sam on November 04, 2011, 02:11:32 pm
1.  We have not one banking crisis but several going on simultaneously.

All the banking crises were caused by irresponsible political lending, in the US lending to poor people in general, members of protected minority groups in particular, and for the most part, caused by lending to underclass Mexicans.

2.  In neither case would THIS set of crises have occurred, because in an AnCap situation (or even a MinCap* situation) would you have had a governmental backstop using coerced tax funds allowing bankers to get away with high-risk affairs and letting them slide on Due-diligence.

A banker borrows short and lends long, because that is profitable and convenient and everyone benefits.  Then one day, something bad happens, and everyone wants to withdraw their money, and there is no money.

Without government backing bankers would have been less inclined to lend irresponsibly, and without government pressure bankers would have been less inclined to lend irresponsibly, but bankers will always be tempted to take risks they should not, because if they win their bets, they keep the money, and if they lose their bets, someone else loses the money.

On this point, the occupy wall street crowd of moochers and parasites are correct.  Bankers have bad incentives that will lead to them doing bad things.  The problem is that the Occupy Wall Street solution is that banks should be more regulated - which is to say people like those at Occupy Wall Street should run them - over educated hippies trained in Marxism and hating white males, but ignorant of maths, finance, probability, or statistics.  We already tried that, with entirely predictable consequences.

 Appraisal fraud such as was commonplace on the *commercial* side of the MBS market bubble (which gets much less news)

It gets much less news, because it caused far less problems.  Most of the money was lost on Mexicans, the vast majority of them underclass Mexicans.  In the US, race politics is the very center of the crisis, as is obvious from the CRA condemnation of Beverly Hills Bank - which is not to say the bankers were innocent.  Most of them were happy to play along.

This is a real problem, to which Occupy Wall Street is the wrong solution, is a call for more of the solution we already tried.  Bankers have bad incentives, incentives to do the wrong thing.  The problem, however, is that regulators have even worse incentives.

Imagine the mob at occupy Wall Street regulating the banks.  No need to imagine.  That is what we already have!


mellyrn on November 04, 2011, 05:14:49 pm
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Imagine the mob at occupy Wall Street .... (emphasis added)

Who said, "It is better to remain silent and be thought a fool, than to speak and remove all doubt"?

I don't need to "imagine" the folks in the #occupy movement.  I am one.  Aren't you lucky this format protects you from having to look me in the eye?

sam on November 04, 2011, 08:24:15 pm
I don't need to "imagine" the folks in the #occupy movement.  I am one.

The Occupy Wall Street movement is 99% astroturf - observe, for example, the Mayor of Oakland directing her grotesquely overpaid city employees to "strike" at full pay.

In so far as there is any movement beyond puppets paid to show up by minions of the Democratic Party apparatus, they don't have any coherent demands.  In so far as they have any coherent demands, the number one demand is that they be bailed out also, with guaranteed jobs in the virtue industry, such as diversity counselor, the business of enforcing virtue on other people, jobs for those officially accredited by prestigious universities as adequately trained in hating whites, males, and white males.  They specifically reject jobs producing anything or performing any service that the recipient of that service is willing to pay for, as inappropriate for their immensely elevated social status.  They want the jobs for which they have been trained, having been trained in hating people and stopping other people from producing stuff, trained for the virtue business.

And talking about their elevated social status:  Observe the addresses of those arrested: http://dailycaller.com/2011/11/02/opulent-homes-of-the-99-percent-slideshow/5_1/

And talking about hatred:  Observe: no enemies to the left, no friends to the right  http://blog.jim.com/politics/no-friends-to-the-right-2.html

Have you attended one of their meetings where they supposedly generate consensus about what is to be done?  Supposedly everyone is equal and everyone is welcome, but unless you know every incredibly minute detail of the ruling elite consensus on everything, which requires a lifetime of dedicated study, your opinion is not going to affect the “consensus” in the slightest.  Everyone is equal at those meetings, but some people are considerably more equal than others.  It is not enough to be politically correct, you need an Ivy League education in political correctness.
« Last Edit: November 04, 2011, 10:14:54 pm by sam »

ContraryGuy on November 05, 2011, 12:26:52 pm
1.  We have not one banking crisis but several going on simultaneously.

All the banking crises were caused by irresponsible political lending, in the US lending to poor people in general, members of protected minority groups in particular, and for the most part, caused by lending to underclass Mexicans.

