TW: Does this look like housing has "bottomed" to you?
Tuesday, March 31, 2009
Lest We Forget Iraq
TW: What is our goal in Iraq again other than leaving with as many of our troops in one piece as possible? Given that our casualties have in fact declined greatly, I would call that a victory. Naturally never having been there in the first place would have truly minimized them.
Any other claims to victory are crap. We made a deal with the Sunni insurgents for a cease-fire. Will that deal hold in the face of Shiite government acts? Have many of the metrics by which the "surge" were meant to be judged born out? Not so much. Violence is down but are you confident it will remain so?
From Tom Ricks blog:
"I thought some of the surge-era deals in Iraq would unravel but I didn't think that would begin happening this quickly. It's only March 2009, and already Awakening fighters are fighting U.S. soldiers in the streets of Baghdad.
Anyone who tells you that the Iraq war is over should be forced to memorize this paragraph from the Sunday edition of the Washington Post:
'As Apache helicopter gunships cruised above Baghdad's Fadhil neighborhood, former Sunni insurgents fought from rooftops and street corners against American and Iraqi forces, according to witnesses, the Iraqi military and police. At least 15 people were wounded in the gunfights, which lasted several hours. By nightfall, the street fighters had taken five Iraqi soldiers hostage'
That is Iraq 2009. Does it sound peaceful to you? Does it seem like the political questions vexing Iraq have been solved?
Here is a quote of the day:
If they don't release Adil Mashadani, all the Awakening in Iraq will rise up like our uprising today," he [a local Awakening Council spokesman] added."
Along with the bombings in west Baghdad lately, the street fighting over the weekend doesn't quite form a trend. But it points toward one possible series of events. That is, the Maliki government is putting the screws to the Awakening movement (for those who just arrived, that's a mainly Sunni group of about 100,000 people, many of them former insurgents, who in late 2006 and 2007 arrived at ceasefires with the U.S. military presence in Iraq). The American plan was to integrate about 20,000 members of Awakening groups into Iraqi security forces, and help the rest find other work.
Meantime, the Baghdad government was supposed to take over the payments to the groups, which when I last checked totaled about $30 million a month. But the Shiite-dominated Baghdad government never really liked the idea. Indeed, the first deals were cut by U.S. officials behind the back of the Iraqi government. So Maliki's guys are:
Arresting some leaders of the "Sons of Iraq" (the American term for Awakening forces)
Attacking others
Bringing only 5,000 of the ex-insurgents into the Iraqi security forces
And stiffing others on pay, with some complaining they haven't been paid in weeks or even months
I think Maliki's gambit is to crack down on the Sunnis while American forces are still available in sufficient numbers to back him up. This is a turning into a test of strength, Sunni vs. Shiite.
There's more. If the Awakening fighting spreads, I wouldn't be surprised to see Moqtada al-Sadr's Shiite militia re-emerge. I've always thought the Sunni Awakening forced him to go to ground, because he didn't want to be the only guy taking on American forces. But if the Sunnis are on the attack again, it might be game on for him as well. I am reminded of Ambassador Ryan Crocker's worry, expressed in my new book and elsewhere, that the future of Iraq was something like Lebanon. That is, it has a government, but it is shaky, and there is violence in the streets, with some political parties having armed wings that are outside the control of the government.
The Washington Post's Anthony Shadid calls this all "potentially worrisome." When Shadid begins to worry, we all should. He's the guy who back in early 2004 used to encourage me to take taxis around Baghdad.
Proven provider John McCreary of NightWatch fame is even more emphatic:
This is a pre-cursor of the second round of the Sunni-Shia civil war to follow."
Question of the day: What should I say the next time someone tells me the surge "worked"?
Any other claims to victory are crap. We made a deal with the Sunni insurgents for a cease-fire. Will that deal hold in the face of Shiite government acts? Have many of the metrics by which the "surge" were meant to be judged born out? Not so much. Violence is down but are you confident it will remain so?
From Tom Ricks blog:
"I thought some of the surge-era deals in Iraq would unravel but I didn't think that would begin happening this quickly. It's only March 2009, and already Awakening fighters are fighting U.S. soldiers in the streets of Baghdad.
Anyone who tells you that the Iraq war is over should be forced to memorize this paragraph from the Sunday edition of the Washington Post:
'As Apache helicopter gunships cruised above Baghdad's Fadhil neighborhood, former Sunni insurgents fought from rooftops and street corners against American and Iraqi forces, according to witnesses, the Iraqi military and police. At least 15 people were wounded in the gunfights, which lasted several hours. By nightfall, the street fighters had taken five Iraqi soldiers hostage'
That is Iraq 2009. Does it sound peaceful to you? Does it seem like the political questions vexing Iraq have been solved?
Here is a quote of the day:
If they don't release Adil Mashadani, all the Awakening in Iraq will rise up like our uprising today," he [a local Awakening Council spokesman] added."
Along with the bombings in west Baghdad lately, the street fighting over the weekend doesn't quite form a trend. But it points toward one possible series of events. That is, the Maliki government is putting the screws to the Awakening movement (for those who just arrived, that's a mainly Sunni group of about 100,000 people, many of them former insurgents, who in late 2006 and 2007 arrived at ceasefires with the U.S. military presence in Iraq). The American plan was to integrate about 20,000 members of Awakening groups into Iraqi security forces, and help the rest find other work.
Meantime, the Baghdad government was supposed to take over the payments to the groups, which when I last checked totaled about $30 million a month. But the Shiite-dominated Baghdad government never really liked the idea. Indeed, the first deals were cut by U.S. officials behind the back of the Iraqi government. So Maliki's guys are:
Arresting some leaders of the "Sons of Iraq" (the American term for Awakening forces)
Attacking others
Bringing only 5,000 of the ex-insurgents into the Iraqi security forces
And stiffing others on pay, with some complaining they haven't been paid in weeks or even months
I think Maliki's gambit is to crack down on the Sunnis while American forces are still available in sufficient numbers to back him up. This is a turning into a test of strength, Sunni vs. Shiite.
There's more. If the Awakening fighting spreads, I wouldn't be surprised to see Moqtada al-Sadr's Shiite militia re-emerge. I've always thought the Sunni Awakening forced him to go to ground, because he didn't want to be the only guy taking on American forces. But if the Sunnis are on the attack again, it might be game on for him as well. I am reminded of Ambassador Ryan Crocker's worry, expressed in my new book and elsewhere, that the future of Iraq was something like Lebanon. That is, it has a government, but it is shaky, and there is violence in the streets, with some political parties having armed wings that are outside the control of the government.
The Washington Post's Anthony Shadid calls this all "potentially worrisome." When Shadid begins to worry, we all should. He's the guy who back in early 2004 used to encourage me to take taxis around Baghdad.
Proven provider John McCreary of NightWatch fame is even more emphatic:
This is a pre-cursor of the second round of the Sunni-Shia civil war to follow."
Question of the day: What should I say the next time someone tells me the surge "worked"?
A Silver Lining: Cheaper Public Works
TW: Not surprisingly taxpayer costs to get public works done are going down amidst the contraction. We are getting a bigger bang for our buck. Now would seem like the time for government to get moving on as much infrastructure as possible whilst hungry contractors are available. Obviously we are doing so as fast as the projects can be defined, this is how counter-cyclical spending is meant to work. Alternatively we could cut government spending, have the contractors sit at home (drawing unemployment) and hope the economy recovers and then spend more per project once the private sector recovers and is bidding for the use of the same workers and materials.
From Mish Shedlock:
"California's poor economy has led to surprisingly low bids on transportation projects across the Bay Area and state, as construction companies fight for their business lives to capture whatever work they can. In an industry where unemployment is at 18.5 percent and more than 30,900 jobs were lost last month, according to the Bureau of Labor Statistics, dozens of firms are vying for work that in the past might draw interest from a handful.
From major highway construction to small sidewalk improvements, bids are sometimes close to half as much as public works officials had projected.
When the Santa Clara County Roads & Airports Department recently sought a contractor to do bicycle and pedestrian improvements along three streets, it expected the cost to be about $975,000. The winning offering was just $543,533.
"Twenty bidders, with the low bid 44 percent under," said Dan Collen, a deputy director with the agency. "Six bidders would have been considered a good turnout, but things have moved beyond competitive. They are desperate."
On the carpool lane project on Interstate 680 from Fremont to Milpitas, the three contracts awarded last month totaled about $88 million — compared with the $136 million Caltrans anticipated.
Repairing bridge decks on Highway 237, Highway 84 and El Camino Real will cost $982,000 — $529,000 less than forecast. Repaving four streets in Cupertino will cost $3.6 million, nearly $1 million under what the city figured it would have to pay. And making the northeast corner of the Virginia-Budd street intersection accessible to the disabled will cost $2,090 instead of $3,000.
..."I've never seen better bidding in my 35 years in transportation," said Dennis Fay, head of the Alameda County Congestion Management Agency."
From Mish Shedlock:
"California's poor economy has led to surprisingly low bids on transportation projects across the Bay Area and state, as construction companies fight for their business lives to capture whatever work they can. In an industry where unemployment is at 18.5 percent and more than 30,900 jobs were lost last month, according to the Bureau of Labor Statistics, dozens of firms are vying for work that in the past might draw interest from a handful.
From major highway construction to small sidewalk improvements, bids are sometimes close to half as much as public works officials had projected.
When the Santa Clara County Roads & Airports Department recently sought a contractor to do bicycle and pedestrian improvements along three streets, it expected the cost to be about $975,000. The winning offering was just $543,533.
"Twenty bidders, with the low bid 44 percent under," said Dan Collen, a deputy director with the agency. "Six bidders would have been considered a good turnout, but things have moved beyond competitive. They are desperate."
On the carpool lane project on Interstate 680 from Fremont to Milpitas, the three contracts awarded last month totaled about $88 million — compared with the $136 million Caltrans anticipated.
Repairing bridge decks on Highway 237, Highway 84 and El Camino Real will cost $982,000 — $529,000 less than forecast. Repaving four streets in Cupertino will cost $3.6 million, nearly $1 million under what the city figured it would have to pay. And making the northeast corner of the Virginia-Budd street intersection accessible to the disabled will cost $2,090 instead of $3,000.
..."I've never seen better bidding in my 35 years in transportation," said Dennis Fay, head of the Alameda County Congestion Management Agency."
Real Estate the Not So Good Investment
TW: We have all heard for our entire lives BS about the immutability of real estate investments. These numbers should make one fairly skeptical of those claims. They symbolize the massive Ponzi scheme Americans (and many internationals) have participated in since about 1980 or so. Keep in mind these are nominal figures, if one were to inflation adjust the dates to which one would have to go to achieve break even would be farther back (1980's maybe 1970's for Detroit, 1990's for most others). Real estate figures by market:
From Floyd Norris at NYT:
Depth of Decline/How far back the decline takes you to achieve break even (nominally)
1. Phoenix -49%/February 2003
2. Las Vegas -46%/May 2003
3. Miami -43%/October 2003
4. San Francisco -43%/October 2000
5. San Diego -41%/August 2002
6. Los Angeles -39%/October 2003
7. Detroit -39%/August 1996
8. Tampa -37%/March 2004
9. Washington -32%/March 2004
10. Minneapolis -30%/June 2001
Twenty city composite -29%/October 2003
11. Chicago -22%/June 2003
12. Atlanta -20%/June 2001
13. Seattle -20%/September 2005
14. Portland -18%/August 2005
15. Boston -17%/April 2003
16. Cleveland -17%/August 2000
17. New York -16%/October 2004
18. Denver -13%/April 2002
19. Charlotte -11%/March 2006
20. Dallas -11%/May 2002
http://norris.blogs.nytimes.com/2009/03/31/how-low-can-they-go/
From Floyd Norris at NYT:
Depth of Decline/How far back the decline takes you to achieve break even (nominally)
1. Phoenix -49%/February 2003
2. Las Vegas -46%/May 2003
3. Miami -43%/October 2003
4. San Francisco -43%/October 2000
5. San Diego -41%/August 2002
6. Los Angeles -39%/October 2003
7. Detroit -39%/August 1996
8. Tampa -37%/March 2004
9. Washington -32%/March 2004
10. Minneapolis -30%/June 2001
Twenty city composite -29%/October 2003
11. Chicago -22%/June 2003
12. Atlanta -20%/June 2001
13. Seattle -20%/September 2005
14. Portland -18%/August 2005
15. Boston -17%/April 2003
16. Cleveland -17%/August 2000
17. New York -16%/October 2004
18. Denver -13%/April 2002
19. Charlotte -11%/March 2006
20. Dallas -11%/May 2002
http://norris.blogs.nytimes.com/2009/03/31/how-low-can-they-go/
Things I Like - Art
Amy Casey is obsessed with houses. And they aren't behaving normally.
