Thanks for some straight talk on the disaster that “free market” fundamentalists have inflicted on American’s national and economic sovereignty.

I can’t really understand how Takimag can abide an zealot like Raimondo romancing Ayn Rand on the front page of your website, when it was her social and cultural views that justified the sort of policies pursued by Alan Greenspan---a member of her “inner circle”---that have caused the problems for the American middle class you describe.

It’s been a great run for Conservatives and the Republican Party to leverage the social issues to win elections in the last 30 years, while they governed like plutocrats, but with the economic destruction of the middle class, that will end soon.

Real paleo-conservatives will have the worst of both worlds in the next few years as America moves away from God and Country to the form of atheistic capitalism and endless wars on behalf of the finance capitalist system that the so-called “Libertarians” like Justin Raimondo and other admirers of the “cult of individualism” that Ayn Rand and Alan Greenspan have used as a justification for the destruction of the American middle class.

The only thing remarkable about the Bear-Stearns “bailout” is that anybody should regard it as remarkable. Indeed, such gov’t intervention is part and parcel of the history of capitalism. Capitalism (defined as absolute and unlimited ownership of property that has no social obligations) begins with an act of gov’t violence (the seizure of the monastery and guild lands and the enclosure of the commons) and the power of both the capitalists and the govmint grow hand-in-hand.

Pure capitalism has never been a stable system; from 1853 to 1953, the economy was in recession 40% of the time. Since then, that is, since the time of massive increase in gov’t intervention, it has been in recession only 15% of the time. And the recessions were shorter and milder in this latter period.

With all due respect to such neo-Austrians as Justin Raimondo (whose anti-war work I really do respect), there simply is no historical precedent for their views. Economic Austria and social chaos share a common border, and you cannot draw near to the one without coming close to the other.  But when we draw near to the chaos, everybody turns to the govmint to avert the crises.

Since the 80’s, the rhetoric of Hayek has ruled the political and economic debate. But the results have been counter-productive. Every state that adopted Hayek’s rhetoric has ended up with the opposite effects of those predicted: higher debt, greater gov’t power, greater centralization, etc. This was true in Britain, the United States, Argentina, Chile, and all the countries that had Hayek-inspired “structural adjustment programs” forced on them by the World Bank.

Now we have reached the point where we cannot pay our debts, nor fight our wars, nor meet our social obligations, nor even provide good jobs to the majority of our citizens, sure the minimum test for any economy.

Bear-Stearns is simply another episode in the history of gov’t intervention, without which the capitalist system would collapse of its own weight. But sooner or later (and I suspect sooner), the gov’t runs out of tools and the system cannot be sustained.

Hartman agrees with Steve Sailer that the roots of the crisis are in federal pressure on lenders to give loans to members of minority groups who were disqualified from mortgages not because of their race, but as a result of objective financial criteria.

This is simply nonsense.  I can’t stand one trick ponies whose explanations for everything are racial.  The simplest explanation is greed.  As the brokers and eventually the banks received all their income and only assumed risk on the front end, they quit having an interest in seeing the loan fulfilled.  When the back-end re-priced the risk, many brokerages (and some banks) had loans they couldn’t sell, and they didn’t have the capitalization or the credit facilities to maintain these loans.  Having gotten spectacularly wealthy by overcompensating themselves and irresponsibly exhausting their capital, they did what any red blooded American would do and declared bankruptcy, leaving someone else to pick up the pieces while they enjoyed their estates.  Recognizing this would of course require looking beyond race as the answer to ever problem.

It’s important to remember that it was the Gingrich Congress---pure “Libertarian ideology at work, with some crazy “futurism” rhetoric thrown in---that resulted in the whole mess we are in.

In 1993, the Congress repealed the depression era financial regulation, the 1935 Glass-Steagall Act, or the second Glass-Steagall Act, officially named the Banking Act of 1935, introduced the separation of bank types according to their business (consumer, commercial and investment banking), and it founded the Federal Deposit Insurance Company for insuring bank deposits

The lunatic “libertarian” influenced Newter Gingrich Congress repealed this regulation and the result was Citibank, and the “free market” did the rest, including the pride of the Citibank/Wall Street Investment crowd, the idiotic idea of taking mortgages and packaging them up as speculative investments.

