White President, Black Heart*

David Weigel | January 18, 2008

I thought Barack Obama's objective assessment of Ronald Reagan's political success would blaze around the liberal blogs and burn out, but I just got off a conference call with Hillary Clinton surrogates scorching Obama about it. Rep. Barney Frank accussed Obama of buying into right-wing frames about small government and the GOP being the party of ideas. "They have one idea," he said: Don't regulate capital at all, ever. "How can you believe that when we have the subprime problem, where the absence of regulation was the problem?"

Tom Edsall of the Huffington Post flipped the question and asked Frank to name the key Democratic new ideas of the last 20 years. "How you combine public sector and private sector activities," Frank said. I thought Oskar Lange had died a while ago, but no, I guess he's still kicking and penning columns for the American Prospect. Frank also argued that liberal Democrats had been right about trade while Republicans were babbling about free markets. "We have now evolved under the leadership of Democrats in particular, a very sophisticated approach: Allowing free trade while at the same time compensating for people who are hurt by it." Also, "if you listen now to best economists on the liberal side, they are much more aware than they were ten years ago, and much more willing to acknowledge, that simple free trade without any enforcements can be very damaging to our people."

Florida Rep. Corrine Brown didn't tussle quite as much with the counterargument, preferring to argue that Obama had endorsed Republican ideas ("like privatizing Social Security?") and Ronald Reagan. "Every time I see a homeless person," she said, "I think about Ronald Reagan. Because it was his programs that first started defunding mental institutions and did not put the support in the community. It is very important that one know the history." She boasted that she didn't vote to rename D.C.'s national airport for Reagan and added, cryptically, that people needed to understand history. "We didn't get there because of smart we are and how good we look but because of the suffering we had to go through to get there."

*Headline explained here.

UPDATE: One point of argument in the blogs seems to be that Obama might really be a secret conservative because his rhetoric is so sing-song and get-along: He won't say mean things about Republicans, the way Reagan said mean things about Democrats. This is moronic. From Reagan's 1980 convention speech:

The time is now to redeem promises once made to the American people by another candidate, in another time and another place. He said, "For three long years I have been going up and down this country preaching that government--federal, state, and local--costs too much. I shall not stop that preaching. As an immediate program of action, we must abolish useless offices. We must eliminate unnecessary functions of government...we must consolidate subdivisions of government and, like the private citizen, give up luxuries which we can no longer afford."

"I propose to you, my friends, and through you that government of all kinds, big and little be made solvent and that the example be set by the president of the United State and his Cabinet."

So said Franklin Delano Roosevelt in his acceptance speech to the Democratic National Convention in July 1932.

This is just smart politics: Win over swing voters and members of the other party with soft rhetoric, then get in office and dismantle their works. It's what makes people like me worry about Obama while we don't worry about the transparently craven Clintons.

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Russ 2000|1.18.08 @ 2:38PM|#

How can a guy who's policy proposals take as much of a stance as his "present" votes simultaneously piss off the Democrats for being conservative and the Republicans for being liberal? This guy is a frickin' genius!

|1.18.08 @ 2:40PM|#

This could be Obama's big break. The biggest problem he is going to have in a general election is people fearing that he is really a closet leftist. This could be his "Sister Soulja moment". Even I have to admit, a guy who counts twits on the leftwing blogsphere as enemies, can't be all bad.

"They have one idea," he said: Don't regulate capital at all, ever. "How can you believe that when we have the subprime mortgage crisis, where the absence of regulation was the problem?"

That's a good point, Barney, but you see, OBAMA DIDN'T SAY ANY OF THAT!!!

GILMORE|1.18.08 @ 2:42PM|#

the whole thing is too fucking stupid. It's Red vs. Blue!! Why do we hate the Reds? Becuase they're the RED team! And the Blue team is forever true!

Forget about ever agreeing with the enemy! Thats why they wear red ties! We wear blue ties!

And both sides hate purple the most! Traitors!

|1.18.08 @ 2:42PM|#

It is incredibly frustrating to hear somebody bash free markets like that. It's also scary since it looks like the dems will be continue to gain more and more power.

|1.18.08 @ 2:43PM|#

Not just the blogs, John.