Please give us verifiable proof of this.  No Fox News or right wing hate blogs like dailycaller of jim.com please.
Like I said, independantly verifiable.

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2.  In neither case would THIS set of crises have occurred, because in an AnCap situation (or even a MinCap* situation) would you have had a governmental backstop using coerced tax funds allowing bankers to get away with high-risk affairs and letting them slide on Due-diligence.

A banker borrows short and lends long, because that is profitable and convenient and everyone benefits.  Then one day, something bad happens, and everyone wants to withdraw their money, and there is no money.

Without government backing bankers would have been less inclined to lend irresponsibly, and without government pressure bankers would have been less inclined to lend irresponsibly, but bankers will always be tempted to take risks they should not, because if they win their bets, they keep the money, and if they lose their bets, someone else loses the money.

Tell that to Enron.  They took incredible risks, and did it in front of everyone.  Because Ken lay was a primary Bush fundraiser, there was no oversight of Enrons activities.
Enron disrupted productions, delayed people, drove up prices.
This is what no oversight does for companies.  Most Capitalist companies are driven by the need for ever-increasing profits at all costs, and by increasingly greedy, ego-maniacal executives.

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On this point, the occupy wall street crowd of moochers and parasites are correct.  Bankers have bad incentives that will lead to them doing bad things.  The problem is that the Occupy Wall Street solution is that banks should be more regulated - which is to say people like those at Occupy Wall Street should run them - over educated hippies trained in Marxism and hating white males, but ignorant of maths, finance, probability, or statistics.  We already tried that, with entirely predictable consequences.

And the alternative is better?  Over educated, ego-maniacal professionals who have been told they are the "Masters of the Universe" for most of their college and work years?
These same people are just as "ignorant of maths, finance, probability, or statistics" as the protestors you deride!
The only statistics they care about are the ones that say they are wonderful, successful, richer than the guy at the next desk over and getting richer.
These are the guys who hired nuclear physicists to create equations that proved there was no risk in investing in sub-prime mortgages; you cant argue with math, now can you?
After all, 2+2 always equals 4, right?  Unless you're in Calculus, where 2+2 can equal 5.

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 Appraisal fraud such as was commonplace on the *commercial* side of the MBS market bubble (which gets much less news)

It gets much less news, because it caused far less problems.  Most of the money was lost on Mexicans, the vast majority of them underclass Mexicans.  In the US, race politics is the very center of the crisis, as is obvious from the CRA condemnation of Beverly Hills Bank - which is not to say the bankers were innocent.  Most of them were happy to play along.

Verifiable proof please, or shut the up with your hatred of Mexicans.
And please stop with the Beverly Hills Bank example, too.  One bank out of tens of thousands might be enough proof of govt evil for this forum, but its obvious that you only have one example out of every other bank in the entire US or you would have used more than just that one.

What is it with that bank?  Did you lose money at that bank; did one bureaucrat out of millions torque you off?
You dont have any proof that every bad loan in American was given to illegal Mexican underclass workers, or you would have linked to it.

OK, so one bureaucrat got mad at one bank in Beverly Hills for not making bad loans, so what?
Of course a Beverly Hills bank isnt going to make loans to poor people!  Its Beverly Hills!  Its where rich people live!

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This is a real problem, to which Occupy Wall Street is the wrong solution, is a call for more of the solution we already tried.  Bankers have bad incentives, incentives to do the wrong thing.  The problem, however, is that regulators have even worse incentives.

Without even the thought of maybe, possible consequences, bankers with bad incentives will keep going!

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Imagine the mob at occupy Wall Street regulating the banks.  No need to imagine.  That is what we already have!

sam on November 05, 2011, 08:19:13 pm
The problem is that the Occupy Wall Street solution is that banks should be more regulated - which is to say people like those at Occupy Wall Street should run them - over educated hippies trained in Marxism and hating white males, but ignorant of maths, finance, probability, or statistics.  We already tried that, with entirely predictable consequences.

And the alternative is better?  Over educated, ego-maniacal professionals who have been told they are the "Masters of the Universe" for most of their college and work years?
These same people are just as "ignorant of maths, finance, probability, or statistics" as the protestors you deride!

The masters of the universe were "quants".  Google it.  Quants are specifically trained in maths, finance, probability and statistics, which is why I listed those particular skills.

