The Stupidest Housing Crash Idea

The most distressing part of the housing crash is how everyone is willing to throw away capitalism, over a crisis which hasn't even caused a recession yet. Having caused this crisis largely through idiotic government policy encouraging lenient lending standards, politicians now claim to be our saviors. Even they have not approached the idiocy of this idea though.

Napoleoni said that in Islamist finance, banks do not charge interest for loans and that this encourages entrepreneurs."

Money has to be invested," she said. "It has to be invested in the real economy, and through real growth, they can produce more money. This system could help us to get out of the current crisis."

Charles Kalm, a graduate assistant from the International Studies Institute, said Americans need to heed the advice of economists like Napoleoni."I think that we can all agree that our economic system is malfunctioning," he said.

"There are a number of things that are going to have to happen to help the average guy, all of the working people, the banks and to help with the main problem, which is faith in the economy."

Yeah, and exactly how well has this financial vehicle worked out for the Islamic world? Even with all of their oil resources, the UN has to do special reports on the economic disaster that is the Arab world. Despite all this wealth, their financial insitutions are a joke. For example:

With few exceptions, the region is plagued by corrupt, state-dominated economies, excessive regulation and bureaucracy, and poorly constructed legal and regulatory frameworks that hinder private sector development, foreign direct investment, and job creation. The 280 million people of the 22 Arab countries combined have a gross domestic product less than that of Spain; 25 percent of Arabs live below the poverty line; foreign direct investment rose everywhere last year, except the Middle East; total nonfossil fuel exports from the entire region amount to less than the total exports of Finland; the Arab world has witnessed a near zero percent growth rate over the past 30 years, while all other developing countries grew at 2.5 percent per annum.

Racist!

It is no surprise that the New York Times should endorse Obama, this is the newspaper that sponsors Paul Krugman, Maureen Dowd and Bob Herbert after all. But could they at least have the class not to make up fake claims of racism while doing it?

In the same time, Senator John McCain of Arizona has retreated farther and farther to the fringe of American politics, running a campaign on partisan division, class warfare and even hints of racism. His policies and worldview are mired in the past. His choice of a running mate so evidently unfit for the office was a final act of opportunism and bad judgment that eclipsed the accomplishments of 26 years in Congress.

Of course, while calling Governor Palin as unfit for office, they claim that Obama is, endorsing Obama's own circular logic that running for office itself is the primary qualification.

As tough as the times are, the selection of a new president is easy. After nearly two years of a grueling and ugly campaign, Senator Barack Obama of Illinois has proved that he is the right choice to be the 44th president of the United States.

In other news, the New York Times has been downgraded to junk status this week...

Unbelievable.

More On The Moron

The idiotic thing, his warning of a Obama presidency wasn't even the stupidest thing he said in that speech.

"I've forgotten more about foreign policy than most of my colleagues know, so I'm not being falsely humble with you. I think I can be value added, but this guy has it," the Senate Foreign Relations chairman said of Obama. "This guy has it. But he's gonna need your help. Because I promise you, you all are gonna be sitting here a year from now going, 'Oh my God, why are they there in the polls? Why is the polling so down? Why is this thing so tough?' We're gonna have to make some incredibly tough decisions in the first two years. So I'm asking you now, I'm asking you now, be prepared to stick with us. Remember the faith you had at this point because you're going to have to reinforce us."

I would agree that he has forgotten a lot, this is the guy after all, who thinks that we kicked Hezbollah out of Lebanon.

"Joe the Dumber" Speaks

Earlier I asked just how dumb Joe Biden is, Joe apparently didn't realize that was a rhetorical question.

"Mark my words," the Democratic vice presidential nominee warned at the second of his two Seattle fundraisers Sunday. "It will not be six months before the world tests Barack Obama like they did John Kennedy. The world is looking. We're about to elect a brilliant 47-year-old senator president of the United States of America. Remember I said it standing here if you don't remember anything else I said. Watch, we're gonna have an international crisis, a generated crisis, to test the mettle of this guy."

OK, so if we elect this young an inexperienced guy, that will guarantee an international incident on the scale of the Cuban Missile Crisis? And this is supposed to a reason to vote for him?

More on Krugman

The Wall Street Journal has an excellent article on what praises Herr Kruggy deserves, and doesn't deserve:

In his popular writing, Paul Krugman is at his best when defending free trade. My favorite is example is his "Ricardo's Difficult Idea," published in the mid-1990s, in which he shares a frustration many of us economists have felt -- that the vast majority of noneconomist intellectuals don't understand David Ricardo's famous insight about free trade almost 200 years ago.

Ricardo grasped that people will specialize in producing the goods and services in which they have a comparative advantage. The result is that we never need to worry about low-wage countries competing us out of jobs; the most they can do is change those goods and services in which we have a comparative advantage. For example, though you can rake leaves faster than the teenager next door, it still makes sense to hire him because you have a comparative advantage in writing software programs. Mr. Krugman points out that most noneconomist intellectuals are unwilling to take even 10 minutes to understand this. But that doesn't stop them from writing about trade as if they're informed.

