Where have all the good jobs gone? Long time passing...

George Will understands everything but the economics; the grand jobs question is answered here as a simple application of the Coase theorem. Perhaps the most basic of transactions costs is the cost of hiring/getting hired. Who pays this cost, the employee or employer? What raises this cost? What lowers it?

Link posted by Steve Antler : 9:39 AM

Tuesday, December 16, 2008

One of those small details that can make a big difference...

Typical of analysis found today in the leftosphere, one "Carl" at the liberal blog the reaction lectures about those pesky hedge funds, their evil habit of short-selling, and how the Madoff scandal is but the proverbial tip of a proverbial iceberg. What Carl doesn't seem to understand, however, is Madoff never actually owned the financial instruments in his fund's portfolio.

Link posted by Steve Antler : 12:09 PM

If I'm so smart, why am I not rich?

Great analysis of the lumpenprofessoriat: [T]he modern university intellectual's pose of social hostility...does not arise from a rational analysis of the American order, but as a distortion of...personal circumstances. I should make better money; I should get the social recognition of a doctor or lawyer (my education is equal to or greater than theirs). To conceal the neurosis of this resentment from myself, I generalize it, transforming it into a social ideal. Why should a businessman make more than a teacher? (If a plumber thinks he can earn $250,000, however, he's a joke.) Thus personal resentment and feelings of superiority are translated into an idealized image of social concern and responsibility. The humanities or social science professor, hating society, sees himself as the better man. And only wishes to associate with those who share his ideals-that is, those with equally idealized images of themselves.

Link posted by Steve Antler : 8:18 AM

Remember -- the buy-in was one million dollars!

Here's the start of a potential bail out of Madoff investors! Your tax dollars at work, protecting Steven Speilberg and other poor victims: "We lost our life savings," said investor Joan Sinkin. Brooklyn transplants to Florida, Sinkin and her husband Arnold said they lost 85-percent of a nearly $1 million investment. Doesn't John Slattery realize that, unlike Joan Sinkin and her husband, the average American enjoys a nest egg of way, way under $150,000?

Link posted by Steve Antler : 7:06 AM

Wednesday, December 10, 2008

I must have said this before because I say it now...

As we have heard many times before in other contexts, Joseph E. Stiglitz insists (with some anger) everything would have been okay if only he had been in charge of it all. But what does he think is the core of the problem? The answer is -- culture: When repeal of Glass-Steagall brought investment and commercial banks together, the investment-bank culture came out on top. There was a demand for the kind of high returns that could be obtained only through high leverage and big risktaking. I suppose I have only one problem with this: Stiglitz is an economist, not an anthropologist, so what does he really know about culture anyway?

Link posted by Steve Antler : 7:57 AM

Tuesday, November 25, 2008

Reliable sources tell us...

In the European International Herald Tribune Dan Bilefsky evaluates Vaclav Klaus; this may be the first major news story based on twenty year old information from the communist secret police.

Link posted by Steve Antler : 8:07 AM

Friday, November 21, 2008

Einstein Revisited

The great equation has now finally been proved but, since the necessary calculations involve "envisioning space and time as part of a four-dimensional crystal lattice, with discrete points spaced along columns and rows", can we take the results to mean time/space is genuinely discrete rather than continuous? This question has bothered me for about a decade and a half.

Link posted by Steve Antler : 10:08 AM

Thursday, November 20, 2008

Regarding this upcoming Secretary of Commerce, former customer of Superior Bank comments on Penny Pritzker's role in the Obama campaign: "They still owe me $113,000," said Fran Sweet, 63, of Downers Grove, who deposited her $480,000 retirement account at Superior a month before it collapsed. "To the Pritzkers, this is nothing. They probably think, 'Why pay her back?' That's nothing. But we're all upset that someone who made these decisions could be in that position." UPDATE: Oopsies, I guess EconoPundit has lots more influence than we thought!

Link posted by Steve Antler : 12:22 PM

Monday, November 17, 2008

Just as we thought...

In San Francisco (where else?) Kathleen Pender tells you how to keep your fancy new car while paying for your mortgage with other peoples' money: Your mortgage must be owned or guaranteed by Fannie Mae and Freddie Mac or held by one of the participating loan companies. If you meet these requirements and can document your income, your servicer will reduce your monthly mortgage payment - including property taxes, insurance and association dues - to 38 percent of your gross income. The reduction can be accomplished in one or more ways: -- Reducing the interest rate, but not below 3 percent. (The new rate, if below market, goes back to a market rate after five years.) -- Extending the term of the loan up to 40 years. -- Reducing the principal on which monthly payments are calculated. Unpaid principal is added to the loan balance and due when the homeowner sells or refinances. The reduced interest payments never have to be repaid. If you owe more than the home is worth, the plan will only reduce principal down to 100 percent of market value, according to an official for the Federal Housing Finance Agency, which supervises Fannie Mae and Freddie Mac. If all three of these maneuvers can't reduce your payments to 38 percent of income, you won't get a fast-track modification but could still request a customized deal, says the official, who spoke on the condition of anonymity. The streamlined process looks only at income, not assets. If you refinanced your home to buy a Mercedes or own another home, you won't be expected to sell them to pay your mortgage. UPDATE: More here.

