Let the Character Assassinations Begin

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Ethan Gach

I write about comics, video games and American politics. I fear death above all things. Just below that is waking up in the morning to go to work. You can follow me on Twitter at @ethangach or at my blog, gamingvulture.tumblr.com. And though my opinions aren’t for hire, my virtue is.

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236 Responses

  1. Avatar zic says:

    Shoot the messenger.

    This can be quite subtle.

    For instance, the Associated Press sent out a style-guide to its writers: Don’t use ‘whistleblower’ to describe Snowden (and Bradley Manning), use the word ‘leaker.’ You see, whistleblowers are protected by law. Leakers, on the other hand, are breaking the law. It’s all in the framing of someone who’s respectable vs. reprehensible.

    Colleagues, With two secret-spilling stories in the news — NSA/Snowden and Wikileaks/Manning — let’s review our use of the term “whistle-blower” (hyphenated, per the Stylebook).

    A whistle-blower is a person who exposes wrongdoing. It’s not a person who simply asserts that what he has uncovered is illegal or immoral. Whether the actions exposed by Snowden and Manning constitute wrongdoing is hotly contested, so we should not call them whistle-blowers on our own at this point. (Of course, we can quote other people who call them whistle-blowers.)

    A better term to use on our own is “leakers.” Or, in our general effort to avoid labels and instead describe behavior, we can simply write what they did: they leaked or exposed or revealed classified information.

    Sometimes whether a person is a whistle-blower can be established only some time after the revelations, depending on what wrongdoing is confirmed or how public opinion eventually develops.

    Source: http://www.huffingtonpost.com/michael-calderone/ap-snowden-whistleblower_b_3416380.html
    Newspapers/freelancers all over the world contribute to the AP, and so follow it’s style guidelines; thus we have pervasive framing with this little word choice.Report

    • Avatar Tod Kelly in reply to zic says:

      Actually, this isn’t simply a semantic choice. “Whistleblower” is very specific term which comes with legal protections that that those caught leaking information are not granted. For example, had Manning or Snowden come to the press to report on sexual harassment – as some military personnel are doing currently – they would be protected under whistleblower laws. What they have done is something entirely different, and the AP is correct to note that they are leakers and not whistleblowers.

      This has not to say Manning of Snowden are not in the right, of course.Report

  2. Avatar b-psycho says:

    Considering that the guy will never be able to come home again, since the US government wants him either caged for life or murdered, it takes some Grade A dumbassery to think “selfish” is an accurate description.Report

    • Avatar Will H. in reply to b-psycho says:

      When I saw that part, I was thinking, “And who do they allege that he was trying to sell this information to?”

      If you give away snowcones, that doesn’t make you the ice cream man.Report

  3. Congress gave the Executive this authority, they passed laws that legalized it, and as I recall, they passed retroactive immunity for the companies that aided the government in doing it before it was legal.

    I guess I’m rather surprised that people are surprised that this was going on when we’ve had enough information to know what was going on and at least 3 elections to do something about it by electing new Congressmen who believed in civil liberties strongly enough to repeal those laws, which is the only meaningful outcome of having a ‘debate’ on the subject.

    If, as I suspect, the American people are perfectly fine with this or fine enough to keep sending the same people back to Congress in 2014, Snowden will pretty much have thrown his life away for no reason.Report

    • Avatar Jason Kuznicki in reply to Comrade Dread says:

      Congress gave the Executive this authority, they passed laws that legalized it, and as I recall, they passed retroactive immunity for the companies that aided the government in doing it before it was legal.

      That was for communications with parties overseas — a clearly mandated part of the NSA’s mission.

      The current controversy concerns all those times when I call my parents in Cincinnati.Report

      • For that particular law, yes, but you would have to be pretty trusting of the government not to assume that having access to all of that data, they weren’t doing anything with it.

        The objections to this seem to mostly be on moral grounds that it isn’t right or that there should be less secrecy surrounding it.

        So if folks really find this intolerable, they could have (or could) elect more congressmen with a higher commitment to civil liberties, but we don’t (and probably won’t.) So this seems to be one of those things that comes out that gets us all chattering and buzzing but ultimately nothing changes.Report

        • Avatar Barry in reply to Comrade Dread says:

          Comrade Dread June 11, 2013 at 12:14 pm

          ” For that particular law, yes, but you would have to be pretty trusting of the government not to assume that having access to all of that data, they weren’t doing anything with it. ”

          Walking slowly backwards.Report

      • Avatar PPNL in reply to Jason Kuznicki says:

        But I don’t think they are legally allowed to access data about your calls to Cincinnati. Now clearly they have the technical ability to do so but I’m not aware of any evidence that they have done so. Now you could legitimately argue that government should not be trusted with that power. After all it is the same government that justified torture. But again it has long been known that our government had this technical ability.

        I’m also finding it disconcerting that people are so outraged with the possibility that government can violate their privacy but the entire rest of the world is fair game. There is a clear legal and constitutional difference but is there really much of a moral difference?Report

        • Avatar Jason Kuznicki in reply to PPNL says:

          Things are a lot worse than you realize, because that’s exactly how this story first broke — with the revelation that the NSA is collecting all domestic telephone records:

          http://www.guardian.co.uk/world/2013/jun/06/nsa-phone-records-verizon-court-order

          Verizon was just the beginning, and all the other carriers are now implicated too.

          Whether it’s legal or not (and I say no), I think that clearly it should not be happening. The rest of the world is a different question, to my mind, and that question may or may not have the same answer.Report

          • It’s interesting, but I’m not sure I agree with this. (I don’t know that I disagree, either; I’m still puzzling.)

            There’s an old adage in business that says having all the data on your desk is the same as having no data on your desk. It’s largely true, I think. And because of this, I’m not sure that I find the government having all the phone records scarier than the government having some of the phone records. I actually wonder if more abuse (or at least more abuse that is truly malevolent) happens with some. For example, if I have 1,000 random phone records I can see myself seeing patterns that aren’t really there, and deciding that 10 people are enemies of the state even though they aren’t, and acting accordingly. If I have trillions of records, I’m not sure that is as likely to happen. The patterns I find, I suspect, will implicate a million people, and be more likely to make se think I must be doing something wrong.Report

            • Avatar Will Truman in reply to Tod Kelly says:

              Having a million records in data form is not such an issue when you have search capabilities, is it?

              It’s one thing to be handed a bunch of boxes that you would have to go through by hand. Technology makes that less of an impediment.Report

              • Avatar Tod Kelly in reply to Will Truman says:

                No, you’re misunderstanding. I’m not saying trillions of records are un-mineable – I’m sure with today’s technology they are very mineable.

                I’m saying that if you have too much data you can’t do anything useful with it. You look at 1,000 records and you can see maybe a dozen patterns, and so you can look at those patterns and try to see if they’re worth anything – and maybe you see things that aren’t there. But all the phone records, for everyone, ever? There are billions, or trillions, maybe even more patterns. You can input almost any parameters and get more patterns than you could ever hope to investigate.

                Google and Facebook have tons of data, and one of the things they know is that because of the sheer volume of data their marketing efforts will be far less precise than, say, our site would be if we chose to market different products to the people that comment here. Google and Facebook knowingly trade precision for volume, which is why they charge a millionth less per “touch” to advertisers than, say, Golf magazine does.Report

              • Avatar Patrick in reply to Tod Kelly says:

                There are billions, or trillions, maybe even more patterns. You can input almost any parameters and get more patterns than you could ever hope to investigate.

                The problem, of course, is that your ability to parse patterns is thus going to be highly, highly susceptible to confirmation bias.

                That is, the algorithm that weighs a social network in such a way that two guys that you know for sure are bad guys pop up within 1 step of each other is going to warrant much more attention than an algorithm that weighs a social network in such a way that those two bad guys wind up within 3 steps of each other.

                And thus you’re going to be examining the network that most conforms to your preconceived notion of what the network is supposed to look like.

                In a relatively closed and bounded system (for example, a mid- or even large-sized corporation) this can be useful because you have pretty reasonable grounds to establish one network as being particularly likely or unlikely based upon large reams of data about how the organization works.

                In a completely open and unbounded system (the Internet), this can be really dangerous because you can really, really easily scoop up tons and tons and tons of people for advanced scrutiny when your whole beginning premise was highly flawed.

                Now, one would suspect that generally speaking people don’t like to screw up, so they’re probably doing lots of internal checking to help prevent themselves from screwing up. But still, if there’s one thing that’s pretty clear in organizational history, it’s “if nobody pays attention to what we’re doing but us, sooner or later somebody in authority screws up significantly and it lasts for a long, long time – or the effects are very strong – before it is caught”Report

              • Avatar Tod Kelly in reply to Patrick says:

                Let me try another tac.

                Let’s say you have access to 1000 phone records, and you see that prior to an attack on US soil there were ten people whose call volume spiked the day before the attack; what’s more, one of those ten did not make a call for 24 hours after the attack was made, and when that call was made it was in a different town than his other calls came from. How suspicious might that look to someone going out of their way looking for a pattern, and what might they do with that suspicion? Might they leak the name of the guy to the press as a terrorist suspect? Might they haul him in and not let him have contact to an attorney? Might they perhaps use physical coercion to get him to confess?

                Now, lets say you have access to trillions of records, and you find that the number of people whose volume went up prior to the attack and then made no calls after is 200 million. What will you do with those 200 million?

                Like I say, I’m not sure I don’t find the chances for abuses against innocent Americans lessened by having all the data.Report

              • Avatar Patrick in reply to Tod Kelly says:

                Now, lets say you have access to trillions of records, and you find that the number of people whose volume went up prior to the attack and then made no calls after is 200 million. What will you do with those 200 million?

                You’ll re-run consecutively more granulated analysis until you get something that looks like a duck.

                Look, I’d be surprised if the Boston Bombing Buttheads’ friends weren’t tagged by social network analysis. Ibragim Todashev probably wasn’t singled out because someone randomly drew his name out of a hat.

                To the extent that this is backwards-looking, I don’t have a problem with it. It’s normal police procedure; I’m willing to give more leeway to law enforcement when they’re following the normal rules of issuing warrants and chasing after actual crimes that have actually been committed.

                But you can get all of those warrants post-haste when a major investigation like that is going on. You don’t need local access to everything, stored in your own files. I imagine that the Feds could walk right into a telco’s office with a warrant to have the telco give them every cell phone number that touched a cell tower within 2 miles of the bombing site and I’d consider that reasonable.

                But, you start collecting this stuff before anything happens, and you have rules about what it takes to get access to it, and you have technicians who get paid to run it, and there’s all sorts of failure scenarios that you didn’t have yesterday that you now have… today.

                Social network analysis is a really powerful tool, but it very, very easily can turn right in your hand. It’s heavily predicated on your ability to refute your own biases, and it’s heavily predicated on your ability to accurately assess weight.Report

              • Avatar Barry in reply to Patrick says:

                Adding on – in a corporate setting, the accuracy and profitability matter (modulo corp politics). In this sort of settings, false positives are just a ‘cost of freedom’.Report

              • Avatar zic in reply to Patrick says:

                The problem, of course, is that your ability to parse patterns is thus going to be highly, highly susceptible to confirmation bias.

                Computer software to understand spoken speech required vast amounts of data; it’s a statistical problem. I’d argue the opposite; the more data available to work with, the better you can refine searches. The quicker you’ll pick up on slang and codewords. This is not linear data mining, it’s fractal data mining.Report

              • Avatar Patrick in reply to zic says:

                There is something to this, but you’re missing a nuance.

                When you have a large corpus of anything, you can train your computer to recognize something that is a likely member of that set. This is basically how spam scanning works, and to a greater extent nowadays this is how a lot of anti-virus/malware things work, because analysis by direct examination is computationally exhaustive.

                If something looks enough like a duck (spam) or acts enough like a duck (malware), or sounds enough like a duck (voice recognition), we can call it a duck.

                The problem in this case is that we don’t really know what a duck is. We don’t even have credible probability functions for things that can help us to tag potential terrorists. Case in point.

                Put another way, how many guys look and act and sound like either of the Tsarnaev brothers, vs. how many of them actually try to bomb stuff?

                It’s a very similar problem to psychopathy. Psychopaths have a tendency to share traits in common; but most of the traits they share in common are actually pretty common traits. The LSRP doesn’t say much about your likelihood of being a psychopath, even with a high score. It just says that if you’re a psychopath, you probably have a high score.Report

              • Avatar zic in reply to zic says:

                Patrick, we’re speaking the same thing; the nuance isn’t clear without massive amounts of data and statistical analysis of it. It’s stepping away from a binary yes/no and approaching analysis from the perspective of probability. the more data you have, the greater the confidence.Report

              • Avatar Patrick in reply to zic says:

                the more data you have, the greater the confidence

                Yeeeeees, but… hm, we might just be talking around each other here.

                Let’s say we have a set H={all the humans}. We have a prospective subset of H, the set T={all of the terrorists}. Optimally, we’d want a way to describe all of the h in H such that the descriptors increase the probability that h is also a t.

                The more representative data we have about what it means to be a member of T, the closer we get to a probability that a particular h is also a t. The more representative data we have about what it means to be a member of not-T, the closer we get to a probability that any particular h is also *not* a t.

                We need both, to have a snowball’s chance in hell of tagging the “t”s with any accuracy while not dragging in a substantial number of “h”s.

                But the data has to be representative… if it’s not, it’s not meaningful data to the analysis at all, it’s just noise, cluttering up the analysis, and actually reducing the likelihood that we’re getting actual predictive descriptors out of the deal.Report

              • Avatar zic in reply to zic says:

                Patrick, take two sets of criminal. One, the Muslim Jihadist. Another a mass shooter. Their internet usage and phone use has been mined in detail. Profiles built. Their on-line haunts correlated with other, similar haunts, their search habits correlated with other search habits. There’s no invasion of privacy here; it’s statistical.

                And so profiles are built. And then patterns looked for in that mass of data; others who might have similar profiles, who might be terrorist threats.

                Now lets say there’s this other guy, a would-be novelist, writing a novel in which a mass shooter and a potential jihadist cross paths. His research creates a profile match; doubly lit-up. And so NSA begins monitoring as much of his key-stroking as possible.

                Our second, maybe he’s an immigrant, 19 or so, spent most of his life here, has some anger at how he’s seen his people treated. He’s also triggered a key-stroke level of scrutiny. Rises to the level of concern that the FBI offers him a chance to bomb something.

                Those are the kinds of slippery slopes that concern me.Report

            • Avatar Ethan Gach in reply to Tod Kelly says:

              Personally, my issue is less with the practical effects in this case, then with the norms being created and the expansive nature of it.

              There is nothing narrow in what the government is doing in this instance, and it remains to be seen whether it will even allow a judicial challenge–in which case there aren’t REALLY any checks on it.Report

            • Avatar Kimmi in reply to Tod Kelly says:

              Tod,
              do you feel the same way if you know a private citizen has all the data? Because I can fucking tell you, all the (medical claims) data is a GREAT fucking way to target say…. AIDS patients.Report

          • Avatar PPNL in reply to Jason Kuznicki says:

            They collect the data. They can’t look at the data without cause. If the data is about calls between Americans within the borders there can be no cause to look.

            They cannot just collect data that they might need or legally be allowed to use. They collect all data and then filter.

            Again it is a matter of trust. There is no evidence that they broke any laws. There are checks and balances to prevent abuse. Well yes but there were safeguards against torture as well so you should be skeptical. But still currently no laws have been broke.

            And again in a sense there is nothing new here. They have clearly been building this ability for a long time. The only thing new is the extent to which the system is operational.

            We have constructed the greatest tool for oppression the world has ever seen and yet it is all legal and constitutional as long as they don’t use it.Report

            • Avatar Burt Likko in reply to PPNL says:

              There ought to be a law. If there isn’t, that’s Congress not doing its job.

              There ought to be checks against how the information is gathered and how it is being used. If there aren’t, that’s the judiciary not doing its job.

              There is this massive amount of data, controlled by people who have become swaddled in anonymity and unaccountability. If it’s all coming down to a matter of trust, then I’m not sure anyone can be trusted to the extent necessary.

              Which is why we have divided government built in to the Constitution. What a shame that as a people we’ve forgotten why.Report

              • Avatar PPNL in reply to Burt Likko says:

                There are checks on how they use the data both constitutional and by law. But again it is a question of trust.Report

              • Avatar Scott Fields in reply to Burt Likko says:

                Burt –

                I don’t know that we as a people have forgotten the benefits of a divided government, as much as we’ve been deprived of our role in the process. The Legislative branch is the one that was designed to be most responsive to the people. But, our electoral process has been so corroded by systemic flaws, like gerrymandering and the structural advantages of incumbency, we have a Congress with a 17% approval rate and a 91% re-election rate. The people can be widely opposed to what they’re representatives collectively are doing and yet it is nearly impossible to throw the bums out.Report

              • Avatar zic in reply to Burt Likko says:

                I agree with this 100%, Burt.

                We had a power grab by the executive branch, under the theory of the Unitary Executive during the Bush Administration. Instead of dismantling and returning power to where it belongs, the Obama administration has consolidated that power.

                If anything, it’s a good lesson in be careful what you sow.

                Politically, suspect there’s one potential: it’s more likely power will be returned to the judiciary and Congress in opposition to Obama then it would have been in cleansing Bush.Report

              • Avatar zic in reply to zic says:

                Shorter: Challenge to conservatives: Not Obama this.Report

            • Avatar Barry in reply to PPNL says:

              PPNL June 11, 2013 at 1:04 pm

              ” They collect the data. They can’t look at the data without cause. If the data is about calls between Americans within the borders there can be no cause to look. ”
              Um, do you believe this? Do you think that we’re stupid enough to believe this?Report

              • Avatar PPNL in reply to Barry says:

                There is no evidence that they are breaking any laws and I would be surprised if they were. That isn’t the point. The question is how far we can trust them to continue to obey the law. We are one social upheaval away from a police state. Many of the people complaining about prism will support its use. After all some of the people most critical of government power ended up supporting torture.Report

              • Avatar Jaybird in reply to PPNL says:

                There is no evidence that they are breaking any laws and I would be surprised if they were.

                This is how I feel about Americans.Report

              • Avatar PPNL in reply to Jaybird says:

                There is nothing particularly American here. The US is using the entire IP infrastructure as an intelligence gathering apparatus. Other countries could protest but I suspect many of them are quietly cooperating in return for a taste of the data.Report

            • Avatar George Turner in reply to PPNL says:

              The Patriot Act allows them to use roving wiretaps on people suspected of being a terrorist, but only with a warrant from the FISA court, and the warrant had to list the person whose activities were being followed. The roving wiretap provision was a necessary update because technology and target behavior had changed, and getting a warrant to listen in on (123)-456-7890 at a particular address doesn’t work in the age of cell phones. It did not authorize wiretaps on everyone, yet that is apparently the purpose of the giant Utah facility.

              Yesterday I heard that Americans make about a billion calls a day. If they were only storing the information that Obama claimed they were, the phone numbers, time, and call duration, then they wouldn’t need much storage space. Thirty two bytes per call would probably cover it, or about 32 gigabytes of storage per day – covering the entire United States. I could store a month’s worth of those US phone records just on my laptop and USB external hard drive.

