-RW
Monday, November 3, 2008
"Laissez-Faire, C'est Fini,"
Things are very bad for capitalism. It is not only Obama, it is worse in Europe.
Ambrose Evans-Pritchard reports:
Ambrose Evans-Pritchard reports:
.
"Laissez-faire, c'est fini," said President Nicolas Sarkozy. "We will intervene massively whenever a strategic enterprise needs our money."
Such language can now be heard daily across Europe. It can only intensify as the fall-out from the EU's €1.8bn trillion (£1.4 trillion) bank rescue becomes clearer, and as Europe's elites discover that their own banks are the most leveraged in the world and have played their own Wagnerian part in Gotterdammerung
Treasury Expects to Borrow $550 Billion of Debt in Q4
During Q4, the Treasury expects to borrow $550 billion of marketable debt, assuming an end-of-December cash balance of $300 billion, which includes $260 billion for the Supplementary Financing Program (SFP). Without the SFP, the end-of-December cash balance is expected to be $40 billion. This borrowing estimate is $408 billion higher than announced in July 2008.
In Q3, Treasury borrowed $530 billion of marketable debt, including $300 billion for the SFP, and finished with a cash balance of $372 billion at the end of September. Without the SFP, the end of September cash balance was $72 billion. In July 2008, Treasury estimated $171 billion in marketable borrowing, assuming an end-of-September cash balance of $45 billion.
About The (Now) $143 Billion Bailout Of AIG
Wapo's Carol D. Leonnig writes:
A number of financial experts now fear that the federal government's $143 billion attempt to rescue troubled insurance giant American International Group may not work, and some argue that company shareholders and taxpayers would have been better served by a bankruptcy filing.But Carol, you need to understand the backstory to figure out what this bailout is all about, and for that we go to NYT's Gretchen Morgenstern (My emphasis):
The Treasury Department leapt to keep AIG from going bankrupt on Sept. 16, and in the past seven weeks, AIG has drawn down $90 billion in federal bailout loans. But some key AIG players argue that bankruptcy would have offered more structure and greater protections during a time of intense market volatility.
The bailout may not be a positive for shareholders or taxpayers, Carol. But, for Goldman Sachs, the bailout is the equivalent of Amy Lumet jumping all over Joe the Plumber.
Two weeks ago, the nation’s most powerful regulators and bankers huddled in the Lower Manhattan fortress that is the Federal Reserve Bank of New York, desperately trying to stave off disaster.
As the group, led by Treasury Secretary Henry M. Paulson Jr., pondered the collapse of one of America’s oldest investment banks, Lehman Brothers, a more dangerous threat emerged: American International Group, the world’s largest insurer, was teetering. A.I.G. needed billions of dollars to right itself and had suddenly begged for help.
One of the Wall Street chief executives participating in the meeting was Lloyd C. Blankfein of Goldman Sachs, Mr. Paulson’s former firm. Mr. Blankfein had particular reason for concern.
Although it was not widely known, Goldman, a Wall Street stalwart that had seemed immune to its rivals’ woes, was A.I.G.’s largest trading partner, according to six people close to the insurer who requested anonymity because of confidentiality agreements. A collapse of the insurer threatened to leave a hole of as much as $20 billion in Goldman’s side, several of these people said.
Days later, federal officials, who had let Lehman die and initially balked at tossing a lifeline to A.I.G., ended up bailing out the insurer for $85 billion.
Their message was simple: Lehman was expendable. But if A.I.G. unspooled, so could some of the mightiest enterprises in the world.
Galbraith Nails It and Mankiw Doesn't Sound Happy About It
Greg Mankiw writes:
Fortunately, I made the cut, and called the mortgage crisis back in 2004.
And, Galbraith is correct when he says:
Most of them teach. And most of them teach a theoretical framework that has been shown to be fundamentally useless.
Mainstream economists have a limited understanding, if any of the business cycle, as I recently pointed out in my comments re: Mankiw's best selling texts.
Further, almost all economists fail to understand the basics of the most important aspect of economics, entrepreneurship. Indeed, there are probably even fewer that do, than the number that called the mortgage crisis. And although, it is an Austrian economist, Israel Kirzner, who advanced the concept of entrepreneur. I don't think most Austrians truly recognize the depth of Kirzner's analysis.
