Amplifying a theme raised by me and others in previous posts, I have an article in the November edition of Quadrant which is now on-line. At its basic, it shows how the way we have configured democracy brings an automatic expander in the size of the regulatory/redistributionist features of government, thus sapping nations’ abilities to increase living standards.
Peter Smith draws from it and expands the theme in an online article this morning. A cynic (and God knows they have much to justify their pessimism) would argue that the political parties have little separating them as far as fostering rather than consuming and reducing the nation’s wealth. Tony Abbott is apparently today signalling some movement towards a less wholehearted redistribution and wealth-sapping political approach. But actions in this direction, especially if specified well in advance, suffer from the normal disadvantage of alerting the losers to a diminution of their loot while not offering enough for the winners. The cure seems to require an obvious picture of decay, as in Soviet era Eastern Europe. However our experience since the velvet revolutions (and the Thatcher/Reagan reforms) indicate such radical reforms quickly regress into more milking of the beneficient producers.
People have to tell government to do less and people need to live more independent.
stackja
2 Nov 12 at 12:11 pm
Im extremely cynical, both major parties seem to see their only agenda as buying their base.
Libs are less open about it, and slower to turn on the spending, in general, but the game has turned government into “daddy”..
And as terrible as it sounds, I blame the female vote. (in general)
Not because they are stupid, but because they are “wired” differently to men in terms of risk aversion. And government nowdays constantly promises to remove risk.
thefrollickingmole
2 Nov 12 at 12:23 pm
So nothing to do with the fact that women are massive net beneficiaries of gubberment largesse?
Rabz
2 Nov 12 at 12:30 pm
alan, I thought the time of rapid growth of government was the mid-20th century?
The deadweight losses of taxes, transfers and regulation limit inefficient policies.
Policies that are found to significantly cut the total wealth available for redistribution by governments are avoided relative to the germane counter-factual, which are other even costlier modes of redistribution. An improvement in the efficiency of either taxes or spending reduces political pressure for suppressing the growth of government.
Government spending grew in many countries in the mid-20th century because of demographic shifts, more efficient taxes, more efficient spending, a shift in the political power from those taxed to those subsidized, shifts in political power among taxed groups, and shifts in political power among subsidized groups. Long term regulatory and budgetary trends are consistent with growth in the political power of those subsidized – especially the elderly.
After the 1970s stagnation, the taxed, regulated and subsidised groups had an increasing incentive to converge on new lower cost modes of redistribution.
Reforms were led by parties on the left and right, with some members of existing political and special interest groupings benefiting from joining new coalitions.
More efficient taxes, more efficient spending, more efficient regulation and a more efficient state sector reduced the burden on the taxed groups. Most subsidised groups benefited as well because their needs were met in ways that provoked less opposition.
Sweden and Denmark could be examples of Gary Becker’s idea that political systems converge on efficient modes of both regulation and income redistribution as their deadweight losses grow.
The recent Swedish economic reforms are an example of a political system converging onto more efficient modes of income redistribution as deadweight losses grow. Improvements in the efficiency of taxes or spending reduce political pressure to suppress the growth of government and thus increase or prevent cuts to both total tax revenue and spending.
The same motives drove reform and saved the welfare state in Australia and NZ.
See http://dev.wcfia.harvard.edu/sites/default/files/BeckerMulligan2003.pdf
Jim Rose
2 Nov 12 at 12:32 pm
And our proud Aboriginals are leading the way…
Forester
2 Nov 12 at 12:55 pm
The fix for this is fixing the upper house systems.
The lower house is for representation.
The upper house is for limitation.
If your income is primarily derived from government, you should not get to vote in an election for the upper houses of the states.
The upper houses of the states, given our system as it is, should select the representatives for the federal senate. Those federal representatives then serve at the whim of the state upper house.
Driftforge
2 Nov 12 at 12:57 pm
Sortition for the Senate. Elect an executive President separately using preferential voting.
At a minimum.
Better still, have Parliament choose the President and council (like a board of directors), confirmed by approval voting. Have them appoint a CEO like PM confirmed by approval voting.
Have candidature done by sortition but subject to approval of the lower tier legislature you come from, then once that is okayed, subject to approval voting.
.
2 Nov 12 at 1:02 pm
Jim
It would be heartening to see the growth of government as now being over. I certainly agree that the growth of spending is asymptotic but do not see it levelling down, in spite of the fact that government has exited some areas of ownership in favour of dictating to the “commanding heights” and making space for welfare/environmental outlays.
Gonski, dental, school swimming lessons all show the quantum of needs is limited only by how much can be squeazed out of the productive sector.
Regulation growth has seen some remittance in terms of economic regulations but, as demonstrated by a just released IPA study, it continues to expand notwithstanding this.
Alan Moran
2 Nov 12 at 1:06 pm
FUCK what is wrong with people these days? Sure there is value in a qualified swimming instructor or nutritionist but what is so bloody wrong about teaching your own kids how to swim, eat properly etc? This cradle to grave crap is stupefying and unedifying.
.
2 Nov 12 at 1:08 pm
If one may turn back the 1780 debating motion back on the heirs of those who supported it (i.e. statist lefties):
Rococo Liberal
2 Nov 12 at 1:23 pm
The problem with Britain was after Henry VIII, subsidiarity was never viewed in a favourable manner.
.
2 Nov 12 at 1:25 pm
Rococo – does that mean that it is now also time for the influence of the crown to increase?
