Atlas Shrugged: The Mocking

Monday, January 17, 2011

The Playground Monitor

It seems Rush Limbaugh and Charles Krauthammer got into a slap fight and there was hair pulling and tears and now Kathryn Jean Lopez is here to wipe their faces and give them a Charms lollipop just like Grandma used to and make the hurt go away.
My e-mail was buzzing last night about Krauthammer vs. Limbaugh.

Sigh.

Wednesday night’s speech in Tucson was the best of Obama’s presidency. Fit between an odd invocation and hooting and hollering, he was — as is appropriate to a president — presidential and focused on many powerful images, and lives. But there were also things to criticize about Obama’s speech, and Rush did.

The "odd invocation" is called someone else's religion, K-Lo. It was a Native American blessing. "One True Ring to Rule Them All" only works for hobbits, as they say on the internet.
Perhaps because he went on too long, the president’s view of America came through.

The view of a socialist Kenyan who will bankrupt America by giving money to the undeserving masses?
Rush Limbaugh doesn’t need a defense team, but “smart, articulate, or oratorical” in funeral oration only goes so far, when one’s record is what it is.

I think her record is "They're Coming To Take Me Away."
Anyway, Rush was giving his honest reaction. And listeners have come to expect nothing less from him. For three hours a day, a voice of reason and entertainment. A voice of solidarity and education.

A voice of irrational hate and spiteful mocking. A voice of conformity and propaganda.
Dr. K does the same — he gives his honest reaction to what he’s observing. He saw the commander-in-chief, the young Hamlet, not fretting, not demurring, not agonizing. And he said so. Gave him credit where due.


Alas, poor K-Lo I knew you well. A blogger of infinite zest, of most excellent obedience, she hath born Rush on her back a thousand times.
Rush couldn’t get beyond the surroundings, though, the buts (as Rush has put it) in his speech, and the reality of his presidency. And he wasn’t alone, if my e-mail is any indication.

Both are wise men with different perspectives, both on the side of the good and just.

One remains the Leader of the Opposition. The other, Critic-in-Chief. (As NR covers have told the tale.)

Another, the sycophant-in-chief.
Rush wasn’t condescending. Charles wasn’t slobbering. I respect Charles’s opinion and always want to hear it. But I was glad Rush didn’t hold back about the big picture.

Good men, honest opinions. It’s a great country.

Good men who would happily sacrifice K-Lo to an angry mob, like Lot and his daughters in the Bible.
Beyond a speech: I want to repeal Obamacare. Rush Limbaugh and Charles Krauthammer want to, too. I want Barack Obama to be a one-term president, defeated in the ballot box. Rush Limbaugh and Charles Krauthammer both want that as well.

There’s unity in that, too.

K-Lo hasn't been this conflicted since the primaries. Her two Daddies are fighting and it's giving her a tummy ache.
Incidentally, for all the divisions even on the right about Sarah Palin, I couldn’t help noticing that a lot of it faded — if only momentarily — among some conservative critics in my midst this week, as the Left really overreached.

She'll still be stumping for Palin for president when the latter is selling wrinkle cream on QVC.
UPDATE: Rush’s on-air response, with a light hand: “I was going to name my first child Krauthammer, even if it was a girl. but no more.”


Yes, Rush is known for his subtle humor. Just as K-Lo is known for her perceptiveness.

Saturday, January 15, 2011

The Lonely GOP-herd

(I have already posted this in Roy Edroso's comments, but I want to post it here as well to preserve it for posterity. It was inspired by comments from Kia and Mr. Wonderful.)

[Roy:]
High on the Hill was the lonely GOP-herd
Lay ee odl lay ee odl lay hee hoo
Loud was the voice of the lonely GOP-herd
Lay ee odl lay ee odl-oo

Folks on the web who were quite remote heard
Lay ee odl lay ee odl lay hee hoo
Angry and clear from the GOP-herd's throat heard
Lay ee odl lay ee odl-oo

[the Commenters:]
O ho lay dee odl lee o, o ho lay dee odl ay
O ho lay dee odl lee o, lay dee odl lee o lay

[Roy:]
A Fool on the bridge of the Starship Dolt heard
Lay ee odl lay ee odl lay hee hoo
Law teachers bad with a grudge to tote heard
Lay ee odl lay ee odl-oo

[the Commenters:]
Christianists mad for the chance to smote heard
Lay ee odl lay ee odl lay hee hoo

[Roy:]
Cheerleaders not wanting Browns to vote heard
Lay ee odl lay ee odl-oo

One grizz'ly girl, nails in bright red coats heard
Lay ee odl lay ee odl lay hee hoo
She yodeled back to the lonely GOP-herd
Lay ee odl lay ee odl-oo

Soon the girl's ear with a greedy gloat heard
Lay ee odl lay ee odl lay hee hoo
What a duet for a girl and GOP-herd

[Roy and the Commenters:]
Lay ee odl lay ee odl-oo

Ummm (ummm) . . .
Odl lay ee (odl lay ee)
Odl lay hee hee (odl lay hee hee)
Odl lay ee . . .
. . . yodeling . . .

Happy are they lay dee olay dee lee o . . .
. . . yodeling . . .
Soon the duet will become a trio
Lay ee odl lay ee odl-oo

Odl lay ee, old lay ee
Odl lay hee hee, odl lay ee
Odl lay odl lay, odl lay odl lee, odl lay odl lee
Odl lay odl lay odl lay

[the Commenters:]
HOO!

Friday, January 14, 2011

Assassins

Arthur Silber is back.

Obama tells us that we must "make sure that we are talking with each other in a way that heals, not a way that wounds," and that "only a more civil and honest public discourse can help us face up to our challenges as a nation." Despite the fact that most of us are taught early in life that "actions speak louder than words," the majority of adults have more deeply internalized a lesson directly opposed to that maxim: when you judge an authority figure, you must give special weight to his words and what he says his intentions are. If his actions profoundly contradict what he "talks" about, it is the actions you must disregard. There is a direct line between forcing a child to believe that physical and/or emotional abuse is inflicted by his parents (or other caregivers) "for his own good" and arguing that the United States must invade and destroy a village, or an entire country, for its own good. Most adults spend their lives refusing to see the connection.

In fact, how a person acts is of infinitely greater significance than what he says. And toward the conclusion of his remarks, Obama conceded as much: "We may not be able to stop all evil in the world, but I know that how we treat one another is entirely up to us."

Is it "civil and honest" to ask how Obama is treating us, those poor, lost souls who are not "good and important"? I dare to proceed in the belief that it is. In answering that question, one fact above all must be mentioned first. That it is not -- and this fact has almost never been mentioned in all the interminable debates about the violence in Arizona -- reveals a great deal about the moral and intellectual rot that suffocates these wretched United States.


While I am not willing to excoriate Gabriella Giffords for her support of the military state while she is in her hospital bed, I am happy to point out that Obama's soon-to-be-famous speech, beautifully written and utterly heart-felt, is fake and cruel in its pandering to American vanity and pride. The same man who declared he can assassinate his enemies at will said the following:

The loss of these wonderful people should make every one of us strive to be better in our private lives - to be better friends and neighbors, co-workers and parents. And if, as has been discussed in recent days, their deaths help usher in more civility in our public discourse, let's remember that it is not because a simple lack of civility caused this tragedy, but rather because only a more civil and honest public discourse can help us face up to our challenges as a nation, in a way that would make them proud. It should be because we want to live up to the example of public servants like John Roll and Gabby Giffords, who knew first and foremost that we are all Americans, and that we can question each other's ideas without questioning each other's love of country, and that our task, working together, is to constantly widen the circle of our concern so that we bequeath the American dream to future generations.

I believe we can be better. Those who died here, those who saved lives here - they help me believe. We may not be able to stop all evil in the world, but I know that how we treat one another is entirely up to us. I believe that for all our imperfections, we are full of decency and goodness, and that the forces that divide us are not as strong as those that unite us.

...

If there are rain puddles in heaven, Christina is jumping in them today. And here on Earth, we place our hands over our hearts, and commit ourselves as Americans to forging a country that is forever worthy of her gentle, happy spirit.

May God bless and keep those we've lost in restful and eternal peace. May He love and watch over the survivors. And may He bless the United States of America.


