* Maxine Waters can barely put a sentence together. The constant stream of WTF expressions on the face of the guy in the dock are priceless. Don’t feel bad, guy, I have no idea what she’s talking about either. Hat tip: Dan Riehl.
* Fix it yourself, then, Senator Jackass. An AIG exec vents in his resignation letter, published in the NYT. If I’m reading it correctly, this individual previously worked in a part of AIG that was solvent and not involved in toxic assets, and then volunteered to work on closing down the bad asset-holding division in an orderly fashion while being paid $1. So his bonus, which Congress just voted to tax at 90%, was his entire compensation for the year. Yes, there are people a lot worse off than him. No, that doesn’t make this little exercise in Chavez-ism okay. Hat tip: NRO
* Book banning makes a comeback. No, it’s not a conspiracy, unless there’s a conspiracy to fill the federal government with incompetent idiots. An innocent-sounding reduction in the legal lead content for children’s …items seems to mean that books printed before 1985 can’t be sold or given away. That’s because they might contain ink that has lead in it. Because of the same law, motorcycle dealers can’t sell dirtbikes and ATVs that are meant to be used by children under 12, because the batteries have lead in them.
If you think back to what was in the news a year or so ago, the new limit is clearly meant to address toys with lead-based paint – and that makes perfect sense. Kids put toys in their mouths. They don’t, however, put small engine batteries or transmission fluid in their mouths. Oh, and there isn’t a single case on record of anyone getting lead poisoning from a pre-1985 book. Other than that, great law!
So I was listening to C-SPAN Radio this afternoon, and Ron Paul was talking. He started off with a great libertarian take on the GOP’s current situation. Among other things, he said that Obama talked a good game about ending the Iraq war before he was elected, just like Bush talked a good game about ending “nation-building” before he became president and initiated two major nation-building projects. It was a great speech.
Then he launched into a rant about how the Federal Reserve is a plot to take away our freedom, the monetary system can’t possibly work, and justice can’t be restored to the universe until only gold and silver are legal tender.
Gold Standard believers tend to sound like conspiracy theorists, especially when they spin vague conspiracy theories about how central banks and monetary policy are tools of de debbil in his war for our immortal souls. The thing is, if big government is de debbil, then they sort of have a point.
There’s nothing magic about gold. It’s shiny, and as a group we have 4,000 years of social conditioning to believe it’s valuable. And it does have intrinsic value. Gold doesn’t corrode, break, flow down the drain, or evaporate on a hot day. It’s neither flammable nor edible. If you put an ounce of gold under your mattress, in 1,000 years it will still be an ounce of gold, exactly as it was when you put it there. You, meanwhile, will be gone with the wind.
And if that works for one ounce of gold, then it works for two ounces, and three, and ten, and so on. If you have three pieces of gold and I have four, we have a reliable way to compare what we have. And it will be mean the same thing tomorrow, the next day, and any day after that.
To put it another way, gold’s durability makes it an excellent medium for storing information. Better, maybe, than paper – though the stuff they print money on is pretty tough. But how about bits and bytes? The thing is, money is basically a point system, so any reliable way of storing everyone’s point total will do.
That said, there is at least one argument in favor of the gold standard, and it’s an important one because it’s precisely why governments prefer paper money. If gold is the only currency, then the world’s money supply is controlled by exactly one thing – the amount of gold people can dig out of the ground. But if gold isn’t the standard, then the money supply is whatever the people with the printing presses say it is.
He who gets to print money is king, and it’s good to be king. Let’s say you took out a mortgage last year for $500,000. This year, you realize you can’t make the payments. Now, you or I would have a couple of options. We could take a second job, sell some stuff and cut back on other expenses, or sell the house and find a less expensive place to live.
