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Now this might seem churlish when the UK bank bailout scheme is being hailed as a bold attempt to backstop the UK financial system, but let's spend a moment thinking about the bigger consequences. Unlike the US TARP which will relieve the banks of toxic assets on their balance sheets, this UK plan will put the government in the boardroom of every participating bank (figuratively if not literally). Can anyone tell me now what really separates the banks from the government? Our liberal, equity-owning democracy has taken a major blow. With this precedent what incentive is there now for me...

In Washington over the last week, there were lots of ideas about what a bailout of Wall Street ought to look like. But none had less chance of becoming law than the plan put out by the core of the House GOP caucus, the conservatives known as the Republican Study Committee. The members of this group (which has more than its share of extremists and buffoons) offered as the cure to our current woes the removal of regulations on businesses and a suspension of the capital-gains tax, as though they were the congressional equivalent of those Japanese soldiers hunkered down...

The US Senate Saturday approved 25 billion dollars in loan guarantees for the financially strapped US auto industry, intended to spark a wave of automotive innovation. The loan guarantees were included in a continuing resolution that included funding for the US government and the wars in Iraq and Afghanistan. President George W. Bush has indicated that he intends to sign the bill. "We're very pleased Congress has chosen to act at this critical time," said Greg Martin, director of communications for General Motors Corp's Washington office. GM had been subject of much speculation that it could be forced into bankruptcy....

NEW YORK (Reuters) - Reserve Primary Fund, a money-market mutual fund whose assets have tumbled 65 percent in recent weeks, fell below $1 a share in net asset value, because of its losses on debt issued by Lehman Brothers Holdings Inc. (LEH.N: Quote, Profile, Research, Stock Buzz). In the industry, money funds whose net assets drop below $1 a share are said to have "broken the buck". The Reserve Primary Fund had about $23 billion in assets on Tuesday, down from about $65 billion in assets as of August 31, said fund spokesman Ming Lee Hatch. Investor redemptions will be...

The failure of Fannie Mae and Freddie Mac, setting in motion the biggest government bailout/takeover in U.S. history, brings a grim sense of fulfillment to competent economists. After all, what did people expect, that water would flow uphill forever? This financial mega-mess is the same sort of event as the collapse of the USSR’s centrally planned economy, another economically unworkable Rube Goldberg apparatus that was kept going, more or less badly, for decades before it fell apart completely. Along the way, of course, famous (yet actually unsound) economists assured the world that everything was working out splendidly. As late as...

Improbable as it might seem, perhaps the most important fact for a voter or politician to know is: No one can make a pencil. That truth is the essence of a novella that is, remarkably, both didactic and romantic. Even more remarkable, its author is an economist. If you read Russell Roberts's "The Price of Everything: A Parable of Possibility and Prosperity" you will see the world afresh—unless you already understand Friedrich Hayek's idea of spontaneous order. Roberts, an economist at George Mason University and Stanford's Hoover Institution, sets his story in the Bay Area, where some Stanford students are...

The nation's largest freshman class in history is moving into college dorms, hanging posters, meeting roommates and learning fight songs. In Indiana University's Assembly Hall last Friday, a remarkably large chorus hailing from private high schools in the Northeast was singing the school's ode to the "Cream and Crimson" in a pronounced New York accent. Freshman Jess Berne, from New York's Westchester County, crosses the Indiana University campus. It's a striking byproduct of one of the most competitive college admissions sessions ever -- an influx of East Coast prep-school students in Indiana. Indiana University welcomed about 260 students from the...

Happy birthday, Johnny Mac! You're 72 now, a cancer survivor, and a presidential candidate who has said on many occasions that the most important criteria for picking a vice president is whether he or she could immediately step in if something happened to the president. Your campaign against Barack Obama is based on the simple idea that he is unready to be president. So you've picked a running mate who a year and a half ago was the mayor of Wasilla, Alaska, a town of 8,500 people. You've selected a potential leader of the free world who knows little or...

UPDATED): While Senator Obama was giving his acceptance speech at Invesco Field in Denver to tens of thousands of Fedzilla supporting numbskulls, I was busy pummeling musical fun gluttons at the New York State Fair with my R&B spirit-infested guitar as I’ve done over 6,000 times so far in my gravity-defying career. My ace crew taped Senator Obama’s speech so that I could watch it after I got off stage and now I’m slamming this out on my laptop. I won’t go away. Write that down. Again. Before I slice and dice the Obaminator’s speech, let’s get one thing clear....

A spectre is haunting the liberal elites of New York and Washington--the spectre of a young, attractive, unapologetic conservatism, rising out of the American countryside, free of the taint (fair or unfair) of the Bush administration and the recent Republican Congress, able to invigorate a McCain administration and to govern beyond it. That spectre has a name--Sarah Palin, the 44-year-old governor of Alaska chosen by John McCain on Friday to be his running mate. There she is: a working woman who's a proud wife and mother; a traditionalist in important matters who's broken through all kinds of barriers; a reformer...

