Tuesday, October 28, 2008

Where Have All the Libertarians Gone?

Ryan Sagar discusses Karl Rove's (unintentional, I assume) purging of the libertarians from the Rove-designed Republican Party:

That coalition between social conservatives and economic libertarians (who tend to be socially moderate to liberal), served the GOP well from 1964 to 2006. It gave the party eight years of Ronald Reagan and 12 years of a Republican Congress. But the Bush years have proven to be one long pulling apart. And, in a matter of days, we may just see the final snap.

Whole thing here. I firmly believe that Bush will be remembered as the Jimmy Carter of the Republican Party - i.e., the man who took the reins of power when his (purported) governing philosophy was, more or less, conventional wisdom across the country and proceeded to smash the living sh*t out of it, yielding a decade or more of reactionary retrenchment by a majority of country. I hate being right.

Polling the Wonks

The American Conservative asks 18 contributors who, if anyone, they plan to vote for this year:

Scott McConnell makes the case for Obama.

Kara Hopkins makes the case for McCain.

John Schwenkler makes the case for Barr.

Gerald Russello makes the case for staying home.

Daniel McCarthy calls for writing in Ron Paul.

Wednesday, October 22, 2008

Why The Republicans Must Lose

Balko channels his inner-Bokononist here:

Which brings me back to why the Republicans need to get throttled: A humiliated, decimated GOP that rejuvenates and rebuilds around the principles of limited government, free markets, and rugged individualism is really the only chance for voters to possibly get a real choice in federal elections down the road.

Precisely what I've been saying since about, uh, 2005.

Tuesday, October 21, 2008


Anna Schwartz is smart.

Thursday, October 09, 2008

Is the Bailout a Bust?

It is probably too early to say for sure, but the Stock Market continues to fall, unemployment continues to rise, and almost everyone I know is still more freaked than not. Here is Steve Chapman's take:

Harvard economist Jeffrey Miron suspects the latter. "The bailout approach will generate uncertainty about what's going to happen," he told me. "It's quite plausible that it has not calmed markets because no one knows what it means."

Instead of stimulating productive activity by removing doubt, it has impeded it by multiplying doubt. It has also encouraged lenders to hold off dealing with their bad debt in hopes of getting a better deal from the Treasury than they can dream of getting from anyone else. But postponing the banks' rendezvous with reality will not speed recovery.

The sheer size and unprecedented nature of the intervention generates a different kind of uncertainty—about how extensively the federal government will immerse itself in the economy from now on. The spectacle of Washington nationalizing private assets is bound to dishearten millions of investors who think that generally, the most helpful economic role for government is staying out of the way.

The rescue surrenders an important principle: that private sector mistakes should be borne by the people who make them. If the bailout means we may all get the bill anytime a company implodes, it will undermine the critical incentives of the market. In the long run, that will not strengthen the economy but weaken it.

I'll buy it.

Wednesday, October 08, 2008

Greatest Athlete Ever?

I think it's clear. His run is wholly unparalleled in the individual sports world. Tiger Woods has won seven PGA money titles. Lance Armstrong stopped at seven Tour de France titles. Dale Earnhardt earned seven NASCAR Winston Cup Championships. Kelly, an old-man in the sport at the age of 36, now has nine titles and is shooting for ten. Unbelievable. And not bad for a dude from the east coast of Florida. Woot.

I Think I'm Out

viva la rEVOLution!

60 Mins on the Crisis

My Securities Reg Professor, Frank Partnoy, was on 60 Minutes this past Sunday discussing the financial crisis. Professor Partnoy used to be derivitives broker and is a smart, smart dude. He blames Wall Street almost entirely for this mess. Meh. Video link here.
On the upside, Tom Smith shares this anecdote:

I don't know if Frank still thinks this, but a few days ago I asked him on a scale of 1 to 10, where 1 is total nonchalance and 10 is gibbering terror, where he would put himself in this crisis. We each wrote down a number on a slip of paper so they would be independent. I wrote a 6 and Frank wrote a 3. So he seemed not that worried. I specialize in worry, so I'm not a very good measure.

