Obama on Various Things...

Nick Gillespie | February 14, 2008

A coupla not-good quotes from the official phenom of '08:

"We are not standing on the brink of recession due to forces beyond our control," Obama said. "The fallout from the housing crisis that's cost jobs and wiped out savings was not an inevitable part of the business cycle, it was a failure of leadership and imagination in Washington."

Obama opened his campaign for next week's Wisconsin primary inside a General Motors plant in Janesville, one day after General Motors Corp. posted a $38 billion loss, the largest ever for a U.S. auto company. He criticized the North American Free Trade Agreement, which was signed during the Clinton administration, and offered a series of plans to inject more jobs into the economy.

"You know, in the years after her husband signed N.A.F.T.A, Senator Clinton would go around talking about how great it was and how many benefits it would bring," Obama said. "Now that she's running for president, she says we need a time-out on trade. No one knows when this time-out will end. Maybe after the election."

I smell...intervention in the economy.

Here's a quote that's a little better, though I'm not sure I believe he would have been a voice of dissent in an Senate that voted 77-23 in favor of authorizing force in Iraq:

"It's a Washington where politicians like John McCain and Hillary Clinton voted for a war in Iraq that should've never been authorized and never been waged - a war that is costing us thousands of precious lives and billions of dollars a week," Obama said.

More here. Truth-teller Bill Clinton calls Obama's war stance "the biggest fairytale I've ever seen," and argues that Obama is more like John Kerry when it comes to bombs away. And reason's Jacob Sullum reported a while back that Obama's position on marijuana decriminalization is twitching back and forth like Robert Downey Jr. on a Friday night.

I believe in change, yes I do. But I believe in cash even more.

Comments

DC Boogie|2.14.08 @ 7:55AM|#

Great, yet another imperialist POTUS is on deck.

We're working on quite the streak.

What'll this year make it? 17 straight?

whiskey|2.14.08 @ 7:56AM|#

I smell the housing crisis caused by a failure of leadership in the Federal Reserve System, which is in Washington, pushing for cheap money

the idea that Greenspan slept while Rome burned isn't quite anti-libertarian

dr_dog|2.14.08 @ 8:05AM|#

Funny... in Canada, our populists are saying exactly the same thing about the decline of Canada's auto sector. You would expect that if free trade were a zero-sum game, they'd at least be able to figure out which side was getting all the benefits.

|2.14.08 @ 8:17AM|#

Decent Economics or Decent Foreign Policy....why do I always have to decide which I want to give up for the other.

Judge Crater\'s Ghost|2.14.08 @ 8:19AM|#

I just don't get the whole enthusiasm thing re Obama. Do people STILL not yet realize that pretty words from a politician mean nothing?

I'm afraid to say it, but I think he's going to be our next President. (Still, anything is better than more Cheney/Bush.)

Jozef|2.14.08 @ 8:20AM|#

This is totally off-topic, but please bear with me. I've been trying to figure this question out for a long time, and so far I haven't fully understood the few replies I've gotten back. I'm wondering why does everyone consider Obama black? Granted, I don't know much about the culture of different races, but I always thought that having one parent black and one white made the person a mixed race, not the father's race. In Slovakia, when I studied English back in the 1990s, the word for such people (50% black 50% white) was "mulatto", and as far as I know, they are still teaching it - some news outlets that don't call Obama black call him mulatto. Still, here in the US everybody considers him full-blooded black. Can anyone, please, explain this discrepancy to me? Many thanks!

|2.14.08 @ 8:24AM|#

Single drop rule:

http://www.pbs.org/wgbh/pages/frontline/shows/jefferson/mixed/onedrop.html

whiskey|2.14.08 @ 8:25AM|#

Jozef:

The one-drop rule is an historical colloquial term in the United States that holds that a person with any trace of sub-Saharan ancestry (however small or invisible) cannot be considered white and so unless the person has an alternative non-white ancestry that he or she can claim, such as Native American, Asian, Arab, Australian aboriginal, the person must be considered black.

http://en.wikipedia.org/wiki/One-drop_rule

America's still views race in terms of its history (quelle surprise!)

robc|2.14.08 @ 8:30AM|#

Jozef,

Okay, couple of answers for you - at one time terms like mulatto and quadroon (or whatever it was) were used. It seemed to be a southern, pre-civil war era kind of thing. Maybe somewhat post war too. However, the terms have fallen completely out of use.

Instead, there became a early 20th century "single drop" method. If you have a "single drop" of black blood you are black. This may have caught on due to the fact that most blacks in America are at least partly descended from whites.

Today, more people go with the concept of mixed-race without using the antique terms, but the single-drop mindset still exists. It is how "blacks" "claim" Tiger Woods. He is 1/4 black, I think?

Personally, I think it is all stupid. People are people. Except the Irish.

robc|2.14.08 @ 8:32AM|#

Wow, I was slow on posting the single-drop rule. Thats what I get for carefully planning out which nationality to insult for maximum humor value.

robc|2.14.08 @ 8:34AM|#

Dutch. Dammit, rob, Dutch. Much funnier than Irish.

Sigh, all that time and I still blew it.

|2.14.08 @ 8:35AM|#

Well, the last guy ran on a "humble foreign policy". You see where that got us. This guy can say anything he likes - who knows what he'll actually do?

I seriously think there's a practical limit to how large a functional democracy can be. In our current situation, is there really any way to approach a candidate for high office and hold their feet to the fire? Absolutely not! The average citizen would find himself in jail for attempting to confront his would-be rulers. You might as well flip a coin, or appoint our office holders the same way we pick a Miss America...

True Believer|2.14.08 @ 8:36AM|#

Intervention in the economy???!! Oh no! That would be like intervening in nature to cure cancer or treat burns. The market is a divinely ordained mechanism that must not be interferred with. Plug your ears and scream until this goes away. Argghhhhhhhh!