Driftforge
2 Nov 12 at 1:27 pm
I admire your pluck, but after our own dismal federal election result I have to conclude that it’s wishful thinking. I’d love to be wrong.
Uber
2 Nov 12 at 1:37 pm
I don’t know anything about economics so mock me if you wish.
Would /could it be possible or even reasonable to make a constitutional amendment or legislate that Government expenditure should be restricted to a certain percentage of GDP, with possible provisions for War or Catastrophe? Further that if Government over spends Government salaries are halved starting at the top, the Prime Minister.
That percentage should be about half the current rate.
Anne
2 Nov 12 at 1:46 pm
Rabz
No better way of limiting risk than voting for the party that panders to your demographic.
It a rational way of voting as long as you see the spoils as a zero sum game.
thefrollickingmole
2 Nov 12 at 1:46 pm
A brilliant yet eminently sensible and well needed idea.
.
2 Nov 12 at 1:47 pm
Moran, you discovered long ago where the lushest pastures lie. You’ve been peddling your well rewarded mantra ever since. No lessons from reality (even as clear and stark as the GFC) will ever divert you from this holy mission. Your faith is Market Absolutism, where greed is the highest good, and where society is directed, forcibly if necessary, to satisfy the greed and lust of a tiny parasitic elite.
1735099
2 Nov 12 at 1:54 pm
Here’s a “tip” numbers: the GSEs involved in the GFC had a two trillion dollar line of credit to the US Treasury.
That is not and never will be an example of “market absolutism”.
Clearly you were taken in by the Viet Cong literature in Viet Nam.
.
2 Nov 12 at 1:58 pm
Numbers has no argument just insults. Lefty trademark and lack of intelligence on show, again.
Gab
2 Nov 12 at 1:59 pm
thanks Alan, political parties are much more efficiency minded these days than 2 or 3 decades ago.
These days the voter is a fiscal conservative. All election promises must be fully costed. Governments must promise to run budget surpluses, pay down debt and get back into surplus if a deficit is run during a recession.
Politicians view been a fiscal conservative as a badge of honour, if not a minimal requirement of winning office.
The voter is such a fiscal conservative that the Ricardian theory of fiscal deficits was too generous. Any budget deficit must be more than offset by future surpluses.
Maybe in the 1980s the notion that deficits will mean higher taxes in the future was a bit demanding. These days the notion that deficits foretell higher taxes is credible. One reason Rudd lost popularity was he was found out as a phoney fiscal conservative.
Gary Becker was good at pointing out that the growth of social regulation continued unabated since 1980.
Jim Rose
2 Nov 12 at 2:23 pm
Poor old Numbers.
180 degrees out of phase with reality, as usual.
I’ll dumb this down as far as I possibly can so you can understand it.
The GFC was caused not by ‘market absolutism’, but by people exactly like you. Y’see, they thought it ‘unfair’ that welfare-dependent people who could not possibly pay a housing loan back were denied loans merely because they could not pay it back. So in the interest of ‘fairness’ they passed legislation to force lenders to provide loans to people who could not pay them back.
This created a housing bubble and (quell surprise) a lot of loan defaults, while saddling the system with vast amounts of dead loans.
And when the whole thing came unglued they blamed the people who had said it could not possibly work (ie: people who knew how the market worked).
Then these same idiots decided that the way to fix a problem caused by too much bad debt was to… run up much greater debts.
In other words, the cause of both the problem and the cause of making it much worse was drooling left-wing idiots just like you.
Mk50 of Brisbane
2 Nov 12 at 2:30 pm
>where greed is the highest good
self-interest is the best motivator for the society with the highest living standards. A point proven time and time again.
So trying to insult people by saying ‘you think greed is good’ isn’t actually an insult. You’re telling people ‘you think you will improve your life by trying your hardest to improve it’ Well, obviously.
Greed is only bad when coupled with immoral and illegal actions, like union thugs siphoning off members money for their own purposes.
Thinking that is an insult just shows envy, hatred and marxism bubbling to the surface like an oily scum.
brc
2 Nov 12 at 2:35 pm
Sounds like a great idea Anne. Who said you don’t know anything about economics?
Skuter
2 Nov 12 at 3:09 pm
You can’t expect the ALP to pick up this theme, it has to be the coalition. The coalition however is more interested in winning than policies. The recent wheat deregulation vote was a joke, revealing that party politics has taken over from principled politics, as was Howard’s big handouts to all and sundry. So I reject the idea that our political parties are fiscal conservatives.
Tony Abbott should spend less time visiting factories and more time presenting policies but he is caught up in the media game as much as anyone else. If you want the general public to see the value in changing many of our basic political and economic structures you can’t expect that to happen in an election campaign, it is a long hard slog that will take sustained debate and focus over years. Politicians no longer think like that.
We waste enormous resources on professional services. A tax return should be a walk in the park but it is a legal nightmare for many. The GST did not deregulate it just created more paper work. Business is overloaded with hopeless amounts of red tape because no party has the courage to think about tax simplification, all they do is tinker about the edges, adding increasing complexity to an already ridiculous taxation structure.
Wipe out government funding to the arts, sports, culture, tourism, industry, etc. Introduce compulsory employment to anyone unemployed for more than 12 months, allow for transitional strategies that encourage people to move from welfare\disability to work by thinking about how humans respond to incentive rather than “justice” or “rights”.
