Mortgage crisis impacting the world economy

[bascule]

So a bit of background on this: in 2002 the Republican-controlled Congress and Presidency, in an unmitigated act of irresponsible deregulation allowed corporations without a bank or S&L charter to issue loans and furthermore relaxed restrictions on keeping interest rates above prime.

 

The result: The US housing market experienced an unprecedented bubble driven by a previously untapped base of irresponsible mortgagors. These people had bad or no credit. This was further impacted by subprime mortgages: these mortgages offered an "interest only" grace period where no principal was due. Clearly this is in the lender's best interest as it makes the initial span of the amortization schedule flat at the maximum interest rate.

 

Several new corporations sprung up to cash in on the suckers, such as New Century Financial, which dubbed itself "a new kind of blue chip". They lured in investors with the promise of an untapped market of potential mortgagors and rising prices within the housing market.

 

Collateral damage: the bubble burst. Surprise surprise: lend money to people who are bad with money and you might have to foreclose on them. Make a policy of this and you kick off record foreclosures the likes of which have never seen before. But hey, at least you can cash out, while screwing both your investors and your mortgagors. AT LEAST YOU'RE RICH!

 

Housing values continued to plummet to record lows, with realtors touting "The timber is worth more than that" and "It's cheaper than a car"

 

Now: US investors are having to sell their international stock to cover losses in the housing market. This lead to a cascade failure among world markets

 

So let me ask you:

 

Is this not the absolute most clearest case of economic catastrophe spurned by the United States government failing to regulate the market and instead serving the interests of corporate lobbyists since the Great Depression?

 

And before someone goes into a category fallacy-ridden diatribe: this isn't about "the rich" and "the poor". Both "the rich" and "the poor" got f*cked here. Some hooligans who decided to make use of some poorly written legislation and overzealous deregulation made out like bandits, while raping both "the rich" and "the poor" in the processs.

[Hammer8]

Your basic premise is incorrect and your appraisal of the problem is exaggerated.

 

The US government deregulated some aspects of lending, this was not 'irresponsible', it was quite in line with the idea of treating adults like adults.

 

Letting adults buy homes and take out loans in partnership with private companies, taking responsibility for their own actions rather than being mollycoddled by nanny government. Inevitably some people make mistakes, some people borrow too much, companies go bust due to too much lending to poor credit risks. That's just part of life. Adults make decisions and take risks, complaining that government hasn't stepped in to protect people from the consequences of their own actions is to infantilise people.

 

The economic consequences are that some companies are in trouble, there is a squeeze in the market for debt, it's not going to destroy the world financial system and it isn't going to usher in a new depression.

[ParanoiA]

The US government deregulated some aspects of lending, this was not 'irresponsible', it was quite in line with the idea of treating adults like adults.

 

Right on.

 

Is this not the absolute most clearest case of economic catastrophe spurned by the United States government failing to regulate the market and instead serving the interests of corporate lobbyists since the Great Depression?

 

No. It's the most clearest case of economic catastrophe spurned by irresponsible people that are used to being protected by regulations rather than thinking for themselves and being responsible for their own actions. Everyone is this process has guilt to share. When you make the government your legitimator, your protector - roles it should never have - then you get people who adapt to being protected and look to the government to distinguish what is legitimate and what is not.

 

Most humans only do as much as they have to. If they don't need to learn about mortgages, interest rates, equity and etc, then they won't, most of the time. The market will work when the people are more responsible. That won't happen until you make them be responsible for themselves, rather than inventing government bureaucracies to do it for them, with bottomless pits of money vacuums to feed them.

[doG]

This reminds me of It Takes A Village and it's false premise that government needs to be our caretaker...

[Pangloss]

Housing values continued to plummet to record lows, with realtors touting "The timber is worth more than that" and "It's cheaper than a car"

 

Yes, they're falling, but record lows? Do you mean record lows for growth, e.g. new housing starts, etc? I suppose THAT could be correct, but surely my house isn't worth less than when I bought it, it's only worth less than it was worth at the peak of the bubble you described. It's still worth double or triple what I paid for it eight years ago.

 

What's happening is more a gradual settling back to reality than an end-of-the-world scenario.

 

 

Is this not the absolute most clearest case of economic catastrophe spurned by the United States government failing to regulate the market and instead serving the interests of corporate lobbyists since the Great Depression?

 

Yes, it's the first time housing prices have declined since the great depression; I believe I read that somewhere as well. But I disagree with your choice of the word "catastrophe".

 

Where I might agree is with your criticism of the government's choice of opening up the markets with those crazy loans.

 

 

And before someone goes into a category fallacy-ridden diatribe: this isn't about "the rich" and "the poor". Both "the rich" and "the poor" got f*cked here. Some hooligans who decided to make use of some poorly written legislation and overzealous deregulation made out like bandits, while raping both "the rich" and "the poor" in the processs.

