Press release from LPHQ:
WASHINGTON – Libertarian Party Chair Mark Hinkle released the following statement today:
“I have been following the Occupy protesters, who call themselves the ‘99%’, with interest.
“It’s true that 99% of Americans do not enjoy the special benefits of crony capitalism. Crony capitalism is very different from real capitalism. In crony capitalism, government hands out special favors and protections to politically well-connected businesses.
“The TARP bailouts, Solyndra, and the military-industrial complex are all facets of crony capitalism.
“Libertarians love free markets and hate crony capitalism.
“Unfortunately, hypocritical Republican politicians have taught a lot of Americans to think that ‘free markets’ means freedom for government and big business to engage in crony capitalism.
“That’s not what free markets are. A free market is where the government leaves businesses alone, does not attempt to pick winners and losers, does not stifle competition, does not hand out corporate welfare, and does not absolve businesses of liability for their actions. Most of our economy today does not resemble a free market at all.
“It’s unfortunate that so many businesses today go to the government begging for handouts and special treatment. I wish they wouldn’t. But the real problem is the politicians who choose to give those favors to them, at everyone else’s expense.
“I hope the Occupy protesters will start to direct their anger away from Wall Street and big businesses, and toward our government, which has done so much to destroy free markets and entrench crony capitalism.”
For more information, or to arrange an interview, call LP Executive Director Wes Benedict at 202-333-0008 ext. 222.
The LP is America’s third-largest political party, founded in 1971. The Libertarian Party stands for free markets, civil liberties, and peace. You can find more information on the Libertarian Party at our website:
For wannabe crony capitalists, it’s a problem that they don’t have the right cronies.
Crony capitalism is not the problem.
Crony capitalism is the solution!
Talking to brick walls is way more fun when you run into them head first a few times.
@42 You are talking to a brick wall.
Or, rather, several of them.
@39 “Those big, bad finance people have taken the money and run, ”
Yep, they sure did, with a big fat bribe to the cops all the way from the guys on the beat to the commish.
“leaving the 99% holding the bag.”
True again.
“Somehow, this morphs into “free” college for all and other confused extrapolations…”
Only if you let it morph into that.
The 99% are justifiably pissed off over having been ripped off and having their future sold down the river.
There are different people seeking to channel their anger in different directions.
Some of those will be asking for more cops on the beat, more spending per cop, etc. (“Cops” in this case being all government, not just actual cops).
The rest of us will either be there to point out that boosting a corrupt police force is counterproductive, and that the corruption is not just a few bad apples but an inevitable feature of the system…or we’ll cede the explanation to those other guys by default.
So what’s it going to be?
I know, the armchair thing is easier, right?
@41 yep.
Call it by its proper name F-A-S-C-I-S-M
http://news.yahoo.com/photos/occupy-wall-street-1318968340-slideshow/
37 tk: I don’t think that the protesters on Wall Street are concerned only, or even primarily, with bad loan practices or derivatives casino games …
me: I got yer meaning, but I would suggest that the inference is that the “casino games” is why they Occupy “Wall Street”. Those big, bad finance people have taken the money and run, leaving the 99% holding the bag. Somehow, this morphs into “free” college for all and other confused extrapolations…
Michael: “JT thanks for the article from FEE.”
You’re welcome. When I read it I thought it had value as a fairly short yet comprehensive explanation of the crisis. A lot of false statements have been made about what happened. I’m glad FEE published that analysis.
Brian @ 34,
I don’t think that the protesters on Wall Street are concerned only, or even primarily, with bad loan practices or derivatives casino games (which are about as “innovative” as putting little puppies instead of little cherries on a slot machine’s rotating surfaces).
Nor am I suggesting that bad loans and securiticasinoization are the underlying causes of the problems the Occupy peeps are concerned about.
All I said is that questions of fact (such as what percentage of bad subprime loans were issued by CRA-covered versus non-CRA-covered lenders) are questions of fact, not of economic philosophy.
That was a pretty narrow statement, for the specific reason that I didn’t wish to invite anything else being read into it.
I suggest the people go to the history books. Wars are not cheap and war that the U.S. has engaged in has had some degree of financial problems associated with it. This one came with low interest rates to help boost the economy and it did! Right out of orbit.
JT thanks for the article from FEE.
Knapp,
If you think that the protesters on Wall Street are concerned only with bad loan practices and a continually innovating and expanding derivatives market I would suggest that you fundamentally misunderstand the movement.