I don't follow Galbraith close enough to know the direction he would like to see economics go (Nothing he has written has shown up on my radar as something I would be interested in reading), but he clearly sees the glaring failures of mainstream economists brought to you by the likes of Mankiw, Krugman etc.
Yes, Mankiw should wince at Galbriath's criticism, since it is texts like Mankiw's (and that of his best selling predecessor Paul Samuelson) that have raised generations who think economics is boring, are clueless about economics and result in a country where a man can be elected president who doesn't have the first clue about economics. How entrepreneurshp works and the nature of the business cycle should be common knowledge the way the fact that the world is not flat is common knowledge. Mankiw has failed us big time.
I was struck yesterday by an excerpt from an interview with economist James Galbraith:
But there are at least 15,000 professional economists in this country, and you’re saying only two or three of them foresaw the mortgage crisis?
Ten or 12 would be closer than two or three.
What does that say about the field of economics, which claims to be a science?
It’s an enormous blot on the reputation of the profession. There are thousands of economists. Most of them teach. And most of them teach a theoretical framework that has been shown to be fundamentally useless.
Like his late father, Galbraith the younger is highly critical of mainstream economics...
Fortunately, I made the cut, and called the mortgage crisis back in 2004.
And, Galbraith is correct when he says:
Most of them teach. And most of them teach a theoretical framework that has been shown to be fundamentally useless.
Mainstream economists have a limited understanding, if any of the business cycle, as I recently pointed out in my comments re: Mankiw's best selling texts.
Further, almost all economists fail to understand the basics of the most important aspect of economics, entrepreneurship. Indeed, there are probably even fewer that do, than the number that called the mortgage crisis. And although, it is an Austrian economist, Israel Kirzner, who advanced the concept of entrepreneur. I don't think most Austrians truly recognize the depth of Kirzner's analysis.
I don't follow Galbraith close enough to know the direction he would like to see economics go (Nothing he has written has shown up on my radar as something I would be interested in reading), but he clearly sees the glaring failures of mainstream economists brought to you by the likes of Mankiw, Krugman etc.
Yes, Mankiw should wince at Galbriath's criticism, since it is texts like Mankiw's (and that of his best selling predecessor Paul Samuelson) that have raised generations who think economics is boring, are clueless about economics and result in a country where a man can be elected president who doesn't have the first clue about economics. How entrepreneurshp works and the nature of the business cycle should be common knowledge the way the fact that the world is not flat is common knowledge. Mankiw has failed us big time.
New World Order: Brown, Sarkozy Seek ‘New Bretton Woods’
FT reports:
Overhauling the global financial system?
With the elites in control of most government power bases, nothing good will come out of such a summit. It should be noted, Sarkozy's half-brother is co-manager of Carlyle Group's banking division.
Nicolas Sarkozy and Gordon Brown have struck up an unlikely partnership ahead of next week’s summit in Washington aimed at overhauling the global financial system.
The French president and the UK prime minister want agreement from the leaders of the G20 group of advanced and emerging economies in the US capital for a “new Bretton Woods”, a redesign of the postwar global financial architecture.
Overhauling the global financial system?
With the elites in control of most government power bases, nothing good will come out of such a summit. It should be noted, Sarkozy's half-brother is co-manager of Carlyle Group's banking division.
Sunday, November 2, 2008
No Safety Helmets for Chicago Police On Election Night
Police were told to report for their 12-hour shifts wearing dress uniforms with the trademark checkerboard caps. They were told to bring their helmets but they must be locked up in car trunks kept miles away and inaccessible. Paul Huebl, of course, with the details.
Waiting Rooms: MD's versus Dentists
The difference is bureaucratic service via free market service- says Lew Rockwell.
Note: Lew Rockwell is discussing the long waits in doctors waiting rooms. I solve that problem the first time a doctor tries to pull that on me. If he keeps me waiting beyond the scheduled time, when he finally walks into the room his assistants stick me in and starts to talk about my case, I tell him something along the lines of, "Doc, that appointment was for 1:00. It's 1:30. That appointment was broken, now I am just here to collect my broken appointment fee which is $250."
The look on the Doc's face at this point is priceless, since the wait has me in a very pissed off mood, and I look it, and we, of course, now have to negotiate this problem out.
After a first visit to a new doctor,though, I never have to wait in the doctor's waiting room.
