Video: The Purpose of Bankruptcy Law

 Posted by on 3 November 2011 at 1:00 pm  Ethics, Finance, Law, Videocast
Nov 032011

In Sunday’s Rationally Selfish Webcast, I discussed the purpose of bankruptcy law. The question was:

What is the proper purpose of bankruptcy laws? When should a person renegotiate his debt with lenders, if ever? Should a person be able to wipe his debt clean by going into bankruptcy? In your July 10, 2011 webcast discussion of strategic default on mortgages, you suggested that a person shouldn’t be able to do that, but shouldn’t lenders be responsible for who they lend money to?

My answer, in brief:

The purpose of bankruptcy law not to give people a fresh start, but rather to peacefully and fairly resolve conflicts that arise between the debtor and his creditors when the debtor is truly unable to pay his debts.

Here’s the video of my full answer:

If you enjoy the video, please “like” it on YouTube and share it with friends in e-mail and social media! You can also throw a bit of extra love in our tip jar.

All my webcast and other videos can be found on my YouTube channel.


Hooray! The fourth and final event of Capitalism Awareness Week is tonight… and you can watch it live via streaming! Here’s the announcement:

The Financial Crisis: Causes, Consequences and Cures

John Allison, Former Chairman and CEO, BB&T Corporation

The cause of the recent financial crisis and subsequent economic downturn has been hotly debated over the last few years. The media, politicians, and even many businessmen have placed the blame on the supposed excesses of free-market capitalism. In this lecture, John Allison, former Chairman and CEO of BB&T, argues that this crisis is in fact a legacy of government’s anti-capitalist policies.

Mr. Allison presents his unique perspective of the financial services industry to support his argument that massive government intervention into the U.S. economy—from the creation of the Federal Reserve in 1913 to a reckless crusade to encourage home-ownership—laid the groundwork for an unsustainable real estate boom. He offers his views on what contributed to the financial crisis and how the government’s response to the inevitable bust—a frenzied series of bailouts, nationalizations, and “stimulus” efforts—is only making things worse.

Finally, Mr. Allison discusses some of his proposed immediate and long-term solutions for moving us towards a stronger economy. Mr. Allison will demonstrate that capitalism, far from being the cause of our financial troubles, is its only cure.

Tuesday, October 4th
5:00 PM Pacific, 6:00 PM Mountain, 7:00 PM Central, 8:00 PM Eastern
North Carolina State University and live streamed online worldwide

You can watch the event live from this page.

Remember, if you’ve not yet contributed to these awesome efforts by The Undercurrent but you’d like to do so… it’s not too late! Paul and I won’t be matching funds as with the first $2000 contributed, but your money will be well-spent!

To make a one-time donation, use this PayPal link. To make a recurring donation, visit TU’s donation page and follow the instructions for “Recurring Monthly Payments.”

Video: The Morality of Strategic Default

 Posted by on 15 July 2011 at 1:00 pm  Ethics, Finance, Videocast
Jul 152011

In Sunday’s Rationally Selfish Webcast, I discussed the morality of strategic default. Here’s the 20-minute video, now posted to YouTube:

I was broadcasting from laptop in my hotel room in Palm Springs… hence the odd background, off-kilter camera, and tinny audio. However, I was really happy with my analysis of this topic, and I hope to write it up into a blog post soon. But since I caught a cold while traveling (blech!) that might be delayed.

Uncle Sam Wants Your Savings

 Posted by on 8 April 2010 at 7:00 am  Activism, Finance, Government
Apr 082010

A few weeks ago, Bob Gifford posted to OActivists about the Treasury Department’s proposal to “manage” our 401(k)s and other retirement accounts. (You know, because the government is such a fine example of fiscal responsibility.) The government is soliciting comments on this proposal. Bob suggested the following talking points:

Along with the obvious things to say about taking over our property, other things you could include are:
  • Americans are perfectly capable of managing their own money and do not need the government to do so.
  • The government has shown no ability to manage our money.
  • Annuities do not have the flexibility necessary for an investment.
  • Annuities provide fixed income and offer no protection from inflation.

