Sunday, June 08, 2008

Phrases that irritate me #94

Can I just point out that the crisis in the world economy has not been "fuelled by corporate greed", as reported in the entrée to this video.

At base, the credit crisis was fuelled by individuals' greed; it was individuals who decided to live beyond their means.

Now, the banks could be blamed for unwisely facilitating such loans but, ultimately, nobody forced these people to take out loans and debts.

And if you are about to argue that all-pervasive advertising, for instance, effectively brainwashes or coerces the weak-minded into taking out loans, then why not make the concept of the untermensch an official one?

After all, what you are then saying is that some people—I, for instance, have never been brainwashed or coerced into taking a loan through advertising—know better than this untermensch.

In which case, you need to admit that this untermensch should be protected by people such as you and I; that we should make their choices for them.

This, of course, requires liberty to be limited—at least as far as said untermensch is concerned—for the good of the people.

And, obviously, we require a collection of "wise men" who should be able to decide exactly how the freedoms should be limited (all in the name of "social justice", you understand).

This is, of course, the paternalist attitude often adopted by socialists and other statists.

It is an attitude that I reject.

36 comments:

Tom Paine said...

What a shame. If you didn't reject it you'd have had to address the issue of how to select the uebermenschen, which has puzzled the great minds of the ages, but still never occurs to the stupid. Shocked though I would have been by your deviation from the libertarian straight and narrow, it would have been a fascinating post.

Dr Rant said...

You know, it's this kind of 'I'm a clever clogs and I'm alright', smug bastard, selfish cunt kind of shit that really, really gives libertarians a bad name.

Let me just summarise:

1. Some very clever people with good educations, well paid jobs, very nice houses, and very nice cars, who were never going to suffer in any way whatsover for their actions, decided that they needed more money to give to shareholders to justify bigger and bigger million pound bonuses.

2. Some very, very poor people from a section of society that has very little experience of home ownership (ie: no-one they know will be able to tell them the pros and cons), that has very little experience of mortgages (ie: no-one they know will be able to tell them the risks), with a bad education from bad, locally-funded (ie: underfunded) schools, who stood to lose what little they had, were spotted as a good 'new market'.

3. The rich, educated, knowledgable people decided to offer the poor, uneducated, ignorant (about mortages and home ownership, at least) people mortgages to fulfuil a dream of generations: to own their own home. What this must have meant to a section of society that has such a long history of oppression and poverty.

4. Why should you miss out on the good times? the rich clever people crooned. All this could be yours! they hissed seductively.

5. The poor stupid people signed up, thinking the boom times had finally reached them. Why not?

6. The clever rich people were so greedy that they had put in clauses in the contracts that meant the interest rates would shoot up after a few short years. The poor stupid people did not realise the terrible implications of such clauses.

7. The interest rates shot up, and the reposessions roled in.

8. The rich clever people are still rich, and live in big houses, with big cars, and have huge bonuses. They have moved on to the next game: claiming it was not their fault and asking for more money from investors.

9. The poor stupid people are bankrupted and homeless, having lost everything.


Yes, DK, libertarians are the future. The political ideology that really cares.

You selfish, nasty, stupid, self-satisfied little fuck.

Dr Rant said...

[Post made 'in character', no personal offense intended, look forward to the response - Ed.]

Devil's Kitchen said...

Dr Rant,

Yup, that was an entirely predicable response. Do you know how I knew that?

Because I predicted it in the post above.

I imagine that you will be one of the "wise men"? Certainly, you won't see yourself as one of the untermensch, eh?

DK

Devil's Kitchen said...

Cross-posted with your second one.

OK, a serious answer?

First, the concept of rising interest rates is not difficult.

Second, financial advisors are absolutely required to ensure that their customers understand the terms of the advice; in fact, the customers have to sign a form to declare that they understand the advice that they have been given.

Third, the fairly minimal rise in interest rates should not have led to so many foreclosures.

The reason that it has done so is quite simple: banks allowed people to self-certificate their salaries.

The banks should not really have allowed this (although it was useful to me when I bought) but, ultimately, people chose to lie about their income (and to a very large extent).

Fourth, I am not alright, Jack. I have lost quite a lot of money that was in banking shares (fucking RBS and their cocking rights issue!); however, I accept that I have to take the rough with the smooth.