Link posted by Steve Antler : 6:57 AM

Wednesday, November 12, 2008

We must help them...

In California and Nevada struggling "underwater" homeowners are forestalling HDTVs until the post-Christmas sales, cutting back on DVD purchases (was 50 per month, now only one), and playing board games (but not monopoly).

Link posted by Steve Antler : 5:34 AM

Okay (you may well ask): what's the right message?

What will most readers take away from Michael Lewis' schadenfreude-laden critical essay on Wall Street entitled (wonder why?) "The End"? My answer is: probably the wrong message. When billions of dollars are wasted by young highly educated financial experts who don't actually know how to allocate capital you should be applauding just how much real value the genuine (nonfinancial) economy generated in the first place. That young financial wizards built leveraged pyramids on this base of genuine wealth is neither new nor surprising. Capitalism continually opens opportunities to rent seekers. And -- sooner or later -- the market corrects inefficiencies created by exploiters of rent seeking opportunities. That's what's happening now. That's what Lewis is describing. UPDATE: Another right message we might take away: this is the way New York ends...

Link posted by Steve Antler : 4:38 AM

Saturday, November 08, 2008

More New-Utilitarian Redistribution?

You may want to compare the average auto industry salary with your own before deciding whether bailouts are justified. Shifting resources from any taxpayer earning an average American salary to an auto worker earning an average salary amounts to shifting money from lower- to higher-income people.

Link posted by Steve Antler : 3:46 AM

Thursday, November 06, 2008

Well, nothing tangible at least...

Hasn't John Kotkin noticed the main difference between the new Starbucks-sippping "creative class" and those smelly old-fashioned "military contractors, manufacturers, agribusiness[es], pharmaceutical [companies], suburban real estate developers, energy companies, old-line remnants on Wall Street and other traditional backers of the GOP" is that the new creative class people don't actually, well, you know, produce anything?

Link posted by Steve Antler : 8:30 AM

Remember that James Burnham guy?

John Hinderacker forgets that old important distinction between ownership and control: Barack Obama is a rather mysterious figure: despite the fact that every policy he advocates will hurt the economy and the stock market, he has been the darling of Wall Street. Employees of securities firms have been among the biggest contributors to his campaign. I'm not sure how to explain that, and I don't really think that today's steep drop represents a case of buyer's remorse. That will come, I think, but not for a while. Sort of like being suprised at high CEO bailout salaries just as their firms go under, no?

Link posted by Steve Antler : 7:15 AM

Sunday, October 26, 2008

Yes, but can he get it for them wholesale?

