"Restore(s) a little sanity into current political debate" - Kenneth Minogue, TLS "Projects a more expansive and optimistic future for Americans than (the analysis of) Huntington" - James R. Kurth, National Interest "One of (the) most important books I have read in recent years" - Lexington Green
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Posted by Kevin Villani on 13th December 2016 (All posts by Kevin Villani)
Interest rates will eventually rise without an even more devastating policy of financial repression. When they do, rising interest costs will produce a vicious cycle of ever more borrowing. We are already approaching the “event horizon” of spinning into this black hole of an inflationary spiral and economic collapse from which few countries historically have escaped. A substantially higher rate of growth is the only way to break free.
National economic growth is typically measured by the growth of GDP, and citizen well being by the growth of per-capita GDP. The long run trend of GDP growth reflects labor force participation, hours worked and productivity as well as the rate of national saving and the productivity of investments, all of which have been trending down.
The population grows at about 1% annually and actual GDP growth averaged 2% overall for 2010-2016 (using the new World Bank and IMF forecast of US GDP at 1.6% for 2016), hence per capita GDP grew at only 1%. Moreover the income from that 1% growth went primarily to the top one percent while 99% stagnated and minorities fell backwards.
Why we are approaching the Event Horizon
The Obama Administration annually predicted a more historically typical 2.6% per capita growth rate, consistent with the historical growth in non-farm labor productivity. How could their forecasts be so far off?
The Obama Administration pursued the most massive Keynesian fiscal and monetary stimulus ever undertaken. Such a policy generally at least gives the appearance of a rise in well being in the near term, as the government GDP statistic (repetitive, as the word “statistic derives from the Greek word for “state” ) reflects final expenditures, thereby imputing equal value to what governments “spend” as to the discretionary spending of private households and businesses in competitive markets. But labor productivity gains stagnated at only about 1%, most likely reflecting the cost and uncertainty of anti-business regulatory and legislative policies that dampened investment, something the Administration denied, trumping even a short term boost to GDP.
As a result the national debt approximately doubled from $10 trillion to $20 trillion, with contingent liabilities variously estimated from $100 to $200 trillion, putting the economy ever closer to the event horizon. Breaking free will require reversing the highly negative trends by reversing the policies that caused them.
Technology alone isn’t sufficient
Obama Administration apologists argued that stagnation is “the new normal” citing leading productivity experts such as Robert Gordon who dismissed the potential of new technologies. Many disagree, but Gordon’s findings imply even greater reliance on conventional reform.
Fiscal policy won’t be sufficient
Raising taxes may reduce short term deficits but slows growth. Cutting wasteful spending works better but is more difficult.
The list of needed public infrastructure investments has grown since the last one trillion dollar “stimulus” of politically allocated and mostly wasteful pork that contributed to the stagnation of the last eight years. Debt financed public infrastructure investment contributes to growth only if highly productive investments are chosen over political white elephants like California’s bullet train, always problematic.
Major cuts in defense spending are wishful thinking as most geopolitical experts view the world today as a riskier place than at any prior time of the past century, with many parallels to the inter-war period 1919-1939.
The major entitlement programs Social Security and Medicare for the elderly need reform. But for those in or near retirement the potential for savings is slight. Is Medicare really going to be withheld by death squads? Are benefits for those dependent on social security going to be cut significantly, forcing the elderly back into the labor force? Cutting Medicare or SS benefits for those with significant wealth – the equivalent of a wealth tax – won’t affect their consumption, hence offsetting the fall in government deficits with an equal and offsetting liquidation of private wealth. Prospective changes for those 55 years of age or younger should stimulate savings and defer retirement, improving finances only in the long run.
The remaining bureaucracies are in need of major pruning and in numerous cases elimination but they evaded even budget scold David Stockman’s ax during the Reagan Administration.
Americans will have to work more and consume less
That is the typical progressive economic legacy of excessive borrowing from the future.
The first Clinton Administration created the crony capitalist coalition of the political elite and the politically favored, e.g., public sector employees and retirees, subsidy recipients and low income home loan borrowers. The recent Clinton campaign promised to broaden this coalition, which would have accelerated the trip over the event horizon.
Reform that taxes consumption in favor of savings and a return to historical real interest rates could reverse the dramatic decline of the savings rate. Regulations redirecting savings to politically popular housing or environmental causes need to be curtailed in favor of market allocation to productive business investment.
Repeal and replace of Obama Care could reverse the trend to part time employment. Unwinding the approximate doubling of SS Disability payments and temporary unemployment benefits could reverse the decline in labor force participation.
