Objective review of Republican candidates for President

[snyprrr]

and was also modest enough not to seek re-election.

weeping for joy

[snyprrr]

And it has to be mentioned that unlike Snyperr, I'm not at all eager to see Granny die off.

It was simply 'A Modest Proposal'.

Dying off is one thing, keeping auntie vege around is another. Look, maybe this is a topic that I can't discuss without a requisite dose of black humor. What I meant was that King Pharma+Government = bad news.

When my time comes,... my time will come. Just like it did throughout history.They'll have to arrest me before I go to the death-spital (hospital). How many infections start at the hospital? Anyhow,... take a pill, take a pill.



How bout that 'Dream Act', huh? Apparently, I live in illegals heaven (not CA). Ay, viene la migra!!

[Todd]

What we believe is that government interference in the market will always end up delivering a worse result than the free market would on its own

History does not support such an idea.  For instance, before the advent of universal public education, there was a colossal market failure in that arena.  The only way to extend the benefits of education to the entire population (well, almost) was to rely on government.  In the US, despite the high demand for railroads, the national system that was created in the 19th could not have been established without direct intervention by and support of the government. 

In the financial realm, panics have been common for centuries, and one of the goals of government policy starting the Progressive Era and continuing on for decades was to limit the effect of panics.  The Fed, while imperfect, has played a significant part in that, especially in the post-war era.  (Prior to that it's record was more mixed, obviously, as it helped exacerbate the Great Depression.  Thank goodness Ben Bernanke knows his history and is not repeating the same mistakes.)  Other legislation did as well.  One of the great legislative failures in the past 20 years was the repeal of Glass-Steagall.  Allowing investment banks to fail is one thing.  Who cares?  But when commercial banks branch into  areas traditionally dominated by investment banks, and when investment banks move into commercial banking, systemic risks increase significantly.  That should not be allowed to occur, especially when the risks are so well known.  There is too much volatility to simply let private firms – that is, the market – act as freely as they want.  Splitting operations reduces systemic risk while still allowing the market to work just splendidly on the institutional side.  Barring that, more stringent capital requirements are needed.  That means more government.

I know it's now fashionable for some to say that Fannie and Freddie caused the problem, or even that government mandates to lend to higher risk borrowers pushed under the auspices of the Community Reinvestment Act helped create the crisis – or better yet, created the crisis by themselves – but the evidence just doesn't support such claims.  True Fannie and Freddie were poorly run and contributed mightily to the problem, but huge volumes of loans never were purchased by Fannie and Freddie.  The problem would have been more manageable without the GSEs in the mix, but there was still a big problem.  Anyone with a memory longer than a a few years would remember that the late 90s offered a first taste of this problem – with non-GSE loans – when bankers were issuing 80/20 piggybacks and 125 LTV loans like crazy.  Fortunately, they died off quickly – the latter product had one of the highest first payment default rates ever seen – and they rarely if ever met GSE standards, and securitization markets were not as deep or sophisticated/complex, so the problem was more contained.  "Relaxed" (to put it mildly) underwriting standards in the last decade allowed more money to enter the market, but the products were constructed to pass GSE and securitization muster, eg, Option ARMs, one of the worst financial products ever created, and new variants of the 80/20 jobs.  But even they by themselves did not cause the problem.  As to the idea that government mandated lending caused the problem, this argument was just this week weakened substantially by a Fed study showing that to not quite be the case.  Of course, people who think the Fed is part of the problem will say things along the lines that the study is political, etc, but the onus is on such critics to offer the empirical evidence to the contrary.

Of course, another problem with the libertarian or market fundamentalist creed that decries government involvement is that it ignores certain realities  of the financial markets, namely that some markets could not even exist with the federal government, and in particular the securities it issues.  What would act as collateral for trillions in financial transactions if not Treasuries?  Perhaps some other sovereign debt.  Which?  Corporate debt?  Local government debt?  Wait, gold!  The government must be involved in the financial markets just so that they function properly.  And guess what, when that happens, the government gets a say so in how things work.  Well, because of that and democracy, imperfect as it is.  Reverting to a false past or an idyll of no regulation would make things worse. 

[DavidRoss]

Consider how much damaged Goldman Sachs et al did because they got Freddie Mac et al to buy their mortgages, and otherwise how much the various government agencies were involved in greenlighting all that mess. 

