Richard Epstein: America Is in Jeter-Like Decline

Libertarian legal scholar (and Reason contributor) Richard Epstein is bearish on American policy-making:

Bad ideas in good times have become good ideas for bad times. We are told that we must constantly have stimulus programs to "jump start" the economy so that it can return to its productive ways. But what we get are "cash for clunkers," short-term subsidies to new home buyers, extended unemployment benefits, and an endless set of home loan forgiveness and loan extension programs that never quite allow underwater homeowners to return to dry land.

At the monetary level, we get a Federal Reserve determined to drive the interest rates as close to zero as it can, and when that fails to gain traction, a spiffy program of quantitative easing, which is intended to inject more money into the economy, to no real effect. Then there are our extensive new programs for health and finance whose contours no one can quite understand. And throughout it all, our leaders lamely proclaim that it is just bad luck, not unsound policies, that leave us mired in the muck.

These clever ideas and new programs never seem to work as advertised. So right now, the smart money predicts a double-dip recession in which unemployment rates will continue to hover around 9 percent. […]

The dominant response from too many political elites is to double-down on the same flawed policies. The failure of ad hoc interventions is treated as proof that half-hearted programs never can achieve success. And so certain politicians and policy makers argue that we must continue on the same doomed course of action. The Obama administration thinks that no evidence can falsify its jaundiced view of the world. […]

We will know that this administration is intent on reversing the decline when the word "deregulation" passes approvingly from its lips. Until that time, we should expect to see housing, labor, and financial markets remain in the doldrums.

Link via Instapundit. Thumpin' Tim Cavanaugh had some "central-planning failing notes from all over" last night.

Comments

[sarcasmic]

“I’ll be here all week”

Thief!

[WTF]

America Is in Jeter-Like Decline

Fuck you, the Yankees are still in first place.

[Pro Libertate]

Not for long.

[Old St. Pete]

Still a Double A’s, I mean Devil Rays, I mean Rays fan? How old are you? 85?

[Restoras]

Yankees have impressed me so far. I don’t watch closely but I didn’t think they’d be in first for as long as they have. Can never count them out it seems – bastards.

[alan]

I’ve loved the guy way back in the early 90’s when he played for my local AAA team. Love the guy still. When I see Gray’s Anatomy laming up miscegenation with dipshittery, I just turn to Jeter to remind myself what a wonderful, Creole world this can be. The closest thing to a sports hero I have this side of Tom Brady’s hair. However, Welch speaks the truth. Jeter’s body is giving out on him. He should retire, come back to the ‘boro and open a sports bar.

[deified]

Derek Jeter always does what’s right. Believe it.

[KDN]

I’m a die hard Yankee fan, born into pinstriped diapers. Jeter is not aging gracefully. He’s always been a bad defensive shortstop and he can no longer hit enough to make up for it. The Yanks are in first despite him.

I’d like to see him shifted to be a Mark DeRosa / Chone Figgins c. 2005 super-sub.

And no, the Rays will not overtake the Yankees. They’re overachieved to this point as is and it’s highly unlikely that Can’t-Hit Kotchman will keep this up much longer (BABIP Career: .277; BABIB 2011: .370. Fluke alert!). The Sox will end up with the division, I hate to say.

[Realist]

Jeter is not aging gracefully.

And you are?

He’s always been a bad defensive shortstop

Those five Gold Gloves are an outrage!

I’m a die hard Yankee fan. The Sox will end up with the division, I hate to say.

How much money have you placed on the Red Sox?

[Ken Shultz]

“We will know that this administration is intent on reversing the decline when the word “deregulation” passes approvingly from its lips.”

Amen, brother!

And that will never happen.

At this point in Carter’s short term, he had already deregulated the airline industry!

The folly of piling new regulation on the financial industry–just as we were trying to claw our way out of recession–was such a profoundly stupid thing to do.

The president will never admit that the financial regulation package was meant for one purpose and one purpose only: to assuage the political forces that became the Tea Party during the last congressional election.