The financial crisis that we are seeing right now is a direct result of electing a Republican Congress in the 1990’s. Finance Capitalism is NOT productive capitalism, it is destructive capitalism, and needs to regulated in the public interest. Instead, these moneychangers in the Temple are profiting from a government bailout, just like the Savings and Loan disaster in the 1980’s----another debacle of “libertarian” economics.

“Fusionism” doesn’t’ work…atheistic finance capitalism doesn’t mix with national sovereignty and cultural stability. Ayn Rand and Russell Kirk are incompatible enemies.

Of course, let’s not forget that US foreign policy and militarism has only one purpose--to prop up the destructive system of international finance capitalism (IMF/WorldBank/FED/Export-Import Bank).

MZForest sed: “Having gotten spectacularly wealthy by overcompensating themselves and irresponsibly exhausting their capital, they did what any red blooded American would do and declared bankruptcy, leaving someone else to pick up the pieces while they enjoyed their estates.”

Yes, I agree. But it’s also important to remember that it was another triumph of the Republican Congress was bankruptcy “reform”, which made it impossible for middle class and working class folks to declare bankruptcy for credit card debt, but made it easier for corporations, CEOs and Wall Street speculators to dump the results of their mismanagement on the public, and walk off with enough money to live for the rest of their lives in aristocratic splendor while people who actually work for a living are struggling to pay off their medical bills.

I think you are right to emphasis Glass-Steagall.  Rather than a fusionist compromise though, I would probably go right to capitulation.  The ‘conservative’ economic position today is a purely libertarian one.

Thanks for the thoughtful comments.  I agree that greed is what turned the making of risky loans into a financial crisis, and that the repeal of Glass-Steagall was a bad idea and ultimately led to this mess.  I would point out, though, that the folly was bipartisan; Clinton signed the legislation repealing Glass-Steagall.

Does anyone else remember Senator Goldwater’s outrage over the Reagan Administration’s bailout of Chrysler?  Goldwater rightly pointed out that real capitalism has its failures as well as successes.  He said that the good parts of Chrysler would emerge under new ownership, and the bad parts would be scrapped.  He was right.

Also does anyone else recall the one good point that justified reading 1,168 pages of turgidity titled “Atlas Shrugged”?  Ayn Rand’s glorious saving grace is that she drew a very clear line between building and looting.  Somehow I fear that this hasn’t been taught at the prestige business seminaries such as at Harvard and Stanford for decades, if ever.  Building is frightfully risky, and looting is a slam dunk.

Red Stockings: “Ayn Rand’s glorious saving grace is that she drew a very clear line between building and looting:

I guess your observation was LOST on Alan Greenspan, her house economist, and member of the inner circle of the cult group that formed around her.

Rather we can look at Ayn Rand’s ideas as mere rhetoric rationalization for oligarchy and plutocracy. She figured out how to make some money off it as well.

Look, I know a ton of leftists who to this day refuse to believe that Mao’s China or Staliin’s Russia were not the logical outcome of communism. You libertarians are ideological zeolots, just like the lefities, who have replaced religion with political dogma.

Libertarians need to take responsibility for their ideas: Newter Gingrich and the Republican Congress “deregulated” the financial markets, and the result of this “freedom” was another bailout for a bunch of dishonest insiders, just as the last FAILURE of “free market” ideology was the Savings and Loan bailout in the 180’s.

The difference is that the plutocrats and looters have the ability to do a lot more damage to the entirer finacial system with the deregulation enacted by the Newter Gingrich Congress.

Keep in mind we face both a short-term credit crisis, which the preceding comments address, and a more ominous “long emergency” poised by globalization and oil (supply and demand). Both parties have promoted global trade and development and continue to do so, refusing to heed the consequences. To save a dollar on a toaster at Wal-Mart, we now pay two dollars more in gas to get there. Soon the toaster will be five dollars higher. Then we won’t have to worry about the toaster. There won’t be any bread.

@M.Z. Forrest:

“This is simply nonsense.  I can’t stand one trick ponies whose explanations for everything are racial.”

