Althouse: "The case for full nationalization [of the banks] is far stronger now than it was a few months ago."

January 26, 2009

"The case for full nationalization [of the banks] is far stronger now than it was a few months ago."

"If you don’t own the majority, you don’t get to fire the management, to wipe out the shareholders, to declare that you are just going to take the losses and start over. It’s the mistake the Japanese made in the ’90s. I would guess that sometime in the next few weeks, President Obama and Tim Geithner will have to come out and say, 'It's much worse than we thought,' and just bite the bullet.'"

184 comments:

Joe said...: I'm all for this since the Federal Government is so obviously the best manager of money. The work they have done so far with the economy has been stellar.; 1/26/09, 10:57 AM
MadisonMan said...: (snicker at Joe's comment)

Bad idea.; 1/26/09, 10:58 AM
vbspurs said...: Ask Mitterand how this worked out in France. Then ask Guy de Rothschild when he wakes up from his nap.

Cheers,
Victoria; 1/26/09, 10:58 AM
Freder Frederson said...: It would be worth just to see DBQ's and Simon's heads explode.; 1/26/09, 10:59 AM
vbspurs said...: Isn't Freder a credit to humanity?; 1/26/09, 11:00 AM
TWM said...: If Barry and the Dems have their way our nation will be barely recognizable in four years and not in the positive way all the people who voted for him thought either.

The United Socialist States of America is closer than you think.; 1/26/09, 11:01 AM
rcocean said...: Simply awful idea. B-of-A merged with Merrill because of pressure from the Government. Citibank backed off the Wachovia deal because of Paulsen.

A little unfair to now nationalize them now.; 1/26/09, 11:03 AM
Freder Frederson said...: Ask Mitterand how this worked out in France.

Actually it did work in Sweden. The current management of our banks have proven they can not be trusted with managing the money they were entrusted with. The shareholders and management, not the taxpayers, need to be punished for their mismanagement and risky and economy destroying practices.; 1/26/09, 11:04 AM
Henry said...: If you don't own the majority, you don't get to fire the management ...

Bank of Newport (RI), your reign of terror is up!

* * *

Proponents of nationalization create their own rationale. In the case of banks, if you do a partial nationalization (just the banks in trouble) you kill investor confidence in continuing to accept risk for the remainder. So good, solid regional banks that are managed perfectly well (thank you very much) will get shafted twice. First the government undermines investor confidence in the entire sector. That creates a crises that forces the government to take over.

When collectivization leads to starvation, you just have to collectivize more.; 1/26/09, 11:07 AM
JohnAnnArbor said...: Just the banks that are in trouble, or all banks?; 1/26/09, 11:11 AM
Freder Frederson said...: Just the banks that are in trouble, or all banks?

The solution is to break up or nationalize the banks that are "too big to fail". We have privatized profits and socialized the risk and that is just wrong. If banks and insurance companies leverage themselves with unwise MBS's and CDSs, they shouldn't be able to run to the government for bailouts when those investments go sours. The management and shareholders should be wiped out and the assets liquidated. Isn't that what capitalism is supposed to be about?

We can't be put in a situation where private institutions cannot be allowed to fail. Unfortunately that is exactly the situation we are in.; 1/26/09, 11:18 AM
Freder Frederson said...: Isn't Freder a credit to humanity?

It is their own cognitive dissonance that will cause their heads to explode. They can save themselves by accepting reality instead of the fantasy world they live in.; 1/26/09, 11:20 AM
Hoosier Daddy said...: The current management of our banks have proven they can not be trusted with managing the money they were entrusted with.

Of course Freder sees no problem at all with the government owning these insitutions. The same government that is running with a $10 trillion debt and a $1 trillion budget deficit.

The management and shareholders should be wiped out and the assets liquidated. Isn't that what capitalism is supposed to be about?

Um yeah. You don't see many conservatives here championing more bail out money.; 1/26/09, 11:26 AM
Freder Frederson said...: You don't see many conservatives here championing more bail out money.

So the conservative solution is to not give another penny to the banks or AIG and just let them all go bankrupt? Maybe even demand the $350 billion (and 150 billion given to AIG) already given out back?

I'm sure that will work out real well.; 1/26/09, 11:30 AM
Sprezzatura said...: Isn't this sort-of the standard procedure when banks go broke? Bank goes broke-->gov takes over-->gov cuts out parts that have value-->gov sells parts w/ value to the private sector.

If that's the suggestion, there's no news. The government has always taken over bad banks. The new thing is handing over cash to failed banks and letting them (management/investors) continue on their merry way--that (like letting them implode w/o any gov action) is what seems unwise.

And, let's do a two-fer and let the autos go bankrupt (or at least prearranged quasi-bankrupt) too.

And, let's create a chapter 11 option for normal Americans, not just for corporations (like the Autos.) Or, take away chapter 11 for corporations. Why do corporations have more rights than people?; 1/26/09, 11:36 AM
Rose said...: We've gone insane. Billions of dollars tossed around like pigeon food. Stabbing in the dark for fast solutions that aren't.

And no one to stop it.; 1/26/09, 11:37 AM
Henry said...: Unintentional comedy line:

Another option is for the government to buy the banks’ most toxic assets either through a giant fund, or, more likely, a federally supported bad bank designed to buy up troubled investments. But in that case, taxpayers might well be the losers: They would have all of the banks’ worst assets and none of their performing loans. And unless a deal is worked out to take a larger share of the banks whose bad loans are shuffled off to the government, the taxpayers would not have the chance to benefit by selling the shares back to private investors.

It sounds like the plan is for the government to buy banks and make a profit by selling them back to the people they bought them from.

This sounds like the old folktale about the two merchants who drained a barrel of their schnaps shipment by selling each other shots with a single coin they exchanged one to the other.; 1/26/09, 11:38 AM
Hoosier Daddy said...: And, let's create a chapter 11 option for normal Americans, not just for corporations (like the Autos.)

There is one. It's called Chapter 13.; 1/26/09, 11:39 AM
Hoosier Daddy said...: So the conservative solution is to not give another penny to the banks or AIG and just let them all go bankrupt?

Yes. It's called Chapter 11.; 1/26/09, 11:40 AM
SteveR said...: I'm not going to get all paranoid here or pretend there aren't any reasonable examples of how/why this might work.. but.. something about this doesn't sound good.; 1/26/09, 11:44 AM
Sprezzatura said...: Hoosier,

I'll assume that you're in favor of rewriting Chapter 13 so that it allows folks the same freedom from debt/obligations that corporations can be granted from Chapter 11.

We're on the same page.; 1/26/09, 11:45 AM
KCFleming said...: On occasion, I'll post here under the moniker Pogoпоссум, from the USSR.

When doing so, I would sometimes get feedback to the extent that I was being silly, alarmist, or way over the top. Just a red scare, seeing Marxists under every bed.

But now you see. With one crisis, we are quickly entering full-blown socialism. And it won't stop with banks.

And yes, it will be worse than you could possibly imagine, likely ending in violence, as these things always must do.; 1/26/09, 11:46 AM
Beau said...: Actually it did work in Sweden

Works well in Canada.; 1/26/09, 11:47 AM
Bart Hall (Kansas, USA) said...: We pulled our corporate accounts from BoA back in '02 because even then they were just one big Charlie Foxtrot.

Our current bank is one of only five banks the America's top 50 to have Moody's rating of B+ or better.

They're out there. Look for them. Give your business to them. The others can, and should, go straight to hell.

The essence of the current mess is that people borrowed huge amounts of money they could never hope to repay.

Please explain how having the federal government do the same thing will in any way address the problem.

What's most likely to happen is twofold:
a) a great surplus of Treasury debt in relation to demand will drive down the price. When bond prices fall, interest rates rise.

b) as the inflation arising from an injection of $4 Trillion hits the economy ... interest rates will rise.

The dollar, now something of a leper-king, will crash, pushing oil prices vastly higher in dollar terms. Non-energy imports will evaporate and world trade will collapse.

Here at home, rapidly rising interest rates will demolish otherwise prudent, sound, and profitable businesses. What the interest rates don't get will be kicked in the junk by energy prices.

In attempting to save the losers we'll do untold long-term damage to sound banks, sound companies, and sound families.; 1/26/09, 11:47 AM
Bart Hall (Kansas, USA) said...: Beau -- Canadian banks have a federal charter, but they are nothing remotely resembling nationalised. Never have been.; 1/26/09, 11:54 AM
Hoosier Daddy said...: Hoosier,

I'll assume that you're in favor of rewriting Chapter 13 so that it allows folks the same freedom from debt/obligations that corporations can be granted from Chapter 11.

Perhaps you can elaborate on the freedom of obligations that corporations receive under a Chapter 11. It's been a while but last time I checked, you have to file a plan of re-organization subject to the approval of a Creditor's Committee.; 1/26/09, 11:55 AM
Anonymous said...: They're smart politicians--just take it one baby step at a time, and before you know it you control the economy. It's classic Chicago patronage tactics.; 1/26/09, 11:57 AM
CarmelaMotto said...: you can't compare Sweden to the US. Sweden has about 5 million people and an economy about the size of NJ.; 1/26/09, 11:57 AM
bearbee said...: The same government that strong-armed Fannie and Freddie into abandoning prudent underwriting standards.

Ha!

