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For your viewing pleasure.
Go to reason.tv embed codes, related articles, and more video, including The Drew Carey Project.
Obama Kids: Sing for Change (Pyongyang Remix):
Financial advisor Bert Dohmen on the bailout:
The Reason.tv Talk Show, with Michael C. Moynihan, Nick Gillespie, Nicky Grist, and John D. Gartner:
Saving Social Security, Episode One: Pimp My Walker:
National Review's editor on Sarah Palin:
I'm sure I'm not the only male in America who, when Palin dropped her first wink, sat up a little straighter on the couch and said, "Hey, I think she just winked at me." And her smile. By the end, when she clearly knew she was doing well, it was so sparkling it was almost mesmerizing. It sent little starbursts through the screen and ricocheting around the living rooms of America.
Yes, ev'rybody's talkin' 'bout bagism, dragism, thisism, thatism, ism ism ism. And, of course, credit default swaps.
Arnold Kling over at Econlog has an interesting little exposition on why you should care, and connects them with some genuine fears about the possible effects of runaway short-selling (for more on which, see this piece from me from last month).
The key, from Kling:
A credit default swap is like insurance against default. If you want to buy a municipal bond or a corporate bond but not take default risk, you try to buy a credit default swap. You pay a fee, and in exchange for that fee the seller of the swap will make you whole if the city or corporation defaults.
The seller of swaps collects nice fees, and most of the time the borrowers don't default. But if borrowers do default, then the seller is like an insurance company in a town that was hit by a hurricane.
Sounds grim. How can the seller of such a swap hope to survive?
Suppose I have sold a credit default swap on Sallie Mae. That means that if Sallie Mae defaults on its bonds, I will have to pay some of the bondholders a big chunk of money. One way I can hedge that risk is to sell short Sallie Mae securities..... However, the more short-selling takes place, the closer they get to default. It is a vicious cycle. Ordinarily, I do not believe that short-selling affects the price, but when there is massive short-selling that is driven by dynamic hedging, I can see where the short selling would drive down prices.
So, does this mean that even the formerly soft on short selling Kling thinks there is a sensible place for short-sell bans or restrictions? It's a little more complicated than that, as are most things in the world of contemporary high-flyin' high finance. Short selling, after all, is a big way** the sellers of the swaps can hope to ride out the storm. Thus:
....if the government tries to curb short-selling, all that does is cripple the credit default swap market. It becomes costly to sell default swaps, so now creditors cannot get them at affordable prices. The only way they can reduce exposure is to sell their munis and their corporates and flee to Treasuries. I'm not saying that the curbs on short selling make things worse, but such regulations certainly don't solve the problem--at best, they shift it.
If my theory is correct, then the credit default swap protection is somewhat of a delusion....It is too late to undo the delusion. In the aggregate, markets under-estimated the risk of the bonds they were buying. The risk premium needs to adjust upward. That upward adjustment is not a credit squeeze--it's a return to reality.
See Kling talking general bailout horrors in this reason.tv clip.
**Amended from "only way" thanks to the totally justified comment from Gilmore.
It's easy (and entertaining) to poke fun at Sarah Palin’s aw-shucks, working-mom routine, writes Associate Editor Michael C. Moynihan. But let’s not forget that Joe Biden also employs a particularly noxious form of populism.
From around the econoblogosphere (sorry for that ugly coinage), semi-consensus about consensus:
Eric Posner at Volokh:
Do economists oppose the bailout bill? No! You might think otherwise from various incautious commentaries, including the economist’s letter written a while back. (The letter said "go slow"; it didn't say "do nothing.") And it is true that most economists don’t like the original Paulson plan, and also don’t like the plan passed by the Senate. But the view that we are currently in a serious financial crisis—the worst since the Great Depression—is, as far as I can tell, unanimous. ...The idea that governments should address financial crises by injecting liquidity in the system is not some new-fangled idea dreamed up by socialists, but conventional wisdom, proved again and again by experience, going back many decades. The problem is that every economist has his own theory about the proper solution.
Alex Tabarrok at Marginal Revolution:
The consensus among economists is now clear, the best strategy for dealing with the financial crisis is to recapitalize the banks that need recapitalization. Paul Krugman, John Cochrane, Luigi Zingales, Douglas Diamond, Raghuram Rajan and many others all advocate some form of recapitalization as do Tyler Cowen and myself. Krugman would prefer a recapitalization in the form of nationalization....The consensus policy of economists would put most of the burden of adjustment on politically powerful holders of equity and bonds.
There is also a consensus among economists that the bailout bill is not the right policy. None of the above economists, for example, is enthusiastic about the bailout.
Lynne Kiesling at Knowledge Problem:
Fast recapitalization, removing the signaling penalty by having the government require banks to stop giving dividends in the short run ... those are the kind of policies that economists have been discussing, fleshing out, and encouraging over the past two weeks. Of course, the challenge to those proposals is that the parties who end up paying are precisely those firms and industries that are politically powerful.
Worried about Social Security? Follow the adventures of Sonny, a young kid trying to retire (eventually) in style.
Produced by Lineplot, this is the first of five episodes.
When Gary Schinagel's niece told him she had seen his name in a local newspaper story about a drug investigation, he decided to go down to the sheriff's office and straighten out what was obviously a misunderstanding. Instead Schinagel, a 47-year-old senior investment associate at Principal Financial Group in Mason City, Iowa, was arrested for violating a 2005 state law that aims to curtail methamphetamine production by limiting the amount of pseudoephedrine, a meth precursor, an individual may purchase. Buyers of cold and allergy remedies containing the chemical have to present ID and sign a log (a requirement that has since been imposed throughout the country by federal law), which allows police to track who is buying how much. Schinagel, who has suffered from chronic nasal congestion since childhood, was not using the pseudoephedrine to cook meth, and he says he's not even sure which rule he broke: the one against buying more than 3.6 grams (120 Sudafed tablets) in a 24-hour period or the one against buying more than 7.5 grams of pseudoephedrine (250 tablets) in a month. The latter offense is a "serious misdemeanor" that can get you up to a year in jail and a $1,500 fine.
The law does allow someone in Schinagel's medical situation to exceed the pseudoephedrine limits, but only with a prescription. "It is a sinking feeling to be placed under arrest," Schinagel, who is free on bail, told the Mason City Globe Gazette. "I've tried all my life to avoid situations like I find myself in now. And I still don't know which line I crossed."
I bemoaned the Sudafed crackdown in a 2005 column.
[via The Drug War Chronicle]
In last night's vice presidential debate, Sarah Palin attacked "predator lenders," which made it sound like she was opposed to the sharing of lions and tigers among zoos. Judging from the context, I'm pretty sure she meant "predatory lenders":
Moderator Gwen Ifill: The next question is...about the subprime lending meltdown. Who do you think was at fault? I start with you, Gov. Palin. Was it the greedy lenders? Was it the risky home buyers who shouldn't have been buying a home in the first place? And what should you be doing about it?
Palin: Darn right it was the predator lenders, who tried to talk Americans into thinking that it was smart to buy a $300,000 house if we could only afford a $100,000 house. There was deception there, and there was greed and there is corruption on Wall Street. And we need to stop that.
Again, John McCain and I, that commitment that we have made, and we're going to follow through on that, getting rid of that corruption.
One thing that Americans do at this time, also, though, is let's commit ourselves, just everyday American people, Joe Six Pack, hockey moms across the nation, I think we need to band together and say never again. Never will we be exploited and taken advantage of again by those who are managing our money and loaning us these dollars. We need to make sure that we demand from the federal government strict oversight of those entities in charge of our investments and our savings and we need also to not get ourselves in debt. Let's do what our parents told us before we probably even got that first credit card. Don't live outside of our means. We need to make sure that as individuals we're taking personal responsibility through all of this. It's not the American people's fault that the economy is hurting like it is, but we have an opportunity to learn a heck of a lot of good lessons through this and say never again will we be taken advantage of.
Despite the nod toward "personal responsibility" in that last paragraph, this is a very strange take on the situation, especially coming from a self-identified conservative who supposedly believes in free markets. Exactly what is a predatory lender, and how does he profit by lending money to people who can't pay him back? That sounds more like a stupid lender. What about the predatory borrower, who takes out a loan and breaks his promise to pay it back? If anyone is getting ripped off here (aside from the taxpayers who have to pay for the bailout Palin and her running mate support), isn't it the lender? Evidently not. In Palin's topsy-turvy world, you are being "exploited and taken advantage of" when you take the money and run.
There's been a mackerel economy in federal prisons since about 2004, former inmates and some prison consultants say. That's when federal prisons prohibited smoking and, by default, the cigarette pack, which was the earlier gold standard.One reason the mackeral standard has taken off: Hardly anyone actually wants to eat the stuff. Another reason: "each can (or pouch) costs about $1." (So it's pegged to the dollar, then?)
Prisoners need a proxy for the dollar because they're not allowed to possess cash. Money they get from prison jobs (which pay a maximum of 40 cents an hour, according to the Federal Bureau of Prisons) or family members goes into commissary accounts that let them buy things such as food and toiletries. After the smokes disappeared, inmates turned to other items on the commissary menu to use as currency.
Books of stamps were one easy alternative. "It was like half a book for a piece of fruit," says Tony Serra, a well-known San Francisco criminal-defense attorney who last year finished nine months in Lompoc on tax charges. Elsewhere in the West, prisoners use PowerBars or cans of tuna, says Ed Bales, a consultant who advises people who are headed to prison. But in much of the federal prison system, he says, mackerel has become the currency of choice.
The Bureau of Prisons views any bartering among prisoners as fishy. "We are aware that inmates attempt to trade amongst themselves items that are purchased from the commissary," says bureau spokeswoman Felicia Ponce in an email. She says guards respond by limiting the amount of goods prisoners can stockpile. Those who are caught bartering can end up in the "Special Housing Unit" -- an isolation area also known as the "hole" -- and could lose credit they get for good behavior.Bonus link: Every time I blog a story like this, I feel obliged to throw in a link to R.A. Radford's classic article "The Economic Organization of a P.O.W. Camp." If you've never read it before, you should.
As many have noted, the bailout legislation passed by the Senate and up before the House today contains a lot of early Christmas presents for various favored industries. One favorite is a provision repealing a 39-cent excise tax on wooden arrows for kids. (I'd have thought for-the-kids nannystaters would have argued for banning such dangerous toys which encourage violence rather than hand arrow corporations a tax break, but these are strange times.)
Another provision that has alarmed the good folks over at the Capital Reseach Center is a clause authorizing a "carbon audit of the tax code." CRC's Green Alert warns:
This appears to be an attempt by global warming fanatics to lay the foundation for an economy-killing carbon tax just like the "cap-and-tax" system that is now destroying European industry.
The actual provision reads:
SEC. 117. CARBON AUDIT OF THE TAX CODE.
(a) Study- The Secretary of the Treasury shall enter into an agreement with the National Academy of Sciences to undertake a comprehensive review of the Internal Revenue Code of 1986 to identify the types of and specific tax provisions that have the largest effects on carbon and other greenhouse gas emissions and to estimate the magnitude of those effects.
(b) Report- Not later than 2 years after the date of enactment of this Act, the National Academy of Sciences shall submit to Congress a report containing the results of study authorized under this section.
(c) Authorization of Appropriations- There is authorized to be appropriated to carry out this section $1,500,000 for the period of fiscal years 2009 and 2010.
I am not deeply schooled in the arcana of legislative construal, but on its face, the provision appears to authorize a look at the tax code to see how it affects the emissions of carbon dioxide and other greenhouse gases. Such an audit could uncover tax subsidies of carbon-based fuels that one would surely want eliminated. On the other hand, it might reveal taxes that are hampering the use of carbon-based fuels.
Finally, it could also find tax subsidies of alternative fuels that one would also want eliminated, but it's unlikely to find taxes that suppress the adoption of alternative fuels. Of course, I understand that those who put in this audit provision will most likely use the findings to argue against carbon fuel subsidies, and skip over the subsidies to the alternative fuels they favor. But isn't eliminating some subsidies better than eliminating no subsidies?
From their DC HQ, reason.tv's Nick Gillespie and Michael C. Moynihan have a freewheeling talk about politics, culture, and changing social mores with Alternative to Marriage's Nicky Grist and In Seach of Bill Clinton author John D. Gartner.
Approximately 30 minutes; shot by Dan Hayes.
Click below to watch.
The House is debating the bailout now and a few members are declaring their switch from "no" votes to "yes" votes. So far:
Jesse Jackson, Jr. (D-IL) [actually made this public yesterday]
John Lewis (D-GA)
Bill Pascrell (D-NJ)
Howard Coble (R-NC)
Gresham Barrett (R-SC)
Zach Wamp (R-TN)
So as of now it still fails 222-211. But we're getting closer.
UPDATE: Elijah Cummings (D-MD) switches. 221-212.
Rep. Ileana Ros-Lehtinen (R-FL) too. 220-213. (And bookmark the Politico's Crypt blog.)
Rep. Judy Biggert (R-IL) switches. 219-214.
Rep. David Scott (D-GA) switches, so it's 218-215. And that's four black caucus members so far who've switched because Barack Obama told them to.
