(w)Ron(g) Paul’s Free Market Fairytale



[media-credit name="Erika Frost" align="aligncenter" width="250"][/media-credit]Gather round, all ye children, for I haveth a tale for thee on why Ron Paul is oh so wrong…

Once upon a time (two weeks ago, actually), MF Global filed the eighth-largest bankruptcy in history, with debts leveraged 40 to one against its capital. That means that for every one dollar of capital MF Global owned, it was buying 40 dollars’ worth of debt. To put that into perspective, Lehman Brothers was leveraged 30 to one when it collapsed in 2008 along with the housing market, flushing our economy down the toilet. Yet while we lingered in that economic sewer, with the scent of Lehman Brothers’ crap still fresh in our nostrils, the jackasses at MF Global decided to pursue those exact same risky practices that got us into this mess in the first place.

But wait, it gets even better. Jon Corzine, the then-CEO of MF Global, is a former senator who has spoken out many times for the need for better regulation of Wall Street. In a speech he gave at Princeton in September of last year, just a few months after he joined MF Global, Corzine talked about how it was unacceptable that some of Wall Street’s biggest players leveraged their shareholders’ money at a ratio of 30 to one leading up to the crisis. Yet in the very next year, Corzine decided to go bipolar and take his own company’s leverage ratio to an insane 40 to one rate with a $6.3 billion bet on high-risk debt from countries like Italy, Spain and Portugal.

As the debt crisis in Europe widened and defaulting became a possibility, the value of that debt tanked, meaning huge losses for MF Global. When investors started asking for their money, it became apparent there wasn’t going to be enough to go around since the company had so little capital to fall back on. Bloomberg Businessweek reports that MF Global’s bondholders will likely recover as little as 10 cents for every dollar they had invested in the company! The insanity of the whole situation is that Corzine obviously knew exactly how risky it was to leverage his company to such an extreme rate, but he did it anyway because of the potentially huge rewards.

The collapse of MF Global is the latest proof that the free market is not always “self-regulating” in the way that Ron Paul and others would have you believe. The New York Times reports that prior to 2004, investment banks were forced to maintain leverage ratios no higher than 12 to one by a longstanding Securities and Exchange Commission regulation. However, the big investment banks successfully lobbied the commission to lift that requirement, arguing it would free up billions to invest in the growing mortgage-backed securities market (oops!). MF Global would not have collapsed if those regulations were still in place today. Of course, Ron Paul and co. will still try to mold MF Global’s failure to fit their free market fairytale: that the collapse of MF Global will prove a cautionary tale for other investment banks against leveraging themselves so highly, leading the market to regulate itself through better business practices since all companies want to ensure their own preservation … blah blah blah.

This WOULD make complete sense, except for the fact that we all just witnessed the cautionary tale of Lehman Brothers over-leveraging itself three years earlier! And you can’t argue that Corzine didn’t take note, because he himself was one of the cautionary tale’s own storytellers! It’s like if the third little pig went around bragging to all his neighbors about how safe he was inside his brick house only to sell it the next day and build a new house out of sticks, thinking about all the money he’d be saving. In comes the wolf, huff and puff, pork chop dinner, nom nom nom.

The truth of the matter is that in an unregulated free market, the huge short-term gains that an investment bank can make on risky bets can easily trump long-term concerns for the company’s health. When a company and investors are making millions on risky bets that pay off, anybody who says, “Hold on a second, guys,” is going to be thrown under the bus before they can even finish their sentence. This conflict of interest is always going to create a slew of risky companies that people invest in anyway because of the huge short-term gains they can make. When the house of cards starts to fall, these high-risk investment banks will go bankrupt, but there will always be others more than willing to fill those empty shoes in the future. The result is a much less stable financial system with big booms and even bigger busts — busts that will disproportionately hurt the average Joe.

When the SEC was preparing to make its decision to eliminate leverage requirements in 2004, according to the Times there was one lone dissenter, a risk management expert who sent in a two-page report warning the agency of its grave mistake.

“He never heard back from Washington.”

Daily Nexus columnist Riley Schenck thinks it’s about time Paul and co. close the storybook and take a good hard look at reality — the pictures aren’t so pretty.

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73 Responses to (w)Ron(g) Paul’s Free Market Fairytale

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  3. Matt Reply

    November 23, 2011 at 6:51 pm

    If this doesn’t get you to look at RP again, nothing will: http://www.youtube.com/watch?feature=player_embedded&v=QLdcB0ln9t8

  4. Grim Reply

    November 16, 2011 at 8:37 am

    Correct me if I’m wrong here, but you seem to be arguing that the stimulus bill was good and that some things are “too big to fail,” am I correct? The stimulus bill did an odd thing with the economy where, like the original trickle during the Hoover administration it worked in a short term, and like that same plan it created a false peak, this false peak lead to one year where there was a ton of job growth and then…..well then we hit an even worse crash then the first part, do you follow me. Sure the money got into the system, but between companies not using it the right way, people placing it into savings funds and various other ways, the money was wasted, the debt rose, and the economy crashed once again, it was as effective as a piece of tape on a crack in a dam wall.

    Now onto part two, nothing is too big to fail. Everything, from the local mom and pop store, to Wal-Mart, to even the United States itself, everything will one day fail, replaced by something else. Greece, Rome, the monopolies of the 10-30’s, the mafia, the Nazis, the USSR, things rise, and things fall, only time remains. The idea that we should prolong the life of something that can no longer stand on its two feet in my opinion is ridiculous. For a healthy economy to exist businesses need to fail, not everything can work. The reason the middle class, the dollar, and the economy itself are so broken is because we have spent money trying to bail out these large corporations, expecting money back that never comes, every dollar wasted in the stimulus bill could have gone to keep us from defaulting on another international loan, every dollar printed to throw into the abyss that was the stimulus bill was more weight on the dollar which at this point is slowly getting to the point where coins aren’t worth the metal to create them (hey look a silver lining to the economic crisis, the destruction of coins as a whole).
    Now look, personally anyone that comes to me asking for money, I’ll give them what I can, I’ve had homeless sleep in a hotel on my behalf, I’ve given out countless hamburgers to less fortunate, but at the end of the day THAT’S MY CHOICE, I would never….will never force another man to take his hard earned money and use it in a way he does not want to. That is my biggest problem with programs like Medicare and Food Stamps, it’s a system where people get on it, get use to it, and never get off it. I have friends who cheat on Food Stamps by living with someone else, having what is essentially a joint income, but file separate taxes so they can continue to cheat the government. The same thing happened with the stimulus bill. Corporations took them, divvied them out to their top people, defaulted and went bankrupt, and that’s way the economy’s the way it is.

    Let’s look at this from another perspective, something that I, and many others have much experience with, student loans. A student borrows money from the government, the government needs to find the money for it so they cut state funding, the state needs to make the money back so they raise the cost of state universities, more students need more student loans, the federal government taxes the states more, university prices go up, the cycle continues on and on.

    The way the economy is working is very similar, a business borrows money from the government, the government asks for it back with interest so the company lays off workers, increases prices, cuts benefits, or does a combination of the three (or maybe something else) to pay the government back, the value of the dollar drops, the business needs more money to make up so it gets another loan, the cycle begins anew.

