Contributors

Wednesday, August 08, 2012


17 comments:

GuardDuck said...

In other words you still don't understand the way a market works....

last in line said...

Agree GuardDuck, flush the bad stuff out of the system. Artificially propping the housing market up just prolongs the suffering.

Mark Ward said...

Other than what's mentioned above, what would be downside of this action be? You guys claim to know more than I do about markets. Fine. Demonstrate your critical thinking here by looking at all the possibilities. Be sure to include an analysis of CDOs and credit default swaps.

GuardDuck said...

The market finds its equilibrium, which it cannot do with outside influences. The downside is that you may not like what that equilibrium is.....which is still better than propping up a market.

Why don't you show an analysis of why CDO's and CDS's should even be considered that doesn't include propping up another market....

Mark Ward said...

Let's see...

In other words you still don't understand the way a market works....

followed by

The market finds its equilibrium, which it cannot do with outside influences.

Clearly, you don't understand how markets work with the latter statement. Markets, in fact, don't find their equilibrium in monopolistic, monopolistically competitive, and oligopolistic markets. Sellers charge higher than the equilibrium price to maximize profit. This leads to an erosion of consumer surplus and inefficiency in the market. That's why the outside influence of government is needed, at times, to make it efficient.

You compound your error further by assuming that the housing market is as simple as the market for apples. It's obviously not which is why I mentioned CDO's and CDS's. That's the downside to letting the foreclosure process just play itself out as Governor Romney suggested. Since you know more than I do about this market and it's various complexities, I thought you might want to explain it to me:)

Mark Ward said...

Oh, and one more thing. Markets can still find their equilibrium even with outside influences. Take, for example, price ceilings or price floors. If they are set well enough above or well enough below the market equilibrium, there is still efficiency in the market.

-just dave said...

If you don't pay for something, how can it really be yours?

juris "bully weasel" imprudent said...

Clearly, you don't understand how markets work with the latter statement.

Says the grad-jee-it of one whole economics class.

GuardDuck said...

price ceilings or price floors

I'll start with this one because it's easy.

So you're saying that an outside influence that isn't influencing doesn't influence? No shit?

Pro tip of the day: An influence needs to influence in order to be an influence.....


monopolistic, monopolistically competitive, and oligopolistic markets

And with the exception of highly efficient players in a market monopolies, competitive monopolies and oligopolies don't form or don't continue without outside influences on the market.


You compound your error further by assuming that it's all so complex almost like your GM interconnectiveness BS. If you can't let the market find it's equilibrium because of what it might do to CDO's and CDS's then supporting the mortgage market is by extension supporting the CDO and CDS market. Outside influence upon both.

Why don't you look into the negative effects of non-capitalized lending upon currency valuation and defend that support and influence upon the CDO and CDS market and by extension your support of artificially increased value of capital.

Mark Ward said...

So you're saying that an outside influence that isn't influencing doesn't influence? No shit?

No. I'm saying that the market won't be inefficient as it is if the price ceiling or floor is set without consideration to the natural market equilibrium. That's when the problems start. It's the same with taxes and the key there is to minimize the deadweight loss.

don't form or don't continue without outside influences on the market.

Mmm...no, that's not true. If it were, then there would've been no need for the Sherman Anti-Trust Act, right? Of course, being a devotee of Adam Smith, you do remember his line about collusion, don't you?

Outside influence upon both.

Also not true. These products originated because the financial sector wanted to avoid regulation. The government didn't create these products.

Why don't you look into the negative effects of non-capitalized lending upon currency valuation and defend that support and influence upon the CDO and CDS market and by extension your support of artificially increased value of capital.

I think I'd like you to explain your understanding of CDO's and CDS's and the downside of simply letting the foreclosure process run its course. Obviously, you support this statement by Governor Romney. Fine. Let's see a critical look at this...all the angles...then I'd be to dive into your statement. You're playing "Gotcha" games again, GD, and avoiding my question.

Of course, if you'd be willing to admit that different rules apply to me, then you could possibly get out of doing your work:)

GuardDuck said...

