Fed Must Release Reports

The Federal Reserve must release reports on emergency bank loans to Bloomburg under FOIA.

Manhattan Chief U.S. District Judge Loretta Preska rejected the central bank’s argument that the records aren’t covered by the law because their disclosure would harm borrowers’ competitive positions. The collateral lists “are central to understanding and assessing the government’s response to the most cataclysmic financial crisis in America since the Great Depression,” according to the lawsuit that led to yesterday’s ruling.

Didn't Obama run on the vow to bring transparency to Government?

“When an unprecedented amount of taxpayer dollars were lent to financial institutions in unprecedented ways and the Federal Reserve refused to make public any of the details of its extraordinary lending, Bloomberg News asked the court why U.S. citizens don’t have the right to know,” said Mathew Winkler , the editor-in-chief of Bloomberg News. “We’re gratified the court is defending the public’s right to know what is being done in the public interest.”

‘Involuntary Investor’

Bloomberg said in the suit U.S. taxpayers need to know the risks behind the central bank’s $2 trillion in lending because the public is an “involuntary investor” in the nation’s banks.

I love that word "Involuntary Investor." It's a nice euphemism for what Socialist and Fascist Governments do with the peoples money.
We are also involuntary investors to:
1. GM
2. Chrysler
3. AIG
4. Goldman Sachs
5. SEIU...
The list could go on and on. All we need to do is look at the TARP to see who we are involuntary investing in.

Oh and don't forget to mention that we are paying interest to banks holding Fed reserve notes. What will this do? Well I'm not an expert but from my readings it would suggest that; given that banks are holding the reserves, and the whole point of issuing the massive amount of reserves was to avoid Great Depression low levels of liquidity, that paying interest is counterproductive. Why would a bank want to make risky loans, when they can just sit on the money and collect directly from the Fed?
I think it's because someone at the Fed realizes the among of liquidity out there right now. They know that once confidence comes that amount of money will lead to high rates on inflation. Then again I might be giving the Fed to much credit.
Somewhere along 2008, we stopped being a capitalistic country and moved to corporate welfare state aka Fascism.
All those Liberals were right, Bush was a fascist all along. Then again so is Obama. Thor help us.

RIP Kopechne....and Kennedy

I'm not one to get sad for a celebrity dying. I really could care less most of the time, if not all the time. I get accused of being heartless, but then I ask them why they aren't sad for the nearly four children die every day as a result of child abuse or neglect? Or the one million child deaths that could have been prevented annually at a cost of $US 1 billion per year. Why did we give $3 billion to CARS again?

One thing about Kennedy's death that isn't getting much coverage is the death of Mary Jo Kopechne. Yes I know she is getting mentioned in passing but what 2 whole minutes out of maybe 3 hours worth of news coverage? Give me a break.

Mary Jo Kopechne (July 26, 1940 – July 18, 1969) was an American school teacher, secretary and political campaign specialist who died in a car accident on Chappaquiddick Island while being driven by US Senator Ted Kennedy.

Kopechne left the party at 11:15 p.m. with Robert's brother Ted Kennedy , after he — according to his own account — offered to drive her to catch the last ferry back to Edgartown , where she was staying. Kennedy stated he made a wrong turn on the way and came upon a narrow, unlit bridge without guardrails. Kennedy drove the 1967 Olds off the bridge and it overturned in the water. Kennedy extricated himself from the submerged car but Kopechne died, after what Kennedy said were several diving attempts to free her.

Kennedy contacted several aides that night, but failed to report the incident to the authorities until the car and Kopechne's body were discovered the next morning. Kopechne's parents said that they learned of their daughter's death from Ted Kennedy himself before he reported his involvement to the authorities, but that they learned Kennedy had been the driver only from wire press releases some time later.

Iowahawk made references to it in a HealthCare satire a few months ago. You can read it here. Iowahawk's post bring me to horror, not for his satire but for what he is alluding to, Liberals will use Kennedy's death to pass Obamacare. It's already happening.
Here is what I wrote on a Cafehayek thread.

I'm more afraid of him in death than I am when he was still alive.
I had mentioned to a friend that I had hoped he would live a nice long life for many years to come, if nothing more than to stop the liberals from reframing the Health Care Debate into a Memorial for the Liberal Lion. It seems from one of the headlines on WSJ, that that is exactly how Pelosi, Reid and Obama will frame the debate now.

I think he did some good things and some crappy ones. Samgrove's point is particularly important to note. Ted never once had to deal with the Forgotten Man's reality. I'm speaking of William Graham Sumner's Forgotten Man.