Service sector labor productivity has been falling since 1987, the more politically favored the faster the decline. Legal services are at the bottom, partly reflecting political power of rent-seeking trial lawyers, followed by unionized health and then educational services. Union favoritism through, e.g., Davis Bacon wage requirements and “card check” increases rent seeking, particularly rampant in the unionized public sector.
Competition, of which free but reciprocal trade has historically been a major component, has traditionally provided the largest boost to well being by realizing the benefits of foreign productivity in a lower cost of goods while channeling American labor into employment where their relative productivity is highest. The transition is often painful, but paying people not to work long term is counterproductive. Immigration of both highly skilled and low cost labor (but not dependent family) generally contributes to per capita labor productivity in the same way as free trade.
None of this will be easy. The alternative is Greece without the Mediterranean climate or a sufficiently rich benefactor.
Kevin Villani, chief economist at Freddie Mac from 1982 to 1985, is a principal of University Financial Associates. He has held senior government positions, been affiliated with nine universities, and served as CFO and director of several companies. He recently published Occupy Pennsylvania Avenue on the political origins of the sub-prime lending bubble and aftermath.
Prof. Lipson assumes that the published position papers, policy speeches and the content of the stadium speeches Trump has been giving for months are irrelevant. This is incorrect. Contrary to what everybody says, Trump has been comparatively specific about what his policy positions are. The best-founded prediction is that Trump will try to do what he repeatedly and firmly said he would do in all the various policy areas.
Prof Lipson says: “… Republicans couldn’t simply say they would repeal Obamacare. They had to promise to replace it with some kind of health-care policy, probably one featuring nationwide insurance markets, health-care savings accounts, medical liability limits, and subsidies for the sick and poor.”
This is exactly what Trump ran on. Universal health care with a large competitive market component. This is actually the optimum position under current circumstances. Trump’s position on this was published early, and it is a top-line blueprint for what he will try to get through Congress, with elbow room for negotiation.
I decided to tabulate electoral votes based on current polls and current [polls] assuming a 5 point Clinton bias and a 13 point Clinton bias… It’s kind of heartening. [Trump] wins assuming only a 5 percent bias.
My friend includes an informative spreadsheet, available here in pdf format and best viewed at greater than original size, and says readers should feel free to pass it around.
My friend adds:
…One caveat; Maine and Nebraska are not winner take all. I don’t have poll data for their individual congressional districts so I was not able to model this aspect. Maine has an interesting governor so I suspect trump will get some electoral votes out of Maine even if he doesn’t win their general.
My friend’s spreadsheet is worth a serious look. Trump may have a much better chance than the pro-Democrat media are suggesting.
Posted by Kevin Villani on 24th September 2016 (All posts by Kevin Villani)
When testifying in 2010 before the Financial Crisis Inquiry Commission into the financial crash, then Federal Reserve Board Chairman Ben Bernanke recommended only one reference, Lords of Finance: The Bankers Who Broke the World (2009), presumably for the narrative that insufficient money printing in the aftermath of the Great War lead to the next one. Right idea, wrong narrative!
The US homeownership rate peaked at a rate well above the current level almost a half century ago mostly funded by a system of private mutual savings banks and savings and loans. The historical justification for federal “secondary market” agencies was political expediency – exemption from now obsolete federal, state and local laws and regulations inhibiting a national banking and mortgage market. Now government-run enterprises account for about 90% of all mortgages, with the Fed their primary funding mechanism, what the Economist recently labeled a de facto nationalization.
The Historical Evolution
How did the private US housing finance system repeatedly go bankrupt? To quote Hemingway: Gradually, then suddenly. The two competing political narratives of the cause of financial market crises remain at the extremes – either a private market or public political failure – with diametrically opposite policy prescriptions. The politician-exonerating market failure narrative has not surprisingly dominated policy, with past compromises contributing to the systemic financial system failure, the global recession of 2008 and subsequent nationalization.
The Great Depression stressed the S&L system, but the industry’s vigorous opposition to both federal deposit insurance and the Fannie Mae secondary market proved prescient as the federally chartered savings and loan industry eventually succumbed by 1980 to the federal deposit insurer’s perverse politically imposed mandate of funding fixed rate mortgages with short term deposits and competition from the government sponsored enterprises.
