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links for 2010-04-30

  • JS: "Like the Mac, the iPhone debuted with a huge technical lead over its competitors. But this time, Apple is determined not to squander its advantage... it's front-running as hard as it possibly can. Anything that has any chance of slowing down "the progress of the platform" has simply got to go... controlling its own destiny... no middleware vendors, no encouragement of cross-platform development... complete, arbitrary control over every application's presence.... It's Apple's contention that other mobile platforms that allow these things... do so at the cost of slowing the speed with which they advance upon their competitors. In Apple's case, it's trying to put as much distance between itself and the guys it sees in its rear-view mirror... the only way to keep developers around while you do things that annoy them... is to provide so much upside—customers, sales and marketing support, new revenue models—that they're willing to choke down the bad stuff."
  • Baumol on Say on the liquidity trap: "Say himself did not always agree. In the Letters to Mr. Malthus, Say (1820 [1821], p. 36n) calls attention to the failure of demand during '. . . what happened to us in 1813 . . . . when interest of money fell so low, for want of good opportunities of employing it and by what is happening to us at this moment in which the capitals sleep at the bottom of the coffers of the capitalists.'"
  • JBS: "Without having recourse to local or temporary restrictions on the use of new methods or machinery, which are invasions of the property of the inventors or fabricators, a benevolent administration can make provision for the employment of supplanted or inactive labour in the construction of works of public utility at the public expense, as of canals, roads, churches, or the like..."
  • WB: "A panic, in a word, is a species of neuralgia, and according to the rules of science you must not starve it. The holders of the cash reserve must be ready not only to keep it for their own liabilities, but to advance it most freely for the liabilities of others. They must lend to merchants, to minor bankers, to 'this man and that man,' whenever the security is good. In wild periods of alarm, one failure makes many, and the best way to prevent the derivative failures is to arrest the primary failure which causes them. The way in which the panic of 1825 was stopped by advancing money has been described in so broad and graphic a way that the passage has become classical"
  • AA&BG: "We provide new estimates of the federal budget outlook.... Under either the extended policy or the Obama policy scenarios, deficits are high and rising over the second half of the decade.... In 2020, the deficit is projected to be between 5 and 7 percent of GDP and the debt/GDP ratio is projected to exceed 90 percent. These figures only deteriorate with the passage of time. The long-term fiscal gap – the size of the immediate and permanent change in spending or taxes needed to keep the long-term debt/GDP ratio at its current level – is in the range of 6-9 percent of GDP. Further health care reform can be an important part of reducing the fiscal gap, but the problem is far too large to be solved by plausible reductions in health care spending alone. Postponing the onset of a fiscal package will make the problem even harder: even just a 5-year delay in implementation would raise the required fiscal adjustment by about 0.4 percent of GDP, or almost $60 billion per year."
  • Engadget: "So, plenty of Dell goodies to choose from right now, but if you're a die hard Dell-making-mobiles follower, you've probably been pining for the Streak (previously known as the Mini 5) for much longer than is strictly healthy. What news for you? Well, the mini tablet is apparently supposed to be getting Android 2.1 in September. Unfortunately, there's no update on that vague "summer" launch window we have for the actual device, so who knows how much time you'll actually get to suffer without 2.1 holding you and telling you everything's alright. Oh, and were you concerned for some reason that you wouldn't be able to kit this thing out with accessories galore? We're pretty sure the collection you'll find in the gallery will alleviate all fears. You could do worse than a $55 spare battery, and the standard accessories are even pretty legit."
  • JY: "I’m honored that President Obama has asked me to serve in that capacity. If confirmed by the Senate, I am looking forward to working even more closely with Chairman Bernanke and the other governors, and continuing to collaborate with my colleagues throughout the Federal Reserve System to conduct policies that foster economic prosperity and ensure a stable financial system. I am strongly committed to pursuing the dual goals that Congress has assigned us: maximum employment and price stability and, if confirmed, I will work to ensure that policy promotes job creation and keeps inflation in check."
  • MP: "Mario Rizzo missed the point yesterday when he wrote in the Christian Science Monitor that the government is trying to regulate how much salt we eat. Obviously, that's not what it's doing with this new FDA initiative. What it is trying to do is regulate the amount of salt companies put in a serving of food. People are as free to buy salt and add it to meals as they ever were.... The idea that that's somehow bad for our ability to operate freely in the world is ridiculous."
  • EA: ""We know that bureaucrats and, even more, Fedzilla, are not the solution; they are the problem. I'd be proud to share a moose-barbecue campfire with the Palin family anytime, so long as I can shoot the moose." That's Ted Nugent on Sarah Palin... [in] Time.... [H]as any other allegedly reputable magazine ever published a stupider article... Nugent also provides a stirring character reference for the quitter of the Alaska governorship: "The tsunami of support proves that Sarah, 46, represents what many Americans know to be common and sensible.... We...e assets to our families, communities and our beloved country connect with the principles that Sarah Palin embodies."... man who terms Hillary Clinton "a worthless bitch," believes "Barack Hussein Obama should be put in jail," and... once attempt[ed] to become the legal guardian of a minor in order to have a romantic relationship with her... has been ordered... to pay child support to... his illegitimate son whom he has never met..."
  • AM&AS: "US Congressional committees are now grilling bankers on the complex instruments that provided subprime mortgages with a veil of security. This column presents new evidence that subprime mortgages had more serious consequences – they were a key factor in the US housing-price boom. When house prices faltered, subprime mortgage holders defaulted en masse, eventually leading to the global crisis."
  • CS: "Apple are trying desperately to force the growth of a new ecosystem... to maturity in five years flat... the cloud computing revolution to flatten the existing PC industry. Unless they can turn themselves into an entirely different kind of corporation by 2015 Apple is doomed... suppliers of commodity equipment assembled on a shoestring budget.... Signs of the Macpocalypse abound. This year, for the first time, the Apple Design Awards at WWDC’10 are only open to iPhone and iPad.... Mac apps need not apply... don't contribute to Apple’s new walled garden.... Any threat to the growth of the app store software platform is going to be resisted.... "It is not Adobe’s goal to help developers write the best iPhone, iPod and iPad apps. It is their goal to help developers write cross platform apps.” And he really does not want cross-platform apps..... The long term goal is... from being a hardware company with a software arm into being a cloud computing company with a hardware subsidiary."

Mark Gongloff of the Wall Street Journal Is Simply Wrong

He writes::

Warning Signal on U.K. Debt?: As investors scramble to protect themselves from the next credit flare-up in Europe, their worries are spreading to the U.K. Investors bought a net $443 million of credit-default swaps to insure against a U.K. default last week, according to data compiled by the Depository Trust and Clearing Corp., taking the total outstanding to $8.2 billion....

That was easily the biggest gain among sovereign borrowers. The size of protection on the U.K. has roughly doubled since the year began, a move that far outpaces the run-up in Greek CDS last fall. The purchases haven't yet caused the prices of U.K. swaps to spike, as in other recent credit convulsions. But the market's behavior in some ways echoes behavior that preceded credit crises in Greece and elsewhere...

The essence of "worry spreading" is that the prices of swaps spike. If the prices don't spike, the worry isn't spreading. It is simply false to say that the market's behavior "in some ways echoes behavior that preceded credit crises in Greece." It does not echo it at all.

Neil Hume has a graph:

FT Alphaville » The UK is the next Greece (updated)

Why oh why can't we have a better press corps?

Obama the Centrist

We are live at Project Syndicate: Obama the Centrist:

BERKELEY – Despite the frequent cries of American Republicans that Barack Obama is trying to bring European-style socialism to the United States, it is now very clear that the US president wishes to govern from one place and one place only: the center.

In fighting the recession, Obama decided early on that he would push for a fiscal stimulus program about half the size of what his Democratic economic advisers recommended, and he decided to count that as a total victory rather than press for expanding half a loaf into the full amount.

Obama has been so committed to that cautious policy that even now, with the unemployment rate kissing 10%, he will not grab for the low-hanging fruit and call for an additional $200 billion of federal aid to the states over the next three years in order to prevent further layoffs of teachers. Rather than stemming further erosion of the national commitment to educate the next generation, Obama has shifted his focus to the long-term goal of balancing the budget – even while the macroeconomic storm is still raging.

And, in order to move forward on long-term budget balance, Obama has appointed a fiscal arsonist, Republican ex-Senator Alan Simpson, as one of his fire chiefs – one of the two co-chairs of his deficit reduction commission. Simpson never met an unfunded tax cut proposed by a Republican president that he would vote against, and he never met a balanced deficit-reduction program proposed by a Democratic president that he would support. Partisans whose commitment to deficit reduction vanishes whenever political expedience dictates simply do not belong running bipartisan deficit-reduction commissions.

Likewise, in dealing with the financial sector’s distress, Obama has acquiesced in the Bush-era policy of bailouts for banks without demanding anything of them in return – no nationalizations and no imposition of the second half of Walter Bagehot’s rule that aid be given to banks in a crisis only on the harsh terms of a “penalty rate.” Obama has thus positioned himself to the right not only of Joseph Stiglitz, Simon Johnson, and Paul Krugman, but also of his advisers Paul Volcker and Larry Summers.

On environmental policy, Obama has pressed not for a carbon tax, but for a cap-and-trade system that, for the first generation, pays the polluter. If you were a major emitter in the past, then for the next generation you are given a property right to very valuable emissions permits whose worth will only rise over time.

On anti-discrimination efforts, the repeal of the US military’s “don’t ask, don't tell” policy toward gay soldiers is on an extremely slow track – if, that is, it is hooked up to an engine at all.

On policy towards the rule of law, the closure of the mistake that is Guantánamo Bay is on a similarly slow track. Moreover, Obama has joined George W. Bush in claiming executive powers that rival those claimed by Charles II of Britain in the seventeenth century.

On healthcare reform, Obama’s proudest moment, his achievement is...drum roll...a scheme that almost precisely mimics the reform that Mitt Romney, a Republican who sought the presidency in 2008, brought to the state of Massachusetts. The reform’s centerpiece is a requirement imposed by the government that people choose responsibly and provide themselves with insurance – albeit with the government willing to subsidize the poor and strengthen the bargaining power of the weak.

In all of these cases, Obama is ruling, or trying to rule, by taking positions that are at the technocratic good-government center, and then taking two steps to the right – sacrificing some important policy goals – in the hope of attracting Republican votes and thereby demonstrating his commitment to bipartisanship. On all of these policies – anti-recession, banking, fiscal, environmental, anti-discrimination, rule of law, healthcare – you could close your eyes and convince yourself that, at least as far as the substance is concerned, Obama is in fact a moderate Republican named George H.W. Bush, Mitt Romney, John McCain, or Colin Powell.

