Wall Street Vs. Government Responsibility for Economic Crisis

According to Investor's Business Daily, the percentage of responsibility for the subprime and nonprime mortgage crisis is pretty clear. Out of 27 million such mortgages, the government held 19.2 million: 12 million by Fannie & Freddie, 5 million by FHA, and 2.2 million with HUD and CRA loans. Wall Street held 7.8 million.

That would mean Wall Street bears 29% of the responsibility, while Washington bears 71%.

In a related piece, Gretchen Morgenson at the NYT notes a recent speech on needed financial reforms by Paul Volcker, former head of the Federal Reserve:

THE other area that cries out for change, Mr. Volcker said, is the nation’s mortgage market, now controlled by Fannie Mae and Freddie Mac, the taxpayer-owned mortgage giants.


“We simply should not countenance a residential mortgage market, the largest part of our capital market, dominated by so-called government-sponsored enterprises,” Mr. Volcker said in his speech. “The financial breakdown was in fact triggered by extremely lax, government-tolerated underwriting standards, an important ingredient in the housing bubble.”

 

Today's Links of Interest

Transcript and Video of Herman Cain on Meet the Press

The Koch brothers donated $20 million to the ACLU

Steven Green, as usual, drunk-blogged the Republican debate tonight

The Politics of Raising Cain

Roger L. Simon sees Cain's campaign as a challenge to political professionals like Rove.

Cillizza & Blake: Why Herman Cain Can Win

Amy Gardner, Cain's Staff Trying to Keep Up

(Interestingly, she notes that Cain's trip to Tennessee may be because a lot of Country music people like him. This may answer the question some have been asking about why he's going there, like the next article.)

Cain's Curious Month Off

Was SimCity Cain's Inspiration for the 9-9-9 Plan? An amusing diversion ...

Discussions of Cain's 999 Plan

999 on Cain's Website and in an editorial in USA Today

The phases of Cain's plan, copied from his website:

Phase 1, 9-9-9:

• Zero capital gains tax
• Ends the Death Tax.
• Eliminates double taxation of dividends
• Business Flat Tax – 9%
• Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders.
• Empowerment Zones will offer additional deductions for payroll employed in the zone.
• Individual Flat Tax – 9%.
• Gross income less charitable deductions.
• Empowerment Zones will offer additional deductions for those living and/or working in the zone.
• National Sales Tax – 9%.
• This gets the Fair Tax off the sidelines and into the game.

Phase 2, the Fair Tax:

• Amidst a backdrop of the economic boom created by the Phase 1 Enhanced Plan, I will begin the process of educating the American people on the benefits of continuing the next step to the Fair Tax.
• The Fair Tax would ultimately replace individual and corporate income taxes.
• It would make it possible to end the IRS as we know it.
• The Fair Tax makes our exported goods and services the most competitively internationally than any other tax system.

Discussion of pros, cons, and what the heck does it all mean [this section will get filled out over the weekend, if you care to stop back]:

Nathan Lewis at Forbes, Flat Tax vs. Fair Tax vs. Herman Cain's 9-9-9 Plan

Edward Morissey at the Fiscal Times, 9-9-Nein! The Herman Cain Mutiny

Bruce Bartlett in the NYT, Inside the Cain Tax Plan

5 Reasons to Reject It

Cain Picks Up Support

from Art Laffer

"Herman Cain’s 9-9-9 plan would be a vast improvement over the current tax system and a boon to the U.S. economy," Laffer told HUMAN EVENTS in a statement. "The goal of supply-side tax reform is always a broadening of the tax base and lowering of marginal tax rates."

Added Laffer: "Mr. Cain’s plan is simple, transparent, neutral with respect to capital and labor, and savings and consumption, and also greatly decreases the hidden costs of tax compliance. There is no doubt that economic growth would surge upon implementation of 9-9-9."

Laffer also said that "such a system provides the least avenues to avoid paying taxes, yet also maintains the strongest incentives for work effort, production, and investment."