Pull Together
Limited Possibilities
Hive Study
Windy - this one reminds me of those carnival rides
Pull Together
Limited Possibilities
Hive Study
Windy - this one reminds me of those carnival rides
Will Sports Suffer Amidst the Contraction? Plus Convenience Fees Piss Me Off
TW: Norris' piece brings up several issues. One, those damn convenience fees one faces now when ordering tickets. As Norris points out why would a fee vary in cost by ticket value? But generally paying 10% and more for a fee on a ticket is merely a disguised base price component. We are becoming a fee soaked society (check out the details on a rental car bill next time! or almost any travel related bill). Fees are becoming ubiquitous and barely disguised base price components. I hate them.
Next, I certainly would not want to be the Yankees or Mets opening gold plated stadiums amidst the great contraction. Baseball should be interesting this year. Baseball has no salary cap unlike football and basketball where teams are limited in their spending but also obligated to spend just about the cap amount. Baseball teams have been increasingly careful with their dollars as the off-season progressed. I fully expect attendance to be off significantly. For those of you who attend games you know how expensive games are with the tickets being almost an afterthought compared to sky high concessions, parking etc. I really feel for folks trying to take kids to the games. There may be some very unhappy owners and players used to living the good life by mid-season.
Finally sports teams have become very good at squeezing the last penny out of their seats. Long gone are the days when all games regardless of the time of year or opponent were priced the same. Now April tix are far cheaper than those post June and the series against say the Cardinals at Wrigley Field are far more expensive than games against the Giants. This pricing makes economic sense and replaces much of the value scalpers extracted previously. Of course this year teams may need to deploy their micro pricing in reverse to put some fannies in the seats.
From Floyd Norris at NYT:
"This is the year that both the New York Yankees and the New York Mets open new stadiums, with fewer seats than the stadiums they replace. Both also have raised prices to levels that only an unlimited expense account could appreciate.
Will it work? Will some tickets go unsold because no one will pay the prices being asked? If so, will the teams act like airlines, selling tickets for what the market will bear at big discounts?
It’s a fair bet that when baseball executives designed the stadiums they did not expect Lehman Brothers to vanish. Nor did they anticipate the bailout backlash. (How do you feel about bankers partying in seats that cost more than $2,000 each?)
I received an e-mail message today from the Yankees proclaiming that “Tickets for Yankee Stadium’s inaugural week are still available.”
So I checked out the second home game of the season, on Friday afternoon, April 17. The cheap seats are sold out, but there are still some good seats left, at prices ranging from $375 (plus a $12.45 convenience fee) to $900 (plus a $23.45 convenience fee).
As it happens, the Mets are in town that same night. There you can get tickets for as little as $60 (plus $7 fee) for seats in what I would have called the bleachers but they call left field reserved. Seats costing as much as $270 (plus a $12 fee) are also available.
Let me know if anyone notices the teams cutting prices to fill seats.
And while I’m complaining, can anyone explain why the fee for buying an expensive ticket online should be higher than the fee for buying a less expensive one?
http://norris.blogs.nytimes.com/2009/03/30/this-is-the-year-that-both-the/
Next, I certainly would not want to be the Yankees or Mets opening gold plated stadiums amidst the great contraction. Baseball should be interesting this year. Baseball has no salary cap unlike football and basketball where teams are limited in their spending but also obligated to spend just about the cap amount. Baseball teams have been increasingly careful with their dollars as the off-season progressed. I fully expect attendance to be off significantly. For those of you who attend games you know how expensive games are with the tickets being almost an afterthought compared to sky high concessions, parking etc. I really feel for folks trying to take kids to the games. There may be some very unhappy owners and players used to living the good life by mid-season.
Finally sports teams have become very good at squeezing the last penny out of their seats. Long gone are the days when all games regardless of the time of year or opponent were priced the same. Now April tix are far cheaper than those post June and the series against say the Cardinals at Wrigley Field are far more expensive than games against the Giants. This pricing makes economic sense and replaces much of the value scalpers extracted previously. Of course this year teams may need to deploy their micro pricing in reverse to put some fannies in the seats.
From Floyd Norris at NYT:
"This is the year that both the New York Yankees and the New York Mets open new stadiums, with fewer seats than the stadiums they replace. Both also have raised prices to levels that only an unlimited expense account could appreciate.
Will it work? Will some tickets go unsold because no one will pay the prices being asked? If so, will the teams act like airlines, selling tickets for what the market will bear at big discounts?
It’s a fair bet that when baseball executives designed the stadiums they did not expect Lehman Brothers to vanish. Nor did they anticipate the bailout backlash. (How do you feel about bankers partying in seats that cost more than $2,000 each?)
I received an e-mail message today from the Yankees proclaiming that “Tickets for Yankee Stadium’s inaugural week are still available.”
So I checked out the second home game of the season, on Friday afternoon, April 17. The cheap seats are sold out, but there are still some good seats left, at prices ranging from $375 (plus a $12.45 convenience fee) to $900 (plus a $23.45 convenience fee).
As it happens, the Mets are in town that same night. There you can get tickets for as little as $60 (plus $7 fee) for seats in what I would have called the bleachers but they call left field reserved. Seats costing as much as $270 (plus a $12 fee) are also available.
Let me know if anyone notices the teams cutting prices to fill seats.
And while I’m complaining, can anyone explain why the fee for buying an expensive ticket online should be higher than the fee for buying a less expensive one?
http://norris.blogs.nytimes.com/2009/03/30/this-is-the-year-that-both-the/
Monday, March 30, 2009
Why Can't We Deal With the Right Issues?
TW: Economist uses the Newsweek Krugman piece to frame a real issue. Others have mentioned the same thing with the cover story Newsweek put out this week. The story implies one thing, Krugman as a strong lefty critic of Obama's econ policies, but then proceeds to spend the vast majority of the article focused on Krugman's personality.
If we as a nation are to address the considerable challenges facing us, we need to have good debates. Those debates are occurring in the blogosphere. On the specific issue mentioned below, bank nationalisation, the debate rages to and fro with very well-informed economists dealing out their views. MSM misses most of this, however, some of it is structural, some of it is simply that most of us cannot keep up with the complexity of the debates.
Ultimately the Economist blogger's point is simply that ideology is much easier to define, trumpet and argue than practical executional policies. We should all keep that in mind as we sort through the information, disinformation, hyperbole, demagoguery and politics associated with these various crises permeating our country at the moment.
From the Economist:
"...that's what Newsweek can do—profile a big personality. They're not up to the task of answering the big questions on banking policy, and probably wouldn't even know where to begin.
...To me, the problem is that we're having the wrong conversations. Newsweek is writing about Paul Krugman instead of writing about what Paul Krugman is saying. The rest of the financial press overwhelmingly casts the nationalisation debate in ideological terms, rather than focusing on the practical challenges. And Mr Krugman, who should be well aware of the practical challenges, particularly as they are embodied in the populist Congress and the bottleneck Senate, focuses his ire instead on the administration, which can only operate within the leeway extended by the legislature.
If this story represents anything, it's our monumental ability to miss the point. And in that sense, it is a damning indictment of decision making in America. "
http://www.economist.com/blogs/freeexchange/2009/03/let_us_now_talk_about_paul_kru.cfm
If we as a nation are to address the considerable challenges facing us, we need to have good debates. Those debates are occurring in the blogosphere. On the specific issue mentioned below, bank nationalisation, the debate rages to and fro with very well-informed economists dealing out their views. MSM misses most of this, however, some of it is structural, some of it is simply that most of us cannot keep up with the complexity of the debates.
Ultimately the Economist blogger's point is simply that ideology is much easier to define, trumpet and argue than practical executional policies. We should all keep that in mind as we sort through the information, disinformation, hyperbole, demagoguery and politics associated with these various crises permeating our country at the moment.
From the Economist:
"...that's what Newsweek can do—profile a big personality. They're not up to the task of answering the big questions on banking policy, and probably wouldn't even know where to begin.
...To me, the problem is that we're having the wrong conversations. Newsweek is writing about Paul Krugman instead of writing about what Paul Krugman is saying. The rest of the financial press overwhelmingly casts the nationalisation debate in ideological terms, rather than focusing on the practical challenges. And Mr Krugman, who should be well aware of the practical challenges, particularly as they are embodied in the populist Congress and the bottleneck Senate, focuses his ire instead on the administration, which can only operate within the leeway extended by the legislature.
If this story represents anything, it's our monumental ability to miss the point. And in that sense, it is a damning indictment of decision making in America. "
http://www.economist.com/blogs/freeexchange/2009/03/let_us_now_talk_about_paul_kru.cfm
High Stakes Poker With the Automakers
TW: I suspect this week's drama with the automakers is merely another inning in the on-going fandango with the automaker bondholders (the bondholders hold tens of billions of notes on the automakers, they must take significant haircuts if the automakers are to have viable recovery plans, the stocks are toast except for casino playing traders). Below Smith outlines the downside of the hardball Obama is playing this week. While at a certain level the bigwigs being held to the fire is enjoyable, the risks are considerable. Ultimately I strongly doubt Obama wants any of the Big Three in Chapter 11, naturally the bondholders know this hence the need for the game of chicken. The southern Republicans may relish the world auto industry losing American based manufacturers, I am not convinced the rest of the American public is ready for that step.
From Yves Smith at Naked Capitalism:
"It would be better if we were wrong, but we are of the school that putting the big automakers into bankruptcy, despite its attractions (being able to restructure debt and dealer networks; the UAW contracts are far less significant economically than the media makes them out to be) misses out on one crucial element: you don't have a business if you don't have customers. And a GM bankruptcy would be a protracted affair. Even if consumers believe the company will make it, what about their local dealer? If they worry they might have to schlepp to get their car serviced, is it worth it?
In typical backwards American deal and contract focused thinking, the officialdom has not spent enough time assessing the single most important issue: how would customers react? If GM and Chrysler were to lose as many as 20% of sales they'd otherwise get as a result of a bankruptcy filing, that it is a very big change in outcomes. And the drop could be considerably higher than that.
I worry that this punitive move will wind up being Lehman redux. Recall that bailout disgust was running high post Bear and Fannie and Freddie, and Someone Had to Suffer to show the Administration was made of real men. Now since no one even dares bitch slap a bank (the bonus stuff is mere Punch and Judy), all the hostility is channeled at Big Auto. And the danger is going into overkill literally, not just figuratively, to make up for being too easy on the financiers. And if GM or Chrysler were to be liquidated, the knock-on effects would be grim. They are important to quite a few parts suppliers. If those suppliers fail, it threatens the viability of the foreign transplants."
http://www.nakedcapitalism.com/2009/03/auto-company-plans-rejected-by-task.html
From Yves Smith at Naked Capitalism:
"It would be better if we were wrong, but we are of the school that putting the big automakers into bankruptcy, despite its attractions (being able to restructure debt and dealer networks; the UAW contracts are far less significant economically than the media makes them out to be) misses out on one crucial element: you don't have a business if you don't have customers. And a GM bankruptcy would be a protracted affair. Even if consumers believe the company will make it, what about their local dealer? If they worry they might have to schlepp to get their car serviced, is it worth it?