    Now look I’m your opinions very valid, just as all opinions are, but I have to strongly disagree. What you define as a horrible monstrosity, I, and those that share my opinion define as beautiful, and that is the fact that a man, can open a business, slowly build a customer base, see continued growth, and by no ones fault but his own, take a gamble and either plummet back to zero or reach a level of economic gain that most of us can only dream of, all by his choice, with no help from the government or some 3rd party that would attempt to take away his right to run that business the way he wants to. To me that is the world I want to live in, where we live and die by our own choices and freedoms, and not under the protection of the government where your freedoms are limited and that is the world that I believe a candidate like Dr. Paul, which is why where things stand right now, he is my choice for president. Because he shares the views that I belive in, and from the looks of it, a good share of people agree with.

    • Riley Schenck Reply

      November 16, 2011 at 2:02 pm

      fuck, i just couldn’t fight the temptation to check back lol….

      Grim, I really appreciate you not lowering yourself to the name-calling, intellect-questioning level of some of the other commenters on this article, and like I’ve said before, the “(w)Ron(g)” jab was unnessary and not very classy on my part; we are all entitled to our own opinions, and I believe that honest debate about where the direction of this country is going is the most important thing in the world right now. I agree with you that both of our opinions are entirely valid, and the idea of a libertarian society can be supported by sound theoretical reasoning (although I disagree, for reasons that are also sound theoretically). However, in my opinion, the unquestionably painful short term effects of policy that you and Paul support are not worth getting to the theoretical “libertarian society” which you all contend is worthwile, but that me and many, many others have serious and legitimate concerns about. But I have already addressed those theoretical concerns, so let me address why I don’t believe it’s worthwile to find out who’s right:

      I too am not satisfied with TARP for many of the reasons you’ve already presented, but yes, the elimination of regulation such as “Glass-Steagall” created a situation that was “too big to fail.” And now, setting aside ideological arguments, we are talking about REAL people here and their livelihoods. To have let all the investment and commercial banks collapse now that we had stupidly let them achieve thier “too big to fail” status would have meant EXTREME hardships for the average american and the millions (like my parents) trapped beneath upside down mortgages. The elimination of effective regulation created this shitty situation that we all have to deal with now.

      But now that we’ve prevented an outright collapse, a second stimulus should be implemented that focuses on the average consumer for the reasons that I’ve already stated (spur economic growth, mitigate the painful effects of austerity). The average consumer doesn’t have the luxury of being able to stash stimulus money into private accounts like those in the finance industry can. Sure, there are always going to be examples of government waste like your toolish friends who take advantage of food stamps, but that is a fallacy to automatically disqualify the real world positive benefits (keeping countless children from going to bed starving, for examnple) based on the selfish greed of the few.

      I am sure that every single person who has posted on this comment board comes from a family that makes far more than the average american ($45,000 per year!!), so it is easy for you to sit on your high-horse and promote policies that you CAN NOT DENY would cause in the short term incredible hardship for the average american. The policies of austerity that you and Paul support would DECREASE lending and borrowing, INCREASE unemployment, and cause ECONOMIC CONTRACTION that would cause real pain and suffering for the average american for many years. We can debate whether or not in the long term, your libertarian society would be for the benefit of all (I disagree), but anyone who’s taken even the most introductory of macro econ classes knows that what you are proposing would mean REAL and SERIOUSLY NEGATIVE consequences for the average american’s standard of living. Why do you think Greek and Italian societies are so scared of their imminent austerity measures?

      Unlike Greece and Italy, who have practically no international liquidity, the United States has more international liquidity than any other country! It JUST DOESN’T MAKE SENSE to pursue policies of austerity that will contract our economy and create widespread hardship when financing is readily available to us. The dominance of the Dollar isn’t bound to fall anytime soon for many reasons including the “stickiness” of monetary preferences and the lack of an suitable alternatives, meaning we can finance our debts and an additional stimulus that will allow us to correct structural problems like our lowest-since-before-WWII tax rate on the wealthy and a interest rate that discourages household saving. We need to pursue smart and effective GOVERNMENT regulation that eliminates “too big to fail” and decreases speculation and market volatility, such as slowly INCREASING the capital gains tax rate.

      Pursuing these types of policies would create a stronger, healthier, and more competitive American SOCIETY that Americans now and long into the future can enjoy.

      • Brandon Reply

        November 16, 2011 at 3:05 pm

        Riley: We’re saying that your introductory macroeconomics class was wrong. Just because it was taught in your college doesn’t make it the only legitimate theory in the world on economics, nor does it make it right. I’ve already attacked your proven examples (all Keynes straw man below if you feel like reading them.

        I know this has been a conversation is generalizations and theory, but the Restore America plan isn’t pure austerity. It cuts waste, deregulates, repatriates money that left for American companies and creates an economy that businesses want to move into.

        This conversation goes round and round in a ideological circle. You can’t disprove Paul’s effectiveness with evidence or real examples, and we can’t prove to you that the US will end up being like every other fiat currency empire of the past until it collapses into a smoking heap. You appreciate order over chaos. You want social and economic equality where we want social and economic freedom. There frankly is no chance that you could agree with people who stand behind Ron Paul.

        I’m curious to know who your candidate is and what their wonderful plan is that will bring about a greater age of prosperity.

  5. Matt Reply

    November 15, 2011 at 6:57 pm

    “If you are eating artery clogging cheeseburgers every day, you are stepping on my rights through the public costs you create which I am going to have to help pay in order to insure that you don’t die in the streets.”

    – In a free society my CHOICE to eat cheeseburgers has no effect whatsoever on your ‘costs’. Only in the deranged, totalitarian, control-grid your philosophy necessitates are you forced to pay for my cheeseburger problems.

    – By your logic, the people manning the government (mostly scumbags, thieves, and liars)are somehow better at making these choices than everyone else. How much to leverage debt, how many cheeseburgers to eat, what plants to smoke, what to to with my kids, how much to exercise, etc. Further, there must be some ‘one-size-fits-all’ program of ‘good choices’ which can be forcibly implemented in a top down manner. Next time you have a life choice to make, just ask yourself, “what would ‘W’ do?” Is that really the kind of society you want to live in? What do you do when you disagree with the people deciding what all the “right” choices are? What if those people are wrong, or stupid, or corrupt?

    You have a long way to go in your intellectual development… I don’t think any comments here are going to change your mind, but you should be aware that what you are advocating has been the folly and dream of petty-tyrants and control-freaks since the dawn of time and has led to more death and suffering than can possibly be tolerated.

    PEACE, PROSPERITY, FREEDOM … is the only alternative to getting fckd over and over again by force-using ass-holes. The sooner you figure that out the sooner you will stop being a tool for those same force-using ass-holes who are fcking you.

    • Vaporizer Reply

      November 15, 2011 at 9:00 pm

      I second that.

      This article is part of a publication of a state owned university, so it should not surprise anyone that the author promotes the violence.

      I would never vote for a politician, but Ron Paul deserves far less criticism than any other U.S. federal politician in office today.

    • Riley Schenck Reply

      November 15, 2011 at 10:36 pm

      Wow, really eloquently put. I can see now that clearly, I am no match for your superior intellect.

      Good job not responding to my central argument (the responsibilities of individuals to society and of society to it’s individuals) by repeating a bunch of canned Ron Paul campaign lines I’ve already heard a hundred times. What are you trying to be, a politician? ;) Lol.

      I’m not going to run around in any more pointless ideological circles with you guys, ya’ll are free to have the last word. Just remember to curse those “lying,” “petty-tyrant thieves” next time you’re driving on a government built highway to a state protected forest, breathing fresh air and eating food protected by food safety laws. And you know what’s even worse? If you stop to eat at a restaurant in Cali, those “scumbag” “control-freaks” have even taken away your FREEDOM to order food that contain dangerous trans fats! Oh the calamity!

