You are browsing the archive for 2014 January 06.

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No Crash for Norwegian Home Prices?

January 6, 2014 in Economics

By Mark Thornton

I have written about the housing bubble in Norway here, here, and here. Reuters reports that housing prices in Norway are finally expected to fall in 2014, but not by much. Their report indicates little chance of a big crash.

“It’s highly unlikely that we’ll see a big drop in housing prices in 2014,” Dryer said. “In the first quarter we should see some growth in prices but we expect it to be more moderate than in previous years.”

I think it is safe to say that this bird had been flown before. Is it the case that every time a bubble is finally recognized that the next report is that prices will only fall a little, but not crash?

…read more

Source: MISES INSTITUTE

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Religious Right Leaders Meet to Plot Big-Money Blitz For 2014 Elections

January 6, 2014 in Blogs

By Rob Boston, Talk To Action

Evangelical groups plot to take a page out of the playbooks of Karl Rove and the Koch brothers by raising millions of dollars.


These are challenging times for the Religious Right. The movement seems to be rapidly losing ground on one of its signature issues, same-sex marriage, and polls show large numbers of young people recoiling from the theocratic agenda of ultra-conservative fundamentalists.

So these groups must be ready to pack up their tents and go home, right?

Not quite. Politico reported last week that the leaders of more than two dozen Religious Right groups met recently in a type of super-council in Tysons Corner, Va., a Washington, D.C., suburb, to strategize about the best way to get back into the game this election year.

The answer they came up with is old-fashioned but often effective: Money.

Politico's Kenneth P. Vogel described the Religious Right's plan this way: “take a page out of the playbooks of Karl Rove and the Koch brothers by raising millions of dollars, coordinating their political spending and assiduously courting megadonors.”

The formation of a new Religious Right super PAC is just one option under consideration.

The story noted that the Republican Party's business wing is pouring lots of cash into the 2014 elections, in the hopes of giving the GOP enough of a boost to take control of the U.S. Senate. Members of the party's well-heeled business faction have vowed that this year they will outspend and outflank social conservatives with the aim of keeping unelectable candidates like Delaware's Christine O'Donnell off state ballots.

Religious Right groups are equally determined to keep their issues front and center in the GOP. The recent event was sponsored by the Council for National Policy, a secretive cabal of far-right groups that seeks to sculpt the Religious Right into a unified phalanx.

Politico reported that 25 organizations participated in the summit, among them Gary Bauer's American Values, Focus on the Family, Ralph Reed's Faith and Freedom Coalition, Americans United for Life, the Family Research Council and the National Organization for Marriage. Representatives of various Tea Party groups and organizations affiliated with …read more

Source: ALTERNET

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Report from the ASSA Conference

January 6, 2014 in Economics

By Peter G. Klein

I attended this year’s ASSA conference in Philadelphia. The big story for most attendees was the weather, with a big winter storm leading to delayed and cancelled flights and trains, missed connections, and a slight damper on enthusiasm. It is a huge conference with several thousand participants and hundreds of sessions, panels, receptions, and other events. As you can imagine, with that much activity, the activities included the good, the bad, and the ugly. For most attendees the highlights were probably the speeches by Bernanke and current AEA president Claudia Goldin and lively give-and-take between Larry Summers and John Taylor. (My sympathies lie with Taylor.) I presented a paper on university business incubators, showing that their contributions to innovation and entrepreneurship may be more modest than advertised. Many Austrian economists attend the conference but the Austrian school is not, unfortunately, well represented on the program.

Much of the conference activities take place behind the scenes, as hundreds of colleges and universities interview huge numbers of job-market candidates in hotel suites, lounges, and cattle pens. (Just kidding about the last.) It’s a well-organized market about which much has been written (the AEA even tries to incorporate some economic theory into its market design). The overall experience for students (and recruiters) is highly variable (though not, apparently, as bad as with the Modern Language Association).

I met several young Austrian economists who are looking for jobs, or have recently secured them and are moving their way along the tenure track. This is all to the good, of course. However, I’ve noticed a disturbing trend in recent years, in which young Austrians seem less interested in the substance of their work than in how it will be received; their emphasis is on “playing the game” rather than seeking the truth. You also hear this said of the movement as a whole; unless Austrians get better at playing the game, our movement is in trouble. I’m reminded of Joe Salerno’s distinction between “professional” and “vocational” economists. Of course, Austrians seeking careers in academia need jobs and should be encouraged to follow the appropriate professional steps to market and distribute their work, to improve their teaching, and to maximize their chances at professional success. But we do not measure the health of our movement solely by PhDs granted, positions secured, or articles published.

