Category Archives: Economics

Making Orwell Proud

Some examples from VDH:

Guantanamo is still open, but there are no longer “enemy combatants” there (Perhaps the name of the camp can be changed next?). The old campaign snicker that a naïve McCain really believed that a then-stronger economy is “fundamentally sound” is now the new Obama gospel about a far weaker one. There are to be no more earmarks in spite of 8,000-plus new ones. A $3.6 trillion-dollar budget is proof of commitment to financial responsibility; the remedy of Bush’s borrowing profligacy is to increase the deficit from $500 billion to $1.7 trillion. Bush’s signing statements bad; Obama’s signing statements good. An end to lobbyists in an administration ensure there are over ten; the highest ethical standards mean the nominations of Daschle, Richardson, etc. The changing meaning of words really does trump memory and reality itself.

Not to mention what a disaster that it would be to make health insurance benefits taxable, which was one of the many mendacious ways by which they slithered into the White House, except that now, maybe it’s not such a bad idea:

Now that Mr. Obama has begun the health debate, several advisers say that while he will not propose changing the tax-free status of employee health benefits, neither will he oppose it if Congress does so.

Let me translate: “Yes, I don’t want to take responsibility for it, because even my lapdogs in the media might find that too much hypocrisy to stomach after all my demagoguery on the issue last fall, but I’ll sign the bill when it gets to my desk, so go for it.”

Well, actually, I’m not sure that it would make Orwell proud. More likely sad at his own prescience.

The Country Is In The Very Best Of Hands

Congressman on the space committee, meet the real space program:

At one point he raised a few eyebrows when he said America’s position in space depended “particularly on funding from the US Congress. Only governments can really afford space.” That was a rather odd comment given the number of people in the room who do business in, and make money from, space, without relying on the Congress for funding. Asked about that comment in the Q&A session that followed his speech, he amended his comments somewhat. “Fundamental research has to come out of the government and then our private sector will partner with us as a government to improve it and make it more ubiquitous, so to speak.”

Later in the Q&A came the topic that is almost inevitable in any discussion of commercial space policy in the US these days: export control, or ITAR. “Can you comment about your thought on ITAR and the ability for US companies to sell products overseas?” someone asked. Griffith had a blank look on his face. The questioner, and others in the audience, repeated and elaborated on the question: you know, ITAR, export control restrictions, that sort of thing? “Is that a ‘Buy America’?” he asked. “I’m not quite sure.”

Sigh…

Well, at least, given that he’s completely innocent of the issue, he might be amenable to being persuaded into a sensible position on it. I’d rather have someone who is educable than someone who is damned sure of the wrong answer.

What Did We Get For Spendulus?

Bupkis:

…that prediction and the job calculations cooked by the president and his economic advisers have already been proven wrong. A Republican insider on Capitol Hill explains that the “forecast for saving or creating jobs is based on the stimulus ensuring that the unemployment rate not exceed 8% between now and 2014.” But we are already passed the 8% mark.

What would have happened without the stimulus? According to the administration’s calculations, we would then hit 9% unemployment. But that is the very figure that many economists now predict we will hit in a matter of months. Some predict we will hit 10%. Four states have already hit that figure.

This is the biggest financial fraud in history. It makes Madoff look like a humanitarian.

Lileks Versus Etzione

Guess who wins?

Only after we come to see that additional goods add precious little to our happiness;

Nonsense and hypocrisy. Computers aren’t basic needs. E-mail isn’t a basic need. Who says so? Me. So this person’s life cannot possibly be happier by the addition of a device that lets him peruse the words and deeds of the world. As for me, base shallow grasping materialist that I am, let me spell it out:

My computers bring me happiness, for they are instruments of knowledge and art. My cameras bring me joy, yea, for they allow me to capture the fleeting shadows of the day or the laughter of my child or the happy romps of my old dog in the new snow, and fix them forever in a form whose quality exceeds the fond dreams of D. W. Griffith. My car gives me pleasure, for it gives me freedom and ease of movement, allows me to meet friends, gather food for the family, and drive to work with the glories of Beethoven crashing from the speakers. Or AC/DC, depending on the mood. For that matter the morning drive is made pleasurable by possessions like the coffee maker, which serves up a hot delicious beverage the moment I wake from a comfortable bed – and the waking, I should add, was gently occasioned by a machine that cost a bit more than one of those $19.99 alarms that sounds like someone tripped the perimeter alarm at Los Alamos.

