Atlas Shrugged: The Mocking

Thursday, October 23, 2008

Less Tall Megan

If you ignore the actual definition of libertarianism and let me make shit up, libertarianism isn't dead at all!

Your Daily Hack Attack:

Nor is there any particular proposal for preventing that institution from falling prey to the same forces that grip the regulated industry. I have said it before, but it is worth repeating: the regulators became overconfident in the same way, and for the same reasons, that the bankers became overconfident. Just as a long and unusually rosy period in the housing market convinced the bankers that they had gotten better at pricing credit risk, a long period without a large bank failure persuaded the regulators that they had gotten better at regulation. They believed that their computer models, and an improved understanding of how markets and the economy worked, would allow them to see problems in time and halt them. Obviously, they were wrong.

This paragraph encapsulates why McArdle is so useless. Her banking friend told her that banks have become better at pricing risk, so she believed him. But what makes it even worse is she ignores the fact that the problem arose from the shadow financial institutions that were not regulated because she wants to undercut any possible future regulations. The banks are suffering because of the mortgage-backed securities, not just the mortgages, which were divided up according to risk and sold. Everyone said that spreading risk would eliminate risk, and nobody really cared if that was true as long as people were making money in the financial sector.

Always remember, several people warned the world that the current practices would lead to ruin. They were called doom-and-gloomers and generally dismissed, including by McArdle. She'll throw in caveats and hem and haw, but in the end she serves her Wall Street masters, both from ideology and elitist inclination.

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