For someone who hangs out with libertarians a lot, announcing that you're okay with a small amount of inflation to relieve the sticky price problem, and that you think the Fed mostly does a good job, is akin to announcing that you've decided to take up human sacrifice to fill those lonely weekend hours. Nonetheless, I stand by the sentiment: inflation is not the big worry that our economy faces.
If you have not seen Karen DeYoung’s Oct 27 story, “U.S. Official Resigns Over Afghan War”, you owe it to yourself, your country, and our soldiers over there to read it. But even more powerful than Ms. DeYoung’s stunner of a scoop is the accompanying letter of resignation itself of Matthew P. Hoh, the 36-year old Marine-turned-Foreign Service Officer. It is a cry of conscience and an indictment of our continued presence in Afghanistan.
One can only pray—I use the word literally—that President Obama will read it before he makes his fateful decision about where we go from here in Afghanistan.
[..] Reading Mr. Hoh’s anguished, principled and urgent letter put me in mind of two great Americans of the Vietnam era: John Paul Vann and Frank Snepp. Vann, a soldier turned foreign service officer was the indispensable man of Acts 1 and 2 of our Vietnam tragedy. Frank Snepp, the CIA officer who spoke out against our shameless betrayal of our friends when Saigon fell, and who was unjustly punished for that act of conscience, was the hero of Act 3. With his letter, Matthew Hoh becomes the indispensable man of what one prays will be the final act of our adventure in the land that defeated Alexander the Great, Great Britain, and Russia.
If after reading Ms. DeYoung’s account and Mr. Hoh’s letter, you draw these same conclusions, do more than post a comment here. Do the old fashioned thing: call your congressman and senator. Tell them, "It’s time for us to go."
It's Halloween season, and the scariest demons in the world of business are insider traders, lurking behind every stockbroker's desk and four-star restaurant banquette. They whisper dark corporate secrets into the ears of venal speculators, and inflict pain and agony upon ordinary investors.
Time to stop telling horror stories. Federal agents are wasting their time slapping handcuffs on hedge fund traders like Raj Rajaratnam, the financier charged last week with trading on nonpublic information involving IBM, Google and other big companies. The reassuring truth: Insider trading is impossible to police and helpful to markets and investors. Parsing the difference between legal and illegal insider trading is futile—and a disservice to all investors. Far from being so injurious to the economy that its practice must be criminalized, insiders buying and selling stocks based on their knowledge play a critical role in keeping asset prices honest—in keeping prices from lying to the public about corporate realities.
Prohibitions on insider trading prevent the market from adjusting as quickly as possible to changes in the demand for, and supply of, corporate assets. The result is prices that lie.
And when prices lie, market participants are misled into behaving in ways that harm not only themselves but also the economy writ large.
As part of guest blogging at Library Grape, I received a review copy of economic historian Bruce Bartlett's new book, The New American Economy, which I've finished reading.
The book is well-researched and clearly written; I recommend it to any lay person interested in the history of modern American macroeconomics (1929-present).
I may post a longer review once I've had more time to digest it, but in the mean time here's a diavlog between Bartlett and David Frum, two conservatives who are refreshing in their honesty.
There is no question that as the government pursued affordable-housing goals—with the Community Reinvestment Act providing approximately half of Fannie’s and Freddie’s affordable-housing purchases—trillions of dollars in high-risk lending flooded the real-estate market, with disastrous consequences. Over the last 20 years, the percentage of conventional home-purchase mortgages made with the borrower putting 5% or less down more than tripled, from 8% in 1990 to 29% in 2007 (see chart above). Adding to the default risk: of these loans with 5% or less down, the average down payment declined from 5% to 3% of the loan’s value.
As for Fannie and Freddie, most of the loans with 5% or less down that they had acquired by 2005 had down payments of 3% or even no down payment at all. From 1992 to 2007, the two entities acquired over $3.1 trillion in low-down-payment or credit-impaired loans and private securities backed by credit-impaired loans—and these are performing horribly: the delinquency rate on Fannie’s and Freddie’s remaining $1.1 trillion in such high-risk loans is 15.5% as of this past June 30, about 6.5 times the rate on the entities’ traditionally underwritten loans. All this risky lending, of course, drove the nation’s homeownership rate up and inflated a housing-price bubble.
Incredibly, the House Financial Services Committee is considering legislation that would broaden the scope of the CRA
Because as we all learned in Poli Sci 101, spreading federal largesse to favored constituencies (in this case, poor minorities) is more important than sound economics.
