Archive for the ‘wsj’ Category

Wall Street Journal organizes financial industry’s plan to destroy market discipline, take over regulation globally – hello?

December 23rd, 2009 No comments

[Update: My follow-up post outlines the WSJ`s report and chief recommendations.]

I thought I’d elevate what was a side and closing comment on Stephan Kinsella’s Avatar thread, about an appalling group of articles at the Wall Street Journal, which seems to have absolutely no clue about how the financial crisis stems from a chain of   government interventions, was fuelled by a government-inflated bubble and was “intermediated” by a financial industry rife with moral hazard.

The WSJ is great at drumming up fears about a world-wide climate change cabal, consisting of everyone one who showed up at Copenhagen, blogged about it or thought about it (fears of regulatory over-reach are perfectly understandable, but nary a cui bono question about the “skeptics” industry), but just what in the heck are they trying to pull here – help to CREATE world government, directed by the same firms and regulators who brought us market opacity, arbitraged investment and capital requirements intended to backstop deposit insurance, rampant profit-taking, financial meltdown and tremendous risk-shifting (to shareholders & taxpayers)? Is the WSJ really so naive about rent-seeking, moral hazard and mission creep?

I urge everyone to take a very close look at the WSJ’s “Future of Finance Initiative” and their recent “Fixing Global Finance” report.

Here’s a copy of my comment, as noted in my prior blog post (with some bracketed additions and changes to order):

What happens abroad at the “Avatar” is pretty basic, but the same
nonsense, with taxpayers, investors and consumers playing the role of
victim, can be seen at home. Has anybody seen the jaw-droppingly
appalling report that the WSJ has run on “Fixing Global Finance”, based
on their “Future of Finance Initiative”, in which they cheerlead a
bunch of financial firms in their efforts to abandon free markets and
to structure global regulation and regulators, to be staffed by a
revolving door of themselves?

[I think I’m being fair to see this as posing a threat to markets and
freedom at least as great as what others see in the more multi-faceted
climate change muddle.]

Even Paul Volker was appalled, not at
their willingness to create more regulation, but at their unwillingness
to confront the moral hazard problems (tied to regulation of public
corporations and the financial sector) that lie at the core of the
financial meltdown. [Volker seems to overlooked the crucial role of
government in driving and feeding the moral hazard problems.] Here’s the link, for those of you who missed it: Property rights, corporations and government-complicit theft? Hmm.

[Sounds familiar. Maybe some of those who want to battle corporate
excesses might not be so crazy after all, even if they neglect to
understand the risks of negative consequences of seeking help from
government. And maybe someday libertarians will get a little more
serious about addressing the festering
concatenation of corporate-linked problems that are generating so much
rot at the core of our government and public company/financial company

Corporations have very unfortunately been inescapably tainted
with statism from the get-go, in ways that play out negatively both
abroad and at home. I’ve devoted a fair amount of time to examining the
entanglement of corporations and government:

Our state governments were wrong to get into competition with each
other to grant corporate status to investor-owned enterprises, in
exchange for fees and later taxes. Corporate status freed investors
from down-side risk, by limiting liability to the amount of capital
contributed. This incentivized investors to encourage corporations to
embark on risky activities that shifted costs to innocent third
parties; the concentration of wealth in corporations (that now have
unlimited lives and purposes, subject to survival in the market); the
corruption of the court system that once protected third parties from
damages caused by others (by replacing strict liability with balancing
tests); and the ensuing battle over legislatures and courts to check
corporate abuses.

I will try to come back later and provide more details of the WSJ initiative/report, but for now let me note that I have relevant discussion at some of my posts on limited liability (see link above) and on “Rot at the Core“.

WSJ on "green" power: Us Grinches HATE Green indoctrination! We also don`t like consumer choice and free markets!

December 30th, 2008 No comments

A post on the Wall Street Journal`s enviro blog, Environmental Capital, reports on one disgruntled reaction to a recent school play called “Santa Goes Green”, and reports on a new children`s book (and website) by the same name.

The post closes with the sarcastic note, “No word yet on what kind of electricity is powering the web site’s servers. “

One wonders if the WSJ has heard of consumer choice or free markets (and is in favor of supporting either), since it doesn`t even raise the issue of parental/consumer preferences, which underlie the subject of the post.  Those who oppose the message of the book can peruse it and simply refuse to buy it for their child if they wish.  Similar principles apply to their child`s school play: they have some ability to object, although the degree of influence they may have may depend on whether the school is public or private.  Surely this would be an interesting point worth having readers think about.

Finally, of course, there is the final note of sarcasm – why does it not occur to the author to consider the legitimacy of consumer preferences for “green” power, and the difficulties that consumers face, in a regulated power market, for buying electricity sourced (and priced) the way they wish?  As Lew Rockwell points out, with truly free electricity markets, people would be able to put their money where their preference lie.   This is exactly the “Smart Grid” market that Google and GE have recently been targetting.

Why is the WSJ uninterested in discussing free markets, much less making the point that “green” consumers ought to be fans of free and competitive electricity markets?  So much easier to diss others` preferences, than to consider how to make allies for the free markets that would better allow all to satisfy their own preferences!