…read more

Source: MISES INSTITUTE

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James Grant reviews ‘Fortune Tellers’ by Walter Friedman

January 6, 2014 in Economics

By Mises Updates

James Grant in the WSJ discusses Roger Babson, Irving Fisher, and John Moody:

So when stocks crashed in 1929, Hoover, as president, summoned the captains of industry to the White House. Profits should bear the brunt of the initial adjustment to the downturn, he said. Capital-spending plans should go forward, if not be accelerated. Wages must not be cut, as they had been in the bad old days of 1920-21. The executives shook hands on it.

In the wake of this unprecedented display of federal economic activism, Wesley Mitchell, the economist, said: “While a business cycle is passing over from a phase of expansion to the phase of contraction, the president of the United States is organizing the economic forces of the country to check the threatened decline at the start, if possible. A more significant experiment in the technique of balance could not be devised than the one which is being performed before our very eyes.”

The experiment in balance ended in monumental imbalance. (For chapter and verse, see Murray Rothbard’s “America’s Great Depression” or “Banking and the Business Cycle” by C.A. Phillips et al.) The laissez-faire depression of 1920-21 was over and done within 18 months. The federally doctored depression of 1929-33 spanned 43 months. Hoover failed for the same reason that Babson, Moody and Fisher fell short: America’s economy is too complex to predict, much less to direct from on high.

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Source: MISES INSTITUTE

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A Portrait of Local ‘Pro-Business’ Politics

January 6, 2014 in Economics

By Ryan McMaken

As I noted in this Mises Daily article from 2012:

[C]hambers of commerce across America, and other lobbying arms of the so-called business community are in the business of lobbying ceaselessly for more government spending, for more subsidies, and for more state power in the name of “business-friendly” policies that often amount to little more than subsidy programs.

At the local level as well, chambers have become major advocates of tax increases and more government spending.

In other words, business leaders have little interest in actually protecting private property. Here’s recent news coming out of Ellisville, Missouri:

For years, city officials have been planning to lure Wal-Mart to Ellisville, about a half-hour away from St. Louis. Their most recent plan involved building a 150,000-square-foot Supercenter, which would have cost $50 million. A private developer could have received up to $15 million in tax incentives. Even more outrageously, Ellisville could have also authorized eminent domain to acquire property.

But in October, after intense pressure from both grassroots activists and a new mayor, Wal-Mart announced it had “decided not to proceed” with the Ellisville store.

In an earlier story, it was reported that Ellisville’s city council had approved tax incentives for the developer. Upon hearing that the taxpayers would foot the bill for a private developer, at least one local business “leader” was jubilant:

Tom DiCarlo, president of commercial real estate firm Pangean Properties, said the project would be a “shining example of what can be accomplished for Ellisville’s economic recovery.”

There are two parts to this controversy. The town planned to lure Wal-Mart to town by providing tax incentives, and the city council also planned to steal land and hand it over to private developers to sweeten the deal. Clearly, the more insidious part of this deal is the eminent domain part, which is nothing more than expropriation for the benefit of a favored special interest. I’m sensitive to the fact that that “tax incentives” could potentially be defined as “tax cuts,” but it’s worth noting that the advocates of such incentives rarely have any interest in opposing taxes. They simply view tax incentives as a policy tool for governments to choose winners and losers. In practice, the tax incentives are designed to benefit the favored firms while government spending and taxation continues unabated for everyone else. (The Boston Tea Party was a reaction to a “tax incentive” program for the East India Company.)

Anyone …read more

Source: MISES INSTITUTE

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Hoppe’s ‘What Must be Done’ Now in Japanese.

January 6, 2014 in Economics

By Mises Updates

Tatsuya Iwakura strikes again. This time, he’s translated ‘What Must Be Done’ by Hans-Hermann Hoppe.

Here is the English version, and here is the Japanese version at Amazon.

This is a monograph. Summary:

How should anarcho-capitalists engage the modern state? Hans-Hermann Hoppe dissects the nature of the modern democratic state and suggests strategies for enacting a bottom-up libertarian revolution in ideology and civil government.

Hoppe begins by examining the nature of the state as “a monopolist of defense and the provision and enforcement of law and order.” Like all state-mandated monopolies, the monopoly of law enforcement also leads to higher prices and lower quality of services. Why is this state of affairs tolerated? The modern democratic states, much more than the monarchies and princely estates of old, are seen as moral and necessary despite ample evidence to the contrary.

In the minds of most modern citizens of democratic states, law and order is what the state says it is, and this has led to a long period of centralization and power consolidation by those states.

