Obama’s Dubious Purchase of the Free Market

When people respond to the claim that Obama is not friendly to “business” they normally start with something like… ‘How can you say that? He (Obama) bailed out the banks, the auto makers and the insurance companies!’ If you claim he is anti-small business, they will point to one of the dozens of tax credits…

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A Government-Made Recession

By mid 2008 almost everybody knew that we were in deep financial trouble. But the forces that brought it about actually began decades ago with The Community Reinvestment Act in 1977. This legislation “forced lending institutions to grant mortgages to people whose income, credit histories, and net worth would previously have disqualified them from getting such loans.”

An old adage suggests that in getting a loan from a bank the recipient must first prove that he does not need one by listing his assets. The bank uses this list to retrieve all or a portion of what is owed should the recipient default on the loan. The less invested or potentially lost the easier it is for the recipient to walk or default. Such is long standing wisdom and favors the more industrious individuals, as it should. What this means in real life is that high crime or impoverished areas of town do not attract investors as readily.

Socialists (share the wealth advocates) saw a race connection, thus injustice, when it was realized that “only 72 percent of minority applicants were approved for mortgages, versus 89 percent of white applicants.” Moral outrage followed which was resolved by legislation ”forcing lending institutions to loan money to people they would otherwise not lend to and in places where they would otherwise not put their money” (“Government Bailout,” The New American, Sept. 29, 2008, pp.11-15).

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When Cars Run on Corn

Here’s Matt Purple in “Corny Capitalism,” posted on American Spectator at the end of August:

Earlier this year, the Environmental Protection Agency issued another one of those announcements read exclusively by government bureaucrats and green policy wonks. The EPA decided to delay a decision to increase the concentration of ethanol legal in gasoline from 10% to 15%. So-called E15 fuel would have to wait for approval until November.

It was a little-read regulatory decision that barely made a splash in the media. But it was also a rock thrown at Washington’s hornets’ nest of food and agricultural lobbyists. “We are disappointed,” warned food giant Archer Daniels Midland. “We find this further delay unacceptable” and a “dereliction of duty,” harrumphed ethanol lobbying group Growth Energy.

…The history of ethanol is a sad torrid affair of crony capitalism and green fantasies. By jumping in bed with the agriculture industry and blindly slapping on new regulations, the government artificially propped up an industry and put itself in a bind from which there may be no return.

Most certainly, the EPA decision is only a delay, not a reprieve.

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Obama’s Dubious Purchase of the Free Market

When people respond to the claim that Obama is not friendly to “business” they normally start with something like… ‘How can you say that? He (Obama) bailed out the banks, the auto makers and the insurance companies!’  If you claim he is anti-small business, they will point to one of the dozens of tax credits…

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“Small Is Beautiful” Guy Hearts Fed

Here’s a reply I just wrote to an email asking me where a certain person got the idea that the economy was in recession 40% of the time in the nineteenth century.  I am calling the person X, because he’s about the most uncharitable (and uncomprehending) antagonist I’ve ever faced — yes, even a genial guy like me has antagonists — and I’m all done dealing with him.

“I’d tell you where he gets it from, but my answer would be too crude.  X is a real estate agent who knows as much about nineteenth-century economic history as any other real estate agent.  (I am not saying real estate agents are ignorant, you understand, but that they tend not to be experts in this highly specialized area.) Yes, there were recessions, but contemporaries correctly blamed them on excessive issue of bank credit, often pushed by federally chartered national banks.  Austrians oppose this kind of activity in the first place, so X proves nothing by citing these panics.  Rothbard shows in his book The Panic of 1819 (Columbia University Press, 1962) that many people decided, in the wake of that panic, that the best policy was 100% reserve banking in a completely private system.  We never got that.  That system, say many Austrians, is the only one that would put a stop to the boom-bust cycle.

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States to Congress: Print More Money

Writes Ryan W. McMaken The states (and the local governments) are facing crushing deficits and declines in tax revenues. Unlike the feds, the states can’t simply monetize debt by having the Fed purchase enormous amounts of new debt. But that doesn’t mean the states can’t ask Congress to run up some new debt for them.…

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