Maybe you ought to read Mr. Hartman’s piece, or even just the rest of Tom Piatak’s paragraph summarizing it, before you jump to the conclusion that his explanation is racial.  To say that the crisis has its roots in a certain situation is not the same as saying that it is caused by that situation, or that that situation is the only factor involved.

And then, after you’ve read the piece, maybe you ought to consider that the willingness to jump to such conclusions itself indicates an unhealthy obsession with race.

Dear Joe Populist:

How dare you call me a Libertarian!  Actually I’m part paleocon and part social democrat.  Exactly where the border is has yet to be determined. 

My own idea of appropriate governmental regulation of business is very nicely expressed in Averill Harriman’s memoirs.  When he was a lad at Groton he was on the debate team, and they were going to debate whether the Interstate Commerce Commission was a good thing.  So Averill wrote his father, Edward H. Harriman to learn his thoughts.

You may recall that EHH controlled the Union and Southern Pacific Railroads and was a major influence in Illinois Central and various others.  President Theodore Roosevelt had confided to the American public via the press that EHH was a malefactor of great wealth and an undesirable citizen.  So his opinion is of some interest.

The malefactor himself advised his son that there should be an Interstate Commerce Commission, and that in authority and prestige it should be second only to the US Supreme Court.  The malefactor’s objection to the Commission as it then stood was that the Commissioners appointed by President Roosevelt had the dismaying habit of announcing their decision of a case before having been bothered to hear it.

Edward H. Harriman was a very odd sort of robber baron.  We could use several of his sort today.

Mr. Richert,

Being a relatively recent subscriber I won’t be at such a disadvantage in the future.  I have seen Mr. Sailer’s theory on this in other forums and assumed Mr. Hartman didn’t significantly deviate from it.  I’m quite comfortable asserting Mr. Sailer is a one trick pony.

Libertarianism? Where the libertarianism in all this? If Greenspan was still a true Randian he would have never been Fed chairman, because a true Randian does not believe in an all-controlling, all-powerful central bank and he does. And not only does he believe in a central bank, he believes it should pump-prime the economy with easy money given away like pork chops at a meat raffle. How Keneysian. He might as well be the Fed chairman for Argentina.

Housing was no different than the dot-com farce. Greenspan is not a flinty, traditional Republican starch collar banker. His philsophy is anybody who wants money should get it until the economy overheats and then I pull the rug out from everybody and we start all over again with another economic boom of my creation. Greenspan’s God is not Ayn Rand, it’s Arthur Laffer. High economic growth at all costs, without exception and regardless of debts run up because he knew the U.S. economy, leveraged with its subsidies, its entitlement programs and its overseas committments, could not sustain itself without such high growth to make sure there was sustainable cash flow coming into D.C.

Re: “its last priority is the preservation of the savings and pensions of the disappearing middle class.” I would rephrase that to read “its FIRST priority is the DESTRUCTION of the savings and pensions of the dissappearing middle class.” Why does anyone believe that THEY HAVE OUR BEST INTERESTS AT HEART?

Since the FED creation in 1913, every bust has been preceded by a credit induced boom. Recessions are always and everywhere a CREDIT phenomenon. Central banking is the culprit. With the ongoing destruction of the dollar, 96% loss of value since 1913, perhaps they are creating the conditions for introduction of the North American AMERO. Hey brother, you got a Peso?

Sean sed: If Greenspan was still a true Randian he would have never been Fed chairman, because a true Randian does not believe in an all-controlling, all-powerful central bank and he does….he believes it should pump-prime the economy with easy money given away like pork chops at a meat raffle. How Keneysian. He might as well be the Fed chairman for Argentina.”

Alan Greenspan believes in HIMSELF, which is the essence of Ayn Rand’s “philosophy of selfishness”. It’s all bull!

On one hand you have Ayn Rand’s lofty utopianism about the “free market“, and on the other, you have Alan Greenspan who is the REALITY of Ayn Rand’s ideas put into practice. All you Randians sound like the commie party members in the 1950’s and 1960’s denying the reality of Soviet Union…oh I can hear them now: “The Soviet Union isn’t REAL communism..”

