Category Archives: Economics

Economics, Media Criticism, Political Commentary, Social Commentary

Lileks Versus Etzione

24 Comments

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.”

Business, Economics, Media Criticism, Political Commentary

Mark To Market Thoughts

17 Comments

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.

Business, Economics, Political Commentary

Good Point

2 Comments

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.

Business, Economics, Media Criticism, Political Commentary, Popular Culture

Why Jon Stewart Attacked Jim Cramer

9 Comments

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.

Economics, Media Criticism, Political Commentary

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?”

Business, Economics, Political Commentary

Judd Gregg For Treasury Secretary

1 Comment

He made short shrift of Geithner’s lies yesterday. Of course, he would never get the job, because he would never put up with the adminstration’s insane plans:

Gregg said the budget is essentially “putting on our children’s backs a debt they can never get out from underneath.”

He added pointedly, “I think we’re putting at risk not only our children’s future, we’re clearly putting at risk the value of a dollar and our ability to sell debt.”

…”The argument that this budget doesn’t have tax increases [on everyone] is, I think, an ‘Alice in Wonderland’ view of the budget,” he said.

He challenged the budget’s math on cutting the debt: “When you take the deficit and quadruple it and then you cut it and half, that’s like taking four steps back and two steps forward. That’s not making any progress; you’re still going backwards.”

Veronique de Rugy has a pretty scary graph of it:

The Obama administration’s budget, called “A New Era of Responsibility, Renewing America’s Promise,” estimates the deficit for this year will total $1.75 trillion. But things will get better, right? Well, according to Obama’s own ten-year deficit projections (see chart), a New Era of Responsibility produces bigger deficits every single year than during the Bush years: $1.75 trillion in 2009 to $533 billion by 2013 — this budget projects higher deficits in 2014 ($570 billion), 2015 ($583 billion), and 2016 ($637 billion). In 2019, the final year in the budget, the deficit is projected to be $712 billion.

Change! But not much hope.

Megan McArdle is regretting her vote:

Having defended Obama’s candidacy largely on his economic team, I’m having serious buyer’s remorse. Geithner, who is rapidly starting to look like the weakest link, is rattling around by himself in Treasury. Meanwhile, the administration is clearly prioritized a stimulus package that will not work without fixing the banks over, um, fixing the banking system. Unlike most fiscal conservatives, I’m not mad at him for trying to increase the size of the government; that’s, after all, what he got elected promising to do. But he also promised to be non-partisan and accountable, and the size and composition stimulus package looks like just one more attempt to ram through his ideological agenda without much scrutiny, with the heaviest focus on programs that will be especially hard to cut.

The budget numbers are just one more blow to the credibility he worked hard to establish during the election. Back then, people like me handed him kudoes for using numbers that were really much less mendacious than the general run of candidate program promises. Now, he’s building a budget on the promise that this recession will be milder than average, with growth merely dipping to 1.2% this year and returning to trend in 2010. Isn’t there anyone at BLS who could have filled him in on the unemployment figures, or at Treasury who could have explained what a disproportionate impact finance salaries have on tax revenue? These numbers . . . well, I can’t really fully describe them on a family blog. But he has now raced passed Bush in the Delusional Budget Math olympics.

Well, some of us saw this coming. It’s just a shame that the Republican nominee was John McCain. There was no good choice.

Economics, Political Commentary, Science And Society, Space, Space Education, Technology and Society

Making Space Relevant To The American People

13 Comments

In a discussion at NASA Watch about the president’s…interesting…statements on space policy, Andrew Tubbiolo has some ideas:

Launch Vehicle Extreme Makeover:
A team of crack yet touchy feely Engineers arrive on a bus, send the NASA team to Disney World, tear everything apart, and employ John Carmak and XCOR Aerospace to rebuild everything…..It’ll all look nice, but doesn’t really need to work. Employ the typical attendees of the Space Access Conference as the mindless mob cheering the action on.

Big Brother, Space Station Edition:
Pick the hottest babes from an international set of scientists, one grumpy Russian, a cut party animal fighter jock from the US Navy and lock them in an orbital space station for one month of intense competition. Make them execute complex, obscure, yet useless tasks that employ almost none of the skills they developed thus far in their lives. Every week someone is voted out the airlock.

The Gong Panel:
A panel of three PI’s from past obscure space missions completed at least a decade ago decide the fate of proposed programs as they are presented live on stage. The proposed project with the highest score wins funding. At any time during the presentation panel members are allowed to reject the proposal by banging a gong.

I think this would go a long way towards making space more relevant to the general public. Heck, it would make me pay more attention to it.

Don’t give PAO any ideas.

[Late morning update]

Here is the full story on the president’s remarks.

He said nothing about whether he wants to continue the Bush administration’s Constellation program, intended to send astronauts to the moon by 2020. The program’s Ares I rocket is behind schedule and over budget, leading to speculation that it will miss its targeted 2015 launch date and further reduce the skilled work force at KSC.