      Now go waste your breath assuring each other of how ignorant I am and the flawlessness of your idol’s unproven ideology…cuz I’m outtie.

      • Brandon Reply

        November 16, 2011 at 2:50 am

        The responsibility of the US government is to protect the freedoms of its people from foreign and domestic threats and hold authority over things not explicitly granted to the states. It is the constitution and the rule of law that ensure the government doesn’t become that threat.

        The responsibilities of individuals, viewed by the founding fathers, was to hold the government to its limited role in their lives by voting and running for public office.

        Your question of responsibility and what you think is the right answer didn’t come about until FDR, who comforted this country with failed economic policies and likely allowed Pearl Harbor to br bombed (cables say he knew about it) to escape the brutal reality of his failure.

        I don’t think it’s a question of Paul’s unproven ideology being the cure-all, I think it’s a question of how long people like you are going to continue supporting the same broken policies until it occurs to you to try something different.

        You print more money to soften the edges of the economic woes, inflation goes up, things are still bad and getting worse. Your solution? Print more money.

        You create a monstrous social welfare system that has to be bailed out every decade. You create an even bigger medical system, that like Canada’s system and many others, will require tens of billions of dollars every few years to keep from going bankrupt. Your solution? Keep throwing money at the problem.

        You talk about these controls and programs, which have already been implemented over in Europe. Look at Europe! You want the US to be like them? You awareness of the world doesn’t leave much room for our faith in your ideals.

      • Vaporizer Reply

        November 16, 2011 at 6:03 pm

        Riley,

        Your sarcasm is clever, but what was the point of it, to insult me? I respect you as a human being and respect your right to disagree with my opinion, and I would hope you would offer me the same courtesy.

        I will respond by stating:

        Government highways are low quality because they are designed by bureaucrats.

        • Vaporizer Reply

          November 16, 2011 at 6:23 pm

          Eloquent or not, my point is accurate that the Daily Nexus is owned by the State of California.

          • Editor in Chief Reply

            November 17, 2011 at 5:18 am

            The Daily Nexus is an independent, student-run newspaper that generates over 90 percent of its revenue from ad sales and the remainder from a quarterly lock-in fee of $3.85, which is approved and paid for by the student body. The university has no authority over the content of the Daily Nexus.

            • Vaporizer Reply

              November 17, 2011 at 5:29 pm

              Students are paid for their work at the Nexus by the school and therefore are employees of the University of California.

              Also, does the Nexus pay taxes? I am genuinely curious.

              “generates over 90 percent of its revenue from ad sales”
              An analogy: many highways in California are entirely funded by user fees, but that does not change the fact that almost all of these highways are owned by the state.

              The people who administer the university are not likely to choose to adopt, say, for example, a pornographic magazine, or an anarchistic magazine. The people who administer the university have, self-evidently, chosen to associate the university with the Nexus.

              • Edward Derpstein Reply

                November 17, 2011 at 9:54 pm

                I think you might have the Nexus mixed up with the Bottom Line, which basically is owned by the university since it is completely funded by student fees.

                But let me know how your anarchist porn magazine comes along, I’d definitely give it a read.

                • Vaporizer Reply

                  November 18, 2011 at 11:48 am

                  Edward,

                  I have no plans to produce a magazine and I never stated that I did. Please focus on reality.

                  I do not have the Nexus mixed up with the Bottom Line. Students who write for the Nexus are indeed payed employees of the university, according to the encyclopedia. If you have evidence to refute that, then please provide it.

                  It’s very hard to criticize the agency that’s paying you, particularly if you have authors paid by the State.

                  • Riley Schenck

                    November 21, 2011 at 4:03 pm

                    First of all, my original response was to “Matt” and his profanity-laced post claiming I have “a long way to go” on my “intellectual development.” My sarcasm was directed at him, not you.

                    As far as your criticism goes, yes, I do get a small stipend for my column, but I can assure that my views are not formed through my editors or some grand University/State conspiracy, but through my Political Science courses, a lot of reading (I especially like the Economist), and my own personal experiences.

                    If you believe there is a grand conspiracy through all the mediums that I’ve listed above to brainwash me (and I’m sure you do), well fine, but to try and blame my editor and the Nexus for my opinions is absolutely ridiculous and makes yourself look quite silly.

                  • Riley Schenck

                    November 21, 2011 at 4:08 pm

                    ALSO, as the editor also already noted (did you just not read that?), my stipend comes from advertising revenues and an Associated Students lock in fee of $3.85 that the student body approved in student elections.

                    The Nexus is not funded whatsoever by the University or the State.

                  • Vaporizer

                    November 25, 2011 at 1:15 am

                    Riley,

                    I used to read the Economist often during patrols while I was sitting in the belly of a Stryker riding through the streets of Mosul with the rest of my squad and waiting to dismount and terrorize and raid the household of another innocent family. That was back when I was still brainwashed enough to believe that ‘political democracy’ is a philosophically sound ideology. The Economist is far to Keynesian for me at this point in time.

                    I did state in my initial post that “i second that” (referring to Matts entire post), and that was an error on my part. A more accurate statement would have been that I agreed with most of his points, but not his statement that your intellectual development is incomplete.

                    Some of your sarcasm may have been addressed to my use of the word “politician” as Matt did not use that word anywhere in his comment.

                    I have addressed the fact that it doesn’t matter if a state owned agency gets it’s funding through user fees: Many State highways are paid for entirely by tolls collected by the motorists who utilize the highways.

                    Academia is presently highly subsidized by the State. Since the majority of funding in academia comes from the State, students have virtually no influence over the hiring of professors, and, as you said, your views are formed partially through your Political Science courses.

                    This is one reason why when I did attend a public university prior to my recent hellish experience in the military, I stuck strictly to Natural Science courses, which are far less biased, although still subject to political whims.

  6. photoj Reply

    November 15, 2011 at 9:14 am

    Ron Paul is looney!

    The idea people would ever think of his as a viable presidential candidate is unbelievable. Many people are uneducation and apparently plain stupid. Please people read the fine print or listen to a debate. He only yields to emotional responses on certain topics with no depth as does a rerun of a Looney Tunes episode. President really, Ron Paul?!#@# OBGYN, oh my god, tell me it aint so!

    • ELeeMacFall Reply

      November 15, 2011 at 2:50 pm

      ur comment is inteligence and good thout-out. It add alots to the discussion

    • Vaporizer Reply

      November 15, 2011 at 9:09 pm

      Dear photoj,

      Why do you want to be ruled by any president in the first place?

      Is there any other candidate for the presidency who is going to be on the ballot who has vowed to pardon all currently incarcerated non-violent drug offenders immediately upon taking office? Do these people deserve to be in captivity?

  7. Lawson Kline Reply

    November 15, 2011 at 8:49 am

    For people to be free, they need to be able to invest their money in a free market. Not a government run market that “guarantees” investors returns on their investments. This is a perfect case of the market regulating itself. The people who invested in MF Global did so voluntarily and should be responsible for their own losses. Ron Paul understands then and this is why I support him for president.

  8. Leo Reply

    November 15, 2011 at 8:05 am

    Another article thirsty for comments xD. You won’t get this attention with other candidates.
    RON PAUL 2012

    • 90 mortgages Reply

      February 20, 2012 at 4:42 pm

      I am totally with you, lol. I really hope Ron Paul makes it for 2012, he’s got my vote!

  9. Brendo Reply

    November 15, 2011 at 4:50 am

    1. What’s so magic about 12:1? The ratio is irrelevant. The entire financial collapse can be trace back to the Federal Reserve.

