2012 U.S. Presidential Election

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Originally Posted by Lemur

I don't believe there is a politician who can claim blame or credit for the meteoric rise of mortgage-backed securities or sub-prime lending. The markets did an exemplary job of committing suicide without any outside help. Indeed, for those who want to put it all on Fannie or Freddie, note that the definition of "subprime" in the USA is a loan that does not meet the Fannie or Freddie minimum guidelines.

A little bit of detail:

During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in the system. Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions.

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We're quoting wikipedia, eh? Well let's not stop before the part that disputes your claim;

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Fannie Mae and Freddie Mac are government sponsored enterprises (GSE) that purchase mortgages, buy and sell mortgage-backed securities (MBS), and guarantee nearly half of the mortgages in the U.S.[dubious – discuss] A variety of political and competitive pressures resulted in the GSE taking on additional risk, beginning in the mid-1990s and continuing throughout the crisis and their government takeover in September, 2008.[36][37]
HUD loosened mortgage restrictions in the mid-1990s so first-time buyers could qualify for loans that they could never get before.[38] In 1995, the GSE began receiving affordable housing credit for purchasing mortgage backed securities which included loans to low income borrowers. This resulted in the agencies purchasing subprime securities.[39] In 1996, HUD directed Freddie and Fannie to provide at least 42% of their mortgage financing to borrowers with income below the median in their area. This target was increased to 50% in 2000 and 52% in 2005. In addition, HUD required Freddie and Fannie to provide 12% of their portfolio to “special affordable” loans. Those are loans to borrowers with less than 60% of their area’s median income. These targets increased over the years, with a 2008 target of 28%.[40]
In 2004, HUD ignored warnings from HUD researchers about foreclosures, and increased the affordable housing goal from 50% to 56%.
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Economist Paul Krugman has also argued in July 2008 that although the GSE are "problematic institutions," they played a small role in the crisis because they were legally barred from engaging in subprime lending.[49] Economist Russell Roberts has taken issue with Krugman's contention that the GSEs did not engage in subprime lending,[50] citing a June 2008 Washington Post article which stated that "[f]rom 2004 to 2006, the two [GSEs] purchased $434 billion in securities backed by subprime loans, creating a market for more such lending."[51] Furthermore, a 2004 HUD report admitted that while trading securities that were backed by subprime mortgages was something that the GSEs officially disavowed, they nevertheless participated in the market.[52] However, in 2011, the Federal Reserve, using statistical comparisons of geographic regions which were and were not subject to GSE regulations finds that GSEs played no significant role in the subprime crisis.[53] In the final analysis, those who seek to deflect criticism of Fannie Mae and Fredie Mac by pointing out that private lenders eventually issued most of the worst performing loans ignore the primary role that the GSE's played in expanding the use of subprime loans. In 1999, Franklin Raines first put Fannie Mae into subprimes, following up on earlier Fannie Mae efforts in the 1990's which reduced mortgage down payment requirements. At this time, subprimes represented a tiny fraction of the overall mortgage market. [54] In 2003, after the use of subprimes had been greatly expanded, and numerous private lenders had begun issuing subprime loans as a competitive response to Fannie and Freddie, the GSE's still controlled nearly 50% of all subprime lending. From 2003 forward, private lenders increased their share of subprime lending, and later issued many of the riskiest loans. However, attempts to defend Fannie Mae and Freddie Mac for their role in the crisis, by citing their declining market share in subprimes after 2003, ignore the fact that the GSE's had largely created this market, and even worked closely with some of the worst private lending offenders, such as Countrywide. In 2005, one out of every four loans purchased by Fannie Mae came from Countrywide. [55] Fannie Mae and Freddie Mac essentially paved the subprime highway, down which many others later followed.

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Originally Posted by Goofball

Yes, it's well known that it's conservatives that favor heavy regulation of the financial markets while liberals take a much more laissez-faire attitude. lol

Are you listening to yourself?

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Have you read about what happened? -