The very last thing we could ever possibly want would be for our imaginary God to give us what we deserve. We not only accept that our president is a wanna-be assassin, we give him money and campaign for him. We kill little girls all the time, little girls who are just as loved as Christina. We would have to be crazy to kill them, evil, out of control and utterly merciless. And yet we do.

Less Fiduciary Megan

Shorter Megan McArdle: If banks have to follow the law it will be harder for people to get a mortgage.

Shorter Megan McArdle: Banks have to follow bankruptcy laws but if they don't I won't get upset about it.

Shorter Megan McArdle's guest poster: When banks don't follow the law they are not failing to follow the law.

Shorter Megan McArdle: That murdered little girl could have been me. Only now do I realize the magnitude of what the world could have lost.


Too bad she didn't think of all the little Iraqi girls that were killed with our bullets and bombs before she supported our illegal war.

Thursday, January 13, 2011

Tragedy/Comedy


She thought it would be easy to walk away from her house but she was wrong.

Life is funny sometimes.

The Perils of 'Jingle Mail'
The previous post reminds me of a topic that I've been noticing on consumer finance boards: people who have been reading stories of "jingle mail" and think that it's not only a good idea, but a way of life. Folks who say something like "I've decided to just let them repo the car. The payments are too high."


I don't know how common this belief is, but it's dangerous ignorance, even if it's only affected a few people. In case I have any readers thinking along these lines: your auto loan is not like a mortgage. If you let them repo the car (or the boat, or the furniture, or whatever other item you paid too much for) the bank is going to sue you for the difference. Maybe not right away, but eventually. And a judge is going to make you pay it unless you declare bankruptcy. They can garnish your wages, seize the contents of your bank accounts, and engage in all sorts of other unpleasantness if you don't pay them.


I mean, if you're getting ready to declare bankruptcy anyway, it might be best to let them repo the car. (Your attorney can advise you on this.) But in the majority of cases--including mortgages, unless you live in the handful of states that forbid lenders from pursuing you for the deficiency--you cannot get out of a secured debt simply by handing over the collateral. Again, I don't know that it is a common misconception. But it scares me to think about anyone just letting an asset go because they're tired of the payments, without realizing that this doesn't make the debt go away. If you can't make your car payments, there are ways to deal with the problem: for example by selling the car, buying a beater, and taking out a note for the deficiency. Or maybe even with a Chapter 13 bankruptcy. But just letting it go and figuring you're done with it is almost always a bad decision.


Speaking of "people" walking away from homes.... (via Calculated Risk)


A new type of property is adding to neighborhood blight: the bank walkaway.

Research to be released Thursday, the first of its kind locally, identifies 1,896 "red flag" homes in Chicago — most of them are in distressed African-American neighborhoods — that appear to have been abandoned by mortgage servicers during the foreclosure process, the Woodstock Institute found.

Abandoned foreclosures are increasing as mortgage investors determine that, at sale, they can't recoup the costs of foreclosing, securing, maintaining and marketing a home, and they sometimes aren't completing foreclosure actions. The property, by then usually vacant, becomes another eyesore in limbo along blocks where faded signs still announce block clubs.

"The steward relationship between the servicer and the property is broken, particularly in these hard-hit communities," said Geoff Smith, senior vice president of Woodstock, a Chicago-based research and advocacy group. "The role of the servicer is to be the person in charge of that property's disposition. You're seeing situations where servicers are not living up to that standard."

City neighborhoods where 80 percent of the population is African-American account for 71.1 percent of red-flag properties, according to Woodstock.

In some cases, lenders might be skirting city rules for property upkeep even after they repossessed properties.

Woodstock found that as of the end of September, 57.1 percent of the estimated 4,468 single-family, likely vacant homes that became bank-owned from Jan. 1, 2006, to June 30, 2010, were not registered with the city as vacant, as they are supposed to be.

"The whole concept of charging off creates this limbo land," said Dan Lindsey, an attorney at the Legal Assistance Foundation of Metropolitan Chicago. "There's still a lien that can follow the borrower."

In November, a U.S. Government Accountability Office report on the frequency and impact of abandoned foreclosures noted that Midwestern industrial cities, including Chicago, seem to bear the brunt of bank walkaways, leaving neighborhoods in deeper distress and cities left to shoulder the associated costs of dealing with unsafe, often unsecured homes.


No doubt McArdle will be horrified by the banks' "dangerous ignorance."

Wednesday, January 12, 2011

Stupid? Or Evil!


Guess what? You'll never believe this. It seems that everything is too hard and nobody knows anything ever. Join us once again as we ask the eternal question: Is Megan McArdle Stupid Or Evil?
There's a sort of fair question highlighted at Balloon Juice--why aren't libertarians proposing solutions for the foreclosure crisis? There are serious paperwork issues, which banks seem to have tried to solve by throwing together some highly suspect legal documents.

That's an interesting way of putting it. Here's another:
At the 2000 National Consumer Law Conference in Broomfield, Colorado, Nye Lavalle released two white papers and reports he authored. The reports released were titled Predatory Grizzly "Bear" Attacks Innocent, Elderly, Poor, Minorities, Disabled & Disadvantaged[10] and 21st Century Loan Sharks."[11]

In a follow-up report in 2008, titled "Sue First, Ask Questions Later,"[12] Lavalle detailed the wide-scale practice of robo-signing in the mortgage servicing industry. On page 1 of the report Lavalle states "one of the many predatory servicing practices developed was the use of known false, fraudulent, and forged affidavits, assignments, and satisfactions of mortgages." In this report, Lavalle identifies a number of non-conformances in the handling of mortgages, power of attorneys, affidavits, and satisfaction of liens in public records across the United States. Among other problems with these records, Lavalle states that he found evidence of documents being forged by using "squiggle marks" that are not the marks or signatures of the officer that is authorized to be the signatory on the document in question. In addition, Lavalle finds that "initials only" marks were used so that anyone can sign an officer's signature. Lavalle also states that he found significant variations in the marks for individuals that suggest multiple signers. Also noteworthy was the revelation that a named officer of a bank or lender was found to have signed documents which would imply that the officer was in many different cities across the United States at once.

A Washington Post article about the robo-signing foreclosure crisis on October 7, 2010, concluded with Lavalle's warning to the industry when the Post wrote "several years ago (2003), on a message board still active on the MERS Web site,[13] one participant (Lavalle) accused the company of participating in fraud and concealing the transfer of loans from public scrutiny." "The company's president and chief executive, R.K. Arnold, responded by insisting that MERS actually increased the transparency of the mortgage system and reduced the cost of homeownership by making the industry more efficient." "We're not perfect," Arnold wrote, "but there's nothing sinister about who we are and what we do."

Beginning in 2009, the allegations of robo-signing by Lavalle, Epstein and Redman were proven by local Palm Beach Attorney, Tom Ice of Ice Legal, who proved up the wide-scale practice of robo-signing in depositions taken of GMAC's Jeffrey Stephan and other robo-signers.[14] News outlets have reported that on September 14, 2010, Jeffrey Stephan testified that he had signed affidavits which he hadn't actually reviewed on behalf of Ally Financial Inc.[6][15] This revelation led to increased scrutiny of foreclosure documentation. The practice was apparently common practice in the mortgage industry, and was given the term Robo-signing.[6] In the weeks following the robo-signing revelation other large banks have come under fire for employing robo-signers as well, including JPMorgan Chase and Bank of America.[16]

In their haste to make money by vacuuming up mortgages to resell, the lenders and MERS broke the laws requiring a clear title trail from each owner to each seller. To cover up their crimes the lenders hired people to forge a title trail, which McArdle calls "throwing together suspect documents" to downplay the frauds. Which is clearly Evil, and what she has been doing for months.

October 20, 2010:
I think it's understandable that a lot of the reaction to the foreclosure mess has focused on the theater--law firms hiring incompetents! robo-signing!--rather than the actual impact. The thing is ludicrous, though it was also probably predictible that something alone these lines would be uncovered. (Not that I did predict it, mind you; I just mean that in hindsight, it seems inevitable) The mass outsourcing of loan service to specialist firms is relatively recent, and those firms have never gone through a large wave of foreclosures, which means that what they're specialized for is simply collecting checks and mailing them onward. Meanwhile, the sheer volume of loans that was pouring through the securitization system seems to have overwhelmed the private companies, the state registry systems, and the regulators; a lot of paperwork has been lost.

