If Martin had lived, even if he had thrown the first punch, could he have not stated he attacked because he was in fear of his life, having been followed by a stranger in a truck? A stranger he suspected to be armed? You know, Standing His Ground.
This is the reason that stand your ground laws _cannot_ make sense.
There is no possible resolution for _two_ people both in fear of their life. Neither of them have to retreat, and both of them can shoot each other, apparently. (This is why self-defense laws are fairly clear about the whole 'who started it' issue.)
We literally have a situation under the law where two people can legally shoot each other. I don't mean one of them can lie, I mean the law literally says that they can shoot each other. That is not 'law', that is frickin Thunderdome.
Of course, 'Stand Your Ground' laws are _actually_ intended for whites to use against minorities, not the other way around.
I guess whomever lives gets to claim self-defense against the other.
I believe the specific rule is that whoever is white gets to claim self-defense. I'm not sure of the exact law, but that's what it appears to be for me.
What was that other case in Florida about the same time? An abusive husband with a restraining order against him broke into a black woman's house, threatened her, and she shot him. (Didn't even kill him). These facts were not in dispute.
_She_ was arrested.(1)
Zimmerman, least we forget, _wasn't_ arrested at first, because the idiotic Stand Your Ground laws don't even let you _hassle_ people who shoot other people by arresting them, which is the most insane law I've ever heard of.
1) Frankly, if you shoot someone under _any_ circumstances, you probably should end up under arrest, even if you don't end up being charged. The problem wasn't that she was, the problem was Zimmerman wasn't.
I don't think I was very clear. The premise is $100 a year, _or_, alternately, we offer them $1000 once, for the first year they're signed up, with no more payments ever, and then _leave their choice in place_ unless they went and changed it after that first year...which almost no one would do. (Especially if you have to go do it in person.)
Basically, there's almost no resistance to being an organ donor by ~80% of the population. There's just no _incentive_ to it either. Pay them to sign up for a single year, leave that choice in place by default, and even with the ability to remove themselves after the year they were paid for, almost no one would. (1)
But the sanest method is, of course, to simply sign everyone up and they can opt-out if they want...and for some reason, the public is horrified at this idea, despite generally being in favor of organ donation. I can't quite figure out why.
(Also, $1000 a year a person isn't that much, but that's beside the point, because we don't need to pay that much.)
1) Mainly because it is patently immoral to remove yourself. It is possible to justify not signing up in the first place via conspiracy theories or some sort of vague religious objection. But it's not really possible to be okay with it _for money_ but not for free, or they have to conclude they just did something immoral for money, or something very dangerous for money, which people don't want to do. Once people have decided to do it, they're mostly morally trapped unless they can invent some _new_ justification.
Oh, and I'm not meaning to call _you_ paranoid, Kazzy.
I'm just pointing out that the people who think that already have no knowledge of how doctors work, as evidenced by their crazy imaginings, so are unlikely to believe any hypothetical safeguards.
(I assume that, under your plan, if they change their mind about kidney donation, they basically just pay the $1k back?)
We can either do that, or we can do something like offering people $100 for each year.
Or, frankly, I think if we just offer people $1000 dollars for a single year's promise to donate them, and that stayed as 'donate' afterward unless they went and changed it, no one would bother changing it.
Of course, what we _actually_ should do is simply make it opt-out. Someone suggested that the government should just take them, and I don't actually see why not. We actually _forbid_ people from keeping bodies and body parts. They are something you are required by law to either bury them in the ground or incinerate. They are _literally_ trash. They have no value to the 'owner' at all. And the owner is dead anyway.(1)
Take them automatically, let people opt out if they've got some religious or moral objection, and problem solved.
The problem is, no one would actually do that.
1) An argument can be made that you do not actually own your body anyway after you die. You did not create it, so it's like any other naturally occurring object. If you pick up a stick on public land, you 'own' that stick if you _keep_ it, but if you leave it laying somewhere in public and someone else picks it up, you can't come back and assert ownership over it. Well...the same thing applies to your body if you just leave it laying around. It's only _your_ body while you're in possession of it. Especially since, unlike a stick, you can't have _any_ expectation of returning to pick it back up, because the government actually pays people to wander around and pick up stray bodies for disposal.