Note: Lew Rockwell is discussing the long waits in doctors waiting rooms. I solve that problem the first time a doctor tries to pull that on me. If he keeps me waiting beyond the scheduled time, when he finally walks into the room his assistants stick me in and starts to talk about my case, I tell him something along the lines of, "Doc, that appointment was for 1:00. It's 1:30. That appointment was broken, now I am just here to collect my broken appointment fee which is $250."
The look on the Doc's face at this point is priceless, since the wait has me in a very pissed off mood, and I look it, and we, of course, now have to negotiate this problem out.
After a first visit to a new doctor,though, I never have to wait in the doctor's waiting room.
Saturday, November 1, 2008
Understanding Pure Kirznerian Dealmaking
The development by Israel Kirzner of the understanding of the entrepreneur is truly Nobel Prize worthy.
A key point in Kirzner's theory of the entrepreneur is that the entrepreneur recognizes opportunities and that the entrepreneur does not have to be a manager, land owner or capitalist, i.e. "funder" of an opportunity. For some reason, academics have an extremely difficult time accepting that an entrepreneur can be just an entrepreneur and nothing else. Perhaps it is because the academic life is so sheltered from the profit and loss system that academics just can't see the many ways profits can be made.
Indeed, even a supporter of Kirzner, Peter Botteke writes in a recent post at his blog:
The late William Simon, former Treasury Secretary and multi-millionaire, once remarked, when you could make a call from a payphone for 25 cents, that if he was flat broke, all he would need to make a million was a roll of quarters.
A friend of mine makes money by walking the streets of the Los Angeles garment district finding items that merchants want to get rid of, he then finds other merchants in the district that he sells the goods to. He never uses any of his own money and makes the difference.
He once sold a truck load of shoes that a merchant wanted to get rid of to the merchant in the next store, and pocketed $6,000 in the transaction.
Note to academicians: You should really try and get what Kirzner means here, it will make your life much more profitable for very little additional work.
It is a great tragedy of academia that no one gets Kirzner's insights clearly, if at all. If they did, and provided insights to students about the wonders of pure Kirzenerain entrepreneurship, the world would have a much higher standard of living, as there is little beside entrepreneurs that raise the standard of living of the world. Not only do Kirznerian entrepreneurs exist, we desperately need more of them.
A key point in Kirzner's theory of the entrepreneur is that the entrepreneur recognizes opportunities and that the entrepreneur does not have to be a manager, land owner or capitalist, i.e. "funder" of an opportunity. For some reason, academics have an extremely difficult time accepting that an entrepreneur can be just an entrepreneur and nothing else. Perhaps it is because the academic life is so sheltered from the profit and loss system that academics just can't see the many ways profits can be made.
Indeed, even a supporter of Kirzner, Peter Botteke writes in a recent post at his blog:
In his comments section, I replied to Botteke this way:Some within the Austrian camp chide Israel Kirzner for distorting Mises on the economic theory meaning of the entrepreneur. They claim instead that the entrepreneur must be a resource owner --- a capitalist. But Kirzner insists on what he calls the Misesian notion of the entrepreneur within economic theory.
Nobody denies that in the real-world, entrepreneurs wear several hats --- owner, manager, etc. But that is different from strictly speaking the economic theory meaning of the entrepreneur which is what Kirzner is concerned about.
Peter,
You said:
"Nobody denies that in the real-world, entrepreneurs wear several hats --- owner, manager, etc. But that is different from strictly speaking the economic theory meaning of the entrepreneur which is what Kirzner is concerned about."
I would take this point one step further.
On at least two occasions, in Kirzenarian fashion, I used neither capital, served as owner or managed a situation, yet I have been able to still make substantial money by saying to one person little more than "you should talk to this person about this, I will arrange it and collect 10%."
I find it fascinating that academicians have so much problem with this point that Kirzner makes. In the real world pure Kirzenarian deals are going down every day.
The late William Simon, former Treasury Secretary and multi-millionaire, once remarked, when you could make a call from a payphone for 25 cents, that if he was flat broke, all he would need to make a million was a roll of quarters.
A friend of mine makes money by walking the streets of the Los Angeles garment district finding items that merchants want to get rid of, he then finds other merchants in the district that he sells the goods to. He never uses any of his own money and makes the difference.
He once sold a truck load of shoes that a merchant wanted to get rid of to the merchant in the next store, and pocketed $6,000 in the transaction.