Haley Barbour

“If this election is where it ought to be, and that is a referendum on how President Obama is doing, Republicans are going to win. If Herman Cain is our nominee against Barack Obama, I think he’ll sweep the south," Gov. Haley Barbour (R-Miss.) told Laura Ingraham today.

Paul Ryan

House Budget Committee chairman Paul Ryan says he “loves” presidential candidate Herman Cain’s signature “9-9-9″ tax plan.

Ryan told The Daily Caller in an exclusive interview that Cain’s plan is a good starting point for debate, and shows the GOP presidential campaign season has entered into a more advanced stage where ideas — not just personalities — have come to the forefront.

A spokesman for Ryan later clarified that Ryan wasn't endorsing Cain.

Today's Links of Interest

Herman Cain Takes the Lead

Cain, Perry, Romney All Beat Obama

Oxford U. History Prof. Tim Stanley says: If the Wall Street protesters really want to reform capitalism, they should join the Tea Party

Michael S. Malone: Waiting for Princip

Illegal Students

Michael Flaherty at the WSJ has an article titled, The Latest Crime Wave: Sending Your Child to a Better School:

From California to Massachusetts, districts are hiring special investigators to follow children from school to their homes to determine their true residences and decide if they "belong" at high-achieving public schools. School districts in Florida, Pennsylvania and New Jersey all boasted recently about new address-verification programs designed to pull up their drawbridges and keep "illegal students" from entering their gates.

Other school districts use services like VerifyResidence.com, which provides "the latest in covert video technology and digital photographic equipment to photograph, videotape, and document" children going from their house to school. School districts can enroll in the company's rewards program, which awards anonymous tipsters $250 checks for reporting out-of-district students.
Only in a world where irony is dead could people not marvel at concerned parents being prosecuted for stealing a free public education for their children.

In August, an internal PowerPoint presentation from the American Federation of Teachers surfaced online. The document described how the AFT undermined minority parent groups' efforts in Connecticut to pass the "parent trigger" legislation that offers parents real governing authority to transform failing schools. A key to the AFT's success in killing the effort, said the document, was keeping parent groups from "the table." AFT President Randi Weingarten quickly distanced her organization from the document, but it was small consolation to the parents once again left in the cold.

At the same time, many American schools are forced to accept the children of illegal aliens, and to even suggest that they shouldn't results in strident accusations of racism and heartlessness.

I am all for public schools educating the children of illegal immigrants. The children are not at fault, and not only would it be morally wrong to deny them an education, it would also be reckless from a utilitarian perspective. However, since those expenses have been incurred due to the deceptions and irresponsibility of the federal government, I also strongly believe that every school which educates these children should be paid to do so by the federal government. (I also believe this is the correct way to handle the local and state incarceration expenses for illegal aliens.)

For similar reasons, the AFT and other organizations that act to destroy educational choice and quality in the American public schools should be forced to pay for the consequences. That, however, would be impossible; you cannot reimburse someone for giving them an inferior education during their childhood. Consequently, these organizations should be abolished.

Today's Links of Interest

Transcript of the Fox News - Google GOP Debate

Simpson & Bowles: Our Advice to the Debt Committee: Go big, be bold, be smart

Fred Barnes at the Weekly Standard: Raising Cain (an interesting comparison of Cain and Obama's biographies)

Back in 2008, Cain defended TARP. This is a complex topic. I think bailing out the banks created a powerful, dangerous moral hazard, but at the same time, letting the banks fail would have had a significant negative impact on a lot of people who were innocent of wrongdoing. Sometimes there is no good option.

Michael Barone says that Cain is beginning to look like a contender.

Jennifer Rubin says Cain can shake up the GOP race.

Jane McGonigal: Gamer's Will Save the World (well, that's not really her headline, but I suspect it's true)

Today's Links of Interest

Alasdair Roberts, The Wikileaks Illusion. A fascinating article in the Wilson Quarterly (why have I never heard of them before?) that looks at some of the unexpected ramifications of the Wikileaks releases.