He's got the blogs mad at him AND the DC Democratic establishment. Now, he can run against "Washington," AND run against "the crazies" at the same time.

Let's see if he can pull it off.

javier|1.18.08 @ 2:45PM|#

How can you believe that when we have the subprime mortgage crisis, where the absence of regulation was the problem?

"Every time I see a homeless person," she said, "I think of Ronald Reagan."

Shit. Sometimes after hearing brain farts like these I am convinced the only way to get this country back is to watch it crash first. I fucking hate liberals (but i'm not a conservatice).

anon|1.18.08 @ 2:46PM|#

"Absence of regulation" - maybe they should apply it to the dimwits who lied on their applications. To the specuvestors who thought housing prices would always rise in double-digit percentage points.

Leftoids, leftoids, leftoids . . . just listen:

Everybody. Saw. This. Coming.

|1.18.08 @ 2:47PM|#

Joe most people like Reagan and remember the 80s pretty fondly. I don't see how you can seriously purge a guy for saying nice things about Reagan. If nothing else it makes Obama's critics seem pretty petty for getting angry about a President who has been out of office for 20 years. It would be as if the Republicans went after Rominey because he said something nice about Jimmy Carter. They would look like loons and it would only make Romney look like a reasonable guy. I think this is doing the same thing for Obama. It is making him look like a reasonable guy. I can't help but wonder if the whole thing is staged to make Obama look better. I just can't believe his critics could be that stupid. But what I know.

Geotpf|1.18.08 @ 2:47PM|#

"GILMORE | January 18, 2008, 2:42pm | #

the whole thing is too fucking stupid. It's Red vs. Blue!! Why do we hate the Reds? Becuase they're the RED team! And the Blue team is forever true!

Forget about ever agreeing with the enemy! Thats why they wear red ties! We wear blue ties!

And both sides hate purple the most! Traitors!"

Well, in theory, he's trying to rise above that, and used Reagan's name as somebody else who did so (hence the term "Reagan Democrats"). I think, in the end, his early stance on the Iraq war will calm down any concerns he has on the left. In establishment circles, I'll bet the only people complaining about it are Clinton supporters.

Of course, trying to get support from Republicans and independents is also a good way to win in the general election, although he still has to bypass the Clinton machine first.

Florida Rep. Corrine Brown didn't tussle quite as much with the ideas, preferring to argue that Obama had endorsed Republican ideas ("like privatizing Social Security?") and Ronald Reagan. "Every time I see a homeless person," she said, "I think of Ronald Reagan."

I don't know why she'd think that. Granted there were no homeless people during the Carter years, and the previously unknown problem didn't rear its ugly head until Reagan got elected. But when Clinton the First was president, he solved that problem, didn't he? All of the homeless in America were taxpaying, self supporting, middle class people until Bush the Second got into power. Everybody knows that.

jackanapestarian|1.18.08 @ 2:49PM|#

"How you combine public sector and private sector activities."

"Allowing free trade while at the same time compensating for people who are hurt by it."

"...simple free trade without any enforcements can be very damaging to our people."

Frank forgot, "Having your cake and eating it too." That's essential in La-la land.

Geotpf|1.18.08 @ 2:51PM|#

"javier | January 18, 2008, 2:45pm | #

"Every time I see a homeless person," she said, "I think of Ronald Reagan."

Shit. Sometimes after hearing brain farts like these I am convinced the only way to get this country back is to watch it crash first. I fucking hate liberals (but i'm not a conservatice)."

Well, in a government actually run by libertarians, we would have a lot more homeless people, wouldn't we?

Nash|1.18.08 @ 2:52PM|#

I'm glad you explained the title. I thought for a minute there I was reading a racist newsletter.

Sulla|1.18.08 @ 2:53PM|#

While I guess the shift to a more service oriented economy and the aftereffects of the GOP "southern strategy" have lessened the power of the so-called "Reagan democrats," you would think that that any serious Democrat contender for the presidency would have some interest in winning that demographic, right? I mean, Obama throws them a frickin' bone and all of a sudden he's throwing the homeless out into the cold.

alisa|1.18.08 @ 2:57PM|#

Confession: Paul Krugman's disdain tilts me more towards Obama. A "less progressive" Democratic candidate? Could be a good thing.

|1.18.08 @ 3:00PM|#

Alisa,

I am not a fan of Obama, but I have to admit the man certainly has the right enemies.

|1.18.08 @ 3:02PM|#

Granted there were no homeless people during the Carter years,

There were bums, though.

