The Value of Everything

Shutting down

2010-06-03T17:35:00.000-07:00

Eric Schmidt, Sergei Brin and Larry Page are now officially off my list of businessmen worthy of respect!!! They are turning over their misguided, stupid intercepted data to a national government!

What part of "Big Brother is watching" do you not understand? Delete the data and show the server logs verifying the deletion, but DO NOT TURN IT OVER to the government! Are you F#%&ing IDIOTS?

I will never access a website in any way connected to Google. I will NOT be associated with any product of any kind connected to Google. That includes Google.com, maps.google com, Gmail and Blogger.com. This blog will be shut down soon. Google is HISTORY as far as I'm concerned.

Dudes, if you think you've dodged a problem by turning over this data, you ain't seen nothing yet. Oh, yeah, and I'm shorting GOOG.

Brad DeLong's Diagnosis

2010-03-29T16:22:00.000-07:00

Brad DeLong has mastered the technique of the petty, ad hominem attack.

His latest attack is on Mario Rizzo, whom I don't know, but wish I did (in contrast to Brad DeLong).

At any rate, as long as Brad is practicing pop/shlock psychology, there's another diagnosis I think he should look at. The part I think applies the most to Brad is this.

Treatment for this disorder is very rarely sought. There is a limited amount of insight into the symptoms, and the negative consequences are often blamed on society. In this sense, treatment options are limited. Some research has found long term insight oriented therapy to be effective, but getting the individual to commit to this treatment is a major obstacle.

Good luck with that, Brad.

The Question Is...

2010-03-15T19:38:00.000-07:00

Moody's was so slow to downgrade the ratings of subprime CDOs, does this mean that the United States Government is already no longer a AAA credit?

http://www.bloomberg.com/apps/news?pid=20601010&sid=a8c_1vtVGzD8

Of more importance to me, if the 3-mo T-bill rate is no longer the risk-free rate, what do I use to calculate a Sharpe ratio?

Freedom's Last Stand

2010-03-15T17:27:00.000-07:00

OK, the title of this post is a little overwrought, but not by much. If Pelosi/Reid/Obama/Axelrod/Emanuel/Soros/Moulitas/Sullivan can pass this bill using this method, then they can pass anything. They can do to the United States what the Bolsheviks did to Russia.

Losing your life, losing an election

2009-11-08T18:11:00.000-08:00

To Obama, it's all the same.

If I read this correctly, our President compared soldiers losing their lives to an insane, fanatical Muslim to Democratic Representatives losing an election over their vote on the health care bill.

It doesn't get any more crass and asinine than that.

Leave it to the BBC

2009-11-03T21:07:00.000-08:00

The BBC has finally run an article that identifies a benefit of gun control. This result if probably not generalizable, but the story is both ironic and funny. My annotated summary is below.

India forces residents of Kashmir to turn in their weapons.

"Following the outbreak of the insurgency, people had to hand in their weapons to police - which put a halt to poaching."

The bear population in Kashmir increases.

"Wildlife experts say the conflict in Kashmir has actually resulted in an increase in the population of bears and leopards."

A bear kills two terrorists that it discovers in it's den.
"A bear killed two militants after discovering them in its den in Indian-administered Kashmir, police say."

You just can't make this stuff up. LOL!
Thanks to Ann Althouse.

Thank you, Congressman Frank

2009-10-27T21:47:00.000-07:00

Congressman Barney Frank--in the odd position of trying to sound reasonable compared to Ralph Nadar--admits what he and the Obama Admininistration are trying to achieve as a result of the economic crisis.

Barney Frank's Fingernails

Update: One of the commenters points out correctly that Frank ostensibly is referring to financial regulation in his comment. But can anyone seriously doubt that his statement doesn't apply equally to economic and social policy as well?

The Logic of Collective Action

2009-10-27T20:51:00.000-07:00

The Value of Everything returns to blogging with two posts--one on an old topic and one on a recent one.

This post is titled with all due respect to Mancur Olson. The attached video (as old as it is) does as much, if not more to delineate the force that collectivism holds over the human psyche as any I have seen. In case your time allocation doesn't permit spending eight minutes watching this video, below is a summary.