Now, don’t get me wrong. My complaints about Obama are not that he is too bipartisan or too centrist. I am at bottom a weak-tea Dewey-Eisenhower-Rockefeller social democrat – that is, with a small “s” and a small “d.” My complaints are that he is not technocratic enough, that he is pursuing the chimera of “bipartisanship” too far, and that, as a result, many of his policies will not work well, or at all.

I understand that politics is the art of the possible, and that good-government technocracy is limited to the attainable. But it would be good if Obama remembered that we dwell not in the Republic of Plato, but in the Roman sewer of Romulus.

Inside Apple Computer's Walled Garden

Charlie Stross:

The real reason why Steve Jobs hates Flash: My take on the iPhone OS, and the iPad, isn't just that they're the start of a whole new range of Apple computers that have a user interface.... Rather, they're a hugely ambitious attempt to keep Apple relevant to the future of computing, once Moore's law tapers off and the personal computer industry craters and turns into a profitability wasteland. The App Store and the iTunes Store have taught Steve Jobs that ownership of the sales channel is vital... as long as he can charge rent for access to data (or apps) he's got a business model.... A well-cultivated app store i... a customer draw... a powerful tool for promoting the operating system... an ecosystem. Apple are trying desperately to force the growth of a new ecosystem... in five years flat... the time scale in which they expect the cloud computing revolution to flatten the existing PC industry... [into] interchangable suppliers of commodity equipment assembled on a shoestring budget with negligable profit.

Signs of the Macpocalypse abound. This year, for the first time, the Apple Design Awards at WWDC'10 are only open to iPhone and iPad apps. Mac apps need not apply; they don't contribute to Apple's new walled garden ecosystem. Any threat to the growth of the app store software platform is going to be resisted.... Steve Jobs.... "It is not Adobe's goal to help developers write the best iPhone, iPod and iPad apps. It is their goal to help developers write cross platform apps." And he really does not want cross-platform apps that might divert attention and energy away from his application ecosystem....

Let's peer five years into the future... LTE will be here. WiMax will be here. We will be seeing pocket 4G routers similar to the MiFi but featuring 50-100mbps internet connectivity.... The availability of 50+mbps data everywhere means that you don't need to keep your data on a local hard drive; it can live on a server.... The iPad by 2015 will have evolved. There will be smaller models with 7"/18cm screens, and larger desktop models... newer processors.... But where it will really shine — the value proposition that will keep punters forking over huge gobbets of steaming money, in the midst of a PC industry that's cratering — will be the external benefits of joining the Apple ecosystem. If you're using an iPad in 2015, my bet is that... you'll just have data on demand... backups... stored in Apple's cloud... software updates... will simply happen automatically in the background... nor will worms or viruses or malware be allowed. You will, of course, pay a lot more for the experience than your netbook-toting hardcore microsofties.... You'll... be surrounded by a swarm of devices that give you access to your data whenever and however you need it.

This is why there's a stench of panic hanging over silicon valley. this is why Apple have turned into paranoid security Nazis, why HP have just ditched Microsoft from a forthcoming major platform and splurged a billion-plus on buying up a near-failure; it's why everyone is terrified of Google: The PC revolution is almost coming to an end, and everyone's trying to work out a strategy for surviving the aftermath.

Cade Metz:

HP eyes webOS iPad rival: Borgs Palm for tablets too: In purchasing Palm, HP intends to build and sell not only a new collection of phones based on Palm's critically-acclaimed webOS, but a line of webOS tablets as well. On Wednesday, the two companies announced that HP has agreed to acquire Palm for roughly $1.2bn - $5.70 per share of Palm common stock - and according to Todd Bradley, executive vice president in HP's personal systems group, the PC giant will use Palm's engineers, webOS mobile operating system, and other intellectual property to fashion all sorts of mobile devices for use at work and at play...

Joel Johnson:

Microsoft Cancels Innovative Courier Tablet Project: According to sources familiar with the matter, Microsoft has cancelled Courier, the folding, two-screen prototype tablet that was first uncovered by Gizmodo.... It appeared from the leaked information last year that a Courier prototype was probably near to completion. The combination of both touch- and pen-based computing was compelling. Perhaps the strong launch of Apple's iPad, currently the only available "mobile tablet" from a major vendor, caused Ballmer to reassess the commitment of Microsoft in a soon-to-be-crowded market.... It is a pity. Courier was one of the most innovative concepts out of Redmond in quite some time. But what we loved about Courier was the interface and the thinking behind it.... Hopefully some of the smart thinking we have seen in Courier will find its way into Microsoft's tablets, whether they're powered by Windows 7 or Windows Phone 7...

Jay Yarow:

Apple Doesn't Have To Worry About The HP Slate Anymore: Apple's iPad team doesn't have to worry about the HP Slate tablet.... An analyst asked what HP would be doing with its iPad-rival. HP's Todd Bradley responded, "We haven't made roadmap announcements," but that HP will explain its Slate plans in more detail when the Palm deal closes.... [I]f HP was still all-in with its Windows-based Slate, we think Todd may have said, "we still plan on partnering with Microsoft on the Slate."

From the Arcbives: Justin Scheck and Nick Wingfield last February:

PC Makers Ready iPad Rivals: Computer makers are developing strategies and devices to challenge Apple Inc.'s iPad.... In the next few weeks, executives from Hewlett-Packard Co. will meet in the U.S. and Taiwan to tweak prices and features on an upcoming keyboardless computer dubbed the Slate.... H-P has discussed selling a version of the Slate—similar to the iPad in size and features, and including a cellular connection—for a price below the $629 Apple charges for an equivalent iPad, one of these people said. Executives at Dell Inc., Acer Inc. and Sony Corp. say they are all watching Apple as they refine their own products. And Microsoft Corp. has a secretive team working on a two-screen tablet device....

"For us, the iPad launch is a benchmark," said Mike Abary, a vice president in Sony's Vaio PC division....

Sumit Agnihotry, a vice president of marketing at Acer, said the company... is developing products midway in size between a smart phone and a laptop, including an e-reader that will come out later this year....

Microsoft has a group of designers who operate out of a little-known company incubation laboratory in Seattle called Alchemy Ventures... working on a two-screen tablet, code-named Courier... it's unclear whether the company will introduce the gadget, these people added. A Microsoft spokesman declined comment....

H-P announced its Slate a few weeks before the iPad... decided to wait for the iPad's unveiling before selling the Slate so it could see Apple's device "and tweak things," such as pricing....

John Thode, a Dell vice president in charge of portable devices, said the company predicted Apple wouldn't do a small-screen tablet since Apple already offered the 3.5-inch screen iPod Touch. So after doing consumer research in 2008 that showed customers would buy Web-surfing gadgets with a five-inch screen, Mr. Thode said, Dell began developing a tablet dubbed the Mini 5. The device, which Dell unveiled in January, will likely go on the market this year using Google Inc.'s Android software.

So any sign of the Mini 5?

Paul Krugman on why Britons should vote for the Labour Party with Gordon Brown at it's head: "that should be Gordon Brown’s slogan: 'He kept us out of the euro.' And that’s the saving grace of the situation."

Knaves or Fools? Why Choose?

Matthew Yglesias, I think, gets one wrong. He says that Steve Spuriell is not a knave but merely a fool:

Matthew Yglesias: Stephen Spuriell on Student Loans: One major analytic error I think liberals tend to make is vastly overstating the level of dishonesty among conservative pundits, analysts, advocates, etc.... [T]he overwhelming majority of smart people with conservative political opinions are working as businessmen.... So you’re left with a kind of denuded population in terms of brainpower. But... smart conservative businessmen have financed a staggering array of conservative institutions creating a tremendous number of jobs for conservative pundits and so forth despite the shallow talent pool. The result is a lot of people saying dumb things that they genuinely believe. Which is all by way of introducing an excellent Barron Young Smith post in which he recaps a dispute between Jon Chait and Stephen Spuriell over the latter’s bizarre critique of Barack Obama’s student loan program.... [I]t quickly becomes clear that Spruiell has no idea why he opposes student loan reform. Or, rather, he knows he opposes it because Obama proposed it and conservative politicians mobilized against it. So he started grabbing random ideas and throwing them together, citing Jason DeLisle without attempting to understand what he was saying, and generally making a fool out of himself.

The second part of the program undermines the first: to know that you don't know why you are supposed to oppose something is time for you to take a deep breath and sit down and let somebody else carry the ball--unless, of course, you are a knave as well as a fool.

links for 2010-04-29

  • PK: "I was rereading the spectacularly mistimed Jonung and Drea paper mocking American economists who were skeptical about the euro, and went back to what I wrote in 1998. Here’s how I described the ugly American critique: 'Here’s how the story has been told: a year or two or three after the introduction of the euro, a recession develops in part – but only part – of Europe...' Make that a decade or so rather than a year or two, and not too far off. To be sure, in that article I went on to predict big near-term trouble that, in fact, didn’t turn out nearly as badly as predicted. But the point is that something like the current crisis has always been an obvious danger — one that the architects of the euro chose to brush off."
  • DJ: "Racial supremacy is a fairly taboo topic in the media.... William Saletan thought it was exciting to tell liberals that they were no better than creationists if they failed to accept the “studies” done by white supremacist J. Philippe Rushton.... Andrew Sullivan and George Will... promote The Bell C... I’d argue that Saletan’s and Sullivan’s flirtations with white supremacy are... general Slate/TNR fetish for contrarianism.... The popularity of Steve Sailer... is much more troubling. Sailer writes for site called; the name is taken from the name of the first white English child born in North America. After Hurricane Katrina, Sailer wrote "What you won’t hear, except from me, is that ‘Let the good times roll’ is an especially risky message for African-Americans. The plain fact is that they tend to possess poorer native judgment than members of better-educated groups. Thus they need stricter moral guidance from society."
  • MY: "William Galston argues, sensibly, that the politically smartest thing for Democrats to do is neither climate nor immigration after Wall Street reform but instead they should “quickly pivot to the economy and would sustain that focus through the spring and summer.” As a matter of political strategy, I agree with that. Nothing would do more to impact the midterms than improvements in the economy. But in legislative terms, what does that mean? The bad economy has led to a collapse in trust in public institutions, and the voters—falsely—believe that fiscal stimulus measures haven’t helped the economy. It would have been smart to simply ignore the voters’ half-assed macroeconomic theories back in February 2009 and pass a bigger and better-designed stimulus bill. But at this point, I think a wide range of incumbents (mostly Democrats, but also Bob Bennett) are simply going to have to lay in the bed they’ve already made."

