Cafe Hayek - Latest Comments in Genetically Engineered Chickens Coming Home to Roost

Re: Genetically Engineered Chickens Coming Home to Roost

Sam Grove — Wed, 24 Sep 2008 17:18:50 -0000

You should question everything you think you know about economics

Re: Genetically Engineered Chickens Coming Home to Roost

Sam Grove — Wed, 24 Sep 2008 17:05:13 -0000

There is a reason for laws against huge monopolies, the banks should be no different.

We do? Can you cite?

Actually, we have laws that create huge monopolies. There used to be one called ATT.

Here in CA, we have PG&E and Pacific Bell.

There are huge monopolies created by law all over the country.

But perhaps you are thinking of the Sherman Anti-trust act, which was created at the whining of extant oil companies when the production efficiencies of Standard Oil threatened their existence.

Re: Genetically Engineered Chickens Coming Home to Roost

maximus — Tue, 23 Sep 2008 22:14:33 -0000

There's an excellent video on the AEI website of Peter Wallison being interviewed by Brian Lamb of C-SPAN regarding the Freddie and Fannie controversies. He talks about how Barney Frank and others were using them as a slush fund for political purposes.

Re: Genetically Engineered Chickens Coming Home to Roost

vidyohs — Tue, 23 Sep 2008 13:52:02 -0000

"If a bank ordinarily wouldn't make certain loans, encouragement from the government is unlikely to make them do so, and even if government encouragement did effect banks behavior, the overall effect should be to make them less likely to extend credit to people.

What am I missing?

Posted by: Blackadder | Sep 23, 2008 8:58:46 AM"

Your exchange with Bill was instructive but I have a simple explanation for the "What am I missing?"

Advertisers "encourage" and thus persuade or not because they have no way of forcing you to respond to their encouragement.

Government "encourages" with all the full force that only government can bring. If one does not respond to the "encouragement" we see things such as Ruby Ridge, the Branch Davidian compound, Elian Gonzales episode, IRS audits, license revocation, regulatory harassment, etc etc.

If you own a bank and government "encourages" you to do a certain thing and you do not....perhaps you won't be a banker tomorrow.

Re: Genetically Engineered Chickens Coming Home to Roost

Oil Shock — Tue, 23 Sep 2008 12:26:30 -0000

What hath central planners wrought?

Re: Genetically Engineered Chickens Coming Home to Roost

muirgeo — Tue, 23 Sep 2008 11:37:55 -0000

Give me the wicked man trying to sell me something over the "good" man forcing me to do be "moral."

Posted by: Bill

You got the wicked man and you'll be paying him some $5,000 dollars in taxes and about as much in cost of living increases and fall in the value of your dollar.

Re: Genetically Engineered Chickens Coming Home to Roost

Oil Shock — Tue, 23 Sep 2008 10:31:47 -0000

Credit is flowing, Sky is not falling

Re: Genetically Engineered Chickens Coming Home to Roost

Sam Grove — Tue, 23 Sep 2008 09:24:55 -0000

Let us not forget the central bank for the false signals created by easy credit.

Re: Genetically Engineered Chickens Coming Home to Roost

Per Kurowski — Tue, 23 Sep 2008 09:20:10 -0000

"And Wall Street left to its own to create instruments to reduce risk and properly allocate capital came up with the most opaque products you could imagine. They purposely withheld information from the markets to steal the crap out of the productive economy."

Posted by: muirgeo |

Suppose this is all true… but then what about the responsibility of the risk surveyors, the credit rating agencies, and what about the responsibilities of those regulators that empowered the credit rating agencies with so much credibility that everyone forgot to do their own homework!

Re: Genetically Engineered Chickens Coming Home to Roost

Sam Grove — Tue, 23 Sep 2008 09:17:36 -0000

2 demerits Oil Shock

Re: Genetically Engineered Chickens Coming Home to Roost

Sam Grove — Tue, 23 Sep 2008 09:16:46 -0000

There, I've closed the block quote tag.