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There appears to be ample evidence that the Bush administration recognized both the risk of subprimes, and specifically the risks posed by the GSE's who had an implicit guarantee of government backing. For example, in 2003, the Bush administration, recognizing that the current regulators for Fannie and Freddie were inadequate, proposed that a new agency be created to regulate the GSE's. This new agency would have been tasked specifically with setting capital reserve requirements, (removing that authority from Congress), approving new lines business for the GSE's, and most importantly, evaluating the risk in their ballooning portfolios. It was in specific response to this regulatory effort that Barney Frank made his now infamous statement "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." [72] Had this new regulatory agency been put in place in 2003, it likely would have uncovered the accounting fraud regarding executive bonuses which was occurring at that time at Fannie Mae. This accounting scandal would later force the resignation of Franklin Raines and others executives. [73] This new agency may also have slowed or stopped the further movement of the entire mortgage industry into subprime loans by exposing the full extent of the risks then taken by Fannie and Freddie, who at this time, controlled nearly half of all subprime loans being issued.
Efforts to control GSE were thwarted by intense lobbying by Fannie Mae and Freddie Mac.[74] In April 2005, Secretary of the Treasury John Snow repeated call for GSE reform, saying "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America … Half-measures will only exacerbate the risks to our financial system." Then Senate Minority Leader Harry Reid rejected legislation saying " we cannot pass legislation that could limit Americans from owning homes and potentially harm our economy in the process." [75] A 2005 Republican effort for comprehensive GSE reform was threatened with filibuster by Senator Chris Dodd (D-CT).[76]

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Originally Posted by Lemur

Ah, Austrian Economics, we meet again. For those who don't know, under Austrian Economic theories, all bad things are due to government interference, and markets are perfect if left in a state of pristine isolation. Never mind that market panics and crashes existed long before any systematic regulation. It's all the government's fault, somehow!

Read the Austrian theory for unemployment for a few laughs. "What if people want to work, but can't get a job? In almost every case, government programs are the cause of joblessness."

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So, with your attack on your strawman - are you denying what Xiahou said about the government being able to create perverse incentives through certain policies and laws? Are you saying this is not possible?

CR

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Originally Posted by Crazed Rabbit

So, with your attack on your strawman - are you denying what Xiahou said about the government being able to create perverse incentives through certain policies and laws? Are you saying this is not possible?

CR

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Your second quote explained how the deregulation caused by the GOP Congress in 1992-2000 was almost countered by Bush through government regulation. But then Liberals who were convinced by the bubble that the deregulation helped the economy (the GOP mantra) then opposed the regulations, leading to the disaster in 2007/2008.

Thus the problem was.....government incentives?

Now, explain to me how US housing is related to Icelandic banks in the UK, or Swedish banks in the Baltic, etc, etc. Or why a US house crash caused global recession.

Where banks activly loaned way above what they could handle in case of a crisis, by bypassing the regulation in place, that's been created from past experiences. Crashes will happen, it's a fundamental flaw built into the system. By acting as crashes can never happen and ignoring the warning signs are a sign of extremely poor self regulation. Need I mention that it's evidently the standard thinking in the financial sector?

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Originally Posted by Xiahou

Ok, now it's time... examples? Show me instances when simultaneous bad management of "enough" companies was the sole cause of "market failure".

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If only there were some sort of example from a market that predated any attempt at systematic regulation ... (And yes, I'm aware there was contract regulation, and some Austrian Economists have attempted to blame the Tulip Bubble on that, to which I say, so sorry I can't provide you with a perfect, government-free market example from the realm of pure reason. Markets happen in the real world, so the Austrian appeal to Platonic Ideals is as predictable as it is maddening.)

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Originally Posted by Crazed Rabbit

are you denying what Xiahou said about the government being able to create perverse incentives through certain policies and laws? Are you saying this is not possible?

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Not even close to what I wrote. Of course government can create perverse incentives, and does so in an ongoing manner. What I find frustrating about Austrian Economics is the dogmatic simplicity of "markets good" and "guvmint bad," which is the premise of anyone who tries to argue that the housing bubble was solely (or primarily) the fault of the wicked, evil guvmint.

Bubbles and market crashes pre-date government regulation of markets. Furthermore, mass unemployment (and starvation) pre-date the welfare state. But don't try to tell this to any true believers in Austrian Economics. Unlike a theory, Austrian Economics cannot be proved wrong. It can only be adhered to and believed with varying levels of religious fervor.

Exemplum gratum, according to Austrian Economics, all famines are government-made. What's that, you say? Famines have occurred at different points in history, for different reasons, under different policies and governmental systems? So how can a single cause be ascribed to all of them? And how do we then account for pre-civilization famines, which would seem to be due to things like climate variations and droughts? Don't ask! It's Austrian Economics! If it isn't working it's because you are not sufficiently pure in your belief and application!

As long as I'm gleefully ripping on the Austrian School, let's look at a statement of principles from one of their Wikis:

Members of this school approach economics as an a priori system like logic or mathematics, not as an empirical science like physics. They strive to discover axioms of the science of human action (called "praxeology") and deduce further truths.

If you can't see the problem in this approach, you aren't looking very hard. Theories are lovely, but empiricism is necessary. You can reason yourself into all sorts of interesting positions, but at some point you have to subject theories to a simple test: does it work in real life? Austrian Economics attempts to turn a (soft) science into a theology, or in the most charitable view, a philosophy. Real-world results and empiricism are discarded; we're arguing from a priori knowledge here. Bah.

