New CBO Director

Doug Elmendorf is the new director of the CBO.  Hopefully he keeps the Director's Blog up and running.

WORDS: "Taint"

Speaking in defense of Blagojevich's appointment of Roland Burris as Senator of Illinois, Bobby Rush said of him that "Roland Burris is worthy. He has not, in 40 years of public service, had one iota of taint on his record as a public servant." Rush's subsequent remarks were designed to distinguish Blagojevich's tainted name—tainted by the "allegations" lodged against him by Patrick Fitzgerald—from Burris's supposedly untainted record. TV commentators seized on the word "taint" to talk about what has become of Blagojevich's reputation in Illinois politics. Though they seemed to be doing so for lack of a better term, this one actually fits the bill pretty well. One definition in the OED of the verb to taint is "to accuse of crime or dishonour." In this regard Blagojevich is clearly a tainted man on both scores.

A Festivus for the Rest of Us

Here is Ta-nehisi Coates on Kwanzaa and the holiday season in general:

"Meh, I don't celebrate Kwanzaa. My Dad was a Black Panther, so I wasn't exactly brought up to think of Karenga (call that Negro "Ron") as heroic. I didn't celebrate Christmas either, and the general consensus in my home was that Kwanzaa was throw-away for people who couldn't deal with not getting gifts. 

But so what? Seriously, this idea that Kwanzaa is fundamentally different from other holidays is silly and unreflective. Debating the holidays, is like debating sex acts. Dude, there's no clean or dirty, only what you're into or what you're not. Do we really want to do the knowledge on Christmas here? Seriously??"

Debating sex acts would be an improvement over spending a couple pay checks on gifts people don't like. Engaging in the sex acts would probably raise social utility even more.  

The Debate over Festivus

A small debate is raging on the Internet over the worth of celebrating "Festivus" in the wake of a Festivus pole that was put up in the Illinois capital. Critics (e.g. here) say it's not a real holiday because it was invented to mock Christmas. They say it's meaningless, not about anything, indeed, invented in a 1997 episode of Seinfeld ("The Strike"), a show that is itself about nothing (FYI: it was really invented much earlier; read the details on Wikipedia's festivus page).

Most of these critics have in mind some idealized image of what Christmas is supposed to be all about. To wit, "a good, merry winter celebration with the tree, the turkey, and the presents, customs mostly borrowed from pagan traditions." Compare Bill McKibben's description: "Christmas is a school for consumerism—in it we learn to equate delight with materialism. We celebrate the birth of One who told us to give everything to the poor by giving each other motorized tie racks.” This reflects a certain cynicism, but at least it is not blind to the way in which Christmas is super-saturated with the imperative to buy, buy, buy. The point is put with neutral understatement on Wikipedia's page on Christmas: "Christmas has become a major event for many retailers."

Against this frenzy of consumerism Festivus was born according to the Seinfeld episode:

Frank Costanza: Many Christmases ago, I went to buy a doll for my son. I reached for the last one they had, but so did another man. As I rained blows upon him, I realized there had to be another way.

Cosmo Kramer: What happened to the doll?

Frank Costanza: It was destroyed. But out of that a new holiday was born: a Festivus for the rest of us!

Festivus, like all holidays, is what you make of it.

The Next Move

Brad DeLong links to a post from the Baseline Scenario on the Glen Hubbard article in the WSJ. The Hubbard plan is basically two plans: 1 part freddie/fannie nationalization, 1 part Bailie Mae. The plan is to reduce mortgage rates to 4.5% for everyone, new home buyers and those who want to refinance. Basically, we are going to subsidize housing to get us out of the mess that we got into in large part because housing was generously subsidized. I tend to think a better way of bringing housing supply and demand into balance would be to increase immigration, both skilled and unskilled, massively. Unskilled immigration might be a difficult sell, though, we could always re-encourage illegal immigration by returning to more lax enforcement. However, increasing skilled immigration shouldn't be as tough a sale.

To the People of Illinois: There is No Presumption of Innocence in the Court of Public Opinion

"To the people of Illinois, I ask that they wait and be patient, sit back and take a deep breath, and please reserve judgment. Afford me the same rights that you and your children have. The presumption of innocence. The right to defend yourself. The right to your day in court. The same rights that you would expect for yourselves."
—Rod Blagojevich, 12/19/08

The legal right to be presumed innocent until proven guilty does not apply outside the courtroom. Let me repeat that: if you are not the judge or the jury in Blagojevich's criminal case, the presumption of innocence doctrine is irrelevant and has no bearing on what you say or think. Outside the courtroom, you are allowed to make judgments about the guilt or innocence of the accused, and to profess your views any way you like, make signs, go on television, whatever. The presumption of innocence, as Dick Cavett reminds us, "has nothing whatever to do with you and me. We can talk, write, broadcast and even put up a billboard (if so foolish) stating that the accused is the one who did it. It has to do with our system. If you find yourself accused of a crime, you do not have to prove your innocence. The burden is on the other side. The prosecution has to prove your guilt. That’s about it. And it is not even a rule of law. It is a rule of evidence, relevant only to the judge and the jury."

