The Globe and Mail - Neil Reynolds Columns

The Fed to the rescue? Don't bank on it

Fri, 3 Oct 2008 00:00 EDT

The Panic of 1907 remains famous primarily as the credit crunch crisis that legendary financier J. Pierpont Morgan solved by himself. He locked New York's most important bankers in his library on East Thirty-Sixth Street and held them prisoner until they agreed to put up the cash needed to restore confidence in the markets. It was also the panic that (seven years later) produced the U.S. Federal Reserve. Now, a century later, in the midst of another panic, the reason it produced the Fed appears elusive. At the time, the progressive politicians insisted that the U.S. could avert future crises provided it had a government-directed supreme bank.

Two streets, one shared destiny

Wed, 1 Oct 2008 00:00 EDT

Perhaps more than most peoples, Americans believe in progress, in the purposeful march of history - and have the history to justify it. For 112 years, the Dow Jones industrial average has tracked the country's spectacular advances and its gut-wrenching retreats, its exhilarating booms and its excruciating busts.

Bailout is petty cash compared with inflation toll

Fri, 26 Sep 2008 00:00 EDT

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Market crisis calls for a shock to the Fed

Wed, 24 Sep 2008 00:00 EDT

Here's one for Naomi Klein. In her celebrated The Shock Doctrine: The Rise of Disaster Capitalism, Ms. Klein argued that radical free-market reforms can be implemented only in the midst of crises - economic crises, natural disasters, wars - manipulated by ideological conspirators for this specific subversive purpose. She quotes free-market economist Milton Friedman to prove it: ''Only a crisis,'' Mr. Friedman wrote in an introduction to one of his books, ''produces real change,'' noting that the crisis could be either actual or merely perceived.

Urban excellence? Utah calling

Fri, 19 Sep 2008 00:00 EDT

In his 2002 bestseller The Rise of the Creative Class, U.S. urban thinker Richard Florida argued that the cities most apt to succeed are the cities that (among other things) attract intellectuals, embrace gays and appreciate counterculture bohemians. This kind of laissez-faire tolerance, he said, draws creative people - and creative people make cities great.

Fannie never truly shook off government reins

Fri, 12 Sep 2008 00:00 EDT

Rising slowly from its Great Depression low (at 41.22 on July 8, 1932), the Dow Jones industrial average finally registered a five-year high (at 194.14 on Aug. 3, 1937) - only to crash once again.

Deflation doesn't have to be a bad thing

Wed, 10 Sep 2008 00:00 EDT

On the Waterfront swept the Academy Awards - Best Film, Best Actor (Marlon Brando), Best Actress (Eva Marie Saint), Best Director (Elia Kazan). Rosa Parks refused to move to the back of a bus in Montgomery, Ala. Olympia Press published the U.S. edition of Vladimir Nabokov's Lolita in Paris. Walt Disney opened Disneyland, the first big theme park, in Los Angeles. Ray Kroc opened the first McDonald's in Des Plaines, Ill. Gasoline sold for 23 cents a gallon, first-class stamps were 3 cents. The average wage reached $4,130 a year and the average hourly rate broke through a dollar an hour.

Rejoice, don't despair, at looming deflation

Fri, 5 Sep 2008 00:00 EDT

Henry Ford produced his first Model T in 1913 and sold it for $575 (U.S.). Fifteen years later, in 1928, Ford sold Model Ts for $290. Technological advances explain some of the drop in price, but persistent deflation - in the midst of a great economic boom - explain part of it, too.

When inflation isn't really inflation

Wed, 3 Sep 2008 00:00 EDT

In one hypothetical scenario, Peter Hall, vice-president and chief economist at Export Development Canada, calculates that the inflation rate could fall to 1.0 per cent in Canada, the United States and Europe by next June - ''quite a disappearing act, indeed.'' The Canadian rate, he says, could fall below 1 per cent. What condition would be needed to produce these remarkably low rates? Only that food and energy prices decline marginally from the peaks they hit earlier this year. And much of this reversal has (for the moment, at least) already happened. ''[It] means one less thing,'' Mr. Hall concluded in his weekly economic commentary, ''that we all have to worry about.''