A pride of young lions attacks and appears to subdue a calf that is part of a water buffalo herd and in the process drag the calf into a river in Kruger National Park.
As the lions attempt to finish off their kill, a pair of alligators try to take the calf from the lions.
The lions--collectively--save their prey from their rival predators.
In the meantime, the water buffalo return to confront the lions with the apparent intention of rescuing--collectively--the calf.
The water buffalo succeed in rescuing the calf and driving off the lions.

Dear Congressman Frank

2009-05-29T17:16:00.000-07:00

Barney Frank is hysterically funny on CNBC this morning. Carl Quintinilla asked Congressman Frank (I'm paraphrasing) whether the government would a) allow inflation to become a problem or b) tighten too quickly and slow economic growth. I'm going to try to quote Rep. Frank exactly, but watch the video (first 30 seconds).

Well, it's interesting. I guess that's kinda' the media approach. Nobody says we might get it right.

With all due respect, Congressman Frank, if it were possible for the government to "get it right," we wouldn't be in this situation to begin with. Congressman, you were the one who said in Congressional hearings on the systemic risk posed by Fannie Mae and Freddie Mac, that you'd "like to roll the dice a little bit."

Well you rolled the dice, and Alan Greenspan and Ben Bernanke rolled the dice, and the mortgage originators rolled the dice and the investment banks rolled the dice--all at your prodding--and here we are. For you to now say that "we might get it right" doesn't pass the laugh test--literally. I laughed out loud at how hysterically preposterous your comment was. Why? Because you and your cohorts in Congress will not allow the Fed to get it right. At the first sign of monetary tightening, you will haul Ben Bernanke, whom you praised so highly in this video, before your committee to grill him on how he can condemn millions of Americans to the unemployement rolls.

You, sir, should be a stand-up comedian, because you are not a serious policy maker.

Spending Is The Tax

2009-05-14T20:58:00.001-07:00

I could not improve on the title of this post by Jerry O'Driscoll. It's a short post, so read the whole thing.

See my (loosely) related post here.

UPDATE: I heard someone on CNBC today finally say what I've been saying for months regarding the stimulus package, to wit: the money has to come from somewhere.

Is the Obama administration as a RICO enterprise?

2009-05-14T20:20:00.000-07:00

George Will has an article in the WaPo today entitled, "Tincture of Lawlessness: Obama's Overreaching Economic Policies". As the title suggests, Will puts forth the notion that Obama is willing to ignore the law. I want to go on record that Obama's actions go beyond "lawlessness."

The Obama administration is a RICO enterprise. Below is the operative sentence--in the Department of Justice's own language--about the scope of the RICO statute.

...the statute is sufficiently broad to encompass illegal activities relating to any enterprise affecting interstate or foreign commerce.

What could be more organized or illegal than circumventing the bankruptcy laws as Obama did in the Chrysler deal? What more corrupt organizations could Obama be involved with than the United Auto Workers union, not to mention the United States House of Representatives?

Finally, just look at the following comparisons between a well-known gangster--Al Capone--and a well-known Obama crony--Rahm Emanual. Both started their careers in Chicago. Both used profanity as a tool for manipulating their opponents. Both achieved diminutive statures.

If that doesn't prove the connection between the Mafia and Obama, what does?

Dear Mr. President-4/27/2009

2009-04-27T19:53:00.000-07:00

I submitted the following message on the whitehouse.gov website today:

Dear Mr. President,
You need to get a grip. I have little doubt that you did not know beforehand about the so-called "photo-op" that consisted of flying an airliner trailed by a fighter jet over Lower Manhattan. But the fact that such an event could occur in your administration indicates the following. You are trying so hard to deny the importance of the September 11, 2001 attacks--which provided the raison d’être for the Bush Administration--that you are willing to traumatize thousands of people in order to pretend that they didn't happen.

For God's sake, take some of the TARP money and go out and buy a clue. This didn't happen when you were three years old, it happened today. Are you responsible for the actions of those in your Administration or are you not? Are you a clueless three-year old or are you the President of the United States?

Best regards,

If I am President

2009-04-22T19:24:00.000-07:00

If I am President in 2017, the country should be prepared for the investigation and prosecution of Obama administration officials involved in the bailouts of financial institutions. These officials deprived private citizens of basic civil rights and appropriated private property without due process.