Balko's Debate Review

The most depressing part of the night for me was watching CNN’s real-time reaction from undecided Ohio voters. When Obama promised health care for everyone, promised that you could also keep your employer-sponsored health-care, promised to do all of this and bring health care costs down (he really must be Jesus), and capped it all off with a pledge to maintain the current system of employer-sponsored health care, his ratings were off the charts. The Ohio group gave McCain his strongest marks when he promised to buy up all the troubled mortgages. Is there any way to pull off this "democracy" thing without using actual voters?

Note to McCain: Don’t crack jokes in a format where you’ll be the only one laughing at them. It’s creepy.

Note to Obama: It’s great soundbite to say everyone has a "right" to health care. But there is no "right" that can only be recognized by forcing someone else to give up time, labor, and resources.

The choices last night on the economy: Mass government intervention pretending to be tangentially related to the free market versus mass government intervention that makes no illusions about any allegiance to the free market.

The choices last night on foreign policy: Four years of lots more small wars versus four years of a couple more big wars.

It's Going to Be a Long Winter

And by winter, I might mean decade. I have an ever-growing ill feeling in my gut that the historical significance of the current crisis will not be credit crunch, the metamophasis of Wall Street, or even the Bailout-package; but, rather, it will be the era in which the United States dumped the free market once and for all in favor a failed idea of central control. Matt Welch seems to share my thoughts:

It is a whiplash-inducing thing, having lived through the Central Europeans' response to their much-graver "economic crises" of the early 1990s—basically, getting the government out of the ownership business, and letting the sold-off chunks fail if need be—and then coming back here to see both major political parties and the establishmentarian media get a national case of the vapors when a decade-long credit binge finally dries out a bit, and unemployment ticks up to a once-enviable 6.1 percent.

And the reason:

In the meantime, we are also witnessing the full flower of what happens when a Republican who has never really worked in the private sector, who emulates the Wall Street-bashing of Teddy Roosevelt, and who has been explicitly railing against the "libertarian" wing of his own party for more than a decade, finally sees his lifelong prize dangled tantalizingly within his grasp. If you thought his economic policies were bad back before he ever had a real shot at the White House, is it really any surprise that in a time of high financial anxiety he's running to the economic left of Bill Clinton?

With friends like these...

Tuesday, October 07, 2008

Best Two Lines I've Read All Night.

By Jesse Walker:
So John McCain's plan to fix Social Security is to be more bipartisan, and his plan to fix Medicare is to create a commission. Glad we cleared that up.

What Would the Austrians Do?

From Cananda's Financial Post:

Austrian economists hold that downturns are the inevitable aftermath of loose monetary policy, thus opposing explanations typically heard prior to the current crisis that attributed recessions to price shocks, underconsumption or central bank tightening of monetary policy.

But if, to rephrase a well-known Nixon quote, we are all Austrians now, it illogically only extends to the diagnosis of the crisis and not to the school's market-based cure. For it is just not consistent to simultaneously assign blame to Greenspan's easy money and then support government intervention to fix the damage, as so many of the business op-ed writers and talking heads on CNBC have.

As the Austrian tradition points out, the dilemma with easy money is that the central bank sets rates below that which the market would naturally set. The natural rate reflects people's willingness to trade present for future satisfactions. When the actual rate is established under this, entrepreneurs and firms are issued a false signal that people are willing to defer more consumption into the future than they really are. As a result, excess investments in capital goods industries, such as housing, are made on the expectation that these will pay off in the long-run. The boom ends when monetary conditions are tightened back to natural levels or the passage of time makes clear that the demand was never really there to sustain the investments made. At this point, a crisis takes place in which capital investments get liquidated and resources are shifted such that the economy's productive capacity more appropriately reflects people's time preferences.


Most commentators resist following the Austrian logic through to the end out of the fear of repeating the policy mistakes that led to the Great Depression. This reflects the orthodox interpretation of that period, according to which the economy fell apart in the early 1930s while U. S. president Herbert Hoover took a laissez-faire approach to the downturn and the Fed ran an overly tight monetary policy.