No amount of regulation will shift the responsibility for the bailouts away from the president who orchestrated it.

http://www.huffingtonpost.com/…..58292.html

Obama isn’t about to deregulate so long as he has to admit his regulation was an attempt to shift responsibility for what he himself did with TARP–from himself to Wall Street. …and anybody who believes that Wall Street was responsible for what Barack Obama did?

Shame on you for being so gullible!

[Invisible Finger]

Ken, all the “regulation” of the financial industry doesn’t amount to a hill of beans compared to the one, single de-regulatory action that Obama et al actually did enact – the suspension of mark-to-market accounting.

If you allow (big) banks to cheat on their books, the other regulations don’t really matter.

[R C Dean]

So much truth.

Among the recent daylight frauds perpetrated by Big Bank, BofA had been carrying a $1BB reserve on its books for mortgage-backed bond litigation. They just settled one (1) of those cases for $8.5BB.

That was a voluntary agreement on their part, an admission, in effect, that the case was worth at least $8.5BB. Yet they had reserved only $1BB.

I know fraud when I see it, and that’s fraud.

[Ken Shultz]

There’s an excellent article on BofA’s acquisition of Countrywide in the journal today…

http://online.wsj.com/article/…..97078.html

“Among the recent daylight frauds perpetrated by Big Bank, BofA had been carrying a $1BB reserve on its books for mortgage-backed bond litigation. They just settled one (1) of those cases for $8.5BB.”

It should be noted that if there was any wrongdoing on that count, it was perpetrated by Countrywide before it was acquired by BofA rather than perpetrated by BofA.

It should also be noted that BofA’s acquisition was done in an environment of extreme pressure from regulators. This was when regulators were going about seizing banks that weren’t even out of compliance (Washington Mutual) and forcing mergers (Merrill Lynch)…

There’s no question they should have known better given their due diligence, but it remains unclear whether BofA could have said “no” on Countrywide–even if they wanted to.

“Henry Paulson admitted that he pressured Bank of America to acquire Merrill Lynch, but more forced mergers are unlikely.”

http://www.forbes.com/2009/07/…..erger.html

[R C Dean]

The wrongdoing I am speaking of isn’t the Countrywide clusterfuck, its the mis-stating of a potential liability on the books of BofA. That one is 100% on BofA’s head.

[Ken Shultz]

From the WSJ article I linked above:

“On Wednesday, Bank of America announced, as expected, an $8.5 billion settlement with investors who took a beating on mortgage bonds issued by Countrywide before the housing market collapsed.”

That was a Countrywide issue. Countrywide issued those securities, and BofA, having bought Countrywide, had to make good on those.

Again, I remember at the time, especially in the wake of New Century and the other subprime lenders cratering almost a year before, banks like Lehman and Bear were buying these guys out of bankruptcy court–to limit their exposure to those subprime lender’s liabilities. (Those buys out of bankruptcy court at pennies on the dollar is eventually what did Bear and Lehman in.)

Why didn’t Bank of America wait to buy Countrywide–why didn’t they wait until Countrywide was in bankruptcy court? If they’d bought Countrywide from the judge in a bankruptcy proceeding, BofA would have been free of all those Countrywide liabilities!

So why didn’t they wait?

Maybe they were stupid. People have done stupid things before, and they’ll do them again. There is another explanation though…

And I gave it above. It very well may have been that the regulators didn’t give BofA any choice in the matter. Paulson, Baird, et. al. were forcing mergers all over the place. …trying to save the weak by forcing them to merge with the strong.

If that was indeed the case, then I don’t blame BofA. BofA didn’t originate those Countrywide loans. That happened before Countrywide was part of BofA. And if BofA had it’s choice, it almost certainly would have bought Countrywide out of bankruptcy to avoid those liabilities.

The regulators didn’t want Countrywide to go bankrupt. They were scared to death–the market was already in panic mode. …and they were doing everything they could to keep people from going into bankruptcy court.

Maybe BofA thought it’s exposure was less than it was–I’m not sure I blame them for that either. If at some point, the value of having the issue settled was worth more than $7.5 billion difference? Then by all means they should have settled whether they had set enough aside or not.