Rep. Donna Edwards (D-MD) switches: We're at 217-216. There's no chance that this will fail.
The mini book reviews of days gone by.
The Pixar Touch: The Making of a Company, by David A. Price (Alfred A. Knopf, 2008). For fans of animation—or anyone required to keep someone under age 12 amused in the past decade—Pixar’s importance is self-evident. The animation company whose story is told in this book has single-handedly remade the look and feel of the animated movie. (This is undeniable even if you, like me, prefer a more traditonal animated style and don't much like the general Pixar "look.") In its nine feature-length films starting with Toy Story in 1995, it has achieved a highly unusual streak of endless success, both commercially and critically, and added many fresh characters to our national mythology.
Author David Price, whose degree is in the computer science in which Pixar’s success as the king of computer animation is rooted, doesn’t deliver much for the enthusiastic fans fascinated by the Pixar crew because of their filmic imagination. This book is more for readers of Wired or Forbes than for those thrilled (and amused) by the plight of the captured clownfish Nemo (from Pixar’s 2003 Finding Nemo, the bestselling DVD in history) or cheering the culinary success of the rat-chef in Ratatouille.
The Pixar Touch is a book of popular business journalism (with a light techy edge) rather than cultural commentary or criticism. It tells the detailed story of a seeming failure of a company that bounced from purpose to purpose and owner to owner in the 1980s before becoming one of the unarguable titans of American pop culture.
As such, the book details the unpredictable contingencies that guided a gang of computer geeks with a love for animation to wild success. They fooled their corporate paymasters—no less a pair of business and culture giants than George Lucas and Steve Jobs—into thinking they were a computer software and hardware endeavor when all they really wanted to do was put on a show: make animated films using computers rather than pen and brush.
When Pixar’s masterminds finally got to do what they wanted to do all along, convincing Disney to partner with their innovative computer graphic techniques to make Toy Story, they succeeded magnificently. Somewhere in there is a lesson in executive decisionmaking that author Price does not belabor. Price doesn’t belabor any particular theme, in fact, allowing the facts and characters to speak for themselves. But some inspiring lessons arise nonetheless.
By detailing the halting, and recent, beginnings of computer animation, in five minute shorts seen only by tech conference geeks or seconds of special effects in mainstream films, and showing how quickly it evolved into the technical and storytelling marvel of Toy Story, the dizzying speed of innovation and improvement in our modern technologies and arts is convincingly hit home.
Another lesson of the Pixar story is how dynamic America’s economic class structure can be. Pixar’s founders, computer graphics pioneers Ed Catmull (a straight-laced Mormon) and Alvy Ray Smith (an erratic hippie), came from backwater colleges the University of Utah and New Mexico State University, not any recognized center of academic or cultural juice. Interesting new ideas and hard work can turn nobodies far from standard centers of power and influence into giants.
Catmull and Smith fell under the wing of eccentric financier Alexander Schure, who founded the New York Institute of Technology (NYIT) and set them up there in the 1970s, buying them all the insanely expensive equipment they needed to begin experiments in computer animation, just because he thought it was interesting. The NYIT was, as Price writes, “somewhere between a third-tier university and a diploma mill,” but birthed the multi-billion dollar Pixar experiment.
In the late ‘70s, George Lucas realized he might have some use for experts in this nascent field of computer animation, and slowly siphoned off Schure’s braintrust. By the mid-‘80s, Lucas had lost interest and sold the division off to then-former Apple exec Steve Jobs. Pixar was born as an independent company—one that made and sold machines and software that helped make computer-generated images. The press release from 1986 announcing Pixar’s independent launch gives no hint of its future as a moviemaking behemoth.
Price delivers just enough of the technical details of computer animation—dropping terms such as bicubic patches, Z-buffer, and texture mapping—while staying rooted in the human and business realities of executive pissing matches, stock option shenanigans, and sweet success after a long battle. Disney passed up Pixar for $15 million in the mid-1980s, and then paid around $6.3 billion net for it in 2006. Everyone who has ever dreamed of showing doubters what they can achieve will be inspired by some element of the Pixar story.
reason.tv is proud to be participating in this year's American Film Renaissance Film Festival, which runs in D.C.-area theaters from Wednesday, October 1 through Saturday, October 4.
On Saturday at 3.30pm, at the Goethe-Institut (812 Seventh St. NW, Washington, D.C. 20001), selections from The Drew Carey Project will anchor the festival's shorts block.
Go here for more information and to buy tickets ($8.00 for that viewing).
Other highlights of the festival include:
Wednesday night: The Dukes. When a group of down-on-their-luck friends try to launch a comeback for their nostalgia group, The Dukes, creative juices flow, as do the risks of ending up on the wrong side of the law. Starring Robert Davi (License to Kill, Profiler), Chazz Palminteri (Analyze This, The Usual Suspects) and Peter Bogdanovich (The Last Picture Show, Mask). Run time: 94 min. Rated PG-13 for brief sexuality and drug references. Introduction and Q&A with Director, Robert Davi. Playing at 7pm at AMC Loews Georgetown 14 (3111 K St. NW, Washington, D.C. 20007).
Film screening ticket $10. After party with actor/director, Robert Davi, at Sequoia Restaurant located in Washington Harbour, within walking distance of the theater. You must purchase the $40.00 ticket to gain entrance to after party.
Thursday Night: Do As I Say. With the 2008 election cycle in full swing, it's hard to turn on the television or open a newspaper without finding politicians, pop stars and pundits blaming capitalism and private enterprise for the world's problems. But how sincere are they about their beliefs? How do they live? The answers will shock you. In Do As I Say, a documentary that will forever change how we see America and its leaders, filmmakers Nicholas Tucker and Lucas Abel take us on an unforgettable journey through a political landscape filled with hypocrites and humbugs. Along the way, they reveal a disturbing national truth: that the two-faced mantra "do as I say, not as I do" has become the unwritten golden rule of modern liberalism. Based on Peter Schweitzer's New York Times bestselling book Do As I Say (Not As I Do) . Run time: 90 min. Not Rated. Introduction and Q&A with director, Nick Tucker. Playing at 7pm at The Carnegie Institution (1530 P St. NW, Washington, D.C. 20005).
VIEW WEBSITE & TRAILER
Film screeing ticket $10. Purchase the $30.00 ticket to attend an after-party with director Nick Tucker in the Carnegie Institution's rotunda.Friday Night: An American Carol. The American spirit is celebrated in the outrageous and totally irreverent comedy An American Carol from David Zucker, the master of movie satire (Airplane!, The Naked Gun, Scary Movie 3 and 4). In An American Carol, a cynical anti-American "Hollywood" filmmaker sets out on a crusade to abolish the 4th of July holiday. He is visited by three spirits who take him on a hilarious journey in an attempt to show him the true meaning of America. An all-star cast featuring Kelsey Grammer, Jon Voight, Leslie Nielsen, Dennis Hopper, James Woods, Robert Davi, Trace Adkins and Kevin Farley. Run Time: Approx. 90 min. Rated PG-13 for irreverent content, language and brief drug references. Playing at 7pm at Regal Ballston Common 12 (671 N. Glebe Road, Arlington VA 22203).
VIEW WEBSITE & TRAILER
Film screening ticket $10. Immediately following the screening, a Pub Crawl will take place within walking distance of the theater. You must purchase the $15.00 to participate in the Pub Crawl.Saturday Night: U.N. Me. In this striking documentary, filmmaker Ami Horowitz illustrates how the United Nations, the world's foremost humanitarian organization created to ennoble mankind, has become so ravaged by corruption that it actually enables evil and creates global chaos. By examining failures in Rwanda and Darfur, and the Oil for Food scandal, Horowitz shows how the UN has become the pacifier of dictators, thugs and tyrants. Using a unique blend of the informational qualities of a traditional documentary and the entertainment value of a narrative film, U.N. Me is irreverent, humorous and intense. Filmed in Africa, the Middle East, Europe and the US. Run Time: Approx 90 min. Not rated. Introduction and Q&A with director, Ami Horowitz. Playing at 8pm at the Goethe Institut (812 Seventh St. NW, Washington, D.C. 20001).
$15 for screening ticket and admission to wine and cheese reception immediately following.
For a full listing of all films on display, go here. Advance online ticket purchases are highly recommended. For more info on that and venues, go here.
Black lawmakers said personal calls from Democratic presidential nominee Barack Obama helped switch them from "no" to "yes," as Republicans and Democrats alike said appeals from credit-starved small businessmen and the Senate's addition of $110 billion in tax breaks and other sweeteners had persuaded them to drop their opposition.
"I hate it," but "inaction to me is a greater danger to our country than this bill," said GOP Rep. Zach Wamp of Tennessee, one of the 133 House Republicans who joined 95 Democrats in rejecting the measure Monday, sending the stock market plummeting.
Others said they were agonizing as they decided whether to change course and back the largest government intervention in markets since the Great Depression. "I'm trying desperately to get to 'yes,'" said Rep. Carol Shea-Porter, D-N.H.
The key to flipping House votes is not anything Obama or McCain have done, or any demands by the Republican Study Committee conservatives who torpedoed the bill last week. I keep hearing about scared constituents calling up their representatives and asking them to do something. The change from 10 to 1 anti-bailout calls and e-mails to 50/50 anti/pro-bailout calls is what's greasing the tracks. The key difference in the Senate roll call and the House roll call: Vulnerable Republicans (there are basically no vulnerable Senate Democrats) voted for the bailout. Those of them concerned about John McCain's campaign also know that he can't really win if any more time is spent talking about the economy.
In the latest edition of Friday Funnies, Henry Payne looks at the taxpayers' role in the Wall Street bailout.
Biden: "you've seen what's happened on Wall Street"
Biden: "letting Wall Street run wild"
Palin: "there was greed and there is corruption on Wall Street"
Biden: "You had actually the belief that Wall Street could self-regulate itself"
Biden: "Letting Wall Street run wild"
Palin: "Stop the greed and corruption on Wall Street"
Palin: "Corruption and the greed on Wall Street"
Palin: "Get rid of the greed and corruption on Wall Street"
Palin: "We have got to not allow the greed and corruption on Wall Street anymore"
Ugh. Someone get Wall Street an ice pack.
Back in 2005, when the U.S. Supreme Court said police officers may use drug-sniffing dogs at will during routine traffic stops, it assumed that such dogs can reliably detect and signal the presence or absence of contraband. But as one of the dissenters, Justice David Souter, noted, "the infallible dog...is a creature of legal fiction." Souter cited examples from court cases of dogs with error rates of up to 38 percent. A recent report in The Tampa Tribune suggests he was being generous:
Talon, who worked for the Palmetto Police Department, smelled drugs on every single vehicle during a four-month period and drugs were found less than half the time.
Circuit Judge Debra Johnes Riva said in a ruling that she had no choice but to throw out evidence in a drug case because of that track record.
Yet a different circuit judge later admitted evidence discovered in a car search that was based on an "alert" from Zuul, a dog with a track record very similar to Talon's. Local police were relieved by the latter ruling. The sergeant who oversees the K-9 division of the Sarasota sheriff's office told the Tribune that if other courts followed Riva's reasoning, it could be "catastrophic to the way we've been doing business." If Talon and Zuul are at all representative, the way they've been doing business is to search pretty much any vehicle they please, using the dogs' reactions as a cover for their hunches. Given the animals' accuracy, police might as well replace them with coins or magic eight balls. At least they'd save taxpayers some money.
[via The Drug War Chronicle]
On September 30, reason.tv caught up with financial advisor Bert Dohmen, the author of Prelude to a Meltdown and Bert Dohmen's Wellington Letter. In this seven-minute video, Dohmen offered his perspective on the proposed bailout, short selling, the Federal Reserve Bank's reclassification of Goldman and Merrill Lynch as banks, and many other topics.
Interview by David Nott; camera and editing by Alexander Manning.
According to a New York Times "news analysis," Monday's House vote against the Wall Street bailout "captured just how much the Republican Party has changed from its 19th-century roots as the party of business and economic stewardship." Reporter Jackie Calmes continues:
The party's base has shifted to the more socially conservative and populist South and West, and away from its historic roots in the Northeast, including Wall Street. House Republicans, most of them in districts purposely drawn to be packed with like-minded conservative voters, reflect that shift.*
While opposition to a taxpayer-funded bailout of Wall Street fat cats clearly has a populist aspect to it, I'm not sure what role social conservatism plays. Weirdly, Calmes does not mention anti-statism or free market principles as a motivation for Republican opponents of the bill, although she closes her piece by quoting the Brookings Institution's Thomas Mann, who says, "This is a function of a group of House Republicans who are philosophically opposed to doing anything like this bailout." The philosophical opposition to which Mann alludes is not rooted in populism or social conservatism.
Calmes is right to call the 19th-century GOP "the party of business and economic stewardship," if by that she means to suggest that the party of Lincoln was more inclined toward economic intervention than the party of Reagan, and in certain respects more pro-business than pro-market. The most conspicuous example of the Republican Party's departure from laissez faire was its support for high tariffs, a policy that is pro-business in the sense that it benefits certain domestic businesses but certainly not pro-market. Protectionism does have a populist appeal, however, and it seems implausible that increasing populism explains the GOP's embrace of free trade, or of free market economics generally. In short, I'm not sure what Calmes is driving at here, unless she is simply insinuating that opponents of the bailout are backward, insular, and irrational.
