Great Comments at Forum on Education

I've been gone on vacation for a while, sorry for the break.

I love economists. There is no Hollywood actor, pop-star, comedian, or celebrity who so regularly blasphemes the mythologies of our times than economists.

This short forum which includes several economists and a few other "prestigious" people at the Chronicle on higher education should be read. Economist Bryan Caplan, makes a clinical, but very non-PC comment. Two excerpts:

"For whom is college attendance socially beneficial?" My answer: no more than 5 percent of high-school graduates, because college is mostly what economists call a "signaling game." Most college courses teach few useful job skills; their main function is to signal to employers that students are smart, hard-working, and conformist.

And another...

College attendance, in my view, is usually a drain on our economy and society. Encouraging talented people to spend many years in wasteful status contests deprives the economy of millions of man-years of output. If this were really an "investment," of course, it might be worth it. But I see little connection between the skills that students acquire in college and the skills they'll need later in life.

The whole article is filled with anti-college thoughts. The non-economists basically parrot myths and pablum. I generally agree that most of college is a status game where learning is secondary to "winning".

HT: Econlog

Paul Krugman doubts Inflation

Paul Krugman, who constantly congratulates himself on predicted the housing collapse, is putting his reputation on the line in his belief that the U.S. is living out the Keynesian model.

He writes:

First things first. It’s important to realize that there’s no hint of inflationary pressures in the economy right now. Consumer prices are lower now than they were a year ago, and wage increases have stalled in the face of high unemployment. Deflation, not inflation, is the clear and present danger.

Hmmm...deflation?

Oil has gone from $32/barrel to $66/barrel (WTI morning of 5/29). The dollar keeps dropping. The 5yr TIPS-Treasury spread (a market indicator of inflation) has risen from -0.7% to +1.4% over the last few months and its growth shows no signs of abating.

Then, in his standard style he throws up a straw man:

But it’s hard to escape the sense that the current inflation fear-mongering is partly political, coming largely from economists who had no problem with deficits caused by tax cuts but suddenly became fiscal scolds when the government started spending money to rescue the economy. And their goal seems to be to bully the Obama administration into abandoning those rescue efforts.

Find me one libertarian economist who had no problem with Bush's profligate spending. Right now, it's the libertarians making the most noise about inflation, not the middling "conservatives" like Greg Mankiw who is all for massive money printing.

Someone is going to be gloating over the next few months, we'll just have to wait and see.

Moderates are Opening Their Eyes

David Brooks, who can only weakly be considered a conservative in my opinion, pinned a nice column at the New York Times today on Obama's recent forays into fascism-lite.

An excerpt (note his sarcastic tone):

These events have heralded a new era of partnership between the White House and private companies, one that calls to mind the wonderful partnership Germany formed with France and the Low Countries at the start of World War II. The press conferences and events marking this new spirit of cooperation have been the emotional highlights of the administration so far.

Wow. He likens Obama's relationship to corporations to Nazi Germany's relationship to Vichy France. Didn't expect to see the day where I thought David Brooks would use stronger terms than I.

At this, the C.E.O.’s behind him don frozen smiles, exuding the sort of spontaneous enthusiasm often seen at North Korean pep rallies.

Double Wow. Now it's a comparison to Kim Jung Il's North Korea.

David, you need to leave some hyperbole on the plate for the blogosphere. That's our niche, you're treading on our turf.

Housing Boom and Bust in France

The amicable Vincent Benard has posted his presentation from the American Dream Coalition conference in Seattle, Washington. This post is in English! (No cutting a pasting into translators required!!).

Housing booms and busts are nothing new to Europe. If you want to understand the seeds, read his post. He boils it down to two necessary ingredients: Credit expansion by a central bank and too much land use regulation. On these points I completely agree.

Mises Conference on the Great Depression

On Saturday, May 30th, the Ludwig Von Mises Institute is hosting an event in Fort Worth, Texas dubbed "The Great Depression: Then and Now". A good friend of mine is planning to go, so I thought I would invite my readers to attend as well. (All 20 of you!)

There are several great speakers, including my friend* Bob Murphy, author of the new The Politically Incorrect Guide to the Great Depression and the New Deal. Bob seems to be a laugh riot from the youtube videos I've seen of his other speaking engagements.

