I'm listening to television idiots call today's stock market selloff "the worst in history" when it demonstrably is not.
When news becomes nothing but a form of entertainment and revenue, perhaps we should expect no better.
So, here is the Dow down 777 points, or 6.98%.
The Great Depression included multiple one-day drops of 12% and 14% and the overall slide was 89%.
And here are the talking heads saying today's drop is the worst in history. History as in stuff that happened after the talking head started high school, maybe. History as in actual history, not so much.
This is not to say that everything is over or that all is well. Quite the contrary -- we may yet see much larger market drops. When the market falls 25% I'll start to worry about systemic problems.
What I see right now is a much delayed correction to the over-inflated financial markets. We have a lot to blame the US government for.
Monday, September 29, 2008
A Defense of Free Markets
This has been submitted to the Forest Grove News Times as a column to be published during the week of 29-Sep-2008.
I provide it here as I submitted it, with a link to the published version. (This will be put online only after the News Times comes out, so they'll have first use of the material.)
-----
Your true friends are those people who -- when you're suddenly unpopular -- still stand by you. I'm a long time friend of the Free Market, and I'm willing to rise now publicly to defend my friend, and to set the record a little straighter. The Free Market is being blamed for all that is wrong with America's financial institutions. Alas, a lot of the criticism is off-base, self-serving, or flat wrong.
Free markets are the ones that exclude force and fraud, and rely on purely voluntary exchanges. Every honest exchange between a willing buyer and a willing seller is a free market transaction. When you hire your neighbor's kid to mow the lawn or babysit, the two of you are engaging in a free market transaction. When they function well, free markets channel greed into acceptable forms that bring about social good. Those who take on risk get to keep any rewards and must shoulder their losses.
Free markets are the result of -- are the sum of -- all these voluntary transactions. But greed itself is not good. Greed unrestrained by law, greed unchannelled, can lead to crimes like fraud and coercion.
Fraud is a crime. When an Enron or Worldcom or Fannie Mae lies and commits fraud, that's not "Darwinian capitalism" -- it's a crime and an attack on the market. That's why it's wrong to say that government is at odds with the market -- in reality government's police powers (and private anti-fraud measures) are what enable markets to exist and function.
Fraud is not only the enemy of free markets -- it's the enemy of good government as well.
Not every market is free. Prisons are rife with black markets, characterized by both fraud and violence. Black market drugs contain dodgy and ofttimes poisonous ingredients; black market disputes are settled with fists, knives and guns. The black market for sex -- prostitution -- is a litany of abuse, disease, violence and misery.
Government plays a vital role in keeping free markets free -- through courts, cops, regulations and transparency rules. Unfortunately, government agencies can sometimes be seduced into acts that don't protect but rather distort markets, harming the many to benefit the few.
These seductions include, for example, a government using taxpayer money to fund a pressure group to coerce banks into lending money to borrowers who can't afford to repay the loans. Then either the bank or the taxpayer takes the loss when the borrowers default. Such lending under pressure may be understandable, but it's not a free market transaction -- remember the ban on force and fraud -- and occurs because the government has abandoned its proper role as guardian of the rule of law.
Such is the case today. Since 1995 the Community Reinvestment Act (CRA) has been used -- along with lawsuits by left-wing pressure groups -- to force banks to lend to low-income, high-risk borrowers. Any bank that resisted was subject to huge fines. That's coercion. If any private person had tried to do this, he'd have been arrested.
To answer concerns by banks that these loans were too risky, the government-sponsored entity called Fannie Mae offered to buy up all riskier loans. By 2007, Fannie Mae and CRA had resulted in an extra $1 Trillion of home loans to people who couldn't pay them back.
Fannie Mae then -- with government approval -- created "securitized" bundles of loans and sold them off to everyone under the sun. Today we're told that nobody, even the creators of these derivatives, really understands them. Selling something you don't understand, and guaranteeing something without the means to guarantee it, are both fraud. Yet the heavily regulated, government-sponsored Fannie Mae did exactly that.
