Bailout Roundup

What Really Happened?
by Lawrence H. White | Cato Institute | December 2nd, 2008
The housing-finance boom and bust are not the results of a laissez-faire monetary and financial system. We didn’t have one...The housing boom and the aftermath of its bust arose from market distortions created by the Federal Reserve, the government backing of Fannie Mae and Freddie Mac, the Department of Housing and Urban Development, and other federal interventions.

Bailouts will lead to rough economic ride
By Ron Paul | CNN | September 23, 2008
Many Americans today are asking themselves how the economy got to be in such a bad spot. For years they thought the economy was booming, growth was up, job numbers and productivity were increasing. Yet now we find ourselves in what is shaping up to be one of the most severe economic downturns since the Great Depression...

Ron Paul: Don’t Bail Out Wall Street
By David Alliot | NewsMax | September 23, 2008
Blame government intervention for the current economic crisis, Rep. Ron Paul, R-Texas, says in an article on CNNPolitics.com. “The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay,” he writes...

"Insight" with Brian Oxman, Kathryn Milofsky [audio]
KLAA 830-AM (Los Angeles) | September 23rd, 2008
Guest: Ron Paul on the economy

Late Edition with Wolf Blitzer [video]
CNN | September 21, 2008
Guest: Ron Paul
"You don't need a 401k to be injured by the destruction of the dollar!"

U.S. Congressional Joint Economic Committe [video]
CNBC | September 24, 2008
Congressman Ron Paul lectures Bernanke on the flaws of the bailout plan and the hazard of the attempt to fix prices versus letting them correct naturally in the free market at the Congressional Hearing. Ron also questions Bernanke's authority and constitutionality of using the printing press to generate all this extra money needed for the bailout.

Fox Business News [video]
Ron Paul | 9/24/08
Paul gives his take on the bailout to rescue the collapsing global financial markets.

Ron Paul's Answer to the President
The financial meltdown the economists of the Austrian School predicted has arrived...

Mises Institute Bailout Reader
Mises.org | 9/26/2008
The events taking place in the financial market offer an illustration of the soundness of the Austrian theory of money, banking, and credit cycles, and Mises.org is your source not only for analysis of these events but also the economic theory that helps explain what is happening and what to do about it.

TIMELINE:
A Tale of Two Gaps: Achievement and Home Ownership
Tom Shuford | EducationNews.org | 10/21/2008
A lot of politicians and, now we know, a lot of Wall Street CEOs are "doing the three-monkey thing." It was their hear-no-evil, see-no-evil, and, above all, speak-no-evil attitude towards lowered lending standards — to close the white-to-minority "home ownership gap" — that caused the immense destruction of wealth of recent months.

The Rest of the Meltdown Story
by Neal Boortz | September 19, 2008
[...] Right now this crisis is being sold to the American public by the left as evidence the failure of the free market and capitalism. Not so. What we’re seeing is the inevitable result of political interference in free market economics…

What Would Ayn Rand Have Done?
By Michael Duffy | Time Magazine | Sep. 19, 2008
[...] [Ayn Rand Institute executive director Yaron] Brook doesn’t blame speculators, traders or financiers for the market’s near-collapse, but instead blames government for having over-regulated the markets in the first place. The business leaders bailed out by government this week “are victims,” he said, “and the government set it up.” Washington under-reacted to previous crisis, let Fannie Mae and Freddie Mac spin wildly out of control as quasi-government agencies while taxpayers piled up unsecured debt in their names. The crisis, he added, was “really fed throughout by government policies.”…

Corporatism, Not Capitalism
Radley Balko | Reason Magazine | September 24, 2008
Many commentators have blamed all of this on capitalism. This isn't capitalism. It's a peculiar kind of corporatist socialism, where good risks and the resulting profits remain private, but bad risks and the resulting losses are passed on to taxpayers. There's nothing free-market about it.

