Jordy Blog

Peter Schiff in Lehi this Saturday

BACKGROUND
Peter Schiff is a well-known Austrian-school economist, best-selling author, radio-show host, investment broker, and financial commentator. Peter is a recent senatorial candidate, and he also served as an economic adviser to Ron Paul’s 2008 presidential campaign. Peter Schiff is perhaps most famous for his detailed, accurate predictions of the housing bubble, the resulting subprime mortgage crisis, the automotive industry crisis, and the crisis in the banking and financial markets. These predictions are documented in his famous YouTube video called “Peter Schiff was right”, as well in his books and many other publications and recordings. Please join Campaign for Liberty and other liberty-minded groups at this FREE event, as Peter explains how we got here, where we’re going, and perhaps how you can protect yourself and your assets from other financial crises that still loom ahead! RSVP below!

IMPORTANT NOTE
Obviously this is pretty short notice. To respect Peter’s time, we will only be holding this event if we can get at least 50-100 solid RSVPs. (And ideally we would get much more than that!) What that means is that, in order for this event to happen, you’ll need to call, email, and text your friends. And don’t forget to share this link (http://tinyurl.com/schiff-rsvp) on Facebook and Twitter! We’ll email a final confirmation to everyone who signs up, regardless of the outcome.

Also note that Peter will also be speaking (along with lots of other great speakers) at the 2011 Grassroots Economic Summit hosted by iCaucus on the same day. There is a $25 charge to attend that event, but it may be worth it for those who have the time and money to attend an all-day event. There are more details on that event on the iCaucus site.

RSVP HERE!

Knight of the Old Republic

This is who I’m being for Halloween.  :)

Ron Paul was dead right about the economy. If you haven’t watched his videos on YouTube, you should. He was calling the bursting of the housing bubble well before it happened. And the credit crunch? Yep, he’s warned of that too.

Ron Paul would have smoked Obama in the debates, especially on questions regarding the economy. Anyway, there certainly wouldn’t have been any bantering about who didn’t support the bailouts enough. Good grief!

Sadly, the way things are looking I think we’re in for more of the same at best, no matter which major party candidate wins. Now that’s scary.

Happy Halloween!

Bush Signs “Mortgage Relief” Bill

Thank goodness our “limited government” Republicans are here to bail us out of the negative economic results of big government through the use of even more big government.  Socialized housing, here we come.

Arson, Rent Control, and the Perverse Incentives of Socialism

Allan Young plugged my last post in a piece he wrote about the potential of arson as a scapegoat of housing-bubble hardships.

His post reminds me of a similar report of arson, this time related to government rent control.  In Thomas Sowell’s excellent book, Basic Economics – A Citizen’s Guide to the Economy, he explains that in places where the government puts price ceilings on rent to make housing more affordable, rental properties often suffer major losses, and many owners end up torching their own properties to avoid suffer ongoing losses.  This trend is well-documented, by the way.  Introduce rent control in a city, and you can bet the level of arson in that city will increase.

So a socialistic program intended to make housing more available will actually make it less available; and because artificially low rents ensure that existing housing is filled while reducing profit incentive to build more housing, renters who might have a place to live under a free market system are forced to flee to another city without rent control, or become homeless.

Yes, it’s just another example of the way the perverse incentives of socialism love to backfire.

Anyway, the arson connection is interesting.  The Government should look at the real-world incentives of policies it creates, which often trigger results exactly opposite of those it intends.  The incentives leading to crash of the housing market demonstrate the exact same principle, but I’ll cover that tomorrow.

Big Government Responsible for Housing Bubble

 I wish more people understood the substance of this recent article from Ron Paul:

Big Government Responsible for Housing Bubble

The House passed two bills attempting to rehabilitate the housing and mortgage market this week.  There doesn’t seem to be any shortage of criticism and blame for the bad decisions, and rightly so.  Lenders and banks do share much of the blame for the overheated market.  Lending standards were relaxed, or even abandoned altogether, creating an exaggerated pool of homebuyers that led to ballooning home prices that many, especially real estate investors, expected to continue forever.  Now that the bubble has burst, the losses are staggering.

However, many in Washington fail to realize it was government intervention that brought on the current economic malaise in the first place.  The Federal Reserve’s artificially low interest rates created the loose, easy credit that ignited a voracious appetite in the banks for borrowers.  People made these lending and buying decisions based on market conditions that were wildly manipulated by government.  But part of sound financial management should be recognizing untenable or falsified economic conditions and adjusting risk accordingly.  Many banks failed to do that and are now looking to taxpayers to pick up the pieces.  This is wrong-headed and unfair, but Congress is attempting to do it anyway.

These housing bills address the crisis in exactly the wrong way, by seeking to hide the problem with more disastrous government bail-outs and interventions.  One measure, HR 5830 the Federal Housing Administration (FHA) Housing Stabilization and Homeowner Retention Act would allow the FHA to guarantee as much as $300 billion worth of refinanced home loans for those facing threat of foreclosure.  HR 5818 the Neighborhood Stabilization Act, would provide $15 billion in loans and grants to localities to purchase and renovate foreclosed homes with the object of then selling or renting out those homes.  Thankfully, President Bush has vowed to veto both of these bills.  It is neither morally right nor fiscally wise to socialize private losses in this way.

The solution is for government to stop micromanaging the economy and let the market adjust, as painful as that will be for some.  We should not force taxpayers, including renters and more frugal homeowners, to switch places with the speculators and take on those same risks that bankrupted them.  It is a terrible idea to spread the financial crisis any wider or deeper than it already is, and to prolong the agony years into the future.  Socializing the losses now will only create more unintended consequences that will give new excuses for further government interventions in the future. This is how government grows – by claiming to correct the mistakes it earlier created, all the while constantly shaking down the taxpayer.  The market needs a chance to correct itself, and Congress needs to avoid making the situation worse by pretending to ride to the rescue.

The only change I would make is to note that, despite its intentionally misleading name, the Federal Reserve is not a government entity; it’s a privately owned bank.

By the way, if everybody wants “change”, and everybody is worried about the economy, why does the Utah GOP (and the GOP in general) go out of their way to ensure that the only presidential candidate that is talking about meaningful change at the very root of our financial problems gets no serious consideration from the mainstream.  Ron Paul has been talking about sound monetary policy for years; and even thought the bubble has burst (making the validity of his tenets even more painfully obvious), he still gets no love from the powers that be at the Utah Republican Party Convention.

Be sure to follow Ron Paul’s weekly columns. They really are excellent.