 

No, it's about Republicans=bad, Democrats=good. But I don't think you've remembered yet that Democrats voted in favor of these changes, and had planned to implement more of them in the CURRENT (Democrat-controlled) congress before the market took this sudden turn.

[Hammer8]

Where I might agree is with your criticism of the government's choice of opening up the markets with those crazy loans.

 

Why?

 

All the government has done is allow adults to freely lend and borrow money to each other on a completely voluntary and open basis.

 

If adults decide that they wish to risk their money lending it to adults with lower than average credit ratings and if those adults with lower than average ratings wish to borrow money freely agreeing to repayment terms and accepting the inherent obligations and risks that is a private matter between them.

 

To suppose otherwise is to suppose that adults need constant supervision and should not be allowed to make decisions about their own money and their own homes without state approval.

 

That is a very disturbing view where adults are treated like children and not allowed to be in control of their own decisions about their own lives because the government knows best.

 

I don't know about you, but i don't think the government knows best about my private finances and i deeply resent that presumptive attitude.

 

 

And on a related note, bascule appears to completely misunderstand how the mortgage business works.

 

When a mortgage holder defaults and a mortgage company reposses the property, it does not make a big profit, it is not RAPING anyone. The foreclosure process takes place where the property is worth less than the value of loans outstanding on it. So the mortgage company is LOSING money.

 

No one is making lots of money from foreclosures, no one is being raped.

[ParanoiA]

When a mortgage holder defaults and a mortgage company reposses the property' date=' it does not make a big profit, it is not RAPING anyone. The foreclosure process takes place where the property is worth less than the value of loans outstanding on it. So the mortgage company is LOSING money.

 

No one is making lots of money from foreclosures, no one is being raped.[/quote']

 

I think he was talking about the original sub prime loan market. Lots of homes were sold - lots of mortgages. Those notes usually get sold early on and those guys are partying on a yaht with some young hunnies right now...

[Pangloss]

Why?

 

All the government has done is allow adults to freely lend and borrow money to each other on a completely voluntary and open basis.

 

This is more a matter of personal ideological preference than objective truths, but I'll be happy to answer on that basis (i.e. this is just my opinion). My answer is that this is not a free-market economy, and ideologically free-market responses and beliefs are irrelvent to analysis of our actual economy. Therefore the point you're suggesting is moot. We have a managed economy that incorporates a certain compromise between management and freedom. To that end, in my opinion, we allowed too many risky loans to take place. The tragedy of the commons reared its ugly head, and that should not have come as a surprise or been allowed to happen.

 

 

If adults decide that they wish to risk their money lending it to adults with lower than average credit ratings and if those adults with lower than average ratings wish to borrow money freely agreeing to repayment terms and accepting the inherent obligations and risks that is a private matter between them.

 

Except that in the real world it's not just a matter of personal risk, it's also a matter of overall economic goals and progress. I don't give a rat's patootie if people want to throw their money away. What matters to me is what happens to mine. And mine is hurting right now because of what other people were allowed to do with theirs.

 

 

To suppose otherwise is to suppose that adults need constant supervision and should not be allowed to make decisions about their own money and their own homes without state approval.

 

That is a very disturbing view where adults are treated like children and not allowed to be in control of their own decisions about their own lives because the government knows best.

 

I don't know about you, but i don't think the government knows best about my private finances and i deeply resent that presumptive attitude.

 

And you're more than welcome to that opinion, and I respect it even in disagreement. Always nice to see another free-market guy here, actually. The online world tends to go the other way.

 

 

And on a related note, bascule appears to completely misunderstand how the mortgage business works.

 

When a mortgage holder defaults and a mortgage company reposses the property, it does not make a big profit, it is not RAPING anyone. The foreclosure process takes place where the property is worth less than the value of loans outstanding on it. So the mortgage company is LOSING money.

 

No one is making lots of money from foreclosures, no one is being raped.

 

Here I have to put on my moderator hat and remind you that you have an obligation not to participate in ad hominem arguments. It's ok to disagree with what a poster says. It's not okay to speculate that because you disagree with them, they therefore don't know what they're talking about with regard to the larger subject. This guideline may be peculiar to this particular discussion board, but I'd appreciate it if you'd keep it in mind for future posts.

[Cap'n Refsmmat]

'scuse me, I just had an attack of irony.

[Hammer8]

This is more a matter of personal ideological preference than objective truths, but I'll be happy to answer on that basis (i.e. this is just my opinion). My answer is that this is not a free-market economy, and ideologically free-market responses and beliefs are irrelvent to analysis of our actual economy. Therefore the point you're suggesting is moot.

 

I disagree, the fact that the economy is not free (obviously) does not invalidate agruments that the ecomony should be free and that restrictions and 'management' are counterproductive.

 

 

 

We have a managed economy that incorporates a certain compromise between management and freedom. To that end, in my opinion, we allowed too many risky loans to take place. The tragedy of the commons reared its ugly head, and that should not have come as a surprise or been allowed to happen.