Hoisted from Comments: John from Cappadocia Emails About Victor Davis Hanson, Procopius of Caesarea, and Maureen Dowd

Hoisted from Comments: John from Cappadocia:

Wingnut Harmonic Convergence: Hoover Institution Department (Or, Denouncing the Illiterate Brown People Is Best Done by Somebody Who Knows How to Spell "Dam" and "Roll"): Brad--

It does strike me that there are powerful similarities between Procopius of Caesarea and one New York Times columnist, Maureen Dowd. Consider the most famous passage that Procopius ever wrote, from his History of the Campaigns of Belisarius:

The emperor and his remaining loyalists were quarreling over whether their chances were better if they stayed in the city or fled for their lives in the still-loyal navy. The debate was all over the place. And then the Empress Theodora spoke:

My belief is that now, more than other times, is not the time to fly even though it saves our lives.... Once you have been an emperor it is unendurable to be a fugitive. May I never be separated from this purple robe! May I die before that day on which people who meet me fail to call me 'Mistress'! If, now, it is your wish to save yourself, O Emperor, there is no problem. We have much money. There is the sea. Here the boats. However, consider well whether after you have saved your skin you will look back and wish that you had exchanged that safety for death. As for myself, I recall that ancient maxim: 'An imperial purple robe makes a good burial-shroud'

After the queen had spoken, all were filled with boldness. They turned their thoughts to how to fight and began to consider how to defend themselves against any attacking hostile force.... The Emperor placed all his hopes on Belisarius and Mundus. The former, Belisarius, had just returned from the Persian front, bringing with him his personal following which was both powerful and imposing, in particular a great number of experienced combat veteran spearmen and horseguards...

We read this passage as one in praise of Theodora: gutsy empress saves the dynasty when all seems lost. Procopius wrote it with a different intention: We are supposed to focus on the unnatural gender roles--on the cowardly girly-man who is the Emperor Justinian and on the unnatural manly-girl who is the Empress Theodora.

This is Maurenn Dowd's standard line on Democratic office-holders: the men (like "Obambi") are all unnatural because they are effeminate, and the women (like HRC) are all unnatural because they re too assertive.

And Procopius's misogyny has powerful echoes in V.D. Hanson. Reread his last paragraph--the one about Barbara Boxer, Nancy Pelosi, and Dianne Feinstein--and think about it.

If I had more time, I would talk about the similarities between Procopius and Victor Davis Hanson on public finance; Remember Hanson:

lower income taxes from 10% to 5% to attract businesses back; cut sales taxes to 7%... build 3-4 nuclear power plants on the coast... tax breaks to private trade and business schools... build a new all weather east-west state freeway over the Sierra; and on and on...

Procopius, similarly, loves all the services that Justinian's empire provides and all the buildings that it builds, but thinks Justinian should lower taxes. Two fools, alike in dignity...

Ezra Klein: Republicans and Democrats Agree on Financial Reform - Republicans and Democrats agree on financial reform -- but is that a good thing?

On health care, Obama proposed to enact RomneyCare. On FinReg, the Republicans are proposing to replace the Dodd bill with the Dodd bill:

Ezra Klein: The important takeaway from the Republican FinReg proposal is that they ... basically agree with the Democrats. At least on the big-picture stuff. They agree that the correct questions for financial reform are "how much information, and how much power, do regulators have?" In fact, their main differences with the Democrats are when they give politicians and regulators more discretionary power than Dodd does. For instance, in the Dodd bill, the Treasury Department, FDIC and Federal Reserve all need to agree that a firm is failing in order for it to be taken over. In the Republican bill, the president and the D.C. district court also need to sign onto the decision. The question in both bills is whether there's any chance that the government will take down a firm before its imminent collapse sparks a crisis. It's too-big-to-fail meets too-hard-to-intervene.

Another example: In the Dodd bill, virtually all derivatives go through a clearinghouse so regulators can see what's happening and companies have to keep sufficient cash on hand to pay off their bets. In the Republican bill, the SEC, the Commodity Futures Trading Commission, and the Federal Reserve Board of Governors will write up regulations for which types of derivatives have to be cleared. So if you basically liked the Dodd bill but were looking to give regulators just a little bit more discretion, then the Republicans are here for you (for a more comprehensive side-by-side comparison, head here).

Greg Ip on Goldman Sachs, Jan Hatzius, and Ben Stein

Greg Ip:

Goldman Sachs: The Ben Stein defence | The Economist: GOLDMAN SACHS is being ripped apart in Washington for making a bundle by shorting the mortgage market while peddling products that would profit from continued housing bubble inflation. If the implication is that Goldman was somehow duplicitous, maybe it should call Ben Stein to its defence. Mr Stein, the economist, comedian, and actor, wrote a column in December 2007, in the New York Times, attacking Goldman’s chief US economist, Jan Hatzius, for issuing deeply bearish reports on the housing market. Mr Stein wrote:

Dr. Hatzius … used a combination of theory, data, guesswork, extrapolation and what he recalls as history to reach the point that when highly leveraged institutions like banks lost money on subprime, they would cut back on lending to keep their capital ratios sound — and this would slow the economy… his paper is not really what I would call a serious overview of the situation. It is more a call to be afraid and cautious based on general principles that he embraces and not on the lessons of history. .. you have to use what I think are extremely far-fetched hypotheticals to get to a scary situation.

Mr Stein goes on to speculate that the real goal of Mr Hatzius’ implausibly bearish outlook is to help Goldman Sachs earn money on its short position in housing. A spokesman told Mr Stein the firm had been bearish on housing since 2006 and that its short position had recently gotten “considerably larger”. In the wake of the dot com bust, investment banks were rightly excoriated for having analysts stamp their approval on companies their firms took public while privately calling them junk. Whatever Goldman’s other sins this time, that doesn’t strike me as one of them. The firm and its chief US economist were of one, very public, view: housing was going down and it would cause a world of hurt

links for 2010-04-28

  • FS: "When Goldman Sachs noticed a pattern of regular losses in its mortgage book at the end of 2006, it decided to start going short, in a move which helped to position it as the most successful bank in the financial crisis. The markets have learned their lesson: now that Greece and Portugal have been downgraded, the rush to the exits is palpable: the flight to quality is on, and bond yields in the European periphery are going stratospheric.... The trick about going short an imploding asset class, of course, is that it only works if you’re in the minority. If everybody is doing it, you just get overshooting asset markets and chaos — which is what we’re seeing now. As far as the financial markets are concerned, if any bailout comes now, it’ll be too late: no country can sustain Greece’s combination of funding costs and debt-to-GDP ratio, no matter how much German money it burns through..."
  • BB: "This morning the New York Times published a story about the “epistemic closure” debate that I commented on earlier. Unfortunately, there was a small error in the Times that I wish to correct. It says that I was fired by the Heritage Foundation for writing a book critical of George W. Bush’s abandonment of conservative principles. In fact, it was another conservative think tank called the National Center for Policy Analysis that fired me, which the Times reported when it happened in 2005. That said, I don’t mean to imply that Heritage is innocent of enforcing a doctrinaire approach to conservative thought that is at the heart of the epistemic closure debate..."

Invisible Hispanics

Matthew Yglesias on bs from the hackish followers of George Will:

Amusing to see commenters suggest that Julian Sanchez and I don't know any Hispanics who aren't maids....

Felix Salmon and Walter Bagehot on the Greek Crisis

Felix Salmon:

Is it now too late to save Greece?: When Goldman Sachs noticed a pattern of regular losses in its mortgage book at the end of 2006, it decided to start going short, in a move which helped to position it as the most successful bank in the financial crisis. The markets have learned their lesson: now that Greece and Portugal have been downgraded, the rush to the exits is palpable: the flight to quality is on, and bond yields in the European periphery are going stratospheric. Greece’s bonds can still be used as collateral at the ECB: Moody’s hasn’t (yet) downgraded them. But S&P’s sovereign-ceiling principles mean that all of Greece’s banks now have a junk rating, and it’s surely now only a matter of time until Moody’s and Fitch follow S&P’s lead and Greek debt becomes a speculative credit instrument rather a government bond which is safe in anybody’s eyes. The trick about going short an imploding asset class, of course, is that it only works if you’re in the minority. If everybody is doing it, you just get overshooting asset markets and chaos — which is what we’re seeing now. As far as the financial markets are concerned, if any bailout comes now, it’ll be too late: no country can sustain Greece’s combination of funding costs and debt-to-GDP ratio, no matter how much German money it burns through. Plug 13% yields into my Greek debt calculator, and the results aren’t pretty, even if they don’t have any effect at all on all the other optimistic assumptions...

Walter Bagehot:

Bagehot: Lombard Street, Chapter 2: A panic, in a word, is a species of neuralgia, and according to the rules of science you must not starve it. The holders of the cash reserve must be ready not only to keep it for their own liabilities, but to advance it most freely for the liabilities of others. They must lend to merchants, to minor bankers, to 'this man and that man,' whenever the security is good. In wild periods of alarm, one failure makes many, and the best way to prevent the derivative failures is to arrest the primary failure which causes them. The way in which the panic of 1825 was stopped by advancing money has been described in so broad and graphic a way that the passage has become classical. 'We lent it,' said Mr. Harman, on behalf of the Bank of England,

by every possible means and in modes we had never adopted before; we took in stock on security, we purchased Exchequer bills, we made advances on Exchequer bills, we not only discounted outright, but we made advances on the deposit of bills of exchange to an immense amount, in short, by every possible means consistent with the safety of the Bank, and we were not on some occasions over-nice. Seeing the dreadful state in which the public were, we rendered every assistance in our power.

After a day or two of this treatment, the entire panic subsided, and the 'City' was quite calm....

On the surface there seems a great inconsistency in all this. First, you establish in some bank or banks a certain reserve; you make of it or them a kind of ultimate treasury, where the last shilling of the country is deposited and kept. And then you go on to say that this final treasury is also to be the last lending-house; that out of it unbounded, or at any rate immense, advances are to be made when no one else lends. This seems like saying—first, that the reserve should be kept, and then that it should not be kept. But there is no puzzle in the matter. The ultimate banking reserve of a country (by whomsoever kept) is not kept out of show, but for certain essential purposes, and one of those purposes is the meeting a demand for cash caused by an alarm within the country. It is not unreasonable that our ultimate treasure in particular cases should be lent; on the contrary, we keep that treasure for the very reason that in particular cases it should be lent.

When reduced to abstract principle, the subject comes to this. An 'alarm' is an opinion that the money of certain persons will not pay their creditors when those creditors want to be paid. If possible, that alarm is best met by enabling those persons to pay their creditors to the very moment. For this purpose only a little money is wanted. If that alarm is not so met, it aggravates into a panic, which is an opinion that most people, or very many people, will not pay their creditors; and this too can only be met by enabling all those persons to pay what they owe, which takes a great deal of money. No one has enough money, or anything like enough, but the holders of the bank reserve.