[*This is the text as it appears in my copy of the paper; the online version is somewhat different.]
It's Christmas in October! To paraphrase Mencken, writes Mike Flynn, the bailout bill is neat, plausible, and wrong.
D.C.'s subway has sprouted a bunch of ads urging economic literacy on our lawmakers. They ask things like: "On average, how much does the owner get for every $100 of a restaurant’s sales? (a) $3, (b) $5 (c) $10 (d) $45."
The ads are posted by a group called Econ4U, which also tossed this line into my inbox recently:
A Center for Economic and Entrepreneurial Literacy (CEEL) analysis of economic education among congressional members revealed that less than 15% of current members have degrees in the business, economics, or finance fields. The research showed that 30.5% of congressional members studied politics and government, while 18.1% majored in humanities. In fact there are more members who studied science (7.5%) than economics (6.7%).
Looks like Sen. John "economics is not something I’ve understood as well as I should" McCain has company on the Hill.
The answer, by the by, to the restaurant question, is (b) $5.
Tune in here for at 3:30pm EST for a live broadcast of reason staff chatting with Nicky Grist on the Alternatives to Marriage Project and John Gartner on his new book, In Search of Bill Clinton: A Psychological Biography.
UPDATE: Short delay, but we'll be starting in 10 minutes.
UPDATE: Sorry gang. Technical difficulties are deep-sixing the livestream. We'll post the chat in its entirety after we're done.
Matt Kibbe, president and CEO of FreedomWorks, is having to defend himself for clinging to “ideology” and “principle" in opposing the bailout plan racing through Congress.
John McCain is pulling out of Michigan, according to two Republicans, a stunning move a month away from Election Day that indicates the difficulty Republicans are having in finding blue states to put in play.Aside from the obvious, horse race implications (It's gotten 17 electoral votes harder for McCain to reach 270), I think this strikes another blow against the "Bradley Effect" hobgoblin. I'm utterly convinced that the number of white voters who'll lie to pollsters about voting for a black candidate has shrunken to a level that can't affect elections anymore; many people are unconvinced. Just two weeks ago, brainy election guru Nate Silver gave race as a reason why Obama was underperforming in Michigan.
McCain will go off TV in Michigan, stop dropping mail there and send most of his staff to more competitive states, including Wisconsin, Ohio and Florida.
Stemming back to the Detroit Riots of 1967, which triggered massive white flight into the city's wealthy suburbs (Detroit, at 82 percent African-American, remains the country's blackest major city), Michigan is not devoid of racial politics. Just one African American, former Secretary of State Richard H. Austin, has ever held statewide office in Michigan. And the area around Howell in Livingston County is a former Ku Klux Klan hotbed. The racial tensions aren't as overt as they once were, but nevertheless, the de facto segregation between Detroit and the suburbs creates little interaction between the state's black and white communities, and the combination of Kilpatrick and the difficult economic situation may evoke some latent prejudice. Although I am generally not a believer in the Bradley Effect, Michigan is one state where it might be worth keeping an eye out for.If there are not enough lying whites to defeat Obama in Michigan, where are they? Southeast Ohio? Southwest Virginia?
Surprise! The bailout includes unrelated giveaways to the undeserving rich!
Hollywood would get a little unexpected boost from the proposed $700-billion bailout of the nation's financial system.
The bill wending its way through Congress would provide tax breaks worth more than $470 million over the next decade for movie and TV producers that shoot in the U.S.
My favorite bit from the L.A. Times story:
Representatives of the Motion Picture Assn. of America, the Directors Guild of America and the Independent Film and Television Alliance, which backed the measures, said it was premature to comment because they had not been approved.
Like Congress, apparently, the MPAA doesn't want to get in the way of legislation by discussing it before it passes.
Just how big is the moral hazard the government is creating via its proposed bailout plan? Anthony Randazzo does the grim math on that and more.
In the ongoing emergency, the SEC has chosen to extend the ban on short-selling a long list of financial (and non-financial once like GE, GM, and Zale Jewelery) stocks until--and this is an interesting twist, via the AP--"until the third business day after enactment of the $700 billion financial bailout plan now before Congress. It will end no later than Oct. 17." Seems kind of interesting to peg the first date for a directive to end to something that, after all, might not happen at all. Or is the fix in?
New reporting requirements for short-sales that are still legal, says AP, "will continue beyond Oct. 17 as an interim rule, the SEC said, promising to seek public comment on it. The SEC, however, made a modification, allowing managers to report their short positions to the agency confidentially, rather than requiring public disclosure."
Why the short-sell ban was a bad idea in the first place, and what it all means, discussed in my article from last week.
This bill does not represent a new and sudden departure from free market principles as much as it represents an emergency response to congressional actions that have ignored free market principles, and our Constitution, for decades. If anyone in Washington should offer their resignation it should be the members of Congress who peddled the fantasy of free home ownership without risk. No institution in our country is more responsible for the myth or borrowing without consequences than the United States Congress.John Sununu (R-NH), in a tight re-election race, says the same thing but with a wee bit more optimism.
Taxpayers who want to ensure that this doesn’t happen again should send a very clear message to Washington that it’s time for Congress to live within its means and restore the principles of limited government and free markets that made this country great. I will do everything in my power to ensure that this bill does not lead us down a slippery slope of European style socialism and slow economic growth
This bill is far from perfect, but it is necessary, and necessary now to protect all Americans. Negotiators, led by Senator Judd Gregg and others, have worked hard to improve taxpayer protections that I have called for from the start: better Congressional oversight, a temporary structure, and assurances that any gains will be used to pay down the national debt. Expanding the Federal Deposit Insurance Corporations coverage adds an important level of security and confidence for the small businesses that are the lifeblood of New Hampshire’s economy. [E]xtending tax incentives and research and development will encourage renewed investment and job creation.Lamar Alexander (R-TN) says it was all an unavoidable response to a potential disaster.
What we are trying to do is prevent a more serious problem by taking a measured response, which will cost the taxpayers the least amount of money and clear up the economic traffic so we can start moving again, and so housing can gradually begin to come back. When housing gradually begins to come back, the economy will begin to come back.And Larry Craig (R-ID), still a senator for three more months, explains that the bill was imperfect but included a sweetener that made it impossible to resist.
Doing nothing is not an option, and I would have voted for the original House bill supported by Idaho Congressman Mike Simpson, because it protected taxpayers, eliminated golden parachutes for greedy CEOs, and gave Congress the authority to end this rescue if it is not serving the taxpayers and the economy. But the bill approved by the Senate tonight goes a step farther by fully funding the Craig/Wyden 'county payments' program to rural schools for four years, with a 75 percent increase for Idaho schools, and by protecting middle class taxpayers this year from the burden of the Alternative Minimum Tax.
Continuing our ongoing series about elite rescue bailout discourse, the Washington Post's editorial board is calling yesterday's economic PATRIOT Act "America's second chance," saying of the House's upcoming vote: "in a responsible legislature, the vote would not be close." (Related but tangential note: Remember when lefties had to support the Iraq War in order to be deemed "responsible"? Ah, memories.)
Still at the WashPost, "Washington Sketch" columnist Dana Milbank saw the vote as downright providential:
As if touched by the hand of God, Senate leaders abandoned their partisan ways and declared a new day of harmony and togetherness. [...]
The United States Senate turning into an amen chorus? Miraculous. And it was a reassuring sign that Congress still can act in the national interest -- once it has exhausted all other possibilities.
Time magazine bemoaned America's lost faith in its leaders, in an article so drenched in elitist lament that, well, here's a sentence:
If the experts are right, the nation now risks great financial hardship, because there was no one to stand up and explain the situation.
And L.A. Times columnist Rosa Brooks wants a new FDR:
We established its basic contours in 1789, half forgot about it until the Civil War and Reconstruction, practically abolished it during the Gilded Age, remembered it again during the Depression and then, during the reign of Reagan the Great Communicator, forgot about it once more.
The government, I mean. It comes in handy in times of crisis, but somehow we just keep misplacing it.
And now, with our economy teetering, we're frantically searching for it again, finally hauling it out from the basement along with some dried-out duct tape and leaky batteries. But after all those years on the shelf, don't be too surprised if it's a little rusty.
I'll let the historians among us address Brooks' People's History lite, but I can point out to my former colleague that federal spending per household, adjusted for inflation, was around $12,500 from 1971-75, and even after all that dirty Great Communicatoritis it vaulted up to nearly $19,000 in Bush's first term. Unless she's just making the point that government is inherently unproductive...though somehow I doubt that.
Puritans of all stripes are now hooking their agendas to concerns about climate change. For example, the Food Climate Research Network, based at the University of Surrey in Britain, is arguing that meat and dairy products will have to be rationed in the future to save the planet from climate change. As the Guardian reports:
People will have to be rationed to four modest portions of meat and one litre of milk a week if the world is to avoid run-away climate change, a major new report warns.
The report, by the Food Climate Research Network, based at the University of Surrey, also says total food consumption should be reduced, especially "low nutritional value" treats such as alcohol, sweets and chocolates.
Voluntary efforts will not be enough--the government will have to force people to eat a climate-healthy diet:
Tara Garnett, the report's author, warned that campaigns encouraging people to change their habits voluntarily were doomed to fail and urged the government to use caps on greenhouse gas emissions and carbon pricing to ensure changes were made. "Food is important to us in a great many cultural and symbolic ways, and our food choices are affected by cost, time, habit and other influences," the report says. "Study upon study has shown that awareness-raising campaigns alone are unlikely to work, particularly when it comes to more difficult changes."
Whole Guardian article here. See also my colleague Katherine Mangu-Ward's excellent column on the "Hey Meaty, You're Making Me So Hot!" campaign.
I guess fighting one elective war isn't enough for the Bush administration. Or the Senate. Or the media.
But it's pretty clear that the White House, helped by a codependent Congress and media, has yet again manufactured a consensus for massive intervention. The last time they managed to pull this off, of course, the United States invaded Iraq. And that has worked out so well that they've decided to start a brand extension or spin-off series: Intervening massively into the economy. The bailout package as Bush Administration: Special Victims Unit.
Think about it and the parallels are disturbing: a high-ranking, respectable, above-the-fray cabinet member working the ropes to achieve bipartisan cooperation; a pliable Congress where appeals to patriotism always trump appeals to principle (sadly, those two things are almost always construed as oppositional); and a media that is fueling the fire (the dread MSM's role in spreading the Bush admin case for war has been pretty well-documented; in terms of the bailout, the most hysterical champions for intervention have been in the print and TV press). Time magazine's next cover story, I learned watching Morning Joe this AM on MSNBC, is actually an essay on "The New Hard Times" and compares our current day to those of The Great Depression. Ominous parallel or coincidence: In the Depression, people formed lines for free soup; today, people form lines to...buy iPhones?
Arguably what is stunning about last night's Senate vote is not that it happened but that it took so long to add enough "sweeteners" to put free-market devotees into an ideological diabetic coma. The bailout-stimulus-Christmas-in-October-bill that just passed the Senate should not be confused with thoughtful legislation. It's larded with junk designed to convince Main Street that it too will share in the welfare being doled out to Wall Street Masters of the Universe. The need for the bailout has yet to be demonstrated. The efficacy of the proposed plan has yet to be demonstrated. Here's hoping that the House of Representatives, that great holding pen for would-be senators and future criminals, keeps it spine and still votes no. At the same time, this might be a good time to declare citizenship in another country.
One other stray thought: The predicate for action now has been incessant comparisons, despite all available evidence, to The Great Depression, a moment where the American (and world) economy contracted over a period of years. Screw the fact that the U.S. economy, by all the normal indicators that get trotted out on a quarterly basis, is doing OK, if not quite good.
In my memory, the last time this happened with such intensity was, er, in 1992, during the closing months of an presidential election cycle where a vulnerable Republican candidate was facing a charismatic Democratic one who kept harping on how rotten the economy was. Things are different now: The outgoing GOP president is the central fearmongerer (or perhaps, given Bush's intensity on the topic, fearmongererer) in this drama, but we shouldn't forget that the election is an essential backdrop for what is happening. This is, coff coff, a particularly political season, and we should all look especially askance at the hurry-up offense coming out of the White House, the Congress, and the media. Bush is desperate for a legacy that doesn't involve quagmires and broken bodies; Congress is trying to give voters some goodies; both McCain and Obama want to show that they can lead, dammit, and please all the people all the time. And the press is desperate for copy and for change.
Andrew Leonard goes digging in the Senate’s bailout package and finds a bunch of “sweeteners” added to lure in votes. Among them:
* Sec. 105. Energy credit for geothermal heat pump systems.
* Sec. 111. Expansion and modification of advanced coal project investment credit.
* Sec. 113. Temporary increase in coal excise tax; funding of Black Lung Disability Trust Fund.
* Sec. 115. Tax credit for carbon dioxide sequestration.
* Sec. 205. Credit for new qualified plug-in electric drive motor vehicles.
* Sec. 405. Increase and extension of Oil Spill Liability Trust Fund tax.