Sandy|2.14.08 @ 8:42AM|#

I don't know where we're going to get good economic policy this election. I'm not sure at this point that a police state with NAFTA is the kind of tradeoff I could even make, even if I were convinced McCain wouldn't pull a Bush on free trade.

Not that I really expect a Dem administration to roll that back that much, but I'm hoping there would be some marginal reforms, something I'm pretty sure is impossible with a Republican administration.

Jozef|2.14.08 @ 8:45AM|#

Many thanks for the explanation; I'll look into that single drop theory a little more. As for the description, I learned the hard way that our English text books may be a little outdated when I used the term I learned at school "negro", with the first black person I've ever met.

|2.14.08 @ 8:48AM|#

I smell...intervention in the economy.

You smell? Now? Have all the writers at Reason had a head cold all these months? All of you have been pushing Obama, a big government statist (look at his voting record) and now you figure it out?

Your opposition to the war uber alles has led you to this point.

|2.14.08 @ 8:54AM|#

I smell...intervention in the economy.

That stench has been around all the campaigns (except one:).

My question is, is Obama any stinkier on this score than any of the others.


Off topic trivia related to the "one drop" rule.

Homer Plessy (of Plessy v. Ferguson) was picked as the plaintiff in the test case because he was an extremely light skinned mulatto* who the organizers believed would elicit a certain symapathy. In spite of the fact that he lost his discrimination case (over rail car seating) in the 90s, someone who checked the voter rolls for the 1920s found that he was registered to vote as a white man.

It seems that in Louisiana at least some definitions were somewhat flexible.

*until reconstruction such people enjoyed a certain status in Louisiana (many were wealthy slaveowners themselves) but as Jim Crow ginned up the "they're all niggers" rule took effect.

alisa|2.14.08 @ 9:02AM|#

Folks ... he's campaigning in Wisconsin. He wants to win in Wisconsin. He would need populist rhetoric even if he were the free-marketest thing since Hong Kong.

|2.14.08 @ 9:16AM|#

I smell...intervention in the economy.

Hey, our economy is strong enough to withstand Obama's tinkerings. What we can't take is 4 more years of GOP intervention in foreign policy.

Since McCain will be the GOP nominee, and will invade every country he can find on a map if he's Prez, it seems that anyone who believes in restrained government needs to vote Obama should he get the nod.

|2.14.08 @ 9:23AM|#

Jozef,

Ignore that "single drop" stuff upthread. Somebody raised in a white household who grew up thinking of himself as white and being considered white by society would still be considered white if he discovered that he had an African-American grandfather.

Just about all African-Americnans have some European and/or Native American ancestry. Racial categories in this country are only partially dependent on genetics. Obama is considered black because he has African ancestry and calls himself black.

|2.14.08 @ 9:26AM|#

Ohnoes, not intervention in the economy!

I mean, can you image where we'd be today if the Fed had made income verification mandatory for mortgage companies?!?

I'll tell you, it would be as horrible as the soup lines that followed the passage of Bill Clinton's economic program.

|2.14.08 @ 9:28AM|#

If you read his speeches rather than listen to them, Obama is the most relentless victimologist I have ever seen; worse than Edwards. It is so over the top it would be laughable if he wasn't so charming in delivering it. It is one of the great rhetorical tricks of the last 20 years that Obama has successfully claimed to be the candidate of hope when the substance of everything he is saying is a relentlessly depressing view of America. It is the exact opposite of Reagan's morning in America, the American people can do anything if we just get out of their way message. Instead it is America is full of powerless victim who can only be saved by Obama. If you listen to what he is saying, it is no surprise he has a messianic quality to his campaign. At heart, it is really about Obama and his ego and his charisma solving all of our problems.

Recently, I read a very interesting book by Norman Kelley called "Head Negro in Charge". It takes apart black politics and leaders like Al Sharpton and Jessee Jackson arguing that they never offer any substance or any solutions. He describes it as a "charismatic road show signifying nothing". Obama in many ways is the "Head Negro in Charge" syndrome brought to mainstream politics.

|2.14.08 @ 9:32AM|#

Your opposition to the war uber alles has led you to this point.

Yeah, libertarians shouldn't be distracted by our government causing the deaths of hundreds of thousands of foreign civilians and wasting a trillion dollars. They should focus on the real issues like capital gains and tax reform--ya know, things that can never be undone if done poorly.

|2.14.08 @ 9:34AM|#

John | January 27, 2008, 10:57pm | #

The Clintons are like the abusive spouse of pants wetting liberals like Chait. The Clintons made feminists into hypocrites by Bill's womanizing. Now they are going to slime Obama as a black candidate and torpedo the most charismatic progressive candidate since Kennedy.

|2.14.08 @ 9:40AM|#

Joe,

He is the most charismatic progressive candidate since JFK. I am not a liberal so I find his ideas and sollutions to be completely lacking in substance and optimism. If I were a liberal, perhaps I would agree with him.

|2.14.08 @ 9:43AM|#

I guess I should make it clearer..

John | January 27, 2008, 10:57pm | #

The Clintons are like the abusive spouse of pants wetting liberals like Chait. The Clintons made feminists into hypocrites by Bill's womanizing. Now they are going to slime Obama as a black candidate and torpedo the most charismatic progressive candidate since Kennedy.

John | February 14, 2008, 9:28am | #

If you read his speeches rather than listen to them, Obama is the most relentless victimologist I have ever seen; worse than Edwards. It is so over the top it would be laughable if he wasn't so charming in delivering it. It is one of the great rhetorical tricks of the last 20 years that Obama has successfully claimed to be the candidate of hope when the substance of everything he is saying is a relentlessly depressing view of America. It is the exact opposite of Reagan's morning in America, the American people can do anything if we just get out of their way message. Instead it is America is full of powerless victim who can only be saved by Obama. If you listen to what he is saying, it is no surprise he has a messianic quality to his campaign. At heart, it is really about Obama and his ego and his charisma solving all of our problems.