Don't Blame Capitalism
By Peter Schiff | Washington Post | October 16, 2008
...Absent from such conclusions is the central role the government played in creating the crisis. Yes, many Wall Street leaders were irresponsible, and they should pay. But they were playing the distorted hand dealt them by government policies. Our leaders irrationally promoted home-buying, discouraged savings, and recklessly encouraged borrowing and lending, which together undermined our markets.

Is Capitalism on the Ropes?
by Larry Elder | September 25, 2008
[...] The Federal Reserve Bank, in effect, prints money to pay for things that voters demand -- but their taxes cannot cover. The proposed bailout of financial institutions enables the Fed to create hundreds of billions of dollars out of thin air. The cost is greater inflation -- a stealth tax on us all...

A Crisis of Global Statism
Pierre Lemieux | Mises Institute | 9/25/2008
The current financial turmoil is a "crisis of capitalism," said a spokesman for Britain's Socialist Workers Party, as good Marxists have been repeating for more than a century. "[A]n unregulated financial system is a disaster," echoed Sheila Rowbotham, professor of gender and labor history at Manchester University. Added a leftist London mayoral candidate, "Capitalism has had its chance and failed; now it's socialism's turn." I wonder what they have been smoking...

The Real Lesson of the Great Depression
Dr. Yaron Brook | Ayn Rand Institute | September 24, 2008

Ayn Rand on Today's Crisis
Alex Epstein | Ayn Rand Institute | September 23, 2008

Why Big Government Is Back, and How to Shrink It to Its Proper Size
Dr. Yaron Brook | Ayn Rand Institute | September 23, 2008

Don't Cap CEO Pay: End Bailouts
Dr. Yaron Brook | Ayn Rand Institute | September 23, 2008

Credit Crisis Makes a Case for Abolishing, Not Expanding, the Fed
Dr. Yaron Brook | Ayn Rand Institute | September 22, 2008

Stop the Bailouts
Dr. Yaron Brook | Ayn Rand Institute | September 22, 2008

** UPDATE **

You're Going To Destroy A Worldwide Economy! [video]

Bailout Fails! [video]

Bob Barr on Your World w/ Neil Cavuto [video]

Ron Paul Warns of Dark Ages [audio]

Roll On, Empire, Roll On

Price Gouging Laws

Ike disrupts gas flow in WNC
Asheville Citizen-Times | September 13, 2008 . . .

The above article states that, "[NC Gov.] Easley said consumers should not be seeing prices increase much more than 20 cents per gallon."

How does a government official know what the price of gasoline should be?

The article further states that, “’The run on gas is creating a crisis before there is a crisis,’ AAA spokeswoman Carol Gifford said."

This is exactly correct. Panic is making a temporary resource shortage worse and is causing pumps to dry up.

The price should be able to fluctuate freely to direct these resources to where they are most needed. “Price gouging” laws are exactly the wrong thing to do.

The gas stations that are running out of gasoline did not raise their prices high enough. And why? The natural economy is now against the law.

Sorry: fire trucks, ambulances, police, buses. We ran out of gas because the prices were too low. What caused prices to remain lower than they would have in a natural economy?: the government.

Gov. Mike Easley declared a state of “abnormal market disruption,” a move charging Attorney General Roy Cooper with enforcing the state’s price gouging law.

Thanks, all-knowing government for once again interfering in the marketplace and for once again getting it wrong.

Triple-A says some North Carolina stations have placed restrictions on the number of gallons people can buy, but cautions the worst thing drivers can do is flock to filling stations to top off their tanks.

True.

One important function of prices is to signal to the consuming public the available supply of a valuable product or resource. When the true picture of that availability is skewed by government intervention, the consumer cannot get an accurate picture. This causes malinvestment and false scarcity.

When panic is in the air and the government forces businesses to fake reality and keep prices low, then this is a recipe for a real disaster.

**UPDATE** from Mountain Xpress:

bobaloo wrote: “‘How does a government official know what the price of gasoline should be?’ Because that’s part of their job. You know, economics.”