On the other hand, perhaps you are suggesting that bad loans and securitization run rampant are the underlying causes (and are the result of “too much government”) of the economic inequities and hardship that the young people on Wall St. are concerned about. If this is your approach, then I would say that you definitely are influenced by economic doctrine.
The real problem is jewish (khazar) capitalism. The libertarians won’t tell you that because many of them are khazar jews themselves, and many are also homosexuals.
rloy, I notice you just conveniently ignored what I posted in post 8 specifically about the causes of the crisis. Point out where the logic is flawed in the study I linked to, which specifically addresses the issue. Or don’t, but then don’t pretend that you know the relevant facts and have drawn a consistent conclusion.
I don’t think it’s difficult for an honest person of at least average intelligence to grasp that when politicians intervene in a market it causes distortions in market incentives (and the more intervention, the bigger the distortions). Sometimes such distortions are harder to see than others, but in this case they pretty much smack you in the face.
RC@30,
I was speaking to the narrow question of “origination of the transactions.”
How and why incentives and consequences ramify through a complex system are questions on which one’s economic philosophy might affect answers.
Who processed this promissory note or wrote that check, on the other hand, isn’t that kind of question. The answer to it is the same whether you’re an Austrian, a Public Choice type, a Keynesian, a Marxist, whatever.
If the statistic that only 6% of bad subprime loans were written by CRA-covered lenders is accurate at all, it’s accurate whether your name is Friedrich or John Maynard. The meaning or import of that fact may be differently evaluated by the two, of course, but if it’s a fact for one, it’s a fact for the other as well.
26 tk: The answer to the question of where the bad loans, the derivatives, etc. came from is a question of fact, not of economic philosophy.
me: Actually, not quite. Yes, the origination of the transactions is traceable. The DRIVERS and the MAGNITUDE of these transactions are not as obvious. For ex., if the Fed wasn’t as loose in the 01-08 timeframe, we might have seen a different picture. If there were no Fed, another picture might emerge. Those holding differing economic theories and assumptions would likely lead to different conclusions.
19 rloy: Yes, the CRA was responsible for a whopping 6% of the bad loans. The idea that derivatives and all the rest exist only because of government intervention is a total fairy tale that only a libertarian could believe. As for economists, few of them (outside of the Mises Institute) believe that Wall St is a group of doe-eyed innocents, or that the Fed is a one-stop scapegoat for all economic ills.
me: Actually, I’ve cited several reasons, including Wall St. itself. I’d say it’s impossible to say any one thing caused the financial chaos of the past few years. As for a “one-stop scapegoat,” I suggest you read your OWN POST #1: “Libertarians seem oblivious to the fact that the 2008 meltdown was caused by deregulated finance capitalism. Wall Street crooks were pulling toxic instruments out of their asses like there was no tomorrow. The entire economy collapsed as a result.”
Project much? 😉
It seems that those who want to blame the CRA for the mortgage meltdown are ignoring the securitization problem which made valuation impossible as well a being a poor investment.
A mortgage pool of 6% loans results in pretty low returns after the securitization fees, broker fees, and loan servicing fees. Add to that defaults fueled by inflation and recession and the fact that many of the mortgage originations were based on inflated appraisals and credit scores. These securities sucked and the way they were sliced into tranches made it impossible to place a value on them. The market dried up which meant lenders could not replenish loan funds to keep the process going.
Also, mortgage lenders don’t lose money on foreclosures. Virtually every mortgage made where the loan to value ration exceeds 80% requires mortgage insurance. It may be FHA insured or VA insured, or private mortgage insurance (PMI). In the event that the proceeds of a foreclosure sale do not cover the amount a lender has in the loan (including foreclosure costs and interest), then the mortgage insurance pays the lender the difference to make them whole.
So, what we had was a recession that caused many defaults, coupled with mortgage backed securities of dubious value. The government bailed out the firms that got stuck with the securities.
But none of this caused the underlying problem of high unemployment, inflation and recession. The real estate bubble fueled by artificially low interest rates would have burst eventually. But the real economic problems already existed by the time the bubble burst.
The ideas that the CRA caused all the problems or that a lack of regulations was the problem is shortsighted. Securities fraud is illegal and low-interest/low-downpayment federally insured loans for low-income people have been around for about 50 years.
Lenders weren’t “forced” to make low-interest loans to poor people who couldn’t pay them. They were/are induced to make risk-free loans to buyers that met certain government guidelines. Generally, the lenders flip the notes, so they don’t care what the interest rate is. However, they do receive reduced origination fees. But, in the absence of these government insured loans, the lenders are making origination fees off of borrowers that would not have qualified for any loan otherwise.