Others Speakers are:

Walter Block
Thomas DiLorenzo
Jeffrey Tucker
Thomas E Woods, Jr. (author of the NYT bestseller Meltdown)

What's great about this conference?

First, it's only $75, which is a bargain. Second, if it's anything like the similar Mises Circle in Houston the crowds are usually small so if you wanted to get a book signed or ask some questions that is available. Third, I'll be there! If you let me know that you are going I may get a group together the night before to have dinner where you'll get to meet my darling wife and kids.

Reservations

To register, you can go here, and if enough of you mention my name in the comments I may be able to negotiate a reserved table closer to the front.

* I'm not sure how you refer to someone with whom you have exchanged a number of e-mails and debated on a blog. My bar for internet "friend" is whether they consistently respond to my e-mails, which he does.

Pat Buchanan becomes an Austrian

Pat Buchanan has a great column today at Human Events. He has apparently just read Tom Woods' Meltdown. A little secret: Tom Woods is an Austrian economist. Pat Buchanan seems to have discovered the Austrian Business Cycle Theory for the first time. The fact that the book has made the New York Times Best Sellers list (#18), and the fact that mainstream Republican thinkers are embracing it, is a good sign.

He seems most taken with Woods' account of the severe 1920-21 depression, where the U.S. quickly got out of it by doing what? NOTHING!

The "forgotten depression" of 1920-21 was caused by a huge increase in the money supply for President Wilson's war. When the Fed started to tighten at war's end, production fell 20 percent from mid-1920 to mid-1921, far more than today.

Why did we not read about that depression?

Because the much-maligned Warren Harding refused to intervene. He let businesses and banks fail and prices fall. Hence, the fever quickly broke, and we were off into "the Roaring Twenties."

He also rebuts the myth that Herbert Hoover was a laissez faire ideologue who refused to intervene as the economy began to tank

Herbert Hoover, contrary to the myth that he was a small-government conservative, renounced laissez-faire, raised taxes, launched public works projects, extended emergency loans to failing businesses and lent money to the states for relief programs.

Hoover did what Obama is doing.

Indeed, in 1932, FDR lacerated Hoover for having presided over the "greatest spending administration in peacetime in all of history." His running mate, John Nance Garner, accused Hoover of "leading the country down the path to socialism." And "Cactus Jack" was right.

Finally, he gets to the myth that World War II ended the great depression:

But how can an economy be truly growing 13 percent a year, as the economists claim, when there is rationing, shortages everywhere, declining product quality, an inability to buy homes and cars, and a longer work week? When the cream of the labor force is in boot camps or military bases, or storming beaches, sailing ships, flying planes and marching with rifles, how can your real economy be booming?

It was 1946, a year economists predicted would result in a postwar depression because government spending fell by two-thirds, that proved the biggest boom year in all of American history.

With this finale:

Should not this creature from Jekyl Island [The Federal Reserve], for all its manifold crimes and sins against the republic, also be summarily put to death?

Yes Pat, let's end the Fed.

Social Security Runs a Deficit 8 Years Early

In recent years, America's social security plan has been predicted to start running deficits by the end of the next decade. This 2004 publication from Cato predicted 2018. The Heritage foundation quoted the Trustees Report in 2008 that predicted 2017.

Now, Kevin Hassett of the American Enterprise Institute, summarizes in a piece at Bloomberg, the latest Congressional Budget Office Report. The Bad News: The yearly surplus effectively hits ZERO next year. He also argues that deficits will be here from now on.

Some excerpts:

We have all been so busy whining about bonuses at American International Group Inc. and arguing about the so-called card- check legislation that we forgot to watch the Social Security surplus. While we were looking away, that surplus disappeared, eight years ahead of schedule.
...
According to the latest Congressional Budget Office estimate, the Social Security surplus will be only $3 billion in 2010. That number is almost surely too rosy, and the actual realization next year will be a big deficit. In February, according to data from the Social Security Office of the Actuary, the program paid out more in benefits than it collected in taxes and interest combined. There will be many more months like that before we are through.
...
Opponents of Social Security reform have tried for years to underplay the problem by stating that the program’s finances are fine. Social Security was, in the most recent report by its trustees, expected to run surpluses all the way to 2017. Why bother to reform something now if the crisis is so far off?

Who wants to bet that the entire surplus (which is a silly notion anyway) will no longer survive until 2041 in the next Trustee Summary?