DK

Devil's Kitchen said...

P.S. Another misunderstanding here.

"Yes, DK, libertarians are the future. The political ideology that really cares."

No, libertarians do not care as you use the term.

However, the libertarianism that I espouse -- especially in education, i.e. removing the state -- would equip people with the knowledge to make informed choices.

Further, you seem to have confused the libertarian support for the free market with a support for corporatism. It's a mistake that many people make, but it is also a fallacy.

DK

Dr Rant said...

I think that to compare the use of leverage by a strong group against a weak group to the Nazi idea of an 'inferior race' is a rather offensive straw man falicy (if I am reading you correctly - perhaps I am missing some sarcasm on your part).

The idea that 'buyer beware' is a good way to conduct business to the extent that you consider a poorly levereaged person to be at fault for buying a deliberately mis-sold product from a much better leveraged person is both dagerous and unjust.

However, if you are looking for a private doctor and don't mind going bankrupt paying for operations/tets/medicines you don't need then please do drop me a line so I can use my superior medical leverage to convince you that unless you pay me shed loads of money you won't see your next birthday. Kerching!

(Oh, and saying 'I'm too clever to fall for that, Dr Rant!' is only of use to you. Unless you think it's ok to steal from stupid people because, well, they deserve it.)

Dr Rant said...

(falacy - sorry)

Dr Rant said...

Damn my typos! Fallacy.

Rory Meakin said...

What a seriously warped, arrogant message, Dr Rant!

1) This dumb-ass characterisation of people into two groups, is this for real? How many people are being re-possesed? Are they really the "very, very poor" poorest? Or are such people, in reality, actually living in social housing or on the streets?

2) "2. Some very, very poor people from a section of society that has very little experience of home ownership (ie: no-one they know will be able to tell them the pros and cons), that has very little experience of mortgages (ie: no-one they know will be able to tell them the risks), with a bad education from bad, locally-funded (ie: underfunded) schools, who stood to lose what little they had, were spotted as a good 'new market'."

Do you actually have a problem with this? (Discounting the waffle about "very, very".) Should people have to prove that their parents owned a property before they are permitted to do so? Or perhaps they should not exactly be barred, but merely the system loaded against them? Is spotting markets also a crime?

3) "The clever rich people were so greedy that they had put in clauses in the contracts that meant the interest rates would shoot up after a few short years." They were so damn greedy that 2-year reduced rates were offered. Don't you feel even slightly ashamed of yourself for writing such utterly vapid pap?

Dr Rant said...

Rory,

I don't want to straw dog you, so could you clarify:

1. you think that unequal application of leverage by those in a position of power against those in a position of weakness is ok?

2. you think that such use of leverage should not be policed in any way to to avoid abuses of power?


Between depriving a man of one hour of his life and depriving him of his life there exists only a difference of degree. You have done violence to him, consumed his energy. Elaborate euphemisms may conceal your intent to kill, but behind any use of power over an other the ultimate assumption remains: "I feed on your energy."

- Muad'dib

V said...

two points.

Banks were not very keen on lending to people who cannot pay back their loans - its called being stupid.
However, many of the wise people in the US decided they would force the banks to give these people a mortgage anyway - the bill is called the Community Reinvestment Act of 1977 (brought in by President Carter)
This was updated by Clinton to make it even harder for Banks to refuse a mortgage application on the grounds of the candidate being too poor!

So, it was the government of the US which changed the policies of the banks. It was that change of policy, combined with insurance industry's misplaced confidence to insure against business cycles which has caused the mess we are currently in.

They made the banks feel more comfortable by insuring these sub prime loans against default - of course, as soon as the insurers realized their mistake, they stuck all their money in oil as a way of hopefully covering their losses when the chicken's finally come home to roost!

The only effect any political intervention can have in the financial world is to make things much worse than they would have been other wise - that is what libertarianism is trying to teach us!

Secondly, any debate where the use of the term Nazi is used to defeat your opponent is already lost - give it up, Dr Rant!

Dr Rant said...

Firstly, Goodwin's law, even if you agree with it (which I don't, I think it belongs in the playround) only applies if the references to Nazis is out of context or innapproriate to the discussion.

Secondly, it was DK who mentioned the Nazis, several times in fact, in his original discussion. I simply said it was a straw man device.

