Iowa’s attorney general said yesterday that he will bring criminal charges over the foreclosure scandal. But most of the press doesn’t have the news.
Yves Smith of Naked Capitalism picks up on this story, as does The Huffington Post and HousingWire.
But the only mainstream media coverage it got was in the Des Moines Register and Reuters.
This is a story the rest of the press might want to report. The ante just got upped a bit on this scandal.
This isn’t necessarily just another politician blowing smoke. BusinessWeek put the longtime AG, Tom Miller, on its cover a couple of years ago with the headline “They Warned Us About the Mortgage Crisis.” He and other state attorneys general tried to crack down on predatory lending but were preempted by the Bush administration. And he’s heading up the joint investigation by all fifty states into the scandal. It’s worth following what he has to say.
Especially when it’s “we will put people in jail.”
That’s also notable, since as we discussed last week, no major executive has gone to jail for the financial crisis and its fallout. It’s unclear, of course, if Iowa will be able to prosecute executives or just the low-level employees who implemented the fraud. (UPDATE: I’m told that Miller’s office says he was indeed just talking about low-level employees and not bank executives.)
Reuters:
Iowa’s attorney general, who is leading a nationwide probe of questionable home foreclosures, met struggling homeowners on Tuesday and said he may bring criminal charges in his state.
“We will put people in jail,” Iowa Attorney General Tom Miller said, referring to cases in his state he plans to prosecute with the U.S. Attorney in southern Iowa…
“Meeting face-to-face with people who have been caught up in this terrible foreclosure mess has only strengthened my resolve to get to the bottom of it and make the system better,” said Miller.
And the Des Moines Register, which misses the “we will put people in jail” quote:
Miller’s office said it’s working on a partnership with the U.S. attorney’s office in Iowa’s Southern District to jointly investigate criminal mortgage fraud cases.
This one’s worth watching.
Well, I'm confused. Is this a "stunt" or not a "stunt"? It was a "stunt" when the Department of Justice *actually* brought charges against some of the so-called small fry because they haven't yet charged any of the major players with criminal violations, even though it is legitimately questionable whether the actions of the major executives were criminal, as opposed to morally reprehensible. Not only that, it was a "stunt" that "backfired."
But here, the Attorney General of Iowa calls a press conference promising to "put people in jail" in a proposed wide-ranging investigation in partnership with the US Attorney -- oh! the irony! -- even though it is questionable whether he has the standing to bring criminal charges against the high level executives. Why is this *not* a stunt, then?
If I were a media critic, I'd take you task for egregious inconsistency, Mr. Chittum.
#1 Posted by James, CJR on Wed 15 Dec 2010 at 01:23 PM
I don't think so, James. The DoJ twisted, stretched, and inflated numbers to make its press release look better. That's a stunt.
We don't yet know whether the Iowa AG is full of it. I explained a bit why it's not just another politician blowing smoke and why his statement is news.
#2 Posted by Ryan Chittum, CJR on Wed 15 Dec 2010 at 02:04 PM
Really? Because Miller was on the cover of Business Week? Well I wish him well and lots more of that “we will put people in jail” stuff. Let's hope it's not just blowing smoke.
As to your derisive "Stunt" story, your link to Naked Capitalism bolsters my major complaint with that post:
Yves Smith says "One concern I have is that the standard for fraud under the law, as opposed to from a common-sense perspective, is stringent, which means it is extremely difficult to prove. Remember Joe Cassano of AIG, the head of AIG’s financial products group? An investigation of him did not lead to prosecution, effectively because he has discussed what he was up to with AIG’s accountants. Fraud, as defined under the law, requires intent. So perversely, “I thought this was kosher” will get you out of a fraud charge. "
Remember you were complaining that the DoJ hadn't even investigated big fry and it was a "stunt" that they had only gotten convictions against "small fry." My argument was that it is hard to prove the elements of a actual crime by the big execs, and premature indictments could blow up in their faces.
I'd also say that "twisted, stretched, and inflated numbers" is your spin and not fact. Financial Fraud Enforcement Task Force was organized back in 2009 and it grew out of a Bush Administration initiative. So in that light, their numbers aren't as screwy as you and Sorkin make them out to be., let alone twisted and stretched.
Not to say that the press release wasn't oversold. It was a mistake to call it a "sweep." I only wish that Weil, Sorkin, and you had been this diligent with the prior administration, especially the highly politicized Bush Department of Justice. Like when Miller "and other state attorneys general tried to crack down on predatory lending but were preempted by the Bush administration." We maybe could have avoided this mess altogether. Where were you guys back then?