The current ALP is a lost cause, the coalition is too gutless to drive a different agenda, too beholden to winning at all costs. Our booming old age pension costs and health care costs are clearly unsustainable but which party is willing to go after welfare or medicare? None. Big Pharma is making a fortune out of problematic products. Consider two of the largest classes of drug sales: statins and antidepressants. Some months ago I read a study which clearly showed that lifestyle intervention is cheaper and better for CVD issues than statins yet doctors will in the first instance provide statins for high cholesterol even though it takes years for statins to reduce CVD risk except in high risk cases. There are now even moves underfoot to prescribe statins for those not at risk, this being driven by Big Pharma. The studies on antidepressants are a friggin joke, rigged trials, concealed data, “gifts” to doctors to prescribe the latest drug. If you want to induce personal responsibility for health it starts with the medical profession who should not prescribe drugs so often but enter into a contractual arrangement with clients that demands before drugs are supplied they make the necessary lifestyle changes. A visit to the doctor should be a set cost so as to discourage people going to the doctor for any old splinter or cold. Won’t happen because at all levels the rent seekers are doing very well out of the health industry.
Sweden and Denmark could be examples of Gary Becker’s idea that political systems converge on efficient modes of both regulation and income redistribution as their deadweight losses grow.
Yeah good point Jim but mention a European country around here and all you hear is “socialist scumbags!”
Dead Soul
2 Nov 12 at 3:19 pm
Coupla things DS.
I’d just go for herbal crap, sunshine, CBT and support of family of friends, moderate smoking and failing that, an old and reliable antidepressant. I have known people to take the new fangled ones and become very shook up and ill from them. If it were safe I’d recommend cannibis over the pharmaceutical as well.
Then again we have over diagnosis and the utility of depression isn’t recognised. If you’re depressed, you don’t like where you are. You have stimulus for change. What about those moody pricks who *like* being depressed?
Can you ever get off or wean yourself off statins? I have an older friend who wants to do so. The faat bastard has also lost a prodigious amount fo weight, and says his doc told him that he “weaned” himself off them.
Like I keep saying, you could run on two campaign ideas; administrative reform and bringing back our civil rights. Actually spending money without waste and graft, and treating citizens as the principals and not as serfs would be immensely popular and well needed.
.
2 Nov 12 at 3:31 pm
dead soul, denmark almost ties in the index of economic freedom with the USA
Jim Rose
2 Nov 12 at 3:34 pm
Jim Rose
How does Texas say compare in the index with Denmark?
These comparisons are very misleading. The EU ought to be compared to the US and then the State individually compared.
The US is a big fucking place with a large regional differentiation.
JC
2 Nov 12 at 3:38 pm
JC
I don’t think the dataset is complete. Look at the BS that an enterprising young lady in the US has to put up with to be licensed to put braids or cornrows through the hair of paying and willing customers! Licences for florists! etc. The US is a really diverse place with some of the most capitalistic and some of the most restrictive economic policies post Soviet Union.
.
2 Nov 12 at 3:42 pm
I agree Dot. I just think these sorts of comparisons Rose brought up are misleading for the reasons you raised and also that comparing say denmark without the EU overlay is really fucking wrong.
The EU is a huge Soviet like apparatus sitting on top of Euroweenie countries.
JC
2 Nov 12 at 3:47 pm
There is next to no building code in Texas for instance.
JC
2 Nov 12 at 3:48 pm
DOT,
In Germany they often prescribe St. John’s Wart for depression and there is good data to support that. Much bloody cheaper, less side effects. A study released two days ago strongly advised pregnant women to avoid antidepressants because of high risk. Bloody stupid to provide antid’s to depressed women, like telling them it is okay to smoke pot. Might even be worse.
CBT is long and expensive. People are encouraged to be too soft. I have raised this issue with psychologists but meet a strange response when I suggest that behavioral change is difficult, can involve pain, so why are you lot using warm and fuzzy therapies?
Preventive medicine is all the rage. The latest DSM V even has a diagnosis for “pre-psychotic symptoms”. Steaming pile of shit but nonetheless doctors will soon be pushing antipsychotics for those so diagnosed. It is estimated that there are now 1 million children in the USA on antipsychotics. Incredibly dangerous given the risk profile for some of those drugs. They now have a problem with “opioid newborns” and “serotonin newborns”. Nuts.
Recent studies claimed the biggest driver of cholesterol is resistin, a protein generated by fat cells. Losing weight is mandatory. I’m inclined to the view that if those on statins don’t lost weight, don’t stop smoking, don’t eat well, don’t exercise, then they can pay full price for the statin.
Dead Soul
2 Nov 12 at 3:50 pm
Souns like Big Government lefty heaven. They want to be the tiny eleite that bosses us all around, and they somehow think that Government is noble and incorruptible compared to private enterprise. What a joke!
Rococo Liberal
2 Nov 12 at 3:52 pm
You’ve dumbed it down to the point of utter bullshit.
Perhaps if you allowed yourself to accept something approaching reality, you might begin to make sense. As it is, your explanation is discredited rationalistic fantasy.
The Lowy Institure’s 2009 paper perhaps puts it as succintly as anything else.
An extract –
I’ll dumb that down for you. The Masters of the Universe (who never produce, make, serve, or fight for anything) allowed greed and avarice (in an under-regulated financial environment) to destroy the whole rotten edifice from within. What part of “investors chased yields” and “lax regulatory oversight” do you not understand?
