Where Have All the Capitalists Gone

I thought big Ben Bernanke was a capitalist but it appears I may have been wrong.

"Government likely has a role to play in supporting mortgage securitization, at least during periods of high financial stress"

Why? Since when did our entire economy become dependent on securitized mortgages. In my opinion never.

"From a public policy perspective, a greater concern with fully privatized [firms] is whether mortgage securitization would continue under highly stressed financial conditions," he said. "As I have noted, almost no mortgage securitization is occurring today in the absence of a government guarantee."

Wait, so in a situation like this banks would actually have to hold the loans that they made? Oh no!!! Then they might even have to make sure the borrower was credit worthy.

"As the Federal Reserve has argued for many years, the enormous [Fannie and Freddie] portfolios pose risks to financial stability," he warned.

Let me get this straight, you want a massive government agency to oversee and back all trillions of dollars of mortgages but the size of the current government agencies doing just that is a threat to stability.
Perhaps if the government had kept its nose out of the mortgage business all along several private smaller versions of Fannie and Freddie would have cropped up to fill that need in the economy. Politicians must think that because they cant see the "invisible hand" it must not exist.

Bumper Stickers

Lately I've been seeing some Bush is a dictator bumper stickers. That can hardly be true because in a real socialist or communist dictatorship the people and their cars would have disappeared from this planet long ago. As I remember 20 million people in Stalin's Russia for example. I'd bet a burrito that the people driving those cars would have no problem telling me what doctor I would see and what quality of health care I could have. Now that a dictatorship.

Regulation

Many people believe that increased regulation is needed in response to the current credit crisis. As Coyote points out the question should be asked if government could do any better. After all the OFHEO, whose only job is to monitor Fannie and Fredie, reported to congress in April that they had more than sufficient capital even under current circumstances. Oops. Oh ya, and their 68 million dollar budget, of which at least 80% must be used for auditing and monitoring, and staff of over 200 people seemed to drop the ball. I'm not totally certain but I kind of doubt that Fannies audit by Delloite and Touche cost 60 million.

Overstepping Bounds

I almost always side with the police on issues but this from the Maryland State Police is to much. If you don't want to read it it essentially says that 53 peaceful activists were put on the terrorist watch list. Why? Well according to their fearless leader:

"I don't believe the First Amendment is any guarantee to those who wish to disrupt the government,"

I hate to be the bearer of bad news for him but that is exactly what the First Amendment is there to guarantee.

HT: Coyote Blog

Goose You Have to Punch Us Out

I thought this was worth quoting in whole

From Mike Munger, a Duke University professor of economics and political science, and the Libertarian candidate for governor.

“The state is the great fiction by which each of us seeks to live at the expense of all of us.” The 19th French economist Frederic Bastiat recognized something that seems to be eluding our wise men in Washington, and Wall Street.

If Bastiat were alive, I can guess his reaction to the bailout: First, we don't know what we are doing, and we are as likely to do harm as help. The desperate hurry comes from electoral politics, and not from any real economic necessity.

Second, we aren't creating value. Government can't create value in financial markets. All we are doing is shifting costs from one group (Wall Street bankers, and mortgage sellers who took enormous and unsupportable risks) and transferring them to another group (taxpayers, who don't know any better).

When you hear someone say “The government bailout of Wall Street,” make a mental substitution: “The taxpayer-funded bailout of Wall Street.” And then remember that we have a federal debt bigger than Jupiter.

Deficits are future taxes. The bailout is simply a way of allowing irresponsible lenders to escape unharmed. If you have a mortgage, and can't pay, then you are responsible. If AIG has debts and can't pay, our leaders want to soak taxpayers for the bill.

The point is that you can't take money away from taxpayers who earned it, give it to the financiers who squandered it, and call that a good policy. There is no danger of another Depression, which was caused by a deflationary monetary policy. We are facing a temporary credit crunch, and it will sort itself out if we leave it alone. Things aren't so bad that a panicked bunch of politicians can't make it much, much worse.

Each can't live at the expense of all. Not even if you are a rich banker.

I especially liked his point about transferring the costs from the people who made poor choices to the taxpayers in general.

What he said

From TJIC:

It’s long pants weather!

Which means it’s belt weather!

Which means it’s inside-the-waist-band-holster weather!

Political Spin

Cafe Hayek brought this little gem of a story to my attention,

Obama vows deep cuts in spending
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Sep 22, 2:53 PM (ET)

By MIKE GLOVER
GREEN BAY, Wis. (AP) - Democratic presidential nominee Barack Obama moved to claim the mantle of fiscal responsibility in a roiling economy, vowing on Monday to slash federal spending on contractors by 10 percent and saving $40 billion.

Wow 40 billion is a lot of money you may be thinking, but you would be wrong. To put this in perspective the federal governments total projected outlays for 2009 are 3.107 trillion. So this 40 billion slash will make just over a 1% difference. A real blue light special. Don't worry I'm sure Obama has a hug your neighbor initiative to spend the savings on.