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Dylan Ratigan destroys the banksters. Eliot Spitzer piles on. swfobject.embedSWF(“http://www.youtube.com/v/n0XIF84AtYg&rel=0&fs=1&showsearch=0&showinfo=0″, “vvq-8476-youtube-1″, “425″, “344″, “9″, vvqexpressinstall, vvqflashvars, vvqparams, vvqattributes); Welcome the future. If you have any questions regarding how current economic and social policies will work, look at the following video. While this one focuses on Detroit, other cities could have been the setting. Perhaps none quite as dramatic, but wait a few years! swfobject.embedSWF(“http://www.youtube.com/v/1hhJ_49leBw&rel=0&fs=1&showsearch=0&showinfo=0″, “vvq-8245-youtube-1″, “425″, “344″, “9″, vvqexpressinstall, vvqflashvars, vvqparams, vvqattributes); If you believe that the housing market is improving, it might be understandable given the “pumping” provided by main-stream media, CNBC, government officials and Federal Reserve statements. However, you might want to look at government actions rather than propaganda. On Christmas eve, after the close of markets, Bloomberg reported regarding Fannie and Freddie: “The two companies, the largest sources of mortgage financing in the U.S., are currently under government conservatorship and have caps of $200 billion each on backstop capital from the Treasury. Under a new agreement announced yesterday, these limits can rise as needed to cover net worth losses through 2012.” This action is not consistent with an improving housing market. It represents the kind of panic reaction that might be taken in a market that is imploding. In the words of Julian Mann, vice president of First Pacific Advisors LLC: “They don’t want the foreclosures now, so they’re saying, we’ll pay whatever it takes to continue to kick the can down the road.” Karl Denninger in an excellent post entitled Fannie / Freddie – What Does Treasury Know? provides the following: What’s the bond market going to think about a literal $5 trillion guarantee (for three years anyway) on MBS? Might some people have known about this in advance, with that being the reason for the bleed in the long end of the bond curve this last week or so? One wonders – of course nobody would ever trade Continue reading Housing Market is Awful When a graph like the following develops, one has mixed emotions: On the one hand, there is the obvious sorrow and empathy for the less fortunate. This economic downturn is serious and probably has a lot further to run both in terms of unemployment and in terms of those requiring help. It is not improbable that the economy will be in a rut for a long time, perhaps a decade or so. Thus, continued need for assistance to the needy is highly likely. On the other hand, one knows how devastating the longer-term impacts of welfare and assistance can be. I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I traveled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer. Benjamin Franklin For a sub-set of the economy, the welfare system has become a lifestyle choice. The siren song of assistance, once accepted, easily corrupts subsequent generations. How many lives have been negatively affected, if not ruined, by the perverse incentives? How many people now accept it as a way of life? How many talented children failed to Continue reading Saving the Needy or Creating the Needy? |
 Friedrich von Hayek founded the Mont Pelerin Society. “Monty Pelerin” is a pseudonym chosen by this blogger to convey general agreement with the philosophy, goals and spirit of the Mont Pelerin Society. No other connection exists between the blogger and the Society. |
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