What's the matter with the French?

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delbified said:
govt insurance of low doc loans was a wealth building strategy of the... govt. the idea was to encourage home ownership amongst low income earners, partly to help alleviate the welfare burden when they retired. the theory was that even if they defaulted on the loans, they would still come out ahead in a rising property market. the problem is this contributed to a price bubble and eventually, a falling market and disaster for everyone. like most attempts to manipulate the market through regulation, it failed.

then the media blamed it all on soulless, greedy multinational companies and everyone nodded sagely to each other.

saying that failed govt policies are the fault of private industry who "made them do it" is a bit over the top.
it is absolutely over the top. but sadly how things shake out. history repeats itself, i am afraid.
 
Scott SoCal said:
I think you are getting into a broarder discussion of human nature. My lack of ideals is really an acceptance of things as they are, not as I'd wish them to be.

I don't see a sea change in human nature on the horizon therefore I know the type of government you espouse will never work on any grand scale for any significant period of time. You will never be able to put enough people in positions of power that are not able to be corrupted.

So, we are forced to deal with reality. Give me a system that allows me a reasonable chance to pursue Liberty and that's about all I can ask. In my view, the founders of the US constitution had the best bluprint to date.
Except that it discounted just about everybody who wasn't a w.a.s.p. then. :D

I think you should also check out the Costituzione della repubblica italiana of 48, or the Constituzione della nation francaise of the Fifth Republic of 58 or the works constitution acts for industrial relations of West Germany of 73, or the priniciples and philosphy behind the establishment of the welfare state in the Constitution of the United Kingdom following WWII to form a more cosmopolitan opinion.

I mean, before you say the "best so far," one must at least have familiarity with the others. ;)
 
delbified said:
but it's not about profit. using water as an example, it's a public resource. the objective is to provide that resource to the public at a minimum cost (to the tax payer). if a private company can provide that service at a lower cost to the tax payer than under state administration, while making $billions in profit, then all that matters is the former - that tax payers benefit. profit made by the private company should be of no concern to you or I.
And this is what you can't comprehend in our discussion, because it goes beyond you frankly.

Let me tell you something, though, there actually are lots and lots of people where I live who find it offensive that some private entity should be making profit on what they believe, in principle, belongs to the public domain. Thus it greatly concerns them. Because they don't want business owning every aspect of life.

And they know its a bunch of bull that the State can't provide them with a low cost water supply, and that rather in selling out to the private sector has simply caved into a different philosophy (and above all different interests and pressures).

History has taught them that when the lords become the title holders over every piece of the State, when the collective is simply transformed into a mass of vassals beneath them: then liberty and democracy are placed in grave danger. Even if the facade still remains in place.

People of the new world have a hard time accepting this, because born in democracy and under a capitalist economy, which, so far, has made them extremely fat in national wealth. However being rich and having a just system or a real, and not percieved, high life quality, aren't necessarily synonymous. This is why, therefore, it's useful to remember that there was once a Middle Ages. (Even if, in the broader scope, your history hadn't experienced one directly because pre national foundation.)
 
delbified said:
govt insurance of low doc loans was a wealth building strategy of the... govt. the idea was to encourage home ownership amongst low income earners, partly to help alleviate the welfare burden when they retired. the theory was that even if they defaulted on the loans, they would still come out ahead in a rising property market. the problem is this contributed to a price bubble and eventually, a falling market and disaster for everyone. like most attempts to manipulate the market through regulation, it failed.

then the media blamed it all on soulless, greedy multinational companies and everyone nodded sagely to each other.

saying that failed govt policies are the fault of private industry who "made them do it" is a bit over the top.
Still the real reason the whole house of cards came tumbling down was because the mortgage holders were left totally free to combine and resell these loans in packages that completely covered up the speculative nature of them and in fact removed them from the original government supported status that they had.
 
May 22, 2010
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rhubroma, i understand your perspective. a lot of people in "capitalist" australia hold a similar view. you're entitled to it - i don't see it as a question of justice, it's just personal preference. your view is simply not the prevailing view in countries like australia and the US.
 