NEW YORK (AP) -- For months, Americans have been subjected to a sort of economic water torture -- a maddening drip of bad news about jobs, gas prices, sagging home values, creeping inflation, the slouching dollar and a stock market in bumpy descent. Then came Bear Stearns. One of the five largest U.S. investment banks nearly collapsed in a single day before the government propped it up by backing emergency loans and a rival stepped in to buy it for a paltry $2 per share. To the drumbeat of signs that seemed to foretell a traditional recession, this added a...

Driving into Slavic Village this week was a surreal experience. The clock appeared to have turned back to the years when this clapboard-built suburb of Cleveland, Ohio, was the proud preserve of migrant Polish and Czech steel-mill workers, and epitomised apple-pie American charm. Through the haze of a winter blizzard, one could make out what appeared to be the brightly embroidered curtains and flowers on the windowsills. And from their porches, many of the home-owners seemed to be waving a neighbourly greeting at our passing car. Pulling up at the kerbside, however, the reality came grimly into focus. Behind the...

ORLANDO, Fla. (AP) - PGA Tour golfer Tripp Isenhour was charged with killing a hawk on purpose with a golf shot because it was making noise as he videotaped a TV show Isenhour was with a film crew for "Shoot Like A Pro" on Dec. 12 at the Grand Cypress Golf course. The 39-year-old golfer, whose real name is John Henry Isenhour III, was charged Monday with cruelty to animals and killing a migratory bird. According to court documents, Isenhour got upset when a red-shouldered hawk began making noise, forcing another take. He began hitting balls at the bird, then...

UPDATE 8:36: Ron Paul has been re-elected to Congress in the Fourteenth District of Texas. Campaign manager Mark Elam: "Chris Peden is toast. It's just a question of how big the margin is." The campaign is looking at a result in line with its final internal polls, with about 70 percent of the vote going to Paul. With about 8,400 votes in, Paul is leading Peden 72-28. UPDATE 8:53: These are early votes being reported right now, but around 40 to 50 percent of votes were cast in early voting and the Paul campaign doesn't expect the election day results...

Dozens of Muslims flocked into a small town house on Capitol Hill to take a big step, last week. Their goal, to raise funds needed to elect Andre Carson of Indianapolis, IN as the second Muslim to the halls of Congress. The Carson for Congress fundraiser was held last Wednesday night, February 6th doors from the national headquarters of the Muslim civil rights organization, CAIR. Less than two years ago, Assad Aktar, an aide for a New Jersey Congressman and organizer of the Carson event, helped to pull together a similar fundraiser for a then-little known State Representative from Minnesota...

As a young economics professor in the late 1970s, Richard Thaler began noticing small but nagging ways in which ordinary people defied the predictions of economic theory. A friend confided that he mowed his lawn to save $10, but winced at the suggestion that he mow someone else's to make $10. A colleague confessed that he'd never go out and buy a $50 bottle of wine for a family meal, but that he'd recently opened up a $50 bottle at dinner because it happened to be lying around. The textbooks assumed people would behave identically when equal amounts of money...

Even academic departments famous for having a “character” are far from intellectually homogenous, but they do suggest certain family resemblances. George Mason University’s economics department is populated by many libertarians, but libertarianism is not its most salient feature. In speaking with several members of the department, I searched for le mot juste: “Freakonomics”? “Weird economics”? “Interesting economics” turned out to be the least inaccurate term for a sub-discipline that encompasses such questions as whether bounty hunters are (and pirates were) as violent as is commonly supposed, how best to survive torture, and whether one ought to pay to have one’s...

John McCain will be the Republican Party's presidential candidate in November. Most Republicans certainly know who John McCain is, but there still seems to be a question as to just what he is. President Bush said last week that there was "no doubt in my mind he is a true conservative." But is he a Ronald Reagan conservative, or more like a Bob Dole moderate? Or is he like Dwight Eisenhower, who claimed in the 1952 nomination battle that he was "just as conservative" as his opponent, Sen. Robert Taft? Mr. McCain's lifetime American Conservative Union rating is 82, compared...

IT has become common wisdom that the battle for the presidency is all about the economy. Voters are being told that the country’s economic health depends on pulling the right lever in the polling booth. This election is certainly important. But based on the historical record, it isn’t likely to result in a major swing in economic policy. Fundamentally, democracy is not a finely tuned mechanism that can be used to direct economic policy as a lever might lift a pulley. The connection between what voters want, or think they want, and what ultimately happens in the economy, is far...

LONDON — The British government announced Sunday that it would bring Northern Rock, the struggling mortgage lender, under its control. It was the first nationalization of a bank in more than a decade and a huge blow for the government of Prime Minister Gordon Brown. The government rejected two takeover proposals for the lender, which ran into trouble last year because of a funding shortage that followed the subprime mortgage crisis in the United States. The government was forced to shore up the company with about £55 billion, or $107 billion, in loans and guarantees. “The government has completed its...