Reason Magazine
- reason.com
- reason.tv
- reason.org
- Donate
- Site Search:
Reason on Facebook
Reason on Twitter
Reason on YouTube
Reason RSSGet Reason E-mail Updates!
Manage your Reason e-mail list subscriptionsadvertisements
Bailout Nation
Barry Ritholtz, author of the forthcoming book Bailout Nation, tells the Wall Street Journal that "if you believe in free market capitalism, you have to let people fail" because "capitalism without failure is like religion without sin." Ritholz provides a decent four-minute primer on what's wrong with Hank Paulson's hurried, $700 billion dollar bailout (which he plausibly estimates could balloon to $1.5 trillion) of Wall Street financial firms:
And as David Boaz notes, Newt Gingrich has only now realized that "We have now launched big-government Republicanism." Well, better late than never.
|9.23.08 @ 11:58PM|#
I dunno, I'd say we could do just fine without religion or
sin.
Analogy nitpicks aside, it goes without saying that he's right
about failure being a necessary part of the free market.
Naga Sadow|9.24.08 @ 12:27AM|#
What's with the late night posts? Not complaining as I'm usually
up til 2 or 3. I suppose I should put in a comment about the topic
though . . .
Gingrich is just now getting it?
The Wine Commonsewer|9.24.08 @ 12:30AM|#
Those who feel guilty reading H&R at night plus the Hawaii contingent are likely happy to see late night posts that can actually be responded to instead of burning out by 2:00 PM EDT.
The Wine Commonsewer|9.24.08 @ 12:32AM|#
Those who feel guilty reading H&R at night work
plus the Hawaii contingent are likely happy to see late night posts
that can actually be responded to instead of burning out by 2:00 PM
EDT.
Fixed
rhywun|9.24.08 @ 12:40AM|#
Not guilty at work here. It beats the usual jabbering with coworkers that everyone else does.
Paul|9.24.08 @ 12:46AM|#
Forgive me if this was covered in Reason earlier, or talked
about, but did anyone catch the near-miss magnitute 10 financial
earthquake that the Fed nearly caused when they declared (by fiat)
that all Mutual Funds would be FDIC insured?
Somehow I totally missed this, but I heard a story on NPR tonight
where upon announcing that all mutual funds would be FDIC insured,
leaders of several major banks called the Fed in a panic,
instructing them that if mutual funds become FDIC insured,
that they would cause a run on standard banks because no one would
bother keep their savings in a bank for the comparitively low
returns?
The Fed changed their policy on insuring mutual funds at the last
minute, in the dark of night.
This is exactly the kind of thing that scares the crap out of me.
They're literally just flailing around. They already tweaked their
short-selling ban because it was screwing up the market.
But this mutual fund issue was a complete bombshell. They were
literally teetering on the edge of creating a nation-wide banking
collapse by causing all depositors to abandon tradtional bank
accounts and throw them in mutual funds.
Paul|9.24.08 @ 12:48AM|#
I wouldn't say tortured analogy.
On further thought, however, I would simply reverse it. Bailouts
are like sin without religion.
shecky|9.24.08 @ 1:20AM|#
I heard that story on npr, too, and I have to say, it's some truly scary shit. It's as if someone like me is in charge of monetary policy, making stuff up as they go along, because, of course, something has to be done.
The Wine Commonsewer|9.24.08 @ 1:29AM|#
Naga, at least Prolefeed (in Hawaii). Maybe a couple of others. Coping with CRS: A mind is a terrible thing to waste. ;-)
Paul|9.24.08 @ 2:04AM|#
Wow, that's so weird, I'm only unstained by religion. Between the two of us, we could make our own church.
|9.24.08 @ 2:25AM|#
Setting aside that it would have been the fair thing to do, I
find it asinine that mortgage holders did not forgive penalties and
alter terms to allow people to stay in their homes, with interest
rates they could afford rather than flood the market with
forclosured houses with no hope of sale. How can this make
sense?
A deal will certainly be struck to stabilize the market, but the
whole thing could have been avoided through the judicious use of
common sense and fairness. I only hope that anyone choosing to
participate in the program is forced to severely limit CEO
compensation and individuals facing forclosure are allowed to keep
their homes under new terms with discounted valuations.
|9.24.08 @ 2:50AM|#
Naga Sadow | September 24, 2008, 1:20am | #
TWC,
There's a Hawaii contingent?
Besides me, there's Kolohe. Maybe others. Makes it tough to post
when, by noon local time it's 6 pm Eastern Time all most of the
threads are dead.
|9.24.08 @ 2:52AM|#
Why is it that even though Bush is one of the least popular
Presidents in history, the only opposition to his policies comes
from Republicans?
The Dems repond to every Bush power grab with: yes, sir! It's
pathetic.
|9.24.08 @ 2:57AM|#
Setting aside that it would have been the fair thing to do,
I find it asinine that mortgage holders did not forgive penalties
and alter terms to allow people to stay in their homes, with
interest rates they could afford rather than flood the market with
forclosured houses with no hope of sale. How can this make
sense?