Economics is not the proper job of the government. Government interference in economics is improper. Moreover, it is unconstitutional. The proper role of government is the protection of individual rights—and no more.

ashevillerock wrote: “i’d be terrified if i saw an ambulance at a bp”

I have not mentioned BP or any other commercial or noncommercial outlets for local gasoline supply. Besides, there are other non-emergency activities where critical resources should be diverted. Prices help drive those resources to their best, most important uses. A city-dweller topping off two cars and a lawnmower ain’t it.

zen wrote: “I think you’ve romanticed free market capitalism and confused the freedom of the individual with the rights of people with money to do whatever the f*ck they want because they have the power to do so.”

No, I have not confused these things. Capitalism is a social system of freedom. Freedom is supported by limited government and a rule of law. The Declaration of Independence makes this case and so do I. Any social system that is not circumscribed by a rule-of-law that protects individual rights is not free.

PatD wrote: "Unbridled capitalism leads to the ridiculous mess we are in today. "

This is not correct. It is government interventionism that has led to the "mess we're in today." The Federal Reserve is a private bank sponsored by the U.S. government. The Federal Reserve Act was signed into law in 1913 and allows this central bank to print money (look at a dollar) and control the economy. Lobbyists curry favor among elected officials. Insolvent corporations do not bail themselves out.

Rob Close wrote: "I do see how all the businesses raising their prices equally at once is in clear violation of Anti-monopoly laws. Those laws are there to keep Capitalism working smoothly"

Anti-trust laws are there to allow one business to use the coercive force of the government to eliminate competition in the free market.

ashevillerock wrote: "Did i read this right? So you don’t think that the government should be interfering in this situation but you think we need our individual rights circumscribed by laws? Are these price gouging laws not the circumscribing laws you’re speaking of? If these laws were not in place we’d be less free? Yet they’re still wrong? "

This is not what I said. The government is (and should be) instituted to protect individual rights. Price gouging laws violate a property owner's right to trade freely in a natural economy.

ashevillerock wrote: "is raising gas prices an effective and reasonable deterrent from buying gas in a time of panic (apparently there’s no shortage, just a panic)?? "

Yes. This is the free market solution to scarcity. One important function of prices is to signal to the consuming public the available supply of a valuable product or resource. When the true picture of that availability is skewed by government intervention, the consumer cannot get an accurate picture. This causes malinvestment and false scarcity. When panic is in the air and the government forces businesses to fake reality and keep prices low, then this is a recipe for a real disaster.

Cheshire wrote: "Without government intervention via laws passed, the 'true free market' would have been dominated by monopolies long ago."

Monopolies are not possible in a 'true free market.' A free market would be open to competition but protected from predation.

Only the government can establish a coercive monopoly. Government intervention, or corporations using government, use force to eliminate competition.

Molton wrote:


Molton perpetuates the fallacy of “price gouging.” I echo the comments of Thunder Pig: “There is no such thing as price gouging.” However, Molton inadvertently makes an unintended point: no consumers have to shop at his fictitious gas station selling gas at very high prices. Individual retailer’s raising prices above market opens the door for entrepreneurs to enter the market and under-sell competitors for a profit.

**UPDATE** from Scrutiny Hooligans weblog:

Clarence Young: Too bad, “gouging” was not allowed. We would have the availability of gas. The government has caused this problem by clamping down on gouging. If some gasoline dealer priced his gasoline at $8 per gallon or more, he would likely have gas. The customers would come in and buy the least amount possible–not the most they could cart away to hoard. Yours in hoped for liberty!

Gordon Smith: Right! Then the people with expendable income could drive to work, and the poor could just suck it up and deal with it. Libertarianism is fun! (if you have some money)

Clarence Young is quite right.

Gordon, everyone has expendable income — even the poor (like meeeee-eeeeee). Sometimes discretionary funds can be found in cash or debt, sometimes in physical assets, or just in time and effort. Even charitable efforts can help the poor surmount difficulties.

