Professor Bainbridge...on law, politics, religion, culture & food

I’d really love for the McCain to make a real economic case for his presidency, rather than all this Ayers stuff and other silliness.  Why isn’t he hammering this stuff?

#1 receive $165,000 over the course of 10 years.  In this day of million dollar campaigns, is that going to make such a difference?  If it is, then I would have to agree with McCain that we need campaign finance reform.

So, Prof. B, were Fannie/Freddie and their employees merely exercising their right to free speech.  Or were they buying access?  If it is the latter, will you call for campaign finance reform?

George Bush has been in office for 7 1/2 years.  The first six years the economy was fine.

A little while ago:
1. Consumer confidence stood at a 2 1/2 year high
2. Regular gasoline sold for $2.19 a gallon
3. The unemployment rate was 4.5%
4. The DOW JONES hit a record high--14,000 +
5. American’s were buying new cars, taking cruises, vacations overseas, living large!

But Americans wanted ‘CHANGE’!  So, in 2006 they voted in a Democratic Congress, and yep, we got ‘CHANGE’ all right. In the PAST YEAR:

1. Consumer confidence has plummeted
2. Gasoline is over $4 a gallon & climbing
3 Unemployment is up to 5.2% (over a 10% increase)
4. Americans have seen their home equity drop by $12 TRILLION DOLLARS & prices still dropping
5. 1% of American homes are in foreclosure.
6. THE DOW is probing 9,000; and $4.5 TRILLION DOLLARS HAS EVAPORATED FROM THEIR STOCKS, BONDS & MUTUAL FUNDS INV ESTMENT PORTFOLIOS!

YEP , IN 2006 AMERICA VOTED FOR CHANGE AND WE SURE AS HELL GOT IT!!!

NOW OBAMA AND POLLS SAY HE’S GONNA BE ‘THE MAN’, CLAIMS HE’S GONNA REALLY GIVE US CHANGE!!

JUST HOW MUCH MORE ‘CHANGE’ DO YA THINK YOU CAN STAND???....

TShaw, that’s really dumb.  The Democrats have done almost nothing since getting elected.  The most you could say is that their hike of the minimum wage bumped up unemployment.  The oil shortfalls and housing catastrophe have been building for a long long time.  You sound like the Dems who blamed Bush when the stock market bubble popped.  The building of the bubble is much more bothersome than the popping.

It’s not the current Democrats in Congress who caused the problem.  It’s those who were in power during the Clinton / Greenspan years.  “Community Reinvestment” is largely responsible for the collapse of the housing market.  However nobody is attacking this program for fear of being called a racist.  Fannie Mae and Freddie Mac are creations and symptoms of the real cause, not the cause itself.  Wall Street Execs living lavish lifestyles are scapecoats.  While these people may have much to answer for, keep in mind (1) golden parachutes didn’t cause this crisis and an occasional $40 million to an exec whose company is bought by the government, while obscene, is but a drop in the bucket and (2) without the ability to market sub-prime mortgages as securities community reinvestment would not have taken off unless the government backed the securities.  They didn’t and “Main Street” took the risk while our government in the 90’s bullied lending institutions into making these loans in the first place.

Chris,

If you are correct (which I doubt) that the policies in the late 1990s were the problem, certainly the four years of total Republican control of the government and six years of partial Republican control of the government was enough to change course.

The problems, IMO stem from a total lack of control of the market by government.  Businesses were encouraged (and are encouraged) to sacrifice long term stability for short term profit (thereby raising the income of corporate executives).  There is and was not adequate protection of shareholders.  That is, shareholders are not able to determine the true value of companies.  And this is a problem because the whole concept of publicly owned stock is based upon shareholders trusting the companies’ board of directors and management.

And there was no control over privately held corporations.  While I have little sympathy for those who owned the corporations, the fact that these companies can have an adverse impact on the economy begs for some sort of check on their power or some sort of oversight.

Capitalism on a grand scale has proven to have flaws.  One of those flaws is that, without strong regulatory oversight, the markets can, and do crash.  Strong regulatory oversight would soften the down cycles (with the negative effect of dampening the up cycles).

Prof B rails against oversight because of the cost associated with it.  Now we are seeing what costs we have without the oversight.

[W]ere Fannie/Freddie and their employees merely exercising their right to free speech.  Or were they buying access?  If it is the latter, will you call for campaign finance reform?

The employees have a Constitutional right to free speech.  But that doesn’t mean they have a Constitutional right to secret speech.  I have no qualms with campaign contributions (although if there are laws in place they should be followed—and later changed).  However, I believe that all such contributions should be publicized so that voters can decide their relevance.  That’s what the Professor is doing here.

The problems, IMO stem from a total lack of control of the market by government.

Are there more federal regulations or fewer regulations today than there were, say, in 1990 (as measured in pages of the Federal Register)?  How can you credibly argue that there’s “total lack of control” by the government when we have such a convoluted body of corporate law.

In fact, Fannie and Freddie had a specific governmental organization set up in ‘92 to audit them and only them.  There were 200 auditors putting in 40 hour weeks auditing Fannie and Freddie, and they never turned up anything until after the two went bust.  Then they immediately put out a 350-page report saying “here are all the problems we know about” ( http://www.marginalrevolution.com/marginalrevolution/2008/10/regulation-a-di.html ).

If those government auditors could handle two companies, how many auditors will we need to handle every company doing business in the US?  What kind of tax hike would be needed.

Then again, even the most libertarian people I’m familiar with concede that regulation is needed when the market isn’t completely free ( http://daviddfriedman.blogspot.com/2008/09/regulation-too-much-or-too-little.html ).  And particular regulations may be necessary to fix things ( http://www.coyoteblog.com/coyote_blog/2008/10/it-took-two-ing.html ).  But I have a feeling the wrong regulations will get the most support, and the government will continue its long streak of incredibly bad blunders.