The View From 1776

Nanny Krugman

A New York Times propagandist believes that the political state must supervise conduct to compel social justice.

Posted by .(JavaScript must be enabled to view this email address) on 10/27 at 11:35 PM
  1. Krugman is spot on.

    He is not necessarily asking for the bailing out of people who have been irresponsible in their borrowing practices, as The View is suggesting. What he is asking for is a protection from the HIDDED predatory practices that take direct aim at these people. And these practices have also snared unsuspecting so-called responsible people. It is like having government protection from tainted food and drugs, which we all want.

    The state has to "supervise conduct to compel social justice". The View is not really against this because, even it will agree, otherwise we would be living in the Wild West. What The View is really arguing about is how far should the state go in this endeavor.
    Posted by .(JavaScript must be enabled to view this email address)  on  10/28  at  01:33 PM
  2. David, I didn't see where he is calling for a bailout of anybody, lender or borrower. I did see he is asking for more regulation and that can be done at the state level. Keep the federal government out of lending except for FDIC money. Many of the loans were "subprime" loans that came from all kinds of lenders and many of the buyers of the packaged loans were definitely duped and those who were "foreign" buyers would seem to fall under the Federal Government's role of "monetary and trade" policies.

    The U.S. has been hurt by these loans. Foreign lenders are now reluctant to loan us money and this nation depends on foreign loans for personal loans, corporate loans and federal loans. Not that the loans will completely fade, but they will be withheld from many who could and would be responsible borrowers.

    So, on much of this, I have to agree with David and Krugman that regulation is needed but, I also have to wonder if there wasn't violations of laws as well as the violations of ethical lending that took place. I am not thinking as much of the home owner's bad choice since anyone with a sixth grade education can figure interest rates and know that the amount of a payment in the early years is mostly interest. And, what sixth grader wouldn't know that doubling the interest would virtually double the payment? Also, why would someone take a loan with a prepayment penalty when most homes are sold within a few years for various reasons.

    That end of it reflect the mentality of a nation of people who have become so dependent on government they can't act responsibly on their own. I got a loan during that "bubble," for new home and was offered all the choices and opted for a fixed rate (higher rate) with no prepayment and 25% down to avoid even a low down payment fee.

    That said, 100,000's of loans were made to illegal immigrants using a TID who didn't have the education to know what they were doing. So, not only did we loan to an illegal, we took advantage of them as well. That is another sign of a sick nation where its individuals believe that unethical behavior is OK as long as it isn't against the law. More laws isn't the solution, however. We have the right to have them, no doubt, but, the solution has to be a nation that has a culture that "hates" and espouses that "hate" for unethical behavior.

    Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.
    John Adams

    What he meant here is not "church going." He was referring to the self-discipline, ethics, and "love of fellow man" that has to exist even with or without laws, if a nation is to be truly free.

    For example, while it is obvious now that some regulation at the state and possibly more is needed at the federal level to protect our nation from people who will take advantage of illegals and foreign lenders who don't have our courts to resort to (we may be able to bring a "class action," against these lenders even in the absence of regulation). Still, it is our own government that allowed TID's to be used for home purchases without a proof of legal residency. So, first, our own government needs some "regulation."

    However, Madison said something else that applies here.
    A well-instructed people alone can be permanently a free people.
    James Madison

    We have to return to being a nation that gives children the common sense skills needed to live in a society with the least amount of regulation as possible because that regulation comes with a price.
    According to a 2001 U.S. government report entitled "The Impact of Regulatory Costs on Small Firms," companies spent roughly $800 billion annually on federal compliance issues before Sarbanes-Oxley was even drafted.

