Cato's monthly in depth issue online magazine.

Hat tip to Will Wilkinson .

This month's topic is free-markets vs. corporatist markets.

Says Will:

this month’s Cato Unbound should be required reading for: leftists and liberals who think libertarians are corporate shills; conservatives with Adam Smith ties who love corporations; libertarians who love Wal-Mart a little too much.

--promoted by pico

Remember the big housing rescue bill that Congress passed and Bush signed int law in July?  That bill, The Housing and Economic Recovery Act of 2008 , contained a program called Hope for Homeowners that was supposed to keep 400,000 families out of foreclosure by allowing homeowners on the brink to refinance into a 30 year fixed rate FHA-insured loan for 90% of the current appraised value of the home. 

So we went to Barnes and Noble the other day, and I'm sitting on the ground in the children's section with my 8-month old baby looking for a book to read to him. I take my eye off him for a minute or two and when I look back he's reached into one of the lower shelves, pulled off a Spongebob paperback, and is chewing on it. It's one of those cheapo books, with the pages only slightly thicker than newspaper, so by the time I notice we're the proud soon-to-be owners of this $3.99 treasure.

Emmmmmm, markets periodicaly crashing, "middle class" continualy declining, China on the economic rise, wealth continues concentrating. Sounds kind of familiar. I'll check back in a year and see how the "predictions" are coming along. Enjoy your political diversions my working class commrades :)

In today's commentary on Marketplace, Robert Reich articulated some thoughts that have been bouncing around in my head since the government started bailing out financial firms: Maybe 'too big to fail' is just 'too big':

The Black Swan , by Nassim Nicholas Taleb is an engaging book about an important topic. However, if a reader who is familiar with the topic(s) will not find any new ideas.

I came across this editorial in the WaPo . Regardless of your political persuasion, the editorial makes an honest point. It's not a biased point, not a political point and not an ideological point. It's the unsexy truth that shouldn't get in the way of how we choose to view the financial matters that have dominated headlines in recent weeks.

Promoted by stinerman

Yes, federal revenues have been increasing since 2003 [Update: This diary was posted in 2007. 2008 revenues are projected to decline in real terms and even in nominal terms] but, needless to say (or one would think), that coincidence hardly establishes causation. While some talk show blowhards, politicians and editorial page / op-ed writers persist in contending that the Bush tax cuts have had a net positive impact on revenues, the strong, broad consensus among economists -- including conservative economists and Bush's own current and former top economists -- is to the contrary: The Bush tax cuts have had a net negative impact on revenues (i.e., revenues would have been higher, and would be higher today, if the Bush tax cuts had not taken place).

This thread is for the final Presidential debate. We'll be starting the live-blog at 8:45p EST. Readers without laptops (is that like Doctors Without Borders?) may want to know that the debate will be available on Hulu.com . Post questions you'd like the candidates to answer, your thoughts on who might win the debate, what each candidate needs to do to win the debate, etc.

I can not believe in America we are even considering a potential POTUS who subscribes to the giant scale of government intervention Barack Obama represents?

Milton must be rolling over in his grave!

Mark Thoma has a a post about the possible corollary between income concentration and bubbles with the idea of one causing the other.

Bubbles – the devastating kind – seem to occur during a period of time when income is becoming increasingly concentrated at the top.

That then raises a question. Do large bubbles cause income to become more concentrated, or does the concentration of income cause the bubbles?

Hat tip to Reason Magazine:

(promoted by John)

Crossposted from Source of Title

Leave it to the geniuses in Congress-- they already want to undo the smartest move they've made all year.