I've talked a lot about the way that making our tax system more progressive has made tax revenues more volatile--they're higher when the economy is booming, and lower when the economy is in depression. But even I am struck by this image from the Congressional Budget Office:
Income taxes, especially corporate income taxes, are sharply off. But revenue from the payroll tax, which is our most regressive, basically hasn't dropped at all.
There are a lot of reasons why we can't pay for all the new spending Obama wants just with taxes on the rich, but this may be one of the most compelling: if we do, we'll be forced to borrow massively every time there's a slowdown.
I suppose that in the left's dream world this won't be such a problem, because slowdowns will be moderated by European-style regulations and workforce controls (e.g. companies aren't allowed to fire people). And economic growth will be likewise moderated.
It can be difficult to get them to admit the logical conclusion of their favored policies, but they effectively don't care much about GDP growth. In the interest of fairness, they basically only care about making sure "the rich" don't get too much richer (i.e. invest their wealth and create "too much" more wealth).
And so progressives might bemoan America's "shrinking middle class" in their talking points. When you show them data that this is because more people moved into the upper class since 1980...
It still freaks them out. Eeek! More rich people means a greater gap between the rich and poor. That's bad, because it's unfair.
Which is why per Obama's own campaign gaffe—defined as a politician unintentionally stating the truth—the left wants to spread this wealth around (i.e. redistribute with more progressive taxation).
I've previously posted this video of Margaret Thatcher responding to a leftist on the rich-poor gap in 1990:
what seems to be conspicuously absent from the conversation in the United States is the realization that Afghanistan’s corruption problem, like its security problem, can be best addressed by additional troops.
(be sure to watch through "controlled demolition")
...not to mention the fact that two missles were able to blow up the entire death star. Seriously, in all of recorded history no death star has ever been brought down by just two missles. There had to be explosives planted inside the death star. There is no way to two missles could have brought down the death star.
And don't even get me started on whether or not the emperor was born within the Galactic Federation Planets...
WASHINGTON (AP) - Federal drug agents won't pursue pot-smoking patients or their sanctioned suppliers in states that allow medical marijuana, under new legal guidelines to be issued Monday by the Obama administration.
Two Justice Department officials described the new policy to The Associated Press, saying prosecutors will be told it is not a good use of their time to arrest people who use or provide medical marijuana in strict compliance with state law.
The guidelines to be issued by the department do, however, make it clear that agents will go after people whose marijuana distribution goes beyond what is permitted under state law or use medical marijuana as a cover for other crimes, the officials said.
The new policy is a significant departure from the Bush administration, which insisted it would continue to enforce federal anti-pot laws regardless of state codes.
Fourteen states allow some use of marijuana for medical purposes: Alaska, California, Colorado, Hawaii, Maine, Maryland, Michigan, Montana, Nevada, New Mexico, Oregon, Rhode Island, Vermont and Washington.
California is unique among those for the widespread presence of dispensaries - businesses that sell marijuana and even advertise their services. Colorado also has several dispensaries, and Rhode Island and New Mexico are in the process of licensing providers, according to the Marijuana Policy Project, a group that promotes the decriminalization of marijuana use.
Attorney General Eric Holder said in March that he wanted federal law enforcement officials to pursue those who violate both federal and state law, but it has not been clear how that goal would be put into practice.
A three-page memo spelling out the policy is expected to be sent Monday to federal prosecutors in the 14 states, and also to top officials at the FBI and Drug Enforcement Administration.
And the arc of the Universe curves a wee bit more towards justice.
check out this amazing letter from Dwight Eisenhower from the last days of World War II. Some of the people who have commented on it have remarked about Eisenhower’s writing style, which is really remarkable in its clarity and directness. It’s also really interesting to read his personal reflections on towering historical figures like Omar Bradley or Patton. What really stays with you, though, is his brief description of touring a liberated death camp, and in particular, his prediction even then of Holocaust denial. This is almost a month before V-E day; the world doesn’t yet know the extent of Germany’s crimes. There’s no greater knowledge of the Holocaust yet to invite denial. And yet the terrible and persistent history of anti-Jewish hatred already compels Eisenhower to vow to stand witness against those who would in the future dismiss the Holocaust as propaganda.
[The NHL lawyer] barely got the word “Chrysler” out of his mouth before Judge Baum interrupted: “Let me say something about these two cases [the Chrysler and General Motors bankruptcies],” Judge Baum said during the Sept. 10 hearing, according to a transcript. “You know, those two cases were so unusual that I’m not sure how helpful the precedent of those two cases is to this court or any court. When the United States government comes in and says, ‘I’m going to buy’ what at one time was the biggest company in America… I mean, I had to get a little smirk when I thought of that poor pension manager from Indiana who was trying to fight that. It was kind of like the gentlemen in Tiananmen Square when the tank came rolling.”