Auto Bailout

Bush is going to release TARP money for GM and Chrysler.  The terms are actually pretty good for the taxpayer and it appears that the conditions set for receiving the money are similar to what would occur in a Chapter 11 Bankruptcy:

"—Reduce debts by 2/3 via a debt for equity exchange. 
—Make one-half of VEBA payments in the form of stock. 
—Eliminate the jobs bank. 
—Work rules that are competitive with transplant auto manufacturers by 12/31/09. 
—Wages that are competitive with those of transplant auto manufacturers by 12/31/09."

This is probably better than the unions would have gotten in a bankruptcy in so far as it requires the automakers to pay into the VEBA fund (as a result of contract negotiations between the unions and the automakers last year health care benefits for retirees were taken over by the unions but the automakers had to make significant one time contributions to the health care trust fund- VEBA).  I am guessing in a bankruptcy proceeding the judge would tell the unions that there is a neat thing callled medicare and to go enroll.  So this is maybe a little more even handed.

Bonuses

This is brilliant!  Credit Suisse is giving their executives bonuses in the form of Mortgage Backed Securities.  Seems fitting.

This Plutocracy and Nepotism stinks to everybody

It's a good sign for small-d democrats that more and more people are voicing their concern over the rampant nepotism and plutocracy in American politics. Whatever happened to skill and merit? Look for more posts on this issue in weeks to come.

Nicholas Kristof takes account of the scene in these words:

And frankly it is discouraging to see the way the system so often elevates particular families into politics, generation after generation, because of their names, bank accounts and Rolodexes. Bill Clinton and Barack Obama are self-made exceptions, but we now have a president who rose in part because of who his father was, and there are many such cases. After all, Beau Biden seems poised to succeed Joe Biden in the senate from Delaware, once his military service is completed. Ken Salazar’s senate seat from Colorado may be filled by his brother John. And here in New York State, we have a governor who is a second-generation politician who is choosing a senator from among such front-runners as a woman who is the daughter of a former president and a man who is the son of a former governor.

Here's a Letter to the Editor worth noting from a reader of the NYT on the subject:

To the Editor:

It is amusing that Andrew M. Cuomo, who owes his whole career to his dad, may not get the Senate seat of Hillary Rodham Clinton (who owes her whole career to her husband) because David A. Paterson (who owes his whole career to his dad) may give it to Caroline Kennedy (who owes her whole career to her dad).

You would think a state as large as New York could find someone who deserves something on his or her own.

David Machlowitz
Westfield, N.J., Dec. 16, 2008

Ag

Tom Vilsack has been slotted for the Ag Secretary. This an awful but predictable pick. I tend to think this will mean Obama will be inclined to piss more money away on Ethanol.

Update: I might have spoken too quickly. Apparently Vilsack is on record as opposing tariffs imposed on Brazilian sugar based ethanol which is much more efficient than corn based ethanol. I still think this nomination is less than optimal but maybe it is not as bad as I initially thought.

Iraq, shoes, and insults

When Bush was the target of an Iraqi journalist's thrown shoes, most of the major TV news outlets called attention to the insulting meaning of the act. Which is true, of course. But perhaps it would have helped to put the act in a political context: when Saddam Hussein's statue was pulled down in the Spring of 2003, Iraqis pounded it with their shoes.

Inflation

It will be interesting to see what the Fed does now that it has gone ZIRP (Zero Interest Rate Policy).  Obviously cutting interest rates is no longer on the table.  There is more discussion of printing our way out of this mess.  Here is Ken Rogoff on increasing inflation.  Here's Greg Mankiw with more of the same. Here's Paul Krugman.  Arnold Kling Dissents.

We're not that stupid Mr. President

As Frank Rich observes in his book, The Greatest Story Ever Sold, the media has it all wrong about Bush. The problem with W. is not that he's stupid, but that he talks to the rest of us as though we are.

Case in point: his interview with Candy Crowley which aired on CNN today. He said:

"You know, the military looks at the president and wonder whether or not the president's going to make decisions based upon victory. Or, whether or not the president would be making decisions based upon its political skin. And if you ever make decisions based upon your political skin where troops are in harms way, you as commander-in-chief will have a lot of problems keeping the respect of the military."