No bank should be too big to fail. Where the hell were the regulators? And why was congress asleep at the wheel as usual.

Why were banks allowed to become too big to fail? And they are still being allowed to become bigger by merging or gobbling up the weak ones.

What a f@#$% mess!; 1/26/09, 11:58 AM
Balfegor said...: It would be worth just to see DBQ's and Simon's heads explode.

Er, won't it just be a huge bout of I told you so!, as in, "I told you he was a socialist!" I mean, it's pretty much a confirmation of every supposedly outlandish criticism of Obama made during the campaign.

That said, since Bush II basically pledged the full credit of the government to back the banks sometime in the fourth quarter last year, nationalisation is not such a huge leap.

I'll assume that you're in favor of rewriting Chapter 13 so that it allows folks the same freedom from debt/obligations that corporations can be granted from Chapter 11.

Wait, how so? Chapter 11 is reorganisations for corporations; Chapter 13 is reorganisations for individuals. My understanding is that in both cases, any restructuring plan is subject to approval by the creditors (otherwise it goes to outright liquidation). Is there a salient difference between them?; 1/26/09, 12:00 PM
An Edjamikated Redneck said...: I was listening to some financial folks on the radio this morning, and one kept calling the sub-prime failure 'The Canary in the Coalmine'.

His view is that we have recognized, autopsied, determined the order in which the organs stopped working and determined a final cause of death for the canary.

Meanwhile, there are still miners in the coalmine, dropping dead.

We need to face facts. The economy is not dying because the banks donated money to under qualified buyers at the government’s insistence.

It’s dying because we have spent the last 15 years, as a country, going into debt to swapping goods amongst ourselves that we bought in China.

It’s kind of a Catch-22. Real Estate is collapsing (worldwide); fix the Real Estate, and we fix the banks. But we can’t fix the banks without propping up the over-inflated real estate values; values that were inflated by the government insisting that free money flood the market.

Meanwhile, if people would just spend a few dollars we would be fine; but nobody has any dollars, can’t borrow any dollars, and have fewer options for earning dollars daily.

And meanwhile, the only entity that can borrow money it has no viable way of paying back keeps on borrowing and wondering why the crisis doesn’t get any better.

I have felt we were screwed since November. I have known we were screwed since last Tuesday.; 1/26/09, 12:10 PM
UWS guy said...: Citi group pushed through a plan today to buy a brand new corperate jet-with your money.

When will you Ayn Rand fetishest realize that the captains of industry aren't working in the financial sector?; 1/26/09, 12:11 PM
Sprezzatura said...: Hoosier,

As I said, I agree w/ you if you're willing to open up Chapter 11 so that it has less limited and formulaic repayment options, I don't have a problem giving the creditors a voice equivalent to what they're allowed in Chapter 13. If you don't think that Chapter 11 has more limited and formulaic repayment options that Chapter 13, then there's no reason for you to disagree w/ changing Chapter 11 in these areas.

We're on the same page!; 1/26/09, 12:15 PM
jeff said...: Buy the bad loans for a pittance. If that wipes out the shareholders so be it. It gets the bad stuff off the books and not all of those loans will default. Offer to buy them for x% on the dollar. The taxpayers then have a shot at getting their money back. If the banks feel its too low, they don't have to sell.
Then let this mess sort itself out.; 1/26/09, 12:16 PM
vbspurs said...: OT:

Oh, God, I thought I had missed Rush Limbaugh's noon blast off at Obama! I'm off to listen, better late than never.

Anyone listening? Ann must be in class.; 1/26/09, 12:17 PM
Godot said...: To quote H. L. Mencken

Every normal man must be tempted at times to spit on his hands, hoist the black flag, and begin to slit throats.

I know I am.; 1/26/09, 12:19 PM
jeff said...: Hmmm. the guy on CNBC is pushing the option I described in my last post. Clearly I was wrong then.; 1/26/09, 12:22 PM
TitusGoAskAlice said...: I can't wait to hear what Rush has to say about this. This is getting good.

Loaves.; 1/26/09, 12:24 PM
sonicfrog said...: I just have two words - Creative Destructionism.; 1/26/09, 12:29 PM
Anonymous said...: UWS:
"Citi group pushed through a plan today to buy a brand new corperate jet-with your money. "

I guess they just watched as 600 private jets landed in DC last week for the Obama coronation and figured they need something just as flashy.
A sort of "keeping up with Jones" thing.; 1/26/09, 12:32 PM
BJM said...: Freder said: The shareholders and management, not the taxpayers, need to be punished for their mismanagement and risky and economy destroying practices.

Taxpayers and shareholders are one in the same. How many millions of seniors do you suppose are invested in what they thought were secure bank financial instruments?

BTW- Re Sweden: In September 2003, Swedish voters turned down entry into the euro system concerned about the impact on the economy and sovereignty. Timber, hydropower, and iron ore constitute the resource base of an economy heavily oriented toward foreign trade. Privately owned firms account for about 90% of industrial output, of which the engineering sector accounts for 50% of output and exports.

Sweden slid into recession in the 3rd quarter of 2008 due to a lack of demand for their exports. Their GDP was 3.2 in 2008 with 6.2% unemployment.

One must also consider that Sweden remained free from Soviet control and prospered post WWII under the American military umbrella, which is part of our national debt.; 1/26/09, 12:32 PM
Anonymous said...: I'll assume that you're in favor of rewriting Chapter 13 so that it allows folks the same freedom from debt/obligations that corporations can be granted from Chapter 11.

We'll do that the day after we amend Chapter 7 to let companies stay in existence with sheltered assets just like individuals can.; 1/26/09, 12:36 PM
George M. Spencer said...: You pick up your tray at the cafeteria. The lady wearing the hairnet behind the steam table says, "Eat all you want, but there's rat shit in some of the food. It could be in the mashed potatoes or the congealed salad or the roast beef. I don't know where it is."

Would you eat anything?

No.

The cafeteria has to sell itself to someone who can cut prices to the bone so that customers will come in the door and eat the food. Maybe the new customers will be dog food makers. Or grease recyclers. Or someone with a rat-shit detector, so that the good food can be sold and the rat shit tossed. Something has to be done to clear the inventory, even if it has to be sold at pennies on the dollar.

Otherwise business will cease.; 1/26/09, 12:37 PM
TitusGoAskAlice said...: Is anyone listening to Rush right now.

Man he is going off on this.

This is great.; 1/26/09, 12:38 PM
ricpic said...: It's all about creating an atmosphere of complete catastrophe. Obama is essentially a terrorist: scare 'em enough and they'll swallow anything.; 1/26/09, 12:38 PM
Sprezzatura said...: ricpic,

What's next, threats of mushroom clouds?; 1/26/09, 12:48 PM
I'm Full of Soup said...: Is Joe up there (First!) THE Joe The Plumber? Cause I like the way Joe (First!) snarks!; 1/26/09, 12:49 PM
I'm Full of Soup said...: Is it safe to assume the NYT writer, David Sanger, has a degree in journalism and maybe walked by an Economics class or two when he was in college?; 1/26/09, 12:51 PM
traditionalguy said...: The banking system works well as local grocery stores also work well. Then the new Wallmart Super Store opens with its economy of scale advantages. Soon the smaller stores lose their customers. The Banking system has historically been regulated to hold down the political clout the Banks possess within local areas by restrictions of County lines, then State lines, then National, and finally Worldwide. Now to justify the assembling of all of this political clout under the control of a World entity does require a super and unusual crisis. The US banks are rated #1 thru #5 on soundness with #1 banks basically refusing all risks, and #2 banks taking very conservative risks, and #3 banks taking normal banking risks, and #4 banks taking speculative risks, and #5 banks being in work out prior to FDIC forced merger or shutdown. The current crisis saw all but a handfull of Banks go to the #4 and #5 ratings overnight. Why was real estate secured loans, always the least risky, now the most risky? This was due to banks having little other source of good earnings except by their participating in the Real Estate Bubble engineered by the US Government to replace the Dot.Com Bubble. Now only #1 Bank wannabees can be found, and we may willingly accept even a new World Bank just to get some source of reasonable risk taking back into Banking system.; 1/26/09, 12:53 PM
I'm Full of Soup said...: I am kinda busy (work) but have the Rush show on.

Rush is all over the place so far but he has kindly offered to construct a stimulus plan for Obama!; 1/26/09, 12:54 PM
Freder Frederson said...: One must also consider that Sweden remained free from Soviet control and prospered post WWII under the American military umbrella, which is part of our national debt.

Actually, Sweden is neutral. It was neutral in WWII, it remained neutral after WWII. It is not a member of NATO and is not under the American military umbrella.; 1/26/09, 12:54 PM
Curtiss said...: "...President Obama and Tim Geithner,”..."will have to come out and say, ‘It’s much worse than we thought,’ and just bite the bullet.”

Biting the bullet?

How about pulling the trigger.

Or maybe swallowing the gun.

Somehow I don't think Obama and the Dems will nationalize the banking industry in his first month in office.

I could be wrong.; 1/26/09, 12:57 PM
Hoosier Daddy said...: We'll do that the day after we amend Chapter 7 to let companies stay in existence with sheltered assets just like individuals can.

You beat me to it.

