The libertarian response to Weisberg's strawman is inspiring.
Carl Oberg
· 1 year ago
My favorite part was when he listed some libertarian-leaning explanations for the crisis and then dismissed them as not being able to explain the crisis. How's that, Mr. Weisberg?
Selfreferencing
· 1 year ago
You should add to this post to include Yglesias's ridiculous and subtly arrogant similar view.
Christopher Monnier
· 1 year ago
> You should add to this post to include Yglesias's ridiculous and subtly arrogant similar view.
I think David Boaz hit the nail on the head when (before Yglesias wrote the post to which you're referring) he pointed out that the totalitarian nature of Communism meant that Communists got what Communists wanted. Fortunately, America is not a totalitarian state, so the same is not true for libertarians. What libertarians want will never be what libertarians get, because by definition libertarian policies will have to go through the grinder mill of a democratic government.
jeebus
· 1 year ago
Enjoy irrelevance!
I mean, even greater irrelevance than before.
Libertarians! You guys are so cute.
John V
· 1 year ago
irrevelance?
Now THAT'S cute....and incredibly naive. Remember that all the liberals' and the conservatives' ideas are basically a mish-mash of many libertarian and even more anti-libertarian ideas.
Sadly, most liberals and conservatives claim their greatest libertarian achievements as their own. Thankfully we have had many victories in social and privacy issues in favor of the individual over the passions of control-freaks and meglomaniacs in society (mainly against liberals and conservatives). Sadly we've not fared as well on the economic front. A few small victories but not nearly enough....just look at the headlines.
Jorge Landivar
· 1 year ago
Sadly we've not fared as well on the economic front. A few small victories but not nearly enough....just look at the headlines.
Come now, free market ideas are now the norm instead of the exception to the norm, we have come a long way in the last 40 years,... we still have a long way to go however.
GilM
· 1 year ago
Thanks!
I've enjoyed irrelevance up until now, and I hope you relevant people will permit me to continue to do so.
If relevance means being a "useful idiot" to the latest politically successful mob, I'd much rather be irrelevant.
John V
· 1 year ago
hehehehe
Greg N.
· 1 year ago
Gil, that picture looks like the "Write-In Party" candidate on SNL. That isn't bad; just sayin'.
Whenever I am accused of something outrageous, I concede the damn thing. "You know, you're right, I eat children by day and rape villages by night... " Everyone laughs, realizes the lunacy and, perhaps with an additional prod or two, proceeds to a more respectable level of debate.
"You know, Jacob Weisberg, you're right..."
webgrrl
· 1 year ago
Um, ok, boiz. But seriously. Didn't we all stop reading Slate long ago? i mean, a loooong time ago?
Here we've talked about the seeming 4 main failure points that caused this cow to tip. One of them was the mysterious question of why the rating agencies - completely sober-sided for about 80 years - suddenly rated every piece of radioactive waste as if it were Tiffany platinum.
It seems like a major problem was that too many were reliant on the software of an agency to rate securities that were too complex for the rating to be verified independently. That, coupled with corporate political fear of delivering massive bad news as soon as it was discovered led to catastrophe. It was a giant system with a single point of failure that failed.
It doesn't seem like a failure of regulation or of deregulation. Just human error, bad judgment, and people who didn't know how to directly value what they were trading.
I don't think more upfront regulation would have avoided much of this, though.
Regulators and rigid rules wouldn't have been any smarter than the interested parties.
webgrrl
· 1 year ago
Yes, it seems like issues with the credit rating software, too little time to rate complex instruments (to examine a tranched CDO in 90 minutes in craziness!), a push to create revenue by getting fees from the sellers of the CDO - basically they are paying you to give ratings, that's clearly a conflict of interest right there.
Note that these issues arose only once the agencies had gone public. The investment banks and agencies used to be private companies, which meant they couldn't be pressured in certain ways, ways the agencies were clearly pressured. Maybe the old system could work only if these two vital entities remained private? That the pressures of public ownership generated the behaviors that drove them mad.
If we would issue any regulation here, it would be that instrument sellers cannot be allowed to pay agencies for ratings. The agencies have to be neutral and independent. Again, this has nothing to do with whom is Democrat, GOP, libertarian or Whig.
Weisberg just doesn't understand the business process of the market at all and so can't actually diagnose the real problem. But I find this in many commentators, actually. A lot of people are talking thru their hats without learning about the CDO business in depth.
webgrrl
· 1 year ago
And from the testimony & documents released today about the rating agencies: the cow IM!
Incredible. In which two quants from Standard & Poors admit the ratings model is broken and that they don't want to rate an instrument. I suspect some gentlemen will spend quality time in jail for this. Look guys we're talking fraud here, I think. Not anyone's political philosophy.
This type of behavior is not unusual. In fact it can get much worse. During the Tech bubble people actually believed in the ridiculous stories they came up with to justify stock valuations.
I think though that you can't just blame the rating agencies. The banks aren't stupid. They knew that the ratings didn't make sense. In fact I think a very large number of people have known for a very long time the ratings did not make sense. A lot of people where just fooling themselves and/or going along with the madness of the crowd.
Mr. Econotarian
· 1 year ago
I think ratings problem was the ignorance of systemic risk. CDOs came from trying to avoid random, occasional mortgage repayment and default risk. The CODs turned an anonymous risky mortgage into a less risky pool. The thought that the entire world of real estate might come crashing down and default rates rise to incredible levels were not addressed.
Ratings aren't magic crystal balls. If nuclear weapons were dropped on major cities in the US, you also would also expect systemic risk even on bonds from (pre-nuked) solid companies which are rated AAA. Of course, if you knew the nukes were in the air, you should not have rated them AAA...