Had there been no Freddie Mac buying all the mortgages in sight (without apparently bothing to check on their validity or risk), perhaps Goldman Sachs might have gone down, or Bank of America, or one or two major institutions--but it would have never developed to the point it did, and threaten to bring down the whole complex of American finance.

We libertarians don't believe that the free market will always deliver a good result--or even deliver a good result most of the time.  What we believe is that government interference in the market will always end up delivering a worse result than the free market would on its own--by inappropriate regulation, by existing companies bringing the regulatory and legislative process under their control so as to hinder new competition and to become rent seeking (ie, get tax money to end up being part of their revenue stream no matter what the merits might be).   To say we would be better off without the Fed is not the same thing as saying we would be at an optimal state without the Fed.  It's being relative to the mess we're in now.

And it has to be mentioned that unlike Snyperr, I'm not at all eager to see Granny die off.

Yes, yes, yes, and yes.  The statists tend to compare their fantasies of how good things can be in a perfect world against the worst real-world examples of the past.  The entire mortgage meltdown and ensuing recession would never have happened without massive government interference in mortgage banking during the '90s.  Fannie, Freddie, the CRA, repealing Glass-Steagal, and deregulation of derivatives, all combined with predictable stupidity and greed (granted, greed is a subset of stupidity) to create a catastophe that never would have happened without government interference with traditional prudent lending practices.

[kishnevi]

History does not support such an idea.  For instance, before the advent of universal public education, there was a colossal market failure in that arena.  The only way to extend the benefits of education to the entire population (well, almost) was to rely on government.  In the US, despite the high demand for railroads, the national system that was created in the 19th could not have been established without direct intervention by and support of the government. 

Some of your argument is a good example of "begging the question" or "assuming your conclusion". 
For instance, I could argue that public education has been a colossal market failure.  When a substantial proportion of the population doesn't even attain the level of basic literacy, and colleges are forced to teach elementary grammar to incoming freshmen, the idea that public education has been a significant achievement tends to pall.  And when you add in all those people who are literate but don't understand why evolution is accepted science....
As for the US railroad system, are you aware that is one of the best examples of crony capitalism and government corruption by business in history.  Supposedly only one railroad in the country was built without government help.  (Rand's depiction of the founder of Taggart Railroads building his empire totally on his own is one of the most fantastic and reality free elements in Atlas Shrugged.)  It's actually a textbood example of how government can screw up a market because of corruption and politics.

In the financial realm, panics have been common for centuries, and one of the goals of government policy starting the Progressive Era and continuing on for decades was to limit the effect of panics.  The Fed, while imperfect, has played a significant part in that, especially in the post-war era.  (Prior to that it's record was more mixed, obviously, as it helped exacerbate the Great Depression.  Thank goodness Ben Bernanke knows his history and is not repeating the same mistakes.)  Other legislation did as well.  One of the great legislative failures in the past 20 years was the repeal of Glass-Steagall.  Allowing investment banks to fail is one thing.  Who cares?  But when commercial banks branch into  areas traditionally dominated by investment banks, and when investment banks move into commercial banking, systemic risks increase significantly.  That should not be allowed to occur, especially when the risks are so well known.  There is too much volatility to simply let private firms – that is, the market – act as freely as they want.  Splitting operations reduces systemic risk while still allowing the market to work just splendidly on the institutional side.  Barring that, more stringent capital requirements are needed.  That means more government.

Not necessarily.  Depositors and investors demanding accountability from the management can supply everything regulation does.  You might accuse me of fantasizing here, given how depositors and investors in general seem to do no such thing at present.  You might be right, but there's no real way of telling how much of that apathy is simply willingness to rely on governmental oversight, and therefore how much apathy there would be in lieu of that oversight.
And don't forget that in the libertarian model, government legitimately intervenes to detect or avoid fraud, and that allows a good deal of oversight and regulation right there.