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Originally Posted by Xiahou

Ok, now it's time... examples? Show me instances when simultaneous bad management of "enough" companies was the sole cause of "market failure".

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Xaihou, I haven't been around for a while, but I remembr you being smarter than this. Are you honestly trying to make the argument that the 2008 meltdown was caused by overregulation? I usually lean more to the right on economic and fiscal issues (especially anything to do with lying, stinking unions). But it is well documented and plain to see that it was lack of oversight and downright knowing, willful thievery on the part of the investment banking firms that led to the 2008 collapse. I've worked in banking and finance for almost twenty years, and I honestly can't believe that executives weren't sent to jail over this. What they did was worse than what Enron and Arthur Anderson got up to.

Team Romney's pounce on the Libya attacks, with a little behind-the-scenes detail:

Behind the curtains a more chaotic and rash picture emerges.

The statement from the Romney campaign was initially released by Romney press secretary Andrea Saul at 10:09 PM — but under an embargo until midnight on September 12th. In other words, it was embargoed until September 11th was over.

Then a few minutes later at 10:24 PM the embargo was lifted and reporters were told they could use the statement immediately. There was no clear explanation of the change.

Bear in mind, this was all happening while attacks on US personnel abroad were ongoing. According to a statement released this morning by the White House, the President was told last night that Ambassador Chris Stevens was unaccounted for. Only this morning did he learn that Stevens had died in the attacks that were on-going last night.

The campaign also authorized Romney’s top foreign policy advisor to give a blistering interview attacking the president while the attacks were continuing.

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Originally Posted by Lemur

Team Romney's pounce on the Libya attacks, with a little behind-the-scenes detail:

Behind the curtains a more chaotic and rash picture emerges.

The statement from the Romney campaign was initially released by Romney press secretary Andrea Saul at 10:09 PM — but under an embargo until midnight on September 12th. In other words, it was embargoed until September 11th was over.

Then a few minutes later at 10:24 PM the embargo was lifted and reporters were told they could use the statement immediately. There was no clear explanation of the change.

Bear in mind, this was all happening while attacks on US personnel abroad were ongoing. According to a statement released this morning by the White House, the President was told last night that Ambassador Chris Stevens was unaccounted for. Only this morning did he learn that Stevens had died in the attacks that were on-going last night.

The campaign also authorized Romney’s top foreign policy advisor to give a blistering interview attacking the president while the attacks were continuing.

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I agree. Not very presidential.

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Originally Posted by Goofball

Xaihou, I haven't been around for a while, but I remembr you being smarter than this. Are you honestly trying to make the argument that the 2008 meltdown was caused by overregulation?

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In a sense, I suppose so. You can pretty much always count on the fact that a business is going to try to make money- no matter what else, they're trying to make money. Why else would you run a business? So under pressure to make loans to people with bad credit, banks found a way to make money off it.

Like I said previously, banks were raking in profits and regulators were happy because their 'home-ownership above all else' goals were advancing.

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Originally Posted by a completely inoffensive name

Just look at 2007/2008. Honestly, I probably should have just made the general point Lemur made because pointing out the obvious must be a bad tactic if your opponent simply demands for examples when there are many all around him.

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So, someone says that that mortgage crisis was wholly due to the free market system. I dispute their claim. You state that there's no shortage of examples for such a thing. When pressed for an example, you state 'Well, look at the mortgage crisis!' :dizzy2:

The American Conservative unpacks just how bad this might be for Governor Romney:

Romney has made many foreign policy blunders before now, but this is the only one that has provoked such swift, harsh, and near-unanimous criticism. The most incredible part is that all of this has been self-inflicted. Romney and his campaign volunteered for this by inserting themselves into the story. If it were simply the other campaign or Democratic partisans that were hammering Romney on this, it wouldn’t be any different from previous mistakes, but the backlash hasn’t been limited to his partisan foes. The dishonesty of the original Romney statement and the gall of his press conference this morning have combined to create serious doubts about his judgment and to confirm the impression that there are no limits to his opportunism.

As a practical matter, this episode shows how useless Romney’s main foreign policy theme has been. According to Romney, Obama “apologizes for” America, and Romney won’t. He tried to shoehorn the embassy attacks into this frame, and it didn’t work for at least two reasons. First, Obama didn’t respond to the attacks by apologizing for anything or sympathizing with the attackers, as Romney’s original statement charged, so it was blatantly false. Romney’s position that the U.S. should never “apologize for” American values is almost beside the point. Would this have made any difference to the people assaulting the embassy in Cairo or the consulate in Benghazi? Would the attacks not have happened if Romney had been conducting his own brand of thoroughly unapologetic activist foreign policy? It seems unlikely. Romney might have legitimately questioned the security arrangements for the consulate, for example, or he could have made the fair observation that Libya’s new government is very weak and Libya as a whole has serious security problems, but that wouldn’t have translated into the easy and satisfying point-scoring that Romney seems to prefer. It wouldn’t have fit his ready-made scheme of Obama-as-Carter, but it would have spared him of most of the ridicule he’s receiving now. Now instead of portraying Obama as Carter, he has presented himself as the bumbling McCain figure of 2012.