The question is should Moody's have known "the nukes were in the air" regarding the housing bubble.
B_
· 1 year ago
I like how libertarians are simultaneously irrelevant and responsible for Everything Wrong with the World.
Bilwick
· 1 year ago
Has there ever been a time when statists didn't want the pro-freedom folks to just shut up and go away, hopefully never to return? The first Pharoah probably told the Egyptians, "That freedom stuff might have been okay when we were simple cavemen, but now you need divine beings--like me! (Weisberg could have been his Dathan: "Nyaahhh, you mugs--where's yer freedom nowwww?") Back before that the boss caveman probably told the others, "Well, sure, freedom might have sounded good when we swinging in trees, but since that monolith showed up we need to have someone strong in charge--namely, me! 'Cause I got the biggest club!" If the recent financial crisis had never happened, do you think Wesiberg and the other State-shtuppers would be saying, "Oh, okay-, things are going fine--I guess we don't need statism now"? Like heck they would. People who like the idea of imposing their will on others--or their masochistic dupes who like being dominated--will always be around hoping people will surrender gracefully, in hard times or good times. And when it's good times, they'll find a way to turn them into hard times.
GilM
· 1 year ago
Matt Welch made a pretty good reply to the Weisberg piece as well.
GU
· 1 year ago
Epic FAIL
MarkySparky
· 1 year ago
I've been a fan of Will for a few years, but the punt return paragraph has made me a confirmed groupie.
All Comments
AHAHA!
I think David Boaz hit the nail on the head when (before Yglesias wrote the post to which you're referring) he pointed out that the totalitarian nature of Communism meant that Communists got what Communists wanted. Fortunately, America is not a totalitarian state, so the same is not true for libertarians. What libertarians want will never be what libertarians get, because by definition libertarian policies will have to go through the grinder mill of a democratic government.
I mean, even greater irrelevance than before.
Libertarians! You guys are so cute.
Now THAT'S cute....and incredibly naive. Remember that all the liberals' and the conservatives' ideas are basically a mish-mash of many libertarian and even more anti-libertarian ideas.
Sadly, most liberals and conservatives claim their greatest libertarian achievements as their own. Thankfully we have had many victories in social and privacy issues in favor of the individual over the passions of control-freaks and meglomaniacs in society (mainly against liberals and conservatives). Sadly we've not fared as well on the economic front. A few small victories but not nearly enough....just look at the headlines.
Come now, free market ideas are now the norm instead of the exception to the norm, we have come a long way in the last 40 years,... we still have a long way to go however.
I've enjoyed irrelevance up until now, and I hope you relevant people will permit me to continue to do so.
If relevance means being a "useful idiot" to the latest politically successful mob, I'd much rather be irrelevant.
But, I don't really see the resemblance.
"You know, Jacob Weisberg, you're right..."
Here we've talked about the seeming 4 main failure points that caused this cow to tip. One of them was the mysterious question of why the rating agencies - completely sober-sided for about 80 years - suddenly rated every piece of radioactive waste as if it were Tiffany platinum.
The Financial Times comes through. In all fairness, I detect nothing political about this point at all.
It seems like a major problem was that too many were reliant on the software of an agency to rate securities that were too complex for the rating to be verified independently. That, coupled with corporate political fear of delivering massive bad news as soon as it was discovered led to catastrophe. It was a giant system with a single point of failure that failed.
It doesn't seem like a failure of regulation or of deregulation. Just human error, bad judgment, and people who didn't know how to directly value what they were trading.
I don't think more upfront regulation would have avoided much of this, though.
Regulators and rigid rules wouldn't have been any smarter than the interested parties.
Note that these issues arose only once the agencies had gone public. The investment banks and agencies used to be private companies, which meant they couldn't be pressured in certain ways, ways the agencies were clearly pressured. Maybe the old system could work only if these two vital entities remained private? That the pressures of public ownership generated the behaviors that drove them mad.
If we would issue any regulation here, it would be that instrument sellers cannot be allowed to pay agencies for ratings. The agencies have to be neutral and independent. Again, this has nothing to do with whom is Democrat, GOP, libertarian or Whig.
Weisberg just doesn't understand the business process of the market at all and so can't actually diagnose the real problem. But I find this in many commentators, actually. A lot of people are talking thru their hats without learning about the CDO business in depth.
Incredible. In which two quants from Standard & Poors admit the ratings model is broken and that they don't want to rate an instrument. I suspect some gentlemen will spend quality time in jail for this. Look guys we're talking fraud here, I think. Not anyone's political philosophy.
This type of behavior is not unusual. In fact it can get much worse. During the Tech bubble people actually believed in the ridiculous stories they came up with to justify stock valuations.
I think though that you can't just blame the rating agencies. The banks aren't stupid. They knew that the ratings didn't make sense. In fact I think a very large number of people have known for a very long time the ratings did not make sense. A lot of people where just fooling themselves and/or going along with the madness of the crowd.
Ratings aren't magic crystal balls. If nuclear weapons were dropped on major cities in the US, you also would also expect systemic risk even on bonds from (pre-nuked) solid companies which are rated AAA. Of course, if you knew the nukes were in the air, you should not have rated them AAA...
The question is should Moody's have known "the nukes were in the air" regarding the housing bubble.
If the recent financial crisis had never happened, do you think Wesiberg and the other State-shtuppers would be saying, "Oh, okay-, things are going fine--I guess we don't need statism now"? Like heck they would. People who like the idea of imposing their will on others--or their masochistic dupes who like being dominated--will always be around hoping people will surrender gracefully, in hard times or good times. And when it's good times, they'll find a way to turn them into hard times.
Plus, he's a fellow Iowan!