In typical backwards American deal and contract focused thinking, the officialdom has not spent enough time assessing the single most important issue: how would customers react? If GM and Chrysler were to lose as many as 20% of sales they'd otherwise get as a result of a bankruptcy filing, that it is a very big change in outcomes. And the drop could be considerably higher than that.
I worry that this punitive move will wind up being Lehman redux. Recall that bailout disgust was running high post Bear and Fannie and Freddie, and Someone Had to Suffer to show the Administration was made of real men. Now since no one even dares bitch slap a bank (the bonus stuff is mere Punch and Judy), all the hostility is channeled at Big Auto. And the danger is going into overkill literally, not just figuratively, to make up for being too easy on the financiers. And if GM or Chrysler were to be liquidated, the knock-on effects would be grim. They are important to quite a few parts suppliers. If those suppliers fail, it threatens the viability of the foreign transplants."
http://www.nakedcapitalism.com/2009/03/auto-company-plans-rejected-by-task.html
Texas Fumbles Around With Evolution
TW: Have posted on the Texas state education board's efforts to inject creationism into our nation's science curricula. The board issued a muddled ruling last week falling short of explicitly pushing creationism into science classes but leaving many doors open by which local entities can do so on their own. I especially like Hitchens final paragraph. If one is going to open things up for comparative debate why should the Christian Genesis explanation be the only alternative (personally I would insist upon the Druids getting some level of recognition).
From Chris Hitchens in Newsweek:
"...last week Texas and schoolbooks meant something else altogether when the state Board of Education, in a muddled decision, rejected a state science curriculum that required teachers to discuss the "strengths and weaknesses" of the theory of evolution. Instead, the board allowed "all sides" of scientific theories to be taught.
...let's "be honest with the kids," as Dr. Don McLeroy[chief creationist tout], the chairman of the Texas education board, wants us to be. The problem is that he is urging that the argument be taught, not in a history or in a civics class, but in a biology class. And one of his supporters on the board, Ken Mercer, has said that evolution is disproved by the absence of any transitional forms between dogs and cats. If any state in the American union gave equal time in science class to such claims, it would certainly make itself unique in the world (perhaps no shame in that). But it would also set a precedent for the sharing of the astronomy period with the teaching of astrology, or indeed of equal time as between chemistry and alchemy. Less boring perhaps, but also much less scientific and less educational.
The Texas anti-Darwin stalwarts also might want to beware of what they wish for. The last times that evangelical Protestantism won cultural/ political victories—by banning the sale of alcohol, prohibiting the teaching of evolution and restricting immigration from Catholic countries—the triumphs all turned out to be Pyrrhic. There are some successes that are simply not survivable. If by any combination of luck and coincidence any religious coalition ever did succeed in criminalizing abortion, say, or mandating school prayer, it would swiftly become the victim of a backlash that would make it rue the day. This will apply with redoubled force to any initiative that asks the United States to trade its hard-won scientific preeminence against its private and unofficial pieties. This country is so constituted that no one group, and certainly no one confessional group, is able to dictate its own standards to the others. There are days when I almost wish the fundamentalists could get their own way, just so that they would find out what would happen to them.
...It's not just that the overwhelming majority of scientists are now convinced that evolution is inscribed in the fossil record and in the lineaments of molecular biology. It is more that evolutionists will say in advance which evidence, if found, would refute them and force them to reconsider. ("Rabbit fossils in the pre-Cambrian layer" was, I seem to remember, the response of Prof. J.B.S. Haldane.) Try asking an "intelligent design" advocate to stipulate upfront what would constitute refutation of his world view and you will easily see the difference between the scientific method and the pseudoscientific one.
But that is just my opinion. And I certainly do not want it said that my side denies a hearing to the opposing one. In the spirit of compromise, then, I propose the following. First, let the school debating societies restage the wonderful set-piece real-life dramas of Oxford and Dayton, Tenn. Let time also be set aside, in our increasingly multiethnic and multicultural school system, for children to be taught the huge variety of creation stories, from the Hindu to the Muslim to the Australian Aboriginal. This is always interesting (and it can't be, can it, that the Texas board holdouts think that only Genesis ought to be so honored?). Second, we can surely demand that the principle of "strengths and weaknesses" will be applied evenly. If any church in Texas receives a tax exemption, or if any religious institution is the beneficiary of any subvention from the Office of Faith-Based and Neighborhood Partnerships, we must be assured that it will devote a portion of its time to laying bare the "strengths and weaknesses" of the religious world view, and also to teaching the works of Voltaire, David Hume, Benedict de Spinoza, Thomas Paine and Thomas Jefferson. This is America. Let a hundred flowers bloom, and a thousand schools of thought contend. We may one day have cause to be grateful to the Texas Board of Education for lighting a candle that cannot be put out."
http://www.newsweek.com/id/191400/page/1
From Chris Hitchens in Newsweek:
"...last week Texas and schoolbooks meant something else altogether when the state Board of Education, in a muddled decision, rejected a state science curriculum that required teachers to discuss the "strengths and weaknesses" of the theory of evolution. Instead, the board allowed "all sides" of scientific theories to be taught.
...let's "be honest with the kids," as Dr. Don McLeroy[chief creationist tout], the chairman of the Texas education board, wants us to be. The problem is that he is urging that the argument be taught, not in a history or in a civics class, but in a biology class. And one of his supporters on the board, Ken Mercer, has said that evolution is disproved by the absence of any transitional forms between dogs and cats. If any state in the American union gave equal time in science class to such claims, it would certainly make itself unique in the world (perhaps no shame in that). But it would also set a precedent for the sharing of the astronomy period with the teaching of astrology, or indeed of equal time as between chemistry and alchemy. Less boring perhaps, but also much less scientific and less educational.
The Texas anti-Darwin stalwarts also might want to beware of what they wish for. The last times that evangelical Protestantism won cultural/ political victories—by banning the sale of alcohol, prohibiting the teaching of evolution and restricting immigration from Catholic countries—the triumphs all turned out to be Pyrrhic. There are some successes that are simply not survivable. If by any combination of luck and coincidence any religious coalition ever did succeed in criminalizing abortion, say, or mandating school prayer, it would swiftly become the victim of a backlash that would make it rue the day. This will apply with redoubled force to any initiative that asks the United States to trade its hard-won scientific preeminence against its private and unofficial pieties. This country is so constituted that no one group, and certainly no one confessional group, is able to dictate its own standards to the others. There are days when I almost wish the fundamentalists could get their own way, just so that they would find out what would happen to them.
...It's not just that the overwhelming majority of scientists are now convinced that evolution is inscribed in the fossil record and in the lineaments of molecular biology. It is more that evolutionists will say in advance which evidence, if found, would refute them and force them to reconsider. ("Rabbit fossils in the pre-Cambrian layer" was, I seem to remember, the response of Prof. J.B.S. Haldane.) Try asking an "intelligent design" advocate to stipulate upfront what would constitute refutation of his world view and you will easily see the difference between the scientific method and the pseudoscientific one.
But that is just my opinion. And I certainly do not want it said that my side denies a hearing to the opposing one. In the spirit of compromise, then, I propose the following. First, let the school debating societies restage the wonderful set-piece real-life dramas of Oxford and Dayton, Tenn. Let time also be set aside, in our increasingly multiethnic and multicultural school system, for children to be taught the huge variety of creation stories, from the Hindu to the Muslim to the Australian Aboriginal. This is always interesting (and it can't be, can it, that the Texas board holdouts think that only Genesis ought to be so honored?). Second, we can surely demand that the principle of "strengths and weaknesses" will be applied evenly. If any church in Texas receives a tax exemption, or if any religious institution is the beneficiary of any subvention from the Office of Faith-Based and Neighborhood Partnerships, we must be assured that it will devote a portion of its time to laying bare the "strengths and weaknesses" of the religious world view, and also to teaching the works of Voltaire, David Hume, Benedict de Spinoza, Thomas Paine and Thomas Jefferson. This is America. Let a hundred flowers bloom, and a thousand schools of thought contend. We may one day have cause to be grateful to the Texas Board of Education for lighting a candle that cannot be put out."
http://www.newsweek.com/id/191400/page/1
Things I Like - Humor
I never wanted a hamster before. And then I saw this:
(there's music, if you can call it that)
Hamster On a Piano Eating Popcorn - watch more funny videos
I'm sure the cats would be thrilled to have a new friend...
(there's music, if you can call it that)
Hamster On a Piano Eating Popcorn - watch more funny videos
I'm sure the cats would be thrilled to have a new friend...
German Views On Afghanistan
TW: The German news magazine Der Spiegel summarizes some reaction from German editorials regarding the latest initiatives in Afghanistan. What strikes me is the lack of any consensus or clear mission in the editorial voices.
One sees the center-right paper patting Germany on its back for having invented the concept of nation-building (huh?) and excusing Germany's ability to avoid combat because they picked the quiet region first before others picked their regions (a kind nyah, nyah approach). The lefty paper rightly mocks the German commitment to increase their police training force by a whopping 150 or so while acknowledging even that paltry change will run into resistance. The German financial paper basically says the U.S. will be left holding the bag.
I have read before that European public opinion has melded the extremely unpopular Iraq situation with the poorly understood AfPak conflict far more so than even here in the U.S. Obama and European leaders have much work to do in order to motivate the European publics to commit their blood and treasure to the AfPak theater.
From Der Spiegel:
"In the run-up to next week's NATO summit, German Chancellor Angela Merkel gave a speech on Thursday in which she offered support for Obama's plan and described the war in Afghanistan as the "most important contemporary test" of the 26-state NATO alliance. At the same time, she said Germany had no plans to send any additional troops to the country. The relatively small number of additional civilian helpers Berlin plans to dispatch to the country has come in for some criticism. On Germany's editorial pages on Friday, commentators are scathing of the country's contribution.
The financial daily Handelsblatt writes:
"Every member of NATO wants a success in Afghanistan But it is the US that has had to handle most of the military work. That will be the conclusion at next week's NATO summit after the niceties have been filtered out of the closing statement. German Chancellor Merkel made that very clear for Germany on Thursday. Germany will not increase its number of troops in Afghanistan. Instead it wants to intensify its civilian reconstruction efforts. But that can't be truly successful without the security that only the military can provide."
"If Obama had any illusions whatsoever when he took office about whether his partners would abandon their increasing reserve on the issue of Afghanistan, then those have been buried by now...Germany may be willing to keep its current 3,400 troops in the country, but other countries are firmly holding to their plans to withdraw. Holland will pull out 1,700 troops by 2010, and a year later Canada's 2,800-soldier contingent will return home. The success or failure on the main front in the battle against radical Islam will be determined by the US's engagement there."
The center-right Frankfurter Allgemeine Zeitung writes:
"Germany can 'really stand by' what it has achieved in Afghanistan since December 2001 -- and with that remark, Chancellor Merkel was right...The fact that NATO's most important mission is in the Hindu Kush is, after all, due to a German initiative. And because Germany was the first to send a reconstruction team to the region, it gave them the chance to select the comparatively peaceful north of the country. There the German forces...were able to fulfil the task set before them."