Their son told them last weekend he had decided to no longer stand and recite the Pledge of Allegiance at school because he didn't believe there is liberty and justice for all, especially when it comes to gay rights.
"To say them words and not mean them would be a lie"
Tyler Cowen citesthis research finding: "Our estimates imply that every death of a helmetless motorcyclist prevents or delays as many as 0.33 deaths among individuals on organ transplant waiting lists."
And then asks: "So should we mandate or tax the use of such helmets?"
WASHINGTON - The Libertarian Party today suggested that, in the future, the announcement date every year for Nobel Prizes be moved to April 1.
"Unlike the gullible people who listened to The War of the Worlds radio broadcast in 1938 and thought Martians really were attacking the United States, when I heard this morning that Barack Obama won the Nobel Peace Prize, I changed the channel in disbelief. But, the same thing was being said in multiple places," Libertarian National Committee Chairman William Redpath said.
"The gravity of the Nobel awards has not been augmented by some of their recent selections, including today's announcement, last year's award of the Economics prize to Paul Krugman, or the 2007 Peace Prize to Al Gore, whose global warming theories he will not defend in open debate. Maybe an early Springtime announcement date would be more appropriate."
Redpath continued, "I didn't know that it was the role of the Nobel Peace Prize Committee to be handicapping the future performance of individuals and organizations. Nonetheless, we congratulate President Obama on his award and hope that three-and-a-quarter or seven-and-a-quarter years from now the Nobel Peace Prize Committee will be seen as prescient.
It has long been true that lesbians have suffered disproportionally under DADT. This last year was no exception:
In fiscal year 2008, the Air Force dismissed 56 women and 34 men. In addition, the Army removed more women under the "Don't Ask, Don't Tell" policy at a greater rate than men when compared with the ratio of women to men in each service. Of those discharged under the policy, 36 percent were women, although women make up only 14 percent of troops in the Army, the data showed.
This is to be expected, since the military tends to attract butch people.
A gay dude is marginally less likely to join the military than a straight man.
While a lesbian is marginally more likely to join than a straight woman.
So of course there are going to be more women than men suffering from DADT, relative to the male/female ratio of all personnel.
The award of this year’s Nobel peace prize to President Obama will be met with widespread incredulity, consternation in many capitals and probably deep embarrassment by the President himself.
Rarely has an award had such an obvious political and partisan intent. It was clearly seen by the Norwegian Nobel committee as a way of expressing European gratitude for an end to the Bush Administration, approval for the election of America’s first black president and hope that Washington will honour its promise to re-engage with the world.
Instead, the prize risks looking preposterous in its claims, patronising in its intentions and demeaning in its attempt to build up a man who has barely begun his period in office, let alone achieved any tangible outcome for peace.
The pretext for the prize was Mr Obama’s decision to “strengthen international diplomacy and co-operation between peoples”. Many people will point out that, while the President has indeed promised to “reset” relations with Russia and offer a fresh start to relations with the Muslim world, there is little so far to show for his fine words.
There is a further irony in offering a peace prize to a president whose principal preoccupation at the moment is when and how to expand the war in Afghanistan.
The spectacle of Mr Obama mounting the podium in Oslo to accept a prize that once went to Nelson Mandela, Aung San Suu Kyi and Mother Theresa would be all the more absurd if it follows a White House decision to send up to 40,000 more US troops to Afghanistan. However just such a war may be deemed in Western eyes, Muslims would not be the only group to complain that peace is hardly compatible with an escalation in hostilities.
[..] The committee said today that he had “captured the world’s attention”. It is certainly true that his energy and aspirations have dazzled many of his supporters. Sadly, it seems they have so bedazzled the Norwegians that they can no longer separate hopes from achievement. The achievements of all previous winners have been diminished.
Color me incredulous. Obama winning the prize is something I had looked forward to—after a few years, once he'd accomplished something, which I thought there was a fair chance of.
But this is bullshit. Imagine if an Olympic committee assigned gold medals to favored athletes before the qualifying rounds were even over!
This committee has made a mockery of themselves, of Obama, of the prize, and of the accomplishments of past recipients.
All will be ridiculed for this absurdly premature award. Insofar as people look to something like the peace prize for inspiration, this has set back the cause of peace.
[W]hen it comes to teenage births, the United States is backsliding. Between 1991 and 2005 the teenage birth rate declined by 34%, according to the National Centre for Health Statistics. Between 2005 and 2007, the last year for which statistics are available, it crept up 5%.