Citizens have at least a voice in what goes on at the governmental level, even if it is lessening.
In the matter of corporations and Wall Street, those most affected by their greed have no voice in the matter. The purchasing and selling of stock is a form of exploitation of the working people.
The destruction of the concept of public – and private – stock trading is something that will stand to benefit the working people.
Brian @ 25,
The answer to the question of where the bad loans, the derivatives, etc. came from is a question of fact, not of economic philosophy
I don’t claim to have the answers to that question, but the answers are the answers whether you’re a Hayekian or a Keynesian.
This argument can be played out 100x and never be resolved. It’s a matter of fundamentally different economic philosophies. There is simply no common ground between Hayekians and Keynesians. Both sides can site as many think tank studies as they want, but in the end, no one is convincing anyone on the other side.
Will it post this time? One can only hope..
“The Community Reinvestment Act all-but-forced the largest lenders to carve out a large percentage of their portfolios for low-income borrowers.”
The CRA gave out a whopping 6% of the bad loans. According to Bush’s own Comptroller of the Currency:
“CRA is not the culprit behind the subprime mortgage lending abuses, or the broader credit quality issues in the marketplace. Indeed, the lenders most prominently associated with subprime mortgage lending abuses and high rates of foreclosure are lenders not subject to CRA.”
http://www.responsiblelending.org/mortgage-lending/policy-legislation/congress/cra-is-not-to-blame-for-blame-for-the-mortgage-meltdown.html
The idea that derivatives and all the rest exist solely due to government intervention is a fairy tale that only a libertarian could believe. Few economists outside the Mises Institute accept such a fantastic narrative, and that includes Nobel Prize winners.
http://drudgeretort.wordpress.com/2011/10/11/nobel-prize-winning-economists-highly-critical-of-conservative-policies/
Tried to post it against and it still didn’t go through…wtf?
Hopefully it will post this time around instead of instantly disappearing into nothing…
“The Community Reinvestment Act all-but-forced the largest lenders to carve out a large percentage of their portfolios for low-income borrowers.”
The CRA gave out a whopping 6% of the bad loans. According to Bush’s own Comptroller of the Currency:
“CRA is not the culprit behind the subprime mortgage lending abuses, or the broader credit quality issues in the marketplace. Indeed, the lenders most prominently associated with subprime mortgage lending abuses and high rates of foreclosure are lenders not subject to CRA.”
http://www.responsiblelending.org/mortgage-lending/policy-legislation/congress/cra-is-not-to-blame-for-blame-for-the-mortgage-meltdown.html
The idea that derivatives and all the rest exist solely due to government intervention is a fairy tale that only a libertarian could believe. Few economists outside the Mises Institute accept such a fantastic narrative, and that includes Nobel Prize winners.
http://drudgeretort.wordpress.com/2011/10/11/nobel-prize-winning-economists-highly-critical-of-conservative-policies/
Hopefully it will post this time around instead of instantly disappearing into nothing…
“The Community Reinvestment Act all-but-forced the largest lenders to carve out a large percentage of their portfolios for low-income borrowers.”
The CRA gave out a whopping 6% of the bad loans. According to Bush’s own Comptroller of the Currency:
“CRA is not the culprit behind the subprime mortgage lending abuses, or the broader credit quality issues in the marketplace. Indeed, the lenders most prominently associated with subprime mortgage lending abuses and high rates of foreclosure are lenders not subject to CRA.”
http://www.responsiblelending.org/mortgage-lending/policy-legislation/congress/cra-is-not-to-blame-for-blame-for-the-mortgage-meltdown.html
The idea that derivatives and all the rest exist solely due to government intervention is a fairy tale that only a libertarian could believe. Few economists outside the Mises/Cato cult accept such a fantastic narrative, and that includes Nobel Prize winners.
http://drudgeretort.wordpress.com/2011/10/11/nobel-prize-winning-economists-highly-critical-of-conservative-policies/
I had a response but it apparently didn’t go through
“The Community Reinvestment Act all-but-forced the largest lenders to carve out a large percentage of their portfolios for low-income borrowers.”
