Thursday, October 2, 2008

Reaction to the VP debate

Relative to expectations, Sarah Palin hit a home run. I hated it when she talked about corporate greed and nasty CEOs, but I loved it when she consistently responded to Biden's torrent of statistics with an appeal to higher principles such as smaller government and keeping taxes low. She was a better communicator than Biden. She was poised, and she made no major errors that I could detect. Her best moment, I thought, was when she got off of her talking points about the mortgage crisis and tried to remind us that in the end, everyone must take personal responsbility for their actions. Nobody forced anyone to take out a gigantic mortgage with no money down, after all.

Biden and Obama have taken pandering to a new low by repeating endlessly that a vote for them is worth a $1,000 check in the pocket of the great majority of voters.

Unfortunately, neither one shed much light on the subprime mortgage crisis. I wish I could, but it is the end result of many years of bad policies and political interference with what should have been free markets. Therefore there is no easy or ideal solution to this mess. I would vote for trying whatever seems to make sense, while trying to avoid the huge, messy and expansive government solutions whereever possible. Why not try changing the accounting rules? That wouldn't be so difficult, and wouldn't cost anyone a dime. How about expanding government guarantees of deposits; anything that will restore confidence in the banking system.


CDLIC said...


Although my position is Government butt-out of markets, and due to it continually butting-in it has been the major cause leading to the current mess, I agree with you something must be done, and therefore, yet reluctantly, ask the following regarding Government intervention: what is you opinion that 1) the FDIC issue net asset certificates as done to save banks during the S&L crisis, and 2) the SEC stop the practice of naked short selling?



Scott Grannis said...

I'm not an expert on the S&L crisis. As for naked short selling, I see it as a problem only to the extent that the market believes the government will continue seizing companies that have been pounded down by falling asset prices. Naked short sellers can reap a fortune if they beat down a stock enough that rating agencies then downgrade them and that forces them to sell securities which depresses their price, etc. Take the government seizures and the rating agencies out of the equation and the problem disappears. Normally I would see no problem with naked short selling.