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Just For The Record

I made a crack in comments the other day that the market was tanking in anticipation of an Obama election. Some may have taken it seriously, but it was a joke.

I do think that markets react to potential election outcomes in general, but in this case, I suspect that there are much deeper issues going on, and given that John McCain has shown himself to be (as he has confessed in the past) as clueless on the economy and economics as Barack Obama, there's probably not much street preference one way or the other. The folks in the pits are probably not even thinking about the election at this point.

While I'm not a conservative, I sure wish that there was at least one in the race, in terms of the economy.


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Jason Bontrager wrote:

I'd like to think that McCain, knowing that he's ignorant, would take an "anything I try is likely to make things worse" approach. I'm pretty sure that Obama would take an "I am The One, and I'm Smarter than You, so I'll fix the economy while I lower the ocean levels and scrub all the Carbon out of the air!" approach.

Guess which one I have more faith in?

Mark Horning wrote:

What the markets like is stability. Stability generally means one party in charge of congress and the other with the presidency.

As far as markets are concerned Gridlock = Good

Rand Simberg wrote:

I'd like to think that McCain, knowing that he's ignorant, would take an "anything I try is likely to make things worse" approach.

I'd like to think that too, but the empirical evidence so far doesn't support the theory.

Mike Gerson wrote:

So what would a conservative do about the financial crisis?

Bill Maron wrote:

From Forbes

"Over 70 percent of CEOs fear an Obama presidency will be a disaster."

Works for me.

Mike Gerson wrote:

"Over 70 percent of CEOs fear an Obama presidency will be a disaster."

Excellent news. Given the public sentiment about CEOs right now, Obama could use this in an ad. Thanks Bill.

What would a conservative candidate propose as a solution to the financial crisis?

ken anthony wrote:

What would a conservative candidate propose as a solution to the financial crisis?

Let bad investments and those that make them fail. This is a feature, not a bug. Punishing failure and rewarding sound investments is what is supposed to happen. Interfering with that is what leads to massive systemic failure, which is what we may soon see.

Get rid of the democratic slush fund known as the CRA and any other legislation like it.

Anyone that voted for the bailout is not a conservative, regardless of their protestations.

While we were married, my ex-wife bought two homes as investments just before the bubble burst. She is still living in one, lost the other, and reality is setting in.

The good thing is, with no money down, it was not as expensive a lesson as it could have been. This will be true for everyone else that has their home foreclosed and goes back to renting (and saving for a home they can afford which was the tradition before the democrats whipped up the buying frenzy.)

Jeff Medcalf wrote:

I started to reply to Mike, but it became way too long for a comment, so it's at Eternity Road instead.

ken anthony wrote:

Great post Jeff, excellent coverage of the issues. Myself, I wouldn't consider Hamiltonians to be conservatives assuming they were to take the actions you've outlined (I agree they would and do.) Certainly a populist like McCain isn't.

I think the most important point you made is that things are worth what someone is willing to pay for them; so when the government steps in they make things worse when the free market would have taken care to resolve the issue in the most efficient (least painful and quickest) manner.

Mike, I read almost the same article a few days ago. I'm not particularly interested in the blame game. I am interested in the use of tax payers money as a slush fund for political activism, which is what Fannie and Freddie were to a very large extent (billions of the trillion or so.)

The fact is, when money and greed are involved, lot's of blame can be spread; however, the prime source of blame can go to those that think tax money can and should be used for social engineering. Both parties involve themselves in this, but one party far exceeds the other... I'll give you a hint...

"Affordable housing"

How do these elected idiots make housing more affordable? By improving everyones standard of living and encouraging savings?...

Or by using both the carrot and the stick, make bad loans or we close your bank and also let us buy up those risky loans so you can make even more of them.

Oh, and make loans to people that have signed a paper saying they only get the loans if they register to vote and volunteer to take five community actions that we will specify.

Karl Hallowell wrote:

One thing that bothers me here is there are calls for "more regulation", but what sort of regulation?

Mike, you wrote:

Excellent news. Given the public sentiment about CEOs right now, Obama could use this in an ad. Thanks Bill.

What would a conservative candidate propose as a solution to the financial crisis?

Vote for Obama or the CEOs win? I suppose it would work.

Given that alleged conservatives have presented solutions to the financial crisis. Mike, what do you think the solution is?

Bill Maron wrote:

"Excellent news. Given the public sentiment about CEOs right now, Obama could use this in an ad. Thanks Bill."

This just goes to show your pathetic ignorance about how job creation drives the economy and the people who create those jobs. Government gets in the way of this all the time with taxes and dozens of regulations that don't do what they are supposed to. You and everyone like you that wants Obama to come in and give to those who haven't earned it are killing the golden goose. He won't save anything, he will ruin it with carteresque policies and appointments. Why do you think world leaders want him to win? They aren't our friends. They figure with him as President, they can further their own interests at our expense. What rubes you people are.

ken anthony wrote:

Let's clarify Bill. The useful idiots are rubes. The engineers of this train wreck want exactly the outcome you describe... finally they get to destroy America which they hate.

Obama hates America. Lather, Rinse, Repeat.

Let him protest, people will see that he's disingenuous.

Obama hates America... right up until election day!!!

This is the meme that needs to be played over and over until some in the middle start to wake up.

Carl Pham wrote:

Rand, don't overlook the context of this election. Suppose both a President Obama and a President McCain would propose dumbass populist feel-good unconstitutional legislation. What happens next?

