I see it regularly claimed that financial crisis reflected de-regulation. I was mighty puzzled. Deregulation? Has not Basel been a spectacular landslide of regulation, with massive apocalyptic government takeover of the financial system, with government deciding who shall be winners and who shall be losers, with government allocating lending to favored groups and away from disfavored groups? Eventually I discovered that this “deregulation†was the Gramm-Leach-Bliley Bill, also known as the Financial Services Modernization Act of 1999, a bill three …
Category: economics
Bryan Caplan’s challenge
if Egypt gets democracy, will suffer war and economic disaster, both of which will be blamed on Jews. Democracy with universal franchise does not work. It works worse with Muslims. No Muslim should be allowed to vote anywhere, especially in countries with substantial numbers of Muslims
$1,200 billion increase cut by $60 billion
From the fact that the deficit is $1,600 billion, and that the “right†triumphantly announces that it has cut spending by 60 billion, which “cut†will somehow fail to prevent the deficit from growing rapidly, I predict collapse in a decade or two – armed conflict between elements of the government, or between the government and the people, or, very likely, both. I have been making a similar prediction, for the same decade, since 1994, and events seem to be proceeding on schedule.
The Wallison dissent
Steve Sailor, is as always great reading, and he issues some comments that on the Wallison dissent that everyone who wants to understand the financial crisis should pay attention to. Peter Wallison tells us Profit had nothing to do with the motivations of these firms; they were responding to government direction. Rather than direction, they were responding to government pressure and persuasion. Basel gave government not so much the power and authority to dispense off budget funds to friends and …
The financial crisis inquiry report
“Best practices†required that the lender accept “non traditional†evidence of ability to pay – and the reason such evidence was non traditional is that it is not evidence. If a mortgage business followed HUD “best practicesâ€, as in practice it had to do, it meant they were allowing borrowers or their loan officers to make $#!% up.
Ambac argues fraud committed for profit caused the crisis
I of course, argue that government pressure to make mortgage loans caused the crisis. After all, the specific examples bad loans that Ambac lists in its lawsuit against Bear Stearns, are all loans that were made to poor people, though Ambac provides no information that would identify the race of these poor people. Ambac, however, argues that Bear Stearn made bad loans, lied that the loans were fine, and sold them on to the next sucker in order to collect …
Who called the financial crisis before it happened?
Among others, Ron Paul, in his speech to the house, proposing amendments to the laws that caused the crisis … the government’s policy of diverting capital into housing creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they …
Brad De Long explains he was wrong
Wrong, that is in that he failed to appreciate his own his immense genius, and wrong in that he failed to appreciate that the progressive left wing account of economics was ever more staggeringly true than he thought it was: According to him, he was wrong to think that: highly leveraged banks had control over their risks. With people like Stanley Fischer and Robert Rubin in the office of the president of Citigroup, with all of the industry’s experience at …
Europe crosses the Rubicon
Ireland has started to issue its own Euros, or rather counterfeit its own Euros, since it has no legal authority to issue Euros – not that anyone worries about legal authority these days. If any one country of Europe can get away with issuing Euros, then the political benefit is captured by the one country issuing Euros, while the inflationary effect is experience by all of Europe. This guarantees over issue of Euros. The proposed cure for this problem is …
Creeping progressivism
Mc Cain is horrified when a bunch of progressive lawyers demand that banks have their paperwork in order before foreclosing. He does not realize that he has implicitly conceded everything that matters to those progressive lawyers. He complains that this will have a detrimental effect on the availability of credit: this action could have a catastrophic impact on home values and mortgage lending … … lenders are discouraged from offering mortgages except to the most affluent and credit-worthy buyers. Surely, after …