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Originally Posted by Lemur

The American Conservative unpacks just how bad this might be for Governor Romney...

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Romney was referring to the statement made by the U.S. embassy in Cairo after the attack there. And yes, it sounded like apologetic bleating to me.

If Governor Romney were merely referring to the unauthorized Tweet from the Cairo embassy, he's had ample time to correct the record. Timeline:

First, the embassy in Cairo--not the White House, not Foggy Bottom, but the embassy--released its statement denouncing (not by name) the makers of the inflammatory film about Mohammed. That was around noon local time Tuesday.

Then the attacks happened.

Then, last night, came Romney's statement criticizing the Obama administration for its allegedly "disgraceful..first response" being "to sympathize with those who waged the attacks."

But: the attack hadn't happened! That first embassy statement was apparently issued because word was circulating about possible violence, and the embassy was trying to quell it.

Then the Obama administration distanced itself from the original embassy statement, and then Romney issued last night's statement.

So here's Romney now, at 10:18 am, now that he must surely know this chronology, still defending his statement from last night and criticizing Obama for defending the attackers. He is continuing to say that the original statement came "after the breach." So he's accusing the embassy and State and the administration of lying. And, by the by, he is criticizing US embassy officials who were under attack.

If he is factually wrong about the first statement happening "after the breach," then this press conference, mark my words, will go down in history as a textbook disaster. Chuck Dodd is being professional but clearly can't believe what we just saw. Amazing, with four people dead, and two not even yet named publicly, that Romney would do this.

This is his meltdown moment, like McCain suspending his campaign. As someone just tweeted: "I mean, seriously. Mitt Romney's first statement after an ambassador was killed was to attack the President over tweets?"

Are you talking about the attack in Cairo or in Benghazi?

I was quoting a timeline.

https://i.imgur.com/9MZd0.png

Meanwhile, Team Romney is circulating talking points. Most interestingly, the bolded bit below is almost word-for-word identical to the unauthorized tweet Romney and Priebus so urgently condemned. Fascinating.

Questions & Answers:

Don’t you think it was appropriate for the embassy to condemn the controversial movie in question? Are you standing up for movies like this?

— Governor Romney rejects the reported message of the movie. There is no room for religious hatred or intolerance.

— But we will not apologize for our constitutional right to freedom of speech.

— Storming U.S. missions and committing acts of violence is never acceptable, no matter the reason. Any response that does not immediately and decisively make that clear conveys weakness.

— If pressed: Governor Romney repudiated this individual in 2010 when he attempted to mobilize a Quran-burning movement. He is firmly against any expression of religious hatred or intolerance.

Reports indicate the embassy in Cairo released its initial statement before the invasion of the embassy commenced. Doesn’t this show they were trying to tamp down the protest and prevent what ultimately happened, not sympathize with the protesters?

— The Administration was wrong to stand by a statement sympathizing with those who had breached our embassy in Egypt instead of condemning their actions.

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Originally Posted by Lemur

If Governor Romney were merely referring to the unauthorized Tweet from the Cairo embassy, he's had ample time to correct the record. Timeline:

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Oh, I think I see your angle: you're saying that the condemnation was Romney's failure. That very well may be, but that does not subtract from the shameful response by the embassy in Cairo. That ambassador better lose his job.

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Originally Posted by rvg

That ambassador better lose his job.

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Text of the infamous Cairo tweet: "We condemn the continuing efforts by misguided individuals to hurt the religious feelings of Muslims -- as we condemn efforts to offend believers of all religions"

Text from Governor Romney's talking points: "Governor Romney rejects the reported message of the movie. There is no room for religious hatred or intolerance."

One is a betrayal of America which must be condemned in the middle of hostilities, one is not. Go figure.

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Originally Posted by Lemur

Text of the infamous Cairo tweet: "We condemn the continuing efforts by misguided individuals to hurt the religious feelings of Muslims -- as we condemn efforts to offend believers of all religions"

Text from Governor Romney's talking points: "Governor Romney rejects the reported message of the movie. There is no room for religious hatred or intolerance."

One is a betrayal of America which must be condemned in the middle of hostilities, one is not. Go figure.

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There is an obvious difference between those two statements; they are like night and day.