And every time I see a homeless person, I mourn for them.

|1.18.08 @ 3:04PM|#

Barney Frank's comment that the subprime mortgate crisis was caused by a lack of regulation is a perfect example of the left's ability to misunderstand the cause/effect of a situation. A lack of regulation had absolutely nothing to do with it. poor business decisions by lenders, and poor financial decisions by borrowers is what caused it. Beautiful thing about markets is, it will never happen again because they both will have learned from the mistake.

|1.18.08 @ 3:07PM|#

"Beautiful thing about markets is, it will never happen again because they both will have learned from the mistake."

Unless of course the lesson they learn is when you do something stupid just whine loud enough and the government will come bail you out.

|1.18.08 @ 3:12PM|#

Beautiful thing about markets is
it'll happen again in 20 years just like clockwork.

|1.18.08 @ 3:13PM|#

Well, in a government actually run by libertarians, we would have a lot more homeless people, wouldn't we?

Probably not, because they'd die off at a much faster rate. Problem solved.

|1.18.08 @ 3:14PM|#

yep.
take away the consequences of poor choices and you get more poor choices.
the principle can be applied to so many aspects of life.
yet so many people in government can't seem to get it.

LD,

You may be on to something. Didn't the Feds solve the immigration problem 20 years ago, too?

Episiarch|1.18.08 @ 3:14PM|#

Thats why they wear red ties! We wear blue ties!

"He is white on the right side. I am white on the left side."

|1.18.08 @ 3:15PM|#

Probably not, because they'd die off at a much faster rate.

crimethink,

I realize your comment isn't meant to be taken any more seriously than mine preceding it, but the correct answer is:

More low-cost housing due to less rental regulation.

Just in case anyone cares.

Legate Damar,
the housing bubble will happen again in 20 years. The credit crisis will not.

Big Kudos for the White Hunter Black Heart reference. Clint Eastwood as John Huston is just kick ass. "Shooting an elephant is a sin, a sin you buy a license and go out and do and that is why I want to do it."

|1.18.08 @ 3:16PM|#

Epi-

Best use of sci-fi to address the real world ever.

'Cept pr0n.

Geotpf|1.18.08 @ 3:17PM|#

Legate Damar-You can regulate rents less without removing public assistance to the poor. A libertarian government would do both; I am favor of the first but not the second.

Scott|1.18.08 @ 3:21PM|#

Tom Edsall of the Huffington Post flipped the question and asked Frank to name the key Democratic new ideas of the last 20 years. "How you combine public sector and private sector activities," Frank said.

Fascism, in other words. It's good that the Democrats are finally taking credit for it. Damn Republicans are always late to the party.

|1.18.08 @ 3:21PM|#

A good portion of the homeless don't want jobs and don't want homes. They would rather beg and live on the street. It really is a lifestyle choice for them. There are a ton of charities out there to help the homeless and anyone who really wants a job and a home will not be homeless for very long. The long term homeless are either mental patients that live on the street thanks to de-institutionalization or what used to be called hobos or bums. The idea that there are millions of otherwise sound minded able bodied people who are on the street because of the evils of the capitalist system is just a myth.

|1.18.08 @ 3:22PM|#

When I moved into the cities from the suburbs eight years ago, I ceased to have any compassion left for the homeless after about six months of encoutering them on a daily basis. 99% have such a sickening sense of entitlement.

|1.18.08 @ 3:31PM|#

The idea that there are millions of otherwise sound minded able bodied people who are on the street because of the evils of the capitalist system is just a myth.

Worry not, my friend. After a Democrat gets eelected president, you won't be reading about the homeless in the NY Times or it's parrots for four years.

|1.18.08 @ 3:32PM|#

You can regulate rents less without removing public assistance to the poor. A libertarian government would do both

I agree. And I think, on balance, they would cancel each other out and we'd have about the same number as we currently do. Not to imply that the number of homeless we have now is minimal, desirable, or the mathematical minimum, but I don't see homelessness, say, tripling (or whatever) in Libertopia.

