EconomyBeat.org » bailout

Fun With Photoshop III

Jon Brooks — Wed, 17 Mar 2010 18:36:27 +0000

Our last post featuring the graphics of Mike Licht of NotionsCapital…

Click on an image to see it full size.

Fun With Photoshop I and II here.

EconTalk – Libertarian perspectives

Jon Brooks — Thu, 11 Mar 2010 20:33:26 +0000

Some of you have no doubt seen the “Fear the Boom and Bust” video featuring the rap stylings of economists John Maynard Keynes and Friedrich von Hayek, two economic theorists with diametrically opposed views. To put the dispute in its most simplistic terms, Keynes thought government intervention was the only way out of economic downturns, and Hayek…not so much. (Think Paul Krugman vs. Ron Paul to get a picture of two contemporary acolytes of these schools of thought.)

In Wikipedia’s entry on Keynes, the section “Economics: out of favour 1979–2007” is followed by “Economics: the Keynesian resurgence of 2008–2009.”

The Financial crisis of 2007–2010 led to public skepticism about the free market consensus even from some on the economic right. In March 2008, Martin Wolf, chief economics commentator at the Financial Times, announced the death of the dream of global free-market capitalism, and quoted Josef Ackermann, chief executive of Deutsche Bank, as saying “I no longer believe in the market’s self-healing power.” In the same month macroeconomist James K. Galbraith used the 25th Annual Milton Friedman Distinguished Lecture to launch a sweeping attack against the consensus for monetarist economics and argued that Keynesian economics were far more relevant for tackling the emerging crises.

So, with governments desperately trying to manage the fall-out from the recent capitalist implosion with courses of action anathema to free-market types, what’s a libertarian to do?

Well, for one, the dream still lives on at the EconTalk podcast, which hosts discussions on all types of economic, business, and financial topics, from a libertarian perspective. A sampling:

Barry Ritzholtz on Bailouts, the Fed, and the Crisis – The CEO, author, and blogger discusses the history of bailouts in recent times, beginning with Lockheed and Chrysler in the 1970s. What is the role of the Fed in discouraging prudence through its efforts to keep asset prices and the stock market at high levels?

Larry White on Hayek – The George Mason economics professor discusses the business cycle theory of Friedrich von Hayek of the Austrian School of economics and his intellectual battle with economist John Maynard Keynes.

Clifford Winston on Market Failure and Government Failure -The Brookings Institution scholar posits that government regulation often fails to meet its objectives and that “idealized theories of government intervention based on textbook theories of market failure are not the way regulation turns out in practice.”

Michael Belongia on the Fed – The former St. Louis Federal Reserve economist discusses the inner workings, politics, and economics of the Fed, how “power and politics play in Federal Reserve decision-making,” and how “various Fed chairs used their power to suppress dissent.”

All you Ron Paul renegades and von Mises votaries — check out the archive here.

Lester & Charlie – Bailout Bandwagon

Jon Brooks — Mon, 08 Mar 2010 16:37:44 +0000

Lester & Charlie lend their expertise to solving the financial crisis.

The Move Your Money Project

Jon Brooks — Tue, 05 Jan 2010 15:24:23 +0000

It’s a different type of “bail-out.”

The Huffington Post and friends are spearheading a nascent movement to move your money from the big financial giants to community banks. From a column by Arianna Huffington and Rob Johnson:

The big banks on Wall Street, propped up by taxpayer money and government guarantees, have had a record year, making record profits while returning to the highly leveraged activities that brought our economy to the brink of disaster. In a slap in the face to taxpayers, they have also cut back on the money they are lending, even though the need to get credit flowing again was one of the main points used in selling the public the bank bailout. But since April, the Big Four banks — JP Morgan/Chase, Citibank, Bank of America, and Wells Fargo — all of which took billions in taxpayer money, have cut lending to businesses by $100 billion.

Meanwhile, America’s Main Street community banks — the vast majority of which avoided the banquet of greed and corruption that created the toxic economic swamp we are still fighting to get ourselves out of — are struggling. Many of them have closed down (or been taken over by the FDIC) over the last 12 months. The government policy of protecting the Too Big and Politically Connected to Fail is badly hurting the small banks, which are having a much harder time competing in the financial marketplace. As a result, a system which was already dangerously concentrated at the top has only become more so.

A web site has been set up called Move Your Money, at which you can type in your zip code to locate a community bank near you. The Huffington Post has a page at which you can submit your experience with local banking, and an interactive map that allows you to drill down to your own area to find what people are saying about the small banks in your neighborhood.

The filmmaker Eugene Jareck has also created a video using the banking-related film “It’s a Wonderful Life” as a theme.

And as usual, Facebook is involved. The Move Your Money page there has over 5200 friends, with many people trading info and stories about local banks. Ditto Twitter. Here’s one post we found there from the blog “Through the Eyes of Mike Anthony.”

Today was the dawn of a new day for me. It was the day I said something with the money that I have. I took the leap and left my big bank for a hometown community bank…

I have been a big bank customer for seven years. For the most part, I’ve never really had any problems. Easy access to my bank twenty four seven is one of the many reasons I opened my accounts there. However, in recent years, they have decided they’re not going to appreciate my business. Any problems I had, I simply had to live with.

Well, I wasn’t going to stand for this… (T)he execs that asked for taxpayer money to help bail their banks out just raked in some pretty hefty profits, not to mention bonuses. I kept thinking to myself “My hard earned taxpayer money, the money I worked for, went to go help someone else who in turn just put it in their own pockets and became richer??” Oh, that was the last straw for me.

I happily walked into the big bank today to close out my accounts. When I walked in I went to see a branch manager. I simply asked her if I would be able to close out my account. Do you know what her response was? “Sure not a problem!” with a smile too!!!! I was absolutely appalled. I couldn’t believe a bank I’ve been so loyal too would just have no problem closing my accounts, not even asking me why! Then, if that wasn’t enough, once they were closed out, here was the last response I got “Thanks, have a great day!” again with a smile!!!

Well, of course they’re smiling. They’re raking in millions of dollars from hard-working taxpayers like us who are helping to bail them out, only for them to go ahead and pocket that money. I’m happy to be with my community bank. It’s not run by any shareholders. Only a board of directors with less than 10 branches. Sure, the conveniences I’ve come to expect from the larger bank aren’t all there, but here’s what it really boils down to: Do I want my money going to greedy people or do I want it representing the people who live where I live and are looking to actually help out the community rather than be extremely greedy? I have voted with my money…

Looks like a fair amount of people think too big to fail doesn’t mean too big to bail…not “out,” but “out of.”