“But this effect – the concentration of risk in the US as the guaranteed assets issued by Fannie and Freddie went primarily to foreign central banks – is a consequence of our need to borrow from foreigners to finance our budget and trade deficits. Without those deficits, more of the safe assets stay home and the overall pool isn’t as risky. So to the extent that this concentration of risk is a factor in causing the problems (and I don’t know how important it was), it was caused by trade and budget deficits, not the actions of Fannie and Freddie.”

LOL! The Investment Banking sector of the US is virtually wiped out. What a great reward for the investment banks! Now, what we US taxpayers did for the Chinese by nationalizing Fannie and Freddie well that the “ultimate ‘moral hazard’ fiasco”!

Just because a hedge fund manager says something doesn’t mean it is necessarily wrong. In this case, purely by accident, some hedge fund managers have their interests temporarily aligned with ordinary citizens. As you said, everyone needs to think for themselves. I think most people are quite capable of doing this.

Twofish: Trust no one, including the people that tell you to trust no one.

Thats an extreme of cynicism. I’d simply say choose your friends wisely.

Don’t know what you mean by “fairness in practice”. Fairness is an ethical principle. Like justice and compassion. Why should it mean something different “in practice”?

I certainly don’t care about fairness when it is distorted to mean its exact opposite.

Twofish: I don’t care very much for consistency.

You should. Consistency (aka “rule of law”) is a good thing as long as it is not taken to extremes. Governments that act consistently will have more credibility and moral authority than a capricious government.

People are very easily fooled by ad campaigns and prevailing fashion. All I want people to do is to look at things deeply, watch their wallet, and listen to all sides of an issue. There are lots of people who want you to think or vote a certain way, and you have to look at things from your own self-interest.

The reason this came up was that people are screaming about a taxpayer bailout whereas if you look at things, a lot of the people screaming are hedge fund managers and quite wealthy people. Part of the reason things ended up so messed up was that tax rates were too low and structural problems like health care and the Iraq War were ignored.

For what it’s worth, I personally think that what Obama says makes a lot more sense than anything McCain has mentioned. Now is not the time for a tax cut, particularly against wealthy people that can afford it.

Trust no one, including the people that tell you to trust no one.

Never attribute to malice what can be attributed to stupidity. On the other hand sufficiently large amounts of stupidity becomes difficult to separate from malice.

I don’t think he has been particularly right about Wall Street.

I didn’t say that. I said that you should expect that Goldman-Sachs will make a huge amount of money from whatever rules come out of this. One consequence of this is that you shouldn’t care that much about what GS wants since they will end up OK regardless of what the rules are. You really should care about 1) what is good for society and 2) what is good for you.

pseudo: So just to be clear, you are in favor of the government actively making investment decisions, yes?

I don’t see any choice in the matter right now. I care a lot about fairness, but I’ve found that fairness in practice means “what is good for me is fair, what is good for you is not.” I don’t care very much for consistency.

DC has been right about Wall St all along. But it is hard to take him seriously when he is constantly spouting jingoistic nonsense about how the Chinese state is better than everyone else.