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42. Freddie Mac and Fannie Mae: An Exit Strategy for the Taxpayer
- Author:
- Arnold Kling
- Publication Date:
- 09-2008
- Content Type:
- Policy Brief
- Institution:
- The Cato Institute
- Abstract:
- The Fannie Mae-Freddie Mac crisis may have been the most avoidable financial crisis in history. Economists have long complained that the risks posed by the government-sponsored enterprises were large relative to any social benefits.
- Topic:
- Economics, Government, and Financial Crisis
- Political Geography:
- United States
43. Rails Won't Save America
- Author:
- Randal O'Toole
- Publication Date:
- 10-2008
- Content Type:
- Policy Brief
- Institution:
- The Cato Institute
- Abstract:
- Rising gas prices and concerns about greenhouse gases have stimulated calls to build more rail transit lines in urban areas, increase subsidies to Amtrak, and construct a large-scale intercity high-speed rail system. These megaprojects will cost hundreds of billions of dollars, but they won't save energy or significantly reduce greenhouse gas emissions.
- Topic:
- Development, Economics, and Government
- Political Geography:
- United States
44. Does Barack Obama Support Socialized Medicine?
- Author:
- Michael F. Cannon
- Publication Date:
- 10-2008
- Content Type:
- Policy Brief
- Institution:
- The Cato Institute
- Abstract:
- Democratic presidential nominee Sen. Barack Obama (IL) has proposed an ambitious plan to restructure America's health care sector. Rather than engage in a detailed critique of Obama's health care plan, many critics prefer to label it "socialized medicine." Is that a fair description of the Obama plan and similar plans? Over the past year, prominent media outlets and respectable think tanks have investigated that question and come to a unanimous answer: no.
- Topic:
- Economics, Government, Health, and Markets
- Political Geography:
- United States
45. Embedded Provincial Reconstruction Teams
- Author:
- Robert Perito
- Publication Date:
- 03-2008
- Content Type:
- Policy Brief
- Institution:
- United States Institute of Peace
- Abstract:
- In January 2007, President Bush announced that the U.S. would double the number of Provincial Reconstruction Teams (PRTs) in Iraq as part of his plan for a "New Way Forward." PRTs are small, civilian-military units that assist provincial and local governments to govern more effectively and deliver essential services. These new PRTs would be embedded with Brigade (Army) and Regimental (Marine) Combat Teams (B/RCTs) participating in the "surge" of U.S. forces into Baghdad, Anbar and Erbil provinces. The new ePRTs would begin as four person interagency teams, but would expand to include civilian experts in a broad range of specialties. These new PRTs were staffed with Defense Department civilians and members of the National Guard and Army Reserve until funds became available to the State Department to hire civilian contractors. The process of deploying civilian experts is now underway, but the B/RCTs to which they are being assigned will return to the United States by August 2008.
- Topic:
- Development, Government, and International Cooperation
- Political Geography:
- United States, Iraq, Middle East, and Baghdad
46. Paper Versus Steel: Haiti's Challenge of Constitutional Reform
- Author:
- Robert Perito and Jasenka Jocic
- Publication Date:
- 01-2008
- Content Type:
- Policy Brief
- Institution:
- United States Institute of Peace
- Abstract:
- Haiti's constitution was adopted on March 29, 1987 when over 90 percent of the voters approved it in a popular referendum. The result was not surprising. Among the most democratic in the world, Haiti's constitution was proposed in the aftermath of the brutal Duvalier dictatorship and seemed to promise an end to arbitrary and violent rule. Unfortunately, that was not the case as the country endured two more decades of turmoil. In the period of instability following adoption of the constitution, its provisions were more often ignored or violated than observed.