As part of The Housing and Economic Recovery Act of 2008 , signed into law by President Bush in June, Congress correctly banned all forms of seller-financed downpayment assistance for FHA-insured mortgages:

SEC. 2113. CASH INVESTMENT REQUIREMENT AND PROHIBITION OF SELLER-FUNDED DOWN PAYMENT ASSISTANCE 

•   (A) IN GENERAL- A mortgage insured under this section shall be executed by a mortgagor who shall have paid, in cash or its equivalent, on account of the property an amount equal to not less than 3.5 percent of the appraised value of the property or such larger amount as the Secretary may determine.
• (C) PROHIBITED SOURCES- In no case shall the funds required by subparagraph (A) consist, in whole or in part, of funds provided by any of the following parties before, during, or after closing of the property sale:
  (i) The seller or any other person or entity that financially benefits from the transaction.
  (ii) Any third party or entity that is reimbursed, directly or indirectly, by any of the parties described in clause (i).

This part of the law went into effect October 1st, discontinuing the use of these sham downpayments that have already cost taxpayers $4.6 billion in unexpected losses due to excess defaults on FHA-insured mortgages this year alone, according to HUD Secretary Brian Montgomery.

But to the surprise of approximately nobody, there is already a movement underway in Congress to abolish this common-sense return to a true 3% downpayment requirement for FHA-insured loans.  Representative Al Green (not the R&B singer, but the Democrat from Texas whose largest campaign donor is the National Association of Realtors ) has introduced a bill that would once again make seller-financed downpayment assistance legal for FHA loans.  In a legislative environment where Democrats and Republicans can't agree on the color of the sky, no less than 26 sponsors from both sides of the aisle are eager for the taxpayers to once again back mortgages with fake downpayments.

Economist Mark Thorton explains with the graphs and an interesting video.

Here's the biggest culprit in the current climate:

Adjusted for inflation, we had negative interest rates during a period of time. That would mean something along the lines that less than NOBODY wanted loans in supply/demand driven rates and thus that we were paying people to take loans. Hmmm. Hardly the case in reality.

This is silly on the part of Ezra.

He links to CEPR table of stats that runs on the theme: Are you better off than you were 8 years ago? Edit: image moved below the fold

Hat tip to Mises .

First video is Paul addressing Bernanke. Excellent.

Second Video is on Fox News. Even better.

Promoted by Brendan

In my previous entry , I focused on the flawed GSE reform bill which passed the House in 2005. 

As it turns out, there was a much stronger bill coming out of the Senate Banking Committee at about the same time.  That bill , authored by Chuck Hagel (R-Nebraska), addressed many of the problems which eventually contributed to the downfall of Fannie Mae and Freddie Mac.

Russ Roberts, one of my all 'round favorite bloggers of Cafe Hayek fame and professor of economics at George Mason University has a great article in Forbes .

I'd heard about this survey a while back. And now, it's done.

Hat tip to Tyler Cowen for alerting me to the results.

I am actually as surprised as Cowen, a libertarian independent like me, that the polls were as close as they were on a general level considering the personal politics of Economists to skew "liberal" (despite that, as a group, those liberals tend to skew "Right" compared to others in Academia)

Obama won the general vote by a count of 59% to 31%.

crossposted from Source of Title  

Ohio Congressman Michael Oxley (R-Mansfield) has an axe to grind with critics who blame Congress for failing to pass reforms that may have averted the need for this week's government takeover of mortgage giants Fannie Mae and Freddie Mac.  As Oxley sees it, he did his part by crafting a reform bill in 2005 and getting it passed by the House of Representatives. 

From the Financial Times :

[Oxley] fumes about the criticism of his House colleagues. “All the handwringing and bedwetting is going on without remembering how the House stepped up on this,” he says. “What did we get from the White House? We got a one-finger salute.”

The House bill, the 2005 Federal Housing Finance Reform Act, would have created a stronger regulator with new powers to increase capital at Fannie and Freddie, to limit their portfolios and to deal with the possibility of receivership.

...

“We missed a golden opportunity that would have avoided a lot of the problems we’re facing now, if we hadn’t had such a firm ideological position at the White House and the Treasury and the Fed,” Mr Oxley says.

But a look back at the efforts to pass that bill calls into question Oxley's version of events.