If you didn't hate freedom, you would be able to see it.

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Originally Posted by Xiahou

In a sense, I suppose so. You can pretty much always count on the fact that a business is going to try to make money- no matter what else, they're trying to make money. Why else would you run a business? So under pressure to make loans to people with bad credit, banks found a way to make money off it.

Like I said previously, banks were raking in profits and regulators were happy because their 'home-ownership above all else' goals were advancing.

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I largely agree. Banks and other companies are out for themselves and blaming them, or an abstract entity called "the market", for not acting in the collective self-interest is stupid.

If the rules aren't designed with that basic premise they're stupid. The problems in this case didn't arise from overregulation as much as from bad and half-assed regulations.

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Originally Posted by Lemur

Text of the infamous Cairo tweet: "We condemn the continuing efforts by misguided individuals to hurt the religious feelings of Muslims -- as we condemn efforts to offend believers of all religions"

Text from Governor Romney's talking points: "Governor Romney rejects the reported message of the movie. There is no room for religious hatred or intolerance."

One is a betrayal of America which must be condemned in the middle of hostilities, one is not. Go figure.

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Romney's flip-flop does not surprise me. If anything, he's very consistent at being inconsistent. The embassy's reply was an epic fail though. I'm disappointed.

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Originally Posted by Goofball

There is an obvious difference between those two statements; they are like night and day.

If you didn't hate freedom, you would be able to see it.

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If you look at the actual press release from the embassy and contrast it with the entirety of Romney's talking points, there's quite a bit of difference. Taking a tweet and putting it alongside a cherry-picked excerpt isn't very productive outside the bounds of political gotcha games.

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Originally Posted by Press Release

September 11, 2012

The Embassy of the United States in Cairo condemns the continuing efforts by misguided individuals to hurt the religious feelings of Muslims – as we condemn efforts to offend believers of all religions. Today, the 11th anniversary of the September 11, 2001 terrorist attacks on the United States, Americans are honoring our patriots and those who serve our nation as the fitting response to the enemies of democracy. Respect for religious beliefs is a cornerstone of American democracy. We firmly reject the actions by those who abuse the universal right of free speech to hurt the religious beliefs of others

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Where Romney went wrong was when he queued a statement for release before the timeline of events was solidified- he stepped in it there. He was right to criticize the embassy's statement, while wrong to assert that the statement was in response to the attack.

But, too much is being made of that and too little questions are being asked about why the embassies were so poorly defended, particularly Benghazi, even though the warning signs were there.

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Originally Posted by Goofball

There is an obvious difference between those two statements; they are like night and day.

If you didn't hate freedom, you would be able to see it.

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Both statements are expressively public disapproval for religious hatred and intolerance.

I think Lemur has the ball on it.

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Originally Posted by Xiahou

If you look at the actual press release from the embassy and contrast it with the entirety of Romney's talking points, there's quite a bit of difference. Taking a tweet and putting it alongside a cherry-picked excerpt isn't very productive outside the bounds of political gotcha games.

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So if we just had more context we'd see that the Cairo embassy was freedom-hating, and Governor Romney was freedom-loving. Gotcha.

Entire text of the Cairo embassy press release: "The Embassy of the United States in Cairo condemns the continuing efforts by misguided individuals to hurt the religious feelings of Muslims – as we condemn efforts to offend believers of all religions. Today, the 11th anniversary of the September 11, 2001 terrorist attacks on the United States, Americans are honoring our patriots and those who serve our nation as the fitting response to the enemies of democracy. Respect for religious beliefs is a cornerstone of American democracy. We firmly reject the actions by those who abuse the universal right of free speech to hurt the religious beliefs of others."

God, you can smell the appeasement and freedom hatred just rising off it in waves!

Compare that with what a real freedom-lover has to say: "We have seen a foreign policy of weakness and decline in American influence and respect. Yesterday, we saw the consequences of this perceived weakness."

-edit-

Frum, as per usual, has a good grip on what happened:

The incident reminds of one other thing: the dangerously distorting effect of disrespect for one's political opponents. Inside Team Romney, and among Romney's donors and core supporters, it may be taken absolutely for granted that Barack Obama is a weak-willed appeaser of radical Islam, a cringing apologizer for America who does not love the country the way "we" do. So why not say it loud, especially when you think you've just caught his administration doing it again? And then you discover the mistake only after the statement has departed the outbox.

And here's a roundup of the tacks being taken by apologists. I'll file the one just stated in this thread under "Romney was unfortunately careless with his timing but essentially correct in his criticism."