              So no, what we’re talking about isn’t just the storage of call meta-data or all they’d need to do is run down to Best Buy and put about a $1,000 on the government credit card. Instead they’re buying billions of dollars of storage. That means they’re sweeping up all the content, too.Report

        • Avatar Barry in reply to PPNL says:

          “But I don’t think they are legally allowed to access data about your calls to Cincinnati. Now clearly they have the technical ability to do so but I’m not aware of any evidence that they have done so.”

          Have a friend explain ‘secret government program’ to you.Report

    • Avatar Barry in reply to Comrade Dread says:

      I’ll let Julian Sanchez reply, because he said it best:

      “We’re paranoid cranks until there’s proof; then it’s old news because we’ve been saying it for years.”

      https://twitter.com/normative/status/344496932103802880Report

  4. Avatar Jason Kuznicki says:

    So often the fraying of the social fabric for David Brooks is nothing more than the choice of individuals to think for themselves.

    As someone who wears the label “libertarian” as proudly as he can manage, I don’t consider myself a social atomist. I prefer the voluntary society over the one in which law and custom make one person the master over another. When faced with a clear choice between these two setups, I always take the first.

    That said, I love cities. The bigger the better. I love art, literature, family, and all the rest. You can make the case that we can’t have these things without some degree of coercion. You might even be right, I don’t know. But it’s clearly wrong to claim that any step away from traditional social strictures is also a step toward atomism.Report

    • Avatar Barry in reply to Jason Kuznicki says:

      Jason, Brooks is full of sh*t, full stop.

      The first mention I ever heard of him was a review of his writing, catching him in a flat-out lie. I have seen nothing from him which negated that first finding.Report

  5. Avatar Jaybird says:

    Earlier this week (or was it last week? Everything blurs together…) Nidal Malik Hasan announced that his motive was that he wanted to defend the Taliban.

    This is one of those things where I said “So… his defense is that he was committing Treason.”

    (Here’s the relevant part of the Constitution: Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court.)

    I haven’t seen anybody out there call this “Treason”, though. (None Dare!)

    Anyway, Dianne Feinstein and John Boehner are calling the leak/whistle-blowing “Treason”.Report

    • Avatar b-psycho in reply to Jaybird says:

      It’s another form of Othering. Techie white dudes aren’t expected to turn against the government, meanwhile Those Durn Mooslims can never be Real Merkins anyway.

      Feinstein, Boehner…if I believed in hell I’d relish the thought of the two of them bathing in its fires.Report

  6. Avatar DavidTC says:

    This article linked to is truly stupid.

    What, one wonders, did Snowden think the N.S.A. did? Any marginally attentive citizen, much less N.S.A. employee or contractor, knows that the entire mission of the agency is to intercept electronic communications.

    No it’s not, you twit. The NSA is also in charge of _securing_ electronic communications and keeping track of classified material.

    But more importantly, he didn’t say he was ‘appalled’ by that ability. He said he didn’t want to live in a society _that did those things_.

    I live in a society with the _ability_ to slaughter thousands of people a day in, say, Chad. And I know that. That does not mean I wouldn’t be appalled if I learned we were doing that!

    We know the NSA _can_ spy on us. The issue is that the NSA apparently _IS_ spying on us, you idiot.

    He betrayed the cause of open government. Every time there is a leak like this, the powers that be close the circle of trust a little tighter. They limit debate a little more.

    The national security state: Abusive spouse edition. If we’d stop crying when they hit us, they’d stop hitting us!

    You know, I think it’s actually time we have a constitutional amendment to affirm something that _seems_ obvious but apparently is not: There is no such thing as secret laws. There are no such things as secret ‘interpretations’ of the law.

    If the government wants to argue that a certain law makes a certain program legal, fine. But, if it does, _we get to know that_. Not the specific program, or who is being watched, we understand secrecy.

    But we get to know that under law X, the government has asserted the right, and the courts agrees, that the government can generally do Y. Not the specific example, not who it’s being used on, not even the technical aspects, but the fact that law X means the government can do Y. (So we can actually debate whether or not Y is a power we want to the government to have.)

    Likewise, this constitutional amendment should affirm the standing to sue of people who assert they were harmed by a secret government program unless the government swear they were not harmed in such a manner.(1) It’s not like terrorists are actually going to sue, and this just gives _standing_, anyway. If someone shows up in court and says ‘My communications were spied on’, the government should be _required_ to admit that is true if it is. (At which point the suit can proceed as normal.)

    1) Not ‘not harmed by _that_ program’, we know the government likes to randomly rename programs so no one can ever tell what anyone’s talking about.Report

    • Avatar PPNL in reply to DavidTC says:

      But again there is no evidence that they have spied on American citizens. It is true that they could do so pretty much at the push of a button. But that would be illegal.

      So the problem is not with what they have done but with what you trust them not to do.Report

      • Avatar DavidTC in reply to PPNL says:

        No evidence except the fact they’ve _also_ been collecting everything but the content of phone calls from Verizon.

        If they feel it is legal to collect all text messages, from everyone in the US, from Verizon, it’s hard to see why they wouldn’t think it’s legal to collect all messages from Facebook.Report

        • Avatar PPNL in reply to DavidTC says:

          As far as I know it would be legal as long as they were restricted in how they used it. The only question is do you trust them to limit themselves. I really don’t in the long run but that does not change the current legality.

          Again this is the greatest tool of oppression the world has ever seen. And its all legal until they cross a line that they have not yet crossed.Report

          • Avatar DavidTC in reply to PPNL says:

            The new fourth amendment:

            The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall be violated however and whenever the government wishes, but the government shall pinky swear not to use the results of those searches and seizures but upon probable cause or if you’re talking with some foreigners or if you’re out of the country or if the government really really wants to.Report

            • Avatar PPNL in reply to DavidTC says:

              That forth amendment isn’t all that new. The only new thing is the scale and even that was easy to see coming.

              The government has allowed the search of some records for a long time. Sometimes even without warrants. They go from that to forcing such records to be kept. Then they construct the the ability to collect and store records on a massive scale themselves.

              But it isn’t a search until they look. And they swear not to look.

              In the near term I am far less concerned with prism than with say half a million warrantless body searches in New York. Or a light shined up my ass before getting on a plane. Prism is legal as long as they have the checks while the body searches instantly reduce the 4th amendment to a stupid joke. But the body searches show what the future of those checks and balances is likely to be.

              So far there is no evidence that they are breaking any law with prism.Report

              • Avatar Patrick in reply to PPNL says:

                But it isn’t a search until they look. And they swear not to look.

                I buy neither premise. And neither does anybody else, I think. Let’s ignore the trust thing for a minute.

                “It isn’t a search until they look”.

                If I set a script on this machine to go search the Internet for torrents of copyrighted materials, and to download and share those materials, but never look at them myself… am I guilty of copyright infringement?

                Machines only do what we tell them to do. They follow rules embedded by their programmers. They aren’t some independent entity.

                If I tell a machine to do something, and the machine does it, I’ve done it by proxy (and not even a particularly distant proxy). Whether or not I monitor the machine’s results is a hugely dubious way to distinguish anything.Report

      • Avatar Barry in reply to PPNL says:

        “But again there is no evidence that they have spied on American citizens. It is true that they could do so pretty much at the push of a button. But that would be illegal. ”

        And, just in case you haven’t noticed, it’d be highly secret. Talking about it would be illegal, most courts would toss it due to the classification, etc. It’d be one of the safer crimes to commit (so long as you were doing it on behalf of the elites).Report

    • Avatar Jason Kuznicki in reply to DavidTC says:

      This: “The national security state: Abusive spouse edition.”

      Yes, yes, yes.Report

      • Avatar Will H. in reply to Jason Kuznicki says:

        Oddly enough, I was thinking of something along the same lines.
        There was a case from Pennsylvania of a secret service agent who used his security clearance to access a computer network to get information on a person for a state trooper.
        The state trooper was involved in a divorce, and he found this one vehicle around his ex’s place a few times.
        Anyway, as it worked out, the trooper had a falling out with the SS agent as well as his wife, and began harassing the SS agent.
        I wish I could find that case again.

        Anyway, it yields a certain perspective.
        Do people feel the same as the lone secret service agent to used his access for an unauthorized purpose as they do toward the mass dragnet of data storage of private citizens?
        The number of affected parties in the Penn. case was much, much smaller.Report

  7. I find the different response between Manning and Snowden to be interesting. Both had their supporters, both have their detractors, but it doesn’t seem that they do in the same proportions.Report

    • Avatar Jason Kuznicki in reply to Will Truman says:

      Agreed. Manning did a lot of good, but also a lot of harm, and wow was he reckless.

      Snowden seems to be playing things a lot more cautiously, and he revealed information that I find to be far more important as well.Report

      • Avatar DavidTC in reply to Jason Kuznicki says:

        Although the jury is still out on that. We don’t know everything he tried to reveal. Snowden actually sent out the _entire_ Pointpoint presentation of which only 4 slides have been revealed by the press, which as deliberately withheld the rest.

        It suspected that is rest contain more details about what, exactly, is going on. Like how it works. (I suspect that, basically, the NSA has read-only database access, either in real time or is being copied on backups. This would allow a mostly automated system while keeping 99% of the tech people in the dark.)

        Wikileaks has mentioned that it has made contact with Snowden, so we may be seeing more of those slides soon.Report

      • Avatar Scott Fields in reply to Jason Kuznicki says:

        Can I be grateful that the information was revealed, agree that it was important that it was revealed and still vilify the messenger? While I have fully supported the efforts of Senators Wyden and Udall to bring to light these same programs, I am appalled that a 29 year old computer contractor has the capacity to decide what information the government should and shouldn’t share.Report

        • Avatar dragonfrog in reply to Scott Fields says:

          Who is supposed to do the deciding? We’ve seen what happens when the properly authorized people do it.Report

          • Avatar Scott Fields in reply to dragonfrog says:

            As I mentioned, Senator Wyden sits on the Senate Intelligence Committee and he has been working to bring this same information to the public, but he’s been doing so through legal means. That he’s not been more successful or more expedient does not negate the work he has done. We should all be throwing him our support. On the other hand, Snowden – unelected, unaccountable, under-informed – has taken it upon himself to be final arbiter without the means to know the ramifications of his actions. That should not be celebrated.Report

            • Avatar Mark Thompson in reply to Scott Fields says:

              If that 29 year old is releasing information that demonstrates that the director of fthe NSA has lied under oath about this, then that puts this well within traditional whistle blowing.Report

              • Avatar Scott Fields in reply to Mark Thompson says:

                Was there anything in the Greenwald interview or in the materials released that would indicate Snowden had any awareness of how Clapper answered Wyden back in March? If not, he wasn’t doing any kind of rebuttal.

                Once again, I’m glad the truth came out about what the NSA has been doing and I’m particularly gratified to see Wyden calling out Clapper on his testimony today. I favor greater transparency in all of this.

                But I still maintain that this information coming from low level third party contractor who gave himself license to decide what should be secret and what shouldn’t be is a net negative for the cause of greater transparency. Security clearances will become much harder to get, greater scrutiny will be given to every document saved or copied at these agencies – the clamp down will be rapid and severe.

                So, call your congress people and demand laws that prevent such secrecy, support vociferously candidates who run on greater transparency, publicly and loudly insist that Obama or the next President rein in the overzealous security state and first and foremost shout out to your fellow citizens that the trade-offs they’ve allowed in their name since 9/11 have tipped much too far from the liberty side, so politicians can do these other things and still stay in office. To all this these things, say yes. But, to leaking, so no.Report

              • Avatar zic in reply to Scott Fields says:

                Sometimes, acts of civil disobedience are required.

                Otherwise, +1.Report

              • It may be that this makes it harder for security clearances to obtain, but that would be the case whenever a whistleblower discloses classified information. But that’s actually not the worst thing – fewer people getting security clearances means that the government in the long run can’t classify as much information. Overclassification of information is a big part of the problem.Report

              • Avatar Scott Fields in reply to Mark Thompson says:

                Overclassification of information is a big part of the problem.

                Agreed. I don’t agree that it necessarily follows that fewer people with security clearances means less classification, though. It would certainly mean fewer people are in on all the secrets. That can’t be good for the cause of greater transparency, IMHO.

                And I’m still not prepared to confer the “whistleblower” title on Snowden. Perhaps new information will change my stance, but as of now he’s just guy using extra-legal means to effect a legal change he desired. That’s vigilantism and vigilantism rarely ends well.Report

        • Avatar Barry in reply to Scott Fields says:

          “Can I be grateful that the information was revealed, agree that it was important that it was revealed and still vilify the messenger? While I have fully supported the efforts of Senators Wyden and Udall to bring to light these same programs, I am appalled that a 29 year old computer contractor has the capacity to decide what information the government should and shouldn’t share.”

          No, because it wouldn’t have come out without him, or somebody like him.

          Frankly, I’m appalled that we have vast secret programs with a court system which has nooooooooooooooooo problem with them (broccoli mandates, yes, 4th Amendment violations, no).Report

    • Could it be a form of fatigue? As in, We’ve already seen this with Manning.

      Also, Snowden does technically remain at liberty for the moment. I don’t know how big a factor that is.

      Third, the Establishment (including Congresspersons of both parties) seems to have done a better job of closing ranks and spinning the story in this case than they did with Wikileaks. (Could be my mistaken impression.)Report

  8. Avatar greginak says:

    I don’t find Greenwald holding back the rest of Snowden’s info helpful or a good idea. If there is important stuff than it is to important to hide or risk not being able to show. Obviously he feels safe enough that he can still get it out even with pressure from the US gov. If this info is so important we need to know about it, which we do, that it is to important to sit on it while the story builds. Or the other conclusion is the rest of the info isn’t all that exciting or serious and he is milking the story. In any case if transparency and secrecy are a major concern than just get in the info out there.Report

    • Avatar PPNL in reply to greginak says:

      Yeah, thats probably a marketing decision. The information is coming out no matter what Greenwald does. He cannot control that. Not even a drone strike can contain it now.

      But you can still milk it.Report

  9. Avatar Angela says:

    While I’m not surprised about the programs (even “shocked! shocked!”), one huge issue has been the problem of proving standing when trying to sue about these abuses.
    Just this February, the ACLU’s suit was thrown out for lack of standing.
    https://www.eff.org/deeplinks/2013/02/supreme-court-dismisses-challenge-fisa-warrantless-wiretapping-law-effs-lawsuit

    With everything classified, standing is impossible to establish. So suing is thwarted.
    Snowden’s actions may help to break the logjam open.

    Also, there’s currently a petition on whitehouse.gov, requesting Snowden get a pardon. The (newly increased) 100,000 limit looks like it could be hit. Of course, this only promises a response to the question; not any desired action.

    (And yes, I’m still outraged. Even though I “knew” it was going on for years and year.)Report

    • Avatar Barry in reply to Angela says:

      “With everything classified, standing is impossible to establish. So suing is thwarted.
      Snowden’s actions may help to break the logjam open.”

      PPNL, are you listening?Report

      • Avatar PPNL in reply to Barry says:

        It is troubling that you think that I have not. All I have said is that what they are doing is not new or illegal. It is however very troubling and the more attention focused on it the better. However I doubt it will do much good. Most members of both parties have supported prism and not many voters will abandon their party over it.

        I also agree about the issue of standing. And it gets worse than that with some of the decisions in torture lawsuits.Report

        • Avatar dragonfrog in reply to PPNL says:

          Most members of both parties learned of the existence of PRISM around the same time we did – that’s one of the main issues, that not even the defence of “the public was not told the specifics, but their trusted representatives were, and they supported it” is available.Report

    • Avatar George Turner in reply to Angela says:

      If the government acknowledges that it has such intrusive data on all Americans, including cell phone locations and whatnot, then I think it puts them in a pickle regarding prosecutions of ordinary crimes. Suppose you get charged with some serious offense and your alibi (that you were elsewhere) lacks confirmation. Well lo and behold, the NSA database, a government archive, quite obviously contains the information that backs up your story.

      How does this affect the government’s case against you? Your lawyer can demand to see the records (establishing that you were, indeed, driving through the park on the night in question). The government will refuse, citing secrecy, policy, and all sorts of other things. That’s BS. What the lazy government workers are doing is making excuses as to why they won’t provide your defense lawyer with evidence supporting your alibi, exonerating evidence that the government possesses but refuses to disclose. To me, that means the case would have to get thrown out. How many innocent people are sitting in jail right now whose innocence could be established with a few simple searches through the top secret databases?

      I think the implications of that, and whether a government can willfully withhold evidence favorable to the accused, is going to have massive legal repercussions.Report

      • Avatar Barry in reply to George Turner says:

        “How does this affect the government’s case against you? Your lawyer can demand to see the records (establishing that you were, indeed, driving through the park on the night in question). The government will refuse, citing secrecy, policy, and all sorts of other things. That’s BS. What the lazy government workers are doing is making excuses as to why they won’t provide your defense lawyer with evidence supporting your alibi, exonerating evidence that the government possesses but refuses to disclose. To me, that means the case would have to get thrown out. How many innocent people are sitting in jail right now whose innocence could be established with a few simple searches through the top secret databases?”

        So far, (as far as I know), courts have been quite generous towards government demands for secrecy. And that includes people provably harmed by the government.

        For right-wing judges, turning down defense appeals is a perk of the job.Report

      • Avatar George Turner in reply to George Turner says:

        The could strike it down on secrecy grounds when it was secret. Obviously the fact that half the internet is talking about it indicates that secrecy has already been compromised. ^_^

        The point being that since we know at least something about it, as does the judge, lawyers, and the jury, the government will be in a difficult position to maintain such a database while denying people access to the data it contains. It’s perhaps the flip side of maintaining a secret database to prosecute people, as would be common in a police state.Report

        • Avatar Mike Schilling in reply to George Turner says:

          The point being that since we know at least something about it, as does the judge, lawyers, and the jury, the government will be in a difficult position to maintain such a database while denying people access to the data it contains.

          Why? Any large organization (government or private) holds a substantial collection of data it keeps confidential.Report

        • Avatar George Turner in reply to George Turner says:

          But why should your whereabouts on the night of some crime (of which you are accused by the government) be kept secret by the government? It’s not like your lawyer would be demanding data on a nuclear missile program or the secret formula for Coca Cola.Report

          • Avatar Mike Schilling in reply to George Turner says:

            I’m guessing the answer would be “You’re free to subpoena your ISP and/or cellphone provider for those records.”Report

            • Imagine this scenario: the first time forensics demonstrates that the suspect must have been in place X around time 2030 and in place Y around 2200 *AND* the Prosecution shows that the Defendant’s cell phone was in place X at 2026 and in place Y at 2203 using these records.

              Why shouldn’t every subsequent defendant accused of whatever crime (or worse) be able to expect their phone records to be handed over as part of discovery?Report

              • Avatar Mike Schilling in reply to Jaybird says:

                Why can’t they ask for their own phone records now?Report

              • If I’m Verizon, I’m saying “we only keep records of your phone calls and *MAYBE* the towers you used in the process of making them, and only for billing purposes.”