The important aspect is that the natural economy should be able to provide important economic information to the community to its greatest possible benefit. And this information should be honest.

The function of price should be allowed to operate freely and without government interference to give consumers an accurate picture of the supply of a value and the varieties of demand being placed on that value over time.

Instead, what we have is the government forcing business owners to falsify the true picture of gas supplies by keeping prices low. Forcing prices to be too low allows for the full range of non-essential consumption that has led directly to gas outages across the region.

Gas stations should have been able to raise prices by calculating current supplies, changes in demand, and anticipation of renewed supplies. Ideally, a station should raise prices to ensure that there is still a gallon left when the tankers arrive.

$8.00 per gallon for a few days is far better than free gas that ain’t there.

Yes, libertarianism is fun.

bobaloo says: Clarence, the market could still self-regulate by not allowing people to buy unlimited gas. Doesn’t this make as much sense?

Rationing can make sense in certain instances, such as concert ticket sales. But it is a poor substitute for the effectiveness of pricing in a free commodities market.

The key problem with rationing is that it is arbitrary: Who will use what formula to determine which consumers deserve how much gas for which uses and for how long? No one has this information. These are all functions of a free market that are circumvented by an arbitrary, coercive and ultimately unfair contrivance.

Rationing takes away the decision-making power of individuals. With freely fluctuating prices, individuals remain free to make economic decisions that best suit their conditions and abilities. Individuals are the better decision-makers in this case, not central planners.

**UPDATE** from Scrutiny Hooligans weblog:

Thunder Pig: The Press Conference yesterday was a total waste of time.

Among other things, I was especially disappointed in the comments made by Rep. Charles Thomas, who has in the past held better public policy views. He was, in a somewhat mean-spirited manner, essentially threatening honest and struggling business-people with oppressive and punitive government legislation; which type of intervention is already responsible for exacerbating a mild, short-term tightening of supply.

His focus is entirely misguided. He should pivot and take a look at the myriad interferences by governments that set in motion the domino effect of economic error.

---

RELATED

What to Do About Gasoline Prices
by Alex Epstein | ARI Media | March 27, 2007
In response to recent rises in gas prices, we are once again hearing calls for the government to "do something" to force prices lower. But no matter what the price of gasoline is, such calls are wrong. All market fluctuations in the price of gasoline, up or down, are a good thing—and none of the government's business.

How Katrina Turned Off the Oil
Platts Oilgram News | August 31, 2005
An on-the-ground look at where Gulf Coast refiners and pipeline operators stand in the aftermath. For some, it isn't pretty.

N.C. price-gouging law promotes gas lines, shortages
Dr. Roy Cordato | John Locke Foundation | September 15, 2008
Consumers can blame North Carolina's price-gouging law for the gas lines and shortages appearing in the wake of Hurricane Ike. That's the assessment of a John Locke Foundation analyst who has studied the unintended consequences of price-gouging legislation.

Do Hurricanes Cause Shortages?
Art Carden | Mises Institute | 9/15/2008
Hurricanes don't cause shortages, however. Price controls do.

How To Solve This Atlanta Gas Shortage
Neal Boortz | Sep 27, 2008 (no permalink)
So, how do you stop the panic buying? Easy. You let the market do what the market does.

Politically Contrived Gasoline Shortage
Craig S. Marxsen | The Independent Review | Spring 2008
Regulatory obstruction of investments in gasoline refineries is probably a more significant threat to the affordability of gasoline than any approaching exhaustion of oil reserves. Reestablishment of refiners’ reasonable property rights and adoption of strict liability as the major instrument for controlling carbon dioxide and refinery pollution might end what otherwise may become an ever-worsening, regulatory-induce “energy crisis.”

Gas sellers accused of gouging will repay drivers
Jordan Schrader | Asheville Citizen-Times | October 21, 2008
Gas stations in Western North Carolina will repay motorists $2,320 that Attorney General Roy Cooper says they overcharged, according to a legal settlement filed Monday.