Let’s not forget the other Ayn Randians---like Newter Gingrich, or Dick Armey! Shees..tax cuts for the rich stolen from the Social Security payroll tax surpluses!  Deregulate the banking industry, gut the Glass-Steagall Act, and make way for Citibank’s consolidation and domination of the banking industry.

How can YOU talk about the evils of a “central bank” and then ignore CITIBANK, which owns 2/3 of the financial services industry…are we supposed to believe the managers of Citibank will act in the public interest, just because it’s “free enterprise”?

Joe Populist,

The reason that Bear Stearns was sold for $2 (less the the price of its own building) is easy enough to figure out. Bear had $20 TRILLION DOLLARS worth of derivatives on its books. That’s also why it cannot be allowed to fail. If Bear’s derivatives had been dumped on the market, and marked as worthless, it would have ignited a chain reaction in all the other major banks and hedge funds who have soaked up similar “structured finance” garbage. Do you know how many derivatives there are out there? Upwards of $550 TRILLION DOLLARS.

The market for over-the-counter derivatives is the largest financial bubble of all time. It dwarfs the value of the entire world’s real estate. The failure of a mere 3% of derivatives would collapse the world financial system in hours. We had a preview of this back in 1998 when the Fed bailed out the LTCM hedge fund because it feared just that scenario of toppling dominos. Guess how many LTCMs there are out there today waiting to blow up.

Greenspan and Wall Street learned nothing from that experience. They pushed forward and got the Depression era Glass-Steagall Act removed. That paved the road to this disaster. Sub-prime was only the spark. The great derivatives meltdown and the Crash of 2008 can’t be that far away.

Note: I’m glad to see that I was wrong about the paleos. The silence about the crisis unfolding on Wall Street and the total and complete humiliation of the lazy faires and free traitors (a bankrupt financial system on welfare) had me alarmed. Buchanan has been talking about this issue since the 1990s.

Now is the time to stick it to the neocons: we can’t afford the bankrupt Empire, a bankrupt “free trade” policy, or the insane immigration policy in the context of a souring economy. Tar and feather them with amnesty and sub-prime mortgages.

@ Prozium
I am curious as to where you found the numbers on Bear Stearns derivatives and the total amount of derivatives in the market.

The benefits of free trade have been known since at least the days of David Ricardo. The Law of Comparative advantage is established and acknowledged by all modern economists. This protectionism is ignorant.  Wages are supressed because of government interferance in the labor market, not the lack of it.

Dr. Médaille I think you can find confirmation of the $20 trillion number here:

http://globaleconomicanalysis.blogspot.com/2008/03/bear-stearns-bankruptcy-looms.html

As for the $550 number, a quick google search shows that it is quoted in various places and forusm…

Not sure if this would be authoritative enough for you:
http://www.marketoracle.co.uk/Article3983.html
(it gives a figure of only $516 trillion though)

Here you go:

http://globaleconomicanalysis.blogspot.com/2008/03/bear-stearns-bankruptcy-looms.html

http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/story.aspx?guid={B9E54A5D-4796-4D0D-AC9E-D9124B59D436}

Note: Sorry, $516 trillion, not $550; I was quoting from memory.

@ Prozium and John Medaille:

When you’re talking about $516 trillion or whatever the numbers are, keep in mind that those figures are notional principal. They are NOT the amount of exposure of the financial institutions involved.

Say bank A enters into a 5-year, $100 million notional swap with bank B to receive fixed and pay floating. It may not cost anything to get into that swap, and the bank’s exposure is most certainly not $100M. Bank A would therefore receive $3M annually (say fixed interest rate is 3%) and pay $3.25M annually (say floating rate is 3.25%), for a net payment of $250,000.

If the floating drops to 2.75% in year 2 bank A would receive net $250,000.

As you can see, notional principal is very different from total exposure. As I said above, sometimes banks have to post collateral with each other when they enter into these kinds of agreements, and sometimes not--it depends on the reputation and the eagerness of a party to do business with the other party.

