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Another one to send to your Liberal friends.

Economy capitalism, economics, free enterprise, Milton Friedman

This article at The Journal of the American Enterprise Institute by Jeffrey Friedman shows us that there is something to learn on BOTH sides of the aisle …

Capitalism gets a bad rap from the libs ... but as an economic system, it "mitigates both human greed and human fallibility."

A BBC poll conducted in 27 countries found last month that only 25 percent of Americans think capitalism is working well—and that this is the highest proportion of any country in the world. Overall, 51 percent of those interviewed thought that “regulation and reform” are needed to fix the problems of capitalism, and 23 percent maintained that an entirely new economic system is in order.

This is the intellectual toll taken by the financial crisis. But the people of the world, including most of its intellectuals, are simply wrong to think that capitalism caused the crisis. And once we understand what really happened, we get a rather different conception of capitalism than those entertained by either its conservative defenders or its liberal critics.

Beginning with “What Really Went Wrong,” Friedman walks us through the mortgage market from 2001 to 2006. During this period subprime mortgages slowly ate away at an otherwise stable financial market.

The heart of the matter is that most mortgages written during the housing boom were pooled into enormous mortgage-backed securities (MBS). Fannie and Freddie securitized mortgages, but so did investment banks, such as Bear Stearns and Lehman Brothers. Shares of these MBS were then sold, as bonds, to investors around the world—but primarily to the world’s commercial (lending) banks. When subprime mortgage defaults began to spike in the summer of 2007, the value of all MBS began to be doubted. By September of 2008, doubt had turned to rout. Nobody wanted to buy the MBS inventory held by Lehman Brothers, since nobody knew how far home prices would drop, and therefore how low the value of MBS might go.

Think you know the “REST OF THE STORY?” Heh, heh … think again and read more HERE

Aw shucks … let me give you one more tidbit just to bait the hook …

How Liberals Get Capitalism Wrong

Liberals are correct to see through the usual defenses of capitalism. But they are wrong on the big picture. They fail to notice that there’s more to capitalism than luck and greed: there is competition—the saving grace of the whole system and, when undisturbed, the source of its strength.

… A baker who offered moldy or tasteless bread would be driven from the field by a competitor offering a better product. That is the message of Adam Smith.

The reason is the competitive nature of the capitalist system; the motives of individual capitalists are irrelevant. Competition puts capitalists’ different motives and ideas to the test of consumer satisfaction. This tends to give consumers what they want—and it diversifies a capitalist society’s investment portfolio. Capitalism thus mitigates both human greed and human fallibility. This is an amazing achievement, but there’s nothing magical about it.

Economy American Enterprise Institute, capitalism, Financial crisis, Jeffrey Friedman, mortgage-backed securities, subprime mortgage market

SUPERMARKETS: The Consumer’s Temple

By Nicole Perlroth | Forbes

In 1930, Michael Cullen invented the supermarket and led the American public into the low prices of the promised land.

They have been credited with creating America’s middle class and blamed for obesity and global warming. They sparked innovations like the bar code, frozen foods and fresh year-round produce. They popularized self-service–and with it mass merchandising and competitive pricing. They created a culture of instant gratification and that uniquely American being: the smart shopper.

Supermarkets are a daily testimonial to the transformative power of capitalism. Few 20th century innovations have had such an impact on the way we live. In his autobiography, former Russian President Boris Yeltsin described his first visit to a Houston supermarket this way: “When I saw those shelves crammed with hundreds, thousands of cans, cartons and goods of every possible sort, I felt quite frankly sick with despair for the Soviet people.”

What would life be like if the supermarkets folded? Just a thought to prompt some gratitude for capitalism.

For some more great stories on the 1930’s, visit this link at Forbes:
Revisiting The 1930s

Coolest Story, Economy capitalism, grocery stores, Michael Cullen, supermarkets

What?

Newsweek’s Clift Blames Capitalism for Woes Facing Obama

By Jeff Poor | via Newsbusters

Clift, appearing on the syndicated April 26 “The McLaughlin Group” gave Obama high marks for his first hundred days and said Republicans were misguided for attacking the growth of the size of government.

“I give him a B+ because there’s a lot of outcomes that haven’t come in yet,” Clift said. “But look, this isn’t about the failure of government and the Republicans are on the wrong tact talking about big government. This is a failure of capitalism. He’s trying to save capitalism.”

Economy, Obama Nation capitalism, Economy, Eleanor Clift, Obama Tax policies, u.s. economy