How The Price System Works [video]
Jörg Guido Hülsmann | Mises Institute | October 07, 2008
Recorded during the 2008 Mises University, Jeffrey Tucker interviews leading Austrian Economists on the topic of Henry Hazlitt's classic book "Economics in One Lesson." (Interview 9 of 12) [27:38]

Mumpower on Drugs

With a federal (or any other) war on drugs, the government creates crime where there was none.

Crimes associated with the black-market illicit drug trade are a consequence of prohibition coercively imposed by the government on an otherwise free people.

However, the essential immorality of prohibition does not absolve violent criminals of their responsibility for their crimes, in so far as they cause injury to others. Drug lords, in the private or public sector, do in fact cause harm to others through threats, intimidation, and force and compel many to live in an atmosphere of violence and fear. Those criminals must be held to account for violating another person’s individual rights regardless of the political errors that led to their underground trade. Innocent individuals, and others, are negatively effected by the criminal culture attending prohibition.

Dr. Mumpower’s personal opinion of drug abuse notwithstanding, in his official capacity he sees the drug problem primarily as a public safety issue and has taken active steps to address this aspect of the problem.

He has also over-reached in his zeal. I have complained about that and found Dr. Mumpower open to persuasion.

As a local public official he cannot repeal prohibition, but he can promote solutions to some crime problems resulting from making certain peaceable, voluntary personal behavior illegal. This is a tough position for a public official to be in; that is, personally opposing bad laws they are nonetheless sworn to uphold.

Dr. Mumpower shares Dr. Ron Paul’s view of the federal war on drugs: both believe that this war should be ended.

Godspeed, good doctors.



RELATED

Federal Drug War Rethought
Bob Barr | Huffington Post | September 10, 2008
"As both a U.S. Attorney and Member of Congress, I defended drug prohibition. But it has become increasingly clear to me, after much study, that our current strategy has not worked and will not work. The other candidates for president prefer not to address this issue, but ignoring the failure of existing policy exhibits both a poverty of thought and an absence of political courage. The federal government must turn the decision on drug policy back to the states and the citizens themselves..."

Living Wage

Minimum wage increase gets passed on to consumers
Scott Clifton | Asheville Citizen-Times | September 10, 2008...

"The first thing that happens when a price is raised on a good or service is that consumers will not buy it as much — or at all. And the first thing that happens when the minimum wage is raised, say, to $8 an hour, is that no employer who believes an employee is not worth his “price” of $8 an hour will be employed at all. It is impossible to make someone worth a certain amount by making it illegal for anyone to offer him less."

COMMENT ON LTE:

The writer makes excellent comments and shows how this government interference in the natural economy is not wrong because it's impractical, but impractical because it's wrong.

RELATED

Minimum Wage Causes Maximum Pain
Burton W. Folsom | Jun. 1, 1998
Sixty years ago on June 25, 1938, President Franklin Roosevelt signed into law America’s first minimum wage: 25 cents an hour, rising to 40 cents an hour over the next seven years, which is equivalent to almost $5.00 in 1998 dollars. Today, many increases later, Senator Ted Kennedy of Massachusetts is pushing for yet another hike in the minimum wage. Now is a good time to reexamine the origins of this important law and its impact on the job market...

McBama

RELATED

McBama vs. America
by Craig Biddle | Objective Standard | Fall 2008
As the 2008 presidential election nears, and while John McCain and Barack Obama struggle to distinguish themselves from each other in terms of particular promises and goals, it is instructive to observe that these candidates are indistinguishable in terms of fundamentals.

When did the idea of freedom become a political orphan?
Steve Chapman | Chicago Tribune | September 7, 2008
Forty-four years after Goldwater's declaration, it's clear that collectivism, not individualism, is the reigning creed of Republicans as well as Democrats. Individuals are not valuable and precious in their own right but as a means for those in power to achieve their grand ambitions...[The idea of freedom] got lost somewhere between Thomas Jefferson and John McCain.