I repeat – your faith is Market Absolutism, where greed is the highest good, and where society is directed, forcibly if necessary, to satisfy the greed and lust of a tiny parasitic elite. This religion is much more dangerous than anything derived from a holy book, be it the Bible or the Koran.
1735099
2 Nov 12 at 3:53 pm
your faith is Market Absolutism, where greed is the highest good, and where society is directed,
Of course it is. Consider the “alternative health industry”. Unregulated and full of shit, providing products that often have little to no value but there is a fortune to be made there and it is being made. It has boomed over the last 20 years. There are gems there but mostly buried under shit.
I call this unalloyed faith in markets “free market spiritualism”. When anyone promotes cure alls alarm bells should ring out across the land. It aint that easy.
Dead Soul
2 Nov 12 at 4:00 pm
numbers says:
As if he has any other options.
Numbers describes crony capitalism in the form of Fanny Mae and Freddy Mac, that unholy alliance between the do-gooders and the Shadow banking system a la Lehman Brothers, Bear Stearns etc.
The deus ex machina of the GFC was the egotistical and narcissistic world view of the left combined with the usual leeches which congregate whenever a witless government is shovelling money out the door in the name of a good cause, ie: AGW.
Of course numbers knows fuckall about AGW as well.
You’re an arrogant prick numbers.
cohenite
2 Nov 12 at 4:13 pm
This is great, we have Emeritus Professor numbers here accusing others of dumbing things down, who then proceeds to ascribe the whole GFC down to two factors:
1) investors chasing yields – this has always been the case and he makes no attempt to show why this got worse in the years leadin up to the GFC; and
2) lax regulatory oversight (just plain false) – we’ve seen the proliferation of capital adequacy requirements under Basel 1, 2 and now 3, the US has at least 8 national regulators for various parts of the financial system with each state having a banking regulator also; we had two government-backed corporations acting as major players in the home lending market, along with more and more rules associated with lending to minorities, low income earners, etc.
Once again, numbers shows he is the catallaxyfiles #1 resident peanut. SfB, hammygar and mOnty will have to lift their game.
Skuter
2 Nov 12 at 4:15 pm
Some think regulation of stuff they are quite uninformed about and dig up any old study they find on google to back up is some sort of cure all!
No. The US system was not “underregulated” you thick deadshit. It was overregulated and was offered fantastic implicit subsidies for poor risk management.
Please shut up and piss of numbers. Soon you’ll be telling us that banks made “predatory loans” (like to explain how that is ever a good proposition for a bank?) under their own volition, whilst the HUD FHA PMI and CRA etc at the same time enforced “equity”.
Dunderhead.
.
2 Nov 12 at 4:15 pm
Hmmm…you just recommended St John’s Wart?
.
2 Nov 12 at 4:16 pm
Now that really gets them going – shed a little sunshine on the Libertarian fantasy of complete deregulation, and all hell breaks loose. Hilarious.
Of course, noname is a guru when it comes to deregulation, unlike David Gruen, who has other ideas about causation
(Dr David Gruen – Address to the Sydney Institute, 16 June 2009)
Perhaps I’m only a humble school principal, but wearing that hat, I learned early about risk management, something very basic overlooked by the spivs on Wall St.
But then, I followed a moral compass, not a mantra of unbridled greed.
1735099
2 Nov 12 at 4:34 pm
BTW it’s Wort – not Wart (sic).
Bit of a Freudian slip there – revelatory of the quality of his thinking…..
1735099
2 Nov 12 at 4:37 pm
Yeah sure numbers, it was a free market
Let’s see what might make us doubt that.
Eight different types of financial regulation at the state and Federal level.
Depression era mortgage exit rules for the borrower.
GSEs having trillions of dollars of lines of credit from the US Treasury.
The mandate of GSEs to buy out shit loans made under CRA banks didn’t want, financed below market rates (hence “re-pricing of risk” as a forced saving later on).
The FHA PMI which meant anyone could get mortgage insurance – no matter your credit status.
Glass Steagall was a stupid law. Our banks operate as I-banks and as commerical banks. No biggie. How does increasing transaction costs make the banking system more stable?
This was caused by, not because of a lack of, regulation.
Banks in the US have FDIC insurance, and were levered up to 135 times. Before dickhead rudd, our banks did not have deposit insurance in any way comparable to that. They were levered around 12:1 and usually around 8:1.
You’re not humble, you’re simple. Your moral compass points only to envy.
.
2 Nov 12 at 4:43 pm
As a Principal did you ever discipline any of your students for abusing personal pronouns and making everything about them?
I hope you did, because it really does make the writer look like a sad c**t.
Infidel Tiger
2 Nov 12 at 4:44 pm
Sure, I’ll explain it to you.
You take a bunch of the predatory loans, roll them into CDOs, tranche them, and sell them to a bunch of dumbarses.
Comprende, senor?
Lord Tillman
2 Nov 12 at 4:44 pm
What Freudian slip, fuckbrain…Freud, what a charlatan he was anyway, you simpleton.
.
2 Nov 12 at 4:45 pm
What? Numbers talking about himself and his life again? Must be a day ending in ‘y’.
Gab
2 Nov 12 at 4:46 pm
So you’re blaming stupid investors for the GFC? Market failure is caused by the participants failing…who’d thunk it?
.
2 Nov 12 at 4:46 pm
So a spiv does something shonky, and it’s the fault of the regulators?
