Dodd-Frank Kills the Congo [ed.: Application of Law of Unintended Consequences]

[emacknight]

@Dick_Dastardly

I would appreciate answers to 1, 2 and 3 please.

Simple: The government failed.

For example, Why the Lone Star State Shines So Bright; Can other states replicate Texas’ economic success? Texas, of all places, didn’t allow borrowers to have no equity loans, going so far as to require 20% down. They also didn’t allow people to take out home equity loans greater than 80% of the value.

Two very simple actions that could either be accomplished by government regulation, or by people willingly choosing to do what’s in their own best interest.

But notice what happened in Texas (and Canada) as a result of those two rules: As a result, Texas never had a housing bubble. Real estate prices appreciated much more steadily and slowly than in states like Nevada and Florida and never really turned down. That means relatively few foreclosures, healthier local banks, and a steadier construction sector. Moreover, it means that Texans never got as indebted as citizens in other states.

Simple and effective regulation, but it wasn’t necessary, since people could have willingly chosen to own a house with equity instead of one without. Wanna know why that wasn’t a federal regulation?

Home Loan ‘Predators’ Were In Congress

The Congressional Black Caucus pushed for no money down loans, they actively campaigned and in 2003 “co-authored legislation freeing borrowers from having to put any money down on a home loan, despite evidence such loans pose a higher default risk.”

The government had a financial motif to get people buying more houses. When they ran out of people to buy houses, they lowered and eliminated requirements such as putting money down. The government created and encouraged the sub-prime lending.

But even that wasn’t good enough because banks only had so much money they could lend. So what did the government do? It created Fannie and Freddie to buy up mortgages allowing banks to lend more. You can harp all you want about how they eventually lost market share, but that only goes to highlight how much of the mortgage market they had at the start of the bubble.

The government, very happily, lowered the lending standards, then offered to buy those shitty mortgages. As a result, house prices soared, and with it came speculation, where speculation ultimately leads to bubbles.

But your solution to all this is to then get even more government involvement. In spite of all that we know about the Great Depression, the government did everything in its power to make sure it all happened again.

[Dick_Dastardly]

@emacknight

Simple: The government failed.

For example, Why the Lone Star State Shines So Bright; Can other states replicate Texas’ economic success? Texas, of all places, didn’t allow borrowers to have no equity loans, going so far as to require 20% down. They also didn’t allow people to take out home equity loans greater than 80% of the value.

Two very simple actions that could either be accomplished by government regulation, or by people willingly choosing to do what’s in their own best interest.

But notice what happened in Texas (and Canada) as a result of those two rules: As a result, Texas never had a housing bubble. Real estate prices appreciated much more steadily and slowly than in states like Nevada and Florida and never really turned down. That means relatively few foreclosures, healthier local banks, and a steadier construction sector. Moreover, it means that Texans never got as indebted as citizens in other states.

Simple and effective regulation, but it wasn’t necessary, since people could have willingly chosen to own a house with equity instead of one without. Wanna know why that wasn’t a federal regulation?

Home Loan ‘Predators’ Were In Congress

The Congressional Black Caucus pushed for no money down loans, they actively campaigned and in 2003 “co-authored legislation freeing borrowers from having to put any money down on a home loan, despite evidence such loans pose a higher default risk.”

The government had a financial motif to get people buying more houses. When they ran out of people to buy houses, they lowered and eliminated requirements such as putting money down. The government created and encouraged the sub-prime lending.

But even that wasn’t good enough because banks only had so much money they could lend. So what did the government do? It created Fannie and Freddie to buy up mortgages allowing banks to lend more. You can harp all you want about how they eventually lost market share, but that only goes to highlight how much of the mortgage market they had at the start of the bubble.

The government, very happily, lowered the lending standards, then offered to buy those shitty mortgages. As a result, house prices soared, and with it came speculation, where speculation ultimately leads to bubbles.

But your solution to all this is to then get even more government involvement. In spite of all that we know about the Great Depression, the government did everything in its power to make sure it all happened again.

