I Guess He Wanted a More Challenging Job

I was a bit amused to see this in the news. Why exactly would you want to go from holding a job where your biggest concern is "where do I stash this ginormous pile of money?" to a company which is doing so poorly it is majority owned by the US government?

DETROIT — General Motors has hired an outsider to run its troubled finance operations, bringing in the chief financial officer of Microsoft.Chris Liddell will join GM next year, GM Chief Executive Ed Whitacre Jr. said in a statement today.

Liddell, 51, brings depth and experience to the job leading GM's global financial and accounting operations, the statement said.

I Think They Are Being a Bit Too Ambitious

I was amused by this Reuter's headline pointed out by Best of the Web.

Obama administration aims for high school financial literacy

Who knows, maybe they can find someone who can teach Tim Geithner how to use TurboTax?

Greatest Music Video Ever

Scary Economics Stat of the Day

While Paul Krugman may have suddenly developed a desire for gigantic deficits, they are terrifying me. George Melloan points out the true size of the money we are borrowing in the WSJ.

A number more relevant to what the government is actually demanding from the capital markets is the Treasury's financing requirement. At a recent Chartered Financial Analyst Institute conference, Treasury official Karthik Ramanathan proudly described the prodigious fund-raising task he and his colleagues pulled off in the fiscal year, what one might call a borrowing feat unparalleled in human history: "In the course of 291 auctions in 251 business days, Treasury issued nearly $7 trillion in gross Treasury marketable securities to raise approximately $1.7 trillion to finance the government."

Idiotic Democrat Quote of the Day

If I knew this new healthcare bill would guarantee immortality, I would have supported it months ago. From Harry Reid:

Today we vote whether to even discuss one of the greatest issues of our generation - indeed, one of the greatest issues this body has ever face: whether this nation will finally guarantee its people the right to live free from the fear of illness and death, which can be prevented by decent health care for all.

Sarah Palin Comment of the Day

I am hardly the world's biggest Sarah Palin fan, but I am constantly amused by how rabid she makes the left, the very same people who insist she is unimportant while discussing her nonstop. For example the AP dedicated 11 fact-checkers to her new book.

AP writers Matt Apuzzo, Sharon Theimer, Tom Raum, Rita Beamish, Beth Fouhy, H. Josef Hebert, Justin D. Pritchard, Garance Burke, Dan Joling and Lewis Shaine contributed to this report.

So I was wondering, did the AP dedicated 11 people to fact-check, for example, Joe Biden's book? Well, no, the answer occured to me. It is actually rather unlikely that 11 people have ever actually read Joe Biden's book.

First Must See Movie of 2010

Hey, how can you not like a movie whose trailer has the hero introducing himself, "I am a Chief Warrant Officer with the US Army ."? Now that I think of it, Matt Damon does look a lot like me...

UW Medal of Honor Memorial

I donated money to help this get built. I wish I could be there today, but have to work.

Earning a medal, of any sort, was the furthest thing from Bruce Crandall's mind on the morning of Nov. 14, 1965, as he repeatedly flew his Huey helicopter through a hail of enemy fire in Vietnam. Only this mattered: His comrades needed him.

Likewise, John "Bud" Hawk wasn't looking for glory on Aug. 20, 1944, when he stayed exposed in a French orchard, taking a shot in the thigh as he directed fire against German tanks. Fact is, Hawk didn't know if he'd live to see sunset.

On Wednesday, Veterans Day, the University of Washington will dedicate a new memorial to eight UW alumni who have received the Medal of Honor, the nation's highest honor for valor in battle.

Tear Down this Wall

In honor of the 20th anniversary of it happening.

Quote of the Day

I am still amazed by this idiotic Obama campaign against Fox. He won't take on the Taliban or Iran, but Rupert Murdoch is his number one target. Charles Krauthammer weighs in with his usual wisdom.

Defend Fox from whom? Fox’s flagship 6 o’clock evening news out of
Washington (hosted by Bret Baier, formerly by Brit Hume) is, to my mind, the best hour of news on television. (Definitive evidence: My mother watches it even on the odd night when I’m not on.) Defend Fox from the likes of Anita Dunn? She’s been attacked for extolling Mao’s political philosophy in a speech at a high-school graduation. But the critics miss the surpassing stupidity of her larger point: She was invoking Mao as support and authority for her impassioned plea for individuality and trusting one’s own choices. Mao as champion of
individuality? Mao, the greatest imposer of mass uniformity in modern history, creator of a slave society of a near-billion worker bees wearing Mao suits and waving the Little Red Book?

The White House communications director cannot be trusted to address high schoolers without uttering inanities. She and her cohorts are now to instruct the country on truth and objectivity?

Obamaegomaniac

Could this guy be more full of himself?

President Obama said during his speech today: ‘For those who question the character and cause of my nation, I ask you to look at the concrete actions we have taken in just nine months.’

Remember When Dissent Was Patriotic?

I was listening to Nancy Pelosi get hysterical today. How that women ever got into a position of authority in this country is beyond me. Anyway, before we get on to that, a look back at the first (and hopefully last) inaugural address by President Obama:

As for our common defense, we reject as false the choice between our safety and our ideals. Our Founding Fathers, faced with perils we can scarcely imagine, drafted a charter to assure the rule of law and the rights of man, a charter expanded by the blood of generations. Those ideals still light the world, and we will not give them up for expedience's sake.

Now, apparently Nancy Pelosi disagrees:

"We are a free country, and this balance between freedom and safety is one that we have to carefully balance," Pelosi began. She then became emotional as she recalled the events, startling the reporters gathered for the weekly news conference.

Well apparently while dealing with foreign terrorists who like to fly planes into buildings, balancing security and rights is not a dilemma, but when dealing with those evil Republicans on the other hand, then you really have to be careful...

Hoover and the Depression

It has become part of modern Democratic dogma that Hoover just fiddled while the economy collapsed, necessitating a rescue by FDR. Not at all true.

Pro-labor policies pushed by President Herbert Hoover after the stock market crash of 1929 accounted for close to two-thirds of the drop in the nation's gross domestic product over the two years that followed, causing what might otherwise have been a bad recession to slip into the Great Depression, a UCLA economist concludes in a new study.

"These findings suggest that the recession was three times worse — at a minimum — than it would otherwise have been, because of Hoover," said Lee E. Ohanian, a UCLA professor of economics.

The policies, which included both propping up wages and encouraging job-sharing, also accounted for more than two-thirds of the precipitous decline in hours worked in the manufacturing sector, which was much harder hit initially than the agricultural sector, according to Ohanian.