Don Luskin, however, resurrects the Krugman Truth Squad, with the cleverest line:

More likely, the Nobel committee decided deliberately to overlook Krugman’s political extremism, just as it chose to overlook John Nash’s schizophrenia in 1994. That’s not to say Krugman is crazy, though he has stated: “my economic theories have no doubt been influenced by my relationship with my cats.”

Whatever the committee was thinking, the only remaining question is what the living Paul Krugman will do with his $1.4 million prize. Will he pay taxes on it at the low rates established in 2003 by George W. Bush, a president and a policy that Krugman has worked so assiduously to discredit? Or will he voluntarily pay at the higher rates he advocates?

It's the End of the World as We Know it...

Well Paul Krugman, yes that Paul Krugman has won a Nobel Prize. As I have mentioned before he is a bit of a tragic character right out of Shakespeare, the young ambitious bright economist turned idiot by a former oilman from Texas. His early work was good, and he probably deserves the award for that, it is just a tragedy for all this money ($1.4 million) to go to someone who has become such a no-talent hack. A Michael Moore with an MIT degree. Have any Nobel Prize winners been so thoroughly debunked by a bunch of nobodies on the Internet, including me? Well, there is Jimmy Carter of course...

The Debate

I am just amazed at how bad of a speaker Barack Obama can be. Maybe he is the one going senile?

BROKAW: We've run out of time. We have this one-minute discussion period going on here. There are new economic realities out there that everyone in this hall and across this country understands that there are going to have to be some choices made. Health policies, energy policies, and entitlement reform, what are going to be your priorities in what order? Which of those will be your highest priority your first year in office and which will follow in sequence?

------------------------------------------

Obama: Health care is priority number two, because that broken health care system is bad not only for families, but it's making our businesses less competitive.

And, number three, we've got to deal with education so that our young people are competitive in a global economy.

Education?

And we can do it, but we're going to have to make an investment. The same way the computer was originally invented by a bunch of government scientists who were trying to figure out, for defense purposes, how to communicate, we've got to understand that this is a national security issue, as well.

The military created the computer in order to communicate?

Despite all that, I was able to go to the best schools on earth and I was able to succeed in a way that I could not have succeeded anywhere else in this country.

What is wrong with the rest of the country?

We haven't been doing enough of that. We tend to be reactive. That's what we've been doing over the last eight years and that has actually made us more safe.

An interesting endorsement of the Bush administration.

Now, Senator McCain suggests that somehow, you know, I'm green behind the ears and, you know, I'm just spouting off, and he's somber and responsible.

Green behind the ears?

Economists on the Bailout

As I mentioned yesterday regarding congressman Brian Baird, I am right and he is wrong. Now what is this guy doing in congress?

All the economists criticized the government-mandated accounting rules, so-called “mark to market.” While these rules were reasonable in principle, they were applied to situations that they weren’t meant to apply to. Paul Evans, an economics professor at Ohio State University, explained that you run into real problems when “someone trades a tiny fraction of a particular type of asset at a very low price to clear it off the books. It is then used to estimate the price of all these other assets.”

The Root of the Problem

I agree that this financial crisis is a problem, but don't have much faith in the wisdom of our leaders to handle it correctly. One example is Congressman Brian Baird from Washington State:

“You’ll be screwed,” Baird said, drawing a nervous laugh from his audience.

Business loans, home loans, car loans — and, of course, college student loans — would dry up immediately, the Vancouver Democrat told students.

“The whole (lending) chain is frozen up” because lax regulation has allowed shady accounting practices that have massively overstated the value of assets now gone bad, Baird said.

Except he has this completely backwards. From a rather good editorial in this morning's Wall Street Journal:

OK, get out your NoDoz and let's wade in. Under current interpretation of accounting rules, banks can be obliged to value loan holdings based on their liquidation or fire-sale value, even if (as now) the fire-sale values are lower than might be suggested by the cash flow and payoff prospects of the underlying assets.

Now recall that accounting is a language of abstraction. In the normal case of a public company, whatever method it uses to value its assets, it merely provides a benchmark for investors to make their own judgments. Nobody takes accounting values as the final word.

Banks, though, are subject to regulatory capital standards and therefore can be rendered insolvent overnight based on an accounting writedown. At the moment, many banks are clinging to "market" values for loans that are higher than probable fire-sale values, and doing so on tenuous grounds. In kibitzing over the Paulson plan, indeed, one knotty question was how Treasury could buy such loans at a price "fair to taxpayers" without propelling the sellers into federal receivership.