Actually individuals are treated far more favorably under Federal bankruptcy laws than he might think.; 1/26/09, 1:02 PM
garage mahal said...: Wholesale fascism/socialism/communism/Marxism. Digital Brownshirts. In my wildest dreams I never thought it would be this bad on practically the first day in office.; 1/26/09, 1:05 PM
I'm Full of Soup said...: Regarding rights:

Corporations can't vote. Neither can than unions or PACs.

In a smart system, we would also preclude PACs from existing or making political contributions.; 1/26/09, 1:05 PM
JohnAnnArbor said...: Actually, Sweden is neutral. It was neutral in WWII, it remained neutral after WWII. It is not a member of NATO and is not under the American military umbrella.

Sweden makes very good military equipment and is neutral in fact. However, if the Soviets had, for whatever reason, invaded Sweden, I doubt we'd have stood by. Sweden (and Ireland and Switzerland) are not part of NATO, but benefited by being located amongst alliance members.

(I remember reading once about Soviet submarine incursions into Swedish waters. Once the Swedes dipped a sonar with a helicopter and physically struck a Soviet submarine! The Soviets were arrogant in their response to Swedish protests, basically daring the Swedes to break out the depth charges.); 1/26/09, 1:06 PM
Bob said...: Banks fail on a regular basis. We just have allowed some banks to become so big that regulators feel they then can't be allowed to fail. So lets limit size of banks to some amount less than "so big".

Nationalizing the banks means your creditworthiness will be driven by your "political worthiness". Barney Franks and Chris Dodd determining who gets a loan. This profoundly bad. Obama will be complaining a week after nationalizing banks that consumers are buying gold and withdrawing cash.; 1/26/09, 1:07 PM
TMink said...: I am with Curtis. Nationalizing the banks would not be biting the bullet, it would be firing the bullet in our open mouth.

There is a difference. The difference matters.

Trey; 1/26/09, 1:07 PM
Hoosier Daddy said...: In my wildest dreams I never thought it would be this bad on practically the first day in office.

I know what you mean about wildest dreams garage. I mean I'm still in shock that Der Fuhrer Bush and Reichmarshall Cheney relinquished power after Jan. 20. I mean all that talk about us being a police state and all.; 1/26/09, 1:08 PM
Sprezzatura said...: Hoosier,

As I've written, now three times, then I'm sure you'll have no problem w/ equalizing the options available to folks pursuing the Chapter 11 and 13 routes.

And, is the Chapter 7 talk supposed to make us believe that folks don't loose assets, e.g. homes via foreclosures? Good one.; 1/26/09, 1:09 PM
Curtiss said...: TMink: There is a difference. The difference matters.

Nuance.; 1/26/09, 1:13 PM
I'm Full of Soup said...: Garage meant to type:

"in his wildest WET dreams".; 1/26/09, 1:13 PM
Balfegor said...: And, is the Chapter 7 talk supposed to make us believe that folks don't loose assets, e.g. homes via foreclosures? Good one.

Your assets can only be protected if, you know, you actually own them. If you have minimal equity in your home, it's hard to see why the homestead exemption would protect you. And it's hard to see why a creditor would approve a restructuring in which they don't get the full value of the loan back, if they can force a liquidation, given that they're a secured creditor. Foreclosure is largely a non-sequitur here.; 1/26/09, 1:17 PM
Chet said...: Wow. The social atmosphere on this Blog is treacherous - a caste system exists here unlike any other blog I've been too.; 1/26/09, 1:20 PM
JohnAnnArbor said...: So lets limit size of banks to some amount less than "so big".

Split them up like we did AT&T and Standard Oil. Subject future merger proposals to scrutiny and possible denial based on certain criteria, including size.

Maybe.; 1/26/09, 1:21 PM
JohnAnnArbor said...: "Caste"?

Haven't heard that one before.; 1/26/09, 1:23 PM
Balfegor said...: As I've written, now three times, then I'm sure you'll have no problem w/ equalizing the options available to folks pursuing the Chapter 11 and 13 routes.

I (not Hoosier btw.) have explained that I don't see a salient difference between them. But I'm not a bankruptcy expert! If you want people to answer your question, you'll have to define your terms -- what do you see as the salient differences. Then we can think about whether we think they're appropriate in both cases, or whether they should be restricted in one or the other case. And we can check to see whether we agree that those differences are actually supported in the code.; 1/26/09, 1:26 PM
Anonymous said...: Chet, where's my juicebox?; 1/26/09, 1:27 PM
Sprezzatura said...: Balfegor,

So, you're in favor of a nationwide homestead law that is automatic and cannot be removed under any circumstances as long as the property is owned free and clear? Well, write your government representatives to get that done!!

And, you seemed to open the door to providing this national protection to folks who only have a substantial equity stake, rather than owning the home free and clear. What percentage of ownership where you (w/ your liberal bleeding heart) thinking about?; 1/26/09, 1:28 PM
KCFleming said...: yeah, Chet, give me your lunch money. NOW.; 1/26/09, 1:30 PM
Bob said...: Note that the headline presumes nationalizing banks is much more rational than just a couple of months back. Thus the trend is such that in a couple of months aurguing against bank nationalization will be viewed as a form of insanity. Game, set, match.

Once the banks are nationalized the process of determining the winners and losers in the marketplace gets easier.

I think the word you're looking for is "cache". As in secure place to store food and valuables.; 1/26/09, 1:31 PM
kjbe said...: Why were banks allowed to become too big to fail? And they are still being allowed to become bigger by merging or gobbling up the weak ones.

Doesn't this happen because merging something Wall Street rewards?; 1/26/09, 1:33 PM
Freder Frederson said...: Once the banks are nationalized the process of determining the winners and losers in the marketplace gets easier.

This process is already occurring under the current system of throwing money at the banks without nationalizing them. Nationalizing the banks creates different winners and losers.; 1/26/09, 1:44 PM
Balfegor said...: So, you're in favor of a nationwide homestead law that is automatic and cannot be removed under any circumstances as long as the property is owned free and clear? Well, write your government representatives to get that done!!

States can do what they like -- what makes sense in one place may not make sense elsewhere. I'd be fine capping the maximum value of the property, although given recent precipitous declines in home values, I can see the argument for an unlimited homestead exception, as I understand is the case in Texas. Simpler that way.

And, you seemed to open the door to providing this national protection to folks who only have a substantial equity stake, rather than owning the home free and clear. What percentage of ownership where you (w/ your liberal bleeding heart) thinking about?

Why would there be a hard and fast rule, let alone a national one? It's just my understanding that if you have minimal equity in a house, then it doesn't matter that the homestead exception covers it in full or doesn't cover it in full, since it's worth so little (or nothing, if you have negative equity). If you can't make payments to the satisfaction of the lender, they'll foreclose on you anyway, no?; 1/26/09, 1:46 PM
vbspurs said...: OT:

Russ Feingold, recipient of an Althouse vote and contribution, just introduced the 28th Amendment: to take away the right of Governors to make Senate appointments. Instead, popular elections should decide a vacancy.

This dog might hunt (until Obama takes away his gun).; 1/26/09, 1:47 PM
vbspurs said...: Nationalizing the banks creates different winners and losers.

The losers are called private citizens, and the winners are called a new bureaucracy.

A new bureaucracy who, like all bureaucracies, are inefficient and are often personally corrupt, not to mention impossible to sack.

Palin isn't the only one who said, thanks, but no thanks.; 1/26/09, 1:49 PM
Kirby Olson said...: The bad banks explode and sink, while the more sound banks have grown a lot not only during this but also during the S & L scandal of the 80s.

You just have to let the economy work, and let the unfit die off.

That's the only way that capitalism works. It's just like the Darwinian view of nature.

Nothing else works.; 1/26/09, 1:50 PM
Chennaul said...: I thought we had a chaste system?

Doesn't somebody have the key to titus's belt?; 1/26/09, 1:51 PM
vbspurs said...: I thought we had a chaste system?

Do we? I fell asleep in hymenomics class.; 1/26/09, 1:56 PM
Hoosier Daddy said...: As I've written, now three times, then I'm sure you'll have no problem w/ equalizing the options available to folks pursuing the Chapter 11 and 13 routes.

Individuals are not corporations and therefore equalizing the options under bankruptcy protection isn't relevant.

And, is the Chapter 7 talk supposed to make us believe that folks don't loose assets, e.g. homes via foreclosures? Good one.

The vast majority of individual Chapter 7 cases don't lose much in the way of assets, if any since there are pretty hefty personal property exemptions. In the case of residences, most states have pretty generous homestead exemptions to boot. If the bank forecloses, it's because the debtor can't or won't reaffirm the mortgage.; 1/26/09, 1:57 PM
David said...: You can't nationalize some of the banks. If you do, private capital will flee all of the banks and you will be worse off.

The article recognizes this: "The first [reason not to nationalize] is that nationalization can prove contagious. If the Obama administration took over Bank of America and Citigroup, two of the largest banks in the United States, private investors could decide to flee from the likes of JPMorgan Chase and Wells Fargo, or other major banks, fearing they could be next."

They have to let the failing banks fail. We have had a procedure for this for decades (the FDIC) and it works well. FDIC takes over the bank, works out its assets and sell what is salable back to private holders.

The goal has to be to have the banks with private ownership: sound and profitable enough to attract private capital. Though it does not appear so now, there is much more private capital than government capital. Ironically achieving this goal involves letting some banks fail and allowing the private capital presently in these banks to be destroyed.