That’s akin to saying that road rules cause accidents. I can see it now – noname aguing with the man in blue after a head-on – “but he could clearly see I was exercising my Libertarian right to drive on whatever side of the road I pleased!”
Welcome to noname’s world……
1735099
2 Nov 12 at 4:53 pm
Emeritus professor numbers, read what you’ve quoted from Labor shill David Gruen. What he describes is not what you’d call an under-regulated environment. Poorly regulated yes, but under-regulated no. This paragraph is key:
Risk management in the financial sector is so heavily prescribed because of the existence of deposit insurance and the prospects of wider bailouts. Banks are told what sort of assets they hold to offset their liabilities and exactly how they should value things by thew regulators. Their risk return models were all signed off by regulators.
The institution failures we saw occurred overwhelmingly in the regulated sector, not the unregulated sector. It was deposit insurance and other bailouts that produced a liquidity problem (not a solvency problem) in the unregulated sector – do you recall how a number of managed funds that weren’t covered by depopsit insurance froze during the GFC here in Australia?
The GFC was overwhelmingly a case of regulatory/government failure, not market failure. You may want to argue that regulatory capture was an issue, but that is anguement for less regulatory power, not more.
Seriously, you have zero understanding of what you’re talking about. But don’t let me stop you. On the contrary, I want you to keep going. Your peanuttery is quite entertaining.
Skuter
2 Nov 12 at 4:54 pm
No – I’m blaming the regulatory environment that permitted it. Is that too complex for you?
1735099
2 Nov 12 at 4:56 pm
You illiterate, spell checking fuckwit, numbers.
GRUEN’S WORDS NOT MINE. YOU CALLED HIM A DEREGULATION GURU.
EAT SHIT, BABY
.
2 Nov 12 at 4:57 pm
The Libs seem to think they can embrace socialism-lite. But you can’t be a little bit pregnant and you can’t be a little bit socialist. It always grows.
Women seem to vote for socialism in greater numbers. It’s ironic that the most ardent feminists are often the most ardent socialists. They just want someone else’s father/husband/son to look after them.
Numbers is missing the obvious point that socialists love being generous with other people’s money. Wanting to choose where and how I give or use my own earnings is not greed.
Ellen of Tasmania
2 Nov 12 at 4:58 pm
That’s akin to saying that road rules cause accidents.
Imagine a sign recommending a speed of 70km/hr on a hair-pin corner. See, it wasn’t that hard.
dover_beach
2 Nov 12 at 4:59 pm
You were not being addressed, numbnuts. Your “DEREGULATION GURU” thinks that you are wrong, too.
Too complex? You can’t even understand why predatory lending is a bullshit theory. Simplistic shit is your calling card.
.
2 Nov 12 at 4:59 pm
dot, if I can correct you on a minor point…the US has at least 8 FEDERAL financial system regulators. Each state has their own. In fact, it is the fragmentation of the US banking system across state lines (because the ability for a financial institution to cross state borders is so heavily regulated) that is one reason put forth for it’s fragility.
Skuter
2 Nov 12 at 4:59 pm
That’s pretty stupid because it’s well known that making branches weak and unable to manage risk is a good way to destroy a bank. They have known this since Wild West days.
.
2 Nov 12 at 5:03 pm
Indeed dot. I might add that the introduction of covered bonds has entrenched the role of deposit insurance at the heart of the Australian financial system – the notion of depositor preference in ADI liquidations had to be removed to allow covered bonds to be issued. APRA was against covered bonds for a long time. Once again Swanny got his ‘mates’ in the room (this time from the big banks) and asked what they wanted in order to keep retail interest rates low – they said more sources of funding and covered bonds will open our access to other investors. This happened because he was concerned at the divergence of retail lending rates and the RBA cash rate – the stupid tosser has no idea about the (lack of) a direct relationship between the two. Also, Hockey had just come out with his nine-point plan, so Swan had to be seen to be doing something.
Also, let’s not forget that Swan approved the mergers between St George and Westpac – the fifth largest bank by lending volume and the second largest – and CBA and Bank West, the largest bank and one of the most aggressive competitors.
It’s clear Wayne Swan wants to destabilise the Australian banking sector by making the big 4 banks ‘Too Big To Fail’…he could write a manual on how to f*ck up a well-functioning banking system…
Skuter
2 Nov 12 at 5:11 pm
You can’t have it both ways. You can’t call Gruen a “Labor shill” and cherry pick a quote – actually to no purpose.
At least you’ve accepted that regulation (you called it “poor”) is an issue.
What’s entirely apparent is that the Masters of the Universe behave without any reference to basic morality.
It’s strange that activities such as high risk lending strategies, shoddy lending practices, pollution of the financial system, destructive compensation practices, bonuses for speed and volume, and failure of oversight are sheeted home to the regulatory system. You’re trying to tell me that removing regulation would cure predatory behaviour?
Next you’ll be advocating Somalia as world’s best governance.
1735099
2 Nov 12 at 5:12 pm
Gibberish cloaked in adjectives.
.
2 Nov 12 at 5:14 pm
Yes, the US system is quite weird in that it is hard for banks to be able to geographically diversify. Also, throw in the community reinvestment act which essentially limits a bank’s ability to cross state borders if they don’t lend ireesponsibly to minorities, low income earners, etc…
Skuter
2 Nov 12 at 5:14 pm
>But, with easy credit
Regulated easy credit.