Because of all this, the regulatory state finds itself in a somewhat absurd position --
its own rules could render many financial institutions insolvent in a manner inconvenient to the state.

The Spin of Michael Moore

Now I am not usually impressed with the intellectual arguments of Michael Moore, but even by his standard this spin is pretty lame:

A lot of people are wondering why the right wing of the Republican Party joined with the left wing of the Democratic Party in voting down the thievery. Forty percent of Democrats and two-thirds of Republicans voted against the bill.

Here's what happened:

The presidential race may still be close in the polls, but the Congressional races are pointing toward a landslide for the Democrats. Few dispute the prediction that the Republicans are in for a whoopin' on November 4th. Up to 30 Republican House seats could be lost in what would be a stunning repudiation of their agenda.

The Republican reps are so scared of losing their seats, when this "financial crisis" reared its head two weeks ago, they realized they had just been handed their one and only chance to separate themselves from Bush before the election, while doing something that would make them look like they were on the side of "the people".

So apparently the Democrats aren't even concerned about looking like they are on the side of the people...

In better news, an American Carol, which is a virtual parody of Moore, comes out this weekend, I look forward to seeing it.

He Wasn't Looking at His Watch

Overall the debate wasn't that exciting. I thought McCain did well, but probably not enough to make a significant change. The point where Obama had to look to see whose bracelet he was wearing was pretty cringe inducing though.

Would the Bailout Turn a Profit?

I am rather suspicious of this deal, but it is an interesting argument. From the WSJ:

You can slice the numbers a lot of different ways. My calculations, which assume 50% impairment on subprime loans, suggest it is possible, all in, for this portfolio to generate between $1 trillion and $2.2 trillion -- the greatest trade ever. Every hedge-fund manager will be jealous. Mr. Buffett is buying a small piece of the trade via his Goldman Sachs investment.

Over 10 years this could change the budget scenario in D.C., which can also strengthen the dollar. The next president gets a heck of a windfall. In the spirit of Secretary of State William Seward's purchase of Alaska for $7 million in 1867, this week may be remembered as Paulson's Folly.

Practicing Economics Without a License

I should be worried that the AP will charge me several thousand dollars for posting this bit, but here goes anyway:

"The financial markets are in quite fragile condition, and I think absent a plan they will get worse," Mr. Bernanke said.

Ominously, he added, "I believe if the credit markets are not functioning, that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal, healthy
way."

GDP is a measure of growth, and a decline correlates with a recession.

No, actually GDP is a measure of, well, Gross Domestic Product. GDP growth would be a measure of growth. A decline in GDP doesn't just correlate with a recession, it is the definition of a recession.

Just How Dumb is Joe Biden?

Sarah Palin may not have a graduate degree, but there is no way she could be as dumb as this moron. You would expect better from someone who (didn't) graduate from the top half of his law school.

Joe Biden’s denunciation of his own campaign’s ad to Katie Couric got so much attention last night that another odd note in the interview slipped by.

He was speaking about the role of the White House in a financial crisis.

“When the stock market crashed, Franklin Roosevelt got on the television and didn’t just talk about the princes of greed,” Biden told Couric.

“He said, ‘Look, here’s what happened.’”

The Speech

I am hardly the target audience, but can anyone explain this bit to me?

John McCain likes to say that he’ll follow bin Laden to the Gates of Hell – but he won’t even go to the cave where he lives.

What, is Barry taunting him for not going there personally? This is a bit of a weird charge, is this idiot seriously accusing McCain of not being militant enough?

And this bit, emphasis added:

Passions fly on immigration, but I don’t know anyone who benefits when a mother is separated from her infant child or an employer undercuts American wages by hiring illegal workers.

That is just bad economics, I know 3 people who benefit, the illegal workers who get jobs better than their other options, the employers who get to pay lower wages, and the consumer who pays less for his product. This does not make it right, but claiming that nobody benefits is just ignoring basic economics.

Calling Central Casting

Barack Obama today, with his bizarre spin in response to charges of race baiting:

"I was in union, Missouri which is 98 percent white - a rural, conservative. and what I said was what I think everybody knows, which is that I don't look like I came out of central casting when it comes to presidential candidates. "

Well, evidently Barack hasn't been paying much attention to the television or movies since the late 70s.

Dennis Haysbert as President David Palmer in TV's '24'

D.B. Woodside as President Wayne Palmer in TV's '24'

Morgan Freeman as President Tom Beck in Deep Impact

Is Obama Anti-Science?

The Bush administration has been criticized, and often quite legitimately, for being anti-intellectual, not listening to experts or scientists on an issue.  But in fact is Barack Obama, the Chosen One, the same way, especially in regards to economists.

The most famous example was from the debates, where he answered that he would raise the capital gains tax, regardless of whether experts said it would lower tax revenue, that fairness was the important factor.