* Sec. 309. Extension of economic development credit for American Samoa.
* Sec. 317. Seven-year cost recovery period for motorsports racing track facility.
* Sec. 501. $8,500 income threshold used to calculate refundable portion of child tax credit.
* Sec. 503 Exemption from excise tax for certain wooden arrows designed for use by children.
There are also tax credits for solar and wind power, and a very expensive requirement that health insurance companies cover mental health the same way they cover physical health.
But remember, this is only about preventing an economic cataclysm.
The New York Times asked several contributors what question they'd pose to Sarah Palin or Joe Biden. They asked me to submit a drug-war related question for Biden. Here it is:
Senator Biden, you’ve been one of the Senate’s most ardent drug warriors. You helped create the office of “drug czar”; backed our failed eradication efforts in South America; encouraged the government to seize the assets of people merely suspected of drug crimes; pushed for the expanded use of racketeering and conspiracy laws against drug offenders; advocated the use of the military to fight the drug war; and sponsored a bill that holds venue owners and promoters criminally liable for drug use by people attending concerts and events.
Today, illicit drugs are as cheap and abundant as they were decades ago. Would you agree that the anti-drug policies you’ve championed have failed? If not, how have they succeeded?
reason contributor Gene Healy also contributed a question:
The claim by Dick Cheney that he was exempt from certain disclosure requirements because the vice president was a “legislative officer” has been greeted with outrage. But the main power the Constitution grants the vice president is a legislative one — breaking a tie vote in the Senate.
So, Governor Palin, Senator Biden, doesn’t Mr. Cheney have a point?
But, then, if the vice president is a legislative officer, how can he wield the vast executive powers that Mr. Cheney has exercised, including orchestrating and supervising a warrantless wiretapping program?
Can the vice president shift between branches at his convenience? If not, what, in your view, is the constitutional status of the vice presidency?
Neither Ford nor [developer] Lionstone will receive any money in the settlement. Ford will, however, end up with slightly more land than she now owns, and more of it will front Music Circle East, where it can be accessed easily.Whole thing here. reason's interview with IJ founder Chip Mellor here.
The pact will let Lionstone build a 225,000-square-foot office building with ground-floor retail on land surrounding Ford's property. The firm has already lined up two tenants, which will take up about 60 percent of the building, and it is in talks with banks for a construction loan, [Lionstone representative Doug] McKinnon said.
The trade will force Lionstone to redesign the tower's parking garage, but the firm has already asked its architect, Nashville-based Earl Swensson Associates, to come up with a new plan. Lionstone hopes to have those plans in place and start construction by the end of this year.
[...]
"This is an example of private parties' sitting down and coming together," said Scott Bullock, an attorney with the Institute for Justice, an Arlington, Va.-based firm that represented Ford. "The lesson here is that government does not need eminent domain to promote redevelopment."
The myth of rural virtue and urban vice is an old one in this country, writes Steve Chapman. Which means that whatever questions Sarah Palin may face in her debate with Joe Biden tonight, she isn't likely to encounter much criticism for her small-town snobbery.
Read it and weep, not least for how quickly the nation's news services have adopted the interventionists' packaging of "rescue" over "bailout." This is your list of no-votes; needless to say the names "Obama" and "McCain" aren't among the 15 Republicans, nine Democrats, and one Bernie Sanders with an easily observable spine.
Decrier of American expansionist foreign policy Chalmers Johnson gripes at Antiwar.com (scroll down a bit) about how no one paid much mind to the casual passage by the House this week of a $612 billion defense authorization:
On Wednesday, Sept. 24, right in the middle of the fight over billions of taxpayer dollars slated to bail out Wall Street, the House of Representatives passed a $612 billion defense authorization bill for 2009 without a murmur of public protest or any meaningful press comment at all. (The New York Times gave the matter only three short paragraphs buried in a story about another appropriations measure.)
........
Our annual spending on "national security" – meaning the defense budget plus all military expenditures hidden in the budgets for the departments of Energy, State, Treasury, Veterans Affairs, the CIA, and numerous other places in the executive branch – already exceeds a trillion dollars, an amount larger than that of all other national defense budgets combined. Not only was there no significant media coverage of this latest appropriation, there have been no signs of even the slightest urge to inquire into the relationship between our bloated military, our staggering weapons expenditures, our extravagantly expensive failed wars abroad, and the financial catastrophe on Wall Street. The only congressional "commentary" on the size of our military outlay was the usual pompous drivel about how a failure to vote for the defense authorization bill would betray our troops. The aged Sen. John Warner (R-Va.), former chairman of the Senate Armed Services Committee, implored his Republican colleagues to vote for the bill "out of respect for military personnel."
During the baseball playoffs, or at least for as long as my Los Angeles Angels of Orange County are still alive, I'll be blogging some occasional hardball over at the L.A. Times' Fabulous Forum blog. First post here, second here.
MARIA BARTIROMO
Mr. President, in 1999 you signed a bill essentially rolling back Glass-Steagall and deregulating banking. In light of what has gone on, do you regret that decision?
FORMER PRESIDENT BILL CLINTON
No, because it wasn't a complete deregulation at all. We still have heavy regulations and insurance on bank deposits, requirements on banks for capital and for disclosure. I thought at the time that it might lead to more stable investments and a reduced pressure on Wall Street to produce quarterly profits that were always bigger than the previous quarter. But I have really thought about this a lot. I don't see that signing that bill had anything to do with the current crisis. Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch (MER) by Bank of America (BAC), which was much smoother than it would have been if I hadn't signed that bill.
MARIA BARTIROMO
Phil Gramm, who was then the head of the Senate Banking Committee and until recently a close economic adviser of Senator McCain, was a fierce proponent of banking deregulation. Did he sell you a bill of goods?
FORMER PRESIDENT BILL CLINTON
Not on this bill I don't think he did. You know, Phil Gramm and I disagreed on a lot of things, but he can't possibly be wrong about everything. On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I'd be glad to look at the evidence. But I can't blame [the Republicans]. This wasn't something they forced me into. I really believed that given the level of oversight of banks and their ability to have more patient capital, if you made it possible for [commercial banks] to go into the investment banking business as Continental European investment banks could always do, that it might give us a more stable source of long-term investment.
As the Journal notes, Barack Obama has described Gramm as "the architect in the United States Senate of the deregulatory steps that helped cause this mess." I wonder when Obama will start pointing his finger at the Man from Hope? But more importantly, does all this architect talk mean that Gramm is Howard Roark and Clinton is Peter Keating, or is it the other way around?
That was the jump headline in a Washington Post article about the new wave of food carts in Washington, DC. And what did the city do to help? It waived many its own onerous regulations for a 32-block zone, allowing vendors to "find a way around regulations that have choked the life out of D.C.'s street food for decades."
In other words, the city is getting credit from the Post for being less terrible than usual. Gee, thanks. Still we should be grateful for small favors: Remember the plight of our bacon-y brethren in L.A., dogged by cruel and unusual anti-food cart bias:
In light of the news, Cato's David Boaz reminds us of the wisdom of Henry David Thoreau: “This government never furthered any enterprise but by the alacrity with which it got out of the way.”
More on food carts here.
A lost tribe of dirty Welsh hippies (no, not reason's noble leader and his family—that's Welch) become honorary members of the Leave Us Alone Coalition:
For five happy years they enjoyed simple lives in their straw and mud huts. Generating their own power and growing their own food, they strived for self-sufficiency and thrived in homes that looked more suited to the hobbits from The Lord of the Rings. Then a survey plane chanced upon the 'lost tribe'... and they were plunged into a decade-long battle with officialdom....When the pilot reported back, officials were unable to find any records, let alone planning permission, for the mystery hillside village surrounded by trees and bushes....Yesterday that fight, backed by more modern support for green issues, ended in victory.
Hilariously, the mud hut dwellers had to provide some sort of environmental impact statement as the final step before finally being left alone:
'We had to prove we were improving the biodiversity of the area and conserving the woodland and we did that."
From our October issue, Science Correspondent Ronald Bailey interviews skeptical environmentalist Bjorn Lomborg about the priorities that should come before global warming.
I personally can't think of any pure bomb shelter plays (although the housing index is up over the past three months), but over the past three months; Campbell Soup Co (which also happened to be the ONLY stock in the S&P 500 that was up yesterday) and Taser International are up 16% and 34% respectively. This compares very favorably to the S&P 500, which has struggled and is down 14% over that time frame.Via Ezra Klein. I echo his challenge: Build your own Apocalypse portfolio!
A new study, "Delinquent Peer Group Formation: Evidence of a Gene X Environment Correlation," by Florida State University researchers published in the September 2008 issue of the Journal of Genetic Psychology, finds that a gene variant of the dopamine transporter (DAT1) gene puts some males at risk of deliquency. As the press release describing the study explains:
Criminological research has long linked antisocial, drug-using and criminal behavior to delinquent peers -- in fact, belonging to such a peer group is one of the strongest correlates to both youthful and adult crime. But the study led by Beaver is the first to establish a statistically significant association between an affinity for antisocial peer groups and a particular variation (called the 10-repeat allele) of the dopamine transporter gene (DAT1).
However, the study's analysis of family, peer and DNA data from 1,816 boys in middle and high school found that the association between DAT1 and delinquent peer affiliation applied primarily for those who had both the 10-repeat allele and a high-risk family environment (one marked by a disengaged mother and an absence of maternal affection).
In contrast, adolescent males with the very same gene variation who lived in low-risk families (those with high levels of maternal engagement and warmth) showed no statistically relevant affinity for antisocial friends.
"Our research has confirmed the importance of not only the genome but also the environment," [FSU criminologist Kevin] Beaver said. "With a sample comprised of 1,816 individuals, more than usual for a genetic study, we were able to document a clear link between DAT1 and delinquent peers for adolescents raised in high-risk families while finding little or no such link in those from low-risk families. As a result, we now have genuine empirical evidence that the social and family environment in an adolescent's life can either exacerbate or blunt genetic effects."
A 2007 Michigan State University study of twins also found a link between the DAT1 variant and "adolescent-onset or adolescent-limited antisocial behavior." In 2002, Wisconsin University researchers reported that young males with a variant of the gene that encodes the brain enzyme monoamine oxidase A (MAOA) have a propensity toward criminality.
So are criminals born or made? The answer from these studies appears to be that they are "made" by the interaction of certain genetic vulnerabilities with bad experiences.
With the rapid spread of genotyping, the question arises: should infants be tested for these gene variants? Such testing could alert parents and enable them take steps to shield their kids from situations that might exacerbate their genetic vulnerabilities. Or would such testing just result in some kids being treated as "bad seeds"?
Obama, who has received a significant amount of celebrity endorsements, will be the beneficiary of a fundraiser at which rock legends Bruce Springsteen and Billy Joel will perform together.
All right. Who should do benefit concerts for:
John McCain?
Chuck Baldwin?
Ralph Nader?
Bob Barr?
In an interview with The Los Angeles Times editorial board last December, Treasury Secretary Henry Paulson made clear that he defined "market failure" as any instance in which investors, including home owners, lost money. In discussing various grand plans to buoy the economy, Paulson said, "What we're doing is avoiding a market failure that would have forced housing values down in a way that was not in the investors' interest, and in a way that the market wasn't intended to work."
You can read more of that exchange here, where it's reprinted in a recent reason column by Tim Cavanaugh. It's a pretty stunning and open admission of how Paulson conceives his job. Basically, his job is to maintain or increase prices, period. He doesn't want to oversee a market that acts as a discovery process because, as Dr. Zaius, the patron saint of all great Platonic experts, could tell you, "You may not like what you find." Indeed, you might find that you misunderestimated what people think your crap is worth (has Paulson, one wonders, ever gone to a garage sale, that ultimate testing ground of the subjective theory of value?).
So Paulson wants to socialize losses by the investing class with his economic PATRIOT Act, a hasty, hurried, and not-clearly-warranted piece of legislation that will somehow manage to change everything without addressing basic incentives in the financial sector (other than underscoring the idea that the American economy is too big to fail, so the feds will oddly bail it out in the name of capitalism).
Given the stunning and uplifting failure of the House to pass the bailout, the Senate will be taking a whack at the pinata tonight, and the bill is likely to pass (so we've been told). Why? Partly because our dear and great leaders have gone out and "sold" the legislation to the American people by now telling us we need to avoid a recession at all costs. As Hillary Clinton has explained (surely in a voice that even Sarah Palin could understand), voters "have to recognize that we are facing a very serious economic slowdown, a recession that could be of long-lasting and deep impact."
So we're doing massive restructuring (read: giving lots of money but not really restructuing basic structures) of the financial markets to avoid a potential recession? Recessions are not easy, but they are periodic events that don't generally call for a bailout plan of this magnitude currently being discussed in Washington. And the old definition of a recession seems up for grabs these days. It used to be that a recession was two or more consecutive quarters of "negative growth" of GDP. These days, it seems to be whenever somebody anywhere is bothered by current conditions.
Look for the price tag of the bailout to keep going up from the admittedly arbitrary $700 billion originally attached to the plan. That's because our leaders are now trying to sell us the plan by offering "sweeteners" that jack up the price and extend the action to all sorts of tangentially related issues (such as alternative energy).