May 22, 2010
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Hugh Januss said:
Still the real reason the whole house of cards came tumbling down was because the mortgage holders were left totally free to combine and resell these loans in packages that completely covered up the speculative nature of them and in fact removed them from the original government supported status that they had.
i doubt it. a much simpler explanation revolves around market fundamentals. by artificially inflating the housing market, by underwriting mortgages of low income earners, a pricing bubble was created. when this inevitably burst, the "house of cards" came down.

it seems possible that if traders were honest about the dubious status of the mortgage securities, they would have been harder to trade and therefore demand for them would have been less, which may have flowed down to the source (home buyers). but it also seems clear to me that traders were just playing the cards they'd been dealt by the govt - bad policy that encouraged the uptake of high risk loans. i imagine that convincing buyers that a security was a lower risk than it really was is nothing new - this was presented as some kind of magical explanation for the GFC - "traders lied to each other about the securities - other traders bought them, thinking they were low risk, when in fact, they were anything but..." who would ever imagine that traders would do due diligence on a trade? yes, this explains the GFC... not.

the problem is that the GFC became the perfect excuse to vent simmering anger at evil and untrustworthy securities traders. everyone loves this line but most people don't really understand how they were to blame - other than by being generally evil and untrustworthy.
 
Nov 24, 2009
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delbified said:
that's a huge assumption. privatised education provides students with more choice - it responds to consumer demand. the fact is, many students want an education that better positions them in the job market. you may not like that, you may value other qualities of education, such as the arts, but you need to ask yourself - is it right to dictate to students what sort of education they should be getting, based on your view of what an education should comprise?

i'd argue: No. if students want to study arts under a privatised education system, then you can bet that institutions will provide arts courses. what's wrong with that? unless you feel the state has a responsibility to impose these courses on students, regardless of whether students want or need them.
Not so sure it's a huge assumption. Middlesex University cut their philosophy programme and the justification was 'simply financial'. The article also says that languages, art, history and literature departments, though not necessarily at Middlesex, face the same growing concern, that they will be cut. If a University like Middlesex which is already subsumed under a funding structure is already making decisions based on a financial basis, do you not think those decisions would be more ruthless in the private sector? It could be possible that privatization would allow students to study humanities-type fields in specific institutions, but if even publicly funded institutions are cutting them, how do you think they will fare in the private sector?

Some things can't exist without some kind of public funding. Opera, for example, would quite frankly be dead long ago without some provision of funds by both the private and public sector through arts grants and public donations because ticket sales alone could not cover all the costs. But, it gets funding because there is an intrinsic value to it, a cultural value to it. I just don't think the Humanities would survive if they were subsumed under a privatization scheme because they wouldn't be able to cover costs.
 
delbified said:
rhubroma, i understand your perspective. a lot of people in "capitalist" australia hold a similar view. you're entitled to it - i don't see it as a question of justice, it's just personal preference. your view is simply not the prevailing view in countries like australia and the US.
I'm well aware of it.

The discussion began with the French protesters, but then has broadened into one of ideologies and principles. It's my view that during the Cold War, and its dramatic climax in the 80's, the yin and yang forces between Soviet communism and American democracy and capitalism had led to extremes, the consequences of which we are facing today and will be for some time in the future.

The victory of the West under American leadership has led to the hegemony of neoliberal capitalism, which, in its form of deregulation and the privatization of everything within the public domain, is an extreme that is the opposite of what communism represented. And extremes aren't healthy.

The principle that says society can just take care of itself is a propagandist falacy. Society doesn't take care of itself, individual people do. And people are greedy.

In the 20's and 30's and during the Second WW the worst part of Europe reared its ugly head. Following the war the best part of Europe envisioned an extraordinary social and democratic program, a contract between the State and its people which balanced individual freedom with social well-being. The Third Way allowed for the private sector to do its business, while maintaining a Public domain that was under the tutelage of government for the communal interest. It represented a compromise between two extremes that gave Europeans under the contract the best social standard on the planet accompanied by economic prosperity.

It is, therefore, a pity to see the forces of neoliberal capitalism and globalization assaulting this contract and tearing it down at its foundations.