Well now in an interview with NPR, he repeats the same argument, in regards to a "windfall profit tax" on oil revenues:

You know because of the timing of our program that many of our listeners are in their cars. And so I want to ask you about your proposal to force big oil companies to share their record-breaking windfall profits. It's hard to find an economist who supports the idea of a windfall profits tax. Most argue that this would stifle investment in oil discovery and oil production precisely at the moment when the U.S. should be encouraging more.

Classic economic theory says you don't meddle in the markets. Look, I mean, most economists buy into that approach. Exxon Mobil made $12 billion last quarter. They made $11 billion before that, and $11 billion before that, and not all of this is going into research and development — and families need some relief.

Now, I am the first to admit that what we need is a comprehensive plan, and that's what I've been putting forward for the last 18 months — making sure that we're increasing fuel-efficiency standards on cars drastically, investing in the retooling so that we can have plug-in hybrids. I have set a goal that we reduce our oil consumption by 30 percent over the next 20 years. So that's the long-term answer to rising gas prices.

But in the short term, the notion that oil companies that have been making record profits, hand over fist, can't give a little bit of that back to make sure that not just drivers but senior citizens on fixed income are going to have the ability to pay for heating this winter, which is going to be a huge potential problem — I don't think that's too much to ask.

Got the Bastard

As someone who has spent a fair amount of time in Srebrenica, I was happy to see this story.

The lawyer for former Bosnian Serb leader Radovan Karadzic say he will conduct his own defense before the International Criminal Tribunal for the Former Yugoslavia in The Hague, where he faces charges of genocide and war crimes committed in Bosnia in the 1990s. Karadzic was arrested near Belgrade on Monday and could be extradited to The Hague within days, but the fact that he's been on the run for nearly 13 years and working and living in Belgrade in disguise raises questions over who knew, why he was arrested now and whether his one time military commander, Ratko Mladic, might soon face the same fate. Sonja Pace has this report from London.

Of course the way the Hague works, it will be another decade before he is convicted, but at least he is not free.

Bizarre Moral Superiority

Wesley Clark, I can't bear to call this idiot general, digs a deeper hole:

"John McCain basically served honorably while in uniform, he did everything the country could have asked," Clark told CNN. "What John Kerry did is John Kerry got out of the uniform and took a judgment, a judgment I didn't agree with at the time, but he had the moral courage to stand up for himself and oppose the conflict in Vietnam.”

On what kind of bizarre planet does a former military officer claim that it is more courageous to get out of the military early and come home and slander the troops, than it is to survive 5 1/2 years in a POW camp, turning down early release several times, and then come home to serve further, retiring as a captain?

This guy is pathetic.

Wesley Clark: Then and Now

Now I have characterized the Democrat's previous attacks on John McCain's military service as poorly thought out, but this one is downright idiotic, not to mention offensive:

Because in the matters of national security policy making, it’s a matter of understanding risk, it’s a matter of gauging your opponents and it’s a matter of being held accountable. John McCain’s never done any of that in his official positions. I certainly honor his service as a prisoner of war. He was a hero to me and to hundreds of thousands of millions of others in the armed forces as a prisoner of war. He has been a voice on the Senate Armed Services Committee and he has traveled all over the world. But he hasn’t held executive responsibility. That large squadron in the Navy that he commanded wasn’t a wartime squadron. He hasn’t been there and ordered the bombs to fall. He hasn’t seen what it’s like when diplomats come in and say, `I don’t know whether we’re going to be able to get this point through or not. Do you want to take the risk? What about your reputation? How do we handle it publicly?

Now as Bob Shieffer points out, Barack Obama doesn't have this experience either. But what has Wesley Clark said on the importance of military experience before in those running for president? Well, we know, because he gave a speech at the Democratic National Convention in 2004, the entire theme of which was how John Kerry's relatively limited military experience made him qualified for president:

John Kerry has heard the thump of enemy mortars.

CLARK: He's seen the flash of the tracers. He's lived the values of service and sacrifice. In the Navy, as a prosecutor, as a senator, he proved his physical courage under fire. And he's proved his moral courage too. John Kerry fought a war, and I respect him for that. And he came home to fight a peace. And I respect him for that, too.

(APPLAUSE)

John Kerry's combination of physical courage and moral values is my definition of what we need as Americans in our commander in chief. And John Edwards with his leadership and extraordinary intelligence, he's going to be a great member of that command team.

Now of course, none of this counts.

Bizarrely Obama himself gives a weak response, trying to draw some absurd non-existent parallels:

For those who have fought under the flag of this nation – for the young veterans I meet when I visit Walter Reed; for those like John McCain who have endured physical torment in service to our country – no further proof of such sacrifice is necessary. And let me also add that no one should ever devalue that service, especially for the sake of a political campaign, and that goes for supporters on both sides.

Excuse me? Has criticizing Obama's extensive military experience been a major campaign issue, and I just haven't realized it?