He was also silent about the fate of the $100billion international space station. Once the shuttle is retired, NASA will depend on Russian Soyuz spacecraft for access to the station.

I’ve been trying, ever since the inauguration, to figure out if the plan is to come up with a new direction for the agency, and then find an administrator to implement it, or to find a good administrator, and direct him (or her) to come up with the plan. Or, given a lot of the other Charlie Foxtrot that’s been going on in general, if there is no plan.

Business, Economics, Political Commentary

The Strategy Of Perpetual Crisis

25 Comments

That seems to be the Obama game plan:

White House chief of staff Rahm Emanuel gave the game away back in November with his observation that:

“You never want a serious crisis to go to waste. What I mean by that is it’s an opportunity to do things that you think you could not do before. This is an opportunity…And this crisis provides the opportunity for us, as I would say, the opportunity to do things that you could not do before.”

Emanuel even helpfully specified the issues where the opportunity would be most helpful to the new administration – “health care area, energy area, education area, fiscal area, tax area, regulatory reform area – things that we had postponed for too long that were long-term are now immediate and must be dealt with.”

Initially, Emanuel’s disturbing words were dismissable as just his own, but the president himself and most recently Secretary of State Hillary Clinton have since repeated variations on the theme. So it is clearly the Obama strategy to use the current economic crisis as justification for his radical agenda.

Call it policy-making by perpetual crisis.

This is a not a new phenomena in the political world, of course. One need look no further than North Korea’s “Dear Leader,” with his constant invocation of the illusory threat of U.S. military invasion to keep his suffering people in their chains.

Kim Jong il is not unique, only the most bald-faced about using real or manufactured threats to justify his dictatorial policies. Other examples from history quickly come to mind, including communist titans like Stalin and Mao continually warning of “imperialist aggressors” from the capitalist West.

What is different now is that we’ve never before seen an American president so explicitly invoke this strategy of using a domestic crisis to achieve long-term domestic policy goals.

Well, I’m not sure it’s unprecedented, but it is extremely dismaying.

Carl Pham proposed an interesting thought experiment yesterday in comments, that complements mine, in which I asked what the administration would be doing differently if they were deliberately trying to tank the economy:

I bet if the entire Obama Administration and Democratic Congressional Leadership were sentenced to hang on December 1, 2009, if the stock market were not above 9000 and unemployment were not below 7%, they would become raging tax-cutting pro-business libertarians overnight.

That is, I don’t believe they are so stupid and deluded as to believe their own hogwash right down to their core. They know very well they’re hanging a millstone around the economy’s neck, costing jobs and punishing capital markets. But they don’t care. They have ambitions — more government power for themselves, better status and pay for their supporters — and they actually don’t care that a bunch of plumbers and HVAC men are going to pay for it with their jobs, 401k’s, life savings invested in the new house. Can’t make an omelet without breaking eggs, y’know.

I think it’s a good bet. Unfortunately, we won’t get to find out. Also unfortunately, the electoral consequences are far more uncertain.

[Update a couple minutes later]

Instapundit has an appropriate quote from Milton:

Chaos Umpire sits, And by decision more imbroils the fray. By which he Reigns.

We’ve always been at war with Eastasia.

[Update at noon]

A revenge tragedy:

As Mr. Henninger points out, this is no ordinary budget: it is a morality play in which “fairness” (note the scare quotes)is pitted against “wealth.”

…So here we are then. Our prince has come. The dragon, Wealth, has been put to the sword, and everyone is gathered downstage to await the finale. It turns out, though, that many who bought tickets thought this entertainment was a species of Romance or Comedy that had a happy ending. Others of us knew that wasn’t what was advertised and said so. I suspect this particular drama is going to have a very limited run.

I hope so. I fear that it won’t.

Business, Economics, Political Commentary

A Better Stress Test For Healthy Banks

“Just look for the ones that are saying ‘no thanks’ to being run by Barney Frank.“

[Thursday morning update]

Related thoughts from Megan McArdle:

What to think of this? One’s first instinct is to say that this is an unalloyed good–the restrictions have made taking the funds costly enough that only truly troubled institutions will do so.

The problem is, that’s precisely what the Fed was trying to avoid. Central bankers have long made a practice of keeping it a secret who borrows from them at the discount window, because publishing the names of those who need a temporary cash infusion could trigger a bank run. In order to get the money into the banks that needed it to stave off a liquidity crisis, Bernanke and Paulson very deliberately asked banks that were widely believed to be sound to take the money too. Otherwise, the government bailout funds might have touched off the very crisis we were trying to avert.

It doesn’t do us much harm to put taxpayer funds into banks that don’t need it–we’re borrowing at low rates right now, and the banks that don’t need the money are the ones with very low default rates.

It’s also possible that some of the measures that express our collective rage at the bankers could tip the banks over the edge. It’s satisfying to make AIG cut out junkets for independent insurance agents, but it also probably means that fewer AIG policies will be sold. Since we now own the company, we probably cost ourselves money in order to express our outrage.

But it feels so good. And feelings, not thought, are what counts with the new regime.

[Bumped]