(1) President Obama: an adoring Democratic Congress instantly passes it, and the Obama judges confirmed by a filibuster-proof Democratic majority in the Senate find penumbras and emanations in the Constitution to uphold it, and an ass-kissing juiced-up MSM spin it as the best thing since sliced bread for us rubes (and if it fails explains how it's all because of the nasty legacy of George Bush).

(2) President McCain: it's picked apart mercilessly by a hostile, sulking MSM, and a hostile Democratic Congress refuses to even consider it -- indeed, holds Congressional hearings on whether to subpoena the White House e-mail discussion on the topic to further embarass the President.

In short, any old crap proposed by Obama will become law, while the only things McCain will get done will be those with such overwhelming popular support, and in which the most pitilessly thorough examination by experts can find no flaw, so that the Democratic Congress is forced to go along to protect itself.

Even if the two men have equally deranged ideas, in only one case are those ideas actually dangerous -- because only one of them will have the power to implement them without much in the way of scrutiny from the media and jealous oversight by the other branches of government.

Dfens wrote:

Hmm, what would a conservative do?

The rallying cry heard all over the Hill the past two weeks was that Congress must act. Our economy is facing a meltdown. Would this bill fix it? Nobody could really explain how it would. In fact, few demonstrated any real understanding of credit markets, of derivatives, of credit default swaps or mortgage-backed securities. If they did, they would have known better than to vote for this bill. All they knew was that this administration was saying some frightening things, and asking for a lot of money. And when has Congress ever been able to come up with a better solution to a problem than to throw more of your money at it? So that is what Congress did, enacting a financial PATRIOT Act in the process.

In its embarrassment at being called a “Do-Nothing Congress” the 110th Congress took decisive action and did SOMETHING. No matter that it was the wrong thing. In fact, it wasn’t until the Senate had a chance to load it up with even MORE spending, when it was finally inflationary and horrible enough, at $850 billion instead of a mere $700 billion, that it passed – and with a comfortable margin, in spite of constituent calls still coming in overwhelmingly against it. 57 members switched their vote!

The market went down anyway. Our nation is now just that much more in the hole. You will pay your part of this mess through inflation, and very likely hyperinflation.

Sometimes doing nothing is much better than thrashing about aimlessly. When one is caught in quicksand, for example, or when one doesn’t understand economics and finds oneself in the position Congress was in for the past two weeks, with decades of irresponsible monetary policy coming to a head. Why should we trust the same people who said just a few months ago that the economy was perfectly sound? The same people who just knew there were weapons of mass destruction? The same people that crammed the PATRIOT Act down our throats? Why not consult the people who had the foresight and understanding to see this coming? They would have recommended such logical actions as repealing the Community Reinvestment Act, which forces banks to make bad loans, or allowing the market to set interest rates instead of the Federal Reserve system. How about abolishing the Federal Reserve altogether? There are many things that could have been done, but don’t expect Congress take a course of action that comes from a place of understanding and competence when they could just spend money. - Ron Paul

Carl Pham wrote:

The weird thing about Ron Paul is how he passes right through wisdom on the way to his final destination of lunacy.

If the guy just learned when to shut up, he'd be a lot more successful.

Habitat Hermit wrote:

1. Ron Paul is not a conservative, if I understand him correctly he's a small-government libertarian (as opposed to a no-government (ultra-)libertarian).

2. Being a conservative (or a libertarian) does not mean that one automatically supports completely unfettered markets. Those who claim otherwise probably haven't thought it through or they would describe themselves/others with more precision, or alternatively they assume (probably correctly) that the overwhelming majority of people don't think about what it would mean and imply.

3. As far as I know nobody but various ultra-libertarians and anarcho-capitalists believes in completely free markets ("free" as in absolutely no government intervention of any kind --Ron Paul fails this criteria considering his support and argument for reintroducing a gold standard (that is government intervention right there)). Perhaps unfortunately "free markets" has become a simplified "sloganized" concept that spans a very wide selection of definitions of "free" and "markets" and is reduced to being a statement that just means one doesn't hate capitalism or profits and don't believe in the fallacy of zero sum economies (all well and good on its own but that's beside the point).

4. If ultra-libertarian and anarcho-capitalistic societies work as envisioned (and they might; it would be very interesting to test for real because no one has in modern times/in a modern society (if that's possible, i.e. not a self-contradiction --places like Somalia do not count as modern societies) --my bet would be on them quickly evolving away from it and towards mixed economies) then the current problem might not exist but if it did (if nearly everyone made the same bad decisions, not at all an unlikely scenario no matter what system is in place) they might well force themselves to abandon their system of non-intervention, however neither ultra-libertarianism nor anarcho-capitalism have any solutions to the current situation as it exists in the current society except for the more or less total deconstruction of the current society and construction of a state-less one. Such an endeavor (if possible from within an existing system) would be even more difficult, time-consuming, and challenging than switching in either direction between near-100% state capitalism (communism, national socialism, etc.) and mixed economy/semi-statist capitalism.

4.1. Changing the environments and circumstances of tools/mechanisms and their use affects the results.

Figuratively I feel like I just now threw up a semi-digested economics book of some sorts ^_^

Habitat Hermit wrote:

Oh and about the market going down: of course it does, none of the choices included "ok everything is just fine now".

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This page contains a single entry by Rand Simberg published on October 9, 2008 5:29 PM.

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