Tag: bailout

Categories
free trade & free markets too much government

Unintended Consequences!!!

Here’s a revelation: A story headlined, “Bailout funds being spent in ways Congress never foresaw.”

What? Our omniscient congressmen failed to forecast the fate of their latest multifarious munificence?

You know, whenever I myself spend hundreds of billions on random questionable socialistic takeovers of the economy, I always demand an itemized account of exactly what I will get in return. Always.

It seems that the $700 billion just authorized by Congress is not only being spent on buying up troubled mortgages but is changing into a “broader bailout of all sorts of troubled businesses.” Some banks used the money to buy other banks instead of to “spur more lending.” And other recipients are paying dividends to stockholders.

Apparently, various central planners of our economy expected those receiving the money to use it in more publicly spirited fashion.

Such caviling ignores the real problem, which is more basic. You can’t cure the effects of gignormous debt creation and gignormous subsidizing of unwise enterprises with even more gignormous debt creation and gignormous subsidizing.

If massive intervention in markets caused the economy to curdle, roll back the massive intervention. Let investors take risks with their own money.

But don’t get drunk all over again, faster and harder, and expect that this time there won’t be any hangover.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies Tenth Amendment federalism too much government

Unbefreakinlievable

Now what?

Well, now the governors are going to Washington to beg for bailouts. New York Governor Paterson and New Jersey Governor Corzine have schlepped their way up to the Hill to explain that they are “cutting all [they] can” from their bloated budgets, and to demand some “relief.”

I don’t believe that the notoriously corrupt governments of New York and New Jersey have pared their budgets to the bone. Or that the only way to cut another dollar is to throw some little old lady out onto the street.

I also don’t believe that the federal government has some magical way of getting money that state governments don’t have. It all comes from the same group of us taxpayers. Unless these governors are talking about taking cash from other states, where else would the money come from? Where but out of thin air — borrowing plus the trusty old printing press?

The feds are wearing the same blinkers as these gubernatorial guys. For example, the wizards at the Federal Reserve are struggling to bring interest rates to zero — as if cheap credit in the past had nothing to do with all the misbegotten easy mortgage loans spawning the present crisis.

Now, I put it to you: If fiscal irresponsibility can be increased from mammoth to infinity, will that, at last, solve the problem? If the Fed were to drop-​ship crates of cash and credit cards onto every neighborhood in America, will that, at last, solve the problem?

Unbefreakinlievable.

We need some Common Sense. I’m Paul Jacob.

Categories
Accountability initiative, referendum, and recall

Why the People

Some people wonder at my support for initiative and referendum. They don’t place much trust in their neighbors to run their lives. They fear what de Tocqueville called “the tyranny of the majority.”

And hey: I don’t trust fellow voters to run my life, either. But I trust voters to let me be free to run my own life more a lot more than I trust politicians.

Voters will choose less government more often than their representatives will.

And less government, in today’s context, means better government.

This was most notably demonstrated in late September. The U.S. House of Representatives voted on the Bush administration’s proposed bailout of the mortgage industry, the biggest takeover of private property in world history.

To politicians, it made a whole heckuva a lot of sense. To Americans who wrote and phoned Congress, the bailout appeared just as it was: a quickie, panic “fix” that merely lined the pockets of a sector of the investor population.

It was a subsidy, socializing risk while letting profit remain private.

Enough Americans notified enough of their reps to convince them to take a stand, defeating the bailout. The letters came in, ten to one against the bill.

Of course, the next week Congress voted in the bailout, adding injury, in the form of a bigger price tag, to the insult of ignoring constituents.

Once again, politicians ignored the people. That’s never good government.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets

When Good Economists Go Bad

It is weird to watch respected economists leap so far off the beam that you question their sanity.

The number who supported the federal bailout made me shake my head. I guess economists can panic, too, get all doe-​eyed in the face of a power grab.

My confidence in sanity returned when I read Nobel Laureate Vernon Smith’s amazingly insightful article in the Wall Street Journal. He argued that the Treasury Department has now committed itself to a kind of auction with which it has no demonstrated competence. Smith’s practical take on the bailout folly reminds me of another Smith, Adam, way back in 1776, explaining why markets work better than governments to create the wealth of nations.

Then, a few days later, Paul Krugman received the Nobel Prize for Economics.

I had read Krugman years ago, and was impresssed with his good sense. But then he began writing op-​eds for the New York Times, and, uh, I began questioning his sanity. On so many issues he seems to believe that the best government governs most. And he’s a very pro-​Democratic Party partisan.

It is worth remembering, though, that Krugman is a left-​winger who supports free trade, attributes Europe’s high unemployment to wage regulations, and regards anti-​globalization activists as enemies of the world’s poor.

Maybe his new prize will remind him of his good sense. He might even rethink his allegiance to Party.

This is Common Sense. I’m Paul Jacob.

Categories
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
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.