Not that the help so given by the banks holding that reserve necessarily diminishes it. Very commonly the panic extends as far, or almost as far, as the bank or banks which hold the reserve, but does not touch it or them at all. In this case it is enough if the dominant bank or banks, so to speak, pledge their credit for those who want it. Under our present system it is often quite enough that a merchant or a banker gets the advance made to him put to his credit in the books of the Bank of England; he may never draw a cheque on it, or, if he does, that cheque may come in again to the credit of some other customer, who lets it remain on his account. An increase of loans at such times is often an increase of the liabilities of the bank, not a diminution of its reserve. Just so before 1844, an issue of notes, as in 1825, to quell a panic entirely internal did not diminish the bullion reserve. The notes went out, but they did not return. They were issued as loans to the public, but the public wanted no more; they never presented them for payment; they never asked that sovereigns should be given for them. But the acceptance of a great liability during an augmenting alarm, though not as bad as an equal advance of cash, is the thing next worst. At any moment the cash may be demanded. Supposing the panic to grow, it will be demanded, and the reserve will be lessened accordingly.

No doubt all precautions may, in the end, be unavailing. 'On extraordinary occasions,' says Ricardo, 'a general panic may seize the country, when every one becomes desirous of possessing himself of the precious metals as the most convenient mode of realising or concealing his property,—against such panic banks have no security on any system.' The bank or banks which hold the reserve may last a little longer than the others; but if apprehension pass a certain bound, they must perish too. The use of credit is, that it enables debtors to use a certain part of the money their creditors have lent them. If all those creditors demand all that money at once, they cannot have it, for that which their debtors have used, is for the time employed, and not to be obtained. With the advantages of credit we must take the disadvantages too; but to lessen them as much as we can, we must keep a great store of ready money always available, and advance out of it very freely in periods of panic, and in times of incipient alarm...

Yet Another Reason Why the World Would Be Better Off Without the Washington Post...

Another Fred Hiatt FAIL:

Matthew Yglesias: George Will On Hispanics: We’ve seen, repeatedly, that Fred Hiatt thinks it’s not a problem if George Will wants to use his Washington Post column to mislead people about facts. But Will’s decided to enter a new kind of loathesomeness with this characterization of where one might meet a Hispanic:

Non-Hispanic Arizonans of all sorts live congenially with all sorts of persons of Hispanic descent. These include some whose ancestors got to Arizona before statehood — some even before it was a territory. They were in America before most Americans’ ancestors arrived. Arizonans should not be judged disdainfully and from a distance by people whose closest contacts with Hispanics are with fine men and women who trim their lawns and put plates in front of them at restaurants, not with illegal immigrants passing through their back yards at 3 a.m.

I suppose it’s true that professional rightwingers like George Will might not encounter Hispanics in any other context. And the fact that racism seems to have such a welcome home in the conservative movement guarantees that will continue to be true for a while. Meanwhile, I might suggest that conservative Arizona fans cogitate a bit on the fact that there are a large number of conservative Cuban American Republican Party politicians in this country and as best I can tell none of them approve of this law. Why do they think that is?

Anyways, the Post has a snazzy new PostPolitics page that helps you swiftly summarize the fact that there don’t appear to be any Hispanic opinion writers at the paper who might be able to have a word or two with Will about this.

Why oh why can't we have a better press corps?

FYI--More Procopius of Caesarea Blogginig

Table of Contents from Procopius of Caesarea, The Secret History of Byzantium:

  1. How the Great General Belisarius Was Hoodwinked by His Wife
  2. How Belated Jealousy Affected Belisarius's Military Judgment
  3. Showing the Danger of Interfering with a Woman's Intrigues
  4. How Theodora Humiliated the Conqueror of Africa and Italy
  5. How Theodora Tricked the General's Daughter
  6. Ignorance of the Emperor Justin, and How His Nephew Justinian Was the Virtual Ruler
  7. Outrages of the Blues
  8. Character and Appearance of Justinian
  9. How Theodora, Most Depraved of All Courtesans, Won His Love
  10. How Justinian Created a New Law Permitting Him to Marry a Courtesan
  11. How the Defender of the Faith Ruined His Subjects
  12. Proving That Justinian and Theodora Were Actually Fiends in Human Form
  13. Perceptive Affability and Piety of a Tyrant
  14. Justice for Sale
  15. How All Roman Citizens Became Slaves
  16. What Happened to Those Who Fell Out of Favor with Theodora
  17. How She Saved Five Hundred Harlots from a Life of Sin
  18. How Justinian Killed a Trillion People
  19. How He Seized All the Wealth of the Romans and Threw It Away
  20. Debasing of the Quaestorship
  21. The Sky Tax, and How Border Armies Were Forbidden to Punish Invading Barbarians
  22. Further Corruption in High Places
  23. How Landowners Were Ruined
  24. Unjust Treatment of the Soldiers
  25. How He Robbed His Own Officials
  26. How He Spoiled the Beauty of the Cities and Plundered the Poor
  27. How the Defender of the Faith Protected the Interests of the Christians
  28. His Violation of the Laws of the Romans and How Jews Were Fined for Eating Lamb
  29. Other Incidents Revealing Him as a Liar and a Hypocrite
  30. Further Innovations of Justinian and Theodora, and a Conclusion

Advantages and Disadvantages of the iPad so Far

Chief Advantages of the iPad so Far:

  • Its sub-netbook size allows me to pull it out and use it in a lot of places and at a lot of times where pulling out the laptop just doesn't work.
  • It is a lot friendlier as a note-raking and quick-lookup device than a laptop.

Chief Disadvatages:

  • Data entry.
  • Moving files across platforms to work on them. (In the end, this may make me a Google docs user.)
  • Hitting the "caps" key when trying to hit the "a" key with my left little finger.
  • Hitting the spacebar when trying to hit one of the bottom-row letter keye.

The Two Faces of Jean-Baptiste Say...

Say I (1803): A Treatise on Political Economy:

Say: A Treatise on Political Economy, Book I, Chapter XV: [T]o say that sales are dull, owing to the scarcity of money, is to mistake the means for the cause; an error that proceeds from the circumstance, that almost all produce is in the first instance exchanged for money, before it is ultimately converted into other produce: and the commodity, which recurs so repeatedly in use, appears to vulgar apprehensions the most important of commodities, and the end and object of all transactions, whereas it is only the medium. Sales cannot be said to be dull because money is scarce, but because other products are so. There is always money enough to conduct the circulation and mutual interchange of other values, when those values really exist. Should the increase of traffic require more money to facilitate it, the want is easily supplied, and is a strong indication of prosperity—a proof that a great abundance of values has been created, which it is wished to exchange for other values. In such cases, merchants know well enough how to find substitutes for the product serving as the medium of exchange or money...

Say II (1829): Cours Complet d'Economie Politique Pratique

The Bank [of England], legally obliged to redeem its banknotes in specie, regarded itself as obliged to buy gold back at any price, and to coin money at a loss and at considerable expense. To limit its losses, it forced the return of its banknotes, and ceased to put new notes into circulation. It was then obliged to cease to discount commercial bills. Provincial banks were in consequence obliged to follow the same course, and commerce found itself deprived at a stroke of the advances on which it had counted, be it to create new businesses, or to give a lease of life to the old. As the bills that businessmen had discounted came to maturity, they were obliged to meet them, and finding no more advances from the bankers, each was forced to use up all the resources at his disposal. They sold goods for half what they had cost. Business assets could not be sold at any price. As every type of merchandise had sunk below its costs of production, a multitude of workers were without work. Many bankruptcies were declared among merchants and among bankers, who having placed more bills in circulation than their personal wealth could cover, could no longer find guarantees to cover their issues beyond the undertakings of individuals, many of whom had themselves become bankrupt...

links for 2010-04-27

  • They did not like either the lobster risotto, or the braised pork shoulder, or the grilled pork loin, or the ice cream, or the coffee. I, on the other hand, thought the braised pork shoulder i had there last month--Maiale al latte--was the best thing I've eaten this year...
  • AK: Fabrice Tourre: "[Paulson had input, but that ACA] ultimately analyzed and approved every security in the deal. ACA had sole authority to decide what securities would be referenced in the transaction, and it does not dispute that point... If ACA was confused about Paulson's role in the transaction, it had every opportunity to clarify the issue."
  • DG: "For the past several decades, Wall Street has continually told Washington that if the Street can't do things the way it always has, and if the government changes the rules to mandate greater transparency and customer protection, that the geniuses in Lower Manhattan won't be able to make money, and it would stunt the industry. They've been wrong every time."
  • I am in broad agreement with Robert Gordon on the potential size of CPI bias, with Jared Bernstein on our lack of knowledge of how large it really is, and... that a big CPI bias should not make us feel happy about the income distribution.... I tend to weigh in... with all three... that America would be a better place with more social democratic policies. Moreover, the bigger CPI bias, the more social democratic we should be. Think about it. If there is 20% of CPI bias in the past 30 years, then median male real earnings have risen by 30% instead of the 10% in official statistics. But real national income per capita has risen by 125% rather than by 90%. A country that is so phenomenally more productive than the country of the mid-1970s should be able to do a much better job at providing... income security, education... and leisure... as well as a... greater share in the rises in real material standards of living of which the rich have grabbed the... tyrannosaur's share.

Macroeconomics: Before the Storm Hit

My Macroeconomic Outlook Presentation, as it stood in June of 2008:

Back when we were still worrying about whether the post-Bear Stearns implicit guarantees of the debt of every large commercial and investment bank of the United States would become a liquidity tsunami that would swamp us and wash us up on the shores of inflation...

God!! Those were nice and easy problems we had back then...


Republicans Propose to Replace the Flawed DoddFinReg Bill with... the DoddFinReg Bill!

I say move the Republican alternative to the Senate floor tomorrow!

Matthew Yglesias:

Matthew Yglesias: Republicans Circulate Draft of Financial Regulation Alternative: Damian Paletta at the Wall Street Journal offers a summary of a 20 page draft of a GOP alternative approach to financial regulation. Overall it’s extremely vague, but appears to be . . . staggeringly similar to what’s already in Chris Dodd’s bill. They get rid of the ex ante resolution fund (which brings the GOP in line with the Obama administration’s preferences) but the resolution process is exactly the same. The derivatives piece sounds the same as what Dodd initially proposed, but scraps Blanche Lincoln’s swap desk spinoff idea. It also does . . . something . . . on Fannie Mae and Freddie Mac but it’s impossible to tell what: “The Republican plan would create federal funding limits and mandatory portfolio reductions for the companies. It will also restrict the amount of money the government can advance the firms.” Would be nice to know what the limits are, what the portfolio reductions are, etc...

Health Care Reform Watch: Former Republican Senator Bill Frist Likes ObamaCare--a Lot

Professional Republican and Ex-Senate Majority Leader Bill Frist likes ObamaCare--a lot:

Igor Volsky: Frist: ‘I Like The Bill,’ ‘I’m Very Proud Of This Administration’: In October, former Senate Majority Leader Bill Frist (R-TN) broke with his party to argue that health care reform “is not socialized medicine.”... Yesterday... Frist again characterized the new law as a moderate measure that he “sort of likes.” From Emily Walker of MedPage Today....