"Now they are boosting the size of the team, they are sending more trainers for the Afghan army, and more troops in time for the election. But they are always being deployed in the north. Sending troops to other parts of the country, places where there is fighting, will become difficult to avoid in the long term. And experience shows: Taking the initiative yourself early is preferable to being forced into something late in the day."
The left-leaning Berliner Zeitung writes:
"..NATO, of course, understands that, in places like Afghanistan, it can only play a small part in any solution and that the rebuilding of civil society is the most important priority."
"It is a platitude which fails to gain extra meaning through repetition in parliament. Merkel's suggestion would only be revolutionary if it were followed by action. But in that respect, Merkel keeps quiet. The fact there are German forces in Afghanistan speaks for itself, according to the chancellor -- and that was all she had to say. There was no mention of Germany sending more police trainers to Afghanistan than those already planned. In total 120 are due to be sent, along with 45 military police. But that's a joke. What is needed are hundreds of civil trainers."
"But that would leave the chancellor in a difficult conflict with the German states, which would be in charge of committing police. Angela Merkel sidestepped this conflict by announcing a revolution -- and then taking a well-trodden path. That is nothing more than political window dressing."
http://www.spiegel.de/international/world/0,1518,615878,00.html
Sunday, March 29, 2009
A Little Chirping From the Left Will Aid Obama
TW: Yesterday, I posited Paul Krugman was far less known than Rush Limbaugh. He still is but the irony of Krugman popping up as cover boy for Newsweek within hours is not lost. In addition to serving Krugman's considerable ego, such stories help Obama. When the conservatives are pulling as hard as their enfeebled selves can to rein in Obama from the right, a little counter-pressure from the left not only offsets the policy debate, it helps Obama to appear centrist.
Krugman's theme is that Obama needs to do more not less. Be more aggressive with the banks by nationalizing them, be more aggressive with stimulus perhaps by a factor of two. Krugman leads the camp concerned that the world economy is at risk of a very severe depressionary contraction. He is the antithesis of those here and abroad who argue the current crisis while significant does not warrant extraordinary intervention in an effort to avoid a more serious contraction.
From Politico:
"...Krugman...appears on the cover of next week’s Newsweek, with the headline “OBAMA IS WRONG: The Loyal Opposition of Paul Krugman.” Krugman, who won the Nobel Prize in economics last fall, has been arguing that Obama is doing too little to respond to threats to the nation’s banking and economic system, and he has contended that the $787 billion stimulus bill should have been bigger. Krugman personifies a conundrum for Obama: He has to cope with complaints from the political left, as well as the more predictable opposition of the right.
“Every once a while, … a critic emerges who is more than a chatterer—a critic with credibility whose views seem more than a little plausible and who manages to rankle those in power in more than passing ways. As the debate over the rescue of the financial system—the crucial step toward stabilizing the economy and returning the country to prosperity—unfolds, the man on our cover this week, Paul Krugman of The New York Times, has emerged as the kind of critic who, as Evan Thomas writes, appears disturbingly close to the mark when he expresses his ‘despair’ over the administration’s bailout plan. …
“There is little doubt that Krugman—Nobel laureate and Princeton professor—has be come the voice of the loyal opposition. What is striking about this development is that Obama’s most thoughtful critic is taking on the president from the left at a time when, as Jonathan Alter notes, so many others are reflexively arguing that the administration is trying too much too soon. "A devoted liberal, Krugman hungers for what he calls ‘a new New Deal,’ and he prides himself on his status as an outsider.
Is Krugman right? Is the Obama administration too beholden to Wall Street and to the status quo, trying to save a system that is beyond salvation? Does Obama have—despite the brayings of the right—too much faith in the markets at a time when prudence suggests that they cannot rescue themselves? We do not know yet, and will not for a while to come. But as Evan—hardly a rabble-rousing lefty—writes, a lot of people have a ‘creeping feeling’ that the Cassandra from Princeton may just be right. After all, the original Cassandra was.”
Krugman's theme is that Obama needs to do more not less. Be more aggressive with the banks by nationalizing them, be more aggressive with stimulus perhaps by a factor of two. Krugman leads the camp concerned that the world economy is at risk of a very severe depressionary contraction. He is the antithesis of those here and abroad who argue the current crisis while significant does not warrant extraordinary intervention in an effort to avoid a more serious contraction.
From Politico:
"...Krugman...appears on the cover of next week’s Newsweek, with the headline “OBAMA IS WRONG: The Loyal Opposition of Paul Krugman.” Krugman, who won the Nobel Prize in economics last fall, has been arguing that Obama is doing too little to respond to threats to the nation’s banking and economic system, and he has contended that the $787 billion stimulus bill should have been bigger. Krugman personifies a conundrum for Obama: He has to cope with complaints from the political left, as well as the more predictable opposition of the right.
“Every once a while, … a critic emerges who is more than a chatterer—a critic with credibility whose views seem more than a little plausible and who manages to rankle those in power in more than passing ways. As the debate over the rescue of the financial system—the crucial step toward stabilizing the economy and returning the country to prosperity—unfolds, the man on our cover this week, Paul Krugman of The New York Times, has emerged as the kind of critic who, as Evan Thomas writes, appears disturbingly close to the mark when he expresses his ‘despair’ over the administration’s bailout plan. …
“There is little doubt that Krugman—Nobel laureate and Princeton professor—has be come the voice of the loyal opposition. What is striking about this development is that Obama’s most thoughtful critic is taking on the president from the left at a time when, as Jonathan Alter notes, so many others are reflexively arguing that the administration is trying too much too soon. "A devoted liberal, Krugman hungers for what he calls ‘a new New Deal,’ and he prides himself on his status as an outsider.
Is Krugman right? Is the Obama administration too beholden to Wall Street and to the status quo, trying to save a system that is beyond salvation? Does Obama have—despite the brayings of the right—too much faith in the markets at a time when prudence suggests that they cannot rescue themselves? We do not know yet, and will not for a while to come. But as Evan—hardly a rabble-rousing lefty—writes, a lot of people have a ‘creeping feeling’ that the Cassandra from Princeton may just be right. After all, the original Cassandra was.”
Iraq And Afghanistan a Comparison
TW: Obama is embarking on a new phase in Afghanistan/Pakistan (AfPak is the emerging moniker). Deploying finite American blood and treasure is certainly worthy of much debate and analysis. Hopefully the discussion relative to AfPak will exhibit far more depth and insight than the lead-up to the foolhardy and disastrous war in Iraq. Unfortunately both here and especially in Europe Iraq and Afghanistan have become conflated into one big operation. The differences though far exceed the similarities. A comparison of the two.
Basis for original involvement/invasion:
Iraq- has never been accurately defined excuses have included but are not limited to:
1) Finding and destroying WMD
2) Implied Iraqi association with 9/11 conspirators
3) A desire to impose democratic institutions in the Middle East
4) Securing oil supplies
5) Preventing genocide
Afghanistan
1) The then Afghan government directly and without equivocation aided and abetted the 9/11 conspirators and supported the greater Al-Qaeda organization
Involvement of other nations beyond the U.S.
Iraq-
The "coalition of the willing" was an Orwellian term manufactured to disguise the paltry support for the U.S. policies. Other than the U.K., few nations provided material support the U.S. Those that did were generally doing so for economic or unrelated political reasons (e.g. Poles, Georgians etc.). Only 139 of the 4,579 soldiers lost in Iraq are from nations other than the U.S. or U.K.
Afghanistan-
N.A.T.O and innumerable other nations joined enthusiastically in the Afghanistan campaign. Initial involvement constrained only by American arrogance in integrating other military forces into the early military actions. Furthermore, the U.N. has been involved from day one in the various nation-building exercises within the country. The non-U.S. involvement has not been without controversy, some nations (i.e. Holland, Australia, Canada) have been aggressively participating in the fighting, others (i.e. Germany) have been reluctant to engage in direct combat. Yet 449 of the 1,122 soldiers lost in Afghanistan are non-American.
Both Iraq and Afghanistan are large countries with complex political and cultural attributes. The end states for both situations are challenging to define. But I believe it is imperative for all to recall why we are involved in AfPak. Our reasons for engaging Afghanistan were and are clear where Iraq never was and never will be. Where Iraq was largely unilateral, AfPak is multi-lateral. When purpose is clear,valid and agreed much can be accomplished and much sacrificed. Obama and other world leaders should keep their eyes on the ball.
Population Matters
TW: There are numerous attributes which influence relative global power. Certainly economics, geography, culture and militaries are important. But raw population remains a crucial factor. The raw impact of teeming populations especially as compared to stable to declining populations amidst the current global powers will have tremendous implications going forward.
The relative populations today are greatly different than as recently as 1945. By 2050 those relationships will be further evolved with emerging markets representing an increasing share of world population. These demographic changes will incite fear in certain quarters, envy in others and ambition elsewhere. How these potentially conflicting perspectives are managed will tell a great deal about global peace and development over the coming decades.
From Populstat.info:
Some selected emerging markets with populations 1945/2008/2050 (in millions):
Afghanistan 8.0/32.0/65.0
Iran 16.0/80.0/110.0
Pakistan 33.0/175./260.0
Nigeria 23.0/155.0/338.0
India 337.0/1100.0/1710.0
Saudi Arabia 3.0/28.0/60.0
Some selected developed markets:
Japan 72.0/127.0/100.0
France 38.0/60.0/58.0
Germany 70.0/79.0/57.0
UK 49.0/60.0/54.0
U.S. 140.0/293.0/349.0
Russia 106.0/140.0/122.0
The relative populations today are greatly different than as recently as 1945. By 2050 those relationships will be further evolved with emerging markets representing an increasing share of world population. These demographic changes will incite fear in certain quarters, envy in others and ambition elsewhere. How these potentially conflicting perspectives are managed will tell a great deal about global peace and development over the coming decades.
From Populstat.info:
Some selected emerging markets with populations 1945/2008/2050 (in millions):
Afghanistan 8.0/32.0/65.0
Iran 16.0/80.0/110.0
Pakistan 33.0/175./260.0
Nigeria 23.0/155.0/338.0
India 337.0/1100.0/1710.0
Saudi Arabia 3.0/28.0/60.0
Some selected developed markets:
Japan 72.0/127.0/100.0
France 38.0/60.0/58.0
Germany 70.0/79.0/57.0
UK 49.0/60.0/54.0
U.S. 140.0/293.0/349.0
Russia 106.0/140.0/122.0
Things I Like - Odds & Ends
Isn't this cool? A little city in what looks like the middle of the ocean. Do you know where this is?
Now do you recognize it?
See the link below for more photos of Venice from the air.
Note - it's in German and the source credited is Dan Kitwood on flickr but the photo stream is no longer active.
http://www.diskursdisko.de/2009/03/venedig-von-oben/
Now do you recognize it?
See the link below for more photos of Venice from the air.
Note - it's in German and the source credited is Dan Kitwood on flickr but the photo stream is no longer active.
http://www.diskursdisko.de/2009/03/venedig-von-oben/
That One World Currency
TW: Michelle Bachmann (Republican MN) amongst other rants recently is very concerned that the US dollar is about to be legislated away (presumably with the connivance of Obama/Geithner). This meme was prominent on Fox as well. I thought I would post an Economist piece that puts the odds of that happening as pretty low.
This is not to say modification of the current international monetary system is not needed. If the U.S. continues its current account deficit indefinitely our economic growth will suffer. As other nations increase their percentage of world GDP alterations to the current systems will become relevant. But sane minds realize those changes will be incremental and potentially beneficial to the U.S. as well as others instead of sudden, surreptitious and designed to harm the U.S.
Long before the US$ is shunted aside massive changes to world GDP including China et al. becoming far larger consumers will be necessary. Note as well the SDR proposal mentioned below did not even include Chinese currency in the basket.
