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 [...]
Nobody gets Fannie and Freddie better than Peter Wallison. Here Peter explains why the twins should be privatized but won’t be: having their own mortgage bank is just too much fun for Congressmen
Everybody wants to talk about the Fed raising the discount rate. Bank profits may go down fractionally, otherwise, snore, snore. Point 75 like [...]
John Tammy, editor of Real Clear Markets is certainly right that it is absurd to expect the regulators to be smarter than the banks. But that’s only an argument against discretionary regulation, which is what got us in trouble. And banks like lawyers, perform a partly public function and for that reason will always be [...]
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 [...]
Bernanke goes all Obama; lays out plan to tighten-up. . . someday. Not saying he is wrong to keep rates low for now; just that making promises to reform someday is a very un-Fed-like, and very politician-like.
If we thought the Administration was serious about coordinating banking reform with Europe, then we’d be scared. Wait a [...]
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 [...]
Stiglitz, smart as he is, is allowing himself to be distracted by the President’s tendency to wander off in to irrelevant details that make good sound bites. Sure, forbid proprietary trading by commercial banks if you like; it won’t hurt. But it was utterly irrelevant to the crisis. Also the rule would tend to extend [...]
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// ]]>The drive to off Bernanke, like 99.9 percent of the stuff we hear coming out of Washington right now is just one [...]
// a href=”http://www.cnbc.com/id/34921639″ target=”_blank”>Stiglitz Says U.S. Has Abolished Capitalism
Parts of this are ho-hum, but Stiglitz gets closer to a core theme of Panic (and thus absolute truth) than any significant public figure we can think of. We argue in the book that the essence of the crisis was replacing strong owners positioned to make strong, [...]