North Carolina governor Bev Purdue:

"I think we ought to suspend, perhaps, elections for Congress for two years and just tell them we won't hold it against them, whatever decisions they make, to just let them help this country recover. I really hope that someone can agree with me on that," Perdue said. "You want people who don't worry about the next election."

The comment -- which came during a discussion of the economy -- perked more than a few ears. It's unclear whether Perdue, a Democrat, is serious -- but her tone was level and she asked others to support her on the idea.  (Read her full remarks below.)

Later Tuesday afternoon, Perdue's office clarified the remarks: "Come on," said spokeswoman Chris Mackey in a statement. "Gov. Perdue was obviously using hyperbole to highlight what we can all agree is a serious problem: Washington politicians who focus on their own election instead of what’s best for the people they serve."

The End of the Blogprof, alas. Another blog I should have been reading all along, it seems, but just discovered as the shutters fell.

Here's Herman Cain's campaign website, just since he's been in the news quite a bit lately.

Susannah Breslin, How a Freelancer Learned to be a Hustler

Today's Links of Interest

Jon Stewart and the Burden of History. This gets a bit personal for my tastes, but it's an interesting take.

Saddam: What We Now Know. As I've said before, he didn't have stockpiles of WMDs, but he had programs to develop them and he provided extensive support for terrorist organizations.

Fast and Furious: Whistle-blowers Allege Corruption, Cartel Ties:

Two former law enforcement officers allege that they cannot get anyone to investigate allegations that the Mexican drug cartels have corrupted U.S. law officers and politicians in the El Paso border region.

Your State University Doesn't Want You (it wants foreign and out of state students who pay out-of-state tuition)


Tea Party, Liberals Play Nice at Harvard (There's a Harvard Law Tea Party!)


Symposium on Deregulating the Legal Profession


The World Will Be More Crowded - With Old People


Gallup Says Americans Express Historic Negativity Toward U.S. Government. Two points of interest:

• Americans believe, on average, that the federal government wastes 51 cents of every tax dollar, similar to a year ago, but up significantly from 46 cents a decade ago and from an average 43 cents three decades ago.

• 49% of Americans believe the federal government has become so large and powerful that it poses an immediate threat to the rights and freedoms of ordinary citizens. In 2003, less than a third (30%) believed this.

Rasmussen Reports Says Only 17% Say U.S. Government Has Consent of the Governed

Today's Links of Interest

Walt Harrington's article, Dubya and Me, is a fascinating look at the former president and a welcome antidote to BDS.

An article on counting crowds.

An old Front Page Mag article about one FBI translator's experience on 9/11. This article is difficult to believe, but it's worth thinking about and investigating further.

Hayek & Keynes

Maybe I've posted them before, but with this recent Powerline post on the two economists, I thought it would be good to put these two videos up.

and the sequel

At Powerline, Steven Hayward brings up some interesting history. Apparently the two economists were friends and admired each other's work. It's a good post with links to more interesting stuff.

Palin and Crony Capitalism, or Fascism

Sarah Palin on crony capitalism:

This icon of American industry is a company full of good employees who make some good products (and is the parent company of a huge media outlet), but GE is also a large American corporation that pays virtually no corporate income taxes despite earning worldwide profits of $14.2 billion last year, $5.1 billion of it in the United States. In fact, they claimed a tax benefit of $3.2 billion, meaning they received more of our hard earned tax dollars than they contributed. How is that possible? It’s because not only do they shelter their money from taxes, but they also get many tax credits, loans, government grants, and other benefits from the federal government that our smaller businesses couldn’t even imagine being able to profit from.

NYT writer Anand Giridharadas actually offers her some praise for her position. The NYT column is behind a registration wall, so I'll also link an Examiner column about the NYT column.

The Examiner columnist, Anthony Martin, calls it like it is. 'Crony capitalism' isn't any kind of capitalism at all. We need to call it by its proper name:

True capitalism stands on its own. It does not need nor seek special favors from government. In fact, when capitalism crawls into bed with big government, what you have is 'Fascism' and not capitalism.

