The nomination for Ben Bernanke's re-appointment to the is coming up.

[drebo]

...

And we all know that wikipedia is the most unbiased, impartial, factually correct source. (that's the IN thing to do, right? Attack the source when you don't want to believe what it says? Craig, amidoingitrite?)

The fact still remains that Keynesian economists could not have predicted the bubble while Austrian economists did. Additionally, I tend to favor a partial-reserve (or no reserve) monetary policy over one where the value of our currency is controlled by a little man in an office in New York.

 

[MotF Bane]

THe disastrous, wrong ideologues of the Austrian school?

The same Austrian school that predicted the recession coming, versus the ideology that caused the recession and drives the deficit ever higher? It's pretty clear which one is actually disastrous and wrong, and it's not the Austrian school.

 

[Moonbeam]

The same Austrian school that predicted the recession coming, versus the ideology that caused the recession and drives the deficit ever higher? It's pretty clear which one is actually disastrous and wrong, and it's not the Austrian school.

Pretty clear that what is untestable is right. Clear generally means, my stupid opinion matches or was created by somebody else. Anybody who is clear about economics is a committed ideologist, in my opinion. On the one hand you are clear, and on the other, you are guessing.

 

[Moonbeam]

And we all know that wikipedia is the most unbiased, impartial, factually correct source. (that's the IN thing to do, right? Attack the source when you don't want to believe what it says? Craig, amidoingitrite?)

The fact still remains that Keynesian economists could not have predicted the bubble while Austrian economists did. Additionally, I tend to favor a partial-reserve (or no reserve) monetary policy over one where the value of our currency is controlled by a little man in an office in New York.

Who cares what you favor. If Bernanke isn't reappointed and some Austrian asshole raises the lending rate to 5 or 6 % how do you see the market reacting?

 

[cubeless]

He's the best man for the job.

He's the best man because anyone who would replace him would have gone to the same schools, hold the same theories, and implement the same policies as him.

The only difference is he is the undisputed expert on these policies and their implementation.

Do you want a lobotomy from the guy who went to Johns Hopkins or the guy who went to East Tennessee Medical College?

the guy from etmc probably has a lot more practice at it...

 

[drebo]

Who cares what you favor. If Bernanke isn't reappointed and some Austrian asshole raises the lending rate to 5 or 6 % how do you see the market reacting?

Foreign investors will certainly be happier and banks will make much less risky investments.

Win-win as far as I'm concerned.

 

[Moonbeam]

The beauty of being an idiot is that you get to be unchallenged. The sane world will never allow your ideas to be tested and proved wrong. Thus you can remain an idiot.

 

[drebo]

The beauty of being an idiot is that you get to be unchallenged. The sane world will never allow your ideas to be tested and proved wrong. Thus you can remain an idiot.

So in your deluded little mind, if the interest rates were raised to 5-6%, banks would all fail, everyone would default on their mortgages, and the credit markets would seize up, right?

News to you: All of the above has already happened at the artificially, stupidly low interest rates we have.

An increase in interest rates means one thing: a return to fiscal resonsibility. That's it.

 

[Lemon law]

Its meaningless to advocate Bernanke be replaced without a clue on who will replace him.

We could therefore do better or much worse.

 

[drebo]

Its meaningless to advocate Bernanke be replaced without a clue on who will replace him.

We could therefore do better or much worse.

I don't like the idea of having an unelected position which only one man in the country is "qualified" to hold. If people feel that Bernanke is the "only" choice, the position should be abolished.

 

[brencat]

there should never be another Fed chairman like Greenspan and Bernanke who espouse "easy money" monetary policy as the solution to all our problems

kick him to the curb

Fixed

Yes, I agree completely!

 

[rchiu]

I don't like the idea of having an unelected position which only one man in the country is "qualified" to hold. If people feel that Bernanke is the "only" choice, the position should be abolished.

Oh so you are saying this country's monetary policy should be determined by popular demand through election?

Just a suggestion, go read up real books and good information source and not just listen to Ron Paul bullshit so you don't post ignorant post like this.

 

[Craig234]

And we all know that wikipedia is the most unbiased, impartial, factually correct source. (that's the IN thing to do, right? Attack the source when you don't want to believe what it says? Craig, amidoingitrite?)