Recently, I read a very interesting book by Norman Kelley called "Head Negro in Charge". It takes apart black politics and leaders like Al Sharpton and Jessee Jackson arguing that they never offer any substance or any solutions. He describes it as a "charismatic road show signifying nothing". Obama in many ways is the "Head Negro in Charge" syndrome brought to mainstream politics.

So, John, when did "slming Obama as the black candidate" and "turning him into Jesse Jackson," like Bill Clinton did, become ok?

|2.14.08 @ 9:43AM|#

The one drop rule is pretty silly. My son was born in TX and is 1/4 asian. He looks white, my wife looks almost white, and there isn't going to be much in the way of minority culture in his upbringing. But according to TX he was a "non-white" birth. The way we are all mixing race is going to go the way of white ethnicty (italian, irish, ect), just something for the old folks to cling to.

|2.14.08 @ 9:45AM|#

"I smell...intervention in the economy."

You just figured out that Obama is a liberal? Heck, that is why this ex-libertarian is voting for him.

Christopher Monnier|2.14.08 @ 9:47AM|#

Obama could be pandering...

|2.14.08 @ 9:50AM|#

"So, John, when did "slming Obama as the black candidate" and "turning him into Jesse Jackson," like Bill Clinton did, become ok?"

When I read his speeches and realized none of them have any substances beyond victimology and the great savior Obama coming to save us. He is not like Jesse Jackson in that Obama does not play the race card. But he is like Jackson and Sharpton in that he offers charisma and very little substance. In that sense, Obama is very much in the tradition of Jackson and Sharpton.

|2.14.08 @ 9:51AM|#

I smell the housing crisis caused by a failure of leadership in the Federal Reserve System, which is in Washington, pushing for cheap money

It wasn't cheap money that caused the "housing crisis", it was lenders tossing out the window the accumulated wisdom of decades re: qualifications for mortgages.

As to the term "housing crisis" - as far as I know, there is no sudden downturn in affordable housing. Indeed, the term "housing crisis" is generally refers to the way housing prices in some markets are falling, which would seem to increase, not decrease, the stock of affordable housing.

Whatever you want to call the current correction in the housing and financial sector, it isn't a housing crisis.

Dangerman|2.14.08 @ 9:52AM|#

...I mean, can you image where we'd be today if the Fed had made income verification mandatory for mortgage companies?!?

I'm pretty sure that the companies that didn't use income verification are paying for it now. Why not enforce laws against providing fraudulent information on loan applications? The person seeking the loan is the one who committed the crime, not the lender for making a poor business model/decision.

|2.14.08 @ 9:59AM|#

Um. I seem to remember a Gorge W Bush coming into office in 2000 promising to focus on restoring civility to the governent and reforming social security and having a 'humble' foreign policy.

that would be 0-3.

People say things that they need to say to get into office. Especially with Obama needing to deliver a KO to Clinton, things get said. I understand that.

But if you sit down and read his books, and you look and see who his primary policy advisors are:

1) Austan Goolsbee on free trade:

"Krizner: Do you believe that current trade policies, in terms of our key trading partners, are flawed? Has free trade essentially helped to weaken the U.S. economy?

Goolsbee: Look, those are two totally different questions. I'm an economist, so you know I'm going to say "no" to the second question -- open markets are good. But I don't think it helps when you open up trade agreements and see that they're 2,000 pages long, and they look just like the tax code -- that the first three pages are about opening markets, and then the next 1,997 pages are loopholes, giveaways, special protections for individual industries. I mean, that's getting us pretty far from the case for open markets."

That sounds pretty much like what most writers of reason might say..

2) David Cutler on Healthcare:

""You can enroll them," Cutler replied, "and then forcibly collect the premiums. That's one way to solve the problem. But it's not necessary to do that."

"A better approach is to do everything possible to make it affordable and available. When it is, almost everyone will have it."

Again - sounds pretty good to me instead of the 'Mandate or die' position of hillary or the 'dig your head in the sand because everything is fine' position of most Republicans..

Jeff Liebman - who was one of the key advisors to Clinton's campaign to reform welfare and a proponent of Social security reform. Two things that certainly are agreeable to most libertarians.

|2.14.08 @ 10:00AM|#

Unfortunately, we are going to bail out the lenders who approved loans to people who couldn't pay them back. Our fearless leaders are going to provide "relief" to the poor, oppressed, borrowers who might otherwise be foreclosed; they will then pass the "relief" directly on to the lenders. Much like, when you were a little kid, your dad handed you a dollar bill to give to the guy in the ice cream truck.

|2.14.08 @ 10:02AM|#

The only thing wrong with this post is that all the economic evidence points to the fact that the housing crisis is directly caused by intervention in the economy.

Interest rates were kept low specifically to reduce wage increases. American corporations however still dispensed the pay raises, but supported by greenspan, they instead channeled that money directly into the 10% of the company, so eventually there would be a snap back.

Mapping shows this, I don't care about income inequality per se, after all I don't live in Rio in Brazil, only government jiggered wage inequalities.


This is not anti-market, only anti-corporation (I know, there are still people who believe that the gov and corps in the US are not interchangeable, however, tracking the flux between corporate officers and government officers, and the way those officers move flawlessly back and forth indicates that linkage).

Not that Democratic intervention is a rosey idea. It's just that it's a little suspect to suggest that it's a horrible that the dreaded democrats are so bad on this when the precious small government conservatives are just as willing, and likely, to do the same.

And if libertarians don't lean towards big government republicans and their big gov policies, than dogs don't lick their....

|2.14.08 @ 10:03AM|#

John,

You're looking for a bit of substance? Go over to your nearest bookstore and pick up Obama's two books. Some 700 odd pages of substance there waiting for your perusal.

|2.14.08 @ 10:05AM|#

reforming social security

Now I remember why I voted for that dickbiter in 2004! He did make a halfassed effort at it though. That's gotta be worth something.

|2.14.08 @ 10:05AM|#

He is not like Jesse Jackson in that Obama does not play the race card. But he is like Jackson and Sharpton in that he offers charisma and very little substance.