                Well, until forced to admit otherwise.Report

              • Avatar Mike Schilling in reply to Jaybird says:

                If I can, when necessary, use my phone provider to document my whereabouts [1], that’s a good fallout of this otherwise unfortunate thing.

                1. Technically my phone’s whereabouts, less useful if I’m charged with a premeditated crime, since I might have left the phone elsewhere to try to establish an alibi.Report

              • Avatar George Turner in reply to Jaybird says:

                What you’re missing is that your phone provider has no interest in your exact whereabouts, much less keeping an archive of them. Does Verizon really care if you were in close proximity to an AT&T subscriber last Thursday? No, all they care about is getting your money, and to do that they need an accurate record of your calls (if they bill by the call). In some billing schemes they wouldn’t even care about individual calls and would have absolutely no reason to store any information about them.

                The government, however, is another matter. They want as much data as possible, and they want it archived and indexed for rapid searches and pattern recognition. If they’re tracking the guy who had the AT&T phone, they’d want to find out about the Verizon user that he was meeting, whereas Verizon doesn’t give a hoot, and to them even noting such information is a waste of time, money, and resources.Report

  10. Avatar Jim Heffman says:

    Gotta say that it’s kind of funny that someone would declare that their government had become intrusive and controlling, and therefore he was fleeing to China.

    “With his theory in hand, Brooks then collects more evidence to support it, like the fact that Snowden donated to the Ron Paul campaign…” (and more of this ilk)

    It’s funny how Stupid Trendy Internet Fake-Libertarianism is suddenly a totally invalid criticism when it’s somebody we like.Report

  11. Avatar George Turner says:

    BTW, there have also been some criticisms of the leaker’s girlfriend, Lindsay Mills, who was a blogger (Her bi-line was something about being a world-traveling pole-dancing super hero).

    Her blog is now down for repairs, but I bet they got some good IP traces from Snowden, checking to see how she was handling the revelations. ^_^Report

  12. Avatar zic says:

    Emily Bazelon’s got two pieces up on Slate worth reading:

    In the most recent she compares and contrasts Snowden and Daniel Ellsberg:
    http://www.slate.com/articles/news_and_politics/jurisprudence/2013/06/edward_snowden_and_daniel_ellsberg_is_the_nsa_leaker_a_traitor.html?wpisrc=flyouts

    and an earlier post that lays out the privacy threat, billing this, when combined with the prosecutions of leakers and reporters, as a limit to freedom of the press. Personally, I think she wrote this with her hammer — media — in mind; and she needs to look beyond her own industry.

    http://www.slate.com/articles/news_and_politics/jurisprudence/2013/06/n_greenwald_s_verizon_story_government_surveillance_of_phone_calls_should.htmlReport

  13. Avatar CK MacLeod says:

    The idea that criticizing Snowden amounts to character assassination fits well with a lot else I’ve run across in recent days. One popular tweet asserted that anyone who criticizes Snowden is an “enemy” – presumably of liberty, perhaps of all that’s good and holy. A blogger over at LobeLog accuse the US of “violating the rights of the entire planet.”

    At the LOOG, looking back to the 18th Century, Mr. Kuznicki made the nonsensical claim in a recent post that “Writs of assistance are also exactly what we have now.” Not content to indict our King, I suppose Obama, as a tyrant, he conjures up images of secret blackmail operations based on nothing, as far as I can tell, other than his imagination. Up above, on the basis of no evidence but general loathing of all authority, b-psycho asserts that “the US government wants [Snowden] either caged for life or murdered.” Mr. Likko tells us in a post at his sub-blog that “Metadata Could Have Squelched The Civil Rights Movement.” Could it have? Maybe metadata could have squelched the Ku Klux Klan or stopped lynching. Maybe metadata could have prevented 9/11. Maybe metadata could have saved the Dodo Bird. We’re told that access to metadata as well as to actual data makes life much harder for terrorists and child pornographers. Maybe some future military coup ending the rule of law state and installing me as dictator could be nipped in the bud by metadata. Or maybe the access to metadata by law enforcement just means that child pornographers, terrorists, and my future coup-plotters will have to find other means.

    There is much we don’t know about Snowden’s revelations, including what he and Greenwald actually have revealed. I’m not sure we know of any wrongdoing beyond an arguably misleading statement by Gen Klapper… though anything is possible, the truth is out there! Check that, we do seem to have evidence of wrongdoing, though we can of course differ about how wrong it was or is: Snowden himself has informed us that, in his opinion, he has violated laws and agreements. Toobin agrees with Snowden, and further believes that the law-breaking involved, on the face of it, seems serious enough to warrant Snowden’s arrest. To that, Mr. Gach comes up with the notion that though Snowden may not have exposed anything illegal, that doesn’t mean that what he exposed “is legal in and of itself.” The notion of something being “legal in and of itself” seems to invoke some idea of innate moral law, but I’m not really sure what the blooger has in mind here.

    Otherwise, people seem to be reading certain ambiguous statements or to be shading descriptions according to whatever notions best suit their political assumptions or inchoate fears, or perhaps their desire to be counted among the “good guys” rather than the “enemies.” That’s true for all observers, and similar suspicions seem entirely applicable to Greenwald and Snowden as well.Report

    • Avatar Chris in reply to CK MacLeod says:

      Much of what you say here is of easy to say when you’re precisely the sort of person who is not likely to be targeted by people in power who might want to abuse and misuse that power.

      That’s not to say that Jason isn’t being hyperbolic in the service of polemics. I assume you’ve been around here long enough to know that this is one of Jason’s techniques, but it’s not an arbitrary one. I think he genuinely believes that the worst case scenario is possible, if not actual, and so his rhetoric focuses on that scenario. I don’t think it’s at all nonsensical, then.

      The title of Burt’s post was barely even hyperbole, if it was at all. We know for a fact that the federal government went to great lengths to monitor, and in some cases undermine, the Civil Rights movement. It doesn’t take a great inductive leap to get to the conclusion that, had that government had the data collection abilities and the network analysis methods that we have available today, they would have been much more efficient at doing both the monitoring and the undermining.Report

      • Avatar CK MacLeod in reply to Chris says:

        We know a lot of things, but we sometimes also forget them, Chris.

        We also know that the federal government also acted at key points to protect the Civil Rights movement or advance the Civil Rights agenda, or in fact that from the earliest days of the union the Feds have often been, if quite unevenly and dividedly, on the side of victims of local and state-level oppression, both legal and extra-legal, a fact that has a lot to do with the historical alignment of liberals and minority groups with the federal government (and the party of the federal government), and that also ends up being conveniently forgotten by libertarians and libertarian-identified politicians who prefer to depict “government” in a general, undistinguished way, as the primary threat to freedom. When Kuznicki depicts the the current government as the government of King George, he quite clearly is ignoring the difference between a liberal-democratic state and a monarchy’s colonial misgovernment. He’s the one who made that comparison and called it “exact,” not me. Of course, liberal-democratic governance can go wrong. There are a lot of problems with the regime form, but it is not the same regime form, and the people who make up the DOJ, the CIA, the NSA, the Obama Admnistration, and private contractors, too, are us, not a decadent hereditary aristocracy administering our affairs from overseas. They even include from time to time people like Snowden. They’re not going to turn overnight into the American Stasi.

        A democratic and also leftwing or progressive stance identifies democratic government as the key to defending the weak as well as the people in general against various forms of oppressive power, including but not limited to unlawful violence. The libertarian or hijacked libertarian tendency thus helps to destroy the positive freedom of workers, minorities, and everyone else, or to make it more difficult to stop polluters, corporate interests, and so on – in addition to terrorists and other outlaws.

        What this means is that liberal-progressives and libertarians might take the same initial positions on different issues, but with different objectives: The progressives seek greater government openness in order to root out corruption and make government more effective. The right-libertarians seek greater government openness in order to expose corruption and make people even more skeptical of government. Their answer to corporate corruption of government is to make government even weaker, and thus put the entire state even more firmly in the hands of the wealthy and powerful.

        The fashionable libertarianism or left libertarianism of this moment doesn’t seem even to be aware of the problem. Liberals and progressives cooperate – sometimes enthusiastically – against their own interests in spreading alienation from government itself, rather than from bad or undemocratic or illiberal government. They have good intentions, but can’t figure out the day after the latest feeding frenzy why the Tea Party attitude and various forms of insane and obscene conspiracism remain popular enough to get elected and re-elected.

        As for the counter-factuals, I despise them. The entire communications infrastructure and networked society are typical products of our moment, our entire culture-state, not anyone else’s, but, if we must, we can imagine that if JFK and RFK were known to have access to this kind of intelligence, there would have been immense pressure on them, and on Hoover, too, to use it to stop anti-protestor violence.Report

        • Avatar Mike Schilling in reply to CK MacLeod says:

          Governmental organizations that opposed the Civil Rights movement, unable to use advanced data-mining, were forced to rely on low-tech solutions like nightsticks, high-pressure hoses, and firearms.Report

        • Avatar Jaybird in reply to CK MacLeod says:

          we can imagine that if JFK and RFK were known to have access to this kind of intelligence, there would have been immense pressure on them, and on Hoover, too, to use it to stop anti-protestor violence.

          We *CAN*… but it makes more sense to me to imagine them doing the exact same things that they did only with better tech.

          “Anybody here seen my old friend Martin? Can you tell me where he’s gone?”
          “Oh, he’s at 5th and Vine. We’ve got a bug on his phone, and the cars of the three people most likely to drive him places, and in his bedroom.”Report

        • Avatar J@m3z Aitch in reply to CK MacLeod says:

          Their answer to corporate corruption of government is to make government even weaker, and thus put the entire state even more firmly in the hands of the wealthy and powerful.

          I wonder if you even understand their logic about how diminished state power will diminish their control over the state. Not whether you agree with it, or whether it is correct, but whether you could state it with any accuracy.Report

          • Avatar zic in reply to J@m3z Aitch says:

            Grover’s tiny bathtub floated into view when I read this.Report

          • I’ve heard it a thousand times in a thousand different forms, 999 of which you would no doubt declare inaccurate, Professor. Instead of proposing a pop quiz, why don’t you make your argument, and perhaps provide some historical examples while you’re at it of where it has worked consistently over any length of time.Report

            • Avatar J@m3z Aitch in reply to CK MacLeod says:

              CK,

              No, I’m not making an argument. I’m curious whether you understand what you’re critiquing. Claiming you do, but asking me to re-explain it to you, falls a bit short of wholly persuasive.Report

              • Why should I care, Mr H, what you believe about what I understand? What difference would it make to anyone else? I argued what I argued. If you have a reply, you are free to give it.Report

              • Avatar J@m3z Aitch in reply to CK MacLeod says:

                You’ve critiqued an argument but have failed to demonstrate that you understand the argument well enough to properly critique it. Care or care not, but you’ve given just cause for doubt about whether you do understand it.

                This is my reply, I assure you. I have no agenda but to discern whether you understand the argument you critique.Report

          • Avatar Michael Drew in reply to J@m3z Aitch says:

            I wonder if you even understand their logic about how diminished state power will diminish their control over the state. Not whether you agree with it, or whether it is correct, but whether you could state it with any accuracy.

            My understanding is that the argument goes that diminished state power will diminish their interest in controlling the state (and obviously eliminate their control, via controlling the state of those things that are no longer in state control, though perhaps not their control over them or their equivalents in the world generally).

            Is that about right?

            I think the response would be that their capacity to control the state to the extent they want to won’t be diminished, merely their interest in controlling certain spects that have been downsized. So it’s not clear that the average person is in better shae if, say he no longer is protected (or “protected”) by as much of a regulatory state, even if a captured one, and the typical coercive powers he faces will be just as controlled by concentrated economic power as it ever was. Plausibly, anyway.

            Perhaps the logic you refer to also relies on claims that diminished state power would mean less state collusion with entrenched economic interests and thus less concentrated economic power in society generally. My view on that one is basically just skepticism of it working out that way. I don’t think the tendency of capital to become concentrated is mainly a function of state interference, even if it is intensified thereby. I don;t think the average person would notice that her government, once smaller, is less under the control of concentrated economic interests as a result of that effect, i.e. the smaller government leading to less-concentrated economic power in society, and thus less capture. I realize that’s not really an argument so much as just skepticism, but I don’t really see what the argument for that prediction is either; it’s just what people say would happen as far as I can see.Report

            • I would call that closer to a critique, Mr. Drew – certainly closer than the one-sentence subpoint of an argument that I happened to offer in passing. I have no idea whether the Professor will grade your effort “proper,” of course.

              It’s worth noting that under the conventional narrow definition of “the state” – i.e., as strictly referring to whatever formally constituted order – the discussion is tilted in favor of the libertarian concept (among others), since it subtly seems to imply that power in the hands of a petty oligarch (or boss, or general, or chieftain, or General Secretary of the Party, etc.) is somehow less authentically power, or intrinsically or demonstrably a better or more just type of power, than power in the hands of a “public official.” In other words, to put my prior argument in more general terms, the libertarian argument is typically presented as a critique of “power” or of “the state,” but is really, to put things clearly, an attack on democracy. Mike Konczal published an amusing and literate version of this very improper critique today (h/t b-psycho): http://www.nextnewdeal.net/rortybomb/we-already-tried-libertarianism-it-was-called-feudalism Corey Robin also happens to be quite fond of it.Report

              • Avatar Michael Drew in reply to CK MacLeod says:

                Finally, does your impropriety know no bounds, MacLeod?

                I blanch.Report

              • Avatar Michael Drew in reply to CK MacLeod says:

                …My, yes, you are correct. That is a very improper critique of libertarianism. Very improper indeed.Report

              • Avatar J@m3z Aitch in reply to CK MacLeod says:

                the libertarian argument is typically presented as a critique of “power” or of “the state,” but is really, to put things clearly, an attack on democracy.

                Madison’s Federalist 10 and the whole Bill of Rights are an attack on democracy, so I guess we’re in pretty good company.

                As for the Konczal piece, it’s astoundingly stupid; as stupid as the argument thatvliberaks want socialism because they favor economic regulation.* Feudalism was based on a king’s ultimate authority over all his subjects, and on serfdom–people born into serfdom and denied the right to leave the noble into who’s service they were born. Even if a libertarian world allowed people to sell themselves into slavery, it would not allow any person to bind their descendants into serfdom, nor would it allow a king with ultimate authority.
                ____________
                *Yes, I know there are libertarians who actually make that claim. That’s why I mention it, to lump Konczal in with that type of person.Report

              • Indeed, Professor, Fed 10 and the Madisonian system in general very much favor constraints on “democracy,” especially as the term was understood at the time. As you observe below, one by-product of the democratic adoption of a constitutional system significantly hostile to democracy itself is terminological confusion, since we call our system “democracy” and speak unreflectively about promoting democracy or democratic values when what we are really about is perhaps better understood as a “mixed regime,” on the model of the classical “polity” but under radically transformed material circumstances – i.e., of modern mass societies.

                As for the Konczal piece, of course it produces just the kind of symptomatically intemperate remarks from ideologues that you have been kind or at least inadvertently helpful enough to produce for us. We can, as the doctors say, “appreciate” the symptomology you exhibit. You blame Konczal – or call his work “astoundingly stupid” – for taking a major libertarian thinker at his word, and for following that thinker’s premises and incidental assertions logically to their illogical or self-contradictory, self-reversing, paradoxical yet necessary conclusions, specifically in the absurd forms of the libertarian feudal state and of freely chosen self-enslavement. You apparently cannot accept, or even rationally consider, the to you highly improper thought that libertarianism may be just as vulnerable as democratism to voting itself out of power, but according to its own mode of operation: not as a majority vote against democracy (e.g., to vote to install the tyrant, to vote to murder the free thinker, to vote democratically to restrict the voting franchise undemocratically, to vote for oligarchy disguised as liberty, etc.), but as a free decision to surrender free decisionmaking (the substance of every contract).

                These are inescapable conceptual problems, Professor. I’d urge you to look into them, but, as you frequently remind me, you cannot stand philosophy (even though you refer to a “proper critique,” which would presume a philosophy, or is an empty phrase). The philosophical framing of the concept is for you like the gaze of Medusa. It turns your intellect to stone: You say that its stupidity astonishes you. The etymology is interestingly roundabout, but the “stone” is right there in front of us. You have volunteered it, informed us that you are struck, as we used to say, “stone deaf,” deaf as a stone or as though hit in the head by a stone, or as though shaken by overwhelming thunder (thunderstruck). If you were vulnerable to the concept, to philosophy, to “proper critique” properly understood, you would not be astonished.

                Precisely because you are deafened, however, you cannot hear anyone explaining the fact to you that you have been deafened, or trying to give you directions away from the thunder: Philosophy says to you, “You can’t hear me – let’s go where it’s quiet.” You don’t listen, of course. You would need to be vulnerable to philosophy to understand that philosophy is just a mirror reflecting you as you are, or a well echoing your words back to you, merely revealing or having already revealed your state of astonishment, your having turned to stone, your stoney silence, your stupefaction before the reflection or discovery of your own… well, I’d use the word you used, but, unlike many others, I respect the Commenting Policy at the LOOG, and wouldn’t want to be thought to have indulged in a gratuitous insult.Report

              • Avatar J@m3z Aitch in reply to CK MacLeod says:

                Wow, CK, your insight into my soul and psyche is fascinating,. Can I come lie on your couch for a full psych workup? I’ll bring the scotch and soda, you supply the unintentional humor.Report

              • Even in your snide jokes, Professor, you still assume some interest on my part in listening to you on my couch. Like all the rest of us unqualified discussants, I’m as or more interested in being listened to, a function that you, as I was just indicating, and as you continue to demonstrate, are inclined not to fulfill. At least, that’s what you say, over and over again. Yet at other times – for instance, when you respond in some detail to the comments of mine that you have declared not worth responding to, repeatedly naming me but doing so in a comment addressed to someone else – you show that you just can’t get enough of me after all. You really do want to get on my couch, slightly inebriated, so I can have my way with your soul and psyche. Even your insults are also come-ons: You lash out, in order to remind both of us and eavesdroppers that you are not really a stone. You’re just not easy.Report

              • Avatar BlaiseP in reply to CK MacLeod says:

                Feudalism did not emerge from some king’s rights. History shows the exact opposite. Kings’ mandates derived from the property owners, that is to say, those with the force to maintain control of property. King John at Runnymede was presented with a curious document, saying even he the king was subject to law — by one of Madison’s Factions, the barons.

                No monarch, no matter how absolute he might have styled himself, could stay on top without supporting Factions. Federalist 10 isn’t an attack on democracy — it’s a brutal assessment of the nature of power.Report

              • Avatar J@m3z Aitch in reply to BlaiseP says:

                Feudalism did not emerge from some king’s rights

                Phew, it’s a good thing I didn’t say so then!

                Federalist 10 isn’t an attack on democracy

                “When a majority is included in a faction, the form of popular government, on the other hand, enables it to sacrifice to its ruling passion or interest both the public good and the rights of other citizens.”

