20 October, 2010

Default Folklore

If you have a nose for political economy, hold it. The murky doubt swirling around the Great Bailout is congealing into a hasty pudding of conventional wisdom--at least for the boosters of TB2F (Too Big To Fail), TARP, Inflationism, Do Somethingism, and etc. And, as long as nobody on the other side of that strategic, shrapnel-filled, yet strangely silent bluff bothers to lay out a rigorous, up-to-date refutation, those Liquidity Trappist Monks can scrawl the official history of the Great Obsession of '08 unhindered for the unwashed.

The apparent shortage of focused 2010 exposés by free market scholars on the multifarious costs and suspect benefits of TARP has been nagging at me for weeks--ever since the TARPorrists began crowing over reports that the shape-shifting program is going to end up costing little more than a used biography of John Kenneth Galbraith. But, more on this later.

A colleague of mine recently asserted that, at the height of the Paternalistic Panic of '08 (the Patroniziclysm?), while some experts may have opposed TARP, even they agreed we would go over a cliff without it. I decided to do some digging on that one. Here are some arguments made at the time. You may judge whether my TARP-defending friend is correct:
  • At 5:50 here Peter Schiff says what he thinks "no bailout" would mean.
  • Here's Cato's Dan Mitchell defending us from Stephen Moore.
  • And here's a nearly admirable piece by Geoff Colvin.
  • Finally, there was this piece by Steve Chapman in the reason. Excerpts:
George Kaufman, a finance professor at Loyola University Chicago, is skeptical... He notes that aside from inter-bank lending, the credit markets were functioning tolerably well at the height of the crisis. Rates on 30-year mortgages actually dropped last week.
    ...A group of 122 economists, including at least two Nobel laureates, signed a letter this week summarizing the danger: "If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted."
      (Here's that letter.)

      (TARP wasn't even used for what it was sold as. So, it's not surprising if its consequences don't match predictions.)

      With so many weaknesses in the rationale for gigantic governmental rescues of private enterprise, one might anticipate that true defenders of free economies (not mere upside allies) would produce a glut of full-throated criticism of what TARP began and ended as. But, and I hope this is due to my own shabby job of searching, I have so far found few articles that qualify.  If you know of any, please post a link in the comments [if comments are disabled, send me a Tweet].

      12/20/10 UPDATE: Forgot something.  See my own 9/29/08 post here.  It quoted this very interesting 9/26/08 WaPo article, which begins:
      Banks throughout the United States carried on with the business of making loans yesterday even as federal officials warned again that their industry is on the verge of collapse, suggesting that the overheated language on Capitol Hill may not reflect the reality on many Main Streets.

      The industry is resilient despite the struggles of some members. Washington Mutual, a troubled Seattle savings and loan that was among the nation's largest mortgage lenders, yesterday was seized by the government and sold to J.P. Morgan Chase.

      At the same time, many smaller banks said they were actually benefiting from the problems on Wall Street. Deposits are flowing in as customers flee riskier investments, and well-qualified borrowers are lining up for loans.

      16 October, 2010

      Feds Threaten Californians

      The San Francisco Chronicle reports:
      The Obama administration has denounced Proposition 19, which would legalize personal use of marijuana in California, and promises to 'vigorously enforce' the federal ban on possessing, growing or selling the drug if voters approve the ballot measure Nov. 2.

      10 October, 2010

      "Virtually Unregulated" Watch

      A new feature here at Vox Politico...

      The origin is straightforward: the past few years (at least) I have noticed that the phrase "virtually unregulated" has become a standard rhetorical alarm, often triggered while calling for--of course--new regulations on whatever realm of activity the speaker has targeted.

      Research for this feature is also straightforward, but it's not because I'm lazy (not that I'm not lazy). No, the idea is to take an ether sample by which to assay the ambitions of bureaucrats, legislators, would-be politicians and, especially, cheerleaders for ever more government regulation.

      Thus, the method for VUW will be to examine the top Google News results for the phrase "virtually unregulated"and report here the breakdown of topics and any other aspects that stand out. (Using Google News because plain vanilla Google results included some rather dated articles.) So, here we go.

      "Virtually Unregulated" search at Google
      October 15, 2010 results:
      1. casualisation (I'd never heard of it either)
      2. fishing and hunting...100+ years ago
      3. communications (This one seems to use the key phrase in a non-fear-mongering way.)
      4. tax sales (Another strange one.)
      5. "rise of poker machines"
      6. independent caregivers (in Mesa County, CO)
      7. the service sector -- "Across the country, the service sector employs millions at shopping corridors, stadiums and tourist zones, locations that go virtually unregulated by labor laws or include special exemptions like the restaurant industry tip credit." [more]
      8. immigration...in Sweden

      It's an odd collection, yet one can glean from even this quick view of the data an interest in controlling how people earn a living, where they live and how they entertain themselves. No big surprises there, but we shall see what future samples of the Net add to this.