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Archive of posts published in the tag: John Allison

Free to Think

“People cannot think unless they are free to think. Government rules and regulations literally prevent thought and prevent experimentation. A free market is a massive experiment in competing ideas, the most productive of which win out. Most of the experiments…

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The Pragmatic Trap

“The backup philosophy for business is pragmatism. In fact, pragmatism is systematically taught in business schools. Many business leaders are proud to be called pragmatists. Pragmatists do “what works.” They are “practical.” However, actually being practical requires that we act…

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Altruism and Benevolence

“The “common good” (or the “public interest”) is an indefinable concept. There is no such thing as the public. The public is only a number of individual people. When the common good of a society is regarded as something apart…

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Centralized Failure

“Because we believe that the way to achieve optimal organizational performance is to allow individual employees to use their minds effectively, we operate with a highly decentralized organizational structure. One problem for the large banks that had regulator-driven risk-management systems…

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Elites with Good Intentions

“Despite the unending failures of statist economies from the Soviet Union to Eastern Europe, to North Korea, to Cuba, and so on, liberals hold on to the belief that intellectual elites with good intentions can direct human activities better than…

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The Fair Value Fiasco

“One of the basic requirements of the law of supply and demand is that there must be a willing buyer and a willing seller. During the chaos created by the random type of government policies just described, this basic condition…

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The Value of Failure

John Allison When the Federal Reserve steps in and uses monetary policy to stop the downside correction process, all it achieves is to defer problems to the future and make them worse. Its action delays and distorts the natural market…

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The Catastrophe of Capricious Regulation

“While the regulators had a legitimate concern, the manner in which they chose to handle WaMu was even more destructive. They decided to take the extra losses created by covering the uninsured depositors from WaMu’s bondholders. The bondholders had expected…

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Creation of Destructive Demand

In 1993, under Andrew Cuomo (currently governor of New York), the Department of Housing and Urban Development (HUD) announced that it would “encourage” Freddie Mac and Fannie Mae to have half their loan portfolios in affordable-housing (subprime) loans. Freddie and…

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Consumption and Investment

In economic terms, spending on housing is consumption, not investment. We live in a house, and therefore we consume the house. Houses are not used to produce other goods. A manufacturing plant that makes computer parts is a production investment.…

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Why The Rating Agencies Failed

One factor that undoubtedly influenced the rating agencies was the way they were compensated. For years, the agencies had charged the buyers of the bonds for rating the bonds, a system encouraged by S&P, Moody’s, and Fitch and that led…

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