bang-bang control loop

On Sunday, January 30, 2022 at 5:45:19 AM UTC+11, jla...@highlandsniptechnology.com wrote:
> On Sat, 29 Jan 2022 13:09:55 -0500, bitrex <us...@example.net> wrote: 
> >On 1/28/2022 9:16 PM, Anthony William Sloman wrote: 
> >> On Saturday, January 29, 2022 at 2:21:06 AM UTC+11, Tom Del Rosso wrote: 
> >>> Tom Gardner wrote: 
> >>>> On 28/01/22 13:52, Tom Del Rosso wrote: 
> >>>>> jla...@highlandsniptechnology.com wrote: 
> >>>>>> On Tue, 25 Jan 2022 09:33:02 -0800,  jla...@highlandsniptechnology.com wrote: 
 
<snip> 
 
> >>>> One of the contributory factors to the 2008 crash was 
> >>>> repealing the law restricting bank to lending only up 
> >>>> to a fixed multiple of their assets. 
> >>>> 
> >>>> At least one (Northern Rock) lent 42* its assets, then 
> >>>> spectacularly crashed burned, and became known as 
> >>>> Northern Crock. The taxpayer picked up the bill. 
> >>>> 
> >>>> Repealing laws only works when people are decent and 
> >>>> honest. There will /always/ be a proportion that aren't, 
> >>>> or who demonstrate the limits of the possible by going 
> >>>> beyond them into the impossible. 
> >>> 
> >>> Repealing laws works whenever the law was a bad idea, which was true in 
> >>> most cases since the progressive era began. The progressive's most 
> >>> consistent behavior is refusal to believe anything they do could have 
> >>> been a mistake. 
> >>> 
> >>> The law you speak of can't hold a candle to the destabilising effect of 
> >>> threatening banks with civil rights prosecution if they didn't lend to 
> >>> people who couldn't afford to pay it back. Of course that wasn't a new 
> >>> law, just a misuse of one. 
> >> 
> >> That was a popular explanation of the sub-prime mortgage crisis shortly after it happened. James Arthur peddled it here with some enthusiasm. 
> >> 
> >> When people looked into what had actually happened, the guaranteed loans made to people in low income areas hadn't been abandoned any more often than usual during the crisis, and the problem was all about irresponsible lending by fringe banks. 
> >> 
> >> It's just right-wing propaganda. George W. Bush Jnr tried to use the expanding house price bubble as an excuse to cut back the guaranteed loans, but Congress correctly rejected his proposal (which clearly hadn't addressed the actual problem) so he just let the bubble blow up and burst. 
> >> 
> >> <snipped the rest>  
> > 
> >The idea that banks lent to everyone with a pulse because they were 
> >somehow afraid of "civil rights prosecution" seems pretty absurd.
>
> They lent to everyone because they could bundle up bunches of bad 
> loans and resell the bundles at a profit. The feds encouraged that on 
> both ends.

The fringe banks did a lot of that. The bundled loans were "innovative financial products" and the US ratings agencies labelled them as much more secure than they turned out to be, which meant that they got sold around the world. That's what turned the US "sub-prime mortgage crisis" into the "global financial  crisis" so the fringe banks weren't the only contributors. I don't think that the feds had any control of the ratings agencies.

https://www.jstor.org/stable/23324880
-- 
Bill Sloman, Sydney

jlarkin@highlandsniptechnology.com wrote:
> On Sat, 29 Jan 2022 13:09:55 -0500, bitrex <user@example.net> wrote:
>>
>> The idea that banks lent to everyone with a pulse because they were
>> somehow afraid of "civil rights prosecution" seems pretty absurd.
>
> They lent to everyone because they could bundle up bunches of bad
> loans and resell the bundles at a profit. The feds encouraged that on
> both ends.

First came the pressure from the Clinton administration, which is 
mentioned at the end of the first NY Times article I cited. Bitrex 
thinks it's absurd and it is, but they did it, and he voted for them.

Second came the banks complaining that the policy was going to kill 
them, so they demanded the repeal of the regulation preventing them from 
selling the debt. That regulation never existed in Europe, but the 
crisis didn't start there because they weren't forced to make bad loans.

Third came the left claiming that the banks demanded the repeal of the 
regulation out of greed. The alternative was to bail out the banks 
instead of bailing out the investment houses.

