AIG spells nationalization of entire insurance industry

With billions of government handouts, AIG is able to offer peerless premiums. In a free market, offering such low premiums would be corporate suicide. But AIG is not a free market participant. It has government backing. Bernanke and Treasury Secretary Timothy Geithner have, on numerous occasions, voiced their intent to do whatever is necessary to keep AIG from folding. In this context, risks that would normally bankrupt the company do not restrict its behavior, because its liquidity flows from a seemingly bottomless barrel, the purse of the citizenry. Losses from these risks will continue to be subsidized, and those subsidies will encourage more risks, and bring on more losses.

Henry Hazlitt and I on the Auto Bailout

“Dying industries absorb labor and capital that should be released for the growing industries.  It is only the much vilified price system that solves the enormously complicated problem of deciding precisely how much of tens of thousands of different commodities and services should be produced in relation to each other.  These otherwise bewildering equations are [...]

No liquidity problems for Lawson campaign

While every other entity in America is crying about its inability to access cash, BJ Lawson’s Congressional campaign just received a huge injection of liquidity.  Lawson, who is running for a U.S. House seat in North Carolina’s 4th district, raised over $150,000 from thousands of donors on Tuesday alone. Many citizens across the nation feel [...]

Open bailout opposition letter to Congress

“That government is best which governs the least, because its people discipline themselves.” – Thomas Jefferson There is a lot of hype in Washington this week, a lot of short-term thinking, but very little honest reflection and philosophically sound governance based on the long term prospects of the American economy.  Jefferson was right: our financial [...]

Want some bad debt? Bailing on America.

“I do solemnly swear that I will faithfully execute the Office of President of the United States, and will, to the best of my ability, preserve, protect, and defend the Constitution of the United States.” – Presidential Oath of Office in its entirety “Stop throwing the Constitution in my face!  It’s just a goddamn piece [...]

Letter to the regulatory proponent

“Despite the long term damage to the economy inflicted by the government’s interference in the housing market, the government’s policies of diverting capital to other uses creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their [...]

Stealth bailouts and the Washington Mafia

You’ve been hearing about the Bush/Paulson plan for “streamlining” or “revamping” the “outdated” regulatory system.  Let me take the spin off of this story for you:  The plan is to allow the Fed to do whatever the hell it wants to, injecting taxpayer money into whatever irresponsible bank needs it for the time being.  After the liquidity [...]

Fed takes several desperate actions, signals economic doom

Bankers working on a Sunday?  If that’s not a sign of the apocalypse, I don’t know what would be.  Ben Bernanke and his secretive Federal Reserve met in a marble palace Sunday to discuss the liquidity of America’s banks.  Here is what they allow the commoners to know. The Federal Reserve announced Sunday that it [...]

Federal Homeowner Preservation Corporation: a blank check from taxpayers

Bank of America announced it will acquire Countrywide, universally thought to be a toxic mortgage corporation, for $4.1 billion on January 11, 2008. This action gave Bank of America about 20% of U.S. market share in the mortgage loan industry. On February 23, the New York Times blew the whistle on a confidential proposal being [...]