The Data Don’t Justify Financial-Market Panic by Robert Higgs

As the hysteria has grown in the discussion of financial markets and related government policies, I have been puzzled by the discrepancy between the best available data and the descriptions quoted in the press – statements by financial gurus, traders, and professors, as well as by government officials. To hear these spokesmen tell the story, you’d think that the world will soon go to hell in a hand basket, if it hasn’t gone there already. Yet every time I look for data to check these claims, I find nothing solid to back them up. …

Consider first the interest rates for commercial paper. For the past several weeks, 30-day nonfinancial paper has been going for about 2 percent; 60-day and 90-day loans in this market have required a slightly greater rate of interest. Financial commercial paper has been going for roughly 3 percent, give or take a few tenths of a point, with little difference among the 30-day, 60-day, and 90-day rates.

Given that the rate of inflation at present is greater than 3 percent, and presumably will remain greater than 3 percent for the next three months, these nominal interest rates on commercial paper imply that lenders are actually giving away money to corporations that sell commercial paper – the nominal rates of interest are less than the expected rate of inflation. Is this situation what one expects to see during a “credit crunch”? Hardly.

Many commentators claim, however, that virtually no transactions are occurring in this market. These claims are completely false. For the week that ended October 1, which is the most recent week currently reported, total commercial paper outstanding amounted to $1,607 billion. Yes, this amount was down from the $1,702 billion reported for the previous week, but is a 5.6 percent drop a good reason to panic? If we go back to March 2008, when nobody was talking excitedly about the commercial market’s “freezing up,” we find that the total amount outstanding, on average, was $1,822 billion, or only 13 percent more than last week. In March, the market was working fine; now it’s “locked up.” This sort of hyperbole, with which we are being bombarded hourly around the clock, is totally without a basis in the facts.

For the year 2006, when the financial markets were, for the most part, still ripping along very nicely, the total amount of commercial paper outstanding, on average, was $1,983 billion; for 2007, it was $1,781 billion. For the past seven months, on average of the monthly data, it was $1,743 billion.

Either someone is deliberately trying to spook us, or these panic-mongers have simply lost their grip on reality. Officials at the Fed and the U.S. Treasury are running around like chickens with their heads cut off. They are dragging the world’s leading central bankers and finance ministers around with them. The news media are raving like lunatics. The big unanswered question is: WHY?

I’ve been suspecting the same. I’d seen numbers here and there that didn’t seem to add up. I’m sure there are components missing to this analysis… but what?

http://www.cato-at-liberty.org/…

Yesterday, the Supreme Court of Texas ruled that Child Protective Services (CPS) abused its discretion by seizing 468 children from the Fundamentalist Church of Latter Day Saints ranch in Eldorado. Eugene Volokh has a roundup of the legal analysis.

CPS invited some mental health workers to the various shelters to help care for the hundreds of children. The mental health workers were disturbed by what they saw of CPS’s treatment of the women and children, and their written reports corroborate the bitter complaints of the FLDS mothers. I don’t think the news media has given this aspect of the story the attention it deserves — so here are some excerpts from the various reports that have been made public:

• “Women were constantly lied to about where their children [were] and when they could see their lawyers and about when they would be reunited with their children.”
• “Constant reminders that the adult women were only guests and that they were not in charge of the children and what CPS did to them. [The children] belonged to CPS now and they could talk, interrogate, separate and treat them any way [CPS] wanted. This included physical exams and x-rays without [parental] supervision.”
• “I sat with Audrey while three of her children were removed for six hours of questioning.”
• “The children arrived healthy and happy and left sick and crying.”
• “The door to the room was almost constantly open. Even when the women closed the door to reduce noise during naptime or to dress themselves or the children, it was almost immediately opened again [by a CPS worker].”
• “The women were lied to and denied access to their attorneys.”
• “At least 5 mothers reported that at night CPS [workers] circled their beds, held flashlight in their faces & then would sit inches away from them as they tried to sleep. Mothers reported that they were scared CPS would take their children during the night.”
• “The CPS workers were openly rude to the mothers and the children, yelled at them for trying to wave to friends and family members in surrounding shelters, threatened them with arrest if they did not stop waving to others, continually reminded them that the women were guests only and could be made to leave if they did not cooperate, threatened the mothers with never seeing their children again if they did not cooperate, and ignored requests for anything.”
• “The children were amazingly clean, happy, healthy, energetic, inquisitive, well behaved, and self-confident; while the mothers were consistently calm, patient, and loving with their children.”
• “Living conditions in the coliseum were not conducive to good health for anyone, and the presence of hostile CPS workers who spied on them constantly, kept them awake at night by shining lights in their faces and talking and laughing created enormous stress for the mothers and children. None of them slept well or enough.”
• “Try to imagine all these children from age 1 to 12 years, left in that coliseum [separated from their mothers] with only CPS and [police officers] to care for them. The only others were mothers whom CPS decided were under 18 and kept in their custody along with their children. The floor was literally slick with tears in places. A baby was left in a stroller without food and water for 24 hours and ended up in the hospital. A 4 year old boy was so terrified that he snuck away and hid and was only found after the coliseum had been emptied the next day.”
• “I witnessed a young mother named Rosinith be required by CPS to board the bus back to the ranch, though her young child was in the hospital with 104 degree fever and even though the child’s physician had personally requested the mother’s presence at the hospital. This event haunts me still, and I cannot imagine such a heartless act.”
• “By the second day, I was ready to run in front of the CNN cameras to shout that there was a travesty happening inside those walls…. Of course I was cautioned not to interfere in a ‘crime scene investigation.’”
• “I have always been proud to be an American and a Texan but this incident is not what America or Texas stands for and something must be done to undo the horrible injustice that has been done.”