So it's not exactly an unexpected shock to find that a bunch of companies decided that the easiest way to handle these little gaps in the paperwork was to, um, commit notary fraud. I'm not condoning it, mind you; these firms will richly deserve whatever sanctions are ultimately imposed. But I can't say it has caused me to leap out of my chair in surprise and horror and shout "Say it ain't so, Joe!"

I find it odd, however, that so many people seem to be implicitly treating this as something horrible that the servicers have done primarily to those being foreclosed on. Yet no one's arguing that the outcome would have been different if the paperwork had been in order. It might have taken longer, which would allow people extra time in their homes--but that's what's happening now. There's some implication that unfair fees are being tacked on for people in foreclosure, which demands redress--I smell class action. But overall, the implications seem much more disturbing for people who aren't in foreclosure.

Those rascally little scamps, with their cute little (and perfectly understandable) frauds. It's not that they deliberately broke the law to cover up liar loans, it's just that financial innovation was so wonderful that the industry couldn't keep up with it!

October 8, 2010:
The story on the foreclosure mess has become a bit overblown in some tellings. It's clear that banks have been taking some shortcuts in preparing their foreclosure documents. The banks are obviously overwhelmed with the volume of foreclosures, and the (apparently) many instances in which sloppy securitization has resulted in lost paper trails, obscuring who, exactly has a right to foreclose. Rather than seeking legislative or judicial clarification, they've resorted to dubious practices that seem (to my non-legally-trained eye) illegal.

That is bad. But as Arnold Kling points out, there's little evidence that this has resulted in improper foreclosures: evicting people who've paid, or who never had a mortgage with your company. Anectdotally, these things do seem to have happened, but there's no evidence that they're frequent, or that they are connected to the procedural irregularities that we're now discovering with foreclosure documents.

Arnold says that the real scandal is our antiquated title system.... We are witnessing the confluence of two problems: our antiquated titling system, and a massive move to securitization without adequate systems for tracking the chain of custody on these mortgages. The result is that it is now unclear who has title to these houses.

The problem is "systemic," not fraud, which only happened because someone made a woopsie.

Back to the present:
As Mistermix says, "Since the basis of libertarian philosophy is property rights, I would have expected a little more outrage from places like Reason about robo-signing". ED Kain adds "In any case, I say mistermix's critique is fair because it is - libertarians are not proposing meaningful solutions to the foreclosure problem as far as I can tell."

I can't speak for Reason (though, full disclosure, my husband works there), but I can tell you why I haven't written more about it: it's an insanely complicated legal issue that would require a crash course in real estate law to understand. Do you understand what the difference between "mortgage chain of title" and "note chain of title" issues? I don't, yet Adam Levitin tells me it is important for understanding the recent Massachusetts case. In order to have anything to say at all, I would have to spend days reporting this, and from what I've already read, I know that this would leave me just barely qualified to describe the issues involved, not to propose a solution. The related areas of law that I do report on, like bankruptcy, have left me with a healthy respect for how complicated it all is.


It's not often you see an opinion-maker admit that she isn't smart enough to understand what she is talking about. It's rather refreshing, but unfortunately it is probably a lie. McArdle has bought a car and a house. She knows that if title is not transferred, she can't prove the house or car is hers. She needs a piece of paper with a signature on it and you can bet your last bottom dollar that she has one.

So far McArdle appears to be coming down hard on the Stupid side of the question but someone who was Evil would want us to think that, wouldn't they? And she is doing far too much misdirection (Look over there! Arnold Kling! Adam Levitin! Systemic failure!) to be operating purely on Stupid.
Now, it would be worth trying to acquire expertise if I felt that there was some sort of unique Megan McArdle perspective that I could add.

Journalism. It does not mean what you think it means.
But overall, my sense is that the issues implicated are quite technical; they do not involve broad philosophical questions, but narrow legal ones about how property rights are handled when the property is transferred.

It's not clear to me that this is an issue in which people who aren't already fairly deep experts need to get involved, other than by providing general support for doing something. But I don't think that's really a controversial proposition.

It seems that McArdle does not understand that the courts do not have to accommodate businesses that broke the law, as a commenter says. She understands that the laws exists and that the companies should have followed the law, but she says that the laws were broken inadvertently by rilly, rilly smart people who were victimized by the inadequate legal system that let them accidentally commit fraud. How can we prove she is being Evil? Because McArdle is so slick we must look closely for the tell-tale signs of deceit; being very careful to not make direct claims that can be disproven and leaving out anything that might harm her argument.
My reading on past financial crises, at least in the US, indicates that when the whole system comes crashing down, the legal systems surrounding debt and property rights always turn out to be inadequate to the new problems.

They are partially repaired by changing the law, but a lot of the issues only end up getting resolved through litigation, as is already happening with the foreclosure mess. That's slow and painful, but unfortunately also necessary; it's how our system clarifies what the law means.

The law is sometimes inadequate for new circumstances and sometimes clarified by litigation but the issue is not the clarity of the laws, it is whether or not the laws were followed, which she admits did not happen.
Since I'm not a lawyer, I can't be any more specific than that. So I'm not sure what more blogging about it would add to the public discourse. Folks like Adam Levitin seem to be doing a fine job of analyzing the problem and recommending solutions; I'm content to leave it up to them.

Yet she writes several posts saying that the problem was systemic, not the result of businesses breaking the laws regarding transfer of title. Look at what they do, not just what they say, and what McArdle did was write several posts downplaying the issue. Which is Evil, and not at all Stupid.

The commenters naively attempt to explain the facts to McArdle.
Serolf_Divad 2 hours ago

"There are serious paperwork issues, which banks seem to have tried to solve by throwing together some highly suspect legal documents. "

Yeah, but these serious issues are a direct consequence of the Byzantine financial intruments that were created to peddle these ridiculous "liars loan" mortgages to investors. Honestly, it's nothing less than stunning to me that we've reached the point where in many cases it's not clear who even owns delinquent mortgage in question. You've got a homeowner whose fallen behind on his payments, a bank that own the righth to "service" the debt, but the debt itself exists "out there" in some vague probability-cloud of etherial investments.

This is what happens when we as a society decide that regulation sux, and we might as well let the financial markets do whatever they want, because they "know best."

McMegan
Yeah, this seems pretty silly. You can make a case for regulatory problems in banking as a whole, especially things like leverage, but the idea that deregulation--rather than regulatory failure to anticipate problems with a relatively new system--was at fault in the foreclosure mess does not comport with what I know of the issue. I'm not aware of a lot of people who were arguing in, say, 2003 that we needed to fix titling problems in MERS--I'm not saying that they didn't exist, but there was no ideological battle over the question.

JoshINHB
rather than regulatory failure to anticipate problems with a relatively new system
Why is that the problem and not

The failure of the architects of the new system to ensure that their contracts were legally enforceable within the existing legal system.

It's not like real estate law fundamentally changed in the last two decades.

McMegan
The MERS system was new, enabling the transfer of mortgages outside of the very expensive country transfer system. It turns out to have a bunch of issues.

JoshINHB
The MERS system is a creation of the financial industry and obviously does not have legal standing in local jurisdictions. Meaning it no more valid in court than a system that I created.

Again, the problem is that the financial industry ignored existing real estate contract law.

Courts generally take a dim view of people that willfully ignore the law.

McMegan
Right, but given that it had developed, the law/regulatory system was going to need to adapt. I mean "adapt" broadly--you could rule that MERS was illegal--but it had to deal with the problem somehow. MERS has created a bunch of problems that the law and regulators will need to clean up.

It's not that people broke the law so they could securitize mortgages faster and make more money. It's just that shit happens in our Brave New World of financial innovation in the greatest economy in the greatest country in the world.
MattJ
If I'm following your argument correctly, you are saying that the law/regulatory system had to deal with the problem that the existing local system for transferring title is very expensive. I'm afraid that doesn't follow at all. Just because the financial system did not like paying the fees to the local governments does not mean that they local governments have to agree to reduce them.

McMegan
I'm not arguing whether or not MERS is a good idea--though I will note that it was a response to a system that was neither designed, nor reformed, to handle securitization. (Whether securitization is a goood idea: also a side issue). I'm arguing that it existed, and the law will have to deal with the problems it created. It does exist, I swear.