Today the same people who created CRA and were supposed to oversee Fannie Mae -- our US Congress -- are telling us that the financial market's woes are caused by "the market" and by a "lack of regulation". The facts say otherwise.
It's understandable why the architects of today's disaster want to distract public attention from their role. Maybe some of them even believe it. We should not buy it.
The public should look closely at the root causes of the disaster and agree on a fix that makes things better, not worse. The root causes involve massive government meddling in the markets and rampant dishonesty. The cure being proposed involves even more government meddling in the markets and is being sold through dishonesty. The public should demand an independent investigation of Congress' role in creating the current financial disaster.
And those who took on risk with the expectation of keeping any rewards, must shoulder their own losses and not be bailed out by taxpayers.
I provide it here as I submitted it, with a link to the published version. (This will be put online only after the News Times comes out, so they'll have first use of the material.)
-----
Your true friends are those people who -- when you're suddenly unpopular -- still stand by you. I'm a long time friend of the Free Market, and I'm willing to rise now publicly to defend my friend, and to set the record a little straighter. The Free Market is being blamed for all that is wrong with America's financial institutions. Alas, a lot of the criticism is off-base, self-serving, or flat wrong.
Free markets are the ones that exclude force and fraud, and rely on purely voluntary exchanges. Every honest exchange between a willing buyer and a willing seller is a free market transaction. When you hire your neighbor's kid to mow the lawn or babysit, the two of you are engaging in a free market transaction. When they function well, free markets channel greed into acceptable forms that bring about social good. Those who take on risk get to keep any rewards and must shoulder their losses.
Free markets are the result of -- are the sum of -- all these voluntary transactions. But greed itself is not good. Greed unrestrained by law, greed unchannelled, can lead to crimes like fraud and coercion.
Fraud is a crime. When an Enron or Worldcom or Fannie Mae lies and commits fraud, that's not "Darwinian capitalism" -- it's a crime and an attack on the market. That's why it's wrong to say that government is at odds with the market -- in reality government's police powers (and private anti-fraud measures) are what enable markets to exist and function.
Fraud is not only the enemy of free markets -- it's the enemy of good government as well.
Not every market is free. Prisons are rife with black markets, characterized by both fraud and violence. Black market drugs contain dodgy and ofttimes poisonous ingredients; black market disputes are settled with fists, knives and guns. The black market for sex -- prostitution -- is a litany of abuse, disease, violence and misery.
Government plays a vital role in keeping free markets free -- through courts, cops, regulations and transparency rules. Unfortunately, government agencies can sometimes be seduced into acts that don't protect but rather distort markets, harming the many to benefit the few.
These seductions include, for example, a government using taxpayer money to fund a pressure group to coerce banks into lending money to borrowers who can't afford to repay the loans. Then either the bank or the taxpayer takes the loss when the borrowers default. Such lending under pressure may be understandable, but it's not a free market transaction -- remember the ban on force and fraud -- and occurs because the government has abandoned its proper role as guardian of the rule of law.
Such is the case today. Since 1995 the Community Reinvestment Act (CRA) has been used -- along with lawsuits by left-wing pressure groups -- to force banks to lend to low-income, high-risk borrowers. Any bank that resisted was subject to huge fines. That's coercion. If any private person had tried to do this, he'd have been arrested.
To answer concerns by banks that these loans were too risky, the government-sponsored entity called Fannie Mae offered to buy up all riskier loans. By 2007, Fannie Mae and CRA had resulted in an extra $1 Trillion of home loans to people who couldn't pay them back.
Fannie Mae then -- with government approval -- created "securitized" bundles of loans and sold them off to everyone under the sun. Today we're told that nobody, even the creators of these derivatives, really understands them. Selling something you don't understand, and guaranteeing something without the means to guarantee it, are both fraud. Yet the heavily regulated, government-sponsored Fannie Mae did exactly that.