Bottom line: while the notional value of derivatives are staggering, the actual exposure is far lower; more like orders of magnitude lower. I’m not saying that the financial situation isn’t bad; I’m just saying it’s easy to misinterpret those numbers if you don’t really understand what they mean.

@ Vissarion

Pardon my ignorance. What is meant by “notional” in this context, and who bears the “notional” risk? Surely the credit swap relates to an instrument with the actual value as stated. I clearly unclear on the matter.

@ Joe Allen

Comparative Advantage is an idealized conception that depends on three idealized conditions: The relative immobility of capital; full employment of resources in both countries, and; balanced trade between both countries. Thus it is useful as a paradigm but dangerous for those who do not understand the difference between a paradigm and actual conditions. If any of the initial conditions do not hold, the theory in practice does not hold.

Neoclassical economists are famous for disregarding initial conditions and treating their theoretical paradigms as holding always and everywhere. But this is not the case.

To take an example from the physical sciences, we know that objects near the earth fall at a rate of 32 ft./second squared. Except that they don’t. The pardigm holds only in a vacuum. If one is going to actually use the formula (say, to design an airplane) one has to first take a measure of the distance between the paradigm and the actual conditions. In aeordynamics, that distance is measured by air pressure, which will modify the paradigmatic formula.

Economic theories work the same way. To hold the formula without taking note of the distance from the ideal starting conditions would be like designing an airplane and disregarding air pressure.

@ John Médaille

No problem, John. ”Notional” in this context is a face amount that is used to calculate payments. Nobody bears the notional risk; that is why these instruments are called derivatives. Notional is just an arbitrary number that is used to calculate amount of payments over time. If you default on the payments, you don’t get sued for the notional; you get sued for the payments you owe, which are typically some small fraction of the notional.

I have nothing but praise for Mr. Piatak’s trenchant essay.  It looks as if Wall Street will be scurrying about like frightened mice.  As I do not think the Global Right or the Global Left can reform their thinking without radical medicine, a collapse may be imminent.  In the long run, will such a collapse be in America’s interests?

Mr. Leaberry:

In the long run, yes, since continuation on our current course spells ruin, and it is inconceivable that we would continue on our current course after a collapse.  In the short run, of course, such a collapse would create great human misery, and for that reason I hope we can learn our lessons without having to undergo such trauma.

The pride of thine heart hath deceived thee,
thou that dwellest in the clefts of the rock,
whose habitation is high;that saith in his heart,
Who shall bring me down to the ground?

That last one was from Obadiah, Verse 3.

Put another way, in homage to my nom de blog, though sounds so much better in the high lonesome wail of Levon Helm: “Can’t raise the cane back up when it’s in the field.”

Greenspan is a libernutian. Libernutian economic theories have allowed derivatives to proliferate, allowed the rich to make obscene profits by gambling with the life savings of the middle class and left a mess for the middle class to clean up.

Prozium: “Greenspan and Wall Street learned nothing from that experience. They pushed forward and got the Depression era Glass-Steagall Act removed. That paved the road to this disaster. Sub-prime was only the spark. The great derivatives meltdown and the Crash of 2008 can’t be that far away.”

I agree. Lazy Faires and Free Traitors indeed. We cannot give the power to destroy the economy to the “free market”, because finance capitalists will always seek short term profit over long term growth. The consequenses o f “deregulation” were the Saving & Loan disaster, and then the Hedge Fund bailout, and now “freedom” has resulted in the derivatives crisis.

The blame is with the idiots that defend “libertarian” ideas (read pimps for the CEO classes)that their tax cuts were funded with long term debt and theft from the Social Security payroll tax surplus. And then their idocy resulted in the gutting of the 1935 Glass-Steagall Act, the consolidation of Citibank (which has also received a large share of “welfare” from the FED), and the “freedom” of the free traitors to make mortgages a speculative investment, which of course, has to be bailed out by the state.

Of course, I can hear these idiots now! Oh, WE don’t support government bailouts...that’s not REAL free market capitalism”...like the commies in the 50’s, who defended “true communism” in the face of Stalin’s crimwes.