My good friend and Roosevelt University colleague Steve Balkin -- with whom I have substantial but always-friendly political disagreements -- has suggested I post this modest proposal. Comments are welcome. Sell Michigan to China: Financing a US Economic Recovery ----By Steve Balkin, Professor of Economics, Roosevelt University, October 17, 2008 Sell Michigan to China – that is what I'm proposing as a way to finance the economic recovery for the US. Think of it. Both countries could benefit. Michigan is now a failed state. Of all the 50 states, it has the highest unemployment rate of 9% in August 2008. Its largest city, Detroit, has the highest crime rate of any US City. Real estate values have been dropping precipitously, and the state and local governments are experiencing hemorrhaging budget deficits. There is an abundance of empty land, empty factories, and abandoned buildings. These people are leaving the state to move where they can more likely find work. China has its economic and social problems too. A major problem in China, as the Chinese themselves express it, is "it has too many people", 1.3 billion, over four times the population size of the USA. Managing its environment, creating a safety net, and continuing its high rate of economic growth to create jobs in the cities for its vast underemployed rural population are daunting tasks that China fails at as much as it succeeds. China expects it can eventually capture a major share of the global auto industry and hopes that more of its population will learn English to fit into the advanced global economy. A lot of our debt is held by China, the country we trade with the most after Canada. China holds about a half a trillion in U.S. Treasury securities and has foreign exchange reserves totaling about $1.5 trillion. When an individual is in debt, there are basically five options: save to redirect consumption to pay down debts, work more to generate extra income, reschedule debts, find a friend or relative to pay your debts for you, sell assets, or default. I am suggesting the US sell some assets. So, I did a thought experiment to consider this option, sell Michigan to China. This will settle up with them -- cancel our debt with them -- as well as bring their economic might, thrifty people, and manufacturing prowess to North America -- in addition to a lot more Chinese restaurants. Michigan would become a hybrid state similar to Hong Kong, now a Special Administrative Region of China. English and Mandarin would be the official languages. If this idea is too shocking, then we could instead just lease Michigan to the China for 99 years. Michigan was originally Native American, heavily Chippewa and Iroquois, whose ancient ancestral roots are in Asia. Later Michigan became French; then British; then part of the USA; and with this financing strategy, will become Asian again. There is American precedent for this strategy. In 1803, Napoleon Bonaparte was fiscally in trouble due to his adventurous foreign wars. So he had to sell the French North American territory of Louisiana which now contains all or part of 15 US states in the center of North America. The price was about 20 million dollars, half in cash and half in debt cancellation. As part of the deal to create a Special Administrative Chinese Region of Michigan in North America, China would have to agree to abide with the international North American regulations set up by the USA and Canada such as those of the Great Lakes Commission and NAFTA. People in Michigan, could stay and retain their property rights or sell to the Chinese and move elsewhere. Of course, people in Michigan would have to approve their transfer to China. If approved, China would be sending millions of its people (perhaps 10 to 50 million) to live in its new North American region buying up residential and commercial property, starting new factories, recovering old jobs and creating new ones, and re-populating Detroit. It would be expected that joint partnerships and ventures would be formed between Chinese automobile corporations and the Big Three, injecting capital, manufacturing know-how, and access to the soon to be largest green auto market in the world – China. Math scores at Michigan schools would shoot to world standards. My family moved to Michigan in the 1950s because of the economic boom there. Michigander families of today would likely want to stay and welcome the economic and social renaissance of their state. I think Chinese people would personally enjoy moving to and vacationing in Michigan. I think they would enjoy its natural beauty, the clean air and water (up north), the Blues and Jazz heritage, the culturally rich ethnic enclaves of African-Americans, Mexicans, Polish, and Arabs; the prowess of its sports teams, its museums, universities, and casinos; and its indigenous foods such as Coney Island hot dogs, Detroit style pan pizza, grilled onion laden sliders, and Yooper meat pasties. A side benefit of this is a demonstration that borders of nation states can be fluid. The USA and China are already bound together in a marriage of economics. It would be advantageous for China to have a region in North America (in the Midwest right between Canada and the USA) and it would be advantageous for the USA to be relieved of much of its foreign debt so it can pay for the finance industry bailout as well as better education, universal access to health care, and an improved infrastructure. Selling Michigan to China would show the world that it is economic and cultural exchanges that define a place and not its borders. It would demonstrate that expending resources to fight over sovereign borders is wasteful and that in its place, cooperation and exchange, for goods and services and also debt removal for land, is not only peace-promoting but also economically smart. Both China and the USA have their faults. People in the USA can learn a lot from China and the Chinese can learn a lot from the USA. Bringing part of China into the heartland of North America is a way to foster and accelerate that process of bilateral learning and get America moving ahead.

Link posted by Steve Antler : 12:03 PM

Friday, October 17, 2008

How many plumbers do you know who make a quarter of a million?

Well, maybe not too many, but here are some numbers: If you are a self employed experienced licensed plumber you can charge between $35-$150 per hour, depending on which part of the United States you live. In larger cities the rates are at the highest end of the spectrum. I believe Boston plumbers charge over $125 per hour. Mid Coast Maine is between $45 & $75 per hour. So, at varying hourly rates here's what someone working a 40 hour week for fifty weeks per year would gross: HOURLY/GROSS $75 / $150,000 $100 / $200,000 $125 / $250,000 $150 / $300,000 $175 / $350,000 $200 / $400,000 I'd have to do some checking on it, but I think any small manufacturer (like myself) would confirm there are many skilled tradespeople in Chicago who bill out their work at $125 per hour. Those who claim to speak for "the people" sometimes don't actually know a lot about the daily lives of workers and the businesses employing them.

Link posted by Steve Antler : 7:10 AM

Joe the Plumber and his False Class Consciousness...

His taxes won't go up but he doesn't know it. Why do I suspect that's really not the point?

Link posted by Steve Antler : 6:31 AM

Monday, October 13, 2008

Roosevelt lite...

Here's the Obama Economic Plan -- a kind of New Deal II that shares its ancestor's dangerous economic incoherence in a major way. Attacks of major social engineering from all angles shout down rational thought and reasonable private sector planning.

Link posted by Steve Antler : 1:09 PM

Take from the poor, give to the poorer...

This is a wide-ranging critique of the Obama tax proposals, but the most disturbing feature is shown in this graph: In terms of marginal tax rates the "95% tax cut" represents a massive tax increase on the working poor, and massive redistribution from poor people who work to poor people who do not.

Link posted by Steve Antler : 9:14 AM

Take the money and run...

To me this looks like discounting of a likely Obama/Democrat victory. US withdrawal means defeat and loss of current power holders' ownership/control of natural resources. Therefore, it would be wise for them to get whatever money they can raise out of the country ASAP. What am I missing?