    Basically, no one can save any more. At least not in the traditional sense, because of the Fed’s double edged policy of high inflation and low interest rates. The Fed admits to 3-4% inflation, but it’s really more like 7-8%. So, I can’t just save money, because it will lose 7-8% a year. And I can’t put it in a savings account, or loan it out, because the Fed has kept interest rates so low, lower than inflation, for a long time. So, my only options for saving are to become a speculator, and enter the stock market. Think about it, everyone, *EVERYONE*, is gambling their life’s retirement savings in mutual funds and money markets and high yield stocks. This is insane. This is why so much money is drawn to wall st. And it’s why no amount of regulation or failure will do anything, because money will always flow to wall st. as long as the Fed is around. End the Fed, and you end the cycle of booms and busts.

    2. If you’re trying to make the case that Government intervention is justified because of market failures, see the next question, but all negative market externalities can be traced to “the tragedy of the commons.” BUT, Sick people aren’t externalities. People get sick, they pay for healthcare. There’s nothing external to the price structure there. What moral responsibility do people have to provide healthcare to someone who has smoked all their life? I’m not saying let them die. But what you’re advocating is using force, to take money from healthy people and give it to people that are unhealthy because of their own decisions. Again, you’re the one advocating using force, I’m just saying let people be responsible for their own decisions.

    3. Every environmental problem can be attributed to “the tragedy of the commons.” Basically, people take care of what they own. When the ownership of something is uncertain, like ocean fishing rights, the air over property, public land, etc. then no one takes care of it, and people will try to exploit it’s resources as quickly as possible, because they have no way to stop someone else from exploiting it. Are private property rights and adequate courts going to solve all environmental problems? Of course not, but they will solve much more than any other solution.

    3. (3 is listed twice) If all cars were made by foreigners, and they were cheaper, would that be such a bad thing? Canada doesn’t have any car manufacturers, are they really that worse off? If Germany wants to subsidize my car purchase, all the more power to them, it’s just less money for me to pay. You’re only looking at one side of the equation.

    • Castorp Reply

      November 15, 2011 at 10:29 am

      3. Every environmental problem can be attributed to “the tragedy of the commons.” Basically, people take care of what they own. When the ownership of something is uncertain, like ocean fishing rights, the air over property, public land, etc. then no one takes care of it, and people will try to exploit it’s resources as quickly as possible, because they have no way to stop someone else from exploiting it. Are private property rights and adequate courts going to solve all environmental problems? Of course not, but they will solve much more than any other solution.

      It seems like you are agreeing with Riley on this one, up until your last sentence.

      Since ownership of the environment (air, ocean, etc.) is inherently “uncertain”, how exactly are private property rights going to save this planet from ecological devastation?

      What exactly will make courts “adequate” in your scenario other than their enforcement of environmental REGULATIONS?

      (Is the commons a “tragedy”, or rather a fundamental reality of life on this tiny spec of rock known as Planet Earth?)

    • Riley Schenck Reply

      November 15, 2011 at 3:24 pm

      Market externalities are, “a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit.” Somebody choosing to smoke all his life absolutely creates a negative externality in terms of the public cost he may incur when he gets lung cancer, because like you say yourself, he is unfairly making other people who didn’t agree on his actions incur the cost of those actions. You on the one hand say we shouldn’t just let them die, yet at the same time you question the moral responsibility of the public to pay for someone’s health care. So assuming we don’t just let people die, being a civilized society and all, we need to find a different way to control for the public costs that smokers incur. The only option you leave yourself with is to tax cigerrattes to so that smokers pay for the public cost that they are incurring. This is an underlying reason for laws that enforce the wearing of seabelts and helmets, the individual mandates for car insurance AND health insurance, and why I would support a form of a “fat tax” on the unhealthiest of foods.

      On the environment, you really think privately owned land has seen better environmental protection than state and nationally protected parks?? No way, Jose.

      And in terms of monetary policy, yes, domestic savings is important for long term economic growth, and having a low interest rate does not encourage growth of that, but if we’re going to raise it, we need to do it in a time of economic growth (not right now), when it’s restrictive effects won’t contract the economy even further and put even more people out of work.

      • Brandon Reply

        November 15, 2011 at 5:10 pm

        Your last paragraph confuses me a bit: are you implying we need to spend our way out of this recession? The system needs to be corrected so that people can save and spend as they FREELY choose. I’m still waiting for that stimulus bill to save all of us or prevent things from getting worse.

        I’ve stated before: we need an EPA, but we need an EPA with less bureaucracy, more practicality and simplicity.

        As for the medical discussion: I think hospitals should have charity trusts so that people can choose to pay for other people’s problems regarding preventative care and maintain the current standard of ER treatment. No, the Federal government shouldn’t pay for an alcoholic’s liver or a smoker’s lungs nor should the Federal government levy taxes on the user to prevent them from doing it. If a state wants to, good for them. I’ll choose not to live there. The individual mandate for car insurance guarantees a person ability to cover costs inflicted on another person’s vehicle; that isn’t anything close to a comparison of the individual mandate for health care. Fat tax?! So basically, you want influence and tell me what do (which is my free choice), because you want to force the government to be accountable for my decisions, because you believe that’s what a civilized society does? I can’t think of a more polite response: fuck you, sir. Who wants help like that? Someone that dreams of being a caged animal.

        Unless I’m wholly mistaken with where your line of reasoning is going, you are advocating to control people fiscally and perhaps socially to save them from their bad decisions. It’s so easy to want to reach out and make the world as we would have it by making decisions on others behaves. So easy in fact, that a rational and literate person COMPLETELY forgets they are advocating control over freedom. You’re either misguided in your means to an end or you actually believe that if the government made decisions on an individual’s behalf then we’d all be happier. I don’t know which is sadder.

        • Riley Schenck Reply

          November 15, 2011 at 6:08 pm

          The first stimulus kept us from falling into a much deeper recession, but it didn’t do enough at the consumer end since it was targeted at the finance sector. We currently have plenty of international liquidity available so it doesn’t make any sense to solely pursue austerity when financing is available. A second stimulus bill (like Obama’s Jobs bill) would do a lot for getting our economy back on solid footing; more money in the hands of the consumer means more consumer confidence which leads to a reduction in unemployment, which in turn leads to more growth. With economic growth, policies of adjusting structural Balance of Payment deficits (by raising taxes and cutting spending) won’t be as restrictive, and won’t cause the economy to contract like it would if Paul got his way. You can hoot and holler all you want, but i can back up my assertions with real-life examples, something that libertarians have a hard time finding. HUGE amounts of government stimulus in the form of WWII spending pulled our economy from the great depression. At the end of WWII we had a debt that was equal to over 120% of GDP, but the increased economic growth combined with higher tax rates implemented under FDR payed that debt off relatively quickly.

          You can join your buddies in cursing at me and name-calling all you like, it’s not going to help your argument. You are getting FREEDOM mixed up with RESPONSIBILITY. It is the responsibility of society to ensure that it’s citizens never die in the streets. As Ghandi said, “A nation’s greatness is measured on how it treats it’s weakest members.” Your little hospital charity trusts are not going to be sufficient to ensure that the weakest members of society don’t suffer this fate. Conversely, it is the responsibility of all the members of society to ensure that their choices don’t impinge on the freedom of others. If you are eating artery clogging cheeseburgers every day, you are stepping on my rights through the public costs you create which I am going to have to help pay in order to insure that you don’t die in the streets. You can eat your damn burgers, but you have a RESPONSIBILITY to pay for the negative externalities that aren’t reflected in the market price. It’s not restricting your freedom, it’s ensuring responsibility and accountability.