Yet it is only a matter of time before the extreme ideology of the victor, which is disseminating more injustice and hardship around the globe today than it is so called democracy and liberty, becomes transformed because of its inherent conflict of interests into the causes of its own decline. The French protesters are defending that contract which represented a compromise between two extremes.
 
May 26, 2009
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delbified said:
traders were just playing the cards they'd been dealt by the govt - bad policy that encouraged the uptake of high risk loans. i imagine that convincing buyers that a security was a lower risk than it really was is nothing new - this was presented as some kind of magical explanation for the GFC - "traders lied to each other about the securities - other traders bought them, thinking they were low risk, when in fact, they were anything but..." who would ever imagine that traders would do due diligence on a trade? yes, this explains the GFC... not.
Let me see if I have this right - it was the fault of the government for leading the traders into temptation by establishing low value loans to risky poor people.

The poor Wall St whizzes who bought those low value loans, efficiently airbrushed out the risks and resold them at a tidy profit before reality asserted itself are blameless.

The lesson to be drawn from this crash is apparently that government should not attempt to help poor people, not that the financial instruments system could use some regulation to keep it straight and stable.

OK, I give up, I have better stuff to do ;)
 
May 22, 2010
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yourwelcome said:
The poor Wall St whizzes who bought those low value loans, efficiently airbrushed out the risks and resold them at a tidy profit before reality asserted itself are blameless.
the low value loans were a hot potato. it was being passed between traders, based on deceit. trading is to an extent a zero sum game - someone is going to be left holding the hot potato. who heated it up - govt policy that supported and encouraged huge numbers of americans with poor creditworthiness to obtain mortgages. that was the root cause, even if michael moore won't admit it.

why would traders buy low value loan securities in the first place? the only plausible explanation is - they miscalculated their value. how is that dishonest? negligent, maybe and dishonest in their decision to pass them off, but they were not the root cause.

blaming traders is like blaming someone who sold you a lemon of a car, due to manufacturing faults. Ok, maybe the seller didn't do you any favours. but who's really to blame?

the australian govt, nor any other i'm aware of, ever underwrote low doc loans like the US did under the Clinton presidency (and continued under Dubya). that's no coincidence - it was a dumb idea and in the end, catastrophic at a global level. the australian housing market continues to hold at record levels. we use mostly the same traders as the US. it's not hard to do the maths on that.
 
delbified said:
the low value loans were a hot potato. it was being passed between traders, based on deceit. trading is to an extent a zero sum game - someone is going to be left holding the hot potato. who heated it up - govt policy that supported and encouraged huge numbers of americans with poor creditworthiness to obtain mortgages. that was the root cause, even if michael moore won't admit it.

why would traders buy low value loan securities in the first place? the only plausible explanation is - they miscalculated their value. how is that dishonest? negligent, maybe and dishonest in their decision to pass them off, but they were not the root cause.

blaming traders is like blaming someone who sold you a lemon of a car, due to manufacturing faults. Ok, maybe the seller didn't do you any favours. but who's really to blame?

the australian govt, nor any other i'm aware of, ever underwrote low doc loans like the US did under the Clinton presidency (and continued under Dubya). that's no coincidence - it was a dumb idea and in the end, catastrophic at a global level. the australian housing market continues to hold at record levels. we use mostly the same traders as the US. it's not hard to do the maths on that.
Your argument that assumes traders are actually quite wholesome types who were merely playing a game that has been sanctioned and legitimized by government, and thus completely innocent, is an incredible thesis. That blame is only to be cast, therefore, upon government, is a nice way to relieve your conscience regarding anything iniquitous and foul about the traders game itself is stunning.

If this isn't ideology, then I don't know what is. In reality it only demonstrates how far the so called "creative finance" and deregulation promoted by neoliberal capitalism, has transformed politics, and therefore government, into being completely at one with the business universe. How the financial interests of the Wall Street traders coincide precisely with those of the politicians and how, consequently, the function of government is predicated upon establishing policy that is most congenial to profit. Even when the business practices and the methods of making profit, place everybody at great risk as was recently the case.