The costs to the building owner of complying with regulations may not quite equal the amount of money lost by the renters in direct housing assistance, but this is offset by)
1. Lower cost of entry into the rental market by those owning empty non-rental properties
and
2. Lower taxes on the rest of the income of the renter (assuming said example is say, employed unskilled labor.)

Malvolio|1.18.08 @ 3:34PM|#

Florida Rep. Corrine Brown: "Every time I see a homeless person, I think about Ronald Reagan. Because it was his programs that first started defunding mental institutions and did not put the support in the community. It is very important that one know the history."

The big upswing in homelessness came from deinstitutionalization, a big Carter-era program. Doesn't everyone know that? I feel like I'm taking crazy pills here.

dhex|1.18.08 @ 3:34PM|#

i grew up in a fuck reagan family and i still don't see why so many people have a boner for that senile sack of shit.

"We didn't get there because of smart we are and how good we look but because of the suffering we had to go through to get there."

man i've read this quote about four times now and i still don't get what the fuck it's supposed to mean.

|1.18.08 @ 3:35PM|#

"He is white on the right side. I am white on the left side."

For the win. That episode affected me in a positive direction as a child.

R C Dean|1.18.08 @ 3:35PM|#

Well, in a government actually run by libertarians, we would have a lot more homeless people, wouldn't we?

I dunno. Why would we?

We would have just as many mentally ill and the "lifestyle homeless" as we do now.

Taxes would be much lower, so your take-home pay would be better and prices would be lower, making it easier for the working poor to stay off the streets.

With lower taxes and less of a regulatory burden, the business climate would be better, so there would be more jobs.

Where would all these new homeless people come from, exactly?

Oh, and lets not fall for the lie that de-insitutionalization started under Reagan in the '80s. The deinstitutionalization movement started in the '60s.

Enough already with "explaining" the hip reference post-titles.

"They have one idea," he said: Don't regulate capital at all, ever. "

Really? Shit, coulda fooled me. But then again, don't let the facts get in the way of partisan pandering, you fucktard.

|1.18.08 @ 3:37PM|#

Was Ronald Reagan homeless or something?

R C Dean|1.18.08 @ 3:39PM|#

man i've read this quote about four times now and i still don't get what the fuck it's supposed to mean.

We didn't get there because of smart we are and how good we look but because of the suffering we had to go through to get there.

It might help if we knew who "we" were and where "there" was.

Bingo|1.18.08 @ 3:40PM|#

Malvolio: There was an article about that not long ago. It also speculated that the high rates of drug use among the homeless were a form of self-medication. Rather interesting! Could be that you can never fully get rid of homeless people unless you lock them up.

|1.18.08 @ 3:42PM|#

Every time I see a homeless person, I put my hands in my pocket and guard my wallet. Then I wonder what happened in the poor bastard's life that turned him into a drug-addled, drunken loser. But I never think of politicians.
And then I go eat a double heaping of food in my warm home.

|1.18.08 @ 3:48PM|#

The big upswing in homelessness came from deinstitutionalization, a big Carter-era program. Doesn't everyone know that? I feel like I'm taking crazy pills here.

Give the man a kewpie doll. The left liked it for all of the usual touchy feely reasons (not a danger to himself or others), the right liked it (less expense, cutting a social program), Heck I'd imagine that libertarians would support deinstitutionalization for those who weren't serving time for criminal behavior. I would.

Deinstitutionalization is such an ugly word in print. I had to look it up to ensure it was, in fact, a real word.

|1.18.08 @ 3:49PM|#

When I lived in Atlanta, which has the worst bum problem of any city I have ever been to in the US, a local church had a policy of letting the "homeless" sleep in their doorways. I went to a neighborhood association meeting and the police had a chart that showed the crime rates in a five block area before and after the church started letting them sleep on their doorways. Shockingly, assaults, robberies and breakins went from near zero to pretty alarmingly high levels over night. Someone from the church was there to assure everyone it was just a coincidence.

Enough already with "explaining" the hip reference post-titles.

Somebody didn't take their Metamucil this morning.