          • Brandon Reply

            November 15, 2011 at 10:41 pm

            Riley: You are saying that we can in fact spend our way out of a recession/depression? Wow. Keynes, huh? Oh boy. History is littered with economies of empires who thought the same thing. Where is your irrefutable proof that your economic theories work? Your theories were at work during FDR’s administration preceding WW2 and they did nothing. WW2? Every other industrial country in the world was in rubble while we had built new factories since the onset of the war, there was no one left to buy goods from but the US. Are you implying we should level other industrial countries to get the same effect? Over 20 million US males died in WW2, it’s an excellent way to trim out the population and make jobs available. Are you recommending that too? Top tax rate bracket was at 75% for people making over 5 million dollars in 1939, and went up to 94% for 1944 and 1945 to fund the war. The deficit went down because we taxed more than we spent following WW2 (no brainer), but things didn’t truly get better for the average American until taxes were slashed and the military industrial complex made cars instead of tanks and sold them to war ravaged countries. Are you catching what I’m saying? Total war, eliminating the competition, and being the last man standing made US what was after WW2. If you want that then “War is God” truly should be your mantra.

            The stimulus plan made things not as bad? You can’t prove that one. Boom and bust is an inevitable cycle (look at a graph of the markets, it’s not just “Austrian business economics nonsense”), I don’t think it’s a question of whether we’ve avoided the bottom but of how much more debt we’re gonna have when we hit it. Keynesian economists are so busy obsessing over printing more money that they don’t even notice the world starting to move away from the US dollar reserve standard. When the world goes off the dollar reserve standard, all of the stimulus plans and quantitative easing we’ve done will make the dollar monopoly money in the global economy.

            I’m having a hard time finding your definition of responsibility and how it applies to citizens in the Constitution. Actually, what you’re saying blatantly disregards concepts of the sovereign individual and promotes collectivism. You are talking about the duty of societies (you really should replace that word with governments) as if it’s a mission statement written somewhere in the Constitution. You’re also speaking in absolutes, as if this responsibility is some absolute truth, which it’s not. Oh and Ghandi was referring to the individuals of a nation and their capacity for compassion, not a tax system that soullessly redistributes wealth to the have-nots. It is through charity that the engine of human spirit can (can, not will) be ignited in the hearts of the downtrodden, not through forced economic slavery and welfare check lines. Using Ghandi to justify your definition of the responsibility of government is like using prosperity to justify war: asinine. You’ve essentially done both in your rebuttal. Ghandi was also a fool with a heart that reached beyond his means and died because of it, you’re more than welcome to join him.

            To me, you are lost. People like you, who think they can helm the economy and peoples lives like a ship toward some united destiny of utopia, will be shocked when it doesn’t end well. If that happens, anarchy will soon follow and in the end I’ll get what I want: freedom. I hope you have no children if you get your way.

  10. Riley Schenck Reply

    November 15, 2011 at 2:06 am

    haha wow I’m honestly really stoked at all these comments, I didn’t even know 30 people read my column! All joking aside, I just want to respond to some of your guys’ complaints/arguments.

    First of all, let me just say that I don’t “hate” Ron Paul like so many of you assume. I actually respect Ron Paul as a man of principle who is honest and doesn’t stand for the typical bullshit political vote pandering that so many Democrats and Republicans succumb to; he really believes in his libertarian society and that it would work for the benefit of all. I’ve also thoroughly enjoyed watching Paul take Hannity and some of the other establishment Republicans to school from time to time on foreign affairs and the ridiculous “war on drugs.”

    I’ll admit, the title of my article was more than a little inflammatory, and maybe a little distasteful. I also probably should have picked on establishment Republicans over Paul, however there aren’t too many of those reading the Nexus, and Paul is, after all, a man who loves to trump up the magic of a market free from any government influence.

    I don’t deny any of your assertions that the finance industry is one of the most heavily regulated industries out there, and by no means resembles the free market that Paul envisions. I of course realize that government policies such as government bailouts and loopholes distort the market and pick winners and losers.

    However, just because there are admittedly inefficient and problematic government regulations, loopholes, etc., I don’t believe that by eliminating ALL governmental regulation and involvement, including smart regulation like the old pre-2004 12:1 leverage requirement I focus on in this article, that everyone will be better off like Paul and his supporters contend. That is the free market fairy tale which I refer to; in an unregulated free market, I believe it’s much more likely we’ll see corporate interests and the interests of the richest Americans easily overpower those of the consumer; in my experience, corporations seem much more beholden to the interests of shareholders (the rich), than to those of the average consumer.

    A couple of significant ideological beefs I have with this free market fairytale that I’ll throw out for a response:

    1. The issue I tackle in my paper, the recent deregulation of the finance industry.
    To me, it seems pretty clear that the consequences of eliminating that SEC regulation that prohibited investment banks from leveraging themselves over a 12:1 ratio (on top of eliminating the Glass-Steaggall act) was to make this recession much more deep and wide than it needed to be. The companies overlooked the potential risks when the potential payoffs were so large, and you can’t just make the blanket statement that the assumption of a government bailout was the reason for that downplay of risk. The banks that had the highest leverage ratios, like Lehman Brothers, did indeed fail at the outset of the crisis, while the Banks that had significantly reduced their leverage leading up to the crisis (Goldman Sachs) were the ones that received bailout money. Based on that, why the hell would MF GLobal, which isn’t anywhere close to being “too big to fail” anyways, think that it would receive a government bailout with a 40:1 leverage ratio? The collapse of MF Global was fueled by corporate greed and speculation that was made possible by the elimination of the SECs leverage regulation (and Paul’s policy of lowering the capital gains tax will only serve to increase speculation and make matters worse). Unless we make some significant reforms to the financial industry, which includes smart regulation and taxation that fight conflicts of interest and take into account systemic risk that the free market ignores, history is bound to repeat itself.

    2. the inability of the free market to take into account negative market externalities, for example, the significant public cost that smokers incur when someone gets lung cancer but can’t pay for it (and don’t tell me we should just let them die, like those idiots at the debate started yelling out).

    3. Protection of the environment. “Strong private property rights” are NOT going to adequately protect the environment. I don’t see how the effects of the clean air act of 1970 (which by the way helped create jobs, not kill them) could have been achieved without a set of rules and regulations. Another example, how can you fight the clogging of our waterways with plastic bags without a law that prohibits them? Let’s be real, a boycott of plastic bags is never going to work because of their abundance, convenience, and the freerider prolem, even when a majority of people in a community supports such a ban. And how the hell do you fight global warming (the disastrous effects of which our grandchildren, not us, will experience), merely through the protection of property rights?

    3. Foreign competition: We live in a global economy, and while I realize that protectionism can be bad because it picks potentially inefficient winners, we need to be pragmatic as well. If we hadn’t bailed out the auto industry, there would be no american auto industry, period. Foreign automakers would have bought up the plants and stepped into the industry vacuum way before a start-up american auto company could raise enough capital not to get squashed. In Germany, the government even paid the salaries of many companies’ manufacturing industry workers in order to save the German manufacturing industry, and as a result Germany has weathered the crises much better than it’s euro neighbors.

    Like Paul and his supporters like to point out, we’ve never seen a “libertarian society,” so it’s impossible for either side to argue definitively whether it would work or not. however, I would point to the much more laissez fair policies of the late 1800s/early 1900s that produced societies in the US and Europe with little regard for public health or safety and extreme wealth inequality as a sufficient warning to not want to experience that libertarian experiment. I know you guys will claim that those inequalities were merely the product of “crony capitalism,” and while I know government collusion played a role (repression of striking unions), I think it’d be difficult prove it caused all the horrors of that laissez-fair society.