Link posted by Steve Antler : 8:57 AM

Victims with more money than you...

Tribune reports on Highland Park homes (average value, say, $3M?) being "short sold" owing to the housing price crash. This is a good test of your ability to feel others' pain. Try real hard to imagine how bad folks feel when their $3M house is worth only $2.6M. Actually, you'll soon get a chance to really feel the pain. The banks wind up eating the loss, and you'll soon own a major chunk of those banks. Feel it. Feel the pain.

Link posted by Steve Antler : 8:28 AM

Democracy at risk...

People actually voting to tax themselves less.

Link posted by Steve Antler : 8:07 AM

Recession interruptus?

Paul the EconoMaven sends a link to this new gloomy prediction of doom fueled by Brad DeLong's analysis. Falling oil prices may reverse the cycle. An extra $30/week in each driver's pocket (do the arithmetic yourself) might turn things around. The "expectations factor" is the wild card in this situation. The MSM has been generating economic pessimism for years -- even in the middle of one of the strongest economic booms in American history. Now we actually, finally, genuinely face a downturn in the cycle. And MSM economic reportage may now have lost its brand and much of its influence. If the boy who cried "wolf!" was finally eaten with everyone in the town watching wouldn't his posthumous credibility have actually gone lower than in the story as we know it? Peoples' daily experience, rather than what they read in the newspaper, may now do more to fuel their economic expectations. Can an extra $30/week fuel a major recovery? In a world with diminished influence of MSM pessimism, the answer may well be "yes." UPDATE: O, my prophetic soul!

Link posted by Steve Antler : 7:41 AM

Scroll down for blogroll...

Please scroll to bottom to find the blogroll. (I've made the usual beginner's mistake of fooling around with my template without a backup. Will try to restore things later today.)

Link posted by Steve Antler : 6:29 AM

Friday, October 10, 2008

Obama and Acorn

Okay, I obtained a document some time ago but decided to leave things alone and not post it. Since The Cleveland Leader is now publishing excerpts from the article, and since (according to the Leader) Social Policy has pulled the article from its web site, here's a .pdf of the whole thing.

Link posted by Steve Antler : 10:18 AM

Wednesday, October 08, 2008

The "Asian Financial Crisis" -- anyone remember that?

Gary Becker: Is this a final "Crisis of Global Capitalism" -- to borrow the title of a book by George Soros written shortly after the Asian financial crisis of 1997-98? The crisis that kills capitalism has been said to happen during every major recession and financial crisis ever since Karl Marx prophesized the collapse of capitalism in the middle of the 19th century. Although I admit to having greatly underestimated the severity of the current crisis, I am confident that sizable world economic growth will resume before very long under a mainly capitalist world economy. Consider, for example, that in the decade after various predictions of the collapse of global capitalism following the Asian crisis, both world GDP and world trade experienced unprecedented growth thanks to the power of market competition on a global scale. The South Korean economy, for example, was pummeled during that crisis, but has had significant economic growth since. World economic growth will recover once we are over the present severe financial difficulties.

Link posted by Steve Antler : 9:59 AM

Sorry to say he just doesn't get it...

Max Schulz: McCain clawed his way back into the race this summer by riding the wave of outrage over the offshore-drilling ban. He further helped his cause by picking a running mate from one of the most important energy-producing states in the Union. How ironic that he is giving back those gains by failing to appreciate that the 2008 contest will go down as the Energy Election.

Link posted by Steve Antler : 9:36 AM

Tuesday, October 07, 2008

This /....../ Just /...................../------/ In

Hulu is /===========================/ going to stream tonight's / ====== / debate.

Link posted by Steve Antler : 8:10 AM

Depression, Obama, and FDR...

The argument FDR prolonged the Great Depression is resurfacing on the web; here's a link to an early working-paper draft of the Cole/Ohanian paper that's probably the latest peer reviewed contribution to this literature.

Link posted by Steve Antler : 8:03 AM

Monday, October 06, 2008

Weight problem?

Are the polls using an incorrect weighting scheme? Is their math wrong? UPDATE: A brief tech guide to foibles of political polling can be found here.

Link posted by Steve Antler : 9:19 PM

Yes, but...

Paul ("EconoMaven") H. sends us a link to this article with the following comment: Trillions will be needed to save the world banking system. Since only the Chinese, the Russians and some of the Arab states have spare cash, they will have to take over. Bye bye cronie capitalism, hurray to not sure what. This is all well and good, but as Arnold Kling points out (in an editorial he complains nobody will publish -- "Earth to Arnolt: it's the title, "Lamps are going Out," that's scaring people!") the only spare cash they hold is in the form of US dollar reserves. My low-value two cents are as follows: from the leading economic indicator frontlines we can tell you buyers have been dramatically switching out of credit card purchases and into checking account drawdowns for about six weeks now. We might even see the first indicators of winding down of consumer credit with tomorrow's release of new numbers.

