Markets Fail When Humans Are Unregulated

[Vast LWC]

That is because you have either not taken US History or failed it miserably.

.

Obviously.

 

[Oddball]

Right...It's all the fault of the people who bought the Pinto, that it blew up when it got hit from behind.

 

[Vast LWC]

Bunch of crap.

The derivatives traders only traded in the mortgages available to them, many of which were undercollateralized and written under duress of possible retribution of authoritarian do-gooders, under the phony rubric of "affordable housing".

It's an all-too-familiar refrain since the beginning of the progressive era.....Economic idiot savant political hacks tried playing God in the marketplace, then blame "capitalism" when all their Utopian do-goodery blows up in their faces.

Sweet, then how do you explain all the upgrades in their value that ended with the derivatives being worth 60 times the value of the original mortgages?

 

[uscitizen]

The "freewheeling" was done at the level of the creation of the mortgages the derivatives traders bought and sold, not anything that they did.

Try to keep up here.

That's like saying the Dutch "Tulip Bulb Mania" of 1637 was the fault of the tulip bulbs.

I wonder how many even know about that?

 

[Vast LWC]

Right...It's all the fault of the people who bought the Pinto, that it blew up when it got hit from behind.

If the owner had claimed the value of that Pinto to be around 2 million dollars,

And then someone else had loaned that person 2 million dollars based on that assumed value...

And then the owner used that 2 million dollars to buy another "2 million dollar pinto".

Then, yes, the resulting loss of 1.99 million dollars would be the owner's fault.

 

[beowolfe]

Huh?

Do not the same human failings apply to the regulators as those in the markeplace?

Of course it does. But just like you don't get rid of the markets because of human foibles, you don't get rid of the regulations because of human foibles.

Nice circular logic.

Are you suggesting that we get rid of markets because of the flawed humans in them? Or are you just suggesting that we get rid of regulations because of the flawed humans in them?

BTW, circular logic is:

Circular reasoning is an attempt to support a statement by simply repeating the statement in different or stronger terms. In this fallacy, the reason given is nothing more than a restatement of the conclusion that poses as the reason for the conclusion.

As you SHOULD be able to see, your use of the term is in error.

 

[Oddball]

Tell me how you get rid of markets.

C'mon, dazzle me.

 

[uscitizen]

Tell me how you get rid of markets.

C'mon, dazzle me.

If they serve no useful purpose then regulate them out.

Kinda like making crack illegal.

 

[Oddball]

Right...It's all the fault of the people who bought the Pinto, that it blew up when it got hit from behind.

If the owner had claimed the value of that Pinto to be around 2 million dollars,

And then someone else had loaned that person 2 million dollars based on that assumed value...

And then the owner used that 2 million dollars to buy another "2 million dollar pinto".

Then, yes, the resulting loss of 1.99 million dollars would be the owner's fault.

Way to totally gloss over the point being made, being that the purchaser of the car bought on both the good faith of the car company and on the good faith of Big Daddy Big Gubmint, in its stupid meddlsome and paternalistic CAFE standards, wouldn't have some potentially seriously life altering externalities.

But then again, leftist party man hacks don't ever consider that their meddlesome proclivities can ever have unintended consequences.

 

[Oddball]

Tell me how you get rid of markets.

C'mon, dazzle me.

If they serve no useful purpose then regulate them out.

Kinda like making crack illegal.

Yeah..."Regulating" crack out of business has been such a smashing success.

Do you ever think before posting such idiocy?

 

[uscitizen]

Right...It's all the fault of the people who bought the Pinto, that it blew up when it got hit from behind.

If the owner had claimed the value of that Pinto to be around 2 million dollars,

And then someone else had loaned that person 2 million dollars based on that assumed value...

And then the owner used that 2 million dollars to buy another "2 million dollar pinto".

Then, yes, the resulting loss of 1.99 million dollars would be the owner's fault.

Way to totally gloss over the point being made, being that the purchaser of the car bought on both the good faith of the car company and on the good faith of Big Daddy Big Gubmint, in its stupid meddlsome and paternalistic CAFE standards, wouldn't have some potentially seriously life altering externalities.

But then again, leftist party man hacks don't ever consider that their meddlesome proclivities can ever have unintended consequences.

did the auto safety ratings agency also rate the car low risk? Like they did with dreivitives and derivitives of derivitives?

 

[Gadawg73]

Dude is right. The Moodys AAA ratings those bundled mortgages received was the big problem.
Government regulations allowing those that did not qualify for a smaller home might have been 7-9% of the problem. Comparing a $160K home that some middle income family got with a little help from the CRA with an adjustable rate mortgage at $850K is the Rush Limbaugh argument but it is invalid.
The guy with the $850K adjustable rate mortgage kept refinancing his home to support his other debt and made 4 times more income than the $160K home buyer. Median home mortgage amounts have never supported the Limbaugh BS. All that was without fact or foundation.
The big problem was the adjustable rate and zero interest loans. Most of those were to upper middle income ahd high income folks and that had nothing to do with Barney Frank or any other government low income rules and regs through Mac or Mae. That is another internet myth.
The big problem was speculation in the real estate market by developersand the banks loaning against that growing speculation. It had to end sometime. Explain how any low income CRA laws had anything to do with that. $ was loaned by banks for raw land to developers for property appraised by the lot. Now that land sits vacant, never developed and worth about one fourth, if that. The commercial market even worse.
Unregulated markets did it. A Republican, Phil Gramm, lobbied and got it in the Gramm, Bliley, Leach Act. Both parties supported it. Anyone that believes the banks sat by willingly and allowed the government to pass laws to force them to accept bad appraisals is a friggin moron.
The banks fucked themselves. They were a large part of it as the commisions were so high they turned and looked the other way.

 

[uscitizen]

Tell me how you get rid of markets.