Fuzzy thinking abounds. If Obama can avoid the fuzzy thinkers, we will muddle out of this. If he can not, we (and the rest of the world) are f-u-c-k-e-d.

This will be the crucial decision of Obama's Presidency, and he will have to make it in a week or two. He has to be clear in his decision. No muddy middle path this time.

So, interestingly, we will know in a month or so whether Obama is going to succeed or fail as a President.

Does he understand this? I hope so.; 1/26/09, 2:04 PM
Hoosier Daddy said...: It's just my understanding that if you have minimal equity in a house, then it doesn't matter that the homestead exception covers it in full or doesn't cover it in full, since it's worth so little (or nothing, if you have negative equity).

That's correct. Depending on the homestead exemption, if you have little or no equity, the exemption doesn't matter. It only really matters when you either own your home free and clear or have substantial equity.

Evidently 1jpb seems to think that you should be able to keep control of all your assets and default on your debts.; 1/26/09, 2:05 PM
Sprezzatura said...: Balfegor,

My snarkiness may obscure it, but I agree w/ your most recent comment.

But, it is important for us to realize that that the existing aggregate homestead laws across the nation are swiss cheese. The blanket idea that there is some guarantee folks don't lose their homes because they own them free and clear is not accurate.

Hoosier,

Nice to see that you've come around to admitting these two forms of bankruptcy do have different rules. Now you're making your true argument--you wouldn't want to have the same flexibility for individuals and corporations.

Re homesteads: see swiss cheese above. And, I'm not in favor of letting folks keep their homes, but I am in favor of not pretending that folks don't lose their homes. There is a big difference.; 1/26/09, 2:13 PM
Hoosier Daddy said...: Nice to see that you've come around to admitting these two forms of bankruptcy do have different rules. Now you're making your true argument--you wouldn't want to have the same flexibility for individuals and corporations.

I never said or alluded to the fact that there weren't two different sets of rules. In point of fact, I have repeatedly stated that there are differences between an individual and a corporation and perhaps such differences are due to the differences in treatment under bankruptcy law. Perhaps if you can expound on why a Ch. 13 is more disadvantageous to an individual we could go from there.

Re homesteads: see swiss cheese above. And, I'm not in favor of letting folks keep their homes, but I am in favor of not pretending that folks don't lose their homes. There is a big difference.

I didn't pretend otherwise. I simply said the vast majority of Ch. 7 filers don't lose personal assets. You don't have to be in bankruptcy to be foreclosed.; 1/26/09, 2:21 PM
Kirk Parker said...: ALJ,

"In a smart system, we would also preclude PACs from existing or making political contributions."

Yeah, because ensuring that citizens can make their voices heard only as isolated individuals will give them so much greater power to influence their legislators. Or something.; 1/26/09, 2:23 PM
Chennaul said...: This comment has been removed by the author.; 1/26/09, 2:26 PM
Chennaul said...: This comment has been removed by the author.; 1/26/09, 2:28 PM
Chennaul said...: If Obama can avoid the fuzzy thinkers, we will muddle out of this. If he can not, we (and the rest of the world) are f-u-c-k-e-d.

Well somewhere at the bottom of all this-where else do you put your money?

Say your an investor overseas-would you put your money in/on Canada Sweden? China?

Now, sometime Obama and Co. have to get over their own legacy building and stop the Irrational De-exhubarance.

Of course it could be all about them, Obama could be nothing but vain.; 1/26/09, 2:30 PM
Freder Frederson said...: That's the only way that capitalism works. It's just like the Darwinian view of nature.

That form of capitalism leads to catastrophic collapse of economies, violent revolutions, and wars in which 10s of millions of people die and genocidal dictators arise.

Look at the history of the first half of the twentieth century.; 1/26/09, 2:32 PM
jeff said...: "The social atmosphere on this Blog is treacherous - a caste system exists here unlike any other blog I've been too."

Uh, what? Could you clarify this a bit?

"Doesn't somebody have the key to titus's belt?"

I'm guessing we lost that a long time ago.

"Russ Feingold, recipient of an Althouse vote and contribution, just introduced the 28th Amendment: to take away the right of Governors to make Senate appointments. Instead, popular elections should decide a vacanc"

Whatever. Who's paying for this? And this is something that we need to amend the constitution with? Didn't it use to be the state legislator picked the senators?
Ah, Google, it can do anything. So the 17th amendment directed the election of senators. So how about letting the Gov pick the replacement, but add the condition that the replacement would ONLY serve out the rest of the term and would be barred from running for that office for a term. Wouldn't that make for interesting replacements.; 1/26/09, 2:32 PM
jeff said...: "That form of capitalism leads to catastrophic collapse of economies, violent revolutions, and wars in which 10s of millions of people die and genocidal dictators arise.

Look at the history of the first half of the twentieth century."

My reading comprehension must be shot. Are you actually claiming the wars in the first half of the twentieth century were due to unbridled capitalism?
Really?; 1/26/09, 2:34 PM
Hoosier Daddy said...: Freder said That form of capitalism leads to catastrophic collapse of economies, violent revolutions, and wars in which 10s of millions of people die and genocidal dictators arise.

Look at the history of the first half of the twentieth century.

Freder's knowledge of history is only matched by his grasp of physics.; 1/26/09, 2:37 PM
jeff said...: Anyone still have their chart of the caste system here? I lost mine and I am curious where Freder is on it.; 1/26/09, 2:39 PM
Chennaul said...: Ooooh that Stalin-he was such a capitalist!

(/sarc)

Wow-with freder I need the sarc tag.; 1/26/09, 2:45 PM
Chennaul said...: Well in the chaste system flow chart he's one of our vestal virgins...; 1/26/09, 2:46 PM
I'm Full of Soup said...: Kirk:

You make a good point of course.

I just wonder if we have to go back to the old one man, one vote days. And add if you are an entity that is ineligible to vote (ie. business, union, corp, LLC, non-profit, etc) you can't make political donations.

The pendulum seems to have swung too far in favor of these "non-partisan" deep-pocketed advocacy groups IMO.; 1/26/09, 2:49 PM
Sprezzatura said...: Hoosier,

Longer strip down periods, limited reassess for current value of cars when calculating repay amount, for all secured loans targeting the entire loan amount for pay back rather than the actual lowered value of the underlying asset, loosening the applicability of automatic stays, required credit training for individuals not companies, stricter requirements for tax return filing.

And, it's so funny for you to talk up the advantages of Chapter 7 after the new law was designed to make Chapter 7 tougher for individuals (e.g. limiting homestead exemptions REGARDLESS of state law) so that more of them would be forced into Chapter 13 so that corporations could better "hog tie" (that's banking term, at least that's how I learned it) their customers.

Not that I'm totally against tough laws, but it's not right for the companies to be writing the bankruptcy laws for their customers. We need balance.

And, it's not insane to suggest that armed with all these tougher bankruptcy laws for individuals banks felt comforted as the pumped up their bad lending because they had their customers even more hog tied. And, that may have been bad for the banks in the long run anyway.; 1/26/09, 2:51 PM
Anonymous said...: "Wow. The social atmosphere on this Blog is treacherous - a caste system exists here unlike any other blog I've been too."

Yes, we do have our Brahmins and our untouchables.; 1/26/09, 2:53 PM
Anonymous said...: If Chapter 7 doesn't have the advantages we've claimed for it, why is it supposed to be a bad thing if it's less available now?; 1/26/09, 2:55 PM
David said...: I got my caste taken off about three weeks ago. I'm doing therapy now.

Somebody asked: "Is it safe to assume the NYT writer, David Sanger, has a degree in journalism and maybe walked by an Economics class or two when he was in college?"

Sanger went to Harvard, got a degree in government, does not appear to have done postgraduate study and has reported on politics, diplomacy and international affairs for his entire career. He has no experience in business or government itself. He's a observer, writer and commentator.

In other words, he's never been responsible for anything but parsing other people's actions and ideas.

Now, it's possible to overcome this background and have something really insightful to say about how the worlds of business and economics works, but not likely.

I would not hire this guy if I had a tough problem to solve, no matter how smart and articulate he is.; 1/26/09, 2:57 PM
I'm Full of Soup said...: Thanks David re the Sanger background.

Bottom line is Sanger is qualified (per our caste system) to comment here on this blog. But he seems to come up short for the required street cred to write about nationalizing banks.

God I love it when I am right.; 1/26/09, 3:07 PM
David said...: If you haven't, read the article carefully. It's a nothing article, retelling some generalities without much insight or fresh thinking. If this is "elite" reporting, the NYT death spiral is going to come sooner than we think.

The only think NYT has left to offer is really great reporting on complex issues. The problem with this article isn't bias, it's mediocrity. Sanger graduated from Harvard 27 years ago and brings forth for the NYT a piece that a good Harvard Crimson reporter could produce in a day.

Terrible.; 1/26/09, 3:10 PM
Simon said...: Hmm. I could have sworn we chose hope over fear?; 1/26/09, 3:11 PM
Anonymous said...: Not that I'm totally against tough laws, but it's not right for the companies to be writing the bankruptcy laws for their customers. We need balance.

Ah, I remember now! You're talking about the more stringent individual bankruptcy law...that our current VP championed in 2005. You do realize you voted for him, right?