Yes, the CRA was responsible for a whopping 6% of the bad loans. As Bush’s Comptroller of the Currency put it:
“CRA is not the culprit behind the subprime mortgage lending abuses, or the broader credit quality issues in the marketplace. Indeed, the lenders most prominently associated with subprime mortgage lending abuses and high rates of foreclosure are lenders not subject to CRA.”
http://www.responsiblelending.org/mortgage-lending/policy-legislation/congress/cra-is-not-to-blame-for-blame-for-the-mortgage-meltdown.html
The idea that derivatives and all the rest exist only because of government intervention is a total fairy tale that only a libertarian could believe. As for economists, few of them (outside of the Mises Institute) believe that Wall St is a group of doe-eyed innocents, or that the Fed is a one-stop scapegoat for all economic ills.
http://drudgeretort.wordpress.com/2011/10/11/nobel-prize-winning-economists-highly-critical-of-conservative-policies/
Me: “In general, it’s better your economic analysis…”
That should read “In general, it’s better to get your economic analyses…”
Mortgage ORIGINATIONS were and are generally done in the private sector. Fannie and Freddie bought them, bundled them at a very fast pace during the bubble. Standards declined, allowing the originators to make a quick buck flipping the paper. Then a synthetic derivatives market sprang up, as Wall Street leveraged the debt more and more.
The Community Reinvestment Act all-but-forced the largest lenders to carve out a large percentage of their portfolios for low-income borrowers.
During the 01-08 timeframe, the Fed (essentially a government institution) kept interest rates VERY low, arguably too low. This also exacerbated the bubble, since even sub-primes were at low interest rates while asset prices continued to surge.
Wall St. was certainly deeply involved in the bubble. Government, however, created the environment and poured gasoline on the fire.
That news report (if you can call it that) merely says that sub-prime loans were given out by private firms. That’s true. Unfortunately, they don’t bother to ask WHY? Here’s a taste from the study I linked to in post 8:
“The presence of Fannie and Freddie in the mortgage market dramatically distorted the incentives for private actors such as the banks….The Fed’s low interest rates, combined with Fannie and Freddie’s government-sponsored purchases of mortgages, made it highly and artificially profitable to lend to anyone and everyone.”
In general, it’s better your economic analysis from economists such as the ones I linked to above instead of from political reporters, who generally know nothing about economics.
“There was also quite a bit of government enabling, such as Fed easy money policies and Freddie and Fannie starting and fanning the flames.”
The vast majority of the problem came from the private sector, not Fannie/Freddie.
http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html
13 TK, my perception is that a much larger percentage of Americans have an non-negative view of “capitalism” than even 30 years ago. Personally, I don’t use the term, I prefer “free market economics.” Even that doesn’t quite get it for me…TAAAList economics might be better characterized as “the economics of peace.” But that’s just me…
RC@12,
That’s the definition of the term as originally coined, by Thackeray.
That’s the definition of the term as popularized by the most popular economist in human history, one Karl Marx, whose disciples ruled 1/3 of the world for much of the 20th century.
That’s the definition that most human beings — as opposed to us fraction of 1% who are both acquainted with, and accept, some libertarian version of economics — are given in public education and generally accept.
Yes, language is a fuzzy thing, and different words mean different things to different people. But just because you and I and Bill over in the corner agree that we’re going to call a thing with four wheels and an engine that you drive around a “chicken,” that doesn’t mean that most people won’t think of a flightless bird when we use that word.
11 tk: “…denotes…”
me: Which tablet is your definition etched on?
RC @6,
“are you suggesting that all capitalism is of the crony variety?”
“Suggesting” is a pretty weak phrasing.
“Capitalism” denotes a mixed, state-regulated industrial economy. Where there’s state regulation, there’s lobbying and bribery, which reduce to cronyism.
“That may be, I spose. Is there such a thing as a ‘free market,’ then?”
Of course there is. But free markets and capitalism are incompatible with each other.
The big problem I see with it is that he writes “crony capitalism” as if there were some other kind, and implicitly conflates “free markets” with an imaginary “real” capitalism of the non-”crony” variety.
Semantics, but true. Obviously “capitalism” is being used as a synonym for free markets here, in opposition to crony corporate statism. In reality, capitalism more often means crony corporate statism,
and should not be used as a synonym for free markets. The term is toxic in origin and frequent usage and should be ditched, not rescued.
Regardless, it is completely correct to point out the difference between free markets (called “capitalism” in article above) and crony corporate statism.
It’s incorrect to suggest that only the government side of that partnership deserves anger, or only that the business side does; they both do.
Libertarians seem oblivious to the fact that the 2008 meltdown was caused by deregulated finance capitalism.
