Talk to most people about the economy: the weary smile response is "the worst is over", "green shoots are emerging", or some token grunt of hope. The main stream media - along with Quantitative Easing & Fiscal Stimulus crowd - are trumpeting the end of recession just around the corner. If this is not the case of hope triumphing over experience, it is certainly the case of hope triumphing over facts.
For a sobering look at facts, uncluttered by government propaganda or industry biases, check out: The End of The End of Recession.
Continue reading "Recession: Picking Signal From Noise" »
by AW
Long observed by the defenders of liberty, a common bi-partisan pattern among politicians is this: use free market rhetoric to practice socialist policies. More precisely, blaim market "failure" to put in place statist policies that increase government control of economic & social activities. Bush did it without apology (steel tariffs, no-child-left-behind, etc.) and Obama does it with impunity (GM takeover, saving favored banks, etc).
Continue reading "Double Double Speak: Socialism Is Capitalism Is Socialism" »
by AW
AIG is the mother of all TBTF ("too big to fail") institutions; it has already received 180 billion dollars of taxpayer money so far. This bailout is larger than that for any other financial institution, and it is widely expected to go higher. How could a staid insurance company be in the center of this?
James Hamilton in his EconBrowser blog explains the moral morass of "selling insurance" like snake oil. Here is an interesting story line that is emerging.
Continue reading "AIG: Moral Hazard and Corporate Looting" »
by Anurag Wadehra
Simon Johnson, of the brilliant blog Baseline Scenario, made two posts of exceptional clarity:
How to save the banks proposes a clear solution, the best one I've heard so far. Simply put, it is:
- Government should fire the bankers and maybe the board
- Then mark all illiquid assets to market value
- Sell all or parts of the bank to new private equity investors
- And then get out.
To do this, government shouldn't use stock with voting rights but warrants which convert to common stock after the restructuring, giving taxpayers the best shot at upside.
Continue reading "Bad Banks: The Road To Economic Hell" »