They were forced to offer it. The regulations said they had to.
>That’s akin to saying that road rules cause accidents
If you passed a road rule giving licences to people who can’t drive, because it’s unfair that they can’t, then you would create more accidents. Really, it’s not that hard.
Force banks to lend to bad credit risks. Create Federal entities to hand out the money and buy the bad paper.
Of course you will get a housing boom if you start handing out free cash.
The only way you can regulate booms out of existence is to regulate in a permanent bust, also known as socialism.
brc
2 Nov 12 at 5:15 pm
Funny that. I couldnt give a stuff about theory. I’m more interested in the reality of the practice and its outcome.
Theft is theft – doesn’t matter if it’s perpetrated by a 14 year old who nicks your wallet, or an Armani wearing spiv in an office on the forty-fifth floor.
“Predatory” – the FDIC defines it as – “imposing unfair and abusive loan terms on borrowers”
Now tell me which part is “bullshit”. Either you believe it doesn’t exist, or it’s OK.
1735099
2 Nov 12 at 5:22 pm
That’s a cop-out.
1735099
2 Nov 12 at 5:24 pm
So you believe in a bullshit theory, even though no bank would want the outcome. Idiot.
Since when were we talking about theft?
As imposed by the CRA, HUD etc.
The US system is simply a crazy mess of socialist regulation. “Worship of free markets”. Dickhead, ignore the talking points and try to think for yourself for once.
Incorrect, it was accurate.
.
2 Nov 12 at 5:38 pm
Theft? The ‘theft” occurred in the bailouts, which libertarians were against, or eventually were against even if they saw some merit in a pragmatic (but ultimately BS) justification for them.
This is to be expected of course, as we “worship market forces”. You’re a gibbering fuckhead, numbers.
You don’t think the US banking system is regulated enough, that the bailouts were necessary but the banks are thieves. You’re an asshat.
.
2 Nov 12 at 5:40 pm
@brc
Bottom line is, no matter what the encouragement, financiers were willing to take on more and more risk. At the tip of the crisis market share for Fannie Mae and Freddie Mac had dropped from 75 percent to 40 percent as a result of expansion by banks of their private-label mortgage securities business.
Throughout the crisis delinquencies of loans guaranteed by Fannie Mae and Freddie Mac remained near 5 percent, whereas the prime mortgages that were privately securitized defaulted at a 10 percent rate and the subprime mortgages defaulted at a 25 percent rate.
The Fannie Mae Freddie Mac story is a fable generated by the usual cabal of Libertarians who have sought to hide the fact that their free market dream became a nightmare.
1735099
2 Nov 12 at 5:41 pm
@ Noname
You always resort to abuse when you’re running out of ideas – and you have a limited vocab.
Try anger management for the first issue. Read widely for the second….
1735099
2 Nov 12 at 5:46 pm
No, they were forced to make the loans. Barack Obama once acted on a CRA case when he worked for ACORN.
Your story is bullshit, numbers. People who got a loan under a CRA arrangement would be sub prime borrowers, which defaulted at 25%, compared to more creditworthy borrowers who defaulted at 10%.
If the GSEs didn’t diversify, they would have been in even more shit.
.
2 Nov 12 at 5:47 pm
Dickhead,
I am an expert on this. You are not. Suck it up, you are being chided by your social better who grows impatient of your ignorance and rank stupidity. My vocabulary is fine.
.
2 Nov 12 at 5:50 pm
Ahah! Noname has revealed the truth – Obama is responsible for the GFC.
You’re seriously deluded.
Fannie Maea nd Freddie Mac were chartered by Congress to encourage homeownership primarily by providing a secondary market for home mortgages. They created that secondary market by purchasing loans from lenders, securitizing them, and providing a guarantee that they would make up the cost of other requirements. The rules prohibited lenders “from making loans based on collateral without regard to [the borrower’s] repayment ability,” required lenders to “verify income and obligations,” and imposed “more stringent restrictions on prepayment penalties.” The rules also required lenders to “establish escrow accounts for taxes and mortgage related insurance for first-lien loans.” In addition, the rules “prohibit[ed] coercion of appraisers, define[d] inappropriate practices for loan servicers, and require[d] early truth in lending disclosures for most mortgages.
These rules were not applied – that constitutes a failure of regulation, no government interference.
1735099
2 Nov 12 at 5:58 pm
“No – I’m blaming the regulatory environment that permitted it. Is that too complex for you?”
Hang on a second, you were blaming greed a few posts ago!
Not once have you addressed the requirements Clinton put on banks forcing them to offer mortgages to minorities who were being rejected because they couldn’t afford the repayments.
That was the source of the bad debts, which were then subsequently traded.
Or numbers if a company goes bust do you think its the fault of the people who bought shares???
ugh
2 Nov 12 at 5:59 pm
Numbers is disingenuous, a typical troll; FM &FM were instructed, that is made, by Clinton policy to provide house ownership to their constituents. When attempts to regulate the refinancing of FM&FM were attempted the democrats blocked it.
It was a classic government created demand and supply bubble of a security which was fractalised into almost non-existence.
Have the left learnt this lesson that you cannot fianance what cannot pay for itself. No and the AGW and RET bubbles show that; only this time it is potentially worse. At least the FM&FM crisis had a base asset, houses.
Carbon trading and RETs have no intrinsic worth; they are completely artificial; any money spent buying a credit or investing in a renewable energy is money burnt.