JoshINHB
Right, but given that it had developed, the law/regulatory system was going to need to adapt..
Not really.

If I as a business owner enters into extra-legal contracts the courts won't enforce those contracts and the legislature won't retro-actively re-write the law to make them enforceable.

Either the laws apply to everyone or we are not a nation of laws.

you could rule that MERS was illegal
I don't think it is illegal, it just doesn't have any legal standing in court.

but it had to deal with the problem somehow.
And the 'libertarian' solution is to force the reckless to be liable for their recklessness.

Not retroactively changing the rules to bail them out.

McMegan
They're not extra legal; they're contracts with the MERS. And the problem is not just the "reckless"; at least as I understand it, until the title is clear, these homes can't be sold. That's not a long-run solution.

JoshINHB
The recklessness I'm referring to is writing contracts without ensuring that they are enforceable within the existing legal framework.

The financial industry as a whole obviously engaged in short cuts at various steps to avoid legal entanglements. That is flat out reckless, if not borderline fraudulent.

MERS is extra legal (ie outside of legal authority) otherwise the subject of your post would not be at issue.

Also:
JoshINHB 2 hours ago in reply to Serolf_Divad

This is what happens when we as a society decide that regulation sux, and we might as well let the financial markets do whatever they want, because they "know best."
Not really, it's more an example of businesses operating outside the existing legal system.
The solution is not retroactively changing laws to protect those lenders, but rather not enforcing those contracts and forcing the lenders to take losses and learn to comply with the law in the future.

McArdle has ignored and down-played fraud, theft and mismanagement from the financial industry (and health care industry, by the way) for a very long time and it's paid off very well for her. She might just be the worst business "journalist" who ever lived.

Next up, Megan McArdle tells us that unlike businesses, individuals can't just break contracts because "people are not corporations." To which one commenter retorts; "People are not corporations but corporations are people." Snap!

ADDED: Rortybomb examines McArdle's posts and says, " I find approaches by libertarians to essentially skip judicial foreclosure for a bank-friendly “rocket docket” quick approach (what the two suggestions above imply) to be improper." but concludes, "McArdle’s post bring up a good point; there should be clarifications on what a proper Democratic response should be to this crisis." I wonder what he feels about McArdle's solution to the problem:

Legislators should set up some sort of system so that banks with a broken chain of paperwork--a note that, for example, was improperly transferred into or out of a Lehman trust--can eventually reconstruct the paperwork in a legitimate process. Banks without adequate paperwork should of course not be allowed to foreclose without it, but over the long run, it is not good for society to have a vast reservoir of houses out there which can neither be foreclosed upon, nor sold.


Retroactivly change the law to legalize the banks' illegal actions. How very libertarian.

Also.

Tuesday, January 11, 2011

Don't Worry, You're Perfectly Safe

We have the greatest news ever, my friends!

I'm not sure why it is so necessary that we identify a culprit in all of this. What good does it do us to know that he is, say, a paranoid schizophrenic?...A terrible thing happened. We live in a universe in which terrible things happen. That's no one's fault--or maybe, everyone's fault. Either way, I don't see much in the way of solutions coming out of this--only terrible, terrible sadness.


Indeed, Megan McArdle. Indeed.

Toning down the political rhetoric would be useless, as nobody/everybody is to blame. And just because someone approves of firearms at public political functions and uses scare tactics doesn't mean they are to blame for people actually becoming paranoid and actually using firearms at public political events. The two are totally unconnected and Megan McArdle is not in any way to blame for the actions of any individual at any time. Therefore she can say whatever she wants, since words do not have any effect.

You might be a bit confused right now since you may remember that McArdle castigated others for rhetorical violence before she realized that it's perfectly okay.

Call me a vaporing language nanny, but I thought it was pretty creepy when Jon Chait described another liberal journalist, Michael Kinsley, another journalist, as "curb stomping" economist Greg Mankiw for, yes, daring to suggest that higher marginal tax rates might have incentive effects. Woo-hoo!


But why stop with curb-stomping? Wouldn't it be fun to pile ten-thousand gleaming skulls of supply-siders outside the Heritage Offices? We could mount Art Laffer's head on a rotating musical pike that plays The Stars and Stripes Forever! Then, in the most hilarious surprise ending of all, the mob could turn on Jon Chait, douse him with gasoline and set him on fire, and then sack the offices of the New Republic!


Somehow, that's not actually funny. Neither is curb stomping, as Ezra Klein pointed out.


Our best guess is that McArdle feels that hate speech is regrettable but unavoidable, while hyperbole is deeply offensive. But let's not get sidetracked. McArdle can tell everyone that health care insurance reform will kill millions of people and it doesn't matter, which is just awesome. Since there are no consequences--none that can be definitively determined, that is--and since the shooter was mentally ill and ideologically incoherent, hate speech or creating an atmosphere of fear and paranoia is A-okay!

That is such a relief. We have always refrained from attacks that we feel are too personal or vehement, since such words might inspire others to action. We worry that whipping people up into a frenzy of loathing might have negative consequences for McArdle. Boy, do we feel silly now!

McArdle again points out in the comments of her recent post that her rhetoric was utterly unrelated to what actually happened, which is absolutely true.

If this guy had been openly carrying, you would have a point. This is what I wrote in the follow-up post:

"Do I think guns should be near Obama? I think that is for the Secret Service to say, and I would support whatever decision they rendered. But we don't know where this guy was, or if he ever even saw Obama.

But if I had to guess, I would say that I do not think that anyone openly carrying a weapon is likely to pose much danger to the president. Why? Because the Secret Service knows he is there. You can bet they have at least one guy watching the fellow with the AR-15, and that if he had taken it off his back and begun to raise it to firing position, he would have been immediately taken out. The people who I worry about are the ones who carry concealed weapons, the better to get a shot off before the Secret Service notices. Or the ones who have found a good hiding place with a sightline to the president. Etc.

It is entirely possible that some nut will shoot someone at a protest, or try to shoot the president (indeed, I expect at least one assassination attempt, as that seems to be par for the course). But I have no reason to think that the fellows brazenly carrying pistols on their hip will be among those nuts. Nor, I think, do the people hysterically accusing them of some pretty evil intentions."

And indeed, it seems to have been someone carrying concealed, which is what I predicted. I separated the two issues even back then; you're conflating them in an attempt to score points on your political opponents. Given the circumstances: for shame.


She wanted people to be able to carry guns openly at public political meetings to demonstrate support for our Second Amendment rights. The shooter hid his gun until he used it to try to assassinate a politician. It is totally unfair to McArdle to say that she is spreading paranoia and fear by encouraging people to openly carry guns at political meetings or telling people that Obama will kill them. I'll bet that if a white male showed up at a political meet-up today carrying a rife or wearing a pistol, nobody would even blink an eye! And won't the Democrats feel foolish when that happens.

And when a media personality is assassinated by a nut--which is going to happen sooner or later--it will not be because the right has been attacking and vilifying the media for years. If some nut walks up to some well-known blogger or journalist that they've seen on tv (but isn't important enough to have security) and shoots them in the head, it will just be one of those things, terribly sad but utterly unpreventable.

Because nobody can know anything ever, and nothing is ever anybody's fault.

Monday, January 10, 2011

Nobody Is Responsible For Anything, Ever

While the right, who spent every minute since September 11, 2001, calling for death and devastation to their enemies, real or perceived, pretend that they are never responsible for anything they say or do, let's take a look at how the war bloggers and freedom-lovin' libertarians really thought about shooting their enemies.

After a couple of careful caveats, Megan McArdle expressed her sympathy and understanding towards those who want to kill people they don't agree with. Cheering on our murder of innocent Iraqis as a war blogger made her famous and successful, so it's no surprise that McArdle would continue to excuse those who think their enemies should be shot.


[...I]f you actually think late-term abortion is murder, then the murder of [abortion provider] Dr. Tiller makes total sense.

Taking the law into your own hands, becoming judge, jury and executioner, makes perfect sense. That is, it makes perfect sense if you're the sort of person who think that we should be able to invade and murder at will. As Jonah Goldberg said:


I’m not sure my friend Michael Ledeen will thank me for ascribing authorship to him and he may have only been semi-serious when he crafted it, but here is the bedrock tenet of the Ledeen Doctrine in more or less his own words: “Every ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show the world we mean business.” That’s at least how I remember Michael phrasing it at a speech at the American Enterprise Institute about a decade ago (Ledeen is one of the most entertaining public speakers I’ve ever heard, by the way).