We already agreed that the government failed. What I’m asking you is that do you agree that they failed by not enforcing regulations already on the books and by having previously scrapped regulations that would have prevented the bubble/meltdown.

And you’re seriously trying to blame the congressional black caucus for scrapping mortgage regulations? You’re kidding, right? Because they “co-authored” a bill that everybody from Bush on down was fully behind? And the government created Fannie and Freddie to buy up mortgages when exactly? You’re aware that F and F had been happily buying up mortgages for over half a century with no problems but when the government deregulated the mortgage industry in the early 2000s F and F demonstrably took no part in the packaging and selling of toxic securities? That these toxic mortgages were originated by unregulated firms like Countrywide and then sold direct to Wall Street, bypassing F and F? Yoiu’re aware that subprime loans were only a fraction of the total toxic mortgage mountain and the majority of toxic loans were prime loans at hundreds of thousands of dollars a pop?

At least you’re agreeing with me that the government lowered mortgage standards. In view of this do you agree that the government should not have deregulated the mortgage industry to the extent they did and should have kept it more regulated than they did? Do you agree they should have enforced regulations that were still on the books that would have prevented much of the loans that became toxic? And when you say “In spite of all that we know about the Great Depression, the government did everything in its power to make sure it all happened again.” can you please explain exactly what it is we know about the Great Depression and what the government did to make sure it all happened again?

[emacknight]

@Fear_Itself

I don’t know what your personal motivation for promoting this line of thinking is, but whenever I hear someone extolling the cult of the individual, I always think it would be exactly what a powerful interest would say, if they wanted to exploit the consumer or the workforce. Denigrate the government, urge people to take care of themselves and never work together or combine their political power to oppose special interests that that seek to exploit the consumer or the workforce.

But this is where you’re wrong. I encourage you to link up with like-minded people. For associations, unions, groups, clans, what ever you feel like joining. If you and Gonzomax want to boycott Exxon because that rig in the gulf is leaking again, go right ahead. If you and your friends think something is important team up exert your influence.

What you can’t do is force me to boycott Exxon.

That’s the point you seem to miss in all these threads. The very nature of government is to be coercive, to enact laws at the tip of a spear (or gun). And the government needs to be strong enough to enforce its laws, and be coercive, otherwise we have anarchy (ie Somalia).

What this means is that for what ever pet project you’ve dreamed, “government” should be used as a last resort. Adding another regulation should be seen as the worst possible choice after all others. Note that you can still have laws and regulations, because without them you have anarchy. But when making decisions, start with the assumption that another regulation is the worst possible solution.

@Fear_Itself

Make it sound like working within the political system to limit the power of special interests is a suckers bet, not worthy of a real patriot. Do whatever you can to prevent individuals from collectivizing and discovering they have far more power united than they do divided.

Well, kind of. Because traditionally (and by that I included today) it was the special interests that use the government to keep people down. Whites use the government to kill Indians and enslave African Americans. Men use the government to limit the rights of women. Heterosexuals use the government to limit the rights of LGBTTT. Christians use the government to limit the powers of Jews and Muslims.

If you don’t want to shop on Sunday, or smoke weed, or marry a dude–don’t.

@Fear_Itself

Keep them separated, keep them suspicious, promote division and tribalism.

How often has the government been used to do exactly the same thing?

@Fear_Itself

That is what I think of when I hear libertarians talk about individuals sticking up for themselves, instead of creating a government that unites their power.

Sure, and when I hear people creating a government that unites their power I assume it’s to subjugate someone else. You assume the government is a force for good, I just watched it lie about WMDs to invade a country and kill hundreds of thousands of people. Unless that’s what you were hoping would happen.

@Fear_Itself

The purpose of government is to protect the weak from the powerful, so I would not be surprised if the powerful promote the opposite as a way to weaken their intended prey.

When was the last time you saw the government protect the weak from the powerful? It sounds great in theory, but I have yet to see it in practice. Right now the government is a tool for the powerful to stay powerful.