From Economist:
"IN FUTURE, changes to the international financial system are likely to be shaped by Beijing as well as Washington. That is the message of an article by Zhou Xiaochuan, the governor of the People’s Bank of China. Mr Zhou calls for a radical reform of the international monetary system in which the dollar would be replaced as the main reserve currency by a global currency. It is a delicate issue, however. When Tim Geithner, America’s treasury secretary, discussed the proposal in New York on March 25th, his remarks sent the dollar tumbling before he made clear that, naturally, he thought the greenback should remain the dominant reserve currency.
Mr Zhou’s proposal is China’s way of making clear that it is worried that the Fed’s response to the crisis—printing loads of money—will hurt the dollar and hence the value of China’s huge foreign reserves, of which around two-thirds are in dollars.
He suggests that the international financial system, which is based on a single currency (he does not actually cite the dollar), has two main flaws. First, the reserve-currency status of the dollar helped to create global imbalances. Surplus countries have little choice but to place most of their spare funds in the reserve currency since it is used to settle trade and has the most liquid bond market. But this allowed America’s borrowing binge and housing bubble to persist for longer than it otherwise would have. Second, the country that issues the reserve currency faces a trade-off between domestic and international stability. Massive money-printing by the Fed to support the economy makes sense from a national perspective, but it may harm the dollar’s value.
Mr Zhou suggests that the dollar’s reserve status should be transferred to the SDR (Special Drawing Rights), a synthetic currency created by the IMF, whose value is determined as a weighted average of the dollar, euro, yen and pound. The SDR was created in 1969, during the Bretton Woods fixed exchange-rate system, because of concerns that there was insufficient liquidity to support global economic activity. It was originally intended as a reserve currency, but is now mainly used in the accounts for the IMF’s transactions with member countries. SDRs are allocated to IMF members on the basis of their contribution to the fund.
Mr Zhou’s plan could win support from other emerging economies with large reserves. However, it is unlikely to get off the ground in the near future. It would take years for the SDR to be widely accepted as a means of exchange and a store of value. The total amount of SDRs outstanding is equivalent to only $32 billion, or less than 2% of China’s foreign-exchange reserves, compared with $11 trillion of American Treasury bonds.
There are also big political hurdles. America would resist, because losing its reserve-currency status would raise the cost of financing its budget and current-account deficits. Even Beijing might want to rethink the idea. Mr Zhou praised John Maynard Keynes’s proposal in the 1940s for an international currency, the “Bancor”, based on commodities. But as Mark Williams of Capital Economics says, central to Keynes’s idea was that a tax be imposed on countries running large current-account surpluses, to encourage them to boost domestic demand."
This is not to say modification of the current international monetary system is not needed. If the U.S. continues its current account deficit indefinitely our economic growth will suffer. As other nations increase their percentage of world GDP alterations to the current systems will become relevant. But sane minds realize those changes will be incremental and potentially beneficial to the U.S. as well as others instead of sudden, surreptitious and designed to harm the U.S.
Long before the US$ is shunted aside massive changes to world GDP including China et al. becoming far larger consumers will be necessary. Note as well the SDR proposal mentioned below did not even include Chinese currency in the basket.
From Economist:
"IN FUTURE, changes to the international financial system are likely to be shaped by Beijing as well as Washington. That is the message of an article by Zhou Xiaochuan, the governor of the People’s Bank of China. Mr Zhou calls for a radical reform of the international monetary system in which the dollar would be replaced as the main reserve currency by a global currency. It is a delicate issue, however. When Tim Geithner, America’s treasury secretary, discussed the proposal in New York on March 25th, his remarks sent the dollar tumbling before he made clear that, naturally, he thought the greenback should remain the dominant reserve currency.
Mr Zhou’s proposal is China’s way of making clear that it is worried that the Fed’s response to the crisis—printing loads of money—will hurt the dollar and hence the value of China’s huge foreign reserves, of which around two-thirds are in dollars.
He suggests that the international financial system, which is based on a single currency (he does not actually cite the dollar), has two main flaws. First, the reserve-currency status of the dollar helped to create global imbalances. Surplus countries have little choice but to place most of their spare funds in the reserve currency since it is used to settle trade and has the most liquid bond market. But this allowed America’s borrowing binge and housing bubble to persist for longer than it otherwise would have. Second, the country that issues the reserve currency faces a trade-off between domestic and international stability. Massive money-printing by the Fed to support the economy makes sense from a national perspective, but it may harm the dollar’s value.
Mr Zhou suggests that the dollar’s reserve status should be transferred to the SDR (Special Drawing Rights), a synthetic currency created by the IMF, whose value is determined as a weighted average of the dollar, euro, yen and pound. The SDR was created in 1969, during the Bretton Woods fixed exchange-rate system, because of concerns that there was insufficient liquidity to support global economic activity. It was originally intended as a reserve currency, but is now mainly used in the accounts for the IMF’s transactions with member countries. SDRs are allocated to IMF members on the basis of their contribution to the fund.
Mr Zhou’s plan could win support from other emerging economies with large reserves. However, it is unlikely to get off the ground in the near future. It would take years for the SDR to be widely accepted as a means of exchange and a store of value. The total amount of SDRs outstanding is equivalent to only $32 billion, or less than 2% of China’s foreign-exchange reserves, compared with $11 trillion of American Treasury bonds.
There are also big political hurdles. America would resist, because losing its reserve-currency status would raise the cost of financing its budget and current-account deficits. Even Beijing might want to rethink the idea. Mr Zhou praised John Maynard Keynes’s proposal in the 1940s for an international currency, the “Bancor”, based on commodities. But as Mark Williams of Capital Economics says, central to Keynes’s idea was that a tax be imposed on countries running large current-account surpluses, to encourage them to boost domestic demand."
Saturday, March 28, 2009
(Click on photos to enlarge)
TW: Ran across site (Indy paper) that has IU basketball archive. The first photo is Bobby Knight's first team from 1971-1972. The bottom is the '08-09 team, Tom Crean's first. What struck me was the vast differences. Hair shorter, shorts longer, more bulk and a heckuva lot more folks needed to run a team these days than back then. Both squads were depleted in both cases because the new coaches ran off some of the inherited players (Knight still had Joby Wright, Steve Downing and John Ritter though, Crean was left with an essentially bare cupboard).
Republicans Really Need A Facial
TW: The Republicans have a serious problem. Their party is being defined as a cast of undesirables by a fleet of obnoxious, toxic media stars. The combination of W. Bush, Dick Cheney, Newt Gingrich, John Boehner, Sarah Palin and now Micelle Bachman as brought to us by Rush, Hannity and Glenn Beck is creating a witches brew.
Barack Obama and the Dems are not perfect but the not so loyal opposition is failing to provide even a modicum of considered, serious, viable alternatives. This piece by Klein frames the challenge. He makes an indirect comparison between Rush and Paul Krugman. Yes, Krugman is strident and outspoken, and even porcine. But Krugman is a Nobel Prize winning economist with massive economic credentials, more importantly his name recognition is likely not even half of Rush's. Rush is an entertainer and a primary face of the Republican party, Krugman is an academic little known beyond the pages of the NYT.
Meanwhile, Bachmann, Gingrich et al. appear regularly on Fox making increasingly outlandish and largely irrelevant accusations and claims. Glenn Beck and Bachmann are touting a one-world currency conspiracy more or less out of thin air. Crazy pols are not new. Racist and virulent anti-communist congressmen fomenting illusory conspiracies were no rarity through the 1960's. But there was no Internet, you tube or Fox News back then to push such rubbish to the fore.
This toxic combination of political caricatures and foaming media personalities bodes ill for the Republicans and the country. We need a serious opposition to help tone policies, not crazy harangues.
From Joe Klein at Time:
"I've known Newt Gingrich for about 20 years now and I've always enjoyed him intellectually, but detested him politically. The reason for the latter is his now-anachronistic first resort to anger; again and again, he cheapens public discourse through exaggeration and wild claims. One imagines that if John McCain were President and Paul Krugman had said, out of the box, that he wanted McCain to fail, Gingrich would be leading the charge, calling Krugman "unpatriotic" and even, perhaps, traitorous.
As it is, I won't call Newt--or the other conservative hyperbolic baloney slicers--unpatriotic. Just graceless, boorish. And completely, demagogically out of touch with the national mood--which is concerned, serious and resistant to right-wing bullpucky. The latest was Newt's completely over-the-top reaction to Tim Geithner's new regulatory plan on the vile Hannity's program the other night:
So far, Geithner--and yes, Summers--have shown excellent balance, a respect for the free market system plus an awareness that the public needs to be protected from the sharks. Gingrich et al will remain banished somewhere in the outer darkness--and the Fox News cave-ghetto--until they realize that the Obama Administration's economic plans are not at all extreme, but a reflection of the broad American middle. Just ask Paul Krugman."
Barack Obama and the Dems are not perfect but the not so loyal opposition is failing to provide even a modicum of considered, serious, viable alternatives. This piece by Klein frames the challenge. He makes an indirect comparison between Rush and Paul Krugman. Yes, Krugman is strident and outspoken, and even porcine. But Krugman is a Nobel Prize winning economist with massive economic credentials, more importantly his name recognition is likely not even half of Rush's. Rush is an entertainer and a primary face of the Republican party, Krugman is an academic little known beyond the pages of the NYT.
Meanwhile, Bachmann, Gingrich et al. appear regularly on Fox making increasingly outlandish and largely irrelevant accusations and claims. Glenn Beck and Bachmann are touting a one-world currency conspiracy more or less out of thin air. Crazy pols are not new. Racist and virulent anti-communist congressmen fomenting illusory conspiracies were no rarity through the 1960's. But there was no Internet, you tube or Fox News back then to push such rubbish to the fore.
This toxic combination of political caricatures and foaming media personalities bodes ill for the Republicans and the country. We need a serious opposition to help tone policies, not crazy harangues.
From Joe Klein at Time:
"I've known Newt Gingrich for about 20 years now and I've always enjoyed him intellectually, but detested him politically. The reason for the latter is his now-anachronistic first resort to anger; again and again, he cheapens public discourse through exaggeration and wild claims. One imagines that if John McCain were President and Paul Krugman had said, out of the box, that he wanted McCain to fail, Gingrich would be leading the charge, calling Krugman "unpatriotic" and even, perhaps, traitorous.
As it is, I won't call Newt--or the other conservative hyperbolic baloney slicers--unpatriotic. Just graceless, boorish. And completely, demagogically out of touch with the national mood--which is concerned, serious and resistant to right-wing bullpucky. The latest was Newt's completely over-the-top reaction to Tim Geithner's new regulatory plan on the vile Hannity's program the other night:
We are seeing the biggest power grab by politicians in American history. The idea that they would propose that the treasury could intervene and take over system assets gives them the potential to basically create the equivalent of a dictatorship.Actually, what we're seeing is a reasoned public reaction to the fact that the financial services industry was given free rein--by Republicans and Democrats (I'm still looking at you, Larry Summers)--to engage in the most outrageous schemes since the 1920s. Millions and millions of people have had their retirement plans shredded by these banker-mopes, millions have lost their jobs. But those are people who do not inhabit the Beltway-right-wing-lecture-circuit planet that Newt and various others live on. Their unwillingness to protect average Americans from the untrammeled rapacity of an unregulated market is a disgrace.
You don't want to do what they want, they take over your company. You do what they want, Congress retroactively, and this is what made last week's lynch mob like a third world government when the Congress literally got out of control, panicked, panicked because people were mad at it, and it turned out that the Congress had passed the authorization in the stimulus bill for to pay those bonuses.
The Congress had approved it, the people at were acting what they thought was the rules set by the government. Suddenly they're being attacked,they are retroactively losing their money. Why would anybody want to invest in a country.
