tag:blogger.com,1999:blog-29196034.post4393764557973488250..comments2024-03-27T05:47:21.295-07:00Comments on Ayn Rand Contra Human Nature: Objectivism & Economics, Part 22Daniel Barneshttp://www.blogger.com/profile/06359277853862225286noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-29196034.post-34850069369702914882009-03-13T11:40:00.000-07:002009-03-13T11:40:00.000-07:00This article is almost a complete strawman, consid...This article is almost a complete strawman, considering that Ayn Rand really focused on philosophy, fiction and art, not economics.<BR/><BR/>If you want to really criticize someone who supported lazziez faire on the economic side of things, then you should read someone like Ludwig Von Mises.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-29196034.post-20966585387708074392009-03-06T15:22:00.000-08:002009-03-06T15:22:00.000-08:00Nyquist: If someone says "the notional value of de...Nyquist: <I>If someone says "the notional value of derivatives is nearly $600 trillion," anyone with a free and open mind would understand right off the bat this meant "derivatives in general," not some particular type of derivative.</I><BR/><BR/>Immediately before using the $600 trillion, you wrote, "the most serious dysfunction existed in the securities markets, particularly in the markets for derivatives." Were interest rate swaps and currency swaps in "serious dysfunction." No, so I think it was quite reasonable to assume you meant CDS.<BR/><BR/>Nyquist: <I>They merely wish to find any pretext, however flimsy and non-logical, to dismiss it out of hand.</I> <BR/><BR/>Change "it" to Rand, add "and criticize her" at the end, then look in the mirror.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-29196034.post-24911737636615568252009-03-06T14:55:00.000-08:002009-03-06T14:55:00.000-08:00Anon: "However, the main subject of discussion was...Anon: "However, the main subject of discussion was CDS."<BR/><BR/>The main subject of which discussion? Here I think you have convinced this post with the previous post. CDS is the main subject of discussion of <EM>this</EM> post, not the previous post, where the notional value of derivatives in general was mentioned.gregnyquisthttps://www.blogger.com/profile/13653516868316854941noreply@blogger.comtag:blogger.com,1999:blog-29196034.post-86899413285772349502009-03-06T14:07:00.000-08:002009-03-06T14:07:00.000-08:00As Kelly has point out, the notional value is, in ...As Kelly has point out, the notional value is, in fact, nearly $600 trillion, just as I said. So how does Anon respond? Well, he's annoyed because I "was not clear about what kind of derivatives they were." The reason I wasn't "clear about" this is because I was merely noting derivatives in general. If someone says "the notional value of derivatives is nearly $600 trillion," anyone with a free and open mind would understand right off the bat this meant "derivatives in general," not some particular type of derivative.<BR/><BR/>This sort of procedure is, alas, all too typical among advocates and defenders of Objectivism. They have no interest in understanding criticisms of Objectivism. They merely wish to find any pretext, however flimsy and non-logical, to dismiss it out of hand. Hence the preoccupation with peripheral issues, accompanied with the tendency to even get those wrong.gregnyquisthttps://www.blogger.com/profile/13653516868316854941noreply@blogger.comtag:blogger.com,1999:blog-29196034.post-44548456430929020932009-03-06T13:01:00.000-08:002009-03-06T13:01:00.000-08:00Michael: "I think you mean..."Thanks for the heads...Michael: "I think you mean..."<BR/><BR/>Thanks for the heads up. That's what I get for posting too quickly.gregnyquisthttps://www.blogger.com/profile/13653516868316854941noreply@blogger.comtag:blogger.com,1999:blog-29196034.post-40801809696460179952009-03-06T12:28:00.000-08:002009-03-06T12:28:00.000-08:00I missed the part about CDS'sKellyI missed the part about CDS's<BR/><BR/>KellyKellyhttps://www.blogger.com/profile/09896872571230152941noreply@blogger.comtag:blogger.com,1999:blog-29196034.post-7987359804754616562009-03-06T11:26:00.000-08:002009-03-06T11:26:00.000-08:00Kelly,It was enough to look at your links, especia...Kelly,<BR/><BR/>It was enough to look at your links, especially the second one. It says: "According to figures released in the quarterly review of the BIS (pp A103) in September the total notional amount of outstanding derivatives in all categories rose 15% to a mindboggling $596 TRILLION as of December 2007.<BR/>Two thirds of contracts by volume or $393 TRILLION fell into the category of interest rate derivatives. Credit Default Swaps had a notional volume of $58 TRILLION, seeing the sharpest relative increase after a volume of $43 TRILLION a year earlier.<BR/>Currency derivatives reached a volume of $56 TRILLION."<BR/><BR/>With his "$600 trillion" Nyquist was not clear about what kind of derivatives they were. However, the main subject of discussion was CDS. The above says the amount was $58 trillion. The other two sites also said $600 trillion w/o saying what kind.