ALS: thoughts on freedom

Australian Libertarian Society Blog

Krazy Kevin!!

Enjoy!

May 1, 2009 Posted by | Politics, Pop culture | 4 Comments

Political Poetry

This is the freedom ride
We will not go and hide
We have just come over here
To keep the public occupied
We are going to ride
Around the Adelaide Hills
We are hardworking people
Who pay the bills

So say the bikies in Victoria today, who may yet morph into a fully fledged political movement. In NSW this won’t stop the police from being able to outlaw them if they can find a judge to agree, because under the new laws in NSW even political parties can apparently be outlawed without any right of appeal (or even any right to be informed of such a decision). In fact as a member of a political party I could in fact be forced to avoid all contact with other members of that party at a moments notice if a judge has secretly agreed to outlaw the party in question. NSW may not be a police state but the levers have been put in place.

For a more complete account of the new laws check out “An Australian Gun Owners blog“.

May 1, 2009 Posted by | General | 4 Comments

GFC confusion, part 1: Lehman collapse

There has been a lot said about the global financial crisis (GFC) and the subsequent recession. Some good. A lot of it quite bad. One of the better overviews of the GFC was done by Stacey & Morris. I think it’s important to directly address some of the confused arguments about the GFC and show why they’re not correct.

One commonly repeated idea is that the financial markets went in a spin because of the collapse of Lehman Brothers. This talking point generally goes on to suggest that the government should have bailed-out Lehman Brothers and should always bail-out delicate businesses otherwise you will get such a collapse. Not true.

First, it needs to be noted that it was the bail-out culture that lead Lehman Brothers (and other businesses) to not accept non-government solutions. Lehman Brothers rejected a takeover offer because they thought they could wait for a better one.

But more to the point, it is simply untrue that the Lehman collapse lead to the financial market problems. The problem is question is the rise in the money market interest rates (the Libor-OIS spread which measures risk assessment). In August 2007 this jumped from 0.1% up to about 0.8%. This was the start of the financial problems.

When Lehman collapsed (15 Sept 2008) the Libor-OIS spread ticked up to about 1%, and then shifted up to about 1.3% over the following days. Then on the 23rd of September 2008, a week after the Lehman collapse, the Libor-IOS spread suddenly shot up until it hit 3.5% in mid-October.

What happened on Tuesday 23 September that caused the change? Certainly not the Lehman collapse. Markets adjust to new information and the Lehman information was old. It is hard to believe that market players were sleeping for a week and then woke up on Tuesday morning and suddenly exclaimed “damn, Lehman collapsed, why didn’t anybody tell me?”

What did happen on that day is that Bernanke & Paulson testified at the Senate Banking Committee about their “rescue package”, asking for $700 billion and only providing a 2.5 page piece of legislation with no mention of oversight and few restrictions on the use. This seems to indicate that it was an increase in political risk that caused the financial market troubles. This is the conclusion from John Taylor, who provides further evidence in his book ‘Getting Off Track’.

May 1, 2009 Posted by | Economics | | 7 Comments

   

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