Bankruptcy, Not Bailout

http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview

I have been sent this link by 2 friends that do not know each other, but know me very well. Jeffrey Miron makes some amazing points.

• The implicit backing of the federal government for Freddie and Fannie encouraged them to take on far more risk than a free market would have allowed.
• "Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending."
• "The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government."
• "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."

Read the article. He makes many more points that fill in the blanks, but I figured 5 was a good synopsis.

Bring On the Shorts

Bloomberg is reporting that 2 companies, Diamond Hill Investment Group and JMP Group Inc. have opted to let their shares be short sold. I know very little about these companies, but I do know that what they've done takes guts and is the truly moral thing for any company in their position to do.

The regulators are giving the financial companies unfair exemptions instead of letting the market run its course and are protecting the weak at the expense of the good. 

Congratulations to the leadership of these 2 firms in standing up for what capitalism is all about, free and fair competition with transparency and justice for all.

Math Joke

The ark lands after The Flood. Noah lets all the animals out and says, "Go and multiply."

Several months pass. Noah decides to check up on the animals. All are doing fine except a pair of snakes.

"What's the problem?" says Noah.
"Cut down some trees and let us live there", say the snakes.

Noah follows their advice. Several more weeks pass. Noah checks on the snakes again. Lots of little snakes, everybody is happy.

Noah asks, "Want to tell me how the trees helped?"
"Certainly", say the snakes. "We're adders, and we need logs to multiply."