Category Archives: Political Economy

Is Ben Having A 'Meltdown'?

Debt, Federal Reserve Bank, Inflation, Political Economy

Or is Mr. Bernanke reading Meltdown? “The Federal Reserve Chairman’s views on asset bubbles,” writes The WSJ, are slowly changing.”

“Earlier this decade, when Mr. Bernanke was a Fed governor, he and other central bank officials said financial bubbles weren’t something the Fed could identify or pre-empt effectively. Its focus was on keeping inflation and unemployment low. [And how well that has been achieved.] Its bubble strategy was to mop up after a bubble burst with lower interest rates to prevent damage to the broader economy.”

In a speech on Sunday at the American Economic Association’s annual meeting, BB repeated the shibboleth about the need for “better regulation” as the first line of defense against future crises. But he also conceded to the need “to ‘remain open’ to using the blunt tool of higher interest rates to avert or pop future asset bubbles … particularly if other approaches aren’t working.”

Why is raising interest rates considered a “blunt tool,” keeping them artificially low is not?

Interminable Time On The Tarmac

Government, Political Economy, Private Property, Regulation, The State

Obama the idiot truly believes that nothing can work without his supervision. He had his stooge order the airlines “to let passengers stuck in stranded airplanes get off the plane after three hours.” How nice.

The AP: “Under the new regulations, airlines operating domestic flights will be able only to keep passengers on board for three hours before they must be allowed to disembark a delayed flight. The regulation provides exceptions only for safety or security or if air traffic control advises the pilot in command that returning to the terminal would disrupt airport operations.”

[SNIP]

What do you imagine will be the unintended consequences of this little exercise? Since Obama’s handmaiden, Transportation Secretary Ray LaHood, has authorized the act of keeping people on the tarmac for three hours, such delays will become standard.

At least up until now, this conduct resulted in unflattering publicity and law suits.

Look, the way the already heavily-regulated airlines treat customers (and vice versa) is appalling. But the solution is not to be found in Obama’s bag of tricks.

Rather, “Only when an airline can undertake ‘curb-to-curb’ handling of its passengers will it stand both to reap the benefits that arise from providing superior service, as well as incur full liability for forsaking passenger safety. This is possible only in a privatized airport, where freedom of association and freedom of contract aren’t overridden or blurred by government, and where responsibility isn’t collectivized.” [“WHOSE PROPERTY IS IT ANYWAY?”]

Obama Promises Sexed-Up Homes

Barack Obama, Economy, Environmentalism & Animal Rights, Political Economy, Technology

How will Big Brother O get you to sex-up your home? Why by skewing production in parts of the economy.

Here is a perfect example of how central planners direct scarce resources into inefficient technologies:

BO is nudging Congress (isn’t that our job?) to provide temporary incentives for Americans to weatherize their homes.

But how—and more importantly why—would cash-strapped Americans spend money they don’t have on retrofitting their abodes with expensive green gimmicks, ASAP?

The first economic order of the day in pushing people to squander scarce resources on fashionable items is for the fool-in-chief to sell the tinsel nation on the sexiness of these consumption goods.

Big Brother Barack says he finds insulation sexy. Sex sells; Obama and sex doubly so.

Is there anything Big Daddy Can’t deliver? Watch:

Stiglitz Stinks

Debt, Economy, Left-Liberalism And Progressivisim, Political Economy, Republicans

“In 2002, Joseph Stiglitz, the Nobel economics prize winner and two co-authors (Jonathan Orszag and Peter Orszag), published an article (‘Implications of the New Fannie Mae and Freddie Mac Risk-based Capital Standard’) in Fannie Mae Papers. They argued that Fannie Mae’s and Freddie Mac’s risk-based capital standard made it very unlikely that the two GSEs (government-sponsored enterprises) would ever require a government bailout. Their results suggested that ‘the risk to the government from a potential default on GSE debt is effectively zero,’ even in ‘the financial and economic conditions of the Great Depression.’ The authors apparently underestimated the possible credit losses from a deep recession, besides ignoring the possibility that the quasi-nationalized housing market and the GSEs could themselves generate a recession. Fannie Mae and presumably the learned authors are not especially proud of this paper, which has disappeared from the GSE’s site,” but our friend Pierre Lemieux, Canadian economist and libertarian extraordinaire, has reproduced it on his site.

So what if Stiglitz is wrong most of the time? Other than some libertarians and devotees of the school of Austrian economics, most pundits make a perfectly good living being mostly wrong.

Public goodwill runs eternal for these failed “experts.” Neoconservative talking twits had been wrong all along about the invasion of Iraq; They consistently dished out dollops of ahistoric, unintuitive, and reckless verbiage. Yet they’ve retained their status as philosopher-kings.

Why not left-liberals like the Keynesian Stiglitz? (Not to be outdone, Republicans are also Keynesians. Or Republikeynsians.)