The annual car evaluations Consumer Reports publishes in its April issue have just arrived—and the news for Detroit is not good. This year the magazine has devised what it calls a “Report Card” on the world’s 15 largest car companies. We show some of the results in the table below. (The "overall score" here is calculated by combining the average test scores for a given company's models a...

Federal Bailout Commitments (Billion of Dollars) Category Fed Res Funding Treasury Funding Other/Pvt Funding 1 Public-Private Investment Trust   < 500 < 500 2 Capital Assistance Plan 900 100   3 Economic Emergency Stability Act-TARP I   350   4 Economic Emergency Stability Act-TARP II   350   5 Fannie Mae/Freddie Mac debt 600       Fannie Mae/Freddie Mac preferred shares   4...

This is not the first time the state of California has had trouble paying its bills. Back in 1992, when California was hit hard by a recession and by major defense cuts, it ran into similar fiscal problems. That year, a payment from the state to AIER for an Annual Sustaining Membership “bounced.” Below is the full report from the AIER archives.  "Someone in California's state government r...

President Barack Obama and members of Congress are promising a lot more government regulatory oversight of the banking industry as part of their continuing bailout of the financial system. But many of those in the financial markets who face these new regulations are also campaign contributors who helped put these politicians in office. The 2008 presidential and Congressional elections were the ...

President Obama is hosting a “fiscal responsibility summit” on February 23 that has the goal of reining in the projected growth in government spending in the years and decades ahead. Any such reform, however, will require a dramatic change in the role of government in American society. In the last six months, as the current recession became worse, the cost of government has exploded on top of...

The Consumer Price Index (CPI) data for December has made many commentators raise the fear of a coming deflation. There is only one problem with these concerns: There are no deflationary forces at work. If anything, a huge inflationary process has been undertaken by the Federal Reserve over the last several months. The Department of Labor reported January 16 that the CPI for all urban consumers (...

The fear of price deflation is moving the Federal Reserve in the direction of establishing an official “inflation target” that would be the goal of monetary policy. The fundamental problem with inflation-targeting is that it is the Fed would be shooting for an annually planned rise in prices and depreciation of the dollar. The minutes of the December 2008 meeting of the Federal Reserve’s ...

With the new stimulus package that is being planned in Washington, government spending will grow even more dramatically than it has over the last several years. More growth in the Federal government’s debt will come with it, as will a greater tax burden for the American people. In its January 7 report, the Congressional Budget Office (CBO) projected that the Federal budget deficit for the f...

Sketchonomics is a new series from AIER that highlights the humorous side of economics and personal finance. Each cartoon will poke fun at a current issue or event, providing some much needed humor to a very serious subject.  

You had to be living under a rock to miss the topsy-turvy ride the economy took in 2008. The housing market tanked. Credit froze. And giants fell, including the now-defunct Lehman Brothers investment bank, insurance company A.I.G. and the government-sponsored mortgage brokers Fannie Mae and Freddie Mac, among many others. In addition, the nation elected a new president who is posed to reverse ...

Rightly or wrongly, voters often hold the president responsible for the state of the national economy. Incumbent fortunes seem to turn with the economic tide. As a consequence, political campaigns often stress those aspects of the economy that appear favorable from the incumbent administration’s perspective or unfavorable from the challenger’s perspective. Recent evidence suggests voters do ...

Not surprisingly much of the economic news has focused on the financial crisis in the housing market. What has received less attention is the consumer credit market. As the table below shows, consumer credit outstanding has increased from a bit more than $2 trillion  in 2003 to $2.5 trillion by the end of the second quarter of 2008, representing a 25 percent increase over five years. Out of this ...

If you thought that that the word “voluntary” means the ability to say yes or no, you obviously haven’t been in Washington, D.C., lately.  When the senior executives of America’s largest banks were invited to a meeting with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke at 3 p.m. Monday, October 13, they found out that the United States government intended to ...

The U. S. government will be using at least $250 billion out of the $700 billion bailout package to buy equity shares in the some of the largest financial institutions in the country. In other words, as  President George W. Bush, Treasury Secretary Henry Paulson, and Federal Reserve Chairman Ben Bernanke confirmed Tuesday, Washington will use more than one-third of that $700 billion for a pa...

When the World Bank surveyed the regulations governing businesses in 181 economies around the world, it detailed many reductions in regulation worldwide, particularly in many developing countries. But it also uncovered the how much many governments continue to make it difficult and costly to do business. Regulations that make it difficult or impossible to register a business, or to have land tit...

The World Bank report, Doing Business, 2009, examines government regulation of business in 181 countries. While the study emphasizes recent improvements that free business from stranglehold of government regulation, it also highlights the extent to which political authorities around the globe continue to make business difficult and costly. In earlier webposts, we saw that the Western developed n...

An open and competitive business environment is the basis for innovation, job creation, and rising standards of living. Unfortunately, the heavy hand of government regulation often hinders private enterprise and the competitive process. As we saw in an earlier webpost, a recent report from the World Bank found that the Western developed nations are far from being models of free-market economies....

Much recent economic news is focused on the current financial crisis. But beneath the investment portfolios that have caused so much concern is the real economy, where actual goods and services are produced, marketed, and sold.  Crucial to market stability and growth is the ease or difficulty these businesses experience to open, run, and even close down.  This, in turn, is dependent on th...

The recent U.S. government takeover of Fannie Mae and Freddie Mac was greatly influenced by concerns expressed by foreign governments and central banks that have heavily invested in American capital markets. The continuing instability in the mortgage industry led many to fear that there might be a major selloff by foreign investors that could threaten a dramatic fall in the value of the dollar. A...

Davy Crockett, it is said, once gave a speech while a congressman in the 1830s in which  he admitted his error in voting for a redistribution of wealth at the taxpayers’ expense. Few congressmen are willing to doubt such policies today if congressional campaign spending is any indication.  According to the Center for Responsive Politics, in the current election cycle 1,289 candidates have ...