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OpenMarket: Subsidies and Bailouts

  • More on Deflation

    November 13, 2008
    Good stuff from Joseph Lawler at the American Spectator, defending Robert Samuelson from, err, Robert Samuelson. He concludes:
    No reasonable observer of government activity would believe that it would engage in temporary interventionism. We saw this play out with the bailout: they asked for the power to do implement one very specificly defined measure, and ended up doing whatever they wanted. Why trust those same characters with any more policy tools, and why think they wouldn't let the inflation genie out of the bottle?
    Why indeed?
  • License to Print Money. Literally.

    November 13, 2008
    The threat of deflation is so big in the UK, where they have found their version of the financial crisis worsened by the weakness of sterling and the size of government, that a former Treasury adviser is suggesting they need to think about printing money. Meanwhile, Rich Lowry quotes AEI's Peter Wallison about Hank Paulson's latest u-turn:
    The problem is that these shifts in direction have caused investors and others to lose confidence that Paulson knows what he's doing, and that in itself could be causing some of the distress in the markets. The whole idea of TARP was to increase confidence, and that's now been frittered away. If you go to Congress with a plan, it...
  • No to Union Auto Bailouts and Voter Fraud

    November 13, 2008
    USA Today has an editorial opposing a massive proposed bailout for the automakers. The automakers would be leaner, more efficient, and more able to survive in the long run if they filed for bankruptcy in order to abrogate their absurdly generous union contracts, rather than being bailed out by taxpayers to the tune of tens of billions of dollars. Airlines keep operating all the time after filing for bankruptcy. By contrast, when England bailed out its automakers in the 1970s, at great cost, the results were disastrous and unsuccessful. But the unions want Obama to support a costly taxpayer bailout of the automakers, and so he is pushing for it. Given the union-backed incoming Democratic Congress, he'll likely get it. But Declan McCullagh explains why...
  • Bail-Outs for Bonuses

    November 13, 2008
    You have to love the timing.  The federal government gives Wall Street billions of dollars just in time for Wall Street to pay out billions of dollars in bonuses. According to ABC News:
    The nation may be diving headlong into recession, but that's not stopping financial firms from a cherished year-end tradition: the awarding of bonuses. Wall Street will distribute bonus checks come December because that is how Wall Street works, experts say. Those checks will be smaller than the big payouts of recent years, however, according to Johnson and Associates, an executive compensation consulting firm, which has released a report estimating that Wall Street bonuses will be down as much as 70 percent compared with 2007. The number of bankers who will share the bonus pool has also decreased because of...
  • The More Government Loot Available, the More Looters Who Come to Washington

    November 13, 2008
    There are endless attempts to "clean up" politics--limiting campaign contributions, restricting lobbyists, and the like--as if the problem is a few self-interested individuals who want to ruin the otherwise pristine process of governing.  But it is government that inevitably dirties the game.  After all, the bigger, more powerful, and wealthier government becomes, the more important it is for everyone to seize control of the beast.  When government hands out hundreds of billions of dollars, it becomes worthwhile to spend millions and even billions to try to get a share of the loot. Consider the special interest bail-out rushed through Congress in September.  It turns out the administration lied--the $700 billion was supposed to be used to buy "toxic" assets. Now, Treasury Secretary Paulson says, none of it will be used for that purpose.  Oh, well ... .  But the money will still be...
  • Detroit Broke City

    November 12, 2008
    In his CBSNews.com column today, CNet's Declan McCullagh makes a good case against bailing out the Detroit Big Three. As he rightly points out, decades of extremely generous union contracts have yielded huge liabilities in what have become known as "legacy costs," which include such things as pensions and retiree health insurance. In recent years, these legacy costs have become an enormous burden on GM, Ford and Chrysler, who face increased competition from foreign automakers, most of whom have lower labor costs thanks to much lower levels of unionization. One particularly lavish benefit is the United Auto Workers' employer-funded "Jobs...
  • To President-Elect Obamaâ€â€Freeze Gov't Regulations this Winter

    November 12, 2008
    Yesterday I called for a major “Deregulatory Stimulus.” Alongside---with financial, health care, energy efficiency, “green job” and other mandates likely in an Obama Administration---the manner in which dozens of Departments, agencies and commissions regulate needs some attention too. Upon raising his hand from the Bible after taking the Oath of Office, President Obama should declare a one year freeze on all new government regulations; he'd naturally exempt those he regards as addressing immediate threats to public health and safety. The point is, during that freeze, the President should clarify an intention to...
  • In mortgage modifications, property rights of investors must be respected

    November 12, 2008
    Today, in addition to Treasury Secretary Henry Paulson's expected announcement of a major mortgage modification plan through the $700 billion TARP, Barney Frank's House Financial Services Committee is holding a hearing entitled "Private Sector Cooperation with Mortgage Modification." However, despite the word "cooperation" in its title, it's clear from letters Frank and others sent out that the hearing will be confrontational rather than cooperative. Specifically, Frank and some fellow committee members seek to villify investors in mortgage-backed secuties who assert their property rights under contracts with banks servicing the mortgages. The harsh tone was set in a letter that Frank and fellow...
  • The Economic Change We Need

    November 12, 2008
    I have an article on that very subject over at NRO today. Check it out!
  • Reject political stimulus, embrace “Deregulatory Stimulus.” And do it FAST.

    November 11, 2008
    Facing an economic downturn and an election, politicians of both parties sought to stimulate consumer demand—and some business investment—through political action. They promised that if the early 2008 “Stimulus Package” didn't succeed, there would be “more to come.” It didn't work, and a stimulus is now the number one Obama priority. His “Big Bang” agenda has to wait its turn. As in recent stimulus campaigns—for example, during the first terms of presidents Bill Clinton and George W. Bush—almost all today's politicians accept the legitimacy of government stimulus and rarely ponder the future economic harm such intervention may cause. Genuine stimulus would entail liberalization of the economy from excessive interventions, regulations,...

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