After a period of practically bipartisan disgust with Romney, the right is finally lining up behind him. A whole set of (frequently contradictory) defenses are already being mustered: that Romney was totally right, that Romney was unfortunately careless with his timing but essentially correct in his criticism, that Romney is the victim of a liberal media conspiracy, that the Democrats are actually the ones politicizing the tragedy and demanding that no one criticize the president during a crisis, etc.

Actually, I wasn't talking about the embassy statement, as that was released before the news of the deaths broke, and is making Romney come off as a bit of a buffoon.

I was referencing the lack of mention that Merica had Freedom Teh Speech, and the muslims needs to just deal with it. We are all no more koran burners than they are all goat sexing homoes.

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Originally Posted by Lemur

Not even close to what I wrote. Of course government can create perverse incentives, and does so in an ongoing manner. What I find frustrating about Austrian Economics is the dogmatic simplicity of "markets good" and "guvmint bad," which is the premise of anyone who tries to argue that the housing bubble was solely (or primarily) the fault of the wicked, evil guvmint.

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But that's what Xiahou was discussing in the quote you responded to. The whole austrian economics thing you launched into was a bit of a non-sequitor at best.

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Bubbles and market crashes pre-date government regulation of markets. Furthermore, mass unemployment (and starvation) pre-date the welfare state. But don't try to tell this to any true believers in Austrian Economics. Unlike a theory, Austrian Economics cannot be proved wrong. It can only be adhered to and believed with varying levels of religious fervor.

Exemplum gratum, according to Austrian Economics, all famines are government-made.
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As long as I'm gleefully ripping on the Austrian School, let's look at a statement of principles from one of their Wikis:

Members of this school approach economics as an a priori system like logic or mathematics, not as an empirical science like physics.They strive to discover axioms of the science of human action (called "praxeology") and deduce further truths.

...

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Your arguments against Austrian Economics seem to be based on arguing against the idiots who purport to be Austrian economists. Simply because one blog claiming to be written by a believer in Austrian economics says all famines are government made does not mean such a belief is core tenant of Austrian economics. The same can be said for the wiki article. I do not need to go into detail with examples on how silly this would be by doing the same thing with fringe morons from the republican or democratic parties.

I would advise reading what actual Austrian Economist Professors with graduate degrees write;
http://www.coordinationproblem.org/

Note that this blog used to have a name involving Austrian Economics, but they changed it after moronic blogs named after Austrian Economics flooded the internet.

As luck would have it, the blog post at the top at this moment reads thusly:

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But it is not the case, as Josh Barro recently argued, “that Austrian economists reject empirical analysis, and instead believe that you can reach conclusions about correct economic policies from a priori principles.” To say so is to misinterpret what Mises meant by the word praxeology and therefore fail to understand what he recommended as the appropriate methods for economists. It is also to rely on interpretations of what people like Mises and Rothbard had to say, as well as the pronouncements of various advocates of Austrian economics on blogs and Internet forums, rather than engaging with the professional research being published in the peer-reviewed journals by practicing Austrians. That research offers a very different picture of the way in which Austrian economics engages the real world. Finally, as that research demonstrates, modern Austrians distinguish among “empirical evidence,” “quantitative data,” and “statistical correlation” in such a way that allows all of them, though less so the third, to play a role in their work. Rather than being anti-empirical, modern Austrian economists are trying to open up the box of what counts as “empirical evidence” to include forms normally dismissed out of hand by the rest of the profession. Arguably, then, modern Austrians might well be more empirical than other economists, at least as judged by their professional work.

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Originally Posted by ACIN

Your second quote explained how the deregulation caused by the GOP Congress in 1992-2000 was almost countered by Bush through government regulation. But then Liberals who were convinced by the bubble that the deregulation helped the economy (the GOP mantra) then opposed the regulations, leading to the disaster in 2007/2008.

Thus the problem was.....government incentives?

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Please tell me more of this parallel universe where the GOP controlled Congress in 1992. And do go into detail on this supposed deregulation that's to blame. From the same link as earlier:

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Economists Robert Kuttner and Paul Krugman have criticized the repeal of the Glass–Steagall Act by the Gramm-Leach-Bliley Act of 1999 as possibly contributing to the subprime meltdown, although other economists disagree.[8][9] The vast majority of failures were either due to poorly performing mortgage loans, permissible under Glass-Steagall, or losses by institutions who did not engage in commercial banking and thus were never covered by the act.[10]

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In my first quote you can see that the government steadily increased the percentage of below-median-income mortgages that the GSE's Fannie and Freddie had to provide.

The liberals were not convinced of the economic benefits so much as they liked the idea of "affordable housing" for people who should not be getting home loans.