Since I seem to be seeing possessions in terms of the flow of the day, let me go on: my computer, which is hardly a basic need, gives me freedom at work unchained to a veal-pen desk; my cellphone lets me write messages to a network of beloved strangers or listen to music from around the world – and take a picture of something, if I choose. Photography is art, right? Art is good, right? Yes, I know – if it serves the general weal in a spiritual burning-issue sense. If I use the camera to snap a picture of the Catholic-run men’s shelter down the street, do I get a pass if I buy a new camera this year?

Or would that be overshadowed by the bilious negativity that rolls in dark waves from my large TV? It’s not a basic need, I admit – can I still have one? Yes, if it’s not LARGE. People who grudgingly admit the usefulness of a TV for pedagogical purposes reserve the right to frown on your TV if it’s larger than it need be, for several reasons: 1) you probably went into debt to get it; 2) it uses energy that makes the planet die; 3) you watch the wrong kind of programs; 4) the size of the screen is regarded as a direct reflection of the stupidity of the viewer.

Unless we’re talking about careful, pained, exquisitely sensitive motion pictures about the horrors of life in the suburbs in the Fifties.

They really should have called the fight after the first round.

Amitai Etzione calls himself a “communitarian.” But there is nothing new about his beliefs. There’s an older, shorter word for them. It starts with “f.”

Mark To Market Thoughts

In discussion from this post from a couple days ago, a commenter makes what seems to me a plausible point:

I firmly believe that the destructive effects of FASB’s change to a mark-to-market accounting standard in November 2007 cannot be overstated. It never made any sense, and the proof of this is that neither Paulsen nor Geithner have been able to do what they set out to do, which was to buy up the so-called “toxic assets.” The problem? They can’t determine a fair price for assets which have been devalued on paper to effectively nothing because of the new mandated accounting standards.

Yet Geithner said recently that these assets have “inherent value” that is not reflected by their current market price, which is an implicit repudiation of the mark-to-market standard. It’s also the reality he has to face. Hence the problem, a kind of Catch-22 of his own making. (He and others, to be fair.)

To buy up the toxic assets at higher than mark-to-market value would admit what everyone knows but won’t speak: that these assets are worth a lot more than the mark-to-market value and always were. If the government hadn’t forced the financial companies to grossly understate the value of their assets in the first place, this banking crisis might never have occurred or at least not nearly at this degree of severity.

Furthermore, if Geithner believes the assets are worth more than the mark-to-market value, then why not simply change the FASB rules back to what they were pre Nov2007 and let the financial companies mark them up on their own balance sheets instead of selling them back to the government? Same reason. Because if the government were to now admit that these assets are, in fact, worth quite a bit more — and that they always were — the smoking gun would be revealed. And so would the fingerprints of all those who helped pull the trigger.

I would hate to think that this is behind the resistance to restore the status quo ante 2008, but sadly, it wouldn’t be surprising. It would also be amazing to think that we wrecked the world economy with a single rule change, and could undo much of the damage by reversing it, but it can’t be ruled out.

[Update a few minutes later]

Commenters are accusing me of naivety, or lack of understanding of the situation, and in rereading my post, I can understand why.

No, I don’t really believe that if the rule hadn’t been changed, all would now be hunky dory, or that by changing it back, housing prices would skyrocket and all would be well with the world, and we’d rewind back to 2006. I understand that there was a huge bubble, perhaps more than one, and that supply and demand had to correct at some point. It’s why, after buying our house in South Florida five years ago, (unlike some of our neighbors) we weren’t going crazy and flipping condos a couple years later.

I am just pointing out that it might have played out differently, or more gradually, and perhaps even in a way that might have resulted in less panic in Washington last fall. I do think that our biggest problem now is not the underlying problems with the economy, which always work themselves out if allowed to, but panicked governmental responses to them that are exacerbating the situation. I do think that mark to market, or at least a sudden change in the rules, played a role in that. I think that it forced fire sales in the banking sector that might have been handled more gradually.

Good Point

A couple days ago, I asked: If Obama really wanted to wreck the economy, would what he be doing differently? Lance Burri has an answer:

How about tariffs? Have we got much in the way of tariffs so far?

Well, no, not yet, though there were some attempts at trade restrictions in some early versions of Spendulous. And he’s made a lot of noise about them in the campaign, but no, so far he hasn’t been that Hoover like. Yet.

Why Jon Stewart Attacked Jim Cramer

Pethokoukis explains. This really appears to be part of a government/media war on investors.

[Update a while later]

More thoughts on the matter from Mark Hemingway:

Anyone who has tuned into his show and seen Cramer strutting around a soundstage that looks like the helm of the Starship Enterprise as envisioned by the Teletubbies’ set designer and pushing buttons that make wacky sound effects could tell you that Cramer is to stock-picking what The Daily Show is to TV news: something not to be taken too seriously.

