Friday, January 30, 2009

Regulatory Statism, (that's Government) Is What Precipitated the Banking Crisis

So says Mike Oliver (Mr. Integrity) guest-blogging at Samizdata:


"The lovers of statism (and of we the people) decided to pull out all the plugs and defend the market at each and every low - to try to fake reality. Instead they super-charged the downside. What would have been a normal correction in the market ballooned into a disaster. Why?

Benanke allowed in summer of 2007 for an asset class never previously allowed to be used as collateral in fed borrowings by financial institutions, and even expanded what institutions could come to the Fed. In effect the Fed was "pricing" this debt (sub prime mortgages, etc.) at a level such that it would not have to hit the market and be priced openly and fairly.. The Fed was apparently afraid of the real consequences of seeing it priced openly. So they in effect took it off the market and froze it at the Fed window as "acceptable collateral" but as an unpriced asset. Hence from that point forward these sorts of assets on bank books were not "priced" in an open and market manner. Hence those who wanted to invest in the bank were uncertain as to the value of these assets. Hence uncertainty arose as to any and all bank valuations."

Read it all, of course.
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Saturday, January 24, 2009

AZ Speed Cameras Recording Streaming Video

This article in the East Valley Tribune (AZ) today reveals the fact that the dozens of speed cameras installed along the states highways over the last few months by Redflex Traffic Systems aren't just snapping picutres of cars traveling 11 mph or more over the speed limit, they are recording continuous streaming video of all vehicles passing by and the system is capable of scanning in each and every license plate, allowing the government to know where everyone is going to or coming from at all times, a fact that was conveniently withheld from lawmakers and the public.
"....But the discussion Quickly turned after [DPS Commander Thomas] Woodward revealed that Redflex actually had round-the-clock videos from each of the fixed and mobile cameras. [State Rep Andy] Biggs said that little bit of information has been kept from both lawmakers and the public.
"At the bare minimum, everybody should be made privy to the fact that if you're driving on everybody's highways, we're taping you, 24/7, and we're going to hold it for 90 days" he said." "
We have the beginings here of what my friends the Samizdatistas would call the "Panopticon State". Very Big Brotheresque.
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The Hockey Stick Hoax

It's been a while since I've revistied the subject of "Global Warming". Take a look at this post at Powerline. It provides more evidence of data doctoring in producing the famous "hockey stick" graph that the Global Warmening alarmists point to as definitve proof of man-made climate change.
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More on Higher Education - Will It Be the Next Bubble to Pop?

This article at Minding the Campus is worth reading. It talks about the cost of higher education and its potential for being the next bubble, a la the housing market. The cost of a college degree has been rising at roughly three times the rate of inflation for some time. People have been willing to pay it, often going deep into debt (see post below), because they see it as the price of entry into the competition for the best paid jobs. Never mind that the degree earned may have little if any relevance to the career they actually end up with. I remember when I went to Large State U that the Chancellor addressed the incoming class and one thing he said has stuck in my mind ever since. He said that only about 5% of all liberal arts majors actually end up working in their field of study. I'm certainly not in that 5%, and that's probably a good thing because chances are it would be a poorly paid job teaching other people the same stuff.
After all, didn't ambitious citizens have to pay their dues to higher ed in order to have a meaningful chance at success? With seemingly no viable alternative or exit strategy, consumers have stretched their pocketbooks to the breaking point and taken out loans to purchase a chance at the American Dream. (Today over 35% of students rely on student loans, and the number is growing.) Not surprisingly, the last twenty years have seen tuition costs rise at over three times the rate of inflation. The overall costs for many private schools add up to $50,000 per year, while public universities cost up to $20,000
for state residents, and over $30,000 for those who hail from out of state. Meanwhile, wages for most Americans have been left in the dust.
Another point made in the article is of particular interest to me because part of my job involves arranging financing for both public and private higher education institutions.
Last September, Timothy Burke, a professor of history at Swarthmore, wrote an influential essay at Inside Higher Ed in which he asserted that "the party's over" for higher ed's tuition and building binge. Burke focused on five main reasons for a contraction in higher education: 1) declines in tuition growth; 2) underperformance by endowments; 3) pullbacks by donors (indeed, on November 26 the Wall Street Journal published a lead story on how the economic crisis has caused a downturn in charity giving nation-wide); 4) lower funding from public and private sources; and 5) the fact that revenues from IPOs, investment property rights, and technology benefit only a few institutions. A respondent to Burke's piece added three other factors: 1) fewer students are attending college as the nation's demographics change; 2) "growing public awareness of the declining economic returns of a college degree" is causing a backlash; and 3) such on-line schools as the University of Phoenix provide education at a fraction of what residential institutions charge. (Will the Internet affect higher ed the same way it has affected newspapers?)
It's all very though provoking. Read the whole thing.
Update: I remembered reading a column by James Taranto in the Wall Street Journal along these same lines a while back and thought I blogged it already. Seems I didn't, so here it is. "College is an expensive way of taking an IQ test."
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Wednesday, January 21, 2009