CPS denies the allegations of mistreatment. But the excerpts above are eyewitness reports from objective/disinterested social workers that CPS invited into the shelters.

Justice is still not served. Not until restitution is paid and those who brought this about are punished directly. Now we need the state to return the children kidnapped from Strong City. Jeff Bent, Wayne Bent aka Michael Travesser son, was on Free Talk Live yesterday for those interested.

http://memphisetc.blogspot.com/

Operation Thug Huntin’

…or “How I spent my Saturday night”

Over 50 law enforcement agencies came together this weekend for Operation Sudden Impact (they said my name for it wasn’t PC enough). In any case, a whole boatload of the Po-Po got together and ran gang interdictions, traffic saturations, drug sweeps, fugitive searches, and some other things I can’t tell you about for a 24 hour period.

It was fun. More about it here.

On the serious side, we now know the mid-south agencies can work together and bring a LOT of police presence and firepower down on a given area if we ever need to do it in a hurry.

Here is a list of agencies involved courtesy of the Shelby County Sheriff’s Web site:

Follow the link to see the huge list of agencies. Check out the comments:

Thank you for the work you do! I’m a Memphis native, relative of former MPD officers, and worked in law enforcement myself. I really enjoy reading your blog. My entire family still lives in Memphis and I go home as often as I can. It’s sad to see what’s become of my hometown. You guys are to be commended for the hard work you put in. Love your commentary!!!

Scary.

FBI raids, Arabs whine, liberal media listens…

There are a couple of stories this weekend on two separate Memphis TV stations (WREG and WHBQ) about some FBI raids on local businesses last week. Both stories center on the poor Arabs who are being harassed by the big, bad Feds. The TV reporters seem really ticked off the FBI didn’t bother to call the TV stations personally and let them know all the facts of the case and exactly when the raids were going to take place…how DARE law enforcement do something without telling the TV news departments?This would be funny except for the fact that the public buys this biased crap.

The stations ran different angles on the same basic story, but the common thread was that the FBI is harassing Arab-owned businessmen and employees. So, in the interest of balance (not to mention those fact thingies), Memphis, ETC would like to share some general facts about middle eastern businesses, terrorism, and the reality of it all.

I wasn’t in on these raids, but we’ve done some in the past. The FBI is always armed with a search warrant, which makes the raids totally legal. Most federal judges won’t sign a search warrant without some really compelling evidence that something criminal is afoot. Apparently that was the case here as well.

To the citizens with their heads buried in the sand, let me state another fact. Terrorists and those who support them are living right here in the Mid-South. They are 99% middle eastern. You may try to spin that, or ignore that fact, but that IS a fact. They are using our laws and our society’s political correctness to skirt the law and fund operations that directly threaten the security of the United States. You may not like that fact, but again, it IS a fact.

Yes, it looks like the FBI did raid Arab owned businesses. Well, last I heard, there were no Canadian, Native Americans, or any other ethnic group besides the Arabs trying to explode a nuclear device in our country. Plus, it’s a funny thing about police work…you follow the evidence in anti-terrorism ops and it just seems to lead to middle eastern folks. Gee, I wonder why?

One of the stories also made mention of the fact that there were some odd items seized in the raid, such as ball caps and jewelry. Well, that may be odd to some Cub reporter who doesn’t care about getting both sides of the story, but that was the bit of information that made the light go off in my head.

I believe the FBI is on to some Arabs running these little corner grocery stores you see that offer all sorts of things besides groceries…you know, CD’s, DVD’s, clothing, jewelry. I’ll bet you my stock in Halliburton this particular case is about counterfeiting and media piracy. Plus, I’d further bet that the FBI thinks funds from these illegal sales are being funneled back to whatever county these jerks are from to fund terrorist operations.

Here’s how it works: Mohammad opens a little store usually in the poorer sections of town. Oh, by the way, your governments lets these folks do this and not pay taxes for 7 years to encourage new small businesses…but guess what? Mohammad has a huge family over here, and at the end of seven years he just sells the business to his brother. Gee, another 7 years of tax-free operations, courtesy of the U.S government. Mohammad sells DVD’s and CD’s cheaper than Wal-Mart, because Mohammad has a $10,000 DVD duplicator in his back room where he is duplicating these movies and CD’s. He sells in the black communities and poorer sections of town because he knows no one will report it because they don’t care. Mohammad is also in the market for stolen cell phones which he can wipe and sell overseas. Since Mohammad pays no taxes, he can afford to send a large amount of his profits back to Yemen, Iran, or wherever…where the money is funneled to the same organizations trying to kill out sons , daughters, moms and dads in Iraq. But in this case this week, the FBI seems to have gotten wind of the operations, and the big bad Feds busted in and took Mohammad’s computers and duplicating equipment, his business records, and some of his counterfeit stuff for evidence. So, Mohammad goes crying to the liberal media which happily gives him a stage for his predictable “They are profiling me” whine, and the liberals just drink that stuff up like it was a Starbuck’s latte’.