I also think that if Obamacare is passed as a memorial for Kennedy, then Kennedy's enduring legacy will be of America finally jumping the shark and going down the Road to Serfdom. I'm sure that's not what Kennedy intended but we all know the law of unintended consequences.

Update: Google Trends for today as of 1439 8/26/09

1.	tropical storm danny
2.	hurricane danny
3.	mary jo kopechne
4.	chappaquiddick incident
5.	joan kennedy today
6.	chappaquiddick ted kennedy

At least people aren't forgetting Mary Jo.

Intro to Macroeconomics

I'm not an economist. I'm learning and I admit that I don't know everything. Who's smarter the man that admits ignorance or the man flaunting his superior intellect?

Anyway, in my Macro class that we (My wife and I) taking right now, we are learning the "glories" of Keynesianism. Now to be sure, I don't like Keynesian macro theory in at least how it is applied. It is my believe that Keynesian polices are partially responsible for the current recession and housing bubble. The other half being the Federal Reserve. One thing that strikes me about Keynesian theory is it's "Socialist-lite" influences. Keynes openly touts the need to "smart people" to fix the messes that the "market creates." I believe as do most Austrian and Free Market economists and minded people, that the Government creates "market failures" by interfering with market processes.
Take the Housing bubble, more and more economists (except the Krugmanites) are coming to the realization that Fed funds rates, housing tax breaks, and a reinterpretation of lending practices lead to the creation of the housing bubble and the subsequent collapse. Basically the Government created the problem, thanks to Lord Keynes.

Two of the pillars of Keynesian macrotheory is the notion of the paradox of thrift and the multiplier.

The Paradox of thrift is a situation in which; The paradox states that if everyone tries to save more money during times of recession, then aggregate demand will fall and will in turn lower total savings in the population because of the decrease in consumption and economic growth. The paradox is, narrowly speaking, that total savings may fall even when individual savings attempt to rise, and, broadly speaking, that increases in savings may be harmful to an economy.

Krugman lives by the Paradox. Which only makes me wonder if it hold true or if it can only hold assuming people don't act like people and only act like wild animals, running into fire type of behaviors. Bob Murphy does a pretty good job at discrediting the notion of the paradox of thrift.

Keynes wants everyone to spend. That's it. Always spend and never save. According to Keynes, savings leads to the road of ruin. My macro teacher says this in his lecture notes.

Deficits stimulate, surpluses restrain. Use each accordingly.

How can this be? Well because of the multiplier of course. The multiplier is a nice little term thrown around by Keynesian that somehow "prove" Government spending is so great.
In a Y = C + I + G + NX system, where Y is income or GDP, C is consumption or spending, I is investment or saving, G is government spending and NX is net exports, Keynesian's assumes that if GDP or Y goes down, it "has" to be because of falling spending. The only answer of course is more G. Later on they will talk about how G gets it's money.
The multiplier is m, where; change in income is equal to m times the change in spending. Seems appropriate, but only helps the Keynesian case if the multiplier is greater than 1. If m is less then 1, then any increase in government spending wastes money. If m is less than 1 lets say 0.80, then for every one dollar the Government takes away via taxes, only 80 cents of that dollar will be spent. The other 20 cents is wasted in due to Government inefficiencies. If on the other hand, m is greater than 1, then income will magically appear from the heavens, all thanks to the wonders of Government know how. To think, people called supply side economics, voodoo economics. Keynesian is more pixies dust and unicorn horns than anything else.
So what is the multiplier term? Is it greater than 1 or less then 1? My macro teacher says a good rule of thumb is 2.5. Of course we have to trust him right? No not really, I did some digging around the glorious internets and found an article by Robert Barro. Barro writes that the multiplier is closer to zero. If that is the case, which to me is more plausible, then for every dollar the Government takes away is burned. We get nothing from it except a bloated bureaucracy.
Digging around some more I found an IMF report which say the average fiscal multiplier for the past 43 recessions is more likely around -1.5. Yet they hedge by taking out any outliers + - 5 so that it is only "marginally negative."
It certainly makes the case that multipliers don't really work the way Keynes wanted them to. It certainly makes the case against Government spending stronger.

Health Care Ignorance

We are all ignorant to a certain degree. Even the so called experts don't know all the relevant information, since it is too vast for anyone person to have a full grasp of every concept and nuance.
That being said, we can do something about our level of ignorance. The old anecdote that knowledge is power is almost always true.
I found this site about health care economics. Maybe we can learn something.