But if you can print money, you have another option. You can print money until there’s twice as much money out there as there was last year when you took out that mortgage. Twice as much money means each dollar is worth half as much, so now your mortgage is effectively just $250,000. Great, right? Except that everything that’s valued in money is also worth half as much. For example, everyone’s salary. And to make matters worse, anything you import from foreign economies now costs twice as much. If you’re the USA, that includes gas and heating oil. Some workers might be able to step up to higher-paying jobs, but most will make minimal gains (if any) and retirees are just going to have to get by with half the real income they had before inflation.
But it works out great for politicians, who can ensure their reelection by running up the public debt to pay for patronage programs (or ‘pork’) and then printing money to pay down that debt. Rinse and repeat. The best part, for them, is that the more the government devalues the currency, the more the people – most of whom don’t quite get how this works – will appreciate the government spending programs. The worse things get, the easier the sell is. We’re from the government, and we’re here to help!
Maybe Ron does have a point…
Because the government said so!
“What we would be required to do would be, for the first time, increase the level of benefit for part-time workers,” [South Carolina Gov. Mark] Sanford told “FOX News Sunday.” “We can’t pay for the benefits already in the program, but to get the stimulus money, we’ve got to increase the program’s size and scale.”
The White House says Sanford’s state, which has the third highest unemployment rate in the nation, would be eligible for $8 billion from the spending bill, which administration officials say would create 50,000 jobs. Sanford said that’s not how job creation works.
Basically, the stimulus bill contains an semi-unfunded federal mandate. States that accept federal money – on a supposedly temporary basis – to prop up unemployment benefits would have to permanently change their rules to allow part time workers to collect unemployment. Sweet, three day workweek here I come!
It’s getting harder and harder to ignore the feeling that the election, the new administration and its media lapdogs, and the “stimulus” policy itself are some kind of collective emotional reaction to the banking crisis, the Bush years, or both. Plan accordingly.
The new US Treasury Secretary, Tim Geithner, announced his reworked financial-sector bailout plan today, with the main headline being its projected $1 trillion price tag.
In case you’re still keeping track, we are now at a minimum, conservatively, of $2.3 trillion just in the past two months for the various bailout plans.
Now, as Geithner has correctly identified (the first Washington official to do so, as far as I can tell), the root of the problem is the huge mass of so-called toxic mortgage-backed securities*. But his plan, weirdly, doesn’t directly address that connection.
To put the numbers into perspective, let’s do some math. Around 3 million homes were in foreclosure proceedings during 2008, on top of a million or more in 2007. Foreclosure is a process, not an event, and it can take months, so some of those might be double-counts. Still, let’s say we have 3.5 million foreclosures, and that that number is a reasonable proxy for the total value of “toxic” assets in the banking system.
The National Association of Realtors says the current median home price in the US is $200,000. That’s for houses that actually sell, so it’s likely a bit high for a foreclosed property, which on average will have sat vacant for months and need several thousand dollars of repairs to be marketable.
3.5 million X 200,000 = 700 billion
That’s an astronomical number, but it’s still just 1/3 of what we’ve committed to spend sofar to treat the symptoms caused by the toxic assets sitting like a lump of mucus at the bottom of the financial sector’s collective throat. And we shouldn’t need to buy them all. Even half the total should be sufficient to give banks confidence that other banks aren’t going to suddenly collapse tomorrow. And the nice thing about owning real estate is that someday you can sell it and break even – or better. So the ultimate cost to the taxpayer of simply buying toxic mortgage-backed securities could range from a small loss to a small profit. Still, I’m talking about an initial cash outlay in the neighborhood of $500 billion, so let’s go with that number.
Sound better than $2.3 trillion?
UPDATE: Administration officials met with laughter while explaining Geithner’s plan to Congress. At this point, the mere fact of Congress being against something might be a reason to take a closer look, but it seems they were laughing specifically at the idea of “guaranteeing” toxic assets. I probably would, too. Not good.
