April 2009
Not Our Fathers’ Auto Industry
The U.S. automotive industry operates in a highly regulated environment, a fact largely overlooked in recent congressional hearings over federal loan guarantees to domestic firms. These regulations affect more than three million American blue- and white-collar workers employed in the industry, along with shareholders and other investors, including retirees (and their spouses) vested in pension funds.
Su Rancho Es Mi Rancho
Reading the newspapers, I wonder which straw will break the camel’s back when it comes to illegal immigration. What will finally cause Americans to rise up and take back their country? The tenth family killed by an illegal-alien drunk driver? The 100th housewife butchered by an illegal-alien murderer? Or the next lawsuit that awards damages to illegal aliens after they have trespassed and vandalized a citizen’s property?
Regulation for Financial Sanity
The Federal Deposit Insurance Corporation (FDIC) just reported that U.S. banks lost money at a $100 billion annualized rate during the fourth quarter of 2008. Sounds grim, but it only describes the visible part of the iceberg our financial Titanic has hit. AIG, a giant insurance company, alone has been covered by the Federal Reserve for $150 billion in losses on derivatives on pools of subprime mortgages, with no end to its hemorrhaging in sight. According to the FDIC, as of the third quarter of 2008, a total of $13.6 trillion in assets, supported by $1.3 trillion of equity capital, was held by commercial banks in the United States. But derivatives (held primarily by four banks) totaled $177.1 trillion, or $136 for every dollar of capital. This massive amount of leverage means that a sneeze (such as derivatives of $2.5 trillion in subprime-mortgage pools) could give the banking system pneumonia. In fact, it did.
Dead Romans and Live Americans
“Libero Ingresso” says the little sign on the doors of an Italian shop. English speakers who know enough Italian to translate the words, Free Entrance, sometimes wonder if there was a time when Italian shopkeepers charged customers an admission fee, to be refunded, perhaps, if a purchase was made. It is just the sort of thing you might expect of Old Europe. We Anglo-Saxons, after all, revealed the truths of free-market economics at a time when the rest of the world was groaning in the darkness of mercantilism and protectionism, when honest farmers and merchants paid taxes on their windows and might be forced to labor on their lord’s land or the king’s highway.
Politics and Economics in America
All things at Rome are for sale.
—Juvenal
Thomas Jefferson has left us an account of a supper-table conversation in the very earliest days of the U.S. government. Vice President John Adams (who was intended by nature for a preacher) declaimed at length about the virtues of the British government, which, he said, if purged of its corruption, would be perfection. Secretary of the Treasury Alexander Hamilton (a canny immigrant bastard with a Napoleon complex) differed sharply. It was its corruption, he avowed, that gave the British government its great stability and power. Add in Jefferson’s views, which agreed with neither, and you anticipate almost the whole history of American political economy.
A New Deal—April 2009
PERSPECTIVE
Dead Romans and Live Americans
by Thomas Fleming
VIEWS
“It Takes Brass to Get Gold”
by Clyde Wilson
Politics and economics in America.
Regulation for Financial Sanity
by David A. Hartman
Government’s important (and reduced) role.
Not Our Fathers’ Auto Industry
by Greg Kaza
History versus economic models.
Ask an Entrepreneur
by William Lutz
Where to turn for sound economic advice.
Meet Rod Blago
As the former governor of Illinois crisscrossed the country on his farewell tour, I kept imagining him lying back in his seat, scalp being massaged by his personal hairstylist (it takes work to keep that Serbian gangster hairdo in pristine shape), while an old Mac Davis song played on an endless loop on his iPod:
O Lord, it’s hard to be humble
When you’re perfect in every way
I can’t wait to look in the mirror
’cause I get better looking each day
“Here, Bobby, hold that mirror up. I gotta work on my smile. Those gals on The View are gonna fall for my eyes.”