The Great Student Loan Racket

If you have a kid you are hoping to send to college soon, read this article in Forbes. It's an eye-opener.

"Get caught in this quagmire and you're stuck for good. Consumers who go on a credit card binge stand a good chance of getting debt discharged in bankruptcy. Not so if they take out a loan to educate themselves. Those loans, per the 2005 bankruptcy law, are not dischargeable. One reason: Without this exception, every student would run through a bankruptcy between graduation and starting a career."

(via Dr. Helen)
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Atlas Is Getting Twitchy......

Neal Boortz posted this yesterday. Of course, you should read the whole thing but here is the central message:

"Here is what many of you don't understand ... to stimulate the economy you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn't need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it now......

......If any new taxes are levied on me, or my company, my reaction will be swift and simple. I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV, and your child's future. Frankly, it isn't my problem any more.

Then, I will close this company down, move to another country, and retire. You see, I'm done. I'm done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship."
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Saturday, January 17, 2009

Hilarity Arises from Near Tragedy

The successful ditching of US Airways flight 1549 on Wednesday was a masterful piece of flyng and happily no lives were lost. Within 24 hours, an enterprising Photoshopper was able to come up with this:




Now that is an apt metaphor.



(from the Dealbreaker)
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Monday, January 12, 2009

Saturday, January 10, 2009

Atlas Shrugged - Maybe More Prophecy Than Fiction

Stephen Moore penned an op-ed in the Wall Street Journal yesterday, pointing out some eerie similarities between the events in Ayn Rand's classic Atlas Shrugged and our current economic/political situation. It's a long (1,000+ pages) book, in rather small type and can be heavy going at times, but it's worth reading. If you don't have the patience for that, at least go read the article. A sample:
"For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism."
and
"The current economic strategy is right out of "Atlas Shrugged": The more incompetent you are in business, the more handouts the politicians will bestow on you. That's the justification for the $2 trillion of subsidies doled out already to keep afloat distressed insurance companies, banks, Wall Street investment houses, and auto companies -- while standing next in line for their share of the booty are real-estate developers, the steel industry, chemical companies, airlines, ethanol producers, construction firms and even catfish farmers. With each successive bailout to "calm the markets," another trillion of national wealth is subsequently lost. Yet, as "Atlas" grimly foretold, we now treat the incompetent who wreck their companies as victims, while those resourceful business owners who manage to make a profit are portrayed as recipients of illegitimate "windfalls." "
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Thursday, January 08, 2009

One Very Pissed-Off Dude

Too many good quotes. Just go and read it.
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Sunday, January 04, 2009

The Republicans Can't Just Play the Game, They Need to Change the Game - Part II

A couple of weeks ago I wrote a semi-incoherent rant post about some of the things I fell the Republican Party needs to do to to make it a genuinely viable alternative to the Democrat Party. As usual, someone has come along and made a much more concise case for what needs to be done. While I ended up on a digression about the FairTax (and I still think we need it), Perry DeHavilland at Samizdata kept the focus where I should have:
"I am not calling for the 'libertarianisation' of the Republican party along the lines I would actually like, just for the party's rationalisation. I am in essence calling for a nominally conservative party to become... conservative. The simple fact is that people can be fellow travellers on a path that leads to liberty without all marching in ideological lock-step. It just boils down to asking the question "do you want the state to have less control over people's lives or more control?" [my emphasis] If a person can honestly answer that they think the state is too powerful and needs to be reduced, that is a fellow traveller.

This is the time to apply that test to Republican politicians, every last one of them... and drive any who fail that simple test out of the party by whatever means necessary...."
Reducing the role of government in the people's daily lives and minimising the opportunities for political interference in free markets is the goal we should be striving for.
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