JANUARY 2, 2009
Irony may not be the correct term. But it is disturbing that Governor Paterson is the successor of a scandal ridden Spitzer himself as he appoints, or appears about to, the entitled Caroline Kennedy. He can, of course, appoint whomever he wants. Governor Blagojevich of Illinois can also legally appoint whomever he wants. The Illinois Legislature will not impeach him and he is innocent until proven guilty. But the US Senate say they will not seat his choice, Roland Burris. There are articles on his qualifications Burris Could Be Illinois’s Senator But Was He a Good AG? and one thing he has over Kennedy is he at least has run for elected office. As far as I know, he also did not offer to buy his seat. So why is Burris not being seated while Kennedy will be treated like a rock star? Have we really looked into all the non-public discussions among Paterson, Kennedy and Bloomberg? Do you really believe there has been no "quid pro quo" somewhere? Why, among millions or more non-politicians, did Paterson happen to choose Kennedy? Joe Biden also is making sure his former seat is being kept warm for his son upon his return from Iraq. But Beau Biden Did Not Accept Senate Appointment even though he could have. He is expected to run for office in the next election while the seat is temporarily being filled. He also had been Attorney General in Delaware when his name was first "floated". Beau Biden demonstrates dignity for fulfilling his Iraq obligations and not taking an easy "freebie", unlike Kennedy, who apparently has no shame. What has Kennedy done to deserve to be Senator? The answer, of course, is nothing; and that's just the way it goes sometimes.
(posted at 12:30 pm by Mike Rulle)
We just keep on movin' on. It does sometimes feel like all is fear and loathing but the reality is better than that, as this Reason magazine article summarizes The Good News from a Bad Year
(posted at 10:49 am by Mike Rulle)
If you want to see a perspective 180 degrees from mine, read this post about how the Federal Reserve should buy stock (from Greg Mankiw's weblog) UCLA economist Roger Farmer suggests the Fed buy some stock. It is people like Robert Farmer that Robert Higgs had in mind who fail to understand how markets really work (see below).
(posted at 10:33 am by Mike Rulle)
I am probably overly attracted to the concept that the simple and mundane are what gets us every time (speculation in California housing, for example), not the "profound" (for example, a 50 year secular cycle of increasing leverage has finally caught up with us) . On the Financial Crisis and Recession weblog today's post discusses Consumption Surprise. Basically, real consumption is increasing, i.e., the amount of goods and services purchased went up in November as their charts show. In particular, the authors speculate that while it is too early to really know what this deflationary trend means, "(we) may get some grip on the question of how much of the drop in consumption was the reaction to the spike in oil prices during the summer and how much from the financial events of the fall". I like the more mundane concept that it was the price of gasoline. This also fits with the post right below that the sky is not falling.
(posted at 10:24 am by Mike Rulle)
Bryan Caplan discusses Robert Higgs in The Crisis Prophet Speaks. Higgs is highly critical of so called "free market economists" who basically have panicked over the last 3 months and abandoned their free market principles. He refers specifically to the "second" law of supply (and demand): "although we can expect markets to respond to price changes, we must recognize the responses take time; and the greater the time the greater the responses". In other words, when the market crashed and Bush went on TV to tell us markets were not functioning, he was ignoring the second law of supply and demand. You cannot expect a real estate collapse of that magnitude to be sorted out by markets in a week. It takes time. Meanwhile the Government engaged in actions which simply added confusion and further complexity to the market's analytical problem. Eventually, assuming we do not want to become the Soviet Union, we need to let markets adjust to reality. Remember, we all are part of the "markets". Markets may seem like something "out there" but all our individual actions, even choosing to buy a pair of shoes, is part of that market. Higgs adds, "we must appreciate the sky is not falling". As Caplan says, "I still can't believe it was FDR, not Higgs, who said "There is nothing to fear but fear itself."