No, you're full of crap with yet another straw man. The quality of the source has nothing to do with you agreeing with it. The quality of your opinion is the question.

But, the perfect record for a long time of righties lying about my position, as the fasle basis for their false opionions, continues with yet another example added to the lies.

Without loooking at the Wikipeda being discussed, no source is perfect, but it's usually very useful, even if your opinions don't agree, and you can learn something. Not you, probably, but honest people.

 

[LegendKiller]

And we all know that wikipedia is the most unbiased, impartial, factually correct source. (that's the IN thing to do, right? Attack the source when you don't want to believe what it says? Craig, amidoingitrite?)

The fact still remains that Keynesian economists could not have predicted the bubble while Austrian economists did. Additionally, I tend to favor a partial-reserve (or no reserve) monetary policy over one where the value of our currency is controlled by a little man in an office in New York.

You don't need to be an austrian or keynesian economist to have predicted the bubble, you just need to have been unbiased.

I don't fall into either camp and I predicted the bubble back in 03/04.

 

[Craig234]

The beauty of being an idiot is that you get to be unchallenged. The sane world will never allow your ideas to be tested and proved wrong. Thus you can remain an idiot.

George Bush got to test his.Well, the people he enabled to - Neocons and other righties...

 

[LegendKiller]

The same Austrian school that predicted the recession coming, versus the ideology that caused the recession and drives the deficit ever higher? It's pretty clear which one is actually disastrous and wrong, and it's not the Austrian school.

You're fundamentally attributing the correctness of a "school" not to the thought processes of the people, but to the thought processes of the school. That is very incorrect, as many "keynesians" predicted the bubble also. You take it for holy writ that 100% of keynesians didn't predict the bubble, while 100% of Austrians did.

That is a silly notion, but one that Austrians love to use, since they themselves lack the forthright ability to admit their methods lack fundamental analysis and logic of human nature.

The fact remains that Bernanke lead the Fed through the worst economic conditions since, if not before, the great depression and he did it rather well. He wasn't 100% perfect, but nobody would have been.

 

[LegendKiller]

So in your deluded little mind, if the interest rates were raised to 5-6%, banks would all fail, everyone would default on their mortgages, and the credit markets would seize up, right?

News to you: All of the above has already happened at the artificially, stupidly low interest rates we have.

An increase in interest rates means one thing: a return to fiscal resonsibility. That's it.

Interest rates being low didn't do anything to cause the problem. All of the financial gimmickry that drove the housing market higher (e.g. option-arm and liar loans) were made to people who couldn't afford a low, or high, payment caused by low, or high, interest rates.

All of those financial gimmicks were meant to get AROUND high interest rates. Thus, they would have occurred no matter what.

 

[brencat]

Interest rates being low didn't do anything to cause the problem. All of the financial gimmickry that drove the housing market higher (e.g. option-arm and liar loans) were made to people who couldn't afford a low, or high, payment caused by low, or high, interest rates.

All of those financial gimmicks were meant to get AROUND high interest rates. Thus, they would have occurred no matter what.

But low interest rates also provided very low cost of capital allowing funds to lever up using borrowed money and speculate in the capital markets, while at the same time punishing savers and retirees on a fixed income. I believe rates needed to be cut to stimulate growth but they should never be at zero. FF should be ~ 2% right now IMO as the absolute floor.

 

[LegendKiller]

But low interest rates also provided very low cost of capital allowing funds to lever up using borrowed money and speculate in the capital markets, while at the same time punishing savers and retirees on a fixed income. I believe rates needed to be cut to stimulate growth but they should never be at zero. FF should be ~ 2% right now IMO as the absolute floor.

Ever hear of spread compression? Low borrowing rates were nothing compared to the spread demanded for funding.

If you want to see how that happens, read up on 5% 15-year CCC convertable PIK toggle notes.

Or how about sub-LIBOR AAA credit card bonds.

The basic fact is that the Fed couldn't control long-term rates. Those were driven by demand and the demand side found very smart ways to shove that stuff into every imaginable pocket of liquidity available, all of which circumvented FF affected rates.

