Tuesday, November 25, 2008
Arnold Kling Explains:
"What we do know is that the risk premium on Treasuries is really, really low. We are like the hedge fund of last resort for the world's investors. Hamilton says the hedge fund should buyTIPS and foreign securities (I assume he means foreign government bonds). That's fine. The hedge fund should also buy debt from Freddie Mac and Fannie Mae, because that debt still trades at a risk premium relative to Treasuries, even though taxpayers are already on the hook for it.
The hedge fund should buy good stuff. Let the bad stuff sit and rot, or collect it as part of the process of shutting down failed institutions."
I haven't looked at many of the pardons in detail but one of the things that is striking is the extent to which the pardons relate to drug related offenses. In fact he just pardoned John Forte of the Fugees for Coke possession (lots of Coke). But the shame in this is that Bush could have done something in office to push for more rational sentencing guidelines regarding non-violent drug crimes but didn't do a blessed thing.
Monday, November 24, 2008
Here's a NY Times article analyzing whether the turnaround of the steel industry can be a good model for the automobile industry. The article discusses the similarities between the too industries, namely legacy costs and how banktrupcies and the resulting reorganizaitons were good for the steel industry. It investigates where the comparison between the two industries dissolve, steel is a commodity and thus price is king; cars are a consumer good, consumer perception is important, not just price. It fails to mention that the demand for steel exploded in the last decade because of the rapid growth of China and to a lesser extent India's economy. The market for steel grew tremendously. Right now, China consumes roughly a third of all steel produced. You throw in the rest of Asia and you have a majority of all steel consumption.
Imagine a counterfactual, China's growth didn't occur to the extent it did. Would the steel industry's reorganization have been adequate to stay competitive? Maybe, but such growth in demand can hide a multitude of sins. Just ask a mortgage broker.
When I read things like this I tend to think that regardless who ultimately wins, nobody will view it as a legitimate victory. This race has stunk to high hell. And this surprises me because Minnesota is one of the few states in the country that does have successful bureaucracies.
Friday, November 21, 2008
Also, Larry Summers will be taking some "senior role" in the White House (I suggest his title be economic consigliere).
BTW: as of this posting this wasn't anywhere on the CNN.com frontpage. Sort of bizarre given that this is typically one of the prestigious cabinet posts (next to SecDef and State) and it's importance has been amplified by the financial meltdown and Secretary Paulson's incompetence.
Here is a piece from the Times Online (home of my favorite Car Writer, also Top Gear Host, Jeremy Clarkson) on the recent rash of, er, Piracy.
Somali pirates are demanding a $25 million ransom for a seized Saudi Super Tanker.
Here is an article that discusses difficulties the Yemenis have encountered with Piracy.
Matt Yglesias discusses the problems with policing piracy on the open seas, namely, the ocean is very, very big and ships aren't so big thus making policing cost prohibitive for many nations. He also talks about how we screwed ourselves by encouraging the Ethiopian invasion of Somalia which has increased the lawlessness of Somalia. A nation without order typically does wonders for breeding terrorism and piracy. Who would have thought?
Here's a Boston Globe article on Peter Leeson (a GMU economist) who is obsessed with Piracy and its organizational structure (hint: democracy and workers comp). Here is an academic article by Leeson fleshing out his take on Piracy and it's organizational structer. Here's the intro:
"This article investigates the internal governance institutions of violent
criminal enterprise by examining the law, economics, and organization
of pirates. To effectively organize their banditry, pirates required
mechanisms to prevent internal predation, minimize crew conflict,
and maximize piratical profit. Pirates devised two institutions for this
purpose. First, I analyze the system of piratical checks and balances
crews used to constrain captain predation. Second, I examine how
pirates used democratic constitutions to minimize conflict and create
piratical law and order. Pirate governance created sufficient order and
cooperation to make pirates one of the most sophisticated and successful
criminal organizations in history."
Here is Brad DeLong advocating Nationalization.
Thursday, November 20, 2008
Over at the Center for Global Development they have a good post on how policy distortions (the light truck exception to the CAFE, tax subsidies to oil companies, and the smallness of our gasoline taxes) have led to our prevalence of non-fuel efficient cars.
Matt Yglesias makes the argument for congestion pricing in Urban areas. He makes the point that those who would pay the fee ultimately are the beneficiaries as they experience less congestion and spend less time commuting. Duh, but nonetheless it bears repeating.