If I am President, I will prosecute these individuals to the fullest extent of the law. Remember that, Tim Geithner, Larry Summers and Christina Romer.

Pulling things together

2009-03-26T17:38:00.000-07:00

Sometimes certain ideas coalesce in time and when that happens, I'll try to point them out. The first one is this letter of resignation by an AIG executive.

(cwcid/ht) Tigerhawk

The second idea is this article in Scientific American. As interesting as the article is, the commentary by Instapundit really appeals to my love of irony.

(cwcid/ht) Instapundit

Finally, if my reader has read this far and clicked some or all of the links, I leave him or her with this quote.

"If you ask me to name the proudest distinction of Americans, I would choose...the fact that they were the people who created the phrase 'to make money.' No other language or nation had ever used these words before; men had always thought of wealth as a static quantity--to be seized, begged, inherited, shared, looted or obtaines as a favor. Americans were the first to understand that wealth has to be created. The words 'to make money' hold the essence of human morality."

The character of Francisco D'Anconia
in Ayn Rand, Atlas Shrugged

I can't vouch for the etymology of the phrase "to make money," but the point is that most of the people at AIG were creating wealth. They were condemned and punished for this in a way that was abominable.

Dear Senator Schumer

2009-03-21T14:22:00.000-07:00

UPDATE: Ok, so I was wrong. Richard Epstein refutes the idea that the AIG bonus law was unconstitutional. If only I could believe that Chuck Schumer read Richard Epstein.

The following is a message I just posted on Sen. Charles Schumers Senate contact page.

Dear Senator Schumer,
The bill that recently passed the House (H.R.1586) to tax AIG bonuses is very likely unconstitutional and must not become law.

It is, in effect, a bill of attainder. Such laws are forbidden by Article I, section 9, clause 3 of the United States Constitution, which states:

"No Bill of Attainder or ex post facto Law shall be passed."

You took an oath to uphold the Constitution. I expect you to do so at all times, but particularly in regard to this bill.

I am not an AIG employee and have no financial interest in AIG or any of its subsidiaries.
Sincerely,

How do I know this law is unconstitutional? By relying on my fellow bloggers, of course. Protein Wisdom is one source. There is a link in the comments of that post to this one at Powerline.

I didn't call my Senator as the Protein Wisdom post suggested. I took the Internet route instead.

Some quotes--number 1

2009-03-20T18:27:00.000-07:00

This is the beginning of my series, Some quotes are too good to miss.

How come when I put my AmEx bill on my Visa, it's stupid, but when the government does it, it's stimulus?

Attribution: Instapundit

Methinks the economist doth protest too much

2009-03-20T17:24:00.000-07:00

Princeton economics professor, Alan Blinder has an op-ed in the WSJ with the title Obama Is No Socialist. The argument he makes should be obvious from the title.

In an effort maintain the most substantive nature possible for this blog, let me deal with Professor Blinder's first point first--that Obama is not attempting to socialize the banking system. To be fair, let me quote exactly Prof. Blinder's argument for this point.

"Secretary of the Treasury Timothy Geithner has made it clear that he opposes nationalizing banks, despite much outcry from the political left -- and even some from the right -- to do just that."

That's it. The sum total of Prof. Blinder's evidence that Obama isn't trying to socialize the banking system is that Geithner has "made it clear that he opposes nationalizing banks." Well, actions speak louder than words. Yes, the Treasury has taken preferred stock in return for bailout funds rather than (voting) common stock. So that means that the government will have no influence on the operational decisions of the banks because they hold non-voting shares. I think the bonus recipients at AIG might think differently about how much operational control the government has.

But what is really more interesting about this article is the perceptual issue this article raises. Two months to the day into Barack Obama's administration, a world-renowned Democrocratic economist finds it necessary to write an article in the Wall Street Journal arguing why the President is not a socialist. What are his defenders going to be writing about a year from now? Stay tuned.

UPDATE: This Forbes article might have been the catalyst for Blinder's op-ed.

This is what passes for accepting responsibility

2009-03-18T19:41:00.000-07:00

The WSJ has an article today with the headline that "Obama Accepts Blame for AIG Bonuses".