                There is some uncertain ground here, as today we use the term democracy to refer to both Madison’s democracy and his republic. But the purpose of his republic was to constrain majorities, particularly permanent majorities, by 1) ensuring multiple competing factions, 2) having an extent of territory large enough to make it difficult for a common interest to readily organize across the whole country, and 3) by selecting better, more wise and disinterested types, to office. Today only 1) can confidently be said to exist. In all this was a strong critique of excessive majoritarianism, which is also what libertarians’ critique (their arguments sometimes follow Madisinian lines, but sometimes diverge into other approaches as well).Report

              • Avatar BlaiseP in reply to J@m3z Aitch says:

                Feudalism was based on a king’s ultimate authority over all his subjects, and on serfdom–people born into serfdom and denied the right to leave the noble into whose service they were born. ftfy.

                Such statements might lead to confusion on the precedence of authority or the origins of feudalism. Feudalism was the working system of the Roman Republic and Empire both. The emperors fled away, their modus vivendi continued for centuries thereafter.

                Madison only supposed he could restrain majorities by setting factions against each other, presuming the states might serve as some sort of firewall. It didn’t work out that way in practice: the Confederacy would find life, not in some majoritarian faction, but in a collection of slave aristocracies — and the only reason they didn’t win was because they never united. The Union was hardly a bastion of freedom either, nor were those who came to govern it any less elitist in form and nature.

                We have less to fear from majorities than from powerful, moneyed minorities. Vox pecunia, vox deoReport

              • Avatar J@m3z Aitch in reply to BlaiseP says:

                We have less to fear from majorities than from powerful, moneyed minorities. Vox pecunia, vox deo

                Both are exceptionally dangerous, but only a straight white male could say what you did without gagging.Report

              • Avatar BlaiseP in reply to BlaiseP says:

                What could you possibly mean? It was powerful, moneyed minorities who establish most power structures — the ones that last, anyway. These babbling majorities, much exercised over nothing, might periodically sweep a creaky old regime from power — but we know how long they last and we know exactly what replaces them — yet another moneyed minority.

                Most people, James, are stupid. They’ll believe pretty much anything they’re told and furthermore they’ll tell you what they want to be told. Loudly. Fervently. Idiotically. You can play these people like a song in the jukebox.

                Vox pecunia, vox deo. The voice of money is the voice of God. Maybe my gag reflex is stronger than yours. But then, the road I’ve travelled has strengthened it. Democracy means anarchy. The only human beings who’ve successfully reformed it, made democracy stand up straight and behave itself and not persecute minorities, were themselves minorities. Just minorities with enough power to make those changes.Report

            • Avatar Brandon Berg in reply to Michael Drew says:

              It seems to me that the functions of government that libertarians would like to keep are inherently less appealing to profit-oriented enterprises than the ones we’d like to abolish. There are obvious reasons why a corporation would be interested in having a hand in the state’s regulation of the economy, and particularly its own industry. Why any but a handful of corporations would be interested in the state’s police power is less clear. Military contractors might still support hawkish candidates, I guess. But the vast majority of corporations simply cease to have a horse in the race.

              Nor is it clear that there’s any better option for addressing regulatory capture. Hardly anyone is supporting shrinking corporations to the point where they wouldn’t have access to huge amounts of capital, and for good reason: Economies of scale are pretty important to the maintenance of an advanced economy.

              So if we’re not going to shrink the corporations down to a manageable size, what else can we do? We can take artistic license with our interpretation of the First Amendment and restrict their speech, I guess, but how much does selling out free speech buy us, really? A big part of corporations’ pull comes from the fact that they play an important role in the economy. It’s not like a senator is going to stop taking meetings with the CEO of a corporation that employs 25,000 people in his state just because the corporation can’t fund his campaign ads anymore.

              So what’s left? We can regulate them! Oh. Right.

              A better critique of the libertarian approach, perhaps, is that it just isn’t stable. We can say that certain types of regulations just aren’t allowed, but we can’t really take them off the table. We tried that the first time around, and then some yahoo decided that “commerce between the states” was just a fancy 18th-century way of saying “pretty much anything,” and here we are.

              And I don’t really have a good answer to that. Ideally I’d like an electorate savvy enough to have a healthy degree of skepticism for the populist rhetoric used to justify cronyism and a general distrust of government intervention into the economy, or even better, the ability to actually understand the likely effects of proposed interventions. And a pony, as long as you’re granting wishes.

              On the other hand, “Sooner or later it will probably degenerate into what we have now,” isn’t all that damning an indictment.Report

              • Avatar Brandon Berg in reply to Brandon Berg says:

                We tried that the first time around, and then some yahoo decided that “commerce between the states” was just a fancy 18th-century way of saying “pretty much anything,” and here we are.

                Not that federalism would actually have solved all the problems—state and local governments are an endless font of petty tyrannies—but it would have at least made government more competitive.Report

              • Avatar Michael Drew in reply to Brandon Berg says:

                A police officer just hangs out around the checkout of my local Target and my local Cub Foods. But not of my local grocery co-op. And then something else still is happening down the street where the subsidized housing starts.

                The police protect the property of rich people and corporations with lots of stuff, and pretty much leave them alone other than that. It’s the reverse for people without much stuff who don’t live in the right parts of town – their property is pretty loosely protected and they generally can’t assume they’re going to be left alone by the police unless they go to them with a problem. Corporations and the rich may not consciously have designs on increasing their control over the police, or the degree to which the police serve their interests, but that’s only because they’re satisfied with the extent to which that’s already the case and either believe it’s how the police operate in society generally, don;t think about how people with less power are treated by the police, or know and don;t care about or approve of the disparity.Report

              • Avatar J@m3z Aitch in reply to Michael Drew says:

                That’s a good point, Michael, and we shouldn’t lose sight of it. But would it change in either direction if we dramatically curtailed economic regulation? I don’t think, unfortunately, that the disparity would diminish, but would there be any reason to worry that it would increase further? I.e., could we reduce the problem (as libertarians see it) of economic regulation without thereby exacerbating this problem?Report

              • Avatar Michael Drew in reply to J@m3z Aitch says:

                Hard to say. My initial comment for that reason went only so far as to say that it’s not clear that an average person would be better off with a drastically diminished regulatory state if it meant that the police power remained as captured as it is.

                I would indeed be concerned that your model would turn out to be wrong and that entrenched economic interest in controlling the state wouldn’t wane with the state itself, but that as the state receded entrenched power would actually become more jealous of controlling what state power did remain, perhaps out of fear that a populace that felt otherwise abandoned by the state on economic would be more of a threat to property and its interests and preemptively in need of being kept all the better in line via force. (Who knows – I’m just spitballing here. That’s all by no means no less of a hunch than any other hypothesis.).

                Meanwhile, I’m of course not as convinced as you that reducing economic regulation would leave regular people better off than you. (I realize you cite deregulation of various industries and the good effects that came therefrom, but to a liberal that might as easily be seen as the elimination of poorly designed regulations, not as the inevitable result of any kind of reduction in regulatory power. Liberals are for distinguishing effective regulation from ineffective regulation and rolling back ineffective or destructive regulation. But the emphasis is on making the distinction between those, not on reducing regulation as a principle.)

                So I have to remain in opposition. But this line of argument is certainly I think the most convincing one for the libertarian position that I’ve come across yet, and it’s not at all beyond the realm of possibility that I could eventually be persuaded by it if those kinds of concerns I mention could be addressed.Report

              • Avatar Michael Drew in reply to Michael Drew says:

                Meanwhile, I’m of course not as convinced as you that reducing economic regulation would leave regular people better off than you.

                …or just better off, your situation aside. (Edit fail.)Report

              • Avatar J@m3z Aitch in reply to Michael Drew says:

                Liberals are for distinguishing effective regulation from ineffective regulation and rolling back ineffective or destructive regulation

                Sure, and libertarians are, too. Now if we could just get the two sides to a shared definition of ineffective and destructive…Report

              • Avatar Michael Drew in reply to Michael Drew says:

                Well, I’m not sure I want them to agree. We need a series of policy agendas to choose from more than we need ideological or policy-analysis homogeneity. Plus, people just have different values and priorities, and I want that to continue, too… 😉Report

              • Avatar Michael Drew in reply to Michael Drew says:

                …However, James, it’s also not totally clear that you can so easily say that given what you’ve said elsewhere in this thread about libertarians’ principle aims, unless you meant to elide the question of whether libertarians are willing, given the option, to keep effective regulation (i.e. unless you’re just saying libertarians want to make that distinction but not to act on it, perhaps just as a means of convincing liberals to let go of ineffective regulations).

                You’ve said the following in this thread:

                Rather, the idea is to eliminate the type of regulatory authority that creates an incentive for regulatory capture and collusion.

                The hypothesis is that where there is power to regulate business there is necessarily the power of protective regulation that favors and protects businesses, from competition and from tort claims, all to the detriment of the consumer. The power of protective regulation creates a great incentive for businesses to seek to control, or at least heavily influence, the regulatory process and agencies. It’s basic rent-seeking.

                But what if protective regulation was simply not available? Then, the libertarian argues, there’s no–or dramatically reduced–incentive for business to control government.

                the libertarian dream wasn’t just a little bit of deregulation here and there, especially when combined–as the financial crisis was–with socialization of losses. That socialization of losses, libertarians would argue, is the inevitable flip side of government involvement in regulating businesses, and creates a moral hazard that simoly encourages further reckless behavior by business. The libertarian dream would be to eliminate all of that.

                It seems to me you’re making clear that the libertarian aim is not to distinguish effective from ineffective (business) regulation in order to keep the former and lose the latter. It seems like you’re saying the aim to essentially eliminate business regulation, and even beyond that, to eliminate (perhaps constitutionally; perhaps necessarily constitutionally, come to think of it), the power to regulate in that area. I really think it says that in the quotes I give, though I’m willing to be corrected about either what those quotes say or what your intent with them was.

                But the way it looks to me is that, unless you were just saying libertarians want to distinguish effective from ineffective regulation but that that doesn’t mean they actually affirmatively want to keep the effective ones, I don’t see how your statements square. It seems like the aim really is just to generally reduce regulation, though if that was done by focusing on first eliminating ineffective regulation, that would obviously be the optimal way to go about it. But I think your statements imply that if that happened, or even if it didn’t, if libertarians were given the option of (nearly) eliminating effective regulation with all else staying equal (i.e. without having to make political trades to obtain that), but only that option, they’d take it.

                I’m open to your thoughts.Report

              • Avatar Michael Drew in reply to Michael Drew says:

                …oops, the last paragraph of the quote is a separate quote. I thought I had an unindented “And” separating it.Report

              • Avatar J@m3z Aitch in reply to Michael Drew says:

                Sure, Michael, most libertarians will think that all, or very nearly all, regulations that seek to create particular economic outcomes are destructive. But that doesn’t mean regulations that prevent negative externalities fall into that category, because those are, by definition, market failures (in contrast to, say, low wages, “too many” taxi cabs, being open for business on Sunday, etc.)

                So when liberals accuse libertarianism of requiring an end to, say, anti-pollution laws, they’re simply wrong. Unfortunately they’re misled by libertarians who–stupidly–believe the same thing (and of course liberals are more apt to believe the stupid version over the more nuanced version of libertarianism because they’re human, and act just as other humans do).

                This is where the real hard regulatory questions lie, I think. In sequence:
                1. When does a market failure actually exist, as opposed to an efficient market outcome we just don’t like. Liberals are more willing to regulate the latter, because they are more likely than libertarians to hold values that (sometimes) conflict with efficiency. Both sides are rational, given their value structures.

                2. When does a market failure rise to a level of significance that it is worth regulating? For example, it’s not humanly possible to ensure perfect information in all markets, so we shouldn’t try to, but we should regulate the type of informational assymmetry that we classify as fraud. On this issue, I think many libertarians are too quick to downplay serious externalities, while l think many liberals are too quick to up-play minor externalities.

                3. What method should the regulation utilize? Liberals are more apt to push for command-and-control methods, while libertarians ate more alt to push for what are variously called market-based or incentive-based methods (I find both terms problematic, but that’s a different topic). An example is direct air pollution controls vs. pollution markets. On this I am unabashedly on the libertarian side. Not that market-based approaches are suitable for everything, just more frequently than skeptical liberals believe (IMO).Report

              • Avatar Brandon Berg in reply to Michael Drew says:

                Are you sure that those are actually police officers and not private security guards? There’s a grocery store in my area that employs security guards who look a lot like police officers, presumably to make them look scarier to would-be shoplifters.

                That aside, is any of this really a function of regulatory capture? Is your theory here that Target is using its pull with the local government to get extra police protection? I would guess that the grocery co-op simply has less need of protection. They tend to be found in upscale, low-crime neighborhoods, because they cater to high-SES clientele. The grocery store I mentioned above is in a somewhat shady part of town, exactly the kind of place where you’d expect a store to employ security guards. The branch of the same chain where I usually shop is in a nicer part of town and doesn’t have guards.

                Your second paragraph describes what I see as a predictable response to the realities of crime patterns. Police go where the crime is, which often means low-SES neighborhoods. If you call them to investigate a crime in a high-SES neighborhood, they’ll come, but they have no real reason to be patrolling it. I’m skeptical that corporate influence plays a major role here.Report

              • Avatar Brandon Berg in reply to Brandon Berg says:

                Apparently you can hire off-duty police officers to act as security guards. I’d be very surprised if on-duty police officers were actually posted at retail stores.Report

              • I’m pretty sure that this is right. Off-duty cops very often moonlight in this sort of capacity.

                On the broader subject, though… it varies from place to place. I lived in two consecutive neighborhoods of ill-repute One police department operated at arm’s length at all times, did cursory drive-throughs but never got out of their cars. The relationship was not such that I would tell them of something I thought was going on. They drove through, but I had to live with my neighbors all the time.

                In contrast, the next place I lived had cops often out of their cars, getting to know people, and trying to ingratiate themselves in the neighborhood. I’m told they worked with community leaders and such, as well. It made a different. I wouldn’t say that I felt entirely safe in either place, but there was one place where I would be willing to talk to the police, and another place where I would fear for my safety if I did.

                Different people will almost certainly come up with different explanations. The cops in the second city were actually trying, or alternately the people in the second city were not actively alienating the cops while the people in the first city will. It’s a rorschach test, I’d guess.Report

              • Avatar Brandon Berg in reply to Brandon Berg says:

                Fair enough, and an interesting point to consider. My point, though, was not so much approval or disapproval of how the police force operates, but rather that cronyism is unlikely to be the complete story, and likely not even a significant factor. It’s unlikely that anyone burned some political capital just to get the police to treat your neighborhood that way.Report

              • Avatar Michael Drew in reply to Brandon Berg says:

                Uniformed. On duty. Just hanging out watching. (At night, usually, not all the time.) In fairness, the area precinct office is across the street.Report

              • Avatar Michael Drew in reply to Brandon Berg says:

                Are you sure that those are actually police officers and not private security guards?

                1000% percent sure. Saint Paul PD. Target also has security officers wearing special Target security officer blues with a Target logo on the lapel. They’re usually shooting the breeze while keeping half an eye each on the checkout.Report

              • Avatar J@m3z Aitch in reply to Brandon Berg says:

                Nor is it clear that there’s any better option for addressing regulatory capture.

                Great comment, Brandon. I just want to touch on the quoted point without implying any general disagreement.

                I favor a constitutional amendment that would require all regulation to be of general applicability, and disallow my regulation whose purpose is to benefit a particular economic entity, thereby disallowing monopolies, cartels, tariffs, protections from tort claims, etc. I think it could have great beneficial effect by allowing a cause of legl action against any anti-competitive regulation, even if the inevitable tough cases limit it more than it woukd be in my ideal world.Report

              • Avatar Stillwater in reply to Brandon Berg says:

                Outstanding comment BB.Report

              • Avatar DavidTC in reply to Brandon Berg says:

                Why any but a handful of corporations would be interested in the state’s police power is less clear.

                If we are assuming a perfect libertarian state, are we assuming lack of laws about unions? No more ‘If X% of worker’s sign up, you must acknowledge the union.’ and no more ‘Right to work (aka, no more legal restriction on union contracts)’? No laws forcing unions at all, but nothing is stopping them from existing either?

                So it’s back to 1900 and the police beating protesters? It seems to me that you’ve completely overlooked the traditional _actual_ abuse of corporate misuse of police power.

                One in which, I must point out, happened without any actual specific ‘laws’ or ‘regulations’ at all except assertions of ‘trespassing’ and ‘resisting arrest’ and all those magical legal charges that don’t actually require any evidence that basically meant ‘Not doing what the cop told you to do so he arrested you, after beating you’.Report

              • Avatar J@m3z Aitch in reply to LeeEsq says:

                I get the pout of your agreement, but what I find to be bullshit is the lesp from “no laws forcing unions” to “it’s back to…police beating protestors.”

                For one, it’s an unfounded logical leap, as it’s quite possible to not have laws mandating unins without having the cops beat protestors.

                For two, the implication that libertarians favor the outcome of police beating protestors demonstrates either ignorance about libertarianism or a willingness to falsely present it.

                So while I recognize and do not quibble with your concern about laws favoring unions, David ties that in with a doubly false argument. Seriously, Lee, don’t you think there’s some value to speaking the truth about other points of view, instead of carelessly misrepresenting them?Report

              • Avatar J@m3z Aitch in reply to J@m3z Aitch says:

                Eh, the “point” of your agreement. I didn’t intend to accuse you of pouting, and I don’t think it would make any sense in this context.Report

              • Avatar DavidTC in reply to J@m3z Aitch says:

                For one, it’s an unfounded logical leap, as it’s quite possible to not have laws mandating unins without having the cops beat protestors.

                Erm, I’m pretty certain I didn’t say otherwise.

                I was just taking issue with _this_ strange comment: Why any but a handful of corporations would be interested in the state’s police power is less clear.

                That really is an oddly ahistoric comment. Traditionally, corporations take a _lot_ of interest in the state’s police power, and use it to bully people who take issue with them. This can either be done somewhat extralegally (And before anyone points out that beating unionizers was illegal…no, not really. If people do not get arrested for blatantly doing something in front of the cops, that thing is not ‘illegal’, regardless of what the law says.), or simply by militarizing the police and having them over-respond to trivial ‘law breaking’ (Like arresting protesters that interfere sidewalk use or their current trick of forcing protesters into areas they aren’t allow, and then arresting them for it.)

                The police may be ‘neutral’ in theory, but in actual fact, that theory is complete bullshit. Police power has _always_ been ‘somehow’ always been on the side of the rich and powerful, both to the extent of not prosecuting those people, and abusively attacking the people who annoy the rich and powerful. Neither of those things are ‘regulations’ in any sense.

                The union thing was just an _example_. We now have laws that grant legal existence to unions, which can respond to things infringing their rights. We have a government department actually set up to deal with this. Both those are in response to _actual misuse of police power by corporations_.

                If that department, if those rights, go away, we’ve gone back to 1900.Report

              • Avatar DavidTC in reply to J@m3z Aitch says:

                Oh, and I should mention that I’m speaking mostly hypothetical here about assaults. Actually assaulting unionizers _now_ is a PR disaster. And unions have too much discipline and experience to be tricked into lawbreaking during strikes, like the police like to do to protesters now.

