In normal times, people don't like their houses foreclosed upon. That's because someone who owes $60,000 on a $100,000 house has $40,000 in equity that they're in danger of losing if they default. Conversely, banks who foreclose on their deadbeat borrowers generally don't mind foreclosing because they can easily sell a $100,000 house to get back ( Read more... )

In the 1980s, the Reagan administration pushed the "welfare queen" myth - anecdotes about other people (blacks or mexicans, usually) driving Cadillacs that your tax money paid for. Although there were a very small number of creative criminals gaming the system by breaking existing laws (the same way that systems are always gamed by creative ( Read more... )

From a libertarian perspective the government's job is to do little more than enforce contracts and insure that people keep their promises. If I pay you ten dollars for a pallet of eggs and you don't give me the eggs, or you give me old rotten eggs, it's the government's job to provide law enforcement and courts where I can get back either my ten ( Read more... )

Efficient markets must be free from moral hazard to operate efficiently. People who make bad choices should suffer bad consequences. Stupidity should be painful for people who make bad choices, not for people smart enough to avoid bad choices. Otherwise, what incentive do they have to make good choices? I'll explain how it works ( Read more... )

John Maynard Keynes was a profane, arrogant, promiscuous, overtly bisexual British elitist. He was on the board of directors of the British Eugenics Society. In the early 1900s he was a member of the free love Bloomsbury Group, many of whose members complained that Keynes' behavior was too dirty for them. He slept with the men from Bloomsbury ( Read more... )

Earlier this week I mentioned that bank executives don't have to take free government money if they want to keep their big salaries. And hey, guess what? Bank of America's CEO suddenly decided that his bank doesn't need any more of our money. Their executives get to keep their huge salaries, we get to keep our money. Win-win. My only regret is ( Read more... )

Gas prices are cheap right now. Really cheap. Between June and December, gas prices have dropped 56% from a national peak over $4 to $1.79 today. What's going on? The election's been over for almost a month now and prices keep falling. Wasn't the point of the Flying Spaghetti Republican Gas Conspiracy to artifically lower gas prices during ( Read more... )

I never buy the extended warranty for cell phones, TVs, or other products*. It's insurance. The problem with insurance is that your payments are certain but your coverage isn't. You're guaranteed to pay them money every month, but when things go bad they're not guaranteed to actually cover what you thought they were going to cover. Suddenly you ( Read more... )

In yesterday's post about Joe The Plumber, mmcirvin set me straight about something that I have been totally wrong about for a very long time, and I expect that others might be mistaken about. Consider the following (extremely simplified) tax brackets ( Read more... )

The Dow has been all over the place recently. That's because trading volumes have been relatively low - most people are staying out of the market completely and preserving what they have rather than risk it in a shaky market. The real indicators of how well the economy is doing right now are the bond rate and the TED spread ( Read more... )