Prevent Mega Bank Bailouts

I had a really strong reaction to an article about mega banks that are too big to fail.  The only way to make sure there are no more mega bank bailouts is to make sure that mega banks are sufficiently capitalized that they can absorb massive losses and that their management has mega incentives to be careful.  The 12 mega banks ought to have 8 to 10 percent of assets in equity capital or convertible bonds that can be turned into equity when needed to absorb losses.   If stock and convertible bond holders are on the hook for a really big chunk of losses, they will force management to be much more careful.  Also, mega bank management compensation above that of the president of the United States and all of the outside directors' compensation should be reclaimable back 3-5 years in the event that a bailout is needed for any mega bank that's too big to fail.  Requirements like this will reduce the number of mega banks, or at least make sure their managements and stock and convertible bond holders have a LOT of skin in the game.  Bottom line is make moral hazard a lot more painful for all involved.

Original Article on the Mega Banks:

http://www.commentarymagazine.com/2013/04/30/too-many-too-big-to-fail-banks/

Unexamined Academic Assumptions

Thomas Sowell had a great article this week on unexamined academic assumptions.  It really spoke to me.  The reason I have a BS in Math and MS in Statistics is because I wouldn't buy into the liberal mindset in Economics class.  I avoided soft subjects, like History, because I would not use Hegel's Dialectic to analyze historical events.  Also, when I was in college during the Viet Nam War, professors taught war was by definition futile.  I thought the professors were nuts to think that "war never solved anything."  It sure solved Nazi Germany and Imperial Japan, not to mention Rome's Carthage problems.  I read history for fun now, but knowing too much makes me uncomfortable listening to people who believe the government is more efficient than private enterprise in running things like health care.  If I object that historically governments are usually very bad at running almost everything, the resulting argument provides a lot more heat than light.  Leftism in higher education is at least partially the result of draft deferments granted to the baby boomers who stayed in college to avoid Viet Nam.  I find the liberals who look down on my education generally have never had any of their assumptions questioned.  They think everybody knows liberals are the good guys, and folks like me are ignorant rednecks.  This attitude does not make for informed dialogue.  So I think Dr. Sowell's article matches my general experience with average "liberally" educated citizens. 

http://www.nationalreview.com/article/347003/academias-unexamined-assumptions

Liberals Want Return to Middle Ages

Liberalism wants to return to those thrilling days of yesteryear, the Middle Ages.  Of course, as the wisest people around, liberals get to be the lords of the manor and the rest of us get to be serfs.  We need to serve the liberal leviathan state with ever increasing taxes.  Regulation serves as the forced labor serfs owe their betters, forcing uncompensated expense on serfs to benefit the liberal state.  And the liberal aristocracy has to look out for their poor serfs, who wouldn't know how to take care of themselves without guidance from their lords and masters.  The liberals and their allies in the guilds, aka unions, will decide what prices are fair.  The serfs can use pre-industrial energy technology in order to keep the environment clean for their liberal overlords.   

Taking the analogy further, environmental regulation is a modern version of the medieval forest laws of England. Serfs were not allowed to hunt game or take wood in the forest or clear the land to cultivate it or graze domestic animals in it. The forest was reserved strictly for the king and the nobles he allowed to use it. It was considered part of the Norman Yoke imposed on the people after 1066. Penalties for forest law violations were severe. For example, poachers either had their hands cut off or were blinded. Today, liberals just confiscate your land or imprison you for environmental violations.

Read the book.  It's called the "Road to Serfdom," by F. A. Hayek.

Recent Article on this topic:
http://www.nationalreview.com/article/360583/medieval-liberals-victor-davis-hanson

Information on Royal Forrest Laws
http://en.wikipedia.org/wiki/Royal_forest

Liberals Buy Votes, Not Defense

Liberals almost always under fund all aspects of national defense.  They also do everything possible to argue that defense spending is wasted.  The reason for this is that liberals always need more money to fund their "investment" in domestic spending.  They don't want defense spending to crowd out domestic spending.  The efficacy of the domestic spending is not an issue for them.   Liberals need ever larger domestic spending simply because that's how they buy their votes.