#3 Posted by James, CJR on Wed 15 Dec 2010 at 03:18 PM
What is predatory lending? An oxymoron?
A predator acts against the victim's will.
A lender loans to a borrower because the borrower consented.
The real predators are found in the chambers of D.C. and the boardrooms of the Federal Reserve: they are the policymakers, the central planners, the wealth destroyers, the easy-money schemers, the "regulators."
#4 Posted by Dan A., CJR on Wed 15 Dec 2010 at 03:39 PM
So a con artist isn't a predator, Dan? A con often works with the victim's will, often directing it to further the scam. That's not predatory? Because that's what all of these financial companies did during the Bush/Clinton era. They scammed their clients.
And that's the defining characteristic of predatory lending. Exploding interest rates, unaffordable principles, false information of what the client can afford and what the client is signing up for, big bonuses on the day of the close.
The economy was a giant Mel Brookes movie for 10 years
http://en.wikipedia.org/wiki/The_Producers_(1968_film)
and it's not so funny when it's your f'in money.
#5 Posted by Thimbles, CJR on Wed 15 Dec 2010 at 06:05 PM
Hello, Thimbles. I have been conned before, so I know what it's like to wrongfully be parted from my "f'in money." But a con artist can not force you to sign a contract against your will, absent the threat of indomitable force behind it. In which case, a violent criminal act has occurred. In any case, buyer beware: read the contract carefully before signing.
#6 Posted by Dan A., CJR on Wed 15 Dec 2010 at 07:24 PM
And high interest rates reflect the high risk of lending to borrowers who would not otherwise be approved for the loan. Or, do you expect a lender to merely break even or lose money in the long term?
#7 Posted by Dan A., CJR on Wed 15 Dec 2010 at 07:35 PM
If fraud occurred, then it should be prosecuted. But if no law, regulation, etc., was necessarily violated, and thus the alleged con-predator was not prosecuted, then the borrower should look at the system by which the alleged predator was able to carry out the alleged predation. This, ultimately, will lead the alleged victim to the central gang of predatory con-artists in D.C., and its moral hazard-laden system of laws and "regulations."
(Sorry for the three separate replies. This highly flawed system would not post my full response until I figured out how to reword the second paragraph to its liking.)
#8 Posted by Dan A., CJR on Wed 15 Dec 2010 at 07:44 PM
These contracts aren't designed to be read. People don't know what they are signing (which is why they rely on the broker) and in those circumstances they should avoid the credit market altogether - it's what I did and I'm doing all right.
But "Buyer Beware" is no excuse for a sellers to offer bad products under dishonest guises. Telling minorities who qualify for prime that they have to accept subprime, telling them they have a fixed rate when ARM terms are buried in the contract, using high pressure sales tactics to ensnare vulnerable people into debts they cannot repay, this is not a benign lender.
At least the pay day lenders are up front about their terms and people have the choice to walk away based on a sound understanding of the arrangement they are getting into. Predatory lending doesn't do that. They sell a misrepresented product which lures consumers into relationships which beat them to death.
Consumers should know better, but that doesn't excuse the lenders predatory conduct which is what you seem to be doing.
#9 Posted by Thimbles, CJR on Wed 15 Dec 2010 at 08:03 PM
"Telling minorities who qualify for prime that they have to accept subprime, telling them they have a fixed rate when ARM terms are buried in the contract, using high pressure sales tactics to ensnare vulnerable people into debts they cannot repay, this is not a benign lender."
Agreed: it is not benign. Still, it is not necessarily reason to prosecute the lender if the lender did not breach the terms of the contract, no matter how deeply buried the terms were. And who do you think sets the rules which compel the lender to offer loans to vulnerable (high-risk) borrowers in the first place? Federal regulators!
Now, I certainly sympathize with the weak and vulnerable, especially when they are lied to. In my locality, such a shady dealer would be sniffed out by word of mouth and eventually investigated if not ultimately prosecuted. Meanwhile, the con artist would lose business to ethical proprietors.
"Consumers should know better, but that doesn't excuse the lenders predatory conduct which is what you seem to be doing."
No. You and I are not far apart in principle. We agree that fraud should be prosecuted. If we disagree at all, it is in how to deal with the issues, and perhaps who is ultimately to blame for the systemic ills. I say that the more the feds intervene via regulations, interest rate manipulation and so on, the worst it gets for everyone. Everyone, that is, except the feds and their industrial cronies.