Other lessor examples abound in Australia; in fact every policy intiative by the Gillard abomination is an example of ideological expenditure, pink batts, BER, set top boxes, aboriginal settlements, illegal immigration; all profoundly wasteful in themselves and infinitely so when combined with the opportunity cost.
Numbers supports vanity expenditure because he is vain; the rest of us have to pick up the tap for his preening.
cohenite
2 Nov 12 at 6:00 pm
And modest with it.
“Expert” – drip under pressure.
1735099
2 Nov 12 at 6:01 pm
You’re an arrogant prick numbers.
cohenite
2 Nov 12 at 6:07 pm
Greed is the common demominator, ignorance is the vinculum.
You’re very loose with the history. “Forcing” is the wrong term to use in the context of crony capitalism, which was central to the failure of the market. There is a complex soup here, but the culture (the medium for growth) was free market capitalism, and that was what failed.
And the driver was greed…..
1735099
2 Nov 12 at 6:09 pm
Define “greed”.
cohenite
2 Nov 12 at 6:13 pm
Thomas Aquinas calls it “a sin against God, just as all mortal sins, in as much as man condemns things eternal for the sake of temporal things”
The part of this which appeals to me as a Mick, is the reference to “temporal things”.
In other words, materialism is at the core of the creed of greed. It is also at the centre of the capitalist ideal.
1735099
2 Nov 12 at 6:20 pm
Numbers, you are a spud peeler and a schoolteacher. I am an eminently qualified economist. You are shoving feathers up your arse pretending to be a chook.
You are wrong. You have been proven wrong over and over again. You blame “greed” even though it never goes away. You blame a lack of regulation when regulation and subsidies created a perverse and unworkable system.
I never blamed Obumma for the GFC. He did, however, prosecute a redlining civil case. Yet you blame “predatory lending” on “greed”. Idiot. it is not deluded AT ALL to point this out, or that you tried to use the “magic negro” card to argue out of this by saying any mention of this is somehow trying to blame one person for the whole mess. You’re hysterical.
You get crony capitalism and free markets mixed up. You are even admitting to the extent of crony capitalism of the GSEs – to which a free market would not let live.
You’re a turkey without a fucking clue. Bugger off.
.
2 Nov 12 at 6:21 pm
It’s also why Stalin lived in a Dacha and the proles lived in vomit inducingly ugly apartments.
.
2 Nov 12 at 6:24 pm
Hmmm…you just recommended St John’s Wart?
To dismiss a whole field because it is mostly bunkum is lazy. Of course there are valuable things there but the field itself is nonsense writ large for the most part. If we think generally all the time we are not engaging in analysis we are too often engaging in polemics.
Consider the eg of Denmark: compulsory employment placement. Or Sweden: fixed cost for seeing a GP. Sweden also has an excellent idea for out of control drug addicts: they take over their lives, full rehab. Only practical solution. What do we do – we prattle on about free will and individual rights, as if such disastrous habits leave a person’s cognition and behavior intact. And surprise surprise atheistic Sweden and Denmark have remarkably peaceful societies, strong social cohesion, and rely on dreadful leftist science to guide their policies. In short, don’t throw the baby out with the bathwater.
Dead Soul
2 Nov 12 at 6:25 pm
I think the same about traditional Chinese medicine. I get sick of these self appointed “sceptics”, labelling anything “woo” they don’t like the sound of or didn’t learn about from their crusty old professors.
I don’t know if the causation exists you are referring to.
.
2 Nov 12 at 6:28 pm
Given that you’re such an expert and all, I’m sure it would be no problem for you to point out for me where I might observe this excellent and pure free market operating.
Take your time…..
BTW
The last time I peeled spuds was on a camping trip with my sons at Lake Julius in 1993. But if it helps you and makes you feel better……
1735099
2 Nov 12 at 6:28 pm
Next you’ll be trying to tell me that Stalin was a Communist.
1735099
2 Nov 12 at 6:30 pm
I get sick of these self appointed “sceptics”, labelling anything “woo” they don’t like the sound of or didn’t learn about from their crusty old professors.
Scientists also suffer from groupthink and the authority fallacy. TCM is interesting but I haven’t looked at. Found some really interesting material on ginseng species though. Seems promising.
BTW, received an email from a friend a few days ago about a mate of his who was given 12 months with adenocarcinoma of the lung. Long past that death prediction time now but refused chemo, only using DCA. Seems to have helped but not completely, he is declining. So I suggested curcumin and aspirin into the mix.
Dead Soul
2 Nov 12 at 6:33 pm
Stupid twat.
“STALIN WASN’T A COMMUNIST”
You are basically a Viet Minh reprogrammed enemy.
.
2 Nov 12 at 6:39 pm
The social cohesion of Norway Sweden and Denmark is due largely to their ethic and religious homogeneity.
manalive
2 Nov 12 at 6:40 pm
What about this, DS?
FAHF-2
http://www.sciencebasedmedicine.org/index.php/an-herbal-cure-for-peanut-allergy/
Quite frankly I find this stuff mind-blowing.
.
2 Nov 12 at 6:40 pm
Still waiting for your example of a pure free market economy….
And I have no idea what the Viet Minh has to do with it.
1735099
2 Nov 12 at 6:41 pm
So wanting a new car is greed, as is, I suppose, an extra bedroom and study.
Aquinas, a prick if ever there was one, despite having a good turn of phrase, was talking about, in effect, materialism.
