Archive for September, 2008

Wall Street Journal explains the bailout crisis

Thursday, September 25th, 2008

Wall street journal reports that this crisis was the predicted result of politically correct lending policies commanded by the Clinton administration, continued and worsened by the Bush administration.

Carpe Diem reports that this crisis was predicted when these policies were introduced by the Clinton Administration.  In 1999, the NY Times observed:

Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s

Which is, of course, what happened.

Posted in economics | No Comments »

The financial crash

Sunday, September 21st, 2008

Brad de Long looks at the financial crisis, and concludes that the wise and good hand of government is necessary.

Third, the market fundamentalists in other sectors will need to be quiet for quite a while. We have just seen financial markets rife with moral hazard, agency, and adverse selection problems crash spectacularly. Is this a situation in which we should move health care–also rife with moral hazard, agency, and adverse selection problems–toward a free market configuration? No. Market regulation needs to be smart.

He gives us a wonderfully clever explanation about multiple financial equilibria. The good hand of the wise and superior technocrat is needede to hold the market at the good equilibrium, and keep it away from the bad equilibrium. Eventually, however, he gets around to mentioning that this explanation is completely irrelevant,for the various financial intermediaries were in fact stony broke.

The cause of the crisis was nothing to do with market failure. Rather, the problem was business failure – businesses made lots of very bad loans, and accounting failure – accounts were prepared in faithful compliance to Sarbanes-Oxley, as the government commanded in excruciating detail, thereby completely obfuscating the fact that these businesses were insolvent.

Tags:, , ,
Posted in economics | No Comments »

carbon footprint

Wednesday, September 17th, 2008

Do you want to reduce your carbon footprint
Obama reducing carbon footprint

Or do you want to drill here now.
Sara Palin on a Harley

Posted in party politics | No Comments »

Never forget, never forgive

Friday, September 12th, 2008

Never forget, never forgive. Make them pay forever.

nine eleven

Posted in war | 1 Comment »

Thai middle class revolts against democracy

Thursday, September 4th, 2008

“The people’s alliance for democracy” is in fact the Thai middle class alliance against democracy, as Cown observes.  Democracy in Thailand has produced bad results nowhere near as bad as Venezuela, but bad enough.  Indeed, world wide we are seeing democratic elections produce governments that are increasingly corrupt, increasingly tyrannical, increasingly bureaucratic, increasingly destructive, and increasingly anticapitalist.

Yet the middle class has no ideology to justify its demands – the name of the movement furtively and shamefacedly denies what it is doing, and their proposed solution (military appointees) is not really going to work.  The military are bureaucrats with guns.  A middle class revolt that professes itself faithful to democracy is like all those peasant revolts that professed themselves faithful to the king.   Doomed.

For two thousand years, it has been claimed that democracy inherently self destructs, that democracy destroys the conditions that make democracy possible.  The fact that democracy worked pretty well during the twentieth century would seem contrary evidence – but a century is not a long time for such a test.

Posted in politics | No Comments »