#10 Posted by Dan A., CJR on Wed 15 Dec 2010 at 10:08 PM
"Still, it is not necessarily reason to prosecute the lender if the lender did not breach the terms of the contract..."
or breach terms of the law, which they did, which was why state DA's and consumer advocates tried to stop them but were shut down by.... Federal Regulators! The Bush administration claimed jurisdiction over multi-state banks shutting down much of the ability for states to protect themselves (I know, real conservative of the Bushies) and then proceeded to help out the banks while ignoring the systemic risk they were creating. So you're right, federal regulators were responsible but not because they were pushing the banks to lower their underwriting standards (they weren't pushing banks at all, not even to pay their FDIC dues) but because they weren't doing their jobs. (Please don't do the CRA myth stuff. It's been shot down so many times here
http://www.cjr.org/the_audit/audit_interview_michael_hudson.php
and elsewhere that it's giving good writers carpal tunnel syndrome.)
But yeah, again we differ. You say that the more the feds intervene via regulations.. the worst it gets for everyone. I say the feds intervened? Since when? They wrote laws preventing intervention.
http://www.pbs.org/wgbh/pages/frontline/warning/
It wasn't new deal style legislation / regulation that sunk the economy, it was the repeal of it. Predators take advantage of their prey's weakness and for 30 odd years we've had mammoth regulatory weakness.
#11 Posted by Thimbles, CJR on Wed 15 Dec 2010 at 11:42 PM
Some types of fraud do not require intent. For example ...
constructive fraud
: conduct that is considered fraud under the law despite the absence of an intent to deceive because it has the same consequences as an actual fraud would have and it is against public interests (as because of the violation of a public or private trust or confidence, the breach of a fiduciary duty, or the use of undue influence)
For other possibilities, see
http://dictionary.lp.findlaw.com/scripts/results.pl?co=dictionary&topic=30/30871e2ed1b1e92ab87cbd4c809d8c7c
#12 Posted by Louis Paul Hebert, CJR on Thu 16 Dec 2010 at 09:54 AM
URGENT need for Lawmakers to act! Scores of HOMEOWNERS DO NOT CONTEST FORECLOSURES BECAUSE:
1. They don't have knowledge of the law in order to recognize which aspects of foreclosure are legally challengeable or even fraudulent.
2. And even those who identify wrongdoing lack funds to pay for attorneys to represent them.
3. Homeowners are told to come to foreclosure auctions with $$$$$$$ that they do not have, SO THEY STAY AWAY from foreclosure auctions.
These homeowners are oblivious about sometimes "straw buyers" and sometimes lawyers in charge of foreclosures, obtain ILLEGAL ownership of people's homes; and pay literally nothing through "credit bids;" and that those recorded deeds from such auctions are null! For these very reasons, there needs to be a probe of lawyers who file foreclosures. http://chn.ge/eU2zAm
Also, the average lay person doesn't know about legal REQUIREMENTS of "standing" that prevents their homes from being repossessed via non-existent lenders or via lenders which have no ownership of promissory notes.
Yet, COURTS ARE SUPPOSED TO ENFORCE STANDING and compliance with established laws! Illegal, defective, fraudulent foreclosures are the cause of useless property deeds for real estate sales; title insurance companies refuse coverage on foreclosed properties –and more!
Further, after certain foreclosure auctions (via simulation) result in fraudulent – NOT LENDER ACQUISITIONS, by lawyers or straw buyers, the common scenario becomes property flipping, neighborhood blight, rodents, and so on!
*Sample of fraudulent foreclosure acts:
–Deliberately use defunct lenders, lenders without “standing” for false civil and bankruptcy foreclosure proceedings.
– Create and conceal malpractice foreclosure delays and engineer billable litigation.
– Orchestrate sham foreclosure auctions; property never acquired by lenders, but 'straw buyers’
– Commit actionable wrongs (unfair debt collection, fraud, various torts) that create lawsuits
– Self-dealing foreclosures which certain lawyers themselves obtain foreclosed properties for flipping.
–Foreclosures naming defunct lenders, illegally recorded property deeds, flipping, blighted communities.
– Unconscionably create false deficiency judgments against property owners after straw buyers acquire homes for pennies on the dollar.
– Intentionally false BANKRUPTCY COURT “Motion to Lift” and “Proof of Claim” on behalf of non-existent lenders which conceals fact of “NON-SECURED” mortgage debt.