 

Not 'allowed to happen'. Perhaps you should consider what you have written there.

 

We are talking about supposedly free adults going about their private business and you are talking about what they are 'allowed' to do. That is predicating the entire discussion on the assumption that adults need the permission of their betters in the benevolent, all seeing all knowing government. Rather than adults doing what they want in their own private affairs and taking responsibility for their own actions, in effect, being adults.

 

And i think you are misusing the metaphor of the tragedy of the commons. There is no over exploitation of a public good here.

 

Except that in the real world it's not just a matter of personal risk, it's also a matter of overall economic goals and progress. I don't give a rat's patootie if people want to throw their money away. What matters to me is what happens to mine. And mine is hurting right now because of what other people were allowed to do with theirs.

 

Other people shouldn't be allowed to take economic and business decisions that might not be in your best interests? Come on, you don't really mean that do you? Think about the implications there, that people need to be controlled and managed and have permission before they are allowed to do anything in case they might makes mistakes.

 

Better the free to make those mistakes and to learn from them than to abdicate all personal responsibility to an encompassing state.

 

 

 

Here I have to put on my moderator hat and remind you that you have an obligation not to participate in ad hominem arguments. It's ok to disagree with what a poster says. It's not okay to speculate that because you disagree with them, they therefore don't know what they're talking about with regard to the larger subject.

 

I'm not assuming anything, i'm pointing out where bascule made a factually inaccurate statement about the workings of the mortgage business. It isn't a question of disagreeing with him on that point, it's a question of him being incorrect on a matter of objective fact and my correcting him. I apologise if i seemed offemsive in any way, but having worked in the business i know for a fact that his statements on how foreclosures are operarted are completely wrong and highly misleading.

[Sisyphus]

Just another example of free-market zealotry ignoring reality, IMO.

 

I mean, look. A relatively free market system has been very good to us, and that's wonderful. The danger, of course, is stuff like this, when people take that success to mean that deregulating is always the best move, no matter what.

 

Obviously, that's not the case. "Free market = good" is a common mantra, but it really misses the point, because it doesn't bother to explain why. Free markets are preferable by default because a) they tend to result in a stronger economy, and b) they usually allow for more personal liberty. Neither is always the case. Any serious economist from Adam Smith on could tell you that, but there will always be strong, partisan factions to furiously deny it, as if there was no middle ground, and any admission otherwise would be a victory for communism.

 

For example, in this case, the first reason, that deregulation is good for the economy, has clearly proved not to be the case. From a purely pragmatic standpoint, then, we're looking at a serious error.

 

What's left, then, is to decide whether a weaker economy is worth it for idealogical reasons, i.e., the principle of "letting people make their own mistakes" and whatnot. I believe that in this case it is not, and I can tell you why.

 

That principle, of letting people make their own mistakes, is based on the underlying liberty of a free society, i.e., the principle that what doesn't harm another person should never be restricted. I agree with this principle, but I believe it is very often applied wrongly, this situation included. Why? Because it does harm me. My property is worth less because of someone else's bad decisions. If my next door neighbor piled corpses on his front lawn, spreading vermin and disease and the stench of death onto my property, you wouldn't say, "Treat him like an adult! We don't need nanny government coming in telling us where we can and cannot pile corpses!" (Or maybe you would, but I should think that the gene for that sort of stubbornness was mostly eradicated during the Black Plague.)

 

But this could all be prevented with a law restricting behavior, specifically the structures of loans. Is that so offensive? Is it really different from any other law, which by definition restricts personal behavior for the common good? Even behavior of "adults?" Are we really trying to claim that there are no good laws? There are people who do claim that, and such people are so removed from the reality that I see that there's really no basis for discussion, but those people are rare. Most opponents of this kind of regulation, I find, just have strong but mostly unexamined faith in free-market capitalism instead of an appreciation for why that market exists and what it gives us.

[ParanoiA]

I think Hammer has lived up to his name already...

 

I hope you're a "he" anyway...I guessed pangloss a "she" when I first came here, but he took it well.

[Pangloss]

I disagree, the fact that the economy is not free (obviously) does not invalidate agruments that the ecomony should be free and that restrictions and 'management' are counterproductive.

 

I didn't mean that your argument wasn't valid, I was trying to say (however poorly) that in my opinion that point is moot. I hope you didn't think I was trying to shut you down; that was not my intent at all.

 

 

We are talking about supposedly free adults going about their private business and you are talking about what they are 'allowed' to do.

 

That's correct.

 

 

That is predicating the entire discussion on the assumption that adults need the permission of their betters in the benevolent, all seeing all knowing government.

 

(shrug) You asked for my opinion. I actually have no illusions about government's ability, I just have an even lower opinion of the general public.