* Roughly, the problem is that there isn’t a 1:1 correspondence between mortgage-backed securities and actual subprime-financed dwellings, so it’s difficult or impossible to nail down the exact value of the securities. What the big banks do know is that they all own enough of them to turn the bottom line red, and that several formerly respected institutions have already gone under without warning. That’s why the credit markets are “frozen”. You can’t lend money to someone if they might be flat broke or even dead tomorrow.
Reason.tv on the topic of economic stimulus (via Instapundit)
Here’s the thing. The root cause of the economic crisis is the credit crisis (sorry for all the ‘crisis’ – lack of a better word and all that) and the root cause of the credit crisis is mortgage-backed securities, where the mortgages in question are defaulted subprime loans. The answer is and always has been to put the bulk of these junk investments into federal receivership and get them off the banks’ books so they can start to lend to each other again. We didn’t, and don’t, need $1 trillion of pork projects to get the economy rolling again, but it’s easy to see why career politicians want this. Forcing cash to flow without fixing the underlying private credit problem moves the economic engine from the private to the public sector (at least until the expropriated money runs out) and becomes in effect a back door route to socialism. I know how that sounds, but think about it. The private sector remains immobilized and the government is the only entity that can spend money. Does that sound good or sustainable? Really?
Also, this is a government-made problem because the government made the rules that allowed – for the first time ever – mortgage lenders to package loans into securities and resell them. If you’re looking for whom to blame, it’s basically two groups: the mortgage brokers who wrote bad loans, knowing they’d be resold right away and become someone else’s problem (and their bosses who allowed the practice – not every bank partook) and the politicians and regulators who set up the system that allowed the abuses. For example, Chris Dodd and other ‘friends of Angelo’.
* Six months of solar power (via Slashdot) – A nice writeup of the actual effects of a modern household solar panel system on electric bills (note that the installation cost isn’t mentioned). The past year makes a pretty good case for investing in alternative energy as a hedge against fluctuating fuel prices.
* AutoblogGreen shows us a vaguely steampunk-looking electric bicycle.
* Wired blogs about the rise of pervasive video surveillance in the US (via Instapundit). I’ve been against things like GPS or RFID tracking of children, and I’m against this for the same reason – no good can come from teaching people to live in a Big Brother world. At any rate, I guess we can’t give the Brits crap about their cameras anymore (“Remember remember the fifth of November…”)
* The new season of American Idol is starting, and as usual we’re watching the auditions. No William Hungs sofar, but bikini girl inspired this line: “She’s just clothes away from being average”
* John Kay in the Financial Times says something I’ve been thinking for years now: Telling people what they want to hear, or ‘going along to get along’ isn’t just lame, it’s dangerous and can lead people to ignore or even participate in everything from minor inefficiency to mass murder.
* Ann Althouse thinks reactions to Joe The Plumber as war correspondent in Gaza “will range from idiot to genius”. But mostly idiot.
* And speaking of teaching people to live in a Big Brother world…
* Glenn Reynolds likes to cruise Amazon.com clearances, and finds some neat stuff like the Eyeclops Bionicam. I like the concept. It’s basically a digital camera with a magnifying glass lens, that can take pictures. I can think of a lot of uses for that.
* And finally another link to Ann Althouse, this time to discuss Clint Eastwood’s character in Gran Torino, and how he is or isn’t like Archie Bunker. Interesting thoughts, if your religion doesn’t get in the way. Either way, you should definitely go see the movie!
* Study says some kids can learn marketable skills through social networking. I’ve also personally seen several people learn social skills online and then go out and use them in the real world.
* Google isn’t the only game in town for web searching, but it’s one of the recommended ways to search for more specialized search engines.
* Don’t let people get away with being jerks in public. I’m of two minds on this. I’m all for taking hateful snobs down a peg, but I don’t see any value in having people get in each other’s faces over politics. Anecdotally, that’s what preceded the civil wars in Bosnia and various other places in the last 20 years.
* What financial crisis? Small banks that hold deposits and make loans the old-fashioned way are doing just fine, thanks. Imagine that.