There already are safeguards like that in place. (Although it's more like no one knows the donor status before the patient dies, because, uh, why would that be relevant?)
The idea that doctors would behave that way is actually rather absurd. Doctors are judged by how many of their patients _don't die_. The idea that they would let some of their own patients die so some other guy would do a surgery so the organs could be used for some random patient...that's paranoia ravings totally separate from how doctors actually work.
Doctors barely have time to actually do their job, they can barely keep track of their _own_ patients. They don't have time to figure out which of them should die so that some other patient of some other doctor can live.
It's sorta like worrying that firefighters might own stock in home insurance companies, and then direct fires _away_ from those properties and towards properties insured by other companies. That...is not a plausible failure mode of firefighters, which generally attempt to stop _all_ fires that they are fighting, and scarcely have time to even _know_ any of that stuff.
Yeah, I'm pretty sure we settled this. Pay people $1000 or whatever to sign up to be organ donors. Everyone would do it in college.
And while some people asset that still wouldn't be enough donations for kidneys, I have to ask...so?
Let's do the thing without possible dangerous repercussion now, before we do the dangerous thing that might backfire horrible. Until we've actually _done_ the safe thing, and it has _failed_, we've got no business debating the dangerous thing.
You guys are leaping to crossing the streams before you tried to trap the ghost like normal. You're trying to break down the door before you checked if it was locked.
Let's try the 'Pay people to agree to donate upon their death' plan before we get to the 'Pay people to donate while still alive' scheme.
And, as an added bonus, this _doesn't require any changes in Federal law_. A state could do this right now. Some states, already, technically do this, although my state has decided that my hypothetical saving of multiple people's life upon my death is worth a grand total of $7 off my driver's license....oh, no, wait, I checked that since last time I talked about this and they actually _stopped_ that back in 2005.
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.
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.
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?
“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_.
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.
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.
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.
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.)
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!
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.
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!
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'.
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.
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!
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'.
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.
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.
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.
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.
*Comment archive for non-registered commenters assembled by email address as provided.
On “Trayvon Martin, the criminalblackmale”
If Martin had lived, even if he had thrown the first punch, could he have not stated he attacked because he was in fear of his life, having been followed by a stranger in a truck? A stranger he suspected to be armed? You know, Standing His Ground.
This is the reason that stand your ground laws _cannot_ make sense.
There is no possible resolution for _two_ people both in fear of their life. Neither of them have to retreat, and both of them can shoot each other, apparently. (This is why self-defense laws are fairly clear about the whole 'who started it' issue.)
We literally have a situation under the law where two people can legally shoot each other. I don't mean one of them can lie, I mean the law literally says that they can shoot each other. That is not 'law', that is frickin Thunderdome.
Of course, 'Stand Your Ground' laws are _actually_ intended for whites to use against minorities, not the other way around.
I guess whomever lives gets to claim self-defense against the other.
I believe the specific rule is that whoever is white gets to claim self-defense. I'm not sure of the exact law, but that's what it appears to be for me.
What was that other case in Florida about the same time? An abusive husband with a restraining order against him broke into a black woman's house, threatened her, and she shot him. (Didn't even kill him). These facts were not in dispute.
_She_ was arrested.(1)
Zimmerman, least we forget, _wasn't_ arrested at first, because the idiotic Stand Your Ground laws don't even let you _hassle_ people who shoot other people by arresting them, which is the most insane law I've ever heard of.
1) Frankly, if you shoot someone under _any_ circumstances, you probably should end up under arrest, even if you don't end up being charged. The problem wasn't that she was, the problem was Zimmerman wasn't.
On “Putting a Price on Kidneys”
I don't think I was very clear. The premise is $100 a year, _or_, alternately, we offer them $1000 once, for the first year they're signed up, with no more payments ever, and then _leave their choice in place_ unless they went and changed it after that first year...which almost no one would do. (Especially if you have to go do it in person.)
Basically, there's almost no resistance to being an organ donor by ~80% of the population. There's just no _incentive_ to it either. Pay them to sign up for a single year, leave that choice in place by default, and even with the ability to remove themselves after the year they were paid for, almost no one would. (1)
But the sanest method is, of course, to simply sign everyone up and they can opt-out if they want...and for some reason, the public is horrified at this idea, despite generally being in favor of organ donation. I can't quite figure out why.