Your point about Carter's act is a good one, though.

However, you have failed to answer my questions about the projection of power down a power gradient and whether it should be in some way monitored and/or policed.

dr cromarty said...

I think you'll find it's Godwin's Law.

I think you'll also find that DK does not mention the Nazis at all, but the term untermensch, a German translaton of an idea from the American author Lothrop Stoddard in his 1922 pamphlet The Revolt Against Civilization: The Menace of the Under Man

Keep up, Rant, or at least get a sub-editor.

Devil's Kitchen said...

Dr Rant,

I have addressed your "power" point above, but I shall repeat it.

"Second, financial advisors are absolutely required to ensure that their customers understand the terms of the advice; in fact, the customers have to sign a form to declare that they understand the advice that they have been given."

This is policed. People are given as much chance to understand as they can.

Ultimately, however, TAKING OUT A LOAN IS LIVING BEYOND YOUR MEANS.

That is the simplest concept of all and I don't quite understand what your problem is.

My point about the untermensch is this: you, from your ivory tower of a good education and (I imagine) middle-class upbringing, have decided that some people are unable to appreciate the consequences of their actions.

Thus, you are designating them as inferior to you: you have made them "under man" or untermensch.

Do you see?

It is an incredibly arrogant position to hold. Further, as I have long-time argued, if you designate people as inferior and mop up after them all of the time, they will either not understand or not appreciate the consequences of said actions (because they never suffer from them); in this way, they become like children -- in other words, they are infantilised.

This is, to a great extent, what the Welfare State (started with the best of intentions, I'm sure) has done to many of the British people.

Get what I'm driving at yet?

DK

Dr Rant said...

Firstly to deal with the Godwin* issue:

Dr Cromarty:

Untermensch (German for under man, sub-man, sub-human; plural: Untermenschen) is a term from Nazi racial ideology used to describe "inferior people"

Although not used by the Nazis, it is a word that refers to Nazi ideology.

DK raised this first, ergo Godwin's Law (and only someone anal and prissy enough to think Godwin's law is any good in the first place would point out prissily an extra O type) does not apply.

Furthermore, raising Godwin's Law falsely to kill criticism is a much worse offense and, unlike Godwin's actual law, one that I think does deserve cesure.

ie: Fuck off!

(Oh, and we do have sub-editors, but not for comments, fuckwit)

Dr Rant said...

Secondly, and more importantly, to deal with DK's response.

Again, I accuse you of a straw man fallacy:

1. I think that a power differential and downward projection of that power down a gradient means, by definition, that the person with less power is vulnerable to abuse and violence (taking the Muad'dibian view that stealing a person's energy is violence, and money and time are expressions of a person's energy).


2. You say that this infers that people at the lower end of a power differential are 'lesser beings' in the way of Nazi ideology.


In now way does an accurate description of economic physical reality (a downward power gradient between banks and poor individuals) be compared to 'making' them lesser beings.



However, to answer your general points:


1. We are all 'lesser beings' and 'greater beings' at different times and in different ways.

For example, you and I are 'greater beings' intellectually than many other people. Therefore, in a world in which con-men in suits selling you stuff that can bankrupt you, we have an advantage and will do better than the average person.

However, (presumably!) you and I are 'lesser beings' when it comes to driving around in a pick up truck with a machine gun bolted to the back and shooting everyone who does not give us their money. Therefore, in a world in which psycopathic thugs shoot you for being clever, you and I would be at a disadvantage.


2. In protecting the weak, the strong protect themselves because even the strongest are weak in some ways.

For example, if the banks were not such bastards then people would be more likely to help them when they suddenly lose billions and have runs on their branches.


3. I don't think that financial advisors are absolutely required to ensure that their customers understand the terms of the advice is a good enough assurance nor is it an excuse when things go wrong.

Buyer beware damages business, because business is built on trust.



Finally, Mrs Rant want's to know what you have against Liberals?

"Libertarians? Does that mean they only eat liberals?"

(Sorry if that's old to you, but it made me laugh.)

Devil's Kitchen said...

Let's say I agree with the rest of your comment -- although I would point out that we, as a society, cannot insure everyone against their own stupidity and lack of education (which we already pay for) -- and move on to other things...