Of course many of the politicians were themselves traders, so therefore it is often quite difficult to distinguish the one from the other. In reality they both were the promoters and players of a game which merged extremely high risk with unchecked greed that was, yes, given the benediction of government. The disaster was thus forecast.

It is another example of why the system that is the driving force behind a rather chaotic globalization needs to be radically reformed and not how it's being done by the US government today, which really amounts to a "change everything so that everything remains the same."

Add this to the list of problems those French protesters are raging against.
 
May 26, 2009
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delbified said:
the low value loans were a hot potato. it was being passed between traders, based on deceit. trading is to an extent a zero sum game - someone is going to be left holding the hot potato. who heated it up - govt policy that supported and encouraged huge numbers of americans with poor creditworthiness to obtain mortgages.
I don't agree that a government policy designed to have low income earners access to relatively small loans is the evil here. Mortgages like that are not an economic problem if they are bought and sold at real values. Maybe they should have written their rules for these loans to pre-empt whatever abuse they could imagine, but in the end it wasn't actually the government abusing these loans, was it?

Without deceitful lenders plus an industry of 'innovative' traders blowing up the values of those loans, there would have been no opportunity for them to get so toxic.

delbified said:
blaming traders is like blaming someone who sold you a lemon of a car, due to manufacturing faults.
Problem with that analogy is in this case it was the seller of the car who created the faults.

delbified said:
the australian govt, nor any other i'm aware of, ever underwrote low doc loans like the US did under the Clinton presidency (and continued under Dubya). that's no coincidence - it was a dumb idea. the australian housing market continues to hold at record levels. we use mostly the same traders as the US. it's not hard to do the maths on that.
I don't think we use the same traders. The Australian housing market is overwhelmingly financed by a small oligopoly of 4 big banks regulated by government to a degree that would be called 'socialist' in the USA. As a bank sector economist here said the other day, the downside of further deregulation is that while profits may go up, it will be at the expense of stability.

Second, Australia doesn't have a huge underclass of working poor and unemployed like the USA, so there's been no need for a US style low income loans program. Seems to me that's one of the benefits of government taking some responsibility in providing health care, public welfare and education. I quite like the economic stability it produces and I'm disturbed by the right wingers here trying to push us further towards the US model.

All that said, the Aussie housing market is hugely overvalued at the moment, underpinned by generous taxbreaks for investors and blind optimism that prices will keep rising faster than wages. That balloon won't keep going up forever.

Anyway, your views obviously differ hugely from mine, let's leave it at that.
 
yourwelcome said:
I don't agree that a government policy designed to have low income earners access to relatively small loans is the evil here. Mortgages like that are not an economic problem if they are bought and sold at real values. Maybe they should have written their rules for these loans to pre-empt whatever abuse they could imagine, but in the end it wasn't actually the government abusing these loans, was it?

Without deceitful lenders plus an industry of 'innovative' traders blowing up the values of those loans, there would have been no opportunity for them to get so toxic.



Problem with that analogy is in this case it was the seller of the car who created the faults.



I don't think we use the same traders. The Australian housing market is overwhelmingly financed by a small oligopoly of 4 big banks regulated by government to a degree that would be called 'socialist' in the USA. As a bank sector economist here said the other day, the downside of further deregulation is that while profits may go up, it will be at the expense of stability.

Second, Australia doesn't have a huge underclass of working poor and unemployed like the USA, so there's been no need for a US style low income loans program. Seems to me that's one of the benefits of government taking some responsibility in providing health care, public welfare and education. I quite like the economic stability it produces and I'm disturbed by the right wingers here trying to push us further towards the US model.

All that said, the Aussie housing market is hugely overvalued at the moment, underpinned by generous taxbreaks for investors and blind optimism that prices will keep rising faster than wages. That balloon won't keep going up forever.

Anyway, your views obviously differ hugely from mine, let's leave it at that.
Thanks for the informative piece.
 
