Can Wall Street re-invent itself again?
By Steven Malanga
Manhattan Institute
Much of the discussion about the financial system’s woes has revolved around strategies to get out of the current mess—from government help for homeowners holding mortgages they can’t re-pay, to takeovers of Fannie Mae and Freddie Mac, to government-arranged marriages like the Bear Stearns-J.P. Morgan deal.
But at some point, when all the bad mortgages have been washed out of the system and all the slumping mortgage-backed bonds have been written off or bought at a steep discount, we’ll look up and realize that something else has happened.
Wall Street’s profit paradigm has largely disappeared, and unless it can find a new one quickly we’re facing an extended period of retrenchment that will have enormous consequences for the Street itself, for those who do business with it, and for those who have lived on Wall Street’s outsized profits for years, including governments like New York City and State.
Starting in the early 1980s, Wall Street entered into a period of unprecedented growth that has been interrupted by only a few short blips in the late 1980s and in the early part of the new century…. Wall Street has proved remarkably good at re-inventing itself during this 25-to-30 year period, even when times seemed as bad as today…. But being burned for a third time may break the spell.
Read more @ manhattan-institute.org
Putting the brakes on Detroit bailout
James Gattuso & Nicolas Loris
Heritage Foundation
Nothing gathers a crowd in Washington like the sight of money being handed out. Thus, in the wake of this weekend’s federal takeover of Freddie Mac and Fannie Mae, automobile manufacturers in the United States were requesting help from the government as well. The Big Three—General Motors, Ford and Chrysler—are asking for $50 billion in low-interest federal loans to develop alternatives to conventional fossil fuel powered vehicles.
The idea has garnered surprisingly broad support: Both Barack Obama and John McCain have both expressed their support for federal assistance to the industry, which is based in the critical swing state of Michigan. (Ralph Nader, meanwhile—who made his reputation as an anti-Detroit crusader—is opposing the move.)…
The proposed bailout, however, would do little to solve the very real long-term problems of the U.S. automobile industry, which include not just fuel inefficiency but large retirement, health, and other costs. Meanwhile, American taxpayers would be left to pay the tab for years of bad business decisions by Detroit. …
Supporters of federal aid say that the aid is necessary for them to finance a shift to more efficient vehicles. High gasoline prices have driven consumers away from purchasing trucks, sport utility vehicles (SUVs), and minivans….But why should taxpayers be asked to pay for this change of business model? Detroit’s dependence on big, non-fuel efficient vehicles was its own doing.
Poverty line is drawn way too low
Urban Institute
The Census Bureau released its annual report on income, poverty, and health insurance coverage for the U.S. population on August 26, 2008. According to the report, median household income increased by 1.3 percent in 2007, while the overall poverty rate dipped slightly and the number and percentage of people without health insurance decreased.
While the overall numbers were positive, not everyone shared in the economic gains. The number and percentage of children in poverty increased, and households in the lowest 40 percent of the income distribution had no significant income gains.
The poverty line or poverty threshold was developed in the 1960s, based on the cost of an economy food plan and the fact that families then spent about a third of their income on food. Although pretax cash income understates the resources available to low-income families because it fails to consider the value of food stamps and the value of refundable tax credits…, the poverty line is way below what it takes for a family to cover basic living costs today. Doing so has become even more difficult as costs of the most important household expenses—food, transportation, and housing—have increased over the past year.
Read more @ urban.org
Eliminate the drinking age altogether
Will Wilkinson
CATO Institute
A hundred and thirty college presidents and chancellors have signed a controversial statement calling for a new debate about the legal drinking age; their notion is to lower it from 21 to 18. Alas, college presidents are politicians of a sort, so none will take the reopened debate where it needs to go. There should be no drinking age at all.
By tradition each state sets its own minimum age for alcohol, but Congress has intruded. A 1984 federal law decrees that if a state picks anything less than 21 it can lose 10% of its federal highway funds. That’s why the debate is so bizarrely fixated on automobiles and the automobile infrastructure. But this debate should be about the desirability of a culture that fosters freedom and responsibility, not about cars and how many people of what age die in them….
Age limits make drinking a badge of adulthood and build in the minds of teens a romantic sense of the transgressive danger of alcohol. That’s what so often leads to the abuse of alcohol as a ritual of release from the authority of parents….. There’s certainly evidence that if we got rid of age limits, teens would drink more. But drinking more is a drinking problem only in the minds of neo-Prohibitionists…
In an America without a minimum drinking age, we would shift our focus from demon rum and car crash statistics to creating an environment where parents are expected to supervise their children and alcohol would become for teens just another thing, like bicycles or swimming pools, that can either make your day or take your life.
Internet pesticide purchases raise concerns
Jillian Olsen
Center for Public Integrity
…Like books, cars, and music, pesticides are available online more than ever, for purchase by both professional exterminators and unsuspecting consumers, said Brian Rowe, pesticide section manager at Michigan’s Pesticide and Plant Pest Management Division. Vendors and customers are now linked by a few clicks of the mouse, letting them circumvent regulations meant to protect people from harmful chemicals….
Officials with the U.S. Environmental Protection Agency and state pesticide departments, charged with managing pesticide sales through all venues, are concerned that some chemicals sold online are not what the vendor claims and could pose a threat to humans or the environment….
While officials have no reliable records to demonstrate the extent of the problem, the pesticides available over the Internet raise serious concerns because of their potency. Vendors are often ignorant of the varied regulations governing the use of pesticides, several state regulators said. Particularly with auction sites like eBay.com, where there are millions of individual sellers, education is the challenge….
For most states, a lack of resources prevents effective monitoring of the web….
Many argue that the EPA should be doing more, emphasizing the challenge of controlling a global marketplace with such a narrow jurisdiction.