So far, Geithner--and yes, Summers--have shown excellent balance, a respect for the free market system plus an awareness that the public needs to be protected from the sharks. Gingrich et al will remain banished somewhere in the outer darkness--and the Fox News cave-ghetto--until they realize that the Obama Administration's economic plans are not at all extreme, but a reflection of the broad American middle. Just ask Paul Krugman."
CNBC Loses One Of Its Calmer Less Strident Voices
TW: I have watched too much CNBC over the years. Many perhaps a majority of its journalists do not impress me. They are either conduits for corporate propaganda (e.g. Bartiromo etc.), right-wing flacks like Kudlow and Dennis Neale or empty suits. Dylan Ratigan tended to be less bombastic and level-headed about the whole thing. Unfortunately he is leaving. Why? who knows given the out-sized egos of these folks. One rumor had it that he wanted to the pursue the line of thought he outlined on a show last October, "how did we get in this mess?"
The Republican Non-Budget
From Kevin Drum:
"...the Republican brain trust in the House decided to show their seriousness about cutting the deficit by publishing a "budget" that contained no actual numbers. The press mostly thought it was pretty comical, and today Eric Cantor and Paul Ryan tried to pretend that they had nothing to do with this project and were only bullied into supporting it...it's also worth noting just how invisible this whole exercise was. It got lots of mockery in the blogosphere, and it also showed up on political shows like Maddow and Olbermann, but aside from that it wasn't so much ridiculed as ignored. If you get your news from the New York Times or NPR or Katie Couric, you'd barely even know this had happened, let alone that everyone thought it was ridiculous."
TW: I was let down with the Republican budget "proposal". I was highly confident that it would be sufficiently bad such that I could have fun pounding it. Unfortunately it was merely ephemeral. There is so little to the document they provided that it is impossible to critique. It was 19 pages (really about 13 if u take out the cover pages and irrelevant graphics). It complained much about Obama's plan, decried taxation, the National Endowment of the Arts etc. and promised economic nirvana if taxes are cut, deficits reduced and bailouts ended. Who can complain about those things? Naturally they did not provide even the slightest hints as to how they would cut taxes, reduce deficits and restore the financial system without "bailouts".
As Drum points out though it was so sparse hardly any MSM coverage was provided. Perhaps next time...oh well.
I did like Contessa Brewer's rant though.
"...the Republican brain trust in the House decided to show their seriousness about cutting the deficit by publishing a "budget" that contained no actual numbers. The press mostly thought it was pretty comical, and today Eric Cantor and Paul Ryan tried to pretend that they had nothing to do with this project and were only bullied into supporting it...it's also worth noting just how invisible this whole exercise was. It got lots of mockery in the blogosphere, and it also showed up on political shows like Maddow and Olbermann, but aside from that it wasn't so much ridiculed as ignored. If you get your news from the New York Times or NPR or Katie Couric, you'd barely even know this had happened, let alone that everyone thought it was ridiculous."
TW: I was let down with the Republican budget "proposal". I was highly confident that it would be sufficiently bad such that I could have fun pounding it. Unfortunately it was merely ephemeral. There is so little to the document they provided that it is impossible to critique. It was 19 pages (really about 13 if u take out the cover pages and irrelevant graphics). It complained much about Obama's plan, decried taxation, the National Endowment of the Arts etc. and promised economic nirvana if taxes are cut, deficits reduced and bailouts ended. Who can complain about those things? Naturally they did not provide even the slightest hints as to how they would cut taxes, reduce deficits and restore the financial system without "bailouts".
As Drum points out though it was so sparse hardly any MSM coverage was provided. Perhaps next time...oh well.
I did like Contessa Brewer's rant though.
Things I Like - Chicago
View of the Chicago River looking south from about Erie ~ 1966Click to enlarge.
There might be a few of you out there who will understand the significance of this picture. There's clearly something missing (The Ohio off ramp hasn't been built yet) and there seems to be an extra bridge up on the right bank.
But what I'm all excited about is the red brick building on the left bank, between the upright and the Grand Ave bridge.
That would be the home of The White House, back when it was a warehouse instead of the really cool lofts we live in today.
The above photo is actually a postcard from "Chuckman's Collection", an on-line collection of hundreds of old Chicago postcards and memorabilia, mostly from the 50's and 60's. The collection is not very well organized so it's tough to search on a specific topic but it's full of interesting items. If you have the time, paging through the site is great fun for anyone with an interest in Chicago from years gone by.
http://chuckmancollection.blogspot.com/
One more thing I noticed, apparently the Kinzie street railroad bridge (which can be seen behind the Grand Ave bridge in the postcard) has been up for a while...
From Tim Kuo at Flickrhttp://www.flickr.com/photos/timkuo/327494918/
Friday, March 27, 2009
Every Mummy Needs a Spritz
TW: As you many know the Soviets mummified Lenin 90 or so years ago when he took the down card. But like any mummy he apparently needs a tune-up once a year or so, a bath to refresh.
Maybe a Strategy Headed In the Right Direction
TW: Afghanistan and Pakistan are tough nuts, but perhaps Obama is moving towards a viable strategy. One, he is clearly integrating the two areas into the single overall challenge they represent given the almost seamless movement of Taliban, Al-Qaeda and other challengers across those artificial borders. Two, while he is sending a modest additional group of troops, the focus on training and the Afghan army is good. Most counter-insurgency experts would agree indigenous forces must be the ones to put down the insurgency rather than foreigners. The fewer western troops there the better. Three, de-emphasizing democracy in an area where democracy is the least of their worries is a good thing.
As for Pakistan I am skeptical that more $ is the answer. Will the Pakistanis change their core policies in return for a few billion $, I doubt it but for now I know of no better alternatives.
I disagree with the meme that Obama is "doubling-down". This is a measured response. Doubling-down to me would mean many tens of thousands of additional troops and more neo-con rhetoric about spreading democracy etc. As long as Obama focuses on building up indigenous Afghan forces, I will remain comfortable that he is taking the prudent path.
From NBC:
"...President Obama will announce that he’s sending an additional 4,000 military trainers and advisers to Afghanistan, on top of the 17,000 he’s already deployed there...the president's new strategy will focus on accelerating the training and doubling the size of Afghan security forces to take over the fighting. But this isn’t just about Afghanistan; today’s policies will also be about neighboring Pakistan...“Obama also would support legislation to triple economic aid to Pakistan to about $1.5 billion a year in exchange for that country cracking down on Taliban and terrorists hiding out along border… The goal is to weaken and ultimately destroy al-Qaeda’s havens and sanctuaries in Pakistan and prevent the terrorist group from returning across the border to Afghanistan, the officials said.” Some might see today’s announcement as a ramping of activity in Afghanistan, but is sending 4,000 trainers/advisers an acknowledgement of the opposite? Everything about this announcement today, in fact, has the feel of trying to minimize the military aspect of the conflict. To put it another way, this is a dramatic shift away from the philosophy some in the Bush administration pushed -- which was democracy for Afghanistan."
As for Pakistan I am skeptical that more $ is the answer. Will the Pakistanis change their core policies in return for a few billion $, I doubt it but for now I know of no better alternatives.
I disagree with the meme that Obama is "doubling-down". This is a measured response. Doubling-down to me would mean many tens of thousands of additional troops and more neo-con rhetoric about spreading democracy etc. As long as Obama focuses on building up indigenous Afghan forces, I will remain comfortable that he is taking the prudent path.
From NBC:
"...President Obama will announce that he’s sending an additional 4,000 military trainers and advisers to Afghanistan, on top of the 17,000 he’s already deployed there...the president's new strategy will focus on accelerating the training and doubling the size of Afghan security forces to take over the fighting. But this isn’t just about Afghanistan; today’s policies will also be about neighboring Pakistan...“Obama also would support legislation to triple economic aid to Pakistan to about $1.5 billion a year in exchange for that country cracking down on Taliban and terrorists hiding out along border… The goal is to weaken and ultimately destroy al-Qaeda’s havens and sanctuaries in Pakistan and prevent the terrorist group from returning across the border to Afghanistan, the officials said.” Some might see today’s announcement as a ramping of activity in Afghanistan, but is sending 4,000 trainers/advisers an acknowledgement of the opposite? Everything about this announcement today, in fact, has the feel of trying to minimize the military aspect of the conflict. To put it another way, this is a dramatic shift away from the philosophy some in the Bush administration pushed -- which was democracy for Afghanistan."
Subsidizing Corporate America
TW: The Republicans moan subsidies/bailouts for auto jobs etc. but rarely about welfare for corporations. Here is a nice tidy example locally (here in Chicago) of our government spending a fortune to attract about 300 jobs to a prime part of our downtown. The cost per job ends up at almost $100K. And our benevolent dictator (ahem Mayor) Daley used funds meant to subsidize development in sub-prime areas of the city, funny how these things work.
Am not saying these things are not necessary but merely that subsidies come in many forms.
From Chicago Reader:
“ [MillerCoors] flirted with Dallas but settled on Chicago because it’s “a true international city” with “an attractive talent pool,” “unique business resources,” “good schools,” and “easy commutes.” (I guess no one with MillerCoors, or for that matter the Department of Community Development, has ever had to depend on the CTA.)
And, almost as an afterthought, the report mentions that “during the selection process, both the City of Chicago and the State of Illinois offered economic incentives” to offset MillerCoors’s “considerable relocation costs.”
I’ll say. Our old friend Governor Rod Blagojevich, about six months before he was hauled out of his house in handcuffs, forked over some $18 million in state tax breaks and subsidies, and Mayor Daley agreed to chip in a little more, which we now know to be $6 million. By contrast, there’s no record of Dallas offering anything on top of its already-lower property taxes. (Neither Dallas city officials nor MillerCoors responded to calls for comment.)
Once they settled on Chicago, MillerCoors execs narrowed their real estate choices to three possibilities: 250 S. Wacker, 33 S. State (the old Carson Pirie Scott building), and 350 N. Orleans (also home to the Sun-Times). In terms of warding off blight—the nominal purpose of TIF subsidies—pushing State Street would have made the most sense, as the eastern part of the Loop has a far higher vacancy rate than the west. But the city left the decision up to MillerCoors. As a result, our tax dollars are going to give the better-off part of the Loop a leg up over its poorer cousin.
But this problem goes back to the founding of the LaSalle Central TIF, where—thanks to gaping loopholes in TIF law—the city managed to stretch the definition of blight to cover one of the hottest real estate markets in town. By 2030, when this district mercifully expires, the city expects it will have siphoned off at least $1.5 billion in property taxes from the schools, parks, police, fire, and other needy public services. City planners have said they will use the cash to, among other things, renovate the old architectural landmarks on LaSalle that are becoming out of date.
Well, 250 S. Wacker is hardly an architectural jewel. Constructed in 1957, it’s a steel and glass box that looks like it was squished to make it fit in its corner space. As even the plan overview dryly notes, “This building has not been identified as historically significant.”
In 2005 the joint venture of Carnegie Realty and D2 Realty LLC bought it for about $16.8 million with plans to renovate it and covert it into offices and condominiums. “We are extremely happy with the property which is situated in an ‘A’ location for our prospective buyers,” John Thomas, CEO of Carnegie, said in a press statement at the time. “We anticipate our buyers will be wholly owned or multi-generational businesses that foresee their real estate needs and investments for the long term.”
By then Thomas had already been convicted of business fraud, and as part of his deal with the feds he became a government mole, according to a 2007 Tribune article by David Jackson. So maybe the building does have some historical significance after all.
