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Posts Tagged ‘crisis’

I present below, without comment, a recent interview of Schiff (investor, Austrian economist, accurate predictor of the current crisis) where he talks about the economic crisis and the stimulus. He predicts hyper-inflation worse than anything we have ever seen if we keep going down this path.

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Arianna Huffington’s latest article condemning laissez-faire as a failed philosophy hits all the right lefty notes. Parts of it almost seem lifted from Obama’s election rhetoric. Not wholly unexpected from a woman who once proclaimed that she only texts three people: her two teenage children and Barack Obama.

Actually, Huffington’s piece is so bad that it almost reads like a self-parody. From her depiction of Bush — a man who oversaw the biggest regulatory expansion since Nixon — as the ultimate free market champion to her refusal to even attempt any kind of analysis,  Huffington reveals herself, like so many others, as a person blinded by her love for the echo chamber she lives in. Naomi Klein’s terrible book which conveniently lumped together all her enemies into an undefinable mass that she could pummel still made a basic, incontrovertible point — times of crisis give those in power an opportunity to extend their sway. Even the Times article Huffington so approvingly links to contains some redeeming features — interesting quotes, lots of relevant history, a (correct) indictment of Bush’s disastrous home-ownership-at-all-costs policy — that make it a good read. Articles by Krugman and Stiglitz, despite their obvious bias often bordering on intellectual dishonesty, usually contain one or two nuggets of truth. Huffington’s piece, full of huffy moralizing and utter lack of intellectual depth, makes you wonder why you just gave up two minutes of your life.

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“The hottest places in hell are reserved for those who in times of great moral crises maintain their neutrality”

Dante Alighieri

[Edit: A reader points out that this quote is actually due to JFK, who (incorrectly) attributed it to Dante]

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The Austrian school of economics is in a permanent “We told you so” mode these days. In this very readable post, Roderick Long gives the Austrian economist viewpoint of the current financial meltdown. After offering a detailed explanation of why it is regulation that got us into this mess (most of his points I agree with, some I am skeptical), he asks the million dollar question:

Okay, some will say, maybe it was government, not laissez-faire, that got us into the mess; but now that we’re in it, don’t we need government to get us out?

His answer is that the government cannot get us out.

There’s just not much the government can do that will help (apart from repealing the laws, regulations, and subsidies that first created and then perpetuate the mess – but that would be less a doing than a ceasing-to-do, and anyway given the incentives acting on government decision-makers there’s no realistic chance of that happening). The bailout is just diverting resources from the productive poor and middle-class to the failed rich, which doesn’t seem like a very good idea one either ethical or economic grounds. The only good effect such a bailout could possibly have (at least if you prefer costly boondoggles without piles of dead bodies to costly boondoggles with them) is if it convinced the warmongers that they just can’t afford a global war on terror right now – but there’s no sign that they’re being convinced of anything of the sort.

So what should the government do? Nothing, is his answer.

I don’t know if I agree with him. Even if he is right on the economics, there are political consequences to doing nothing, and not all of them are good for freedom or economic health. Furthermore, not beng a trained economist, I cannot fully measure the accuracy of his claims or pass a judgement on whether the Austrian approach to money is superior to, say, that of the more mainstream Chicago school of economics. The fact that the Austrian economists have — unlike everyone else — always used verbal, imprecise and non-mathematical arguments, does not exactly inspire scientific confidence.

However, I do recommend that you read the whole thing.

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One of the disturbing aspects of the whole bailout thing is the staggering amount of power it gives to Paulson, the Treasury secretary (basically, complete discretion, with virtually no oversight, about how to spend $700 billion). You’d think that the Congress would try to solve this problem, not make it worse. The whole thing beggars belief.

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