Category: too much government

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too much government

Up and Down and Up and …

The stock market won’t serve as a crystal ball. How about a Magic 8‑Ball?

I’ve never asked “the stock market” for advice. But millions of people trade stocks. Their actions are presumably reflective of their judgments … some sober and rational, others panicky and irrational.

Often there’s no way to tell. But note how, in the push for ever-​more government intervention in the economy, traders are said to be dull-​witted if they don’t respond with exuberant glee to bailout news. They are thought smart only if they buy, buy, buy when government repeats the same mistakes that got us into this easy-​credit-​slathered mess to begin with.

Banks fail. Stocks decline. More banks fail. Stocks decline. Government announces a trillion-​dollar bailout. Stocks rise.

Then there’s trouble passing the bailout in Congress. The stock market dives hundreds of points!

Oh no! Obviously, we “need” the bailout! So there’s arm-​twisting, pork-​larding, another hundred billion in taxpayer dollars added to the biggest one-​day mortgaging of children’s future ever. Finally, the bailout passes.

And stocks dive even harder! Huh? The capitalists were supposed to be ecstatic about the feast of a free lunch. Therefore, the market must have fallen “despite” — not “because of” — the giant hit taxpayers are taking.

Some science, where 20/​20 hindsight imputes particular reasons to a process filled with conflicting reasons.

Me, I’m going to take up tea leaves.

This is Common Sense. I’m Paul Jacob.

Categories
too much government

The More They Speak of Change

The more the presidential candidates promise change, the more it seems things are likely to stay just the way they are.

And I’m not the only one to notice. Washington Post columnist David Broder recently called it “the strangest of all presidential contests.” He argued, “The longer it goes on, the less we know about what either of these men would do if he were in the Oval Office next year.”

Both candidates are slinging promises of billions for this and billions for that, claiming to be everyone’s Mr. Everything. In the second presidential debate, Senator John McCain declared that if he were president, he “would order the Secretary of the Treasury to immediately buy up the bad home loan mortgages in America and … let people be able to make those payments and stay in their homes.”

No matter how much more house I buy than I can afford, the government will pay my mortgage?

Obama promises even more: “But most importantly, we’re going to have to help ordinary families be able to stay in their homes, make sure that they can pay their bills, deal with critical issues like health care and energy.…”

Obama’s administration is covering all my bills. Wow.

Both men seem oblivious to the reality that the next president will be handed a country badly in debt and unable to pay for the massive commitments it has already taken on. He won’t be handed a magic wand.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Designing a Cartel

Interior design: Most homeowners wing it, but a few call in the professionals.

Regulation of interior design: Most states just let our nation’s Graces freely contract with willing Wills. But a significant number of states, including Oklahoma and Connecticut, regulate these designing women and men.

Why? Have you heard a horrified outcry of Upton Sinclairesque proportions? I sure haven’t. I’m sure old Upton would have cooked up some story, if it had crossed his mind. He believed in regulating everything. He hated free enterprise, enough to lie for his cause.

So, who hates freedom of contract enough to regulate the industry?

Why, the industry itself!

A study released last year by the Institute for Justice shows that one group of interior designers, the American Society of Interior Designers, has been pushing regulation for years. Why? For one clear reason: to clear out the competition.

On the bright — or at least pastel — side, the group hasn’t been all that successful recently. So the group has raised its membership fees, redoubled lobbying efforts.

In response, a competing group, the Interior Design Protection Council, joined with the Institute for Justice to declare the month just passed, September, as Interior Design Freedom Month.

It’s too late to celebrate. But — wait a second — shouldn’t every month be Interior Design Freedom Month?

This is Common Sense. I’m Paul Jacob.

Categories
term limits too much government

A Barney Frank Appraisal

Guess what: The disastrous policies that spawned our recent mortgage crisis prove that congressional term limits would be a very bad idea.

Not my opinion, I hasten to add. It’s the view of one Edward Tucker, writing a letter to the Wilmington [DE] News-​Journal. Sorry, Ed, about how this Internet thing keeps your communiqué from dropping immediately into the ash heap of history.

Tucker’s view is typical of those who claim term limits would disastrously eject “experience” from the halls of power. He has nothing but praise for the expertise and gab gift of Representative Barney Frank, who has clung to his seat since 1981.

“The ability of only a few elected officials, such as … Barney Frank of Massachusetts, to speak intelligently about financial issues…has been impressive and reminds us that elected officials can grow expertise in office.”

Sorry, Mr. Tucker. But Barney was not one of the few congressmen who had been trying to curb the reckless lending policies of the Federal Reserve and Fannie Mae and Freddie Mac. (The three Big Fat F’s that each deserve a Big Fat F.) Frank was, frankly, one of the chief enablers of federal policies that pushed easy credit and shaky mortgage loans.

Long-​time incumbents may become expert indeed at spewing plausible-​sounding nonsense in front of the cameras. But expertise in con-​artistry isn’t quite the cure-​all it’s cracked up to be.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

Don’t Bank On It

It’s not a chorus.

If you’ve been watching the “debate” over how best to con American voters into giving troubled banks $700 billion for bad loans, you might think it’s a chorus in the financial industry, especially from bank presidents.

You might assume they’re all shouting: GIVE US THE BAILOUT MONEY! NOW!

Not so. At least one banker dissents. John Allison, president of BB&T — with $136 billion in assets and 1500 branches — sent an open letter to Congress protesting the bad economics behind the bailout. He notes that his own company, though affected by the downturn, is in a much stronger position than many of BB&T’s competitors.

Why? Well, his bank did not join the orgy of bad lending, despite the enticement of the Federal Reserve’s easy credit policies and government pressure to give loans to bad-​risk borrowers.

So why should the government reward the bad economic conduct of institutions that played along with the bad government policies? Why make it harder for the economy to recover by punishing sound and productive economic conduct with burdensome new government taxes?

Allison thinks the debate has suffered from domination, as he says, by those “financial institutions [that] made very poor decisions.”

Perhaps it’s because politicians have a whole lot more in common with foolish decision-​makers than wise ones.…

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

$700 Billion Bad Bet

The administration’s proposed $700 billion bank bailout has finally passed the Congress — in large part because of fear that the economy would crumble if “something” wasn’t done.

But the magic men in Washington don’t have any guaranteed fixes in their bag of tricks. Certainly robbing the taxpayers of $700 billion — that’s a billion, 700 times — won’t cure the economy.

It will, long run, hurt the economy. How? By hampering realistic adjustment to current market conditions. It means taking $700 billion from productive economic activities to buy up debt at prices nobody in the private market is willing to pay. As economist Arnold Kling points out, “If [Bernanke and Paulson] were taking their plan to a venture capital firm to seek funding, they would be laughed out of the office.”

How did we get here? In previous years, the federal government compelled banks to give mortgages to persons who really couldn’t afford them. Meanwhile, the easy credit policies of the Federal Reserve made it easy for banks to obey these irresponsible demands.

Hence the housing bubble. Which popped.

The only long-​term solution is to get the government out of the market. Stop trying to paper over the horrendous consequences of past government interventions with even worse government interventions. The free market ought to be free. Otherwise, we’ll one day end up with no market at all.

This is Common Sense. I’m Paul Jacob.