Materialism is in the Green lexicon a synonym for anti-nature, so therefore greed is unnatural.
Disease is natural.
Is wanting to cure disease and illness greed as well, or even profiting from it?
cohenite
2 Nov 12 at 6:42 pm
Stalin wasn’t a communist.
Still waiting for your example of a pure free market economy….
What does that prove – socialism and regulation are pervasive? Before that, protectionism or racism?
Well anyway. Here is an old example of a free market.
http://mises.org/daily/1865
Idiot. I am not justifying myself to some fool who thinks Stalin was not a commie.
.
2 Nov 12 at 6:50 pm
WIN – A Current Affair tonight.
Grandparents call for taxpayers to pay Grandparents to daycare Parents kids…
Forester
2 Nov 12 at 7:05 pm
Noname has to go back to 1681 to find something vaguely relevant.
It may have stood a chance with the Quakers, but they stuffed it up by banning the Micks -
“Catholics were barred from official posts in the colony”.
The pure Libertarian ideal is a delusion. It has, however a strange appeal to adolescents.
And to Noname, of course. He’s an expert, after all. One of those who knows more and more about less and less, until he knows everything about nothing…..
1735099
2 Nov 12 at 7:19 pm
Congratulations.You are now a nominee for Weasle Words 2012.
“At its basic, it shows how the way we have configured democracy brings an automatic expander in the size of the regulatory/redistributionist features of government, thus sapping nations’ abilities to increase living standards”.
Er, more big government?
Idiot.
Steve MacNeil
2 Nov 12 at 7:46 pm
The social cohesion of Norway Sweden and Denmark is due largely to their ethic and religious homogeneity.
Religion is dead in those D and S, one book I recently read stated that in Sweden and Denmark it is considered “funny” to even talk about theology.
Australia has many different peoples and is also a very peaceful society. Homogeneity is obviously important but it is not the only factor.
Your point highlights why I don’t like people clinging so seriously to a particular world view whether it be religious or secular and why I love this quote from Nietzsche …
The surest way to corrupt a youth is to instruct him to hold in higher esteem those who think alike than those who think differently. ~Friedrich Nietzsche
DOT,
Yes, good example of following through on the claims from unconventional sources. People sometimes to forget that discoveries begin with anecdotes, not the scientific method.
Dead Soul
2 Nov 12 at 7:54 pm
Dead Soul, discoveries….. many times serendipity?
Jessie
2 Nov 12 at 8:01 pm
Numbers says:
This after he has just used Aquinas as a fucking reference. Twit.
cohenite
2 Nov 12 at 8:05 pm
Dead Soul, discoveries….. many times serendipity?
As Asimov once wrote: The important times in Science is not “Eureka” moments but “that’s funny”.
Or John Wheeler, the brilliant physicist:
“In any discipline find the strangest thing and explore it.” Or
“If you haven’t found something strange during the day, it hasn’t been much of a day.”
John Wheeler
—-
V. close on those quotes, my database is closed so off the top.
Dead Soul
2 Nov 12 at 8:06 pm
@ cohenite
A twit is someone who can’t tell the difference between a reference and an example.
1735099
2 Nov 12 at 8:44 pm
Oh, great. The Cat is reduced to squabbling comments from Numbers. This is scraping the bottom of the barrel, Sinc.
blogstrop
2 Nov 12 at 9:01 pm
Book time.
blogstrop
2 Nov 12 at 9:02 pm
@Blogstrop
Main problem with this site is that it is frequented by those who lack life experience and as a consequence, take themselves far too seriously.
Doubt that Sinclair has a cure for that…….
1735099
2 Nov 12 at 9:06 pm
Watcha reading, Blogstrop? (if you don’t mind me asking).
Gab
2 Nov 12 at 9:08 pm
Yeah, what a fucking imbecile. “Stalin wasn’t a communist”
You should have stayed in Vietnam.
.
2 Nov 12 at 9:33 pm
Probably a good idea to ban Catholics back then.
This is the kind of scum that James II appointed as Lord Chancellor after being Lord High Justice
http://en.wikipedia.org/wiki/George_Jeffreys,_1st_Baron_Jeffreys
.
2 Nov 12 at 10:00 pm
“If it saves just one life it’s worth it”
Bullshit!
Harold
2 Nov 12 at 10:05 pm
What have I been reading? A mix of political memoirs or biographies, and some military history, with a bit of Paul Theroux’s travel books for light relief. I’ve been steering clear of fiction for some time.
It’s disappointing to see a self-proclaimed school principal display such ignorance on a topic that has become as polarised in debate as is the GFC. Most here will be familiar with my standard recommendation for those who are interested in finding out the truth about it. Schweizer’s “Architects of Ruin” tells the whole sorry tale and names names in a finely woven narrative starting way before most of us realised there was a problem – back in Alinsky’s prime. To put it in a nutshell, mk.50 is correct and numbers is just spouting slogans, which is what we’ve come to expect.
This thread is another sad example of the combined talents being frittered away countering one apparently incapable of learning, and therefore badly suited to the task of teaching.
Blogstrop
3 Nov 12 at 6:53 am
Often misattributed to Alexander Fraser Tytler.
Annabelle
3 Nov 12 at 2:43 pm
Dead Soul,
In response, perhaps of interest..
Thanks for Wheeler link.
Jessie
4 Nov 12 at 5:18 pm