A Great Column on AIG

Wendy Milling is a new contributor to Real Clear Markets. I believe this is her first article there. It is good, and accurate. Read it.

Update - Here's a great "I Quit" letter from an AIG employee published in the NY Times. (HT: Club for Growth)

Another Day, Another Trillion

The U.S. government debt continues to skyrocket as the Obama Administration burns through cash. The probability of eventual U.S. default increases by they day. Now, Treasury Secretary Tim Geithner throws a potential $1 Trillion of gasoline on the fire.

Paul Krugman writes:

The likely cost to taxpayers aside, there’s something strange going on here. By my count, this is the third time Obama administration officials have floated a scheme that is essentially a rehash of the Paulson plan, each time adding a new set of bells and whistles and claiming that they’re doing something completely different. This is starting to look obsessive.

But the real problem with this plan is that it won’t work. Yes, troubled assets may be somewhat undervalued. But the fact is that financial executives literally bet their banks on the belief that there was no housing bubble, and the related belief that unprecedented levels of household debt were no problem. They lost that bet. And no amount of financial hocus-pocus — for that is what the Geithner plan amounts to — will change that fact.

I repeat my suggestion to the President: Ask Geithner to resign.
Furthermore: Get some conservative economic advisors for balance. Your people are taking us towards the brink.

Even Krugman is Criticizing the White House

Paul Krugman may be the person most responsible for the stimulus fiasco by using his soap box at the New York Times. He has wooed his sychophants in the broader media and the Democratic party and convinced them to hurl the country towards a new soft socialism. But now, even he is beginning to question the choices and competancy of Tim Geithner as well as the Fed.

First here,

Every plan we’ve heard from Treasury amounts to the same thing — an attempt to socialize the losses while privatizing the gains. We’re going to buy up all the bad assets at premium prices; no, we’re going to offer the banks guarantees against losses; no, we’re going to let private investors buy the stuff, but offer them de facto guarantees against losses in the form of non-recourse loans.
...
And the insistence on offering the same plan over and over again, with only cosmetic changes, is itself deeply disturbing. Does Treasury not realize that all these proposals amount to the same thing? Or does it realize that, but hope that the rest of us won’t notice? That is, are they stupid, or do they think we’re stupid?

And then some righteous anger about AIG's 4th bailout here:

AIG is in trouble because it wrote many credit default swaps, in effect guaranteeing others against losses it lacked the resources to cover. We, the taxpayers, are now covering those losses, for fear that not doing so would cause a financial catastrophe. But this means that US taxpayers have now assumed the downside risks for all of AIG’s counterparties.

In effect, then, we’ve already nationalized a large part of the financial industry’s potential losses.

So at the very least, we have a right to know who the counterparties are: who are we subsidizing, here? And beyond that, shouldn’t there be some quid pro quo? Shouldn’t the US government get something in return for taking on so much of the risk?

My advice to Obama: Fire Geithner, the markets would soar!

Good Quotes

Scott Grannis at his blog, Calafia Beach Pundit has some insightful quotes from economic thinkers of the past:

J.S. Mill: “Consumption never needs encouragement.”

J.B. Say: “It is the aim of good government to stimulate production, of bad government to stimulate consumption.”

J.S. Mill: “The usual effect of attempts of government to encourage consumption, is merely to prevent savings; that is, to promote unproductive consumption at the expense of reproductive, and to diminish the national wealth by the very means which were intended to increase it.”

F. A. Hayek: "Knowledge in our field is never established by experiment, but can be acquired only by following a rather difficult process of reasoning. No knowledge can be regarded as established once and for all … you have always to convince every generation anew. In fact, knowledge once gained and spread is simply lost and forgotten.”

Note - If you are looking for a blog with really good economic data (in the form of easy to read charts and graphs, of course!) from a free market perspective I recommend Scott's blog. He's pretty easy to read as well.

Some States Are Getting Screwed - An Update

Marginal Revolution posted the graphic below in this post.

If you recall, I blogged on the noticable fact that states with low unemployment rates seemed to be getting more stimulus spending. I picked out the most egregious examples. Alex Tabarrok plotted all of the states. As you can see from the scatterplot below, there is a negative correlation between unemployment rates and per capita infrastructure spending in the stimulus. That is, states with low unemployment are, on average, getting more money than states with higher unemployment.