- Topic:
- Government, Peace Studies, and Politics
- Political Geography:
- United States, Caribbean, and Haiti
47. Stress-Testing the Regulators: Market Risks and the EU Economy
- Author:
- Max Watson
- Publication Date:
- 04-2008
- Content Type:
- Policy Brief
- Institution:
- Chatham House
- Abstract:
- Today's market turbulence and global imbalances prompt the question whether economic and regulatory policies are poorly designed or just badly implemented. The question is urgent for Europe, which has its own asset booms and imbalances to worry about as well as the backwash of US problems. The imbalances in Europe's economies in large part reflect favourable shocks, such as falling interest rates and growing financial integration. But the 'growth crisis' in Portugal underscores the fact that there can be hard landings, even without a financial crisis, if fiscal policy is unwise and if productivity fails to take off. The current global imbalances and turbulence also have a common backdrop in the long period of unusually easy liquidity and low risk premia during which today's problems built up. This suggests that central banks should be prepared more often to 'lean against the wind' in times of asset price exuberance, and that politicians should not cut taxes or boost spending permanently on the back of revenue gains that result from transient financial booms. Banks and supervisors have many lessons to draw. Some involve going 'back to basics' on issues such as liquidity, off-balance-sheet operations, and the ability to close and reopen banks. Others require a careful look at incentives – in executive pay, rating agency roles and loan production systems. Supervisors also need to take better account of boom-bust cycles when they assess risks, and address cross-border issues in EU banking. Moral hazard has been partly addressed by pain inflicted on bank managements and shareholders. But at the macro level it may be building up as policy-makers act to limit losses in a setting where they cannot trace the ultimate fallout from risks. In future, their discretionary interventions need to be truly exceptional and much more symmetrical, or the money supply and the public debt will ratchet up amid serious resource misallocation.
- Topic:
- Economics, Government, and Financial Crisis
- Political Geography:
- United States and Europe
48. Anatomy of a Train Wreck: Causes of the Mortgage Meltdown
- Author:
- Stan J. Liebowitz
- Publication Date:
- 10-2008
- Content Type:
- Policy Brief
- Institution:
- Independent Institute
- Abstract:
- Why did the mortgage market melt down so badly? Why were there so many defaults when the economy was not particularly weak? Why were the securities based upon these mortgages not considered anywhere as risky as they actually turned out to be? This report concludes that, in an attempt to increase home ownership, particularly by minorities and the less affluent, virtually every branch of the government undertook an attack on underwriting standards starting in the early 1990s. Regulators, academic specialists, GSEs, and housing activists universally praised the decline in mortgage-under- writing standards as an “innovation” in mortgage lending. This weakening of underwriting standards succeeded in increasing home ownership and also the price of housing, helping to lead to a housing price bubble. The price bubble, along with relaxed lending standards, allowed speculators to purchase homes without putting their own money at risk. The recent rise in foreclosures is not related empirically to the distinction between subprime and prime loans since both sustained the same percent- age increase of foreclosures and at the same time. Nor is it consistent with the “nasty subprime lender” hypothesis currently considered to be the cause of the mortgage meltdown. Instead, the important factor is the distinction between adjustable-rate and fixed-rate mortgages. This evidence is consistent with speculators turning and running when housing prices stopped rising.
- Topic:
- Economics, Government, Markets, Financial Crisis, and Minorities
- Political Geography:
- United States
49. How Did We Get into This Financial Mess?
- Author:
- Lawrence H. White
- Publication Date:
- 11-2008
- Content Type:
- Policy Brief
- Institution:
- The Cato Institute
- Abstract:
- As policymakers confront the ongoing U.S. financial crisis, it is important to take a step back and understand its origins. Those who fault "deregulation," "unfettered capitalism," or "greed" would do well to look instead at flawed institutions and misguided policies. The expansion in risky mortgages to under qualified borrowers was encouraged by the federal government. The growth of "creative" nonprime lending followed Congress's strengthening of the Community Reinvestment Act, the Federal Housing Administration's loosening of down-payment standards, and the Department of Housing and Urban Development's pressuring lenders to extend mortgages to borrowers who previously would not have qualified.
- Topic:
- Economics and Government
- Political Geography:
- United States
50. Nuclear Renaissance: Is It Coming? Should It?
- Author:
- Sharon Squassoni
- Publication Date:
- 10-2008
- Content Type:
- Policy Brief
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- Expectations for nuclear energy have grown dramatically. More than thirty nations now have plans to build nuclear power plants for the first time. A nuclear renaissance, however, is not a foregone conclusion. A major expansion would require significant policy and financial support from governments. Key questions need solid answers beforehand: Can nuclear power help reduce dependence on foreign oil or contribute significantly to needed reductions in carbon emissions? Is nuclear power economically competitive? Can safety be assured and is an acceptable solution for nuclear waste at hand? Can nuclear power be expanded in such a way as to adequately control the added risks of proliferation? To minimize some of the risks of nuclear expansion—whether related to economics, safety, security, or proliferation—the United States should consider several actions: help strengthen the rules of nuclear commerce and transparency, deemphasize the element of national prestige with respect to nuclear energy, help other countries undertake clear-eyed assessments of all available options for generating electricity, and limit the acquisition of sensitive nuclear technologies like uranium enrichment and spent-fuel reprocessing.
- Topic:
- Energy Policy, Environment, and Government
- Political Geography:
- United States