And if you don't mind killing people who piss you off or get in the way, you certainly don't mind supporting their deaths or injury when they piss you off or get in the way.


We accept that when the law is powerless, people are entitled to kill in order to prevent other murders--had Tiller whipped out a gun at an elementary school, we would now be applauding his murderer's actions. In this case, the law was powerless because the law supported late-term abortions. Moreover, that law had been ruled outside the normal political process by the Supreme Court.


Megan McArdle is saying that if the laws of the law, the normal legal and political procedures of elections, judges, appellate judges, and appeals to the Supreme Court don't go your way, it's perfectly understandable to murder your opponents. Not that she'd do it, of course. Ha ha! She has an Ivy League degree and just writes about murder being okay, she doesn't actually do it herself! But it's certainly understandable if someone else thinks it's okay. Not that that'll ever happen!


Jason Zengerle says that the idea of betting on an outcome like the discharge of a gun at another human being is "offensive". Well, I'm betting on good behavior, which doesn't seem that offensive to me. Zengerle et. al. are the ones claiming that people openly carrying guns have a significant probability of hauling off and shooting someone for no good reason.

I find that rather offensive, given how little the people saying this sort of thing actually know about the protesters. They may, to be sure, be gun-mad lunatics dying for a chance to shoot some random stranger. Me, I'd expect the gun-mad lunatics are probably carrying their gun concealed somewhere on their person, the better to use it without being stopped. But I don't know. The point is, neither does the other side. All these confident predictions of impending violence do not, to me, seem to rest on much more than the belief that people who openly carry weapons near a rally must be gun-crazed lunatics who want to intimidate Democrats with threats of violence. This is somewhat circular to say the least.

Zengerle also conflates this with presidential assassination, as have many other commentators. As far as I know, only one chap has been near the president, and he was a publicity stunt. The others seem to be at less august meetings. If a gun nut wants to assassinate a minor Senator or Congressman, he doesn't need to carry a rifle to a protest somewhere. They're not that well protected. And also, not that frequently attacked.


We certainly hope you noticed there that McArdle was talking about how people should be able to openly carry guns around politicians. She said nothing about it being okay to hide a gun and shoot someone, for pete's sake! Just that it was okay to kill your political enemies who did not break the law, or that it was okay to assault protestors who have not committed a crime, or that it's okay to kill foreigners who did not attack you.


If you think that someone is committing hundreds of gruesome murders a year, and that the law cannot touch him, what is the moral action? To shrug? Is that what you think of ordinary Germans who ignored Nazi crimes? Is it really much of an excuse to say that, well, most of your neighbors didn't seem to mind, so you concluded it must be all right? We are not morally required to obey an unjust law. In fact, when the death of innocents is involved, we are required to defy it.

It's okay, says Megan McArdle of The Atlantic. She understands how murderers feel. After all, she couldn't wait to murder innocent Iraqis after 9/11. It's perfectly natural to want to ignore the laws we fought so hard to establish and pick up a gun and start shooting. Or, even better, send a soldier to do the dirty work.




As I say, I think their moral intuition is incorrect.

Well, thank God that McArdle doesn't really think that it's understandable that people killed an abortion doctor despite the fact that she just said it was okay.




The fact that conception and birth are the easiest bright lines to draw does not make either of them the correct one. Tiller's killer is a murderer, and whether or not he deserves the lengthy jail sentence he will get, society needs him in jail for its own protection.


Oh, I see. It's not that abortion doctors, who are performing leagal procedures, should be protected. She doesn't want to be blow away during all the mayhem.. She needs to be protected. But her enemies? Get out the target sights, baby!




Using the political system to stomp on radicalized fringes does not seem to be very effective in getting them to eschew violence. In fact, it seems to be a very good way of getting more violence. Possibly because those fringes have often turned to violence precisely because they feel that the political process has been closed off to them.


Please read the entire thing so you can see the nuance and caveats for yourself. No doubt McArdle would think them perfectly adequate and that they absolve her of any responsibility for publically accepting the anti-law, pro-gun-and-muder attitude of the poor, put-upon people who don't win elections and therefore must pick up a gun and start blowing people away because their political party lost the last election.


Speaking of losing elections, Megan McArdle, to her instense grief, was on the losing side of the health care vote. It passes and she nearly passed out in spastic agonies of fear and loathing. Words being her weapons and wingut welfare her bullets, she locked and loaded.




If you design a formula to deny granny a pacemaker, knowing that this is the intent of the formula, then you've killed granny just as surely as if you'd ordered the doctor to do it directly. That's the intuition behind the conservative resistance to switching from price rationing to fiat rationing. Using the government's coercive power to decide the price of something, or who ought to get it, is qualitatively different from the same outcome arising out of voluntary actions in the marketplace. Even if you don't share the value judgement, it's not irrational, except in the sense that all human decisions have an element of intuition and emotion baked into them.

Health care reform will lead to rationing and rationing will kill Granny!



[...W]hy don't you tell some person who has a terminal condition that sorry, we can't afford to find a cure for their disease? There are no particularly happy choices here. The way I look at it, one hundred percent of the population is going to die of something that we can't currently cure, but might in the future . . . plus the population of the rest of the world, plus every future generation. If you worry about global warming, you should worry at least as hard about medical innovation.

The other major reason that I am against national health care is the increasing license it gives elites to wrap their claws around every aspect of everyone's life. Look at the uptick in stories on obesity in the context of health care reform. Fat people are a problem! They're killing themselves, and our budget! We must stop them! And what if people won't do it voluntarily? Because let's face it, so far, they won't. Making information, or fresh vegetables, available, hasn't worked--every intervention you can imagine on the voluntary front, and several involuntary ones, has already been tried either in supermarkets or public schools. Americans are getting fat because they're eating fattening foods, and not exercising. How far are we willing to go beyond calorie labelling on menus to get people to slim down?

These aren't just a way to save on health care; they're a way to extend and expand the cultural hegemony of wealthy white elites. No, seriously.


The government is trying to control you and will force you to live by their dictates! Millions will die!



The things that make markets innovate--profit potential--have been mostly squeezed out of the [Dutch] system. The things that hasten market discover--prices--have also been increasingly relegated to central authority. Having something like that in the United States would produce exactly the outcome I'm worried about. So if Matt is right, and this is where the slippery slope ends up, my nightmare will have been realized.


Nighmares of Northern European-type socialist rationed care!



If the public sector atrophies, the scope for manipulation broadens, because the information about what's available outside the public sector shrinks. Nor is this just crazy speculation. I actually think it's pretty reasonable when conservatives worry that the Dutch attitudes towards euthanasia are influenced by the burden old people and severely disabled children put on the public purse. I don't see how they could fail to be.

So I don't think it's crazy that Rasmussen is reporting that 51% of people now trust their insurance companies more than the government to handle their health care. In fact, I expect that number to go up. This is not, as some libertarians would have it, because the free market is Teh Awesome, while the government is Teh Suck. It's because the two institutions are, on this particular question, balancing each other. In doing so, they are creating cost inflation. But they're preventing something that many people legitimately believe is worse.

Death panels!



I suspect that [John] Holbo, and many of my interlocutors, are made intensely uncomfortable by the idea that their root assumption--that they are on the side of reducing human suffering and lengthening lifespans--might be wrong. There are a bunch of ways you can deal with this disturbing possibility. You can scream at me. You can posit a highly speculative world in which government and academia suddenly, and for no apparent reason, get a lot better a inventing devices and mass-market drugs than they have so far proven. You can claim, falsely, that government and academia already do all the work producing useful drugs. You can assume that slashing pharma profits 80% will have no impact on their behavior, or at least, only change the behavior you want to change.

Or you can bite the bullet and say, we should save lives now at the expense of lives later. There's philisophic justification for that choice. But that opens up a whole can of worms about things like global warming. It helps if you phrase it aggressively: "How dare you suggest that someone should suffer now when we can treat them, so that someone who's not even born yet can live?" and don't think much about the equally inflammatory alternative formulation: "How dare you suggest that billions and billions of people suffer and die for the sake of a few uninsured Americans right now?" Geometric progressions are a bitch. So is figuring out the right discount rate for the lives of future world citizens, as William Nordhaus and Nicholas Stern can attest.