–Involved in fraudulent collection of property damage insurance, as well as mortgage-default insurance.
–Fraudulent foreclosures abet loss of property taxes to city revenue, rodents, vagrants
– Thousands of families made unlawfully homeless from null foreclosure proceedings.
Foreclosure lawyers are officers of the court. Lawyers are required to know applicable laws and civil procedure; this knowledge is not required from mortgage lenders, nor loan servicers. Lawyers are the ones who file those inadequate or questionable foreclosure which lead to useless property deeds and impediments to real estate sales; title insurance companies reluctance to cover foreclosed properties; mortgage default claims disputes due to defective foreclosures.
*MORE info: Request for Congressional Foreclosure Panel to Examine Foreclosure Lawyers
http://www.change.org/petitions/view/request_for_congressional_foreclosure_panel_to_examine_foreclosure_lawyers#
#13 Posted by Barbara Ann Jackson, CJR on Thu 16 Dec 2010 at 12:02 PM
After years and years of failed regulations, you get those "conservatives" who come around with their supposed panacea of "deregulation." In the overall scheme, this regulation and deregulation really amount to "gaming the system." This is the "moral hazard" of federal intervention. When the feds step in, it ends up benefiting certain groups while hurting everyone else. And when the feds come back to supposedly correct the problem with deregulation or more regulation, the results are the same or worse. It's the system that is flawed: a system of federal intervention in which politicians and bureaucrats and regulators have arbitrary power to decide who can do what, in spite of moral, constitutional, or practical limitations. Professor Michael Rozeff addresses the moral and practical flaws here.
#14 Posted by Dan A., CJR on Thu 16 Dec 2010 at 03:29 PM
"When the feds step in, it ends up benefiting certain groups while hurting everyone else."
As opposed to what? Circumstances of life being as they are, things which benefit some people impact others differently. The moral hazard when have in unregulated markets is the same moral hazard we have in Stanford Experiments -
http://www.youtube.com/watch?v=cMoZ3ThW6x0
Give people power without check and people will behave in terrible / horrible ways. Separate people's actions from consequences and you will get criminogenic environments in which bad behavior is rewarded. The government is supposed to be a check upon economic actors such as business and banks. The press and the electorate are supposed to be a check upon the government. Libertarians believe in a fairytale world where rational, perfectly informed consumers act in accordance with their interests and check the market. They don't.
If we are to follow the logic of your link and assume that the government does not have the expertise to manage the nation's complex economic affairs, then how can we then assume that individual consumers do? Therefore, if no one is qualified to manage the world's economic affairs but guys like Jamie Dimon, then no one exists to check Jamie Dimon or the other masters of the universe. They own the world, we're just living in it. That's what we've seen for thirty years, more or less:
http://www.youtube.com/watch?v=QTcL6Xc_eMM
That's not the way it was after New Deal legislation brought about 50 years of financial stability, prosperity, and a healthy middle class. Friedman and Hayek have failed in every place they are tried because they believe markets are machines needing no maintenance, no inspections. Consumers can inspect for themselves.
Everywhere it's tried, including in America under Randroid Greenspan's careful gaze, it has failed. And the libertarian approach to these failures is not to blame the institutions for fostering and encouraging a criminogenic environment, not to blame the predators for exploiting a criminogenic environment, but to blame consumers for not being smart enough to avoid the criminogenic environment they live in. It may be Jamie Dimon's world, but don't ever blame Jamie Dimon and don't ever suggest rules to govern Jamie Dimon's behavior.
Sorry, but that is not a productive approach.
#15 Posted by Thimbles, CJR on Thu 16 Dec 2010 at 08:22 PM
Thimbles, you put Dr. Zimbardo's thesis well, and I admire the root-level moral-ethics perspective. Thanks for the reference, and hear hear.
But you actually advance my moral and practical sentiments when you squarely nail the state (and that state-crafted, evil-encouraging environment): "Give people power without check and people will behave in terrible / horrible ways. Separate people's actions from consequences and you will get criminogenic environments in which bad behavior is rewarded."
Whether you intended to, there you also defend individual liberty, de-centralization and free-enterprise. Ever since Hamilton et al. "won" against the anti-Feds, the trend for the United States has been toward more centralization, more FedGov power, everywhere.