[..] Consider Texas. The state requires only that public schools emphasise abstinence, not that they forsake all other approaches. Any district could choose to be more comprehensive. But few do. Last year the Texas Freedom Network, a religious-freedom watchdog, gathered curricular materials from the state’s public-school districts. Their findings, published earlier this year, are disturbing. Fully 94% of the districts took the abstinence-only approach. Those pamphlets and brochures that bothered to discuss contraceptives were often full of errors, or deliberately misleading.
The materials also traded on shame and fear. Across the state teenagers were warned that premarital sex could lead to divorce, suicide, poverty and a disappointed God. One district staged a skit about a young couple on their honeymoon. The husband presented his bride with a beautiful wrapped present that he had been saving for years. Her gift for him was in tatters.
the modern G.O.P. considers itself the party of Ronald Reagan — and Reagan was a fierce opponent of Medicare’s creation, warning that it would destroy American freedom. (Honest.)
Pretty silly of old Ronald, wasn't it? Well, also today, over at the Wall Street Journal, three past presidents of the American Medical Association write:
the right of patients to privately contract with physicians to ensure they have the medical care they want, without penalty—regardless of what the government pays—must be recognized and protected. Today, if a doctor wants to bill a patient for additional payment over the Medicare reimbursement, he has to withdraw from Medicare entirely for two years. A patient who agrees with this arrangement can't receive any Medicare money for that service, either.
So, if you include the right to sign mutually advantageous contracts and engage in the gains from trade as part of "freedom," then President Reagan was not so far off the mark.
The problem, it seems, is that Medicare sometimes tries to push the price of medical services below their equilibrium levels (a phenomenon that will likely get more severe with the Medicare cuts being envisioned in the pending healthcare reform bills). Such price controls naturally lead to private attempts to circumvent them, which in turn lead to regulations to prevent that behavior. These new regulations cannot help but impinge on economic freedoms.
As we try to shake off the financial crisis, here's a bright idea. Take a law that has led to the writing of an enormous amount of bad mortgages and expand it. Then take enforcement away from bank examiners and give it to housing activists. Sound like a poisonous cocktail? Well, it is what the Obama administration and Democrats are currently stirring up on Capitol Hill.
The White House and Congress want to expand a 30-year-old law--the Community Reinvestment Act (CRA)--that helped to fuel the mortgage meltdown. What the CRA does, in effect, is compel banks to seek the permission of community activists to get regulatory approval for bank expansions and mergers. Often this means striking a deal with activist groups such as ACORN or unions like the Service Employees International Union and agreeing to allocate credit to poor and minority areas that are underserved.
In short, the CRA encourages banks to make trillions in loans they would not ordinarily make. What's more, these agreements often require that banks offer no-money-down mortgages and remove caps on how much debt a borrower can take on. All of this is done in the name of "financial democracy."
The CRA is not about community development; it is, essentially, affirmative action in lending. Trillions in loans are now to be made not on the basis of whether they can be paid back but to meet CRA goals. This is precisely what we need to get away from. Drinking this potent cocktail would be dangerous to our financial health.
Today's monthly unemployment rate report showed a rise from 9.7 to 9.8%.
And this spam/phishing made it to my inbox...
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McCain is recruiting candidates, raising money for them and hitting the campaign trail on their behalf. He’s taken sides in competitive House, Senate and gubernatorial primaries and introduced his preferred candidates to his top donors.
It’s all part of an approach that is at odds with most other recent failed presidential nominees, whose immediate response to defeat was to retreat from the electoral arena. But those familiar with McCain’s thinking say he has expressed serious concern about the direction of the party and is actively seeking out and supporting candidates who can broaden the party’s reach.
In McCain’s case, that means backing conservative pragmatists and moderates.
“I think he’s endorsed people with center-right politics because he has an understanding that the party is in trouble with certain demographics and wants to have a tone that would allow us to grow,” said Sen. Lindsey Graham, the South Carolina Republican who is McCain’s closest friend and ally in the Senate.
“At a time when our party is struggling and has a lot of shrill voices and aggressive voices, he’s one that can expand our party,” said John Weaver, a longtime McCain friend and strategist.
Yet he's still unapologetic about choosing Palin—an unvetted and extremely polarizing nominee who was manifestly unqualified for high office. Cognitive dissonance much?
"Washington Post labor columnist Harold Meyerson, who is to economics what Roman Polanski is to the age of consent, nonetheless tries to condemn that which he does not begin to comprehend, let alone consider legitimate." —Matt Welch, Reason
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(Eugene Volokh)
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A powerful president and a popular rival highlight an election that has
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Cantor 'stunned' by Virginia Tech shootings
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House Majority Leader Eric Cantor (R-Va.) said Thursday that he was
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