Thanks for the memory-jogger.; 1/26/09, 3:11 PM
Simon said...: jeff said...
"Russ Feingold, recipient of an Althouse vote and contribution, just introduced the 28th Amendment: to take away the right of Governors to make Senate appointments. Instead, popular elections should decide a vacancy"

If we had one less amendment, the kind of vacuous little pinheads who would propose such amendments would have been kept well away from the levers of power. There is a very good reason why Governors should have temporary appointment powers: to prevent a vacancy at a time of crisis. Special election take time. If Feingold had bothered to read the voluminous studies done on continuity of government after 9/11, instead of wasting his time and ours in a self-righteous circlejerk with the leftosphere about how awful the Bush administration was, he might recall that the consensus of those studies was that the 17th Amendment's appointment authorization made the Senate the branch most likely to survive a catastrophe. Unlike the House, which would take months to reconstitute because there was no special election provision, the Senate could be rapidly repopulated, dramatically increasing the speed at which the country could get back on his feet. And dipshit Feingold wants to undo that - to potentially hobble this country at the very moment it would most need flexibility - because a Democratic governor embarrassed the party? He should hang his head in shame.; 1/26/09, 3:19 PM
Joe said...: Are appointed senators historically any better or worse than elected senators?

I also find it ironic that one giant solution to campaign financing for the Senate is to drop the campaigning entirely.; 1/26/09, 3:25 PM
David said...: "Well somewhere at the bottom of all this-where else do you put your money?

Say your an investor overseas-would you put your money in/on Canada Sweden? China?"

No. If we go down, they go with us.

Where to hide?

1. Pay off all debt you can.
2. Own some gold or gold shares.
3. Own more gold.
4. If you have a job, do everything you can to keep it.
5. Own Treasury Bills, despite the zero percent interest. Or insured bank deposit. The US government will likely still be around.
6. Make peace with God and your family.
7. Pray.; 1/26/09, 3:26 PM
TitusInTheNameofLoveYeah said...: I am outraged.

I am not going to take it any longer.

I am ready to pull a train. I mean rob a train.

We are sinking. We are dieing. Everyone, hurry up, get laid. It may be the last lay of your life!!!!!

My balls are very tight right now as well. Does anyone else have tight balls currently?; 1/26/09, 3:27 PM
TitusInTheNameofLoveYeah said...: We are melting, man OverBoard!!!

Every man for himself.

The fires are burning.

Oh Beautiful For Spacious Skies

Bullets over Broadway.

Help, Antie Emmm, Autien Emm!!!!!

God Save the Queen.; 1/26/09, 3:29 PM
BJM said...: Freder said: Actually, Sweden is neutral. It was neutral in WWII, it remained neutral after WWII. It is not a member of NATO and is not under the American military umbrella.

Actually Sweden's status was of a non-combatant during WWII.

The Swedish govt made pragmatic choices not to defend Norway or Finland and made many concessions to Germany, for example allowing the Wehrmacht to use Swedish railways and the extensive export of iron ore for the German weapons industry. As Germany weakened the Allies pushed for Sweden to abandon its trade with Germany, and to stop all German troop transit over Swedish soil. Sweden accepted payments from the Allies to compensate for loss of income, but continued to sell steel and machined parts to Nazi Germany at smuggler's prices.

To their great credit the Swedes managed to save most of Finland's Jews from the Holocaust at great risk to themselves and took in tens of thousands of dislocated and orphaned children.

Sweden remained free after WWII because NATO drew the line in Europe. That the Soviets wouldn't have invaded Sweden on the basis of their neutrality doesn't pass the laugh test, especially given Sweden's strategic position on the Baltic Sea.; 1/26/09, 3:30 PM
jeff said...: anyone find that damn key yet?; 1/26/09, 3:38 PM
ricpic said...: If you were a despised straight, Titus, you could lie in a woman's arms and cradle your head between her tatas for comfort. Instead you're limited to being tea bagged. What deprivation.; 1/26/09, 3:48 PM
Freder Frederson said...: Ooooh that Stalin-he was such a capitalist!

The point is that unbridled capitalism--that which so many on this site are so enamored of--led to the economic, social, and political upheaval that created the conditions for two World Wars. Fascism and communism (and social democracy) arose because of the instability caused by free-wheeling capitalism.

On the other hand, the parade of horrors that Hayek touted during World War II if the Western Democracies followed their "Road to Serfdom" (even though they adopted the economic policies he warned against) never came to pass.; 1/26/09, 3:50 PM
KCFleming said...: "unbridled capitalism--that which so many on this site are so enamored of--led to the economic, social, and political upheaval that created the conditions for two World Wars. Fascism and communism (and social democracy) arose because of the instability caused by free-wheeling capitalism."

Jesus. This wins the prize for the stupidest comment of the past 5 years.; 1/26/09, 3:52 PM
Beau said...: Beau -- Canadian banks have a federal charter, but they are nothing remotely resembling nationalised. Never have been.

In 1938 the government amended the Bank of Canada Act and nationalized the bank.
Although it remains a Crown Corporation and is owned by the federal government, the bank does enjoy a certain degree of independence from the government.
... from the website; 1/26/09, 4:03 PM
George M. Spencer said...: Pogo--

Someone using the name "Freder Frederson" posted this at another website in August 2006:

"I have consistently overestimated the intelligence and good sense of the Bush administration. And therefore, I am of the opinion, that if worse comes to worst, Bush and Rumsfeld will let it get even worse. They will ignore all the warnings of the professional military and as the Army slowly starves, and most importantly, runs out of fuel, they will insist every thing is just fine, until it is too late.

Remember, the most important and essential thing for the Army is its fuel supplies. All its fuel is trucked from Kuwait. The obvious way to really fuck the Army up north is to start blowing up the fuel convoys heading north. The fuel (JP-8--basically diesel) is trucked up north in tanker trucks just like the ones you see on the road here every day. The ones operated by the Army are painted green or desert sand, other than that they are completely unarmored. However, the vast majority are operated by contractors and driven by foreign nationals (Pakistanis, Somalis, Indians, Turks). The insurgents don't even have to blow up all the fuel trucks to stop the shipments. They just need to blow up enough of them to convince the contract drivers that whatever they are getting paid it is not worth it and they quit and go home.

The M1 tank gets about 3 gallons per mile (not mpg), the Bradleys do a bit better. They were designed to fight a defensive war in western Europe with an extensive road network and short supply lines. Actually, our whole supply and logistics system was designed to fight a war in Europe. That is why we are destroying our equipment in Iraq.

Our soldiers will end up walking and riding camels back to Kuwait, and that will not be a pretty sight. Sure we will be able to provide them with air support. But our most deadly close air support assets are extremely vulnerable to shoulder fired anti-aircraft missiles, which of course there are plenty of floating around Iraq. We don't have many AC-130s in the inventory and if the Iraqis demonstrate that they can shoot a couple down, they would probably quickly be pulled."

Now that's stupid....fantasies of American defeat and humiliation in Iraq.; 1/26/09, 4:04 PM
KCFleming said...: He's an idiot in 2 spheres.

Mebbe he should do a post on sports, and try for 3 outta 3.; 1/26/09, 4:09 PM
I'm Full of Soup said...: Something about this stimulus plan that makes me think of the old Monty Python song...SPAM SPAM SPAM SPAM SPAM. Don't ask me why as I have not figured that out yet.

Could it be that we all may soon be eating SPAM three times a day?

Bet that would ruin Titus's day not to mention his loafs.; 1/26/09, 4:10 PM
Beau said...: Say your an investor overseas-would you put your money in/on Canada Sweden? China?

Canada for me. Though if I had shares in Halliburton, I'd have kept them:) The moment Bush took y'all to war I transferred all my US investments to Canadian. It was an easy decision, from my perspective (not American and not caught up in the emotional/political drama of the moment), to see that the US economy had the potential of ending up in the toilet.; 1/26/09, 4:15 PM
Automatic_Wing said...: The moment Bush took y'all to war I transferred all my US investments to Canadian.

You sound like a real financial genius. But have you considered the fact that 87% of Canada's exports go to the US? If the US economy goes in the toilet, Canada is sure to follow and quick.; 1/26/09, 4:20 PM
Chennaul said...: Chambliss, Inhofe, Thune and Susan Collins-yes Susan Collins voting against Geithner appointment.

Beau-

You do know that Harper is a Conservative-right?

Still what's the GDP of Canada again?

And of course the Canadian economy is completely insulated from that of the United States....or so you seem to think.; 1/26/09, 4:21 PM
JAL said...: 2:04 This will be the crucial decision of Obama's Presidency, and he will have to make it in a week or two. He has to be clear in his decision. No muddy middle path this time.

He wants to vote present.; 1/26/09, 4:26 PM
Beau said...: You sound like a real financial genius.

I'll lay odds that I'm looking a whole lot better financially than you right now. I also, purchased a lot of gold.

But have you considered the fact that 87% of Canada's exports go to the US?

You want our oil, you want our water, you want our timber, and many other natural resources.

If the US economy goes in the toilet, Canada is sure to follow and quick.

It's not going to be good for any country given the wonderful job the Bush administration did over the past 8 years. Thanks for that.

For all the pearl clutching going on here about Obama, Bush's words mid December seem to have been forgotten.
"I’ve abandoned free market principles to save the free market system."