C'mon, dazzle me.

If they serve no useful purpose then regulate them out.

Kinda like making crack illegal.

Yeah..."Regulating" crack out of business has been such a smashing success.

Do you ever think before posting such idiocy?

And if you get caught with crack you go to jail.
Unless you are in the entertainment industry or a preacher/advisor to Bush.
Pretty much the same thing though.

Traders would not like going to jail.

 

[Vast LWC]

Way to totally gloss over the point being made, being that the purchaser of the car bought on both the good faith of the car company and on the good faith of Big Daddy Big Gubmint, in its stupid meddlsome and paternalistic CAFE standards, wouldn't have some potentially seriously life altering externalities.

But then again, leftist party man hacks don't ever consider that their meddlesome proclivities can ever have unintended consequences.

I'm not glossing over anything.

While the loss of that Pinto is regrettable, the manufacturer of the Pinto has no responsibility for the 1.99 Million Dollar loss, as they did not value the car at 2 Million Dollars to begin with.

The only responsibility of the Pinto owner is the original price of the car. And possibly any injury the driver sustained, which would still have nothing to do with the loss of the 2 million dollars.

 

[Oddball]

Way to totally gloss over the point being made, being that the purchaser of the car bought on both the good faith of the car company and on the good faith of Big Daddy Big Gubmint, in its stupid meddlsome and paternalistic CAFE standards, wouldn't have some potentially seriously life altering externalities.

But then again, leftist party man hacks don't ever consider that their meddlesome proclivities can ever have unintended consequences.

I'm not glossing over anything.

While the loss of that Pinto is regrettable, the manufacturer of the Pinto has no responsibility for the 1.99 Million Dollar loss, as they did not value the car at 2 Million Dollars to begin with.

The only responsibility of the Pinto owner is the original price of the car. And possibly any injury the driver sustained, which would still have nothing to do with the loss of the 2 million dollars.

Both the Pinto and the bad "A" paper mortgages were forced into the marketplace.

Blaming the dealers in and purchasers of them amounts to nothing more than blaming the victims.

 

[uscitizen]

Way to totally gloss over the point being made, being that the purchaser of the car bought on both the good faith of the car company and on the good faith of Big Daddy Big Gubmint, in its stupid meddlsome and paternalistic CAFE standards, wouldn't have some potentially seriously life altering externalities.

But then again, leftist party man hacks don't ever consider that their meddlesome proclivities can ever have unintended consequences.

I'm not glossing over anything.

While the loss of that Pinto is regrettable, the manufacturer of the Pinto has no responsibility for the 1.99 Million Dollar loss, as they did not value the car at 2 Million Dollars to begin with.

The only responsibility of the Pinto owner is the original price of the car. And possibly any injury the driver sustained, which would still have nothing to do with the loss of the 2 million dollars.

Both the Pinto and the bad "A" paper mortgages were forced into the marketplace.

Blaming the dealers in and purchasers of them amounts to nothing more than blaming the victims.

The ratings were not forced. Nor were the derivitives from those bad mortgages.
the market itself did that.

 

[Vast LWC]

Dude is right. The Moodys AAA ratings those bundled mortgages received was the big problem.
Government regulations allowing those that did not qualify for a smaller home might have been 7-9% of the problem. Comparing a $160K home that some middle income family got with a little help from the CRA with an adjustable rate mortgage at $850K is the Rush Limbaugh argument but it is invalid.
The guy with the $850K adjustable rate mortgage kept refinancing his home to support his other debt and made 4 times more income than the $160K home buyer. Median home mortgage amounts have never supported the Limbaugh BS. All that was without fact or foundation.
The big problem was the adjustable rate and zero interest loans. Most of those were to upper middle income ahd high income folks and that had nothing to do with Barney Frank or any other government low income rules and regs through Mac or Mae. That is another internet myth.
The big problem was speculation in the real estate market by developersand the banks loaning against that growing speculation. It had to end sometime. Explain how any low income CRA laws had anything to do with that. $ was loaned by banks for raw land to developers for property appraised by the lot. Now that land sits vacant, never developed and worth about one fourth, if that. The commercial market even worse.
Unregulated markets did it. A Republican, Phil Gramm, lobbied and got it in the Gramm, Bliley, Leach Act. Both parties supported it. Anyone that believes the banks sat by unwillingly and allowed the government to pass laws to force them to accept bad appraisals is a friggin moron.
The banks fucked themselves. They were a large part of it as the commisions were so high they turned and looked the other way.

You are both right in that that was the problem with the Mortgage Industry. A problem that should be addressed. That is true.

However, my point is that the derivatives were an entity of their own, with next to no basis in reality, and it is the derivatives and the credit default swaps associated with them that caused the economic crisis.

For instance, for the sake of argument, let's say we had 30 Mortgages, with a combined value of 6 million dollars.

The derivative of that bundle of Mortgages was valued at 360 million dollars.

Thus one is only loosely associated with the other. The mortgages are based in reality, while the derivative, or at least 356 Million dollars of it, is based on fantasy.

 

[Vast LWC]

Both the Pinto and the bad "A" paper mortgages were forced into the marketplace.

Blaming the dealers in and purchasers of them amounts to nothing more than blaming the victims.

Even when the Mortgages were originally rated as "A", they still had nowhere near the rated value that most of these derivatives ended up having.

The value just kept being artificially inflated again and again, mostly by private firms.

 

[Vast LWC]

The ratings were not forced. Nor were the derivitives from those bad mortgages.
the market itself did that.

"You must spread more Reputation around before giving it to this user"...

Dang it.

 

[Gadawg73]

The Moodys ratings forced?
HAHAHA LOL
Forced with cash from the banks and financial institutions to Moodys.
It is called commissions Dude and the government does not pay them.