 

By the way, I'm not "predicating the entire discussion", I'm simply stating my opinion, which you asked for. The discussion (i.e. this thread) is welcome to go where it wishes. I'm not steering anything, I'm just responding to your inquiry.

 

Just to be clear, it's actually not of interest to me to generally respond on issues that I'm not feeling particularly open-minded about. I just felt in this case it would be rude not to respond to such a direct question. Like I said, I respect your opinion on it. I've seen these arguments before, and used to be of that opinion myself, and over time have come to feel otherwise. You'll probably have a lot more luck talking to Sisyphus, who replied above.

 

 

And i think you are misusing the metaphor of the tragedy of the commons. There is no over exploitation of a public good here.

 

(shrug) I disagree, on both counts.

 

 

Other people shouldn't be allowed to take economic and business decisions that might not be in your best interests? Come on, you don't really mean that do you? Think about the implications there, that people need to be controlled and managed and have permission before they are allowed to do anything in case they might makes mistakes.

 

Extrapolations aside, that's more or less exactly how I feel.

 

 

Better the free to make those mistakes and to learn from them than to abdicate all personal responsibility to an encompassing state.

 

Sure. Just so long as your mistakes don't hurt me.

 

There's something in between those two extremes, and that something is actually what we have today. It's a compromise, and I feel this compromise is better than either of those two extremes.

 

Sue me. At least you're still allowed to do that!

 

 

I'm not assuming anything, i'm pointing out where bascule made a factually inaccurate statement about the workings of the mortgage business. It isn't a question of disagreeing with him on that point, it's a question of him being incorrect on a matter of objective fact and my correcting him. I apologise if i seemed offemsive in any way, but having worked in the business i know for a fact that his statements on how foreclosures are operarted are completely wrong and highly misleading.

 

Just to be clear, what I had a problem with is that you stated baldly that he doesn't know anything about the mortgage business because he made an inaccurate statement about one aspect of its functionality. I don't allow that here. Thanks for apologizing to bascule.

[ParanoiA]

For example, in this case, the first reason, that deregulation is good for the economy, has clearly proved not to be the case. From a purely pragmatic standpoint, then, we're looking at a serious error.

 

It has not proved to be the case. Not when you consider the psychology of the public inherent in a constant regulation environment. Maybe from a pragmatic standpoint, the quickest "fix" is to plug the regulation hole, but the larger problem is too much regulation - contributing to the psychology of entitlement and over protection.

 

If my next door neighbor piled corpses on his front lawn, spreading vermin and disease and the stench of death onto my property, you wouldn't say, "Treat him like an adult! We don't need nanny government coming in telling us where we can and cannot pile corpses!"

 

Man I about fell out of my seat...I'm envisioning south park, stan's uncle - the hunting guy - on a bull horn...

 

Thing is, vermin and disease would qualify as harm to others. Not to mention, that behavior laws applied locally are usually the goal of the libertarian ideology, even some nuisance laws.

 

But I think you're really missing it here. I think you overestimate the significance of these laws. It's not harassment laws that keep me from driving my truck naked and cussing out little kids at bus stops. It's not nuisance laws that keep me from painting a giant breast on the side of my house. The country isn't going to go into chaos without these laws.

 

And what about neighborhood covenants and associations - contracts? Nobody wants crappy neighbors and that can be solved without making laws. Most people deserve the benefit of the doubt since most people aren't a nuisance like you outline above. That's a disturbing deviation from our founders that we've introduced, we impact the majority to stop a minority.

 

I think most are a bit conditioned to the legislative method of behavior modification.

[CPL.Luke]

all right so lets say that I'm a lender, and somebody comes into my office and asks for a loan to buy a large amount of stock which he thinks will do very well, I give him the loan. Its my money right so I should be able to do with it as I please...

 

it should also be noted that alot of lenders are actually bankers, hence the principle of banking. If you give me money I will keep it safe and pay you interest. however I will then give loans out to people with your money and make it back and more before you need your money again.

[Pangloss]

The slippery slope argument doesn't work here, CPL.Luke, because we've been managing this economy for half a century or more, and we're doing just fine.

[Hammer8]

(shrug) You asked for my opinion. I actually have no illusions about government's ability, I just have an even lower opinion of the general public.

 

So you think that the general public can't be trusted to make big decisions concerning their own money and that the government should step in to make those decisions for them? Have you considered the possibility that it is exactly because people have the attitude that the government should hold their hand all the time and protect them from the consequences of their own actions that is preventing people from maturing in the first place? It is the general cultural attitute in which no one is responsible for there own actions that is infantilising an entire civilisation.

 

 

By the way, I'm not "predicating the entire discussion", I'm simply stating my opinion, which you asked for. The discussion (i.e. this thread) is welcome to go where it wishes. I'm not steering anything, I'm just responding to your inquiry.

 

By 'predicating the discussion' i was referring to the underlying assumptions you were using in our discussion, i did not mean to imply that you were in any way steering the thread.