So, a couple of weeks into the worst global crisis since the Japanese bombed Wall Street in 1929, what have we learned?
1. That the secretary of the Treasury has a very weak grasp of the market mechanisms he's messing with.
2. That the fear of a recession, however you want to define it, is enough to throw a heaping load of money at Wall Street.
3. That Congress won't stop believing that the time for a bailout is always yesterday and that the bailout should include more stimulation than a vibrating bed at a hourly-rate motel, all the better to sell it to the American people.
Virtually every member of the New York-Washington axis of power has been pushing the need for a bailout. Which is only one more reason to question it (just watch cable TV, read the Wash Post and New York Times, or watch C-SPAN's surveillance cameras of Congress).
Here's hoping that the Senate finds a spine and votes down the bailout. Or if they pass it, that the House keeps pushing back until the reasons to act in such a decisive manner are clear not just to Hank Paulson, Hillary Clinton, Barack Obama, and John McCain.
Let's be clear, writes Mike Flynn, Director of Government Affairs at the Reason Foundation. This is a Wall Street crisis, not a national economic crisis.
John McCain joins President Bush and Secretary of Goldman Sachs Henry Paulson in the "pass-this-bill-or-prepare-to-eat-garbage" coalition:
If the financial rescue bill fails in Congress yet again, the present crisis will turn into a disaster. As credit disappears, students will no longer be able to get loans for college, and families looking for a new home will be unable to get a loan. New car sales will come to a halt. Businesses will have difficulty securing credit for operations and may be unable to pay employees. If we fail to act, the gears of our economy will grind to a halt.
At this point I'm amazed that he (or his many alarmist cohorts) left out the part about being forced to sell ourselves into white slavery to the Red Chinese....
Remember back when people jumped all up in Alan Greenspan's grill just for him uttering the phrase "irrational exuberance"? We now have the president, his Cabinet, and his would-be successor predicting imminent economic collapse if we don't immediately pass a trillion-dollar bailout rescue that will force taxpayers to overpay for currently illiquid mortgage-based debt instruments. And oh yeah, there might be a financial "panic." Ya think?
On October 1, 1988, Mike Dukakis was campaigning in Texas (where he was down 10 points) and George H.W. Bush was in Massachusetts (where he was down 8). An AP analysis gave the edge to Bush, with reservations.Sixteen states plus the District of Columbia are leaning the vice president's way or solidly in his column, putting him at 226 electoral votes -- 44 short of the 270 needed to claim the presidency, and 25 votes closer to his goal than a month ago.
Another 21 states with 175 electoral votes would go to Republican George W. Bush. That leaves 13 toss-up states with 137 electoral votes.
Despite steady late-summer advances by Bush - and Democratic talk of a Dukakis rebound - neither man has been able to seize an advantage in a string of states where the election will be decided. The list includes Michigan, Ohio, Illinois, Missouri, New Jersey, Connecticut, California and others, totaling over 150 electoral votes.There was no state-by-state electoral analysis in 1980, when Carter and Reagan were basically tied, but Carter pollster Pat Caddell gave a briefing to reporters that now reads like doom.
He said Carter's "lead is expanding very steadily" in New York but is "a litle lagging" in Ohio. He said the president appears to have improved his position in Pennsylvania and such southern states as Mississippi, South Carolina and Louisiana. Texas is close but "still tough" for Carter, while "we have a real shot at Oregon and Washington," Caddell said.
On election day, Carter won... none of those states. So it's not unheard of for a Democrat to be leading in the polls as October starts and then suffer a monthlong melt. The differences this year: an economic crisis, worries about the Republican's running mate (comparable to 1988), cash parity (and maybe an advantage) for the Democrats, and, of course, a black candidate leading the Democratic ticket.
UPDATE: If I had to pick one reason for why Obama's outperforming Kerry, it's in this Pew poll. At this point in 2004 Kerry had a net positive favorability of 12 points (53-41) to Bush's 17 points. Obama has a net favorability of 35 points (66-31) to McCain's 25 points. Do Republicans expect, say, a Jeremiah Wright ad to knock 23 points off Obama's favorability?
Senate leaders scheduled a Wednesday vote on a $700 billion financial bailout package after accepting tax breaks and a higher limit for insured bank deposits in a bid to win House approval and send legislation to President Bush by the end of the week.Two responses:
Top lawmakers said the Senate proposal, worked out after a day of behind the scenes maneuvering, would include tax breaks for businesses and alternative energy and higher government insurance for bank deposits.
In an act that promises to upend New York City’s political world, Mayor Michael R. Bloomberg plans to announce Thursday that he will seek a third term as mayor, according to four people who have been told of his intentions.As the Times points out, Bloomberg used to be a supporter of term limits. He had real life experience with the law when, in 2001, Rudy Giuliani mused about entering the election between Bloomberg and Mark Green to win a third caretaker term. No one believes that some political novice billionaire could guide the city through the wreckage of 9/11. And then he, you know, did. So why not just talk former Time Warner CEO Richard Parsons into re-entering the race, if the times call for business experience?
...
In his appearance on Thursday, they said, Mr. Bloomberg, a former Wall Street trader and the founder of a billion-dollar financial data firm, will argue that the worldwide financial crisis—with its potentially severe impact on New York City—demands his steady hand and business experience.
As Senior Editor Jacob Sullum writes, neither Barack Obama nor John McCain have said that it's dangerous to rescue Wall Street firms from their own mistakes instead of letting the market punish them, or that it's unfair to make taxpayers pick up the tab. Instead, both major party candidates have thrown their weight behind the bailout. So much for the alleged benefits of bipartisanship.
Governor, your candidacy has ignited extreme hostility, even some hatred on the left and in some parts of the media. Are you surprised? And what do you attribute this reaction to?So, all Palin needs to score a Thursday knockout is for Gwen Ifill to ask questions like that. Let's go and check how she opened the 2004 debates.
Governor, the Gibson and the Couric interview struck many as sort of pop quizzes designed to embarrass you as opposed to interviews. Do you share that opinion?
Have you followed the attacks on you, say, via Drudge or the blogs? Some of them are just made up and out of left field, others are just mocking. Do you follow those?
Governor, you mentioned the people who are struggling right now. Have you and your husband, Todd, ever faced tough economic times where you had to sit around a kitchen table and make tough choices?
Governor, when you say things are tight right now, is that simply because of Todd being off not working? Or is it because of extraordinary demands on the fiscal resources of the Palin family? What’s the situation there?
Governor, let’s turn to a couple of issues that the MSM’s not going to pick up. You’re pro-life, and how much of the virulent opposition to you on the left do you attribute to your pro-life position, and maybe even to the birth of, your decision, your and Todd’s decision to have Trig?
Do you think the mainstream media and the left understands your religious faith, Governor Palin?
Governor, let’s close with some foreign affairs. It is reported that you had an Israeli flag in your governor’s office. You wore an Israeli flag pin occasionally. One, is that true? And two, why your support for Israel?
Have you and Todd heard from your son? And how is it on your nerves having your son deployed?
Vice President Cheney, there have been new developments in Iraq, especially having to do with the administration's handling.
Paul Bremer, the former head of the Coalition Provisional Authority, gave a speech in which he said that we have never had enough troops on the ground, or we've never had enough troops on the ground.
Donald Rumsfeld said he has not seen any hard evidence of a link between Al Qaida and Saddam Hussein. Was this approved -- of a report that you requested that you received a week ago that showed there was no connection between Abu Musab al-Zarqawi and Saddam Hussein?
If you want to start your watch, it's 49 and a half hours before Gwen Ifill is accused of sexism and bias against moose-hunters.
Don't worry, things are looking up up up! If, that is, your well-being is somehow connected with an increase in the money supply. (Which is hardly the case for most of us.) See this somewhat alarming graph of data from the St. Louis Fed, showing a one-month monetary base increase of 11.6 percent in this magical month of September 2008, a month that I hope turns out to be less historically significant than it seems stuck here in the middle of it.
And while we are musing on growth figures, let's contemplate what must be a wild coincidence in a world of absolutely rock solid, nothing-to-worry-about, government-managed paper currency, how's the price of gold gone this month? Since Sept 11, up nearly 19 percent.
Good news today on the eminent domain front. As The New York Sun (RIP!) reports, a New York appellate court has rejected the state's motion to dismiss the lawsuit challenging its controversial Atlantic Yards development project in Brooklyn. [It] highlights an increasingly dominant House dynamic: the rise of the conservatives, what a friend calls the proponents of "free trade, libertarianism, true free markets, freedom from government intervention in a wide range of sectors, true, rock-ribbed, hard core conservatism," led by younger Reps. Jeb Hensarling and Mike Pence. Hensarling and Pence flexed their muscles and showed their power by opposing this bill.But the question is, well, what did all the flexing accomplish? Talking to Hill staffers today, I'm not convinced that the picture is any better for conservatives. (Certainly it's still pitch black for the resolute invisible hand crowd.) Both the Democrats and the Republicans are proposing new additions to the bill and making it clear what it would take to get them on board. Democrats are talking about adding unemployment insurance to the bill. The Republican proposals are summed up by CQ:
The Republican Study Committee, a group of conservative House Republicans, wants the core of the bill to create a government insurance plan for shaky assets, with premiums paid by financial institutions... [and] new Securities and Exchange Commission regulations prohibiting “mark to market” accounting, which requires companies to value assets based on their current potential sale price.From what I've heard, adding one or both of the GOP's reforms to the bill that failed yesterday might bring on enough Republicans to pass it, if every Democrat voted the same way. Republicans are not at all sure that they're winning the PR war here. Constituent calls, which were running about 9-1 against the bailout on Monday, were running about 50-50 today, a development pinned on the stock market crash, media alarmism, and Sec. Paulson's grave warnings.
Old hands at public speaking tell nervous newbies to picture their audience naked. But will the advice work in reverse? I know I'm not alone in being anxious that at Thursday's vice presidential debate Gov. Sarah Palin will embarrass herself, Sen. John McCain, and possibly America in a manner so spectacular, so horrifying that the American electoral system will never recover. Perhaps the best way for me (and others) to deal with our nervousness is to imagine Palin naked?
Having trouble conjuring the image on your own? There's always the fine artwork of Bruce Elliott, on display in the Old Town Ale House on Chicago's North Side, a bar owned by his wife, which depicts Gov. Palin standing on a bear rug in nothing but red high heels.
From the bar's website: "This is a laid back watering hole, the likes of which you don't see much in Chicago anymore. The neighborhood is gentrified. The Ale House is anything but." God bless America.
See the SFW version at right. Go here and scroll to the bottom for the NSFW version.
The ever-falling level of American political discourse thanks you for the tip, Baylen Linnekin.
It's time to revive the goal of completely eliminating nuclear weapons, writes Science Correspondent Ronald Bailey. So where do the two major party presidential candidates stand?
In the David Brooks column Jesse Walker flags below, the National Greatness co-creator also tosses off the following interesting line:
It has been interesting to watch [House Republicans] on their single-minded mission to destroy the Republican Party.
A curious accusation coming from a guy who A) warned Republicans (inaccurately) that their failure to nominate John McCain over George W. Bush in 2000 meant that the GOP was "doomed," in dire need of "creative destruction," and that McCain and the country might be better off launching a Teddy Roosevelt-style third party run; and then B) still managed to have a president who mostly heeded his big-government conservatism advice from about Sept. 12, 2001 onward.
It was David Brooks who, five months after the attacks on the World Trade Center, saw a "huge opportunity" to "create a governing Republican majority" through Bush echoing "precisely the aggressive foreign policy and patriotic national service themes that John McCain struck in the 2000 primary season," including "rogue-state rollback," "nation-building," and "a summons to national service." President Bush, Brooks gushed, had finally "broken the libertarian grip on the GOP."
It was Brooks who, on the eve of the 2004 Republican National Convention, performed an endzone dance celebrating "the death of small-government conservatism," arguing that the Republicans "must embrace" a T.R.-tastic "progressive conservatism" if they want "to become the majority party for the next few decades."
And it was David Brooks who, after nearly seven years of a big-government conservatism administration, declared that "official conservatism [has] slipped into decrepitude," to be saved only by a bunch of young writers, especially Ross Douthat and Brooks' former assistant Reihan Salam, who together are hawking a new book about–surprise!–how the GOP can create a governing majority by pandering more effectively to middle class "Sam's Club voters" than the Democrats. "The best single roadmap of where the party should and is likely to head," Brooks enthused. "It may take a few defeats for the G.O.P. to embrace a Sam's Club agenda, but sooner or later, it will happen. Trust me."
So to sum up: The Republican Party has been following David Brooks' advice for more than seven years now, and as a partial result is on the verge of a near-historic ass-whupping. For which David Brooks blames "nihilist" libertarians. Nice work, if you can get it.
Three years ago, Sandalio "Sandy" Gonzalez’s 32-year career with the Drug Enforcement Agency came to an abrupt end after he blew the whistle in a horrifying case now known as the “House of Death,” in which Immigration and Customs Enforcement agents stand accused of looking the other way while one of their drug informants participated in torturing and murdering at least a dozen people in an abandoned house near the Texas-Mexico border.