Link posted by Steve Antler : 8:14 AM

Involvement with Keating Five: Bug or Feature?

I think this is a terrible mistake for the Obama side. It draws attention to the fact McCain has been around long enough to have dealt with similar crises and their attendant scandals and systemic economic problems.

Link posted by Steve Antler : 7:53 AM

Sunday, October 05, 2008

Postutilitarian redistribution...

I'm not even going to bother to show you the numbers, but I'll just say it: right now the average US public sector employee has a higher income than the average private sector employee, meaning any increase in taxes to deal with public sector salaries redistributes income from lower- to higher-income people. Currently a popular essay on the web, Michael Malone's "The End of an Era" predicts a bright technological future following an unsettled present. But still, disturbing but possible, this comment on the essay (scroll down to find it) raises the credible spectre of a permanently postutilitarian America: Rather than expecting technological advances to overcome Washington corruption, I would predict another scenario: In a few years the U.S. will come to look like Argentina. Argentina has defaulted on foreign debt and as a result has been cut off from outside funding for seven years. It depends entirely on Hugo Chavez' government for help in papering over its large budget deficits. In turn, government welfare expands. We won't look like Venezuela, with its "Bolivarian brigades" that sustain the Chavez regime, because we do not have oil available for export via a state-owned enterprise. But politicians in Washington nevertheless have become enamored of the Chavez-statist business model, which includes increasing the already very large public employment rolls. The new minority in the U.S. will be non-government employees and business owners, who will basically have no say in how things are run but will be taxed to help pay for it. Don't count on the internet -- or any other technology -- to restore the U.S. to fiscal sanity. It can't be done. Before long, most Americans will be dependent on a (broke) federal government for their livelihoods, and thus will be in no mood to buck the system. Without fiscal sanity, freedom goes out the window, by the way. That's fine with the folks in the Capital. No problem. Argentina, here we come.

Link posted by Steve Antler : 7:39 AM

Saturday, October 04, 2008

MSM should read as well as cite, perhaps?

Mark Stricherz gets it mostly right and does a good job integrating Thomas and Mary Edsall's Chain Reaction into a larger context, but he shortchanges the Edsalls by, it would seem, not actually having read their book. The 28 member body called the "Commission on Party Structure and Delegate Selection" -- the McGovern Commission -- is dealt with in detail by the Edsalls, and they credit it, rather than racial prejudice alone, as the main cause of the Democrats' perennial problems.

Link posted by Steve Antler : 11:58 AM

U herd it here 1st...

Mike Allen and the Obama folks who are feeding him these very basic talking points will soon be embarassed when they realize how close is McCain's to the old Democratic health care plan constructed by none other than Hillary Clinton. The crucial element, as she wound up seeing it, was lack of national competition for a "standardized" product. True, she had a tin ear when dealing with businesses smaller than GM, but in proposing consolidated regional markets and standardized plans she came quite close to what will probably be the final draft of the McCain plan. Just wait. The Clintons may soon point to weakness and naivety (lack of "nuance," perhaps?) in Obama's critique of the McCain health proposals.

Link posted by Steve Antler : 10:55 AM

Good news from Karl Case...

The latest numbers for the Case/Schiller S&P multicity US home price index appeared Sept. 30th. No time to post all the diagrams, but here's Chicago's plot: No question but the index says everywhere the falling trend in home prices is moderating. UPDATE: It would appear Martin Feldstein, who suggests a positive feedback loop (falling home prices are causing additional price declines), is ignoring the most recent numbers.

Link posted by Steve Antler : 10:17 AM

Friday, October 03, 2008

Why not add voter registration and an automatic vote for Democratic Party?

Here's a novel idea from the oddly-titled blog "The Moderate Voice": If we provided that any illegal alien could secure all necessary working papers to become "legal" so long as they join a recognized American union and remain in good standing, we would solve all of the problems associated with Mexican workers. Then employers have no excuse. If they need more low-skilled workers, they need only turn to the unions. Any illegal alien who chooses not to join a union, will not be able to find work. Unions will help workers adjust to our culture, language and work ethic. They will help them secure training and better wages, make sure they are not competing with Americans, and help insure they have health and other insurance. American workers, whether in guilds, trades or unions, have always been there to help immigrants adapt. They will do it again.

Link posted by Steve Antler : 11:08 AM

The easiest thing to spend...