 

Just to be clear, it's actually not of interest to me to generally respond on issues that I'm not feeling particularly open-minded about. I just felt in this case it would be rude not to respond to such a direct question. Like I said, I respect your opinion on it. I've seen these arguments before, and used to be of that opinion myself, and over time have come to feel otherwise. You'll probably have a lot more luck talking to Sisyphus, who replied above. .

 

Well, just talking to people who agree with me seems pointless, i might as well go and talk to a mirror.

 

 

Sure. Just so long as your mistakes don't hurt me. .

 

You've raising this point a couple of times now, i really fail to see how any 'innocent' bystanders are being hurt. You yourself told us that the value of your house has risen since you bought it, what are the wider implications? A temporary blip in the stock market? Housing prices correcting from an overinflated high? Unless you are an active investor or property developer, in which case you know the risks, it is hard to see where people are really being hurt, let alone 'raped' as bascule put it.

 

 

There's something in between those two extremes, and that something is actually what we have today. It's a compromise, and I feel this compromise is better than either of those two extremes. .

 

All your other opinions i can respect, even when disagreeing with them. this one however, i can not.

 

The idea that when confronted by two opposing points of view that each one can be labelled 'extreme' (as if extremism is automatically bad! the word seems to induce a Pavlovian response, unthinking reaction) and that therefore some compromise in the 'middle' is 'better' is devoid of reason, logical or sense.

 

A compromise between right and wrong, between correct and incorrect is never going to be right. The instinct to head for a soggy compromise so as not to appear 'extreme' is an abdication of judgement and an acceptance of automatic conformity, in a sense the abdication of independent thought.

 

It is not a matter of looking to avoid being 'extreme' or being 'moderate' it is a matter of looking to make the right decision. To put it in context, think what constituted 'moderate' compromises in other socio political environments.

 

 

Sue me. At least you're still allowed to do that! .

 

Unfortunately! Have you noticed how many companies are looking for listings in London rather than New York recently? The American legal system is a serious factor in this.

 

 

My broader point is simple, the more you regulate to protect people, the more people come to expect government to take responsibility for their lives, they become infantilised and dependent, so justifying ever more regulation and intervention! This isn't a case of protecting people from a 'tragedy of the commons' ( you haven't explained how you feel this scenario fits in that catergory?), it's a case of some business's and some individuals making some bad decisions and suffering the consequences. An experience which might be unpleasant, but also a big lesson in lifes realities.

[Pangloss]

You've raising this point a couple of times now, i really fail to see how any 'innocent' bystanders are being hurt. You yourself told us that the value of your house has risen since you bought it, what are the wider implications? A temporary blip in the stock market? Housing prices correcting from an overinflated high? Unless you are an active investor or property developer, in which case you know the risks, it is hard to see where people are really being hurt, let alone 'raped' as bascule put it.

 

You mentioned the reason right there in your reply. Some degree of harm being agreed-upon, the point is established, and I'm moving on.

 

 

The idea that when confronted by two opposing points of view that each one can be labelled 'extreme' (as if extremism is automatically bad! the word seems to induce a Pavlovian response, unthinking reaction) and that therefore some compromise in the 'middle' is 'better' is devoid of reason, logical or sense.

 

A compromise between right and wrong, between correct and incorrect is never going to be right. The instinct to head for a soggy compromise so as not to appear 'extreme' is an abdication of judgement and an acceptance of automatic conformity, in a sense the abdication of independent thought.

 

I didn't say taking a stance is always bad. But this country was founded on the principle of compromise. It's the most important factor behind the writing of the constitution. How could that possibly be the case if compromise is never going to be right?

 

Let me just ask you point-blank: Are you willing to stand behind that and say it again, outright? Do you actually believe that compromise is never the correct answer to any situation, ever?

 

Not that I will mind if you state that belief -- more power to you. You're welcome to believe as you like.

 

 

Unfortunately! Have you noticed how many companies are looking for listings in London rather than New York recently? The American legal system is a serious factor in this.

 

If they're trying to avoid socialist economic constraints, going to Europe is hardly a step in the right direction! You should have mentioned Shanghai instead of London. And I would have agreed with that point -- more free trade zones in the US might be a good idea. I imagine you'll see that as a contradiction, but I've never made an ideological point about this -- that's your hangup, not mine -- I'm totally willing to take a mercenary approach to global trade. Again, compromise. Sometimes we should do things that are more socialistic in nature. Other times we should take a more capitalist approach.

 

I would even go so far as to say that our ability and willingness to compromise is one of the main reasons for our economic success in the latter half of the 20th century. We were willing to take a predominently capitalist approach, but modifying it with control measures along the way so as to avoid the more eggregious catastrophes. Sometimes we were successful, sometimes not, and we've learned a lot along the way (for example we've learned that Keynsian economics goes too far, and we need a more free-market approach, thank you Milton Friedman). But that compromise effort is what brought us to where we are today. And it's a right nice place to be.