In August, Senior Editor Radley Balko spoke with Gonzalez about the case, the cover-up, and what it all means for federal law enforcement and the War on Drugs.
So if you stand up for a principle, you're a nihilist; and if you refrain from passing an enormous new intervention after a Wall Street crash, you're reenacting Smoot-Hawley. Welcome to the worldview of a man who prefers "the collected expertise of the Treasury and Fed" to the dispersed expertise of traders in the market, a wise crowd screaming to us that some inflated prices need to come down and some bloated companies need to fail.let us recognize above all the 228 who voted no — the authors of this revolt of the nihilists. They showed the world how much they detest their own leaders and the collected expertise of the Treasury and Fed. They did the momentarily popular thing, and if the country slides into a deep recession, they will have the time and leisure to watch public opinion shift against them.
House Republicans led the way and will get most of the blame....If this economy slides, they will go down in history as the Smoot-Hawleys of the 21st century.
What's sad is that they still think it's 1984. They still think the biggest threat comes from socialism and Walter Mondale liberalism.Forget Marx and Mondale. At the moment, the biggest threat to economic liberty comes from people like Hank Paulson, George Bush, and David Brooks.
Via Drudge comes this CNN.com column by economist Jeffrey Miron. After detailing the government's role in fueling the subprime mortgage crisis, which is at the heart of the current "crisis," he concludes:
So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.
The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.
Miron notes that, among other things, Wall Street is now engaging in "strategic behavior" in anticipation of a bailout. He argues that the current credit freeze, such as it is, is largely a function of firms waiting to see what's coming out of Washington. The whole piece is well worth reading.
Miron participated in our recent forum, "The Great Bailout Brouhaha." His contribution:
Jeffrey A. Miron
1. How bad is the current market situation?
The current situation is serious, but not so much because the economic conditions are especially bad. The situation is serious because policymakers seem poised to undertake an enormous intervention that will have huge adverse effects and may well exacerbate the very kind of problem the intervention is meant to fix.2. How bad are the current proposed bailout plans?
See #1. The bailout is a terrible idea. It transfers a huge amount of wealth to people who do not deserve it. It will generate enormous incentives for creative bookkeeping as the investment houses and banks try to rid themselves of any assets they do not want. The bailout fails to eliminate the crucial policies that contributed to and caused the current situation, such as the Community Reinvestment Act, the creation of Fannie Mae and Freddie Mac, and so on. Last but hardly least, the bailout sets a terrible precedent: If you take huge risks and become too big to fail, the government will bail you out.3. What's the one thing we should be doing that we're not?
The only things we should be doing are eliminating the underlying policy causes of the current situation; see #2.
Jeffrey A. Miron is senior lecturer and director of undergraduate studies in the Department of Economics at Harvard University.
T-shirt handed out by Denver's police union to commemorate the 2008 Democratic National Convention:
Last week, more than 200 economists signed a letter expressing concern about the White House's proposed bailout plan. While not completely opposed to government action, the letter urged caution, thoughtfulness, and careful assessment before rushing to action. It concluded this way:
...we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.
When asked about the letter at a meeting last week with leaders of Congress, President Bush reportedly replied:
"I don't care what somebody on some college campus says."
This administration's contempt for intellect and worldliness is bizarre. It's not as if the letter came from the heads of 200 women's studies or sociology departments. These are people who've studied economics for much of their lives. And most of them share Bush's alleged (if not practiced) fondness for free markets.
From our October issue, Tim Cavanaugh reports on the state of the sexual revolution.
Die Obama Fahne hoch!
This bill was vague and contained more dressing than substance for working Americans. It gave the Secretary of the Treasury unparalleled purchasing power of any financial instrument without adequate, enforceable oversight. There were no guidelines in this bill directing the Secretary as to how or which troubled assets to buy. The bill did not address how or when the government would sell the purchased assets back in the market. Despite the positive provisions of this bill that help tenants, the provisions to help homeowners were not mandatory; they were discretionary. Finally, the Economic Stimulus bill which passed the House and included real benefits to working Americans such as extending unemployment benefits, providing additional food stamp assistance, and investing in infrastructure to create good-paying jobs is effectively dead.Tom Udall, a New Mexico Democrat who's running for Senate (and expected to win).
Any plan that puts taxpayer money at risk must ensure that taxpayers get paid back before shareholders, bondholders or executives—so that corporate CEOs do not get a golden parachute while taxpayers are left to pay the bill.Dennis Kucinich, who is Dennis Kucinich, and will vote against any bailout, no matter what's in it.
Additionally, Congress should act further to keep Americans in their homes by addressing the crisis in the mortgage industry as well as the one in the financial sector. Any economic package that allows tens of thousands of Americans to lose their homes is simply inadequate.
Why aren't we helping homeowners directly with their debt burden? Why aren't we helping American families faced with bankruptcy. Why aren't we reducing debt for Main Street instead of Wall Street? Isn't it time for fundamental change in our debt based monetary system, so we can free ourselves from the manipulation of the Federal Reserve and the banks? Is this the United States Congress or the board of directors of Goldman Sachs? Wall Street is a place of bears and bulls. It is not smart to force taxpayers to dance with bears or to follow closely behind the bulls.Another hint about the politics came from the RNC, which cut an ad linking Obama to the bailout ("he wants to spend another $1 trillion of your money"). The ad was released before the vote, when Republicans assumed the bailout bill would pass.
Are journalists, politicians, analysts, et al. really so retarded that they insist on leading all stories about yesterday's Dow with a patently useless measure? (The short answer is probably yes.). To wit:
Stocks plunge as House rejects bailout package: Dow absorbs biggest one-day loss in history: 777.68 points
Stocks plunged yesterday with the Dow Jones industrial average falling nearly 780 points—the biggest one-day point drop ever—after federal lawmakers failed to pass a $700 billion plan to bail out the financial system.
That particular formulation comes from The Baltimore Sun, but you've all read or heard countless variations on the theme. If this figure is not expressed in percentage terms, it is absolutely useless. Indeed, for most of its existence, the DJIA, couldn't have dropped 780 points because the index wasn't that high. Which of course reporters (and pols, and analysts, et al.) know, and always bury somewhere deeper in the story. To wit, from the Sun story mentioned just a few lines above:
The Dow's 7 percent decline was the 17th biggest percentage drop in its history, well below the more than 20 percent drops seen in October 1987 and the Great Depression.
Somehow "Dow absorbs 17th-biggest percentage drop in its history" just doesn't pack the same wallop, does it? More here.
As John McCain's fallen in the polls, a question I hear again and again in D.C. is: When will he unleash the Jeremiah Wright ads? It's just assumed that, at some point, McCain or a 527 will remind voters that for 20 years Barack Obama sat in the pews with a pastor who said "God Damn America" and... other things.Given the way he's run his campaign, I'm convinced he would authorize any attack he thought would work. I think the reason we haven't seen the Wright card played yet is that McCain and his advisers are genuinely not sure how it would go over. Could it scare some voters away from Obama? Certainly. Could it look like an overt appeal to racism and generate a backlash, especially among the media? That's also a distinct possibility.AL concludes that if a Wright ad appears, it'll appear in the 19-day stretch between the final debate and the election. I think it's possible a Wright ad would surface before the final (10/15) debate, just as a way to get a question in there about the rev. Nothing rattles Obama more. But at this late date I'm a skeptic about the power of Wright.
In other words, it's a big gamble, too big a gamble to make while you're within shooting distance in the polls.But big gambles start to look better when you're trailing by a lot and running out of time.
What a strange and wonderful narrative that's coming out of the failure of the bailout bill in the House o' Reps yesterday:
Ms. Pelosi delivered the Democratic votes she had promised, but could not muster enough of them to avert a defeat that could long be remembered.
More here, from The New York Times.
Now, we "know" why the Republicans pissed on the bill (well, by a 2-to-1 margin, meaning 65 GOPpers voted for the bailout): Speaker Nancy Pelosi (D-Calif.) gave a rankly partisan speech that dried House Minority Leader John Boehner's teary eyes and steeled the will of the free-market ideologues to vote against a bill they know is bad for all sorts of reasons (more on that in a second).
But why didn't the Dems, who hold a freaking majority in the House, not pass the bill on a party-line vote? Did you get that above about the Dems? Pelosi delivered the votes, but just not enough of them. WTF? That's like a line from Pravda.
Actually, according to the morning yak shows, she gave passes to tons of congressfolks in "tough" re-election fights, and to various other folks who didn't like the bill.
In any case, here are two non-ideological reasons why it's great that this bailout went down the tubes faster than you can say "Bearstearnswachoviaaig":
1. This thing was The PATRIOT Act of the financial world. That is, it's a bill designed to address an enormously complicated situation that will have incredibly far-reaching implications probably for decades. Warren Buffet and others have invoked Pearl Harbor to conjure up the need for speed when it comes to the bailout. But this isn't war. Or terrorism. Or even a depression. We've got time to work through the details, which are all that matter. There isn't any need to pass virtually any bill in seven days, or even seven weeks, or even seven months. Especially important ones. That's one (of many) lessons of The PATRIOT Act experience.
2. This thing is gigantically unpopular with the American people. Polls show large majorities against the bailout, which suggests that, at the very least, the Hank Paulsons, George Bushes, Barney Franks, and Nancy Pelosis of the world have done a real crap job of selling the bill to people. At least since federal soldiers illegally kicked the Cherokees out of the Southeast, the government has had a credibility gap wider bigger than Lyndon Johnson's earlobes. That trend has, er, only accelerated under President Bush for reasons that don't need to be rehearsed here. And Pelosi, remember, came into office saying the Dems were going to be the party of fiscal responsibility—and then larded up a farm bill with more lard than a Golden Corral parking lot. This bailout came with a "Trust Us" sticker on it. And no one is willing to trust the government (a good thing, actually).
If you believe in, coff coff, "Free Minds and Free Markets," there are plenty of other reasons to be glad that any bailout effort tanked. Most of which are rooted not simply in anti-interventionist ideology but in pragmatic concerns over the ways that rules work and how institutions are governed. You can read about them by scrolling through the past week's, month's, and (40) year's worth of economics coverage in reason. So there's no need to go in to them right here. But if you want to, start here.
Judging by the flat-out anger and how-could-you-do-this wonderment yesterday from the cable news likes of Wolf Blitzer, I had a hunch that today's Washington Post would be a testament to flaming establishmentarian contempt. The paper did not disappoint. From the lead editorial, with the stale-as-Gibbon headline of "Congressional Neroes: Republicans and Democrats fiddle as the economy burns":
Given the poor marketing of a proposal whose advertised $700 billion price tag will probably never materialize in full, and given the fact that the rapidly developing credit crisis has not quite been felt on Main Street, we are not surprised at the angry correspondence from voters -- or, rather, from certain self-selected voters. But among the 133 Republicans and 95 Democrats who voted no yesterday, there are certainly some who know better, and their lack of political courage is stunning.
Love those "self-selected" and "know better" bits. Then on page 3, Dana Milbank uses the insanity non-defense:
The Dow Jones industrial average closed down 778 points, the largest one-day point drop in history. And no wonder: In the Congress of the United States, the insane are now running the asylum.
After the shocking vote of 228 to 205, party leaders did their usual rounds of partisan finger-pointing, but it really wasn't a partisan issue at all. The center had collapsed in favor of a coalition of far-right and far-left zealots. What was once the lunatic fringe was now a majority: 40 percent of House Democrats, going by yesterday's vote, and fully two-thirds of Republicans. [...]
On the floor, the usual partisan splits gave way to two new coalitions: pragmatists and wing nuts.
Everybody knows this bailout is the right thing to do, it seems, except for the American people, the House of Representatives, and others among us who are predisposed against trillion-dollar takeovers of the financial industry's bad bets.
During the revolution the year before, the Vietnam-era culture wars had escalated into fist fights, even mob fights, between the "jocks" and the "freaks" (and evenWatch the movie version of Grease today, with its half-disco soundtrack and its closing wisecrack about Nixon, and it's obvious that it's "about" the 1970s much more than it was ever about the '50s. But I'm not sure that was self-evident at the time. (As my mom said to my dad as my family watched the film on TV, circa 1980: "There really were people who lived like this.") Lest you think this reinvention process stopped in the Carter era, go rent The Brady Bunch Movie, with its curious conceit that the early '70s were a lost age of innocence. (For the target audience, most of whom were under 10 in the original Brady era, perhaps it was.)"pukes"), as protestors were called....Kenneth Koch stopped his poetry class from rushing down from Hamilton to join in a brawl between jocks and freaks going on below by crying out, like a WWII movie heroine, in his campiest voice, "Stop! WE'RE ... what they're FIGHTING FOR!" His students broke up laughing, sat back down and Koch went on with the lecture, while the jocks and freaks punched it out outside.
Researching in Butler and Avery libraries, [Elizabeth] Guffey discovered George's twice-weekly Spec ads: "Jocks! Freaks! ROTC! SDS! Let there be a truce! Bury the hatchet (not in each other)! Remember when we were all little greaseballs together" (p. 113). The ads consciously "evoked," Guffey commented, a "vision of the Fifties as a pre-political teenage Eden."
