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Attention readers:

You may be interested to know that financial deregulation and pure unchecked greed were not the cause of, but are in fact the obvious solution to, the ongoing economic crisis. What’s more, none of this would have happened if not for the Federal Reserve and the 16th amendment — Hayek, Friedman et al predicted it!

If this strikes you as a compelling thesis, slap on a Ron Paul button, wipe the semen off your copy of Atlas Shrugged, and head on down to the IMU for what promises to be a stimulating series of conversations.

[AcadStudorg] Austrian Economics, book/discussion club!!
Students for Austrian Economics (UI) [austrian.econ.uiowa@gmail.com]
Sent: Thursday, September 10, 2009 11:08 AM
Attachments:
Hello,

In light of the near total meltdown of our banking and financial systems in Fall of 2008, much more attention is being paid to the field of economics. In particular, many more scholars are paying attention to the Austrian School of Economics, which unlike other economic schools of thought, saw our current crisis coming years ahead of time and have a theory to explain the events we have seen.

Are you skeptical of multi-trillion dollar deficits and debt?

Do you trust a monolithic, all-powerful central bank that centrally plans monetary policy and sets interest rates?

Do you believe that freedom, and not government, should be the driving force in the economy?

If you are concerned about any of the above questions, then you will likely be interested in attending the regular weekly meetings of ‘Students for Austrian Economics (UI)’

Come Join Us! Every Thursday at 6 pm, beginning this Thursday, September 10th, in the Kirkwood Room (257) of the Iowa Memorial Union.

We will be studying economics in the traditions of the great 20th century economists Ludwig von Mises and Murray Rothbard!

We will begin introducing the basic concepts that make the Austrian School distinct and follow up with pertinent conversation about current events.

It will be a wonderful, intellectually stimulating time!
Thank you for your consideration,

-Students for Austrian Economics-

www.mises.org

So, y’know how the right wing keeps getting crazier and crazier in their hatred for the President? I’d assumed it was just because they’re, well, crazy, and unrepentantly racist and just generally bad people. But it suddenly occurs to me that it’s not just that they’re getting carried away with partisan opposition, craziness, unrepentant racism, and general malevolence. Consider the following scenarios:

1. Particularly harmful elements of Party A controls all levers of government for close to a decade. Nearly all of the worst fears of a particular segment of Party B are realized, thanks to the avarice and misanthropy of the ruling portion of Party A. For this wing of Party B, it’s as if their society is completely turned on its ear, everything they hold dear is being crushed, and there’s little cause for optimism. Suddenly, Party B wins control of the government in a landslide, thanks in large part to Party B’s sudden interest in the aforementioned segment of itself. Things start to improve immediately, and Party B rejoices. Unfortunately, a horrific economic crisis explodes at pretty much the same time, and the outlook is extremely dire. However, given the demonstrated competence of the leader of Party B, as well as the widespread acceptance of the idea that recovery will mean a dramatic structuring of society in a way that the recently empowered part of Party B has been working toward for decades, there is cause for optimism. So members of this particular segment of Party B find themselves simultaneously relieved, exhilarated, and terrified.

2. Party A has controlled government for close to a decade, and despite early popularity, the segment of Party A that seems to be running things becomes increasingly reviled by the majority of the citizenry, even as all the things they fought to see happen for decades are implemented. As it turns out, they were wrong about pretty much everything. To make matters worse, Party B is getting much more popular at the same time that it is coming under the sway of the worst enemies of Party A. And, on top of all of this, the economy has completely collapsed (probably as a result of the implementation of Party A’s favorite fantasies), which is setting the stage for massive changes that happen to resonate strongly with the worst fears of Party A’s suddenly unpopular wing. There is nothing for these Party A stalwarts to feel other than defeat and hopelessness. They are utterly crushed and humiliated, perhaps permanently, probably for decades to come, but certainly for the next several years. There is no room for optimism.

Things are really bad for wingnuts right now. You remember in late 2001 how all us progressives started to feel a certain dread about what was to come? And how reality ended up much worse than we were expecting? And how each new day brought fresh horrors that could barely be believed? That’s where they are right now: everything they’ve ever believed in is blowing up in their faces, they’ve become completely politically marginal, their enemies are in power, and they’re afraid that Barack Obama will use the economic meltdown in the same way that George W. Bush used 9/11: as a political cudgel to smash in the brains of anybody who stands in the way of a radical agenda.

Of course, for most of us, Obama’s agenda isn’t nearly radical enough, but remember that the wingnuts think Karl Marx was an avatar of Satan. They have no idea what socialism is, except that it’s roughly synonymous with evil. And they’re proud of this ignorance: to know Marx/Satan is to become him. So, armed with willful ignorance, an alarming capacity for cognitive dissonance, and only the merest seed of empathy (though only in the form of “it could happen to ME!”), they go nuts. Barack Obama becomes their George W. Bush (which, given their dedication to dualistic thinking, makes perfect sense to them).

