Category Archives: Economics

Throwing Good Money After Bad

Iain Murray says the new mortgage plan won’t work. Why would it?

[Update late morning]

More thoughts from Tim Oren:

There’s no way to resolve the rates on offer from the ‘bad money’ with those needed by rational, market driven ‘good money’ investors. The result is the good money will stay home. Home, in this case, mostly being China or the Middle East. The fraction of federally originated loans, already at 35 percent, is going to keep on rising, and it will done with more fiat money cranked out by the Feds.

The politicians are trying to reinflate the housing market. Their irresponsible behavior is instead likely to leave that market deflated by driving out the good money, while debasing the currency and piling up debt for the productive and future generations.

Just as in the thirties, all of these ad hoc, arbitrary panic measures are going to cause a lot more damage than simply letting the market work. Because the “Change” administration is deathly afraid of change.

The Laughter Is Over

The Washington Post has an obituary for Tom Rogers. I didn’t know that he was having kidney failure. I wonder how he was holding out otherwise? How bad was his heart condition? Could he have lived several more years with a transplant?

I’m always frustrated when I hear of people dying of kidney failure, regardless of age, because it would be needless for many to do so, if only the free market was allowed to work (as in many other things). People who support the current regulations in the name of “medical ethics” are consigning thousands to needless death each year. And if he could have held out for a few more years, we might get to the point at which we can grow new ones from stem cells.

Anyway, this will be his legacy:

In a 2005 interview with Today’s Engineer, a publication of the Institute of Electrical and Electronics Engineers, he recalled delivering a talk on civilians traveling in space and afterward finding his wife in tears.

He asked her why she was crying. “Because I can’t stand so many people laughing at you,” she said.

Well, because he was willing to accept having people laugh at him, for years, a lot of the laughter has died down, and it’s finally becoming a real business, and likely to be the one that finally opens up space for the rest of us. And I hope that Estelle, in her understandable grief, is proud of him now. She certainly should be.

[Update about 9:30 AM Pacific]

Rich Coleman has info on the memorial service via email:

Memorial services are being held Saturday – Feb. 21 at 1 P.M. at the
Vantage House in Columbia, MD. The address: 5440 Vantage Point Road,
Columbia, MD 21044.

I’m planning to attend the services, all are welcome, please let me
know if you plan to attend as well.

If I was still back there, I would.

[Update mid morning]

Leonard David weighs in over at NASA Watch:

In my near 30 years of jail time in Washington, D.C., Tom was an anchor for me. We had many morning meetings at the Cosmos Club – and I savor to this day his words of wisdom on space, and in particular space tourism.

In fact, I recall one memorable morning gabfest when Tom got so animated, swinging his arms wildly to make a point, that he knocked his own glasses off – sending them off into near space and forcing me into retrieval action.

That gusto was infectious…and spirited me onward.

Secondly, Tom was “there and on call” – a stalwart voice for space tourism when it was – quite literally – a giggle factor folly. His voice of trust, experience, and reason made the idea of space tourism not only compelling, but matter-of-fact. He was ahead of the power curve…and we ALL owe him a debt of gratitude for carrying the torch early on.

Thirdly, I remember Tom as one hell of a story-teller. He would launch into a treatise on some tangent of a factoid, so much so, that the listener might fall into a catatonic state – yet the saga would come full circle with the recipient of Tom’s words of wisdom invoking the “ah ha…I got it” response.

Tom Rogers was a true visionary – and thank god I retrieved his glasses that day at the Cosmos Club.

He was pretty far-sighted without them.

The Liberaltarian Discussion

…continues, with thoughts from Ilya Somin. And this continues to make me crazy:

In a strange way, the Bush record of massive expansions of government has also shifted the goalposts for liberal Democrats. They seem to assume that anything Bush and the Republicans did must have been “laissez faire” (despite overwhelming evidence to the contrary) and that the current Democratic agenda represents a needed course relative to failed free market policies rather than a continuation of Bush-era trends of greatly increased government spending and regulation.

I continue to be both appalled and dismayed at this inability of the Democrats to recognize (or to be honest about their recognition) that the last eight years bore no resemblance to free markets, or laissez-faire. We overspend, and overregulate, and when it goes south, it gets blamed on tax cuts and underregulation. Madness.

[Update a couple minutes later]

Randy Barnett follows up.