I’ve spent enough time fighting commies in the Labor unions, to know the dangerous sounds of the “true beliver” when I hear them. Screw “fusionism”...there is no union between speculative finance capitalism and the values of God and Country. Libertarians are our enemies.

Great quote from Ralph Nader’s dad:
“Capitalism will never fail because Socialism will always bail it out”

Credit goes to Steve Sailor for posting it on his blog.

Capitalism will never fail because Socialism will always bail it out”

clever, but wrong.

Capitalism IS a social order. Your just not a member.

@ Vissarion

Thanks for the help. Researching the term a bit, I find that the real problem seems to be determining just what the “notional” numbers represent. Even the people who use them do not understand how actual risk relates to notional amounts. But there is a relation. The problem is, when you cannot state the risk, then risk gets replaced by uncertainty. The difference is that risk can be priced, but uncertainty can’t, and what has no price, has no market.

So--we know that there is $15T on the BSC balance sheet, but we don’t know--and BSC doesn’t know--just how much risk that represents. So did JPM get a deal (assuming they get it, which is not yet certain) or did they get a poison pill? And considering JPM has more of this stuff than BSC, will they be able to digest it all, or are they merely the next candidate for a bailout?

@ John Médaille

You’re welcome. It’s a complex subject; I understand the math and the logic behind financial derivatives, but I don’t really know much about how companies have to account for them on their balance sheets.

[Btw, we’re taking up space here on the topic of faith-based economy, so I hope the editor doesn’t mind that we’re straying from the subject a bit.]

One correction: risk IS uncertainty and you can price it if you can describe it mathematically. People who work with derivatives should understand the risk; what makes it hard to understand for the general public is that risk is probabilistic. You have to assume a certain set of future outcomes and then do what-if analysis for each one. You can even take into account once-a-century events and what impact those would have on the markets.

Re: Bear Stearns and JP Morgan, Bear’s NY HQ building is worth about 6 times what JPM paid for the whole company. JPM’s real risk is cash payments related to BSC positions in derivatives, and I’d be surprised if JPM didn’t scrub most if not all of BSC’s contracts and calculated the exposure before taking over BSC. Don’t worry, young investment banking associates can work 100 hour a week to do that kind of analysis quickly. :)

On top of that, Fed is guaranteeing $30B to JPM (with our tax money, should I say), so I’m fairly certain that we shouldn’t feel sorry for JPM.

“‘Strong’ is not the word most people would use to describe stagnating wages, a shrunken manufacturing base, a falling dollar, rising oil prices, record trade deficits, and massive debt financed by foreigners, but Bush and McCain show no indication that they recognize any of these as problems, or have any idea how to deal with them.”

But, but .... .... .... Barack Obama’s pastor hates America!

And John Kerry hates the troops!!

And Clinton received seven blowjobs!!!

See? The American plutocracy has nothing to fear. Bread And Circuses will save them when all else fails.

To read the excerpts from the meeting between James Dimmon of JP Morgan and his new “associates” at Bear Stearns is to read something akin to the spirited pronouncements of the mildly insane. One must feel sorry for the 14,000 slated to be shown the door @ Bear Stearns but one must also be mindful of the punishments that reality always inflicts upon the delusional. It is perhaps a metaphor for what may very well come to pass for all of us in this seriously unhinged lapsed-Republic.

One desperation move after another is being made and all concerned are waving flags and singing the Battle Hymn of the Republic while the ship slowly lists.  This is not a time for revenge nor Schadenfreude nor fear and sadness , it’s a time for sober assessment, courage, honesty and clarity and we will not be seeing any of that any time soon because we have a government and corporate industry that is hell bent upon self-destruction. Confusion and contradiction reigns, it is now the national pastime. What we have here is the old mantra of the drunk: “You think you’re bad...heh....watch me as I kick my own ass”.

According to the N.Y. Times today:
Dimmon to “more than 400 Bear Executives-seething, fearful and to their dismay, far poorer than they were a week ago” :

“I don’t think Bear did anything to deserve this”

Oh really. So much for market forces.

Dimmon continuing:
“No one on Wall Street could have anticipated this”

Gee, how could they?..... bundling non-verified loans as a financial instrument for building wealth and tying this effort to the uber bubble-creator of all time… our building industry..... seems entirely legitimate to me but then, .....