It’s not that I have any sympathy for the wingnuts (how could anybody?), but I’m trying to feel a little bit of empathy for them, if for no other reason than it’ll make it easier to keep beating them. Plus, right now we’re where the wingers were in 2002, and maybe if we understand them better, we can avoid their fate, or at least learn how NOT to lose when we’re inevitably tossed from power.

Here’s a juicy quote from some corporate tax lawyer from a recent AP story on how Senate Republicans are blocking efforts to tax the AIG bonuses (surprise, surprise). It appears in the context of a discussion of the possibility that legislation preventing bonuses will lead to corporations raising salaries to match what employees lose in bonuses.

Here it is:

“‘If the vast majority of bonuses become fixed salaries that would harm the institutions because they would have higher fixed costs,’ Willens said. ‘What happens if the bank suffers through a poor year? It has all these fixed obligations they have to meet. That’s the beauty of the bonuses.’”

Um, I’d say the bank has suffered through a pretty poor year. A year so poor that it needed to accept billions of dollars of government bailout money to stop it from utterly collapsing. And yet it still felt obligated to pay out these ludicrous bonuses. How is that ANY DIFFERENT from what he’s talking about?

Seriously, how does this guy have a job?

“Current crisis not related to fuel prices: Current problem is not that consumers are demanding different, more fuel-efficient vehicles; the problem is that consumers are not buying vehicles at all.” – UAW

You spent years trying to get me to drive a Ford Gigantor, Chevy Truckles (now with balls!) and Chrysler Mini-my-wallet Van. There’s a reason the car I drive is from 1991, actually quite a few. The largest factor? It gets 26 m.p.g. highway and it’s all-wheel-drive! Why would I pay you for no improvement? Certainly it’s time you set the bar at 50+ for anything that doesn’t tow something. You’ve had years to work on this.

I’m not the only one suggesting that maybe the DJIA dive is simply the traders on Wall Street doing what they can to force the bailout:

(A) bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This “moral hazard” generates enormous distortions in an economy’s allocation of its financial resources.

Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.

Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.

Further, the current credit freeze is likely due to Wall Street’s hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.

http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html

200 Economists agree that yesterday’s vote was the right way to go. Is it a cause to celebrate? No, but it’s certainly time to stop saying things like “Great Depression 2.”

So, John McCain’s campaign has been in trouble for the last week or so, as Palin’s popularity has plummeted, his bestest buddy turns out to be (surprise, surprise) collecting hundreds of thousands of dollars for nothing other than assuring that investment banks will have inside access to a McCain White House, and he and pretty much everyone around him have been vomiting gaffes as if their common sense had been up all night shotgunning ipecac. The economic situation others here have been covering well (and I’ve been avoiding, out of sheer terror) is turning into McCain’s worst enemy.

And now, he’s suspending his campaign until some sort of bandaid is signed into law. Nobody appears to be fooled by this gambit.

So now, I ask, with all due sincerity, is there any way in the world for McCain to win this election?

like me, you may still be unclear on a lot of the details of the current economic clusterfuck. but here’s one fact you can easily wrap your head around, even if its implications are nothing short of mind-boggling:

at $700 billion, the bailout so far has exceeded the cost of the entire iraq war. 

did you get that? in one week, we’ve spent more money buying bad debt from wall street than we have in five years of all-out adventurist profligacy in the middle east. remember all those no-bid reconstruction contracts? remember the pallette-loads of cash that simply disappeared into thin air? the millions spent blowing up infrastructure and then rebuilding it? the bribes doled out to tribal leaders in anbar to ensure that “the surge worked”? chump change. drops in the bucket compared to last week’s emergency measures in the financial sector, a move the treasury secretary isn’t even willing to say will work.

it gets worse:

Sen. Richard Shelby (R-Ala.), the ranking member of the Senate Banking Committee, thought the $700 billion estimate … was not realistic. “It’s going to be about $1 trillion at least.” 

at least a trillion. is that even a real number? how many gajillions is that, exactly? 

something very strange is happening to me. my outrage is evolving into something transcendent: a kind of awestruck giddiness, mixed with what i can only describe as dazed, grudging respect for the psychotics who pulled this off. a sum of money so vast exceeds the capacity of my conceptual and moral vocabulary to describe it. this is more than a fuckup or an ambitious plan gone horribly wrong. it is trans-historical; we have entered the territory of the sublime.

around the middle of last week, i was still shrugging and making the observation that this is what happens when you put a cokehead in charge of your economy. but now i see that i haven’t given george bush and his corporatist gang-rape squad nearly enough credit. the magnificent mess we are witnessing could not have resulted from simple irresponsibility and corruption; you or i couldn’t pull it off if we tried. these people are evil geniuses in the fullest sense of the term, with all the obsessive, grandiose and amoral connotations one associates with comic book supervillains. they have turned our country into a vast nihilist art installation right under our noses, while we debated whether they merely corrupt or simply incompetent.

bravo, i say! my hat is off. i simply don’t know how else to react.