Note to academicians: You should really try and get what Kirzner means here, it will make your life much more profitable for very little additional work.
It is a great tragedy of academia that no one gets Kirzner's insights clearly, if at all. If they did, and provided insights to students about the wonders of pure Kirzenerain entrepreneurship, the world would have a much higher standard of living, as there is little beside entrepreneurs that raise the standard of living of the world. Not only do Kirznerian entrepreneurs exist, we desperately need more of them.
How To Make Money In 2009, Advice From an American Oligarch
Forget serving the consumer, that's so yesterday.
Carlyle Group co-founder David Rubenstein says, according to the PEU report, that you have to get in line with the federal government, the TARP package. A huge stimulus bill is coming in January, signed by new President. It will put enormous amounts of money into job creation programs, transportation, infrastructure, & alternative energy. Get your name out in Washington, D.C. for your share, says Rubenstein.
Carlyle Group co-founder David Rubenstein says, according to the PEU report, that you have to get in line with the federal government, the TARP package. A huge stimulus bill is coming in January, signed by new President. It will put enormous amounts of money into job creation programs, transportation, infrastructure, & alternative energy. Get your name out in Washington, D.C. for your share, says Rubenstein.
Charlie, What You Got?
As John Carney puts it, if you see CNBC's Charlie Gasparino on the street be careful asking him "what you got?"
On The Lew Rockwell - Naomi Wolf Podcast
I emailed Bob Murphy about Naomi Wolf in early October, and Murphy posted to his blog:
...Now folks, Robert Wenzel sent me this 27 minute YouTube, and I wrote back, "What part should I listen to? I don't have time for this whole thing." And he just said, "The whole thing, man.
So when Lew Rockwell featured a 50 minute interview with Wolf, Bob alerted me in an email with a copy to the link.
I emailed back:
In Naomi Wolf you have an extremely bright, progressive (read left-wing), truth seeker, who has knowledge of libertarianism, but not a deep, deep understanding, and she has, by her own intense study, been finding problem after problem with government.
In Lew Rockwell, you have a man with a 10th dan Black Belt understanding of libertarianism.
...Now folks, Robert Wenzel sent me this 27 minute YouTube, and I wrote back, "What part should I listen to? I don't have time for this whole thing." And he just said, "The whole thing, man.
So when Lew Rockwell featured a 50 minute interview with Wolf, Bob alerted me in an email with a copy to the link.
I emailed back:
Yeah, it's an hour [long], It is on my list for later today.Bob, 20 minutes later, emailed again:
...this is awesome. I am literally jumping up and down in my officeHow best to describe this interview: Think a Socrates-Plato podcast.
listening to this. It is unreal.
In Naomi Wolf you have an extremely bright, progressive (read left-wing), truth seeker, who has knowledge of libertarianism, but not a deep, deep understanding, and she has, by her own intense study, been finding problem after problem with government.
In Lew Rockwell, you have a man with a 10th dan Black Belt understanding of libertarianism.
Somewhere during the interview, the truth seeking Wolf turns into a bright and curious student and begins asking Rockwell questions about libertarianism. As a master, Rockwell, is able to reply with quick, clear, succinct answers to her questions. You can sense the genuine curiosity in Wolf's voice, and often the moments when Rockwell's explanation to a question has opened up Naomi to a perspective on the world she had never thought about before.
This podcast will be a classic.
(Note: You don't need an ipod to listen to it, you can just click on the link provided and listen to it over your computer.)
Paul Huebl Thinks It Is Gong To Be Real Bad In Chicago On Election Night
The Chicago police are going to raise the bridges over Chiacgo's Chicago River to prevent crowds from moving North towards Chicago's wealthy Gold Coast area.
Huebl has the worst case scenario here.
Huebl has the worst case scenario here.
Pat Buchanan: Comrade Obama?
"If Barack Obama is not a socialist, he does the best imitation of one I've ever seen.
"Under his tax plan, the top 5 percent of wage-earners have their income tax rates raised from 35 percent to 40 percent, while the bottom 40 percent of all wage-earners, who pay no income tax, are sent federal checks."-says Pat Buchanan, his full column is here.
"Under his tax plan, the top 5 percent of wage-earners have their income tax rates raised from 35 percent to 40 percent, while the bottom 40 percent of all wage-earners, who pay no income tax, are sent federal checks."-says Pat Buchanan, his full column is here.
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