Warren Buffet explained how to lose a few trillion, here and there. Well managed companies, like Warren Buffet’s, don’t get government guarantees. Badly managed companies with good political connections get government guarantees. So naturally all the capital floods to companies with a track record of losing it.This is capitalism in reverse. For capitalism to work, the people who are good at managing stuff have to wind up in charge of stuff, and the people who are bad at managing stuff …
Category: economics
The run begins on Europe
Moody’ issued a warning on European banks, which implies that the smart money is moving out of the worst affected banks: Eastern European banks, and Western European banks with a lot of exposure to Eastern Europe.This, in turn, is putting pressure on European government bonds, as speculators doubt that European governments will be able to bail out their banks, or will go broke attempting to do so – the most fragile European regimes are facing increasing reluctance to buy their …
Chinese becoming wealthy, Americans ceasing to be
Captain Capitalism explains why Chinese are becoming wealthy, and Americans ceasing to be.
The lesson of Japan’s failure
Ten years ago, Japan had a banking crisis very like the one we just had. It was discovered that financiers and big businessmen had blown staggering sums of money, whereupon the government massively intervened to keep those that had screwed up from losing their jobs. The Japanese economy has been stagnant ever since, even though, or perhaps because, the government has poured huge amounts of “stimulus†over the economy, so much “stimulus†that the Japanese government is now approaching bankruptcy. …
The cause of the crisis
In numerous posts, I have argued that CRA affirmative action caused the economic crisis that is happening now. Vdare provides a far better post than any of mine, giving us case histories and numerous horror stories of bank?s proudly pissing away stupendous amounts of money, and boasting of their wonderful CRA compliance in so doing. The bank?s boasts of trillions of dollars gives the lie to the much repeated claim that CRA was tiny, supposedly much too small to cause …
affirmative action, bad loans, bailout, crisis
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 been blaming affirmative action loans. But instead of pushing back against government pressure to make bad loans to protected minorities, lenders eagerly embraced bad loans …
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 in a position to repay, even if the bubble pops. If one reads what purport to be analyzes of the crisis, they usually use windy …
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 houses secured by twenty percent down payments, mortgages on farmlands, mortgages on mines and oilfield with secure property rights, mortgages on commerical facilities such as …
Global Average temperatures to 2008-October
This is the running twelve month average world temperature, as measured by satellites, as reported by The National Space Science and Technology Center. World temperature change in centigrade degrees. It goes up, it goes down. If there is any trend, the trend is less than the decade to decade fluctuations, and is not at all apocalyptic. This differs from other graphs you may have seen because it starts at the start of the satellite data and ends at the present, …
Why iceland went bust – and why the US went bust
The usual answer, of course, is the evils of capitalism: this country’s banks – virtually unregulated – to borrow more than 10 times their country’s gross domestic product from the international wholesale money markets. Watch as a Graf Zeppelin of debt propels its self-styled “Viking Raiders†across the world’s financial stage, accumulating companies like gamblers hoarding chips. In fact, of course, the government regulators made lots of easy money available to ordinary Icelanders. 100% down no deposit, with easy payments …