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If you don’t know then be sure to read Forbes fantastic overview of the maverick banker who saw and timed the current banking implosion.
Too many nuggets to quote, read the whole thing.
Are these the same guys couple of years ago did a great fluffy write up on Sir Allen Sanford. Roosters do come home to crow. Another genius.
Classical Liberalism Protection
Saturday, April 4, 2009
Read About The Entrepreneur Andy Beal On Forbes.com!
The story is a very good example of entrepreneurship.
The lull periods in the life of an entrepreneur may sometimes be because there are no ‘real’ opportunities even though the entrepreneur is very actively alert or it may be because the entrepreneur is in a relatively latent state.
The story is also a very good example of the purpose and the potency of capital.
This story also serves as a testimony that what Ron Paul said is perfectly correct: if the bubble malinvestment is simply allowed to be liquidated as part of the market process the economy will recover quickly.
The reason this option (non-interventionism) is not permitted by the ego-driven interventionists is because then their intervention will be seen as not only totally unnecessary but as the cause of the malinvestment in the first place.
Among other things, this story demonstrates that it takes pretty serious balls to take a contrarian stand near the top of a credit bubble – to be willing to turn down business, lay off employees, not get sidetracked by directors, other banks, rating agencies, and regulators who think you are nuts for not joining in the fray. It’s probably why there is only one Ron Paul in Congress too.
The following was also a good comment on the Forbes blog:
Posted by MarkASadowski | 04/04/09 02:01 PM EDT
Beal didn’t get caught up in the financial bubble because he was playing with his own money rather than shareholder’s or, ultimately, the taxpayer’s. Something has seriously gone wrong with the public corporate system when the executives get handsomely compensated for making lousy deals that run their companies into the ground. We need to make management more accountable to shareholders.
709. BANKS, Fictitious Capital. – The banks themselves were doing business on capitals, three-fourths of which were fictitious; and to extend their profit they furnished fictitious capital to every man, who having nothing and disliking the labors of the plow, chose rather to call himself a merchant, to set up a house of $5,000 a year expense, to dash into every species of mercantile gambling, and if that ended as gambling generally does, a fraudulent bankruptcy was an ultimate resource of retirement and competence. This fictitious capital, probably of one hundred millions of dollars, is now to be lost, and to fall on somebody; it must take on those who have property to meet it, and probably on the less cautious part, who, not aware of the impending catastrophe have suffered themselves to contract, or to be in debt, and must now sacrifice their property of a value many times the amount of their debt. We have been truly sowing the wind, and are now reaping the whirlwind. If the present crisis should end in the annihilation of these pennyless and ephemeral interlopers only, and reduce our commerce to the measure of our own wants and surplus productions, it will be a benefit in the end. But how to effect this, and give time to real capital, and the holders of real property, to back out of their entanglements by degrees requires more knowledge of political economy than we posses. I believe it might be done, but I despair of its being done. The eyes of our citizens are not sufficiently open to the true cause of our distress. They ascribe them to everything but their true cause, the banking system; a system, which, if it could do good in any form, is yet so certain of leading to abuse, as to be utterly incompatible with the public safety and prosperity. At present, all is confusion, uncertainty and panic. – TO RICHARD RUSH. FORD ED., X. 133. (M., June 1819.)
Good article! Thanks! It emphasizes a point which the mainstream media would poke out their eyes before allowing them to see it: by subsidizing failing businesses, the state punishes successful entrepreneurs.
Someone send him “Inclined to Liberty” or Ron Paul’s Manifesto.
$2 mil buy gambling? Why not send some of that cash towards the Mises Institute.
Here there’s another good point I found in the news about bailout injustice and democracy loathing.
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