Though a quant has incentive to arrange bets so that if the quant wins, the quant wins, and if the quant loses, the quant is bailed out, a quant is competent, and regulator is not competent.  The regulator has no idea what the quant is doing. Further, a quant has a time horizon extending beyond the next election, whereas a regulator does not.

The big error of the quants was to disregard the fat tails of the non normal distribution - which they probably disregarded not because they were stupid, but because in a fat tail event, someone else would wind up with the dud contracts, most likely the taxpayer, or failing the US taxpayer, German banks.  The regulators did not even know what a non normal distribution was, other than perhaps that a normal distribution is also called the bell curve, and the bell curve is racist.  They would probably think therefore, that a non normal distribution is anti racism, though "fat tails", which means much the same thing, would sound to them like a racial epithet against black and Hispanic women.  The average regulator probably thinks that a fat tail event is an overweight Hispanic woman attempting to flirt with a quant.

And please stop with the Beverly Hills Bank example, too.

Beverly Hills bank was the only bank in America to refuse to drop its lending standards to ridiculously low levels.  Because of its failure to drop its lending standards, the regulators came down on it.

We have a pile of government papers warning bankers that demanding assets, income, and credit rating has disparate impact, and is therefore racist, and when one bank failed to get the hint, the regulators called that bank racist.

One bank out of tens of thousands

The question is why did the other 9999 banks drop their lending standards?  The one bank that did not drop its lending standards provides the answer.

The behavior of the banks was bad, but the behavior of the regulators was far worse, and the worst thing about the banks behavior was their failure to resist regulatory demands that the banks should behave even worse than they were naturally inclined to behave.
« Last Edit: November 05, 2011, 09:24:59 pm by sam »

ContraryGuy on November 06, 2011, 08:04:24 pm
The problem is that the Occupy Wall Street solution is that banks should be more regulated - which is to say people like those at Occupy Wall Street should run them - over educated hippies trained in Marxism and hating white males, but ignorant of maths, finance, probability, or statistics.  We already tried that, with entirely predictable consequences.

And the alternative is better?  Over educated, ego-maniacal professionals who have been told they are the "Masters of the Universe" for most of their college and work years?
These same people are just as "ignorant of maths, finance, probability, or statistics" as the protestors you deride!

The masters of the universe were "quants".  Google it.  Quants are specifically trained in maths, finance, probability and statistics, which is why I listed those particular skills.

Though a quant has incentive to arrange bets so that if the quant wins, the quant wins, and if the quant loses, the quant is bailed out, a quant is competent, and regulator is not competent.  The regulator has no idea what the quant is doing. Further, a quant has a time horizon extending beyond the next election, whereas a regulator does not.

The big error of the quants was to disregard the fat tails of the non normal distribution - which they probably disregarded not because they were stupid, but because in a fat tail event, someone else would wind up with the dud contracts, most likely the taxpayer, or failing the US taxpayer, German banks.  The regulators did not even know what a non normal distribution was, other than perhaps that a normal distribution is also called the bell curve, and the bell curve is racist.  They would probably think therefore, that a non normal distribution is anti racism, though "fat tails", which means much the same thing, would sound to them like a racial epithet against black and Hispanic women.  The average regulator probably thinks that a fat tail event is an overweight Hispanic woman attempting to flirt with a quant.

And please stop with the Beverly Hills Bank example, too.

Beverly Hills bank was the only bank in America to refuse to drop its lending standards to ridiculously low levels.  Because of its failure to drop its lending standards, the regulators came down on it.

We have a pile of government papers warning bankers that demanding assets, income, and credit rating has disparate impact, and is therefore racist, and when one bank failed to get the hint, the regulators called that bank racist.

One bank out of tens of thousands

The question is why did the other 9999 banks drop their lending standards?  The one bank that did not drop its lending standards provides the answer.

The behavior of the banks was bad, but the behavior of the regulators was far worse, and the worst thing about the banks behavior was their failure to resist regulatory demands that the banks should behave even worse than they were naturally inclined to behave.


The light begins to dawn.  You arent just some random troll, you are an astroturfer.
For one thing, laymen dont use the term "quants".
For another thing, your disdain of regulators makes you sound like a banker; because even the other people on this forum dont talk like that, and they love freedom and hate government and the regulation it brings.
I dispute your argument of the quants time horizon:  the quant has a time horizon of exactly three months, just like any other Wall Street employee.  The quant is an analyst whose job it is to provide a mathematical answer to a time sensitive decision of what price, how much risk, or "how do we destroy Americas economy, and make it look like someone else's fault".