The Wall Street Journal has an article discussing auto execs claiming for the umpteenth time that they can't go into bankruptcy because there are no funds availbe, thus they need the bailout. This logic is maddening. Supporters of the bailout agree with the fact that the Big Three need to be streamlined and reorganized. They also agree that chapter 11 is an optimal means of achieving a reorginazation. They proceed to claim that Chapter 11 is not a viable option because of the lack of financing available, and then turn around and say that the Government needs to bailout the Big Three, or put in other words, provide the financing they are not able to obtain on their own in credit markets. But if the government can provide the Big Three with funds for a bailout it could just as well provide DIP financing.
Wednesday, November 19, 2008
Tuesday, November 18, 2008
Alan Keyes is suing to establish that Obama was not born a U.S. Citizen thus disqualyfing him from the Presidency. I sort of thought this fever swamp issue was put to rest when Obama's birth certificate from Hawaii surfaced. The Freak Show refers to Alan Keyes, not Dear Leader.
Norm Coleman is certified as the election winner with a 215 vote margin, the recount begins tomorrow.
Monday, November 17, 2008
I wonder if Obama's thinks Hillary won't be able to survive vetting, or namely, that the vetting would bring up enough juicy stuff on Bill that it might undermine her? This is all idle speculation and a bit stupid as she did seek to become President! However, the Hillary campaign refused to disclose their tax data or any donor information regarding the Clinton Global Initiative.
Here's an article on how the National Review has become increasinly crappy and hacktastic.
The best argument I have heard for keeping GM out of chapter 11 is that they won't be able to obtain DIP (Debtor-in-possession) financing and thus will actually end up in Chapter 7. However, if this is the reason why they need a bailout as opposed to bankruptcy couldn't the government provide the DIP financing? Then you can sustain GM through the reorganization, and more importantly, a reorginazation in fact occurs.
Thursday, November 13, 2008
NHTSA, the National Highway Traffic Safety Administration, the kind folks who make your auto manufacturer issue a recall have created a free email subscription service where can keep tabs on whether your car has a recall or a technical service bulletin. This is a handy feature if you own a Volkswagen like yours truly.
Wednesday, November 12, 2008
Saturday, November 08, 2008
The Big Question, a Star Tribune blog, attempts to explain some of the newly appearing votes. This is where I have always thought the Democrats have shined in terms of shenanigans. Republicans subtract, Democrats add. I honestly think Franken will win at this point whether or not there were in fact enough votes in the first place as it seems the votes will appear one way or another.
Friday, November 07, 2008
Thursday, November 06, 2008
Here is the bio on one of the frontrunners for the next Supreme Court vacancy. When my employer (Uncle Sam) was being sued he was on the panel and had an excellent grasp of the record and asked really inciteful questions.
Here is a piece from TNR on Tim Geithner who is a short lister for the Treasury. Larry Summers is mentioned also as a likely candidate. I tend to think Summers has a greater chance if for no other reason than that Geithner is currently pretty busy as president of the Fed Reserve Bank of New York where he is playing a central role in trying to contain the financial meltdown. Paul Volcker is another contender.
John Podesta, former Clinton Chief of Staff, is the head of the Obama transition team and is a candidate for energy secretary.
Here is a panel of conservatives on the conservative crack up and what to do moving forward. My favorite suggestion is Tucker Carlson's that we actually put forth a candidate that has demonstrates some degree of fluency in English.
Over at Culture 11 Conor Friedorsdorf proposes a series of panels to discuss the political challenges facing conservatism and possible policy responses. I love the idea for the title- Conservatism- What the F-ck? (Obviously the liberal equivalent would be: Liberalism- What the Fuck?)
And This Just Cracks Me Up:
The boys over at Powerline demanding to know when Obama will back away from this whole global warming hoax.
Wednesday, November 05, 2008
Goes to Robert Novak. I love this quote in particular:
"He may have opened the door to enactment of the long-deferred liberal agenda, but he neither received a broad mandate from the public nor the needed large congressional majorities."
I think it is clear that Obama has a mandate, what he does not have is much fiscal room to maneuver.
Tuesday, November 04, 2008
I am going to go and vote this morning and encourage all of my readers to as well (that's five votes right there). However, there is something of a fetish made about participation without any observation made regarding the quality of that participation. If you don't pay any attention to politics, have no notion about our system of governance, or the candidates who are attempting to win your vote, maybe the best and most responsible thing you could do is stay home. We have a very low participation in voting when compared to other developed countries, but there is also much wider spread apathy regarding governance. Anyhow, here is an old fortune column from Greg Mankiw on the virtues of not voting for those that aren't terribly engaged.
Monday, November 03, 2008
Saturday, November 01, 2008
David Leonhardt has a good article on the difficulties surrounding a bailout for homeowners. Leonhardt believes a bailout will incentivize those underwater on their mortgage but able to make payments to conveniently fall behind. Such a plan does seem rife with perverse incentives.