So I don’t necessarily blame BofA for that either.

[Ken Shultz]

You seem to think my complaint has something to do with the regulation we have not being especially effective at preventing huge losses on Wall Street?

There is no regulation that will prevent downturns in the economic cycle. That regulation is like leprechauns and the Easter Bunny.

There is no regulation that will ever prevent credit crunches, etc. during downturns in the economic cycle either. It doesn’t exist.

I couldn’t care less about mark to market accounting. I couldn’t care less about anything anybody imagines will somehow prevent people who take huge risks at the top of the business cycle from suffering big losses on the downside of the cycle!

I do care about the profound stupidity of heaping regulation on the banking industry–just as the economy starts starving for lack of credit.

We cannot clear the housing market while the government is making it absurdly difficult to qualify for a home loan. Not if but when we have another downturn in the future–making it absurdly difficult to qualify for a home loan isn’t about to prevent downturns in the business cycle.

And the solution to our politicians bailing out the banking industry isn’t giving politicians more power over the banking industry. The solution to our politicians bailing out the banking industry is to take more of our politicians’ power away.

[Invisible Finger]

WTF??? The government is NOT making it absurdly difficult to qualify for a home loan. In fact, it is still relatively EASY to qualify for a home loan.

If the choice was between Ken Shultz and Hernando deSoto, I’d take deSoto in a heartbeat.

http://www.businessweek.com/ma…..634112.htm

[Ken Shultz]

“Loan portfolios that experienced the most tightening in standards over the last year include credit card, home equity, commercial and residential construction and residential real estate loans.”

—June 24, 2011

http://blogs.wsj.com/economics…..consumers/

[Ken Shultz]

“WTF??? The government is NOT making it absurdly difficult to qualify for a home loan. In fact, it is still relatively EASY to qualify for a home loan.”

So, just to painfully clear, your link wasn’t supposed to have anything in it to support your absurd statement–do I have that correct?

“If the choice was between Ken Shultz and Hernando deSoto, I’d take deSoto in a heartbeat.”

So your link was just to de Soto?

Did de Soto argue that heaping regulation on the banking industry will somehow prevent the next downturn in the business cycle?

…I don’t even have to read the article–De Soto isn’t anywhere near as stupid as you’re making him out to be.

[Invisible Finger]

Ken, the deSoto link clearly explained valid regulation on the financial industry that seemed pretty goddamned libertarian to me. All the actual so-called regulation being heaped on banks STILL isn’t actual USEFUL regulation. Your tone makes it sound like all regulation is bad and DeSoto clearly states and gives examples of regulations on financial institutions that actually reinforce property rights.

Honestly, I don’t get the “don’t regulate banks” meme. Ron Paul and many of the founders basically wanted to regulate them to the point that they barely exist.

[Ken Shultz]

We’re so far away from “Don’t regulate banks” that I don’t see how anybody could confuse opposing the heavy regulation that was heaped on the banking industry since Obama’s taken office–with “Don’t regulate banks”?

We could get rid of a ton of regulation–and still not be anywhere close to the way things were before Obama took office!

“We will know that this administration is intent on reversing the decline when the word “deregulation” passes approvingly from its lips.”

That was the point of the post, and I couldn’t have said it better myself. …and we’ll never hear that “deregulation” word from the Obama Administration.

What’s more extreme and ideologically rigid?

The observation that piling regulation on the banking industry was a stupid thing to do just as we were trying to claw our way out of a recession?

Or the Obama Administration, which will never ever roll back regulation of the banking industry? ..not even if it’s choking the economy!

We could start by repealing Dodd-Frank–and we’d still have forever to go before we got anywhere near “Don’t regulate banks”.

[Invisible Finger]

The main regulatory problem created by politicians is making it harder to open a new bank, thus ensuring less competition in the industry.

[Ken Shultz]

You don’t see any complications for the financial industry associated with Frank-Dodd at all?

Really?!