The S&Ls were largely replaced by the commercial banks. To make banks competitive with Fannie and Freddie, politicians and regulators allowed virtually the same extreme leverage, in return for a comparable low-income lending mandate – CRA requirements leading to a market dominating $4 trillion in commitments to community groups to whom the Clinton Administration had granted virtual veto power over new branch and merger authority.
The Financial Crisis of 2008 and the aftermath
The Big Short by Michael Lewis and more recent movie portrayed not just banker greed but the extreme frustration of those shorting the US mortgage market stymied by a housing price bubble many times greater than any in recorded US history that refused to burst. The reasons: 1. the Fed kept rates low and money plentiful, and 2. whereas banks would have run out of funding capacity, the ability of Fannie and Freddie to continuously borrow at the Treasury’s cost of funds regardless of risk and their HUD Mission Regulator requirement to maintain a 50% market share kept the bubble inflating to systemic proportions.
The Obama Administration fully embraced the alternative private market failure narrative in Fed policy, regulation and legislation:
To partially ameliorate the effects on the real economy of disruption to the global payments mechanism the Fed had to bail out the banking system. QE1/2/3/4 and ZIRP (zero rates), now NIRP, did this by re-inflating the house price bubble, postponing defaults while allowing banks risk-free profits. The Fed – and taxpayers – would lose more than the entire S&L industry did should rates rise by a comparable amount if it marked its balance sheet to market.
Regulators had to appear to punish the banks. In response to paying hundreds of billions of dollars in what the Economist labeled “extortion” – some of which ironically went to populist political action groups – and the subsequent oppressive regulatory regime, U.S. commercial banks are exiting the US mortgage market in spite of ongoing profits enabled by extreme leverage.
One legislative centerpiece, the Dodd Frank Act passed in July 2010 in direct response to the financial crisis, doubled down on political control of financial markets without addressing the future of Fannie and Freddie. The other, Obamacare, enacted four months earlier, was similarly premised on regulating private health insurers to make health insurance simultaneously cheaper and more widely available.
The Long Term Consequences
Bernanke’s focus on choosing the narrative was useful, but the political choice of the market failure narrative appears to reflect convenience rather than conviction. The direct taxpayer costs of implicit or explicit public insurance and guarantees come with both a whimper – tax savings amounting to tens of billions annually due to the deductibility of interest costs – and a bang – future taxpayer bailouts generally delivered off-budget.
Fannie and Freddie conservatorship deftly avoided debt consolidation while dividends reduced reported federal deficits. The student loan market has also been de facto nationalized, with potential unbudgeted losses totaling hundreds of billions. Obamacare was similarly premised on regulating private health insurers to make health insurance simultaneously cheaper and more widely available, but under-budgeted health insurance subsidies predictable caused massive losses and health insurers are now withdrawing from the market.
Monetary policies caused household savings to stagnate as returns to retirement savings evaporated. Defined obligation public pension funds were all rendered technically insolvent when funding is valued at current market returns rather than the assumed rate as much as ten times that. The failure of the economy to grow per capita was explained as the “new normal”. But politicians made no attempt to reflect the implied technically insolvency of public pensions or Social Security and Medicare.
Private firms fail, but private markets rarely do. Public protection and regulation makes firms “too big to fail” until markets fail systemically. The current and projected future public debt bubble is unsustainable, and financial markets will eventually ignore the accounting deceptions and pop it. The relative weakness of other sovereign debt is delaying the inevitably, making The Really Big Short a good title for a Michael Lewis’s sequel. Politicians and central bankers will again say “nobody saw this coming”. What then?
==== Kevin Villani, chief economist at Freddie Mac from 1982 to 1985, is a principal of University Financial Associates. He has held senior government positions, been affiliated with nine universities, and served as CFO and director of several companies. He recently published Occupy Pennsylvania Avenue on the political origins of the sub-prime lending bubble and aftermath. This article was originally published at FFE.org
… Or as I used to refer to Hillary as “Her Inevitableness.” This was back in that campaign season of 2008, when she and the Fresh Prince of Chicago were going toe to toe. I called that contest “Ebony vs Ovary” and regret that such a pithy phrase never caught on in the blogosphere.