    Lastly, the dream of a libertarian society is precisely that: a dream. The United States was founded on the fundamental idea of compromise, and the fact is that you will never get to experience your pure libertarian society to see if it works or not in a government that requires compromise, because the ACTUAL policies that Ron Paul proposes in order to move the country in that direction will undeniably cause additional hardship for many more Americans in the short term future. When you implement a plan of AUSTERITY, of drastically reducing government spending (taxes are already too low for tax cuts to make up the difference), you are essentially pulling money out of the economy, causing economic contraction and higher unemployment. To assume that the private sector will magically pick up the slack when consumer demand is necessarily lower is naive and ignorant of simple Economics 101. I’m sure Ron Paul realizes this, but he believes that many years of painful austerity will be worthwhile if the end result is his libertarian experiment. The problem is that the majority of Americans are not going to agree.

    So, to sum it all up, I stand by my claim that Ron Paul’s “libertarian society,” is indeed just a “free market fairytale,” ideologically and practically.

    Bring it on! ;)

    • Matt Reply

      November 15, 2011 at 3:28 am

      Allow me to try to address some of your points:

      The market DID regulate itself in the case you are describing. A business manager who was making poor decisions caused his company to go bankrupt. The only people who lost money were the owners(shareholders) who voluntarily invested in a risky enterprise. The same people would have earned money had the managers made wiser decisions.

      The fact that this company went bankrupt is a good thing. Should it be allowed to continue its shenanigans? Further, no captial is destroyed in bakruptcy, it merely changes hands … whatever factories, equipment, workers, etc., that this company was using have been FREED UP … away from destructive uses and can now be redirected to more fruitful ends.

      Ill try to address your points more directly:

      1) Would regulations have prevented the financial crisis? NO.

      The problem is systemic and related to our monetary policy. The system of money we live under is BAD for the vast majority of people and only good Goldman Sachs of the world. Its a rigged system.

      As a left/progressive … you must learn about the monetary system. It is (as you people say) “evil.” Far (far) worse than big bad drug companies, and wal-mart, etc. Why do you think anarchistic Tyler’s goal in ‘Fight Club’ was to destroy the banking records and finacial data of society to ‘Free’ everyone. Its a left issue too, you should figure it out:

      Here’s a link to an audio book about it. Its not ‘right-wing’ or anything and you will begin to understand wtf is going on in the world .. its very interesting stuff, enjoy:

      http://mises.org/media/search/1?q=case%2520against%2520the%2520fed

      2) Lung cancer is not a market-externality. You can’t give healthcare to everyone until you dramatically lower the costs. High economic prosperity combined with low-cost medical care is the only way to get help to everyone. That requires markets, profit-loss, competition, cost-conscious consumers, etc. Without that, far less people will get medical attention than otherwise could, and you will be to blame!! (exaggerating but you get my point)

      3) In the situation you have described about Germany subsidizing some particular industry, that was a dumb move on their part. All that happened there was that German tax-payers paid a portion of the products which that industries consumers purchased. So, if you bought something from that company, thank the German tax-payer … he helped pay for it. Thank him and move on, and hope you are not forced to pay for his stuff (hint: you are, the government makes you)

      • Riley Schenck Reply

        November 15, 2011 at 4:26 pm

        Thanks for the audiobook, I’ll look into it when I have time. I will admit I’m not in any way an expert on monetary policy or the fed, but I talked to one of my professors a while back about the Gold Standard (Benjamin Cohen, a straight baller in International Political Economy, taught at Columbia and Princeton), and he was talking about how the relative stability of the Gold Standard under Pax Britannica was more due to Britian’s hegemony which enabled them to fix arbitrary prices of gold to their currencies, not because of any type of gold magic which he contends would actually create a more volatile system than one controlled by central banks.

        There are A LOT of reasons for the ’08 crisis; hearing someone try to blame it solely on central banking policies seems pretty far fetched when you’ve learned about the different effects credit default swaps, speculation, leveraging, repeal of glass-steaggall, conflicts of interest in the rating agencies, and the accumulation of systemic risk, to name a few, had in the lead-up to ’08. Financial regulation that addressed some of these problems absolutely could have prevented the housing market bubble being as extreme as it was, and absolutely could have limited the damage to a large extent. Speculation caused systemic risk that the market wasn’t able to control for effectively, similar to the stock market crash of 1929.

        In terms of market externalities, and specifically smoking induced lung cancer, you can refer to my response to the other dude’s response above. On Health care, I agree with you, a fundamental problem of Obama Care is that it doesn’t control the crazy high costs that are caused by American’s unhealthy style of living and by the conflicts of interest that are inherent in a third party payer insurance system. I agree with you on the problem, but disagree on the solution.

        • Brandon Reply

          November 15, 2011 at 4:52 pm

          Oh and… The Gold standard with no Fed was unstable because of fractional reserve banking (bank runs). Really, if we instituted some form of debt free currency that wasn’t influenced by our policy arm of the government or a private institutions, It would be a flexible and stable compromise.

          Greenspan touched interest rates during the tech stock crash while the White House in the late 90’s order Freddie Mac and Fannie Mae to make housing affordable (issue loans to people they shouldn’t). These this were controlled by the Fed and the Federal government. Without them, there wouldn’t have been a crash.

          Until we deregulate and rid ourselves of favoritism (corporatism), we’re going to repeat this cycle. So, if we’re not going to force the situation to stabilize itself and reach an equilibrium, then yes, we’ll need leveraging regulation, the Glass-Steagall Act (or the abortion that is Dodd-Frank) and derivative limiting laws. But know this, when politicians are empowered to reach into the affairs of the economy, IN ANY WAY, the bankers hands reach back. As long as we choose to meddle in the affairs in the economy, you will never get the money out of politics.

      • Brandon Reply

        November 15, 2011 at 4:38 pm

        Riley: I think Matt addressed most of your points thoroughly enough such that I don’t need to rehash anything. However, he didn’t cover your very profound point about the reality of what laws and reforms we would have with Ron Paul. We obviously wouldn’t have his laissez faire dream economy but a hybrid because of the forces at work politically.

        So, what good would Ron Paul do in 4 years? Audit the Fed. He likely couldn’t end it but we would audit it and shine a light on bad decisions and their makers. We could stop quantitative easing and unstable interest rate policies (that made the housing bubble so big).

        Deregulate. Paul doesn’t want to eliminate the EPA, he wants to reform it. Most industrial and manufacturing companies want to be compliant with EPA’s regulations but filing the paperwork requires a team of lawyers who chew up millions of dollars every year. Who would want their factory in this county? Simplify the guidelines, get rid of the bureaucratic burdens; emphasize conservationalism and stop yielding to irrational environmentalism. Industry would actually come back to the US, go figure.

        There are many things about Paul’s truly conservative fiscal policy that could help this country within a year.

    • Daniel Reply

      November 15, 2011 at 3:34 am

      ” in my experience, corporations seem much more beholden to the interests of shareholders (the rich), than to those of the average consumer.”

      Sigh…this is what I mean by your ignorance – go Google “corporation”. It could not exist without the state. For God’s sake, who gave a corporation “personhood”?? THE STATE!

      With that being understood, the rest of your argument is completely frugal.

      • Riley Schenck Reply

        November 15, 2011 at 2:36 pm

        I understand that corporations wouldn’t exist without the State, and I understand that corporations are granted certain priviledges and rights by the government. I obviously am aware of the “personhood” status which you refer to which was created to limit the liability of shareholders and the founders of corporations.

