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...
November 1, 2007Talk about the blind leading the blind! Superbank Citigroup Inc. was supposed to be a big player in Treasury Secretary Hank Paulson's "superconduit" to provide liquidity for the securitized debt instruments that had their valuation in question because of an unknown number of bad mortgages and other loans.
But with an analyst report downgrading Citi to "sector underperform," as well as predicting it will have to raise about $30 billion by slashing its dividend and/or selling off its assets, other financial institutions will now be even more reluctant to follow Citi off a cliff of unspecified height.
Let me pull back a minute, lest I sound like a doomsayer. This blog post is about the flaws of Paulson's concept of a...
October 29, 2007Today, I have a piece in American Thinker on how environmental regulations, much more than global warming, were likely a factor in the intensity of the California fires.
Specifically, the article shows how the Endangered Species Act again hampered residents and city officials from reducing the fuel load from dry brush. This has happened before, as CEI adjunct fellow RJ Smith and former scholar Ike Sugg have documented, and was actually an issue in some Congressional races in 1994, when Southern California homeowners were forbidden from mechanically cutting brush because it might harm the habitat of the kangaroo rat. Many of those homes perished in fires. The GOP pointed to this as an example of big government's encroachment on property rights, but many in Congress then abandoned Endangered Species Act...
October 24, 2007Hans, excellent points about the folly of a government-organized bailout. Indeed the Dow had gone back to 14,000 the week before Paulson opened his mouth and proposed the bailout last week. Today, the Dow rose by more than 100 points when big mortgage bank Countrywide Financial Corp. announced, without any direct prompting by any government agency, that it would refinance or modify $16 billion in mortgages. Part of the rise in the Dow was probably due to the fact that investors knew Countrywide was making a decision that would help its bottom line, rather than responding to the "moral hazard" of a promised government bailout.
The market has lots of incentives to smoothe out volatility. The problem is the...
October 5, 2007Michelle,
Excellent points about the lack of correlation in Australia between global warming and forest fires.
And, for an in-depth look at what's really causing the fires there, I would suggest this blog by one of CEI's great Aussie friends, Jennifer Marohasy. Jennifer is a senior fellow at the Melbourne-based think tank, the Institute of Public Affairs, which is fighting the good fight for the free market and sound science in Australia, and has had some impressive results in shaping the debate.
Jennifer's blog and her site have some excellent refutations of environmental myths about how global warming is supposedly affecting Australia. She has some particularly good stuff on...
Biz consultant Ed Martin -- a fighter for the free market, sound science and the real "corporate soul"October 3, 2007At the OpenMarket, most of our writing is about law and policy. But ultimately, it's people that make the "open market" work. When market rules are put in place that allow maximum freedom and protect individual liberties such as property rights, it's the individual innovators who can better society with their writings, inventions, and methods of selling. And people ultimately complete the circle when they push for and create the policies that make possible a dynamic, innovative culture of commerce.
So this post, and many more I will write, is going to focus on an individual making a positive difference. I'd like to introduce OpenMarket readers to business consultant Ed Martin, and to congratulate Ed on the opening of his new firm, Triple Win International. Martin is one of those unique individuals on the forefront of both market...
September 17, 2007D.C. Councilman and former mayor Marion Barry, as well as some of his colleagues on the City Council, have a novel idea on how to help D.C. residents struggling with the credit crunch: limit their ability access emergency cash by capping annual percentage rates that payday lenders can charge at 24 percent.
After initally voting unanimously for the cap, the D.C. Council is holding a new vote on the issue this week. Statist groups like the Center for Responsible lending are pushing hard to keep the cap. But hopefully, it will become apparent to the majority of the Council that the laws of economics cannot be legislated away, and when governments attempt to do so, the final bill enacted is always attached to an additional piece of troubling legislations: the Law of Unintnded Consequences
Basic microeconomics, of which...
September 17, 2007Last night, in an interview with CBS's "60 Minutes," Former Federal Reserve Chairman Alan Greenspan said that on his first date with Andrea Mitchell, now his wife, they went back to his place, where he showed her an essay he had written on antitrust. This is probably the essay.
"Anti-Trust: Rule of Unreason" was written while Greenspan was a part of novelist-philosopher Ayn Rand's "collective." It appeared in her mid-'60s book Capitalism: The Unknown Ideal.
In the essay, Greenspan makes the case for wholesale repeal of antitrust law. Almost all of the passages are still relevant in light of recent controversies such as the recent Whole Foods-Wild Oats merger. There is an especially powerful passage in the essay that essentially says that we will never know how many innovations have been killed -- how many...
September 12, 2007I recently returned from my first visit to Columbia, Mo., since I graduated from the University of Missouri there 1994. I am a graduate of the Journalism School there, or J-school as we like to call it, which is considered one of the best in the country for both newspapers and broadcasting. Columbia and the campus are in the middle of the state of Missouri, tucked between rural areas about two and a half hours from both Kansas City and St. Louis. Famous reporters from Jim Lehrer to Paula Zahn spent their college years in Columbia, and chances are very likely if a student is at MU from out of state, he or she is there for the J-school.
Some lectures I gave to journalism students on risk and economic reporting were arranged by J-school graduate student Lene Johansen, whom we will soon be proud to be hosting as CEI's new Warren T. Brookes Journalism Fellow. I'll have more on how the...
September 12, 2007Angela,
Thanks for noting the cite on why the SEC "reforms" of Sarbox would still mandate that companies be suggested to broad reviews for "internal controls."
With questions about accounting for collateralized debt obligations and mortgage-backed securities, the case for overhauling Sarbox is just that much stronger. The fact that the law and its interpretation by the SEC and Public Companuy Accounting Oversight Board mandated that companies spend so much time looking at trivial "internal controls" such as the number of letters in an employee password meant there was less time and probably less importance on decisions involving business judgements such as assessing the risk of these novel financial instruments.
Sarbox critics such as Larry Ribstein, Peter Wallison, and me have said for years that...