Michael Moore Makes an Unbelievably Bad Analogy Choice
I just got back from dinner with Richard Ebeling and the hosts of tomorrow’s Freedom Seminar, along with some of their donors.
I flipped on the TV so I could fully appreciate my advantage over Stephan Kinsella. I couldn’t resist watching Michael Moore pontificate to Larry King about the significance of the elections. (His conclusion was that voters demonstrated that they wanted Obama to pursue the progressive agenda for which they elected him in 2008.)
Then, as a special treat, Moore said that most of the mortgage fraud had been conducted by the Wall Street banks. King asked him to elaborate, and Moore fumbled for an embarrassing amount of time–I actually thought he was going to punt and move on.
But then Moore recovered, and said something like this (paraphrase): “These banks gave mortgages to people who they knew wouldn’t likely pay them back. And then these same banks went out and bet against these investments. If a casino did that, they’d be prosecuted.”
Really? So a casino doesn’t lend someone money, and then bet against the investment that the person makes with it?
How doesn’t an individual know they can’t pay it back, those mortgages tell you what your monthly payment is for say 10-30 years, how can you be tricked. I don’t see why it wasn’t plain as day for them.
Anyways I checked out the Maoist Rebel News, and obviously gold mines a misunderstandings which make you feel sick, but from his critique of Stateless Capitalism early on he says this.
” The bank wants the interest rate to be as high as possible so as to make the most money possible from the loan. However, the productive capitalist wants the interest rate to be as low as possible so as to give as little of his surplus-value (his profit) as possible in paying back the loan. This takes on the form of a struggle between two sets of capitalists. In the concrete, a bank’s interest rates must be high enough to generate a profit, but low enough so as not to choke off the profits of the productive capitalist.
This is why so often you hear someone in some magazine or on television saying that interest rates are too high, (discouraging people from investing in production), and then someone saying that it is too low (discouraging banks from lending money). It is absolutely necessary to have some form of regulation to keep these two groups from going to war.”
http://maoistrebelnews.wordpress.com/2010/08/23/critique-of-stateless-capitalism/
So not only does he not understand the Federal Funds Rate, but he thinks that the government literally decides the interest rate for investors who spend the money would start a war without government.
Too much bad stuff, can’t take anymore. Of course he claims his opponents never read anything Marxist actually say, and were all part of a cult, and are stupid, and immoral, but who’s to claim otherwise with words of wisdom like that
The Maoist Rebel is clueless. He writes:
So in a stateless society, exactly how is no regulation whatsoever supposed to make this work? Banks will just keep creating more loans because it’s the only way they make money. Why would they regulate the loans they make? They would just be working against their own profit motive. And this working against the profit motive would defeat the purpose of capitalism.
Presumably, the folks living in the stateless society would be smart enough to recognize funny money when they see it and not accept it as money. A banker issuing warehouse receipts as notes backed 100% by specie would be liable for fraud if he was not holding the actual gold to be redeemed. Isn’t this real basic stuff? Notice how our opponents are always clueless about real basic stuff?
Speaking of Michael Moore, I rented his “Capitalism – a Love Story” video a few months ago. Moore insists upon calling every bad act of the US government and our current funny money regime “capitalism”. Since I viewed him as an IP Nazi, I created a brand new you tube.com page specifically for a few short clips from his movie (I feared that my entire collection might be zapped if he complained about one or two clips of his films). I purposefully did not label the videos, except I did label one clip as “Warren Evans”.
Warren Evans was the Detroit Chief of police in charge of the notorious raid where an A&E camera crew went along and that killed Aiyana Jones.
http://www.lewrockwell.com/grigg/grigg-w148.html
Evans had formerly been Wayne County Sheriff (in which Detroit is located). He appears in Moore’s film because he announced a “compassionate” halt to mortgage foreclosures and is quoted in the film as stating that the cause of the mortgage meltdown was “the free market”. My “Warren Evans” clip was two minutes long. There was no mention of the film name or Moore’s name in the title or contents of the clip. Nevertheless, Moore’s you tube snitches found it and had it zapped by youtube as a copyright violation within 30 minutes of being uploaded.
In another clip that I simply called “P long” for “long priest clip”, Moore’s long time priest, Dick Preston explains that Jesus was a socialist and that western countries stealing fish from the Somalis and dumping waste in their waters are examples of “capitalism”. As of now, it has not been zapped.
http://www.youtube.com/user/Brod248?feature=mhum#p/u/6/HX886KrMQ3E
I would think it is also quite basic that these are not examples of “capitalism”.
I don’t understand when Moore says that banks bet against the investments made by their clients. Can someone clarify?
I think he is referring to the scandal in which the SEC sue Goldman Sachs for betting against the housing bubble.
The Big Short by Michael Lewis, even though it completely neglects Fed credit creation and ABCT, still does a good job explaining how Deutch Bank and Goldman “bet” against mortgage-backed securities by, among other things, creating credit default swaps, and taking advantage of almost unbelievable negligence on the part of the ratings agencies. It’s a fun read, too.
Casinos are just one of the many things Moore pontificates about, but knows nothing about.
Banks are another.
Jonathan-
The banks made hedges that a certain percentage of the loans would go bad, essentially “betting” that some of them would end up in foreclosure. As loans got even more risky and poorly vetted, they increased their hedge. That is the “bet” in reference.
Hope that helps clarify.
You expected better from Michael Moore?
Truly enjoyed the Freedom Seminar, today. You and Professor Ebeling deliver the message extremely well. Thank you!