Unintentional Commentary

In the "Life in Grace" rollo I presented during the Via de Cristo I served this last weekend, I made mention of the Big Eight Accounting firms -- which reflected the state of accountancy in my university days. That link tells of how the Big Eight became the Big Four; a significant part of that story is how the accounting firms lowered their professional standards in search of greater profits. The collapse of Arthur Anderson in the Enron scandal, for instance, followed a couple of decades of abandoning the principles that, well, I was taught as an accounting major at CSUN.

Then there is the announcement that showed up in my inbox today from the Accounting and Information Systems section of the CSUN Alumni Association:

This message is to invite you to upcoming November events for the CSUN AIS Alumni:Association

Monte Carlo Night on Friday evening, November 7;

• Doors open: 5:30 PM, Games: 6:00 PM-10:00 PM, Raffle at the end of the evening
• Roulette ♣ Craps ♥ Blackjack ♠ Texas Hold' em ♦
• Refreshments / Appetizers
• Faculty and current Alumni Members: $30 General Public: $40

I'm trying to imagine those who taught me accounting sponsoring a Monte Carlo Night. Then again, I try to imagine those who taught me banking leveraging entire banking companies on home loans that clearly could not ever be paid off.

Apparently I don't have quite enough of an imagination to have been an accountant or banker in 2008. Given what's happened, I don't think I have anything to be ashamed of.

There Ain't No Such Thing as a Free House

Okay, I've not quoted its subtitle quite correctly. But The Recession Reader over at LewRockwell.com offers you the opportunity to learn how the Panic of 2008 was no surprise. And even if everything falls apart, maybe we can learn something for the future.

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The Recession Reader
There is No Such Thing as a Free House

Someone once remarked that the best indicator of a recession is the number of times "Mises" "Hayek" or "Austrian" appear in the newspapers. During the boom, no one wants to listen to the lessons of the Austrian economists. No one wants to hear that we need to live within our means – that the Federal Reserve does not have the power to print us into prosperity by artificially creating credit. So while the writers of LewRockwell.com were warning against the housing bubble and the inflationary nature of the Fed, the mainstream was touting the economic wisdom of Bernanke and Greenspan. When this recession hit, it seems everyone except the Austrians was caught off guard. Commentators, bureaucrats, and politicians began panicking, "Something must be done! This is Something…therefore it must be done!"

Instead of looking to the mainstream for answers to this crisis, why not look to those who saw it coming?

For those new to Austrian economics, this reader will offer an introduction to this unique school of thought. It is unlike any other school of economics you have likely come across. Instead of focusing on unrealistic mathematical models, the writers here build their thinking on human action and observations of how the economy actually runs.

What’s important is not necessarily the specific political opposition to this bailout, but rather educating people about the dangers of nationalization, central banking, and government regulation. Only when people recognize the dangers of the government’s "socialism for the rich" will we be able to get back on the road to prosperity. Unfortunately, a correction is necessary. There is no such thing as a free house. The more the government intervenes, the longer and more painful it will be. But this crisis gives the country a chance to rethink its previous assumptions about the economy and the government’s role in it. Hopefully, this reader will be a first step for many into an exciting, growing branch of economic thought.

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Find the resources, which includes essays and links to books, here. MInd you, they don't pull their punches. Hat tip to Gary North's Specific Answers, where Dr. North suggests that, if you can't read it all, pick one link in each category.

And if you want more, see The Bailout Reader which offers a similar education from the Ludwig von Mises Institute.

Mistaken Principles

Pastor Zip tries to stay out of politics on this blog. I'm not always successful, but I try. Not that I don't think about matters political, for I do and have over the last 40 years (Sammy Iacobellis and I marched around the school playground as 3rd graders cheering for Nixon) developed some strong opinions about issues great and small.

But I try to leave them out of this blog because Pastor Zip is, well, a Christian pastor whose vocation is to preach the Gospel so that the Holy Spirit may bring people to faith in Jesus Christ. Politics and governing are, from a Lutheran perspective, perfectly honorable vocations. But while they are both ruled by God for society's benefit (this comes from Luther's Two Kingdoms doctrine, which might be described as a very early version of what we call "the separation of church and state"), they are different and we cross kingdoms (or that "line" of separation) at our peril.

Of course, that "line" between the kingdoms -- not always very clear even in Luther's day -- is ferociously blurred in a republican democracy (I'd have written "democratic republic," but that term was ruined for generations by Stalinist communist regimes). And as an American citizen I have rights and responsibilities. But speaking politically can easily get in the way of preaching the Gospel, so I do my best to keep them separate. If you want my more politically-minded thoughts, see the 21st Century Whig. Even there, though, I aim to address principles more than specific current issues -- and I hope that, if you head over there you'll find that my recent entries (over there and, yes, here) on the response to the Financial Panic of 2008 point to principles.

