All Posts Tagged With: "bailout"
Political Bankruptcies: How Chrysler and GM Have Changed the Rules of the Game
The topic of corporate bankruptcy law scarcely titillates the imagination of ordinary citizens, even those with a deep interest in constitutional and public affairs. Harried people treat bankruptcy almost dismissively as a useful way of winding up firms that cannot keep their financial heads above water. In practice they sense rightly that the corporate bankruptcy [...]
18Nov2009 | Richard A. Epstein | 1 comment | ContinuedStealth Expansion of Government Power
The government of the United States spent the year debating major new undertakings, ranging from health care to climate change to energy development to tax reform. Yet a far more fundamental shift, in the form of a rapid and pervasive expansion of government power over the private sector of the economy, has been going on [...]
23Oct2009 | Murray Weidenbaum | 0 comments | ContinuedGovernment Motors
Government Motors
by Michael Heberling
Michael Heberling (mheber01@baker.edu) is president of the Baker College Center for Graduate Studies in Flint, Michigan.
If Washington owns it, it just can’t keep its hands off.
—Senator Lamar Alexander
Twenty-five years ago President Reagan told auto workers in Orion, Michigan, “You’ve demonstrated when the chips are down, what people can do working together freely, [...]
Getting in Deeper
In what the Wall Street Journal calls "a watershed moment for government intervention in the private sector," the Federal Reserve announced yesterday it will regulate executive compensation at all banks so that they will not have incentives to take on too much risk. The term "pretence of knowledge" comes to mind.
23Oct2009 | Sheldon Richman | 19 comments | ContinuedSaving Is Killing the Economy?
In the midst of the current recession, many of the oldest fallacies in economics are making a comeback. In a column titled “Why Saving is Killing the Economy,” senior writer Chris Isidore repeats one of the oldest: that the key to economic recovery or growth is consumption and that saving retards that process. Isidore states [...]
19Aug2009 | Steven Horwitz | 4 comments | ContinuedTransforming America: The Bush-Obama Stimulus Programs
George W. Bush’s and Barack Obama’s “stimulus” programs will permanently transform the American economy. The market-based system that has produced unprecedented prosperity relies on profit and loss, which rewards individuals and firms that add value to the economy and penalizes those that detract value. The various stimulus programs undermine that system.
My discussion will focus on [...]
The Fatal Conceit
The politicians are confident that they can wisely spend trillions of your dollars. The arrogance of the political class is stunning.
17Jun2009 | John Stossel | 9 comments | ContinuedOught Implies Can
Too often ethical pronouncements have an air of hubris about them, as the pronouncer simply assumes we can do what he says we ought to do. By contrast, economics demands some humility. We always have to ask whether it’s humanly possible to do what the ethicists say we ought. To say we ought to do something we cannot do, in the sense that it won’t achieve our end, is to engage in a pointless exercise. If we cannot do it, to say that we ought to is to command the impossible.
24Apr2009 | Steven Horwitz | 4 comments | ContinuedRecycling Discredited Ideas
The current financial crisis has fueled a frenzied recycling of discredited Keynesian ideas. We are hearing again of the need for “public works,” of the need to “stimulate” the economy. The Federal Reserve is frantically inflating the supply of money. We are laying the groundwork for a disaster reminiscent of the 1970s—if not worse.
1Apr2009 | Peter Lewin | 5 comments | ContinuedA Microeconomist’s Protest
The conventional macroeconomic diagnosis and proposed cures ignore many important structural or microeconomic factors.
1Apr2009 | Mario Rizzo | 8 comments | ContinuedToo Big to Succeed
One widely cited culprit for the 2008 financial crisis was a supposed decision by the U.S. government not to regulate a relatively new type of financial instrument known as a credit default swap (CDS). In fact, this so-called “failure to regulate” refers to regulations that prohibited public trading of these instruments, concentrated risk in a small number of large firms, and massively increased the probability of a financial disaster. To add to the irony, one of the government officials most responsible for these interventions, then-Federal Reserve Chairman Alan Greenspan, recently apologized for having had too much faith in the free market when he should have apologized for not having had enough.
1Apr2009 | Less Antman | 2 comments | ContinuedGovernment Sets Us Up for the Next Bust
If an athlete injures himself and suffers great pain, we recognize the shortsightedness of giving him painkillers to keep him going. The pain might be masked, but at the risk of greater injury later.
That’s a good analogy for the inflationary policies now pursued by Washington. These policies may temporarily “stimulate the economy,” but they also [...]
Black Swans, Butterflies, and the Economy
One side blames the market. The other blames government. We get two causal stories going in opposite directions and a lot of animus. But both perhaps are missing something important in this titanic debate about our current financial crisis. It’s time we exposed a complicated truth about the economy of the 21st century.
Nassim Nicholas Taleb [...]
Too Big to Fail
“Once you lose your freedom to fail, you also lose your freedom to succeed and you cease to be a free society.” —U.S. Rep. Jeb Hensarling of Texas
In March 2008 the investment banking firm Bear Sterns failed and the federal government quickly stepped in. The public was inundated with the phrase “too big to fail” (TBTF) [...]
The Financial Bailouts: “See the Needle and the Damage Done”
On Wednesday, September 17, 2008, according to the New York Times, Fed Chairman Ben Bernanke used “a speaker phone from his ornate office” to tell Treasury Secretary Henry Paulson “that it was time to adopt a comprehensive strategy that Congress would have to approve” for dealing with the financial-market troubles. After a second call on [...]
27Feb2009 | Lawrence H. White | 8 comments | ContinuedBailing Out Statism
The key to understanding the saga of Fannie Mae and Freddie Mac—the recently nationalized twin government-sponsored enterprises (GSEs) that dominate home financing—is this:
They were set up—intentionally—to distort the housing and mortgage markets. Government planners were not content to let voluntary exchange and spontaneous market forces configure those industries unmolested. So—holding the taxpayers hostage—they intervened.
Make no [...]
Theory and Crisis
What might be even more distressing than the current buildup of the corporate state in response to the supposed economic crisis is the way some self-styled advocates of the free market are willing to cast aside the economic theory they once claimed to embrace.
If you are a glutton for cable news-talk shows, you know it’s [...]
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The End of Prosperity: How Higher Taxes Will Doom the Economy–If We Let it Happen
By Arthur B. Laffer, Stephen Moore, and Peter J. Tanous