“I like the bill,” Frist said during a panel discussion with former Democratic Senate Majority Leader Tom Daschle at the American Hospital Association’s (AHA’s) annual meeting. “I think it’s got lots of positive stuff in it, other than the costs.”

Frist also praised President Obama’s second health summit, saying the President had “persuasive charisma” and “command of the subject.” “You have a president there who got his hands dirty, but still looked presidential,” Frist said. Earlier this month, Frist predicted that the state lawsuits challenging the constitutionality of health reform would likely fail. “”I don’t think that is going to be successful,” Frist told reporters after a speech last Thursday to educators in Nashville. He added, “From a justice, fairness and equity standpoint, I’m very proud of this administration and that America has addressed this.”

And somebody who wishes me ill emails me a Financial Times column by professional nonpartisan Clive Crook, who thinks Bill Frist and the rest of us who like ObamaCare are very wrong:

Clive Crook/a>: [T]he Obama administration has over-reached. Democrats failed to convince the country that their healthcare reform was the right solution to an obvious and pressing problem, yet passed their law anyway. Many voters are angry about this, and entitled to be. Also, despite the administration’s denials, the reform will most likely add to public borrowing, which was on a dangerously high trajectory to begin with. Again, they are right to be concerned...

Training the Human Element

It's clear that I will never find the iPad more than an amusing toy until I actually write things on it. And it is clear that I will never write things on it until I get good at it. And it is clear I will never get good at it until I can touch-type on the virtual keyboard. And it is clear that I will never be able to touch-type until I get lots of practice.

A vicious circle.

Which I am going to try tobreak out of via exercises like this one...

American Income Volatiilty: Sprung, Brooks, and Rose

My reading of Stephen Rose is that the best way to report his finding is: "fully 60% of adults aged 34-59 in 2005, over the previous ten years, had at least one year in which their household's total income excluding capital gains would have supported material living standards for its members that, when adjusted for family size and composition, would have equalled or exceeded the material living standards of a family of four with household income greater than $100,000 in 2009."

From Andrew Sprung:

xpostfactoid: In which I (essentially) win my "quick bet against Brooks": Three weeks ago... [David] Brooks reported that according to Rose, "Over the last 10 years, 60 percent of Americans made more than $100,000 in at least one of those years, and 40 percent had incomes that high for at least three." My inference, that Rose was referring to household rather than individual income and that "Americans" should be "American households," was based on past Rose writings and a near-identical error that George Will made in citing Rose's income data claims.... Brooks complained that I was wrong, that Rebound did refer to "adults" as opposed to "households." The Dish posted a direct quote from Rebound:

Another way to look at incomes over many years is to see how often people experienced high and low incomes. Indeed, fully 60 percent of adults had at least one year in which their incomes were at least $100,000 (p. 119).

I posted a retraction and apology.... Today my copy of Rebound finally arrived.... [W]hile the book does indeed (of course) contain the sentence above, Rose's definition of terms earlier in the chapter makes it clear "their incomes" signifies the household income of each "adult" -- adjusted, moreover, for age and household size. The chapter in question, "The Myth of the Declining Middle Class," begins with a bit of terminological slippage that's clarified later but turns up in Brooks' representation....

These longitudinal data show that many people have long term incomes of over $100,000 a year--a level that permits a minimum level of discretionary expenditures in most parts of the country. This large base of families with reasonably high incomes provides the underpinning of our mass-consumer market as evidenced by crowded suburban malls (103).

That conflation is more or less explained later in the chapter, when Rose discusses the various factors that need to be folded into apples-to-apples comparisons of household incomes across different eras and income levels:

Analysts agree that one's standard of living is best reflected by total family income--a figure that includes all sources of income (e.g., earnings, business income, rental payment, interest and other financial income, and transfer payments such as Social Security, unemployment insurance, and welfare and disability payments) from all members of the family.... Few dispute that the same amount of money does not support the same level of consumption in households of different size, and researchers have developed methodologies to align income and size to get equivalent standards of living.  For example, in the approach that is used here, a single person with $50,000 of income has the "equivalent income" of a family of three with $86,600 or a family of four with 100,000....

I should not have cast my inference that Brooks was misquoting Rose as a near-certainty without being able to verify it. Literally, there was no misquote -- or rather a minor one, converting Rose's "fully 60 percent of adults had at least one year in which their incomes were at least $100,000" to a more active verb formulation: "Over the last 10 years, 60 percent of Americans made more than $100,000." Brooks' re-cast also edits out a ghost of pronoun slippage in Rose's studiedly vague formulation: "adults" had years in which "their" incomes were over $100k. While "their" grammatically agrees with "adults," keeping both in the plural somehow highlights the elision by which household income (the term Rose uses in earlier writings citing similar statistics) becomes the income enjoyed by the individuals in the household. If Brooks read the full chapter, -- and it's not clear whether he had an advance copy or simply interviewed Rose -- he should have noted the multiple lenses through which that vision of "60 percent of adults" enjoying the magic six-figure income level was filtered.

Obama Tries to Guide Israel onto a Road to Long-Run Survival

Gideon Rauchman watches the friend of Israel at his work: "if Israel does not take [the road Obama offers] soon, the long-term survival of the Jewish state will be imperilled..."

Israel’s fear and loathing of Obama: I could not help thinking back to the early stages of the Northern Irish peace negotiations.... The Israelis’ furious reaction to the pressure they are under from the Obama administration is reminiscent of the British rage early in the Northern Irish peace process, when it became clear that our American allies were intent on “talking to the terrorists” of the Irish Republican Army. But, as it turned out, the Americans were right to insist that there was a peace deal to be made with the IRA. They are right again on the Middle East peace process. There is still a deal to be had – and if Israel does not take it soon, the long-term survival of the Jewish state will be imperilled.

In their more reflective moments, some senior Israeli politicians will acknowledge that a two-state solution is as vital for Israel as it is for the Palestinians. Dividing the land is the only way of ensuring that Israel remains both Jewish and democratic.... Yet for all their long-term concerns, the Israelis have failed to make vital concessions, because the status quo still feels more comfortable.... By contrast, calling a complete halt to illegal Israeli settlements on Palestinian land – as Mr Obama has demanded – entails risks and pain. There are members of the Israeli cabinet who still cling to the idea of a Greater Israel, incorporating all of the West Bank. If Benjamin Netanyahu, the Israeli prime minister, delivered the settlement freeze the Americans want, his rightwing coalition would probably collapse. Many Israelis also worry that an eventual move to uproot at least 80,000 settlers as part of a peace deal could lead to a revolt in the army – some 30 per cent of whose officers are religious conservatives, presumed to be sympathetic to the settlers.... So rather than discuss settlements, the Israelis are desperately trying to change the subject. They point out that there are many obstacles to a peace deal other than the settlements....

The Israelis are certainly right to argue that there is no guarantee that a freeze on settlements will lead to a peace deal. On the other hand, there certainly is a guarantee that a continued expansion of settlements will ensure that no peace deal is ever possible.... [N]o special explanation should be needed for Mr Obama’s insistence on a settlement freeze. Such a policy is in the interests of Israel as well as the Palestinians. Israelis may fear and even detest Mr Obama – but the American president is actually doing them a favour.

Wingnut Harmonic Convergence: Hoover Institution Department (Or, Denouncing the Illiterate Brown People Is Best Done by Somebody Who Knows How to Spell "Dam" and "Roll")

Victor Davis Hanson:

The Remains of a California Day: By three, I drove up to the CSU Fresno Henry Madden Library to get a Greek edition of Procopius’s History of the Wars. (Procopius is the ancient sort of the DC insider blogger/pundit: he praised Justinian, sort of, in the History of the Wars, damned him as demonic in the Secret History, and eulogized him in the Buildings — all predicated on the degree to which Procopius felt that the emperor was well/sick, dead/alive, popular/unpopular and the degree to which he was in/out with the court. In the same manner, Procopius was the secretary to Belisarius, his apologist, his primary critic, and perhaps (this is disputed) the same Procopius who, as magistrate, put him on trial for his life. In other words, he was a sort of New York Times or Newsweek columnist...

To which one can only say: "Huh?!"

I know of no New York Times economist who has in one column said that President so-and-so is the best leader the Roman Empire has ever had, and in another has said that so-and-so is a demon who sometimes forgets his head and wanders around the White House at night with the fires of hell spurting from his neck--or of one who has claimed that any President's wife wished that she were differently shaped so that she... um... well, in Edward Gibbon's phrase, would have "more than three altars at which to make offerings to the god of love."

And then VDH gets cranky:

It is touchy to use the library, since its hours are now vastly abbreviated due to furloughs (You, reader, will come to know that word soon enough in the increasingly bankrupt America: it means that we must not tamper with union contracted employees, so we simply ask them not to come to work a day or so a month. The resulting pay cuts are not pay cuts.)...

[Nine paragraphs about how things were much better in the old days--back when a pretty boy cost less than a sword, and Romans respected their elders, etc...]

All of which raises the question: how would we return to sanity in California, a state as naturally beautiful and endowed and developed by our ancestors as it has been sucked dry by our parasitic generation?... [W]e would have to close the borders; adopt English immersion in our schools; give up on the salad bowl and return to the melting pot; assimilate, intermarry, and integrate legal immigrants; curb entitlements and use the money to fix infrastructure like roads, bridges, airports, trains, etc.; build 4-5 new damns...

Me? I think people who don't give enough of a damn about their spelling to know how to spell "dam" shouldn't be opining about how to improve California schools--and I just plain think that people shouldn't be accepting endorsements from people who don't give enough of a damn about their spelling to know how to spell "dam." But maybe that's just me:

VDH goes on: store water in wet years; update the canal system; return to old policies barring public employee unions; redo pension contracts; cut about 50,000 from the public employee roles...

Those homonym typos: they will get you every time in this age of spellcheckers. I have to recommend a serious immersion program for all Hoover Institution fellows.

And there is more:

...lower income taxes from 10% to 5% to attract businesses back; cut sales taxes to 7%; curb regulations to allow firms to stay; override court orders now curbing cost-saving options in our prisons by systematic legislation; start creating material wealth from our forests; tap more oil, timber, natural gas, and minerals that we have in abundance; deliver water to the farmland we have; build 3-4 nuclear power plants on the coast; adopt a traditional curriculum in our schools; insist on merit pay for teachers; abolish tenure; encourage not oppose more charter schools, vouchers, and home schooling; give tax breaks to private trade and business schools; reinstitute admission requirements and selectivity at the state university system; take unregistered cars off the road; make UC professors teach a class or two more each year; abolish all racial quotas and preferences in reality rather than in name; build a new all weather east-west state freeway over the Sierra; and on and on. In other words, we would have to seance someone born around 1900 and just ask them to float back for a day, walk around, and give us some advice...