Cash for Clunkers

Hopefully by now everyone has heard of the Cash for Clunker debacle. It is a Government program designed to stimulate the car manufacturers as well as "help" curb greenhouse gas emission from older model cars. This of course is a clear case of Bootleggers and Baptists phenomenon:

Supplement to the Economic theory of regulation by Yandle: Bootleggers and Baptists. Baptists lobby legislatures to shut down liquor stores on Sunday, but demand for alcohol doesn't go away and is satisfied by bootleggers. Bootleggers earn a living satisfying this demand! Upshot is that government regulation works out in complicated ways.

In Cash for Clunkers, the Bootleggers (the ones making the money) are the car manufacturers, where the Baptists are the "Greenies." The deal was that people would scrap their "older" cars for newer ones that were more fuel efficient ones. It's supposed to be a win-win for everyone, if everyone includes only the Green Lobby and the Car makers. Everyone else, the taxpayers, gets the shaft. It was hugely popular, for obvious reasons, it made a car that might have been worth $500 dollars, now worth up to $4500. The program was supposed to last until November 1st, but unfortunately it already ran out of money.

It was unclear how many cars had been sold under the program on Friday, but the number was far higher than anyone had expected. About 40,000 vehicle sales were done through the program but dealers estimated they were trying to complete transactions on an additional 200,000 vehicles, said Sen. Debbie Stabenow, D-Mich.

This is a clear case of the Government not knowing the consequences of their actions. They should have known that they were going to cause a artificial mini boom. Then of course these are the same politicians and officials that didn't have a clue they were creating an artificial boom in housing. So really this is par for the course. It begs the question, why do people think government run health care is a good thing? That is for a different post though.

Going back to the Bootlegger model, lets look at the car companies. It's not hard to see why they wouldn't love this idea. They would be selling more cars without having to cut their own sales prices. The $4500 is being paid for by the taxpayer, so anyone reading this is helping pay for someone else's brand new car! I bet you didn't know you were so generous or that you had all that extra money to help your fellow man out! Well I really can't say everyone is paying since 43.4% of Americans pay zero or negative taxes.
Now to be fair there are a lot of dealerships that are offering other incentives to help move cars but the problem here is that you have to ask why no one was buying the cars in the first place? Could it be that people don't want to shell out money of big ticket items in a time of still rising unemployment? Now of course that can't be it.

Now looking at the Baptists here, the Greenies. There argument is that these older cars wer putting more GHG in the air that will lead to catastrophic global warming that will destroy everything! I don't believe it. This is an excellent book which should spark the death knell for the AGW alarmists; Heaven and Earth, Global Warming, the Missing Science.

One of the things not really considered here are the poor. It will be interesting when all this is said and done, to see the statistics and what income levels were able to buy these newer cars. I don't think it takes a Ph.D to see that only the well off will be able to afford the new cars, while at the same time, destroying older model and usually cheaper cars will not be available for lower income folks. One of the unintended consequences of this will be, a shortage of "affordable" cars for the poor. Which is probably what some want to happen all along. That will give them a reason to "help" the poor afford cars, much in the same way as they did for housing.

Can ayone say Boom/Bust?

UPDATE: Added a comment made over at CafeHayek.

C4C is a broken window fallacy.

It's a perfect example of law of unintended consequences and the ineptness of Government all rolled into one bill.

Partial list of unintended consequences:
1. The poor will be worse off since there will be fewer lower prices, perfectly usable cars on the market.
2. Short term boost in auto sales for dealerships, all this does is reduce inventory, by offering incentives to buy but does nothing about the long run outlook for the auto manufacturing companies. The underlining problem is why there was so much pent up inventory? That's something government fiat cannot fix.
3. From number 1, we will see a "crisis" in "affordable" cars for the poor, looks for another government program to help elevate that, which will cost even more tax dollars.
4. From number 2, the auto companies will see this short term boost as a sign of consumer confidence and long term expectations. They will boost production, but quantity demanded hasn't changed. If anything quantity demanded will go down in the long run because of this program. The Auto companies will loose money in the long run because of C4C and will require government intervention, which thanks to all those campaign donations, they'll receive able tax money to pay for their foolish investments.

This is a layperson view with an Austrian twist. I am no economist and haven't even finish Intro to Macro yet...which probably is the reason why I see this so clearly. My head isn't filled with Keynesian mumbo jumbo yet so my ability to reason hasn't been dulled.

This is just another piece of evidence as to why Keynesianism is a worthless theory and needs to be scrapped. I'm convinced if and when we get out of this mess, in 2 hundred years when they look back at the 20th century, the top 5 most "evil" people from the 20th will be; Hilter, Stalin, Pol Pot, Mao, and Lord Keynes.