Re: Genetically Engineered Chickens Coming Home to Roost

Oil Shock — Tue, 23 Sep 2008 09:08:53 -0000

Just making an attempt to fix the HTML error with blockquote

Re: Genetically Engineered Chickens Coming Home to Roost

Sam Grove — Tue, 23 Sep 2008 09:02:05 -0000

And Wall Street left to its own to create instruments to reduce risk and properly allocate capital came up with the most opaque products you could imagine.

Please tell us of this fabulous world where Wall Street is left to its own. Certainly it's not in this world.

Re: Genetically Engineered Chickens Coming Home to Roost

BoscoH — Tue, 23 Sep 2008 09:01:07 -0000

George, how about addressing my point rather than deflecting it? You've yelled "stop" at the notion that Congress might have exerted some influence on lending practices through its oversight of the GSEs, despite all sorts of evidence to the contrary. Russ has dished it up the ton in the past few days. In your first post today, you pretty much said it was an invalid line of inquiry and that it was clearly just market failure requiring more regulation. Politicization played no roll, according to you, and the market went wild lending money to poor people. Were they hoping to make it up on volume?

Re: Genetically Engineered Chickens Coming Home to Roost

colson — Tue, 23 Sep 2008 08:57:19 -0000

muirgeo:

The answers to most of your questions can be found in the full-length article from the WSJ that Don quotes from.

Look at where the incentives were: FMae and FMac created the incentives by purporting to be what it wasn't, then when banks balked at swallowing any more sub-prime debt, they started doing what they shouldn't have done which is to become a holder of these mortgage obligations. The reality is that some people in Congress tried to stop this while others in Congress did nothing.

And to be able to support FMac's and FMae's mortgage-crack habit, banks had to create some complicated financial instruments to mitigate the amount of risk involved in taking on these debts.

So who really gives a rat's behind if someone made a billion dollars in 2006. It is irrelevant. Or maybe it is relevant. Those paychecks are recognition of many factors aside from the piece of paper it is written on. Second, how much do you think the government takes from that? Probably more than every reader of this blog makes combined. And that is *not* obscene?

Is it obscene that he continues to give away large amounts of money to fund a variety of philanthropic pursuits? It must be disgusting to think that he contributes to the health care system in Nepal. Or that he runs a nature preserve. Or how about the obscene amounts of money given to Stony Brook to fund and promote math and physics education? I won't even tell you how much disgusting money he's poured into autism research.

I could keep going down your list of wealthy people but I think you'd be disgusted by knowing the size and scope of their philanthropy and the taxes they paid on that wealth.

Re: Genetically Engineered Chickens Coming Home to Roost

Oil Shock — Tue, 23 Sep 2008 08:50:13 -0000

"Socialism is an orgasmic belief that the most wickedest of men will do the most generous of things for the greatest good of everyone" -Oil Shock

And Keynes wanted to bail out the crooks who withheld the information and the fools who invested without the information. Liquidate bad debt. Say no to fascist Keynesian bail out.

"The Italian Charter of Labour says that private enterprise is responsible to the state . . . [but] it is the state, i.e., the taxpayer, who has become responsible to private enterprise . . . . Profit is private and individual. Loss is public and social."

--Gaetano Salvemini, Under the Axe of Fascism(1936), p. 380. (Salvemini was a brave critic of Italian fascism under Mussolini).

( from LRC blog )

Re: Genetically Engineered Chickens Coming Home to Roost

Bill — Tue, 23 Sep 2008 08:44:44 -0000

"Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."

Give me the wicked man trying to sell me something over the "good" man forcing me to do be "moral."

Elections don't make men pure.

Re: Genetically Engineered Chickens Coming Home to Roost

muirgeo — Tue, 23 Sep 2008 08:28:54 -0000

Hayek said that markets and prices are about information.

