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OpenMarket: October 2008

  • "All the sanctimony without all the effort"

    October 6, 2008
    Thus sums up Buck Strickland his love of carbon offsets in last night's new episode of "King of the Hill." Buck, owner of Strickland propane and Hank Hill's employer, is expecting to get into hot water over illegal dumping, since, as one panicked staffer says, "People hate people who hate the environment." Hank calms Buck and his colleagues down, saying, "We just need to show people we don't hate the environment." Problem is, Hank means it -- starting an office carpool, banning bottled water, and refusing to turn on the air conditioning. Buck, of course, doesn't like this, and complains loudly. Hank tells Buck, regretfully, "You made a mistake and, well, fixing it...
  • Election Season Gives Me Imaginary Relatives

    October 5, 2008
    The upcoming election has given me new relatives, all of them imaginary.  The Obama campaign's get-out-the-vote operation calls my house on an almost daily basis, trying to reach people who don't live there, like Cyrus and Hassan Bader.  But I've never heard of either of them, even though I share their last name.  The Obama people have also tried repeatedly to reach my 18-month old daughter Sarah.
  • All of the bailouts are expected to $1.8 trillion and we get "green credits" and IRS fun!

    October 4, 2008
    Thanks to Declan McCullagh for his article that highlights the non-financial portions of the bailout. Particularly useful is his chart (with information from Reuters) that shows that all the various bailouts of this year will cost $1.8 trillion. Here are some useful comparisons: the GDP of the UK is $2.1 trillion. The GDP of Australia is $646 billion. I wonder if it makes more sense to rent Australia for a couple of years?
  • Market down on bailout -- Don't compound damage with overregulation of 'Main Street'

    October 3, 2008
    Today -- five days after a courageous independent vote against Treasury Secretary Hank Paulson's $700 billion bailout for Wall Street -- the U.S. House of Representatives disappointingly approved the same basic measure. Many of the bill's other "sweeteners", such as earmarks and a regressive increase in deposit insurance for upper income bank customers --will also cost taxpayer hundreds of billions of dollars. All this week I and my colleagues have pointed out ways this bailout could, in addition to being costly, be counterproductive for the economy. Wall Street may have been feeling this "buyers' remorse" today as the Dow Jones Industrial Average pared back ealier gains to end the day down by 150 points. As Yahoo Finance noted, "financial stocks, which had traded sharply higher on the promise the bill would be passed, fell after the House vote on profit-taking and as the market...
  • Better Lifestyle Bureau?

    October 3, 2008
    On a day when government takes a large stake in the financial markets, we should be aware that all sorts of organizations are trying to expand their reach and tell us what to do and think. As well as the Feds, the seemingly innocuous Better Business Bureau may be about to revise what Better Business means. Rick Berman explains:
    Instead of giving businesses a pass or fail rating, it would implement a new system in which businesses are graded A-F. There will be more than a dozen factors that determine your grade, one of them being “reputation of the industry.” So instead of investigating the dry cleaner that was reported to have stolen clothes and charged more to people with poor English skills, the BBB will randomly go after industries that the board determines...
  • Bash the Bailout: Government is Not the Answer

    October 3, 2008
    The bailout bill that passed through Congress today seeks to solve the financial mess by massively increasing government involvement in private finance. But more Government cannot be the answer to a government-created problem. The fact is that short-sighted government policies distorted the market in the first place. Bankers were certainly to blame for responding to these signals from government in the hope of a quick buck, but at its base, much of the problem was caused by government. These are the top twelve articles, stories and papers that we think demonstrate this fact.
    1. Fannie Mae and Freddie Mac are at the heart of the crisis, having helped to create an artificial mortgage boom. Fred Smith warned Congress about this in 2000, and was ridiculed for it. Read what happened ...
  • Carbon audit: Can we turn this threat into an opportunity?

    October 3, 2008
    Section 117 of the just-passed bailout bill requires a "carbon audit" of the tax code. The provision requires the Secretary of the Treasury, working with the National Academy of Science, to undertake a comprehensive review of the 1986 Internal Revenue Code to "identify the types of and specific tax provisions that have the largest effects on carbon and other greenhouse gas emissions and to estimate the magnitude of those effects." The study is authorized at $1.5 million and is due in two years. Presumably, the sponsors of this provision hope to use the study to lobby for carbon taxes and repeal of what they are pleased to call "special tax breaks" for "polluting" industries. But free market energy advocates could have some fun with this. For example, several studies (see...
  • CEI President Issues Statement on the Bailout

    October 3, 2008
    Statement of Fred L. Smith, Jr., President of CEI: The bailout bill that passed the Senate is no improvement over the bill the House rightly rejected on Monday.  Representatives should stick to their guns and reject the bill for the following reasons:
    • The bill perpetuates an unrealistic view of homeownership. Ill-considered legislative and regulatory initiatives have turned the American dream into the American nightmare for many people. Failing to reform the political programs and pressures that triggered the current crisis merely sets us up for the next crisis.
    • The bill tries to relieve symptoms without addressing causes. A lack of proper monitoring of the creative financial instruments that have evolved in recent decades has resulted in “toxic” debts that are difficult to identify and...
  • Bailout Bill Grows More Bloated, Ignoring Alternatives

    October 3, 2008
    There are alternative approaches to the bailout that would cost taxpayers less.  But instead, Congress is expanding the bailout bill to stuff it with more pork and put more burdens on the already overstretched FDIC.  Economics professor Russell Roberts explains how the government spawned the mortgage bubble in the Wall Street Journal. The bailout will cause inflation and the risk of ...
  • Kling hits secondary market -- misses benefits

    October 3, 2008

    Arnold Kling hits the creation of the secondary market for mortgage loans as the major factor -- 50 percent — causing the current financial crisis. As Kling wrote:

    In hindsight, I think that the crisis was caused by a) creation of the secondary mortgage market (50 percent) b) low down payment mortgages (30 percent) c) the "suits vs. geeks" divide (15 percent) d) other (5 percent)

    The more I think about the secondary mortgage...

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