Today the same people who created CRA and were supposed to oversee Fannie Mae -- our US Congress -- are telling us that the financial market's woes are caused by "the market" and by a "lack of regulation". The facts say otherwise.
It's understandable why the architects of today's disaster want to distract public attention from their role. Maybe some of them even believe it. We should not buy it.
The public should look closely at the root causes of the disaster and agree on a fix that makes things better, not worse. The root causes involve massive government meddling in the markets and rampant dishonesty. The cure being proposed involves even more government meddling in the markets and is being sold through dishonesty. The public should demand an independent investigation of Congress' role in creating the current financial disaster.
And those who took on risk with the expectation of keeping any rewards, must shoulder their own losses and not be bailed out by taxpayers.
Monday, September 15, 2008
Feminism succeeds, and Leftists cop out
I'm watching the left-wing feminists (as opposed to all the other feminists) get wigged out over Sarah Palin. It's sad for feminism when its earliest adopters, definers and defenders now pitch it over the railing in their haste to crush a powerful woman whom they disagree with on policy issues.
Feminism doesn't win by having the early adopters go further and further away from the middle (as happens today with some other socially progressive trends) -- feminism wins when the middle moves toward the formerly progressive position.
As I tell my Republican friends, you don't win the political and policy contest by just getting someone from your party elected -- you could find yourself electing a sellout who really is pushing the other side's agenda. Then your policies get even further away from adoption.
You truly win when the other side starts adopting or stealing your ideas and they become mainstream.
In this case with Palin, we're seeing both of these things: first, evidence of the wholesale adoption by the Republican base of the basic tenets of old style feminism -- that women should have the same opportunities as men, that workers should be judged on results not on their reproductive organs -- and second, the sellout of the far left from anything to do with that sort of feminism.
For example, Ellen Goodman criticizes Palin for being, in essence, a bad feminist -- because she isn't lobbying for government programs to nationalize motherhood (federal child care, federal handouts to mothers, additional federal entitlements, additional federal mandates on employers, etc.)
At this point it's no longer really feminism that Goodman (and so many others, like Katherine Marsh and Judith Warner) are defending -- it's the old Democratic agenda of ever larger government and ever more citizens, in one form or another, on the dole.
The real test of your belief in your stated position is when you have to defend someone you dislike or disagree with. The ACLU proved itself to me when it defended the American Nazi Party's right to free speech -- clearly the ACLU really does (or did) believe in free speech, even for vile speech. Leftist feminists have proved something very different: they don't care about women's rights; they only care about the big-government agenda of the left.
Feminism doesn't win by having the early adopters go further and further away from the middle (as happens today with some other socially progressive trends) -- feminism wins when the middle moves toward the formerly progressive position.
As I tell my Republican friends, you don't win the political and policy contest by just getting someone from your party elected -- you could find yourself electing a sellout who really is pushing the other side's agenda. Then your policies get even further away from adoption.
You truly win when the other side starts adopting or stealing your ideas and they become mainstream.
In this case with Palin, we're seeing both of these things: first, evidence of the wholesale adoption by the Republican base of the basic tenets of old style feminism -- that women should have the same opportunities as men, that workers should be judged on results not on their reproductive organs -- and second, the sellout of the far left from anything to do with that sort of feminism.
For example, Ellen Goodman criticizes Palin for being, in essence, a bad feminist -- because she isn't lobbying for government programs to nationalize motherhood (federal child care, federal handouts to mothers, additional federal entitlements, additional federal mandates on employers, etc.)
At this point it's no longer really feminism that Goodman (and so many others, like Katherine Marsh and Judith Warner) are defending -- it's the old Democratic agenda of ever larger government and ever more citizens, in one form or another, on the dole.
The real test of your belief in your stated position is when you have to defend someone you dislike or disagree with. The ACLU proved itself to me when it defended the American Nazi Party's right to free speech -- clearly the ACLU really does (or did) believe in free speech, even for vile speech. Leftist feminists have proved something very different: they don't care about women's rights; they only care about the big-government agenda of the left.
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