If he isn't playing the race card, he isn't like Jackson and Sharpton. The charisma over substance thing just makes him a politician, just like [insert name of elected politician] and [insert another one]. (And are you really saying Sharpton has "charisma"?)

|2.14.08 @ 10:14AM|#

Mortgage crisis = stupid people taking out loans, stupid people granting said loans and more stupid people purchasing those loan packages. I must be insensitive expecting folks to be accountable for their own mistakes.

One other painful (for me) point to make. In spite of what you may gather by reading the gloom and doom about the auto industry, we still make cars in the US. The big 2.5 and the UAW have only themselves to blame for record losses. layoffs and buyouts. I love SE Michigan a lot, but any bailout of the domestic auto industry is just going to cost all Americans, many of whom would love UAW wages and work rules.

Whiskey|2.14.08 @ 10:14AM|#

Lawrence | February 14, 2008, 10:02am | #

I mean, hell, remember, corporations are per se government interference in the free market. I never agreed that their investors could limit their liability!

Jesse Walker|2.14.08 @ 10:14AM|#

Have all the writers at Reason had a head cold all these months? All of you have been pushing Obama

On what planet?

|2.14.08 @ 10:15AM|#

What happened, Jesse? Didn't you get the memo?

|2.14.08 @ 10:16AM|#

Well, I'm not voting for him. Or praying to him. Or buying his latest, Grammy-winning CD.

|2.14.08 @ 10:23AM|#

Auto Mfrs:

I like bashing Nardelli as much as the next guy (maybe more), but if Chrysler actually does what they have been talking about, lately- focusing on efficiency, and abandoning the fruitless pursuit of "market share" by overproducing cars and then having to bribe customers (and rental companies) to take those cars off their hands- they might come out of this as a profitable company.

And then Cerberus will throw a big IPO party.

|2.14.08 @ 10:34AM|#

And General Motors should be parted out.

|2.14.08 @ 10:38AM|#

Well, I'm not voting for him. Or praying to him. Or buying his latest, Grammy-winning CD.

Or, as the T shirt said re: Huckabee: I already have a saviour. What I need is a President.

|2.14.08 @ 10:50AM|#

And General Motors should be parted out.

And the resulting companies should just refuse to negotiate with the UAW.

"Go on strike. We'll hire non-union workers at 80% of your demands and then turn away thousands. And we won't fire them when you finally settle, these will be permanent workers."

|2.14.08 @ 10:52AM|#

I seem to remember a Gorge W Bush coming into office in 2000 promising to focus on restoring civility to the governent and reforming social security and having a 'humble' foreign policy.

Me, too. Down the memory hole, dude.

|2.14.08 @ 10:54AM|#

Also my apologies for being off-topic, but I would like to say thanks to Jozef for raising this question and of course to all those in depth responses, because this same issue has been bothering me for the past few weeks. The term that I learned to describe someone that is half white and half of SSA decent was "half-caste" - maybe this is not politically correct any longer? Yet this "one drop rule" honestly scares me - especially since I am German and believe that the entire world should learn from the atrocious mistakes we made? Maybe this also explains why Germany is now by 82% for Obama and everyone is just thrilled about your election! (sorry guys, just the truth :- ))

Before anything is said, I would like to admit that I would have voted for G.W. (and I like him!) - even if I do not agree with the foreign policy of the US or actually not with "our pretence" as well. As a scientist, it seems to me that Western "politicians" in general seem to ignore any scientific evidence, when it comes to dealing with different cultures. Subsequently even though I do highly respect John McCain, his idea of staying in the region for the next 100 years is extremely counterproductive and will certainly not help the US economy in the long run. Don't you feel that we (all of us) urgently need to seek solutions to decrease our dependence on oil and get our politicians back on track to restore our values?

A simple example showing that we are not only talking about the US, but need to see this issue within a greater context.

1.5 years ago I became the victim of torture in Dubai (the UAE), just because I meet with a local human rights activist (a professor of constitutional law) and organized a workshop on Islam & democracy in Norway. I am still suffering from PTSD and my government conveniently ignored this incidence, for purely economic reasons. Yet, it is exactly this so called "economic friendship" that is supporting terrorist funding. (this has already been proofed by scientists)
Also the US is supporting this country, despite this fact, the dictatorship, and those numerous HR violations.

Don't you feel that it is about time that we stop playing this "foreign policy" game and let money decide what is "ethical", while US soldiers are risking their lives in those places?

|2.14.08 @ 11:03AM|#

Perry, if Obama's advisors are saying those things, and he listens to them when sending recommendations to Congress for legislation, then that's not too bad. But, if instead, a Democratic Congress sends him their own versions of universal healthcare and economic control packages, and he signs them, that's very bad. I know he's got charisma, and from a world view of America's image as Head of State he can be very good, but he better be tough when the bills hit his desk if they suck. I worry he will compromise too much. I hope he doesn't because I think he'll be our next President.

|2.14.08 @ 11:07AM|#

Andy, I don't understand. You like G.W. yet you don't like our relationship with middle eastern dictators? Who do you think leads the way in perpetuating those relationships?

|2.14.08 @ 11:16AM|#

Andy,

Mulatto is the term most educated Americans would use to describe anybody outside America who is part white and part black. Americans wouldn't get in to specifics based on percentages. South Americans, on the other hand, do. They have lots of differnt terms for mulattos based on the exact shade of color the particular person is. That's kind of like the way things were in the South before the Civil War (though they used percentage of black ancestors rather than skin tone) when terms like quadroon and octoroon were common. None of these terms, including mulatto, are used by Americans to describe Americans anymore. When a lunatic tyrant slaughters half a million people it tends to harden attitudes and erase nuance. After the Civil War, anybody with noticable black heritage became a nigger, period. That's why the 1/4 black Tiger Woods is "black" and the the 1/2 Barak Obama are black yet Adrianna Lima is "mulatto".

ed|2.14.08 @ 11:45AM|#

Obama is savvy enough to pander--er--cater to his audience du jour. But does he really mean it? What if he promises massive, heavy-handed intrusion into the private affairs of private citizens, and those citizens respond with, "Hell yeah!"? Then we'll get what we deserve, and the libertarian "movement" will prove to be an illusion.

|2.14.08 @ 11:47AM|#

When I read his speeches and realized none of them have any substances beyond victimology and the great savior Obama coming to save us.

