And yes, obviously there has been a fair bit of intervention already (though presumably as you know the Federal Reserve doesn’t technically act as a government body).

I WOULDN’T call…….

You need to give this show a little time to play out. it does take a while for cases to get to court. This isn’t Law and Order repeats you know. Stop being so impatient :-)

I would exactly call judicial actions government intervention.

Anyways you have just had government intervention with the Fed’s actions over Bear Stearns as well Opening the Fed window to investment banks junk paper.

Take advantage of it by buying bonds issued by US banks or investment banks as theyre trading at very attractive yields. Since the Bear Stearns bailout bond and debt holders now have an implicit US government guarantee. And therefore risk reward wise it can’t get better than that. Just thank Uncles Ben and Sam for the gift.

It just isn’t poor families by the way. There were lots of people taking spec positions buying numerous houses at a time using dodgy info on their low doc loan applications and the brokers were lying. it was purposeful deliberate fraud in numerous cases as a Deutsche bank research paper points.

Here:

The speculation numbers reported by the WSJ are almost beyond belief. About 20% of mortgage fraud involved “occupancy fraud,” or borrowers falsely claimed they intended to live in a property, according to an analysis by BasePoint Analytics, a provider of fraud-detection solutions in Carlsbad, Calif. Another study, by Fitch Ratings, looked at 45 subprime loans that defaulted within the first 12 months even though the borrowers had good credit scores. In two-thirds of the cases, borrowers said they intended to live in the property but never moved in. The lenders knew this was happening and did nothing to proactively prevent it. Home builders have reached similar conclusions.

http://www.princeofwallstreet.com/2008/02/19/speculation-and-fraud-in-mortgage-lending-turning-a-blind-eye/

It’s a blog run by some young kid investment banker.

If so much illegal dealing was going on anyway, then its as good as being a basically unregulated market.

Funny, but in the old days we called that fraud.

The subprime lending cluster bomb was mostly about government intervention.

The US housing market is actually quite interventionist with a number of agencies involved in mortgage lending causing all sorts of market distortions In fact its far, far more interventionist than ours.

There is a wide perception that FHLMC securities are backed by some sort of implied federal guarantee, and a majority of investors believe that the government would prevent a disastrous default. Vernon L. Smith, 2002 Nobel Laureate in economics, has called FHLMC and FNMA “implicitly taxpayer-backed agencies.” [2] The Economist has referred to “[t]he implicit government guarantee”[3] of FHLMC and FNMA.

Freddie Mac is leveraged at over 30:1

The Fed left interest too low for too long thereby causing some fairly significant credit mis-pricing.

They were kept between 1% and 2% for about 3 years in the early part of the decade. Talk about monetary mismanagement by the Fed.

There was also the little discussed intervention by Federal authorities including the bloody Fed and other agencies such as the HUD coercing and later demanding that banks stop their “racist” lending practices (in the late 90s) as they were turning down a high number of minority loan applications. This had the effect of loosening up lending standards.

Take all these factors together and this becomes another example of people calling market failure when muddleheaded intervention and bad policy paves the road to hell.

In practice, markets in this globalized world are often dominated by major actors who when they get things wrong, trigger destruction that is not often creative at all. And then get bailed out by taxpayer money.

That is not free markets, that is political interference. Regulation of private enterprises often permit corrupt and fraudulent businesses hide between compliance. When private organisations fail, politicians who have long taken credit for the good times, seek to offset the damage of private bad decisions through bailouts and other rent seeking enabling activities. I do not advocate this at all. When the state shows a propensity for interference, it can legitimise excessive risk taking, such as what recently occured in the UK with Northern Rock.

The economy is bigger than any actor, including the state. However, it is only the state that has the power to coerce all players, and change the playing conditions.