 

You don't really think Alan Greenspan went from objectivist cheerleader to the world's most powerful economic controller without changing his mind on these issues, do you?

 

 

'tragedy of the commons' ( you haven't explained how you feel this scenario fits in that catergory?)

 

Pardon me. Too many people took out variable-interest mortgages, and defaults have topped half a million in the first half of 2007 alone -- a record. Several home loan mortgage companies (most notably yesterday American Home Mortgage) have shut their doors resulting in thousands of layoffs. There's a host of other obvious negative impacts associated with these events as well. In other words, tragedy of the commons. Too many took a bite from a dangerous pie.

 

 

Now don't get me wrong, I realize there are positive aspects to those developments as well. I'm simply stating my belief (which I cannot prove, nor can you disprove, you can only state a counter-opinion) that the negatives outweight the positives in this area. That's my opinion. Yours differs. Way it goes.

[ParanoiA]

Sure. Just so long as your mistakes don't hurt [i']me.[/i]

 

But if you're looking for indirect harm, it's a never ending chain reaction that will reach back through time as well as implicating everyone in the present. Indirect harm, is a slippery slope. Some would argue we're slipping down the slop right now.

 

The home owners in my neighborhood are beginning to move out and rent out their properties. This is driving the market price down in my neighborhood. Is that a valid reason to deny owners the right to lease out their property?

 

That's why indirect harm is a weird and quite subjective concept from which to make laws and so forth. Freedom, here in America anyway, was defined by direct harm being the threshold of your liberty. You understand by living here, and anywhere for that matter, that what other humans do will indirectly effect you - there's no avoiding it - every single action has an infinite chain reaction of consequences. Only direct harm can be managed and dealt with objectively.

 

I didn't say taking a stance is always bad. But this country was founded on the principle of compromise. It's the most important factor behind the writing of the constitution. How could that possibly be the case if compromise is never going to be right?

 

Because compromise isn't necessarily a mixture of "correct" and "incorrect", but moreso a mixture of your idea and my idea - which may help us get by, but neither of our ideas are having a chance to work to their full potential. Many ideas depend upon their dynamics in order to work well, dyanamics that are being sacrificed in the "compromise".

 

That's why I've always thought that perhaps none of us have any idea whether, for instance, conservatism or liberalism work well. We've never implemented either idea fully. How can liberalism work if there are no entitlement programs? How can conservatism work when there are entitlement programs? (In reality, I don't think any one works better than the other, rather just a personal preference of pros and cons...)

 

Just a thought, but sometimes I wonder if compromise isn't the cause of not solving any of our problems.

[Hammer8]

You mentioned the reason right there in your reply. Some degree of harm being agreed-upon, the point is established, and I'm moving on.

 

Not really, i'm asking how 'innocent' bystanders are being hurt. All i can see is some involved participants being hurt. A different principle entirely.

 

 

I didn't say taking a stance is always bad. But this country was founded on the principle of compromise. It's the most important factor behind the writing of the constitution.

 

I disagree. Where was the compromise with Britain? A compromise would have been some increased degree of home rule and lower taxation. Instead a completely uncompromising war of independence was fought.

 

The constitution and bill of rights aren't about the principle of compromise, naturally compromises had to be made between the different schools of thought, that was a necessity, not principle to be glorified.

 

 

How could that possibly be the case if compromise is never going to be right?

 

Of course a degree of compromise is necessary, but that does not make if a principle to aim for. The idea you enunciated is that two opposing ideas are 'extremes' and therefore positioned yourself as the moderate in favour of compromise. That's a common tactic in politics, label your opponent 'extreme' orr 'ideological' and present yourself as the 'moderate' in favour of 'compromise. It's a use of emotive terms to avoid rational discussion.

 

Let me just ask you point-blank: Are you willing to stand behind that and say it again, outright? Do you actually believe that compromise is never the correct answer to any situation, ever?

 

I never said that. Sometimes compromises are necessary. That does not make them desirable or something to be aimed at. A compromise between what is right and what is wrong is not going to be right, it just might be a bit less wrong than the alternative.

 

 

Not that I will mind if you state that belief -- more power to you. You're welcome to believe as you like.

 

I know i am, but thanks for the reassurance.

 

 

If they're trying to avoid socialist economic constraints, going to Europe is hardly a step in the right direction!

 

Nope, i wasn't referring to socialism at all.

 

I was referring to legal systems. The increased risk of litigation in the US is now effecting investment decisions.

 

You should have mentioned Shanghai instead of London. And I would have agreed with that point

 

No. I referred to London for the fact that a large number of multimation companies are choosing to register in London and not in New York bcause the legal environment is more business friendly. This is a fact openly acknowledged by the NYSE who have complained about London 'poaching' very large amounts of business from New York. So far Shanghai has not done this at all so your suggestion is incorrect.

