Coolidge Corner

Kling & Roberts on the Crisis One Year In

Had the pleasure of being there in person.  Arnold Kling (starts around 7:30) is a little more technical but his insights into policy responses are well thought out and delivered.  Russ Roberts (at 33:00) is a bit more accessible (I think his poker analogy is brilliant).  It was interesting to see him get a little fired up as I am used to him being so polite on EconTalk.

For Your Friday Listening Pleasure

Wow

So, the fed bought AIG for $85 Billion.

Not sure that I have much insightful to say without a little more reflection.  I will say the prospect of "the Next New Deal" is both terrifying and increasingly likely.

Federal Reserve: Same bad policy, now with internal self-contradiction

The New York Times, reporting on Federal Reserve and Treasury warnings the housing crisis may be more protracted then first thought:

Officials said that the Federal Reserve remained concerned that the declining housing market would not reach its bottom and financial markets would not become more stable before some time next year,

This struck me as unexpectedly accurate given the source.  Also, I couldn't help but think of Rothbard:

Only if there is no interference, direct or threatened, with prices, wage rates, and business liquidation will the necessary adjustment proceed with smooth dispatch. Any propping up of shaky positions postpones liquidation and aggravates unsound conditions. (America's Great Depression, Ch. 7, p. 185)

Is the FED now willing to push back against the agony-prolonging calls to prop up prices and slow foreclosures?  Unfortunately, even their own understanding of the need for restraint is insufficient to rival their hunger for control and power:

[Bernanke]  outlined a series of steps the Fed is considering in the coming months. One such step would extend low-interest lending programs to Wall Street’s largest investment banks into next year. . . Mr. Bernanke also recommended that Congress grant the Fed broader authority to monitor and supervise the financial markets to assure greater stability in the future.

[Treasury Secretary Henry M. Paulson, Jr. indicated] the Bush administration was working to prevent as many home foreclosures as possible