I personally don't think much of Obama's plan to continue on what Bush began as a solution. I'd have let the fu***kers go down with the ship. All that bailout money now sitting in offshore accounts. WTF, Paulson, Bernanke, and that dickhead Greenspan should be hung out to dry.

I'm with David on this. Don't live on credit, save, buy gold, and do whatever you can to hang onto your job.; 1/26/09, 4:36 PM
Bob said...: "They were designed to fight a defensive war in western Europe with an extensive road network and short supply lines. Actually, our whole supply and logistics system was designed to fight a war in Europe. That is why we are destroying our equipment in Iraq."

How about acknowledging US designed the Abrams for an offensive style of war. Being able to hit a target over a mile away while moving 50+ mph isn't defnsive. The whole supply and logistics system was recreated in Iraq (and halved in Europe). I can say from personal experience that WE are not destroying our equipment. Seems some people (AQ, Iraqis - Sunni mostly, and Iranian Kuds force) don't like us in the neighborhood. So they plant IEDs and put on vests.; 1/26/09, 4:42 PM
Beau said...: You do know that Harper is a Conservative-right?

He's a dick too. His economic plan last December comprised basically of two irrelevant solutions. He didn't start paying attention until the opposition formed a coalition to chuck the conservatives out. When it looked like he was going to lose his job he began to take things seriously and had the Governor General prorogue government so that he could get his shit together. They are all a bunch of wankers.; 1/26/09, 4:45 PM
Chennaul said...: This comment has been removed by the author.; 1/26/09, 4:49 PM
Beau said...: God Save the Queen.

Actually, while we're all having this done to us, it's a case of lying back and thinking of England.; 1/26/09, 4:49 PM
BJM said...: AJ Lynch said...

Something about this stimulus plan that makes me think of the old Monty Python song...SPAM SPAM SPAM SPAM SPAM. Don't ask me why as I have not figured that out yet.

Could it be that we all may soon be eating SPAM three times a day?

Why ever not? Soon we'll be living in the lake.; 1/26/09, 4:52 PM
Beau said...: You do know what the price of oil and timber has been doing?

The actual price of oil is irrelevant. It's speculators who drove it up last year. Right now the important issue isn't the cost, but who has it, until alternate energies are developed.; 1/26/09, 4:53 PM
KCFleming said...: Actually, I think Beau is quite right, and very bright. Smarter than me by a long shot in re investing.

He's nailed the threats pretty well, I think. in short, we're fucked. And we just made the folks who screwed it up very wealthy.

Goodbye, dollar, we hardly knew ye.; 1/26/09, 5:03 PM
Anonymous said...: Blaming the great wars of the last century on "unbridled capitalism" faces the same problem as blaming the Great Depression on same: Why was the bad thing so long in coming, considering how long capitalism had been "unbridled" beforehand? And especially, why did it wait until a time when capitalism was considerably more bridled than formerly?; 1/26/09, 5:06 PM
vbspurs said...: Susan Collins

Ooh! Ooh! Proof positive that she is still royally pissed with the Dems for running a nasty re-election campaign against her, in Maine.

"The tactics used by Democrats to secure at least 58 Senate seats may have damaged their chances of winning vital support from Sen. Susan Collins (R-Maine) in key votes in the 111th Congress.

Collins told colleagues at a small Senate prayer breakfast meeting last week that she still felt lingering resentment toward Democratic senators who campaigned against her in Maine.

She confessed that she had “trouble forgiving colleagues” who traveled to Maine and told voters she was “a Bush clone and called into question her ethics,” said a senator who attended the meeting."

Woman bites dog.

Cheers,
Victoria; 1/26/09, 5:10 PM
Henry said...: The point is that unbridled capitalism--that which so many on this site are so enamored of--led to the economic, social, and political upheaval that created the conditions for two World Wars. Fascism and communism (and social democracy) arose because of the instability caused by free-wheeling capitalism.

Freder. Read up on Bismark.; 1/26/09, 5:13 PM
Kirby Olson said...: Hitler started the biggest war of the twentieth century, and he was a National Socialist.

A lot of the wars of the twentieth century starred communists of various stripes.

The North Vietnamese, for instance, killed a lot of Americans. 50,000 or so.

Stalin killed all kinds of people.

Democratic capitalists don't generally start wars according to Amartya Sen because they have something to lose, and there are votes at stake.

Communism only works by savaging the wealthy and functional. First they have a Civil War and seize the assets of the wealthy Jews, or the wealthy bourgeoisie, and then they continue pillaging in neighboring countries until someone finally puts a silver stake in their vampyric heart.

Obama is beginning with the idea of "spreading the wealth around," which is another term for pillaging, or dipping his beak in the blood of others.

After he's drained, let's see what he does next.

Mexico or Canada, I presume, will somehow be next up.; 1/26/09, 5:18 PM
Revenant said...: The point is that unbridled capitalism--that which so many on this site are so enamored of--led to the economic, social, and political upheaval that created the conditions for two World Wars.

It takes a special kind of ignorance to think that "unbridled capitalism" existed in Europe prior to either world war.; 1/26/09, 5:19 PM
vbspurs said...: Freder. Read up on Bismark.

Guys, it's no use. Trust me when I say this as a trained historian. Every person in continental Europe thinks that socialism is a bullwark against the worst excesses of capitalism, and that furthermore, classical liberalism led to National Socialism in Germany, etc.

Europeans have a Spengler idée fixe about history...

Cheers,
Victoria; 1/26/09, 5:20 PM
Kirby Olson said...: I meant to write, After he's drained this country dry, let's see what he does next.; 1/26/09, 5:21 PM
Chennaul said...: Victoria-

Interesting-I didn't know that.

Thanks for the link.; 1/26/09, 5:23 PM
Anonymous said...: The point is that unbridled capitalism--that which so many on this site are so enamored of--led to the economic, social, and political upheaval that created the conditions for two World Wars. Fascism and communism (and social democracy) arose because of the instability caused by free-wheeling capitalism.

You can certainly make an argument for the Great Depression as a catalyst, if not a cause, of World War II, although you can debate to what extent "unbridled capitalism" was responsible for the Great Depression (e.g., what part did the rise of protectionist policies play in exacerbating and extending the economic downturn?). However, I'm not aware of any significant factor "unbridled capitalism" played as a contributing factor to World War I (as opposed to treaty entanglements, the rise of nationalism, competition for colonies and resources, etc). Would you care to enlighten us?; 1/26/09, 5:24 PM
Chennaul said...: Of course I'm talking about the Susan Collins story.; 1/26/09, 5:26 PM
vbspurs said...: My pleasure, Mad. I meant to compliment you earlier on a funny thing you said. Must look for it. :); 1/26/09, 5:28 PM
Bruce Hayden said...: You can certainly make an argument for the Great Depression as a catalyst, if not a cause, of World War II, although you can debate to what extent "unbridled capitalism" was responsible for the Great Depression (e.g., what part did the rise of protectionist policies play in exacerbating and extending the economic downturn?).

I think it much easier these days to argue that the Great Depression was a result of government intervention and socialism.; 1/26/09, 5:40 PM
Revenant said...: You sound like a real financial genius. But have you considered the fact that 87% of Canada's exports go to the US?

Yeah, I had to laugh when I read that Beau had put his money in CANADA in order to avoid the decline of the American economy. That's like avoiding the collapse of the housing bubble by moving your money from mortgage securities to home construction stock.; 1/26/09, 5:49 PM
Beau said...: Yeah, I had to laugh when I read that Beau had put his money in CANADA in order to avoid the decline of the American economy.

Laugh on. Doing what I did made for a happy situation for me.

That's like avoiding the collapse of the housing bubble by moving your money from mortgage securities to home construction stock.

If I'd done that then it would,but I didn't.; 1/26/09, 5:54 PM
Sprezzatura said...: Look at what aconservative economist not as smart as Rush, and many Althouse commenters is saying:

"It grieves me to say so, but President Obama's conservative critics just don't get it. The new president has put forward a plan for economic recovery that is more coherent than they are willing to admit. "

Of course the whole piece isn't BHO cheer leading. But, it seems like conservative folks would be better off if they turned off Rush, and turned to Stelzer, imho.; 1/26/09, 6:14 PM
David said...: "The point is that unbridled capitalism--that which so many on this site are so enamored of--led to the economic, social, and political upheaval that created the conditions for two World Wars. Fascism and communism (and social democracy) arose because of the instability caused by free-wheeling capitalism."

Here we go again: the single cause approach to history. Find the thing you dislike, and then attribute all bad things to that cause.

A few other causes come to mind:

1, Monarchical and nationalist rivalries
2. Incompetent monarchs and politicians
3. Imperial ambitions
4. The rise of a new force that created a power imbalance in Europe (German Unification.)
5. The political, economic and moral weakness of Russia, which invited internal revolution and external rivalry.
6. The collapse of the monarchical system and the rise of parliamentary influence, which was unstable and unsophisticated.
7. A class system that enabled governments to send millions of lower class people to death in war
8. The fact that Europe had avoided major war for nearly 100 years and had forgotten its destructiveness.
9. Terrorism (Assassination of the Archduke).

This has not gotten us even halfway through the forces leading the The Great War of 1914-18.

The causes of the Second World War are perhaps a little more straightforward and the economic collapse of the 1930's certainly played a part.