 

--

more free trade zones in the US might be a good idea. I imagine you'll see that as a contradiction, but I've never made an ideological point about this -- that's your hangup, not mine

 

No, i'm quite aware of China's pro business policies and i fail to see what contradiction you are referring to?

 

As for 'ideological point', you make my argument for me! You choose to label my position with an emotive word, thereby avoiding having to actually confront my ideas with reason. Exactly the same tactics as when you talk about 'extreme' opinions and 'compromise' The idea that one persons ideas are 'ideological' (and therefore wrong somehow!) is a common trick, afterall everyone wants to portray themselves as 'bipartisan' and 'moderate' don't they? If you can do that then you don't need to actually defend your ideas or critic someone elses, all you need to do is give them a nasty label:rolleyes:

 

 

--

- I'm totally willing to take a mercenary approach to global trade. Again, compromise.

 

I fail to see where compromise is coming into this. You want America to have good economic policies and possibly some sort of free trade zones, ok, if you can make an argument for that then fine. Where is the element of compromise?

 

Sometimes we should do things that are more socialistic in nature. Other times we should take a more capitalist approach.

 

Yes, and not in this matter of home loans. Here over regulation was a problem, it infantilised people, it retarded business and it resulted in a larger state payroll.

 

Lightening the regulations was the correct move. When you give people freedom some will abuse it, some will make mistakes. That is the very price you pay for freedom, ad the result is that you learn to take responsibility for yourself and as a person and as a society you become more mature.

 

You don't really think Alan Greenspan went from objectivist cheerleader to the world's most powerful economic controller without changing his mind on these issues, do you?

 

Changing your mind is fine. Infact changing your mind when confronted with new evidence is a sign of intellectual integrity. What is not fine is automatically splitting the difference when confronted with two opposing points of view and calling it 'compromise'.

 

 

Pardon me. Too many people took out variable-interest mortgages, and defaults have topped half a million in the first half of 2007 alone -- a record. Several home loan mortgage companies (most notably yesterday American Home Mortgage) have shut their doors resulting in thousands of layoffs. There's a host of other obvious negative impacts associated with these events as well. In other words, tragedy of the commons. Too many took a bite from a dangerous pie.

 

The tragedy of the commons is where a public good is overexploited by private agents because of a lack of private property title. That is not what has happened here.

 

Yes, a lot of people may have borrowed too much, then again, a lot of people had the chance to buy a home which they had never previously had.

 

A market opened up, people moved in, some overextended themselves. The bubble deflates and at the end of the day the weaker players go under and the stronger ones continue. That happens in all markets, it happens with airlines, groceries, automobiles, lumber and so on. There is no need to be scared of it.

 

 

Now don't get me wrong, I realize there are positive aspects to those developments as well. I'm simply stating my belief (which I cannot prove, nor can you disprove, you can only state a counter-opinion) that the negatives outweight the positives in this area.

 

So you think that denying people with low credit rating the chance to take out a mortgage, restricting lending to approved groups and keeping it all a nice and cosy cartel with stifled innovation is more positive than simply letting companies measure lending risk themselves and make their own rational investment decisions?

 

Freedoms a bit too scary for you isn't it? Letting people take risks with their own money.

 

 

That's my opinion. Yours differs. Way it goes.

 

Indeed, i am aware that we have different opinions. I'm slightly confused why you repeatedly mention that fact.

[Pangloss]

But if you're looking for indirect harm, it's a never ending chain reaction that will reach back through time as well as implicating everyone in the present. Indirect harm, is a slippery slope. Some would argue we're slipping down the slop right now.

 

The home owners in my neighborhood are beginning to move out and rent out their properties. This is driving the market price down in my neighborhood. Is that a valid reason to deny owners the right to lease out their property?

 

I've not suggested any further actions so you can't portray my position as a slippery slope. I believe each economic control action has to be looked at independently.

 

But of course, as I keep saying, you're welcome to feel that it's wrong and that we should be doing things differently. More power to you.

[CPL.Luke]

pangloss I wasn't attempting to portray a slippery slope and as such I don't understand your post, however the point of my post was to illustrate that some regulation is necessary even if its regulating what someone can do with their money.

[Pangloss]

Not really, i'm asking how 'innocent' bystanders are being hurt. All i can see is some involved participants being hurt. A different principle entirely.

 

I've answered this already. I didn't participate in the variable-interest-rate rush, and I've been harmed by it. Millions of other Americans are similarly affected by the impact of that failure (though I disagreed with Bascule about the extent of that harm). Let's move on.

 

 

I disagree.

 

The constitution and bill of rights aren't about the principle of compromise, naturally compromises had to be made between the different schools of thought, that was a necessity, not principle to be glorified.

 

(shrug) Obviously we disagree about the place of compromise in society and government. Way it goes.