I don’t have thousands tied up in mutual funds comprised of stocks, backed, through some convoluted process, by AIG. I don’t have a house that’s rapidly losing value, or for that matter a car loan to deal with. It’s times like these where the screams of sheer terror coming from the financial sector have that finite degree of separation from my daily life that it almost feels good to be a lowly student employed by a large healthcare organization. All that aside, it’s really hard not to feel like this is All George’s Fault. For now, I’m reading a lot of articles on The Motley Fool, which is providing some real temperance to the sky-is-falling feeling. I also appreciate the range of opinions realclearmarkets.com is offering (admittedly, it’s easy to click over from RCP).

As I said above, I’ve got little invested (sorry) in this directly, more so indirectly, and yet it’s quickly becoming the issue of Election 2008. In fact, it’s certainly bigger than the election. 700 billion dollars of wealth invested in the market evaporated and more to go considering the slide of nearly 500 points today means it’s not long before this starts taking out the retirement savings of everyone. Thank goodness it’s rapidly becoming the election platform plank that might just beat McSame into a quiet life at one of his dozen homes. Take a little breather from the hot AZ summer John, maybe some time at the beach? Certainly Cindy’s beer distributorship is depression-proof. Retire and let someone with patience and a willingness to learn step in to deal with this issue which you claimed to have little expertise in before last week. It’s hard to look at a January 2009 with McCain/Palin at the helm and envision anything better than the horrible situation the economy is in today.

Which leads me to another Kos post, also in the digg feed, which quotes the former National Review Online publisher, Wick Allison, as saying:

It gives me comfort just to think that after eight years of George W. Bush we will have a president who has actually read the Federalist Papers.

Most important, Obama will be a realist. I doubt he will taunt Russia, as McCain has, at the very moment when our national interest requires it as an ally. The crucial distinction in my mind is that, unlike John McCain, I am convinced he will not impulsively take us into another war unless American national interests are directly threatened.

“Every great cause,” Eric Hoffer wrote, “begins as a movement, becomes a business, and eventually degenerates into a racket.” As a cause, conservatism may be dead. But as a stance, as a way of making judgments in a complex and difficult world, I believe it is very much alive in the instincts and predispositions of a liberal named Barack Obama.

May all fiscal conservatives reach such enlightened positions after this week’s mess.

There’s flip-flopping, and then there’s this. Pheeew.

But in all fairness to John McCain, the disconnect runs deeper in the GOP. How do you premise your entire economic platform on keeping government’s dirty mitts off our sacred financial institutions, then insist the government bail them out when they inevitably succumb to the too-predictable consequences of unchecked, boneheaded, myopic greed? How to reconcile the yawning discrepancy between these two postures? Let me give it a shot…

Everybody knows that free markets are identical with freedom and state planned economies are evil. Taking over an entire industry is about the most evil thing a government can do, but only when that industry is successful. See, when a foreign government dares to nationalize a critical economic resource — let’s say oil — because its private owners — who, just for fun, let’s postulate have their home offices on Wall Street — have failed to handle that national resource in a way that sustains that nation’s economy or benefits its people… well, that’s bad. Real bad. We go to war over stuff like that when other people do it.

But when our own financial institutions get into trouble, the government has to take control in order to right the ship. Otherwise, the economy would suffer! It may seem unfair to expect taxpayers to bail out companies that do stupid, evil things that ultimately lead to their own undoing. But things will be even worse if we don’t. It’s all about the public good!

And so you see, it’s not that Republicans are against government oversight of private enterprise. On the contrary, when the shit happens they advocate the same policies as guys like Hugo Chavez. It’s just that they draw a key distinction between assets and liabilities: when a business is successful, hands off! As long as somebody somewhere can theoretically be making money off it, any form of government intervention would be oppressive. BUT, the moment that moneymaking enterprise ceases to make money and instead creates problems, it’s on the rest of us to dig the moneymakers out of the hole they have dug for us all.

I hope that clears up any confusion. You may now resume voting Republican on the principle that they’re good with money.

I love how our Captains of Industry constantly call for the government to keep its nose out of the marketplace, and then as soon as all their awful decisions catch up with them it suddenly becomes to government’s job to bail them out.

Anyway, if you or anyone you know has any interest in buying a house in Greenfield, Mass. (Charlie? Got any family out here who want to move?) please send them my way. Before things get ugly. Please.