...is other people's money: ...before we conclude that markets failed, we need a careful analysis of public policy's role in creating this mess. Greedy investors obviously played a part, but investors have always been greedy, and some inevitably overreach and destroy themselves. Why did they take so many down with them this time? Part of the answer is a political class greedy to push home-ownership rates to historic highs -- from 64% in 1994 to 69% in 2004. This was mostly the result of loans to low-income, higher-risk borrowers. Both Bill Clinton and George W. Bush, abetted by Congress, trumpeted that rise as it occurred. The consequence? On top of putting the entire financial system at risk, the hidden cost has been hundreds of billions of dollars funneled into the housing market instead of more productive assets. Beware of trying to do good with other people's money. Unfortunately, that strategy remains at the heart of the political process, and of proposed solutions to this crisis.

Link posted by Steve Antler : 9:58 AM

Today is Friday...

The old Two-Ton-Baker song went "Friday: fish-day, everybody happy , well I should say!" Well, it's Friday and it's payday and now we'll see just how many anecdotes appear about credit shortages around the nation. If I'm wrong we'll all review Irving Fisher's debt-deflation theory of the Great Depression and its early role in the eventual creation of the Cowles Commission. (Despite the recent more-optimistic forecast memo I ran the latest Eviews version of Ray Fair's US Model and got a recession prediction, by the way. First time ever.)

Link posted by Steve Antler : 5:28 AM

Trouble in social paradise...

It turns out European banks are as greedy and prone to cowboy-behavior as are all those Wall Street tycoons: The storyline is evolving much as eurosceptics predicted, yet the final chapter could end either way as the recriminations fly. Germany has already shot down the French idea. The nationalists are digging in their heels in Berlin and Madrid. We are fast approaching the moment when events decide whether Europe will bind together to save monetary union, or fracture into angry camps. Will the Teutons bail out Club Med? If not, check those serial numbers on your euro notes for the country of issue. It may start to matter.

Link posted by Steve Antler : 5:24 AM

Thursday, October 02, 2008

The second time as farce, yet again...

The NYT now warns American universities -- Vermont, for example -- are losing full losing access to their short term investment funds. Oh no! American education is in danger! Lest you worry too much about University of Vermont here's the latest on its endowment and its over 13% growth during the previous fiscal year. These institutions are like the English monastaries of Henry VIII's time -- fat, wealthy, growing, and quite uninterested in sharing anything with, you know, those starving "poor" people on the other side of town. Don't worry about the universities. They've wallowed in government subsidies as their endowments have grown almost beyond measure. With only one exception that we know of, they've spent nothing to make higher education more affordable for all families.

Link posted by Steve Antler : 2:37 PM

The second time is farce?

I've been joking (joking?) with friends for weeks that I'm just waiting for news that the Reichstag is burning. I think the building is burning.

Link posted by Steve Antler : 8:13 AM

Wednesday, October 01, 2008

He speaks who signed the legislation into law...

Bill Clinton explains why repeal of Glass-Steagall has nothing to do with the current situation. (We're not calling it a "crisis" until Friday -- payday -- generates the payroll problems so many are predicting.)

Link posted by Steve Antler : 7:39 AM

But how many Americans know what "percentage" means?

At last David Cay Johnston writes something I can agree with.

Link posted by Steve Antler : 7:30 AM

In the emailbox...

A good friend and former colleague at Memorial University sends us the following news from the once-impoverished Province of Newfoundland and Labrador: Newfoundland is awash in petrodollars and next year is forecast to become "Have Province" with money going the other way to Ottawa. What's the lesson? I think it is "drill here, drill now, pay less."

Link posted by Steve Antler : 7:24 AM

Tuesday, September 30, 2008

Ich bin ein Skeptiker...

The incomparable Dasha sends us this translation from the Sept. 30th edition of the daily Berlingske Tidende: The International Monetary Fund (IMF) has made a clear statement: With its current system Europe cannot respond to a crisis like that in the US in the same way the latter has. The IMF recommends more regulation and control of banks, which can be tempting in the present situation. However we should ensure that the mechanisms of the free market are soon re-established. Otherwise we will end up in a crisis like the one in the 1930s when the screws were tightened to such an extent that the economy didn't recover until the 1950s. Hopefully we have learned from history so that this part of it will not be repeated.

Link posted by Steve Antler : 12:01 PM

Lenders will find borrowers sooner or later...

Jeffrey A. Miron: ...a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources. Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time. Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen. Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents. The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion. If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth. It seems to me there's an inherent contradiction in all this. Virtually every public figure who can find a TV camera is engaging in rent-seeking behavior, claiming this will all turn into a systemic crisis and catastrophic collapse unless the all-important public sector rescues the helpless private sector. But the public sector has lost its credibility. Each passing day with everyday economic life going forward more-or-less normally makes all public figures look like spoiled children behaving badly to grab grownups' attention.

Link posted by Steve Antler : 11:18 AM

What happened was this...