If the innovation spurred by the private sector could save 1% of the people who currently die each year, the number of people we'd be killing along with the private sector would necessarily be hugely larger than the number of people we'd save by implementing such insurance, since the most grotesquely exaggerated estimates released by interest groups pin the latter figure at around 0.8% of deaths in America (a much smaller number than the number who are estimated to be killed by access to the system--nosocomial infections and treatment side effects). That's even before you consider the people in other countries who would be saved by these advances. When I talk about the utilitarian calculus of weighing the good of current uninsured against the good to people who are currently, and in the future, untreatable without further innovation.

[snip]

So let me turn it around on John Holbo, et. al. Put aside your ideological committments, and seriously consider the possibility that I might be right. What P(less innovation) would it take for you to abandon the quest for single payer? How many billions of lives would you be willing to gamble on your speculation about alternative innovation mechanisms? I submit that as a practical matter, it shouldn't take a very large possibility that you're wrong to make you at least pause a moment, and reconsider.

Imagine, arguendo, that I am right, and the US is basically providing most of the incentive for innovation. Imagine further that Nixon had succeeded in passing a national health care plan. Would more, or fewer, people be suffering and dying today?

So let me offer another hypothetical. If liberals can build an alternative to the profit model that's at least as productive, in dollars spent, as the private sector, and looks reasonably likely to scale, I'll probably cave. (I reserve the right to worry about rationing, but I find that worry less pressing.) At the very least, my worries about the issue will move it to the back burner for me. But the thing is, you have to do it first. Use prizes, non-profits, the research agency Dean Baker's proposed, or any combination of the above. You just have to do it first. Right now, it's just too much of a gamble.

If government health care is passed, millions will die. And we all know that it's okay to kill if we'll save lives, like Dr. Tiller's assassin. Who knows how many people will die now that Gabrielle Giffords has voted for health care reform?



What if everything goes the way I think it will? What if converting the United States to a single payer system causes the pace of medical innovation to slow to a crawl? People who have diseases for which there are not now good therapies lose all hope, because there is virtually no pharma or medtech industry which might invent something to save their life. Lifespans stop lengthening. Pharma and medtech turn into fat, soft, government suppliers, using the regulatory power of the healthcare agencies to keep out incumbents. There are periodic shortages of various treatments because the government has a budget problem, or has gotten the prices wrong--and knowing us, the whole system comes with a "buy American" mandate.

Is that a tradeoff you would make? Save the few thousand who might be kept alive by healthcare they now can't afford, and take the possibility of new treatments from the millions who might be cured, or at least have their conditions improved?

It's no good dismissing it on the grounds that it's unlikely, because you can't think it any more unlikely than I think the notion of a healthcare reform that is all upside, no downside.

I can see the arguments for both sides. There's no right answer, and certainly no happy one. I'm well aware that there are real people who may die because of my preferences. And other real people who may die because of yours. None of them are any less worthy of life than any other.

That's why I found the First Things article interesting: because it faced up to the fact that on the margin, any choice we make about healthcare has terrible implications. When it comes to healthcare, we cannot help but play God. And unlike Him, we are cursed with imperfect knowledge. All we have is our intuitions, our observations of the world, and our best guess about the future.

Or Millions Will Die!!!!!

The funny thing--heh, you'll love this--was that Megan McArdle simply made up the claim that health insurance reform would kill medical innovation. All that fear-mongering, all that You're going to Die! rhetoic was based on a lie. She was just guessing! And, of course, she is being paid by multi-millionaie with close economic ties to the current health care and insurance systems.

But that's just business. Megan McArdle's fearmonging has absolutely nothing whatsoever to do with disturbed individuals who are susceptable to outside forces due to mental illness. When a nice, clean, middle-class woman like Megan McArdle tries to frighten people into supporting her ecnomic interests she is not spreading fear and paranoia, which might be picked up by crazed individuals with easy access to guns.

She's just doing her job.

Friday, January 7, 2011

The Best Of All Possible Worlds. Again.

Shorter Megan McArdle: Regulations are bad, except when they're good. Once started, regulations can't be decreased so we should decrease them. We should have fewer regulations, except when we should have more. They should help people, but not too much.

The Nature Of Power


Hint: If you give them the rope, you'll lose.

Glenn Greenwald:

There's a fundamental distinction between progressives and groups that wield actual power in Washington: namely, the latter are willing (by definition) to use their resources and energies to punish politicians who do not accommodate their views, while the former unconditionally support the Democratic Party and their leaders no matter what they do. The groups which Obama cares about pleasing -- Wall Street, corporate interests, conservative Democrats, the establishment media, independent voters -- all have one thing in common: they will support only those politicians who advance their agenda, but will vigorously oppose those who do not.


Progressives keep forgetting that a win for the Democratic Party is not a win for progressives. We are the bastards at the family picnic and will only be tolerated as long as we don't draw attention to ourselves. We have no power at all and our non-stop string of losses proves it. Even when we win we lose. John Caruso:

What I like best about the the health care drama in the US right now is how nearly everyone is fighting on the other side, unwittingly or otherwise. We've got Democrats working to save Obama's nationalized version of Romneycare, while Republicans are doing everything possible to defeat insurance-purchasing mandates that would give even greater power and wealth to their corporate patrons in the health insurance industry.


Back to Greenwald:

Similarly, the GOP began caring about the Tea Party only once that movement proved it will bring down GOP incumbents even if it means losing a few elections to Democrats. [my bold]


What is the goal--to win elections, or to increase progressives' power so winning an election means progressive policies are enacted? Winning elections is not achieving our goal. It is utterly illogical to devote time and money if we don't benefit from those actions. If all you want is to say "We're Number 1!" then you've achieved your goal, but if your goal is to gain power, you've wasted your money and time.

When your methods don't work, use different methods. Don't keep using the same methods and insist that you've won when it's perfect obvious that you haven't achieved your goal.

The far right doesn't mind losing some elections as long as they increase their power. You cannot win over powerful forces if you are not willing to fight them. The tea baggers would rather lose than elect someone they don't want in office. The Republican power structure needs their votes. The tea baggers are withholding those votes until they get something back. That gives them power.

Of course they are fooling themselves as well; they are advancing the goals of their corporate leaders, not tax-payers, but if they were smart they wouldn't be tea baggers. They are achieving their goal--putting people in office who say they will shrink the size of the government.


That is exactly what progressives will never do. They do the opposite; they proudly announce: we'll probably be angry a lot, and we'll be over here doing a lot complaining, but don't worry: no matter what, when you need us to stay in power (or to acquire it), we're going to be there to give you our full and cheering support. That is the message conveyed over and over again by progressives, no more so than when much of the House Progressive Caucus vowed that they would never, ever support a health care bill that had no robust public option, only to turn around at the end and abandon that vow by dutifully voting for Obama's public-option-free health care bill. That's just a microcosm of what happens in the more general sense: progressives constantly object when their values and priorities are trampled upon, only to make clear that they will not only vote for, but work hard on behalf of and give their money to, the Democratic Party when election time comes around.

I'm not arguing here with that decision. Progressives who do this will tell you that this unconditional Party support is necessary and justifiable because no matter how bad Democrats are, the GOP is worse. That's a different debate.


We take crumbs and pretend we've been given the entire loaf of bread. Congress doesn't care about anything but money, and right now they're chowing down on a great big ole Screw You sandwich.

The point here is that -- whether justified or not -- telling politicians that you will do everything possible to work for their re-election no matter how much they scorn you, ignore your political priorities, and trample on your political values is a guaranteed ticket to irrelevance and impotence. Any self-interested, rational politician -- meaning one motivated by a desire to maintain power rather than by ideology or principle -- will ignore those who behave this way every time and instead care only about those whose support is conditional. And they're well-advised to do exactly that.


Power is given, not taken. If you are willing to fight to keep and/or gain power, you have to refrain from giving your power-your vote-to someone who will give almost nothing in return, even if it will hurt you in the short term. Giving away your vote and getting nothing in return will guarantee that we remain powerless.

Correction added to comments.