Not so. It was caused by government pushing credit. Financiers went along, bargained that they would get bailed out, and won at the expense of everyone else. All aided and abetted by government every step of the way.
“I hope the Occupy protesters will start to direct their anger away from Wall Street and big businesses”
Um….hello? Wall Street and big business are responsible for the problem (as usual). How does it make sense to direct anger away from them?
Here, I agree with rloy. The other side of the coin is that big business partnered with big governments and made big profits off big disaster. Anger is very legitimately directed at both big business AND big government.
Good release.
rloy: “Libertarians seem oblivious to the fact that the 2008 meltdown was caused by deregulated finance capitalism.”
LOL. Deregulated finance? Funny.
http://fee.org/wp-content/uploads/2009/12/HouseUncleSamBuiltBooklet.pdf
TK @5
This is one of the areas where critics of the LP see our arguments fall apart and break down. Throughout history corporate and private financial interests have continually usurped the power of the state, whether it was the railroad barons or the banking cartels.
The closest thing we probably ever had to a free market may have been during the revolutionary war because almost every market was a black market.
I see most the protestors in the crowd still want government to “fix this” somehow… and in the end most all modern political messages, even those from the LP, seem to fail to grasp that government can’t fix it.
That power will always be abused by someone more clever and evil and ill intentioned … that is the root of the problem we must deal with. Should these protestors prevail we will just begin a renewed cycle of abuse of authority and power.
5 tk, are you suggesting that all capitalism is of the crony variety? That may be, I spose. Is there such a thing as a “free market,” then?
Semantics may get in the way of the basic idea that MH is getting at: The more gov’t involvement in the economy, the more it will distort the economy. A nightwatchman state distorts less than what we have today. Whether a nightwatchman state distorts more than a stateless configuration…it’s hard to say…we’d have to have empirical evidence that a stateless configuration could sustain a modern economic arrangement. Without evidence, we’d be guessing….
A fair piece from Mr. Hinkle.
The big problem I see with it is that he writes “crony capitalism” as if there were some other kind, and implicitly conflates “free markets” with an imaginary “real” capitalism of the non-“crony” variety.
1 rloy: Libertarians seem oblivious to the fact that the 2008 meltdown was caused by deregulated finance capitalism.
me: I hadn’t heard that the Treasury, SEC, etc. were abolished…were they? I’d think most Ls recognize that regulation has changed over time.
rloy: Wall Street crooks were pulling toxic instruments out of their asses like there was no tomorrow.
me: I’d think most Ls recognize that there was some fraud in creating the real estate bubble. There was also quite a bit of government enabling, such as Fed easy money policies and Freddie and Fannie starting and fanning the flames.
rloy: The entire economy collapsed as a result.
me: “Collapse” seems way overstated. These are challenging times, no doubt, but life seems to be going on.
http://www.kansascity.com
1 day, 14 hours ago
An Agenda for the 99%
Midwest Voices contributing columnist: arturomora
The Kansas City Star
The “Occupy Wall Street” movement needs to eventually go beyond protests and get real about what it takes to influence real change.
Their pride in not having an agenda is charming for a limited time, but feeds into stereotypes about ineffective progressive politics.
Comparisons have been made to the Tea Party Movement, but they have delivered the goods, while the 99ers don’t even know what they want yet.
Like it or not, the Tea Party has changed our politics big time in the last two years.
They started out the same way as the 99ers, with often disorganized and derided rallies, including fringe elements who were sometimes racist or just plain wacko.
The Tea Party transformed that early madness into an almost complete takeover of the Republican Party and of our national political debate, and it remains to be seen if the 99ers can do the same.
Part of the problem is typical to progressive protests, the over-the-top inclusiveness and lack of focus.
Now don’t get me wrong, I am a fan of progressive politics, as readers here well know, and inclusiveness is one of my favorite positive words.
Read more: http://voices.kansascity.com/entries/an-agenda-for-the-99/#ixzz1b2lG7QWd
#1, how come the best and brightest didn’t recognize these were “toxic assets?” What were they counting on? Cong.BarneyFrank saw nothing wrong with these assets even when warned by the likes of RonPaul and even John McCain.
Libertarians seem oblivious to the fact that the 2008 meltdown was caused by deregulated finance capitalism. Wall Street crooks were pulling toxic instruments out of their asses like there was no tomorrow. The entire economy collapsed as a result.
“I hope the Occupy protesters will start to direct their anger away from Wall Street and big businesses”
Um….hello? Wall Street and big business are responsible for the problem (as usual). How does it make sense to direct anger away from them?