        I don’t understand how that weakens my argument about a specific piece of deregulation that caused unnecessary damage to our economy (I assume that’s what you meant when you said “frugal,” even though that doesn’t make any sense lol, you think my argument is “thrifty?)

        I think that libertarian ideas can be useful as an analytical tool to help us understand our world and it’s problems better, much like the marxist analytical perspective is. However, like marxism, I don’t think the remedies of this perspective are realistic.

        How would you eliminate, in the real world, the existence of corporations without throwing the economy into insane turmoil?? We need common sense reforms (like redifineing their “personhood” and overturning citizens united), not throw the baby out with the bath water.

        • ELeeMacFall Reply

          November 15, 2011 at 2:46 pm

          “How would you eliminate, in the real world, the existence of corporations without throwing the economy into insane turmoil?”

          Simply allow more competition by REMOVING burdensome regulations from start-ups and small businesses. That will take care of the problem in a more or less orderly way, as new alternatives will precede (i.e., CAUSE) the downfall of established big-business interests and there won’t be a lapse between the end of the old order and the beginning of the new.

          “We need common sense reforms (like redifineing their “personhood” and overturning citizens united), not throw the baby out with the bath water.”

          That’s a good start. But legal personhood is just one suit for the same old protectionist ideology. Removing restrictions on starting and running businesses is ultimately the best way to ensure that old, corrupt institutions are replaced by new and better ones.

          And you needn’t worry about throwing out the baby. Public stock companies existed long before corporations, and continued existing, for a while, even after “corporation” meant a fictitious legal person. And so they could again. The function of LLC arrangements could be replaced through the insurance of liabilities (which would have a controlling function on the kinds of liabilities which would be permissible). And I can’t think of other useful function for corporations (in the broad sense) to exist.

  11. Charles D. Reply

    November 15, 2011 at 12:28 am

    Your emotions are understandable but your complaints are incomplete… First of all, just a protip from a BBC contributor, using pejoratives in a piece, opinion or otherwise, automatically dissipates any credibility you could have had. Secondly, Paul’s whole support about a laissez faire system means that yes, in the short term banks would go hog wild in the absence of regulations, but once that hangover comes and they fail, and the government doesn’t bail them out, well then they’ll realize “oh snap, we better actually play smart or we’ll go out of business.” It’s the tough-love concept of growing-through-experience that we have moved away from, that Paul advocates so strongly for returning to. We have gotten too used to having our mom come in and make everything okay for us, and we have lost sight of how to live away from our parents’ house and on our own.

  12. reteo Reply

    November 14, 2011 at 10:46 pm

    Let me see if I have this straight…

    A company does something stupid and gets destroyed. Then another company that is supposed to have learned from the first acted even more idiotic and got destroyed.

    And the fault for their destruction is that they were allowed to act like morons in the first place? Is it not possible that they take such crazy risks because they have faith that someone is going to catch them before they fall? “Too big to fail” and all that?

    The free market is a complete lack of regulation; the fact that people/companies/whatever CAN fall, and nobody will be there to pick up the pieces, is reason enough not to do stupid things. It’s a reason to start small and build up carefully. It’s a reason to make sure the customers are happy, rather than the shareholders.

    And by the way, no regulation, no corporations; the very concept is a LEGAL fiction designed to protect against legal repercussions in a very much regulated system… there are no corporations in a free market, only partnerships. And partners can be held liable for the bad behavior of their companies… which induces them to ensure good behavior or pull out should their attempts fail.

  13. John Galt Reply

    November 14, 2011 at 9:39 pm

    How does someone this stupid actually figure out how to post a blog? Our technology has come so far, even a caveman can do it.

  14. AustinDave Reply

    November 14, 2011 at 7:17 pm

    I can’t believe that there is anyone left that thinks that there is a free market in this country. Government regulations have proven time and again to be disastrous. In the case the author mentions, the consequence of government intervention is a false sense of security that the SEC gives the investor. An unelected, un-Constitutional department has no business writing law as it is impossible for us to hold them accountable. People must be responsible for researching their own investments. All that you can do is prosecute fraud and misrepresentation with long jail terms, and remove limited liability protections.

  15. Jimmy Reply

    November 14, 2011 at 7:13 pm

    Dude, what? So in your vision of America, no company would be allowed to fail? Sure, company failures can hurt the “Average Joe” as you put it, but companies that make bad decisions like this MUST be allowed to fail. Otherwise, someone has to pay to bail them out (hint: that’s us). Are you saying you would have bailed out MFGlobal?

  16. Daniel Reply

    November 14, 2011 at 4:24 pm

    This article is rather telling of the author’s ignorance.

    On one hand, he understands that there are banks that are so big they have the ability to cripple to entire u.s. economy, yet thinks they’re that big because of the free market. Without regulation, every single bank that leverages like this would quickly be out of business.

    Furthermore, the free market tried its damnest to punish those who have practiced poor business in 2008…and what did we do? The government stepped in, subverting the free market, and further punished the American people. Instead of there being a sharp collapse of the economy with an instant recovery, we’re headed toward a decade or two of a horrible economic scenario (think Japan).

    You people that call the free market a “fairy tale” are the ones living in a dream world. Free market economics (aka Austrian economics) have clearly shown the REALITY of the situation. One day, we’re going to be broke…and it’s precisely because statists and those at the top think that the free market is a “fairy tale”.

  17. ELeeMacFall Reply

    November 14, 2011 at 3:40 pm

    So how, exactly, do the literal THOUSANDS of regulations pertaining to banking and high finance effect a “free market fairytale”?

  18. cory Reply

    November 14, 2011 at 2:41 pm

    so, the FDIC comes along and says to banks, “don’t worry about being responsible with your customer’s money. if you fuck up, we (by we, we mean the money stolen from taxpayers) will have your back.”

    and somehow, with this ONE federal program regulating the banks (among thousands of others), you equate our economy with the free market?

    have you not been paying ANY attention to obama’s presidency and the new REGULATIONS (warning: making it obvious that there’s no such thing as a free market) passed during his administration?
    jesus christ dude, i hope you don’t get paid to write this drivel. that would make you a capitalist

  19. Bill Reply

    November 14, 2011 at 2:24 pm

    You don’t have a clue what you’re talking about. There are tens of thousands of pages of regulations in existence but no interest in enforcing them. The regulations protect the major players from competition and provide endless loop-holes for banks and their lawyers to justify criminal behavior.

  20. Apathy much? Reply

    November 14, 2011 at 2:18 pm

    Author of this article: you are so, SO wrong.

    Way to contribute to the slanted education of millions.

    • Yosh Reply

      November 15, 2011 at 10:55 am

      riley…..owned

  21. Ronnie Reply

    November 14, 2011 at 1:52 pm

    Self regulating means that if you screw up, you go out of business. They is no way to stop stupid things from being done. It’s just that taxpayers shouldn’t be on the hook for the damages. Also, just look up financial regulations in the US. There are dozens upon dozens. We are horribly regulated. Is it that “journalists” don’t read or just refuse to believe what they read?

  22. gavin Reply

    November 14, 2011 at 1:32 pm

    Would someone mind explaining to the author that the US banking sector is the least free-market industry in the US economy? His venomous rhetoric is actually blasting modern Keynesianism bordering on Socialism.

  23. RaL Reply

    November 14, 2011 at 1:28 pm

    Quit bailing them out & they’ll stop taking such high risk investments. Thats the self-regulating freemarket Ron Paul is talking about. When they realize we aren’t going to bail them out anymore they’ll stop making poor investment decisions.