Simply put, a quant is just another computer programmer.

Your buddies in the quant industry ignored your "fat tail" events because, as computer programmers and mathematics majors, they have no education in economics.

Also, not only are you a Wall Street-paid astroturfing troll, you also obviously worked for or with this bank of yours; whgich is why you are so upset about it and keep going on and on and on and on and on about it.

Lastly, who is this "we" who has all this documentation you mention?

I should know better than to feed the trolls.

ContraryGuy on November 07, 2011, 01:30:18 am
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Imagine the mob at occupy Wall Street .... (emphasis added)

Who said, "It is better to remain silent and be thought a fool, than to speak and remove all doubt"?

I don't need to "imagine" the folks in the #occupy movement.  I am one.  Aren't you lucky this format protects you from having to look me in the eye?

I'm surprised at you, mellyrn; as an AnCap, I thought you were all for unregulated capitalism.
Isn that what we've been arguing about?  No regulations, no oversight; total freedom to let the capitalists do whatever they want?

mellyrn on November 07, 2011, 07:10:33 am
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I'm surprised at you, mellyrn; as an AnCap, I thought you were all for unregulated capitalism.
Isn that what we've been arguing about?  No regulations, no oversight; total freedom to let the capitalists do whatever they want?

In what do you see the contradiction?  I think the current financial mess happened because of governmental collusion and protection, and that it is not an example of a truly free market at all.  E.g., if it were not for government decreeing that Federal Reserve (a private bank, no more "federal" than Federal Express) notes are the lawful currency of the land, I wouldn't have to use them.

And "no regulations" does not equal "no oversight" -- in a free market I can choose not to do business with a capitalist who violates my preferences.  And you can choose to do business with him if you don't mind his practices.  Whether he gets to stay in business, then, will depend on whether the community is more like you or more like me:  he won't get to stay in business just for having bought the (artificial) regulators, but instead for having satisfied the inherent "regulators".



mellyrn on November 07, 2011, 08:10:48 am
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Observe that Singapore, by a quite moderate and reasonable increase in the severity of punishment, reduced crime to near zero.

I gather that, in your eyes, violence committed by the state doesn't count as "crime".

happycrow on November 07, 2011, 08:28:32 am
It gets much less news, because it caused far less problems.  Most of the money was lost on Mexicans, the vast majority of them underclass Mexicans.  In the US, race politics is the very center of the crisis, as is obvious from the CRA condemnation of Beverly Hills Bank - which is not to say the bankers were innocent.  Most of them were happy to play along.

With all due respect, Sam, when all one has is a hammer, everything begins to look like a nail.  Underclass Mexicans are not generally in the habit of financing the purchase of apartment buildings and shopping centers.  

ContraryGuy on November 07, 2011, 08:56:45 am
It gets much less news, because it caused far less problems.  Most of the money was lost on Mexicans, the vast majority of them underclass Mexicans.  In the US, race politics is the very center of the crisis, as is obvious from the CRA condemnation of Beverly Hills Bank - which is not to say the bankers were innocent.  Most of them were happy to play along.

With all due respect, Sam, when all one has is a hammer, everything begins to look like a nail.  Underclass Mexicans are not generally in the habit of financing the purchase of apartment buildings and shopping centers.  

In sams view of the world, they are.

macsnafu on November 07, 2011, 10:59:37 am
Quote
Imagine the mob at occupy Wall Street .... (emphasis added)

Who said, "It is better to remain silent and be thought a fool, than to speak and remove all doubt"?

I don't need to "imagine" the folks in the #occupy movement.  I am one.  Aren't you lucky this format protects you from having to look me in the eye?

I'm surprised at you, mellyrn; as an AnCap, I thought you were all for unregulated capitalism.
Isn that what we've been arguing about?  No regulations, no oversight; total freedom to let the capitalists do whatever they want?