Best of the comments found beneath this from ABC: So let's see: - Pelosi brings the bill to a vote, yet no speaker does that unless they know they have the votes beforehand. - She has at least five different Democratic committee chairman vote no and at least 12 Democrats on Frank's committee vote no. - More than 90 Democrats in total vote no. ALL of them are in tight races or traditional Republican districts. - The bill fails, and when Republicans tried to ask for extended time to twist some arms the Democrats, INCLUDING BARNEY FRANK, screamed for "Regular Order", meaning no special cirumstances should be allowed. Pelosi agreed, closing the vote. Conclusion: Pelosi did not want the bill to pass. Why? A poor economy is good for Obama, that's why. Simultaneously she made Bush look like an even bigger fool (if that's possible) and blamed the poor economy on House Republicans. Pelosi is willing to send the country headlong into a depression as long as it makes Obama look good. Democrats, what has happened to the party of JFK?

Link posted by Steve Antler : 10:59 AM

Monday, September 29, 2008

A living nightmare...

Yes, a horribly bad dream come true -- and you can find most of my youth and middle age in the upper left hand corner of the diagram. UPDATE: More here. UPDATE II: And, for comic relief, here's the stopped clock that every six months or so is sort-of-right, uh, twice (or maybe only once?) a day. UPDATE III: Yes, I know, it's supposed to be first time as tragedy, second time as farce, but here you can consider UPDATE II the latter and this the former.

Link posted by Steve Antler : 8:05 AM

Friday, September 26, 2008

"Deal May Be Dead -- Democrats Blame McCain"

Of course the Democrats have majoriies in both houses so they can make happen any deal Bush won't veto (and who thinks he's going to veto anything)? Yeah, that bad McCain. He made us do it. UPDATE: Paul Krugman asks where are the "grownups"? Why wasn't the Paulson plan convincing? Why is McCain playing spoiler Earth to Paul, Earth to Paul, please come in: the Democrats are in the majority in both houses. They can pass whatever legislation they want. Hello?????

Link posted by Steve Antler : 6:16 AM

Thursday, September 25, 2008

Pigs are flying and...

on Fox News Dennis Kucinich is talking about the bailout and I agree with him.

Link posted by Steve Antler : 3:53 PM

Negative energy earmark...

Porkbuster altert! Porkbuster alert! Glenn Reynolds -- are you listening? Here's an inverse earmark being sneaked into the bailout package! Hello? Help? Anyone listening?????

Link posted by Steve Antler : 2:26 PM

Who is being saved? Where are they?

Paul Krugman says the bursting of the housing bubble has led to a surge in defaults and foreclosures. Google the term "surge in defaults and foreclosures," you'll get six pages of current news results, but when you google the same term for images: you get close-ups of concerned faces, empty homes with signs in front, folks lined up in front of banks, but not a single shot of a family with all their furniture sitting in front of a house they were thrown out of. In our day to day lives every one of us has once or twice seen this kind of unhappy circumstance, and in California the foreclosure rate is now supposedly up 300% and, we're told, thousands of families are being thrown out of their homes. So why can't I find even one news photo of a family and all their furniture sitting around in front of a foreclosed home? UPDATE: Send me a link to the photo I missed. I'm waiting. UPDATE II: And then again, we have stuff like this: "A foreclosure would be devastating," he says. "My wife and I would have to start from scratch."

Link posted by Steve Antler : 9:08 AM

Wednesday, September 24, 2008

What I think...

Okay here goes, this is my perfectly amateur opinion right now. The sky is not falling. Paulson knows this. He'd like lots of additional power and money (for himself and the administration) so that when business returns to more-or-less ususal he (and the administration) can take the credit (no pun intended). UPDATE: Let's paraphrase and put in really simple terms what we long ago learned from Irving Fisher: it is sometimes useful (and reasonably accurate) to imagine a "national balance sheet." Right now our national balance sheet shows we're insolvent. We might solve the problem overnight -- add substantially to the asset side of the balance sheet, in other words -- by credibly adopting an "all of the above" policy of insourcing all American energy production. Indeed, the process may have already begun. UPDATE II: Lending goes on (although all the graphs show flatness in the latest observations). UPDATE III: John "carpe diem" McCain makes his move and, perhaps, determines the outcome! Remember, even if the crisis heals itself, those who get in front of a flexible policy to address it get to take credit for the healing. As this is written Obama is speaking live on TV, so I can liveblog a response; Obama is now taking credit for suspending the campaign? I don't get it. He's now explaining a sort of confusing set of phone calls back and forth. Does he look presidential? I leave it to you to decide. Okay, he's now answering reporter's question saying the debate should proceed. McCain was more decisive "in his own mind" than, says Obama, he was on the telephone. Which side looks more decisive? I leave it to you to decide. A further thought -- Eisenhower (1952): "I shall go to Korea!" McCain (2008) -- "I shall go to Washington!" McCain's action seems like the sort of decisive moment -- "Mr. Speaker, I am paying for this microphone!" -- that changes everything. Now Obama is making his standard campaign speech. McCain has suspended his campaign owing to the national emergency. Who looks better? I leave it to you to decide. UPDATE IV: Just an idea, but if I'm right you heard it here first: won't the McCain camp now suggest the VP debate go forward Friday night? Sweet!