 

 

The idea you enunciated is that two opposing ideas are 'extremes' and therefore positioned yourself as the moderate in favour of compromise. That's a common tactic in politics, label your opponent 'extreme' orr 'ideological' and present yourself as the 'moderate' in favour of 'compromise. It's a use of emotive terms to avoid rational discussion.

 

Actually it's you who've been using that tactic. You took my point about the value of compromise and (in your post #10 in this thread) abusively misrepresented it in the following manner:

 

We are talking about supposedly free adults going about their private business and you are talking about what they are 'allowed' to do.

 

That is a gross exaggeration of my point, and, I'll note, you haven't apologized for it. Similarly you've grossly exaggerated my point about the two economic extremes. I've not said that people who believe in capitalism are "Extremists", I'm saying that pure capitalism and pure control economics are the two extreme positions on the subject, and that what I believe we should be doing (and what in fact we do) is something in between. You asked me for that opinion, and I don't appreciate being called out, answering you, and then being deliberately misrepresented and used to perjoratively dismiss anybody who disagrees with you.

 

You're the one who's doing the spinning and emoting and labelling to avoid rational discussion. And I'm the one who's going to stop it.

 

 

There is no need to be scared of it.

 

Freedoms a bit too scary for you isn't it? Letting people take risks with their own money.

 

More of the same, more deliberate misrepresentation of my position, more perjorative dismissal, more emotional appeal. Only now you're just being rude.

 

If you don't want to own up to your behavior, fine, but you will be held responsible for it either way.

 

 

Indeed, i am aware that we have different opinions. I'm slightly confused why you repeatedly mention that fact.

 

Because you're using me as a platform for ideological spin-doctoring, in addition to failing to acknowledge other people's valid points when they're made. And I don't appreciate it. And it's not how we do things here.

 

Capiche?

[Pangloss]

Not really, i'm asking how 'innocent' bystanders are being hurt. All i can see is some involved participants being hurt. A different principle entirely.

 

I've answered this already. I didn't participate in the variable-interest-rate rush, and I've been harmed by it. Millions of other Americans are similarly affected by the impact of that failure (though I disagreed with Bascule about the extent of that harm). Let's move on.

 

 

I disagree. <pointless straw man removed; I never said there weren't times when we don't compromise>

 

The constitution and bill of rights aren't about the principle of compromise, naturally compromises had to be made between the different schools of thought, that was a necessity, not principle to be glorified.

 

(shrug) Obviously we disagree about the place of compromise in society and government. Way it goes.

 

 

Of course a degree of compromise is necessary, but that does not make if a principle to aim for. The idea you enunciated is that two opposing ideas are 'extremes' and therefore positioned yourself as the moderate in favour of compromise. That's a common tactic in politics, label your opponent 'extreme' orr 'ideological' and present yourself as the 'moderate' in favour of 'compromise. It's a use of emotive terms to avoid rational discussion.

 

Actually it's you who've been using that tactic. You took my point about the value of compromise and (in your post #10 in this thread) abusively misrepresented it in the following manner:

 

We are talking about supposedly free adults going about their private business and you are talking about what they are 'allowed' to do.

 

That is a gross exaggeration of my point, and, I'll note, you haven't apologized for it. Similarly you've grossly exaggerated my point about the two economic extremes.

 

I've not said that people who believe in capitalism are "Extremists", I'm saying that pure capitalism and pure control economics are the two extreme positions on the subject, and that what I believe we should be doing (and what in fact we do) is something in between. You asked me for that opinion, and I don't appreciate being called out, answering you, and then being deliberately misrepresented and used to perjoratively dismiss anybody who disagrees with you.

 

You're the one who's doing the spinning and emoting and labelling to avoid rational discussion. And I'm the one who's going to stop it.

 

 

There is no need to be scared of it.

 

Freedoms a bit too scary for you isn't it? Letting people take risks with their own money.

 

More of the same, only now you're just being rude.

 

If you don't want to own up to your behavior, fine, but you will be held responsible for it either way.

 

 

Indeed, i am aware that we have different opinions. I'm slightly confused why you repeatedly mention that fact.

 

Because you're using me as a platform for ideological spin-doctoring, in addition to failing to acknowledge other people's valid points when they're made. And I don't appreciate it. And it's not how we do things here.

 

Capiche?

[Genecks]

This reminds me of It Takes A Village and it's false premise that government needs to be our caretaker...

 

I wouldn't say it's a false premise. I would say you don't share the enthymeme. I believe in self-autonomy. However, I believe a lot of people are too stupid or ignorant to have self-autonomy. Thus, the government exists as the autonomic factor. It controls the law, money, and way those are controlled. It is governement that allows and sets the standard and ideal ways that money is used. The people obey those social fictions, unless they are using natural goods or trading like farmers.

 

Perhaps it's not the social duty of a bunch of people to be the autonomic factor, but the reality is that there are a bunch of people in high places as the autonomic factor.