Anyway – bend over, for here she comes again, the woman whose main qualification for high office seems to have been in staying married to her horn-dog of a husband who coincidentally was the occupant of the White House three administrations ago. She does not appear to be particularly charming or charismatic, or to enjoy the company of other people, as her spouse did. She also doesn’t seem to have any facility for above-board political wheeling and dealing among parties or individuals of equal standing. She has, however, been very good at ruthlessly manipulating others from a position of strength, in the manner of a Mafia don. She has a long-standing reputation of treating no-name personnel who worked in the White House or the State Department – military, housekeeping staff, and members of the Secret Service – with rudeness and outright abuse. Read the rest of this entry »
Finally, you might ask why did Cameron promise the referendum in his party’s election manifesto? It is simple. Even with the promise of a referendum, Cameron barely overcame the UKIP surge: a 3.8 million vote surge. It was only by peeling off voters from UKIP—through the promise of the in-out referendum—that made him PM. Had he not made this election pledge, any number of marginal Tory seats would have tipped: Labour, Lib-Dem, or UKIP. There was no blunder here by Cameron. It was not the referendum which destroyed Cameron’s ministry; rather, it was the promise of a referendum which made Cameron the Prime Minister in the first instance.
[. . .]
Parties who have been rejected at the polls twice should engage in meaningful introspection, at least, if they expect to be taken seriously in the future. The let’s put all the blame on Cameron position lacks just the sort of gravitas that one hopes to see in serious opposition parties.
If a society permits those who engage in wilful violence and those that command the police & the revenue office to drive normal political expression underground, then that society will not have normal political expression. One consequence of the lack of normal political expression is that every poll will lack validity.*
The bookies, until the votes were being counted, were showing greater than 2:1 odds against Brexit in yesterday’s referendum. The subsequent Brexit victory appears to confirm the hypothesis that many Brits were lying to pollsters.
The bookies are showing odds of around 3:1 against a Trump victory in our presidential election. Arguing predictions is a fool’s game, but it may be that our election polls are wrong for the same reason as the Brexit polls apparently were. The Democrats and their media allies have demonized Trump as a racist and misogynist, and it seems likely that many people who intend to vote for him aren’t admitting it. We’ll know soon enough.
Posted by Trent Telenko on 16th June 2016 (All posts by Trent Telenko)
In its public relations on Omar Mateen’s attack in the Pulse night club in Orlando, the federal government is engaged in a propaganda technique know as “The Big Lie”. That is, it’s stating an untruth often enough to get people to believe it.
It is four days after the Pulse attack. Omar Mateen spent 18 days in Saudi Arabia and the United Arab Emirates (UAE) in 2011 and 2012. There is no way that all the associates of Mateen in those two trips can be known in four days. Nor what if any training or Islamist materials Mateen might have received on small items like USB drives while on those trips.
See if you can spot all the weasel words from this Fox News story passage quoting the Saudi Ministry of the Interior —
A Saudi Ministry of Interior spokesman confirmed that Mateen twice performed the umrah Islamic pilgrimage and that travel records showed he also visited the United Arab Emirates on one of the trips. But he said Saudi officials, who closely surveil tourists deemed to be a terror threat, had no evidence Mateen traveled to Yemen of made contact with known extremists during his visits to the Kingdom.”
Weasel Phrase #1 & questions raised —
Mateen twice performed the umrah Islamic pilgrimage…
Did Mateen attend Mosques or other Islamic organizations in Saudi Arabia with ‘extremist’ connections?
Did people who became extremists after 2011 to 2012 attend Saudi Mosques or other Islamic organizations at the same time as Mateen or travel with Mateen?
Weasel Phrase #2 & questions raised —
…had no evidence Mateen traveled to Yemen or made contact with known extremists during his visits to the Kingdom.
1. Would the Saudis know if Mateen meet ‘known extremists’ in the UAE?
2. Did people who the UAE consider ‘extremists’ meet Mateen?
3. Did Mateen attend mosques or other Islamic organizations in the UAE with extremist connections, and at the same time as then-unknown ‘extremists’?
Given the simple questions raised above, there is absolutely no reasonable way that Pres. Obama and the FBI Director stating that Omar Mateen “self-radicalized” can be considered as anything but a deliberate lie after only four days of investigation.
Given the use of the Big Lie on Orlando by FBI Director James Comey, we now have to assume all the following about organizations, politics and near-future events.
FBI Director James Comey is President Obama’s partisan “good dog” in the same sense that Attorney General Loretta Lynch, Director of Homeland Security Jeh Johnson, and Director of National Intelligence James Clapper are.
The federal government’s top priority in dealing with Muslim terrorism in the USA will remain political correctness in surveillance before attacks and narrative damage control after attacks, rather than prevention of attacks.
There will be an increasing number of domestic Muslim terrorist attacks because of the Obama administration’s open-borders immigration policy and refusal to properly vet this immigrant stream for radical Islamic Terrorists.