"By keeping industrial wages too high, Hoover sharply depressed employment beyond where it otherwise would have been, and that act drove down the overall gross national product," Ohanian said. "His policy was the single most important event in precipitating the Great Depression."

The findings are slated to appear in the December issue of the peer-reviewed Journal of Economic Theory and were posted today on the website of the National Bureau of Economic Reasearch (www.nber.org) as a working paper.

The Opinion Journal Imitates Me

This sounds familiar:

Two Columnists in One!
"Basically we have a world-class budget deficit not just as in absolute terms of course--it's the biggest budget deficit in the history of the world--but it's a budget deficit that as a share of GDP is right up there....

Krugman on Deficits

Paul Krugman on his blog yesterday shows once again how he has stopped becoming a serious economics. First Kruggie from 2004, when the budget deficit was a mere $413 billion:

PROFESSOR PAUL KRUGMAN, PRINCETON ECONOMIST: Well, basically we have a world-class budget deficit not just as in absolute terms of course - it's the biggest budget deficit in the history of the world - but it's a budget deficit that as a share of GDP is right up there.It's comparable to the worst we've ever seen in this country.

It's biggest than Argentina in 2001.

Which is not cyclical, there's only a little bit that's because the economy is depressed.

Mostly it's because, fundamentally, the Government isn't taking in enough money to pay for the programs and we have no strategy of dealing with it.

So, if you take a look, the only thing that sustains the US right now is the fact that people say, "Well America's a mature, advanced country and mature, advanced countries always, you know, get their financial house in order," but there's not a hint that that's on the political horizon, so I think we're looking for a collapse of confidence some time in the not-too-distant future.

Now from his blog, when it was announced that the deficit will total over $9 trillion, over the next decade, more than double the worst deficit under Bush, for 10 straight years!

It turns out that I was a little over-pessimistic in my assessment, mainly because the $9 trillion includes this year’s deficit, so we start from debt at 40% of GDP, not 50%. Overall, the OMB puts debt in 2019 at 76.5% of GDP; that figure is slightly exaggerated, however, because various financial rescues get counted as additions to the deficit even though taxpayers end up with additional assets. Net of these assets, the debt in 2019 is 68.9% of GDP.

As I’ve pointed out, that’s bad, but it’s not horrific either by historical or international standards. On a comparable basis, federal debt hit
109 percent of GDP at the end of World War II, and hit a second peak of 49 percent at the end of the Reagan-Bush years. And a number of European countries have hit substantially higher debt levels without crisis.

The Postalization of Health Care

I went to the post office this morning, there is a major one only a couple of blocks from work. I simply needed to pick up some stamps. I searched around for a vending machine, as I destest having to deal with postal employees, but alas, there were none. Finally I asked a couple of employees standing behind a counter chatting with each other accomplishing nothing, if I could buy some stamps.

They informed me that I could not, because it was only 8:25, and the people who sold the stamps do not come on duty until 8:30. With a scowl I replied, "Thanks for the great service." and one of them replied sarcastically, and with no apparent sense of shame "you are welcome".

Now continuing what is possibly the world's most clueless argument for getting government involved in our healthcare, is Jesse Jackson Jr. I swear this guy is setting new records for bad economics.

Stimulus Success?

Several months ago I argued that Keynesian stimulus was not a proven concept. It might be a bit early to say definitively, but the early evidence showed that I was unfortunately right.

White House economic adviser Austan Goolsbee promised on "Fox News Sunday": "It's going to take more than a few months to turn it around." That contradicts White House economic adviser Lawrence H. Summers' promise in January that the economy would start improving "within weeks" so long as the president's $787 billion stimulus was passed.

The stimulus actually has dampened economic projections. In January, before the stimulus was passed, 53 business economists and forecasters surveyed by the Wall Street Journal expected gross domestic product (GDP) for the third quarter (July through September) to rise by 1.2 percent at an annual rate. Predictions became gloomier after the stimulus passed in March. In May, these experts forecast only a 0.6 growth rate for the third quarter.

Great Moments in UW Class of 93 History

I was interested to find out the woman who broke the expense account scandal in the UK was a classmate of mine. Unfortunately, I didn't know her. Big school and all.

If the British tabloids knew about the sex-advice column Heather Brooke wrote for the University of Washington Daily nearly two decades ago they might run with it as a salacious news item.

Something like "sex writer rocks Parliament."

But that information hasn't reached them, it seems, and Brooke has proven to an entire nation she is a journalist of another ilk. In doing so, the former Seattleite has shaken up the British parliamentary leadership and perhaps changed forever the relationship between the British press and the House of Commons.

No Kidding

In the bizarre beyond belief category, President Obama proposes the largest deficits, by far, in US history through massive spending increases, and then notes that they are a bad idea.

May 14 (Bloomberg) -- President Barack Obama, calling current deficit spending
“unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”

Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”

You Are Joking, Right?

Jake Tapper is about the only serious journalist left. Robert Gibbs continues to be the clown of the White House.

JENNIFER LOVEN, AP: The $100 million target figure that the president talked about today with the Cabinet, can you explain why so small? I know he talked about -- you know, you add up 100 million and 100 million, and eventually, you get somewhere, but it would take an awfully long time to add up hundred million (inaudible) in the deficit. Why not target a bigger number?

GIBBS: (Smiling) Well, I think only in Washington, D.C. is a hundred million dollars...

LOVEN: The deficit's very large. It's not a joke.

GIBBS: No, I'm...

LOVEN: The deficit's giant. $100 million really is only a step.

GIBBS: But no joke.

LOVEN: You sound like you're joking about it, but it's not funny

.GIBBS: I'm not making jokes about it. I'm being completely sincere that only in Washington, D.C. is $100 million not a lot of money. It is where I'm from. It is where I grew up. And I think it is for hundreds of millions of Americans.

LOVEN: The point is it's not a very big portion of the deficit.

TAPPER: You were talking about an appropriations bill a few weeks ago about $8 billion being minuscule -- $8 billion in earmarks. We were talking about that and you said that that...

GIBBS: Well, in terms of -- in...(CROSSTALK)

TAPPER: ...$100 million is a lot but $8 billion is small?

Obama's Economic Mirage

I am a bit behind on this, but this deserves posting, as it makes a point that I have tried to make several times. I don't know what this is, but it sure as hell isn't economics. From columnist Robert Samuelson.