Yet principles (or the lack thereof) have their consequences. (Yes, that's drawn from Richard Weaver's Ideas Have Consequences.) And I'm particularly struck by an article by Steve Salier that, while offering another analysis of how we got into this financial mess, also speaks of the ELCA and (whatever is left of) mainline protestantism. Don't be put off by his title, "Karl Rove—Architect Of The Minority Mortgage Meltdown", but read it in light of the "reigning ideology of multiculturalism and diversity" that is also the ELCA's. Yes, Saliers is talking politics, partisan politics. But the parallels to the same failed ideology in the within the ELCA and its sphere are, well, startling.

Presbyterian Minister Cleared

Hat tip to TitusOneNine:

Pastor who wed gay couple is cleared

A church court of Pittsburgh Presbytery ruled 9-0 that the Rev. Janet Edwards did not violate scripture or the constitution of the Presbyterian Church (USA) when she conducted what she has always said was the marriage of two women in 2005.

Since church and state define marriage as between a man and a woman, she cannot have done what she was accused of, the court ruled yesterday.

"It can't be an offense to the constitution to attempt to do the impossible," said the decision, read by the Rev. Stewart Pollock, chairman of the Permanent Judicial Commission of Pittsburgh Presbytery.

The full story appears in today's Pittsburgh Post-Gazette; read it here.

And you though sophistry was something left behind in the Middle Ages...

Taxpayers Lose

Wall Street has been bailed out -- for the moment. $700 billion (or more!) is going to be borrowed by the Federal Government in the name of "fiscal responsibility" and "opening the credit markets." My pension plan has been "saved." But will it actually buy anything when I retire?

Blaming the Free Market

Last Monday on the site of the Commonwealth Foundation for Public Policy Alternatives, economist Mark W. Hendrickson, Adjunct Professor of Economics Education at Grove City College, rubutted charges that the financial mess is a failure of "deregulation" and the free market. spt+

Blaming the Free Market

Guest Commentary: Mark W. Hendrickson

It’s finger-pointing time, folks. Whose fault is the ongoing financial crack-up that has hurt, angered, and frightened so many people? There is plenty of blame to go around, and the American people deserve to know the culprits. Simple justice, though, demands that the innocent not be condemned with the guilty. Already there is one innocent that has been unfairly maligned as a cause of the debacle—the free market.

As previously explained ("Anatomy of a Financial Crisis: Part I" and "Part II"), the current crisis began with a real-estate bubble that morphed into a financial house of cards. The real-estate bubble was generated by the expansionary credit policy of the Federal Reserve System. The Fed, having been created by Congress to act as Uncle Sam’s banking agent, and the Fed’s policies, are emphatically not free-market phenomena.

Neither are Fannie Mae and Freddie Mac. Congress gave Fannie and Freddie a privileged status that had these effects: first, enriching their top executives along with key congressional allies (time for some ethics hearings on Capitol Hill!); second, becoming the dominant player in what historically had been a private market for home mortgages; and third, sticking the American taxpayers with hundreds of billions of dollars of bad mortgage debt. Thanks, Uncle Sam.

That having been said, the Wall Street titans that have headlined the financial crisis this year (Bear Stearns, Lehman Brothers, AIG, etc.) were not created by government. However, the problems in the financial industry have resulted from a political failure, namely, improper regulation.

Liberals repeatedly accuse conservatives of being ideologically opposed to regulation. What nonsense! Neither “free markets” nor “deregulation” mean “no rules.” On the contrary, they assume the rule of law. What they oppose is excessive, stifling, and costly overregulation. The Latin root of “regulation”—regula—means “rule” and also connotes regularity, that is, predictability and constancy as opposed to arbitrariness and privilege. No market can function without clear rules of the game, and no true defender of free markets is dogmatically “anti-regulation.” That would be absurd.

The crisis today isn’t due to an absence of regulation, but the presence of mistaken regulation. For example, the Clinton administration, invoking the Community Reinvestment Act, imposed new regulations that penalized lending institutions if they didn’t lend “enough” money in low-income neighborhoods, regardless of the credit-worthiness of the borrowers. This regulatory regime undermined the traditional, market-based practice of risk-assessment that is the primary fiduciary duty of lending institutions. Regulators forced lenders to abandon financial prudence in subservience to a political goal, and then compounded the risk by allowing the proliferation of zero-down and no- or low-documentation mortgages. These regulatory blunders have come back to haunt us. They are responsible for the current wave of mortgage defaults and foreclosures, which in turn have torpedoed mortgage-backed securities and the many layers of financial derivatives based on them.