I know it's now fashionable for some to say that Fannie and Freddie caused the problem, or even that government mandates to lend to higher risk borrowers pushed under the auspices of the Community Reinvestment Act helped create the crisis – or better yet, created the crisis by themselves – but the evidence just doesn't support such claims.  True Fannie and Freddie were poorly run and contributed mightily to the problem, but huge volumes of loans never were purchased by Fannie and Freddie.  The problem would have been more manageable without the GSEs in the mix, but there was still a big problem.  Anyone with a memory longer than a a few years would remember that the late 90s offered a first taste of this problem – with non-GSE loans – when bankers were issuing 80/20 piggybacks and 125 LTV loans like crazy.  Fortunately, they died off quickly – the latter product had one of the highest first payment default rates ever seen – and they rarely if ever met GSE standards, and securitization markets were not as deep or sophisticated/complex, so the problem was more contained.  "Relaxed" (to put it mildly) underwriting standards in the last decade allowed more money to enter the market, but the products were constructed to pass GSE and securitization muster, eg, Option ARMs, one of the worst financial products ever created, and new variants of the 80/20 jobs.  But even they by themselves did not cause the problem.  As to the idea that government mandated lending caused the problem, this argument was just this week weakened substantially by a Fed study showing that to not quite be the case.  Of course, people who think the Fed is part of the problem will say things along the lines that the study is political, etc, but the onus is on such critics to offer the empirical evidence to the contrary.

to which I would say, the basic problem was that Freddie and Fannie effectively guaranteed almost any mortgage proffered them, allowing the bad loans to turn into financial kudzu. (I think the CRA had some impact, but not nearly as much as the conservative side claims.)

Of course, another problem with the libertarian or market fundamentalist creed that decries government involvement is that it ignores certain realities  of the financial markets, namely that some markets could not even exist with the federal government, and in particular the securities it issues.  What would act as collateral for trillions in financial transactions if not Treasuries?  Perhaps some other sovereign debt.  Which?  Corporate debt?  Local government debt?  Wait, gold!  The government must be involved in the financial markets just so that they function properly.  And guess what, when that happens, the government gets a say so in how things work.  Well, because of that and democracy, imperfect as it is.  Reverting to a false past or an idyll of no regulation would make things worse.

This last paragraph is where you seriously fall victim to question begging.  You're assuming those financial transactions would be necessary.  They might not be.  However, just to be clear, I'm not saying we should have no government and no government debt.  So sovereign debt would exist in my perfect universe.

Personally, I'm not very much against the Fed. I know it has an important, possibly irreplaceable, position in the financial world.  I'm against the whole system of crony capitalism and government for the lobbyists and for those who can get their agents elected to office so they can grab their share of the public revenues which seems to currently characterize American government at almost all levels.   But there is a rational basis for the anti-Federal Reserver argument, and Ron Paul is not a loony for making that argument.  It's simply that most Americans don't agree with his premises--or rather, they agree with some of his conclusions without bothering to investigate his premises.

[Wendell_E]

Is it just me, or does it seem like Americans talk about 'the next election' basically the day after the previous election?     All the 'hype' for the 'next election' seems to start like at least 3 years in advance.

Only the shortsighted ones.  Some are already planning for the election after the "next" one.

[eyeresist]

The entire mortgage meltdown and ensuing recession would never have happened without massive government interference in mortgage banking during the '90s.  Fannie, Freddie, the CRA, repealing Glass-Steagal, and deregulation of derivatives, all combined with predictable stupidity and greed (granted, greed is a subset of stupidity) to create a catastophe that never would have happened without government interference with traditional prudent lending practices.

If someone grows up to be a serial killer, we might take into account the behaviour of his parents, but ultimately the one who pulls the trigger is responsible - in this case, incompetent and corrupt companies who tried to build their fortunes on what was obviously a Ponzi scheme.

[Todd]

For instance, I could argue that public education has been a colossal market failure.

You cannot argue that because the fact that literacy exists at the level it does today is because of government action.  Education is imperfect, to be sure, but it is less imperfect than it was before widespread government involvement.

As for the US railroad system, are you aware that is one of the best examples of crony capitalism and government corruption by business in history.

Yes, I am aware of the history of the railroads, and the role that the government played in their creation.  The point is that without government involvement, the high demand for railroads and the economic benefits they brought would have never occurred. 

Depositors and investors demanding accountability from the management can supply everything regulation does.

Absolutely false.  Most depositors lack basic financial understanding, let alone understanding of complex concepts like reserves, lending, risk management, etc.  What one gets if one relies on depositors are rashes of bank runs.  History is unambiguously clear that government oversight is needed here. 

the basic problem was that Freddie and Fannie effectively guaranteed almost any mortgage proffered them, allowing the bad loans to turn into financial kudzu. (I think the CRA had some impact, but not nearly as much as the conservative side claims.)

False.  Fannie and Freddie routinely rejected large amounts of assets that would not meet even their relaxed standards.  The problem was and is bigger than Fannie and Freddie.

You're assuming those financial transactions would be necessary.