All of which is a lead-in to an actual endorsement of a candidate. First, the throat-clearing:

...PS. I don’t vote Democratic any more much, if at all, but haven’t gotten around to changing my registration to Independent...

That's what we want: political engagement and civic participation!

But this June I will at least once more vote in the Democratic primary, largely for Mickey Kaus...

Why? Nepotism!

...whose online campaign seems to be reminding us just how absurd Barbara Boxer has become. He has good sense about unions and amnesty and state spending (my late mother, an appellate judge, used to speak highly of state Supreme Court Justice Kaus, a Democratic moderate, who, I think, was his father)...

But even though he will vote for Mickey Kaus in the primary of the political party that he thinks should lose, he does not dare express a preference for a candidate of the political party that he thinks should win. That would be dangerous: he might get one of them mad at him if he chose one who did not win, and anyway changing your registration so that you can actually participate meaningfully in self-government would be work:

In general, I have listened to all three senatorial Republican candidates and they are all good...

Why will he vote for the Republican? Because he hates Barbara Boxer. Why? He can't quite get it out--some of it is that she was mean to Ward Connerly and unladylike:

...Note — Barbara Boxer is a particularly unfortunate sort of politician, combining arrogance (remember her much publicized slapdown of a general and African-American businessman) with a loud sort of ignorance...

But mostly, it seems, because she has a vagina:

...(A diversity note: Three of the most powerful women in the world that have a lot to do with running the U.S. are multimillionaire, doctrinaire liberals, who at one time lived within about 50 miles of each other in San Francisco — Nancy Pelosi, Dianne Feinstein, and Barbara Boxer.)

Let me say that I have heard DiFi called many things in her political career. But until now "doctrinaire liberal" has not been one of them.

And how does Mickey Kaus react to this unexpected endorsement?

Mickey Kaus: Victor Davis Hanson Endorsement.... He takes a while to get there! But it's an enjoyable trip.... Hanson's comprehensive platform for California is pretty good too. I agree with about 2/3 of it...

In my inbox:

The aforementioned VDH piece... is a picture-perfect piece of the kind of Old White Guy cultural reaction that is at the heart of the Tea Party Movement. Poor VDH, tending the crops and restoring the Old House out there in the central valley, is sadly watching the priceless legacy of Old White Guy California being ruined by criminal Mexican thugs, illiterate young people (probably Obama supporters), environmentalists, and public employee unions. It's very close in spirit to the classic 1970s tome, The Camp of the Saints...

DeLong Smackdown Watch: Goldman-Sachs and ABACUS

It's "Have a Cow," Robert...

Robert Waldmann:

Robert's Stochastic thoughts: Brad DeLong clears his throat. I throw a cow. He wrote

The win-win benefits of trading money for money--where are they? It turns out that they are there. There are, actually, four:

  1. Trading money now for money later: people who want to save now and spend later can make win-win trades with people who want to spend now and save later.
  2. Risk: people who are unusually averse to risk in general can make win-win trades by trading off some of the risks that they are bearing to people who are unusually tolerant of risk in general.
  3. Insurance: people who are holding a lot of one big risk can reduce the risk of catastrophic loss by paying a great many others to each take a small piece of that risk.
  4. Information: people who have information that prices are going to rise can make win-win deals with people who have information that prices are going to fall--although here the win-win is not for the participants in the trade: for them it is zero-sum, and the winners are those others who observe the market price at which the trades occur.

I comment. Ahem. Your fourth win-win "Information:" is not like the others. You redefined win-win to mean "socially desirable" and decide that, if a third party wins, it is a win-win. Also, as you understood when you were in high school and Grossman and Hart figured out when you were in college, information does not explain trading. If the only differences across people were that they had different information then trades couldn't be win-wins. If it were common knowledge that everyone is rational then trades couldn't occur. It is not unusual for someone in a type 4 trade to think they are in some other sort of trade. In theory there are no type 4 trades which are known to be type 4 trades.... Obviously not everyone is rational (who ever thought everyone was). In particular, there is a group which keeps writing papers which correspond to actual financial markets and keeps being ignored. I forget who they are, but they have created a subfield of Lake Wobegone finance in which everyone thinks they are relatively more informed than they are. Obviously this is what's normally happening -- traders think their trades are profitable, because they think the traders on the other side are irrational....

It is obvious that the synthetic CDO market was type 4 Wobegone finance. The Case-Shiller assets are better for hedging of all risk except specifically for RMBS default risk.... Basically ACA had to know that their counterparties were someone like Paulson. Now there was fraud all right. ACA didn't know that their counterparty was uhm helping them choose underlying assets for the synthetic CDO. However, if they thought they were selling insurance, then they were dangerous fools such that taking their money is a public service....

I think type 4 trading reduces the valuable information in prices. The trades can't exist in Nash equilibrium. Therefore finance theorists assume that there are some irrational traders. Then finance theorists (except for DeLong et al) assume that the volume of irrational trade is exogenous. They conclude that anything which causes high trading volume causes prices to be closer to fundamental values. That's a pretty direct passage from an unjustified assumption to a conclusion. I think it is obvious that higher trading volume causes greater price volatility and that this volatility is always vastly greater than the volatility of fundamental values. So I think that, aside from not being an argument that type 4 trades are win-wins, your argument has it backwards. I think that real world type 4 trading reduces the information content of prices -- because it is fundamentally irrational. So less of it would be better. Goldman Sachs has damaged its reputation as a fair broker with this scam. I think that is an excellent thing, because that reputation caused people to trade if they thought they were smarter than average. Fear of being cheated by Goldman Sachs makes up for irrational overconfidence and will lead the economy towards where it would be if everyone were rational.... [W]hat's bad for Goldman Sachs is good for the world.

Yes, the Current Government of Israel Is Deeply Corrupt, Why Do You Ask?

Philip Elmer-Dewitt: The official explanation for seizing the devices at the airport never did make sense: On the face of it, Israel's decision Saturday night to allow iPads to be brought into the country was a straightforward reversal of a sensibly cautious import policy.... But... [no] experts outside (or, for that matter, inside) Israel... [bought] the explanation that the ministry was concerned that a device that used American Wi-Fi power standards... could harm the country's wireless networks.... Time magazine on Tuesday picked up a line of reasoning floated five days earlier....

It is worth noting that Apple's Israeli distributor, iDigital, is run by Chemi Peres, the hyper-entrepreneurial son of Israeli President Shimon Peres. Clearly, iDigital wants its lucrative cut of every iPad brought into the country — which it will undoubtedly receive when a modified European version of the iPad is approved for import over the next two or three months. But in the meantime, iDigital can't make money off the slow trickle of iPads entering the country via private citizens, tourists and international businessmen....

[E]ven Israeli ministers can be influenced by the weight of international opinion.... The order to lift the ban came from Communications Minister Moshe Kahlon... [who now claims that he had] not been apprised of the initial decision to ban the iPad...

A Spring Dilemma

If I take enough allergy medicine to feel human, I am immensely sleepy.

If I take sufficiently litle allergy medicine to feel alert, I feel absolutely miserable.

What should I do?

April 28: Econ 210a: The Great Recession in Historical Perspective

April 28: Macroeconomics—Up to 2007:

Question: In what respects, given what you know, has the police response to what we are now starting the call the "great recession" exceeded reasonable expectations for what can be accomplished in the heat of the moment?

Dean Baker Once Again Driven into Shrill Unholy Madness by Zachary Goldfarb and the Washington Post

To sell overvalued and buy undervalued assets is something that financial firms are supposed to do: it is how they do the Lord's work.

And Dean Baker reads Zachary Goldfarb in the Washington Post so the rest of us do not have to:

Why Is It Front Page News That Goldman Bet Against the Housing Bubble?: The Washington Post's most widely cited source on the housing market during the run-up of the housing bubble was David Lereah, the chief economist of the National Association of Realtors, and the author of Why the Housing Boom Will Not Bust and How You Can Profit From It. In many articles, Lereah was the only expert cited. This was ungodly bad reporting. Today's paper has a front page story, the main point of which appears to be that Goldman Sachs made bets against the housing market and stood to profit from the collapse of the bubble. (The story actually leaves this conclusion in question.) It's not clear what in this story would be newsworthy and especially what would make it front page news.

If Goldman did bet against the housing bubble, then its actions were helping to bring the bubble to an end before it caused even further damage to the U.S. economy. Goldman's actions would have the effect of making homes more affordable for new buyers. It would also help to increase the national saving rate (a top Washington post priority), by eliminating bubble-generated wealth that was spurring consumption. In short, while Goldman's actions were undoubtedly taken for profit, they would be beneficial to the economy as a whole.

Goldman has been accused by the Securities and Exchange Commission of misrepresenting its issues of collaterized debt obligations in order to get investors to take the long-end of the housing market. This is a serious accusation and presents the possibility of substantial civil, if not criminal penalties. However, there is nothing at all improper about placing a bet against a bubble in the market. It is not clear what the Post thought to be the news in this story.

Why oh why can't we have a better press corps?

Why We Would All Be Better Off Without the Republican Party

Greg Sargent::

Graham has made this threat before By now you’ve heard that Lindsey Graham is responding to the Dems’ fast-tracking of immigration reform by pulling his support for the awesomely tripartisan climate change bill he was set to unveil with Joe Lieberman and John Kerry. He says immigration reform makes it impossible to move on climate change.

But we’ve been here before: Last spring, Graham issued the same threat, saying that if Dem leaders moved forward on health reform it would kill the chance of compromise on immigration.

“The first casualty of the Democratic health care bill will be immigration reform,” Graham said in March, adding that movement on health reform would “kill any chance of immigration reform passing the Senate this year.” Time to wise up to Graham’s game?

California Republican Politician Failure

Eric Jackson::

Twitter / Eric Jackson: So Meg Whitman's defense o ...: So Meg Whitman's defense of spinning $EBAY stock given her from $GS is

  1. everyone was doing it,
  2. I only made $1.8m on it,
  3. no one cares

Meg, they were trying to bribe you by giving you some of the allocation--trying to take some of your shareholders' money and give it to you in the hope that you would feel obligated and give something to them in the future.

Did you succumb?

