A different kind of political blog.

An uplifting speech from the Czech Prime Minister to the Conservative Party Conference:

This issue involves the trust in the individual and in his ability to make his free decisions. I know that the Conservative Party today strives for a reform aiming to revive the individual responsibility. “Human action or human design?” That is the question. People do not need an omnipresent all-caring state. What they need is opportunity.

Follow the link for the transcript.

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Mises.org reports on false confidence in the state to guarantee stability, and…

Moreover, as many commentators have remarked, guaranteeing large financial firms from failure will bring calls for regulating them still more tightly. This is an old story: past political interventions create the reasons for new ones.

The present financial turmoil is really a failure of global statism. Socialism has failed once again. Let’s try capitalism.

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The FT reports* on the continuing sale of financial firms’ securities:

A recent ban on short selling failed to halt the sell-off in the financial services sector in London on Tuesday as doubts about the effectiveness of a proposed $700bn US government rescue plan grew.

Details of the plans for the $700bn fund to buy distressed assets from banks remained unclear after further negotiations in Washington on Monday, leaving investors afraid the final package would be watered down.

Meanwhile, the Ludwig von Mises Institute asks, “Can the Rescue Plan Fix the US Economy?”:

But why should pumping more money do the trick? It seems that, for most experts, money is an agent for economic growth. Money however is just a medium of exchange and cannot create real wealth as such. On the contrary, monetary expansion results in the squandering of real wealth and economic impoverishment (look at Zimbabwe). If the pool of real savings is declining, then real economic growth will follow suit regardless of how much money the Fed is going to pump.

Both are recommended reading:

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* The FT updated their article slightly as the UK responded to initial US trading.

As a result of the bailouts and the socialization of the mortgage agencies, the financial system is now fully infected with moral hazard. The disastrous effects of these government interventions will show up soon. The major task of bringing the capital structure in order is still ahead and more pain is in the waiting.

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The Guardian:

A £12bn takeover of Britain’s biggest lender, HBOS, failed to halt the deepening crisis in world financial markets last night, as a wave of fresh speculation on global stock markets saw two of Wall Street’s most prestigious investment banks targeted as the latest victims of the credit crunch.

So, irrespective of whether this was or was not the correct crisis measure, over the years four financial institutions have become one — with consequent effects on competition and therefore the effectiveness of market forces — and still the rot has not stopped.

I see the Prime Minister personally intervened in this business arrangement. I note that the present solution to firms being too big to fail — that is, too big to be subject to market forces — is to make them bigger and less subject to market forces.

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