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When the financial crisis story first broke in mid-September, 2008, We suggested a few commentaries that seemed to be particularly helpful in understanding the financial crisis.  As the situation was changing, we looked to commentators who were able to step back and give us some insights about what is going on in the market as well as what the appropriate government action should be.   Since then, it has become apparent that the crisis is likely to unfold over a period of months and that the ramifications of it are likely to touch on the very underpinnings of the American economy, a subject which is at the very core of our mission. We'll continue to highlight excellent commentary and provide our own thoughts through our weekly update emails.(to subscribe click here)

October 23, 2008

 

  • The National Taxpayers Union, The Heritage Foundation, Citizens against Government Waste and the Competative Enterprise Institute have partnered to create a blog on financial reform called BeyondBailouts.org
  • Claire Berlinski. What the Free Market Needs. LA Times.  Argues that without strong intermediary institutions, like property rights, the free market can't work.
  • William Voegeli. Reforming Big Government.  The Claremont Review of Books. Points out that until now there has been a stalemate between those espousing ideals of limited government and those who want more government solutions to social and economic problems.  If the forces of bigger goverment have won this political round, they still haven't come up with a solution on how to pay for it.

 

October 16, 2008

 

The Political Economy of the Bailout
http://econlog.econlib.org/archives/2008/10/the_political_e_1.html

Arnold Kling has been one of the strongest and smartest voices among economists who have opposed the financial system bailout. In this piece Kling argues that one of the flaws of the current bailout plans is that power is consolidated in the hands of the Treasury Secretary. One of the virtues of well-functioning markets is that both knowledge and power are dispersed within the system. One of the reasons that the financial system was brought to the brink of collapse was that power was already too concentrated in the hands of a few CEOs and institutions in the economy. The bailout plans make that problem even more acute.

Everybody Else Did It
http://online.wsj.com/article/SB122411797796038903.html

This Wall Street Journal editorial argues that the Senate hearing held Thursday to look into the origins of the financial crisis are intended not to pinpoint the causes of the crisis, but to divert blame from where it rightly belongs: on Senator Christopher Dodd and other Democrats who fought Republican attempts to reign in the excesses of Fannie Mae and Freddie Mac. 'In February 2004, while Republican colleagues warned of the systemic risks posed by Fannie Mae and Freddie Mac, Mr. Dodd pronounced the mortgage market "one of the great success stories of all time."' Today the Democrats are pointing fingers at Bush's economic policies for the meltdown, but a fair examination of the record shows that Bush and the Republicans tried mightily to avert the mortgage mess and it was the Democrats who stood in the way.

Don't Blame Capitalism
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/15/AR2008101503166.html

 

Peter Schiff argues that blaming unbridled greed and insufficient regulation for the market mess completely misses the most important factor: government created the conditions which encouraged the housing and financial bubble to inflate. Worse, Schiff argues, the steps that the government is taking today will likely inflate yet another bubble and lead to more consolidation of economic power in the hands of the government.

The Bankrupting of Henry Paulson
http://www.realclearmarkets.com/articles/2008/10/the_bankrupting_of_henry_pauls.html


John Tamny argues that the heirs of Ronald Reagan's legacy, George Bush and Henry Paulson, are betraying the basic principles that animated the Republican Party since 1980. By pursuing ever more government interference in the marketplace Bush and Paulson are pushing a plan that both will not work and that will undermine the smaller government/free market philosophy of the Republican Party. "In a blast to the past, one that will bring us less economic vibrancy alongside rising unemployment, the very GOP operatives who would publicly refer to Thatcher and Ronald Reagan as the 20th century's greatest leaders are seeking to undo all that they accomplished. So this is why we elect Republicans?"

Senator Government
http://online.wsj.com/article/SB122412908424239827.html


The Wall Street Journal argues that neither Senator Obama nor Senator McCain spoke very convincingly about how to address our economic woes in last night's debate, but that at least McCain understands that taxing wealth and job creation is bad economics. Obama's plan to tax wealth and job creation is exactly the wrong strategy for spurring growth.

 

MNFMI

King Banaian. SCSU Scholars.

 

October 10, 2009

 

  • Blaming Derregulation. Sebastian Mallaby. Washington Post. Author argues that failure to address China's emergence both as an exporter of cheap goods and their capital surplus (which deposited a surge of Chinese savings in asset markets around the world) caused the bubble in housing prices and eventually the crisis.

 

http://www.washingtonpost.com/wp-dyn/content/article/2008/10/05/AR2008100501253.html

 

 

October 9, 2009

MNFMI

 

Craig Westover

David Strom

King Banaian SCSU Scholars

 

 

Other Commentary

  • There's No Easy Way Out of the Bubble Vernon L. Smith. Wall Street Journal

http://online.wsj.com/article/SB122351051370717359.html

  • It's Time for Banks To Put Their Chips On the Table Manuel Hinds. Wall Street Journal

http://online.wsj.com/article/SB122351071819917433.html

  • Blame Accounting Alchemy for Market Evaporation. Amity Shlaes Bloomberg.