CR

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Originally Posted by Crazed Rabbit

Please tell me more of this parallel universe where the GOP controlled Congress in 1992. And do go into detail on this supposed deregulation that's to blame. From the same link as earlier:

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My bad, it was....1994/1995 ish when Congress switched to Republican control. Should have just looked up the correct year in the first place. Point is that under this divided Government (GOP Congress and Dem President) that deregulations started to occur which built up the bubble.

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In my first quote you can see that the government steadily increased the percentage of below-median-income mortgages that the GSE's Fannie and Freddie had to provide.

The liberals were not convinced of the economic benefits so much as they liked the idea of "affordable housing" for people who should not be getting home loans.
CR

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From what I remember reading there was:
A. An act in 2000 that prevented any regulation of the derivative market.
B. The SEC at some point allowed banks to take on more debt than they were previously allowed, to dangerous levels.
C. Rampant fraud regarding the rating of bundles of bad mortgages, which was allowed unchecked by government agencies.

None of these were particularly good for the economy.

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Originally Posted by Crazed Rabbit

Your arguments against Austrian Economics seem to be based on arguing against the idiots who purport to be Austrian economists.

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No true Scotsman would argue from a priori knowledge!

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Originally Posted by Crazed Rabbit

Note that this blog used to have a name involving Austrian Economics, but they changed it after moronic blogs named after Austrian Economics flooded the internet.

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It should be instructive that the owner of the blog felt the need to distance himself from morons who have latched onto the version of Austrian Economics that has metastized in the public and policy spheres.

His full essay about the multi-hued perfection of Austrian Economics (which is merely quoted in the blog) can be found here. Reading it through, and reading between the lines, he appears to be rather worried about those "morons" who espouse Austrian Economics. An interesting nugget from his fourteen-paragraph self-congratulation:

Rendering human action intelligible means telling better stories about what happened and why. [...] [Austrian Economics is] used to offer a better understanding of history and contemporary events by organizing a wide range of empirical data into a coherent narrative that renders those events intelligible. We can never have the knock-down power of the scientist’s laboratory (though even there, rhetoric and storytelling matter a great deal), so the best we can do as economists is tell better-organized, more richly empirical, and more logically valid stories. If we economists limit ourselves to just econometric evidence, we are cutting ourselves off from important parts of the empirical world, and it is those who do so, and not the Austrians, who are being insufficiently empirical.

I certainly have more sympathy for a storyteller than a philosopher; the resulting writing is going to be a lot better, and narratives are usually more engaging and meaningful than espoused theories. I think Horowitz's assertion that he and his True Scotsmen are more empirical than anyone else is laying it on a bit thick.

There remains the underlying problem that Austrian Economists (the Scottish and un-Scottish varieties) tend toward this wild bias against government, which is reflected in certain strands of Libertarian and GOP ideology. Frankly, it's foolish. Governments are one way to organize people; corporations are another. Limited partnerships? Sole proprietorships? Armies? Navies? Useful ways to organize people. All can co-exist, all have their weaknesses, all have their strengths.

Was the wicked, evil government behind the Dutch tulip crisis? The dot-com bubble? The junk bond collapse? The 1907 banker's panic? The 1997 Asian market panic?

Anyone who has worked in a commodities pit or a brokerage will tell you that markets are subject to herd behavior, and herds can do illogical things. Thus I find the reflexive assumption that markets are logical absolutely maddening. Sure, markets are logical in the long run, but in real-time they can behave like a panicked mob, and a lot of folks can get trampled before that mob calms down. And in a long enough timeframe, we are all dead. So the ultimate logic of a market may or may not have the smallest bearing on the results for individuals and corporations in a relevant timeframe.

As for Fannie and Freddie, it sure as hell looks as though they were participants but not causal in the 2008 market collapse. Some bits to chew on:

Many others are answering this question by looking at the collapse moment; I want to focus on the origination of bad mortgage debt and the bubble itself. [...] from 2002-2005, [GSEs] saw a fairly precipitous drop in market share, going from about 50% to just under 30% of all mortgage originations. Conversely, private label securitization [PLS] shot up from about 10% to about 40% over the same period. This is, to state the obvious, a very radical shift in mortgage originations that overlapped neatly with the origination of the most toxic home loans.

Furthermore, there was a severe and simultaneous bubble in commercial real estate. (Peaked in 2007 at approx. $6t, which was down to $3.5t by 2010.) Please point out the government policies that created a perverse incentive for subprime lending leading to the bubble/crash in commercial real estate, which just happened to coincide with the housing bubble/crash. You'll have a hard time finding that set of policies, because they did not exist.

From where I'm standing, it sure as hell looks as though some people want to blame the government for reasons that have nothing to do with observable reality, and reasoned backward from that conclusion to their evidence.

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Originally Posted by Lemur

So if we just had more context we'd see that the Cairo embassy was freedom-hating, and Governor Romney was freedom-loving. Gotcha.