It's preferable that reason explain them, thereby making us all the more hip, rather than us lamesters remaining lame.

|1.18.08 @ 3:50PM|#

The big upswing in homelessness came from deinstitutionalization, a big Carter-era program

I didn't know it was a Carter-era program. I do remember reading that it was assumed that local shelters would be built but that NIMBYism prevented that. I guess no one was smart enough to see that coming.

|1.18.08 @ 3:51PM|#

J Sub D,

We kicked them out on the street and left them to rot in the name of "mainstreaming them". Actually, if there is one person to blame for that as much as anyone, blame Ken Kesey for making state mental hospitals look like the unecessary spawns of evil in One Flew Over the CoCo's Nest. He also unfairly slandered shock treatments which have been repeatedly shown in scientific studies to actually help people suffering from severe mental illness. No kidding, you can look it up.

|1.18.08 @ 3:54PM|#

I remember when Newt Gingrich praised FDR. Republicans didn't have a cow about that.

takimag[dot]com/site/article/why_the_beltway_libertarians_are_trying_to_smear_ron_paul/

Bingo|1.18.08 @ 3:55PM|#

Odd story: Pulled up to a freeway exit ramp near my apartment. On my left was some older gent holding up a cardboard sign asking for money. On my right was another older gent twirling around an advertisement for the local furniture store's sale. There's a few companies out here that will teach you the proper sign-twirling techniques and you get paid $12 an hour to do the same thing the homeless guy was doing.

The homeless aren't homeless because they are poor and downtrodden, they are homeless because they are outright leeches or mentally ill.

|1.18.08 @ 3:56PM|#

I remember when Nixon praised Wilson. Republicans didn't have a cow about that.

I remember when Dan Quail praised JFK. Republicans didn't have a cow about that either, but Bentson did.

|1.18.08 @ 3:58PM|#

When I lived in Atlanta, which has the worst bum problem of any city I have ever been to in the US

John,

From this, am I to assume that you've never been to San Francisco?

Fluffy|1.18.08 @ 3:58PM|#

I don't want to sound too much like a Paultard goldbug here, but the subprime mortgage crisis is pretty much an artifact of Fed policy from 2001 to 2004.

Interest rates were set artificially low, and easy credit created a bubble which has now burst. Pretty straightforward macroeconomics, really.

If you want the full court Paultard press, I would add that Fed policy in 2001 and 2002 was dictated by the fear that a serious recession might follow the 9/11 attacks, which as we all know were the result of decades of US intervention in the Middle East creating blowback.

So the subprime mortgage crisis is due to the Fed and to US Mideast policy, really. :-)

|1.18.08 @ 3:59PM|#

My brother-in-law would be homeless if he didn't have his sisters to take care of him. It's just because he's too lazy. He wants others to support him.

|1.18.08 @ 4:02PM|#

"John,

From this, am I to assume that you've never been to San Francisco?"

No I haven't but I have heard the stories. Atlanta is pretty bad. Post Kartina I think it might be hitting San Francisco levels.

|1.18.08 @ 4:05PM|#

Deinstitutionalization is such an ugly word in print. I had to look it up to ensure it was, in fact, a real word.

But is cosmodeinstitutionalization?

Gilbert Martin|1.18.08 @ 4:05PM|#

"Barney Frank's comment that the subprime mortgate crisis was caused by a lack of regulation is a perfect example of the left's ability to misunderstand the cause/effect of a situation. A lack of regulation had absolutely nothing to do with it. poor business decisions by lenders, and poor financial decisions by borrowers is what caused it."

That is true, but the salient enabling factor was massive increases in the money supply by the Federal Reserve Bank and other central banks around the world in their attempts to "manage" the economies of their nations. This created a liquidity bubble where two much cash was chasing too few real assets (i.e loans to legitmate borrowers actually capable of repaying them). Institutional investors including pension funds and University endowment funds were reaching for yield in wanting to put that cash to work and were willing to suspend belief in the soundness of those sliced and diced tranches of collateralized mortgage loans. The financial institutions were thus encouraged to give them what appeared to be what they wanted by creating those securities - for a nice fee of course.

It was government that created the macro-economic enviroment that encouraged this behavior to begin with.

|1.18.08 @ 4:08PM|#

"When I lived in Atlanta, which has the worst bum problem of any city I have ever been to in the US"

What! John Rocker didn't straighten that up when he was in Atlanta? We know how much John Rocker hates scum.

kinnath|1.18.08 @ 4:08PM|#

From this, am I to assume that you've never been to San Francisco?

