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Links 1-17-2011

January 17, 2011

The TC Must Read:

Mish’s Global Economic Trend Analysis: Utah’s “Quiet Title Law” Bypasses MERS, Awards Homes Free and Clear; One Homeowner Had $417,000 Debt Erased: “Some investor just lost $417,000 through no fault of his own. Another person who deserved to lose his house because of default just got one free and clear. Is that justice? In what way?”

Because these banks didn’t follow the clearly defined law, they have opened themselves up to a huge and unending wave of SEC fraud.  Mish’s point is that this is not fair to the investor.  But who is the party at fault?  Is it the homeowner who is following the law, or the bank who didn’t.

I found this Arnold Kling piece to be more than a bit offensive – here is a supposed libertartian who wants to rewrite contracts between two parties because he doesn’t like the outcome when the law is followed. He doesn’t seem to understand that there are two different legal models to follow – one prohibits some actions and allows everything else, the other allows some actions and prohibits everything else.  In cases where we are dealing with dangerous substances – like the ownership of properties – we use the “allows some actions and prohibits everything else” model because with very limited choices and well established laws, the odds of making major mistakes are very small.  For things like “Living Life” we use the model of “prohibit a few things, but you can do anything else” as the legal model.

Then, There is a qualitative difference in the case of the banks because of the quantity of fraud and mistakes.  If I yell at my kid once, well, maybe it was a bad day for one of us. If I scream at him constantly, it is abuse, even if the words I use are the same.  If there were just a few problems with a few mortgages, I would be firmly on Klings side. Heck, everyone makes mistakes, and good faith attempts to make things work should be tolerated.

But this is not what is happening with mortgages. There are problems with nearly every stage of the process, all created by a few rouge corporations who decided to make up their own rules, and in some cases, not even bother with making up rules.  The sheer volume of problems precludes the assumption of good faith in this case.

If course there are huge problems with ownership and moral issues.  We had a great system that eliminated these problems already. This system took many, many years of hard work by lots of people over time to construct so it would eliminate these problems.  It is very much like the libertarian ideal that Kling professes to support.

I know Arnold Kling does not like the solution, but I can put this into language he can understand. You need to sit your ass down in a chair and study if you want to learn. You need to follow the law to avoid legal and moral problems.

  1. Thinking About Aristotle of Stagira and Moses Finley: Archive Entry From Brad DeLong’s Webjournal: Why did the all time genius support something very much like slavery?  Thats a good question.  There are others here too – and they are disturbing to consider what the answers might be.
  2. Worthwhile Canadian Initiative: Spain, Ireland, and the US. All breaking Okun’s Law.
  3. Bots Demand a Double Space at the Ends of Sentences! – Grasping Reality with Both Hands: I like the double space too.  I know when the end of sentences happen.
  4. Hu Says U.S. Must Respect Sovereignty, Defends Yuan – Bloomberg: Will China respect our Sovereignty if we decide to weaken the USD against the Yuan?  heh.
  5. FT Alphaville » China: it is big and it is clever:  It’s currency was actually 40% weaker than we thought.
  6. Economics’ Newest Thinking Comes from the Old Masters – BusinessWeek:  There is nothing that can be done.  We must accept the fate our god has placed upon us.
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