I am constantly amazed at the willing suspension of disbelief a lot of Americas have about terrorists operating in American, right now, in YOUR neighborhood. Chances are you’ve bought stuff from them. Even more amazing is that the news media takes a passing glance (maybe) at these stories when actual terrorist are caught…like the University of Memphis Arab student who just happened to have a pilot’s uniform, airport layout diagrams, and books on how to fly planes and act like a pilot (plus all his Muslim jihadist propaganda) in his car.

Wake up, people….

Just because it’s legal doesn’t make it right. Is this guy going to go justifying what Mao, Stalin, Hitler, etc. did because it was all “legal.” And what was the results from those raids? Where any of them convicted on anything related to terrorism or even the dubious “sponsor of terrorism?” Where are these Arabs who are bringing in nukes? What’s the delivery mechanism? Prove to me that this isn’t bigoted propaganda used to bring about a police state?

http://www.usadaily.com/…

At a Ron Paul rally in Ft. Lee today several dozen supporters braved the cold air and held campaign signs and American flags for motorists approaching the George Washington Bridge and traveling on Lemoine Avenue. (Ron Paul was not present at the rally).

After the rally, Ron Paul supporters headed to Monument Park on Palisade Avenue where in November 1776 General George Washington began his famous retreat which culminated on Christmas day crossing the Delaware River. Monument Park is the only park in the United States dedicated to the soldiers of the American Revolution.

Dr. Murray Sabrin emceed the Monument Park rally on this anniversary of the Bill of Rights (1791). New Jersey was the first state to ratify the Bill of Rights on November 20, 1789.

Assemblyman Mike Doherty who has endorsed Ron Paul for President and introduced him at the Philadelphia rally last month gave an impassioned talk about why Ron is the best candidate for president. Ron Paul, Doherty pointed out, will protect U.S. borders, abolish the income tax, cut unnecessary and unconstitutional spending, defend the U.S. dollar, and protect U.S. sovereignty.

High school student and LewRockwell.com blogger Max Raskin told the gathering why all young people should rally behind Ron Paul. “Its simple”, said Max, “The welfare-warfare state is unsustainable and his generation will have to pay an enormous amount of taxes to foot the bills.” Max urged everyone to help get Ron Paul’s message out to all young people in New Jersey so he can win the February 5th primary.

xyz and I were two of those several dozen. First I’d like to say it was damn cold yesterday. My tea turned to iced tea in less than 10 minutes and of course it had to be breezy and there was ice everywhere. But that didn’t stop the 40+ of us (as I counted while we rallied on the Route 95 overpass). We spent an hour waving signs and flags and xyz and I handed out copies of the Manhattan LP’s Serf City. The one thing not reported by USADaily was how Doherty also talked a good minute on how he doesn’t want a candidate who wears dresses and how Ron Paul would never wear a dress.

As for the NYC Ron Paul HQ party: It went well. Not as many people showed up as we expected but it was respectable. Given that it was below freezing and sleeting I’m a bit surprised we had the turnout we did. It was a special night though. We had a projector connected up and displaying RonPaul2008.com when it broke $12 million. The video below captured the excitement.

There were two camera crews there from the news media. One was NY1 and I was told the other was CNN. A quick search of NY1.com however doesn’t produce anything at the time of posting. xyz and I left at 2:30AM to catch the 2:50AM bus home. When I purchased a bus ticket for xyz with a $5 bill I received my change for the $3.40 ticket. Appropriately the one dollar coin it gave me was from the new president series, Thomas Jefferson.

UPDATE:

Here are some photos from the party… including xyz getting a backrub and another video.

http://www.nytimes.com/…

WITH the health care system at the center of the political debate, a lot of scary claims are being thrown around. The dangerous ones are not those that are false; watchdogs in the news media are quick to debunk them. Rather, the dangerous ones are those that are true but don’t mean what people think they mean.

Here are three of the true but misleading statements about health care that politicians and pundits love to use to frighten the public:

STATEMENT 1 The United States has lower life expectancy and higher infant mortality than Canada, which has national health insurance.

STATEMENT 2 Some 47 million Americans do not have health insurance.

STATEMENT 3 Health costs are eating up an ever increasing share of American incomes.

Nice to see an organization/person other than a libertarian one or MooreWatch is acknowledging and explaining the deceptive numbers Michael Moore and others use when railing against the US healthcare system. Our system obviously has issues but there is no need to distort the facts to make it sound worse just to further your agenda.