I guess those kinds of mistakes happen when our illustrious President screams that the sky is falling as his party passes the largest increase in spending in the history of the world be damned a proper review.

Vincent Benard Writes the Complete Story on the Credit Crisis

For months now I have witnessed various economists lay out their version of the housing collapse and financial crisis. For whatever reason, none seemed to be able to wrap their heads around all of the pieces that I was seeing.

However, my friend Vincent Benard, a French economist and President of the "Institut Hayek", has now done that, and this time it is in English! Link here.

A general outline:

Ignition - Fannie Mae and Freddie Mac*, Fed Reserve's Low Interest Rates**
Amplification - Land Use Regulations
Propagation - Federal Reserve system encourages banks to be highly leveraged, Derivatives were poorly priced and risk misunderstood
Punchline - "Big Government is the culprit"

* - Vincent sent me some links after I poo-pooed Fannie and Freddie here. I have since softened my stance and believe that the two government subsidized organizations have more influence than my previous impressions.
** - I railed against this theory here, but again I have softened my stance (without writing about it) that it does have a significant impact, it is just not a primary cause.

Robert Barro Slams Paul Krugman and His Stimulus

I happened to see this interview of Robert Barro, linked by PoorandStupid.com

[Atlantic blog:] Do you read Paul Krugman's blog?

[Barro:] Just when he writes nasty individual comments that people forward.

Oh, well he wrote a series of posts saying he thought the World War II spending evidence was not good, for a variety of reasons, but I guess...

He said elsewhere that it was good and that it was what got us out of the depression. He just says whatever is convenient for his political argument. He doesn't behave like an economist. And the guy has never done any work in Keynesian macroeconomics, which I actually did. He has never even done any work on that. His work is in trade stuff. He did excellent work, but it has nothing to do with what he's writing about.

I'm not in a position to...

No, of course not.

I'm not in a position to know things like the degree to which Paul Krugman counts as a relevant expert on new Keynesian economics.

He hasn't done any work on that.

Robert Barro, who's credentials I mentioned here, is revealing that the President of the United States, Barack Obama, is being led around by the nose by an economist who has no professional experience examining the proper role of economic stimulus.

Inflation is Coming

Contrary to what the Keynesians and their marionette in the White House believe, there is no liquidity trap and there is no threat of long-term deflation.

George Melloan has an op-ed in the Wall Street Journal (HT: EPJ) with the following excerpts:

Why 'Stimulus' Will Mean Inflation

In a global downturn the Fed will have to print money to meet our obligations.

So what is the outlook? The stimulus package is rolling through Congress like an express train packed with goodies, so an enormous deficit seems to be a given. Entitlements will go up instead of being brought under better control, auguring big future deficits. Where will the Treasury find all those trillions in a depressed world economy?

There is only one answer. The Obama administration and Congress will call on Ben Bernanke at the Fed to demand that he create more dollars -- lots and lots of them. The Fed already is talking of buying longer-term Treasurys to support the market, so it will be more of the same -- much more.

And what will be the result? Well, the product of this sort of thing is called inflation. The Fed's outpouring of dollar liquidity after the September crash replaced the liquidity lost by the financial sector and has so far caused no significant uptick in consumer prices. But the worry lies in what will happen next.

Even when the economy and the securities markets are sluggish, the Fed's financing of big federal deficits can be inflationary. We learned that in the late 1970s, when the Fed's deficit financing sent the CPI up to an annual rate of almost 15%. That confounded the Keynesian theorists who believed then, as now, that federal spending "stimulus" would restore economic health.

Adding to this analysis is recent data. Ten year Treasury rates are rebounding rapidly. From around 2% up to almost 3% in 6 weeks. The long term inflation outlook priced into the 5yr treasury/TIPS spread reveals that inflation expectations by the market have risen from almost -1% to +0.37% (at time of publish), again in about 6 weeks. Oil prices are slowly rising from low 30’s to low 40’s. Gold prices are rising as well.

Many have made a big deal about the astonishing growth in the money supply, but this has been offset by growing excess reserves held by banks. The banks were hoarding cash and not lending. However, the bi-weekly reports from the Fed show that excess reserves fell a little bit, meaning more of that massive money supply is getting into the market.

While rapid inflation isn't a sure thing from the data, I see nothing in the markets right now that predicts anything but growing doubts about deflation.