What defines the "post-material economy" is a growing willingness to sacrifice money income for psychic income -- "feeling good." Some people may gladly pay higher energy prices if they think they're "saving the planet" from global warming. Some may accept higher taxes if they think they're improving the health or education of the poor. Unfortunately, these psychic benefits may be based on fantasies. What if U.S. cuts in greenhouse gases are offset by Chinese increases? What if more health insurance produces only modest gains in people's health?

Obama and his allies have glossed over these questions. They've left the impression that somehow magical technological breakthroughs will produce clean energy that is also cheap. Perhaps that will happen; it hasn't yet. They've talked so often about the need to control wasteful health spending that they've implied they've actually found a way of doing so. Perhaps they will, but they haven't yet.

We cannot build a productive economy on the foundations of health care and "green" energy. These programs would create burdens for many, benefits for some. Indeed, their weaknesses may feed on each other, as higher health spending requires more taxes that are satisfied by stiffer terms for "cap-and-trade." We clearly need changes in these areas: ways to check wasteful health spending and promote efficient energy use. I have long advocated a gasoline tax on national security grounds. But Obama's vision for economic renewal is mostly a self-serving mirage.

Jury Strikes Blow for Incompetent Professors Everywhere

Give me a break. I know Harvard PhDs at the University of Washington who haven't been able to get tenured positions yet, and they give this idiot, with a MS in Communications from some unknown experimental university a department chair at CU. He should have never been hired in the first place. Firing was the correct action.

DENVER — A jury ruled Thursday that the University of Colorado wrongly fired the professor who compared some Sept. 11 victims to a Nazi, a verdict that gives the professor $1 and a chance to get his job back.

"What was asked for and what was delivered was justice," Ward Churchill said outside the courtroom.

Then-Gov. Bill Owens was among the officials who had called on the university to fire Churchill after his essay touched off a national firestorm, but the tenured professor of ethnic studies was ultimately terminated on charges of research misconduct.

Great News: Obama Budget Even Worse than Thought

Remember, this is the budget that Nobel Prize Winner Paul Krugman just called "Very, very good". He might want to think about taking that back.

President Obama's ambitious plans to cut middle-class taxes, overhaul health care and expand access to college would require massive borrowing over the next decade, leaving the nation mired far deeper in debt than the White House previously estimated, congressional budget analysts said yesterday.

In the first independent analysis of Obama's budget proposal, the nonpartisan Congressional Budget Office concluded that Obama's policies would cause government spending to swell above historic levels even after costly programs to ease the recession and stabilize the nation's financial system have ended.

The Robert Gibbs Comedy Hour

I hope Obama doesn't get rid of this guy, he is a laugh a minute. The guy is like a one man Abbot and Costello.

A Return to Depression Economics

Nevermind that it was been tried before with disasterous results, populist economics can be, well, popular with some politicians:

"The housing affordability crisis trumps any theoretical recommendations of economists," New York State Assemblyman Jonathan L. Bing, a sponsor of many of the rent-control provisions pending in New York, told FOXNews.com.

Bing supports bills that would further limit the amount landlords can increase rent after tenants move out, and that would increase to $240,000 the maximum income of people who qualify for rent control.

San Francisco Tenant Union Director Ted Gullicksen supports legislation that would llow tenants to avoid rent increases that would make them pay more than 30 percent of their income in rent.

The city's proposed law would also force landlords to let tenants take in roommates, who, Gullicksen said, could help with the rent.

But should landlords be compensated for the new restrictions on their property? "I don't think so," Gullicksen said. "Rents are so extraordinarily high. Landlords in San Francisco are just making huge amounts of money."

Economic Knowledge

I came across a survey which showed how poorly high school students understand economics. I wonder if you gave it to Congress if they would do any better. Or president Obama for that matter...

In 1999, researchers at the Securities and Exchange Commission concluded that 66 percent of high school seniors could not pass a basic economic literacy test. Things have not changed for the better since.

In 2008, the Jump$tart Coalition for Personal Financial Literacy administered its financial literacy test to 6,856 high school seniors in 40 states. The overall score was 48 percent. Only 17 percent knew investing in stocks would probably generate the most return over an 18-year period.

Hey Tim...

While we undergo the biggest financial crisis in 70 years, the Obama administration has enough time to plan attacks against Rush Limbaugh and revamp our social systems for the next 2 decades, but they can't seem to appoint anyone to the Department of the Treasury to actually do anything. Here is a list of the appointed positions there:


Secretary
Deputy Secretary
Under Secretary — Domestic Finance
Under Secretary — International Affairs
Under Secretary — Terrorism and Financial Intelligence
Assistant Secretary — Economic Policy
Assistant Secretary — Financial Markets
Assistant Secretary (Deputy Under Secretary) — International Affairs
Assistant Secretary (Deputy Under Secretary) — Legislative Affairs
Assistant Secretary — Management and Chief Financial Officer
Assistant Secretary — Public Affairs/Director — Policy Planning
Assistant Secretary — Tax Policy
Chief Counsel — Internal Revenue Service/Assistant General Counsel for Tax
Commissioner — Internal Revenue (five-year terms of office)
General Counsel
Inspector General
Inspector General — Tax Administration
Treasurer — United States

Of all those positions, only Secretary Geithner, the guy who can't figure out Turbo Tax, has actually been appointed. Come on, it is not like there aren't any unemployed finance people out there. Hell, I would consider a couple of those positions, if you made the right offer...

Hey Tom...

Now I am not a typical conservative in that I have read far more Thomas Friedman than I have listened to Rush Limbaugh, but I have to take Tom to task for this part of his editorial today.

Meanwhile, the Republican Party behaves as if it would rather see the country fail than Barack Obama succeed. Rush Limbaugh, the de facto G.O.P. boss, said so explicitly, prompting John McCain to declare about President Obama to Politico: “I don’t want him to fail in his mission of restoring our economy.”

OK, that sounds nice, Rush has become the Democrats designated whipping boy, an intentional plan as it turns out, but that is not what he said. Here is the original quote which started this whole thing off.

If I wanted Obama to succeed, I'd be happy the Republicans have laid down. And I would be encouraging Republicans to lay down and support him. Look, what he's talking about is the absorption of as much of the private sector by the US government as possible, from the banking business, to the mortgage industry, the automobile business, to health care. I do not want the government in charge of all of these things. I don't want this to work. So I'm thinking of replying to the guy, "Okay, I'll send you a response, but I don't need 400 words, I need four: I hope he fails."

He never says that he wants the country to fail, just Obama. And he is even more specific than that, he is talking about specific economic policies that Rush opposes, not the presidency in general. Whether you agree with him or not, that is well within the normal political discourse and Thomas Friedman owes him an apology.