"3. I don't think that financial advisors are absolutely required to ensure that their customers understand the terms of the advice is a good enough assurance nor is it an excuse when things go wrong."

What, then, would you suggest? That we ban people below a certain IQ from being able to take out loans?

"Buyer beware damages business, because business is built on trust."

Quite so, my good doctor, quite so. And, as Tim Worstall argues, who is now paying both the financial and trust-loss cost (which will translate into financial loss) of this credit crunch?

Yes: the banks and their employees and their investors (including me). This is as it should be.*

Yes, people will lose their houses, but that happens every day.

Oh, and you'll like this. My g/f's father was a banker and lost his job in the last big crash in the 80s/90s; and he lost his house (completely true, by the way).

Now, I would imagine that you call that "justice" whereas the poor people who lied about their income on the self-certification forms... well... that's just them being exploited, right?

Let us look at this crunch: who does it affect? Banks, mainly.

Interest? Did it hit 6%? You might remember the 80s/90s when it was at 15%. You know how much a mortgage costs, I presume: a few percentage points rise should not anywhere near bankrupt anyone unless they have vastly inflated their real salary in order to take out that mortgage or loan (or lose their job, but nothing will guard against that. Oh, except loan repayment insurance).

In short, my good doctor, your power gradient is a total fallacy. Apart from anything else, the customers eroded trust when they agreed to lie about their income.

Oh, I could write so much more, but I'll wait for your reply first...

DK


* And there will be a further crunch. As soon as RBS shares get anywhere near what I bought them for, I'm selling up.

Dr Rant said...

Ok,

I agree with much of what you say there (except that the power differential and gradient is bollocks in this case - clearly the banks have more power than an individual applicant).

The phrase that irritated you was the 'fueled by corporate greed'.

Do you mean 'because there was no corporate greed', or do you mean 'because there was greed on both sides' (even if that greed was not universal.

Obviously, everyone did not lie on their mortgage application and every banking agent did not mis-sell all of their mortgages.



I should add that I have worked with a group in which an 'uebermenschen' mentality produced horrific outcome - Native Americans. It is not that I think that this does not happen, and it does in the UK, but that I think it should not be used as an excuse not to protect the weak from the strong.

Devil's Kitchen said...

Dr,

A bank has more power than an individual: this is why we need competition. Any monopoly firm has more power than an individual: luckily we do not (quite) have that in banking yet.

And the individual can still refuse the loan. Quite seriously, can I recommend Eamonn Butler's Best Book On The Market? It's very simple and enjoyable and will take less than a day to read.

"Do you mean 'because there was no corporate greed', or do you mean 'because there was greed on both sides' (even if that greed was not universal."

Yes, that's pretty much what I meant. There was greed on the part of the consumer (however much the Daily Mail rants, owning your own house, for instance, is not a human right) and there were faults on the part of the banks.

However, my point is that those faults would not have been exploited had individuals not been greedy.

"Obviously, everyone did not lie on their mortgage application and every banking agent did not mis-sell all of their mortgages."

Absolutely. The difference is that banks can be sued if they mis-sell, c.f. the entire industry built around sueing for endowment mortgage mis-selling (although they did very well for me and my father. And my financial advisor, as it happens). Individuals (especially poor ones) rarely are because their assets are, essentially, of less worth to the banks than 25 years of loan repayments.

As for your personal experience... well, I don't doubt it. Doctors seem to deal disproportionately with the "untermenshen" (for reasons that are fairly obvious), but it boils down, I guess, whether it is better to be cruel to be kind...

DK

Dr Rant said...

Sorry, just off the top of my head regarding the fact that a doubling in interest rates won't bankrupt you unless you lie on the form:

Salary £20k/year
Maximum mortgage (4x salary, 100% of house value): £80k
Interest on loan at 5% £4k/year.

Loan repayment £5,500/yr
Tax: £5k
NI: £250
Council tax: £2k
Car depreciation £1k (assume cheap car needed for work)
Fuel £350
Road tax £150
Car Insurance £450
House insurance £350
Child care (single parent with two pre-school children, on top of the child allowance and state-provision) £3,000
Food (essentials for adult and two young children, absolute minimum): £4k
Left over income: £3,800 or just over £70 per week.

Let's say interest rates go up to 15%:
Repayments go up £8k/yr.