And in a genuinely stunning coincidence, this happened at exactly the same time that the "Obama is like a scary black politician" line ceased to be uttered by the Clintons, and began to be argued by Republicans.

I'm pretty sure that the companies that didn't use income verification are paying for it now. Why not enforce laws against providing fraudulent information on loan applications? The person seeking the loan is the one who committed the crime, not the lender for making a poor business model/decision.

If punishing bad guys is what's important to you, that's fine. If avoiding a recession and the widespread damage to the housing, construction, and credit sectors we're seeing is what's important, then pointing to the fact that the dumb lenders are suffering too is of little solace.

|2.14.08 @ 11:57AM|#

You're looking for a bit of substance? Go over to your nearest bookstore and pick up Obama's two books. Some 700 odd pages of substance there waiting for your perusal.

John has no interest in substance. What he is interested in is bashing whomever is in the way of the next warmonger-in-chief.

|2.14.08 @ 12:05PM|#

seems to me that Western "politicians" in general seem to ignore any scientific evidence, when it comes to dealing with different cultures.

What does scientific evidence have to do with dealing with cultures?

Yet, it is exactly this so called "economic friendship" that is supporting terrorist funding. (this has already been proofed by scientists)

How can scientists prove that?

|2.14.08 @ 12:12PM|#

It is not punishing bad guys, there is no moral element to the current housing crisis. Some investors and business made implicit bets that the housing markets would continue to appreciate, these bets were wrong and they have paid the financial consequences.

These businesses made terrific profits when things were goodm and are now suffering that times are bad. That is life.

The businesses with some viable portion, Countrywide, MBIA, will find some willing buyer. Others will go into bankruptcy. That is the way the free market operates. Despite whatever short-term economic disturbance we are in, in the medium to long-term the economy will be fine.



Short-term efforts to stimulate the economy will help, but lead to long-term debt and inflation. I would prefer that we allow the economy to suffer in the short-term, say 12-18 months. Then have the long-term hangover of debt and inflation that will occur from overly stimulative policies.

|2.14.08 @ 12:33PM|#

Some investors and business made implicit bets that the housing markets would continue to appreciate, these bets were wrong and they have paid the financial consequences.

And so is everyone who owns a home or a 401k, whether they took out a stupid loan or not. And we were finally coming out of the lousy economy and heading into the high area of the business cycle.

But hey, some of those lenders are suffering, too. So it's all good.

|2.14.08 @ 12:35PM|#

Does every bad investment require a safety net? Does that apply to poor people and rich people alike? What kind of behavior do we want to encourage, exactly?

Tony Monterastelli|2.14.08 @ 12:46PM|#

Don't blame Obama. He's just doing what Democrats do.

Blame the Republicans. It's their job to put up a candidate who can articulate the other side of the argument.

|2.14.08 @ 12:50PM|#

Like a lot of folks I have a 401 (k) and as long as you did not purchase securities in those companies that were most affected by inflted market conditions. I.E. making the same bet that housing prices would continue to rapidly appreciate, you are fine.

There might be a short-term decline in your portfolio's market value, but right now is a terrific time to put your money in the market. We are finally getting to a period where good companies are trading for reasonable prices. I am actually quite happy for the correction.

Similarly, if you own a house and you see a short-term decline. So what. If you financed your home with a normal 30 year of 15 year mortgage, short-term price movements are basically irrelevant to your life.

If you purchased a home with the intention of flipping it 12 months later for a 200% return on your equity, sure you are screwed. That is the bet you made.

Same thing happened to people who bet were heavy dot com buyers 9 years ago. I have sympathy, but don't believe there should be any bailout.

The private sector will take care of the banks, bond insurers and brokers who are in trouble. I would go further to say that buyers in securities today will see terrific returns in the future.

Jeff S.|2.14.08 @ 1:05PM|#

"I mean, can you image where we'd be today if the Fed had made income verification mandatory for mortgage companies?!?"

Joe, assuming you are in favor of the above, were you in favor of it in 2003? How about in late 1999? In 1988? Stated income loans existed then but were much less common.

How about no- or very-low downpayment loans? Were you in favor of regulating this mortgage product in 2003? 1999? 1988? They too existed then.

Do we know for certain that when housing values stabilize that they will be more or less where they would have been had the government been more involved in dictating loan terms by lenders?

Should I be able to make a mortgage loan to my friend without verifying his income?

What should the government have been doing in 1995-2000 to prevent the NASDAQ from hitting 5046?

|2.14.08 @ 1:20PM|#

I mean, can you image where we'd be today if the Fed had made income verification mandatory for mortgage companies?!?

Millions of people wouldn't have homes they owned?

|2.14.08 @ 1:20PM|#

Or co-owned with a bank. Still better than renting.

|2.14.08 @ 1:40PM|#

I mean, can you image where we'd be today if the Fed had made income verification mandatory for mortgage companies?!?

