Jim's Blog

It is often claimed that the disaster was produced by deregulation.  What deregulation you may ask?

Well, mostly, the dismantling of Glass-Steagall.  I don’t think dismantling Glass-Steagall caused the crisis, but it is undeniable that if Glass-Steagall had remained in effect, the crisis would have been far less severe, for Glass-Steagall restrained financial institutions from being too big to fail.  It was the biggest institutions, the institutions too big to fail, that behaved the worst, and lost the largest proportion of the assets they managed.  Glass-Steagall also prevented financial institutions from all being “diversified” in exactly the same way, which “diversification” is not very diverse at all.

So why, and how, was Glass-Steagall dismantled?  It was dismantled by being replaced and superseded by Basel II.  Glass-Steagall consists of seventeen pages, that a competent person can, with some effort, comprehend.  Basel II consists of thousands of pages, no one knows how many, and no one person knows more than a tiny fraction of what is in these thousands of pages.

That is “deregulation”.

There have been numberless highly successful prosecutions for predatory lending, even though there is no plausible evidence that predatory lending has ever happened in recent decades, nor has such evidence ever been presented in court, nor is it plausible that predatory lending could be profitable except for lenders who break the borrowers legs and arms in the event of default. Read the rest of this entry »

Bryan Caplan asked why socialism turned out evil and proposed three competing explanations.  Volokh Conspiracy followed up, and a horde of socialists appeared out of the wood work, objecting to the premise of the question, claiming that socialism was just fine.

So time to re-run my golden oldie:  Why socialism needs killing fields.  Read the rest of this entry »

Capital controls are characteristic of third world dictatorships teetering on the edge of bankruptcy.  And now America has capital controls.

On the one hand, there is a lot of ruin in a nation. On the other hand, that which cannot continue, will stop. The present level of government spending is unsustainable.

At what point then, do we get general collapse? Read the rest of this entry »