Republicans now see DHS and FBI counterintelligence as an utterly Democratic partisan organization like the IRS.
The first Republican-majority government after the San Bernardino and Orlando terrorist attacks will see a new, independent, federal counterintelligence agency with an utterly partisan GOP senior leadership established.
And last, there will be no indictment of Hillary Clinton over her illegal e-mail server unless and until Donald Trump wins the presidency.
Make your preparations for the future accordingly.
Our own country is caught by all this, as it was in the first half of the 19th Century and in the middle decades of the 20th. We were able to adapt to survive: in the 19th by extending the franchise and in the 20th by expanding public services and mass prosperity. As a result British governments regained the authority to govern. They did so by reforming the institutions of representative government the country already had, thereby responding to the demands of an electorate emboldened and liberated by technological change.
Today, governments are once again losing the authority to govern, and for similar reasons. Another major financial crisis might lose them it completely; but a new crisis might not even be needed. Whitehall’s failure to control immigration, its puny efforts to tackle the housing question, the feebleness of our defences, the incompetence of our transport and energy policies might, whether jointly or severally, tip us over.
In the past, the country has been sustained in times of crisis by a solid body of electors who felt they had an interest in the existing structures which kept them, on the whole, safe and relatively prosperous. That body’s support is no longer so solid. The IT revolution is largely responsible. The speed of communications make governments and Parliamentary procedures look flat-footed. Increasingly the public is at least as well-informed as the Whitehall departments who are telling them what to do. It is virtually impossible to keep anything secret and anyone who betrays a confidence is regarded as heroic. The more rules we have, the more the public feels they are used as a means of flouting their spirit.
Worst of all, social media stimulate one issue politics and make the simple solution credible. You and I know that competent administration is boring and usually demands compromises. We also know that effective legislation needs careful preparation, much internal and external debate, a mind-numbing command of detail and a lively warning mechanism against the law of unintended consequences. The same applies to parliamentary scrutiny.
Any sensible electorate would be only too pleased to delegate this necessary day-to-day grunt to a Whitehall and Westminster it trusted and, although interested and argumentative, get on with the rest of its life.
Sadly, that is not where we are.
The candidacies of Trump and Sanders are in large part responses to public concerns about the problems Salisbury describes. They are inadequate responses, likely to fail politically and on their own terms and eventually to be superseded by other responses. The pot will continue to boil at greater or lesser intensity depending on who gets elected and what follows. It seems unlikely that the underlying problems will begin to be solved unless the voters develop a realistic understanding of what needs to be done, and start electing politicians who are both willing and competent to do it. It may be a while.
So, as I am devoting all my energy and time to finishing the first draft of another book, I have been following – with lashings of sorrow, pity, dread and the merest splash of schadenfreude – developments in Europe. Germany, which seems to be cracking under the weight of a full load of so-called refugees, Sweden, ditto, Brussels, where the concerned citizens appear to be too frightened to continue with a protest march against fear, and the governing authorities appear to be more concerned about the legendary anti-Muslim backlash than the certainty of Islamic terror unleashed in some European or English city. Read the rest of this entry »
After 240 years of relative quiescence, at 4:53 PM local time on Tuesday 12 January 2010 the Enriquillo fault system ruptured near 18°27’ N, 72°32’ W in an M 7.0 earthquake, followed by numerous aftershocks, mostly westward of the mainshock hypocenter. Institutional functionality, or the lack thereof, in Haiti prior to the earthquake was such that there was no local seismometer network in place, so nuances of slip in the 2010 earthquake involving several associated faults have had to be inferred from kinematic models.
The Enriquillo fault itself forms the boundary between the Gonâve Microplate and the Caribbean Plate, but seismic activity along it is driven by collision with, and subduction of, the North American Plate. The entire fault system may have begun a new cycle of large earthquakes similar to those of the 18th century, in which case there will be several more such events with significant effects in Haiti and the Dominican Republic through, very roughly, 2080.
Around half the entire US population donated money for Haitian earthquake relief in 2010. I may not have been among them, but as initially recounted in this forum in April of 2011, I was drawn into restoration work in a computer lab and fixed-wireless network in Petit-Goâve, and have subsequently assisted in similar efforts in Musac (Mizak), La Vallée-de-Jacmel. Paging through the visa section of my passport, I now find an astonishing number of red ENTRÉE and blue SORTIE stamps from the Ministere de l’Interieur et des Collectivites Territoriales / Direction de l’Immigration. My God, I’ve been down there 16 times. What was I thinking?