It's one thing to play Devil's Advocate; it's another thing to just play dumb.  Rights and responsibilities go together.  Sam did make the point that without government backing and bailouts, banks would be more conservative and engage in less high-risk loans and investments.    So you can complain about unregulated banks all you want, but government privileges are just as bad as government restrictions.   We want to do away with both, get it?  In Ancap, there would be no massive redistribution of taxpayer money to bail out troubled banks who made bad, risky loans. 
I love mankind.  It's PEOPLE I can't stand!  - Linus Van Pelt.

ContraryGuy on November 07, 2011, 01:13:15 pm
Quote
Imagine the mob at occupy Wall Street .... (emphasis added)

Who said, "It is better to remain silent and be thought a fool, than to speak and remove all doubt"?

I don't need to "imagine" the folks in the #occupy movement.  I am one.  Aren't you lucky this format protects you from having to look me in the eye?

I'm surprised at you, mellyrn; as an AnCap, I thought you were all for unregulated capitalism.
Isn that what we've been arguing about?  No regulations, no oversight; total freedom to let the capitalists do whatever they want?


It's one thing to play Devil's Advocate; it's another thing to just play dumb.  Rights and responsibilities go together.  Sam did make the point that without government backing and bailouts, banks would be more conservative and engage in less high-risk loans and investments.    So you can complain about unregulated banks all you want, but government privileges are just as bad as government restrictions.   We want to do away with both, get it?  In Ancap, there would be no massive redistribution of taxpayer money to bail out troubled banks who made bad, risky loans. 

I get it; massive redistribution of wealth through the capitalist system, just none of it downward toward the product-buying public.

I know you will say that you can vote with your money, and your feet.  Do you really think that would make any difference?
If you do, it would surprise me; I had not taken you for a naif.

macsnafu on November 07, 2011, 01:48:48 pm
Quote
Imagine the mob at occupy Wall Street .... (emphasis added)

Who said, "It is better to remain silent and be thought a fool, than to speak and remove all doubt"?

I don't need to "imagine" the folks in the #occupy movement.  I am one.  Aren't you lucky this format protects you from having to look me in the eye?

I'm surprised at you, mellyrn; as an AnCap, I thought you were all for unregulated capitalism.
Isn that what we've been arguing about?  No regulations, no oversight; total freedom to let the capitalists do whatever they want?


It's one thing to play Devil's Advocate; it's another thing to just play dumb.  Rights and responsibilities go together.  Sam did make the point that without government backing and bailouts, banks would be more conservative and engage in less high-risk loans and investments.    So you can complain about unregulated banks all you want, but government privileges are just as bad as government restrictions.   We want to do away with both, get it?  In Ancap, there would be no massive redistribution of taxpayer money to bail out troubled banks who made bad, risky loans. 

I get it; massive redistribution of wealth through the capitalist system, just none of it downward toward the product-buying public.

I know you will say that you can vote with your money, and your feet.  Do you really think that would make any difference?
If you do, it would surprise me; I had not taken you for a naif.

No, you don't get it.  Without government privileges, like monopoly and subsidies and such, you only get rich by offering a product or service that people are willing to buy.  Like any voluntary exchange, it's trading value for value.  You could call that voting with your money, if you want, but you'll have to show how voluntary exchanges can result in the impoverishment of the consumer. 
I love mankind.  It's PEOPLE I can't stand!  - Linus Van Pelt.

sam on November 07, 2011, 04:49:34 pm
Sam did make the point that without government backing and bailouts, banks would be more conservative and engage in less high-risk loans and investments.  

Banks would be more conservative.  But in the event of an economic crisis, some of the loss would be born by their depositors, thus their incentives to be conservative are inefficiently weak.  Thus banks are apt to be insufficiently conservative.

However, the incentives for regulators are worse than those of bankers, since regulators get political gain by directing loans to favored or politically well connected groups, and do not suffer any losses when such loans go bad.  Thus, from the lead up to the recent crisis, we have a great pile of documents where regulators demand that banks lend more recklessly, and threaten banks that are insufficiently reckless.

Having political authorities breathing down bankers necks to make sure the bankers lend responsibly, cannot work even if the political authorities have good intentions, since they are unlikely to know what loans are responsible, and the political authorities are unlikely to have good intentions.   We have a pile of documents from the lead up to this crisis revealing bad intentions.

Post hoc penalties, dire penalties for bankers going bankrupt, can work, and in the past have worked.  Regulating banks to lend safely cannot work, and is exactly what caused the present crisis.
« Last Edit: November 07, 2011, 04:51:21 pm by sam »