Thursday, January 6, 2011

Making Mistakes

Everyone makes mistakes. That's a given. We run out of time, or are a little careless, or our reach exceeds our grasp and we try to discuss things we don't know much about. What matters is how we handle our mistakes. We can simply say we were wrong, correct the error and learn from our mistakes. Or we can desperately spin to maintain a fake aura of elite superiority and spend the rest of our lives sniping at our enemies, who had the nerve to point out our errors.

Performance Metrics

Greg Mankiw explains one of his:

Similarly, when I write a column for the New York Times, I am not good at predicting how much it will get people talking. As a result, I monitor the subsequent blogosphere commentary to judge if the article is a snore (like most things that get published) or if it is commanding attention. At the very least, I expect my articles to be noteworthy enough that within a few days Brad DeLong will call me a moronic hypocrite. I hope my articles incite some wider commentary as well, but I never know in advance
.
Personally, I don't despair if it takes Brad more than a few days to unleash the vitriol. I know that eventually, he'll get around to it.


Brad DeLong corrects one of Megan McArdle's many, many errors and gets on her You Are Dead To Me list for life, evidently. It's going to be a long, long list.

If you can't admit fault you can't correct faults and will continue to make errors. Fortunately for McArdle, being wrong is not detriment to success, as long as your errors benefit the people paying you.

The Edrosothon

Jay B. is conducting an Edrosothon, which is raising money to pay back Roy Edroso for all the entertainment that he has given us for years with no remuneration. It's not a donation, it's paying a very overdue bill.


It is a crime and a shame that very, very wealthy Democrats refuse to pay the people who do their work of fighting corporate Republican conventional wisdom for them so they don't have to sully their hands with any tiresome arguments or unpleasant words. Money is tight and before too long we might be left with a blogging world that consists solely of Jonah Goldberg, Megan McArdle, Michelle Malkin, K-Lo, and the Koch Krew at Reason.

Wednesday, January 5, 2011

Lying, Truth--What's The Difference?



If wishes were horses, Megan McArdle would have a herd of ponies.


It's almost impossible to separate deceit from fantasy thinking in the conservative mind, since one of the pillars of conservatism is the substitution of belief for reason. People believe what they want to believe and then tell themselves and everyone else that what feels right to them is right; that is, their beliefs are factually and morally correct because they believe them to be. Nothing is more tightly enclosed than this circular reasoning; if they want to believe something it is a fact, and if they don't the fact is an opinion. From there any argument is going to degenerate into a "no it isn't"/"yes it is" exchange, since refusing to accept facts means never having to say you're wrong. Let's watch Megan McArdle ignore facts to both deceive her gullible admirers and reinforce her belief that she is an important part of the world of the meritocratic financial elite.

Last year, with much fanfare, we were told that new financial regulations would make it harder for credit card companies to suck in innocent college students with their malicious wares. This year, as the regulations actually go into effect, we're finding out that this has had an unwanted side effect. It turns out that college students aren't the only ones with high household incomes, but low personal earnings. Stay-at-home Moms also fit that description, and from now on, they're going to have a hell of a tough time getting credit in their own name: [snipped quote]

McArdle does not quote the regulations, which would be the natural thing to do on a blog. They're easy to find and understand, but McArdle enjoys asymmetry of information, which enables her to see herself as part of a secret club of elite people in the know. She also enjoys being deceptive regarding the regulations, which would be much more difficult if she actually quoted them.


‘‘(p) PARENTAL APPROVAL REQUIRED TO INCREASE CREDIT LINES FOR ACCOUNTS FOR WHICH PARENT IS JOINTLY LIABLE.—
No increase may be made in the amount of credit authorized to be extended under a credit card account for which a parent, legal guardian, or spouse of the consumer, or any other individual has assumed joint liability for debts incurred by the consumer in connection with the account before the consumer attains the age of 21, unless that parent, guardian, or spouse approves in writing, and assumes joint liability for, such increase.’’.


And:

‘(i) the signature of a cosigner, including the
parent, legal guardian, spouse, or any other individual who has attained the age of 21 having a means to repay debts incurred by the consumer in connection with the account, indicating joint liability for debts incurred by the consumer in connection with the account before the consumer has attained the age of 21; or‘‘(ii) submission by the consumer of financial information, including through an application, indicating an independent means of repaying any obligation arising from the proposed extension of credit in connection with the account.


Yes, housewives could find it harder to get credit--if they are under 21, have no job or independent income, and want to get a new credit card or increase a credit limit on a credit card account they hold jointly with their husband. Being a stay-at-home mother has much less to do with it than being under 21. [See Update And Correction] Revealing all the facts, however, is much less convincing than leaving them out. It's a lousy method of argumentation but considering the source it's not a surprising one.

In fact, if the rules are strictly applied, they're going to impact a lot more than just stay-at-home Moms. Most women still earn less than their husbands, meaning that they're going to end up with less ability to secure credit in their own name than their husbands have.


If they're under 21 and have no income, then yes, their husbands will be able to secure more credit. Unless the husband is also under 21 and has no income. The law doesn't say "wife," it says "spouse." Ordinarily a libertarian like McArdle should be overjoyed to see credit cards denied to minors without jobs--surely the poor credit companies would be better off without giving credit to unemployed teenagers? And what's good for wealthy corporations is good for America!

That translates into less economic power to, say, open a business using her credit, or leave a bad marriage, because you might not be able to get a mortgage on your own with only a limited credit history. Presumably, more women are going to end up as joint-account holders with their husbands, rather than limiting themselves to the piddly amount of credit they can secure under their own names.


That's very true. The unemployed teenage mother who leaves her husband might be unable to open her own business or take out a mortgage on a house! And if she leaves her husband, she might not be able to get a credit card until she gets a job!

All of which goes to show how hard it is to craft legal rules that will produce even a relatively well-defined outcome. We know what the framers of this legislation wanted: they wanted to prevent credit card companies from targeting relatively affluent kids . . . kids like, say, their kids . . . who might take those credit cards and get themselves into trouble running up bills they couldn't pay. But how do you actually do that? Credit card issuers need a solid rule, not a vaguely worded admonition not to let affluent kids get into too much trouble with their first Amex.

That regulation looked well-defined to me. No credit for unemployed teenagers without a co-signer. That's pretty clear.

You can't just make it illegal to give credit cards to college kids--there are a lot of college kids who work full time and pay their own way.


Then they have a source of income don't they? And this rule doesn't apply to them.

Nor can you simply target an age range, since there are a fair number of self-supporting twenty-year-olds out there who would be justly outraged at being denied credit.


If they're self-supporting they have a source of income and the rule changes don't apply to them. Again.


So instead, they targeted income--and accidentally denied credit to the housewives.

Teenage housewives with no credit, no job, and no co-signer, yes. Otherwise, not so much.

Of course, there's probably room for interpretation in the rules. I'd guess that by the time regulatory review is done, they will be interpreted so as to allow non-working spouses to get credit cards using marital income. But I'd also guess that this will involve substantially weakening the restrictions on credit for college kids.

Why? The regulators could just remove "or spouse" and thereby avoid the problem of single teenage mothers with no jobs being unable to take out mortgages.

Nobody's this stupid. Better lying hacks, please.

UPDATE AND CORRECTION: The situation is more complex than my snark takes into account and I was wrong about the age cut off. It applies to people over 21 as well. Downpuppy in comments points out that the regulations are a different from the statuate. Anyone with no income would be affected by the rule change, not just people under 21. The rules don't apply to people with joint credit card accounts or even, it seems, states with community property laws. And one thing is pretty clear--it's no accident that everyone without legal access to money potentially can't get a credit card. Housewives weren't accidently excluded. (I'll be happy to make any more corrections if necessary.)

Second, the Board understands that there has been some confusion as to whether Regulation B (12 CFR Part 202) requires a card issuer to consider spousal or other household income when considering a consumer’s ability to pay under § 226.51. In response to concerns raised by commenters, the Board stated in the February 2010 Final Rule that, when a card issuer is evaluating an underage consumer’s ability to pay under § 226.51(b), Regulation B does not compel the issuer to consider the income of the consumer’s spouse. See 75 FR 7723. The Board also stated that card issuers would not violate Regulation B by virtue of complying with the requirements in § 226.51(b). Id. However, the Board understands that these statements may have left some uncertainty because they did not expressly address the general ability to pay requirement in § 226.51(a), which applies to all consumers regardless of age.

