For all of you so called “liberals” out there.

[bearishgurl]

[quote=walterwhite]i think it would be quite comfortable to wear justa fig leaf.

we named one of our dogs fig.

the sec did seem kind fo lame with the madoff thing.

Having done some big law firm work dealing with financial prospectuses and medium size transactions, sometimes it seems like the SEC is primarily there to ensure disclosure in unbearably long, complex, unreadable and ultimately misleading prospectuses. Or at least teh appearance of disclosure. Actually, I tend to go with the whole fig leaf metaphor.[/quote]

lolol . . . scaredy . . . :=D

[Allan from Fallbrook]

[quote=walterwhite]
…sometimes it seems like the SEC is primarily there to ensure disclosure in unbearably long, complex, unreadable and ultimately misleading prospectuses. Or at least teh appearance of disclosure. Actually, I tend to go with the whole fig leaf metaphor.[/quote]

There were plenty of savvy investors and even some financial pundits that were aware of Enron’s coming implosion and largely because they’d done their homework and pored over the Enron financials, including the hundreds upon hundreds of footnotes, annotations and appendices. The problem with that is that it takes an enormous amount of time and an understanding of how a firm like Andersen (or PWC or Deloitte) can “present” the information.

Similarly, there were investors and pundits who called the coming fall of 2008 crash quite presciently, too. Same attention to detail, and same willingness to do the homework.

For the average investor, however, you might as well be asking them to understand quantum physics. In many cases, they’re placing their faith in some stock jock who probably understands the “product” even less, he’s just pimping what the company tells him to sell and calculating his next bonus.

Someone’s gotta pay for the mistress, the Ferrari and the Bolivian marching powder…

[Ren]

I agree that the problem is concentration of power, and I’ll add that having long-term employment positions available in that power center (the Career Politician) makes corruption inevitable. The size of the government doesn’t matter, although it should be sized to be as efficient as possible for the population it serves.

Although more transparency can only help, the people involved will still find a way to hide their corruption, so it isn’t a complete solution. What is needed is to change the very structure of all government (city, state, and federal) so that there are no corruption beneficiaries. Much larger groups should make the decisions, not individuals or small groups, but also not the uneducated public, unless voting is by 2/3 majority (the bullet train bond measure passing is a perfect example of public ignorance resulting in bad decisions). I have no idea how this would be accomplished, but it’s obvious to me that it’s necessary. In fact, I’ll go so far as to say that anyone (liberal or conservative) who thinks concentration of power is a good thing has, by definition, a god complex – i.e., their party should be the ones defining behavior and morality.

The ideal government would be self-correcting and free of individual human weakness. Maybe all citizens would be required to serve in the government for a few years, like jury duty but only once. Their position would be determined by aptitude and education. If politicians existed at all, their job would be to propose measures and help the mandatory service employees understand the issues they’re voting on. They would have zero real power. The job of regular government employees would be to perform the work of running a society and military, while very large groups of appropriately educated service employees would make decisions regarding corporate regulation, taxes, foreign policy, and defense. The “common” would be back in common sense – imagine 10,000 randomly chosen academics with graduate work in political science, history, and international relations voting on whether to go to war, instead of one man making that decision, or (chuckle) a congress full of lawyers and the wealthy, the majority of them (on both sides) bought and paid for. Iraq would never have happened. Government pay and benefits would be in line with the private sector. The bullet train proposal would have been instantly squashed (amid much incredulous laughter that it was proposed in the first place). My tax dollars wouldn’t be spent studying the mating habits of squirrels because some congressman’s donor’s daughter is a zoologist.

Of course this is a change which won’t occur without a real revolution taking place (probably after economic collapse), because it would require politicians to work to eliminate their own jobs.

[CA renter]

[quote=Ren]I agree that the problem is concentration of power, and I’ll add that having long-term employment positions available in that power center (the Career Politician) makes corruption inevitable. The size of the government doesn’t matter, although it should be sized to be as efficient as possible for the population it serves.

Although more transparency can only help, the people involved will still find a way to hide their corruption, so it isn’t a complete solution. What is needed is to change the very structure of all government (city, state, and federal) so that there are no corruption beneficiaries. Much larger groups should make the decisions, not individuals or small groups, but also not the uneducated public, unless voting is by 2/3 majority (the bullet train bond measure passing is a perfect example of public ignorance resulting in bad decisions). I have no idea how this would be accomplished, but it’s obvious to me that it’s necessary. In fact, I’ll go so far as to say that anyone (liberal or conservative) who thinks concentration of power is a good thing has, by definition, a god complex – i.e., their party should be the ones defining behavior and morality.