* The electric Mini-E has impressive specs for a pure electric car, plus a long-ass press release. Though, at $850/mo to lease the car, it’s not for everyone. Or anyone.
* Lung cancer patient’s own stem cells used to grow a new section of windpipe! This is Star Trek stuff ; replacement body parts with no anti-rejection drugs. The future is now.
* So you put wheels on your treadmill and drive it down the street, Fred Flintstone style. It is “The Most Pointless Exercise Machine Of All Time“, or just an epic fail waiting to happen?
* And speaking of fail, how about this picture from the California wildfires!
* UAW boss Ron Gettelfinger wants us to know it’s the economy, not the 40% higher cost of union labor at the Big Three, that has Detroit swirling down the drain. Yeah.
* The New Scientist has a roundup of myths and reality about going green at home. A couple of the answers are a little off, like the claim that laptop batteries should be completely drained and then recharged, but overall it’s topical and up to date.
* I am shocked, shocked! to learn that redlight-camera industry insiders get out of paying their tickets.
* ” ” ” ” ” ” that Democrats in Washington want to use the Federal bailout to reprioritize Detroit from building gas guzzlers most people don’t want, to building CAFE-designed cars most people won’t want.
* John McWhorter on how Obama’s election will affect black attitudes (via Instapundit). I especially hope he’s right about Jesse Jackson and Al Sharpton being put in perspective. Their outlook has been obsolete for years, but they were still the only game in town. Now they’re not.
* Robert Farago reminds us that bailing out “domestic” automakers is an elusive goal when GM, Ford and Chrysler all import major subassemblies or entire vehicles from overseas, and Toyota, Honda, Mitsubishi and BMW make vehicles in the US for sale here and abroad.
* A Chicagoland high school student demonstrates that provoking the followers of a personality cult gets the same results today as it always has (via Snowflakes In Hell). Well, she’s still alive so maybe there’s been some progress.
* Former county treasurer
Grandpa Simpson Carol Elliott of Ventura County, NH, blamed those damn kids for replacing her with a college student on election day. No, really. And she’s a Republican. Sigh.
* And an analysis of Prop 8’s success in allegedly liberal California. I read elsewhere that almost all the newly registered voters in this election were minorities who registered as, and presumably voted Democrat. I suspect a lot of these people helped vote down gay marriage even while they were helping vote up Barack Obama. The black community – at least where I live – is no friend of gays, and I have the impression that the hispanic community is quite socially conservative too.
* And finally, some good old-fashioned FAIL! from our friends at the Fail Blog.
Greg Mitchell at E&P has this feeble denial of media bias in the late presidential campaign:
We’ve posted on this subject in recent days, suggesting that the widely-publicized recent studies, including the Wash Post’s self-audit, are flawed or misleading, but now I have done a full article about it over at E&P.
Er, seriously, you’re not fooling anyone. Obama may have been the better candidate, but the vicious attacks on Palin, near-total blackout on Biden and total blackout of anything remotely embarrassing (especially anything liberal) about Obama’s past can’t be explained or justified in any other way.
The most you can say for the MSM in this campaign is that they did manage to treat McCain more or less with the respect he deserves. My personal theory is that 90% or more of working journalists (and 100% of editors) are just arrogant fatheads who see themselves as the guiding star sent out to lead the dumb masses by the nose. But I’m willing to entertain alternatives, such as that reporters bashed Palin to get back at her for bashing them in her convention speech, that they were more interested in Obama because of the historic nature of his potential election, that Biden was ignored because he’s an old story in Washington, the campaign was covered as a horse race because all campaigns are covered as horse races, etc. The only problem is that if true, none of those explanations are really any better than plain political bias.
And Mr. Mitchell, at least don’t deny it. The few other countries with a free press have media companies who wear their political leanings on their sleeve and let the public decide what to read. Only in the US does the major media pretend to be objective and unbiased. We now know that’s not true and never has been — at least have some dignity about it.