[Invisible Finger]

Ken, I don’t give a shit about the financial industry if their actions work against property rights. Again, complications aren’t restrictions – and if mark-to-fantasy accounting is reinforced in the legislation then the complications come at virtually no cost to the existing financial industry players. All the costs get put onto individuals and their property rights.

If a deregulated financial industry results in the weakening of individual property rights, then deregulating the financial industry is a bad idea. That viewpoint isn’t any different from the framers’.

[Ken Shultz]

“Ken, I don’t give a shit about the financial industry if their actions work against property rights.”

For some reason? When the Obama Administration and the politicians in Congress tell you that they’re not responsible for what they themselves did and how they voted?

You seem to believe them.

Let me ask you this: in terms of how the following affected your property rights, which was worse?

A) Lehman disappearing from the face of the earth.

B) TARP

In terms of how much credit banks will be allowed to offer you and your business in the future, which of the following affected your property rights more?

A) Bear Strearns disappearing from the face of the earth.

B) Frank-Dodd.

Here’s a hint: unless you willingly put your money at risk in a bank stock or a mortgage security or a home loan? Nothing Wall Street did before the bust affected your property rights at all.

80% of TARP still hasn’t been paid for–it’s still coming out of your paycheck and will continue to do so for at least another eight years.

Frank-Dodd is about limiting the availability of credit to would be home buyers (among other things)…

If you don’t like what TARP and Frank-Dodd does to your property rights–then you should blame the politicians who orchestrated and voted for TARP and Frank-Dodd.

Not Wall Street.

Not the banks.

They didn’t vote themselves a chunk of your paycheck for the next decade! That was politicians who did that. Blame the people responsible–not someone else.

It doesn’t matter how many politicians and pundits take to the air waves–no amount of regulation will ever shift the responsibility for what Barack Obama and Congress did to anyone other than Barack Obama and Congress.

TARP Vote: Obama Wins, Senate Effectively Approves $350 Billion

http://www.huffingtonpost.com/…..58292.html

January 15, 2009

[Greer]

I wonder if the Yankees will regret Jeter’s contract as much as America will regret Obama. Or the other way around.

[Mike M.]

The Yankees don’t regret the ’04 ALCS as much as America will come to regret Obama.

[swillfredo pareto]

The failure of ad hoc interventions is treated as proof that half-hearted programs never can achieve success.

Except that is a completely corrupt excuse. Two years ago progressives and other welfare statists promised that government intervention in the marketplace, at the spending levels that were passed, would pull the country out of the crapper. Remember when unemployment would peak at 10% if we didn’t start decommissioning 4-year old automobiles immediately?

Fast forward to today and the progressive argument is that the spending was not high enough and we still need more? Who is more credible, the goal-post movers or the people who correctly predicted then that government intervention was a bad idea and are sticking with that same prediction today? At least 20% of the next round of stimulus had better be on Astroglide.

[Achtung Coma Baby]

Quick, someone ask Obama to name the person whose hand he’s shaking!

[BHO]

“Big Papi”

[Yikes]

What the hell is Obama wearing there? Did he borrow something out of William Howard Taft’s closet? Geez, at least try to LOOK presidential, and not like you’re heading back out to a tricked-out Corolla.

[Warty]

It looks like one of Mao’s shirts to me.

[Mr. Blackwell]

Goes great with mom jeans.

[mr simple]

Is that Bruce Leroy Brown?

[Federal Dog]

“The dominant response from too many political elites”

So when, if ever, will people start opening admitting what we all know: That these loudly self-proclaimed “elites” are in reality low-functioning, uneducated, and greedy two-bit grifters.

[Otto]

I made this Komik for another thread, but it works here, too.

Apologies to capitol l for not working in the sobbing Statue if Liberty…

[Lord Humungus]

Can we partition off a part of the U.S. for anyone who wants to get off the crazy train? Just sayin’

or a small island… something.

[Devil's Advocate]

Come to Idaho. Things are pretty free here, our governor and legislature enjoy giving the Feds the finger, and if we ever did decide to leave the people on the East Coast probably wouldn’t even notice (until John Kerry tries to go skiing in Sun Valley).