Housing Bubbles Around the World

The blame for the American housing bubble has been a battle between the Left and the Right. The Left wants to vaguely blame deregulation and a yet still undefined "Greed". The Right over plays its hand by including minor distortions caused by the Community Reinvestment Act, Fannie Mae/Freddie Mac, and Barney Frank. Both sides, with some cause, have blamed the Federal Reserve and it's easy credit policies. As I have said before, they ignore land use planning, to their peril.

Wendell Cox and Hugh Pavletich, released their 5th annual Demographia International Housing Affordability Survey: 2009. (HT: ObjectifLiberte).

Lots of pretty charts and graphs, not a standard and dull academic paper, so at least skim it.

What hurts the case for much of the Right and destroys the claims on the Left, is the international nature of the boom and bust. How exactly did regulation in the United States cause housing booms and busts in the U.K., Ireland, Canada, Australia, and New Zealand? How did regulation cause a massive boom on the West Coast, Florida, and the Northeast, but not in Texas, Georgia, and North Carolina when the latter states have more population growth?

For regular readers, none of this will come as a surprise because I've already linked to half the articles and studies mentioned in the paper.

*********

In related news:

Last year I attended the 6th Annual Preserving the American Dream Conference in Houston. This year, the conference is being held in Seattle. I thought it was fantastic last year. I was able to speak to aforementioned Wendell Cox for a few minutes, which was a treat. Also note that Vincent Benard, who writes Objectif Liberte and occasionally leaves comments on my site, will be making the trek from France to present at that conference as well.

A Heavy Gun Takes Aim At The Stimulus

When people support the stimulus, they will offer up Nobel Prize winning economist Paul Krugman to lend weight to their cause. Well, another heavy hitter came out today in the Wall Street Journal to pillory the Obama Stimulus. Robert Barro, is a Harvard macro economist, and listed as the 3rd most influential working economist based on the number of times his papers have been published in major journals, cited by other major papers, and purchased, according to University of Connecticut Econ Department’s IDEAS ranking. Mr. Krugman, is #15. If you sort by citations alone, Barro rises to 2nd. As a note, when I was in grad school Barro was mentioned quite often, Krugman never that I recall.

Here are some excerpts from his Wall Street Journal piece:

Back in the 1980s, many commentators ridiculed as voodoo economics the extreme supply-side view that across-the-board cuts in income-tax rates might raise overall tax revenues. Now we have the extreme demand-side view that the so-called "multiplier" effect of government spending on economic output is greater than one -- Team Obama is reportedly using a number around 1.5.
…
The explanation for this magic is that idle resources -- unemployed labor and capital -- are put to work to produce the added goods and services. Brian's note - Economist Robert Murphy eviscerates this argument here
…
If the multiplier is greater than 1.0, as is apparently assumed by Team Obama, the process is even more wonderful. In this case, real GDP rises by more than the increase in government purchases. Thus, in addition to the free airplane or bridge, we also have more goods and services left over to raise private consumption or investment. In this scenario, the added government spending is a good idea even if the bridge goes to nowhere, or if public employees are just filling useless holes. Of course, if this mechanism is genuine, one might ask why the government should stop with only $1 trillion of added purchases.

What's the flaw? The theory (a simple Keynesian macroeconomic model) implicitly assumes that the government is better than the private market at marshaling idle resources to produce useful stuff. Unemployed labor and capital can be utilized at essentially zero social cost, but the private market is somehow unable to figure any of this out. In other words, there is something wrong with the price system.
…
In any event, when I attempted to estimate directly the multiplier associated with peacetime government purchases, I got a number insignificantly different from zero.

…in terms of fiscal-stimulus proposals, it would be unfortunate if the best Team Obama can offer is an unvarnished version of Keynes's 1936 "General Theory of Employment, Interest and Money." The financial crisis and possible depression do not invalidate everything we have learned about macroeconomics since 1936.

Much more focus should be on incentives for people and businesses to invest, produce and work. On the tax side, we should avoid programs that throw money at people and emphasize instead reductions in marginal income-tax rates -- especially where these rates are already high and fall on capital income. Eliminating the federal corporate income tax would be brilliant. On the spending side, the main point is that we should not be considering massive public-works programs that do not pass muster from the perspective of cost-benefit analysis. Just as in the 1980s, when extreme supply-side views on tax cuts were unjustified, it is wrong now to think that added government spending is free.