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-29196034.post-45677711421252707132009-03-06T10:21:00.000-08:002009-03-06T10:21:00.000-08:00Anonymous try typing in "notional value for deriva...Anonymous try typing in "notional value for derivatives of nearly $600 trillion" into Google. you'll get story's like the following: <BR/><BR/>http://www.business-standard.com/india/news/shankar-acharya-global-financial-crisis-an-asian-view/08/54/348801/<BR/><BR/>http://seekingalpha.com/article/99674-coming-soon-the-600-trillion-derivatives-emergency-meeting<BR/><BR/>http://www.fxstreet.com/fundamental/market-view/12-urgent-questions-for-2009-/2008-12-29.htmlKellyhttps://www.blogger.com/profile/09896872571230152941noreply@blogger.comtag:blogger.com,1999:blog-29196034.post-3477343507925609712009-03-06T09:29:00.000-08:002009-03-06T09:29:00.000-08:00"The CDS market has long since ceased to be a mean..."The CDS market has long since ceased to be a means of hedging credit exposure, if indeed it ever really was. At its peak, its outstandings totaled $62 trillion, more than twice the world’s total outstanding loans." (convincing argument link)<BR/><BR/>From Wikipedia:<BR/><BR/>"By the end of 2007, the CDS market had a notional value of $45 trillion, of which the corporate bond, municipal bond, and structured investment vehicles market totaled less than $25 trillion."<BR/><BR/>"[T]he Depository Trust and Clearing Corp, which maintains a database holding around 90% of all credit derivative transactions, held $29.2 trillion of outstanding CDS trades as of 26 December 2008."<BR/><BR/>Maybe there was a spike between the two dates. Plausibly a chunk of that spike was based on Fannie Mae and Freddie Mac debt! <BR/><BR/>"According to Citi via the FT, there is some $400 billion of notional volume in Lehman CDS outstanding, perhaps 80% of the volume of CDS written on Fannie and Freddie's $1.4 trillion debt."<BR/>http://www.ft.com/cms/s/0/7a268486-93cd-11dd-9a63-0000779fd18c,dwp_uuid=11f94e6e-7e94-11dd-b1af-000077b07658.html?nclick_check=1<BR/><BR/>However, in the comments to <I>Objectivism & Economics, Part 21</I> Nyquist says the notional amount was $600 trillion, nearly 10 times the $62 trillion cited above!! Not only did he present a misleading number, it looks false. And somehow Nyquist manages to give government a pass in the CDS market.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-29196034.post-79102343057662783112009-03-06T05:33:00.000-08:002009-03-06T05:33:00.000-08:00Ayn Rand wrote little or nothing about financial m...Ayn Rand wrote little or nothing about financial markets, which probably matched her knowledge of them. In what seems to be his habit, Nyquist scans what she did write that he believes might apply to what he wants to write about. He reads it very uncharitably and misses other passages that might apply. For example, in her <I>Nature of Government</I> she wrote a little about breach of contract, including this. <BR/><BR/><I>Some of these actions are obviously criminal. Others, such as a unilateral breach of contract, may not be criminally motivated, but may be caused by irresponsibility and irrationality. Still others may be complex issues with some claim to justice on both sides. But whatever the case may be, all such issues have to be made subject to objectively defined laws and have to be resolved by an impartial arbiter, administering the laws, i.e., by a judge (and a jury, when appropriate). .... Such, in essence, is the proper purpose of a government, to make social existence possible to men, by protecting the benefits and combating the evils which men can cause to one another.</I><BR/><BR/>Do you think that just maybe this might apply to an insurance contract or CDS? Of course not, to Greg Nyquist. Consider what Ayn Rand might have said about a life, auto, or homeowner's insurance contract. Suppose some insurance companies sold policies and then refused to pay legitimate claims, which is obvious fraud. Do you really believe Ayn Rand would have said it was wrong for government to interfere simply because it was "an infringement of individual rights"? Yet that is essentially the view Nyquist expresses. <BR/><BR/>I won't deny there is a tendency among Objectivists to deny that regulations can ever have a positive effect. But to claim that Ayn Rand "opposes all regulations" is hogwash.<BR/><BR/>By the way, the change that occurred in the life insurance market Mr. Hutchinson wrote about in his first paragraph was not due to simply government regulation. It was in the self-interest of the life insurance companies to not sell policies without an "insurable interest." Government regulation was probably after the fact, as usual.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-29196034.post-4386536686146913522009-03-05T23:30:00.000-08:002009-03-05T23:30:00.000-08:00Good post, but this part doesn't say what you want...Good post, but this part doesn't say what you want it to:<BR/><BR/>"... and since Objectivists insist on equating the moral with the practical, this suggests that any infringement of 'individual rights' cannot possibl[y] lead to bad results (such as aversely affecting millions of people)."<BR/><BR/>I think you mean to say that Objectivists believe any infringement on individual rights *will* lead to bad results - thus all regulations are immoral and impractical, in their view. <BR/><BR/>Incidentally, the widespread use of short ETFs may also be contributing to the market's rapid decline. Some people call these ETFs "weapons of mass destruction." <BR/><BR/>The uptick rule used to prevent a lot of short selling, but the SEC, under the leadership of Bush appointee and staunch free marketeer Chris Cox, repealed it. Hmm. How's that working out? Let me check my portfolio ...<BR/><BR/>- Michael Prescott (Blogger won't let me sign in)Anonymousnoreply@blogger.com