How can the libertarian fight back against this trend?

Hoppe offers a program that can pave the way for a new libertarian society.

…read more

Source: MISES INSTITUTE

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Sen. Rand Paul Appears on Fox New's Hannity with Eric Bolling – January 4, 2014

January 6, 2014 in Politics & Elections

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Source: RAND PAUL

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Sen Rand Paul Appears on This Week with George Stephanopoulos – January 5, 2014

January 6, 2014 in Politics & Elections

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Source: RAND PAUL

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Is Egypt Committing Economic Suicide?

January 6, 2014 in Economics

By Dalibor Rohac

Dalibor Rohac

How does one save an economy on the brink of bankruptcy? In Egypt, the answer seems to be a stimulus plan. Egypt’s finance minister, Ahmed Galal, announced that starting in January the government will increase the planned stimulus package by 25 per cent to a total of $4.36bn.

All of this is happening at a time when the country’s budget deficit is at 14 per cent of GDP, and the growth in public debt — currently at 87.5 per cent of GDP — is out of control.

The new stimulus plan is to be financed largely through short term borrowing from the Gulf countries — Saudi Arabia, Kuwait, and United Arab Emirates — which all pledged support to Egypt’s government following the ousting of President Mohamed Morsi in July 2013. Reliance on this form of aid is precarious not only because of its temporary nature but also because the Gulf countries hardly have reputations as reliable donors.

Egypt’s economic problems are not cyclical and cannot be solved by more spending or by looser monetary policy.”

Somewhat perplexingly, Galal is by no means oblivious to the magnitude of the country’s fiscal problem. A graduate of Boston University, he worked at the World Bank for 18 years and authored several prominent academic publications about the problems of emerging economies, and most prominently the Arab world. He is thus the last person in Egypt who could be seen as ignorant of the perils that the rising debt represents. Indeed, he said recently that he “worried sick about the budget deficit” — and for a good reason.

Galal’s gamble is that the spending increase — most of it allocated towards public investment, with a minor part used for salary raises in the public sector — will help Egypt’s economy grow out of its current problems. With high rates of economic growth — such as the 7 per cent annually that Egypt enjoyed before the end of Mubarak’s rule — the soaring public debt would certainly become more manageable. More importantly, stronger economic growth would mean more jobs for Egypt’s masses of unemployed young people — many of whom were the moving force behind the events of the Arab Spring.

Yet this gamble is unlikely to work. Increasing public spending at a time when the deficit-to-GDP ratio is nearing triple digits would be seen as an extremely risky strategy, even for a country afflicted …read more

Source: OP-EDS

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Are Banks Too Big to Jail?

January 6, 2014 in Economics

By Mark A. Calabria, Lisa Gilbert

Mark A. Calabria and Lisa Gilbert

A libertarian from The Cato Institute and a progressive from Public Citizen may not often agree on politics or what the proper role of government should be, but we agree the public has been kept in the dark on the “too big to jail” issue for too long.

Just over a year ago, many were stunned when the Department of Justice decided not to indict HSBC, headquartered in London an one of the world’s largest banks. The Justice Department made this decision despite the fact that the bank willfully failed to comply with anti-money laundering laws.

The public has been kept in the dark on the “too big to jail” issue for too long.”

HSBC’s criminal activities seemed to most observers to provide a strong case for the government. These activities included permitting narcotics traffickers to launder hundreds of millions of dollars of drug proceeds through HBSC subsidiaries. It also facilitated hundreds of millions of dollars in transactions on behalf of customers in countries that are sanctioned by the United States: Cuba, Iran, Libya, Sudan and Myanmar (formerly known as Burma).

But instead of charging HSBC, the Justice Department entered intoa deferred prosecution agreement. Under its terms, the government agreed not to prosecute the company for its actions in exchange for HSBC acknowledging wrongdoing, paying a fine and agreeing to cooperate with the government and remedy its compliance programs. The back’s CEO issued a statement accepting responsibility and saying: “The HSBC of today is a fundamentally different organisation from the one that made those mistakes.”

One can question the wisdom of our drug war and whether banks should be drafted into law enforcement duties, but those policy questions do not change a bank’s duty to comply with the law.

In a Senate Judiciary Committee hearing after the settlement, U.S. Sen. Charles Grassley, R-Iowa, asked Attorney General Eric Holder why the government chose not to indict HSBC.

Holder responded by saying he was not talking about HSBC in particular but that, “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy.”

From Holder’s statements, it appears that the government was so worried …read more

Source: OP-EDS