After Woodstock, Sha Na Na founders John "Jocko" Marcellino '72, Don York '71, Rich Joffe '72, '93L, Scott Powell '70 and manager Ed Goodgold '65 gained the talents of Jon "Bowzer" Bauman '68 and "Screamin'" Scott Simon '70. Their popular television show joined with Happy Days and Grease popularizing the new myth. By the 1980 Presidential election, America had embraced the dream of the Fifties as a pre-political Golden Age. So much so, [Daniel] Marcus painstakingly shows, that the American political landscape was altered to take advantage of this invented cultural memory.
Economists David Levy and Sandra Peart explore the nasty role of ratings agencies in the busted housing market.
At Overlawyered, guest blogger of Crispy on the Outside Baylen Linnekin (yes, that Testicle Festival guy) reports on a bizarre legal case involving a traveling zoo, alligator dander (or something), penguins, and a Hampton Inn:
A Miami area maid is suing her employer, Hampton Inn, in federal court there, claiming she was forced to clean up after hotel guests who defecated and urinated on floors, left feathers strewn about, and emitted allergenic dander. The guests included "Maya the spider monkey, Bob the alligator, Tango the Macaw", and two lemurs, along with their human handlers. The multispecies group all stayed at the Hampton Inn at Miami Airport hotel for about a week while in town as part of a traveling zoo.
Interesting notes about the case include 1) a filing showing a training manual created by Busch Gardens, which had hired the traveling zoo, sensibly suggesting animal handlers "[b]ook a room near an ice machine when on the road with penguins"; and 2) plaintiff Arlin Valdez-Castillo's claim to have been kidnapped and driven to a cemetery by two men who pressured her to drop the lawsuit. (Douglas Hanks, "Traveling zoo at hotel made me sick, maid says", Miami Herald, Sept. 24).
The moral of the story? There isn't one, I suppose. Or this: Don't just stay at a Holiday Inn Express; work there too.
It’s been close to five months, now, and it looks like it’ll be at least another month until we get a report on the Easton, Connecticut police raid that killed 33-year-old Gonzalo Guizan. Police were acting on a tip from a prostitute who claims she saw a gun and a small amount of cocaine at the house. They stormed the place hours later, with little investigation. Guizan didn’t live at the home. His family says that he was visiting the home’s owner, Ronald Terebesi, Jr. The two were planning to open an employment business together. Police shot Guizan at least a dozen times as he ran toward them, likely out of fear. Guizan was unarmed.
Police found no guns, and only enough drugs and paraphernalia to charge Terebesi with a misdemeanor. That charge was dropped when Terebesi agreed to undergo treatment.
After three abortive tries, Space X's Falcon I rocket reached orbit yesterday:
reason has a long, proud history of getting too excited about developments in the private space industry, something Ron Bailey will be chronicling in the upcoming 40th anniversary issue of the print magazine. But I'm going to go ahead and get excited anyway.
For more of me getting pumped about a space vacation—which I'm sure I'll be able to afford when the market recovers—revisit Space Travel for Fun and Profit.
Granted, this is from Friday, so all hell mighta broke loose over the weekend and today, when Congress surprisingly bowed to the will of the American people:
"We collect money from local savers, and we lend it in the local community," said William Dunkelberg, chairman of Liberty Bell Bank in Cherry Hill, N.J. "We're doing fine. There are 9,000 financial institutions out there, and most of them are small and most of them are doing fine."
Dunkelberg, a professor of economics at Temple University and chief economist for the National Federation of Independent Business, added that a recent survey of that group's members found that only 2 percent said getting a bank loan was the great challenge facing their businesses.
"If you can't get a loan, my advice is to go see your local community bank," Dunkelberg said.
Even some of the nation's largest banks, which have pushed hard for a federal bailout, deny that the current situation is forcing them to reduce lending. "The strength of our core businesses, capital and liquidity are enabling us to continue to support our customers," Bank of America, the nation's largest bank, said in a statement. It added, however, that the bailout plan would allow more lending.
The most recent Federal Reserve data show that the volume of outstanding bank loans declined 0.5 percent from the last week of August to the second week of September, though it was up more than 6 percent from the corresponding time last year.
Hat tip: Todd Morman via Open Left.
Decisions by the Secretary pursuant to the authority of this act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.So much for checks and balances! Or as the Cato Institute's William Niskanen put it, "For the second time in six years, the Bush administration has asked Congress for nearly unlimited authority without an independent professional review of the evidence that led the administration to request such authority."
Actions by the Secretary pursuant to the authority of this act shall be subject to chapter 7 of title 5, United States Code, including that such final actions shall be held unlawful and set aside if found to be arbitrary, capricious, an abuse of discretion, or not in accordance with law.
Judicial review by the federal courts, in other words, which is immeasurably better than placing Paulson (or whoever replaces him) above the law. As Niskanen notes, the Bush administration has an extremely troubling record of pushing and grabbing for as much executive branch authority as it can possibly get. Former Justice Department attorney and "torture memo" author John Yoo, for instance, recently went so far as to praise the belligerent and domineering Andrew Jackson for his "vigorous exercise of his executive power."
Assuming today's crazy quilt of "no" votes eventually comes undone, let's hope that this particular improvement at least remains intact.
Foreign Policy lists five of the planet's most notably murderous metropoli, with murder rates per 100,000 population ranging from Moscow's 9.6 to Caracas's 130.
Our own New Orleans comes in with FBI stats of 95. (They list Moscow because it's so bad in comparison with most European capitals--but for 2007, our own capital of D.C. had a murder rate of 30.)
On the bright side, the overall U.S. murder rate has fallen since 1991 from 9.8 to 5.6.
William Kristol, the Weekly Standard editor and New York Times columnist who has been a John McCain ideologist for more than a decade now, has the most unintentionally hilarious post-bailout-failure recommendation you'll read this week:
It's time for McCain to act decisively, and to lead, as he did with the surge. [...]
McCain should lead-by re-suspending his campaign (fine, let observers mock him when he announces this), and leading his party and the Congress towards a solution.
In other Standard commentary, Dean Barnett is not impressed with "The Mike Pence doctrinaires who welcome a free market curative like a Depression for our current woes." More:
I guess they view it as sort of the economic equivalent of that stuff your drink the night before a colonoscopy. As misguided as Pence and his minions are, they at least have a certain nobility complementing their foolishness. I would be remiss if I didn't note that a significant subdivision of the Pence camp rejects the counsel of virtually everyone who knows anything about economics and instead believes that our current situation isn't so dire. Call it conservative magical thinking.
Journalist Trey Garrison wades ten years into the New York Times archives and finds warnings of what was to come:
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
The moment of sanity:
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Leave it to the evil free market economist to rain on the "everyone should own a home" parade. Good thing no one listened to him!
From our October issue, Will Wilkinson explains why the "libertarian paternalism" advocated by Cass Sunstein and Richard Thaler will ultimately empower political elites and limit individual liberty.
It's probably too early to figure out the politics of all this, but given the bill's vast unpopularity, and the pressure that put on the House of Representatives, I think we can state without fear of contradiction that Tim Cavanaugh nailed this between the eyes in his August/September magazine column:
In a political season simply oozing hope, change, and historical firsts, here's something that might actually be encouraging: a widening gulf between promised election-year giveaways and the expressed desires of the populace on the receiving end. Has shameless political pandering become one more item on the long list of services Washington can't deliver?
Specific to the housing-finance crisis, Cavanaugh, noted,
Americans never wanted a mortgage bailout of any kind. In March Rasmussen found that Americans opposed bailing out homeowners by nearly a 2-to-1 margin (53 percent to 29 percent), and were even more strongly opposed to bailouts for lenders. [...] In May, during consideration of a mortgage-rescue bill sponsored by Rep. Barney Frank (D-Mass.), Rep. Kevin McCarthy (R-Calif.) told the L.A. Times that his constituent mail was running "50 to 1: 'Don't bail these people out.'"
Is McCarthy just another aloof Republican? For his sake I hope not: His district, Bakersfield, ranks eighth nationwide in the number of foreclosure filings per household, according to the foreclosure-tracking company RealtyTrac. Now this great country is not lacking in areas that have been designated "foreclosure epicenters." Yet even in Bakersfield, which may actually deserve that title, bailout supporters are as rare as hens' teeth. So who is for this thing?
That would be, first, the media[.]
Read the whole thing here.
That is, I give you relief from the bailout, with perhaps the greatest news story written in weeks. Here's how it begins:
State attorneys say John LaVoie should be forever barred from the massage business because he ran a house of prostitution camouflaged as a church.But in his latest court argument, the Tucson man says he hired women at Angel's Heaven Relaxation Spa — near University Medical Center — not to sell sex but to comfort the afflicted through the religious act of "laying on of hands."[...]Whatever they offered, LaVoie's "angels" operated out of an office building at 1740 E. Lester St., northwest of Campbell and Speedway.The Angel's Heaven Web site displayed portraits of young women over trademarked names."Oriental Angel" described as 5-foot-2 with dark brown hair and hazel eyes, invited visitors to discover "Far East delight."Brown-eyed "Passion Angel" peered out over this message: "Come to Angel's Heaven now and be touched by an angel willing to take you to heaven and back."
"This offer of comfort by this means is based on several Biblical passages."
Prosecutors declined to file prostitution-related criminal charges against LaVoie after a Tucson police detective compromised the investigation. Detective Michael Moser told his sergeant in February 2004 that he had sex with one of LaVoie's angels after work, at her home and in his police car.
Internal Affairs records show then-Chief Richard Miranda agreed to suspend him without pay for a week and demote him from detective to officer. Before police served the discipline, Moser retired in September 2004.
If that's what it took to rile up the House Republicans enough to remember their free-market roots, then more like this, Madame Speaker!
I'll actually second Pelosi's motion about the Bush administration's deficits and "fiscal irresponsibility," and I share her concerns about giving the secretary of the treasury "czar-like powers," but I am nothing but sincere when I ask–what is this "anything-goes economic policy" she and her ilk constantly refer to? How does the accusation of "no regulation, no supervision, no discipline" square with, I dunno, the Sarbanes-Oxley Act, which (besides providing full employment to accountants, and helping to strong-arm the media) contributed directly to the current crisis through its "mark to market" accounting rules?
As in John McCain's bizarre call to fire Security and Exchange Commission Chair Christopher Cox, what–specifically–were the regulations that weren't being enforced? Every day, every hour, you keep hearing this stuff: The Party is Over, no more unfettered capitalism, time for regulation, etc., but where's the supporting evidence that A) this is actually true, and B) X regulation, when being allegedly unenforced, caused Y to happen? Consider this an open invitation in the comments.
University of Chicago Business School Professor Luigi Zingales explains why Treasury Secretary Hank Paulson is wrong to push for a taxpayer-funded bailout.
Within a year of the day he leaves office, and no matter who succeeds him, George W. Bush will be a popular public figure, regarded with affection and a little nostalgia even by those who voted against him and thought he was the worst president in our history.You know who had a great sense of humor? Herbert Hoover.
...
What does Bush have to do? Not much, just be himself, not the wise and inspiring leader of the Western world — he never quite got that one right — but the amiable, funny, folksy and gregarious guy who tricked himself and the rest of us into thinking he was something more. Now he doesn’t have to do that. We’ll not be depending on him, so we’ll be free to like him.
The one body of government most hardwired to the American public just rejected the leadership of both major political parties, the president of the United States, his administration, the two contenders to his throne, and seemingly every talking head on cable television. The first tally was 228-205-1; but it looks like they're keeping the vote open long past the allotted time, and now it's at 226-207-1. "They're just going to hold it closed until they can get enough Yeah votes," CNN's floor reporter just said. That's the same maneuver they used to create a huge new Medicare/prescription drug entitlement. Democracy!
C-SPAN today has been more gruesome than watching David Cronenberg's Crash. Among the minute-by-minute horrors of crap economics, utterances of the phrase "inaction is not an option," and nausea-inducing bipartisanship, my favorite moment might have been when Majority Leader Steny Hoyer (D-Maryland) quoted favorably, and without irony, Spiro fucking Agnew, as saying "the cost of our failure will far exceed the price of our progrees." Just one of scores of comments today that did not make any sense, at least not to me.
The Dow Jones tumbled down 650 points (more than 5 percent) right when the deal looked killed, but now it's around minus-450 for the day and heading northward, though in a herky-jerky way.
More importantly, if this vote is allowed to stand, 132 House Republicans and 94 Democrats will have, at least for a moment, slowed the rush to nationalization that has shot through Washington like Hoof in Mouth disease these past days and weeks. I'm as apocalyptic as the next guy, but I never did understand how a temporary illiquidity in the mortgage-backed securities and credit default swaps markets required the biggest government intervention since Richard Nixon's disastrous wage and price controls.
UPDATE: Mistah bill, he dead.
Why is Bill Clinton slagging Barack Obama and praising John McCain and Sarah Palin? What was driving him to distraction back when he was in the Oval Office? In a review of John D. Gartner's new In Search of Bill Clinton: A Psychological Biography, reason's Nick Gillespie plumbs the Freudian depths of the Man from Hope.
