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.

A letter concerning economic reality

As a response to this bloomberg.com article, which declares and celebrates the end of laissez-faire economic influence, I shared with my mother (who forwarded the article to me) thoughts so relevant to the economic discussion in America today, they are worth repeating here:
This article, besides unpardonably confounding economic liberty with imperial oppression and brutal dictatorhip, [...]

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 of [...]

Thomas Jefferson on “implied powers” of the Congress

Thomas Jefferson gave his opinion on the Constitutionality of a national bank on February 15, 1791. In that testament, he not only provided a brilliant legal argument against the institution of a national bank; he also explained the intent of the Constitution’s two most controversial phrases. Today’s political analysts exchange differing opinions on [...]

So many reasons to love Thomas Paine

Thomas Paine was, by some accounts, the most well-read Englishman ever to live. If you are reading this, regardless of who you are, or how many Nobel prizes you have won, you can rest assured that Paine’s education was more complete than your own. When you read his commentaries on money and the [...]

Government submits to God, who wants to leave us alone

This story is, of course, fictional.  If you see this headline in the newspaper tomorrow morning, you will need to pinch yourself–and if that does not wake you–realize that you have in fact died and gone to heaven.  As I imagine it, there are no tax collectors in heaven.  Upon entry into heaven, I could pick up the [...]

Wealth, Economics and Foreign Policy

A real financial tip: Don’t buy anything you can’t afford, and hold onto whatever property you have through this depression. This is not a sale on financial stocks, nor is it a time to be jumping into shallow pools of capital. This is the beginning of something unprecedented and horrible for this country, and the media [...]

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 pressures [...]

The birth of a new Republican party

Throughout the primary season, Republican activists have been turning out in droves to denounce the mistakes their own party has made under the reign of President Bush.  The Republicans who elected Bush in 2000 supported a platform of non-interventionism, lower taxes, less spending, more individual freedom, and smaller government.  Bush delivered almost exactly the opposite. 
Republican [...]