(Also, $1000 a year a person isn't that much, but that's beside the point, because we don't need to pay that much.)
1) Mainly because it is patently immoral to remove yourself. It is possible to justify not signing up in the first place via conspiracy theories or some sort of vague religious objection. But it's not really possible to be okay with it _for money_ but not for free, or they have to conclude they just did something immoral for money, or something very dangerous for money, which people don't want to do. Once people have decided to do it, they're mostly morally trapped unless they can invent some _new_ justification.
"
Oh, and I'm not meaning to call _you_ paranoid, Kazzy.
I'm just pointing out that the people who think that already have no knowledge of how doctors work, as evidenced by their crazy imaginings, so are unlikely to believe any hypothetical safeguards.
"
(I assume that, under your plan, if they change their mind about kidney donation, they basically just pay the $1k back?)
We can either do that, or we can do something like offering people $100 for each year.
Or, frankly, I think if we just offer people $1000 dollars for a single year's promise to donate them, and that stayed as 'donate' afterward unless they went and changed it, no one would bother changing it.
Of course, what we _actually_ should do is simply make it opt-out. Someone suggested that the government should just take them, and I don't actually see why not. We actually _forbid_ people from keeping bodies and body parts. They are something you are required by law to either bury them in the ground or incinerate. They are _literally_ trash. They have no value to the 'owner' at all. And the owner is dead anyway.(1)
Take them automatically, let people opt out if they've got some religious or moral objection, and problem solved.
The problem is, no one would actually do that.
1) An argument can be made that you do not actually own your body anyway after you die. You did not create it, so it's like any other naturally occurring object. If you pick up a stick on public land, you 'own' that stick if you _keep_ it, but if you leave it laying somewhere in public and someone else picks it up, you can't come back and assert ownership over it. Well...the same thing applies to your body if you just leave it laying around. It's only _your_ body while you're in possession of it. Especially since, unlike a stick, you can't have _any_ expectation of returning to pick it back up, because the government actually pays people to wander around and pick up stray bodies for disposal.
"
There already are safeguards like that in place. (Although it's more like no one knows the donor status before the patient dies, because, uh, why would that be relevant?)
The idea that doctors would behave that way is actually rather absurd. Doctors are judged by how many of their patients _don't die_. The idea that they would let some of their own patients die so some other guy would do a surgery so the organs could be used for some random patient...that's paranoia ravings totally separate from how doctors actually work.
Doctors barely have time to actually do their job, they can barely keep track of their _own_ patients. They don't have time to figure out which of them should die so that some other patient of some other doctor can live.
It's sorta like worrying that firefighters might own stock in home insurance companies, and then direct fires _away_ from those properties and towards properties insured by other companies. That...is not a plausible failure mode of firefighters, which generally attempt to stop _all_ fires that they are fighting, and scarcely have time to even _know_ any of that stuff.
"
Yeah, I'm pretty sure we settled this. Pay people $1000 or whatever to sign up to be organ donors. Everyone would do it in college.
And while some people asset that still wouldn't be enough donations for kidneys, I have to ask...so?
Let's do the thing without possible dangerous repercussion now, before we do the dangerous thing that might backfire horrible. Until we've actually _done_ the safe thing, and it has _failed_, we've got no business debating the dangerous thing.
You guys are leaping to crossing the streams before you tried to trap the ghost like normal. You're trying to break down the door before you checked if it was locked.
Let's try the 'Pay people to agree to donate upon their death' plan before we get to the 'Pay people to donate while still alive' scheme.
And, as an added bonus, this _doesn't require any changes in Federal law_. A state could do this right now. Some states, already, technically do this, although my state has decided that my hypothetical saving of multiple people's life upon my death is worth a grand total of $7 off my driver's license....oh, no, wait, I checked that since last time I talked about this and they actually _stopped_ that back in 2005.
On “Let the Character Assassinations Begin”
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.
"
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.
"
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?
"
“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_.
"
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.
"
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.
"
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.
"
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.)
"
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!
"
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.
"
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!
"
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.
"
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.
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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!
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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'.
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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.
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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.
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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.
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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.
*Comment archive for non-registered commenters assembled by email address as provided.