Worth Reading, Mostly Economics, for April 25, 2010

  • MY: "The John Birch Society was nuts, and it’s to... Buckley’s credit that... he tried to purge the Birchers.... Similarly... Rauch wants to bring the conservative movement into closer touch with external reality... laudable. But... [Rauch:] 'Buckley’s gambit succeeded. The Birchers and their conspiracy-mongering were banished... and the stage was set for the reality-based critique of liberalism that brought Ronald Reagan to power.' My impression is that Jimmy Carter’s 1980 re-election campaign more-or-less succeeded in planting serious doubts in the mind of the electorate about the wisdom of electing a rightwinger like Ronald Reagan.... If you look at the two-party split ... 1980 looks like a very typical election. Maybe there’s a case to be made that Buckley’s 1965 denunciation of the Birchers helped Reagan win the presidential primary 15 years later, but it seems doubtful... the main reason to sideline kooks... is that governing with kooky ideas is going to be bad for the country."
  • RR: "The Dodd bill now... is a step in the right direction... a very modest step... leaves out three of the most important things.... Require that trading of all derivatives be done on open exchanges.... Resurrect the Glass-Steagall Act in its entirety.... Cap the size of big banks at $100 billion in assets..."
  • RA: "Romer's comments almost exactly reflect ... Elsby, Hobijn, and Șahin... through the first quarter of 2009, unemployment behaved about as you'd expect... thereafter departures from normal... Okun's Law... and the Beveridge Curve... broke down a bit.... The rate of outflow from unemployment has fallen across all industries... skills mismatch isn't a major factor.... [No] disproportionate decline in... outflow... among the long-term unemployed.... Extensions of unemployment benefits... some upward pressure.... But... it's very easy to overstate the importance... the depth and length of the recession has shifted... workers into the category... of those who take a long time to find new jobs, and so the decline in unemployment across the labour force as a whole is quite slow. Ms Romer is suggesting that the way to fix this problem is to work at the demand side. There's nothing intrinsically unemployable about these folks..."
  • MS: "[African-Americans] really don’t have a reason to, to be honest — we haven’t done a very good job of really giving you one. True? True. For the last 40-plus years we had a ‘Southern Strategy’ that alienated many minority voters by focusing on the white male vote in the South. Well, guess what happened in 1992, folks, ‘Bubba’ went back home to the Democratic Party and voted for Bill Clinton.”
  • DD&Others: "A lot of the problem is that as well as the noted New Keynesian economist Greg Mankiw... s a dreadful Republican Party hack... Greg Mankiw.... Greg Mankiw writes things that are obvious errors and pointed out as such in Greg Mankiw’s textbook, and they get blamed on Greg Mankiw. There’s a sitcom in it.... Barry 04.19.10 at 6:37 pm: dsquared, there used to be a blog about it, hosted by ‘the noted New Keynesian economist Greg Mankiw’. IIRC one of the favorite methods used by Joe Random Internet Commenter to make ‘dreadful Republican Party hack, also called Greg Mankiw’ look like a fool or a liar was to quote from that book by ‘the noted New Keynesian economist Greg Mankiw’. Eventually, the comments were closed.... Hogan 04.19.10 at 9:03 pm: 'There’s a sitcom in it.' But they’re macroeconomists! Identical macroeconomists, and you’ll find They walk alike, they talk alike, sometimes they even think alike. You could lose your mind When macroeconomists are two of a kind!"
  • FS: "One of the more thought-provoking bits of the Shleifer paper on financial innovation is this part of the model: 'Optimism about the profitability of the new claim at t = 0 encourages the intermediary to over-inves.… Investment in A occurs only if new securities can be engineered, so financial innovation bears sole responsibility for unproductive investment....' To put it another way, it was the excessive and irrational demand for collateralized debt obligations which caused all those Miami condos and Phoenix tract homes to be built in the first place. That... raises an interesting question about the damage caused by synthetic CDOs.... Yves Smith... writes in her new book, “Econned,” that “Magnetar.... If the world had been spared their cunning, the insanity of 2006-2007 would have been less extreme and the unwinding milder.”... But... the Magnetar-driven boom in synthetic CDOs was actually preferable to the boom in RMBS-based non-synthetic CDOs which preceded it."
  • CU: "If you remember, the Tea Parties were originally formed to protest the bailouts. They were so mad at the Wall Street bankers who destroyed the economy and then took our hard earned money for their efforts.... [But] they're going to sit out this fight on financial reform and put absolutely no pressure on Wall Street at all. Because they are tools easily manipulated by right-wing organizations funded by corporate America. I really feel sorry for them. They're dupes. They think they are so fiercely independent when in fact they are the most easily manipulated people in the country. All that anger toward the power establishment and what happened? They were used by that same establishment to fight against health care reform and to try to protect the health insurance companies. Suckers. Now, when it's time to fight the financial companies, where are they? Nowhere to be found. Why? Because FreedomWorks and Americans for Prosperity didn't organize any bus rides..."
  • Almunia et al.: "The Great Depression of the 1930s and the Great Credit Crisis of the 2000s had similar causes but elicited strikingly different policy responses. While it remains too early to assess the effectiveness of current policy, it is possible to analyse monetary and fiscal responses in the 1930s as a natural experiment or counterfactual capable of shedding light on the impact of current policies. We employ vector autoregressions, instrumental variables, and qualitative evidence for 27 countries in the period 1925–39. The results suggest that monetary and fiscal stimulus was effective -- that where it did not make a difference it was not tried.... They are consistent with multipliers at the higher end of those estimated in the recent literature, and with the argument that the impact of fiscal stimulus will be greater when banking systems are dysfunctional and monetary policy is constrained by the zero bound."
  • AM&AS: "[H]ousehold leverage as of 2006 is a powerful statistical predictor of the severity of the 2007 to 2009 recession across U.S. counties. Counties in the U.S. that experienced a large increase in household leverage from 2002 to 2006 showed a sharp relative decline in durable consumption starting in the third quarter of 2006 – a full year before the official beginning of the recession in the fourth quarter of 2007. Similarly, counties with the highest reliance on credit card borrowing reduced durable consumption by significantly more following the financial crisis of the fall of 2008. Overall, our statistical model shows that household leverage growth and dependence on credit card borrowing as of 2006 explain a large fraction of the overall consumer default, house price, unemployment, residential investment, and durable consumption patterns during the recession. Our findings suggest that a focus on household finance may help elucidate the sources macroeconomic fluctuations."
  • Time: "Bank deposit guarantee schemes have been tried in Nebraska, Oklahoma, Kansas, Mississippi, Texas, North Dakota, South Dakota and Washington... ended in failure and loss... scandal and default... weakened the moral fibre of bankers and served chiefly as a temptation to bad banking. Honest banking has been penalized for dishonest banking. Despite this evil-smelling State record Congress was determined to clamp a similar system down on all Federal Reserve member banks, make it optional with nonmember State banks. It was this arbitrary method of forcing big banks to stand sponsor for little banks that outraged Manhattan bankers. Big State banks in New York talked covertly of seceding from the Federal Reserve System rather than submit to such a levy. Even big national banks might exchange their Federal charters for State charters to escape from the Reserve. Such a withdrawal on a large scale might well wreck the whole Federal Reserve System"
  • AHR: "We believe this party was founded by Abraham Lincoln, a man who was instrumental in doing away with evils towards people of color.... Later, the Republican Reverend Martin Luther King Jr. picked up Abe’s mantle and helped fight the injustice of racism. Republicans in that era fought to free blacks from slavery, which gave people of color freedoms and citizenship. It is unfortunate that our own members of the Republican Party believe that we have to trample on our Constitution.... [W]e are ultimately holding President Obama accountable. Obama promised Hispanics that he would pass immigration reform within 90 days of his Presidency. Had Obama carried out his promises to Hispanics last year, the Hispanic community would not be experiencing the crisis we are experiencing right now.... McCain believes he is in the fight of his life.... McCain’s valuable experience contributed to Americans winning the Iraq war."

DeLong Smackdown Watch: Felix Salmon on the Hazards of Living in the Distant Past

Felix Salmon says that when he claims Goldman Sachs "generally lived up to its mantra of "long-term greed": Do right by your clients, the idea went, and ultimately you will do very well by yourself..." he was talking about the 1990s, while I am talking about earlier years--the 1970s or the 1930s.



The Goldman wars continue | Analysis & Opinion |: Finally on Goldman I should mention that I have a piece in the Washington Post today explaining just how bad the SEC charges are for its reputation. The economic historian Brad DeLong has a learned response, saying that Goldman never really had the reputation that I’m claiming it had:

Felix Salmon thus, I think, mistakes the business of Goldman Sachs. The old House of Morgan was an investment bank interested in building long-term relationships. Goldman Sachs is instead about doing deals and having the knowledge, sophistication, and intelligence so that it can do the deals with greater ease than anybody else–but it won’t protect you from itself, and won’t protect you from yourself.

I didn’t really have the pre-war years in mind, of course, but Brad does have a good point, and there were other shops, like Lazard and Rothschilds, which probably had a better reputation in terms of long-term client service than Goldman had in the 1990s. Still, when it came to the big investment banks, Goldman was at the top of the heap: its clients trusted it more than they trusted, say, Bear Stearns or Merrill Lynch. And it’s lost a lot of that reputation now.

Jesse Walker of Reason on Gary Allen

From Hit and Run:

Moscow Girls Make Me Sing and Shout: As we plow through all those Sgt. Pepper's retrospectives, let us not forget the pioneering work of Gary Allen of the John Birch Society, who in 1969 exposed the Beatles' links to world communism. ("That Music: There's More To It Than Meets The Ear," American Opinion, February 1969.)... Allen had a surprisingly simple approach: Take "Back in the U.S.S.R." literally, and assume everything else has a hidden meaning.

Thus, "Magical Mystery Tour" is about drugs ("Roll up, roll up [your sleeve] for the mystery tour," he decodes), as is "Hey Jude" (cf. "let her under your skin"). And "Revolution"'s slap at Chairman Mao is:

simply telling the Maoists that Fabian gradualism is working, and that the Maoists might blow it all by getting the public excited before things are ready for 'Revolution.'...In short, 'Revolution' takes the Moscow line against Trotskyites and the Progressive Labor Party, based on Lenin's Leftwing Extremism: An Infantile Disorder."

Which isn't to say the Beatles themselves were necessarily responsible for those messages. Allen... believes "the reason the Beatles and other folk-rock groups received such success in the music field was because they were backed by the Entertainment Section of the Communist Party." He also quotes trumpeter Joseph Crow, "possibly the country's Number One expert on musical subversion":

Neither Lennon nor McCartney...had technical training in music. For them to have written some of their songs is like someone who has not had physics or math inventing the A-bomb. It's possible, but not very probable. Because of its technical excellence it is possible that this music is put together by behavioral scientists in some "think tank." I know from personal experience that it takes a great deal of time to create complicated music and lyrics, and I don't know when The Beatles would have time to put this kind of stuff together. They are always on tour, vacationing, or making a movie...

From Gary Allen, None Dare Call It Conspiracy

The tea party movement of its day...

Gary Allen:

NONE DARE CALL IT CONSPIRACY, by Gary Allen with Larry Abraham (1971): Many people cannot refrain from rationalizing. After reading this book, some will bemoan the fact that the situation is hopeless. These will be many of the same people who, before reading this book, really did not believe the problems facing us were serious. Some people wake up and give up in the same week. This is, of course, just exactly what the Insiders want you to do. The conspiracy can be defeated. The insiders are not omnipotent. It is true that they control important parts of the federal government, high finance and the mass media. But they do not control everything.... There is an old cliche in sports that quitters never win and winners never quit. We need a million Americans who are not quitters, but, moreover, who have the will to win!

