Wednesday, July 23, 2008

Mae I help you?

PRE-POSTSCRIPT: Within the "MAE/MAC" story are wheels within wheels. They're government-backed and subsidized. But they also have their own PACs and spread the campaign donation funds around to Congress. Nonlinear feedback government corruption!

Read here for more from the Wall Street Journal, which was all over this long before it became "news."
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The non-recession continues, with strengthening economic growth figures. Since we live in an age when the media is its own parody, leave it to the Onion to tell it to us straight.*

But what about rising energy prices? That's due more to the falling dollar than anything else. The falling dollar does boost exports. Among other things, strong exports are keeping us from slipping into recession.

But what about the mortgage/finance crisis? That's real, but it effects only one part of the economy. Its roots lie mostly with bad government policies, although demographics play a role too: the Boomers have exited their prime house-buying years. In fact, I wouldn't be surprised if this thing doesn't end with the government-backed mortgage sector going through a controlled disintegration. It's just like the savings and loan crisis from 15 years ago, except Fannie Mae, Freddie Mac, and Ginnie Mae are government-created and government-guaranteed. If their loans go bad, government has to step in and make good on them for their investors. That's what "government-backed" means. Don't expect that fact to stop a lot of whining about "bailing out investors." If we want to not do that, we should stop the government from backing private-sector loans.

The Wall Street Journal has waged a lonely, decade-plus-long campaign against the reckless credit practices of the government-backed mortgage industry. (See this from a year ago.) Reality has caught up, at last, but -- alas -- not the rest of the media.

Boogie Nights return: Here's a depressing item from Megan McArdle on a recent, ignorant declaration by a bunch of University of Chicago professors protesting the positive influence of two of the school's crown jewels, its Economics and Finance departments. Here is more of the Boomer, New Left "progressive" illiteracy at work. Instead of telling people the truth (which is known in the "global south," by the way) -- that the accelerating integration of economies has been immensely beneficial to poorer countries -- we get stale neo-Marxist blather from the 1970s.

Even trained economists who should know better, but who are also infected with desire to relive their long-haired youth -- like Krugman -- are swooning for specious arguments against free trade. And don't mistake it: such willed ignorance is foretaste of an Obama administration, wiping out 30 years of economic progress on an altar of Boomer nostalgia.

We really do seem to be slipping back 30 years or so, what with inflation, the disappearance of a conservative alternative in American politics, and the revival of discredited leftism. Similar policies (an explosion of public spending) lead to similar results. The only things missing are the bad drugs, bad sex, and polyester leisure suits.

But I do hear a cheezy ABBA soundtrack in the background ....
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* Of course, Samuelson does get it right, as he always does. He routinely puts the rest of the media to shame.

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