I recommend the whole thing, but it's a little dense for the uninitiated.

Sweatshops - A Needed Solution

After reading this article by Nicholas Kristof at the NY Times, I had to link to it. (HT: Club for Growth)

Mr. Kristof makes the case, quite irrefutably, that sweatshops are a symptom of poverty, not a cause. They should not be shunned, but seen as a tool to lift the world's poorest from unimaginable squalor.

Here are some excerpts, but try to read the whole thing at the link:

The miasma of toxic stink leaves you gasping, breezes batter you with filth, and even the rats look forlorn. Then the smoke parts and you come across a child ambling barefoot, searching for old plastic cups that recyclers will buy for five cents a pound. Many families actually live in shacks on this smoking garbage.
...
Talk to these families in the dump, and a job in a sweatshop is a cherished dream, an escalator out of poverty, the kind of gauzy if probably unrealistic ambition that parents everywhere often have for their children.
...
When I defend sweatshops, people always ask me: But would you want to work in a sweatshop? No, of course not. But I would want even less to pull a rickshaw. In the hierarchy of jobs in poor countries, sweltering at a sewing machine isn’t the bottom.
...
Look, I know that Americans have a hard time accepting that sweatshops can help people. But take it from 13-year-old Neuo Chanthou, who earns a bit less than $1 a day scavenging in the dump. She’s wearing a “Playboy” shirt and hat that she found amid the filth, and she worries about her sister, who lost part of her hand when a garbage truck ran over her.

“It’s dirty, hot and smelly here,” she said wistfully. “A factory is better.”

Larry Kudlow's Rally for the Cause

I'm not a huge fan of Larry Kudlow. He often used incomplete economic arguments to justify George Bush policies that really weren't great ideas. He also has a love affair with supply side economics that borders on infatuation. That being said, he has a good article today at RealClearMarkets.

Excerpts:

In fact, the GOP has a great opportunity to challenge Obama’s Keynesian pump-priming by insisting there be a major tax-cut component in any new fiscal package. Republicans shouldn’t merely push for somewhat less government spending. They have to make a bold case that tax rates matter for economic growth and job creation. They must insist that any recovery package includes this key element. Shift the debate. Say clearly that a reenergized economy cannot occur without lower marginal tax rates.

In particular, the GOP position should include lower tax rates on large and small businesses. Right now the top federal tax rate for C-corps is 35 percent. Small businesses, which pay the individual rate, also are taxed at 35 percent. These rates should be 20 percent for both C-corps and S-corps (including LLCs). This would make a huge difference. It would be a boon for our global competitiveness, since companies in the U.S. (as well as Japan) are taxed way above the rates of other advanced countries. It also would attract job-creating investment flows to the U.S. at a time when capital is on strike in our financial markets and economy. And while businesses collect corporate taxes, it’s really consumers who pay the final cost.
...
But the congressional Republicans have to step up to the plate right now. Me-too-ism on spending is a big mistake in both political and economic terms. Instead, the GOP should argue that fiscal policy needs a choice -- not an echo (to paraphrase the late conservative stalwart Barry Goldwater).

Caroline Baum Rips on Government Intervention

From Bloomberg:

Before you can declare free markets a failure, you have to establish that they exist, says Paul Kasriel, chief economist at the Northern Trust Co. in Chicago.
“We do not have free markets in credit in the U.S. or anywhere else that I know of,” he says. “The price of short- term credit is fixed by central banks. It would only be by accident that a central bank would fix the price of short-term credit” at the precise level that a free market would.

Chosen People

Fixing the price of any other commodity, including labor, has proven to be a failure, an affront to the inviolable invisible hand. Yet when it comes to setting the interest rate that will keep the economy on an even keel, we put our faith in a chosen few to get it right.

All sorts of unintended consequences flow forth from central bankers’ fixing of a short-term rate. Hold the rate too low, and it leads to a misallocation of capital into, say, housing or dot- com stocks. That’s what happened in the late 1990s and again in the early part of this decade.

“We are now experiencing the economic and financial market fallout from (Alan) Greenspan’s interference with the free market,” Kasriel says.

In a true free market, risk-takers are punished for bad bets. Not so in the current crisis, where financial institutions -- with the exception of Lehman Brothers -- are deemed too big to fail and rescued, merged or recapitalized.

No commentary necessary. Read the entire article here.