Posted by: BoscoH

Absolutely!! And Wall Street left to its own to create instruments to reduce risk and properly allocate capital came up with the most opaque products you could imagine. They purposely withheld information from the markets to steal the crap out of the productive economy. They new dam well what they were doing... they were going for the easy money instead of doing the responsible thing.

"Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."

Keynes

Re: Genetically Engineered Chickens Coming Home to Roost

muirgeo — Tue, 23 Sep 2008 08:23:14 -0000

I agree the Fed needs to become a completely government run entity likely incorporated into the Treasury department. It needs a further degree of separation from the Banksters who try to infiltrate it.

Monetary policy should be more automated and dollars should be tied to true increases in productivity and SHOULD not be given with attached debt.

Re: Genetically Engineered Chickens Coming Home to Roost

BoscoH — Tue, 23 Sep 2008 08:19:05 -0000

George, so what kind of regulation would you have liked? No lending to poor people? No lending into predominantly minority areas? With the exception of Oil Shock, who is parroting the Lew Rockwell line that this is all about fiat money (FTW?!?), I don't think anyone here is denying that there was some failure in the market to assign risk correctly assuming that the government would not be the guaranteer of last resort for securities packaged by Fannie and Freddie.

Hayek said that markets and prices are about information. So it should not be surprising that the forensic analysis of this debacle by Hayek fans focusses on information injected into the system that throws it off. I see what Frank and others did from the committee room to influence Fannie and Freddie much the same way I see Congress' continuing use of the anti-trust exemptions to "influence" MLB, the NFL, and the NBA. Lost in the steroid debate, for example, was the fact that they were anything but a shortcut! There could be no airing of the issue because Congress already knew what its goals were and how the leagues would toe the line under implicit threat of losing anti-trust exemptions.

Re: Genetically Engineered Chickens Coming Home to Roost

Bill — Tue, 23 Sep 2008 07:59:34 -0000

Blackadder,

I agree, we should focus attention on Fed policy. Otherwise we will be in this boat again before too long.

Re: Genetically Engineered Chickens Coming Home to Roost

Bill — Tue, 23 Sep 2008 07:58:27 -0000

Muirego,

Your reasoning is a post hoc fallacy. What specific regulations lead to specific rises in home ownership and on what economic basis?

Re: Genetically Engineered Chickens Coming Home to Roost

muirgeo — Tue, 23 Sep 2008 07:47:55 -0000

Here is a history lesson.

We can go back to the pre-government financed housing and a lot of you would NOT be in homes. There would be depressions every 5-7 years. You would need as much as 50% down and would maybe get a 10 year loan. Or we could go back to the well regulated time in history when home ownership was supported by well regulated government agencies and home ownership and the economy soared. Or we can enter the modern Cowboy finance era of homeownership infiltrated by corporate raiders and banksters where paper pushers set up the rules get rich and destroy the system.

My history beats up your politics!!

(Borrowed from the My History Beats Up Your Politics blog and podcast)

Re: Genetically Engineered Chickens Coming Home to Roost

Blackadder — Tue, 23 Sep 2008 07:08:57 -0000

Bill,

You may be right. It could very well be that the housing bubble was the result of an inflationary monetary policy by the Fed. But if Fed policy is the culprit, then attention should be focused there, not on government efforts to promote homeownership.

Re: Genetically Engineered Chickens Coming Home to Roost

Per Kurowski — Tue, 23 Sep 2008 06:59:31 -0000

"Enough already. This mad scramble to find governmental regulatory culpability is a quixotic adventure for the protectors of ideology."

Posted by: muirgeo | Sep 23, 2008 9:26:57 AM

Ignoring the facts that our banks had to have equity dependent on the risk determined by the credit rating agencies; and that insurance companies were not even allowed to go where the credit rating agencies ratings allowed them to go, and think this empowerment of the credit rating agencies has nothing to do with regulatory culpability, sound also like a quixotic adventure for the protectors… of the other ideology.