Something like this …
What I’m feeling for the GOP is a kind of disinterested sympathy, punctuated with schadenfreude, the disinterest arising from never having been a Republican, the sympathy from the GOP identification of a plurality of my close friends – uniformly horrified by what is happening – and the schadenfreude from the abrupt collapse of three-plus decades of pharisaical social conservatism. Turns out that eventually enough of the electorate whose resentment you’ve been stoking figures out that it’s a waste of time and fastens on to something else, something that matches their actual resentments a lot more closely. Read the rest of this entry »
Posted by Lexington Green on 13th February 2016 (All posts by Lexington Green)
[While I was finishing this post, I saw the terrible news that Justice Scalia died. God rest his soul. The GOP Senate majority should not permit President Obama to replace Justice Scalia, and should slow-walk any appointment he may make until after January 2017. That empty seat will be and should be a campaign issue. It raises the stakes considerably for the next President.]
The other day a friend asked me: “what kind of judges would Trump appoint?”
“They will be the best, the smartest legal scholars we have, people who know the Constitution up and down, the whole thing, and especially our second amendment, which no one will touch, not while I am President, the second amendment is sacred, and they will be outstanding judges, judges who will be fair, but also do justice, and keep our country safe, so that criminals like the guy who killed Kate, beautiful Kate in San Francisco, people like that will go to prison for a long, long time, or back to Mexico, where they belong, if they are here illegally. And the judges I appoint will follow the law carefully, and they will always do what is good for America. And I know some of the best people in the country who will advise me on which judges to pick, great lawyers, great trial lawyers, and I know lawyers who are great negotiators, the best in the country, some of these guys are killers, not nice guys, but tough, smart, incredible lawyers, and legal scholars, from top law schools, the best law schools, and they know who the best people are, not necessarily people you have heard of, but the best, and we will appoint amazing judges. Trust me, the American people will be very proud of the judges we pick.”
This is of course a spoof of Mr. Trump’s speaking style.
Posted by Kevin Villani on 11th February 2016 (All posts by Kevin Villani)
Long time Democrat turned Republican Donald Trump, who as a business titan relied more than any of his opponents on “Wall Street” funding, decisively won the Republican primary. In sharp contrast, socialist Bernie Sanders decisively won the New Hampshire Democrat primary by attacking his opponent’s Wall Street ties. Trump supporters apparently believe that the way to deal with Wall Street a**holes is a bigger a**hole who will negotiate much better deals, whereas Sanders supporters believe that “Wall Street (a synonym for the entire US financial system) is a fraud” requiring major extractive surgery.
Most people within the NY financial community including the numerous mid-town asset management firms agree that many Wall Street players were a**holes during the sub-prime lending debacle leading to the 2008 financial crisis, but surely the Sanders pitchfork brigade wouldn’t travel uptown. This may explain why among the thousands of books and articles written in the aftermath of the financial crisis and the Occupy Wall Street movement, Wall Street hasn’t defended itself and has found few defenders willing to go public.
Truth be told, Wall Street has always attracted more than its share of greedy a**holes. But historically they discriminated against the less profitable investments in favor of those that had the highest return potential relative to risk. This represented the brains of a heartless US capitalist system. Defenders of capitalism correctly argue that it is the only economic system at the base of all human economic progress, however unequally distributed. Progressive critics argue for greater equality, the poor made poorer so long as the better off are equally so (although this is not the way it is typically represented).
Posted by Michael Hiteshew on 29th November 2015 (All posts by Michael Hiteshew)
I’m going to predict Hillary Clinton will not be elected. I believe the majority of Americans are fed up with the lack of economic growth, high unemployment, increasingly bad race relations, politically driven riots, politically driven campus unrest, and an increasingly chaotic international situation. They’re going to vote for a change of government.
The real question is what to do when the GOP controls all three branches of the federal government. What should it do, in what order? Ted Cruz, for example, will immediately repeal what he considers all of Obama’s illegal executive orders. Nice. But of limited impact in the great scheme of things. What I’m concerned about are the fundamentals.
My list of fundamentals:
1. Replace the tax code with a lower, flat tax. Everyone pays at the same percentage.
2. Pass a balanced budget amendment. Include debt repayment in the budget.
3. Require all rules and regulations from any federal agency be approved by Congress. Require a cost-benefit analysis be included for each. Each regulatory agency and its existing rule set should be reviewed and scrubbed.