Accordingly, the Board clarifies that Regulation B does not compel a card issuer to consider spousal or other household income when considering an applicant’s ability to pay under either § 226.51(a) or (b), unless, for example, the spouse or household member is a joint applicant or accountholder or state law grants the applicant an ownership interest in the income of his or her spouse. Furthermore, the Board clarifies that card issuers would not violate Regulation B by virtue of complying with the requirements in § 226.51(a) or (b). Thus, to the extent that a card issuer is not permitted to consider spousal or other household income when evaluating a consumer’s ability to pay under § 226.51, the card issuer’s failure to consider such income when performing that evaluation does not violate Regulation B.

Third, the Board understands that the use of the word ‘‘independent’’ in § 226.51(b) but not in § 226.51(a) has been interpreted by some as prohibiting consideration of household income with respect to underage consumers but permitting it for other consumers. This difference in wording reflects the language in the statutory provisions implemented by § 226.51(a) and (b). Specifically, § 226.51(a)(1) follows TILA Section 150 in requiring a card issuer to consider the ability of the consumer to make the required payments, whereas § 226.51(b)(1)(i) tracks TILA Section 127(c) 8)(B)(ii) by requiring a card issuer to obtain financial information indicating that an underage consumer without a cosigner has an independent ability to make those payments. Congress’ use of ‘‘independent’’ in TILA Section 127(c)(8)(B)(ii) but not in TILA Section 150 could be interpreted as establishing a less stringent standard for consideration of household income if the consumer is 21 or older. However, TILA Section 150 requires card issuers to consider ‘‘the ability of the consumer to make the required payments,’’ which indicates that Congress intended card issuers to base this evaluation only on the ability of the consumer (or consumers) applying for the account.

Indeed, to the extent that TILA Section 150 was intended to ensure that credit cards are not issued to consumers who lack the ability to pay, it could be inconsistent with that purpose to permit a card issuer to open a credit card account for a consumer without income or assets based on the income or assets of a spouse or other household member (unless the consumer has an ownership interest in the household income or assets). Accordingly, using its authority under TILA Section 105(a) and Section 2 of the Credit Card Act, the Board proposes to amend § 226.51 to require that, regardless of the consumer’s age, a card issuer must consider the consumer’s independent ability to make the required payments.

In addition to providing a single, consistent standard for evaluating a consumer’s ability to pay, the Board believes that this proposed revision is consistent with the intent of TILA Section 150. Consistent with the proposed amendments to § 226.51, the Board would revise comment 51(a)(1)–4 to clarify that, as a general matter, consideration of information regarding the consumer’s household income or assets does not by itself satisfy the requirement in § 226.51(a)(1) to consider the consumer’s independent ability to pay. The comment would further clarify that, if, for example, a card issuer requests on its application form that applicants provide their household income, the card issuer may not rely solely on that income information to satisfy the requirements of § 226.51(a). Instead, the card issuer would need to obtain additional information about the applicants’ independent income (such as by contacting the applicants). However, the comment would also clarify that, if a card issuer requests on its application form that applicants provide their income (without referring to household income), the card issuer may rely on the information provided to satisfy the requirements of § 226.51(a). For organizational purposes, comment 51(a)(1)–4 would be divided into subparagraphs, and this guidance would be set forth in subparagraph 51(a)(1)– 4.iii.

The Board would also add additional guidance regarding spousal income in new subparagraph 52(a)(1)–4.i, which addresses the types of income or assets that may be considered when performing the § 226.51(a) analysis. The Board would clarify that, when an applicant’s spouse is not a joint applicant or joint accountholder, a card issuer may consider the spouse’s income or assets to the extent that a federal or state statute or regulation grants the applicant an ownership interest in that income or those assets. For example, assume that a consumer is applying for a credit card account, but the consumer’s spouse is not a joint applicant. If the consumer and the spouse reside in a community property state where state law grants the consumer joint ownership of income or assets acquired by the spouse during the marriage, the income or assets are considered the consumer’s income or assets for purposes of the § 226.51(a) analysis.

The Board acknowledges that the proposed amendments to § 226.51 and its commentary could prevent a consumer without income or assets from opening a credit card account despite the fact that the consumer has access to (but not an ownership interest in) the income or assets of a spouse or other household member. However, the Board has previously concluded that it would be inconsistent with the intent of the Credit Card Act for a card issuer to issue a credit card to a consumer who does not have any income or assets. See § 226.51(a)(1)(ii). Furthermore, a consumer without independent income or assets could still open a credit card account by applying jointly with a spouse or household member who has sufficient income or assets. See comment 51(a)(1)–6. Nevertheless, the Board solicits comment on whether it would be appropriate to provide greater flexibility in these circumstances.

The Board also notes that, as discussed in the February 2010 Final Rule, neither the Credit Card Act nor § 226.51 requires verification of information provided by a consumer regarding income or assets. See 75 FR 7721. Thus, while a card issuer that, for example, prompts applicants to provide household income on an application form could not rely on that information by itself to satisfy the requirements of § 226.51(a), a card issuer that requests on the application form that applicants provide their own income is not required to verify that the income provided by the applicant does not include household income.

Tuesday, January 4, 2011

One Of These Things Is Not Like The Other


One of these things is not like the others. Can you guess which one?




Mark Twain


Ralph Waldo Emerson


Glenn Reynolds


Henry Wadsworth Longfellow

All appear in the "pages" of The Atlantic but only one is a racist, fear-mongering idiot whose dearest wish is to live long enough to have sex with an android. Great artists often have personal views that later generations find abhorrent, but David G. Bradley's editors obviously believe that we should put up with abhorrent views from mediocre minds as well.

If The Atlantic wants to publish more work from modern luminaries such as our Captain Reynolds of The Light Brained Brigade we suggest fellow law professor Ann Althouse.* Her intellectually rigorous examination of the sex life of Bill Clinton will fit right in with the new direction of this venerable magazine.


*Hi, Ann!

Monday, January 3, 2011

The Way The World Should Be

This is why Megan McArdle tried to destroy Elizabeth Warren, in brief: Warren, via Balloon Juice:

By enforcing existing laws and involving state authorities early on, the agency could have made sure that the law was respected. No one would need to wonder whether the world of borrowing and lending works only one way: Families have to follow the legal rules, but the rules are optional for big banks.


That's exactly how McArdle wants the financial world to work: the elite make the rules, the lower classes follow them.

Every Sperm Is A Ross Douthat Waiting To Be Born


Would you kill this sweet little innocent sperm? (from)

Un Hommage To Ross Douthat (via TBogg)


The American entertainment industry has never been comfortable with spermicide. Oh, sure, there's a movie every so often about ejaculating into a pie or in a Turkish prison, but by and large the death of millions of teensy-tiny little babies-to-be seems too controversial in its genocidal implications.

This omission is often cited as a victory for the pro-spermicide movement. Recent movies such as "The 40 Year Old Virgin" make spermicide seem acceptable, which makes the few sperm that manage to live long enough to fertilize a womb more rare than the sweaty, muscular men who survived the Battle At Thermopylae in 300, yet another all-too-real example of Hollywood instigating the death of millions of sperm.

Recent studies have shown that upper class men are committing spermicidal genocide in record numbers, as they have a lower birth rate than the lusty, muscular lower classes, who work with their hands and sweat and let all their sperm reach true masculine fulfillment through shooting those suckers into God's Fertile Fields, just waiting to give the spark of life to the egg that will one day, God willing, grow up to be a man with strange facial hair and a squeamish reaction to the sight of female breasts.

The only solution is for the poor sperm vessels to donate their sperm to the rich sperm vessels, who can use this unselfish gift to compensate for the decades the rich spend spilling their seed on blue dresses and Wall Street groupies, thereby killing God's Sacred Gift To Men and driving up the country's dry cleaning bills. When we think of sperm, let us think of this little poem, written as two prospective parents sought to find the tiny heartbeats of millions of wee little babies-to-be:

We tried to find you,

Little Sperms, to begin

God's Holy Pilgrimage.

My wife said in fear

Will nothing work-

Not porn, not lingerie?

...And then we saw it,

Rising slowly, then harder and harder,

The Sacred Multitude.

The is the paradox of America's unborn seed. No millions of lives are so desperately sought for, so hungrily desired, and yet so legally unprotected from the sin of spermicide rampant in Liberal America today.