At any rate, after renovating the building, Carnegie and D2 sold it in 2007 for about $57 million to AEW Capital Management, an investment firm out of Boston. But by last summer, the downtown office boom was dying, and AEW was desperately seeking new tenants, as the vacancy rate at 250 S. Wacker was about 82.5 percent. When MillerCoors moves in, 100 percent of the building will be occupied.
...According to the overview, the “project will expand the tax base because the investment in the property will result in an increase in its assessed value.” Well, let’s hope so. At the very least, maybe AEW will drop its ongoing appeal to get the Cook County Board of Review to lower its assessment. (The firm currently pays about $422,000 a year in taxes on the building.) But even if the tax base does expand, until 2030 none of those new tax dollars will go to schools, parks, or other taxing bodies; they’ll flow into the LaSalle Central TIF fund, so Mayor Daley can hand them over to the next conglomerate that comes knocking on the city’s door..."
http://www.chicagoreader.com/features/stories/theworks/090326/index.php?cAction=
Am not saying these things are not necessary but merely that subsidies come in many forms.
From Chicago Reader:
“ [MillerCoors] flirted with Dallas but settled on Chicago because it’s “a true international city” with “an attractive talent pool,” “unique business resources,” “good schools,” and “easy commutes.” (I guess no one with MillerCoors, or for that matter the Department of Community Development, has ever had to depend on the CTA.)
And, almost as an afterthought, the report mentions that “during the selection process, both the City of Chicago and the State of Illinois offered economic incentives” to offset MillerCoors’s “considerable relocation costs.”
I’ll say. Our old friend Governor Rod Blagojevich, about six months before he was hauled out of his house in handcuffs, forked over some $18 million in state tax breaks and subsidies, and Mayor Daley agreed to chip in a little more, which we now know to be $6 million. By contrast, there’s no record of Dallas offering anything on top of its already-lower property taxes. (Neither Dallas city officials nor MillerCoors responded to calls for comment.)
Once they settled on Chicago, MillerCoors execs narrowed their real estate choices to three possibilities: 250 S. Wacker, 33 S. State (the old Carson Pirie Scott building), and 350 N. Orleans (also home to the Sun-Times). In terms of warding off blight—the nominal purpose of TIF subsidies—pushing State Street would have made the most sense, as the eastern part of the Loop has a far higher vacancy rate than the west. But the city left the decision up to MillerCoors. As a result, our tax dollars are going to give the better-off part of the Loop a leg up over its poorer cousin.
But this problem goes back to the founding of the LaSalle Central TIF, where—thanks to gaping loopholes in TIF law—the city managed to stretch the definition of blight to cover one of the hottest real estate markets in town. By 2030, when this district mercifully expires, the city expects it will have siphoned off at least $1.5 billion in property taxes from the schools, parks, police, fire, and other needy public services. City planners have said they will use the cash to, among other things, renovate the old architectural landmarks on LaSalle that are becoming out of date.
Well, 250 S. Wacker is hardly an architectural jewel. Constructed in 1957, it’s a steel and glass box that looks like it was squished to make it fit in its corner space. As even the plan overview dryly notes, “This building has not been identified as historically significant.”
In 2005 the joint venture of Carnegie Realty and D2 Realty LLC bought it for about $16.8 million with plans to renovate it and covert it into offices and condominiums. “We are extremely happy with the property which is situated in an ‘A’ location for our prospective buyers,” John Thomas, CEO of Carnegie, said in a press statement at the time. “We anticipate our buyers will be wholly owned or multi-generational businesses that foresee their real estate needs and investments for the long term.”
By then Thomas had already been convicted of business fraud, and as part of his deal with the feds he became a government mole, according to a 2007 Tribune article by David Jackson. So maybe the building does have some historical significance after all.
At any rate, after renovating the building, Carnegie and D2 sold it in 2007 for about $57 million to AEW Capital Management, an investment firm out of Boston. But by last summer, the downtown office boom was dying, and AEW was desperately seeking new tenants, as the vacancy rate at 250 S. Wacker was about 82.5 percent. When MillerCoors moves in, 100 percent of the building will be occupied.
...According to the overview, the “project will expand the tax base because the investment in the property will result in an increase in its assessed value.” Well, let’s hope so. At the very least, maybe AEW will drop its ongoing appeal to get the Cook County Board of Review to lower its assessment. (The firm currently pays about $422,000 a year in taxes on the building.) But even if the tax base does expand, until 2030 none of those new tax dollars will go to schools, parks, or other taxing bodies; they’ll flow into the LaSalle Central TIF fund, so Mayor Daley can hand them over to the next conglomerate that comes knocking on the city’s door..."
http://www.chicagoreader.com/features/stories/theworks/090326/index.php?cAction=
International Cooperation...Maybe
TW: Have been banging the table on the biggest risks to this economic crisis being international relations deteriorating into a self-centered free-for-all. We are not there yet by any means but the signs are there. The G20 summit next week will be a big tell (and possible inflection point for the equity markets). The Czech prime minister who happens to be the rotating head of the EU is not a big player merely symbolic. This all about the Germans and French.
From Jim Kwak at Baseline Scenario:
"Once upon a time there was a president named George. He liked to do things his own way, which annoyed some of his “friends” in Europe. But then a new president named Barack was elected, who not only promised to be nicer to his friends, but was actually very popular in most parts of the world. And the people of the world thought we would see a new era of international cooperation, at least between the U.S. and Europe. Not so much.
On this side of the Atlantic, the Obama administration and the Fed have been working night and day in an attempt to turn around the economy: Fed funds rate reduced to zero, $800 billion stimulus package, new plan to aid struggling homeowners, new plan for buying toxic assets, new budget, decision by the Fed to buy long-term Treasury bonds, new domestic regulatory framework outlined this week, etc. We’ve been plenty critical of various aspects of the U.S. response, but at least they’re trying.
(Continental) Europe, by contrast, has decided they’ve done enough and it’s time to sit back and watch.
First,...Jean-Claude Trichet, head of the European Central Bank, said that no new measures are needed to combat the global economic crisis. Then Mirek Topolanek, the prime minister of the Czech Republic and the president (in this rotation) of the European Union called the U.S. emphasis on fiscal stimulus “the way to hell.” And all of this is coming in the week leading up to the next G20 summit. What happened to diplomacy?
While it is relatively easy to write off a prime minister whose government collapsed on Tuesday night, there is a very real divide between the United States and, in particular, Germany, the heavyweight in the European economy. And it’s very clear that the Germans (and the French) do not want to spend more money, increase their budget deficits, or do anything except talk about international financial regulation.
I think there are three possible reasons for this attitude.
1) The Germans believe that the economy will recover on its own from this point. Given that not even the optimists in the Treasury Department believe this, I don’t see how this could be the case.
2) They are so afraid of any risk of inflation that they would rather suffer through an extended recession and high unemployment. This could be possible, although misguided, especially since Germany is already in worse shape than the U.S., with its economy expected to shrink by 3.8% this year (vs. 2.5% for the U.S.).
3) They realize that their economy is driven by exports, and therefore they are planning to free ride off of the U.S. stimulus package. In this scenario, Germany gets to contain its national debt and minimize the risk of inflation, while letting other countries turn the global economy around.
Now, we’re not blameless here, what with our “Buy American” provision in the fiscal stimulus. But at least our government isn’t closing its eyes and assuming the problem will go away.
From Jim Kwak at Baseline Scenario:
"Once upon a time there was a president named George. He liked to do things his own way, which annoyed some of his “friends” in Europe. But then a new president named Barack was elected, who not only promised to be nicer to his friends, but was actually very popular in most parts of the world. And the people of the world thought we would see a new era of international cooperation, at least between the U.S. and Europe. Not so much.
On this side of the Atlantic, the Obama administration and the Fed have been working night and day in an attempt to turn around the economy: Fed funds rate reduced to zero, $800 billion stimulus package, new plan to aid struggling homeowners, new plan for buying toxic assets, new budget, decision by the Fed to buy long-term Treasury bonds, new domestic regulatory framework outlined this week, etc. We’ve been plenty critical of various aspects of the U.S. response, but at least they’re trying.
(Continental) Europe, by contrast, has decided they’ve done enough and it’s time to sit back and watch.
First,...Jean-Claude Trichet, head of the European Central Bank, said that no new measures are needed to combat the global economic crisis. Then Mirek Topolanek, the prime minister of the Czech Republic and the president (in this rotation) of the European Union called the U.S. emphasis on fiscal stimulus “the way to hell.” And all of this is coming in the week leading up to the next G20 summit. What happened to diplomacy?
While it is relatively easy to write off a prime minister whose government collapsed on Tuesday night, there is a very real divide between the United States and, in particular, Germany, the heavyweight in the European economy. And it’s very clear that the Germans (and the French) do not want to spend more money, increase their budget deficits, or do anything except talk about international financial regulation.
I think there are three possible reasons for this attitude.
1) The Germans believe that the economy will recover on its own from this point. Given that not even the optimists in the Treasury Department believe this, I don’t see how this could be the case.
2) They are so afraid of any risk of inflation that they would rather suffer through an extended recession and high unemployment. This could be possible, although misguided, especially since Germany is already in worse shape than the U.S., with its economy expected to shrink by 3.8% this year (vs. 2.5% for the U.S.).
3) They realize that their economy is driven by exports, and therefore they are planning to free ride off of the U.S. stimulus package. In this scenario, Germany gets to contain its national debt and minimize the risk of inflation, while letting other countries turn the global economy around.
Now, we’re not blameless here, what with our “Buy American” provision in the fiscal stimulus. But at least our government isn’t closing its eyes and assuming the problem will go away.
Things I Like - Sciences
Holy Cow! Is that guy holding a baseball player in his hand?? That's right, you'll be thrilled to know that technology has brought us LIVE baseball cards!!Topps, the #1 maker of baseball cards is introducing cards that can be used with a computer to bring your favorite players to life.
Won't you feel terrible keeping them all cooped up in a shoebox?Just hold the special 3D Live card in front of a webcam and watch a three-dimensional avatar spring to life -- rotate the card and the figure rotates in full perspective. The technology provided by Total Immersion also allows collectors to drop the player into simple pitching, batting and catching games using the computer keyboard.
~ engadget
Check out the video to see them in action - be sure to have the sound on for full effect.
Did anyone else flashback to this?
Thanks to Mr. White for the link
Islam (Or Any Religion) And Freedom Of Speech
TW: I tread on religion fairly lightly on the blog for a variety of reasons but freedom of speech to me is in terms of societal needs a top fiver (right up there but quite at the same level as separation of church and state amongst others). Islam, the orthodox versions at least, appear to have challenges with two of my favored good governance attributes. Islamic countries in many respects have been shunted aside as an international player in organizations such as the U.N. etc. As their numbers and political influence grow, how will governments who do not agree with some of our Western beliefs intersect?
Btw I assume the U.S. (and hopefully France/UK) would veto the item should it actually pass.
From Economist:
"THE freedom to discuss religion critically was at the root of modern intellectual freedom. It is therefore both depressing and worrying to learn that the United Nations may be in the process of turning the "defamation" of religion into an offence. This would not only make a mockery of the United Nation's charter on human rights; it would mark a serious attempt to reverse the Enlightenment and everything that flowed from it. It would be good to have another Voltaire to summon up the appropriate outrage at this development.
...A powerful bloc of 57 Islamic states is again pushing for the UN to make it a criminal offense to criticise or 'defame' Islam.
...Though the 57 nations of the Organization of the Islamic Conference (OIC), a bloc which also dominates the UN's Human Rights Council, have been lobbying for the move since 1999, the signs this time are that the resolution could well be made binding. While the resolution calls for protection against "defamation" of all religions, it only mentions Islam by name.