    If the citizens of this nation can't function without the government regulating every aspect of their lives, they will find their tax burden so high they can't pay for their basic needs eventually. The wealthy will be able to but, the majority of the people won't be able to. As a result, they will try to shift that burden to business and the wealthy who they believe can afford it but, they will either leave, find a way to protect their wealth or "drop out," and become one of the "masses" that looks to others to care for them. That, of course, is normal in a nation in decline where the people themselves are the root cause of the decline.
    Posted by JanPBurr  on  10/28  at  06:46 PM
  3. They become part of a self-fulfilling prophecy. The more they need from government, the more they depend on it and the more it costs them and the more it costs them, the more they need from it. Eventually, their standard of living suffers as we have seen over the last 50 years or so. Now it takes two workers to provide what one could provide then. Now, our social program spending has grown so high, our infrastructure is all rated at "C," "D," or "F," and getting rapidly worse. And since we are tapped out as tax payers, we are borrowing more to pay for what we spend on. That is causing taxes to have to rise due to rising interest on debt. AND, there is no workable solution being found by Congress to turn that trend around. In fact, many now are beginning to believe no workable solution prior to a complete economic collapse where even social programs will go wanting for funds, can be found by any Congress. We may have passed the point of "no-return," and yet, more government is being sought, and in this case, may actually be needed based on the type of people we have borrowing and lending money in a sick nation.

    So, if we need more laws, it is because we have a nation so sick that even with the laws, we won't find "protection." A "crook" can always find a way to "scam" somebody. "A fool and his money are soon parted" and that is true with or without laws.

    If we can no longer let market forces work, states and local governments regulate what can and can't be done, and are so unethical in our thinking that we not only "loan" unethically, but borrow unethically (lie on the forms about income, seek something for nothing type deals, etc) then our nation doesn't stand a chance of surviving as a "great nation" and "land of opportunity for much longer.
    Posted by JanPBurr  on  10/28  at  06:54 PM
  4. The liberty endowed human individual requires freedom to succeed, which requires a similar aspect of freedom - to fail.

    When representative government fails to protect priority freedom, and thereby imposes its control, the definitive in human nature is abused, and cannot succeed - good usury intentions not withstanding.

    Freedom to choose requires individual choice and personal responsibility. Any other alternative is anti-human. To what purpose and end?

    A brother's keeper is a successful jailer.

    semper fidelis
    vincit veritas
    Posted by Jim Baxter  on  10/28  at  07:06 PM
  5. I agree with you Jim but, remember, this nation was a "nation of law," and while we tried to limit laws that infringed on the "freedom of opportunity," we certainly had all kinds of laws regarding business and morality and social behavior.

    "Monetary policy," was one of the most important areas of "law," to our founders. It was important because without regulation, it could actually impede opportunity. Even when we moved to "factional banking," we set limits on lending to 10 times what was actually held. Thus a bank with $1 million could lend $10 million because that ratio was believed to never jeopardize the banks ability to handle the normal daily deposits and withdrawals of cash by its clients. Whether that was good or not, doesn't negate the fact that we have always regulated lending in this country.

    In todays, "unethical" world we have a huge problem with our "monetary policy," in that we are leveraged not 10 to 1 but thousands to one on these loans. They threaten the entire monetary system of the U.S. We are facing a collapse of our currency, in part, because of these loans. If the foreign lenders stop buying our debt, our nation goes into default basically. Our dollar's value could drop to where it takes not $1.44 to buy a euro or $1.04 to buy a Canadian dollar (or the goods they would buy) but even 1,000 U.S. dollars to buy a euro or Canadian dollar. The world is filled with history of exactly that happening with currencies that lose the faith of the people in that currency.

    We are talking about
    In its latest survey, the Bank of International Settlements (BIS) calculates that the total "notional" value of all derivatives outstanding in the world is a mind-boggling $415 trillion.

    That's over eight times the GDP of the entire world economy
    Posted by JanPBurr  on  10/28  at  07:32 PM
  6. The thing is the present administration grew lax in enforcing existing laws or just ignored them. Krugman is asking for the government to do the policing that is on its books. He is not asking for new regulations. He is also ask for the restoration of of regulations to protect people that were discarded by law makers in Congress and this administration.
    Posted by .(JavaScript must be enabled to view this email address)  on  10/28  at  09:38 PM
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