Forth came conservative economists predicting the crises in many 
articles they published between 1998 and 2005, many of which you can 
still read online. Liberal economists and politicians contradicted them 
all the while.

Fifth (after the crisis) came the liberal economists claiming that the 
people who predicted the crisis don't understand what cause it, but 
they, who never wrote an article predicting it, understand it 
completely.


-- 
Defund the Thought Police 

On 1/29/2022 10:03 PM, Tom Del Rosso wrote:
> jlarkin@highlandsniptechnology.com wrote:
>> On Sat, 29 Jan 2022 13:09:55 -0500, bitrex <user@example.net> wrote:
>>>
>>> The idea that banks lent to everyone with a pulse because they were
>>> somehow afraid of "civil rights prosecution" seems pretty absurd.
>>
>> They lent to everyone because they could bundle up bunches of bad
>> loans and resell the bundles at a profit. The feds encouraged that on
>> both ends.
> 
> First came the pressure from the Clinton administration, which is
> mentioned at the end of the first NY Times article I cited. Bitrex
> thinks it's absurd and it is, but they did it, and he voted for them.

I wasn't old enough to vote in 1996.. 8-)

> Second came the banks complaining that the policy was going to kill
> them, so they demanded the repeal of the regulation preventing them from
> selling the debt. That regulation never existed in Europe, but the
> crisis didn't start there because they weren't forced to make bad loans.
> 
> Third came the left claiming that the banks demanded the repeal of the
> regulation out of greed. The alternative was to bail out the banks
> instead of bailing out the investment houses.
> 
> Forth came conservative economists predicting the crises in many
> articles they published between 1998 and 2005, many of which you can
> still read online. Liberal economists and politicians contradicted them
> all the while.
> 
> Fifth (after the crisis) came the liberal economists claiming that the
> people who predicted the crisis don't understand what cause it, but
> they, who never wrote an article predicting it, understand it
> completely.
> 
> 

On Sunday, January 30, 2022 at 2:03:35 PM UTC+11, Tom Del Rosso wrote:
> jla...@highlandsniptechnology.com wrote: 
> > On Sat, 29 Jan 2022 13:09:55 -0500, bitrex <us...@example.net> wrote: 
> >> 
> >> The idea that banks lent to everyone with a pulse because they were 
> >> somehow afraid of "civil rights prosecution" seems pretty absurd. 
> > 
> > They lent to everyone because they could bundle up bunches of bad 
> > loans and resell the bundles at a profit. The feds encouraged that on 
> > both ends.
>
> First came the pressure from the Clinton administration, which is 
> mentioned at the end of the first NY Times article I cited. Bitrex 
> thinks it's absurd and it is, but they did it, and he voted for them. 

The banks applied pressure to the Clinton administration, rather than the other way around.
The banks wanted to be de-regulated, and they got their wish.
 
> Second came the banks complaining that the policy was going to kill 
> them, so they demanded the repeal of the regulation preventing them from 
> selling the debt. That regulation never existed in Europe, but the 
> crisis didn't start there because they weren't forced to make bad loans. 

US banks weren't "forced to make bad loans".  The loans to people who in low-income neighbourhoods were carefully regulated to make sure that they wouldn't go bad, and they didn't, even after the sub-prime mortgage crisis.
 
> Third came the left claiming that the banks demanded the repeal of the  regulation out of greed. 

That was a large part of the banks' motivation.

> The alternative was to bail out the banks  instead of bailing out the investment houses. 

What's that supposed to mean?

> Fourth came conservative economists predicting the crises in many  articles they published between 1998 and 2005, many of which you can 
> still read online. 

Predict crises often enough, ,and you will be bound to be right some of the time.

> Liberal economists and politicians contradicted them  all the while. 

Correctly. Using bad theory to predict a crisis doesn't validate the  theory when one of the many predicted crises finally happens.
 
> Fifth (after the crisis) came the liberal economists claiming that the  people who predicted the crisis don't understand what cause it, but 
they, who never wrote an article predicting it, understand it  completely.

They understood what to do about it, which is why the consequences of the global financial crisis were a lot less devastating than the consequences of the 1929 stock market crash.
 
> Defund the Thought Police

Can't see why Tom Del Rosso is so worried about the thought police. He doesn't think for himself at all. What he has posted is pretty much the same right wing nonsense that James Arthur was spouting directly after the sub-prime mortgage crisis hit.

-- 
Bill Sloman, Sydney