The Bear Stearns bailout and the associated calls for further Federal intervention in the mortgage market have highlighted once again an eternal economic truth: in an era of excessively cheap money, only the money is cheap. Everything else — assets, business ethics, economic stability, support for free markets – becomes either horrendously expensive or wholly […]

The Bear Stearns bailout was not quite unprecedented; Continental Illinois Bank in 1984 and Citicorp in 1991 were both beneficiaries of Fed-orchestrated rescue operations. And notoriously, the hedge fund Long Term Capital Management was not allowed to fail in 1998. However since the mortgage crisis is by no means over, and further financial difficulties seem […]

On August 27, 2006 this column suggested that US house prices would fall by 15% nationwide, peak to trough. On March 11, 2007 this column suggested that the total bad debt loss from the mortgage crisis would be about $1 trillion. At a meeting at the American Enterprise Institute Wednesday, it became clear that in […]

We are frequently told that modern democracies are “soft” and unable to bear the stress of a major war, compared with our iron-hearted ancestors with less affluent lives. However contemplation of the likely relative effects of the possible war between Colombia and Venezuela makes one realize: a society that finds the costs of a major […]

The complex and ongoing collapse in the US securities markets, and the extraordinarily expensive demise of Northern Rock in Britain, signify gross failures of banking regulation on both sides of the Atlantic. As regulation has grown more complex, it has become notably less effective. In the post-financial-holocaust world that we will shortly enter, how should […]