Alan Greenspan: We Didn't Do It

In today's Wall Street Journal Alan Greenspan makes an argument that I have been making for a while. Obviously he knows a little more about the subject than I do, although he is a bit biased.

There are at least two broad and competing explanations of the origins of this crisis. The first is that the "easy money" policies of the Federal Reserve produced the U.S. housing bubble that is at the core of today's financial mess.

The second, and far more credible, explanation agrees that it was indeed lower interest rates that spawned the speculative euphoria. However, the interest rate that mattered was not the federal-funds rate, but the rate on long-term, fixed-rate mortgages. Between 2002 and 2005, home mortgage rates led U.S. home price change by 11 months. This correlation between home prices and mortgage rates was highly significant, and a far better indicator of rising home prices than the fed-funds rate.

The Smartest Woman in the World

OK, I had better stop now, this could go on forever.

Tiredness appeared to show Friday when she answered questions in front of 500 young Europeans at the European Parliament, where she was the highest-ranking U.S. visitor since the late U.S. President Ronald Reagan in 1985.

A veteran politician, Clinton compared the complex European political environment to that of the two-party U.S. system, before adding:"I have never understood
multiparty democracy.

"It is hard enough with two parties to come to any resolution, and I say this very respectfully, because I feel the same way about our own democracy, which has been around a lot longer than European democracy."

The remark provoked much headshaking in the parliament of a bloc that likes to trace back its democratic tradition thousands of years to the days of classical Greece.
One working lunch later with EU leaders, Clinton raised more eyebrows when she referred to EU foreign policy chief Javier Solana, who stood beside her, as "High Representative Solano."

She also dubbed European Commission External Relations Commissioner Benita Ferrero-Waldner as "Benito."

Condoleeza Rice Would Have Got it Right

Apparently the State Department doesn't own a Russian-English dictionary. I suppose I could loan them one of mine if they are that hard up.

Clinton presented Lavrov with a gift-wrapped red button, which said "Reset" in English and "Peregruzka" in Russian. The problem was, "peregruzka" doesn't mean reset. It means overcharged, or overloaded.

And Lavrov called her out on it.

"We worked hard to get the right Russian word. Do you think we got it?" Clinton asked Lavrov.

"You got it wrong," Lavrov said. "This says 'peregruzka,' which means overcharged."

They must not have worked that hard. The least they could have done was write it in Cyrlic. And just how smart was it to give the Russians a big red button? We have been trying to keep the Russians from pressing the red button for the last 6 years now.

Diplomatic Blunder #2

The other day I posted about how the Brits felt slighted regarding Obama's treatment of their PM. Now it appears I could start an entire series on the new administration's diplomatic idiocies.

As he headed back home from Washington, Gordon Brown must have rummaged through his party bag with disappointment.

Because all he got was a set of DVDs. Barack Obama, the leader of the world's richest country, gave the Prime Minister a box set of 25 classic American films - a gift about as exciting as a pair of socks.

Mr Brown is not thought to be a film buff, and his reaction to the box set is unknown. But it didn't really compare to the thoughtful presents he had brought along with him. The Prime Minister gave Mr Obama an ornamental pen holder made from the timbers of the Victorian anti-slave ship HMS Gannet.

What, was there a sale at Best Buy?

Obama Insults the Brits

Who would have thought we would be looking back at the comparative competence of the Bush administration.

Obama to World: Drop Dead!
The White House could easily have granted the press conference Gordon Brown so clearly craved. Though there was something a little craven, a touch humiliating about much of the build-up to this week's Prime Ministerial visit to Washington, it's reasonable to suppose that, in this instance at least, Brown may have been treated a little shabbily. The kindest way to view this is that the White House is so focused on economic fire-fighting that it has little time for diplomatic niceties;
alternatively it sends a tough reminder as to who wears the trousers in this relationship partnership. There'll be none of this Athens to Rome nonsense, Mister Brown. (Was it just a coincidence that the BBC went big on Macmillan visiting JFK in their footage last night?)

Well, maybe next time we will elect someone who has actually managed to hold down a full-time job for more than a couple of years?

Paul Krugman Then and Now

If there were still any question that Paul Krugman, large cash awards from Swedish bankers aside, should no longer be taken seriouslyas an economist, check out this editorial from last week. But first, let's set the stage by looking at his previous statements.

From 2003, when the budget deficit was a "mere" $378 billion:

As a drunk is to alcohol, the Bush administration is to budget deficits.....

It's O.K. to run a deficit during a recession, as long as the deficit is clearly temporary. But both the numbers and the administration's search for excuses tell us that there's nothing temporary about the red ink. On the contrary, we'll probably be on a deficit bender until the baby boomers retire -- and then it will get much worse.

Paul Krugman in 2004, when the deficit was $413 billion:

Well, basically we have a world-class budget deficit not just as in absolute terms of course - it's the biggest budget deficit in the history of the world - but it's a budget deficit that as a share of GDP is right up there.

It's comparable to the worst we've ever seen in this country.

It's biggest than Argentina in 2001.Which is not cyclical, there's only a little bit that's because the economy is depressed.

Mostly it's because, fundamentally, the Government isn't taking in enough money to pay for the programs and we have no strategy of dealing with it.

So, if you take a look, the only thing that sustains the US right now is the fact that people say, "Well America's a mature, advanced country and mature, advanced countries always, you know, get their financial house in order," but there's not a hint that that's on the political horizon, so I think we're looking for a collapse of confidence some time in the not-too-distant future.

Now, Paul Krugman on a Obama budget that starts out at $1.7 trillion and even in its best year never dips below $500 billion, more than any Bush deficit:

But I don't blame Obama for leaving some big questions unanswered in this budget. There's only so much long-run thinking the political system can handle in the midst of a severe crisis; he has probably taken on all he can, for now. And this budget looks very, very good.

In fact that is even the title of the editorial, in big bold letters:

Krugman: This budget looks very, very good

Amazingly he even spins things to make it look like Bush had it easy as a result of the real estate bubble:

Bear in mind that from 2005 to 2007, that is, in the three years before the crisis, the federal deficit averaged only $243 billion a year. Now, during those years, revenues were inflated, to some degree, by the housing bubble.

By contrast I am not aware of him ever pointing out that the surplus of the late 90s was mainly due to capital gains resulting from the stock market bubble, even thoough most serious economists admit it was, to Krugman it was purely the genius of Bill Clinton and Robert Rubin.

And finally he manages to spin this once more:

But won't the deficit be swollen by interest on the debt run-up over the next few years? Not as much as you might think. Interest rates on long-term government debt are less than 4 percent, so even a trillion dollars of additional debt adds less than $40 billion a year to future deficits.