The only successful communist movement arose in Russia, which was more of a feudal society than a capitalist one. National Socialism was made possible military defeat and the collapse of the moral authority of much of the leadership of German society.

Sure, the inequities and failures of Darwinian capitalism were a factor, but not likely the decisive one.; 1/26/09, 6:33 PM
Revenant said...: Laugh on. Doing what I did made for a happy situation for me.

This is just the finance version of "I have a hot girlfriend and plus I can kick your ass because I know karate". On the internet nobody knows you're a dog.; 1/26/09, 6:41 PM
Simon said...: 1jpb said...
"Look at what a conservative economist not as smart as Rush, and many Althouse commenters is saying: 'It grieves me to say so, but President Obama's conservative critics just don't get it. The new president has put forward a plan for economic recovery that is more coherent than they are willing to admit.'"

I'm sorry -- who has claimed that the plan is incoherent? I don't know of anyone calling it incoherent. Flawed, dangerous, bad, &c., sure, but that's a very different point. Who says it's incoherent? Let's see an example.; 1/26/09, 6:47 PM
Revenant said...: Of course the whole piece isn't BHO cheer leading. But, it seems like conservative folks would be better off if they turned off Rush, and turned to Stelzer, imho.

Maybe you should have read it. Essentially all he says -- although he takes a lot of words to say it -- is that while the stimulus package might make things worse, it is possible that it could make things better.

Consider that point duly noted. Let's just say that if the government is going to borrow and spend a trillion dollars on my behalf, I want something better than "well it might work or it might not".; 1/26/09, 6:49 PM
jeff said...: "Of course the whole piece isn't BHO cheer leading. But, it seems like conservative folks would be better off if they turned off Rush, and turned to Stelzer, imho."

Why? Are you saying the recession is over and it was Obama's stimulus package that fixed it?

Appealing to authority will more impressive if the stimulus package works. I have my doubts.; 1/26/09, 6:52 PM
Sprezzatura said...: I'm having trouble figuring out where folks are coming down re agreeing or disagreeing w/ Stelzer's piece. Correct me if I'm wrong.

Revenant agrees w/ Stelzer [BTW, I did read the whole thing. I thought he was saying if BHO sticks to what BHO says the plan is positioned to work, w/ the ubiquitous economist caveat that nobody of any political preference will guarantee something will work--if you're waiting for a thoughtful economist w/o that caveat you'll be waiting for a long time (of course there are the Krugman types on both sides, who think they walk on water, but I'd stay away from them.)]

Simon disagrees w/ the overall sentiment of the Stelzer piece, but he agrees with the quote I excerpted.

Jeff; I have no idea.; 1/26/09, 7:12 PM
jeff said...: "Jeff; I have no idea."

Pretty simple, not sure why you dont get it. You say:
"Of course the whole piece isn't BHO cheer leading. But, it seems like conservative folks would be better off if they turned off Rush, and turned to Stelzer, imho."

And my point is why are they better off? Based on what? Was he correct about the stimulus package? In other words if I find a economist that agrees with Rush or whoever, can I now say you would be better off listening to Rush?; 1/26/09, 7:29 PM
Revenant said...: I thought he was saying if BHO sticks to what BHO says the plan is positioned to work

You thought wrong. What he argues is that if the Obama government sticks to the plan and the theory they're working under is correct, the plan is positioned to work. Many economists (and most conservatives, excluding fans of big government like Bush and McCain) think the theory in question is a load of dingo's kidneys. As a parallel, if a priest decided the way to end the crisis was to pray for divine intervention, and he fashioned a prayer to that effect which was uttered during a traditional Christian church service -- well, that would be a coherent plan. Its just that the "God will fix the economy" theory underlying it is wrong.

Stelzer's point was that Obama's plan was coherent, not that it was a good plan. Obama has a story on how to fix things, and the plan fits with that story. The Republicans, in contrast, aren't offering a coherent plan -- just criticism of the Stelzer plan. That's the point Stelzer was getting at.; 1/26/09, 7:45 PM
Anonymous said...: I also don't know who these people are who regard the plan as incoherent rather than bad, but if Steltzer were all I had to go on I might have been one of them. He admits that there's not much fiscal stimulus there, and has no idea whether the programs are independently justifiable or not, but hopefully suggests that if they are, they'll be good for us in the long run. On the other hand, there's the huge increase in debt, which might throttle the recovery later on-- but that's the long run, and who cares about the long run? We also learn that reining in the huge new entitlement programs and the huge old ones will be easier than reining in just the old ones, but we don't learn why.; 1/26/09, 7:52 PM
ricpic said...: Where have you gone Unbridled Capitalism
Our nation turns its lonely eyes to you
Woo woo woo
Woo woo; 1/26/09, 8:02 PM
Beau said...: This is just the finance version of "I have a hot girlfriend and plus I can kick your ass because I know karate". On the internet nobody knows you're a dog.

That's applicable to everyone. However, it doesn't change my philosophy and what I did.

My point is, that everyone should think for themselves. Embracing Bush's policies didn't work out well for you; neither should anyone blindly follow Obama. Take care of your own shit, and follow a personal economic path that doesn't rely on someone else to save you.

I don't get anyone who goes along with policy for reasons partisan. I don't, haven't, and am better off for it. Mock and dismiss but I'm not the one who's been standing around with my head up my arse for 8 years, voting for Bush TWICE (give me strength!), while he drove my country into the dirt. Dirt that China now owns. Meanwhile he’s headed back to Texas to cash in his Haliburton shares.
You on the other hand, continue to waffle on while Rome burns.; 1/26/09, 8:05 PM
Automatic_Wing said...: However, it doesn't change my philosophy and what I did.

What you did was invest your money in Canada, which happens to be the industrialized country *most* reliant on a healthy US economy. Which doesn't make any sense, when you consider that you're also saying that same US economy is doomed. For your story to make any sense, you should be investing in countries that have minimal interaction with the US - like Papua New Guinea or Zambia or someplace.; 1/26/09, 8:18 PM
Sprezzatura said...: Revenant,

Could you link to the top six economist who provide detailed, reasoned, and precise opposition to the particular details of the BHO plan? You speak of many economists in opposition so this should be an easy lift.

I'm serious, I'd like to read their ideas. Hopefully they aren't the trite opinions I'm already familiar with--you know, like the right's version of Krugman.; 1/26/09, 8:28 PM
Revenant said...: That's applicable to everyone. However, it doesn't change my philosophy and what I did.

What you claim is that you "transferred all [your] US investments to Canadian" when "Bush took [us] to war".

This is funny for a number of reasons. First, because (as has been noted) no nation's economy is more tightly tied to the health of the United States than that of Canada. Even China is less dependent on our economic well being. Canada is America's little economic remora.

The second reason this is particularly hysterical is that March of 2003, i.e. "when Bush took y'all to war", was when the US economy was at its worst -- the DJIA was at 8174, down 20% from when Bush took office. From the point where Bush "took us to war" US markets soared 70% over the next four and a half years. The market didn't fall below its 3/03 level again until three months ago.

In short, your claim is that you cashed out of the American market just in time to avoid nearly doubling your investment in four years -- so that you could invest in the one nation guaranteed to be completely fucked if the American economy tanks. The jokes, they write themselves.; 1/26/09, 8:30 PM
Revenant said...: This comment has been removed by the author.; 1/26/09, 8:33 PM
Beau said...: What you did was invest your money in Canada, which happens to be the industrialized country *most* reliant on a healthy US economy. Which doesn't make any sense, when you consider that you're also saying that same US economy is doomed.

I get that you can't understand that someone could have the foresight to make investments that are not based entirely on the US economy. US policies haven't been the shining example of prudence and good management to the rest of the world for a while now. In time, the US will no longer dominate the global economy and that's not a bad thing. Just sayin'.; 1/26/09, 8:53 PM
Revenant said...: Could you link to the top six economist who provide detailed, reasoned, and precise opposition to the particular details of the BHO plan? You speak of many economists in opposition so this should be an easy lift.

No, I said many economists disagree with the theory behind the stimulus package. The details of the plan are important in the sense that the specific kicks, punches, and slaps used in beating a child are important to a person who does not accept the theory "the best way to teach children to behave is to beat them". I.e., not important at all.

The specific theory that many economists object to is the theory that the government can promote growth by borrowing money and then spending it. Even if none of the money goes into political pork projects (and of course much of the Obama plan goes to exactly that) and all of it goes into what an objective observer would probably consider economically useful projects, the government's allocation of that money will be less efficient than what the market would have done.

Google "criticism of Keynesian market stimulus". You'll find enough reading material to last you a lifetime. :); 1/26/09, 8:55 PM
Ralph L said...: I own some Royal Bank of Canada stock, so I presume it isn't wholy government owned. It's done better than most large banks.; 1/26/09, 9:08 PM
Automatic_Wing said...: I get that you can't understand that someone could have the foresight to make investments that are not based entirely on the US economy.

Well, congratulations, I guess. Your portfolio of Canadian investments is only around 90% dependent on the US economy.; 1/26/09, 9:12 PM
Beau said...: Reverent: Whatever. Not much point for you to parse through what you think I could have done better is there now? We'd all be billionaires with 20/20 hindsight.

It worked. It could have not worked, but at the time and listening to the hysterical call to go to war, I trusted my own instincts and it paid off.

I was responding to Madawan's post 'Say your an investor overseas-would you put your money in/on Canada Sweden? China?'

