New York Times – September 17, 2008:

Is the United States no longer the global beacon of unfettered, free-market capitalism?

In extending a last-minute $85 billion lifeline to American International Group, the troubled insurer, Washington has not only turned away from decades of rhetoric about the virtues of the free market and the dangers of government intervention, but it has also probably undercut future American efforts to promote such policies abroad.

“I fear the government has passed the point of no return,” said Ron Chernow, a leading American financial historian. “We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have been doing in its wildest dreams.

“For opponents of free markets in Europe and elsewhere, this is a wonderful opportunity to invoke the American example,” said Mario Monti, the former antitrust chief at the European Commission. “They will say that even the standard-bearer of the market economy, the United States, negates its fundamental principles in its behavior.

Mr. Monti said that past financial crises in Asia, Russia and Mexico brought government to the fore, “but this is the first time it’s in the heart of capitalism, which is enormously more damaging in terms of the credibility of the market economy.

In France, where the government has long supported the creation of “national champions” and worked actively to protect select companies from the threat of foreign takeover, politicians were quick to point out the paradox of what is essentially the nationalization of the largest American insurance company.

“Today the actions of American policy makers illustrate the need for economic patriotism,” said Bernard Carayon, a lawmaker of President Nicolas Sarkozy’s center-right governing party, UMP. “I congratulate them.

An appropriately funny comment from MikeN: “If it moves tax it, if it keeps moving regulate it, and if it stops moving subsidize it.”




  1. Mr. Fusion says:

    #57, LibertyLoser,

    Your whole quote and argument just goes to my point that public financial institutions may not discriminate on civil rights basis. Your quotes are correct. Yet none of this FORCES an institution to make a loan to anyone in a specific area. What they may not do is decline to make a loan in that area if they would have made a similar loan in another area under the same conditions. For way too many decades minorities could not get loans even if they had as good or even better credit scores than whites. Often if they did get a loan, the interest and conditions were not as favorable.

    Yet no bank was ever forced to make a loan that was substandard. For your small mind let me rephrase this. No bank may deny a loan solely based upon discriminating factors.

  2. ECA says:

    26,
    You are getting there..
    MORALLY CORUPT
    BACK PEDDLING RELIGIOUS
    ME FIRST
    Lie to get their way
    IGNORANT BASTARDS

    The Smart ones that KNOW better then to take the jobs, will end up being ruled by those that DONT know any better.

  3. Mr. Fusion says:

    #59, Cow-Paddy,

    Because you say? Please site the part of the Constitution that allows any but the Congress to issue legal tender…

    First, though it is bad manners, “site” is a part of the virtual internet world where an internet page is located. You meant to write “cite” which means to show where you got your information, a “citation” is a written acknowledgment of the source of the information.

    It is not illegal for anyone to issue legal tender. In fact I did it twice today, I wrote a check to my insurance agent and then I wrote a check at the post office. A personal check IS legal tender. If I had of put gas in the car and used my debit card then that would have been legal tender as well.

    I think (and it is usually dangerous to try and anticipate what someone really means) you meant specie. That is the printing of paper currency or what is commonly called “dollar bills” or “notes”. The printing of paper currency and minting of coins is regulated under the United States Coinage Act. The act of actually printing them is controlled by the Federal Reserve (the Fed) which has sole jurisdiction. The Fed is the central bank in the US, formed under an act of Congress.

    Because the Constitution does not address a central bank or specie it can not be unconstitutional.

  4. LibertyLover says:

    #62, It wasn’t just ninja loans but ARM’s that became toxic (or are still toxic) as well.

    There is a regulation that is _supposed_ to help the industry allowing realtors to “flip” properties. They take out a mortgage on the house with only the requirement they pay the interest (or a small stipend) for a couple of years. This is usually good as it keeps the cash flowing. Cash flow is a good thing.

    Unfortunately, too many people (borrowers and lenders, alike) utilized the regulation to actually purchases houses, in the hopes they would be able resell later (new subdivisions tended to go up in value once completed). Guess what? They got caught with their britches down.

    No responsible financial institution would loan someone money when they know there is little to no chance of being paid nor would anyone else buy such a loan. To take out a loan without revealing those facts would fail, to lie about your facts would be fraud. To sell a loan that had no chance of being repaid without full disclosure would probably also be a fraud.

    Actually, they would if they knew the government would bail them out. Which is what happened. I know it’s a heartbreaker, but it’s true.

    How many loans like this were made and how many are in default, I don’t know. I seriously doubt it is very many. Just because one existed or was made does not mean they were common or easy to find. That is the basis for my strawman point.

    http://tinyurl.com/3qb522

    This website figures there are 600,000. Figure them at $100,000 each and that comes to $60,000,000,000. Note these are the ones in any condition to sell. Some are just key drops. And these are just homes — not commercial property.

  5. Sea Lawyer says:

    #47, “Our money isn’t really worth anything anyway…”

    Our money is worth whatever people are willing to exchange for it, the same goes for anything used as money, gold and silver included. The only advantage a precious metal has is that it is more scarce so it restricts the amount of it you can coin, but considering currency is a small amount of the total money supply, it doesn’t offer the advantage you think it does. Most of our money exists as nothing more than an entry on a ledger somewhere.

    Free markets can be divorced from this. You can have a free market to PRODUCE & sell goods and services that doesn’t involve making money without producing anything…”

    How are you going to “divorce” the process of “making money without producing anything” as you put it? Interest is money earns when it is loaned to another who requires it for an entrepreneurial purpose. Are you just going to divorce the free-market from loan making? Good luck with that one, as nothing new will be produced at all.

