Community Reinvestment Act

Steve Sailer and others have observed how the combination of changing demographics, Bush’s commitment to an “ownership society,” cheap dollars, securitized mortgages, and the emerging importance of the relatively obscure Community Reinvestment Act, were major factors that in combination render the housing crisis a “diversity recession.” Critics have countered that a lot of other factors, [...]

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The Bailout Gets a “Bronx Cheer”

On news of President Obama’s bailout plan, the market tanked an incredible amount today, nearly 5%.  Gold went vertical.  The consensus view is that Treasury Secretary Geithner’s long-awaited proposals kicked the can down the road.  There is a “bad bank” proposal and plans for continued acquisition of “toxic” securities through other means, but the price [...]

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Pharmaceutical Companies’ Anti-Competitive Industry Code

It’s pretty amazing to me that the pharmaceutical industry is openly agreeing to an anti-competitive code of conduct to pull back on various perks to doctors. Starting Jan. 1, the pharmaceutical industry has agreed to a voluntary moratorium on the kind of branded goodies — Viagra pens, Zoloft soap dispensers, Lipitor mugs — that were [...]

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Economic History and Obamanomics

The absolute craziest convention on Wall Street, at the Federal Reserve, and among academic economists is simply to ignore economic history before the Great Depression. It’s particularly wacky to do so as the Federal Reserve, which was billed as a means of avoiding economic dislocation after the Panic of 1907, was established in 1913. In [...]

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The Audacity of Outdated Keynesianism

The Federal Reserve has just lowered interest rates to, in effect, zero.  Obama promises to spend perhaps $850 billion in a very dubious infrastructure program, as if filling potholes and repairing bridges that were too expensive to repair in good times, can now be gold-plated in times of austerity, and that, by some alchemy, spending [...]

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Economists and the Bailout

I’ve recently become intrigued by the writings of Nicholas Taleb.  They resonate with me because his criticism of mathematical modeling of markets–i.e., the central activity of “econometrics” and the basis of so much Wall Street activity–has long been a theme of the Austrian School of Economics. The same skepticism of predictability that leads the Austrians to reject [...]

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Economy Round Up

I thought Mitt Romney’s op-ed opposing the Detroit bailout had the right combination of free market instincts, industry knowledge, patriotic compassion, and credibility. It reminded me of why I voted for him.  I say that as someone who recognizes the unfairness of bailing out Wall Street while letting this strategically important industry suffer.  But there’s [...]

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The Chimera of Price Stability

Bush said yesterday that the U.S. “will continue to act to resolve this crisis and restore stability to our markets.” John McCain–during his last “townhall” debate with Barack Obama–said, “But we all know, my friends, until we stabilize home values in America, we’re never going to start turning around and creating jobs and fixing our [...]

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Inflation or Deflation?

This is a useful analysis of the dual pressures on the economy: the massive decline in spending and housing prices, which is counterbalanced by inflationary activities such as the Federal Reserves’ expansion of lending and its increase of balance sheet assets. In other words, the only reason we won’t have hyperinflation (yet) is because of [...]

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Financial Crisis Round Up

Steve Sailer has a very funny piece on WaMu’s advertising, which bragged about the company’s contempt for stodgy old bankers. Pretty obvious generational and ethnic subtext in this ad: WaMu positioned itself as a new kind of bank for the the age of diversity and free spirits. Interesting piece from the Von Mises Institute on [...]

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A Quick Thought on Bankruptcy

There seems two kinds of important ignorance about bankruptcy in the current discussion of the housing crisis. First, on the regulator side, Secretary Paulson and Chairman Bernanke’s discussions suggest that they believe somehow assets disappear if Lehman or some other institution fails.  This is simply not the case; in their capacity as brokers, investment banks [...]

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Too Complex?

Thomas Sowell reminds us that reality is often comprised of systems in action, where there are no obvious heroes and villains, nor easy entry points for political control.  His reasoning stands in sharp contrast with the sentimentality and demagoging of our politicians on issues such as gas prices: Some people think that the reason the public [...]

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Unthinking Responses on the Economy

Market-oriented Republicans see the housing crisis and say, “The market is working, and will, if only we let it.”  Democrats see the temporary pain of the slowdown and say that we need a stimulus.  Missing from both accounts is any talk of monteary policy; today, monetary policy is out of the hands of the domestic market [...]

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Paulson’s Proposal

Treasury Secretary Henry Paulson’s proposal to consoldiate various financial regulatory agencies is uninspired and likely will prove useless.  This proposal rests on the unquestioned assumption that bad economic results should never occur, and, if they do on a large enough scale, should be bailed out by the government.  If they should be bailed out, then the federal government rightly [...]

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Economic Ignorance at the Journal

Economic ignorance in the Wall Street Journal shouldn’t be too surprising.  After all, these are the guys that forget the law of supply and demand applies to labor markets. But the scale of ignorance in “journalism major” Holman Jenkins’ recent editorial is staggering.  He says: No wonder economists of diverse ideological stripes are lining up [...]

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