Megan nails it: the government is using its intervention in the banking system to pressure banks to give special deals to the government’s special friends.
Tag: capitalism
Securitization
From the point of view of oligarchs and crony capitalists, the crisis is not that a lot loans were made to no hablo English wetbacks. The crisis is that people are rejecting securitization of debt. The Obama regime’s capitalism smashing measures are intended not to destroy capitalism, nor to install socialism, but to restore securitization of debt. This is socialism for the financiers, not for the proles: Crony socialism, crony …
Galt strike or inadequate aggregate demand?
The Randian concept of a Galt Strike is that if the elite slack off, the masses will be impoverished – that countries are rich or poor according to whether the elite is productive, while the masses and resources do not matter much, except in extreme cases such as oil rich sheikdoms. There has been a large fall in GDP over the past six months: The Keynesian explanation of this fall is …
The crisis explained
I have been seeing a lot of references to “a speculative bubble†Nope. They were not speculating. The crisis consisted of people, mostly members of protected minorities with nothing to lose, buying houses they could not afford with borrowed money in the expectation that they would go up, and if they went down, it was the bank’s problem. So the people who bought houses were taking no risk, since mostly …
The Stimulus bill
Bryan Caplan wonders why Brad Delong cannot comprehend those who doubt the effectiveness of the stimulus bill. Assume that creating value is easy, any brainless fool can do it, even the brainless fools at Washington Mutual. It is then immediately obvious that the government can make everything lovely by printing money and giving it to the morally worthy. Are car production lines shut down while unemployed workers idle? Just print …
Warren Buffet explains how to lose a trillion
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 …
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 …
Cause of International Inequality
Arnold Kling is much puzzled by the inequality of nations. I don’t know why. The answer is pretty obvious. Firstly, you require capitalism, which requires not mere formal laws recognizing private property, but a culture of respect for entrepreneurship, for property rights in productive capital and freedom to do business. With that respect, the laws are unnecessary, as in today’s China. Without that respect, the laws are useless, as in …