Bankrupt.

(Actually, they would decompensate at 10% interest rate).



This does not take into account house price falls at the same time as changes in circumstances (such as loss of job or change in job that is common when house prices fall) that causes most problems.

As I say, off the top of my head and open to correction.

Dr Rant said...

Absolutely,

As with everything, the wisdom is in how much of something, and when, is good and bad.

As my chemistry teacher used to say when I questioned whether he should be putting his hands into a dish of acid:

"Too much of anything is bad for you."

Can't remember what he died of in the end, though....

Devil's Kitchen said...

Dr,

"Council tax: £2k"

Where? In Lambeth, mine is £1200 (not including single living discount).

"Car depreciation £1k (assume cheap car needed for work)"

Irrelevent. I've just bought a car for precisely this reason: am I worried about depreciation? No.

You've also missed out Child Benefit: for two children is roughly £40 per week or just over £2,000 per year. (There are probably other benefits too, e.g. SureStart).

"Let's say interest rates go up to 15%:
Repayments go up £8k/yr."


That's my point: interest rates up to 15% per year is nothing like we have seen. Interest rates may have touched 6% from 4.5% (when I got my mortgage in 2000) but they have gone nowhere near 15%. But they did in the 80s/90s.

As I said,

"a few percentage points rise should not anywhere near bankrupt anyone unless they have vastly inflated their real salary in order to take out that mortgage or loan (or lose their job, but nothing will guard against that. Oh, except loan repayment insurance)."

DK

Dr Rant said...

Ok, knock a bit off the council tax, but I had included the child benefit in the childcare costs to let mum go to work.

Car depreciation irrelevant?

How did you pay for your car?

Either a loan (living beyond means: include the repayments in the figures instead), or you paid cash in which case you have to save for your car which is where the annual depreciation figure comes from: that's the money you put aside to pay for your next car.

Exclude that, and the person will lose their job when their car packs in and they can't afford a new one.

No, car depreciation is an essential calculation. I didn't include car repairs, which should come to the amount you knocked off above for the council tax.


"A few percentage points"

A few suggests between 3% and 7% to me.

Well, 5% increase will bankrupt this woman.

You can imagine how painful a 2.5% increase will be to someone working flat out to scrape by as in the above example.

Devil's Kitchen said...

Dr,

"How did you pay for your car?"

Savings from my income. You?

"Well, 5% increase will bankrupt this woman."

Yes, but even with this crisis, we haven't seen a 5% increase.

Anyway, let's say it rises to 6% (a realistic, real-life scenario), on your calculations.

6% x £80k = £4,800.

She has left over: £3,000.

Plus Child Benefit: £2,000 = £5,000.

Let's say it rises by 5%, to 10%:

10% x £80k = £8,000.

So, she has £3,000 + £2,000 - £4,000 = £1,000.

OK, then she's really fucking struggling (but not bankrupt).

But, of course, nothing like this has happened in the latest crisis.

You have also failed to take into account wage rises and whether it's a capital/interest mortgage or an interest only.

DK

Dr Rant said...

Why did you save up for a car?

Why not simply sell your old car and use that money to buy a new one?


(Hint: the figures need to be sustainable.)


ps: The child support was included in the childcare, and the car repair costs that I forgot cancel out the lower council tax that you are lucky enough to have (we pay £1500 for a bedsit that our salaried doctor uses 2 days a week).

Devil's Kitchen said...

Dr,

"Why did you save up for a car?

Why not simply sell your old car and use that money to buy a new one?"


Because I have never had one before.

"(we pay £1500 for a bedsit that our salaried doctor uses 2 days a week)"

You know as well as I do that how long your doctor stays in that flat is irrelevant to the Council Tax figure.

"The child support was included in the childcare"

So, free state education does not extend from the age of 4 up? I think it does.

If the mother cannot work, there are substantial benefits that will make all of these calsulations irrelevant, e.g. housing benefit, council tax benefit, working family's tax credit, etc.

DK

Rory Meakin said...

"Why did you save up for a car?

Why not simply sell your old car and use that money to buy a new one?"


I see a theme in your thinking here, Dr. It doesn't seem to occur to you that someone might buy a car for the first time, just like you seemed to disapprove of unwashed buying a house without already having owned one...