Link posted by Steve Antler : 7:26 AM

Crime Unit steps in...

Barring some prime time urgent presidential address on national television, this now puts everything on hold. The nation awaits uncovery of bad guys and evil doings. It's a shame John Kenneth Galbraith is dead. He'd write about it with such witty irony. (Remember -- "In Goldman Sachs we Trust"? What a guy.) Of course you have to remember all this is mostly above the FBI's pay grade. Paulson and company have trouble explaining to Congress exactly what's going on -- how will those great folks at the FBI sort it out? Investigators say that despite calls from some quarters to prosecute wealthy bankers who helped fuel the mortgage bubble, it is unclear what crimes they will find at the root of the exotic financial vehicles that have sickened banks around the world. A more likely outcome of the probes will be hundreds more retail-level fraud cases of the type already being brought against brokers, real-estate agents, and buyers related to falsified mortgage applications. UPDATE: Wikipedia provides this useful graph: It is my understanding national mortgage foreclosures are now roughly twice their 1995-2005 trend value. Mortage fraud -- from a quick view of the graph -- seems to be maybe four to five times its trend value for the same period. On main street, exactly who is in trouble? UPDATE II: On basis of this post Glenn Reynolds asks why not solve the mortgage crisis by giving money to homeowners? I'll tell you why, Glenn. If the lenders were unable to sort out the crooks from the real home buyers, why do you think the federal government will do better? UPDATE III: A significant problem may be that folks' personal experience of the "crisis" is very class-stratified. Well-off people (like myself) tend to encounter the white-collar-crime evidence of the crisis -- the guy in the condo who borrowed a half million and declared bankruptcy, or the house next door that somehow generated a mortgage twice its value before the owner sold out and vanished. Our daily experience, in other words, makes this look like a problem only for extremely wealthy financial folks and small time crooks.

Link posted by Steve Antler : 7:09 AM

Monday, September 22, 2008

Out on a limb we go once again...

Without saying it, I think Bill Kristol has (in effect) predicted neither McCain nor Obama will support the administration's bailout plan. It's the prisoner's dilemma. If McCain comes out against, Obama's got to follow.

Link posted by Steve Antler : 1:27 PM

Sometimes less is more...

Newt says it for me: Implementation of the Paulson plan is going to be a mess. It is going to be a great opportunity for lobbyists and lawyers to make a lot of money. Who are the financial magicians Paulson is going to hire? Are they from Wall Street? If they're from Wall Street, aren't they the very people we are saving? And doesn't that mean that we're using the taxpayers' money to hire people to save their friends with even more taxpayer money? Won't this inevitably lead to crony capitalism? Who is going to do oversight? How much transparency is there going to be? We still haven't seen the report which led to bailing out Fannie Mae and Freddie Mac. It is "secret"[?] Is our $700 billion going to be spent in "secret" too? In practical terms, will a bill be written in public so people can analyze it? Or will it be written in a closed room by the very people who have been collecting money from the institutions they are now going to use our money to bail out? UPDATE: So you say "but we have to do something." Okay. This is the something we have to do. UPDATE II: And for the tinhat bring-back-Glass-Steagall crowd, here's a primer on the subject. Somebody correct me if I'm wrong: (a) Wasn't much of Glass-Steagall aimed at creating smaller, more-local (and therefore less-powerful) financial institutions, closer to the communities they served (and therefore less politically challenging to Washington bureaucrats)? (b) Isn't the current crisis mostily attributable to the size (and transparency) not of institutions but of the financial instruments created by these institutions? Is it somehow true that only "large" institutions can create "large" instruments? As Meagan puts it: If Glass-Steagall's repeal had meaningfully contributed to this crisis, we should see the failures concentrated among megabanks where speculation put deposits at risk. Instead we see the exact opposite: the failures are among either commercial banks with no significant investment arm (Washington Mutual, Countrywide), or standalone investment banks. It is the diversified financial institutions that are riding to the rescue.

Link posted by Steve Antler : 7:12 AM

Sunday, September 21, 2008

And nobody will listen to them...

Economists against bailout. Oh, you want to know my opinion? I can't get past Henry Paulson telling me this morning that I had to look not at equities markets -- where everything is transparent and mostly known -- but rather at all those thoroughly opaque, non-transparent debt markets. Of course the problem is there's nothing to see there.

Link posted by Steve Antler : 2:31 PM

Saturday, September 20, 2008

Two Democrats...

Charlie Rangel is a rich tax cheat; -- FDR was disabled. "But seriously Rep. Rangel, would you agree we can attribute President Roosevelt's uncanny popularity to voters' kindness regarding his disabilities?"

Link posted by Steve Antler : 2:41 PM

 
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