Keep a close eye on this. If it is implemented, there may be some room for self-defensive actions.

Those are good suggestions. Also, as you might recall, Paul recent published an op-ed in Pajamas Media on this topic: “Government Grab of Retirement Accounts.”

If you wish to tell the federal government what you think, you can send your e-mail to [email protected] with “RIN 1210-AB33″ in the subject of the message. Here’s the comment that I submitted:

I’m completely opposed to any government takeover or management of retirement accounts like 401(k)s.

The government has shown itself wholly incapable of managing its own finances. Any government interference with 401(k)s would just be yet another way to steal the hard-earned money of responsible Americans, so that politicians could spend it it on pork and welfare. That would be morally grotesque — and grind the economy to a halt.

Respect property rights: hands off our retirement savings!

[name & address omitted]

Please do submit a comment, even if only something short and sweet! They’re due on May 3rd at the very latest.

The New F***ing Citibank

 Posted by on 18 March 2009 at 11:05 am  Finance, Funny
Mar 182009

Today’s video: “The New F***ing Citibank

Probably NSFW due to repeated use of F-bombs. (Via Radley Balko.)

The New Symbol of the Bailout

 Posted by on 6 February 2009 at 4:03 pm  Finance, Funny, Politics
Feb 062009

While we’re on a condom theme today…

Too perfect!

Buy a Toaster, Get a Free Bank!

 Posted by on 17 December 2008 at 12:34 pm  Finance, Funny
Dec 172008

(Found anonymously floating by in a forwarded email.)

Dec 032008

If you haven’t yet read Alan Greenspan vs. Ayn Rand and Freedom by Harry Binswanger, published in Capitalism Magazine, I strongly recommend that you do so. It’s a great article to send to people to who claim — whether honestly or not — that Alan Greenspan’s actions over the last 25 years or so represent Ayn Rand’s philosophy in any way, shape, or form.

Consider Dr. Binswanger’s list of Alan Greenspan’s betrayals of Ayn Rand’s principles:

I can’t say I knew Alan Greenspan, though, being an associate of Ayn Rand, I met him a few times in the 1960s. But by 1970–almost 40 years ago–I and a couple of other Objectivists in that circle already realized that Greenspan was compromising on her philosophy. Little did we know how far his anti-Rand journey would take him. As the years rolled on,
  • he was hailed as the man who “saved” Social Security–by extending its confiscatory power,
  • when Bill Clinton’s State of the Union address called for socialized medicine, he rose to his feet, standing next to Hillary Clinton in giving a standing ovation to that proposal,
  • he became head of the mammothly anti-capitalist Federal Reserve, directing the government’s manipulation of money and credit,
  • he provided a laudatory dust-jacket blurb for a book attacking Ayn Rand (by a woman he had “irrevocably” condemned in print in 1968). Yet he repeatedly refused to contribute to or lend his name to the Ayn Rand Institute,
  • he wrote, in 1995, that government central banking is a necessity: “Only a central bank, with unlimited power to create money can guarantee that such a process ["a cascading sequence of defaults"] will be thwarted before it becomes destructive.” (Note that we just witnessed this “cascading sequence of defaults” despite –or, actually, caused by –our central bank.),
  • he wrote in his autobiography about coming to reject Objectivism: “as contradictions inherent in my new notions began to emerge . . . the fervor receded”,
  • and now he has blamed free markets (as if we had them!) for his failures at the Fed. In conceding that his “ideology” was wrong, he was understood to be saying Ayn Rand was wrong–even though he had long ago forgotten or evaded every essential of what Ayn Rand stood for.

Can it get any worse than that? Yes, it can — and Dr. Binswanger lays out the case clearly. In essence, “a man who betrays Ayn Rand, and who wrecks the economy of the U.S. in carrying out that betrayal, then succeeds in shifting the blame onto Ayn Rand and capitalism.” Lovely, no?

Go read the whole thing. And then post a link to it in the comments of every annoying blogger who claims that the current financial crisis is a refutation of Ayn Rand’s ideas.

