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  An American Manifesto
Saturday December 20, 2014 
by Christopher Chantrill Follow chrischantrill on Twitter

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Obama Fails the Test "We're Owed and They Aren't"

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Too Big To Fail

by Christopher Chantrill
March 20, 2008 at 12:38 pm

WHAT DO we do about institutions, particularly financial institutions, that are “too big to fail?”

In the current credit crunch that becomes a big deal. The government runs around worrying about the bankers. It seems like we let the little guy go to the wall, foreclose on his mortgage, and send him out into the street.

Not one penny, you might say, for the struggling homeowner, but billions for the bankers.

Last weekend, the Federal Reserve bailed out failing investment bank Bear Stearns.

Actually, the Fed didn’t quite “bail out” Bear Stearns. They gave it to JP Morgan Chase for a couple of hundred million. That means that Bear’s stockholders got two cents on the dollar. I don’t think that’s exactly a bailout. It looks to me more like a haircut.

You can tell that the Fed probably did the right thing by reading what Larry Kudlow, an old Bear hand, had to say about it. He wonders if Bear Stearns really had to go down in flames. After noting that the Fed could have let Bear Stearns in at the discount window and telling us that he used to work at Bear, he gives us this:

All of this kind of makes me wonder whether Bear Stearns wasn’t some kind of sacrificial lamb. Did government policy makers hope to convince the public that a big Wall Street firm could indeed fail? Or wouldn’t be bailed out? Listen, they were buried, not bailed out.

The fact is, Bear shareholders got creamed with the $2 per share purchase price. The shareholders include all the men and women who’ve worked there for years, and who own roughly one-third of the firm’s equity.

After the Bear Stearns creaming, the word was that Lehman Brothers might be next. But the Lehman bears got a talking to from the Fed: Keep lending to Lehman, the Fed said. You could translate the message, if you like: If you chaps keep on down this road, the Fed seemed to say, we could end up giving all you chaps a haircut too.

So maybe the Fed isn’t crazy when it makes a sacrificial lamb out of Bear Stearns. Maybe it is sending a message to the sharks: we are loading up with harpoons here at the Fed.

Maybe the Fed is crazy like a fox.

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Christopher Chantrill blogs at www.roadtothemiddleclass.com.  His Road to the Middle Class is forthcoming.


 TAGS


What Liberals Think About Conservatives

[W]hen I asked a liberal longtime editor I know with a mainstream [publishing] house for a candid, shorthand version of the assumptions she and her colleagues make about conservatives, she didn't hesitate. “Racist, sexist, homophobic, anti-choice fascists,” she offered, smiling but meaning it.
Harry Stein, I Can't Believe I'm Sitting Next to a Republican


US Life in 1842

Families helped each other putting up homes and barns. Together, they built churches, schools, and common civic buildings. They collaborated to build roads and bridges. They took pride in being free persons, independent, and self-reliant; but the texture of their lives was cooperative and fraternal.
Michael Novak, The Spirit of Democratic Capitalism


Taking Responsibility

[To make] of each individual member of the army a soldier who, in character, capability, and knowledge, is self-reliant, self-confident, dedicated, and joyful in taking responsibility [verantwortungsfreudig] as a man and a soldier. — Gen. Hans von Seeckt
MacGregor Knox, Williamson Murray, ed., The dynamics of military revolution, 1300-2050


Society and State

For [the left] there is only the state and the individual, nothing in between. No family to rely on, no friend to depend on, no community to call on. No neighbourhood to grow in, no faith to share in, no charities to work in. No-one but the Minister, nowhere but Whitehall, no such thing as society - just them, and their laws, and their rules, and their arrogance.
David Cameron, Conference Speech 2008


Socialism equals Animism

Imagining that all order is the result of design, socialists conclude that order must be improvable by better design of some superior mind.
F.A. Hayek, The Fatal Conceit


Sacrifice

[Every] sacrifice is an act of impurity that pays for a prior act of greater impurity... without its participants having to suffer the full consequences incurred by its predecessor. The punishment is commuted in a process that strangely combines and finesses the deep contradiction between justice and mercy.
Frederick Turner, Beauty: The Value of Values


Responsible Self

[The Axial Age] highlights the conception of a responsible self... [that] promise[s] man for the first time that he can understand the fundamental structure of reality and through salvation participate actively in it.
Robert N Bellah, "Religious Evolution", American Sociological Review, Vol. 29, No. 3.


Religion, Property, and Family

But the only religions that have survived are those which support property and the family. Thus the outlook for communism, which is both anti-property and anti-family, (and also anti-religion), is not promising.
F.A. Hayek, The Fatal Conceit


Racial Discrimination

[T]he way “to achieve a system of determining admission to the public schools on a nonracial basis,” Brown II, 349 U. S., at 300–301, is to stop assigning students on a racial basis. The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.
Roberts, C.J., Parents Involved in Community Schools vs. Seattle School District


Postmodernism

A writer who says that there are no truths, or that all truth is ’merely relative’, is asking you not to believe him. So don’t.
Roger Scruton, Modern Philosophy


Physics, Religion, and Psychology

Paul Dirac: “When I was talking with Lemaître about [the expanding universe] and feeling stimulated by the grandeur of the picture that he has given us, I told him that I thought cosmology was the branch of science that lies closest to religion. However [Georges] Lemaître [Catholic priest, physicist, and inventor of the Big Bang Theory] did not agree with me. After thinking it over he suggested psychology as lying closest to religion.”
John Farrell, “The Creation Myth”


Pentecostalism

Within Pentecostalism the injurious hierarchies of the wider world are abrogated and replaced by a single hierarchy of faith, grace, and the empowerments of the spirit... where groups gather on rafts to take them through the turbulence of the great journey from extensive rural networks to the mega-city and the nuclear family...
David Martin, On Secularization


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©2007 Christopher Chantrill