Why The New Deal Didn’t Work

This is an important point:

The New Deal prolonged the Great Depression because of not one but a combination of misguided policies that made it harder for employers to create jobs and harder for consumers to buy things. Keynesian commentators talk as if FDR made a single key mistake, like not incurring big enough budget deficits. This ignores the tripling of the tax burden during the New Deal period (1933-1940). Also ignored is the fact that New Deal spending was mainly paid for by the middle class and the poor, because the biggest revenue generator for the federal government was the excise tax on beer, cigarettes, chewing gum, and other cheap pleasures disproportionately enjoyed by the middle class and the poor. Moreover, several New Deal laws made everything — especially food — more expensive when Americans desperately needed bargains.

There’s a lot more.

Notions that the New Deal didn’t work because they didn’t do enough of it (particularly based on the absurd notion that the war was “the New Deal on steroids” which was why it did) are just the kind of rewriting of history that I was talking about.

[Update on Tuesday morning]

There are few things I enjoy more than dealing with history-challenged simpletons who stupidly assume that because one doesn’t accept the gospel that FDR Saved Us From The Breadlines, that one must therefore think that Herbert Hoover was (in the parlance of the times) the cats pajamas, and that if we’d only stuck with his (non-existent) laissez-faire policies, all would have been well with the world. Larry Kudlow had a guest on his show who made this idiotic assumption last week, when he talked about Larry’s “hero,” Herbert Hoover. Kudlow quickly put him in his place (as I did here with my own idiot in comments). It’s the same (or at least related) pigheaded mindlessness and false choice that causes people to foolishly assume that because I’m down on Democrats I must be a Republican.

[Update a couple minutes later]

Michael Barone, on the real lessons of the Great Depression. Of course, those pushing “stimuli” don’t want to learn the real lessons, because it would remove much of the justification for their efforts to grow government and take over more and more of our lives as individuals.

[Bumped to Tuesday morning]

Will The “Stimulus” Really Stimulate?

Economists say no:

“I think (doing) nothing would have been better,” said Ed Yardeni, an investment analyst who’s usually an optimist, in an interview with McClatchy. He argued that the plan fails to provide the right incentives to spur spending.

“It’s unfocused. That is my problem. It is a lot of money for a lot of nickel-and- dime programs. I would have rather had a lot of money for (promoting purchase of) housing and autos . . . . Most of this plan is really, I think, aimed at stabilizing the situation and helping people get through the recession, rather than getting us out of the recession. They are actually providing less short-term stimulus by cutting back, from what I understand, some of the tax credits.”

It won’t slow them down, of course. Because it’s not really about “stimulus.”

As a commenter over at Instapundit noted a few weeks ago, a government providing stimulus is like an ugly and uncoordinated person performing a lewd dance. Even if the intent is to stimulate, the effect is exactly the opposite.

[Afternoon update]

The shock doctrine:

Last year the US economy was hit with one shock after another: the Bear Stearns bail-out, the Indymac collapse, the implosion of Fannie Mae and Freddie Mac, the AIG nationalisation, the biggest stock market drop ever, the $700bn Wall Street bail-out and more – all accompanied by a steady drumbeat of apocalyptic language from political leaders.

And what happened? Did the Republican administration summon up the spirit of Milton Friedman and cut government spending? Did it deregulate and privatise?

No.

It did what governments actually do in a crisis – it seized new powers over the economy. It dramatically expanded the regulatory powers of the Federal Reserve and injected a trillion dollars of inflationary credit into the banking system. It partially nationalised the biggest banks. It appropriated $700bn with which to intervene in the economy. It made General Motors and Chrysler wards of the federal government. It wrote a bail-out bill giving the secretary of the treasury extraordinary powers that could not be reviewed by courts or other government agencies.

Now the Obama administration is continuing this drive toward centralisation and government domination of the economy. And its key players are explicitly referring to heir own version of the shock doctrine. Rahm Emanuel, the White House chief of staff, said the economic crisis facing the country is “an opportunity for us”. After all, he said: “You never want a serious crisis to go to waste. And this crisis provides the opportunity for us to do things that you could not do before” such as taking control of the financial, energy, information and healthcare industries.

That’s just the sort of thing Naomi Klein would have us believe that free-marketers like Milton Friedman think. “Some people stockpile canned goods and water in preparation for major disasters,” Klein wrote. “Friedmanites stockpile free-market ideas.” But that is exactly what American left-liberals have been doing in anticipation of a Democratic administration coming to power at a time when the public might be frightened into accepting more government than it normally would.

As is often the case when the left accuses the right of something (lying, racism, hate), Naomi Klein’s thesis is simple projection.