Your statement clearly implies that you do not know what transactions I am referring to.  Treasuries are used as collateral for trillions of dollars worth of transactions that companies voluntarily engage in daily to make money and ensure liquidity (repos, swaps, etc), as well as to meet regulatory requirements.  I assume nothing; I look at how the system operates.  Companies must, if they are to meet their fiduciary duty to investors, deploy capital in as efficient and profitable a manner as possible, so in that sense, the transactions are, in fact, necessary. 

One of the biggest problems of the so-called "libertarian" viewpoint is that they ignore reality in favor of the notion that there are always alternatives readily available.  There are not.  Let me ask you, what types of alternatives are there?  And would the increased transaction costs, illiquidity in the market, and opacity of financial transactions make the market more stable and efficient?  The obvious answer is no, because such set ups have already been tried. 

[Todd]

Old news to Texans, I assume, and to others who may have followed Rick Perry's career, but Ruger sells a gun inspired by the governor.  Neato.



Good news or bad news for Ms Bachmann I wonder.

[karlhenning]

The lowest point of the evening — and perhaps of the political season — came when moderator Wolf Blitzer asked Ron Paul a hypothetical question about a young man who elects not to purchase health insurance. The man has a medical crisis, goes into a coma and needs expensive care. "Who pays?" Blitzer asked.

"That's what freedom is all about, taking your own risks," Paul answered. "This whole idea that you have to prepare and take care of everybody. . . ."

RTWT here.

[Todd]

I liked Ms Bachmann's recent assertion that the HPV vaccine caused someone, somewhere to become mentally impaired.  She's a bigger nut than I thought, which is saying quite a bit.

[DavidW]

In response to karl: I remember that in the debate.  I don't think that Ron Paul is callous.  He is saying that it is the responsibility of the community and not the government to pay for these people.  He also said that no hospital would turn away someone just because they couldn't pay.

The question was misleading, meant to portray him as a cold, heartless bastard.  Honestly it was pretty stupid.

[karlhenning]

In response to karl: I remember that in the debate.  I don't think that Ron Paul is callous.  He is saying that it is the responsibility of the community and not the government to pay for these people.  He also said that no hospital would turn away someone just because they couldn't pay.

Thanks, Davey.

[DavidW]

What hurt Ron Paul the most was his statements about 9/11.  He was trying to say that the idea that the Muslim community has not declared jihad against us and then proceeded to attempt to quote bin Laden as to the reasons the WTC was bombed.  But the jeers were so loud that nobody was paying attention, the soundbite will be taken out of context (if it's not already, I cancelled cable) and he should be out of the race soon... by his strongest supporters, the Tea Party.

[Brian]

RTWT here.

Apparently the real low point of the evening was Wolf Blitzer's question. My mom says that after "...or do you let him stay in the coma?" people in the audience cheered.

[kishnevi]

Apparently the real low point of the evening was Wolf Blitzer's question. My mom says that after "...or do you let him stay in the coma?" people in the audience cheered.

Yes, it's the audience reaction that was despicable.  Paul sort of criticized the audience in his answer, which was essentially "the answer to that is charity, not government".  Apparently Paul has a lot more charity than the audience did.

And Rick Perry's spokesman issued something the next morning that essentially said Perry was taken aback by the audience reaction and hoped people would remember that the GOP claims to the "pro-life" party.  Of course, Perry seems to forget that part about pro-life when presiding over a death penalty machine that has (if my math is right) executed someone an average of once every two weeks for the entire term he's been governor of Texas.

[DavidW]

Apparently the real low point of the evening was Wolf Blitzer's question. My mom says that after "...or do you let him stay in the coma?" people in the audience cheered.

Excepting that 9/11 question I swear the audience wildly cheered for ANYTHING that came out of the mouths of Ron Paul and Rick Perry!

[Lethevich]

And Rick Perry's spokesman issued something the next morning that essentially said Perry was taken aback by the audience reaction and hoped people would remember that the GOP claims to the "pro-life" party.  Of course, Perry seems to forget that part about pro-life when presiding over a death penalty machine that has (if my math is right) executed someone an average of once every two weeks for the entire term he's been governor of Texas.

This is a confusing thing about a lot of the US right - the government should have minimal impact on the private affairs of the individual, but it should be allowed to execute them

[karlhenning]

Sure wish the Fed would execute la Palin . . . .

[Daverz]

This is a confusing thing about a lot of the US right - the government should have minimal impact on the private affairs of the individual wealthy conservative white men, but it should be allowed to execute them

Fixed that for you.