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_shlaes&sid=apo.oUsjjkjM

  • We're Not Headed for a Depression. Gary S. Becker. Wall Street Journal

http://online.wsj.com/article/SB122333679431409639.html#printMode

  • How to Recapitalize the Financial System. Greg Mankiw

http://gregmankiw.blogspot.com/2008/10/how-to-recapitalize-financial-system.html

Myth Busters. Alvaro Vargas Llosa. The New Republic.

http://www.tnr.com/politics/story.html?id=3cd3f908-4ddd-4397-9ad8-f4ec057e4212

  • Good Policies Can Save the Economy Lee Ohanian. Wall Street Journal

http://online.wsj.com/article/SB122342618776613613.html

  • The Bailout and the Vanishing Taxpayer. Steven Malanga. Real Clear Markets

http://www.realclearmarkets.com/articles/2008/10/the_bailout_and_the_vanishing.html

 

 

October 2, 2008

 

MNFMI

David Strom

 

King Banaian SCSU Scholars

 

Other Commentary

 

Edmund S. Phelps. We Need to Recapitalize Banks. Wall Street Journal (subscription may be required) The author (who is the winner of the 2006 Nobel Prize in economics and directs the Center on Capitalism and Society at Columbia University) argues that whatever the causes and whoever is to blame, the only way forward is to improve corporate governance and in the short term, infuse cash in exchange for warrants.
 
R. D. Congleton. Notes on the Fiscal Crisis and Bail Out, Moderate Skepticism.


Thomas Cooley Home Truths. Forbes. What to do with the 20 Million Americans who are "upside down on their mortgages" with the decline in housing prices and have no incentive NOT to default? One answer: A "shared appreciation loan."

Michael Flynn. The Roots of the Crisis. How did Wall Street Get into this Mess? Reason Magazine. Goes over the history of the crisis.  

Holman W. Jenkins Jr. Mark to Mayhem? Wall Street Journal. (Subscription may be required.) Suspending Mark to Market rules alone might spare us a massive bailout.

 

 

 

October 1, 2008

The Financial Crisis: A Timeline. Foxnews Business

The Republican Study Committte Alternative Rescue Plan (9/29)

 

 

 

Sept. 28, 2008

 

Draft Verstion of the Bailout Bill. (Speaker's version of the Bill) 4:41 PM CST 9/28/08

Tapscott Copydesk Blog, DC Examiner. Side by side Comparision of Frank-Dodd Bill, Final Version Bailout Bill.

Rep. Mike Pence. Why I oppose the bailout. Human Events

 

Sept. 27, 2008

MNFMI

Craig Westover

King Banaian

 

Other Think Tanks and Commentary

 

  • Bruce Bartlett. Why the Bailout? (9/27) "This is not to say that the administration's plan is the best we could do. But now is not the time to come up with something better. There is no time. The program can be revised later, when the emergency is past. For now, everyone should hold their noses and vote "yes" on the bailout."

 

Sept. 25, 2008

MNFMI

David Strom. What a Mess (9/24)

Craig Westover.  The Elephant in the Room:  “We don't need better policy for management and oversight of the financial markets. We do need policy that better facilitates dispersing economic knowledge to those making economic decisions.”

http://www.americanexperiment.org/publications/2008/20080923westover.php

King Banaian.  King is cautiously in favor of the Paulson-Bernake Plan.  

When markets were left to clean their own messes (9/24/08)

http://www.scsuscholars.com/2008/09/when-markets-were-left-to-clean-their.html

What makes a bailout good? (9/19)

http://www.scsuscholars.com/2008/09/what-makes-bailout-good.html

The day investment banking died (9/22)

http://www.scsuscholars.com/2008/09/day-investment-banking-died.html

More thoughts on the Paulson, McCain and Obama plans (9/23/08)

http://www.scsuscholars.com/2008/09/more-thoughts-on-paulson-mccain-and.html

 

Other Think Tanks and Commentary

 

 

Sept. 18, 2008

  •  http://www.ibdeditorials.com/IBDArticles.aspx?id=306370789279709
  • Investors Business Daily pointed out in an editorial this week that the seeds of the current crisis were sown at least as early as the Clinton Administration and perhaps earlier.  All from policies that were intended to socially engineer particular outcomes out of the financial markets that were politically popular in the short term but not economically sustainable in the medium to long term. 
  • “Ticking Time Bomb goes off: Public Shocked.” Robert Higgs compares the Fannie Mae/Freddie Mac crisis to the vast entitlement crises down the road.http://www.independent.org/blog/?author=5
  • Amity Shlaes argues in her Bloomberg column that there are 3 ways out of this new crisis: (1) No more bailouts (2) better information and (3) better rules.

http://www.bloomberg.com/apps/news?pid=20601039&sid=aVYZYAiyc0Gw&refer=columnist_shlaes