Month: December 2010

Quote of the Day

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[T]he Federal Reserve System has recapitalized major U.S. banks by paying interest on bank reserves and by keeping an unusually high interest rate spread, which allows banks to borrow short from Treasury at near-zero rates and invest in other higher-yielding assets and earn back lots of money rather quickly. In essence, we’re allowing banks to earn their way back by arbitraging interest rate spreads against the U.S. government. This is rarely called a bailout and it doesn’t count as a normal budget item, but it is a bailout nonetheless. This type of implicit bailout brings high social costs by slowing down economic recovery (the interest rate spreads require tight monetary policy) and by redistributing income from the Treasury to the major banks.

Tyler Cowen, The Inequality that Matters

(He ends with a very disappointing, hands-thrown-up-in-the-air conclusion. I do not believe we are as bereft of policy options as he suggests. Possibly more on this later from me.)

UPDATE:

NRO: One thing that matters to you and a lot of disciples of Austrian economics is inflation. Some think it’s necessary and good because, with sticky prices, it helps to stimulate growth. Can you explain your problems with steady inflation?
PAUL: It’s the worst thing any government could deliberately do. It’s counterfeit. It means some people will benefit at the expense of others. People who saved money and are living off their savings get cheated. It’s a moral issue: They might make 1 percent on their certificates of deposit, and they can’t live on that. And the government practically gives the money to the banks and then they turn it over and buy Treasury bills and bonds and make 3 or 4 percent. So they make billions of dollars after having just been rescued from their bankruptcy.

Ron Paul, interviewed in NRO.

RIP – Denis Dutton

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A&L is clothed in black. Denis Dutton did much to make the blogosphere a better and more thoughtful place. Obits here and here. The Art Instinct site blog; a presentation. Authors on Google gives us a sense of his own vision — one implied by A&L’s subtle and evenhanded framing. The Chronicle’s blog appreciation and comments. D. G. Myers gives a more heart-felt and warmly written obit. And at National Review.

Quotes of the Day

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Victor Davis Hanson (at around 14:00):

What Thomas Friedman would need to do is get on a bicycle and go across rural China, and then compare that with biking across Nebraska, and see which society is more resilient and stable.

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Ann Althouse:

Well, you will pull the plug on grandma, but only after grandma has signed the document the doctor explained to her long before she got into the situation she’s in now, back when it seemed like autonomy and control.

“Using unwanted procedures in terminal illness is a form of assault,” [said Dr. Donald M. Berwick, administrator of the Centers for Medicare and Medicaid Service].

The question is what do patients want and how what they want will be determined. It seems to me that the effort is to get people to commit in advance to death-hastening choices, by getting everyone to sign these documents. Now, all the new regulation seems to do is to authorize Medicare reimbursements for the time health care professionals spend counseling patients about the value and importance of signing the document. It’s hard to see what’s wrong with that. If treatments are covered but advice about forgoing treatment is not covered, then there’s an incentive to do expensive things.

In a recent study of 3,700 people near the end of life, Dr. Maria J. Silveira of the University of Michigan found that many had “treatable, life-threatening conditions” but lacked decision-making capacity in their final days. With the new Medicare coverage, doctors can learn a patient’s wishes before a crisis occurs.

Treatable? You have a condition that can be treated, but you can’t think well enough anymore to decide whether you’d prefer to die? If you’ve signed the document, the answer is you’d rather let the condition kill you, because you allowed the doctors to “learn [your] wishes before” this “crisis” occurred. You didn’t know what the crisis would be or how you would feel when it happened, but you had “wishes” then and these will be taken as your “wishes” now.

(Many of the comments are also worth reading, particularly the one by Bender at 10:21 AM on 12/26/10 and the one by Ann Althouse at 2:21 PM on 12/26/10.)

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Oleg Atbashian:

* Why do those who object to tampering with the environment approve of tampering with the economy? Isn’t the economy also a fragile ecosystem where a sudden change can trigger a devastating chain reaction?
* Isn’t the latest economic crisis such a chain reaction?
* Aren’t most of today’s social ills the result of tampering with social ecosystems?
* Why is bioengineering bad, but social engineering good?

 

Something New or Deja Vu?

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FROM THIS WEEK’S HEADLINES:

Despite tensions, Turkish diplomats are keen to point out when they started their trilateral meetings the then leaders of Pakistan and Afghanistan would not even talk to one another. On Thursday night the Afghan and Pakistan presidents dined together.

“Turkey-Afghanistan-Pakistan summit in Istanbul, Turkey, Friday, Dec. 24, 2010. ” – VOA (via Small Wars Journal)

FROM THE HISTORY BOOKS:
“Dear Mr. Prime Minister:

I send you this personal message because I want you to know about my decision to extend military aid to Pakistan before it is public knowledge and also because I want you to know directly from me that this step does not in any way affect the friendship we feel for India. Quite the contrary. We will continually strive to strengthen the warm and enduring friendship between our two countries.

Our two Governments have agreed that our desires for peace are in accord. It has also been understood that if our interpretation of existing circumstances and our belief in how to achieve our goals differ, it is the right and duty of sovereign nations to make their own decisions. Having studied long and carefully the problem of opposing possible aggression in the Middle East, I believe that consultation between Pakistan and Turkey about security problems will serve the interests not only of Pakistan and Turkey but also of the whole free world. Improvement in Pakistan’s defensive capability will also serve these interests and it is for this reason that our aid will be given. This Government’s views on this subject are elaborated in a public statement I will release, a copy of which Ambassador Allen will give you.

What we are proposing to do, and what Pakistan is agreeing to, is not directed in any way against India. And I am confirming publicly that if our aid to any country, including Pakistan, is misused and directed against another in aggression I will undertake immediately, in accordance with my constitutional authority, appropriate action both within and without the UN to thwart such aggression. I believe that the Pakistan-Turkey collaboration agreement which is being discussed is sound evidence of the defensive purposes which both countries have in mind.

I know that you and your Government are keenly aware of the need for economic progress as a prime requisite for stability and strength. This Government has extended assistance to India in recognition of this fact, and I am recommending to Congress a continuation of economic and technical aid for this reason. We also believe it in the interest of the free world that India have a strong military defense capability and have admired the effective way your Government has administered your military establishment. If your Government should conclude that circumstances require military aid of a type contemplated by our mutual security legislation, please be assured that your request would receive my most sympathetic consideration.

I regret that there has been such widespread and unfounded speculation on this subject. Now that the facts are known, I hope that the real import of our decision will be understood.

With best wishes,

Sincerely,

DWIGHT D. EISENHOWER”

Letter to Prime Minister Nehru of India Concerning U.S. Military Aid to Pakistan. February 25, 1954

Long term strategy-wise, the American foreign policy establishment appears to get “stuck” in habits and patterns and grooves and constituencies and conventional wisdoms and all of that. I suppose that’s life in a big old messy democracy, eh? Or is it possible to do better? (By the way, this is not “blame America” time here at ChicagoBoyz. India, Pakistan, America, Turkey – what have you – all have “agency” and are responsible for individual national actions.)