My brother used to tell us stories of wearing "no spare change" buttons and crossing streets to avoid "homeless".

That was 15+ years ago. I don't know if it has gotten better or worse.

|1.18.08 @ 4:17PM|#

Beautiful thing about markets is, it will never happen again because they both will have learned from the mistake.

HA HA HA HA HA HA HA HA HA HA HA HAAAAAAAA!!!!!

You think nobody ever got burned by receiving a loan they couldn't pay for before 2007? You think no mortgage companies ever took a hit for irresponsible lending practices before last November?

A good portion of the homeless don't want jobs and don't want homes. They would rather beg and live on the street. Uh huh. John, give the first and last name of a single homeless person.

|1.18.08 @ 4:19PM|#

"The absence of regulation was the problem" is not a statement about cause.

Why'd the house burn down? The lack of fire trucks was the problem. Everybody who thinks I just said absent fire trucks start fires, please stare while I waive this shiny object around.

Is this really that hard, or are you all just pretending?

|1.18.08 @ 4:20PM|#

"A good portion of the homeless don't want jobs and don't want homes. They would rather beg and live on the street. Uh huh. John, give the first and last name of a single homeless person."

Joe I live in Washington DC, They are everywhere. Go talk to them. Not that ones that are street preaching or swearing at trashcan but the ones of sound mind. The last thing they want to do is work. You can live in denial all you want, but anyone who has been around them knows that to be the case.

Bingo|1.18.08 @ 4:22PM|#

joe, that is a terrible analogy that has no bearing on the subject. However, the condescensions are appreciated as always.

Fluffy|1.18.08 @ 4:25PM|#

That is absolutely not what Frank was saying, Joe.

How can you believe that when we have the subprime problem, where the absence of regulation was the problem?

This sentence clearly is Frank's statement that the absence of regulation "problem" and the subprime "problem" are the same "problem". Coming on the heels of the previous sentence, it is clear that Frank sees the roots of the subprime problem in the absence of regulation of evil capital.

Oops, bad tag.

|1.18.08 @ 4:28PM|#

Let me fix that for you:

Somebody didn't take their Metamucil this morning.*

It's preferable that reason explain them, thereby making us all the more hip, rather than us lamesters remaining lame.

*explanation of Metamucil insult here.

Charlie Chan|1.18.08 @ 4:28PM|#

"if you listen now to best economists on liberal side"

Does Barney Frank really talk like that?

|1.18.08 @ 4:32PM|#

I love reading the comments on this page. It reassures me that people still think.

|1.18.08 @ 4:33PM|#

~~Rep. Barney Frank~~ The Red Queen accussed Obama of buying into right-wing frames about small government and the GOP being the party of ideas.

And sentenced him to be beheaded.

|1.18.08 @ 4:38PM|#

"You think nobody ever got burned by receiving a loan they couldn't pay for before 2007? You think no mortgage companies ever took a hit for irresponsible lending practices before last November?"

I think what the original poster was saying was that the Fed should have learned a lesson about its easy money policy in that it was what caused the housing bubble and the irresponsible lending and borrowing practices. Hopefully, there will be lessons learned from all this. But, unfortunately, the next generation often doesn't learn lessons from the mistakes made by the previous generation. People often don't learn from history or they learn the wrong lessons from history by not learning the true causes of the problems.

|1.18.08 @ 4:41PM|#

Joe,
"the absence of regulation was the problem" IS a statement about cause.

Re: the stuff you said about the credit crisis.
The current crisis has caused the banking system to completely alter their lending standards. I understand the texas s&l scandals but this is a very different problem. The problem being, giving loans to people who can't afford the terms. It won't happen again in this way. Sure there will be more irresponsible lending practices again, but it won't involve giving $400k mortgages to people who make &30k a year.

|1.18.08 @ 4:46PM|#

Barney Frank. Evil capital. Yep, you sure do know a lot about Barney Frank. snort.

John, no one questions that those people exist, but has it occured to you that the most visible professional panhandlers you see, the ones who commute to the gleaming white sections of DC, might not be representative of the homeless population as a whole?