The ideal government would be self-correcting and free of individual human weakness. Maybe all citizens would be required to serve in the government for a few years, like jury duty but only once. Their position would be determined by aptitude and education. If politicians existed at all, their job would be to propose measures and help the mandatory service employees understand the issues they’re voting on. They would have zero real power. The job of regular government employees would be to perform the work of running a society and military, while very large groups of appropriately educated service employees would make decisions regarding corporate regulation, taxes, foreign policy, and defense. The “common” would be back in common sense – imagine 10,000 randomly chosen academics with graduate work in political science, history, and international relations voting on whether to go to war, instead of one man making that decision, or (chuckle) a congress full of lawyers and the wealthy, the majority of them (on both sides) bought and paid for. Iraq would never have happened. Government pay and benefits would be in line with the private sector. The bullet train proposal would have been instantly squashed (amid much incredulous laughter that it was proposed in the first place). My tax dollars wouldn’t be spent studying the mating habits of squirrels because some congressman’s donor’s daughter is a zoologist.

Of course this is a change which won’t occur without a real revolution taking place (probably after economic collapse), because it would require politicians to work to eliminate their own jobs.[/quote]

1. IMHO, this is an argument for a LARGER government, not a smaller one.

2. I have far less faith in “academics” regarding war (or just about anything else) than I do with highly competent, **experienced** people who have proven themselves in their respective fields over a long period of time.

“Academics” brought us the financial crisis and all the failed (and extremely expensive!) bailouts. The corruption was there, to be sure, but the academics failed to sound the alarm. It was bloggers and a handful of more intelligent professionals who were trying to warn about the credit/housing bubble when it was still growing. The “experts” failed to see it (at least, that’s what they claim), and they failed to stop it when it was perfectly clear what the outcome was going to be.

[Arraya]

The big question is why did academics fail at forecasting this? THAT is the question and how that applies to society overall?

[urbanrealtor]

[quote=Arraya]The big question is why did academics fail at forecasting this? THAT is the question and how that applies to society overall?[/quote]

Probably because the immediate incentive structure did not benefit more than small actors and constituencies.
That is a recurring problem with treating Adam Smith and Milton Friedman as if they were Muhammed.
The explanatory utility of small actors working as an invisible hand gets wildly goofy when applied to big companies.

You have lots of little actors with incentives that benefit them instead of their company or that benefit their division instead of the firm or that benefit their company’s p/l this year but alienate clients moving forward.

For example, WaMu made lots of loans when the lending side needed better market share. They took resources away from other priorities.
When the loans started to go bad (inevitably) they did not have a functioning loss mitigation department (it had been folded into collections).
So when a distressed homeowner called them, they had aggressive credit card collectors bully the borrower.
This was a failure of overall strategy due its sacrifice at the alter of tactics.

A more obvious example is how Sony who had the largest catalog of songs and the best portable music player failed utterly to capitalize on digital music.
However, Apple, who had just come back from being within 90 days of bankruptcy ate their fucking lunch. Unbelievable.
The answer is that Sony set up divisions to compete with each other.
So the music division hated the electronics and vice versa and the tech side couldn’t get anyone to talk to them.
Each small actor there (the division bosses) lived in fear of being upstaged by or having talent poached by, the other division bosses.
Ever wonder why there are like 3 distinct Sony companies that make video games?

The bottom line is that academics assume that private actors know how to operate in their own best interest.

And that is often not true.

If those giant actors (banks or conglomerates) have strategies and incentive structures that are too focused on small constituent actors (like short term options and bonuses based on short term localized success), then it is often to the detriment of the overall mission of the company or big actor.

[patientrenter]

[quote=Arraya]The big question is why did academics fail at forecasting this? THAT is the question and how that applies to society overall?[/quote]

Shiller, Roubini, Roach, and a few other luminaries, academic or otherwise, did in fact diagnose the bubble and forecast a crash.

But they were a tiny minority, and were marginalized by the mainstream media. The reasons are several:

1. Inside academia, most economists spend their entire careers fine-tuning theories that predict a few economic variables for the next quarter. As a profession, economists spend very little time developing a more rigorous understanding of economics or finance over the long term.

2. In the finance world, those who develop a theory saying that the current bonuses and profits of their firm might be largely bogus, simply not sustainable over the long run, or an example of egregious economic rent extraction, will either decide they don’t have enough evidence and keep collecting their paychecks, or they will speak up and promptly be cast out of the community. It’s a tough choice. Most take the easy path.

3. Most mainstream media organizations are supported or controlled by the same people and firms that do well as long as the bubble continues. They will be made to feel disapproval if they suggest we have a bubble. Even now, how many people are suggesting that the Federal Reserve should let asset prices slip back to their levels in the mind-1990’s, before the huge expansion beyond historical trendlines since then? No one in the mainstream media wants to call that.