(posted at 9:58 am by Mike Rulle)
I believe something about physical science which probably appears eccentric if not out right stupid. If it can be imagined by mankind, it will be attempted and likely eventually succeed. Remember when the first Matrix movie came out in 1999? Many who saw it, myself included, had a hard time following it even after the fact. Yet the premise of it, that one's brain can be manipulated to simulate reality, is easily imagined today. For example, Brain-Computer Interfaces for Manipulating Dream and Monitoring and manipulating the human brain: new neuroscience provide a glimpse of what scientists are working on. The premise of The Matrix to me is now obvious. But scientists are already well ahead of such visions. One can spend 10 minutes or so and read about human genome "sequencer" Craig Venter in this article Craig Venter's Epic Voyage As one commentator put it he is working on artificial life forms "where your dog becomes your cat". And so forth.
(posted at 9:43 am by Mike Rulle)
In Lectures on Macroeconomics, No. 12 Arnold Kling points out what many have observed before in many contexts; mankind is a trend follower. John Bogle, founder of the Vanguard Funds, has pointed to this tendency in equity markets. The bottom line is we, as a group, tend to "buy high and sell low". This really is a phenomenon of sorts, but not that difficult to at least sympathize with, if not quite fully understand. When markets are rising we feel "richer" and more secure, so we "buy more" of everything. Conversely, when markets are falling we feel "poorer" and more insecure, so we feel protective and engage in less risky activity. The problem is when we all do this at the same time it over accentuates the things we fear and the things we desire at exactly the wrong time. This is fascinating and probably not something which can be changed. Interestingly, Keynesian policies of stimulus spending are designed to address this aspect of human nature. The problem is empirically it has never been proven to work.
(posted at 9:22 am by Mike Rulle)
Have been saying this myself for years, as many have, but could not say it better myself UK official: man-made climate change is a con. One of the real tragedies of this, which Bjørn Lomborg has been most outspoken about Our priorities for saving the world, is the diversion of funds from more critical real global environmental problems and the restrictions on growth these global warming policies impose. It is a true travesty, not just of science, but of justice.
(posted at 8:22 am by Mike Rulle)
When I wrote Pinball Wizards, my intention was to also discuss Social Security and other unfunded "Ponzi" schemes the Government supports. George Mason Economics Chair, Don Boudreaux of Cafe Hayek, writes the following in the NY Times
"Like many people, Ben Stein was assured that Bernard Madoff "never lost money" ("They Told Me That Madoff Never Lost Money," Dec. 28). Unlike many people, Ben Stein wisely understood this assurance to be nonsense.
Imagine if your employer had an "employee savings" plan. You contributed 15% of your income. But you discover that instead of actually investing the money, he used it to pay operating expenses of the company. That is, you have no savings at all. You have just the "promise" that you will be paid at retirement. That is Social Security. The only way you can get paid is if the number of employees grow "ad infinitum" along with the company's ability to pay. The size of this problem is large. It also can be fixed. The media, however, calls Social Security the "third rail" of politics; touch it and you die.
(posted at 8:00 am by Mike Rulle)
Yesterday, I stated Greenspan Fed's monetary policy probably contributed to the housing bubble but was not the sole cause. Some think this is an obvious statement. Meaning, it is obvious he should have been more restrictive. If only we could know what is obvious now. Proof that there is no such thing as "obvious" is the complete lack of look forward consensus among economists today. People forget that there was a reasonably strong view we were about to enter a Japan like deflation back in 2002. The lack of consensus today exists not just among economists, but sometimes even within any particular economist's own ideas. If there had been more care taken on "teaser rates" and "credit quality" at 1) mortgage originators in the West like Countrywide, Washington Mutual, and Golden Gate; at 2) the rating agencies like Moody's and Fitch; at 3) the banks like Citi, Lehman, and Merrill; and 4) if there were more care taken at Fannie and Freddie on sub-prime guarantees, we would not now be discussing any of this. Greenspan is not the first Fed chairman to have pushed real rates negative and Bernanke proves he is not the last. "Woulda, coulda, shoulda"
(posted at 7:45 am by Mike Rulle)
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