Oh, great. You ruin the economy to the point that the Fed drops interest rates to effectively zero, and scare everone from investing in anything other than treasuries, then take pride in the fact that the national debt is cheap to finance.

And they gave a Nobel Prize to this guy?

It's the Spending Stupid

In only a month Barack Obama's fiscal policy has gone from merely stupid to scary. From today's Journal:

Note that federal income taxes are already "progressive" with a 35% top marginal rate, and that Mr. Obama is (so far) proposing to raise it only to 39.6%, plus another two percentage points in hidden deduction phase-outs. He'd also raise capital gains and dividend rates, but those both yield far less revenue than the income tax. These combined increases won't come close to raising the hundreds of billions of dollars in revenue that Mr. Obama is going to need.

But let's not stop at a 42% top rate; as a thought experiment, let's go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.

Fast forward to this year (and 2010) when the Wall Street meltdown and recession are going to mean far few taxpayers earning more than $500,000. Profits are plunging, businesses are cutting or eliminating dividends, hedge funds are rolling up, and, most of all, capital nationwide is on strike. Raising taxes now will thus yield far less revenue than it would have in 2006.

Maybe They Should Outsource Chris Matthews

MSNBC host Chris Matthews is now not only trying to spin his bizarre "Oh God!" outburst when Governor Bobby Jindal spoke last night, but he added to this by claiming that the Republicans "outsourced" the speech to him. Now I will give the benefit of the doubt that Matthews was not making some cheap crack about Jindal's Indian heritage, even though Democrats can somehow find racial offense in a political cartoon about a chimpanzee, but I will point out what a stupid comment it is.



The fact is, and being a longtime political pundit Matthews should know this, having a governor give the rebutal is not only not unusual, but the norm. Let's look at who the Democrats had give the rebutals under Bush.

2008 Kathleen Sebelius governor of Kansas
2007 Senator Jim Webb
2006 Tim Kaine governor of Virginia
2005 Senator Harry Reid and Representative Nancy Pelosi
2004 Representative Nancy Pelosi and Senator Tom Daschle
2003 Governor Gary Locke of Washington State
2002 Representative Richard Gephardt

So 3 out of the last 7 (the first, like yesterday's was technically not a State of the Union), and 2 out of the last 3.

The Reality of Manufacturing

I criticize the AP a lot, but this time they get it right.

Manufacturing in the United States isn't dead or dying. It's moving upscale, following the biggest profits and becoming more efficient, just as Henry Ford did when he created the assembly line to make the Model T.

The U.S. by far remains the world's leading manufacturer by value of goods produced. It hit a record $1.6 trillion in 2007, nearly double the $811 billion in 1987. For every $1 of value produced in China's factories, America generates $2.50.

As I have said before, there is no future in the US for manufacturing cheap goods, it is in high-tech, higher margin items.  Sorry, if you want to spend the rest of your life making cheap sneakers, you will have to move to China.

Guess I Won't Be Drinking Much Beer Down in Oregon

This threatens to ruin my occasional pilgrimage to Powells. Books and beer are about all the state has to offer.

PORTLAND, Ore. -- Five Oregon state lawmakers want to impose a hefty tax on beer and have introduced a bill that brewers say would cripple them.

Four Portland legislators joined a Springfield senator to introduce Oregon House Bill
2461, which would impose a $49.61 tax on each barrel of beer produced by Oregon brewers.

The Presidential Fearmonger

As I have discussed before, this rhetoric by President Obama is both irresponsible and unpresidential. Let's hope it stops.

President Barack Obama has turned fearmongering into an art form. He has repeatedly raised the specter of another Great Depression. First, he did so to win votes in the November election. He has done so again recently to sway congressional votes for his stimulus package.

In his remarks, every gloomy statistic on the economy becomes a harbinger of doom. As he tells it, today's economy is the worst since the Great Depression. Without his Recovery and Reinvestment Act, he says, the economy will fall back into that abyss and may never recover.

This fearmongering may be good politics, but it is bad history and bad economics. It is bad history because our current economic woes don't come close to those of the 1930s. At worst, a comparison to the 1981-82 recession might be appropriate. Consider the job losses that Mr. Obama always cites. In the last year, the U.S. economy shed 3.4 million jobs. That's a grim statistic for sure, but represents just 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost -- fewer in number than today, but the labor force was smaller. So 1981-82 job losses totaled 2.2% of the labor force, the same as now.

I Feel So Much Better With Our National Security In These People's Hands

OK lady, shut up.

WASHINGTON, D.C. - A senior U.S. lawmaker said Thursday that unmanned CIA Predator aircraft operating in Pakistan are flown from an airbase inside that country, a revelation likely to embarrass the Pakistani government and complicate its counterterrorism collaboration with the United States.

The disclosure by Sen. Dianne Feinstein (D-Calif.), the chairwoman of the Senate Intelligence Committee, marked the first time a U.S. official had publicly commented on where the Predator aircraft patrolling Pakistan take off and land.

Oddly Enough, Not a Single Woman Reported Dreaming About Joe Biden

Sorry, but this is kinda creepy.

The other night I dreamt of Barack Obama. He was taking a shower right when I needed to get into the bathroom to shave my legs, and then he was being yelled at by my husband, Max, for smoking in the house. It was not clear whether Max was feeling protective of the president’s health or jealous because of the cigarette.

The other day a friend of mine confided that in the weeks leading up to the election, the Obamas’ apparent joy as a couple had made her just miserable. Their marriage looked so much happier than hers. Their life seemed so perfect. “I was at a place where I was tempted daily to throttle my husband,” she said. “This coincided with Michelle saying the most beautiful things about Barack. Each time I heard her speak about him I got tears in my eyes — because I felt so far away from that kind of bliss in my own life and perhaps even more, because I was so moved by her expressions of devotion to him. And unlike previous presidential couples, they are our age, have children the same age and (just imagine the stress of daily life on the campaign) by all accounts should have been fighting even more than we were.”

Jonah Goldberg on the New Deal

I have covered this a couple of times already, but I don't know if there is a modern political pundit who lays it out any better than Jonah Goldberg.  I wish I could write this well.