4. Pass welfare reform. Only the old and infirm should be on social benefits long term. Everyone else should be working and contributing to society. I would be open to CCC and WPA type programs to make the long term unemployed productive.
5. Repeal ObamaCare. Go to a market based healthcare and insurance system. Vastly reduce the legal hurdles and risks to providers. Include tort reform.
6. Repeal Common Core.
7. Review the costs and goals of every federal agency. Close every unnecessary agency. Start with the Dept of Education.
At the state level, I would like to see every Republican controlled governor-legislature team perform a full scale review of its school system: its administrative burden, its curriculum, its goals and its metrics. Consider voucher and competition systems to give parents a choice of schools and make schools compete for students.
People are ready for change. The future of the nation requires it. What good is attaining political power if it is not used?
Posted by Mrs. Davis on 24th October 2015 (All posts by Mrs. Davis)
The Wall Street Journal has an excellent article (behind paywall) by Andrew Staub on the budget stalemate in Pennsylvania. While the overall fiscal situation is less dire than Illinois (lottery winners are still being paid), the personalities less dramatic and the politics more genteel, the problems both states are confronting are ones the Federal government is ignoring courtesy of the Federal Reserve and central bankers world wide who tolerate the expansion of American debt.
One interesting aspect of the situation Staub passes over is the split in the Republican party. While the Republicans hold a majority in both houses, they are really composed of two factions, liberal leaning Rockefeller Republicans from the eastern side of the state and more conservative members from the west. They are not so far apart that they could be described as RINOs and Tea Partiers, but their inability to consistently act in concert has weakened their numerical majority in the past. However, they recently united to pass a sure to be vetoed paycheck protection bill that had foundered under the previous Republican governor because of resistance from the easterners. This is an indication that, at least in opposition to a Democrat governor the Westerners are starting to prevail.
On the other hand, Governor Wolf sent a tax increase bill to the House, forcing Democrat members to vote on it and the Republicans were happy to accommodate him. 73 Democrats walked the plank for their leader and 9 refused, creating division in the usually solid Democrat ranks. It will be interesting to see the electoral consequences for them.
But there is insufficient power on either side to prevail in the budget impasse. Until the schools start closing, probably after Christmas, there is little pressure on either side to move.
In addition to all this, Kathleen Kane, the Commonwealth’s attorney general has lost her law license as a result of her actions in disclosing sealed information from an investigation into pornographic emails circulating among, allegedly, PA Supreme Court staff and personnel in the AG’s department. She then accused a member of the court of sending and receiving racial, misogynistic pornography. She is under investigation for releasing the materials and the Supreme Court has suspended her license to practice law. The post of AG is frequently a stepping stone to the governorship in PA and the Democrats have lost an attractive potential candidate and leader.
Pennsylvania has been a solid Democrat state in presidential elections. But with the party torn apart, the deceased in Philadelphia may not be able to turn out in sufficient numbers next November to assure the result, if the Republicans can provide an acceptable alternative to HRM. But then PA always finds a way to leave the Republican candidate standing alone at the altar.
The 100-year threshold is also a statistical guess based on data on past storms and assessments of whether they’ll occur in the future. That means the models change every time a new hurricane strikes. The numbers being used as guidelines for construction are changing as time passes.
The standard also does not mean—can’t possibly mean—that a 100-year storm will occur only once per century. It means that such a storm has a 1 percent chance of happening in any given year. So for example, it’s technically possible for several 100-year floods to occur in just a few years, although it’s highly unlikely.
One way to look at it is that the engineers need to estimate how high a wall New Orleans needs to protect itself against a reasonably unlikely flood — say, a 1-in-1000-year event. This is the line of discussion pursued in the CNBC article.
Another way to look at it is to observe that the odds of another Katrina, or worse, within a specified period are highly uncertain. In this case a radical course of action might be called for. You do something like: take the best estimate for the wall height needed to protect against a 1000-year flood and then double it. Building such a levee would probably be extremely expensive but at least the costs would be out in the open. Or you might decide that it’s not the best idea to have a coastal city that’s below sea level, and so you would discourage people from moving back to New Orleans, rather than encourage them by subsidizing a new and stronger system of walls.
In this kind of situation the political incentives are usually going to encourage public decisionmakers to ignore radical solutions with high obvious costs, in favor of the minimum acceptable incremental solution with hidden costs: probably subsidies to rebuild the levees to, or perhaps a bit beyond, the standard needed to protect the city in the event of another Katrina. And it’s unlikely that any local pol is going to advise residents to move out and depopulate his constituency. Thus, eventually, a worst case will probably happen again.