Frank Rich isn't the only one who knows that this is a total lie - many in the military know this as well. Rich writes:

It was all too predictable that even when the administration was forced into rebuilding Iraq, it would time every pivot point, from the creation of a constitution to the scheduling of elections, to deadlines dictated by Rove's political goals at home (whether a State of the Union speech or a domestic election), rather than to the patience-requiring realities of forging a post-Saddam government. That cynical priority was what had dictated the timing of the rollout of the product in the first place: it wasn't a mushroom cloud that was imminent as the White House pressed for a congressional resolution in the fall of 2002, it was the midterms....Shouldn't it have raised alarms that a war was being rushed on an arbitrary and reckless timetable that was in sync with an American election campaign? (222)

Journalist Crowley: have you not learned anything about the ways of this White House? Shame on you for letting the President's remark pass without question as though it were true.

The Word of the Year

Here's a bit of belated new: The Oxford English Dictionary's Word of the Year is hypermiling.  You learn something new everyday.

The Fed Cuts Rates

They have cut it down to .25%.  The Lost Decade has arrived.

Depression Economics

Over at TPM Cafe they are discussing of Paul Krugman's recently re-released book "The Return of Depression Economics".  Brad DeLong, Dean Baker, Paul Krugman, and Robert Reich are leading the discussion.  Brad DeLong has several insightful posts as is his norm but this sentence jumped out at me: 

"We clearly need to separate capital adequacy regulation from rating agencies that can be gamed in order to eliminate regulatory arbitrage..."

Everyone is constantly calling for regulation to prevent future crises, which is valid.  But we also must look at the extent to which the present regulatory framework fueled the crisis.  One of the things that has clearly emerged is that the securitization of mortgages was favored from a regulatory standpoint as opposed to the traditional model where a bank both originated and held the mortgage.  This in large part fueled the leveraging of the financial sector.  That and the fact that every banker in America was seemingly stupid.

Reducing Wages

I really don't get why bringing the UAW workers wages in line with the rest of the industry is considered beyond the pale.  It is in many senses overly generous. The big three have a horrible reputation for quality.  In order for them to compete they will not only need to build cars of comprarable or superior quality but be able to compete on price.  To me that means that workers' wages need be below that of their competitors.  There are consequences of failure, and those consequences shouldn't be solely borne by the taxpayer.

Czars

Why do we always have policy Czars as opposed to Tsars?

"Double Shot at Love"

Is this for real?

American Bailout

Eliot Spitzer proposes that Washington sets up a competition among the big 3 for who receives the bailout.  Whichever 2 companies present the best business plans get to divvy up the bailout monies.

BTW, Eliot Spitzer is now a columnist for Slate.  Not a bad gig for a disgraced governor.  Maybe Rod Blagojevich could get a weekly column/diary- "Letters from Levenworth".

Barney Frank's Error

'"No. We’re not propping up companies. That’s your mistake," he tells Stahl, who had asked him about taxpayer money going to prop up companies that had made bad decisions. "We’re propping up individuals. The world doesn't consist of companies. The world is people. The country is people."'

The implicit thrust of Barney Frank's argument is correct, we shouldn't prop up companies, but we should assist those people who work for them and whose livilihoods are seriously damaged by their employer's demise. However, Frank's response is in fact to prop up the companies or in other words, to protect those jobs.  Why should the American taxpayer have to subsidize a company so it can have the "privilege" of paying for an inferior product.  Ostensibly the taxpayer already has that privilege and has decided not to exercise it. A more promising and just route would be to let companies fail and provide their workers with unemployment insurance (for a limited duration), tranining assistance, gap coverage in their medical care (which wouldn't be necessary if the health system was predicated on employer provided health care but I digress), and relocation assistance.  

Two Words not Mentioned in the Auto Bailout Discussions

Work Rules.  Just saying.  They are a huge disadvantage for American auto manufacturers, arguably a bigger competitive disadvantage than the wage discrepancy.  I actually thought the alternative bill proposed by Corker was entirely sensible.  I hope something along those lines makes it through in January.

An Object Lesson in Political Corruption

I found this little gem on page 72 of the criminal complaint against Blago:

Later on November 12, 2008, ROD BLAGOJEVICH talked with JOHN HARRIS. ROD BLAGOJEVICH stated that his decision about the open Senate seat will be based on three criteria in the following order of importance: “our legal situation, our personal situation, my political situation. This decision, like every other one, needs to be based upon on that. Legal. Personal. Political.”