My response was Canada and gold. I don't play around with my investments. I'm cautious and conservative. It wasn't about making quick money, I took a long view that worked in my favor.; 1/26/09, 9:16 PM
DaLawGiver said...: This is just the finance version of "I have a hot girlfriend and plus I can kick your ass because I know karate".

Well, I do have a hot girl friend and I can kick your ass because I do know karate but I won't because I bought $300,000 worth of Krugerrands at 250 per oz in 2002 and am too busy enjoying my new 1000 acre ranch I bought in Colorado. Did I mention my new house is solar/wind powered and that I have my own water well? So piss off.; 1/26/09, 9:20 PM
Beau said...: Well, congratulations, I guess. Your portfolio of Canadian investments is only around 90% dependent on the US economy.

Well thanks. But.not.all.Canadian.
investments.are.dependent.on.
the.US.economy.

I know, it's difficult to understand, but you seem to be laboring under the mistaken belief that the US is the center of the universe. There are investment opportunities that are not dependent on the US economy.; 1/26/09, 9:34 PM
Revenant said...: Not much point for you to parse through what you think I could have done better is there now? We'd all be billionaires with 20/20 hindsight.

You don't get it. You tried to brag that hindsight shows your decision to bail from America to Canada in 2003 was the smart play. In reality it was (a) a stupid idea, as Canada is entirely at the mercy of the American economy and (b) not actually profitable, since you missed out on a four-year boom.

I'm not saying you should have been able to know you'd miss the boom or know when the right time to sell off would have been. I'm just amused that you think hindsight shows you to have been smarter than the rest of us.; 1/26/09, 9:35 PM
Revenant said...: But.not.all.Canadian.
investments.are.dependent.on.
the.US.economy.

Sure. Some are just dependent on the Canadian economy... which is dependent on the US economy.

Although I'm sure that your next claim will be that you invested in Canadian investments that have nothing to do with the economy of Canada, either. It's the little known non-Canadian Candian Index Fund, or NCCIF.; 1/26/09, 9:37 PM
Beau said...: I'm not saying you should have been able to know you'd miss the boom or know when the right time to sell off would have been. I'm just amused that you think hindsight shows you to have been smarter than the rest of us.

I've made no claim whatsoever. Jesus man, get over it.; 1/26/09, 9:39 PM
Sprezzatura said...: Revenant,

Are you acknowledging that you can't provide six economists who provide detailed, reasoned, and precise opposition to the particular details of the BHO plan?

Sadly, I overestimated you.

Now that you're sending me to Google searches for unspecific (to BHO's plan), generic anti-Keynes perspectives I can see that you didn't even comprehend the Stelzer excerpt I put in my comment:

"It grieves me to say so, but President Obama's conservative critics just don't get it. The new president has put forward a plan for economic recovery that is more coherent than they are willing to admit."

You're one of those who can't get past the obscure, unspecific google doctrine searches.

Disappointing.

Maybe someday you'll get those six links. I'm not holding my breath.; 1/26/09, 9:48 PM
Revenant said...: I've made no claim whatsoever.

You stated about that you'd lay odds that you were better off than people who hadn't bailed out of their US investments.

Jesus man, get over it.

Get over it? I'd just having fun mocking an internet blowhard.; 1/26/09, 9:49 PM
Beau said...: You stated about that you'd lay odds that you were better off than people who hadn't bailed out of their US investments.

Now your just making it up as you go along. You must win a lot of arguments that way.; 1/26/09, 9:58 PM
Beau said...: You're..not your.; 1/26/09, 9:59 PM
Revenant said...: Are you acknowledging that you can't provide six economists who provide detailed, reasoned, and precise opposition to the particular details of the BHO plan?

I explained why providing detailed and precise objections to the specifics of Obama's plan was not necessary to support my earlier claim. I'm unaware of any precise and detailed economic argument for OR against Obama's plan, which is unsurprising considering that it isn't finalized yet.

I think your problem is that you take it for granted that the government can fix the economy by borrowing and spending -- so to you, the only argument is over whether specific kinds of borrowing and spending are good or bad. But you're missing the whole branch of economics that holds that government borrowing and spending inherently suppresses economic growth -- whether the government is buying roads and hospitals or hookers and cocaine. The only difference is how *much* the government's activity hinders economic growth. This is one of the lines of economic thought I was thinking of when I said that many economists object to the theory behind Obama's plan.

Now that you're sending me to Google searches for unspecific (to BHO's plan

In support of my claim that many economists disagree with the theory behind Obama's plan, I suggested a search that would yield countless links to arguments against the theory behind Obama's plan. I'm not sure why you object to this, but my working theory is that you're not very bright.

generic anti-Keynes perspectives

"Generic anti-Keynes perspectives"? What might those be?

Keynesian economics was dominant for half a century and continues to be extremely popular. More criticism of it has been written than you could read in a lifetime. There is no "generic" opposition to it any more than there is generic opposition to Communism or free markets or any other large and influential body of thought. There are a wide range of economic theories that hold that "we'll save the economy by borrowing lots of money and spending it" is a dippy idea, and their reasons for thinking this are equally varied.

I can see that you didn't even comprehend the Stelzer excerpt I put in my comment:

I entirely comprehend it. It is just that I know what the word "coherent" means and you don't. You think "coherent" means "good" or "effective". It just means "logically consistent". A plan can be logically consistent and still be a bad idea to implement if the axioms on which it is based -- the economic theory that government spending stimulates the economy, in this case -- is wrong.; 1/26/09, 10:45 PM
Sprezzatura said...: Revenant,

Turns out I do know what incoherent means. I just read your comment, which was an excellent example of blather that did not form a coherent reason to oppose the particular, specific details of the BHO plan?

For some reason you can't see that your random google attacks on Keynes is different than a coherent attack on BHO's plan.

Re generic:
1. Relating to or descriptive of an entire group or class; general. See Synonyms at general.

OK, so you are making precise claims related to BHO's plan. You explicitly say that BHO's plan will "suppresses economic growth" You say that your view is easy to back up with a "whole branch of economics."

Please provide six links to economists (expressing views based on data) that prove that BHO's plan to have the feds borrow to send money to the states, pay for infrastructure, and reduce taxes will suppress the GDP, in the current financial slowdown, more than would have occurred w/o the stimulus? In other words, make a coherent argument that uses data and relative historical econometrics that are precisely related to the particulars of and the economic situation surrounding BHO's plan. Anything less is just more generic BS because it's not applicable.

Or, just admit that you don't have a coherent response to the BHO plan. [We both know that's the truth anyway.]; 1/27/09, 1:05 AM
Sprezzatura said...: Yes, I do realize that google results aren't random. Don't want to get you all off track looking for diversions again.; 1/27/09, 1:12 AM
Revenant said...: Turns out I do know what incoherent means. I just read your comment, which was an excellent example of blather that did not form a coherent reason to oppose the particular, specific details of the BHO plan?

Of course it did. The theory that government borrowing and spending is a net hindrance to economic growth is a coherent and logical reason for an adherent of that theory to oppose any and all "stimulus packages" that involve the government spending borrowed money.

So we see, again, that you don't know what "coherent" means. You think that just because you don't agree with that theory, the argument is incoherent. That's false. The argument may (in your opinion) be wrong, but it is logically sound.

Re generic: 1. Relating to or descriptive of an entire group or class; general.

Like I noted before, the idea that you can lump opposition to Keynesianism into a group is quite funny to someone who has actually studied economics. :)

Please provide six links to economists

I will provide one link to an economist for each time you demonstrate understanding of the argument I've made. So far I owe you zero links. :); 1/27/09, 3:14 AM
AllenS said...: I find Obama's coherent plan, incoherent as far as where he's going to get the money. Or do I have my in/coherents mixed up?; 1/27/09, 7:05 AM
Anonymous said...: The link I want to see is one* arguing for the stimulatory effect of the spending plan without reference to a Keynesian multiplier. In the absence of such an argument, Revenant's "generic" attacks would seem to be directly on point.

*I was tempted to demand six, but worried that people might mistake it for a desperate attept at delay.; 1/27/09, 8:29 AM
Beau said...: I will provide one link to an economist for each time you demonstrate understanding of the argument I've made.

Another internet blowhard. We should form a club; 1/27/09, 12:07 PM
Revenant said...: *I was tempted to demand six, but worried that people might mistake it for a desperate attept at delay.

Meow!; 1/27/09, 3:36 PM
hdhouse said...: how in the world can the government do worse than Citi, WaMu, etc. have done?...Even under Mr. Bush, a chucklehead of the first order, the banks were run worse than the white house...

I fail to see their defense or those who argue against nationalization. Banks have a unique duel obligation - to their depositors and shareholders and to the national monetary system and financial framework in general. The rule should be simple: you cannot afford to have banks badly managed as it hurts all parties and in this time of razor thin margins of error, it is 3 strikes and you are out...rather than buy more baseballs to swing and whiff at.; 1/27/09, 4:38 PM
Revenant said...: how in the world can the government do worse than Citi, WaMu, etc. have done?

The government's yearly budget is $2 trillion in the red. It has $12 trillion in debt and $40 trillion in unfunded Social Security and Medicare obligations.

Care to name a corporation that's $52 trillion in the red and losing two trillion a year?; 1/28/09, 1:27 AM