If you had to name ten things “which changed everything” in the last 2 decades nearly all the good stuff will have crept out of woodwork from the inner pages while all the bad stuff was parading above the fold. You can even think of the inner pages as being in an endless war with the front page, in an unending battle between the ordinary working stiff and the self-important leaders. The working stiff makes and the self-important leader taxes and wastes. Booms happen when the regular Joe can temporarily outpace the great men and the years of the locust occur when the opposite is true.
This is a nice post that touches a number of important themes about progress and how people perceive it. Worth reading.
Posted by Mrs. Davis on 27th June 2015 (All posts by Mrs. Davis)
It’s hard for me to believe but I’ve finally found a reason to be thankful for FDR. Were it not for him there would not be a 22nd Amendment. And were there no 22nd Amendment, Obama would be running again and would win for the same reasons he won the last two times. Every cloud has a silver lining.
On the other hand, we are probably looking forward to the most interfering and disruptive ex-Presidency since…
The description of the robot valet and cook makes it seem like dependence would make us more of a slave to the technology then the other way around, but the robot cars and drones are closer to the mark. I can’t imagine anyone waving amicably at today’s red light cameras, although many drivers would probably welcome the hail of bullets fired in their direction.
The robot reporters prediction was about 50 years too soon, but we’re now starting to see them for statistics heavy topics like fantasy sports.
The most amusing part is about GE’s role in the upcoming cyber serfdom.
Most remarkable is General Electric‘s new Yes-Man, a master-slave manipulator of incredible dexterity. Any movement the human master makes with his hand, even lifting a finger, is faithfully duplicated by the powerful slave machine. In a fantastic demonstration, Yes-Man fixed a girl model’s hair-do and applied cosmetics, all with the gentle touch of a woman’s hand.
Of course, it took awhile, but we know now that the GE Yes-Men did in fact come into existence and took over the entire company. For the past decade they apparently had the same short term forecasting skills as Mechanix Illustrated.
According to the article, this was all just a walk in the park for cybernetics pioneer Dr. Norbert Wiener who envisioned the Age of Robots unfolding before us. Well, he didn’t exactly deliver the Jetsons, but Wiener did leave us with some insights to give us some pause in our pursuit of a future with digital autonomy.
Finally the machines will do what we ask them to do and not what we ought to ask them to do. In the discussion of the relation between man and powerful agencies controlled by man, the gnomic wisdom of the folk tales has a value far beyond the books of our sociologists.
In short, it is only a humanity which is capable of awe, which will also be capable of controlling the new potentials which we are opening for ourselves. We can be humble and live a good life with the aid of the machines, or we can be arrogant and die.
Kevin Madigan revisits a theme that is anathema to many on the Right but deserves serious consideration:
As Pope Francis recently remarked, reflecting this relatively new attitude of tolerance and pluralism, “Each individual must be free, alone or in association with others, to seek the truth, and to openly express his or her religious convictions, free from intimidation.” It has been said, and not without reason, that the church changed more from 1960-2000 than in the previous millennium. Yet even today, outside Western Europe and the U.S., predominantly Christian states—Russia and Uganda, for instance—have notoriously repressive laws.
All of this is to say that traditionalist Islamic states and Muslims have not, historically speaking, had a monopoly on authoritarianism, violence against apostates, the wholesale rejection of religious pluralism, and the manipulation of religion to realize political agendas. But in the same sad set of facts lies some good news: The startling changes experienced by Western churches over the past several centuries suggest that similar changes might occur within the world of Islam.
Madigan’s piece is worth reading in full.
Bernard Lewis pointed out that the fascist authoritarianism we take for granted in today’s Arab world is itself a European import. Who’s to say that the direction of future political changes there must be negative.
One strong takeaway from this analysis is that the West should support Muslim moderates and modernisers. We don’t do that consistently, which may be an indirect cause of the Middle East’s current dire condition.
Still, many thought that globalization made war between the great powers impossible. In 1909, the British journalist Norman Angell wrote an internationally best-selling book, “The Great Illusion,” that argued that financial interdependence and the great growth in credit made war self-defeating, since it would result in financial ruin for both victor and vanquished.
Angell was dead wrong. (Oddly, it didn’t prevent him from winning the 1933 Nobel Peace Prize.) Extensive trade and financial relations did not stop Germany from declaring war on both Britain and Russia, its two largest trading partners, in 1914.