It may be difficult to see how it is fascism. We associate fascism with government oppression, but when the government picks the winners in the economy, it also picks the losers, just like Mussolini picked the winners and losers. If you aren't in the right political crowd, in the politically-picked 'winners,' you are relegated to be a 'loser' and are oppressed by 'crony capitalism,' by fascism.

What is the Tea Party?

Two articles about what the Tea Party actually is.

Dan Balz writes in the Washington Post, What the tea party is -- and isn't. Balz reports on a set of papers on the Tea Party delivered at the recent American Political Science Association conference. He touches on demographics, effectiveness, the history of the Tea Party movement, and expectations for the future.

In response, Don Surber writes The Blind Men and the Tea Party, wherein he notes that a bunch of liberal poli sci profs research the Tea Party and find exactly what liberals have been saying they would find. He notes some rather obvious questions that should have been asked, but most importantly that there was no comparison with anything on the left.

A Sickness in America?

Do Progressives Shame the Country on the Anniversary of 9/11?

The claim is spot on with regard to Krugman and a number of others, but I think a number of those who would call themselves progressives do not fall in behind Krugman on this.

More along these lines from Ace, analyzing Krugman and Parker:

We have never really been arguing about whether we should go to war, or whether we should hate. The only contention of these past 10 years has been whom we should go to war with, and whom we ought to hate.

The bien pensants are quite insistent that we must not hate some External Other who serves as a bogeyman exciting our darker passions.

Rather, they urge, we must direct these darker passions at an Internal Other, the vast majority of Americans who do not consider themselves a type of latter-day digital order of Jesuits.

Apparently we all have the right basic emotional take on things; some of us have just chosen the wrong bogeymen to fear and hate.

This is exactly right. I have said for years that one of the chief difference between the left and right is that the right is concerned with external enemies and the left with internal enemies.

Althouse also addresses the topic, criticizing Krugman for not allowing comments.

Mark Steyn's Let's Roll Over discusses things missing from the 9/11 commemorations.

Today's Links of Interest

Popular Mechanics: How to Make Your Own Apps reviews two pieces of app-making software, Google App Inventor for Android and GameSalad for iPhone's, iPads, etc.

Michael J. Totten reviews The Devil's Double, a movie based on the true story of Uday Hussein's body double.

Here's the trailer:

Gary S. Becker, Nobel Prize-winning economist: The Great Recession and Government Failure

Just a taste:

The origins of the financial crisis and the Great Recession are widely attributed to "market failure." This refers primarily to the bad loans and excessive risks taken on by banks in the quest to expand their profits. The "Chicago School of Economics" came under sustained attacks from the media and the academy for its analysis of the efficacy of competitive markets. Capitalism itself as a way to organize an economy was widely criticized and said to be in need of radical alteration.

Although many banks did perform poorly, government behavior also contributed to and prolonged the crisis. The Federal Reserve kept interest rates artificially low in the years leading up to the crisis. Fannie Mae and Freddie Mac, two quasi-government institutions, used strong backing from influential members of Congress to encourage irresponsible mortgages that required little down payment, as well as low interest rates for households with poor credit and low and erratic incomes. Regulators who could have reined in banks instead became cheerleaders for the banks.

This recession might well have been a deep one even with good government policies, but "government failure" added greatly to its length and severity, including its continuation to the present.

Update - Some more links of interest:

Arthur Herman: The Ultimate Stimulus? World War Two and Economic Growth. Herman challenges the idea that WWII brought us out of the Depression, noting data that shows the increase in government spending came at the expense of private spending. Also, he points out that the economic boom of the '50s came only with a massive reduction in government spending.

Nigel Warburton on Introductions to Philosophy

Today's Links of Interest

Lawrence Solomon on how science works and the new CERN data:

The science is now all-but-settled on global warming, convincing new evidence demonstrates, but Al Gore, the IPCC and other global warming doomsayers won’t be celebrating. The new findings point to cosmic rays and the sun — not human activities — as the dominant controller of climate on Earth.

