The New York Times explains: creditors came to believe that their loans to unsound financial institutions would be made good by the Fed — as long as the collapse of those institutions would threaten the global credit system. Bolstered by this sense of security, bad loans mushroomed. Of course any crisis is multicausal. I have …
Month: December 2008
No warming trend in raw surface temperature data
You have all seen those GISS graphs of global warming. Anthony Watt checked the raw data on which they are based. The cooked data shows warming, the raw data shows cooling. Of course this does not mean the data is necessarily fraudulent – but the adjustments are largely guesswork, so when they compile these graphs, …
The cause of the crisis
Capitalism and free markets are prone to bubbles, and a great deal more prone to bubbles when speculators can expect that the government will print as much money as needed to keep the bubble going, but bubbles do not in themselves lead to massive financial defaults, because normally lenders only lend to people who are …
The crisis
Fred Thompson argues the solution is thrift – which exactly what the government is trying to prevent. Obviously he is right – and yet wrong, for one person’s savings have to be another person’s obligations. What we need is a financial system that mobilizes savings for sound investments – such as mortgages on reasonably priced …