Only employees would get mortgages? Because standard income verification either doesn't count or drastically discounts self-employment income.

|2.14.08 @ 1:48PM|#

There's an argument that the government's not allowing lenders to price subprime loans according to risk--without a rate ceiling, that is, or at least without one lower than the state usury rate--may have contributed to the subprime component of the mortgage crisis. Lenders had two choices when the rates were capped--don't make loans to riskier borrowers or make the loans but at a rate that is too low. The former option wasn't really there, because lenders can easily run afoul of laws preventing disparate impacts in their lending behaviors if they refuse to make loans.

There's also a school of thinking that the Fed contributed to all of this by artificially keeping rates too low. And there's the lovely contributions of Fannie and Freddie.

|2.14.08 @ 1:49PM|#

Not to excuse stupid borrowers and lenders, of course. I'm just suggesting that more government action might be less useful--and, perhaps, more harmful--than some would think.

|2.14.08 @ 2:51PM|#

Or, as the T shirt said re: Huckabee: I already have a saviour. What I need is a President.

Or, similarly for Hillary: I already have a mother. What I need is a President

|2.14.08 @ 3:08PM|#

Clearly the solution to the subprime debacle is New Deal version 3.1. Let's get some good old-fashioned Keynesian stimulus going--build some little bridges over creeks in Bumfuck, Arkansas--and that should only take, what about six years to get the economy humming again, just like the first time it was tried?

Most of the people looking at huge losses in their 401(k)'s had 30% or more allocated to the financial sector, even AFTER the warning signs started turning up last July. If they'd been reading the Austrian market analysts I read (Daily Reckoning, Minyanville, Bill Fleckenstein), they would have had gains last year and be about breakeven this year. So yeah, as far as I'm concerned, they can go pound sand.

|2.14.08 @ 3:18PM|#

You love Obama, then call your senators and urge them to Vote for S.2433 Global Poverty Relief. This Obama-sponsored bill will turnover 0.7% of the US GNP to the United Nations to fight poverty, an amount estimated at $845 Billion over a 13-year period. Such a great idea! The UN is so effective at things like this. And where is Obama getting this money? Increased taxes on Coprations and the "wealthiest among us". Guess what, if you have a good job, this means you.

The media keep comparing him to JFK. However, he actually reminds me more of Hitler in his early rise-to-fame days. Hitler made the Germans feel good again too.

Good Luck to you all.

|2.14.08 @ 3:22PM|#

You know, the Nazis had pieces of flair that they made the Jews wear.

.|2.14.08 @ 3:55PM|#

I call Godwin.

Jennifer|2.14.08 @ 4:43PM|#

I mean, can you image where we'd be today if the Fed had made income verification mandatory for mortgage companies?!?

It's in any company's best interest to only make loans to folks who actually have a snowball's chance in hell of paying them back. If a mortgage company is too stupid or too greedy to do this, why should we have a law forcing them to do so? Let the stupid or greedy companies go bankrupt. And bring fraud prosecutions against the people who got mortgages only by lying about their incomes. Simple, easy, and we don't need to invent a new federal bureaucracy to do it.

|2.14.08 @ 5:04PM|#

Lily -

Where did you get the idea that the Global Poverty Relief bill would hand over the money to the United Nations? The text of the bill says nothing of the kind.

Now, I am as skeptical of "big plan" global poverty schemes as anybody, but the bill certainly does not hand over billions to the United Nations.

|2.14.08 @ 5:07PM|#

Back in my banking days, it was clear that there were people--like our friends at ACORN--who wanted nothing less than socialized lending. If not to the extent of actually replacing private lenders with the government, they at least wanted to force lenders to make prime borrowers pay higher rates to subsidize subprime (or low income) borrowers.

|2.14.08 @ 5:13PM|#

It's in any company's best interest to only make loans to folks who actually have a snowball's chance in hell of paying them back. If a mortgage company is too stupid or too greedy to do this, why should we have a law forcing them to do so? Let the stupid or greedy companies go bankrupt.

No, no, no, Jennifer, this is all wrong. Keynes taught us that we have to solve all such problems with more and more cheap money and government spending, growing forever and ever. I mean, we can't just *allow* a recession to happen. People would have to cut back on things and start saving! They might even have trouble finding a job for a year or two! The horror! The horror!

|2.14.08 @ 8:00PM|#

If we could tap libertarian denial as an energy source, we could solve global warming tomorrow.

Have any of you people noticed that WE'RE GOING INTO A RECESSION BECAUSE OF THIS? Not a natural, excess-capacity-leading-to-slackening-demand, business cycle recession. No, we were coming out of one of those. We're supposed to be on the upswing right now.

Yeah, mortgage companies and people who aren't as smart or moral as you; that's who's suffering here. I mean, it's not like a deep, extensive recession that kills the housing sector is going to make it any harder for poor people to buy homes or anything.

If you don't have a solution, there can't be a problem. Get ready to drink, everyone, because I'm popping the cork on a big old jug of "This is why libertarians don't win elections."

Freaking ostriches. Yeah, sure, market discipline will solve everything. I mean, Lord knows the market never sent any signals that lax lending procedures were risky before 2007.

|2.14.08 @ 8:21PM|#

FatDrunkAnd Stupid,
Thanks for the explanation! I will integrate this newly acquired vocab into my future communication attempts :- ) When it comes to Latin America, I was actually aware of this "strange" differentiation and of course also noticed that there seems to be a distinct "class" categorization of human beings by their heritage in those nations. Being a blonde German, I suddenly got treated a lot better than my senior Pakistani colleague (and this by highly educated folks) - this has never happened in the States. (Thank God!)

Nick,
what I tried to say was that I like "the person" G.W. and obviously a lot of US citizens did as well (otherwise how did he get to be in the White House for two terms? You guys have a tendency to look at the personality, rather than at the issues - don't tell me that you voted for him, because of his IQ) not the "G.W. and friends" combination (or power elites) that is perpetuating those relationships. But I also tried to emphasize that "we Europeans" are doing exactly the same (keeping a lower profile though). :- (
Moreover we are not only talking about the Middle East - I did my Ph.D. on Nigeria and it is the same scandalous déjà vu.