The resolution deems offending Islamic sensitivities a "serious affront to human dignity" which could lead to "social disharmony", "violations of human rights" and "incitement to religious hatred in general and against Islam in particular". If passed, the resulting binding resolution would find its way into various UN documents all of which would require that UN member states at "local, national and international levels" start restricting the free speech of citizens to prevent public criticism of religious beliefs, particularly Islamic belief"
Btw I assume the U.S. (and hopefully France/UK) would veto the item should it actually pass.
From Economist:
"THE freedom to discuss religion critically was at the root of modern intellectual freedom. It is therefore both depressing and worrying to learn that the United Nations may be in the process of turning the "defamation" of religion into an offence. This would not only make a mockery of the United Nation's charter on human rights; it would mark a serious attempt to reverse the Enlightenment and everything that flowed from it. It would be good to have another Voltaire to summon up the appropriate outrage at this development.
...A powerful bloc of 57 Islamic states is again pushing for the UN to make it a criminal offense to criticise or 'defame' Islam.
...Though the 57 nations of the Organization of the Islamic Conference (OIC), a bloc which also dominates the UN's Human Rights Council, have been lobbying for the move since 1999, the signs this time are that the resolution could well be made binding. While the resolution calls for protection against "defamation" of all religions, it only mentions Islam by name.
The resolution deems offending Islamic sensitivities a "serious affront to human dignity" which could lead to "social disharmony", "violations of human rights" and "incitement to religious hatred in general and against Islam in particular". If passed, the resulting binding resolution would find its way into various UN documents all of which would require that UN member states at "local, national and international levels" start restricting the free speech of citizens to prevent public criticism of religious beliefs, particularly Islamic belief"
Thursday, March 26, 2009
Worst Congressperson Award
TW: Bachmann may be the worst congressperson in the House of Reps, which of course is an achievement. TPM has coined the "Bachmann Effect" as the somewhat perplexed reaction of her foes when she spouts yet another weird concept.
Misleading MSM Economic Reporting Permeates
TW: The latest meme is that the economy is bottoming in particular relative to housing,perhaps or perhaps not. One thing for certain though is MSM is really pounding some of these monthly numbers as positives when as Ritholz shows they are not really and what is certain is that the year over year numbers continue to be horrible. Monthly numbers are always tricky as our statistics are just not that accurate and noise can easily pollute a particular month.
I always focus on moving averages and the year over years. We have a huge economy most of these numbers are estimates with as the piece points out large +/- variances which ultimately will be revised. The revisions over the past year have been almost uniformly down. Most of these stats use historical trends for seasonality factors etc., when we encounter historically drastic circumstances those factors become especially tricky and less accurate.
Finally these are U.S. data some of the best in the world, if ours are sketchy use an extra grain of salt with other large countries (i.e. China).
From Various Headlines Painting a Rosier Housing Outlook:
"WSJ: Sales of new homes rose in February for the first time in seven months, the Commerce Department reported Wednesday, another sign that the housing market is thawing
Bloomberg Purchases of new homes in the U.S. unexpectedly rose in February from a record low as plummeting prices and cheaper mortgage rates lured some buyers. Sales increased 4.7 percent to an annual pace of 337,000 . . .
Marketwatch: The U.S. housing sector continues to see signs of improvement. The latest government data showed new home sales climbed in February for the first time in seven months, sending shares of home-building companies soaring.
From Barry Ritholz:
A parade of the mathematically innumerate business writers (and even worse headline writers!) continue to misread data. The latest evidence? New Home Sales. After incorrectly reporting the Existing Home Sales, the mainstream media misread the Census department report of New Homes.
No, New Home Sales data did not improve. In fact, they were not only not positive, they were actually horrific. The year over year number was a terrible down 41%. Sales from this same period a year ago have nearly been halved.
Why did the media report this as positive? If you only read the headline number, you saw a positive datapoint: February was plus 4.7% over January.
To get the the facts, you need to read below the headline. In the present case, it wasn’t the seasonality factor that was confusing, it was the “90-percent confidence intervals” — or as it is more commonly known, the margin of error.
From the Census Bureau:
Sales of new one-family houses in February 2009 were at a seasonally adjusted annual rate of 337,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.7 percent (±18.3%)* above the revised January rate of 322,000, but is 41.1 percent (±7.9%) below the February 2008 estimate of 572,000.
The median sales price of new houses sold in February 2009 was $200,900; the average sales price was $251,000. The seasonally adjusted estimate of new houses for sale at the end of February was 330,000. This represents a supply of 12.2 months at the current sales rate.
Note that the month over month data at 4.7% — plus or minus 18.3% — is statistically insignificant. (i.e., meaningless). The reported data does not inform us if sales improved month-over-month or not. It is a range, from down -13.6% to plus 23%. Since “zero” is part of that range, we can draw no conclusion. As the Census Department itself notes, “the change is not statistically significant; that is, it is uncertain whether there was an increase or decrease.”
The data does however, tell us that the year-over-year sales fell 41.1% plus or minus 7.9% gives us a range of -49% to -33.2%. The entire range is negative, therefore we can conclude sales fell year-over-year.
These are facts. This is data. This is how you interpret it. Most of the MSM reports (WSJ, Marketwatch, Bloomberg) were simply wrong. Not nuanced, not shaded, but 2+2=5 wrong.
Let me remind that many of these folks incorrectly misinformed you that Housing wasn’t getting worse in 2006, 2007 and 2008 — just as Home sales and prices went into an historic freefall. Now, these same folks are misinforming you that Housing has turned around and is improving. That is simply unsupported by the data."
I always focus on moving averages and the year over years. We have a huge economy most of these numbers are estimates with as the piece points out large +/- variances which ultimately will be revised. The revisions over the past year have been almost uniformly down. Most of these stats use historical trends for seasonality factors etc., when we encounter historically drastic circumstances those factors become especially tricky and less accurate.
Finally these are U.S. data some of the best in the world, if ours are sketchy use an extra grain of salt with other large countries (i.e. China).
From Various Headlines Painting a Rosier Housing Outlook:
"WSJ: Sales of new homes rose in February for the first time in seven months, the Commerce Department reported Wednesday, another sign that the housing market is thawing
Bloomberg Purchases of new homes in the U.S. unexpectedly rose in February from a record low as plummeting prices and cheaper mortgage rates lured some buyers. Sales increased 4.7 percent to an annual pace of 337,000 . . .
Marketwatch: The U.S. housing sector continues to see signs of improvement. The latest government data showed new home sales climbed in February for the first time in seven months, sending shares of home-building companies soaring.
From Barry Ritholz:
A parade of the mathematically innumerate business writers (and even worse headline writers!) continue to misread data. The latest evidence? New Home Sales. After incorrectly reporting the Existing Home Sales, the mainstream media misread the Census department report of New Homes.
No, New Home Sales data did not improve. In fact, they were not only not positive, they were actually horrific. The year over year number was a terrible down 41%. Sales from this same period a year ago have nearly been halved.
Why did the media report this as positive? If you only read the headline number, you saw a positive datapoint: February was plus 4.7% over January.
To get the the facts, you need to read below the headline. In the present case, it wasn’t the seasonality factor that was confusing, it was the “90-percent confidence intervals” — or as it is more commonly known, the margin of error.
From the Census Bureau:
Sales of new one-family houses in February 2009 were at a seasonally adjusted annual rate of 337,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.7 percent (±18.3%)* above the revised January rate of 322,000, but is 41.1 percent (±7.9%) below the February 2008 estimate of 572,000.
The median sales price of new houses sold in February 2009 was $200,900; the average sales price was $251,000. The seasonally adjusted estimate of new houses for sale at the end of February was 330,000. This represents a supply of 12.2 months at the current sales rate.
Note that the month over month data at 4.7% — plus or minus 18.3% — is statistically insignificant. (i.e., meaningless). The reported data does not inform us if sales improved month-over-month or not. It is a range, from down -13.6% to plus 23%. Since “zero” is part of that range, we can draw no conclusion. As the Census Department itself notes, “the change is not statistically significant; that is, it is uncertain whether there was an increase or decrease.”
The data does however, tell us that the year-over-year sales fell 41.1% plus or minus 7.9% gives us a range of -49% to -33.2%. The entire range is negative, therefore we can conclude sales fell year-over-year.
These are facts. This is data. This is how you interpret it. Most of the MSM reports (WSJ, Marketwatch, Bloomberg) were simply wrong. Not nuanced, not shaded, but 2+2=5 wrong.
Let me remind that many of these folks incorrectly misinformed you that Housing wasn’t getting worse in 2006, 2007 and 2008 — just as Home sales and prices went into an historic freefall. Now, these same folks are misinforming you that Housing has turned around and is improving. That is simply unsupported by the data."
Get Rid Of the Mortgage Subsidies
TW: Cows will fly first but I do strongly support eliminating or reducing real estates subsidies aka the sacrosanct mortgage interest deductions. I have never seen a compelling case for the subsidies. But the deductions are now so firmly entrenched in American psyche that they are likely impossible to displace (especially amidst the current crash, although obviously the bubble might have been mitigated with less aggressive subsidies). Why should housing receive such preferential treatment? You tell me.
The Republicans want to take the subsidies to new heights (in fairness the Dems fall over themselves as well). I say if no subsidies work for Swiss then it should work for us.
From Kevin Drum at Mother Jones:
"David Freddoso lauding the House Republicans' new housing plan. You will be non-shocked to learn that it consists of a bunch of new tax breaks, including — naturally — elimination of the capital gains tax on investment property. Yawn.
But wait! It turns out that the House GOP's plan has inspired some surprising comity between right and left: they both hate it. Jerry Taylor gives the conservative rationale for opposing the plan:
So: get rid of housing subsidies and we'd have both a freer market and bigger government. It's a win-win! Except for anyone who actually voted for it, of course. But at least we get this bonus factoidish wonkery from Taylor:
The Republicans want to take the subsidies to new heights (in fairness the Dems fall over themselves as well). I say if no subsidies work for Swiss then it should work for us.
From Kevin Drum at Mother Jones:
"David Freddoso lauding the House Republicans' new housing plan. You will be non-shocked to learn that it consists of a bunch of new tax breaks, including — naturally — elimination of the capital gains tax on investment property. Yawn.
But wait! It turns out that the House GOP's plan has inspired some surprising comity between right and left: they both hate it. Jerry Taylor gives the conservative rationale for opposing the plan:
I know that there is plenty of political capital to be gained by providing handouts to middle-class homeowners and little political capital in removing the same. But a political party that ostensibly stands for free markets and limited government should not be in the business of underwriting or subsidizing private investments in anything unless we can find some plausible market failure in need of correction (and perhaps not even then).Matt Yglesias provides the lefty view of why this plan sucks:
Preferential subsidies for investment in housing lead people to, on average,consume more housing and less stuff-that-isn’t-housing than they otherwise would. In other words, bigger houses instead of fancier clothes. This, in turn,has a substantial negative impact on the economy. Larger houses cost more to heat and cool, and larger houses lead to longer commutes. We shouldn’t stop people from buying big houses if that’s what they want to do, but it’s quite harmful to be specifically encouraging them to invest their resources in this way quite independently from the financial crisis. Reduce the tax-side subsidies to homeownership and we’d have somewhat faster economic growth, somewhat more public revenue, and a somewhat cleaner environment.
So: get rid of housing subsidies and we'd have both a freer market and bigger government. It's a win-win! Except for anyone who actually voted for it, of course. But at least we get this bonus factoidish wonkery from Taylor:
For what it is worth, Switzerland is the only major country I am aware of that does not implicitly or explicitly subsidize housing in any substantial manner.Home ownership rates are somewhere around 35% as a consequence. But no one thinks of Switzerland as poor or deprived somehow because it does not receive the positive externalities allegedly associated with private home ownership."
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