If they do it for the few percent of loans in default, and it
becomes common knowledge, everyone else will try to renegotiate
loan terms. And there's no such thing as a house "with no hope of
sale". You can sell any house with the right (read: market)
price.
I only hope that anyone choosing to participate in the program
is forced to severely limit CEO compensation and individuals facing
forclosure are allowed to keep their homes under new terms with
discounted valuations.
The market difficulty was caused in part by people buying houses
they can't afford. If you reward these folks by letting them stay
in those houses they should never have bought instead of moving
into something they can actually afford, you create a moral hazard,
encourage future irresponsibility, and penalize prudent renters who
didn't buy at inflated prices and are ready to purchase these
houses at more realistic valuations.
bill|9.24.08 @ 4:24AM|#
@rm2muv
That's what the whole credit default swap problem is about. The
mortgage holders thought they were insured against the loss of the
loan because they had bought "insurance" by selling CDS's. If the
loan goes bad they would be paid by the insurers so it was no skin
off their back if it did. So the banks made tons of crappy loans,
the insurers took on too much responsibilities and when the
defaults started no one could cover the nut and the whole house of
cards came tumbling down.
|9.24.08 @ 4:31AM|#
If we have not now arrived at socialism, then one must question the very definition of socialism ... and just as only Nixon could go to China, could a so-called conservative Republican thrust us into the arms of the super-statist-socialist world.
|9.24.08 @ 4:39AM|#
firma | September 24, 2008, 3:21am | #
These people like Gingrich must hate admitting Ron Paul was
right...
As long as he does admit that Paul was right, its cool.
|9.24.08 @ 8:28AM|#
Besides me, there's Kolohe. Maybe others. Makes it tough to
post when, by noon local time it's 6 pm Eastern Time all most of
the threads are dead
But you can just hang out with Rick and TC and go visit Icepick.
Doesn't that make it all worthwhile?
|9.24.08 @ 8:33AM|#
"capitalism without failure is like religion without sin."
Evolution without extinction would be a better example...except
that it would upset both fundies and greenies. There's no easy way
to sugar coat the fact that in order to have winners you need to
have losers (especially when you're talking to losers).
PC|9.24.08 @ 9:08AM|#
"capitalism without failure is like religion without sin."
But what if that "failure" was completely "forgiven" by a
superfluous act of "repentence"?
You know it is a jubilee year, "God" is just forgiving "God's"
people.
|9.24.08 @ 9:19AM|#
Episiarch,
I'm posting from the guest house right now. I'm an old friend of
Robin's.
|9.24.08 @ 9:23AM|#
ProL, give Zeus and Apollo a treat for me and don't forget to occasionally break the fourth wall.
|9.24.08 @ 10:14AM|#
Sorry, Episiarch, no can do. Zeus and Apollo are chasing Thomas down the beach right now. Damned shame, but Higgins and I are enjoying the quiet time, talking about our days with British Intelligence.
|9.24.08 @ 11:30AM|#
But you can just hang out with Rick and TC and go visit
Icepick. Doesn't that make it all worthwhile?
Really? A Magnum PI reference? Nice!
|9.24.08 @ 11:46AM|#
Oh, please. Robin Masters was Orson Welles. I'd know that voice
anywhere.
Unless you are Orson Welles. In which case, I like a number of your
films. When are you going to do Heart of Darkness?
|9.24.08 @ 12:45PM|#
Oh, well, fair enough. What about acting? Loved you in The
Third Man!
I'm going to go drink some Paul Masson in
honor of your work.
|9.24.08 @ 3:49PM|#
Religion isn't much without sin, yes. But it also supplies a way to forgiveness. The analogy still holds; what's great about the US is the ability for people to take risks, lose, and still survive.
|9.24.08 @ 4:07PM|#
Gingrich must hate admitting Ron Paul was right
Gingrich can go to hell. He had a chance to return the Republican
party to its platform, and he sold out for a power grab. FUCK
HIM.
-jcr
|9.25.08 @ 12:12AM|#
G.W. Bush, State of the Union, January 2008:
"In the work ahead, we must be guided by the philosophy that made
our nation great. As Americans, we believe in the power of
individuals to determine their destiny and shape the course of
history. We believe that the most reliable guide for our country is
the collective wisdom of ordinary citizens. And so in all we do, we
must trust in the ability of free peoples to make wise decisions,
and empower them to improve their lives for their futures.
To build a prosperous future, we must trust people with their own
money and empower them to grow our economy."
So much for "the philosophy that made our nation great".
Site comments/questions:
Media Inquiries and Reprint Permissions:
(310) 367-6109
Editorial & Production Offices:
3415 S. Sepulveda Blvd.
Suite 400
Los Angeles, CA 90034
(310) 391-2245