This is among the most sober and well-argued pieces we have seen on the flaws of the administration’s financial reform proposals. We thought we might end up disagreeing more strongly when Wallison pulled out the old chestnut of the “moral hazard” supposedly created by too-big-to-fail. We have always been skeptical of the moral hazard explanation [...]
One of the most-read pieces in the financial press this week is Joseph Stiglitz’s interview with Forbes. He starts off just right, making the point that no commentator other than the humble authors of Panic have made: the essence of the crisis was the attempt to have capitalism without ownership, or without strong ownership. That’s [...]
If free market types are to grapple effectively with the late crisis, they need to get one thing clear in their heads: The mega banks are not free market institutions. They are agencies of the government.
Creating and maintaining the currency is a core function of government, laid out right in the Constitution (c.f. “and regulate [...]
Gabcast! Richard Vigilante on Up Front Tuesday with Vicki McKenna.
We’re reading Peter Schweizer’s terrific “Architects of Ruin” which so far is mostly about how the fair housing campaign corrupted the mortgage market. We spend a chapter on this in Panic (see “You’ve Got a Friend at Freddie’s) but Peter tells the story in horrifying detail often shocking even us. Our favorite so far: in [...]
Not surprisingly our old friend Andy Kessler gets it exactly right. Forget smarter regulators or smarter banks; that’ll never happen. Raise capital requirements, limiting the banks ability to create money and fund poor investments. More people read Andy than read us, by a couple orders of magnitude, so now all we have to do is [...]
The only thing surprising about Frank Luntz’s suddenly famous memo on how to oppose Obama’s financial reforms, is that anyone is surprised. Of course the House bill establishes permanent bail-out authority, and of course it sticks taxpayers with at least part of the bill. And the Senate bill will be even worse on this point.
Language [...]
It seems like whenever the government or its apologists want to distract attention from government’s responsibility for the financial crisis they start talking about hedge funds. Thus Bloomberg’s headline today about Volcker’s testimony: “Volcker Says Hedge Funds Should be Allowed to Fail”
Well, when weren’t they? The only hedge fund that ever moved the U.S. government [...]
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