May 22, 2010
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yourwelcome said:
I don't agree that a government policy designed to have low income earners access to relatively small loans is the evil here. Mortgages like that are not an economic problem if they are bought and sold at real values. Maybe they should have written their rules for these loans to pre-empt whatever abuse they could imagine, but in the end it wasn't actually the government abusing these loans, was it?
yes it was. the govt was issuing financial incentives for Freddie Mac/Fannie Mae to purchase low doc loan securities - which inflated their values. this was govt policy. they were govt backed organisations.

the whole point of the govt policy was to distort the value of the loan securities, to encourage their trade and continue the flow of loan approvals to low income earners. this was done in plain sight - they had enormous loan companies who had that objective. as i understand it, other non-govt traders bought the securities from them - now there's no doubt greed was involved here, but to an extent, these organisations were victims as much as perpetrators.

yourwelcome said:
I don't think we use the same traders. The Australian housing market is overwhelmingly financed by a small oligopoly of 4 big banks regulated by government to a degree that would be called 'socialist' in the USA.
those aren't the traders. the banks are just the front end - the securities are onsold to the global securities market.

yourwelcome said:
Second, Australia doesn't have a huge underclass of working poor and unemployed like the USA, so there's been no need for a US style low income loans program.
that's debatable. australia has a much smaller population and hides its underclass more easily. home ownership is out of reach of many. but it does have tighter lending rules. this is good regulation.
 
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rhubroma said:
Except that it discounted just about everybody who wasn't a w.a.s.p. then. :D

I think you should also check out the Costituzione della repubblica italiana of 48, or the Constituzione della nation francaise of the Fifth Republic of 58 or the works constitution acts for industrial relations of West Germany of 73, or the priniciples and philosphy behind the establishment of the welfare state in the Constitution of the United Kingdom following WWII to form a more cosmopolitan opinion.

I mean, before you say the "best so far," one must at least have familiarity with the others. ;)
Again, your post makes me smile. Thanks for that.

Admittedly, you know much more about the French and Italian Constitutions than I. But don't you get the feeling they still are not convinced they have it right? The 2nd Republic followed by the 3rd Republic followed by the 4th Republic followed by the 5th Republic.... how long until the 6th?

I'll stand by my original opinion concerning the US founders and the document they created. I'll defer to you to name the best of the rest.
 
Scott SoCal said:
Again, your post makes me smile. Thanks for that.

Admittedly, you know much more about the French and Italian Constitutions than I. But don't you get the feeling they still are not convinced they have it right? The 2nd Republic followed by the 3rd Republic followed by the 4th Republic followed by the 5th Republic.... how long until the 6th?

I'll stand by my original opinion concerning the US founders and the document they created. I'll defer to you to name the best of the rest.
I think that the late XVIII century US Constitution was a good start. I think that the unforeseen and unforeseeable consequences of XIX industrial capitalism, and the ensuing ideological reaction of Marx and Engels, taken into consideration along with the fanatical nationalism at the basis of WWI, which then begot the fascist regimes and crisis of the WWII era, had led Europe to a more evolved concept of democracy and the economy within those constitutions mentioned above.The lessons learned from a simultaneously devastating and intensely imaginative century and a half circa between these two moments, was fundamental to envisioning a new system that drew elements from both sides.

I think the US could learn much from this middle road between ultra-privatization and communism, between individual freedom and collective cooperation and support, that was at the basis of these documents.

The present course of history has only reinforced my conviction in this regard.
 
delbified said:
that's a huge assumption. privatised education provides students with more choice - it responds to consumer demand. the fact is, many students want an education that better positions them in the job market. you may not like that, you may value other qualities of education, such as the arts, but you need to ask yourself - is it right to dictate to students what sort of education they should be getting, based on your view of what an education should comprise?

i'd argue: No. if students want to study arts under a privatised education system, then you can bet that institutions will provide arts courses. what's wrong with that? unless you feel the state has a responsibility to impose these courses on students, regardless of whether students want or need them.
In fact privatized education is often not giving students what they absolutely need.