Barbarians at the gate? The WSJ wrings its hands over Somali pirates but ignores the failure of property owners to defend themselves

November 26th, 2008 No comments

The Wall Street Journal runs a remarkably whiny and unperceptive piece by weekly “Global View” columnist Bret Stephens about the expanding problem of ocean piracy off of Somali waters in and around the Gulf of Aden.   An unvarnished neocon and former editor of the Jerusalem Post, Stephens rather reflexively reviews the outbreak of piracy as an existential threat by barbarians to a civilized, flabby and impotent West, for which the proper response is a wakening resolve to defend civilization via a “muscular” (i.e., violent) response by the US and other civilized Western states, less hampered by a concern for legal niceties.  The editorial is accompanied by a video clip of an interview of Stephens by WSJ assistant editor James Freeman in which Stephens states his views even more strongly.

Under a headline of “Why Don’t We Hang Pirates Anymore?”, Stephens uses his soap box to decry a “legal exquisiteness” that has left the civilized West apparently impotent to deal with “the most primordial” of the various forms of “barbarism” alive today – the growing number of ragtag but surprisingly effective Somali pirates.  (What are the other forms of barbarism that merit mention by Stephens?  The “suicide bombers on Israeli buses, the stonings of Iranian women, and so on.”)  Stephens argues that a move from the halcyon days when captured pirates could be quickly and harshly dealt with – which treatment he argues was responsible for the elimination of piracy in the late 18th century (“a civilizational achievement no less great than the elimination of smallpox a century later”) – to modern civilized justice is responsible for this outbreak of piracy, and calls for a defense of civilization that keeps in mind the lesson for how such barbarism was defeated in the past (viz., quick and harsh treatment of pirates).  Says Stephens,

our collective inability to deal with it says much about how far we’ve regressed in the pursuit of what is mistakenly thought of as a more humane policy. A society that erases the memory of how it overcame barbarism in the past inevitably loses sight of the meaning of civilization, and the means of sustaining it.

Someone a little more skeptical of the benefits of government action might note that not only do the Somali pirates certainly not threaten civilization (and to date have used very little violence), but that the success of the pirates can be laid at the door of the owners of the vessels and cargo and their insurers, who have to date apparently failed utterly to even try to fend off any of the pirates.  The success of a few pirates has simply invited more piracy attempts – crime is contagious, as Ron Bailey notes today on Reason.  No doubt there are plenty of governments that would love to have their military actual provide some useful services, but why should the failure of property owners to take even minimal precautions and self-defense measures not only not be mentioned, but be rewarded with government stepping into the breach?

Given the lack of self-defense by vessels, it is hardly surprising that Somalis and others view ships as equivalent to common property, to be harvested on a first-come, first-served basis, with a resulting rush of entrepreneurial Somalis entering the new profession.  Sure, we could use a little law and order, but there’s a reason why firms that wish to survive and prosper put a little effort of their own into protecting their own assets (and those of their customers).

Stephens’ own failure to consider the responsibility of property owners to protect their own assets is surprising.  And Stephens strikingly and conveniently fails to note the role of the US in hampering the emergence of a Somali state and perpetuating lawlessness.  But to a neocon, so many problems look existential and seem to require the application of violence by states.  In spying “barbarous” actions by others, neocons (i) never seem to consider how barbarous are our states themselves (look at the many innocent deaths that the US is responsible for, directly or indirectly, in Iraq and Afghanistan), (ii) often ignore the role of government in creating problems, and (iii) frequently overlook the much vaster thefts perpetuated by governments and by corporate insiders who line their own pockets while persuading governments to socialize losses.   Neocons seem to form a part of the “Great Theft Machine”, by which every problem looks like a nail for the hammer of state, and whereby those calling for more hammer blows conveniently forget to call attention to those who benefit most from the use or manufacture of hammers.

It is a shame that the Wall Street Journal sees so many problems just crying out for “strong states” to solve, while ignoring the real and much more pressing problems that such states themselves create.  (We have encountered Stephens before, in an intelligence-insulting piece that dissed the leading National Academies of Science, the American Geophysical Union, the American Meteorological Society, Stephen Hawking, Thomas Schelling and now Exxon and AEI as “deluded” believers in the “sick-souled religion” of global warming.)

April Fools?! WSJ starts an enviro blog!

January 30th, 2008 No comments

“No, your computer isn’t misfiring. Welcome to a new Wall Street Journal blog, Environmental Capital.”

So says the WSJ’s announcement of its new blog, which replaces its Energy Roundup blog and, in addition to continue to track daily energy news, will “go further, analyzing how the energy world, and all of business, is adapting to mounting concern about the planet.”  The blog description states that: “Environmental Capital provides daily news and analysis of the business of the environment. It tracks how growing green concern, particularly over climate change, is roiling established industries and spurring new ones – and how that shift is affecting investors, consumers and the planet.”

What’s up with the WSJ?  Is it growing dotty and green, like its new owner, Rupert Murdoch*?  Or is it struggling for market share as industry changes to reflect a changing environment? 

Inquiring minds want to know!

The new blog is here:

h/t to Andrew Revkin of the New York Times, who warmly welcomes the competition:


* Murdoch, owner of Fox News, has made a personal commitment that his businesses will become climate neutral. In a recent speech, he stated his reason plainly. “I am no scientist. But I do know how to assess a risk — and this one is clear. Climate change poses clear, catastrophic threats. We may not agree on the extent, but we certainly can’t afford the risk of inaction.”

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