And who among us is living in a "fairytale world"? When the primary ethic is to firstly do no harm, the Feds can preserve life, liberty and prosperity by not acting. (How many wars have been truly necessary, or fruitful?). Only the govt has that much power: more than enough power to create the "environment" encouraging wanton evil (as Dr. Z. might put it), and get away with it. The U.S. govt commits economic and military war globally, violating liberties everywhere. Its central bank and its subsidiaries "fund" the foreign and domestic "initiatives" with the help of the govt's other taxes (including "regulations"). Is that not the ultimate in mass-predation? Whatever you'd call it, it's antithetical to free-market capitalism, and destructive of a free and just society. Id rather say that those wanting more of this are the ones dealing in fairy tales.
And while it's reasonable to say that Friedman's vision of capitalism has failed where it has been tried, the influence of Friedman (the supposed "hero" — again, borrowing from your source) was predictably overpowered by the state (the "evil") and the state-crafted "environment." The govts were nothing if not highly centralized, anti-market, anti-libertarian designs wherein only the regimes enjoyed free trade and free association. So it was ripe for failure, not unlike the situation in today's USA. I agree with both Noam Chomsky's and the Austrian economists' criticisms of Friedman's designs.
Finally, here is where you and I differ philosophically: "The government is supposed to be a check upon economic actors such as business and banks. The press and the electorate are supposed to be a check upon the government. Libertarians believe in a fairytale world where rational, perfectly informed consumers act in accordance with their interests and check the market."
I rather say the govt exists to protect (defend, uphold) our liberties; that the Several States (and yes, the press and electorate) exist to check the federal govt; that the market is not just a system but is every individual voluntarily engaging in free and consensual association; and that libertarians tend to believe that the market checks the individual aggressor and, esp., the state mass-aggressors, much more effectively, expediently and ethically than the central ruling monopoly. Simply put: I have more faith in individuals and voluntary groups, than the federal govt, when addressing societal ills, esp. in the wake of the govt's incomparable, ill-causing violence and compulsion.
(Aside: FDR's statism was anything but good for working folks and overall prosperity, and there are numerous reasons (e.g., the ill effects on the poor and minorities); you don't have to be a libertarian to oppose central planning and statism; neither Hayek nor Friedman believed that "markets [need] no maintenance, no inspections"; I never knew that "guys like Jamie Dimon" are "qualified to manage the world's affairs"; and who, but the criminal and his defenders, would "blame consumer
#16 Posted by Dan A., CJR on Fri 17 Dec 2010 at 08:08 PM
I should add this 4-minute video, which best explains our root differences here.
( http://www.youtube.com/watch?v=PGMQZEIXBMs )
#17 Posted by Dan A., CJR on Fri 17 Dec 2010 at 08:40 PM
Okay, got some time on my hands so here we go:
"Whether you intended to, there you also defend individual liberty, de-centralization and free-enterprise."
No, I defend individual liberty as far as it respects the values of the group - and vice versa (unique circumstances demand nuanced judgement), I support de-centralization which includes the break up of monopolies and colluding industries, and I believe in regulated enterprise because unregulated enterprise has unregulated and catastrophic results. And what we have seen in the last 30 years, especially in the last ten, is a break down in regulation. This resulted in powerful people operating without check and powerful people's actions being separated from their consequences. Remember, none of the powerful people responsible for this massive fraud epidemic have paid for it in jail time and only a few have paid a pittance in fines. The government doesn't have the resources these days to prosecute the mighty as they deserve.
http://www.democracynow.org/2010/7/16/goldman_sachs_settles_civil_fraud_case
They can't even get them to admit they did anything wrong. America has weak government. Wall Street and the financial sector has centralized the power.
http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/
"When the primary ethic is to firstly do no harm, the Feds can preserve life, liberty and prosperity by not acting. (How many wars have been truly necessary, or fruitful?). Only the govt has that much power: more than enough power to create the "environment" encouraging wanton evil (as Dr. Z. might put it), and get away with it. "
The primary ethic of a doctor is "do no harm". Governments, societies, and business have different priorities. If someone raped my wife while a police officer whistled dixie, I would not be praising this representative of the government for "doing no harm" when the situation required it.
And let's all be clear here. Liberals were the first ones to break with government during the Bush years and it was an awful lonely task. Conservatives supported Bush administration tactics and lies and fight any measures to demand any accountability for them. Libertarians were awful quiet during the Bush years, with the exception of Ron Paul occasionally. I do not believe in an unaccountable government, on the contrary I believe in a transparent government requiring the informed consent of the governed to operate. That has not been the primary ethic of the security state conservatives.