If I understood US politics correctly, there seems to be strong evidence that the so called "most powerful man in the world", seems to have a lot less "actual power" than for instance Gordon Brown or Angela Merkel. Most Germans somehow internalized the distorted idea that G.W. is dreaming of attacking some nation at night and will give the order while having pancakes in the morning! Nevertheless that same "establishment" is not really going to vanish after the election and which of your candidates will have the courage to really clean up and try a more humanitarian approach?

Will John McCain remember all those years he spend as a POW and take a closer look at the ongoing human trafficking in some countries, before being "best buddies" with megalomaniacs. Will he understand the urgent need for Western nations to
highlight the importance of reformist opinions in those troublesome countries and give them international forums? And finally will he allow the US public to know the truth about what is happening in those countries, instead of running a propaganda campaign that will eventually cost many innocent lives?

I have been there and can assure you that nothing is getting better and that there will never be a real democracy in Iraq (unless you will exchange the entire population) - at least not in the next 100 years. This "dream" is conceptualized around the assumption that Western-derived standards of conduct, in other words the normative concept of "good governance" and "democracy", will be adopted in non-Western politico-cultural contexts. No chance - no matter how long we will stay in the region.

Joe,
How do you expect Obama to add some substance to his speeches? The majority of people would have no clue what he is talking about! Just ask yourself the question, why so many highly educated people are voting for him? You will find a correlation to the substance … :- )

Hector|2.14.08 @ 9:58PM|#

joe,

I mean, it's not like a deep, extensive recession that kills the housing sector is going to make it any harder for poor people to buy homes or anything.

Where did that recession come from? The economy is still strong. A decrease in the price of houses will make it easier for poor people to buy them. "Kills the housing sector" applies to real estate agents, speculators, and developers, not buyers.

TallDave|2.14.08 @ 11:31PM|#

I'm mystified that so many so-called libertarians still think giving Iraqis some semblance of basic rights like voting, free expression, freedom of assembly, and the right to own things like cellphones, cars, and generators was a mistake or not worth the cost.

I suppose there's a nativist argument that it didn't do America any particular good, given the absence of the expected stockpiles of WMD and our failure to steal their oil. Still, a war that gave similar rights to a few million transplanted Africans on the grounds that "all men are created equal" means what it says is now almost universally deemed worth the price of a few hundred hundred thousand lives -- though, then again, I've heard that wasn't the sentiment of most at the time.

TallDave|2.14.08 @ 11:39PM|#

If we could tap libertarian denial as an energy source, we could solve global warming tomorrow.

If we could harness the dismal power of leftist negativity, we could dim the Sun and create a new Ice Age.

Have any of you people noticed that WE'RE GOING INTO A RECESSION BECAUSE OF THIS? Not a natural, excess-capacity-leading-to-slackening-demand, business cycle recession. No, we were coming out of one of those. We're supposed to be on the upswing right now.

In point of fact, the United States has not met the definition of "recession" in 17 years, 4th qtr GDP was just revised up sharply due to a previously undetected export boom, and most economists do not believe we are in or heading into a recession now.

I could go on about unemployment and inflation being at historic lows, but why bother starting the obvious? Now, if you'll just take off the crap-colored glasses, you'll find this reality thing actually looks pretty good without them.

Kevin Carson|2.14.08 @ 11:40PM|#

NAFTA *is* "government intervention in the economy."

TallDave|2.15.08 @ 9:01AM|#

If avoiding a recession and the widespread damage to the housing, construction, and credit sectors we're seeing is

Again, you're missing the point of what a market does.

The damage was not done when the values of those subprime-backed securities fell, any more than the damage was done in 1929 when the stock market crashed. In both cases, the damage had ALREADY happened; what you're trying to "fix" is the market's recognition of those problems.

For decades leftists told us needed to find a way to lend money to the poor, because they were missing the American dream, two Americas, etc. Subprime lenders did, by ignoring the credit risk factor, and now we reap the harvest of another socialist failure.

Andy|2.15.08 @ 9:55AM|#

TallDave,
Are you sure that you are not the one living in mystified denial?
Reading your comment reminds me of all those conversations that I have had with the US military in Kuwait and elsewhere. Well, at least the majority of them believe that they are fighting for a worthwhile cause and that is really irritating. (and sad!)
In line with their illusions, you are talking about basic rights like voting, freedom of expression, freedom of assembly, etc. and from your comment I can deduce that you really believe that you have brought those HRs to that region. Unfortunately it seems that you know very little about this part of the world, little about Islam, little about Arab culture and about development concerns in general.

In this respect, let me remind you that owning cellphones, cars, and generators is not development per se, but merely the accumulation of some material assets. You do not measure development in such terms! Moreover we "the Western World" cannot impose our values and our culture onto non Western environments - change needs to be endemic!! In other words, if a society wants to change, they will have to do it by themselves and we need to urgently respect the fact that they do not want us there. (Not in Iraq, not in Saudi, not in Afghanistan, not in Sudan or elsewhere (not us Germans and not you guys either - none of us!) For John McCain to compare the situation to US forces being in Germany or Japan, is just ridiculous - we are talking about two totally different scenarios here.

What is really disturbing is that I am just wondering where you are getting this distorted picture from. Please take a look at history and see where such populist
propaganda has brought mankind! My grandparents generation believed our leaders and see what we have done - the shame will never go away - there is no need for such things anymore in the information age. Take a look at numerous blogs and discuss this with locals from the region - they will tell you the unveiled reality. (If they have the courage, because it may get them directly into prison - Reporters Without Borders should help you to understand this)

The Inconvenient Truth is that we!!! (all of us - because I am not pointing a finger here - Germany made a hell of a lot of money out of this war!) have destabilized the region even further, stirred up even further hatred and are still promoting terror by sponsoring those "power elite" actions through various channels. (trade, development aid, charity, etc.)