Wayne Allyn Root, that other VP nominee who looks better every day, announces a new book that'll hit shelves in April.The Conscience of a Libertarian... is modeled after Root's hero Barry Goldwater and Goldwater's all-time best-selling conservative book The Conscience of a Conservative.I met with Root last month and he was, as you'd guess, extremely excited about the book, and about the potential to increase his visibility for a possible run at mayor of Las Vegas. If London can elect an ideological pundit to run the trains on time, why not Sin City?
Root said of his new book, “The Conscience of a Libertarian will honor the ideals of freedom and limited government as communicated by great political leaders such as Thomas Jefferson, Barry Goldwater, Ronald Reagan and, most recently, Dr. Ron Paul. My views are simple- the government that governs least, governs best. I believe the constitution is clear- power does not belong to the government, or the politicians, or the career bureaucrats, or corporate interests, or lobbyists. It belongs to the American people. The day that I take office, I vow to dramatically cut government; to dramatically lower taxes; to dramatically increase freedom; to fight to make my own political office obsolete; to make government so small, you won't even notice it's missing; and, most importantly, to give power back to the people- where it belongs.”
Root said of his political future, “I want to thank great patriots and freedom-fighters like Libertarian Presidential candidate Bob Barr and Republican Presidential candidate Dr. Ron Paul for reinvigorating the modern- day Libertarian freedom movement. I would do anything, make any sacrifice, to move the freedom agenda forward. The media has called me "Ron Paul on steroids!" A quarter of a century from now, I'll still be younger than Ron Paul is today. That's a very good thing- the freedom movement can benefit from the unique combination of energy, passion and youthful enthusiasm that I bring to the table."
Even though it doesn’t seem to be resonating with voters, Barr’s almost obsessive attention to the government spying issue continues unabated. Richard Viguerie, a Barr friend and longtime Republican operative, says he’s urged Barr to focus less on privacy issues and more on the corruption of incumbents. “I share Bob’s concerns about privacy,” he says, “but it doesn’t affect the voters right now; it’s not where they live.”The new Zogby poll puts Barr at 3.7 percent, way out ahead of the third party pack, and with him in the race a 1.2 point Obama lead swells to 3 points.
Friday, while I was over here asking (and trying to answer) five questions about the short-sell ban, CFA Nicole Gelinas over at the City Journal was doing the same about the bailout, in what functions as a decent short primer on the many problems with what's been a-going on down Washington way. A sample, addressing one of the biggies: Why do we think this plan will do what's promised, that is, jumpstart credit markets?
Three. How will this plan restart the now-moribund credit markets? Secretary Paulson figures that by taking bad assets off financial institutions’ books and giving them cash equivalents instead, the government can entice them to start lending again while encouraging private investors to put new money into those institutions. But the bailout can’t change the fact that the primary infrastructure through which America has exported its private debt to the world—securitization—is now severely weakened. Nor can the bailout change the fact that many potential investors in financial institutions may now believe that these firms’ business model is broken. It will take more to fix that perception than erasing bad debt—the defining symptom of that broken business model. Lending institutions likely need time—months, maybe years—to figure out what went wrong, before private capital can replenish the banks’ coffers. Plus, lenders must reassess the credit risk behind all manner of potential borrowers, and they need to re-price that risk as well, charging some borrowers much higher rates than in the past and refusing credit to some applicants altogether. These tasks, too, will take time, and unavoidably reduce access to credit.
In not-unrelated news, one of the great warning voices about the coordination problems with wild credit creation, Austrian economist and libertarian luminary Ludwig Von Mises, would be 127 years young today, were he still alive at this hour.
I’m told McCain recently expressed unhappiness with his staff’s handling of Palin. On Sunday he dispatched his top aides Steve Schmidt and Rick Davis to join Palin in Philadelphia. They’re supposed to liberate Palin to go on the offensive as a combative conservative in the vice-presidential debate on Thursday.That's a sensible spin. The last time Palin was effective, she was reading a combative conservative speech (much of which was written for whichever VP McCain decided on) at the RNC, all slashing attacks on community organizers, high taxes, and book learnin'. But it was, you know, a speech. Like the kind Barack Obama makes, the kind that leads conservatives to mock him for jellifying without a teleprompter. If Palin's been faltering since then (hint: she has!), it's because she's not a combative conservative. She's an affable, aw-shucks conservative. That's how she got her 80 percent approval rating. Witness some of her final 2006 gubernatorial debate and see if you can locate the grenade-tosser whom Kristol is summoning.
Nearly two years after being driven from Mogadishu, Islamists have re-taken swathes of south Somalia and may have their sights again on the capital.[Hat tip: Dan Clore.]
The insurgents' push is being led by Al Shabaab, or "Youth" in Arabic, the most militant in a wide array of groups opposed to the Somali government and military backers from Ethiopia, an ally in Washington's "War on Terror"....
Analysts say Islamists or Islamist-allied groups now control most of south Somalia, with the exception of Mogadishu, Baidoa where parliament is protected by Ethiopian troops, and Baladwayne near the border where Addis Ababa garrisons soldiers.
That is a remarkable turnaround from the end of 2006, when allied Somali-Ethiopian troops chased the Islamists out of Mogadishu after a six-month rule of south Somalia, scattering them to sea, remote hills and the Kenyan border.
The Islamists regrouped to begin an insurgency that has killed nearly 10,000 civilians. Military discipline, grassroots political work, youth recruitment and an anti-Ethiopian rallying cry have underpinned their return, analysts say.
Baboucarr Njie was preparing for his prayer session Friday night, Sept. 26, when he heard children in the Islamic Society of Greater Dayton coughing. Soon, Njie himself was overcome with fits of coughing and, like the rest of those in the building, headed for the doors."I would stay outside for a minute, then go back in, there were a lot of kids," Njie said. "My throat is still itchy, I need to get some milk."
Njie was one of several affected when a suspected chemical irritant was sprayed into the mosque at 26 Josie St., bringing Dayton police, fire and hazardous material personnel to the building at 9:48 p.m.
Someone "sprayed an irritant into the mosque," Dayton fire District Chief Vince Wiley said, noting that fire investigators believe it was a hand-held spray can.
According to fire dispatch communications, a child reported seeing two men with a white can spraying something into a window. That child was brought to the supervising firefighter at the scene.
Wiley would not discuss that report, but said the investigation has been turned over to police. Police were not commenting.
The 300 or so inside were celebrating the last 10 days of Ramadan with dinner and a prayer session, but the prayer session was interrupted so those suffering from tearing, coughing and shortness of breath could receive treatment.
I wonder, from a mediator's standpoint, which is the easier psychotic meme to disspell: xenophobia or fundamentalism? Also, I received a copy of this DVD with a magazine subscription--has any commenter watched it yet?
The fabulously named economists Luc Laevan and Fabian Valencia have a working paper on banking crises [pdf] out for the International Monetary Fund, covering 42 meltdowns in 37 countries since 1970. Their conclusion? Beware bailouts:
Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.
Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions' liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.
Link via tax-code-spelunking journalist David Cay Johnston, who in another post over at TPM Cafe urges some much-needed journalistic skepticism about the scope and urgency of the crisis, and therefore the need to bail anyone out:
The news is full of anecdotal evidence of companies and individuals having trouble getting credit. But there is no sign that this is other than cherry picking specifics because in the ordinary course of business lots of people get turned down or have their credit lines frozen.
If the markets are about to seize up how did one of the biggest players in the deeply troubled newspaper industry, McClatchy, get its $1.2 billion of credit lines renewed on Friday? And keep in mind that McClatchy gets the majority of its advertising revenue from two of the states with the biggest subprime mortgage/overvalued housing problems - California and Florida.
The TED spread, a technical market measure widely cited, is not even at record levels (or at least was not when I last looked Thursday night). If this is the worst financial crisis since the Great Depression then why is not setting new records - huge new records?
Brian Doherty interviewed Johnston back in December 2007.
In 2003, the New York Times published an article about growing concerns over growing debt, risky mortgages, and questionable accounting practices at quasi-government businesses Fannie Mae and Freddie Mac. The following passage, featuring move-along, nothing-to-see-here quotes from the now-chair of the House Financial Services Committee Barney Frank (D-Mass) and committee member Rep. Melvin Watt (D-N.C.), seems relevant given what we know today:
Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
Representative Melvin L. Watt, Democrat of North Carolina, agreed.
''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.
Detroit's crime lab may have a ten percent rate of error:
The Police Department here shut down its crime laboratory on Thursday after an audit uncovered serious errors in numerous cases. The audit said sloppy work had probably resulted in wrongful convictions, and officials expect a wave of appeals in cases that the laboratory processed.
The interim mayor, Kenneth V. Cockrel Jr., and the new police chief, James Barren, ordered the laboratory closed; Mr. Cockrel called the audit’s conclusions “shocking and appalling.” Pending and future cases will be sent to the Michigan State Police, which operates seven laboratories.
Officials from the Detroit Police Department, the Wayne County prosecutor’s office and the State Police will try to determine whether the errors resulted in guilty verdicts against innocent people.
“We do not want any of our activities to result in someone being imprisoned that doesn’t belong there,” the Wayne County prosecutor, Kym L. Worthy, said at a news conference with Mr. Cockrel and Mr. Barren. Ms. Worthy said the mistakes also might have let violent criminals remain at large.
David E. Balash, a retired State Police official who consults on firearms cases, said the audit’s findings could lead to payouts of hundreds of millions of dollars in lawsuits.
“I would have never anticipated that it would have been this systemic,” Mr. Balash said. “It’s almost incomprehensible.”
Disturbing as all of that is, the city is at least acknowledging the mistakes and doing what it can to correct them. Which is more than we can say for Mississippi.
Roger Koppl and I discuss how to ensure more reliable forensic evidence in criminal cases here.
The federal government wants to bail out an industry that can't meet its obligations. But as Steve Chapman writes, this will only increase the chance that next time, it will be the goverment itself teetering on the brink of financial doom.
One:
Late Friday night, the north London home/office of Martin Rynja, publisher of the independent UK press Gibson Square, was firebombed in what is being treated as a terrorist attack, of which police had advance warning, which is how they were able to warn Rynja to leave the premises for his own safety, stake out the building, and arrest three men shortly after the house was bombed; the small fire it created was quickly put out. (A fourth arrest was made later in the day.) Gibson Square is the UK publisher of The Jewel of Medina, Sherry Jones's controversial novel about A'isha, one of the wives of the Islamic prophet Mohammed, which was dropped by Random House after Islamic studies professor Denise Spellberg warned the publisher the book would incite violence by Muslim extremists (after which she did everything she could to make sure those potential terrorists knew the book was coming).
Read the whole thing at GalleyCat, which has done a phenomenal job tracking the myriad trials and tribulations of historical pop lit. author Sherry Jones. Since losing her contract with Random House, Jones has pinned much of the blame for her book's ups and downs on Denise Spellberg, a professor at UT-Austin. In her efforts to dissuade anyone from publising Jewel, Spellberg has argued that it "use[s] sex and violence to attack the Prophet and his faith," and called it "soft core pornography." But Jones is either naive or scrambling to deflect attention by arguing that pejorative labels are the culprit here, or that all would be well if only radicals could read her book:
"The planting of that bomb is Martin Rynja's letterbox was not about my book," Jones said, noting that the novel was not yet available in Britain. "It's not about the content of my book. It's not about the ideas in my book. It must be about the rumors and innuendos....I feel that the people who resorted to violence are responsible," Jones emphasized. "But her use of the word 'pornography' has done nothing to help the situation."
Despite her incendiary criticisms, Spellberg is a periphery figure in this case. Neither she, nor any other prominent pro-Islam critic of The Jewel of Medina (or any similar media), is responsible (or ethically liable) for an act of terrorism simply for having predicted it. And as disheartening as it may be to hear a Western academic rationalize—or even defend—terrorism in response to art, especially when radical leaders are responding with an "I-told-you-so" smugness, we shouldn't be surprised. The reactions that followed the Jyllands-Posten cartoons established that violence, not intellectual outrage or artistic rebuttals, is the means with which extremists are most likely to react to objectionable representations of Mohammed. And we've known for a while, at least since 9/11, that it's only a matter of time before some finger-wagging academic announces that the only way to deal with said extremists is to appease them.
While Random House may have acted differently if Spellberg had supported the book's publication, it's unlikely that Islamic radicals would have looked the other way simply because an American female academic gave Jewel two historically-correct thumbs up. Not that Spellberg's retraction matters. The Telegraph reports that clerics in London predict more attacks:
But the radical cleric Anjem Choudhary, who lives in Ilford, east London, said he was "not surprised at all" by the attack and warned of possible further reprisals over the book
"It is clearly stipulated in Muslim law that any kind of attack on his honour carries the death penalty," he said.
"People should be aware of the consequences they might face when producing material like this. They should know the depth of feeling it might provoke."
I'm interested to see how England's moderate Muslims will react to this news, and whether or not this will spark a more comprehensive (and hopefully, intelligent) conversation about cultural assimilation in Western Europe. And while I'm still opposed to the wars in Iraq and Afghanistan, it seems about time to abandon the assertion that withdrawing American troops from the Middle East is a long-term solution to Islamic extremism.
Lastly, I bet someone at Random House breathed a great big sigh of relief after hearing this news.
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