Sunday morning rant

From Calculated Risk

Libertarianism vs formalism

From Mr Moldbug

Bear Stearns and shareholder rights

I've already picked on this post from Ms McArdle – but I have something more to say.  She says:

 

There will still be some sort of moral hazard, I think (though the mysterious knzn does have a point), in that bankers will not be as cautious about systemic risk as they should be. Alas, we live in an imperfect world, and the price of preventing catastrophes is that you will have more of them to prevent. Ultimately, that's a price I'm willing to pay. And I think you should be too. The people screaming that we ought to let the banks fail don't seem to realize that they, too, can be thrown out of work in the resulting hideous recession.

 

As I said below, we'll never really know if the government is saving us from catastrophe, because the government will always intervene; therefore, talk of catastrophe will always be speculative.  So, the cost of not intervening is an unknown.

 

But, my point here is that even the first-order costs may be higher than we expect, i.e. they may be more than the $29 billion guarantee from taxpayers via the Fed.  The government can now intervene and essentially dictate the price of a company if "times are bad" (I assume regulators will always view times as "bad" now).  What does this mean for shareholders of the dealers?  Have their ownership rights been eroded significantly because of this?  If so, will shares prices fall some specific amount to reflect this marginal loss of ownership?

 

[I have other objections, should we be comfortable with the way these decisions are made – a few economic experts making them on Sunday evening (perhaps in a smoke-filled room)?  Does Congress or the Executive Branch really have any ability to check the Federal Reserve's behavior in this area (my limited experience in working with the Fed on Capitol Hill is that Fed does whatever it wants)?  What consequences will the upcoming war between the Fed and the SEC over who regulates the big dealers have?]

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League of democracies

I once thought this was a good idea.  I'm not so sure anymore.  My guess is that in 5 years it would devolve into being exactly like the UN.  I guess it would 5 years of being slightly better though.

The call for a menaissance

I'm in.  Some scary stats:

 

52% said they had to live according to women’s rules

58% said they would prefer to be the main breadwinner, with 34% preferring their wife to be a full-time mother/homemaker, and 24% preferring their wife to work part-time.

only 33% felt they could speak freely what they thought

67% felt it safer to conceal their opinion

more than half thought society was turning them into “waxed and coifed metrosexuals”

 

Here's the Telegraph piece.

 

As far as recommended reading, here's a list off the top of my head: Manliness, The Old Man and the Sea, Tom Jones, Tom Sawyer and Taking Sex Differences Seriously.  I can't resist throwing in the best biography of Churchill that I've read.

Jury nullification

From Mr Balko

Wither capitalism

Every time I see a statement like this, I cringe: “The past 10 days will be remembered as the time the U.S. government discarded a half-century of rules to save American financial capitalism from collapse.”

Capitalism’s supporters, the few that there really are, have never successfully given it a definition. Ayn Rand tried, but it never seemed to take. Marx gave it a definition, but it was wrong and is now hopelessly obsolete.

What happened here is that many factors, but mostly government-caused factors, contributed to a housing bubble (here’s a good explanation that’s easy to follow). I assign most of the blame to banking regulations and the Federal Reserve’s monetary policy. Both of these violate capitalism and give us a mixed-economy (a mix between capitalism and socialism). Then the government intervenes to clean up it’s own mess and this is touted as saving capitalism. It could easily be touted as bailing out socialism.

Also, we don’t know what would happen if the government got out of the way and let capitalism work. Perhaps the market for MBS would pick up if investors were confident that the government wasn’t about to intervene and change the payout structure of the asset that they are about to buy. Maybe it would be ugly for a while, but return to normalcy quickly. We won’t know, because government will never try. Instead we’ll have all sorts of economists sound off about how terrible it will be. Unfortunately, I believe the best way to find out how things would work is to try them. Massive government intervention in the economy in the ’30s seems to have extended the Great Depression. Now we’re to believe that economists know better and intervention will work this time, b/c doing nothing (i.e. allowing capitalism to work) would fail (we know this, b/c some smart people have thought about it a lot). Color me skeptical.

Gravel on FDR

Heh

Free Photoshop

Cool

Who said limited government was impossible?

Check out self-limitation in action.