In fairness to Sirota, DeLong, and Gross, their argument is more empirical. They rebut the charge that the New Deal “prolonged” the Great Depression by pointing to FDR’s efforts to stabilize the banking system. And they’re right to make that argument. Many of those efforts did help end the Depression, as even Milton Friedman and Federal Reserve chairman Ben Bernanke have argued. But some of those efforts didn’t help. For example, it’s doubtful Gross et al. would defend FDR’s embarrassingly erratic and ultimately destructive behavior during the ill-fated London Economic Conference in 1933. Few would dispute that his decision to blow up the conference as a sop to protectionist Democrats helped prolong the Great Depression, at home and abroad. More generally, the apologists protest too much. Plenty of “normal” and sane people believe the New Deal prolonged the Great Depression. In 1995 a survey by Robert Whaples, published in the Journal of Economic History, showed that half of economists and one-third of historians agreed somewhat or entirely with the proposition that the New Deal prolonged the Great Depression. 

Pork Central

The new Porkulus bill has billions of dollars to fight "global warming" and then also has this (emphasis added):

For example, the latest version contains $2 billion for a clean-coal power plant with specifications matching one in Mattoon, Ill., $10 million for urban canals, $2 billion for manufacturing advanced batteries for hybrid cars, and $255 million for a polar icebreaker and other "priority procurements" by the Coast Guard.

Am I the only one who sees the obvious solution here?

The Wisdom of Joe Biden

If I had the time I would create a blog dedicated to all of the stupid things that Joe Biden says, but that would suck up my time even more than talking about conspiracy theorists.

But let me move for a second to what I was supposed to talk about. I was asked to talk about foreign policy. You know that old joke, you know, an expert is anyone from out of town with a briefcase? I'm out of town, but I don't have a briefcase, and I know a lot of you know as much and more about foreign policy as I do, but it's like that old joke, I hope you Texans aren't offended, but in Delaware that old joke about the Texan who said ‘I don't now much about art but I know what I like?’ Well, I may not know much about it, but I know what I think, and I know what I think we have to do.

It has got so bad that even the One is starting to give him the smackdown.  He should lock him in a closet, but then again He picked him to be VP.

When You Have Lost the New York Times...

Even the New York Times is discussing the failure of mega-government spending to stimulate the economy.

Most Japanese economists have tended to take a bleaker view of their nation’s track record, saying that Japan spent more than enough money, but wasted too much of it on roads to nowhere and other unneeded projects.

Dr. Ihori of the University of Tokyo did a survey of public works in the 1990s, concluding that the spending created almost no additional economic growth. Instead of spreading beneficial ripple effects across the economy, he found that the spending actually led to declines in business investment by driving out private investors. He also said job creation was too narrowly focused in the construction industry in rural areas to give much benefit to the overall economy.

CBO Projects that Stimulus Package a Net Loss

Allah Pundit on Hot Air brings up a Washington Times article discussing a Congressional Budget Office report on the stimulus plan. The Times reports:

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.

Allah then asks if this is correct:

The confusion lies in the term “on net.” Does that refer to the entire period from 2009 to 2019 or the period not including 2009 and 2010, since specific growth numbers for those two years are provided? If the former, then the Times is right and CBO is claiming that the loss in GDP from 2011 to 2019 will wipe out any growth over the next two years for a net loss. If the latter, then the Times is way off.

The letter is available on the CBO website though, so we can take a look, and it seems to back up the negative viewpoint.

From the intro:

At your request, the Congressional Budget Office (CBO) has conducted an analysis of the macroeconomic impact of the Inouye-Baucus amendment in the nature of a substitute to H.R. 1. CBO estimates that this Senate legislation would raise output and lower unemployment for several years, with effects broadly similar to those of H.R. 1 as introduced. In the longer run, the legislation would result in a slight decrease in gross domestic product (GDP) compared with CBO’s baseline economic forecast.

Later in the letter:

Including the effects of both crowding out of private investment (which would reduce output in the long run) and possibly productive government investment (which could increase output), CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. H.R. 1, as passed by the House, would have similar long-run effects. CBO has not estimated the macroeconomic effects of the stimulus proposals year by year beyond 2011.

It indicates several times in the paper that its methodology is calculating a not a year by year change, but a cumulative change from the baseline. Here it is in the endnotes. From table 1:

Estimated Macroeconomic Impacts of the Inouye-Baucus Amendment in the Nature of a Substitute to H.R. 1, Fourth Quarters of 2009, 2010, and 2011
2009 2010 2011
GDP (Percentage from baseline)
Low estimate of effect of plan 1.4 1.2 0.4
High estimate of effect of plan 4.1 3.6 1.2

And from table 2:

Note: For each option, the figures shown are a range of "multipliers," that is, the cumulative change in gross domestic product over several quarters, measured in dollars, per dollar of additional spending or reduction in taxes.

So the Washington Times, and Allah Pundit are more or less correct, the CBO predicts that by 2019 the cumulative effect on GDP will be .1% less than it would be otherwise. Of course this is not a huge difference, I suppose it matters whether you want your cake now or later, but it does lend credence to Michelle Malkin referring to it as the Generational Theft Act of 2009.

A Trade War?

Earlier I brought up the question of a possible trade war. Burton Malkiel, the author of the excellent A Random Walk Down Wall Street, addresses the issue further in today's Journal:

As the world-wide recession deepens, protectionist sentiments are rising. The House of Representatives' version of the economic stimulus bill contains a provision that only American-made steel and other products be used for the infrastructure projects. Wrapped in the cloak of "Buy American" patriotism, the Senate version of the bill contains even stronger anti-free-trade provisions.

This Buy American momentum is bad economics, and by threatening to destabilize trade and capital flows, it risks turning a global recession into a 1930s-style depression. Asked about Buy American on Tuesday, President Barack Obama told Fox News that "we can't send a protectionist message." He said on ABC News that he doesn't want anything in the stimulus bill that is "going to trigger a trade war." He's right.

Yes, I would agree that he doesn't want a trade war, but that doesn't necessarily mean he won't start one. In reality it is really up to Congress, and they do not seem settled on the matter.

US senators voted overwhelmingly, late on Wednesday, to require the "Buy American" provisions "be applied in a manner consistent with US obligations under international agreements".

However, an amendment put forward by Republican Senator John McCain which would have removed the clause altogether was defeated.

Speaking before a vote on that amendment, Mr McCain warned that if the provisions were passed it would "only be a matter of time before we face an array of similar protectionism from other countries - from 'Buy European' to 'Buy Japanese' and more".

The problem with this of course is that "in a manner consistent with US obligations" is a matter of interpretation, and any law which promotes favoritism towards US companies can still provoke a backlash, as other countries will just do the same thing.

President Obama could of course veto the bill if he feels the language is too strong, but he is not very likely to do that after arguing that not passing the bill will bring on a catastrophe.

