South African catastrophe

March 29, 2009

I'm glad to see the catastrophe there getting some attention.  The good people – white and black – of South Africa are being sacrificed to the gods of political correctness.  From Peter Hitchens:

This fast-approaching catastrophe is a source of shame and apprehension to millions of honest people, white and black, in South Africa itself.

It is also a tragedy for Africa as a whole, a continent hungry for any reason to hope. And it is grave news for the civilised world, which needs no more failed states.

Yet I can promise you I will be accused of alarmism and pessimism for saying so, and quite possibly of 'racism' too.

The "science" of economics

March 29, 2009

Some good thoughts (perhaps a great subject and some decent thoughts on it – but certainly a subject that needs to be re-examined).

The pawning of Obama’s supporters

March 29, 2009

This may become a running series, though I'm not sure I have enough patience to go through all the foreign policy stuff (e.g., the Surge in Afghanistan and the continuation of troops in Iraq, etc.).

Anyway, here's a financial one:

I had naively assumed that the goosing of government stats practiced by the Bushies might abate, at least temporarily, with Team Obama in charge (I'll confess I got tired of watching the non-farm payrolls birth/death adjustments and the like, and figured I'd leave it for the hard core investment oriented sites like the Big Picture).

But I thought for at least the first year of so of the new Administration we might get more or less truthful government stats (well as truthful as they can be, given the limitations and quirks of their data gathering and models).

I'm sure you'll be surprised to realize that government publishes fake statistics.  No offense meant to Ms Smith, whom I read and learn from regularly, but if you were stupid enough to believe this, then you need to re-evaluate your political philosophy in light of obvious contradictions with reality.

The battle lines are drawn

March 27, 2009

"At this point, I think that the relevant political divide is not between the two parties. It is between the forces of Progressive Corporatism and the (much smaller) forces of The Resistance."

Behold! The wisdom of our elites

March 27, 2009

Careful, lest ye be blinded by the light of the extremity of the wisdom

Vox populi, vox gibberish

March 27, 2009

From Best of the Web Today:

Two Countries in One!

 "81% Say Congress Can't Raise Taxes Retroactively"–headline,, March 24
 "57% Support 90% Tax on AIG Post-Bailout Bonuses"–headline,, March 23

Financial coup

March 27, 2009

This article, on how financiers have taken over government, is getting a lot of attention.

Frankly, while interesting in parts, this article is pretty dumb.  You could have written a similar article at any time in American History.  Nothing new is happening here.  For a decent history of this issue (in a book that is not really directly related to this issue) try this one, for example.  The rise of large financial regulators and especially the Federal Reserve (and especially the New York Federal Reserve) has always been completely and unseparably intertwined with large financial firms.  There is nothing new to see here.

I still cringe every time I read that deregulation in the 80s is to blame for the crisis.  Presumably, this means the repeal of Glass-Steagall is to blame.  Let's assume that the integration of investment banking and commercial banking is to blame for the crisis.  Logically then, the institutions where the most integration between investment and commercial banking has taken place should be in the worst shape.  I would suggest that JPM was the most integrated institution.  Also, firms with lower levels of integration should be doing best – I would nominate BAC and LEH and BS as contenders.  I don't mean to suggest that this argument is 100% wrong, but I see no evidence for it being correct.

(I think it would be more interesting to analyze whether the big deregulation of financial firms in Britain under Thatcher was the real cause.  People don't realize that after that event, regulating financial firms became very difficult.  If regulation in the US became too stringent, whole portions of a firm would just move to a different jurisdiction.  I still think this argument is weak and purely ideological, but at least this form of the argument would have some logic to recommend to it).

The crisis and the Fed

March 27, 2009

A symposium

Seizing financial firms

March 27, 2009

I've read a lot about the Geithner plan for creating some form of conservatorship all financial firms (not just banks).  No one has mentioned – what I believe to be – the main objection.  The Secretary says he needs these powers to avoid what is happening at AIG.

The problem is that the way AIG is being bailed-out is exactly the same as the way the largest, insolvent banks are being bailed-out.  There is a process for dealing with insovlency at large banks, namely allowing the FDIC to put them into receivership.  That's not what Secretary Geithner is doing with large, insolvent banks.  Let's say there was a well-established receivership process for a company like AIG – I don't think the government would have allowed them fail, just like they are not allowing large banks to fail despite the existence of a well-established process for banks.

Shadow banking system

March 27, 2009

Good thoughts – as usual, even though I don't always agree – from Mr Hempton