"Whatever you'd call it, it's antithetical to free-market capitalism"
Free market capitalism is antithetical to democracy. Democracy functions based on the will of the people. Free market capitalism functions based on the will of the purchaser. One system enumerates power based on the accumulation of votes and popular support, the other based on the accumulation of money. I will take democracy over free market capitalism any day.
Part 2 in a bit.
#18 Posted by Thimbles, CJR on Sat 18 Dec 2010 at 10:06 AM
"And while it's reasonable to say that Friedman's vision of capitalism has failed where it has been tried, the influence of Friedman (the supposed "hero" — again, borrowing from your source) was predictably overpowered by the state (the "evil") and the state-crafted "environment.""
No, Friedman fails because it benefits, very disproportionately, people with money. When a minority of people assume the majority of power, the society breaks apart. Citizens become like the prisoners in the Stanford Experiment, they are subjected to the whims of the powerful without their consent. In a country Friedman economics is tried in, the people with money aren't necessarily even from the country. They're members of a global financial elite:
http://www.commondreams.org/views05/1212-20.htm
completely removed from the consequences of their actions. They encourage strong police oriented governments to protect their property + investments and weak "laissez-thieve" governments to prevent "bureaucratic interference" with their profit focused activities.
http://transcripts.cnn.com/TRANSCRIPTS/1011/08/ps.01.html
"TAIBBI: Well, I think what they've done is they've -- there are -- people in America have a lot of frustrations about government, they have a lot of frustrations about regulation. You talk to these people -- I've talked to Tea Partiers who own hardware stores and restaurants and they're upset about things like health inspectors and ADA inspectors and these little nuances that they see as being government intrusion, but they conflate that with regulation of these giant banks like Goldman Sachs and JPMorgan/Chase and they think it's the same thing. And what they've managed to do is convince all these Americans to campaign for deregulation of these massive companies under the banner of, "let's get the government off our back."
PARKER: But the Tea Party's actually doing the work, the legwork for the big banks, how does that happen? How did they not know that that's what they're doing? TAIBBI: Well, I think it was an organic process. I mean, people who say that the Tea Party isn't a grassroots movement, I think, are incorrect. I think in some respects, it is a grassroots movement. They were organized around a lot of local issues, but there were also powerful interests, the Koch brothers and other financiers, once they saw this movement happening, were more than willing to push it along and give it the energy and the resources that they needed to spread around the country.
SPITZER: You know, again, I want to quote you, because I think your words are just so good, and it comes to the title of the book, you say, and it comes back to what you just mentioned -- "There are really two Americas, one for the grifter class and one for everyone else. In everyone else land, the world of small businesses and wage- earning employees, the government is something to be avoided. In the grifter world, however, government is a slavish lap dog to the financial companies that will be the major players in this book use as a tool for making money."...
TAIBBI: It's a completely -- two completely different worlds. The world of, you know, the small business owner who has to deal with small government intrusions, these small regulations and this other world that exists in the stratosphere where Goldman Sachs and JPMorgan/Chase and other guys who are on the phone with these guys who used to work in their companies and they're basically making the rules of the game as they go along"
The weak government also useful as it takes people's eyes of the real criminals while they reduce the population to desperation, an excellent state for people to be in while you negotiate with them.
Friedmanite economies are unstable and they inevitably break down in spite of gov
#19 Posted by Thimbles, CJR on Sat 18 Dec 2010 at 10:55 AM
"I never knew that "guys like Jamie Dimon" are "qualified to manage the world's affairs"; and who, but the criminal and his defenders, would "blame consumers" for the state-crafted, crime-encouraging environment?"
Numero Uno: It wasn't state crafted, let's remember who was in charge when all this blew up, eh? George Bush and the deregulation posse. He usurped state regulations and regulators while pulling regulations off the books and assigning industry lobbyists as regulatory leaders. Libertarians, however, never miss an opportunity to blame government while absolving bankers. If the government brought a stop to bad bank activities, Libertarians would scream "Overreach!" and "The state is a big bully!" If the state doesn't prevent a crash, libertarians scream "Why didn't you stop this, Government! "
Numero 2: "Not me, and no self-styled libertarians I have known."
I hate to do this:
"What is predatory lending? An oxymoron?
A predator acts against the victim's will.
A lender loans to a borrower because the borrower consented."
In your words, it's the consumer's fault.
"I should add this 4-minute video, which best explains our root differences here.