The truth is that the Fed at the time did try to add liquidity, lowering its rediscount rate until late 1931 and continuously increasing reserves under its control. Money supply nevertheless fell, but that was because people lost faith in the financial system and hoarded currency. Meanwhile, Hoover met the downturn with interventionist gusto. He passed the Smoot-Hawley tariff to help domestic industries and obtained the co-operation of business leaders to support wages and investment. We haven't gone down this protectionist and corporatist road yet but Hoover's attacks on short selling and his creation of the Reconstruction Finance Corporation, which among other things loaned money to banks, bear an eerie resemblance to the current policy response.

"We might have done nothing",Hoover said, "[but] we determined that we would not follow the advice of the bitter-end liquidationists." Thus has the Bush administration decided as well, having successfully cajoled a recalcitrant Congress to follow Hoover's example.

Sounds right to me. And then there's this:

[T]he Paulson scheme will also turn into a price support regime for housing.

Yep. In giving the feds a blank check to purchase bad mortgages at articificially inflated prices, we are only preventing the market from correcting itself, and delaying the inevitable bottom-out. Hold on.
Matt Kibble attemps to answer, "What would Mises Do?" Good read.

Thursday, October 02, 2008

A Cynic's Cynic

No one can touch Nick Gillespie:

[I]t's pretty clear that the White House, helped by a codependent Congress and media, has yet again manufactured a consensus for massive intervention. The last time they managed to pull this off, of course, the United States invaded Iraq. And that has worked out so well that they've decided to start a brand extension or spin-off series: Intervening massively into the economy. The bailout package as Bush Administration: Special Victims Unit.

Think about it and the parallels are disturbing: a high-ranking, respectable, above-the-fray cabinet member working the ropes to achieve bipartisan cooperation; a pliable Congress where appeals to patriotism always trump appeals to principle (sadly, those two things are almost always construed as oppositional); and a media that is fueling the fire (the dread MSM's role in spreading the Bush admin case for war has been pretty well-documented; in terms of the bailout, the most hysterical champions for intervention have been in the print and TV press). Time magazine's next cover story, I learned watching Morning Joe this AM on MSNBC, is actually an essay on "The New Hard Times" and compares our current day to those of The Great Depression. Ominous parallel or coincidence: In the Depression, people formed lines for free soup; today, people form lines to...buy iPhones?

Arguably what is stunning about last night's Senate vote is not that it happened but that it took so long to add enough "sweeteners" to put free-market devotees into an ideological diabetic coma. The bailout-stimulus-Christmas-in-October-bill that just passed the Senate should not be confused with thoughtful legislation. It's larded with junk designed to convince Main Street that it too will share in the welfare being doled out to Wall Street Masters of the Universe. The need for the bailout has yet to be demonstrated. The efficacy of the proposed plan has yet to be demonstrated. Here's hoping that the House of Representatives, that great holding pen for would-be senators and future criminals, keeps it spine and still votes no. At the same time, this might be a good time to declare citizenship in another country.

Wednesday, October 01, 2008

Paging Miss South Carolina


Roots of the Crisis

By Mike Flynn. Great read.

Ah... What's $700 Billion

...on top of $99.2 Trillion?!? According to the President of the Dallas Federal Reserve, that's the amount of unfunded liabilities associated with Social Security and MediCare. It's laughable. And frightening. Want it in numbers you can (almost) digest:

Let’s say you and I... and every U.S. citizen who is alive today decided to fully address this unfunded liability through lump-sum payments from our own pocketbooks, so that all of us and all future generations could be secure in the knowledge that we and they would receive promised benefits in perpetuity. How much would we have to pay if we split the tab? Again, the math is painful. With a total population of 304 million, from infants to the elderly, the per-person payment to the federal treasury would come to $330,000. This comes to $1.3 million per family of four—over 25 times the average household’s income.

Heh. We're toast.