I look forward to your response :-)
With warm regards from Hamburg (Germany)

|2.15.08 @ 11:11AM|#

Did anyone else wonder where John got the looney-toons idea that Barack Obama, of all people, is a "negative victimologist," while John McCain, with his grumbing about scary terrorism and how awful Barack Obama is, is offering a sunny, morning-in-America message?

Why, from the Wall Street Journal editoral page, of course.

Right after the Wisconsin speech, TV broadcast another -- by victorious John McCain. The contrast with Sen. Obama's is stark. The arc of the McCain speech is upward, positive. Pointedly, he says we are not history's "victims." Barack relentlessly pushes victimology. - WSJ, 2/14

John | February 14, 2008, 9:28am | #

If you read his speeches rather than listen to them, Obama is the most relentless victimologist I have ever seen; worse than Edwards. It is so over the top it would be laughable if he wasn't so charming in delivering it. It is one of the great rhetorical tricks of the last 20 years that Obama has successfully claimed to be the candidate of hope when the substance of everything he is saying is a relentlessly depressing view of America. It is the exact opposite of Reagan's morning in America, the American people can do anything if we just get out of their way message. Instead it is America is full of powerless victim who can only be saved by Obama. - John, 2/14

|2.15.08 @ 11:11AM|#

And look at that, the same language from Tall Dave. What a shocker.

|2.15.08 @ 11:34AM|#

joe,

Austrian economists--who are just about the most free market economists on the planet--have been screaming that the banking system was taking on too much risk and that housing was in a bubble for years now. Check out the book Empire of Debt if you want to see what I'm talking about.

The fact is that Federal Reserve interventions make the U.S. financial/banking system very much a mixed, rather than free-market, system. Essentially, the price of money is fixed by the Board of Governors, and when bubble-blowing jackasses like Alan Greenspan and Ben Bernanke fix that price too low, it mutes the signals that would otherwise have been broadcast loud and clear in a system of free banking.

Do you seriously believe that we can magically print, monetize, and bail our way out of every recession that comes along, especially one that is effectively fallout for 10+ years of excessive money and credit creation? If so, you should quit using Keynes's texts for your rolling papers. Mises said this better than I possibly can, so let me put it in all caps for you: "THERE IS NO MEANS OF AVOIDING THE FINAL COLLAPSE OF A BOOM BROUGHT ABOUT BY CREDIT EXPANSION. THE ALTERNATIVE IS ONLY WHETHER THE CRISIS SHOULD COME SOONER AS A RESULT OF VOLUNTARY ABANDONMENT OF FURTHER CREDIT EXPANSION, OR LATER AS A FINAL AND TOTAL CATASTROPHE OF THE CURRENCY SYSTEM INVOLVED."

So, here's my solution joe. Let's take our lumps and go through a recession now, so that we don't wind up facing a hyperinflationary collapse (and the attendant Mad Max apocalyptic outcomes) five years down the road.

And yes, we're *all* going to suffer, a *lot*, before this recession (or possibly depression) works itself out. But if property speculators and mortgage financiers--who were the worst perpetrators of the financial imbalances that now have to be liquidated--suffer a little more, I'm going to chalk that one up to sweet, sweet justice. And maybe you should look at the fact that Austrian bears have been remarkably prescient (and almost completely alone) in forecasting the current market turmoil as a wee little inductive sign that, "Hey, they might be on to something!"

Or you could just continue your moral preening, either way.

|2.15.08 @ 11:45AM|#

Joe,

What three or four specific mortgage lending reforms would you make now that you know that the industry needs more government regulation?

TallDave|2.15.08 @ 1:01PM|#

Are you sure that you are not the one living in mystified denial?

Quite sure.

you really believe that you have brought those HRs to that region.

We really have. Clearly you have no idea what's been going in Iraq the last five years. Educate yourself with some actual facts.

http://www.brookings.edu/saban/iraq-index.aspx

Hundreds of TV, radio, and newspapers that freely criticize the government. Three free and fair elections. Ten times as many phones as pre-liberation. One HUNDRED times as many cell phones. Five times as many cars. Internet access. Thousands of generators in local neighborhoods for the first time. Provincial elections scheduled for October.

These are not illusions.

Well, at least the majority of them believe that they are fighting for a worthwhile cause and that is really irritating. (and sad!)

Yes, it is very irritating and sad that there so many deluded people like yourself that do not recognize the incredible advances in human rights in Iraq, and worse yet would presume to tell our military otherwise.

TallDave|2.15.08 @ 1:08PM|#

And look at that, the same language from Tall Dave. What a shocker.

Yes, it's shocking that other reasonable people also notice how depressing, negative, and inaccurate leftist rhetoric is.

In another amazing coincidence, I asked a co-worker what color the sky was and like me he said it was blue. Clearly there is some sort of mind control going on in this country.

grumbing about scary terrorism

Yeah, a few buildings get knocked down and a few thousand Americans get killed, and everyone overreacts. Walk it off, people!

Of course, the constant refrain of how global warming is going to kill us all is perfectly resaonable.

TallDave|2.15.08 @ 1:22PM|#

Moreover we "the Western World" cannot impose our values and our culture onto non Western environments

You do know we wrote Japan's constitution, right?

You do know Iraqis wrote and voted to ratify their own constitution, right?

For John McCain to compare the situation to US forces being in Germany or Japan, is just ridiculous - we are talking about two totally different scenarios here.

Yes, it's quite ridiculous. Japan and Germany were much worse than Iraq (see Dachau, Auschwitz, Nanking). Remind me how those occupations worked out again.

Please take a look at history and see where such populist
propaganda has brought mankind! My grandparents generation believed our leaders and see what we have done - the shame will never go away

And yet it doesn't stop you from arguing against the same kind of interventions by America that ended your nation's shameful behavior. Clearly you learned the wrong lessons from your nation's history.