The article contains this quote:

"Washington is all in a tizzy and everybody is pointing fingers at each other and saying it's their fault, the Democrats' fault, the Republicans' fault," he said at a town hall meeting Wednesday. "Listen, I'll take responsibility. I'm the President."

He added: "So for everybody in Washington who's busy scrambling, trying to figure out how to blame somebody else, just go ahead and talk to me, because it's my job to make sure that we fix these messes, even if I don't make them."

Is this what passes for taking responsibility these days? How about revealing that President Obama was a leading recipient of political donations from AIG last year. As reported in the WSJ Political Diary e-mail (paid subscription required):

"It turns out that last year AIG not only spent $10 million on lobbying Congress but also was a generous political donor. The top two recipients?
None other than Senate Banking Committee Chairman Chris Dodd, who collected $103,100, and then-Senator Barack Obama, who took in $101,332 (John McCain was a distant third). No wonder Messrs. Obama and Dodd both are scrambling to avoid the AIG tar baby. "

The Obama Administration is taking Orwellian rhetoric to new heights. I don't know what else to say about it.

Thought experiment for the maestro

2009-03-15T08:50:00.000-07:00

Plenty of time has elapsed for people to digest and comment on Alan Greenspan's defense of his policies in the WSJ. Greenspan argues that it was not Fed policy--which affects short-term interest rates--that caused the housing and credit bubble. Rather, he argues, it was the disconnect between short-term interest rates and long-term, in this case, mortgage rates. He lays the blame for this disconnect on the high savings rates of developing countries as their economies expanded. He even manages to work in the ironic twist that the saving behavior by these countries was the result of a "tectonic shift in the early 1990s...from heavy emphasis on central planning to increasingly dynamic, export-led market competition." Well, of course! Market competition is to blame for everything.

The following thought experiment might be useful for evaluating Greenspan's thesis that he/the Fed isn't to blame for the housing bubble and collapse. First, imagine that all the influences that have been put forth as causes of the housing bubble--lax regulation, shoddy credit standards by lenders, the effect of the Community Reinvestment Act and others--had all been the same, but that the Fed had not expanded credit as rapidly as it did. Would a bubble still have occurred? I would suggest that even with all these public and private sector errors, without the Fed expansion of credit, the bubble would not have happened.

Next, suppose that none of the factors listed above had occurred--regulation was appropriately strict, lenders didn't qualify un-creditworthy borrowers, the CRA had not influenced bank lending--but that the Fed had still expanded credit in the way that it did. Would a bubble have occurred in some other sector? I suggest that it would have. It might not have been in tulips or in ostrich feathers, but it would have occurred in some other asset class.

This thought experiment is useful for evaluating arguments about the cause of the crisis--and the ways to prevent the next one--that are posed by both the right and the left. Whatever else one wants to attribute blame to, if the Fed hadn't permitted credit to expand too rapidly, a bubble still would have been far less likely to occur. And the only way to prevent the next bubble is to avoid the causes in the first place. More on that in another post.

Soaking the rich

2009-03-03T21:18:00.000-08:00

Following on my first (new) post below, here is more data regarding where our tax system is heading. This information has been around long enough that it is difficult to believe that our politicians are not pushing us along this path, but maybe that's being paranoid.

The first chart below shows the share of total taxes paid by the bottom 50 percent of taxpayers. For the latest year available from the IRS, this fraction is less than 3 percent.

The next chart shows, for comparison, the share of taxes paid by the top 5 percent (that's five without a zero). For the latest year, that fraction of over 60 percent. Is there anything to be concerned about in these statistics. One way of judging this is to compare the tax share with the income share--the share of total income that the top 5 percent earn. For the most recent year, that share was 36.7 percent. So the top 5 percent of income earners take in 36.7 percent of the measured income, but pay more than 60 percent of the taxes paid. I'll leave the question of whether that is fair to another post.

What about the bottom 50 percent of taxpayers?This is what concerns me. What is happening is that the share of income taxes paid by the bottom 50 percent is approaching zero.

Here's the bottom line. As soon as the bottom 50 percent are paying no tax, there is no chance of reforming the tax system to make it fairer and more efficient. Once half the income earners pay not tax, what incentive do that have politically to support tax legislation that lowers taxes on the top 50 percent?

We are moving toward a situation, in other words, where lowering tax rates will be impossible.