Not mentioned by Blagojevich is the criterion of merit or ability for holding the open Senate seat, nor is there any regard for what would be beneficial for Illinois, or anybody outside his own family. He seeks only men and women of wealth with the right connections who will help him bring honor and benefit to his own family. The main cause of this corruption is the ambition of Blagojevich to get himself put in higher offices or in a position to make a lot of money after he leaves office, and to do either one of these things he desperately needs to avoid impeachment as governor, which would take away his reputation. But now that his foolish ambition is out in the open, he'll have great difficulty forging an alliance with anyone.

For a brief "readers guide" to the criminal complaint, go here.

Hard Core

Martha Stewart will be on Top Chef. Go big or go home.

Top Chef Blogging

So I am watching Top Chef (how did I live without a DVR for so long), anyhow I never noticed this but Jeff is the chef of the Dilido Beach Club if I read it correctly. You ask why is this significant? It's not but it would be if it were the Dildo Beach Club and all the food served was cooked in a phallic mold.

Automaker Bailout

The democrats seem intent on replicating the structure of a bankruptcy proceeding for the automakers without having them go into bankruptcy.  It appears the car czar (or commissar if you prefer) is nothing more than an ersatz bankruptcy judge.  However, this all leads me back to my original point regarding the bailout, if what the automakers need is a massive reorginization then what they should do is go into bankruptcy.  If they bankruptcy is not a tenable option because automakers cannot obtain debtor in possession financing on credit markets the government can provide the DIP financing.  The only purpose this legislation seems to serve is to kick the bucket further down the road and in the mean time give democrats hope of creating a government sponsored enterprise in the form of the domestic automobile industry.  This is a stupid bill.  That said, I am not sure the republicans shouldn't vote for it.  It could be that this bill as awful as it is, is simply the least bad option.

Barack Names DOE Secretary

Barack Obama is nominating Steven Chu to serve as the Energy Secretary.  You have probably never heard of Steven Chu as he is not a former governor or senator but an actual scientist, a nobel-prize winning physicist at that.

Frannie

I think we can dispense with the story of Fannie and Freddie being innocent victims of the subprime mess:

"The former executive, Edward J. Pinto, who was chief credit officer at Fannie Mae, told the House Oversight and Government Reform Committee that the mortgage giants now guarantee or hold 10.5 million nonprime loans worth $1.6 trillion — one in three of all subprime loans, and nearly two in three of all so-called Alt-A loans, often called “liar loans.”"

Recycling

"Recycling is the philosophy that everything is worth saving except your time." 

Recycling: Still Little More Than A Profit-Making Scheme

This post could be titled "Against Recycling - Part 2". In my first post ("Against Recycling") I opined that recycling has functioned merely to license ever more consumption, thereby producing even more waste. And now, as a result of the downturn in markets for scrap materials, some recycling programs, according to the New York Times, are struggling to find a place other than the garbage dumps - where everything eventually ends up anyway - to send their stock of recyclable material:

The downturn offers some insight into the forces behind the recycling boom of recent years. Environmentally conscious consumers have been able to pat themselves on the back and feel good about sorting their recycling and putting it on the curb. But most recycling programs have been driven as much by raw economics as by activism.

Cities and their contractors made recycling easy in part because there was money to be made. Businesses, too — like grocery chains and other retailers — have profited by recycling thousands of tons of materials like cardboard each month.

But the drop in prices has made the profits shrink, or even disappear, undermining one rationale for recycling programs and their costly infrastructure.

“Before, you could be green by being greedy,” said Jim Wilcox, a professor at the Haas School of Business at the University of California, Berkeley. “Now you’ve really got to rely more on your notions of civic participation.”

Office 2007

My office is slowly converting over to Office 2007.  I was unfortunately placed on the office pilot for deployment.  Anyhow, it sucks, totally counter-intuitive.  However, the track changes feature is better.

Another 500,000 Jobs Bite the Dust

The unemployment rate has just jumped up to 6.7%.  How long till we hit double digit unemployment?  I say somewhere in 2010.

Obama Backs Off Windfall Profits Tax

I think this is a good thing.  A windfall profits tax would do little other than increase our consumption of foreign oil while having a negligible impact on overall consumption.  If the end goal is to decrease consumption of fossil fuels the best means of achieving that goal is to tax the consumption of fossil fuels, not production.

Office Etiquette

I have a pregnant coworker who is currently experiencing bouts of morning sickness.  Nothing out of the norm there, however, instead of running off to the bathroom to relieve herself she just sits in her cube and pukes her guts out, albeit in a trash can.  But further she is yet to remove her trash can and empty the contents.  I recognize that morning sickness happens and pregnancy can be unpleasant but is it really too much to ask that you go to bathroom if you are going to upchuck?  I have never heard of anybody just sitting in the cube and puking all morning.