Megan McArdle Disappoints Me

Robert Waldmann

I thought the only thing she knew was that she is a libertarian. Now I realize she doesn’t even know what the word “libertarian” means. She wrote

Will the new head of the CFPA crack down on mortgages that offer prepayment options? [skip]

Of course not. There is no constituency for such a thing except for a few crazy libertarians.

So libertarians think that the government should crack down on a product that consenting adults buy from consenting banks ? McArdle has some addled idea that she supports the market, by which she means, she opposes everything Democratic policians do. If one invented a product (the 30 year fixed rate mortgage with a prepayment option) with great success in the market, respect for the market requires banning it.

She thinks banning contracts that parties chose to sign is “libertarianism.” She has learned nothing and forgotten the one thing she learned once.

Amazingly the thorough takedown at the Irvine Housing Blog, didn’t mention this howler (target rich environments and all that). It does note that McMegan makes a plainly false claim about a time series, but that’s birdie for the course.

Two full paragraphs long McMegan quote in case I distorted meaning by removing context after the jump.

As of this writing, are we rethinking any of it? Will the new head of the CFPA crack down on mortgages that offer prepayment options? Will lawmakers finally break up Fannie and Freddie and cut off the flow of cheap capital they glean from the implicit government guarantee? Will it get the FHA out of the business of propping up the conventional loan market?

Of course not. There is no constituency for such a thing except for a few crazy libertarians.

OK so two out of three policies which she described as “libertarian” don’t display more love of regulation for the sake of regulation (or FDR bashing) that I’ve ever had. Is that a good average ?

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