I speak as someone who once, with a bunch of others, jammed all Channel 9 TV reception in the Melbourne CBD for about 45 minutes with footage of Sterlac dangling by flesh hooks from a crane to the tune of Roger Whittakers Dang Me, They Oughta Take A Rope And Hang Me interspersed with me reading generic news in a balaclava. Boy, did the cops turn up fast to put a stop to that little prank. Never caught us though and the Herald-Sun later blamed it on TISM – who never issued a denial, the sneaky credit-seizing bastards.

That was you? Best. Prank. Evah. I dips me lid!

Lerner was an architect and his successors have included 3 urban planners and 1 civil engineer who have continued on with the good work.

Rather than cynically gripe about the hopelessness of central planning I think it would be more profitable to learn from those few who have achieved excellence.

That might be worth a post down the track with a bit of debate/discussion thread that may be digested by others.

I’m happy to suggest some starting points.

Simply, that when individuals, or even groups of individuals act independently to each other, their ability to innovate and manage risk is enhanced, and on the flip side, when individuals and groups of individuals get things wrong, the impact is generally less because the market provides alternatives and will renew the mismanaged capital through creative destruction and renewal.

Absolutely right…in theory. In practice, markets in this globalized world are often dominated by major actors who when they get things wrong, trigger destruction that is not often creative at all. And then get bailed out by taxpayer money.

Exhibit A: The subprime fuckup.

When centrally planned economies go wrong you end up with rations and queues.

As opposed to foodstamps and mortage foreclosures?

Look I’m all for free markets and capitalism (which are two discrete and distinct entities) which are now delivered the most incredible wave of prosperity, creativity and opportunity in human history.

But they are processes and tools not blind ideologies and value-free visions.

Take a look at the media laws and see if you can make head or tail of them? Some of the sections actually contradict each other.

Yep, they’re a total mess. Decades of Governments of all stripes pandering to, panicing about and pissing around with powerful media interests and new technologies have turned it all into a complete dog’s breakfast.

Personally I think Australia’s media laws should take up no more than about five pages of single-spaced 12 point Times New Roman. Mainly dealing with what areas of the electromagnetic spectrum should be quarantined off for emergency and essential services traffic. And of course for mobile phone companies and wifi providers.

Beyond that, open slather I reckon. I’m really looking forward to interrupting everyone within a 1 km radius watching “Sixty Minutes” with a pirate TV broadcast. It’s surprisingly easy to do techwise. Just the fines for interrupting sanctioned commercial use of the airwaves are stiff and rigorously enforced.

I speak as someone who once, with a bunch of others, jammed all Channel 9 TV reception in the Melbourne CBD for about 45 minutes with footage of Sterlac dangling by flesh hooks from a crane to the tune of Roger Whittaker’s “Dang Me, They Oughta Take A Rope And Hang Me” interspersed with me reading generic news in a balaclava. Boy, did the cops turn up fast to put a stop to that little prank. Never caught us though and the Herald-Sun later blamed it on TISM – who never issued a denial, the sneaky credit-seizing bastards.

Media anarchy for all!

They do screw up, N. Aboriginal affairs has been a mess for the past 30 years. Take a look at the media laws and see if you can make head or tail of them? Some of the sections actually contradict each other.

The problem with the free market is that it is based on the assumption that market players are absolutely rational decision makers whose capabilities of reasoning and memorizing are unlimited.

There is a utilitarian argument that is pro-market that recognises that voluntary transactions between individuals to be preferable to coerced transactions. Simply, that when individuals, or even groups of individuals act independently to each other, their ability to innovate and manage risk is enhanced, and on the flip side, when individuals and groups of individuals get things wrong, the impact is generally less because the market provides alternatives and will renew the mismanaged capital through creative destruction and renewal. When centrally planned economies go wrong you end up with rations and queues.

Actually, there is another point in which I disagree with you as well, since individuals do not need to have full knowledge in which to make a decision because they are part of a market. They can take their cues for making a decision based on the actions of others, with a major information marker being price.

The problem with the free market is that it is based on the assumption that market players are absolutely rational decision makers whose capabilities of reasoning and memorizing are unlimited.

I wouldn’t argue that. markets explains exchange between people. And why would you think government action is more rational?