Another instance of regulatory failure occurred in 2005, when Republicans sought to diminish the risk of an eventual collapse of Fannie and Freddie by imposing stricter capital standards on them. That attempt was blocked on a party-line vote by Democrats.

What kind of rules does a market economy need to function well? In a society of free people, the primary rule is that one person’s freedom ends when it intrudes on another person’s rights. Thus, the right of free speech doesn’t include the right to yell “Fire!” in a crowded theater. Similarly, we have a right to seek profit, but not if our actions would wreck the entire financial system and ruin others.

We need rules against dangerous excesses—things like giant investment banks leveraging shaky debt instruments by a factor of over 30-to-1 or creating hundreds of trillions of dollars’ worth of financial derivatives. In 1998, the firm Long Term Capital Management (LTCM) shook the foundations of our financial system when its $1 trillion portfolio of derivatives started to implode. That was our warning that we needed rules to protect innocent people from the fallout of a financial nuclear explosion. Sadly, we didn’t heed that warning. Firms far larger than LTCM have created over $100 trillion in derivatives, threatening the viability of our country’s financial structure. Why was this permitted?

We face a financial cataclysm, not because of market failure, but due to political failure. Government interference with free markets, combined with government’s failure to perform its primary function of protecting the people, have brought us to the brink. In the desperate attempt to postpone the day of reckoning, the only solutions being proposed are additional government interventions, even partial nationalizations, and less reliance on markets. When things continue to worsen, please, just don’t blame “free markets.” They no longer exist.

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Dr. Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision & Values at Grove City College, www.visandvals.org.

Veteran pianist takes reins

Mel White has been one of Zion's organists for some 17 years and, prior to that, accompanied Zion's choir for many, many years. The following article appeared in last Sunday's edition of the Peoria Journal Star, and is posted it its entirety here for non-commercial use under a Creative Commons license.

Veteran pianist takes reins

By THEO JEAN KENYON of the Journal Star
Posted Sep 27, 2008 @ 10:11 PM

PEORIA — Name a musical, any musical that's been performed in the Peoria area, and chances are you've heard Mel White at the piano or seen him on stage.

When White sits down at the piano for the Caterpillar Employees Mixed Chorus production of "The Music Man," opening Thursday at East Peoria Community High School, it will be his 157th show.

And he'll also be conducting the eight-piece orchestra.

Most of his shows have been performed in Peoria with Peoria Players and Corn Stock Theatre, but he's also performed as accompanist, director or actor in shows at Conklin's Barn II Dinner Theatre in Goodfield, the former playhouse in Farmington, at Bradley University and even one gig of 2 1/2 months in Venice, Fla.

Some of his favorite shows, he says, have been "My Fair Lady," "The King and I" and "G.I. Jukebox," a USO-style show performed earlier this year at Conklin's.

"It was all that music from World War II, about 90 percent music and 10 percent dialogue," White says of "G.I. Jukebox."

The Caterpillar Employees Mixed Chorus called him this spring to take over as accompanist and orchestra director for "The Music Man."

White previously had accompanied the mixed chorus shows for 26 years while working in the accounting department at Caterpillar Inc. until retiring after "32-plus" years.

He still thinks the chorus is a remarkable idea.

"They take everybody, and for a lot of people it may be their only chance to make it on stage," he says. "We've had a blind person in the show, and it took extra people to guide him on stage."

This year the show suffered a plague of summer colds during rehearsals, and White himself caught one from others in the cast.

But he showed up anyway.

"I've never missed a rehearsal," he insisted to music director Helen Ferguson.

"At 84, he makes us all look bad," says Ferguson whose husband, Alan Ferguson, is making his directorial debut with "The Music Man."

"I'm not a classical or technical player," says White. "I studied in grade school, where we had those cardboard keys, and I had a year and a half of private lessons."

"But my grandmother and the grandmother of Betty Merkel were in the same set, and when my grandmother heard that Betty had been enrolled in a dancing class, my grandmother enrolled me, too," he recalls of his early introduction to music and dance.

Merkel, who died in 2003, grew up to become a well-known local dance instructor and choreographer who owned and operated the Betty Merkel Ford Dance Studio in Peoria for more than 40 years.

White says of that early class he took with Merkel: "I do know dancing."

Although White graduated in accounting at Bradley University and made that his career, he has been playing and performing ever since on one stage or another.

White says "The Music Man" has "a wonderful score." He dug out the one he used when the Caterpillar chorus first produced it several years ago and found the new one has more pages and some changes, but noted that Willson's memorable songs are still in the same key.

Now in his 80s, White admits his back gives him some trouble when walking or standing.

"But sitting is no problem," he says, and he'll be sitting at the piano starting Thursday.

Theo Jean Kenyon can be reached at (309) 686-3190 or tkenyon@pjstar.com.

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