Ouch.

Plummeting Polls

Here’s good news. The president’s popularity is no longer in the stratosphere, and his policies are particularly unpopular:

When Gallup asked whether we should be spending more or less in the economic stimulus, by close to 3-to-1 margin voters said it is better to have spent less than to have spent more. When asked whether we are adding too much to the deficit or spending too little to improve the economy, by close to a 3-to-2 margin voters said that we are adding too much to the deficit.

Support for the stimulus package is dropping from narrow majority support to below that. There is no sense that the stimulus package itself will work quickly, and according to a recent Wall Street Journal/NBC poll, close to 60% said it would make only a marginal difference in the next two to four years. Rasmussen data shows that people now actually oppose Mr. Obama’s budget, 46% to 41%. Three-quarters take this position because it will lead to too much spending. And by 2-to-1, voters reject House Speaker Nancy Pelosi’s call for a second stimulus package.

Good. I hope that the Maine Mushheads and Arlen Spector end up regretting their stimulus support.

[Update a few minutes later]

Jen Rubin has a related piece over at PJM on the end of the honeymoon, but I thought that this comment really stood out in terms of incandescent asininity. And note that it doesn’t even have much to do with the topic: it’s an all-purpose turd for any punchbowl:

To all Republicans and Conservatives:

Please leave. Please just pack your stuff, your bibles, your guns, your racism, your intolerance, your greed, and your ignorance and leave. Africa is a great place for you, or perhaps South or Central America. I mean, isn’t that your dream scenario? Low taxes, all business, who cares if your surroundings are crap as long as you are getting paid?

You people must go. You live in a fantasy world devoid of any rational thought outside your own myopia. You think you “work so hard”. Most of you are completely full of **it. The only reason you haven’t lost your jobs (yet) or your home, is because thus far, you are lucky. You didn’t make any “wise” or omnipotent decisions that separate you from “all the losers who are losing their homes”. The housing market is over inflated everywhere. You didn’t, “stay within your means any more than anyone else”. You are so completely narcissistic that you think you are still safe because you are smarter, or work harder, or are somehow intrinsically better. You aren’t. You are greedy, ingnorant, and very “un-American”.

It doesn’t get any smarter after that.

[Update a couple minutes later]

Maybe this explains the fall in the polls. Frank J. says that Barack Obama is simply too awesome:

Before you grab the pitchforks and label me an apostate, hear me out. Now I am an enlightened individual who fully understands and appreciates President Obama (pbuh), but can we expect the same from other countries with non-Obama leaders? Those people have never produced a person like Obama, not to mention elected him, so it is natural for them to be scared and intimidated by someone so beyond their understanding. To them, meeting Obama must be like encountering Jesus riding a dinosaur — both reassuring and intimidating at the same time. It’s natural they’ll be confused.

Just look at the British reaction to Obama’s meeting with Gordon Brown. They seem to think their prime minister was snubbed by not getting the special reception they had become accustomed to when the troglodyte Bush was dictator. Many British reporters were also angry how Obama seemed hesitant to answer many questions. Such nonsense shows that the British are still stuck in pre-Obama thinking. Of course the unrefined Bush would make a big deal of meeting foreign leaders; to that simpleton, it must have been like being visited by advanced aliens. It would be silly for Obama, though, to act like it is an honor to meet with other countries’ non-Obama leaders, or for him to hold the pretense that speaking with them would give him knowledge he did not already possess. He is Obama; the British should not worry if Obama is listening, because he already understands their needs better than they do. As for the British press, they must learn to be more like the American press, which already knows there is no reason to question Obama. Obama is aware of what we need to know and when we need to know it, so there is no reason for the formality of questions. We simply must sit and wait for his wisdom, but the British have yet to come to that understanding. Also, it wouldn’t hurt if in the future they brought offerings of gold and silver.

It’s a trenchant analysis.

More from Jen Rubin, on Barack Obama’s liberal petri dish:

that’s apparently what the country is from Obama’s perspective – a liberal petri dish to grow the New Deal II. But the economy is not a political science lab experiment for most elected leaders and certainly not for voters who simply want things to get better. So why doesn’t the administration listen to these worried Democrats, the Republicans (who are still offering bipartisan solutions), and the “soured” punditocracy which is increasingly frustrated with the president?

This reminds me of the old joke from the Soviet Union. A teacher is instructing her students in Marxism, and one of them raises his hand and asks, “Is it true that Karl Marx was a scientist?”

“Oh, yes,” the teacher replied. “He was the greatest scientist in the history of mankind.”

“Well, then why didn’t he try this crap on rats first?”