Alan D. Schwartze, Bear Stearns CEO asserted:
“We here are a collective victim of violence”

all on paper of course.

Capitalism , being a form of human communication and interaction is as subject to the various forms of human delusion as is anything else. What is different this time around is that the Government-Media-Wall Street circus entered into a dance that was foolhardy and suspect… from a basic capitalist mindset.... from the get go.... assuming the raising of capital is still a capitalist endeavor. Those who profited enormously by shorting the instruments at the gate were the only people who could see the obvious but they neglected to speak against the instruments that could make them money even though they knew they were bad news and , in a word, counterintuitive. Welcome to the world of the Fiat Money and the quarterly profit statement.

A news article from the June 14, 2004 issue of the journal of the National Notary Association has another illuminating tidbit. The article described the ADDI (Attention Deficit Disability Initiative?) “American Dream Downpayment Initiative” legislation signed by President Bush. The President was reported as saying:
“I’ve called on the private sector mortgage banks to be more aggressive about lending money for first time home buyers.....and the response has been really good”

Rill rill rilly good I suppose, another mission accomplished. Productive as always, the actions spawned a rising new business: Consultants, for a fee, advising Homeowners how to default. We also have Collections agencies going touchy feely now , offering to “help” the customer get a grip which is good because a rising percentage of people are paying their mortgage and debt by credit card. Funny how VISA has, in this atmosphere, a “$45 Million debut on Wall Street” as reported in the N.Y.Times today.

This President emerged upon the National Political Scene with a record breaking campaign fund that far surpassed all others to date. Despite a reputation as a lightweight, he went on to become what will likely go down in our history as the most destructive Executive the Republic has ever endured, our first much ballyhooed MBA President. If he had been a success earlier in his life, one could assume that perhaps it was all an innocent mistake. But this Executive had amply demonstrated a near perfect record of under-achievement and business failure. Look at this issue sideways and it is not a stretch to see it as a superbly planned and well-executed, pooching of a gullible public. Creative Destruction is the hallowed term I believe. One cannot claim conspiracy because it has happened in broad daylight. One cannot pin it all on the Executive either, for he has had ample help from many quarters.

Faith Based is the leitmotif and faith in this demo-centric crew is for the masochistic. Some time must pass for a comprehensive understanding of the serial misadventures we have undertaken as a result of 9/11 but it is certainly beginning to look like fear has been become capitalized and the paycheck is arriving daily. At least we have shown that socialism and capitalism are equally destructive when intelligence and pragmatism go out the door simultaneously with any respect for the law or history. Both Socialism and Capitalism have their Cult of the Personality and we are about to see what 10 more months of this current motley cast of dear leaders are about to bring.

This is a great essay by Tom Piatak although that is to be expected.  Mr. Piatak also has an excellent essay on WFB up at Vdare.com at the following link:

http://www.vdare.com/piatak/080320_buckleyism.htm

Sam Spade,

Thank you for your kind words.

@ Vissarion

One correction: risk IS uncertainty and you can price it if you can describe it mathematically.

Since the time of Frank Knight, it has been a standard practice to separate “risk” from “uncertainty,” with the former being priced, but the later having no price and hence no market; the former can be calculated, while the latter is, well, uncertain.

In the case of Bear-Stearns, the uncertainty should be replaced by mere risk, and not much of that, since the govmint is guaranteeing $30B; nevertheless, they sold the whole company for less than the price of its HQ building. Makes you wonder what it really going on.

So far, the market isn’t buying it, and has placed a price of from $4-8/share on BSC. But there is a chance that the Fed and JPM know something the market doesn’t.

Mr. Richert,

I have read the article now.  (I rec’d the issue on Thursday.) I think he misplaces cause and effect.  It was an interesting piece though.

@M.Z. Forrest:

“I think he misplaces cause and effect.”

I’d be interested in hearing what you mean by that.  If you mean that greed came before the Clinton and Bush administrations urged a loosening of the mortgage market, I’m sure that Mr. Hartman would agree with you.  But the administration actions made it possible to act on that greed.