a proper constitutional government such as our founders gave us. Not the one you want which is nothing but mob rule.

     And how was most of that fixed? Since government wasn’t really into fixing those things until after WWII? Well for one thing a growing economy fixed things and also technological advancement for another. It is just funny the misinformation you have inside your head. You were brainwashed very well.

     You are really is tyrannical in the final analysis. I am not the one willing to use government force to collect student debts because I don’t think government should be providing student loans. There is enough private money available for someone to go to school. Maybe if there wasn’t so much money available, a college degree would cost less and mean more than it does now.

     You obviously went to a school which didn’t provide you with a good liberal education, a good Marxist education yes, a good liberal education? No way.
116. Buddha Is Laughing1, June 8, 2011 at 7:40 pm

     The real problem is that in the final analysis you are completely clueless about the proper analysis of the Constitution because you lack the training to conduct such an analysis, so pardon me while I laugh in your sociopathic face, Rove-o.
117. Buddha Is Laughing1, June 8, 2011 at 7:41 pm

     Hell, you’re too stupid to realize graft is a crime that by definition requires two criminals.
118. Roco1, June 8, 2011 at 8:45 pm

     hell, you are too stupid to realize lobbying congress isnt a crime last time I looked.

     So pardon me while I laugh Grouchy Marx-o.
119. Roco1, June 8, 2011 at 8:47 pm

     I know what kind of an analysis you do, mob rule good, individual liberty bad. I dont need a law degree to know that isnt what the founders were thinking of when they wrote the Constitution.
120. Buddha Is Laughing1, June 8, 2011 at 8:52 pm

     “I know what kind of an analysis you do, mob rule good, individual liberty bad.”

     That statement alone shows you suck at analysis.

     “I dont need a law degree to know that isnt what the founders were thinking of when they wrote the Constitution.”

     Really. Adding “psychic” to your list of super-troll powers? You don’t need a law degree to form an opinion about a subject of which you have a demonstrated limited understanding, but it might give you the context and collateral knowledge to at least formulate an arguable if not correct opinion whereas now your opinions are neither arguable nor correct.
121. Roco1, June 8, 2011 at 9:22 pm

     so now you are admitting you think the founders did not base the Constitution on individual liberty?

     Are you serious? Where did you go to law school? So they taught you the Constitution was a document to provide social justice to the mob? Probably so, based on your posts.
122. Gyges1, June 9, 2011 at 11:33 am

     Buddha,

     If all devils are essentially the same, the covert. However, let me counter by framing the issue with a different imagery, should all fevers be treated with the same drug?
123. Buddha Is Laughing1, June 9, 2011 at 12:11 pm

     Gyges,

     But you also re-frame the metaphor in terms of corrective action. As framed it above, the metaphor is in terms of identification. To stick to your changed metaphor, one cannot treat a fever one does not recognize nor know the causation thereof.

     The fever can kill you no matter its cause if left untreated, but the first step in successful treatment is proper identification. Causation is relevant to treatment certainly, but the fever is still the net outcome of the illness. In this instance, the net outcome (the fever) is no matter that the initial causation is slightly different than past causations (previous nationalistic forms of fascism versus the Austrian school form of post- transnational fascism that is consequent from their hands off attitude). Compare it to traditional nationalistic fascism as a bacterial infection and post- transnationalist fascism to a viral infection. Untreated the fever either causes will kill you. Again, the idempotency of entailment still applies.

     _______________

     Corporatist Troll,

     “so now you are admitting you think the founders did not base the Constitution on individual liberty?”

     You keep trying to insert premises into my statements that don’t exist but all you succeed in doing is sticking your own head further up your ass. The foundation of the Constitution is more than one simple proposition. Along with protecting individual rights, freedom from tyranny in all its forms – political and economic, individual and systemic – is also a foundation of the Constitution. You apparently read the Declaration of Independence with as little comprehension as you apply to the Constitution.

     Also “hell, you are too stupid to realize lobbying congress isnt a crime last time I looked.” I never said lobbying as in the right to petition was a crime. But pay for play is illegal. It’s called graft. Here, let me explain what I mean when I say graft. A colloquial term referring to the unlawful acquisition of public money through questionable and improper transactions with public officials. Graft is the personal gain or advantage earned by an individual at the expense of others as a result of the exploitation of the singular status of, or an influential relationship with, another who has a position of public trust or confidence. The advantage or gain is accrued without any exchange of legitimate compensatory services. Behavior that leads to graft includes bribery and dishonest dealings in the performance of public or official acts. Graft usually implies the existence of theft, corruption, fraud, and the lack of integrity that is expected in any transaction involving a public official. Graft is the natural result of the current campaign finance system, a system that was “lobbied” for by industry to override previous safeguards against the practice like FECA.

     You’re also too stupid to realize there is a difference between the Constitutional right to petition (which should cost nothing) and graft (the system currently in place).

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