That situation is a liberal politician's dream and in light of their performance the last 10 years, it may be a conservative politician's dream also. The liberals don't have to worry about the electorate thwarting their plans. (That's different from the economy thwarting their plans.) But the conservatives can still propose earmarks while paying lip service to lower taxes, because they know the electorate will never stifle their own tax and spend plans. How's that for a conspiracy theory for you.

Redemption happens

2009-03-02T17:14:00.001-08:00

This deserves more than an update to my previous post. Instapundit has the Rick Santelli backlash totally covered. The story was false, so the web sites that promoted it just took down their posts, instead of publishing a retraction. Barry Ritholz has also covered the disappearance of the story (this is called credit where credit is due).

This is rich

2009-02-28T16:54:00.000-08:00

The backlash against Rick Santelli is in full swing. One thread was started by Playboy (of all places) and it's even been picked up by Barry Ritholz (who is sometimes reasonable as a lawyer turned financial market commentator).

The Playboy rhetoric is not high-minded. The posts names Zack Christenson as the registrant of the Chicago Tea Party domain name--in August 2008--and refers to him as "a dweeby Twitter Republican." Fair enough. I'll probably resort to name calling on this blog at some point, despite my best efforts to avoid it.

The meme goes that Santelli's comments were part of an organized media campaign sponsored by the Koch family. But let's suppose that the story is accurate as written. Conservatives have begun a media effort to oppose policies they disagree with. I just have one question.

Why is it that when MoveOn.org creates a PR campaign with George Soros' help, it's "democracy", but when a "a dweeby Twitter Republican" starts a PR campaign with the Koch's help, it's a conspiracy?

NYC Tea Party

2009-02-28T15:39:00.000-08:00

The NYC Tea Party was fairly well -attended. I would have liked to see a thousand people, but it is New York--that bastion of liberalism--after all. The crowd was varied as far as age, but I have to say that minorities were a little underrepresented. On the other hand, one speaker urged the audience not to adjust their cameras, because he was, in fact, a black Republican.

Aside from Obama himself, the politician who seemed to get the most attention was Charles Shumer for his quote that the American people don't care about the "porky" provisions of the stimulus bill. (This group didn't care about the stimulus portions of the pork bill.)

UPDATE: Good photo gallery from Jeff Smith.
(cwcid: Glenn Reynolds)

UPDATE: The New York Post story.

Dear Professor Roubini

2009-02-27T17:05:00.000-08:00

I have the greatest respect for your prescience and foreknowledge about the current financial market crisis. I respectfully suggest, however, that your latest Twitter post about your interview with Maria Bartiromo (hereafter referred to on this blog with the greatest respect as "Maria") misses a very important point about the nationalization of the large banks in the United States.

I refer you to Gerald P. O'Driscoll's recent column in the WSJ. As Jerry points out, there are two flavors of nationalization. The FDIC has practiced one flavor for a long time, with respectable effect. In that flavor, the FDIC closes down insolvent institutions, sells off the pieces that they can and the taxpayer is on the hook for the rest. The operative words here are "closes down."

The other flavor of nationalization, which is the one you confuse, is to somehow allow these institutions to continue to operate so that at some later time they can be "sold back" to the private sector.

There are many problems with this approach, but I will mention only one.

THE SALE BACK TO THE PRIVATE SECTOR WOULD NEVER HAPPEN!

Do you honestly think that if Barney Frank and Christopher Dodd were to get their hands on a bank that is backed by the full faith and credit of the United States, that they will ever let it go?

Not in a million years.

As Jerry O'Driscoll points out, "nationalized" banks would be quickly politicized.

In fairness, I believe that you think there is some happy median between shutting down the largest financial institutions in the US and having them operate under political control.

I respectfully submit that you are mistaken.

Starting over

2009-02-26T20:23:00.000-08:00

I've decided to return to blogging in order to contribute to the debate about how to get out of the current financial crisis. The stimulus plan stimulated me to do this.

Here is a post about one issue that has concerned me for some time--the idea that the number of taxpayers who owe no tax is likely to exceed 50%. When that happens, it is likely to be a tipping point in the debate about reforming the tax system because the majority that pays no tax will outvote the minority that pays something.

Here is one reason this is important.