Congressional Democrats are trying to intervene in a complex and varied market they know little about but that consumers navigate without need of help. This will not end well.
Original Article: Washington’s Planned Theft of Credit Card Benefits
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2024-01-12
Back when I was a construction lender, I thought the perfect construction loan would pay off after one day, just long enough to collect the loan fee. After all, time is your enemy in construction lending. Any of a myriad of unknowns can keep construction from being completed: the market may evaporate for what is being built, interest rates may rise to make a loan uneconomic, construction costs could increase to require a loan modification or more borrower equity (good luck), just to name a few.
Time is risk. As Gerald O’Driscoll and Mario Rizzo wrote in their book The Economics of Time and Ignorance, “As long as we remain in a world of real time, unexpected change is inevitable, and ignorance is ineradicable.”
In good times senior bank management would regret construction loan payoffs. In
2024-01-12
Jamaica is a small island in the British West Indies, but despite its stature, this tiny nation has elicited the attention of global elites. In politics, Jamaica’s voting behavior at the United Nations is closely monitored by her neighbors in the Caribbean and the global community because she commands influence. Due to historical and cultural complexities, Jamaica is a magnet for academic research, and writing about the country has manifested into a cottage industry. Consistent with her fame, those who study Jamaica tend to be heavyweights in academia. Luminaries from Jeffrey Williamson to Josh Lerner pen intellectual missiles on Jamaica’s economy.
Always in the den of controversy, Jamaica’s recent economic performance has motivated a lively debate between economist Noah Smith and
2024-01-09
The Federal Reserve’s inflation of the money supply and interest rate manipulation distort capital markets through, among other things, the creation of asset bubbles. As the cost of borrowing decreases and cheap money floods an economy, speculation in capital markets increases, leading to prices unmoored from fundamentals.
Underlying these asset bubbles is a certain investor psychology—one based on expectations, encouraged by Fed actions over the last thirty-five years—that the Fed will always step in with easy money when asset prices threaten to decline.
Overleveraged speculators caught out by rising interest rates and risky loans are experiencing significant distress. Meanwhile, the apartment market continues to demonstrate dangerously speculative behavior.
Higher Risk, Lower Return
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