Of course, you can't buck the conspiracy head on, trying to fight it on its home grounds. But the Insiders are vulnerable to an end run.... The one thing these conspirators cannot survive is exposure.... Richard Nixon has said of the Republican Party: "We've got to have a tent everyone can get into." The Democrats have obviously believed that for a long time. But a Party must be based on principles or it has no justification for existence. Bringing Socialists into the Republican Party theoretically may broaden the base, but, in reality, serves only to disfranchise those who believe in a Constitutional Republic and the free enterprise system. In 1972, the Republicans will try to make you forget that Richard Nixon was elected on George Wallace's platform but has been carrying out Hubert Humphrey's.... It is only logical that the Insiders will try to apply the coup de grace against America through a Republican President simply because most people cannot believe that a Republican could be "soft on Communism" or would jeopardize our liberty or sovereignty....

The issue, very simply, is the enslavement of you and your children. Just because many of these Insiders are theoretically Americans, don't think they will spare this country the terror they have brought td thirty others through their hired Communist thugs.... What can we expect from the conspiracy during the next few years? Here are fourteen signposts on the road to totalitarianism compiled some years ago by historian Dr. Warren Carroll and a refugee from Yugoslavian Communism, Mike Djordjevich.... President Nixon already has invoked numbers 1, 14 and 14. Steps 2, 3, 6, 7, 9, 12 and 13 already have been proposed and some are actively campaigned for by organized groups.... The choice is yours. You can say, "It can't happen here!" But nearly every one of the one billion people enslaved by the Communists since 1945 doubtless said the same thing. Or you can end run this whole conspiratorial apparatus....

If you are unwilling to get involved because you feel it may be bad for business or may jeopardize your social respectability, just look into the eyes of your children and tell them that making a buck and climbing the social ladder are more important to you than they are. This is the end of our case.... If you decide that you will do something — that you at least are not yet controlled — read on — pick up the ball we are tossing you and with thousands of others, let's "end run," the conspiracy. Here's how: The four keys in this program are:

  1. You. What you do now is, of course, the key.... So keep reading and then act.
  2. This book: None Dare Call It Conspiracy.... You can simply pass this book out and let it do the job for you. The conspiracy may be able to stifle publicity on this book and keep it off the magazine rack at your local supermarket, but they can't stop you from distributing it.... It is quite possible that in distributing this book, questions will come up concerning certain statements and conclusions with which you are not able to deal. There are a number of organizations that have well documented material on all subjects raised in this book. But after considerable personal research the author has concluded that the organization which is the leader in this field, has had the most experience, and is doing the best job of exposing the conspiracy is The John Birch Society.... Doesn't it appear strange that this organization which works toward decentralization of political power and the exposure of the Insiders should be so vilified by the mass media, while the Council On Foreign Relations, which promotes centralization of power in the hands of a few within a world government, is practically never mentioned?...
  3. Your Precinct.... Start your "end run" in your own precinct now. Lists of registered voters are available from your County Registrar....
  4. Your Congressman.... [Y]our local Congressional candidate must be forced to take a public stand on the Council on Foreign Relations, its goals, and its power in the federal government. And once your candidate is elected you must make sure that he does not submit to the incredible pressure which will be put upon him in Washington to compromise his principles.... How would you like to be a Congressman who had voted for any one of the 14 Signposts to Slavery, asking to be elected by constituents who had read None Dare Call It Conspiracy?... Never contribute money to the Republican or Democratic National Committee. That money... will never reach anti-C.F.R.-Establishment candidates.... A candidate running on good conservative principles is not enough. We've had many such candidates, and although most of them are very good men, they never come to grips with the real problems — exposing those behind the World Socialist Movement....

To summarize: You do not necessarily have to be an articulate salesman to make this "end run." You do not necessarily have to know all the in's and out's of the total conspiracy-the book is intended to do this for you. All you have to do is find the wherewithal to purchase the books and one way or another see that you blanket your precinct with them. Then force your Congressman to stand up to the C.F.R. Establishment...

DeLong Smackdown Watch: Sources of Social Surplus from Finance Edition

Hoisted from Comments: Robert Waldmann:

Throat-Clearing on the SEC's Goldman Sachs Case: Ahem. Your fourth win-win "Information:" is not like the others. You redefined win-win to mean "socially desirable" and decide that, if a third party wins, it is a win-win. Also, as you understood when you were in high school and Grossman and Hart figured out when you were in college, information does not explain trading. If the only differences across people were that they had different information then trades couldn't be win-wins. If it were common knowledge that everyone is rational then trades couldn't occur. It is not unusual for someone in a type 4 trade to think they are in some other sort of trade. In theory there are no type 4 trades which are known to be type 4 trades. Obviously in reality there are such trades....

Obviously not everyone is rational (who ever thought everyone was?). In particular, there is a group which keeps writing papers which correspond to actual financial markets and keeps being ignored. I forget who they are, but they have created a subfield of Lake Wobegone finance in which everyone thinks they are relatively more informed than they are. Obviously this is what's normally happening -- traders think their trades are profitable, because they think the traders on the other side are irrational.... It is obvious that the synthetic CDO market was type 4 Wobegone finance. The Case-Shiller assets are better for hedging of all risk except specifically for RMBS default risk which can be completely hedged with only non-synthetic CDOs. Basically ACA had to know that their counterparties were someone like Paulson. Now there was fraud all right. ACA didn't know that their counterparty was uhm helping them choose underlying assets for the synthetic CDO. However, if they thought they were selling insurance, then they were such dangerous fools that taking their money is a public service...

The Future of Education

Anya Kamanetz:

The Virtual University: The face-to-face learning experience, like the live concert experience, remains inimitable. Research shows that, at its best, hybrid learning beats both online-only and classroom-only approaches. Learners can take in and retain more content faster and more easily, form strong mentoring and teamwork relationships, grow into self-directed, creative problem solvers, and publish portfolios of meaningful work that help jobs find them. These innovations hold out the tantalizing possibility of beating the cost disease while meeting the world's demand for higher education....

[C]olleges do provide a bundle of services. You crack a book or go to lecture and learn about the world. You go to labs or write papers and build a skill set. You form relationships with classmates and teachers and learn about yourself. You get a diploma, and the world can learn about you. Content, skills, socialization, and accreditation. The Web and allied technologies can make each of these services better, cheaper, more accessible, and even free to the student. Content, whether text, video, audio, or game-based, has progressed the furthest along that path. Interactive teaching algorithms can adapt to your learning style on the fly, allowing you to grasp concepts intuitively and at your own pace. And the Internet hasn't just changed the way we consume information. It has altered the way we interact. Social media can help students and teachers form learning communities. Reputation, assessment, and certification are held jealously as a monopoly by existing institutions, but new tools and models are knocking on that door, too.... Open content -- also known as open courseware, or open educational resources (OER) -- can mean any use of the Web to share the fruits of faculty time, from curricula to lesson plans to texts to original research.... Students spend an average of $1,000 a year on textbooks, and faculty spend countless hours preparing and updating course materials, which prompts the question: What will it take for colleges to realize the power of free and open resources and use them to cut educational costs?...

Whether hybrid classes, social networks, tutoring programs, games, or open content, technology provides speed skates for students and teachers, not crutches. To save money and improve learning, educational technology has to be well-designed and carefully implemented. The roles of professors will shift, and new jobs will be created in place of the old. "Technology can't make a bad teacher into a good teacher," says Sarah Robbins, an expert on the use of gaming in teaching who goes by the Internet handle Intellagirl. "Students who don't want to learn won't suddenly become great students when you put a gadget in their hands. Learning to teach with technology is less about 'how does it work' and much more about 'why should I use it.'".. Over its long history, higher education has been uncommonly resistant to innovation in teaching practices. It's clear we're just beginning to glimpse the full potential of what technology can do to transform education. Increasingly, this is going to be considered part of good teaching practice. Rather than dust off the same old mimeographed course packets year after year, professors these days have no excuse for not bellying up to the buffet of brand-new, free course materials and activities or logging on to the wealth of wikis and portals to find and share best practices... it's not clear yet which innovations will become mainstays, the chalkboards, textbooks, and diplomas of the future, and which will be marginal applications or mere flashes in the pan. At this point, however, the hybrid, NCAT-style course-redesign models seem most compelling. Not only do they show some of the best learning results, but they're in keeping with the multifaceted history of the university, and they offer the reassurance of familiarity -- a scaffolding, if you will, for the transition to new modes of teaching. tap

Department of "Huh?!"

Phoenxwoman directs us to:

Mark Leibovich:

Is Incurious Mike Really That Incurious?: Gary Allen... the John Birch Society... railed against the “big lies” that led to the United States’ involvement in World Wars I and II... the Trilateral Commission... “Red Teachers.” Rock’n’roll was a “Pavlovian Communist mind-control plot.” He wrote speeches for George Wallace.... None of Mike Allen’s friends seemed to know any of this about his father.... I asked Mike Allen what it was like being his father’s son. “We have a very close family,” he said slowly. “I’m very close to all my siblings, and I’m very grateful to my parents for all the emphasis they put on education and family and sports and Scouts.” He called his father “a great dad.” How did he make his living? “I don’t know the details of it,” Allen said. He did some teaching, but Allen said he was not sure where or what age groups, whether elementary school or high school or something else. He had an office at home. “To me, he was my dad. So that’s what I knew.” He says he never read anything his father wrote. After some fidgety minutes, I asked Allen how he became an Eagle Scout...

The Modern Republican Wingnut View in a Nutshell II

Chris Hayes:

Who’s Afraid of Democracy?: Given the choice between democracy without free markets or free markets without democracy, many conservatives would cheerfully opt for the latter.... This central tension between laissez faire capitalism and the redistributive whims of a democratic electorate isn’t discussed much. But it can poke through the surface during moments of clarity, such as the last election, when minimum wage increases passed in every state—red and blue—where they were on the ballot.... Democracy fails to produce good policies precisely because it reflects the will of the majority. Or, as H.L. Mencken once put it: “Democracy is the theory that the people know what they want and deserve to get it good and hard.”... “If people are rational as consumers and irrational as voters,” [Bryan] Caplan writes, “it is a good idea to rely more on markets and less on politics.”... [T]he book eats its own tail. Caplan wants to grant a presumptive authority to the consensus view of economists, but the consensus view of economists is that voters are rational, which is, of course, precisely the position he wants to convince us is wrong.... Caplan’s willingness to embrace the darkness, however, is what makes this book so important.... Given a choice between democracy without free markets or free markets without democracy, many conservatives would gladly choose the latter. Hence Milton Friedman advising Augusto Pinochet in Chile and the Bush administration’s support of a coup in Venezuela. And the book’s manifest elitism is not fringe...