Mortgage spreads were at historical lows. The market practically priced out ALL risk spreads. It was insane.

 

[drebo]

Interest rates being low didn't do anything to cause the problem. All of the financial gimmickry that drove the housing market higher (e.g. option-arm and liar loans) were made to people who couldn't afford a low, or high, payment caused by low, or high, interest rates.

All of those financial gimmicks were meant to get AROUND high interest rates. Thus, they would have occurred no matter what.

As stated (and it should have been immediately evident for someone as learned as you), all of the "financial gimmickry" would not have been possible had interest rates not been so low for so long.

EVERYTHING that has resulted in the recession we are now in goes back to the Fed, whether it be guaranteeing Fannie and Feddie or providing nearly free capital. Higher interest rates would have prevented a lot.

 

[drebo]

No, you're full of crap with yet another straw man. The quality of the source has nothing to do with you agreeing with it. The quality of your opinion is the question.

But, the perfect record for a long time of righties lying about my position, as the fasle basis for their false opionions, continues with yet another example added to the lies.

Without loooking at the Wikipeda being discussed, no source is perfect, but it's usually very useful, even if your opinions don't agree, and you can learn something. Not you, probably, but honest people.

My comment was aimed at the fact that all you ever do is call people idiots and claim that every source you don't like is biased and therefore dismiss it as irrelevant or stupid.

Thanks for not disappointing me.

 

[LegendKiller]

As stated (and it should have been immediately evident for someone as learned as you), all of the "financial gimmickry" would not have been possible had interest rates not been so low for so long.

EVERYTHING that has resulted in the recession we are now in goes back to the Fed, whether it be guaranteeing Fannie and Feddie or providing nearly free capital. Higher interest rates would have prevented a lot.

Again, the interest rates had almost nothing to do with it. Almost all of the gimmickry was designed to circumvent interest rates. 5/1 ARMS were designed to have low interest rates for a short period, locking in the shortest period of the yield curve (and the least spread-ey). Even if rates had been jacked up, the 5/1s were still done and locked in.

Option-Arms were designed to circumvent ANY interest rate increases, considering that you had the ability to capitalize a cumulative 25% of coupon. That means that even if the Fed had jacked up rates, it wouldn't have mattered.

Liar Loans were designed to not even tie affordability to the mortgage, thus, who cares if you could afford the interest rate?

On the funding side, as mentioned above, the market had their own version of Option-Arms in PIK toggle notes. Risk spread compression was abound.

The only theory that comes even close to explaining the boom is that low rates in Treasuries, as a by-product of low FF rates (although I don't buy into it since they are different products), resulted in yield-chasing to RMBS and other products. This is a silly argument as long-term rates aren't set by the Fed, FF rates have limited affect on LT rates when a bubble is in full blown frenzy mode.

As far as the GSEs, the guaranty was always implied but never explicit. The GSE's proportion of the mortgage market actually DECLINED during the bubble.

Seems to me you love reading Austrian FUD but know very little of reality.

 

[Moonbeam]

LK: Seems to me you love reading Austrian FUD but know very little of reality.

It's his religion.

 

[Craig234]

My comment was aimed at the fact that all you ever do is call people idiots and claim that every source you don't like is biased and therefore dismiss it as irrelevant or stupid.

Thanks for not disappointing me.

And the 100% rate of the right lying about my position adds another example.

 

[werepossum]

You don't need to be an austrian or keynesian economist to have predicted the bubble, you just need to have been unbiased.

I don't fall into either camp and I predicted the bubble back in 03/04.

Oddly enough I happened to catch Glenn Beck on the radio in that same time frame when he was predicting that this bubble would happen, and why it would happen, and why it would take the stock markets and financial sector with it. I had kind of thought he was an idiot before that, but I did some research and found he was absolutely correct in his facts. And as it turned out, he was absolutely correct in his predictions as well.

I'm no economist but I really enjoyed Hayek's writings on economics. There may not be much math, but I haven't noticed any other schools having much success predicting economic cycles either. I think all economic theories are like climate models, most useful in predicting things that have already happened. But as you said, it didn't take much theory to see this bubble coming, just some research.