"1. you think that unequal application of leverage by those in a position of power against those in a position of weakness is ok?

When you talk about 'power', what exactly do you mean? Better circumstances or licence to use force?

2. you think that such use of leverage should not be policed in any way to to avoid abuses of power?"

DK has mentioned the fact people have to sign their name to the statement that they understand their loan agreements. I am satisfied with this. If you can worm your way out of an agreement by revising your memory of events such that you "didn't understand" what you signed, then what is the point of anyone signing anything.

Feeble minded journalists love an easy lunch by making programmes and articles about people for whom loans were "shoved down their throats" (ie, offered) and who were innocent spendthifts seduced by "corporate greed". It says more about the pervasive rot of statism that people believe they can live off the hard work of everyone else and be sheilded from the consequences of their actions than anything about "corporate greed".

PS - If anyone did lend their money to people who default on their debts, then too bad for them too.

Dr Rant said...

Ok, you've not had a car before.

I'll explain this slowly then.

When you get you're next car you will trade in the one you have.

It will not be worth what you paid for it. It will have depreciated.

To buy your next car (assuming you buy a similar value of car as the first time) you will need to make up the difference.

That money needs to be saved over the lifetime of the previous car.

Thus, for sustainable budgeting you need to include the vehicle depreciation in your annual outgoings.

That money is saved for when the car needs replacing.

If you don't (say, for example, you're mortgage goes up) then you will have problems such as increased repair bills, inability to replace the car (with loss of job if car is key to job) etc..

Is this making sense to anyone, or do I need to get Alvin Hall in here?



Rory:

1. I didn't say the 'unwashed' should not get a house. I said that lenders are in a position of unequal power and therefore have certain responsibilities, which I thought they had neglected.

2. For power I mean power. Knowledge is power. Physical force is power. Money is power. Or at least they all can be.

Doctors are not allowed to shag patients because of the power gradient, for example.

(And if we can't have any fun, I don't see why the fucking bankers should!)

dr cromarty said...

dr rant

Touchy, aren't we?

You got some spelling wrong and you didn't go to the sources. Big deal.

Get over it. Or take some lorazepam.

Dr Rant said...
This comment has been removed by the author.
Dr Rant said...

My Dear Dr Cromarty,

I beg to differ:

"I think you'll also find that DK does not mention the Nazis at all"

Yes, he does. He associated the behaviour in the post to a term used to describe Nazi ideology.


"but the term untermensch, a German translaton of an idea from the American author Lothrop Stoddard in his 1922 pamphlet The Revolt Against Civilization: The Menace of the Under Man"

Stoddard came up with the name and idea, but the Nazi's co-opted it, took it as their own, and built a full size working reality out of it.

To say it is not a Nazi reference is like saying that the concentration camps don't count either because the British 'invented' them in Boer war.


"Keep up, Rant, or at least get a sub-editor."

Hmm.

First you falsely accuse me of getting something wrong.

Then you try to silence me with a deliberate miss-application of Godwin's Law.

Then you insult me and suggest I need a sub-editor.

Then, rather than apologise, you suggest i'm touchy.

Furthermore, you have not contributed to this debate in any constructive way.

You know where this is going:

You are a clearly a troll.

dr cromarty said...

@dr rant

Yes, you are touchy.

[Did it really require

ie: F*** off!
and

f***wit?

No, it didn't. God help your patients if they dare disagree with you.

I point out a minor factual inaccuracy and you fly off the handle. Calm down, dear (or alternatively try 0.5mg SL lorazepam as reqd)

BTW with superb irony your patronising hauteur rather makes DK's point.

Dr Rant said...

Dr Rant is a fictional, grumpy bastard, GP so we tend to swear a lot in character as it's the way he talks.

If you didn't know him, then I apologise for any offense.

Having said that, we are in The Devil's Kitchen, which is hardly a bastion of Whitehousian correctness.....

dr cromarty said...

dr rant

Thanks for that. I'd like to bury the hatchet, if that's OK. No disrespect intended and I'm sorry if I offended.

I'd hardly be here if the odd sweary word offended me....

Dr Rant said...

No problem.

We probably should be more careful using the Dr Rant persona away from his own blog.

(Hence the disclaimer after the original post in this comments section.)

Apologies.