    And no Capitalism is not simply about earning interest from money, Capitalism is a system of free exchange between agents who come together in order to satisfy their own self interests. If we freely come together, and you get what you want and I get what I want, then we have both benefitted – and nobody has lost out (unlike that asinine monologue from Michael Douglas that keeps getting brought up these days). That is what free market Capitalism is in essence, when forces interfere with this free exchange (monarchs, government, whatever), you no longer have Capitalism, you have something else entirely.

  6. LibertyLover says:

    #63, Liberty Loser is correct if the dems and pubs get their way.

    In any case: You are correct, there is no one with a gun to their heads. However, if regulators see that too many minorities are refused, there will be an investigation. This results in lots and lots of money spent on lawyers.

    National Community Reinvestment Coalition, the authority to challenge the megamergers if the banks involved do not have good records of lending in minority neighborhoods.

    So I ask you, should a company spend 100,000’s of dollars on lawyers or 1,000’s of dollars on a bad loan that gets pushed up to F/F Mac?

    If you, personally, knew you could get away with making an extra 100,000 grand that was legal, would you do it? If not, then you are fool.

    It was a social program that caused this mess. Whether it was intended or not, the fault lies in those who passed it.

  7. Paddy-O says:

    #67 “The only advantage a precious metal has is that it is more scarce so it restricts the amount of it you can coin, but considering currency is a small amount of the total money supply, it doesn’t offer the advantage you think it does.”

    I never said it offered advantages…

  8. bobbo says:

    #62–Fusion==we aren’t disagreeing with one another. But wiki says that NINJA Loans were “significant”. Yes, I’d like to know the numbers as well. Whatever they are, its enough to give us the “sub-prime mortgage crises” we have today in the 2-3 Trillion dollar range. So, maybe ninja in fact thru fraud ((can any financial institution be fooled so many times, I don’t think so)) or by express application.

    It appears Congress thru Barney Frank and others put pressure on folks to lend to unqualified borrowers==but the whole point of being a regulator is to resist such pressure and bring a spotlight on it when warranted. Not hard to subcumb to pressure when its what you want to do anyway.

    ALL YOU FREEMARKETEERS–I blame you for this. Too many regulations==this outcome is unavoidable. Lets not hear such crap out of your mouths for decades to come.

    THE SOLUTION TO THE PROBLEM IS DEAD SIMPLE=======reimpose all the safety rules that had been in place for 50 years and only removed in the last 10 years or so. Update them to conform. PROTECT THE PUBLIC!!!!! and not your contributor base.

    Be nice if a few people would go to jail too, but I won’t hold my breath.

  9. LibertyLover says:

    #68, Retraction and clarification:

    They did have a gun to their head. The law does say what it is supposed to do: prevent discrimination. I agree that it was a noble cause.

    However, the flip side is if they did discriminate, the government would put them in jail.

    So, in effect, they did have a gun to their head, forcing them to approves loans that might have been bad but too expensive to defend in a court of law. Cheaper to just loan the money and let the government bail them out.

    Jail vs. Gov bailout . . . hmmm.

  10. Mr. Fusion says:

    #66, Liberty Loser,

    You don’t have a clue. Bobbo and I were discussing No Income, No Job, No Asset mortgages.

    Your link points out the number of mortgages in default. That could be anything to a late payment to foreclosure. The article itself even points out that most loan defaults do not end up in foreclosure.

  11. bob says:

    The New Deal 2.0

    Heeeere we goooo!

    Lets slaughter pigs to drive up pork prices and save the farmers!

  12. ECA says:

    70, bobbo..

    regulations were suspended on MOST things back in NIXONS era.

  13. bigwhale says:

    Definition of “unfettered”: Department of Agriculture, Department of Commerce, Department of Energy, Department of Health and Human Services, Department of Housing and Urban Development, Department of Labor, Department of Transportation, Federal Accounting Standards Advisory Board, Federal Financial Institutions Examination Council, Federal Financing Bank, Government Accountability Office, Office of the Inspector General, Commodity Futures Trading Commission, Consumer Product Safety Commission, Environmental Protection Agency, Equal Employment Opportunity Commission, Export-Import Bank of the United States, Farm Credit Administration, Federal Communications Commission, Federal Deposit Insurance Corporation, Federal Housing Finance Board, Federal Maritime Commission, Federal Reserve System, Federal Trade Commission, National Capital Planning Commission, National Credit Union Administration, National Labor Relations Board, National Transportation Board, Occupational Safety and Health Review Commission, Office of Compliance, Overseas Private Investment Corporation, Pension Benefit Guaranty Corporation, Securities and Exchange Commission, Small Business Administration, Social Security Administration, Tennessee Valley Authority, U.S. Trade and Development Agency, United States Agency for International Development, United States International Trade Commission.

  14. bobbo says:

    #78–bigwhale==WOW!!!! All those agencies agitating for less regulation and less enforcement. Makes you wonder how we lasted this long!!!

  15. Uncle Patso says:

    According to LibertyLover (whose main source has a page devoted to “An Unofficial Thomas Sowell Fan Page” — surprise, surprise!), all the ills of the world are Bill Clinton’s doing, and any evidence to the contrary must be ignored!

    And, I’m sorry, I don’t care if it’s bad manners: I don’t mind the occasional typo (I’ve committed many myself), but I refuse to consider the political opinions of posters who consistently can’t spell common words correctly.

    Turn on spell check!

    [Sigh!}

    Thanks. That was therapeutic.


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