How many of the homeless people you see are children? Because children make up about 1/3 of the homeless in this country.

|1.18.08 @ 4:49PM|#

Um, yeeeeeeeaaaaahhhhhh, I'm going to go out on an limb here and say that the Chairman of the House Financial Services Committee understands that there are things called "borrowers" and "lenders" involved in loans, and that the people who borrowed and lent outside of prudent standards were the initial cause of the problem.

The fact that he's talking about regulating borrowing and lending TELLS YOU that he realizes there are people doing stupid things. That's why he wants there to be regulations.

|1.18.08 @ 4:52PM|#

Pinette,

You're right, it will happen again some other way. When it started to happen this way, people like Barney Frank recognized it, and wanted to set some standards for lending, and for selling mortgage-backed securities.

It's like taking out the trash. Some genius will always come up with a plan to get around the existing regulations that couldn't possibly fail, and a prudent government works to keep up with that.

|1.18.08 @ 4:53PM|#

You think nobody ever got burned by receiving a loan they couldn't pay for before 2007? You think no mortgage companies ever took a hit for irresponsible lending practices before last November?

Packaging sub-prime loans into AAA loan guarantees were not created in a "free market" they were created under the moral hazard of years of government bailouts and competing federally guaranteed sub-prime loans (duh fanny may, freddy mac) and federally insured securities.

Sorry folks blaming the free market under that climate is falling into the realm of frantic delusion.

joe is right that loan agents will not learn from the sub-prime mess (this is a joke...joe is dead wrong about pretty much everything and has no idea how market incentives work)...how can they ever learn anything if they are continually rewarded by the government for bad behavior and protected from the punishment the free market would give them.

|1.18.08 @ 4:55PM|#

"The fact that he's talking about regulating borrowing and lending TELLS YOU that he realizes there are people doing stupid things. That's why he wants there to be regulations."

Because only big government can tell us who we should loan to.

The problem was the easy money policy of the Fed, not the need of the big nanny state to take us by the hand and tell us who we should and should not make loans to.

|1.18.08 @ 5:02PM|#

Because only big government can tell us who we should loan to.

How's YOUR IRA doing, CJ?

You know those people who took out mortgages that were too big? And the companies who made the loans?

Damn right they need the government to regulate their behavior. Some people think they're invincible, some people think it can't happen to them, and some people just don't know very much about the financial industry and figure the bank wouldn't give them a loan if they can't afford it.

|1.18.08 @ 5:11PM|#

if you think the mortgage industry is unregulated, you're a moron.

the loans you want to regulate so badly don't exist anymore, BECAUSE THE INVESTORS WON'T LOAN THE MONEY ANY LONGER.

Barney Frank's subprime regulation bill is a REAL ESTATE CRASH ACT. Let President Hillary sign it into law, if she's stupid enough.

|1.18.08 @ 5:12PM|#

Some people think they're invincible, some people think it can't happen to them, and some people just don't know very much about the financial industry and figure the bank wouldn't give them a loan if they can't afford it.

MORAL HAZARD

Look it up joe you might learn something

|1.18.08 @ 5:14PM|#

Yes, anybody who thinks the mortage industry is unregulates is a moron.

Has anybody met anyone like that?

Yeah, remember before financial regulation, when there weren't any bubbles, speculation, or people getting in over their heads?

Yeah, me neither.

Stop telling me I don't know things, shithead.

R C Dean|1.18.08 @ 5:18PM|#

The fact that he's talking about regulating borrowing and lending TELLS YOU that he realizes there are people doing stupid things. That's why he wants there to be regulations.

The fact that so many people think the government should save someone from being stupid says it all, really.

|1.18.08 @ 5:19PM|#

Has anybody met anyone like that?

No, I haven't met Barney Frank.

Any guess which type of mortgage loan have the loosest guidelines now joe? FHA loans shithead.

Fluffy|1.18.08 @ 5:19PM|#

You know those people who took out mortgages that were too big? And the companies who made the loans?

Damn right they need the government to regulate their behavior.

No, they don't.

Your continued responses in this thread make it absolutely clear that YOU, at least, consider evil capital to be the problem. And so does good old Barney.

People have always taken out loans they can't afford, and companies have always made bad loans. They have typically done so in predictable numbers that were easy to model for and price against. The only way you can get a systemic problem is if credit becomes so loose that the models fail.