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I already posted the entire press release, but I guess you posting it again doesn't hurt. Yes, it was a profoundly stupid press release- even the White House says it was released without authorization and that it should have had major revisions before being released, but don't let that stop you.

Here's an article from Foreign Policy - Inside the public relations disaster at the Cairo embassy

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"People at the highest levels both at the State Department and at the White House were not happy with the way the statement went down. There was a lot of anger both about the process and the content," the official said. "Frankly, people here did not understand it. The statement was just tone deaf. It didn't provide adequate balance. We thought the references to the 9/11 attacks were inappropriate, and we strongly advised against the kind of language that talked about ‘continuing efforts by misguided individuals to hurt the religious feelings of Muslims.'"

Despite being aware of Washington's objections, the embassy continued to defend the statement for several hours, fueling the controversy over it, a decision the official again attributed to Schwartz.

"Not only did they push out the statement but they continued to engage on Twitter and retweet it," the official said. "[Schwartz] would have been the one directing folks to engage on Twitter on this."

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Originally Posted by Major Robert Dump

Actually, I wasn't talking about the embassy statement, as that was released before the news of the deaths broke, and is making Romney come off as a bit of a buffoon.

I was referencing the lack of mention that Merica had Freedom Teh Speech, and the muslims needs to just deal with it. We are all no more koran burners than they are all goat sexing homoes.

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but....

Vis-a-vis the election itself, a scan of the numbers (I recommend 270towin.com) suggests the following:


Obama is significantly less popular than in 2008. For a host of reasons (first black, guilt, tired of the GOP, etc.) Obama enjoyed a 5-6% upsurge in support over normal Dem voter support in the last few Presidential elections. This support has eroded and Obama's support has faced a "regression towards the mean" this time around. States he won last time, like Virginia and Colorado, are too close to call or leaning Romney this time around.

Nevertheless, the slight shift in electoral votes, coupled with the voting patterns and percentages suggested by the contests in '04, '00, and '96, suggests that Obama is heading into November with a clear -- arguably insurmountable -- lead in the Electoral College despite Romney's strong overall support. Simply put, too much of Romney's popular support is concentrated in states where he will win anyway, whereas Obama's support -- particularly powerful in urban areas throughout the nation -- gives him a leg up on many of the closely contested states.

Drawing on 270towin's data -- re-interpreted slightly to account for my "read" on recent polls, I suggest the following division of Electoral Vote standing:

Safe Obama: DC, DE, HI, IL, MD, NY, RI, & VT totalling 76 electoral votes.

Very likely Obama: CA, CT, MA, NJ, NM, OR, & WA totalling 111 electoral votes.

Leaning Obama (but not a sure thing yet): ME, MI, MN, NH, PA totalling 54 electoral votes.

Too Close to Call: CO, FL, IA, NV, OH, VA, & WI totalling 91 votes.

Leaning Romney: AZ, GA, IN, NC, SC, & SD totalling 65 votes.

Very likely Romney: AK, AR, KS, MO, MT, ND, NE, TX, & WV totalling 79 votes.

Safe Romney: AL, ID, KY, LA, MS, OK, TN, UT, & WY totalling 61 votes.


Thus, in terms of states these candidates are likely to win without any further effort or fear of reversal, Obama starts with 187 electors to Romney's 140.

If Obama wins only Maine and Minnesota from his list of "leaning" states, his total goes to 201. If we presume that all of the other leaning states are 50/50 propositions like the too close to calls (and I think that is being generous to Romney), Obama still only needs to secure 69 electors of 131 (FL, PA, NH, & OH would suffice) to win.

By contrast, if we assume that ALL states leaning toward Romney vote for Romney, Romney produces a total of 205 electors. To win, he needs 65 of the 91 available on the original too close to call listing above and MUST include a win in Florida under any and all circumstances to produce enough electors to reach 270. He could afford to drop Ohio and Iowa or Ohio and Nevada; He could afford to drop Iowa, Nevada, and Either Colorado or Wisconsin or Virginia...

In short, Romney must nearly run the table on the too close to call states to win AND hold all of those states that are leaning his way. Obama only needs to take a chunk out of the too close crowd.


Could this all shift? Of course. The media is saying that it will all hinge on the debates. If, however, both experienced pols live up to their normal solid performances in the debate, the real truth is that the media is promoting them in order to sell advertising time.

This one is Obama's to lose folks. Romney could even win the popular vote and still come up short.

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Originally Posted by Seamus Fermanagh

The media is saying that it will all hinge on the debates.

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They always say that, and it's rarely true. Remember the true media bias: simplified conflict.

Oh how I doth hate winner-takes-all rules in states, and the Electoral College. It doesn't even have a football team