The research, published with little fanfare this week in the prestigious journal Nature, comes from über-prestigious CERN, the European Organization for Nuclear Research, one of the world’s largest centres for scientific research involving 60 countries and 8,000 scientists at more than 600 universities and national laboratories.

...

The hypothesis that cosmic rays and the sun hold the key to the global warming debate has been Enemy No. 1 to the global warming establishment ever since it was first proposed by two scientists from the Danish Space Research Institute, at a 1996 scientific conference in the U.K. Within one day, the chairman of the Intergovernmental Panel on Climate Change, Bert Bolin, denounced the theory, saying, “I find the move from this pair scientifically extremely naive and irresponsible.” He then set about discrediting the theory, any journalist that gave the theory cre dence, and most of all the Danes presenting the theory — they soon found themselves vilified, marginalized and starved of funding, despite their impeccable scientific credentials.

True? Beats me. I do look forward to reading the Nature article, however.

An Entrepreneurial Fix for the US Economy

Jim Geraghty: Taking the Alter Challenge on Obama

Left Turn: A Book with an Interesting Theory on Political and Media Bias

Crime Declining Even in Economic Hard Times

The Other McCain: The Politics of Fear:

Unjustified fear of “right-wing extremism” is fomented simply as a way of demonizing Republicans who, the liberals would have us believe, are on the one hand beholden to dangerous crackpots while, on the other hand, are also tacitly encouraging violent extremists. So if some nut commits a heinous crime and is then alleged to have been a Rush Limbaugh listener — vote Democrat! 

Because if you don’t vote Democrat, the Republicans will take charge and then the brownshirts will be goose-stepping down Main Street next week.

...



Beyond such transparent guilt-by-association smears, however, we see that the fearmongers benefit from the nebulousness of the threats with which they excite the phobias of their audience. They rely on the “ghosts of fascists past” that haunt the liberal imagination, so that a rally of people waving Gadsden flags and grumbling about taxes can easily be made to conjure up nightmares of Nuremberg in 1934.

It does little good, in protesting against such distortions, to point out the blindingly obvious fact: The dreams of the Tea Partiers — fiscal responsibility, limited government, the rule of law — are the antithesis of Nazi dreams of an all-powerful totalitarian super-state. Nor does it do much good to point out what Jonah Goldberg has explained at length, that modern liberalism owes a tremendous debt of fascism.

And two three more links just because these sites should be linked:

Open Secrets - Keeping track of money in politics.

View from the Porch, an interesting blog I came across in my web wanderings.

The BioLogos Forum - A website devoted to dialog between science and faith.

Today's Links of Interest

Goldberg: My Rick Perry Problem, and Ours

Murphy: Tea Party Rage Dies

Alter: You Think Obama's Been a Bad President? Prove It

Wehner: Answering Alter's Challenge

Ransom: Obama is a Bad President

Boehner Blasts Obama Over Increase in Regulations

Lewis: It's the Economy, Dummkopf!

Book Review: The Life and Thought of Herbert Butterfield

Book Review: Special Interest / Class Warfare (on school reform in the US)

And finally, Is Gibson Guitar the Target of a Politically-Motivated DOJ Investigation?

Learn Liberty

I just found out about Learn Liberty from the following video posted at Gregory Mankiw's blog. It claims to be "a resource for learning about the ideas of a free society." Looks like there are a lot of interesting videos there. Here's one:

Top 3 Common Myths of Capitalism

Here's the website for Learn Liberty and their sponsoring organization, the Institute for Humane Studies.

Today's Links of Interest

Foreign Policy: Life After Debt

LeafSnap - an app for those with an interest in trees

UK Riots: The end of the liberals' great moral delusion

Top 3 Common Myths of Capitalism, by Harvard economist Jeff Miron

CERN: 'climate models will need to be substantially revised'