( http://www.youtube.com/watch?v=PGMQZEIXBMs )"
Basic propaganda that pretends that taxation is the same as violence and that maintaining the commons for all has no individual benefit.
(Man pays cartoon taxes, tax revenue pays for cartoon medical school, man nearly dies when his heart seizes, man delivered to cartoon doctor who saves him life. Man retires on disability because of heart, doctor's wages deducted to pay for Man's social security)
gotta run
#20 Posted by Thimbles, CJR on Sat 18 Dec 2010 at 11:29 AM
Thimbles, your arguments actually promote greater centralization of power as a means to affect change. This is where we differ. And though it may be an irreconcilable difference in the short run, I feel compelled to defend my position nonetheless.
"It wasn't state crafted, let's remember who was in charge when all this blew up, eh? George Bush and the deregulation posse."
In other words, the state (D.C. power monopoly) was in charge. Or, are you claiming that U.S. presidents and regulators are private-sector actors? (Perhaps you misinterpret my use here of the term state to mean TX, CA, et al.)
"I defend individual liberty as far as it respects the values of the group ..."
Individual liberty and collectivism are naturally opposed. Individuals voluntarily joining and forming groups is another thing; your idea here, however, supports the forced grouping of individuals, an idea that opposes liberty.
"I support de-centralization which includes the break up of monopolies and colluding industries ..."
But you support centralization of power for the largest and most indomitable power monopoly of all: D.C. (More central power to regulate personal behavior equals more centralization of [monopoly] power.)
Monopoly can only exist and thrive with the collusion of govt and industry, via law-making, "regulation," "subsidies," and other corporatist govt system-gaming.
"And what we have seen in the last 30 years, especially in the last ten, is a break down in regulation. This resulted in powerful people operating without check and powerful people's actions being separated from their consequences."
Another excellent argument against federal manipulation (intervention). I repeat: More central power to regulate personal behavior equals more centralization of (monopoly) power. Central planning does not work; that is, unless the goal is to decimate individual liberties, destroy wealth, protect favored industry from competition and failure, and concentrate power to the govt-connected few at the expense of everyone else. I repeat: The trend since the founding has been more concentration of power to D.C. (What has been the ratio of regulations to deregulations over time? A thousand to one? Greater?)
"Wall Street and the financial sector has centralized the power."
No. 545 people in D.C. ultimately centralize the power. Wall Street can only influence the decision of whether and how to rule and regulate. Congresspeople do not have to go along with the desires of lobbyists, but they do because they love the monopoly power and perks. But this is what you get when the central govt is allowed to egregiously (e.g., unconstitutionally) intervene in the first place.
"The primary ethic of a doctor is "do no harm". Governments, societies, and business have different priorities. If someone raped my wife while a police officer whistled dixie, I would not be praising this representative of the government for "doing no harm" when the situation required it."
Here, you imply that govt is above moral law, and misunderstand the concept of "do no harm." Govt's job is to defend life and liberty — e.g., do not pass laws which prevent women from carrying pepper spray, tasers or guns.
"Liberals ... Conservatives ... Libertarians ... [S]ecurity state conservatives."
You are stuck on superficial partisan dichotomies. The root-level philosophical and political battles, throughout history, have been The Individual v The State, Individuality v Collectivism, Liberty v Authoritarianism.
Dem v Rep and lib v con are convenient ways in which the all-powerful state is able to keep the focus off the core struggle, to convince the people that the state is the savior when in fact it is the biggest violator of human rights.
And you are wrong to say that "libertarians were awful quiet" during Bush
#21 Posted by Dan A., CJR on Sat 18 Dec 2010 at 10:33 PM
"In other words, the state (D.C. power monopoly) was in charge."
There's a difference between being in charge and taking charge. You can't claim something is state crafted when the state did no acts to craft and ensured no one did who tried to act as regulatory hand to hold the invisible one back before it smashed everything.
The banks did this to themselves.
You could make an argument that the Federal Reserve, led by libertarian Greenspan and his neo-classical economic staff - ala Ben Bernanke, assisted in this by prolonging a interest rate drop, but nobody forced them to abuse the easy credit (and not all of them did http://www.cjr.org/the_audit/subprime_didnt_have_to_be_a_di.php ) and no one restrained them either. The attitude of that era was laissez-fraud.
And again, the only people questioning this back in the day were liberals like me and organizations like ACORN. Everybody else was focused on Freddie and Fannie and their "interventions in the market" while Wall Street swallowed it up.