Or, more properly, if the models become corrupted. The subprime problem was ultimately a problem of data. A housing bubble created by cheap Fed credit made entire classes of loans appear more creditworthy than they actually were, because borrowers who got into trouble could refi out of it or sell their property into the bubble. After a few years of that, the data the big conduits were looking at told them that subprime loans were a good investment with low default rates, so they made more of them. A lot more.

The only way to prevent this from happening would be to stop the housing bubble from ever stopping. There is no regulatory regime that will stop lenders from making loans that market conditions make it appear are sound. We wouldn't want one even if it were possible.

|1.18.08 @ 5:22PM|#

Not evil, Fluffy. Stupid.

And not "capitalism" in the abstract. Specific people.

But hey, if telling yourself that little story makes you feel better, have at it.

joe, abridged|1.18.08 @ 5:24PM|#

Free people make mistakes, so to prevent that we should enslave them all, fuckwad.

|1.18.08 @ 5:24PM|#

Yes, x, the Chairman of the House Financial Services Committee doesn't know that mortgages are regulated.

See, Fluffy, I don't think x is evil. I think he's stupid, and prone to self-delusion to make himself believe things he wishes were true.

People are like that.

|1.18.08 @ 5:26PM|#

"Enslave, WAAAAAAAHHHHHHHHHHHH!!!!!!!!"

This is the level of discussion about the role of regulation in markets that really demonstrates conservatives' superior grasp of the functioning of the financial system.

Russ 2000|1.18.08 @ 5:37PM|#

Damn right they need the government to regulate their behavior.

Did the SEC get eliminated in the last budget and I just missed it? Did Sarbanes-Oxley get repealed and my employer didn't hear about it?

If the regulators ain't regulatin', then the proper response (if you believe in regulating) is to FIRE THE FUCKHEADS and hire regulators who will regulate. Instead, we get the brilliant idea that what these regulators-who- won't-regulate really need is more regulations to ignore.

|1.18.08 @ 5:39PM|#

Naw, they're still there.

The policymakers just won't do what the people who know what they're talking about tell them needs to be done.

Don't blame this ideological policy-making decision to stay out of the markets on the grunts.

Russ 2000|1.18.08 @ 5:58PM|#

Yeah right. Grunts are never corrupt and there's no wall of silence.

DEMAND KURV!!!!!!!!!!!|1.18.08 @ 6:25PM|#

This is the level of discussion about the role of regulation in markets that really demonstrates conservatives' superior grasp of the functioning of the financial system.

DEMAND KURV!!!!!!!!!!!

|1.18.08 @ 6:42PM|#

joe, once again, there is more to the universe than "conservative" and "liberal". Maybe you would get a rise from dissing "conservatives" if you posted to a conservative blog. If anything, dissing the "conservatives" in the Reason blog is going to make people angry for mis-labeling them "conservative", not whatever trite thing you have to say about "conservatives".

|1.18.08 @ 6:47PM|#

I know, Rex, I got a little ticked off from the crap. "Duh, you don't know ekonomiks."

It gets old. Mea culpa.

I know there are a lot of useful insights from thoughtful economic conservatives, that's why I come here.

Nash|1.18.08 @ 6:55PM|#

"i grew up in a fuck reagan family and i still don't see why so many people have a boner for that senile sack of shit."

I think mainly because his rhetoric was completely radical and totally different than what the American people had been getting for the last 20 years.

He also delivered this message in a conventional way and was really slick on television.

Think Ron Paul but more coherent, charismatic and without as much paleo baggage.

Of course Reagan didn't govern like his rhetoric and he was far more big government than conservatives want to admit but his fan club blames that on his congress.

|1.18.08 @ 7:36PM|#

dhex,

Reagan was not senile or old when he came into office.

For people my age (I assume you're about my age), our image of Reagan comes from about 1986 or 1988. For people a little older, their image of the man was established in 79 or 80, when he was a very different man.

x,y|1.19.08 @ 10:33AM|#

A good portion of the homeless don't want jobs and don't want homes. They would rather beg and live on the street. Uh huh. John, give the first and last name of a single homeless person.

I believe John Stossell did a 20/20 piece on this.

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