                In fact, I’ve often responded to ‘We should get rid of laws that let unions do whatever they want’ bullshit by privately agreeing…yeah, let’s get rid of all union laws. And then laugh as the Teamsters refuse to delivery to non-union shops and police officers strike.

                But, as I said, the turn of last century union stuff is one of the more obvious _examples_ of corporations misusing police power. There are plenty of others.Report

              • Avatar Kimmi in reply to J@m3z Aitch says:

                David,
                firing all of the unionized folks is, however, easy and painless.
                And good for you, so sayeth the Ralph Nader.Report

              • Avatar DavidTC in reply to J@m3z Aitch says:

                The problem is that there are various industries entirely held by unions.

                The entire entertainment industry, for example. Shipping, for another.

                And once you get rid of the laws barring sympathetic strikes…

                Or laws that allow unions to be punished for what union members do… (Imagine that outgoing shipment gets blocked by a single striking worker, who is then arrested. One at a time. And the union can’t be held liable for this.)

                Or laws that require unions to have a certain _portion_ of workers. What if the dozen repairmen in a factory of three hundred decided that _they_ were going to strike?

                I’m not entirely convinced most workers would end up worse off without union law, is all I’m saying. I’m not saying I actually _want_ that removed, I just think the reality of ‘no laws about unions’ would be rather different than most people _proposing_ that think, because they have appear to have literally no idea that labor laws actually restrict unions in a lot of ways.Report

            • Avatar J@m3z Aitch in reply to Michael Drew says:

              Michael,

              You’re on target. The idea is not to totally eliminate the state and its regulatory power. Libertarians tend to believe in laws against force and fraud (although they often prefer to allow those to be handled through common law tort claims, rather than through statutory law). Rather, the idea is to eliminate the type of regulatory authority that creates an incentive for regulatory capture and collusion.

              The hypothesis is that where there is power to regulate business there is necessarily the power of protective regulation that favors and protects businesses, from competition and from tort claims, all to the detriment of the consumer. The power of protective regulation creates a great incentive for businesses to seek to control, or at least heavily influence, the regulatory process and agencies. It’s basic rent-seeking.

              But what if protective regulation was simply not available? Then, the libertarian argues, there’s no–or dramatically reduced–incentive for business to control government. If they can’t seek favors from government, and don’t have to fear heavy regulation from government, then what gains would be available to them that would be worth controlling it? Ths is where CK’s emphasis on “control” of government misses the libertarans’ point by being overbroad–he doesn’t break down what parts of government they want to control, so he doesn’t as far as I can tell, understand the argument very well.

              Now the preceding is all just to phrase it in my own way. It’s perhaps a more refined version of what you wrote, but it’s not a correction, because you were basically correct.

              As to the historical examples CK asked for, it’s a lousy trick question. We’ve never really tried the libertarians’ experiment of disallowing business regulation due to refusal by liberals and conservatives alike. Their refusal is legitimate, of course, and I don’t imply otherwise. But it’s a pretty low to demand historical examples when none have been allowed. On the other hand we have done some degree of deregulation, of trucking, telecoms, railroads, and airlines (not that regulation if them is entirely absent, but the anti-competition regulation is gone), and it has not led to them seeking more control over government.

              Of course libertarians could be wrong. Again, I’m not here in ths thread to push the libertarian case as much as I am to question a critic’s level of knowledge. In particular it seems to me that the libertarian argument rests on two important assumptions. One: in the absence of regulation there is not much businesses want from government (aside from gov’t contracts, which may or may not be a severable issue). Two: It’s impossible to have regulation without the potential for protective regulation, hence regulation inevitably leads to rent-seeking, regulatory capture, and and collusion with government.

              If these assumptions are wrong, then perhaps reducing government’s regulatory power would lead to more corporate control of government. But a) an argument for why businesses would do that is necessary, not the simple assertion, as CK limited himself to, and b) it would be false to infer that therefore libertarians actually desire that outcome (which I do not imply that CK did here, but which I have seen others do on this blog), rather than just being empirically incorrect.Report

              • Avatar Michael Drew in reply to J@m3z Aitch says:

                Glad we’re on the same page to some extent by this point, JH. 😉Report

              • Avatar Michael Drew in reply to J@m3z Aitch says:

                …I think the real issue for liberals is not that they doubt that the results of that would match the predictions, so much as it seems to treat minimizing regulatory capture as a primary and exclusive priority. It entirely sacrifices a regulatory function that liberals are interested in (the “power to regulate business,” which you say always creates “power of protective regulation that favors and protects businesses, from competition and from tort claims, all to the detriment of the consumer,” which in turn “creates a great incentive for businesses to seek to control, or at least heavily influence, the regulatory process and agencies,” which you do say you would eliminate) in the effort to make sure that function is captured by industry to the most minimal degree possible. Liberals do care about capture, but they’re willing to accept some of it because they think that some beneficial regulatory function can survive, and it’s worth it to them to have that and seek ways to contain capture of it than just have to give it up entirely.

                So while they probably do doubt the two assumptions underpinning the claim that the effect of reducing the regulatory scope of government on business would be what libertarians think/hope it would, liberals’ objection to this agenda I think is actually at a prior stage – that of prioritizing the problems they’re most interested in solving, and/or identifying the major causes of those problems.Report

              • Avatar J@m3z Aitch in reply to Michael Drew says:

                I agree. Libertarians, of course, think lots of the things liberals want to regulate as not either not problematic enough to justify regulation (say, minimum wage), or handled sufficiently through tort claims. And I doubt there’s sufficient common baseline assumptions for the two sides to come to agreement.

                I sort of stand in the middle, thinking both sides are not careful enough with their assumptions. E.,g, I think libertarians are too often too dismissive of externalities, but liberals too often too sensitive to minor externalities. And of course, since I’m splitting the difference, I must be right!Report

              • Avatar Michael Drew in reply to J@m3z Aitch says:

                I’m really at sea on regulatory capture myself. I don’t really know how to get an empirical hold on the issue – its scale and effects. As I think what you’ve said suggests, it’s hard to find resources on the topic that aren’t overtly and rather exaggeratedly polemical. The part of me that is sympathetic to the case that it’s the defining problem of modern political economy also views that as completely unavoidable and intractable, and agendas to address it nearly utopian. Meanwhile, there’s a part of me that wonders whether, even if its scale is vast, its normative effect is close to neutral, or even possibly net positive. It’s not obvious to me that having mutually-empowering institutions in society is worse than not, depending how people end up being treated by them. (For example, while it’s true that the police don’t treat the poor equally to how they treat the rich and corporations, I’m not convinced that it would be better overall for everyone, or even just the poor, if there were no police, or even if the police just completely left the poor alone – not responding to either their needs for protection nor crime they commit.) It seems like it depends on how bad the abuse in the worst significantly-sized class of cases is.

                Maybe I’m just a moderate conservative.Report

              • Avatar Kimmi in reply to Michael Drew says:

                I just get kinda irate when libertarians don’t understand that regulatory capture is often worse in non-governmental agencies (BBB, I think, is one. corps can pay to erase black marks from their BBB record).

                I favor an active and free press, that isn’t afraid to embarrass the living shit out of the government. Frequently.

                That’s enough to make sure the truly egregious captures (Mines and Mineral Resources, anyone?) get dealt with — using fire.Report

              • Avatar zic in reply to J@m3z Aitch says:

                We’ve never really tried the libertarians’ experiment of disallowing business regulation due to refusal by liberals and conservatives alike.

                But this is not true.

                We did do this, and we did it quite recently; it collapsed the economy. The bankers of the world set up a market in synthetic derivatives after Glass Steagall was repealed; a market for hedging loans to home owners (people becoming property owners! Good thing!), a market that seemed to make the risk evaporate.

                By the mid, late 1980’s, Brooksley Born was agitating about this market, warning that without regulation, there was no way of knowing what was going on within it, no way of knowing the risks it presented to the world’s economy.

                When the market collapsed, for every $1 of money lent to homeowners, there were $50 of bets on the outcome of that $1. Those bets were insured. And there was no money to pay them off.

                This is just the kind of libertarian dream your describing, James. And before you go along and say we haven’t tried it; you should really spend some time studying the experiment we did try. You see the outcome all around us; and this outcome wasn’t the result of regulation or regulatory capture, it was, as Greenspan liked to say, the market regulating itself. It didn’t.Report

              • Avatar J@m3z Aitch in reply to zic says:

                No, zic, I have to strongly disagree. The (partial) repeal of Glass-Steagall was not responsible for the economic crisis. It’s a post-hoc argument that ignores critical facts.

                1. Glass-Steagall (hereafter, G-S) was not repealed. Only the portion that prevented federally insured banks from being affiliated with investment banks (firms that underwrite and deal securities).

                2. G-S still prohibited federally insured banks from underwriting or dealing securities. It only allowed them to buy and trade them for their own accounts. That is, they could not create securities, but they could hold them. Securities are loans, and banks hold loans.

                3. Most of the big firms that ran into trouble were investment banks or mortgage bundles–Bear Stearns, AIG, Merrill Lynch, Lehman, Fannie and Freddie–whose securities activities were unaffected by the change in G-S. Absent any change in G-S, the investment banks and Fannie/Freddie would have done no different, and would have run into the same problems, because the change in G-S did not affect their activities. And because these firms are not insured, it’s simply not true that all the “bets” on mortgages were insured.

                4. The federally insured banks that ran into trouble were not engaging in wild speculation unleashed by the change in G-S, but were buying and holding securities that were AAA rated. Granted they couldn’t buy those particular investments before, and granted we all know in retrospect that they shouldn’t have been triple-A, but AAA securities are expected to be solid investments, so all G-S did was allow federally insured banks to invest in investments nearly everyone expected to be safe, not in n vestments expected to be risky.

                Knowledge was at fault, not G-S, and there is no way to regulate against mistaken knowledge.* The only way to prevent these problems from occurring periodically is to dramatically limit investment, which would itself have severe economic effects.

                _________
                *You mention Born’s late ’80s warning. Yes, he recognized the lack of transparency in mortgage-backed securities, which was the essential danger. But that was long before the change in G-S, which means the danger he recognized had nothing–zip, zilch, nada–to do with the change in G-S. If he was right, then this would have happened even if G-S had never been changed.Report

              • Avatar J@m3z Aitch in reply to J@m3z Aitch says:

                Oh, in addition, I meant to say the libertarian dream wasn’t just a little bit of deregulation here and there, especially when combined–as the financial crisis was–with socialization of losses. That socialization of losses, libertarians would argue, is the inevitable flip side of government involvement in regulating businesses, and creates a moral hazard that simoly encourages further reckless behavior by business. The libertarian dream would be to eliminate all of that.

                And no, we have never have tried that.Report

              • Avatar Kimmi in reply to J@m3z Aitch says:

                You had a fun fine market in derivatives, didn’tcha though?
                Are you any happier with the gold market (as distinct from the carry trade — I mean the dark gold stores that never see the light of day)?

                These are the markets that we didn’t regulate (hard to price something when you don’t know how much of it we got, isn’t it?)…

                Bank Failure Friday stands as a testament to exactly how much we continue to hurt from the whole shebang. (hey, at least no martial law!)Report

              • Avatar LeeEsq in reply to J@m3z Aitch says:

                What about the entire 19th century? Very little or no regulation of the economy or finance and no bankruptcy laws and no government bailouts or assistance during the various panics.Report

              • Avatar Francis in reply to J@m3z Aitch says:

                Eliminating the socialization of losses would require eliminating the corporate form. Under your theory, there is no substantial justification for allowing the owners of an enterprise to capture all of the profits while avoiding the responsibility for paying all debts.Report

              • Avatar b-psycho in reply to J@m3z Aitch says:

                Eliminating the socialization of losses would require eliminating the corporate form.

                You say that like it’d be a bad thing…Report

              • Avatar j@m3z Aitch. in reply to J@m3z Aitch says:

                Eliminating the socialization of losses would require eliminating the corporate form.

                Ahem, TARP had nothing to do with the corporate form. Nor do subsidies for businesses that can’t make a profit.

                Under your theory, there is no substantial justification for allowing the owners of an enterprise to capture all of the profits while avoiding the responsibility for paying all debts.

                Eh, exactly. I don’t think there is any justification for private gains combined with socialized losses. Do you think that’s some kind of criticism of my position? Are you for private gains and socialized losses? I mean, what the fuck do you think you’re saying? I know this issue brings out everybody to criticize libertarians, but you’ve got some responsibility for not talking utter fucking nonsense, eh?Report

              • Avatar BlaiseP in reply to J@m3z Aitch says:

                The soundtrack for this thread should be The Residents playing Pachelbel’s Canon. Recursively horrible.Report

              • Avatar Brandon Berg in reply to J@m3z Aitch says:

                Under your theory, there is no substantial justification for allowing the owners of an enterprise to capture all of the profits while avoiding the responsibility for paying all debts.

                This doesn’t happen. Limited liability and the associated risks to creditors are priced into loans made to limited-liability corporations. Moreover, even when corporations default on their loans, this is not “socialization of losses.” The creditors are investors who willingly accepted the risk of default in exchange for higher yields, not uninvolved third parties.

                In an age where people diversify into dozens or hundreds of stocks through mutual and index funds, limited liability really isn’t that big a deal for publicly traded companies. It’s much more important for small businesses, which are often owned by one or a handful of people whose investment into the business is a large chunk of their net worth.

                Anti-corporate types have this fantasy that if you eliminated limited liability, big business as we know it couldn’t exist. This is completely backwards—it’s small businesses that would be hit the hardest.Report

              • Avatar Brandon Berg in reply to J@m3z Aitch says:

                I know this issue brings out everybody to criticize libertarians, but you’ve got some responsibility for not talking utter fucking nonsense, eh?

                Ah…I remember my first time on the Internet. Let me know if you need some help finding your way around.Report

              • Avatar J@m3z Aitch in reply to J@m3z Aitch says:

                Uh, Brandon, it’s me. I’ve been here a while. (Yes, I should have learned by now, but I still believe falsehoods and illogic need to be called out.)Report

              • Someone should submit a guest post so this discussion can move back up top.Report

              • Avatar DavidTC in reply to J@m3z Aitch says:

                Granted they couldn’t buy those particular investments before, and granted we all know in retrospect that they shouldn’t have been triple-A, but AAA securities are expected to be solid investments, so all G-S did was allow federally insured banks to invest in investments nearly everyone expected to be safe, not in n vestments expected to be risky.

                So in other words, the problem _was_ a lack of regulation. You’re just arguing that we needed _different_ regulation that G-S, that we needed to regulate the banks buying and selling the crap loans as securities. (Some of which, it must be pointed, actually ended up legally having no loans in them, so were actually _fraudulent_ securities. See various lawsuits about this.)

                The only way to prevent these problems from occurring periodically is to dramatically limit investment, which would itself have severe economic effects.

                This is demonstrably not true. There are a dozen different ways to stop the entire fucking economy from repeatedly collapsing like clockwork.

                For example, we could stop allowing _insurance_ on loans, period. If you want to take responsibility for a loan, you have to buy the goddamn loan. Secondly, stop allowing the bundling of loans into anything else.

                In fact, just generally stop treating ‘loans’ as anything other than what they actually are, so banks have no incentive besides ‘I hope this person keeps making loan payments’.

                More generally, _actually have regulation of the market_ so that people catch things like, I dunno, trillions of dollars of crap being sold as AAA. Or catch whatever the next goddamn incredibly risky method the superrich invent to move more money than actually exist, around for no conceivable purpose, except to skim money out.

                Just a crazy idea.

                The only way to prevent these problems from occurring periodically is to dramatically limit investment, which would itself have severe economic effects.

                Oh, well, I guess you win that argument. Stopping the entire fucking economy from collapsing every couple of decades could have…dun-dun-DUN…economic effects!Report

              • Avatar DavidTC in reply to DavidTC says:

                I really find myself astonished by this post, BTW. It’s like an entire damn town burned down, killing thousands, because the insulation used in houses was made almost entirely of wax-covered cotton soaked in gasoline.

                And someone says ‘We need better fire codes, lack of regulation killed those people’, and the response is ‘Oh, that stuff was mistaken rated as fire retardant, and thus was entirely legal for the builders to use, so the ‘fire codes’ wouldn’t have helped.’.

                That…is not helping the argument that we had enough regulation. Insulation being _extremely_ flammable instead of non-flammable is something that, you know, regulators should have caught at some point. So should they have caught a _trillion_ dollar market in giant shitpiles marked as AAA.Report

              • Avatar Kimmi in reply to DavidTC says:

                … you want to eliminate the market in mortgages?
                ow. ow. ow.
                Market destruction makes my teeth ache.Report

              • Avatar J@m3z Aitch in reply to DavidTC says:

                For example, we could stop allowing _insurance_ on loans, period. If you want to take responsibility for a loan, you have to buy the goddamn loan. Secondly, stop allowing the bundling of loans into anything else.

                Don’t you think this would dramatically diminish the loan market? If loans can’t be insured, banks will be less willing to loan, or will charge higher interest rates to do so. So who will lose out? The wealthy, who are good bets for repayment, or the poor, who are not such good bets for repayment?

                And if loans can’t be bundled, what happens to the mortgage market? Who buys the loans from mortgage initiators without effectively bundling them? And if they are effectively prohibited from buying mortgage loans, where do the initiators get the cash on hand to make more loans? And who, then, has trouble getting a loan, the rich or the poor? Keep in mind that Fannie and Freddie were created by the gov’t to participate in this secondary mortgage market for the conscious purpose of helping lower and middle class Americans get into home ownership. We don’t have to continue pursuing that policy, of course, but we should recognize that your proposals would put a severe crimp in that policy.

                This is actually my most pressing concern about regulation, that we see a particular problem and create a solution for that specific problem without considering the broader ramifications of our solution. Rent-seeking, corruption, perverted incentives and markets are the bad outcomes, of course, but this is the problem that inadvertently produces the bad outcomes. (Not that they can’t be created intentionally, too, but I assume we’re probably in agreement on the badness of that.)Report

              • Avatar DavidTC in reply to DavidTC says:

                I have no problem with the market in mortgages. I have a problem with the market in _securities_ of mortgages.

                You want to own a damn mortgage note, you take all the risk of that _specific_ mortgage, not a random bundle of mortgages you’ve been assured are rated AAA in total. You are in charge of servicing payments (Although feel free to hire someone for that) and you are in charge of the hassle of foreclosure (Which you can’t hire someone for.) and reselling the damn thing if the loan fails, so, uh, you’re going to want to not own loans that will fail.

                The economic collapse has demonstrated that if you allow people to cloud risk behind layers and layers of securitization and insurance on that securitization and instruments created from other securities and insurance on insurance on a securitization of insurance on a security on the concept of someone owning a house, they will easily create an entire self-deluding market created on literally nothing. A market composed of actual things in theory (houses), but where the actual things have no relevance to anything going on in the market.

                Which would be fine, normally. I mean, there’s an entire market of old stamp that is entirely based on nonsense, where the market exists because…the market exists, and nothing there is inherently more valuable than 45 cents, and usually not even that much.