  24. John Reply

    November 14, 2011 at 1:03 pm

    You need to get a refund on your tuition, bro…., or are the taxpayers on the hook for that also? Commie.

  25. Brandon Reply

    November 14, 2011 at 12:01 pm

    I don’t understand the direction that this counter point is going in. MF Global and Corzine were Obama’s largest contributors from Wall Street. Dodd-Frank was made such that it capped certain investment practices and left others untouched; It tries to act like Glass-Steagall but doesn’t do nearly enough and outright benefits others. Or, instead of having government regulation, leveraging and risk should be decided between the investor and the investment bank instead of being submerged in a murky stew of where the government ends and where the bankers begin. We could also rid ourselves of fractional reserve banking, therefore not needing to differentiate between investment banks and savings banks, and people could truly choose their investments (ie: liabilities).

  26. Santiago Reply

    November 14, 2011 at 11:54 am

    Actually, MF Global is the proof that markets are self-regulating. People realized that the company was making bad bets and were overleveraged and they pulled the plug. Goodbye bad company run by Dumb Democrat….

  27. Nishanth Reply

    November 14, 2011 at 11:49 am

    Wow,such negative comments. But with such a ridiculous title, im not all that surprised. I not even a paul supporter but i can see why they are pissed. If you read some of their arguments they present some varied and sensible points.

  28. paul patroit Reply

    November 14, 2011 at 11:24 am

    If the goofs that invested their money did their homework and didn’t listen to an “investment manager” or “financial advisor” who is getting a kick-back for pushing the risky investment as a “sure thing”, then there wouldn’t be billions at stake — buyer beware — that is free market. When the house of cards collapses and lots of money is lost, so what? That is the risk you take when you gamble on Wall Street! Same as Vegas — “you rolls them dice and takes your chances!” Ron Paul 2012

  29. Guy silvernale Reply

    November 14, 2011 at 11:21 am

    This article is truly retarded! You act as if Dr. Paul was running the economy when this happened. The fact of the matter is there was regulation, but because all the regulatory organizations are bought and paid for by the the very corporations that they are intended to regulate, these corporations can do whatever they want. Dr. Paul has never been against regulation, regulated free markets are the way to go, but Government should not be the regulators because their corrupt power hungry warmongers, so true regulation has to be put on the backs of the consumer!
    It is true the company would have failed whether Dr. Paul or Obama or any one of the other candidates was in charge. The only difference is Dr. Paul would not rob the bankrupt taxpayer to bailout these bastards so their genius CEO who made a high risk move and ran his company into the ground, can take home an extra 30 million! And whatever candidate you support would do just that, not to mention getting our boys arms and legs blown off overseas! So next time why don’t you get real, and title the article accordingly! Something like “Ron Paul’s honesty and integrity really scares me because I can’t own him unlike everyone else!”

  30. Jay Reply

    November 14, 2011 at 11:17 am

    I have news for the author. They are currently investigating fraud and other illegal proceedures that took place within MF Global. So all your laws and regulations don’t mean D**K! These companies break the law, and your regulations on a regular basis. It’s only when one of them gets caught with their hand in the cookie jar that we hear anything about it. Imagine if you will that MF Global had been able to stand for 2 more weeks. Chances are with the Greek crisis winding down, they probably would have had enough money to avoid bankruptcy. If they had lasted those 2 more weeks, we would have never heard anything about this. No matter how many regulations/laws the company violated. A lotta good they do!

  31. voter Reply

    November 14, 2011 at 11:14 am

    So just because Lehman went bankrupt we are supposed to think that no other company will ever make the same mistakes? As many people commenting here have pointed out, the free market worked for Lehman. The company no longer exists. It has worked for MF in the same way. Fact is, the FREE MARKET needs to be able to regulate itself MORE THAN ONCE.

  32. craig Reply

    November 14, 2011 at 11:11 am

    Oh, you’re soooo clever with your whole “(w)Ron(g)” headline. Do you get paid to come up with that stuff? Or do you hire people to help you?

  33. HumanLiberty Reply

    November 14, 2011 at 11:08 am

    Wow, talk about doublethink. There aren’t many American’s now living, if any, who’ve known a free market. Free markets cannot be said to exist when interest rates and money supplies are centrally controlled, “money” derives it’s value by coercion through “law”*. I can’t tell if the author is blind to that, or knows it and is serving another agenda. Free markets may have there flaws, but the fact that people who make mistakes go OOB is not one of them. And those flaws are nothing compared to those of the alternatives, which lead, invariably, to monolithic power. Everything this author summons as evidence against the market is in fact evidence against Gov’t intervention therein.

    *in quotes because unconstitutional laws are inherently void (though somehow that sure doesn’t seem to prevent their enforcement…)

  34. Eddie Reply

    November 14, 2011 at 11:06 am

    The author has literately no understanding of free market enterprise. That fact he tries to be cute about it, makes it all the more embarrassing. I feel for him, really.

  35. Chander Reply

    November 14, 2011 at 11:05 am

    Using your opinion to call someone names just goes to show how morally corrupt you are and how you’re full of hatred towards someone who is only trying to question the status-quo. He has been right on everything he has predicted in last 30 years and yet you dare to call him wrong with reference to people who probably have been a part of this mess.

    I’m a canadian and I believe every country should have a ron paul.

  36. Joe Reply

    November 14, 2011 at 11:03 am

    What planet do you live on. The financial services sector in the US is the furthest thing from a free market that one can imagine. Consider the littany of “federal” regulators that oversee, watch blow up and then bail out Wall Street enterprises: The Securities and Exchange Commission, the Commodities Futures Trading Commission, the Federal Reserve, the Comptroller of Currency, the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation, then there is FINRA and the exchanges who are overseen overseeing. Wall Street is the most federally regulated AND THEREFORE the most corrupot industry in the US. And everytime this industry blows up, we are told by these watchful regulators that if we don’t bail these guys out, the world will end. Just like, if we don’t pre-emptively invade Iran, they will nuke the entirety of the US.

    You, Mr. Schneck, are an establishment shill, whether you know it or not.

  37. Thomas jefferson Reply

    November 14, 2011 at 11:02 am

    MF global went bankrupt. Free Market solved problem. LOL

  38. really? Reply

    November 14, 2011 at 10:56 am

    This article doesn’t warrant any other response than this one.

  39. Anonymous Reply

    November 14, 2011 at 10:43 am

    What free market?

  40. Jesse for Ron Paul Reply

    November 14, 2011 at 10:40 am

    Actually the free market did speak… the person that made the bad decision (who ironically lobbied against this kind of thing) was punished and he lost his business. His assets will be liquidated and sold to the highest bidder. Perfect!

  41. ese Reply

    November 14, 2011 at 10:38 am

    So….You are saying that large corporations are incompetent to make wise investments so we need regulations to prevent them from shooting themselves in the proverbial foot.

    I say it leave it up to the investors and CEO’s of those companies to make their own decisions because their business is their business. Companies that make poor decisions should reap the consequences but companies that make the smart moves should prosper. That seems pretty simple to me.

  42. Kidding? Reply

    November 14, 2011 at 10:32 am

    SRSLY? You call THAT ‘Free Market’? That crony capitalism structure? Free market would have never allowed that to exist. Government intervention did.

  43. Rienone Reply

    November 14, 2011 at 10:21 am

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    Operation Distract America commencing…

    ***ESTABLISHMENT SPONSORED ARTICLE***

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