Month: September 2008

No Atheists in Foxholes, No Libertarians in Financial Crises:

This is the line that Paul Krugman uttered the other night to some great yucks from the Bill Maher crowd.

Not really an original thought for Krugman — see Jeff Frankel’s remarks from last July.

Krugman in typical fashion communicates his point in a smug fashion and implies that only someone completely bonkers would maintain a libertarian stance.  But the reason we are in this mess to begin with is because we weren’t bonkers enough to pursue libertarian economic policies.  Instead, statist intervention in financial markets has been pursued for decades.  Government policies that privatized profits, but socialized losses; easy credit monetary policy; regulations which favored some groups at the expense of others, etc. all created our current mess.  NOT free markets, and only free markets will permit the adjustments to economic realities that are required to get the market economy back on-track.

I don’t know about atheists in foxholes, but I do know that only economic libertarianism can get us out of the mess of political capitalism we are currently in.  To argue otherwise, as Krugman and his crowd do, not only belies a fundamental lack of economic understanding, but an innocence of public choice.

Not Buying It – The Current

What’s clear is that a bunch of financial institutions have made mistakes and lost money. What’s unclear is why anyone (other than the owners and managers) should care. People make mistakes and lose money all the time. Restaurants fail, grocery stores fail, gas stations fail. People pick the wrong stocks, they buy the wrong cars, and they marry the wrong spouses without turning to the Treasury for bailouts.

Fannie Mae Eases Credit To Aid Mortgage Lending – New York Times:

Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
[…]
Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.

hat tip Cafe Hayek

Capitalists, Capitalism, and the Siren’s Song of Stability:

The desire for stability and predictability has been the calling card of dirigisme regimes since the dawn of capitalism, whether they called themselves “socialist”, “fascist”, or just plain “interventionist.” It is but a thinly disguised power grab by those who own the means of production, and who will profit at our expense, rather than profiting by serving us better. “Stability” is a siren song that we must do our best to ignore, lest we enable them make an even bigger mess than they already have.