This is Transparency?

Geez, this guy makes Bush seem eloquent.

New Deal Policies and the Persistence of the Great Depression

Earlier I posted an excellent editorial by professors Harold Cole and Lee Ohanian in which they argue that the New Deal made the Great Depression worse, or at least last longer. In it they discuss their academic research, which I fortunately was able to find. I haven't managed to read the whole thing, and it is quite technical at times, but rather interesting. From the conclusion:

The recovery from the Great Depression was weak despite rapid productivity growth, and was accompanied by significant increases in real wages and prices in several sectors of the economy. A successful theory of the recovery from the Depression should account for persistent low levels of consumption, investment, and employment, the high real wage, and the apparent lack of competition in the labor market. We developed a model with New Deal labor and industrial policies that can account for sectoral high wages, a distorted labor market, and depressed employment, consumption, and investment despite normal productivity.

Our results suggest that New Deal policies are an important contributing factor to the persistence of the Great Depression. The key depressing element behind these policies was not monopoly per se, but rather linking the ability of firms to collude with paying high wages. Our model indicates that these policies reduced consumption, and investment about 14 percent relative to their competitive balanced growth path levels. Thus, the model accounts for about half of the continuation of the Great Depression between 1934 and 1939.

New Deal labor and industrial policies did not lift the economy out of the Depression 51 as President Roosevelt and his economic planners had hoped. Instead, the joint policies of increasing labor’s bargaining power, and linking collusion with paying high wages, impeded the recovery by creating an inefficient insider-outsider friction that raised wages significantly and restricted employment. The recovery would have been stronger if wages in key sectors had been lower. 52

None Dare Call It Science

The anti-war fringe has been pushing the Lancet medical study claiming that 600,000+ Iraqis have died as a result of the war (and that was several years ago). I have argued against it on a couple of occasions, and Slate did a particularly good column on it. Now there is even more reason to doubt their conclusions.

Gilbert Burnham said in the Lancet medical journal in 2006 that 650,000 civilians had died since 2003 - a figure far higher than other estimates.

A polling association in the US said Dr Burnham had refused to supply "basic facts" for its inquiry into his work.

It did not comment on the accuracy of his conclusion.

The American Association for Public Opinion Research (AAPOR)began investigating Dr Burnham's work .

Reproducibility is of course one of the key parts of the scientific method. They should be begging for people to review their work, not blocking them.

The Lost Library Book

With all that is going on right now, sometimes it is nice to just read a story like this. From a Southern California radio station, via the Best of the Web.

Chesley Sullenberger has a problem. He borrowed a book from the Danville Library – and it’s overdue. To complicate matters, the book was an interlibrary loan from Fresno State.

Sullenberger contacted librarians and asked for an extension on the loan and a waiver on the overdue fine. The reason? The book is in the cargo hold of the US Airways plane that made an emergency landing last month in New York’s Hudson River. Sullenberger is the pilot who made that landing. No one was seriously injured.

Fresno State library officials were impressed with Sullenberger’s sense of responsibility… and waived all fines and fees, even the one for losing the book. The library’s going one step further: when the replacement book goes up on the shelf, it will have a special template in front, dedicating it to Chesley “Sully” Sullenberger.
Oh, by the way. The topic of that book? Professional ethics.

The One Politician Dumber than Joe Biden

That is 6 billion this year alone! Although Barack Obama promises to save 3 million of those....

More On the Great Depression

I discussed recently how I thought the government helped make the Great Depression even greater. Helpfully an editorial in the Wall Street Journal today by economists Harold Cole and Lee Ohanian assists me in making my case.

The goal of the New Deal was to get Americans back to work. But the New Deal didn't restore employment. In fact, there was even less work on average during the New Deal than before FDR took office. Total hours worked per adult, including government employees, were 18% below their 1929 level between 1930-32, but were 23% lower on average during the New Deal (1933-39). Private hours worked were even lower after FDR took office, averaging 27% below their 1929 level, compared to 18% lower between in 1930-32.

Even comparing hours worked at the end of 1930s to those at the beginning of FDR's presidency doesn't paint a picture of recovery. Total hours worked per adult in 1939 remained about 21% below their 1929 level, compared to a decline of 27% in 1933. And it wasn't just work that remained scarce during the New Deal. Per capita consumption did not recover at all, remaining 25% below its trend level throughout the New Deal, and per-capita nonresidential investment averaged about 60% below trend. The Great Depression clearly continued long after FDR took office.

Unfortunately not everyone reads history. And one of those people we just elected president.

The European Union warned the US yesterday against plunging the world into depression by adopting a planned “Buy American” policy, intensifying fears of a trade war.

The EU threatened to retaliate if the US Congress went ahead with sweeping measures in its $800 billion (£554 billion) stimulus plan to restrict spending to American goods and services.

Gordon Brown was caught in the crossfire as John Bruton, the EU Ambassador to Washington, said that “history has shown us” where the closing of markets leads — a clear reference to the Depression of the 1930s, triggered by US protectionist laws.

Can We Question Their Patriotism Yet?

Vice President Joe Biden, back during the campaign:

Noting that wealthier Americans would indeed pay more, Biden said: "It's time to be patriotic ... time to jump in, time to be part of the deal, time to help get America out of the rut."

Which makes all their appointments interesting:

The failure by the former Senate majority leader to pay taxes on the free use of a car and driver for several years, first reported Friday by ABC News, complicates Daschle's nomination and erodes the chances that it will sail through the Senate.

Daschle said tonight he did not realize his car service was income and not a gift from a good friend.

After the closed-door session, the Democratic senators on the Finance Committee expressed support en masse for their former colleague.

"There is a completely understandable, rational, reasonable and acceptable explanation" for his mistakes," Sen. John Kerry, D-Mass., said.

As I said earlier, how scary is it for a $700 billion bailout being run by a guy who can't figure out how to use TurboTax.

So Much for Bipartisanship

Well the stimulus bill passed today, without a single Republican voting for it. I am not sure what is scarier, a $350 billion TARP package in the hands of a man who can't figure out how to use Turbotax properly, or $900 billion in the hands of Democrats eager to buy off votes.

Well for a refreshing breath of reality, the National Review has an excellent article on the failed history of Keynesian stimulus. I actually have a copy of the awkwardly named The General Theory of Employment, Interest and Money, sitting on my shelf, that I have been meaning to read. I will have to move it up in priority, so I know what woes are in store.