Absent a Moral Defense of Capitalism

 Posted by on 25 November 2008 at 12:01 am  Economics, Finance, Politics
Nov 252008

On a Nov. 20th NPR radio interview, David Wessel, Pulitzer-prize-winning Economics Editor of the Wall Street Journal sounded rather optimistic. Despite calling our present economy “as fragile as at anytime since Roosevelt took over,” he predicted that the Obama team would get right to work even before inauguration to hold off another Great Depression.

He said the challenge for Obama will be basically threefold: 1. like Roosevelt during the Depression, Obama will have to reassure the American people, that is “make us feel better,” by whom he appoints and how he describes the economic situation; 2. put together a huge fiscal stimulus package consisting of tax cuts and increase in government spending; and 3. deal directly with the housing crisis by helping people whose mortgages are worth more than the value of their home.

He summed up his personal reaction to the economic crisis by saying he was “quite impressed by the diligence of the people in the government who are charged with this and how creative they’ve been and inventive in trying to respond to it.”

In an October panel discussion at his alma mater Haverford College he explained the causes of the present crisis — that complicated interplay of Federal Reserve interest rates, the across-the-spectrum failure of economic checks and balances by rating agencies and regulators, the “democratization of credit” for homeownership, the “morally criminal” predatory lending practices, faulty assumptions about ever-increasing housing prices and unsecured lending by investment banks, and the under-appreciated connection between the housing market and banking system.

He then describes the timeline of the government’s reaction to each emerging crisis: a huge Fed rate cut in January, the historic loan to Bear Stearns (a non-Federal Reserve bank), the quick and efficient nationalization of Freddie and Fannie, Treasury Secretary Paulson’s sweeping authority granted by Congress, the $700 billion bailout legislated by Congress in a 400-page bill, Barney Frank, Democrat chairman of the House Financial Services Committee, being unable to refute the argument that “if you help Wall Street, why can’t you help Main Street,” and the spill-over protectionist reaction by central governments in Europe and Asia.

Mr. Wessel’s comment about the historic economic crisis: “I don’t think this was a problem caused by government, but government permitted it to happen.”

Despite a couple of disparaging remarks Mr. Wessel made about businessmen and choosing a career on Wall Street, maybe I can’t explain Mr. Wessel’s reaction to the crisis on the fact that he’s worked his entire career as a journalist and never as a businessman who has had to meet payroll, answer to shareholders, negotiate with unions, comply with regulations, pay ever-rising costs of employee health care, pay taxes, pay Worker’s Compensation taxes, hold the line on production costs, etc. etc. … and still survive.

I also can’t necessarily explain it by the fact that the college economics department co-sponsored the talk with the college’s Center for Peace and Global Citizenship, which:

“…exists to expose all members of the Haverford community, but especially students, to the key global issues of the day so that they can better equip themselves to help solve these problems after they leave Haverford’s campus. In this regard, the CPGC is one of the most visible examples of the College’s Quaker ethos, grounded in testimonies of peace, lives of service, and a concern for the world at large.” (emphasis mine)

Regardless, what I can say is that one of society’s best-recognized experts on the American economy makes absolutely no defense of capitalism in anyway whatsoever. He not only credits government in “creatively” tackling the crisis, he tacitly accepts the premise that government bureaucrats, regulators and legislators should play a fundamental and sweeping role in managing the economy. Furthermore, he flagrantly denies that government is the problem.

Yaron Brook, executive director of the Ayn Rand Institute, has spoken a lot about the economic crisis lately. He correctly explains that if capitalism is to survive, it needs moral sanction to counter the altruist ethics that infects our society today. As Objectivists know, Ayn Rand provided that philosophic moral justification for the total separation of state and economics: the morality of rational egoism.

We have a separation of church and state that is explicitly spelled out in the Constitution, and yet we still are fighting tooth-and-nail against the Religious Right to uphold it.

And we don’t even have that much of an explicit defense of capitalism. How then is capitalism to survive in an environment when leading knowledgeable and educated intellectuals like Wessel can look the facts straight in the eye, and be blind to the conclusions?