[equalizer]

The Economist magazine in the Jun 16th 2005 print edition clearly spelled out biggest bubble in history. In the June 13, 2005 Time magazine edition they stated why housing was destined to keep climbing due to endless foreign born Americans who have strong bias for houses.

Supposedly smart, rich people read the Economist. Why did almost everyone except us ignore their sage warning?

http://www.economist.com/node/4079027

http://bigpicture.typepad.com/comments/2005/06/uhoh_time_magaz.html

[Ren]

[quote=CA renter]1. IMHO, this is an argument for a LARGER government, not a smaller one.[/quote]

Actually it would most definitely end up being smaller, as I’m only referring to the most powerful positions. The rest would remain “regular” employees. Using the federal government as an example, once you replace 1,000 (or whatever) major decision makers with 10,000 private citizens, making choices based on logic rather than vested interests (what a concept!), the other 1.8m government employees would immediately begin getting trimmed. No more squirrel research, although programs with incredibly obvious benefits (such as stem cell research) would receive funding because it makes sense.

[quote]2. I have far less faith in “academics” regarding war (or just about anything else) than I do with highly competent, **experienced** people who have proven themselves in their respective fields over a long period of time.

“Academics” brought us the financial crisis and all the failed (and extremely expensive!) bailouts. The corruption was there, to be sure, but the academics failed to sound the alarm. It was bloggers and a handful of more intelligent professionals who were trying to warn about the credit/housing bubble when it was still growing. The “experts” failed to see it (at least, that’s what they claim), and they failed to stop it when it was perfectly clear what the outcome was going to be.[/quote]

Ah, but the academics you speak of had ulterior motives. They were primarily interested in the success of themselves or their company (“it’s a great time to buy/invest!”). The bloggers and professionals that you also mention are the academics I speak of. Self-taught or college educated, it’s the private citizens that I trust, the ones who would not benefit from the decisions they made in government service. I know there would be exceptions and some individuals would still make biased decisions, but that’s where the sheer numbers come in. A large group of knowledgable, mostly unbiased people would make better decisions than the people currently “serving” us. The corporations that now benefit from political corruption will be policed by the new service employees and the regulations they put in place.

I don’t doubt there are problems with this idea, but I’m confident it would work better than the joke of a system we have now.

[markmax33]

[quote=Arraya]The big question is why did academics fail at forecasting this? THAT is the question and how that applies to society overall?[/quote]

Central banks and Keynesian economics has failed 100s of times and never succeeded. The dual mandate of the fed made it impossible for them to act on it. People worshiped Greenspan like a God.

[scaredyclassic]

And I commend you for not bringing up greenspans religion.

[Arraya]

[quote=walterwhite]And I commend you for not bringing up greenspans religion.[/quote]

liberatarianism?

[markmax33]

[quote=walterwhite]And I commend you for not bringing up greenspans religion.[/quote]

Lol…no wonder SK loves the fed and doesn’t want to see it audited…jk, sort of.

[urbanrealtor]

[quote=markmax33][quote=walterwhite]And I commend you for not bringing up greenspans religion.[/quote]

Lol…no wonder SK loves the fed and doesn’t want to see it audited…jk, sort of.[/quote]

Dude.
You are such a bigoted douche bag.

I find it funny how you complain about Jews being anti-American as you drop your English every 3rd post.

I really don’t get that you are very American.

Yeah I am sure you have a flag on your car and worship at The Rock but you really don’t seem to get the whole diversity of opinion thing.

We are the mother-fucking homeland for lots of groups.

We have most of the worlds Irish and Jews and about half of all Mexicans.

I don’t know where all the Pollacks came from but both my dad and I married Polish chicks so apparently there are a lot.

This becomes relevant to the US as a country in the following way:

-We supported Solidarity in Poland in the 70’s and 80’s partially out of ethnic sentiment (though fighting commies was part of that).

-We supported the independence of Ireland (over the oppression of our British allies) largely out of ethnic and personal sentiment. Mind you we did that when most of Ireland (and Irish Americans) sided with the Axis powers.

-We supported a Jewish state on some god-awful real estate that we thought would go largely uncontested based on moral and ethnic sentiment. We are still paying for the stupidity in execution of that one.

-We continue to support liberal reforms in the near east as part of this sentiment.

Remember, there is nothing in the constitution permitting us to go to war in Europe in the 40’s.
We could have just defended ourselves from Japan and called it a day.

I, for one, am really glad that we allow our sentiment to guide us. We have made mistakes to be sure.
Likud, Hamas, UVF, and Sinn Fein are great examples of us not thinking through our actions.

Still I am glad we did them and that alone is a good reason to vote against Ron Paul.

[urbanrealtor]

[quote=Arraya][quote=walterwhite]And I commend you for not bringing up greenspans religion.[/quote]

liberatarianism?[/quote]

Unitarian Universalism.
Duh.

[Author]

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