                So this imaginary nonsense they’ve invented would be fine…if, you know, their collapse didn’t take down the entire economy.

                Now, trading loans around is probably a good deal less exciting and useful than trading securities around, so there would be a lot less of it…and? Those are _people’s homes_. It’s not a fucking casino, it’s not even the damn stock market. There’s no actual reason we need a liquid market in trading future mortgage payments around!Report

              • Avatar Burt Likko in reply to DavidTC says:

                You can hire someone to take care of the hassle of foreclosure for you. Such people are called “lawyers.”Report

              • Avatar J@m3z Aitch in reply to DavidTC says:

                David, you didn’t address my critique. I kniw you’re not opposed to all selling of mortgages, but how do we have an extensive mortgage market that serves the less wll off if we don’t allow securitization? You’re suggesting, it sounds like to me, selling mortgages one at a time, or at least only in small batches. That dramatically increases the cost of buying mortgages, so fewer will be bought. That means less money flowing into the mortgage initiation market, which means a squeeze on credit for the less well off.Report

              • Avatar DavidTC in reply to DavidTC says:

                My comment on the ‘bundling’ of loans was a bit confusing.

                I don’t actually mind transferring a ‘bundle’ of loans, if by which we mean ‘A bunch of loan sold at once’.

                I don’t think that’s the _greatest_ idea (It’s rather like trying to buy 1000 used cars at once.), but the problem isn’t there. Those are complete loans actually sold to a different bank which now owns them. It doesn’t really matter if 1 or 50 are sold at once.

                I was talking about bundling them into securities, and I was just being unclear. Or even into some sort of ‘meta-loan’ of some other form, which you know banks will invent the second we stop letting them put them in security. Each loan exists independently.

                I am against anything which attempts to dilute or mask the risk of any specific individual loan, or anything which allows businesses to make money from the loan, but _not_ have to deal with the problems of a loan gone bad and the hassle of foreclosure.Report

              • Avatar Kimmi in reply to DavidTC says:

                David,
                That sounds like you’re against dumb money in general (pension funds and stuff like that).
                After all, they’re prime buyers of mortgage tranches, and each person only assumes responsibility for a small portion of each mortgage (if one mortgage defaults, you’re only out a dash of cash).

                This also makes my teeth hurt.

                I’m not against regulating markets, but we do have a financial sector for a reason.Report

              • Avatar DavidTC in reply to DavidTC says:

                You’re suggesting, it sounds like to me, selling mortgages one at a time, or at least only in small batches. That dramatically increases the cost of buying mortgages, so fewer will be bought.

                Oh, and creating securities from loans requires creating a legal trust, _that trust buying a small amount of loans_, a ratings agency rating that trust, securities sold from that trust, and then the trust hiring a loan servicer.

                So I’m not seeing how the ‘cost increases’. Either way, some entity is buying a few dozen mortgages at a time. And with securities, you have to create that damn entity in the first place and after you have to rate it and sell shares in it!Report

              • Avatar DavidTC in reply to DavidTC says:

                That sounds like you’re against dumb money in general (pension funds and stuff like that).

                After all, they’re prime buyers of mortgage tranches, and each person only assumes responsibility for a small portion of each mortgage (if one mortgage defaults, you’re only out a dash of cash).

                Are you _for_ pension funds buying shitty securities?

                I’m actually a little baffled as to how people are suggesting this is a good system, or saying that ‘This is how the system works’ when we’re talking about how, uh, it completely failed.

                Yes, I am aware of how the system ‘works’, how everything has been set up for us to blindly hand our money to them and _hope_ they don’t fuck us over. I am aware of how that literally _every_ investment opportunity has become a casino operated by the superrich.

                I’m not against regulating markets, but we do have a financial sector for a reason.

                Yes. That reason is: So middle-class people will hand their retirement money over to corporations who own everything, and hopefully will have some sort of positive return on it when they retire. (A ‘positive return’ if they ignore the fact that their entire life they’ve been borrowing back their own money from said corporations.)Report

              • Avatar J@m3z Aitch in reply to DavidTC says:

                David,

                A security is just a large bundle. And derivatives are generally just a portion of that bundle, so a derivative is just a somewhat smaller bundle.

                So I’m not seeing how the ‘cost increases’.

                It’s cheaper to create a vehicle for a transaction of 10,ooo Xs than to make 10,000 individual purchases. Buying in bulk nearly always has returns to scale; that’s why businesses do it. All those details you mention? They’re largely boilerplate. “Joe, print up another form 386-49, put in ID number 387694504, and forward a copy to the ratings people.” Of course not quite that simple, but all pretty standardized, because anything a successful organization does on a regular basis gets standardized. They’re not in the business if imposing unnecessary costs on themselves.Report

              • Avatar zic in reply to DavidTC says:

                James,
                And derivatives are generally just a portion of that bundle, so a derivative is just a somewhat smaller bundle.

                That’s traditional derivatives. Synthetic means something else. There is no portion of the bundle at the bottom of the pile, there are only bets on the outcome of the portions of the bundle.Report

              • Avatar DavidTC in reply to DavidTC says:

                A security is just a large bundle. And derivatives are generally just a portion of that bundle, so a derivative is just a somewhat smaller bundle.

                Not exactly. A _security_ is a promise by a trust to pay money based on, in this case, their ownership of a bundle of loans. (Or, to put it another way, it’s a piece of stock in a corporation that exists solely to own said bundle and return dividends on it, except taxes work differently.)

                Are you taking semantic issue with what I said, or are you asserting that it would be impossible to stop the securitization of mortgages? Because the later is simply not true. What types of things can be put in securities is pretty easy to regulate.

                I guess, strictly speaking, that wouldn’t stop derivatives on _individual_ mortgages (?!), but I don’t actually care about that hypothetical.

                It’s cheaper to create a vehicle for a transaction of 10,ooo Xs than to make 10,000 individual purchases. Buying in bulk nearly always has returns to scale; that’s why businesses do it.

                You’ve figured my secret out: I am completely and utterly opposed to people selling mortgages ‘in bulk’.

                Mortgages are a house plus a person plus all sorts of stuff added together to create an _individual_ situation with an _individual_ risk.

                They’re not damn identical rolls of paper towels when you can buy 1000 rolls _without looking at them_. They’re not government bonds which presumably all have the same level of risk, they’re not even stocks where each individual stock in the same company have the same risk.

                They’re all _unique_ risks, and _completely_ unsuited to building any sort of financial commodity market around.

                And, I must point out, in theory _we already had someone look at the risk_. The originator of the mortgage. It’s not damn rocket science to do, especially if originators that intend to sell the mortgage _keep the paperwork_, and purchasers occasionally do spot checks to make sure the paperwork is correct.Report

              • Avatar j@m3z Aitch. in reply to DavidTC says:

                My last response, David, not out of anger, but tiredness and other things I need to do.

                Are you taking semantic issue with what I said, or are you asserting that it would be impossible to stop the securitization of mortgages?

                Definitely not the latter, since I agree it would be untrue. More semantic. “Just” a bundle may have been a bit of an overstatement, but my point was that we’re still operating with those bundles of mortages that don’t bother you; they comprise the fundamental value, whatever it may be, and a derivative is just derived from that fundamental value. Everyone keeps saying their wildly unsafe or something, but since their value is wholly dependent on the value in the bundle (or the perceived value of it), I don’t see any actual argument for how they’re so bad.

                To put it another way, I see claims of badness, but I don’t see a persuasive explanation of the mechanism of their badness.

                You’ve figured my secret out: I am completely and utterly opposed to people selling mortgages ‘in bulk’.

                I didn’t figure that out. I didn’t have any idea it was true. 😉 In fact my argument about buying in bulk was predicated on the assumption that you were not opposed in principle to buying in bulk. Did I really write that unclearly? If so, my bad.

                Mortgages are a house plus a person plus all sorts of stuff added together to create an _individual_ situation with an _individual_ risk. They’re not damn identical rolls of paper towels when you can buy 1000 rolls _without looking at them_.

                Look, I’m in complete agreement about the opacity of the MBSes. I wrote about that years ago in a policy brief on the subject. But 1) you’ve already said you don’t really strongly object to buying bundles of them (although you were clear that you don’t think it’s ideal), so you’ve already admitted that despite their non-identicality, you’re ok with buying mortgages in bulk, despite your argument here. 2) I think you’re missing out on the point of buying a bundle of mortgages, which is to reduce risk by offsetting potentially bad ones with potentially good ones, a strategy that normally works because there are always far more good mortgages than bad ones (even in the mortgage crisis there were, just with not with a high enough proportion). It was a strategy that had worked for years, and suddenly didn’t work. It sucks, but it wasn’t an inherently terrible idea.

                And you’ve been clear on your position about assuming the risk, but note that they were assuming the risk here, just mitigating potentially riskier bets with expected to be safer ones, but even the better ones had some degree of risk, and that risk was assumed.

                And without some strategy for risk mitigation, investment will diminish. And again, that will affect the poor more than the wealthy. You have not addressed that point, and I really wish you would consider it.

                They’re all _unique_ risks, and _completely_ unsuited to building any sort of financial commodity market around.

                Sure they’re unique risks. I’m a unique height and you’re a unique height, but together we have an average. There are reasons we use statistics to consider things in aggregates. To say mortgages are different requires something more than saying each is unique, because that doesn’t distinguish them from anything else we use averages for.

                And, I must point out, in theory _we already had someone look at the risk_. The originator of the mortgage.

                Well, here we may in fact switch positions, oddly enough. I think one problem in the market may–may–have been that originators didn’t have a full incentive to consider risk, since they had nearly rock solid guaranteed buyers of their mortgages. If they put out mortgages that satisfied Fan and Fred, they didn’t need to do any further analysis of the risk.

                Now to the extent bundling is a problem–and although I surely haven’t yet expressed this, I don’t think it’s entirely unproblematic–it’s that it’s too costly to assess individual risk when you buy thousands of mortgages. I recognize, and accept, that this plays into your critique of bundling, but if the risk assessment is done right at the beginning, it shouldn’t need to be done later, and the bundling wouldn’t be a problem. So a big part of the problem came at the beginning of the process, not at the bundling stage. (Granted, the bundlers and buyers of bundles should have recognized these dangers. In general they didn’t because the home market had been strong, and they were–I think–looking backward more than forward. In other words, they were too humanly fallible, and as a consequence of their inattentiveness to the lack of information, the market wasn’t operating with the actual efficiency they though it was. I.e., the market was in fact flawed, and they didn’t see it.)Report

              • Avatar DavidTC in reply to DavidTC says:

                Definitely not the latter, since I agree it would be untrue. More semantic. “Just” a bundle may have been a bit of an overstatement, but my point was that we’re still operating with those bundles of mortages that don’t bother you; they comprise the fundamental value, whatever it may be, and a derivative is just derived from that fundamental value. Everyone keeps saying their wildly unsafe or something, but since their value is wholly dependent on the value in the bundle (or the perceived value of it), I don’t see any actual argument for how they’re so bad.

                The badness is from the difference between the real value of the bundle and the perceived value. Or, rather, the fact those two things often have no relation at all.

                (And, yes, things have whatever value people perceive them to have, so I guess the difference is really between the value if you just glance at them and the value if you look closely. Like the value of a bushel of rotten apples.)

                In fact my argument about buying in bulk was predicated on the assumption that you were not opposed in principle to buying in bulk.

                I think I’m the one being unclear here:

                ‘Buying in bulk’ is really just another way to say ‘buying without actually paying attention’. I am not opposed to buying in bulk in the sense that I want there be any limits on how many you can buy at once (Or however that would work), I’m opposed to _careless_ buying, which people basically _must_ do if they’re buying in bulk. (Although they could certainly do that without buying in bulk.)

                The market was, and still is, behaving in an absurdly irresponsible manner, operating completely blind and _not caring_, because that let them be part of the money orgy. (Yes, _still_. While they won’t actually make new loans, they’re still in pretend-land with the existing securities.)

                Which would be fine, except, uh, the economy is needed by other people also, and we can’t just let the banks fail.

                2) I think you’re missing out on the point of buying a bundle of mortgages, which is to reduce risk by offsetting potentially bad ones with potentially good ones, a strategy that normally works because there are always far more good mortgages than bad ones

                It’s not _buying_ in bulk that reduces risk. It’s _owning_ in bulk.

                Considering how _insanely_ large banks are this point, they would clearly have a large enough pool of mortgages if they just, you know, gave people mortgages and mostly kept them. We don’t need them to resell them, we don’t need eight billion mortgage originators, we don’t need security and derivatives of those security or _anything_ except ‘Issue X loans, charge enough interest that if Y% fail you will make money’.

                And if they can’t afford to hold all mortgages, I have nothing against things like Freddie and Fannie, along as the rules about what mortgages they will buy is reasonable strict…which it was. (The problem there was the crash of housing prices, as I understand.)

                I mean, hell, it used to be that little community banks managed to offset risk with a few thousand mortgages.

                This entire thing with securities and derivatives and insurance is casino literally looking for a place to happen. It makes no sense. It is not needed in the least.

                Make loans. Take loan payments. Occasionally foreclose, which is a bad thing and annoying for all concerned. That’s it. That’s the fucking job of banks. Stop doing other shit.

                If people want to operate investment houses, feel free to do so. That’s what _stocks_ are for, not mortgages. You want to invest in ‘mortgages’, buy some damn bank stock.

                And you’ve been clear on your position about assuming the risk, but note that they were assuming the risk here, just mitigating potentially riskier bets with expected to be safer ones, but even the better ones had some degree of risk, and that risk was assumed.

                I don’t mind migrating risky mortgages with less risky mortgages. That’s how it’s supposed to work.

                And without some strategy for risk mitigation, investment will diminish. And again, that will affect the poor more than the wealthy. You have not addressed that point, and I really wish you would consider it.

                I find it odd how you keep talking about how things will ‘affect’ the poor or there will be ‘economic effects’. Yeah, I entirely agree that what I am proposing will change things.

                For example, the entire damn economy might not collapse, which, incidentally, _affected the poor_.

                And yes, I would rather have less home ownership than to let this happen again. Or, more specifically, I’d rather have less _bank_ ownership. I would bet money that home _ownership_ has not actually increased if by ‘home ownership’ we mean ‘people who actually own their house’. All this push for home ownership functionally did is make _banks_ into the rental property owners. That is not any sort of useful goal.

                Well, here we may in fact switch positions, oddly enough. I think one problem in the market may–may–have been that originators didn’t have a full incentive to consider risk, since they had nearly rock solid guaranteed buyers of their mortgages. If they put out mortgages that satisfied Fan and Fred, they didn’t need to do any further analysis of the risk.

                The problem wasn’t really Freddie and Fannie. Eventually, they started buying stupid loans also, but their problem was mainly the bubble collapsing. I.e., their loans were only stupid in that they had one for a house that sold for six hundred thousand was actually only worth eighty thousand.

                The original problem, and the reason housing prices got so idiotic to start with, was everyone else buying loans. If people had not done that, and Freddie and Fannie had just continued to buy ‘safe’ loans which were _basically_ safe (And sued banks for fraud when they were not), everything would be fine.

                Now to the extent bundling is a problem–and although I surely haven’t yet expressed this, I don’t think it’s entirely unproblematic–it’s that it’s too costly to assess individual risk when you buy thousands of mortgages. I recognize, and accept, that this plays into your critique of bundling, but if the risk assessment is done right at the beginning, it shouldn’t need to be done later, and the bundling wouldn’t be a problem. So a big part of the problem came at the beginning of the process, not at the bundling stage.

                Oh, the bundling stage was _also_ completely fucked up, WRT a complete failure to securitize loans correctly, but that’s not actually important right here. 😉

                The thing is, with reselling loans enmass to people who don’t have time to look at them (Let’s call it that instead of ‘bundling’ per se.) there is never any incentive to think before issuing said loans.

                Do _you_ have a way to make such incentive? Because I can’t figure it out other than creating a universe where most loans stay where they start, or at the very least, when they move, they move as actual _loans_ and not nonsense hidden behind nonsense offset with insurance with a completely random rating assigned.Report

              • Avatar zic in reply to J@m3z Aitch says:

                It dismays me that your response is centered on the regulations in GS, not the lack of regulation within the synthetic derivatives market.

                Only the portion that prevented federally insured banks from being affiliated with investment banks (firms that underwrite and deal securities). The profit from synthetic derivative trading (the unregulated market) rested on those securities; so there was, and this is well documented, an ever-growing need for the mortgages — securities — on which to build the derivatives market. Sketchy lending practices were a result, not a cause.

                When GS was partially repealed, the wall between lending and investment crumbled; and lending became a tool to generate product for investment banking; leading to ever-growing amounts of sketchy lending and escalating property values based on this opaque market, not on the actual values of the property. If you or anyone else is sitting on an underwater mortgage, it is the result of this market.

                There’s been volumes written about the ratings; but this is actually another discussion about libertarian government that should be aired; because it’s a great example of business paying its own regulator. I’ve often heard this touted as a good model. The actual evidence is, as far as I can tell, mixed.

                Another piece of the problem your missing here is the insuring part. Our economy collapsed because the insurers — particularly AIG — was overextended; it did not have regulation separating it’s different pots; and when they all came due at the same time, it was at risk. And it was so big, with fingers in so many parts of the economy, that AIG’s failure meant toppling the global economy. A particular concern of mine is that AIG was insuring products within an opaque market; so it’s unclear to me that they knew what they were insuring.

                Synthetic derivatives were a completely unregulated market. This market was smaller before GS semi-repeal, back in the day when Born was warning it was a potential trouble, and she was ignored by Greenspan, Summers & crew. When the bar keeping traditional banking out of that market fell, the results were what they were.

                And for the record, Born is a she.Report

              • Avatar J@m3z Aitch in reply to zic says:

                Look, zic, you claimed “repeal” of G-S was responsible, so I responded to that. Now you’re “dismayed” that I didn’t run to your new goalposts instead? I think it’s best if I just bow out now. This has all the signs of getting ugly between us, and I don’t want that with you.Report

              • Avatar zic in reply to zic says:

                I will take the correction on my time line; the repeal of portions of GS separating securities banking and investment banking opened the flood gates.

                But it was a flood gate built on the regulation separating regulated markets with unregulated markets; and the particularly libertarian dream that goes unanalyzed its the unregulated portion.

                We can nitpick words here; I apologize for being unclear. But the underlying argument matters. It matters a lot. If you want to stand on the laurels of unregulated markets, learn about the experiment we did, don’t say we haven’t tried it. We did. It was not a graceful result.

                Read 13 Bankers, I’d be happy to send you my copy if you want. Read the first part of Nate Silver’s book. At the very least. Google Brooksley Born, and watch her Frontline interview.Report

              • Avatar DavidTC in reply to zic says:

                There’s been volumes written about the ratings; but this is actually another discussion about libertarian government that should be aired; because it’s a great example of business paying its own regulator. I’ve often heard this touted as a good model. The actual evidence is, as far as I can tell, mixed.

                It’s worth pointing out that it appears that almost all of those AAA-rated securities had _no loans in them_. The banks fucked up the creation of the security and didn’t put the loans in them correctly, because, you know, that would be ‘work’ and it was more fun to swim in the giant money pit.