As Dr. Brook states in his talks, obviously the fact about capitalism’s success is simply not enough; the fact that government interference in the economy wrecks havoc is simply not enough. We must make the moral argument that laissez-faire capitalism is not only practical, it is morally right.

The Loss of Values Due to Contradiction

 Posted by on 17 November 2008 at 12:01 pm  Abortion, Finance, Politics
Nov 172008

Two current events I have selected have nothing in common, except for being in the news. Well, they also pertain to underlying rational values that are at risk of being destroyed by their own best advocates. Why? Because their champions are trying to operate under contradiction.

On the heels of the joyously-resounding defeat of Colorado’s “personhood” amendment comes another threat to abortion in Colorado. This time a private citizen, Mark Hotaling, is suing Planned Parenthood of the Rocky Mountains and Boulder Valley Women’s Health center for violating the state’s constitution. He claims that federal dollars received by these clinics are illegally being used to perform abortions. Hotaling says he’s just standing up “for the will of the people and the constitution.” For this, he’s getting moral support from Ms. stand-up-for-the-people Kristi Burton, the evangelical who got Amendment 48 on the ballot “to empower the citizens to have a choice” about when life begins. And he’s getting financial and legal support from the influential Religious Right group, the Alliance Defense Fund.

In the other story, Treasury Secretary Henry Paulson said the $700 billion bailout plan won’t include the purchase of troubled assets from banks after all, a turn-around from the original plan. And unlike the rescued financial sector, the American auto industry might not get the additional help it’s been asking for. Stock exchanges revolt in their roller-coaster tumble with daily bad news about the economy and over worries of how governments will fix it.

What values are at stake here?

In the first story, the value is the right to abortion. As writers on this blog and on Politics without God have argued, abortion is an absolute, inviolable right. Ayn Rand explains the right to abortion in her famously clear and pithy way: “An embryo has no rights. Rights do not pertain to a potential, only to an actual being.”

In the second story, the value is free trade. Free trade is the unencumbered right for free individuals and companies to voluntarily exchange goods or services with each other to their own mutual benefit on terms they both agree on. Because humans must create what they need to survive and thrive, and because they can’t individually make everything they need, a market for such exchange is required. It reflects the sum of “all the economic choices and decisions made by all the participants,” thereby creating wealth.

In a society based on rational principles, it is possible to protect the right to abortion under any and all circumstances; and it is possible for free trade to proceed to any degree of wealth that can be created by human ingenuity. But not so in a society where contradiction is introduced and enforced.

In the first story, the women’s health and abortion clinics vociferously defend a woman’s legal right to abortion as granted by the Supreme Court in Roe v Wade. Yet they are willing to accept the expropriated earnings of wealth from others in society in the form of government grants in order to survive. While the clinics in the lawsuit deny directly using federal funds for abortion, they still must play by the arbitrary and ever-changing rules of those who hold the monopoly on force (i.e., the government). In the end, the right to abortion becomes conditional.

In the second story, the biggest intervention in the marketplace in American history has just happened. But decades of regulation, restrictions and biased preferences haven’t led businesses to rise up and crusade for their right to free trade. It’s led to just the opposite: the despairing cry for help using the expropriated earnings of others in society in the form of bailouts. Business are boldly proud and assertive when things are going well; but when things are not, they crumble under pressure and want a quick fix by any means from those who hold the monopoly on force (i.e., the government). In the end, the right of free trade becomes conditional.

It is a contradiction that we can uphold and pursue rational values that require freedom while accepting the conditions set by those who hold the monopoly on force. We have nobody to blame but ourselves: American citizens, with their endless special-interest appeals to their legislators, have allowed this untenable situation to unfold.

You can’t be free and sleep with the devil. Or, as Ayn Rand more eloquently puts it: “a contradiction cannot be achieved in reality and… the attempt to achieve it can lead only to disaster and destruction.”

Abortion rights are being chipped away every year. And we are in a worsening financial crisis of unprecedented proportions. The only way out is to eliminate the contradiction. The only way out is to hold government to its proper, non-contradictory function of protecting individual rights. And it is the citizens who must take this corrective action.

Suffusion theme by Sayontan Sinha