site banner
PaperclipPerfector  5d ago (text post)   20280 thread views

Culture War Roundup for the week of October 20, 2025

This weekly roundup thread is intended for all culture war posts. 'Culture war' is vaguely defined, but it basically means controversial issues that fall along set tribal lines. Arguments over culture war issues generate a lot of heat and little light, and few deeply entrenched people ever change their minds. This thread is for voicing opinions and analyzing the state of the discussion while trying to optimize for light over heat.

Optimistically, we think that engaging with people you disagree with is worth your time, and so is being nice! Pessimistically, there are many dynamics that can lead discussions on Culture War topics to become unproductive. There's a human tendency to divide along tribal lines, praising your ingroup and vilifying your outgroup - and if you think you find it easy to criticize your ingroup, then it may be that your outgroup is not who you think it is. Extremists with opposing positions can feed off each other, highlighting each other's worst points to justify their own angry rhetoric, which becomes in turn a new example of bad behavior for the other side to highlight.

We would like to avoid these negative dynamics. Accordingly, we ask that you do not use this thread for waging the Culture War. Examples of waging the Culture War:

  • Shaming.

  • Attempting to 'build consensus' or enforce ideological conformity.

  • Making sweeping generalizations to vilify a group you dislike.

  • Recruiting for a cause.

  • Posting links that could be summarized as 'Boo outgroup!' Basically, if your content is 'Can you believe what Those People did this week?' then you should either refrain from posting, or do some very patient work to contextualize and/or steel-man the relevant viewpoint.

In general, you should argue to understand, not to win. This thread is not territory to be claimed by one group or another; indeed, the aim is to have many different viewpoints represented here. Thus, we also ask that you follow some guidelines:

  • Speak plainly. Avoid sarcasm and mockery. When disagreeing with someone, state your objections explicitly.

  • Be as precise and charitable as you can. Don't paraphrase unflatteringly.

  • Don't imply that someone said something they did not say, even if you think it follows from what they said.

  • Write like everyone is reading and you want them to be included in the discussion.

On an ad hoc basis, the mods will try to compile a list of the best posts/comments from the previous week, posted in Quality Contribution threads and archived at /r/TheThread. You may nominate a comment for this list by clicking on 'report' at the bottom of the post and typing 'Actually a quality contribution' as the report reason.

4
Top Bottom Old Controversial Comments
Jump in the discussion.

No email address required.

To be fair, most government-paid civil engineers take a much lower salary than they could in the private sector. So it's not quite that this guy figured out a hack here, only that he sacrificed early to reap a larger return later. Similarly the State took the inverse deal: pay him less now in exchange for more later, in order to make their budgets temporarily look better.

I think the solution for both is actuarial integrity -- defined benefit plans need to be run in such a way that the State pays in year X the expected future costs of all (incremental) future liabilities accrued during year X. The only real exploitation is that voters in X accrue liability for year >X without paying for it, another intertemporal transfer of wealth.

A non-solution (afaict) is for governments not to hire competent civil servants and instead farm that stuff out to McKinsey consultants and others. Not because the McKinsey consultants aren't smart, but because it's a diffusion of accountability that ultimately costs Idaho more than paying competitive salaries for in-house expertise.

[ One astute commenter noted that one good that McKinsey does produce is laundering the low status of working for bumfuck Idaho into PMC-respectability. An excellent observation, if something of a tangent here. ]

Presumably they have a net positive effect on GDP when measured on the spending side, and if we ASSUME they don't declare bankruptcy, or renege and duck out on the debt, or just die early (not something I wish on them), they're helping the engine of Capitalism in this country sputter along.

Eh, bankruptcy is (in expectation) priced into the transactions. Lenders make out fine charging these two 7% interest on their HELOC and car note. It's not like dumping it on the fisc.

Their retirement on the public dime, OTOH, will certainly be dumped on us.

A big issue for public pensions is that many were originally paid for with corruption. Public unions promised politicians support in exchange for pensions. Taxpayers at the time happy because they didn't get stuck with a big bill at the time, but now the bills are coming due. So I don't really have much problem giving these pensioners a haircut; their pensions are dirty money.

No different than any other public obligation or liability. Might as well shaft municipal bondholders too on this theory,

Yes. Difference is there's at least some chance the bondholders will be shafted.

Municipal bondholders will not be shafted because investors, quite reasonably, don't purchase them unless required to by law, and the people/institutions required to buy them by law are big institutions that can afford good lobbyists.

Munis can be attractive since they are tax exempt. HNW individuals should probably have a small sum in Munis

I've looked at NJ munis. They suck (for good reason).

Well fed and state tax free. If you are in highest bracket basically double the yield

Twice nothing is still nothing.

"The Lord gave, and the Lord hath taken away"

But I doubt it, they built the propaganda into the name "public servant".

Eh, bankruptcy is (in expectation) priced into the transactions.

In an efficient market, that's true. Is that even legal right now? I know that college admissions have changed over time (and between jurisdictions) between unmeritocratic discrimination being illegal and required.

I would not be the slightest bit surprised if charging previously-illegal immigrants the real cost of a loan (or just denying them) was blocked by anti-discrimination laws.