                I am not talking about a security comprised of ‘bad’ loans. I am talking about a security comprised of _no_ loans, in fact, comprised of nothing, because banks did not actually bother to transfer the mortgage notes properly into the trust that is a ‘security’.

                And these securities were ‘rated’ AAA.Report

              • Avatar J@m3z Aitch in reply to zic says:

                Zic and David,

                I make no defense of the errors in ratings. I simply say that it’s very difficult to create regulations that insure such errors never happen. The place to target, though, is not the trading of these securities, but the ratings agencies. And if we can create effective regulations on them, I’d have no hesitation in supporting those regs.

                I’m reminded of the case of a now-defunct accounting agency (Arthur Andersen, maybe?). When it engaged solely in accounting, it was a great market-based watchdog. While a firm might want an accountant that helped it fudge its books, to attract investors it is necessary to use a CPA with a reputation for integrity. So being a good watchdog was good for business.

                But then it got into selling other financial services, and its incentives got warped. To keep client firms buying those other services it had to keep them happy on the accounting end. So for a while they got away with dishonest accounting practices while still trading on their reputation for integrity. It finally caught up with them (with the Enron debacle, iirc), and now they are no more.

                Now, I would like to say the market will generally prevent that from happening again, or at least prevent it fom happening regularly, because other accounting firms will learn that lesson. But I’m sure you’ll agree with me if I say that, alas, human memory is short, and, woe unto us, we all have an amazing ability to say, “It can’t happen to me; I do what they did without screwing up like they did.”

                So a regulation limiting accounting firms to only selling accounting services? Unless someone explains some really bad consequences I haven’t foreseen, I’m good with that. Maybe there’s something along those lines we can do with ratings agencies, and I would support that.Report

              • Avatar zic in reply to zic says:

                James, you’re still avoiding the discussion of the synthetics derivatives market, which was completely unregulated.

                Consider this: perhaps the shoddy ratings was related to the unregulated nature of the market being rated.Report

              • Avatar Kimmi in reply to zic says:

                James,
                as long as you have spirited competition in ratings agencies, there’s incentive on the company’s part to go to the ratings agency that requires the “least work for the best rating”.

                If you don’t have spirited competition, you’ve got an oligopoly or a monopoly anyhow, don’t you?

                (maybe if we regulated the ratings agencies??)Report

              • Avatar J@m3z Aitch in reply to zic says:

                Zic,

                Synthetic derivatives did not cause the financial crisis, because they were wholly defendant on the values of . They exacerbated some firms’ losses, but they were not the underlying problem, which was a housing bubble caused by the Fed’s loose money policy. At best, constraining synthetic derivatives would have had some tempering effect on the crisis, but could not have prevented it.

                If you want to regulate them, fine. Just be clear about how you would regulate them. Just creating some regulation is not a magic bullet. I know that sounds condescending, but I can’t help but say it. I know liberals recognize that simply creating a regulation is not a magic bullet, but it is my considered opinion that liberals do not recognize the full force of that point, how easy it is for regulations to fail to achieve their goals or to have adverse side effects, and to over-estimate the likelihood that a truly successful regulation without adverse side-effects is even possible.

                It’s perhaps just a difference in our relative levels of optimism ans pessimism. But I am always reminded of responses I heard back in the ’90s when a mentally/emotionally disturbed student in our town shot up his school. Everyone asked why he hadn’t received any mental help. When it turned out he had, everyone shifted to, “well, if there had been another layer” to the safety net” mode. But it’s possible the only regime that might have prevented that shooting was one where every emotionally disturbed kid was locked up, despite never having harmed anyone before, and that’s too high a price to pay.

                Support regulation of synthetic detivatives, by all means (although we’re a long way from where you started, with G-S repeal, which suggests the problem may be narrower than you initially suggested), but be cautious about assuming there’s some set of regulations we can create that will ensure this never happens again. If it’s not this, it will–will–be something else. The only way to prevent this, that, or sonething else, is to abandon markets.Report

              • Avatar zic in reply to zic says:

                James, I think you’ve drunk the koolaid.

                Synthetic derivatives caused the housing bubble and the insurance on those derivatives caused the economic collapse. Without the hunger for ever more mortgages to package into securities that were then hedged with synthetic derivatives, there would have been no collapse. As noted by DavidTC, there were actually derivatives sold that had no mortgages underlying them. There were significant complications for properties being foreclosed as there was often no identifiable institution/person to take ownership of the foreclosed property.

                Seriously, and I say this because I think we do a lot of shitty regulation, I’d be first to sign up for review, and elimination or replacement of most regulation. But no regulation, which is what we had here, was a greed feast on a nearly unimaginable scale. You cannot make arguments for free, unregulated markets that have any logical basis if you do not understand what happened here.

                1. We had an opaque market used for financial hedging;
                2. The wall between investment and securities banking was dismantled (GS);
                3. The opaque market provided a way to hedge securities, seemingly removing the risk, so a frenzy of risky lending commenced;
                4. The opaque market began soaking up mortgage-backed security hedges at astronomical rates;
                5. Removing the perception of risk and easy money led to increasing housing prices, a real estate bubble, and spawned a plethora of bottom-feeders like Countrywide;
                6) When enough of the bets on housing fell on the losing side, investors called to be made whole by the insurers. This was not the lenders being made whole; it was the hedgers — often with no stake in the underlying mortgage securities at all — but insurance on their bets on the outcome of those securities;
                7) Too many hedged called in on top of payouts for the typhoon and Katrina losses meant AIG was insolvent in a matter of days.

                And the house of cards tumbled from there.

                Yes, there were many other things at play here; ratings, shoddy lending; real-estate bubble mentality, over-borrowing by consumers. But all of those things found fertile soil due to the demand for ever more profit from this completely unregulated market. The reason GS matters here at all is because it shows the demarkation of something that limited money going into this market and removal of that limit.Report

              • Avatar Mike Schilling in reply to zic says:

                Before CDOs, mortgages were a self-regulating market: underwriters were unwilling to lend money to bad risks, because the risk was theirs. (And this remained true, regardless of the CRA.) After CDOs, risky mortgages could be hidden in the same tranche as sounder ones, and, as the rot set in, the proportion of risky ones kept increasing. It’s well attested that underwriting standards loosened or went away entirely as worse and worse mortgages could still be sold profitably on the secondary market. Blaming this culture of corruption and fraud on the CRA and the Fed is simply an exercise in assuming that anything bad that ever happens must be the government’s fault.Report

              • Avatar J@m3z Aitch in reply to zic says:

                Zic,

                Synthetic derivatives caused the housing bubble

                No, the Fed’s loose money policy was the main culprit. Without the loose money interest rates are higher, fewer people buy houses, and home prices don’t climb so high because there’s less pressure.

                Mike,
                Blaming this culture of corruption and fraud on the CRA and the Fed is simply an exercise in assuming that anything bad that ever happens must be the government’s fault.

                Thanks for replying without reading what I actually wrote. It would take multiple paragraphs to show the several ways you’ve misrepresented my arguments, but I don’t think it’s worth the hassle.Report

              • Avatar DavidTC in reply to zic says:

                1. We had an opaque market used for financial hedging;

                I think your use of ‘opaque market’ is a lot better than the way I’m trying to explain it, so I will steal that term. And, hell, we didn’t just have _one_ opaque market.

                We had an opaque market for mortgages. Those mortgages were actually shit, but no one looked at them.

                Which then were packaged into opaque securities. Those securities were shit _on top of_ being full of shit, because they were often put together carelessly. (The entire premise of a ‘security’ is that by creating a trust correctly, you can create something that is ‘secure’. Failing to do it _exactly_ right is, well, completely failing at securitization.) Even if the mortgages had been good, the securities were shit.

                Which were then clouded by owners taking insurance out on them, making the market even _more_ opaque. And then somehow _other_ people took out insurance on them, which would have made the market more opaque, except that was probably literally impossible at this point.

                At that point, you don’t have a market. You don’t even have a damn casino, where you can at least see the bets and calculate odds. It’s playing blackjack in the dark, and everyone is just _guessing_ what the card values are. But everyone will make money, because mysteriously rising housing prices are causing money to rain from the ceiling!

                It is complete and utter nonsense, it is financial _gibberish_.

                And it operated the damn economy for a decade.

                3. The opaque market provided a way to hedge securities, seemingly removing the risk, so a frenzy of risky lending commenced;

                I agree, but it’s not just a quantitative difference in behavior. People seem to think banks made ‘more risky loans’.

                But it wasn’t being ‘more risky’ with loans, it is that the money being handed out literally did not fit the moral definition of ‘lending’. Lending has, built in, the assumption of repayment. Banks ‘lent’ money without the slightest expectation they would be ‘repaid’, because they planned to sell the loans in ten seconds.Report

              • Avatar zic in reply to zic says:

                James,

                Doesn’t ‘loose monetary policy’ generally mean low interest rates on overnight lending? Then we’d still be in the same boat now, when it’s essentially 0%.

                Greenspan reiterated his “shocked disbelief” that financial companies failed to execute sufficient “surveillance” on their trading counterparties to prevent surging losses. The “breakdown” was clearest in the market where securities firms packaged home mortgages into debt sold on to other investors, he said.

                “As much as I would prefer it otherwise, in this financial environment I see no choice but to require that all securitizers retain a meaningful part of the securities they issue,” Greenspan said. That would give the companies an incentive to ensure the assets are properly priced for their risk, advocates say.

                Source: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ah5qh9Up4rIg

                Report

              • Avatar Mike Schilling in reply to zic says:

                I’m not misrepresenting, I’m disagreeing. Loose money has the potential to cause bubbles — financial chicanery that magnifies demand by not insisting it be backed by even loose money guarantees them. I was sloppy about bringing up the CRA, though: that’s Roger’s hobbyhorse, not yours.Report

              • Avatar j@m3z Aitch. in reply to zic says:

                I’m not misrepresenting,

                Yes. You are. It’s all in that final sentence of yours. It’s amazing how much wrong about my position you managed to pack into it. I mean, it may be true as a statement, but it’s complete BS as a reflection of what I’ve said here. But you’ve corrected one part of it, so maybe there’s hope you can figure out the other two or three things you got wrong in there.Report

              • Avatar DavidTC in reply to zic says:

                “As much as I would prefer it otherwise, in this financial environment I see no choice but to require that all securitizers retain a meaningful part of the securities they issue,” Greenspan said. That would give the companies an incentive to ensure the assets are properly priced for their risk, advocates say.

                Well, that’s an interesting idea. Have securities, but require the issuer to keep part of them. Not sure how that works with derivatives, but whatever.

                Of course, the obvious loophole here is issuers getting insurance on that, or somehow making a security to create those other securities. (Don’t look at me like that, you know they will.)

                Or, you know, we could ask ourselves what the hell any of this has to do with the actual real world, and why we don’t just limit ourselves to first-order risk taking.

                You loan people money, that’s it. That was the risk. If they pay you back, you make money, if they don’t you lose.

                You buy or sell a future, that’s it. You will pay that amount in the future for the thing. That was the risk. If the price changed in the right direction, you made money, because you sold a thing for more than it was worth, or bought it for less.

                You don’t want to do those personally? Get a money market account or a mutual fund or invest in a company that issue loans.

                No one has ever been able to give me an adequate explanation of why we need any more layers to all this, why we have to lump random stuff together and then slice it apart or whatever craziness has been newly invented this week. We already have entities to pool risk that you can purchase a small amount of. They’re called ‘corporations’ and they issue ‘stock’. Amazing, I know.

                Anyone remember when the way to make money off of ‘loans’ was to put money in a savings account, and then banks loaned it out to other people, and in return the bank would _give interest_ to you? Ah, the old crazy days, when the government wasn’t handing out money as fast as possible to banks, so the banks actually _needed yours_.Report

              • Avatar Dave in reply to zic says:

                the lack of regulation within the synthetic derivatives market.

                It’s the credit derivatives market in general that concerns me; however, again, this has nothing to do with Glass Steagall.

                When GS was partially repealed, the wall between lending and investment crumbled; and lending became a tool to generate product for investment banking; leading to ever-growing amounts of sketchy lending and escalating property values based on this opaque market, not on the actual values of the property. If you or anyone else is sitting on an underwater mortgage, it is the result of this market.

                The investment banks were already in the mortgage securitization business and had been for a number of years. They weren’t doing a lot of volume in private label subprime mortgage-backed securities but they were doing some (the banks were also big into commercial mortgage backed securities).

                As far as Glass Steagall is concerned, it certainly aided in perpetuating too-big-to-fail by allowing behemoths like Citi, BofA and JP Morgan chase to grow, but the biggest blow-ups in 2008 were Bear, Lehman and Merril (which would have died had BofA not acquired it). None of these companies were direct beneficiaries of a G-S repeal and were already in the businesses that would eventually be their undoing.

                Brooksley Born’s warnings about the credit derivatives markets should have been heeded. Under no circumstances should we accept an arrangement where a relatively small number of people can act in a way where their actions can threaten the global financial system.Report

              • Avatar Dave in reply to zic says:

                No one has ever been able to give me an adequate explanation of why we need any more layers to all this, why we have to lump random stuff together and then slice it apart or whatever craziness has been newly invented this week. We already have entities to pool risk that you can purchase a small amount of. They’re called ‘corporations’ and they issue ‘stock’. Amazing, I know.

                Trying to have a conversation about mortgage lending from the perspective of the 2008 financial crisis is almost like having a conversation about ship building as the Titanic is sinking. It ignores everything that took place before and after and tends to distract from the true fundamentals.

                As someone that works in the commercial real estate business, I can give you many good reasons why loans are routinely securitized and sold. Commercial real estate mortgages aren’t that opaque. Actually, they’re quite transparent to people that understand them.Report

              • Avatar DavidTC in reply to zic says:

                Trying to have a conversation about mortgage lending from the perspective of the 2008 financial crisis is almost like having a conversation about ship building as the Titanic is sinking.

                Ah, the US. Where we can’t solve problems _before_ they happen, because clearly everything is working and how dare anyone suggest otherwise, and we’re not allowed to solve them _after_, because we’re all emotional or something.

                Wait…_as_? Are you asserting that we shouldn’t talk about how our _current_ ship is built _as that ship is sinking_?

                As someone that works in the commercial real estate business, I can give you many good reasons why loans are routinely securitized and sold.

                …and those reasons are?

                Let me see if I can guess one of them: Because there is not enough capital in the market otherwise. You know what I say to that? Screw the market, then.

                If there is not money in a market, we don’t need to run around inventing weird submarkets so that we can get random pension funds investing in the market and losing all their money when it collapses. It’s complete nonsense. It’s the superrich wanting a casino and demanding that everyone else place ‘safe’ bets so there’s money on the table and no one notices when tiny amounts (from each person) go missing..

                If businesses need money, how about all those superrich who keep calling themselves ‘investors’ and ‘job creators’ and ‘risk takers’…actually take a fucking risk and create some jobs by _investing_ in a company. Instead of having banks issue loans so they can buy sliced and diced securitized randomness and never actually risk anything.

                A lot of people here seem to be content with _explaining_ the nonsensical system set up, like I don’t understand it. I actually think I understand it fairly well. Perhaps not perfectly, but fairly well.

                In fact, I’m starting to suspect I understand it much better than other people, who have drank the kool-aid that it is somehow _useful_ and not this crazy money-shuffling gibberish dance that the rich have created to siphon money out.

                Commercial real estate mortgages aren’t that opaque. Actually, they’re quite transparent to people that understand them.

                Erm, being understood by the people that understand them is somewhat tautological.

                Are they understood by the people buying them? Are they understood by the people rating them?Report

              • Avatar BlaiseP in reply to zic says:

                Fact is, this discussion has been bruited about for umpty-ump diaries. The Libertarians will never agree the market failed — it could only be failed. Everyone else will disagree, as the Navy log entries state “Steaming as before” and it won’t make a particle of difference.

                We tried it the Libertarians’ way. We deregulated these markets. The ratings agencies, the mortgage bundlers, the banks, the insurance firms, everyone was busy fucking the mortgage market like a twenty dollar whore and the bottom dropped out. We’re still recovering.

                And yet… and yet…. still we have the Libertarians, trying to tell us otherwise. It was the Fed (which happened to be run at the time by a noted Libertarian, that old reptile Alan Greenspan, who sat before Congress and mournfully uttered these words: ” “Those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity (myself especially) are in a state of shocked disbelief.”

                Shocked disbelief. To everyone except the Libertarians, who continue to believe, every scrap of evidence to the contrary, that markets are self-regulating and that self-interest is our sovereign guide to prosperity and progress. They’re beyond incorrigible. These are articles of faith with them. They are a cult.Report

              • Avatar Dave in reply to zic says:

                People wonder why I’m a labelphobe.

                The Libertarians will never agree the market failed — it could only be failed.

                I’m a libertarian and it doesn’t take much for me to realize that the markets failed. I had a front row seat to this fiasco perhaps a year before Main Street caught wind of what was going on. I’d like to think that experience had a lot of influence on my thinking.

                I apologize if this screws up your labeling system, but my very friendly advice to you is to make sure your labels don’t apply to me. If not, I’ll just have to prove you wrong. 😉

                I’ll make a few other points before I turn my attention to a response to DavidTC.

                We tried it the Libertarians’ way. We deregulated these markets. The ratings agencies, the mortgage bundlers, the banks, the insurance firms, everyone was busy fucking the mortgage market like a twenty dollar whore and the bottom dropped out. We’re still recovering..

                What happened with the ratings agencies had more to do with fraud than deregulation. The mortgage bundlers were the Wall Street firms and the fact that they weren’t called out has less to do with deregulation and more to do with a SEC that has no testicular fortitude. The “deregulatory” issue with the i-banks was the relaxing of leverage requirements which allowed firms like Lehman to lever up like hedge funds. Bad idea. As far as the commercial banks, the repeal of Glass Steagall had a lot to do with spreading too-big-to-fail to the commercial banking sector, but the biggest blow ups prior to and during the crisis were the Wall Street banks and AIG.

                AIG was a major issue as is the opacity of the credit derivatives markets, especially with respect to the CDS markets. Without getting into too much detail, I am in full support of requiring capital cushions for CDS contracts not unlike run-of-the-mill insurance. Also, I’d like to see more transparency in the markets via an exchange or some mechanism that allows regulators to monitor positions and counterparty risk.

                And yet… and yet…. still we have the Libertarians, trying to tell us otherwise.

                Not me, and actually, given what I remember James writing in his post about Glass Steagall back in January, he seems to have a good understanding of what happened. It seems as if he and I may not agree on some things, but it’s certainly better than some things I’ve seen written (i.e. – the Community Reinvestment Act).

                It was the Fed (which happened to be run at the time by a noted Libertarian, that old reptile Alan Greenspan…

                About that libertarian thing, while I agree that his lack of willingness to step in and regulate the mortgage lending markets was a terrible mistake, it was his interest rate policy that set the wheels in motion, a policy that doesn’t quite conform with libertarian free market principles. He had it backwards. He stepped in when he had no business stepping in and he fell asleep at the wheel when he needed to take control of things. It may not do well for the Libertarian label but those are the facts.