"Individual liberty and collectivism are naturally opposed. Individuals voluntarily joining and forming groups is another thing; your idea here, however, supports the forced grouping of individuals, an idea that opposes liberty."
Wrong. Liberties can be achieved through collective process and liberties can be trampled by individual control. We have the freedom to share information on a medium that was created by tax payer dollars and evil government. Individual entities have ever since sought to control that freedom and make it proprietary, make it censored, make its access tiered towards the players who can pay for better service. Your knowledge of Atlas Shrugged doesn't make you a philosophy expert or a master of economics. It sure didn't do it for Alan Greenspan at any rate.
I got to run, but I leave you with a question which you have not answered to my knowledge.
I believe in counterbalanced powers. I believe in the divided government with which American government checks itself (ideally speaking, though lately the influx of conservatives with the belief in a unitary executive _ so long as he's white and republican _ is distressing).
When power has no check, it becomes destructive. I believe that the electorate and the consumer act can act as a check upon the government and free market, but in circumstances where they don't, corruption finds easy footing.
I believe you cannot rely on individual conscience to check the potential of corruption, especially when people are being taught that the individual is sacrosanct and that greed is good.
So how do you deal with situations like this:
http://www.youtube.com/watch?v=Kd0SuDuxqQY
If you believe political power has no role in checking the reach of private power, what should act as a check upon private power when the consumer can't (or won't)?
Vigilante power?
The problem with doctrinaire libertarianism is that they believe that the market is some sort of deistic system that will naturally and rationally operate at producing the most optimal outcomes without oversight or direction. They refuse to recognize information asymmetry and absolve the market of blame when it falls out of control, which it invariably does as I mentioned before.
Market power needs a check, and if you deny the role of political power than you've left a void that requires filling. Who, in your mind, checks the invisible hand?
#22 Posted by Thimbles, CJR on Sun 19 Dec 2010 at 07:52 PM
The market is the best regulator, and the "Gasland" issue (like all the other issues you bring up) proves it.
-- The producer of "Gasland" himself declined the $100,000 from the gas company. Instead, he smelled a rat and decided to inform his fellow Americans of the possible dangers. Now, thanks to the free flow of information (a.k.a., free market), property owners will be better informed as to the wisdom of taking the $100,000. After all, it wasn't the federal govt that produced "Gasland"; it was a private actor, using the free market to spread what he considers news beneficial to the general public. And my critique of his work is one way the free market sifts out the frauds and such. Meanwhile, you're still wondering why the feds just can't seem to prevent the alleged mistreatment of landowners by drilling companies. Good luck with that.
-- What do we know about the status of any of the land-owners' lawsuits against the drilling companies? If in fact the companies violated law or committed fraud, then we'll know the true extent of culpability, and who's in bed with whom. No?
-- According to the same federal govt you have so much faith in, the drilling companies are required by federal law to inform landowners of the dangers, including a list of the chemicals used in the process. And if this did not happen, then landowners should claim breach of contract, and perhaps sue them. Or, if your faith in the feds is justified, the landowners can wait around for the feds to prosecute their corporate buddies for fraud.
-- It appears the producer of the documentary conveniently omits, distorts, and invents facts. (See: "Debunking 'GasLand'" and this ABC story.)
-- Do you really trust the historically wasteful, corrupt, corporatist federal govt — the same govt that allegedly allowed the gas companies to operate allegedly unethically — to fix the alleged problem here? Seriously though.
If you want to honestly debate the role of govt, fine. But it's useless for me to go back and forth with someone who claims that when the govt acts and fails, it is not the fault of the govt — someone who claims that the govt didn't really act and that it was rather the fault of free market capitalism, when in fact the market has been in an ever-tighter central-planning straight jacket since the Republic was founded. You claim that I have not answered a question, but what about all the above points at which the self-contradictions in your arguments were in full view? You simply found a way of diverting the debate, lumping me into political molds to which you ascribe fantastical beliefs. Every issue you have posed thus far demonstrates, at its core, a failure of extra-constitutional federal action and central planning. Yet, in every instance, you push for more central-govt control over personal choices and the flow of goods and information. Amazingly, you castigate libertarians for their visions of a world where people are not coerced and controlled by Big Brother at every turn. I have thus far tried to address your points down to the root, but this is the last time I will seriously entertain your diversions. Cheers.
#23 Posted by Dan A., CJR on Wed 22 Dec 2010 at 09:47 PM