I'm in education on the front lines. Giving students all the choice, doesn't mean giving them an education. I mean we aren't at a shopping mall. The popularity of a subject often has nothing to do with what students need to "purchase." Treating something as important as education, which means the forma mentis of the emerging generation, as if it were entirely up to their choice has led to the disaster. There is a core knowledge which should first be acquired. The objective of a good education isn't about getting a job first, or what is necessary in the field of employment, but to form critically informed citizens. And this can only be gotten in the humanistic tradition, after which one can become a scientist or a medic or a trader, etc.

The problem is that students in the primary and secondary schools (I can speak for America) aren't being taught to think critically. They don't have to learn how to write, let alone articulate orally, their thoughts. When they get to university they should be merely fine tuning and perfecting what they had been required and exposed to in the earlier phases. Instead they are starting from the foundation. I get asked by my university students time and time again what antiquity means! Students who have chosen to come to Rome to study! And they don't make conections. Everything for them exists in an immediate and eternal now. The wider implications of what they have reviewed previously, in regards to how it can inform about similar paterns (or discontinuities) in future scenarios, is entirely lost upon them. And they don't study! Mediocracy becomes exchanged for excellence and everybody feels they are entilted to an A.

I would be a liar if I spoke otherwise. And it has nothing to do with their being in Rome.

I also know that in the grammer schools in the US things are increasingly based upon standardized tests, where the institutions are targeting numbers and percentages to demonstrate "results" to the State they are in part funded by. A corporate mentality of statistical, board-meeting, praxis, has thus become the model for education! We fill in the dots with lead pencils and that's it.

It's just aweful.
 
May 22, 2010
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i was referring to tertiary education, moreso than primary or secondary. i agree there needs to be a core curriculum for primary and secondary schooling. but once a student has graduated and wants to enter the tertiary sector, they should be free to choose whichever type of study they want to undertake, including none at all.

the argument in favour of public colleges/universities is much weaker. no one has the right to dictate to an adult what they need to learn.
 
delbified said:
i was referring to tertiary education, moreso than primary or secondary. i agree there needs to be a core curriculum for primary and secondary schooling. but once a student has graduated and wants to enter the tertiary sector, they should be free to choose whichever type of study they want to undertake, including none at all.

the argument in favour of public colleges/universities is much weaker. no one has the right to dictate to an adult what they need to learn.
Agreed on everything till the last statement, if only because I was not suggesting that the schools (public or private) should dictate what students should study just to be clear.

You'll have to excuse me, for I was in the middle of correcting my mid term exams. Read your quote above and saw occasion to vent my frustrations. :D

I realize we have drifted away from the original topic, though many of the French protesters were students so...

In any case, the problem is really that the public schools have lost all sense of rigor and purpose in the formation of students, before they get to the university. Then, when they enter the private university system, they are floating on a sea of hot magma, which often swirls them aimlessly about. Unfortunately too, the private universities are increasingly being run like corporations. The adminsitrators coming from a business formation and not an intellectal one. The quality of students and the instruction, I'm talking about in the humanities not in finance and business courses (but that's something else) has droped as a result. Then, of course, there is much grade inflation, because it is very difficult to fail the "paying customers," err, um I mean students. This leads to a lax environment. I'm not saying this to be mean, and in many respects its not the students' fault, but this is the objective state of things. I therefore get students (many not few) who after 8 years of primary school, 4 years of secondary school and 2 years at university have never heard of the Ancient Roman Empire. Coming to a Rome based program! The things they don't know in the general education sense, compared to their Italian age contemporaries is noteworthy.

In Italy, although the Berlusconi administration is masterfully beginning to F-up even this with so called education "reforms," the primary and secondary school system is still very good in the humanities and sciences and, therefore, in giving the kids a good grasp of the world critically, and those mechanisms which have conditioned the course of civilization and history. And they are rigorous. Students fail who don't perform, where performance is based on a much higher expectation than what I can even place on my university students. I should know, I have a daughter in the quinto elementare (5th grade). Thus when they arrrive at university, they are truly ready for specialization. The problem is funding at the university level, but as my students demonstrate: you can throw as much money from the private sector into the system you want, though this doesn't necessarily mean you have elevated the quality of instruction, nor that of the students. Often, in fact, considering all the business praxis that have taken over the institutions, it seems quite to the contrary.
 

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