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OpenMarket: October 2008

  • Turning Responsible Citizenship into a Sucker's Game

    October 30, 2008
    Some people are hopelessly boring.  They save money, live within their means, don't buy too much house, pay their bills, and contribute to the community.  Then there are wastrals, who spend and borrow wildly and expect others to clean up after them.  The U.S. government is funded by the former but obviously spends an increasing amount of its time catering to the latter. Reports the Washington Post:
    Negotiators for the Treasury and Federal Deposit Insurance Corp. are nearing agreement on a plan to have the government guarantee the mortgages of millions of distressed homeowners in what would be a significant departure for the federal rescue program, which has so far directed relief exclusively to banks and other financial institutions. The plan, which...
  • Paying Dividends with Public Money

    October 30, 2008
    Normally corporate dividends--or executive salaries--should not be a matter of government concern.  But how about when the feds are forking over taxpayer money to encourage borrowing?  It turns out that the banks have taken the money (some more enthusiastically than others) and, well, used it for other things, such as buying other banks and paying dividends.  This has reduced the White House to whining that they are supposed to be getting out there throwing money at borrowers, any borrowers. But there are dividends to pay.  Reports the Washington Post:
    U.S. banks getting more than $163 billion from the Treasury Department for new lending are on pace to pay more than half of that sum to their shareholders, with government permission, over the next three...
  • Does a Foreclosure Moratorium Make Sense?

    October 30, 2008
    Despite some recent good news—like stocks recovering some value—politicians continue to believe they can solve the housing crisis through economic gimmicks.  The latest: a proposal to have a 90-day moratorium on home foreclosures. The last thing that anyone wants is more folks kicked out of their homes. But if banks don't recover some capital now, won't the crisis simply deepen? Just as much as struggling home owners want to stay in their homes, banks want those folks to stay in their homes.  Banks like it when people are paying their loans and only foreclose on homes only as a last result as it is—they're better at brokering loans than real estate. If taking control of a home and selling it on the market is already...
  • You're Still A Racist, Obama Advisor Says

    October 29, 2008
    Even if you vote for Obama, you're still probably a racist, according to Harvard law professor Charles Ogletree, in his remarks at recent events like a panel discussion at my alma mater  Ogletree, Obama's top advisor on race issues, explains that since Obama is "biracial," his election won't prove that racism has receded.  ...
  • And the ride starts all over again...

    October 29, 2008
    Thee Federal Reserve lowered its key rate to 1%. Convinced that inflation is no-longer a problem, the Fed believes this is the time to help stave off a recession. This policy didn't work well when Greenspan tried in 2001 - it helped the jump in oil price and drove the dollar to fall against other currencies - oh and it made lending for home super cheap. Combined with aggressive lending from the Federal Reserve, a Fannie and Freddie newly reflushed with cash to buy up mortgage backed security , and the federal government going on a mortgage buying spree... Does this sound like 2002-2006 all over again, just a bit bigger? Are our policymakers really this dense....this is truly criminal.
  • My apologies to the Swiss (hold firm against OECD meddling)

    October 29, 2008
    Last week, the German government said that Switzerland should be placed on the international blacklist for tax havens. Really? That is, according to Peer Steinbruck (German finance minister):
    Speaking to reporters in Paris after a conference on measures to combat tax avoidance, Steinbrück said Switzerland deserved to be on the list being drawn up by the Organization for Economic Cooperation and Development because Swiss investment conditions encouraged some German taxpayers to commit fraud.
    The...
  • O'Grady hits Obama's trade policy

    October 29, 2008

    More good reads in the WSJ today.  Mary Anastasia O'Grady in her column in the Wall Street Journal provides a sharp contrast between the two presidential candidates in their approach to international trade.

    As O'Grady notes, Senator Obama views trade — not as an economic artivity — but as a tool to pursue other social goals, such as labor and environmental standards.

    Mr. Obama says he would change the way the U.S. negotiates trade agreements. Instead of focusing mainly on removing barriers to the movement of goods and services, he would use the agreements "to spread good labor and environmental standards" to the rest of the world. He voted against the Central American Free Trade Agreement (Cafta) in 2006 and says he will oppose others...

  • Obama victory priced in the market, says columnist

    October 29, 2008

    The Wall Street Journal today has an insightful article by George Newman, “an economist and retired business executive.”

    Newman brings up a new rationale for the steep drop in the stock market -- that investors have already priced in a likely Obama victory.

    The valuation of an individual stock reflects the collective expectation of investors about a company's future profits, dividends and appreciation, and the same is true of the market as a whole. These profits, in turn, are greatly influenced by government policy on taxes, spending, subsidies, environmental and other regulations, labor laws, and the corporate legal climate. Investors have heard enough from both candidates in the last month or two to conclude that...

  • LibertyWeek 14: Conviction Spooktacular

    October 29, 2008
    Prepare yourself for the latest episode of the best free market podcast around, LibertyWeek.
    Your hosts Richard Morrison and Cord Blomquist discuss the looming presidential election, Halloween, the conviction of Alaska Sen. Ted Stevens, the continuing economic unease, tough times for the U.S. Postal Service, American companies react to Internet censorship abroad, Cox's new wireless service, Microsoft's new web-based OS Azure, and all the finest Olympic News. Listen now!...
  • Stock Market Selloff?

    October 28, 2008
    Following the economy, especially lately, can be confusing. Reporters are not helping matters. A CNN.com article, for example, blames yesterday's stock market plunge on a selloff. But there was no selloff; every seller requires a buyer. Just as more people were selling, so were more people buying. Describing yesterday's market as a selloff only tells half the story. The same article says that today's 600-point gain happened when "investors scooped up a variety of shares." But those buyers cannot buy unless somebody sells to them. Again, the article only tells half the story. And here is one case where two halves do not a whole make. So what really happened yesterday and today? High trading volume. That may not sound very exciting. But at least it's accurate. Flaws and...

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