Using quaint Keynesian arguments to rationalize heavy spending is nothing new. But its resurgent popularity is somewhat surprising. Democrats and their favorite economists spent the past 25 years bemoaning the “twin deficits” of the 1980s and then claimed that the strong economy of the late 1990s was the result of President Clinton’s fiscal restraint — the precise opposite of “fiscal stimulus.” Also working in the anti-Keynesian mode, former treasury secretary Robert Rubin co-authored a 2004 paper with forecaster Allen Sinai and Peter Orzsag of the Brookings Institution, who now has been tapped by Obama to lead the Office of Management and Budget. They argued that “budget deficits decrease national saving, which reduces domestic investment and increases borrowing abroad.” Big budget deficits, warned Rubin, Orzsag, and Sinai, would “reduce future national income” and risk a “decline in confidence [which] can reduce stock prices.”

Joe the Dumber Speaks, Again

I had thought, well, I had hoped that Obama still had him locked in a closet somewhere, but apparently they still let him speak occasionally. Economist Gregory Mankiw, or as I call him, the anti-Krugman, takes him to task for his recent statement on the stimulus bill:

In a TV interview last month, Vice President Joe Biden said the following:

Every economist, as I've said, from conservative to liberal, acknowledges that direct government spending on a direct program now is the best way to infuse economic growth and create jobs.

That statement is clearly false. As I have documented on this blog in recent weeks, skeptics about a spending stimulus include quite a few well-known economists, such as (in alphabetical order) Alberto Alesina, Robert Barro, Gary Becker, John Cochrane, Eugene Fama, Robert Lucas, Greg Mankiw, Kevin Murphy, Thomas Sargent, Harald Uhlig, and Luigi Zingales--and I am sure there many others as well. Regardless of whether one agrees with them on the merits of the case, it is hard to dispute that this list is pretty impressive, as judged by the standard objective criteria by which economists evaluate one another. If any university managed to hire all of them, it would immediately have a top ranked economics department.

Ouch. It well worth reading the rest. I didn't realize that Mankiw had a blog. It is not on my to read list.

Kristof Copies Krugman

A couple of years ago I posted a link to Paul Krugman's excellent essay on sweatshops in the third world (this was back when Krugman was an actual economist).

For many years a huge Manila garbage dump known as Smokey Mountain was a favorite media symbol of Third World poverty. Several thousand men, women, and children lived on that dump--enduring the stench, the flies, and the toxic waste in order to make a living combing the garbage for scrap metal and other recyclables. And they lived there voluntarily, because the $10 or so a squatter family could clear in a day was better than the alternatives.

So I was a bit surprised to read this editorial recently by Nicolas Kristof in the New York Times:

Before Barack Obama and his team act on their talk about “labor standards,” I’d like to offer them a tour of the vast garbage dump here in Phnom Penh. This is a Dante-like vision of hell. It’s a mountain of festering refuse, a half-hour hike across, emitting clouds of smoke from subterranean fires.

The miasma of toxic stink leaves you gasping, breezes batter you with filth, and even the rats look forlorn. Then the smoke parts and you come across a child ambling barefoot, searching for old plastic cups that recyclers will buy for five cents a pound. Many families actually live in shacks on this smoking garbage.

Now I think both editorials are good mind you, and the wording is different enough that it is not plagiarism, but Kristof is hardly being original.

CSPAN Porn

I was amused by this passage:

WASHINGTON - Barack Obama’s $825 billion plan to boost the recession-bound U.S. economy has some elements that, well, aren’t the sort of stimulus that House Minority Leader John Boehner says he can believe in.

“I’m concerned about the size of the package, and I’m concerned about some of the spending that’s in there,” Boehner complained Friday after a meeting at White House.

“How can you spend hundreds of millions of dollars on contraceptives? How does that stimulate the economy?”

OK, maybe I have a dirty mind, but when talking about contraceptives you should be careful discussing "stimulate" and the "size of packages".

Obama Does Have Superpowers!

Faster than a speeding bullet, stronger than a locomotive... able to time travel. From the new White House website.

President Obama swiftly responded to Hurricane Katrina.

Yeah, OK, buddy.

Michael Shermer on the Bailouts

Ever since I have taken up following conspiracy theorists I have been reading a lot of Michael Shermer, he is founder of the the Skeptic Society after all. He recently wrote a pretty decent book on economics, which I got an autographed copy of (and actually made a YouTube video of when the troofers interrupted it). He continues this theme with a editorial in the City Journal.

Though the financial crisis is complex and has many explanations, one of its primary causes involves Fannie Mae and Freddie Mac, the nation’s largest guarantors of home mortgages. Recall that Fannie and Freddie are government-run organizations that do not make loans directly to customers; rather, they buy loans from the banks that make those loans directly. In spring 1999, Fannie and Freddie—under pressure from the Clinton administration—increased their portfolio of loans to lower- and moderate-income borrowers from 44 percent to 50 percent by 2001. That meant granting loans to higher-risk customers.

Now, there’s nothing wrong with corporations’ and institutions’ taking higher risks, so long as they adjust for it by charging more. The higher price acts as a risk signal to both buyers and sellers, thereby dialing up their emotion of risk aversion. That’s what Fannie Mae was already doing, in fact: when it purchased loans that banks made to high-risk customers, it bought only those that charged 3 to 4 percentage points higher than conventional loans. But under the new program, Fannie would buy high-risk mortgages that were only 1 point above a conventional 30-year fixed-rate mortgage (and that added point would be dropped after two years of steady payments). In other words, the normal risk signal sent to high-risk customers—you can have the loan, but it’s going to cost you a lot more—was removed.

Atlas Still Shrugs

One of the greatest books ever, but one I hoped wouldn't come true.

Many of us who know Rand's work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that "Atlas Shrugged" parodied in 1957, when this 1,000-page novel was first published and became an instant hit.

Rand, who had come to America from Soviet Russia with striking insights into totalitarianism and the destructiveness of socialism, was already a celebrity. The left, naturally, hated her. But as recently as 1991, a survey by the Library of Congress and the Book of the Month Club found that readers rated "Atlas" as the second-most
influential book in their lives, behind only the Bible.

Only in Seattle: Part II

Well they at least figured out that it isn't really that big of a deal to put salt in the ocean, but geez, they have to hire a consultant. Doesn't anyone on the city council have a cousin in Spokane or something?

The Seattle City Council will consider hiring an outside consultant to look at the city's response to December's historic snowstorms.

City departments will give the mayor a report Jan. 30, but Councilmember Tom Rasmussen said this morning that an outside party could help city officials figure out what went wrong.

The storms stranded bus riders and left ice and compact snow on many streets for nearly two weeks.