January 25, 2008
Iain, you're so right that it's not just bad policy, but bad politics, for Republican candidates not to challenge costly regulations aimed at fending off the exaggerated threat of global warming. And as I wrote last week in the American Spectator, Mitt Romney showed in Michigan that bashing costly environmental regulations can still be good politics, as it was for Ronald Reagan in 1980 and congressional GOP candidates in 1994.
Overlooked in his Michigan victory was the extent to which Romney scored points specifically by attacking regulations that hurt the auto industry, such as the Corporate...
January 18, 2008After Federal Reserve Board Chairman Ben Bernanke basically said yesterday that making the Bush tax cuts permanent should be off the table for now, in exchange for a Keynesian temporary "stimulus" package of income-boosting "rebates," the Dow Jones Industrial average fell by more than 300 points. (Hat tip to John Tamny of RealClearMarkets.com for making this connection in one of his e-mail alerts). Today Bush formally announced a temporary "stimulus" --again backing away from making permanent his 2001 and 2003 cuts in income, capital gains, and dividend tax rates -- and the stock markets tumbled further.
It is far from clear we are facing a recession, but we are facing an uncertainty about the economy that is making the market nervous. And part of what is making the market nervous is, ironically, politicians' urge to do "something,"...
January 14, 2008For the past few political seasons, diehard political buffs will frequently visit one site to get the latest info on various races and campaigns: RealClearPoltics.com. The site offers a compendium of original analysis and links to the most informative political stories from various publications.
This primary season is no exception, but now there's something new. For those of us who also like to follow the market, which itself has had its twists and turns in the news lately, RCP now has a sister site: RealClearMarkets.com. We encourage all OpenMarket readers to check RCM out. It is the same format as RCP: links to variety of views on economic policy (with more than a few statist, as well as free-market, columns included) with penetrating original analysis.
The editor of RCM is, in fact, a...
January 4, 2008Today's jobs survey points to slowing growth, but we are still far from a recession. And as my CEI colleagues and I have said before, the best things the government can do is remove tax and regulatory impediments to growth, and not make things worse through ill-conceived intervention that could scare away business investment.
First, a little context about the 5 percent umemployment rate being bandied about. Buried in today's Associated press story is that claims for unemployment benefits rose three-tenths of a percent, from 4.7 percent in November to 5 percent last month.
But the unemployment rate was consistently above five percent during the first five years of the Clinton administration. (See this 1996 CNN story where 5.6 percent unemployment is described as "low." )
January 3, 2008On New Year's Day, the SEC suffered a defeat, and I hailed it as a victory. Nothing unusual about that scenario, except this was not the SEC I usually write about.
This SEC I'm talking about is not the Securities and Exchange Commission -- which burdens entrepreneurs with mandates from laws such as Sarbanes-Oxley. This was the SEC on many more people's minds yesterday: the Southeastern Conference of college sports.
The SEC's Razorbacks football team of the University of Arkansas got creamed in the Cotton Bowl, and I rejoiced. Not because I have anything against Arkansas, but because of who defeated them. The victors were my alma mater, the Tigers of the University of Missouri, who had gone for about 30 years without being in any college football "bowl...
December 28, 2007Anna Schwartz, longtime colleague of the late Milton Friedman and celebrated free-market economist in her own right, had some interesting things to say about the current credit crunch. In a story published on December 23 in the London newspaper the Telegraph, Schwartz told reporter Ambrose Evans-Pritchard that the buckets of money being thrown into the system by central banks in the U.S. and Europe were not getting to the root of problem. In fact, they were probably making things worse.
“Liquidity doesn't do anything in this situation,” Schwartz said. “It cannot deal with the fear that lots of firms are going bankrupt.”
Schwartz's comments are especially significant given that in her research with...
December 16, 2007While much of the media attention has focused on National Review's recent editorial endorsing GOP presidential candidate Mitt Romney, another of the magazine's editorials may have been overshadowed. This is a pity, because it's of high significance in the credit and housing policy debate.
In an editorial posted on NR's web site on December 11, the premiere conservative magazine came out squarely against the Bush administration's "voluntary" rate freeze for borrowers with resetting adjustable-rate mortgages (ARMs). The unsigned editorial hit all the right notes on how the bailout rewards irresponsibility, limits choices, and may send a terrible signal to international investors about America's upholding of its contracts.
"For markets to work properly, imprudent actions must have...
December 6, 2007“Wall Street Falls on Mortgage Unease” read the headline of an Associated Press story posted on Yahoo Finance just after the markets closed on Monday of this week. The headline was fairly typical of financial stories of the last few months, as the stock market has see-sawed due to mortgage woes and fears of a broader impact on the economy. The article noted that “the stock market's decline followed a week in which the Dow Jones industrial average made its biggest weekly point gain in more than four years.”
But then the story noted something unusual. This day, the factor wasn't a new spike in foreclosures or a big bank's announcement of expected losses from mortgage-backed securities. Rather, the government's own announcement of an impending mortgage rescue plan may have reignited the market's nervousness....
November 26, 2007As the joke goes, there's good news and bad news. Which would you like to hear first?
Upon hearing no answer from the readers of Open Market, I'll begin with the bad news. On November 15, the U.S. House of Representatives passed the "Mortgage Reform and Anti-Predatory Lending Act" as an answer to mortgage woes. This "absurdly patronizing government-knows-best bill," as my colleague Eli Lehrer called it in a CEI press release, goes beyond the goal of improved disclosure to ban mortgages that are, in the bill's words, "inappropriate" for borrowers.
The borrowers, however, would not be deciding what is "inappropriate." That is left for the government to decide after the fact, and to punish lenders through penalties or legal judgments. Needless to say, not only would this limit mortgages choices, it would likely make home loans much...
November 15, 2007Yesterday I had an article in National Review Online analyzing Rep. Barney Frank's answer to subprime woes. As I write, Frank's "Mortgage Reform and Anti-Predatory Lending Act," H.R. 3915, is on the House floor today. It's almost certain to pass; the only question is how many Republicans will vote with Frank.
The vote doesn't guarantee ultimate passage of anything like this legislation, as the Senate counterpart to Frank's House Financial Service Committee has yet to put together a bill. Still, with the constant bombardment of headlines about all the issues rolled into the "subprime meltdown," there could very well be a legislative stampede that would make matters worse -- and cause us to lose a little bit more of our freedoms.
As I say in the NRO piece, the terminology of some of the...