                Shocked disbelief. To everyone except the Libertarians, who continue to believe, every scrap of evidence to the contrary, that markets are self-regulating and that self-interest is our sovereign guide to prosperity and progress. They’re beyond incorrigible. These are articles of faith with them. They are a cult

                Speaking of topics that have been more than beaten into the ground…

                I’ll assume you’re not talking about me. That way I won’t have the urge to throw my monitor out the window. 😉Report

              • Avatar Dave in reply to zic says:

                The bankers of the world set up a market in synthetic derivatives after Glass Steagall was repealed

                That market already existed and had threatened to take down the market in 1998 prior to the Glass Steagall Act’s repeal, which for some reason seems to get credit as a major cause of the crisis (it wasn’t…tertiary at best).

                Long Term Capital Management got itself into trouble with its derivatives positions when its bets went sideways after Russia defaulted on ruble-denominated bonds in the Summer of ’98 causing all sorts of volatility in the markets.

                While I’ll try to address a few more comments, mortgage-backed securities per se were not the problem. It was the originate-to-securitize business that led to the rise of private label subprime securities and everything else that followed. Not only did the Fed not step in to regulate mortgage markets as it should have when mortgage fraud rose to an alarming level, but there may have been little to no market for a lot of this garbage in the first place had 1) the Fed not over-tinkered with interest rates sending other bond yields down – an unintended consequence was that yield seeking investors had to look elsewhere for yield and look where that got us; 2) the rating agencies had a clue. There are a lot of reasons why this got screwed up, but I see these two situations as having a lot more to do with what happened than something like the repeal of the Glass Steagall Act.

                When the market collapsed, for every $1 of money lent to homeowners, there were $50 of bets on the outcome of that $1. Those bets were insured. And there was no money to pay them off.

                Probably more than that with the synthetic derivatives.Report

              • Avatar Patrick in reply to Dave says:

                Can someone explain to me why we ever needed a market in mortgage-backed securities when we had Freddie and Fannie to buy mortgages in the first place?

                Without using the phrase, “because people made a ton of money that way”, anyway.Report

              • Avatar Dave in reply to Patrick says:

                I have about two minutes before I leave and I don’t mean to sound too short or glib, but I’ll put it this way:

                When the Fed cut rates to historically low levels and kept them there for a year, yields on fixed income investments dropped as well (as to be expected). Still, the demand for higher-yielding investment grade rated securities was still there. There was one of the main sources of demand for AAA-rated RMBS backed by what ended up being complete crap.

                At the time all of this started to happen, I don’t think Fannie and Freddie were buying subprime mortgages (they started to ramp that up in 2005 I believe) so for anyone looking to securitize and sell subprime-backed loans, the secondary market was the place to do it. We all know how that ended.Report

              • Avatar Patrick in reply to Patrick says:

                Still, the demand for higher-yielding investment grade rated securities was still there.

                Well, of course.

                But – investment neophyte I am, admittedly – this seems to me to be a case of “I can’t find the investment that fits the parameters that my clients are looking for, so I’ll invent one”… or… “because people made a ton of money that way”.Report

              • Avatar clawback in reply to Patrick says:

                The case that can be made for mortgage securitization is that greater geographical capital mobility was needed. Recall that at the time banks were somewhat more regional, compared to the national behemoths in charge today. If the need for housing was uneven geographically, there could have been a geographical imbalance in the demand for and supply of capital. Securitization makes it easy for this capital to flow between banks in large transactions.

                Otherwise real estate development in a region would be constrained by the supply of capital in its banking market.

                That’s how the story goes, anyway. Some of us might counter that Nevada and Florida would have benefited from some constraints on development.

                On the other hand, I’ve never heard a coherent case for synthetic derivatives of MBS. Those really were just a case of predation.Report

              • Avatar zic in reply to Patrick says:

                Patrick, ‘derivatives’ suggest there are actually pieces of mortgages at the bottom of synthetic derivatives. But there are not; that’s the ‘synthetic’ part, it’s make believe.

                A derivative has two opposing hedges; a pull and a push; one to buy and one to sell the underlying security. The sale of synthetic derivatives depended on two opposing bets, so it was a hedge of sorts, but without the sale of underlying security involved. Instead, the bets were placed on the rated securities like betting on a pro-sports game. There’s someone on the opposing side of the bet, but neither party needs to own any interest in the actual teams playing; you’re just gambling on the outcome of the game.

                It wasn’t the amount of money lent and not repaid that put AIG on the edge of insolvency, and with that, many of the investment banks it insured; it was the amount of money bet (and those bets were insured because the rested on AAA securities) that caused the economic collapse. Nobody had the capital necessary to pay off all the losers.

                And Dave, the $50/$1 ratio is what’s in Nate Silver’s book; at its height, the synthetic derivatives market had $50 bet on every $1 leant in a mortgage.Report

              • Avatar Kimmi in reply to Patrick says:

                Pop Quiz: Do you have a prime mortgage?
                20% downpayment, isn’t it?Report

              • Avatar BlaiseP in reply to Patrick says:

                @Patrick: Dave’s right. Here’s kinda how it works, simplified to the point of partial wrongness: Dave knows this, hope he forgives me.

                So you’ve got some big money to invest. A hundred brown manilla envelopes lie on your desk, each with a prospectus inside. Doesn’t matter what’s inside. You’re going to buy a bond.

                But a bond comes in two parts: the principle and the interest. We can separate these two. The interest payments are called a Strip. If the Strip is backed by good solid investments, it’s a wonderful thing for Wall Street because they can use the difference between a given Strip and the Fed Funds rate to compose the aforementioned “synthetic” instruments — which is sorta beyond the scope of this discussion.

                If I’m running Hammerhead Loan Sharking, I charge a high interest rate to my bottom feeding clients. Big Strip, lot of risk, that’s the normal order of things. But if I were able to convince the market my “bonds” were top-notch, say, get Moody’s to rate Hammerhead Bonds AAA, Wall Street would call me Wonder Boy Blaise and I’d get a picture of myself on the cover of Fortune and the money would pour in.Report

              • Avatar Dave in reply to Patrick says:

                Dave knows this, hope he forgives me.

                This works. I get things wrong all the time so who am I to split hairs? Structuring can get extremely messy and complicated (beyond my scope of understanding) but you got the point across.

                Another way to look at it is through Super-Senior tranches where the bondholder gets both principal and interest, priority on those cash flows and a sizable amount of loss protection.

                Still, it works because no matter what, if the underlying collateral is rotten, in both of your examples, the bondholders who think they are in a safe position are screwed.Report

              • Avatar Francis in reply to J@m3z Aitch says:

                We’ve never really tried the libertarians’ experiment of disallowing business regulation due to refusal by liberals and conservatives alike.

                True but deceptive. The deceptive bit is that we have plenty of history, and plenty of examples around the world, regarding the operation of business in a de-regulated environment. 1870 to 1929 may be out of most everyone’s lived experience, but we do have history books. Have you been reading the labor history series over at lg&m? De-regulated business environments were great for capitalists, not so much for employees.

                Another thing that drives me nuts about this debate is the vagueness. Which regulatory environment? EPA and the FWS drive businesses nuts, but sane libertarians understand that common law remedies utterly failed to keep air and water clean or preserve native species. The SEC has been raked over the coals for years as being far too lenient. Tens of thousands of pages of material are available right at your fingertips regarding the complexity of bank regulation. The USPTO has been in the news recently; do the lessons of laxity in patent issuance bear at all on any other regulatory environment? Health care is always a good topic of conversation; should the federal government play no role in ensuring that poor Americans have access to care?

                Since the inception of the republic, the court system has pretty consistently refused to review economic regulation. The rare instances have arisen, so far as I know, when the statute / regulation is such a naked act of protectionism that a court has found a constitutional violation of due process / equal protection even in the light of the rational basis test. You really want to change that? You really want every single law, regulation, rule, order and memorandum litigated to determine whether it’s sufficiently of general applicability under some form of strict scrutiny?

                Apparently yes. So what you really want is, despite the fact that the industrialized world is still facing a huge crisis in joblessness, is a paralyzed state.

                No thanks.Report

        • Avatar b-psycho in reply to CK MacLeod says:

          What “the problem” is is institutions so damn large that they drag anyone attempting to leash them.Report

        • Avatar Chris in reply to CK MacLeod says:

          CK, do you seriously think “The government does good stuff too” is an answer to the worry that it has and might again do bad stuff?

          Also, feel free to expound on libertarians or American left/progressives/liberals, but such things have little to do with me. I’m not a libertarian, and I’m not a progressive.

          Oh, and if you despite counterfactuals, do you despise induction generally? Abduction? The experimental method in science? Analogical inference? While it is true that we are talking about contemporary technology, it is also true that the government used whatever technology it had to crack down on dissidents, including communists, socialists, and the Civil Rights movement. So again, it’s not much of an inductive leap.Report

          • Avatar CK MacLeod in reply to Chris says:

            Chris, I was obviously referring to historical counterfactuals of the type being abused in this discussion. They can have some limited utility, but the cartoon versions of alternative history that merely serve to display someone’s preconceptions, and that can easily be turned into their opposites according to any other polemical purpose, add no new information.

            I ended up having to point out that “government does good stuff too” in discussion with you because, however you’re identifying yourself politically today, you’re playing into this “government does bad stuff” theme. It’s true that “government” has used technology or law enforcement capacities to do all sorts of bad things. This isn’t news. It has used those same technologies in furtherance of goals that you may or may not consider worthwhile, but that an overwhelming majority of your fellow citizens, including especially your left and liberal fellow citizens, do consider worthwhile. It is specifically a distortion to play into this claim that “government” was uniformly hostile to to Civil Rights or subversive of the movement. Anyone who is even minimally familiar with the history knows that the story is much more complex than that, and, more relevantly, on whose side the argument against government interference was mainly deployed.

            The government at any given time and at any given level is made up of citizens with different opinions and different beliefs subject to varying public pressures. Among the public pressures in the current instance was a general desire to limit terrorist attacks on the American homeland to an absolute minimum. The laws that enabled the program were passed under regular order of government. Maybe you don’t like the laws. You’re free to try to change them. Maybe liberal-democratic governance no longer works in the US of A, or maybe you just don’t like what your fellow citizens choose to do with it. In the latter case, your problem would seem to be with liberal democratic governance itself. Maybe you’ll like even less what your fellow citizens would choose to do if they ever came to agree with that stance.Report

            • Avatar Chris in reply to CK MacLeod says:

              I find this response as odd as the last one. No where have I suggested that the government only does bad, or even that it can’t do good with these things. Nor have I suggested that the majority of people may agree with what it’s doing. These are only compelling arguments if you believe:

              a.) the good the government does always outweighs the bad, in every domain in which it operates;
              b.) the majority should always be followed (I took it to be part of Jason’s argument, for example, that this was not the case; I think history suggests it’s a bad way to go as well).

              I don’t believe either of those things. In fact, I doubt there are any people, including you, who believe either of these things.

              And again, on subversive movements, the government, being a multiplicity, does multiple things (generally, in line with the majority), sometimes working both in support of and against those movements. However, in the case of the Civil Rights movement, the labor movement of the late 19th and early 20th century, left wing political and social movements, anti-war movements, etc., the government has tended to work against them much more than for them until they finally worked for them. And again, the relevant issue here is how the government used surveillance, often secret and rarely with individual legal authorization, to spy on and undermine the Civil Rights movement. You may not like historical counterfactuals, but given what we know, this inference is not a stretch, and simply waving your hand at historical counterfactuals generally hardly answers that. Hell, it doesn’t answer it at all.

              You’re bobbing and weaving and not actually addressing anyone’s points.Report

              • Avatar CK MacLeod in reply to Chris says:

                Chris, you can define what you believe the relevant issue is however you like, I suppose. As for addressing “anyone’s points,” that was the purpose of my initial comments. My main argument: Snowden’s and Greenwald’s claims deserve reasonable skepticism, and that denouncing skeptics presumptively or by false association is wrong. It would be wrong even if there wasn’t good reason for skepticism, which I happen to thing there is.

                People who think that the program has not been adequately described or examined are not monarchists, or racists, or fascists, or totalitarians. Those allying themselves with Greenwald and Snowden may also be contributing to an agenda they do not share. Apparently, because you don’t identify yourself as a “progressive” or “liberal,” you’re not interested in that problem. Fine. Otherwise, your response is, “maybe the program really could be harmful, and it was was OK for Mr. Likko to bring up Civil Rights Era suppression of dissent or for Mr. Kuznicki to indulge in a little hyperbole. In isolation, I have no problem with Likko’s illustration on its own terms, even though I think it has extremely limited utility. We can differ about Kuznicki’s typical mode of argument. Again, in isolation, it’s hardly a big deal that he indulges in hyperbole. As I stated from the outset, however, both fit within an overall pattern of pre-emptive denunciation of anyone with a different point of view on this topic – need I review? – and a connected unwillingness to look at the underlying facts or in this case a lack of them. I consider those two tendencies, especially put together, a lot more dangerous even than the ghost of COINTELPRO, since they’re a big part of what leads to COINTELPRO and worse.Report

              • Avatar Chris in reply to CK MacLeod says:

                I’m not allying myself with Greenwald or Snowden. Everything I’ve said here, I’ve said many times before in this forum and others. Hell, so has Jason. So have several others here. My problem with the post-9/11 approach to fighting terrorism is not limited to recently revealed (or not revealed, whatever you want to think) surveillance programs. Hell, my biggest problems are things more like this one, or this one, or this one, or targeted killings, or torture, or the use of military contractors (and their relative immunity), things generally supported by the majority. I spent much of my youth as an entirely ineffective anti-war activist (not just Iraq, but Kosovo and Afghanistan as well), and my primary concern is that we’re making the world a more dangerous place, where more people will suffer, than simply that the government is collecting metadata (which we already knew anyway). I can live with the fact that this sometimes puts me on the side of Greenwald, even if I can’t stand him, and don’t read him. I don’t think it suggests that I share his agenda, or that my views and actions (to the extent that I take them anymore, which is very little) necessarily contribute to agendas to which I do not share. Or to the extent that they do so contribute, I don’t see that as necessarily meaning that I should think or act differently (does the fact that single payer health care would mean people at insurance companies would lose their jobs suggest that I shouldn’t support, in our current political system, single payer health care?). Which brings me to this:

                People who think that the program has not been adequately described or examined are not monarchists, or racists, or fascists, or totalitarians. Those allying themselves with Greenwald and Snowden may also be contributing to an agenda they do not share.

                This is the rhetorical ploy you keep using. It’s nothing but a ploy. It certainly doesn’t suggest that you, yourself, are at all interested in looking “at the underlying facts or in this case the lack of them.” I find it increasingly frustrating. I’m not allying myself with Greenwald or Snowden. Everything I’ve said here, I’ve said many times before in this forum and others. Hell, so has Jason. So have several others here. My problem with the post-9/11 approach to fighting terrorism is not limited to recently revealed (or not revealed, whatever you want to think) surveillance programs. Hell, my biggest problems are things more like this one, or this one, or this one, things generally supported by the majority.

                Unlike a lot of people here, I think you’re usually actually saying something, and not just being purposefully obtuse as a method to make yourself look, or feel, superior (an accusation, I’m sure you’ll recall, you’ve gotten a lot lately). Because of that, I actually spend time reading and trying to understand you. As a result, it’s all the more frustrating when you seem to make no effort to understand what others are saying, but instead merely dismiss them with hand waving and condescending rhetorical ploys. I’ve reached a level of frustration in this particular conversation that compels me to disengage. So, until the next conversation, enjoy trying to reach all of the folks here who don’t take you as seriously as I do.Report

    • Avatar b-psycho in reply to CK MacLeod says:

      Up above, on the basis of no evidence but general loathing of all authority, b-psycho asserts that “the US government wants [Snowden] either caged for life or murdered.”

      Government officials are calling what he did “treason” in public. A previous whistleblower is currently on trial even after having pled to many of the charges already because the government in prosecuting him wants to make sure he never sees the light of day again. How is that not evidence?Report

      • Avatar Jim Heffman in reply to b-psycho says:

        “Government officials are calling what he did “treason” in public.”

        Government officials are calling raw milk deadly poison in public. That doesn’t mean A Majority Of Right-Thinking Citizens agree with them, or that the halls of the White House are ringing with echoes of the President’s raging howls.Report

  14. Avatar Jaybird says:

    Has anybody else made the “12 Inches Of Snowden” or “Informer” joke?

    Because I can’t believe I’d be the first person to make that one.Report

  15. Avatar b-psycho says:

    Re: the financial debate above…

    I’ve wondered at times the effect if for banks to sell loans they required the permission of the ones who originally took out each loan — that is, if you took out a loan, they’d have to come to you and ask if they can sell it rather than simply wait for your payments.

    Beyond that, that finance is so large, influential & hard to follow in the first place is itself a huge problem. We should seek to disperse & simplify it, and also to crush its relevance: financialization of our lives comes from debt becoming necessity rather than rare burden.Report

    • Avatar Kimmi in reply to b-psycho says:

      Had to sign giving permission for my bank to sell my loan.Report

      • Avatar b-psycho in reply to Kimmi says:

        You did?

        Why’d you give permission? Did lower interest come with it or something? I’d have said no.Report

        • Avatar zic in reply to b-psycho says:

          I sold a house a few years ago, the buyers had to sign permission for their loan to be sold at the closing. I’d guess that this is standard practice now, a requirement to getting the loan.Report

          • Avatar Kimmi in reply to zic says:

            Yeah, if you don’t, you have suddenly taken your mortgage from “standard loan” into “freaky shit that NOBODY pulls”. This isn’t “no escrow account” territory. This is completely rewriting someone’s business enterprise for your convenience.Report

        • Avatar Kimmi in reply to b-psycho says:

          I got a decent company (I think they mentioned who they were selling it to). Nearly no bank keeps mortgages on the books anymore.

          So, um, yeah, if you start asking for seriously out there shit, like having your credit union keep your mortgage on the books, you do get much higher interest rates (as in, they’d make up a number. And it would probably be about 8-10%. No market means you can’t really shop around, remember?).Report

          • Avatar b-psycho in reply to Kimmi says:

            If they see a loan as too much of a risk to keep on their books, then they shouldn’t make that loan.Report

            • Avatar MikeSchilling in reply to b-psycho says:

              It’s not the risk of a particular loan, it’s the flexibility to move their money in and out of mortgages (or, to say it another way, in and out of long-term investments with specific terms).Report

              • The flexibility which then ballooned to hiding loans that shouldn’t have been made, mostly dealing with a horribly inflated market, in chunks then claimed to actually be of great loans, then passed around & multiplied until we got the crackup and making finance whole on the backs of us commoners.

                Screw flexible. I want boring, simple, & small.Report

        • Avatar greginak in reply to b-psycho says:

          We’ve had a house loan sold a couple of times without our knowledge. We just got a letter saying it was sold.Report

          • Avatar MikeSchilling in reply to greginak says:

            Us too, but I’m pretty sure we had to agree to that possibility when we got the initial loan. I know there was a disclosure form saying that the initial lender sold N% of its loans within a year.Report

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