Lenders make out fine charging these two 7% interest on their HELOC and car note.

Nervous laughter.

Sorry, I came of age during the 2007-2008 subprime mortgage crisis, I am overtly sensitive to the whole "Just give money to financially irresponsible people and hope that in the aggregate we make adequate returns to justify the risk" approach.

I'm sure SOME lessons were learned since then. Maybe not the right ones.

I'm sure it'll be fine.

The problem with the '07-08 crisis wasn't with the returns, it's that the loans were packaged into MBS and sold to investors under a false bill of health. The lessons weren't that you can't have high-risk/high-return assets, only that you must not try to pawn them off as low risk with fanciful assumptions. And that buyers of those collateralized debt must do more diligence.

The bill of health wasn't false. It's trivially easy to take a cdo prospectus and simulate what happens in the event of a catastrophic drop in house prices.

It's just that everyone - buyers, sellers, rates, regulators, all assumed that this was a very low probability event. Reality turned out to be worse than nightmare/worst case scenarios in various stress tests cooked up by regulators.

The sellers (who are often accused of fraud) kept the risky tranches on their books while selling the safe ones - the opposite of what one would do if they knew the risk.

No, they assumed it was uncorrelated and that you could lower risk by bundling large tranches of mortgages.

That works until there is a large correlated event that impacts all of them at once.

I don't think you quite understand what was done. The risk reduction comes from being in the senior tranches and taking losses last.

This happened. Folks owning the senior/low risk tranches lost the least, exactly as CDO sellers promised. (This is quite mechanical and unsurprising.) The stress tests at the time did not assume uncorrelated losses - that's dumb, even for a regulator.

CDO sellers who kept the junior tranches (I.e. first losses) went bankrupt. Why would they do that if they were selling the senior tranches with a false bill of health?

I agree that the tranch setup distributed risk as advertised. The problem was that much of market (including CDO sellers) believed in their models that used a gaussian copula, which vastly underestimated the tails as compared to a power law.

This wasn't "sellers pull a fast one on buyers" -- that's too simplistic a model. They got into the business because they convinced themselves of an overall model that didn't put enough weight on the tail risks. Then they kept the most junior tranches because of that belief in the low overall risk.

[ There's a related problem which is that gaussian models are extremely sensitive to parameter changes in ways that power laws aren't. When you get to the CDO-squared (a CDO of CDOs) then you the output of one model being fed as an input to another, with the expected impact to accuracy. ]

See, e.g., this excellent summary: https://www.hks.harvard.edu/sites/default/files/centers/mrcbg/files/Barnett-Hart_2009.pdf

The issue was that they never really understood the level of systemic risk involved. The whole securitization scheme was based on the idea that, while high-risk mortgages might be too risky on an individual basis, in aggregate only a small percentage of them would default, and the riskiness led to higher interest rates. If you're assuming that a certain percentage of the mortgages are going to default over a given time period, you can price that in. They didn't forsee that there would be a foreclosure crisis that would lead to default rates grossly in excess of what was anticipated, and that this would cause a domino effect whereby the problem would keep getting worse.

Yes and no. It was obvious from day 1 that those CDOs weren’t good as good. They were labeled AAA but had yields materially higher compared to other AAA. This was attractive for insurance companies who legally were required to have a percentage of assets in AAA. But the only reason why one AAA trades at a yield much higher than other AAA is that the first isn’t really AAA.

Bingo. Pennies are free in front of a steamroller stuff.

What is this place?

This website is a place for people who want to move past shady thinking and test their ideas in a court of people who don't all share the same biases. Our goal is to optimize for light, not heat; this is a group effort, and all commentators are asked to do their part.

The weekly Culture War threads host the most controversial topics and are the most visible aspect of The Motte. However, many other topics are appropriate here. We encourage people to post anything related to science, politics, or philosophy; if in doubt, post!

Check out The Vault for an archive of old quality posts. You are encouraged to crosspost these elsewhere.


Why are you called The Motte?

A motte is a stone keep on a raised earthwork common in early medieval fortifications. More pertinently, it's an element in a rhetorical move called a "Motte-and-Bailey", originally identified by philosopher Nicholas Shackel. It describes the tendency in discourse for people to move from a controversial but high value claim to a defensible but less exciting one upon any resistance to the former. He likens this to the medieval fortification, where a desirable land (the bailey) is abandoned when in danger for the more easily defended motte. In Shackel's words, "The Motte represents the defensible but undesired propositions to which one retreats when hard pressed."

On The Motte, always attempt to remain inside your defensible territory, even if you are not being pressed.


New post guidelines

If you're posting something that isn't related to the culture war, we encourage you to post a thread for it. A submission statement is highly appreciated, but isn't necessary for text posts or links to largely-text posts such as blogs or news articles; if we're unsure of the value of your post, we might remove it until you add a submission statement. A submission statement is required for non-text sources (videos, podcasts, images).

Culture war posts go in the culture war thread; all links must either include a submission statement or significant commentary. Bare links without those will be removed.

If in doubt, please post it!


Rules


Recommended Posts And Communities

Recommended Realtime Chats