I'm saying that the market won't be inefficient as it is if the price ceiling or floor is set without consideration to the natural market equilibrium.

You engrish no good...splain with words.


Mmm...no, that's not true.


Mmm, yes it is. No matter how much collusion there is, if the colluders over price the market then the opportunity is ripe for non-colluding competition. Of course the problem is large, successful colluders can leverage outside influences to create barriers to market entry. (that means rent seeking and favorable regulation)


avoid regulation

You realize that an action taken due to regulation - whether it is to comply with or avoid - is still an action taken due to outside influence? Of course you don't.



You're playing "Gotcha" games again, GD, and avoiding my question.

If you stopped being worried about 'gotcha' and actually paid attention to what was being said or asked then you'd be a lot less of an asshole.

You question was already answered. But you are too dense to realize it. (I'm not your student and your essay question is not only irrelevant but purposeful distraction.) But to repeat - LET THE MARKET DO WHAT THE MARKET WILL DO. ANY OUTSIDE INFLUENCE WILL ONLY DISTORT THE MARKET AND MAKE ANY EVENTUAL COLLAPSE WORSE.

Mark Ward said...

Spoken like a true free market fundamentalist. What do you think would've happened if we just let the market do what it would've done in 2008?

Certainly, government is a factor but it's not always the problem which is what you are intimating here, GD. Even Greg Mankiw, Mitt Romney's economic advisor and author of my economics text, doesn't go as far as you do. Few do. Thank God.

If only the economy were run by right wing bloggers....

GuardDuck said...

It would have crashed. Then it would have recovered and values would have normalized.

Instead it sorta crashed, and it has limped along in limbo for four years. And nothing has normalized, values are still propped and artificially inflated. And that will bite the market even bigger in the future.

government is a factor but it's not always the problem which is what you are intimating here

No I am not. That you can't see any criticism of your position without attributing it to 'gov't hate' is your fundamental mental block.

You present a 'problem' and blame it on the rich or the greedy. If I point out the base of your 'problem' is more accurately laid at the feet of, say, government, that does not mean I think every problem is gov't. That means that you incorrectly attribute cause and I disagree with you.

That you incorrectly attribute cause often, and that I disagree with you often bias' your view. To whit- you think I hate gov't because I have cause to point out your error so often.


true free market fundamentalist

To be criticized such by a statist with socialist economic tendencies is a rather flattering complement. Thank you.

juris imprudent said...

What do you think would've happened if we just let the market do what it would've done in 2008?

It would have been similar to Iceland - instead we are aping Japan.

I'll tell you what, I'll buy you a copy of Capitalism and Freedom if you will read it and ask questions (and not just reject every word because it is heresy to you).

juris imprudent said...

Even a few Friedman excerpts would do you a lot of good...

Mark Ward said...

Well, I knew the Scarlet "S" would be hauled out again. Just call me Hester....

Your analysis of what would've happened, GD, is completely ludicrous. In your zeal to never admit that there is any sort of fault with free markets, you ignore several fundamental realities, the primary one being that it wasn't simply one market. It was the world economy. You have refused to accept this which is why I wanted you to take an honest look at CDO's and CDS's. With no other viable option, the government had to take action. Even your like minded ideologues in the private sector were begging the government to do something.

It would be great if the government could stay out of the economy business. I'd certainly support that and that's why I'm not a "statist." If only there wasn't that pesky thing known as human nature...

Mark Ward said...

Well, I knew the Scarlet "S" would be hauled out again. Just call me Hester....

Your analysis of what would've happened, GD, is completely ludicrous. In your zeal to never admit that there is any sort of fault with free markets, you ignore several fundamental realities, the primary one being that it wasn't simply one market. It was the world economy. You have refused to accept this which is why I wanted you to take an honest look at CDO's and CDS's. With no other viable option, the government had to take action. Even your like minded ideologues in the private sector were begging the government to do something.

It would be great if the government could stay out of the economy business. I'd certainly support that and that's why I'm not a "statist." If only there wasn't that pesky thing known as human nature...